DocketNumber： MW-183
Judges： Mark White
Filed Date： 7/2/1980
Status： Precedential
Modified Date： 2/18/2017
The Attorney General of Texas May 27, 1980 MARK WHITE Attorney General Honorable George M. Cowden Opinion No. MW-18 3 Public Utility Commission of Texas 7800 Shoal Creek Boulevard Re: Validity of section 67A, of Austin, Texas 76757 art. 1446c, V.T.C.S. Honorable Tom Creighton Chairman Senate Committee on Economic Development Senate Chamber State Capitol Austin, Texss 76711 Dear Sirs: Chairman Cowden hs requested our opinion concernhq the constitu- tionality of section 87A of article 1446c, V.T.C.S. He has asked whether these provisions violate article 3, section 56 of the Texas Constitution which prohibits the enactment of certain local and special laws. Section 67A provides as follows: (a) The provisions of this section apply notwith- standing any other provision of this Act. (b) Water and sewer utility property in service which was acquired from an affiliate or developer prior to September 1, 1976, included by the utility in its rate base shall be included in all ratemakitg formulae and at the installed cost of the property rather than the price set between the entities. Unless the funds for this property are providsd by explicit customer agreements, the property shall be considered invested capital and shall not be con- sidered contributions in aid of construction or customer-contributed capital. (c) Depreciation expense included in cost of service shall include depreciation on all currently used, depreciable utility property owned by the utility. p. 584 Honorable George M. Cowden d( Honorable Tom Creighton - PageTwo (MW-183) As you state in your request, the intent of the bill appears to be to require the Commission to include in the invested capital or rate base of water and sewer utilities all property contributed to the utility by developers or affiliates prior to September 1, 1976 and to allow such utilities a return on this type of property and depreciation expense for such. Senator Creighton asks three questions which must be answered only if the statute is found to be constitutional. Where the statutory challenge is grounded on special cr local characteristics, the Texas courts have developed specific tests to be applied in determining constitu- tionality. Classifications appearing to be special or local have been held valid if: (1) there exists a reasonable relationship between the classification and the object sought to be classified; (2) the classification is not an arbitrary device to disguise a special or local law; and (3) the law in question operated equally on all members of the classification. Robinson v. Hill,507 S.W.2d 521
(Tex.-1974); Smith v. Davis,426 S.W. 2d
827 (Tex. 1968); County of Cameron v. Wilson,326 S.W.2d 162
(Tex. 1959). If the practical effect of the classification is such that others can fall within the classification, the statute is not special or local in nature. City of Fort Worth v. Bobbit,41 S.W.2d 228
(Tex. Comm’n App. 1931); Creps v. Board of Fireman’s Relief and Retirement Fund Trustees of Amarillo,456 S.W.2d 434
(Tex. Civ. App. - Amarillo 1970, writ rePd, n.r.e.). However, a recent case involviw the Public Utility Regulatory Act involved a class closed by dete. There, as here, portions of the Act applied to utilities falling within a class defined by date. The court concluded: Not only must a classification be broad enough to include a stistantial class based on characteristics legitimately distinguishhg that class from others, but the legislation must be intended to apply uniformly to all municipalities that may in the future come within the classification designated. Morris v. City of San Antonio,572 S.W.2d 831
, 833-834 (Tex. Civ. App. - Austin 1978, no writ). Under section 87A no utilitv can aualifv for the rate treatment afforded bv the statute after September 1, 1976. It”has b&n urged in briefs sdmitted to this office that the September 1, 1976 cut-off date established a reasonable classification since that was the date the rate jurisdiction of the Commission became effective. It is difficult to perceive, however, any reasonable basis for treating systems acquired by utilities before that date differently than systems acquired after that date particularly when the legislation was enacted more than two years after rate jurisdiction attached. Accordingly, we believe section 87A is a local or special law and is thus unconstitutional. In light of our determination on the constitutional question, we need not address Senator Creighton’s questions. P. 585 Honorable George M. Cowden & Honorable Tom Creighton - PegeThree (Mw-1831 SUMMARY Because section 87A of article 1446c, V.T.C.S., creates a closed class of water and sewer utilities, it is unconstitutional as a special law in violation of article 3, section 56 of the Texas Constitution. AX& MARK WHITE Attorney General of Texas JOHN W. FAINTER, JR. First Assistant Attorney General TED L. HARTLEY Executive Assistant Attorney General Prepared by Scott Wilson Assistant Attorney General APPROVED: OPINION COMMITTEE C. Robert Heath, Chairman Rick Gilpin Andy Kever J. Scott Wilson Bruce Youngblood P. 586