Creedmoor-Maha Water Supply Corporation v. Texas Commission on Environmental Quality and Jona Acquisition, Inc.

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-09-00460-CV
Creedmoor-Maha Water Supply Corporation, Appellant
v.
Texas Commission on Environmental Quality and Jona Acquisition, Inc., Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. D-1-GN-08-004388, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING
OPINION
The Creedmoor-Maha Water Supply Corporation (Creedmoor) appeals a district court
judgment dismissing, for want of subject-matter jurisdiction, claims for declaratory and injunctive
relief through which it seeks to challenge a final order of the Texas Commission on Environmental
Quality (TCEQ). In a single issue, Creedmoor asserts that the district court erred in dismissing its
claims. We disagree and will affirm the district court’s judgment.
BACKGROUND
Appellant Creedmoor is a non-profit, member-owned water supply corporation
(WSC) that provides water utility service to retail customers. The right or ability to sell water or
sewer service to the public is regulated by the State, and WSCs are generally required to obtain
a certificate of convenience and necessity (CCN) from TCEQ as a prerequisite for providing
retail water or sewer service to the public. See Tex. Water Code Ann. § 13.242(a) (West 2008).
With this right, which is typically granted exclusively as to a designated geographic area, comes
a corresponding duty to “serve every consumer within its certified area and . . . render continuous
and adequate service within the area or areas.” Id. § 13.250(a) (West 2008); see also id.
§§ 13.250(b)-(e), .2501 (West 2008) (limitations on utility’s ability to refuse service). In 1975,
Creedmoor obtained a CCN from TCEQ’s predecessor granting it the right and duty to provide
water service to customers located in a several-thousand-acre area encompassing portions of
Caldwell County, Hays County, Bastrop County, and southeastern Travis County.
The record reflects that Creedmoor currently serves approximately 2,344 existing
connections. For the water it sells to customers, Creedmoor relies primarily on wells in the
Barton Springs-Edwards Aquifer, although it also purchases water wholesale from the City of Austin
and another supplier. Creedmoor’s aggregate total maximum daily capacity of all supplies is
2,380 gallons per minute (g.p.m.).
The legislature has delegated to TCEQ the authority to revoke or amend CCNs under
certain circumstances. Section 13.254 of the water code authorizes TCEQ, on petition or sua sponte,
to revoke or amend a CCN either with the holder’s written consent or without such consent where
(1) “the certificate holder has never provided, is no longer providing, is incapable of providing, or
has failed to provide continuous and adequate service in the area, or part of the area, covered by the
certificate;” (2) in certain counties “the cost of providing service by the certificate holder is so
prohibitively expensive as to constitute denial of service;” (3) “the certificate holder has agreed in
writing to allow another retail public utility to provide service within [the holder’s CCN’s] service
area;” or (4) the holder has acquiesced in another retail public utility’s provision of services in the
holder’s CCN’s service area by failing to file a cease-and-desist action within a specified time. See
2
id. § 13.254(a) (West 2008). These revocation proceedings are governed by the Administrative
Procedures Act (APA), and parties aggrieved by the TCEQ’s orders may seek judicial review. Id.
§ 13.003 (West 2008) (“Chapter 2001, Government Code applies to all proceedings under this
chapter except to the extent inconsistent with this chapter.”); see also id. § 5.351(a) (West 2008) (“A
person affected by a ruling, order, decision, or other act of the commission may file a petition to
review, set aside, modify, or suspend the act of the commission.”).
In 2005, the legislature created an alternative means by which areas within a CCN
can be modified or revoked. An “owner of a tract of land that is at least 50 acres and that is not in
a platted subdivision actually receiving water or sewer service” may petition TCEQ for “expedited
release” of the area from a CCN “so that the area may receive service from another retail public
utility.” Act of May 29, 2005, 79th Leg., R.S., ch. 1145, § 9, sec. 13.254(a-1), 2005 Tex. Gen. Laws
3771, 3775, codified at Tex. Water Code Ann. § 13.254(a-1). The petitioner has the burden of
demonstrating that:
(1) a written request for service, other than a request for standard residential or
commercial service, has been submitted to the certificate holder, identifying:
(A) the area for which service is sought;
(B) the timeframe within which service is needed for current and
projected service demands in the area;
(C) the level and manner of service needed for current and projected
service demands in the area; and
(D) any additional information requested by the certificate holder that is
reasonably related to determination of the capacity or cost for
providing the service;
3
(2) the certificate holder has been allowed at least 90 calendar days to review and
respond to the written request and the information it contains;
(3) the certificate holder:
(A) has refused to provide the service;
(B) is not capable of providing the service on a continuous and adequate
basis within the timeframe, at the level, or in the manner reasonably
needed or requested by current and projected service demands in the
area; or
(C) conditions the provision of service on the payment of costs not
properly allocable directly to the petitioner’s service request, as
determined by the commission; and
(4) the alternate retail public utility from which the petitioner will be requesting
service is capable of providing continuous and adequate service within the
timeframe, at the level, and in the manner reasonably needed or requested by
current and projected service demands in the area.
Tex. Water Code Ann. § 13.254(a-1) (West 2008). The petitioner is required to deliver a copy of
the petition to the CCN holder, “who may submit information to the commission to controvert
information submitted by the petitioner.” Id. Once TCEQ determines that a petition is
administratively complete, it “shall,” within 90 days, “grant the petition” unless it makes an express
finding that the petitioner failed to satisfy the elements listed above and “supports its finding
with separate findings and conclusions for each element based solely on the information provided
by the petitioner and the certificate holder.” Id. § 13.254(a-3) (West 2008). TCEQ may grant or
deny a petition subject to terms and conditions specifically related to the petitioner’s service request
and all relevant information submitted by the petitioner and CCN holder. Id.
In contrast to the revocation proceedings under subsection (a), the legislature
exempted from the APA the TCEQ’s proceedings on petitions for expedited release. See id.
4
§ 13.254(a-4) (West 2008). It also made the TCEQ’s decision on the petition “final after
any reconsideration authorized by the commission’s rules” and mandated that it “may not be
appealed.” Id.
If an area covered by a CCN is “decertified” under either subsection (a)’s revocation
proceedings or subsections (a-1) through (a-4)’s expedited release procedures, another retail
public utility may not render service to the public in that area “without providing compensation for
any property that the commission determines is rendered useless or valueless to the decertified
retail public utility as a result of the decertification.” See id. § 13.254(d) (West 2008). The
legislature has prescribed procedures for determining the amount of compensation required. See id.
§ 13.254(e)-(g-1) (West 2008). Factors in determining valuation include “the amount of the
retail public utility’s debt allocable for service to the area in question,” “the impact of future
revenues lost from existing customers,” and “other relevant factors.” Id. § 13.254(g).
Appellee Jona Acquisition, Inc., now known as Carma Easton, Inc. (“Carma”), is
seeking to develop a master-planned community—including residential, multi-family, restaurant, and
retail land uses—on approximately 1,960 acres in Travis County near the intersection of U.S. 183
and F.M. 1625, a few miles south of the Austin-Bergstrom International Airport. A significant
portion of Carma’s planned development is located within the area encompassed by Creedmoor’s
1975 CCN. In May 2008, Carma filed with TCEQ a petition for expedited release of the area from
Creedmoor’s CCN. Carma alleged and presented proof that it had requested Creedmoor to provide
service for 10,300 living-unit equivalents (a measure of water flow or usage) with projected peak
water demand over 13,000 gallons per minute (g.p.m.), that Creedmoor had been given the required
90 days to review and respond to the request, that Creedmoor had refused to provide the service or
5
was unable to do so because of inadequate infrastructure or water supplies (although the evidence
also reflected that Creedmoor professed to be “still pursuing our search” for suitable supplies), and
that the alternative retail public utility from which Carma desired to obtain service—the City of
Austin—was capable of providing Carma the service it needed. See id. § 13.254(a-1). Creedmoor
filed a response to Carma’s petition. See id. On August 8, 2008, after considering Carma’s petition
and Creedmoor’s response, TCEQ’s executive director signed an order granting the petition and
releasing the area at issue from Creedmoor’s CCN. Creedmoor filed a motion with the TCEQ
commissioners to overturn the executive director’s order, which was overruled by operation of law
on November 4, 2008.
On December 5, 2008, Creedmoor filed suit against appellees seeking declarations
under the Uniform Declaratory Judgments Act1 that the TCEQ order was invalid and also seeking
injunctive relief enjoining the order’s enforcement, affirmatively recertifying the disputed area
to Creedmoor’s CCN, and enjoining Carma from seeking water service from another utility
until released by Creedmoor.2 Both TCEQ and Carma answered and filed pleas to the jurisdiction.3
Following a hearing at which Creedmoor and TCEQ presented evidence, the district court granted
the pleas, dismissed Creedmoor’s suit, and signed a “final and appealable” judgment. This
appeal ensued.
1
See Uniform Declaratory Judgments Act (UDJA), Tex. Civ. Prac. & Rem. Code Ann.
§§ 37.001–.011 (West 2008).
2
See id. §§ 37.003, .004, .011. Creedmoor also sought attorney’s fees under the UDJA. See
id. § 37.009.
3
Carma also asserted counterclaims for declaratory and injunctive relief that are not at issue
on appeal.
6
ANALYSIS
In a single issue, Creedmoor urges that the district court erred in granting appellees’
pleas to the jurisdiction because “Creedmoor pled sufficient jurisdictional facts in its petition,”
“sovereign immunity is either waived or not implicated,” “Creedmoor has standing to bring its
claims,” and “Creedmoor’s claims are not time-barred.”
Standard and scope of review
A plea to the jurisdiction challenges a trial court’s authority to decide a case. See
Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. 2004). Analysis of
whether this authority exists begins with the plaintiff’s live pleadings. Id. at 226. The plaintiff
has the initial burden of alleging facts that affirmatively demonstrate the trial court’s jurisdiction to
hear the cause. Id. (citing Texas Ass’n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446
(Tex. 1993)). Whether the plaintiff met this burden is a question of law that we review de novo. Id.
We construe the pleadings liberally, taking them as true, and look to the pleader’s intent. Id.;
Texas Logos, L.P. v. Brinkmeyer, 254 S.W.3d 644, 659 (Tex. App.—Austin 2008, no pet.). If the
pleadings do not contain sufficient facts to affirmatively demonstrate the trial court’s jurisdiction
but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading
sufficiency, and the plaintiffs should be afforded the opportunity to amend. Miranda, 133 S.W.3d
at 226-27. If the pleadings affirmatively negate the existence of jurisdiction, then a plea to
the jurisdiction may be granted without allowing the plaintiffs an opportunity to amend. Id. at 227.
When resolving issues presented by the plea to the jurisdiction, we may consider
evidence that the parties have submitted and must do so when necessary to resolve the jurisdictional
7
issues. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). In fact, in a plea to the
jurisdiction, a party may present evidence to negate the existence of a jurisdictional fact alleged in
the pleadings, which we would otherwise presume to be true. See Miranda, 133 S.W.3d at 227. To
the extent the challenge implicates the merits of the plaintiff’s cause of action, the party asserting
the plea has the burden of negating a genuine issue of material fact as to the jurisdictional fact’s
existence, in a manner similar to a traditional summary-judgment motion. See id. at 227-28.
Whether the party meets this burden is a question of law that we review de novo. Id. at 228. If the
pleading requirement has been met and the party challenging jurisdiction submits evidence that
implicates the merits of the pleader’s cause of action, we take as true all evidence favorable to the
pleader and indulge every reasonable inference and resolve any doubts in the pleader’s favor. Id.4
Appellees have asserted that Creedmoor’s suit is barred by sovereign immunity.
Creedmoor insists that its claims do not implicate sovereign immunity because they seek
“prospective” declaratory and injunctive relief to restrain “ultra vires” or “unconstitutional” acts by
TCEQ, and do not seek “retrospective monetary relief.” See City of El Paso v. Heinrich, 284 S.W.3d
366, 368-69 (Tex. 2009) (“[W]hile governmental immunity generally bars suits for retrospective
monetary relief, it does not preclude prospective injunctive remedies in official capacity suits
against governmental actors who violate statutory or constitutional provisions.”). Similarly,
Creedmoor urges that it seeks declarations as to the construction and validity of water code
4
A somewhat different standard applies when a challenge to a jurisdictional fact’s existence
does not implicate the merits. See University of Tex. v. Poindexter, ___ S.W.3d ___, No. 03-04-
00806CV, 2009 WL 1896071, at *3 (Tex. App.—Austin July 3, 2009, no pet.).
8
subsections 13.254(a-1) through (a-4)—something the UDJA generally authorizes5—and that its
allegations against TCEQ present a justiciable controversy regarding the scope and validity of the
agency’s statutory authority. See Texas Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d
849, 855 (Tex. 2002) (“Private parties may seek declaratory relief against state officials who
allegedly act without legal or statutory authority. But such suits are not ‘suits against the State.’
This is because suits to compel state officers to act within their official capacity do not attempt to
subject the State to liability. Therefore, certain declaratory-judgment actions against state officials
do not implicate the sovereign-immunity doctrine.”) (citations omitted); Federal Sign v. Texas S.
Univ., 951 S.W.2d 401, 404 (Tex. 1997) (“[A]n action to determine or protect a private party’s rights
against a state official who has acted without legal or statutory authority is not a suit against the
State that sovereign immunity bars.”). Alternatively, Creedmoor argues that the UDJA waives
sovereign immunity as to its claims. See Heinrich, 284 S.W.3d at 373 n.6 (stating that the UDJA
“contemplates that governmental entities may be—indeed, must be—joined in suits to construe
their legislative pronouncements” and that such a requirement impliedly waives sovereign immunity
(quoting Texas Educ. Agency v. Leeper, 893 S.W.2d 432, 446 (Tex. 1994) (citing Tex. Civ. Prac.
& Rem. Code Ann. § 37.006(b); Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 697-698
(Tex. 2003))). Even if we accept them as accurate, Creedmoor’s contentions do not resolve whether
its claims implicate sovereign immunity.
5
See Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a) (“A person . . . whose rights, status,
or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have
determined any question of construction or validity arising under the instrument, statute, ordinance,
contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder.”).
9
Regardless whether the remedies Creedmoor seeks are properly characterized as
“prospective” or “retrospective” in nature, they would have the effect of invalidating the TCEQ
order. Creedmoor seeks injunctive relief restraining the order’s enforcement, recertifying the
disputed area to Creedmoor’s CCN, and prohibiting Carma from acquiring water service from
anyone other than Creedmoor until Creedmoor agrees to release the area. Creedmoor also requests
declarations that water code subsections 13.254(a-1) through (a-4) and the implementing rules
“are unconstitutional and the TCEQ’s Approval Order is thereby invalid and vacated” and that
“TCEQ exceeded its statutory authority in issuing the TCEQ Approval Order[;] thereby said Order
is hereby invalid and vacated.” Generally, a suit challenging a specific administrative order
implicates sovereign immunity because it seeks to control state action—it seeks to restrain the State
or its officials in the exercise of discretionary statutory or constitutional authority. See Texas Dep’t
of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 198 (Tex. 2004);
Southwest Airlines Co. v. Texas High-Speed Rail Auth., 867 S.W.2d 154, 157 (Tex. App.—Austin
1993, writ denied) (op. on reh’g); see also Heinrich, 284 S.W.3d at 372-73 & n.6 (ultra vires
suit—the converse of a suit to control state action—“must not complain of a government officer’s
exercise of discretion, but rather must allege, and ultimately prove, that the officer acted without
legal authority or failed to perform a purely ministerial act”). Sovereign immunity bars such a
suit unless the legislature has waived immunity, see Mega Child Care, Inc., 145 S.W.3d at 198
(acknowledging that statutory right to judicial review of administrative decisions waives
sovereign immunity against such suits), or the claimant affirmatively alleges facts demonstrating
that the agency’s action is unconstitutional or ultra vires of the agency’s statutory authority. See
Texas Highway Comm’n v. Texas Ass’n of Steel Importers, 372 S.W.2d 525, 530 (Tex. 1963);
10
Southwestern Bell Tel. Co. v. Public Util. Comm’n, 735 S.W.2d 663, 668 (Tex. App.—Austin 1987,
no writ).6 The latter type of claims are said to invoke the trial court’s “inherent jurisdiction” to
protect against agency action that is unconstitutional or ultra vires of the agency’s statutory authority.
See Southwestern Bell, 735 S.W.2d at 667-68.
Creedmoor does not avoid these jurisdictional limitations merely because it pleads
claims under the UDJA. The UDJA is not a general waiver of sovereign immunity; it “does not
enlarge a trial court’s jurisdiction, and a litigant’s request for declaratory relief does not alter a suit’s
underlying nature.” Heinrich, 284 S.W.3d at 370; see State v. BP Am. Prod. Co., 290 S.W.3d 345,
360 (Tex. App.—Austin 2009, pet. filed). One implication of this limitation is that an otherwise
proper UDJA claim seeking to construe or invalidate a statute is nonetheless barred by
sovereign immunity if the remedy would have the effect of establishing a right to relief against the
State that implicates sovereign immunity and for which immunity has not been waived. See City of
Houston v. Williams, 216 S.W.3d 827, 828-29 (Tex. 2007) (per curiam) (“‘[P]rivate parties cannot
circumvent the State’s sovereign immunity from suit by characterizing a suit for money damages,
such as a contract dispute, as a declaratory-judgment claim.’” (quoting IT-Davy, 74 S.W.3d at 856);
“[I]f the sole purpose of such a declaration [regarding a governmental body’s statutory authority] is
to obtain a money judgment, immunity is not waived.”); see also BP Am. Prod., 290 S.W.3d at 360-
61; Koch v. Texas Gen. Land Office, 273 S.W.3d 451, 455 (Tex. App.—Austin 2008, pet. filed).
6
See also Continental Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393, 397
(Tex. 2000) (“It is well recognized under Texas law that there is no right to judicial review of an
administrative order unless a statute provides a right or unless the order adversely affects a vested
property right or otherwise violates a constitutional right.”) (citing Stone v. Texas Liquor Control
Bd., 417 S.W.2d 385, 385-86 (Tex. 1967)).
11
This principle extends to UDJA actions that seek declaratory or injunctive relief
against agency orders from which the legislature has not granted a right of judicial review and
thereby waived sovereign immunity. See KEM Tex., Ltd. v. Texas Dep’t of Transp., No. 03-08-
00468-CV, 2009 Tex. App. LEXIS 4894, at *8-18 (Tex. App.—Austin 2009, no pet.) (applying these
principles in another suit attempting to challenge non-appealable agency order through UDJA).
Thus, regardless of the fact that Creedmoor invoked the UDJA, sovereign immunity barred the
district court from granting the relief it requested—effectively invalidating the TCEQ order—unless
Creedmoor properly invoked the court’s inherent jurisdiction by alleging unconstitutional or
ultra vires action. See Southwestern Bell, 735 S.W.2d at 668; see also KEM Tex., Ltd., 2009 Tex.
App. LEXIS 4894, at *8-12. And the fact that Creedmoor does not seek monetary relief, as
Creedmoor emphasizes, is not dispositive because its claims would equally implicate
sovereign immunity if the effect of the remedy sought was to control state action. See Heinrich,
284 S.W.3d at 370-72; KEM Tex., Ltd., 2009 Tex. App. LEXIS 4894, at *8-12 (rejecting argument
that UDJA plaintiff’s claims purporting to seek to “determine or protect its rights” and not
retrospective monetary relief automatically meant that the claims avoided sovereign immunity).
Similarly, the fact that a claimant purports to allege “ultra vires” or “unconstitutional”
conduct by a state official does not alone mean that it has avoided sovereign immunity and invoked
a trial court’s inherent jurisdiction. To assert a valid ultra vires claim, the plaintiff “must not
complain of a government officer’s exercise of discretion, but rather must allege, and ultimately
prove, that the officer acted without legal authority or failed to perform a purely ministerial act.”
Heinrich, 284 S.W.3d at 372. Conversely, if the plaintiff alleges only facts demonstrating acts
within the officer’s legal authority and discretion, the claim seeks to control state action, and
12
is barred by sovereign immunity. See id.; McLane Co. v. Strayhorn, 148 S.W.3d 644, 650-51
(Tex. App.—Austin 2004, pet. denied). In the same way, if the claimant is attempting to restrain
a state officer’s conduct on the grounds that it is unconstitutional, it must allege facts that
actually constitute a constitutional violation. See Dewhurst v. Hendee, 253 S.W.3d 320, 334-39
(Tex. App.—Austin 2008, pet. struck) (Hendee II).
Creedmoor asserts that it invoked the district court’s inherent jurisdiction by alleging
both ultra vires conduct by TCEQ and that water code subsections 13.254(a-1) through (a-4) and its
implementing rules are unconstitutional as TCEQ applied them. In support, it quotes portions of its
live petition that consist chiefly of legal conclusions.7 Creedmoor, however, has the initial burden
7
In addition to quoting its prayer for declaratory and injunctive relief, previously discussed,
Creedmoor identifies the following portions of its pleading as invoking the district court’s
inherent jurisdiction:
[T]his Court has Jurisdiction over Plaintiff’s Declaratory Judgment Action because
the Executive Director, Staff, and Commission of the TCEQ exceeded their statutory
authority when they issued the TCEQ Approval Order granting [Carma’s] Petition
to decertify a portion of Creedmoor’s CCN when: (1) [Carma] did not own all the
property that it sought to be decertified from Creedmoor’s CCN and the TCEQ knew
that [Carma] did not own the property; (2) [Carma] did not make a complete
and valid non-standard water utility service application to Creedmoor for the
Property; the TCEQ knew that Creedmoor had outstanding indebtedness to the
U.S. Department of Agriculture; and (4) Creedmoor did not refuse to provide service
and was capable of providing adequate water service to [Carma].
And:
Petitioner is seeking an order from this Court that the Texas State Statute
Texas Water Code § 13.254[(a-1) through (a-4)] and the related TCEQ rule found at
30 TAC Section 291.113(b), (d) and (c) is unconstitutional because it: (a) conflicts
with the Federal Statute found at 7 USC § 1926(b) and thereby violates the
Supremacy Clause found in Article VI, Clause 2 of the US Constitution; (b) violates
that “Open Courts” provisions of Texas Constitution art. I. § 13 because it denied
Creedmoor the ability to appeal the TCEQ Approval Order granting [Carma’s]
13
of alleging facts that affirmatively demonstrate the district court’s jurisdiction. See Miranda,
133 S.W.3d at 226. Likewise, the fact that Creedmoor characterized the TCEQ order in its
pleadings as a “constitutional violation” or as “exceeding statutory authority” does not control our
jurisdictional determination. Rather, we construe the statutory or constitutional provisions that are
implicated, apply them to the facts Creedmoor has pled and that were not negated by evidence, and
determine whether Creedmoor has alleged acts that would constitute violations of the relevant
constitutional provisions or exceed TCEQ’s authority under the relevant statutory provisions. See
Director of Dep’t of Agric. & Env’t v. Printing Indus. Ass’n, 600 S.W.2d 264, 265-70 (Tex. 1980);
Hendee v. Dewhurst, 228 S.W.3d 354, 368-69 (Tex. App.—Austin 2007, pet. denied) (Hendee I);
see also KEM Tex. Ltd., 2009 Tex. LEXIS 4894, at *8-20.8
Petition decertifying a portion of Creedmoor’s CCN thereby depriving Creedmoor
of its due process of law when its goods and reputation have been injured; and, (c)
violates Petitioner’s rights of due process.
8
In its reply brief, Creedmoor argues that whether its factual allegations actually stated
legally cognizable violations of the statutes and constitutional provisions at issue “is not the subject
of this appeal as it goes to the merits of Creedmoor’s underlying claims.” Creedmoor is mistaken
in its view of our standard of review. As we explained in Hendee I:
To the extent that Plaintiffs suggest that it is categorically improper to adjudicate,
through a jurisdictional plea, jurisdictional issues that implicate or overlap the
merits, that notion is belied by Miranda. See [Texas Dep’t of Parks & Wildlife v.]
Miranda, 133 S.W.3d 217,] 227-28 [(Tex. 2004)] (regarding whether parks and
wildlife department acted with gross negligence so as to waive sovereign immunity
under the recreational use statute). It is also well-established that where a trial court’s
jurisdiction depends upon whether a state official’s acts are within her constitutional
or statutory authority, such as when a plaintiff alleges ultra vires action to avoid
sovereign immunity, the trial court may sometimes be able to decide
the jurisdictional issue as a matter of law based on the pleadings by construing the
constitutional and statutory provisions defining the actor’s authority and
ascertaining whether the acts alleged would exceed that authority. See, e.g., McLane
Co. v. Strayhorn, 148 S.W.3d 644, 649 (Tex. App.—Austin 2004, pet. denied)
(acknowledging that in determining whether declaratory judgment suit may
14
“Ultra vires” claims
In its live pleading, Creedmoor alleged that TCEQ “exceeded its statutory authority”
when it granted Carma’s petition and issued its order because (1) Carma “failed to meet the
requirements of TWC § 13.254(a-1) and 13.2502 when it made its non-standard water utility service
applications to Creedmoor;” (2) Carma “did not own all the land it sought to decertify;” (3) “TCEQ
knew that [Carma] had outstanding indebtedness to the U.S. Department of Agriculture”; and
(4) “Creedmoor was willing and able to supply [Carma] with sufficient water.” We have previously
detailed the authority the legislature has delegated to TCEQ to decide petitions for expedited release
of an area from a CCN. See Tex. Water Code Ann. § 13.254(a-1)-(a-4). In short, the legislature has
delegated to TCEQ the exclusive authority to decide expedited release petitions as prescribed in the
statute, exempted TCEQ from the APA’s requirements when deciding such petitions, and explicitly
made TCEQ’s decision final and unappealable. See id.
be maintained against a state official, it was first necessary, in light of
sovereign immunity principles, to construe statutes defining official’s powers to
“decide whether the [official] validly exercised her discretion or acted outside of her
legal authority”); cf. Director of Dep’t of Agric. & Env’t v. Printing Indus. Ass’n,
600 S.W.2d 264, 265-70 (Tex. 1980) (construing constitution to determine whether
plaintiff alleged ultra vires action by state officials; state had raised issue via
special exceptions). And Miranda would further allow jurisdictional challenges, via
its summary judgment-like process, to the existence of the alleged acts that are
asserted to have been beyond the actor’s constitutional or statutory authority.
Hendee v. Dewhurst, 228 S.W.3d 354, 368-69 (Tex. App.—Austin 2007, pet. denied) (Hendee I).
While genuine disputes over the existence of facts material to jurisdiction will preclude dismissal,
see Miranda, 133 S.W.3d at 227-28, the pure legal question of whether pled and un-negated facts
would establish a constitutional violation or ultra vires conduct can—and must—be resolved to
determine the trial court’s jurisdiction, and this is true regardless of whether that issue parallels the
merits. Hendee I, 228 S.W.3d at 368-69; see also Miranda, 133 S.W.3d at 227 (emphasizing that
jurisdictional issues should be resolved “as soon as practicable”).
15
Three of Creedmoor’s factual allegations of “ultra vires” conduct plainly complain
of the merits of the decision TCEQ made on Carma’s petition. Creedmoor challenges whether
Carma met its burden of showing that (1) it had requested service from Creedmoor in compliance
with water code subsection 13.254(a-1)(1)-(2); (2) it was “the owner of a tract of land that is at
least 50 acres and that is not in a platted subdivision actually receiving water or sewer service,” see
id. § 13.254(a-1); or (3) Creedmoor “has refused to provide the service” or was not capable of doing
so. See id. § 13.254(a-1)(3). These are allegations that TCEQ reached an incorrect or wrong result
when exercising its delegated authority, not facts that would demonstrate TCEQ exceeded that
authority. See North Alamo Water Supply Corp. v. Texas Dep’t of Health, 839 S.W.2d 455, 459
(Tex. App.—Austin 1992, writ denied) (“The fact that the [agency] might decide ‘wrongly’ in the
eyes of an opposing party does not vitiate the agency’s jurisdiction to make [the] decision.”); see also
KEM Tex., Ltd., 2009 Tex. App. LEXIS 4894, at *17-18. The fourth allegation—“TCEQ knew that
[Carma] had outstanding indebtedness to the U.S. Department of Agriculture”—does not implicate
any provision in water code subsections 13.254(a-1) through (a-4) and does not state any acts by
TCEQ beyond its statutory authority (although, as we discuss below, it does relate to one of
Creedmoor’s constitutional theories). In short, none of these allegations invoked the district court’s
inherent jurisdiction to remedy ultra vires agency actions.9
9
For this reason, we need not address whether Creedmoor’s ostensible ultra vires claims are
also barred by the rule that ultra vires claims must be brought against individual state officers in their
official capacity, not the State or its agencies, see Heinrich, 284 S.W.3d at 372–73, or whether
the UDJA would have any implications in regard to this rule under the circumstances here. See id.
at 373 n.6 (observing that Heinrich was “not challenging the validity of the bylaws or the governing
statute, but rather petitioners’ actions under them”); see also id. at 370 n.3 (also noting that parties
had not disputed proper construction of statute at issue).
16
Supremacy Clause & 7 U.S.C. § 1926(b)
As for its constitutional theories for invoking jurisdiction, Creedmoor primarily
emphasizes its allegations that TCEQ’s application of water code subsections 13.254(a-1)
through (a-4) and its implementing rules, 30 Tex. Admin. Code § 291.113 (2009), violated the
Supremacy Clause of the U.S. Constitution10 by violating a federal statute, 7 U.S.C.A. § 1926(b)
(West 1999). Simply described, 7 U.S.C.A. § 1926 establishes a loan program through the
U.S. Department of Agriculture to aid designated associations, including water supply corporations,
in developing and operating water distribution and sewer-service facilities in rural areas, which
are secured by the association’s assets. See 7 U.S.C.A. § 1926(a) (West 1999 & Supp. 2009).
Subsection (b) of section 1926 imposes federal restrictions on competition and customer choice in
areas served by indebted associations:
The service provided or made available through any [indebted water] association
shall not be curtailed or limited by inclusion of the area served by such association
within the boundaries of any municipal corporation or other public body, or by the
granting of any private franchise for similar service within such area during the term
of said loan . . . .
Id. § 1926(b). The U.S. Fifth Circuit Court of Appeals has stated that section 1926(b) “‘indicates
a congressional mandate that local governments not encroach upon the services provided by
[federally indebted water] associations, be that encroachment in the form of competing franchises,
10
See U.S. Const. art. VI, cl. 2 (“This Constitution, and the Laws of the United States which
shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under
the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every
State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary
notwithstanding.”).
17
new or additional permit requirements, or similar means,’” see North Alamo Water Supply Corp.
v. City of San Juan, 90 F.3d 910, 915 (5th Cir. 1996) (per curiam) (quoting City of Madison v. Bear
Creek Water Ass’n, Inc., 816 F.2d 1057, 1060-61 (5th Cir. 1987)), and advances two policy
purposes: “(1) to encourage rural water development by expanding the number of potential users
of such systems, thereby decreasing the per-user cost, and (2) to safeguard the viability and financial
security of such associations (and [the] loans) by protecting them from the expansion of nearby
cities and towns.” Id. The Fifth Circuit has further termed “the service area of a federally indebted
water association” as “sacrosanct” and stated that “the statute should be liberally construed to
protect . . . indebted rural water associations from municipal encroachment.” Id.
Federal courts have identified three elements or requirements that a water utility
must establish to invoke the protections of section 1926(b), which we conclude are consistent
with the statute: (1) the utility is an “association” within the meaning of section 1926; (2) the
utility has a qualifying federal loan outstanding; and (3) the utility “provided or made [service]
available” to the disputed area. Chesapeake Ranch Water Co. v. Bd. of Comm’rs, 401 F.3d 274, 278
(4th Cir. 2005); Le-Ax Water Dist. v. City of Athens, 346 F.3d 701, 705 (6th Cir. 2003); see also
North Alamo Water Supply Corp., 90 F.3d at 915 (omitting the first element). Here there is no
dispute that Creedmoor sufficiently pled the first two elements. Creedmoor alleged that it is a
water supply corporation that has traditionally funded its capital improvements through loans
under section 1926; that its assets, including its CCN “and all rights, duties, and privileges
arising therefrom,” are pledged in security for this debt; and that its current indebtedness to the
Department of Agriculture, $1 million, will not be paid off until 2044 or 2046. However, the parties
18
join issue as to whether Creedmoor sufficiently pled facts demonstrating that it “provided or made
[service] available” in the disputed area.
To meet its burden as to whether it “provided or made [service] available” in
the disputed area, Creedmoor relies on the undisputed fact that its CCN encompassed the area
before the TCEQ order. This is all it needed to do, Creedmoor reasons, because the existence of its
legal duty under its CCN to provide service to the area, see Tex. Water Code Ann. § 13.250(a),
singularly establishes, as a matter of law, that it “made [service] available” there. To support that
proposition, Creedmoor relies on the Fifth Circuit’s North Alamo decision.
North Alamo arose when the City of San Juan, Texas, began providing water service
to five subdivisions that were within the certificated area of the North Alamo Water Supply
Company and adjacent to North Alamo’s existing lines. 90 F.3d at 913. North Alamo sued the City
in federal court under section 1926(b) seeking to enjoin it from providing the service. Subsequently,
the City filed applications with TCEQ’s predecessor under water code section 13.254 seeking
to decertify portions of North Alamo’s service area and to recertify them in the City’s name. Id.
Before the agency reached a decision, the district court entered an agreed preliminary injunction
enjoining the City from servicing any additional customers in North Alamo’s certificated area and
requiring it to request that the agency take no further action on its decertification petition. Id. at 914.
The district court later entered final judgment in North Alamo’s favor on two “alternative” grounds.
First, the court held that North Alamo had, as a matter of law, “made service available” as required
by section 1926(b) because it had the legal duty, as the CCN holder for the area, to provide
continuous and adequate service to residents in its certificated area. Id.; see Tex. Water Code Ann.
§ 13.250(a). Second, the district court held that because North Alamo had water service lines
19
adjacent to the disputed areas, it had, as a factual matter, “made service available” as section 1926(b)
required. North Alamo, 90 F.3d at 914. The City appealed. While the City’s appeal was pending,
the agency issued a cease-and-desist order requiring the City to cease providing service in the
disputed area once North Alamo initiated service there. Id.
The Fifth Circuit affirmed the district court. It agreed with the district court
that North Alamo’s “state law duty [under its CCN] to provide service is the legal equivalent to
the Utility’s ‘making service available’ under § 1926(b).” Id. at 915-16. It also upheld the
district court’s “alternative” findings that North Alamo had “made service available” as a factual
matter. Id. at 916. Specifically, the court noted “three findings of fact relevant to this conclusion:
(1) the Utility currently provides water service to subdivisions adjacent to the disputed areas; (2) the
Utility has lines and adequate facilities to provide service to the disputed areas; and (3) the Utility
has not refused service to anyone who has requested service within the Certificated Area.” Id. “[O]n
the strength of these alternative legal and factual determinations,” the Fifth Circuit affirmed the
district court’s legal conclusions that North Alamo had “‘made services available’” to the disputed
areas and that the City had violated section 1926(b). Id.
The City had also appealed the district court’s injunction prohibiting it from pursuing
its applications to decertify the disputed area from North Alamo’s CCN and recertify the area to
itself. The Fifth Circuit held that this issue was moot and did not reach its merits because the agency
had ultimately entered its cease-and-desist order declaring that North Alamo had the exclusive right
to provide water service to the disputed areas. Id. at 919-20; see also id. at 917 n.27 (“[A]n
injunction, purporting to control the actions of the [agency], a state regulatory body, would create
a considerably more difficult federalism question: Namely, does § 1926(b) also preclude a state
20
regulatory agency from modifying the service area of a federally indebted utility. But we leave that
issue for another day.”).
Creedmoor insists that North Alamo stands for the propositions that (1) it need only
show that it “made service available” either as a legal or factual matter, and (2) the fact that its CCN
encompassed the disputed area (at least before the TCEQ order) suffices to establish that it “made
service available” as a legal matter. Carma questions Creedmoor’s reading of North Alamo, urging
that the court recognized that a water utility must establish that it “made service available” as both a
legal and factual matter. As Carma points out, the North Alamo court cited, in support of its analysis
of whether the utility “made service available” as a legal matter, a case from the Tenth Circuit, which
holds that the utility is required to demonstrate that it has “adequate” facilities within or adjacent to
the area to provide service to the area within a “reasonable time” after a request for service has
been made. Id. at 916 (citing Glenpool Util. Servs. Auth. v. Creek County Rural Water Dist. No. 2,
861 F.2d 1211, 1214 (10th Cir. 1988)); see Sequoyah County Rural Water Dist. No. 7 v. Town
of Muldrow, 191 F.3d 1192, 1203 (10th Cir. 1999). In fact, as Carma observes, the other
federal circuits that have considered what “provided or made [service] available” requires have
uniformly held that it requires, in addition to a legal-right or duty-to-serve element, a “pipes in the
ground” or “physical ability” element that requires the utility to show that it presently has
the physical means to serve the area. See Chesapeake Ranch Water Co., 401 F.3d at 279-81
(Fourth Circuit surveys other circuits’ decisions and adopts three-part test from Sixth Circuit:
(1) utility is “physically capable of serving the area”; (2) it has legal right to do so (which may be
shown by proof of legal duty); and (3) disputed area is already within geographic boundaries of
utility’s franchise or certificated area); Le-Ax Water Dist., 346 F.3d at 706-07 (Sixth Circuit reviews
21
decisions and adopts its three-element test); Rural Water Sys. # 1 v. City of Sioux Center, 202 F.3d
1035, 1037 (8th Cir. 2000) (requiring that utility demonstrate (1) physical capability to provide
service to area, and (2) legal right under state law to serve area); Sequoyah County Rural Water Dist.
No. 7, 191 F.3d at 1203 (utility must demonstrate “‘that it has adequate facilities within or adjacent
to the area to provide service to the area within a reasonable time after a request for service [has
been] made’” as well as legal right to serve).
To adopt Creedmoor’s view, Carma urges, would mean that a “federally indebted
utility could never be decertified, even if it admittedly could not provide service.” Similarly, TCEQ
argues that section 1926(b) is not implicated by its regulatory action releasing the disputed area
from Creedmoor’s CCN. See Tex. Water Code Ann. § 13.254(a-1)(3) (requiring petitioner to show
that CCN holder “has refused to provide the service,” “is not capable of providing the service on
a continuous and adequate basis within the timeframe, at the level, or in the manner reasonably
needed or requested by current and projected service demands in the area,” or “conditions the
provision of service on the payment of costs not properly allocable directly to the petitioner’s service
request, as determined by the commission”). TCEQ points out that the Fifth Circuit in North Alamo
expressly left open the “difficult federalism question” of whether section 1926(b) preempted its
predecessor agency from decertifying North Alamo under section 13.254(a). North Alamo, 90 F.3d
at 917 n.27, 919-20.
“‘The ultimate touchstone in every preemption case’ is the intent and purpose of
Congress as discerned primarily from the language of the statutory provision and the context of its
enactment, and then through ‘the reviewing court’s reasoned understanding of the way in
which Congress intended the statute and its surrounding regulatory scheme to affect business,
22
consumers, and the law.’” Worthy v. Collagen Corp., 967 S.W.2d 360, 367 (Tex. 1998) (quoting
Medtronic, Inc. v. Lohr, 518 U.S. 470, 485-86 (1996)). “We are also bound to follow the decisions
of the United States Supreme Court, the final authority on federal preemption issues.” Id. The
U.S. Supreme Court has not yet spoken as to the meaning or scope of “provided or made [service]
available” in section 1926(b), whether this provision embodies a legal or factual component or both,
and what each component would require. For further guidance, we may look to the jurisprudence
of the lower federal courts. Creedmoor suggests that we should ignore cases from outside the
Fifth Circuit because “we are not in the 10th Circuit[,] we are in the Fifth Circuit[;] therefore[,] the
holding of Fifth Circuit should control.” To the contrary, the Texas Supreme Court has instructed
us that while we “may certainly draw upon the precedents of the Fifth Circuit . . . in determining
the applicable federal rule of decision, [we] are obligated to follow only higher Texas courts
and the United States Supreme Court.” Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296
(Tex. 1993) (per curiam). And absent such binding authority, as Penrod indicates, we must
independently determine the applicable federal rule of decision and may draw not only upon the
Fifth Circuit but “any other federal or state court” to that end. Id. at 296.
Because section 1926(b) does not include an express definition of “provided or made
[service] available,” we look to the ordinary meaning of the terms. Chesapeake Ranch Water Co.,
401 F.3d at 280. “To ‘provide’ ordinarily means ‘to make available,’ to ‘furnish,’ to ‘supply,’ or to
‘equip,’” while “[t]o ‘make available’ ordinarily means to ‘render’ ‘suitable or ready for use.’” Id.
(citing Webster’s Encyclopedic Unabridged Dictionary of the English Language 142, 1161, 1556
(2001)). These ordinary meanings denote actual provision of service or physical capacity
and readiness to provide service, not merely a legal right or duty to do so. This construction is
23
also consistent with the Congressional intent reflected in the statutory scheme and the context
in which it was enacted. On its face, the protections in section 1926(b) reflect congressional
recognition that the loans would finance actual construction of water and sewer projects in
rural, often unincorporated areas, where the utility would otherwise be vulnerable to having its
customers served by those projects (and revenue those projects would generate) annexed away by
any encroaching municipalities. Similarly, the legislative history of section 1926(b) reflects that
Congress intended for the statute “to assist in protecting the territory served by [an indebted]
association facility against competitive facilities, which might otherwise be developed with
the expansion of the boundaries of municipal and other public bodies into an area served by the
rural system.” S. Rep. No. 87-56, at 67 (1961), as reprinted in 1961 U.S.C.C.A.N. at 2309
(emphases added). The protection of section 1926(b) is thus “defensive” in nature, intended “to
protect territory already served by a rural water association from municipal expansion into the rural
water association’s area.” Le-Ax Water Dist., 346 F.3d at 708 (emphasis added).
Consistent with the statute’s text and context, federal appellate courts have
overwhelmingly concluded that section 1926(b)’s “provided or made [service] available” element
requires proof of both a legal right or duty to serve a particular area and a “pipes in the ground” or
“physical ability” component that requires the utility to show that it is already providing service to
the area or presently has the physical means to do so. See Chesapeake Ranch Water Co., 401 F.3d
274, 279-81; Le-Ax Water Dist., 346 F.3d at 706; Rural Water Sys. # 1, 202 F.3d at 1037; Sequoyah
County Rural Water Dist. No. 7, 191 F.3d at 1203. While Creedmoor insists that North Alamo is
to the contrary, we note that it was decided on very different facts, which involved the paradigmatic
scenario to which section 1926(b) was plainly directed—a municipality annexing away areas that
24
a rural water utility is already serving as a matter of fact. Creedmoor points us to no case in which
a court has held that section 1926(b) protects a utility that relies solely on bare possession of a
legal right or duty to serve an area without regard to whether the utility has in fact served or is
capable of serving the area.
We are persuaded by the majority view of the federal circuit courts—to establish that
it “provided or made [service] available” to the disputed area, Creedmoor was required to plead (and
ultimately prove) that it either presently was serving the area or at least presently had the physical
means to do so. Creedmoor comes no closer to pleading facts meeting this requirement than a
bald assertion that it “stands ready willing and able” to serve Carma’s development “under the
court’s holdings in North Alamo” and “under the terms of its lawful tariff, the Texas Health and
Safety Code, the Texas Water Code and TCEQ Chapters 290 and 291 rules.” Elsewhere in its
pleading, however, Creedmoor acknowledges that its tariff (which, the record reflects, it amended
in response to Carma’s service requests) required “developers” of over ten living-unit equivalents
or 10 connections requiring meters with standard flow capacities of 10 g.p.m.—i.e., Carma—to
provide their own “water right or long term lease sufficient to meet the minimum capacity demands
. . . of the tract in question,” “funding for the design, construction, and placing into commercial
operation of all production, treatment, storage, pressure, operational and security facilities needed
to secure the tract in question,” “funding for the design, construction and placing into commercial
operation of all distribution system facilities and infrastructure required on the tract in question,”
and “payment of all engineering, survey, legal, hydrological, recording and other fees needed to
provide retail public utility service on the tract in question.” While Creedmoor insists that “[a] tariff
requirement requiring large developers to supply (in cash or in kind) a portion of the source of the
25
water to be distributed by a rural water company is not unusual,” it remains that Creedmoor has
not “provided or made [service] available” to Carma’s development under any ordinary meaning
of that phrase. See Chesapeake Ranch Water Co., 401 F.3d at 279-81; Le-Ax Water Dist., 346 F.3d
at 706; Rural Water System # 1, 202 F.3d at 1037; Sequoyah County Rural Water Dist. No. 7,
191 F.3d at 1203; see also Pittsburg County Rural Water Dist. No. 7 v. City of McAlester, 358 F.3d
694, 719 (10th.Cir. 2004) (to extent that utility’s rates are unreasonable, excessive, and confiscatory,
it is not making water service “available” within meaning of section 1926(b)); North Alamo Water
Supply Corp., 90 F.3d at 916 (relying on findings that utility already provided water service to
adjacent areas, had “lines and adequate facilities to provide service to the disputed areas,” and utility
“has not refused service to anyone who has requested” it). In short, Creedmoor’s pleadings
affirmatively refute, rather than support, any allegation that it “provided or made [service] available”
to the disputed area as a factual matter.
Moreover, even if Creedmoor’s pleadings had alleged facts demonstrating it had
“provided or made [service] available” to the disputed area, these allegations would have been
negated by uncontroverted evidence presented by TCEQ at the hearing on the pleas to the
jurisdiction. TCEQ introduced a report of Creedmoor’s engineer reflecting that the utility lacked
both the infrastructure and water to serve Carma’s development. Creedmoor did not present
evidence to controvert these assertions, although it did present a report of its engineer opining as to
the utility’s lost revenues if the disputed area was released.11
11
On appeal, Creedmoor attempts to present additional affidavit evidence that it considers
relevant to its physical capacity to serve Carma in the future. Like summary-judgment evidence
presented for the first time on appeal, we may not consider Creedmoor’s additional jurisdictional
evidence. See Hendee I, 228 S.W.3d at 376; see also University of Tex. v. Morris, 344 S.W.2d 426,
26
Because Creedmoor has not alleged facts demonstrating that it “provided or made
[service] available” to the disputed area—and, in fact, Creedmoor’s pleadings and the jurisdictional
evidence negate that fact—Creedmoor cannot invoke the district court’s inherent jurisdiction through
its claims under the Supremacy Clause and 7 U.S.C.A. § 1926(b). Because that holding defeats
jurisdiction, we do not reach whether the TCEQ’s order is the sort of “curtailment” or “limitation”
that section 1926(b) prohibits.
Open Courts
In addition to its Supremacy Clause claim, Creedmoor pleads that water code
section 13.254(a-4)—the provision exempting expedited release petition proceedings from the APA
and barring judicial review of TCEQ orders in those proceedings—violates the Texas Constitution’s
“Open Courts” guarantee:12
1. Texas Water Code § 13.254(a-4) is in Violation of Texas
Constitution art. 1 § 13 “Open Courts” Guarantee
61. The Texas Constitution guarantees that no Texas statute may deprive any
person, including a corporate person, from due process of law through
recourse to the courts anytime his ‘land, goods, person or reputation’ have
been injured.
62. The Texas Water Code § 13.254(a-4) provides that an order of the TCEQ
issued under the authority of Water Code § 13.254(a-1) “is final after any
reconsideration authorized by the commission’s rules and may not be
appealed.”
429 (Tex. 1961) (general principle that appellate courts must consider only evidence that was before
trial court at time of judgment).
12
See Tex. Const. art. I, § 13 (“All courts shall be open, and every person for an injury done
him, in his lands, goods, person or reputation, shall have remedy by due course of law.”).
27
63. A CCN constitutes a “good.”
64. Texas Water Code § 13.254(a-1) through (a-4) and 22 TAC Section
291.113(b), (d) and (e) is in direct violation of the “Open Courts” provisions
of the Texas Constitution art. 1 § 13 because it denies Creedmoor the ability
to appeal the TCEQ Approval Order granting [Carma’s] Petition decertifying
a portion of Creedmoor’s CCN thereby depriving Creedmoor of its due
process of law when its goods and reputation have been injured.
65. Therefore [Creedmoor] submits that the portion(s) of Water Code § 13.254(a-
4) and the TCEQ Rule found at 22 TAC Section 291.113 which excerpts
expedited releases of utility service areas from the due process rights
guaranteed in the Texas Administrative Procedures Act, Texas Gov’t Code
Chapter 2001 is unconstitutional and thereby a legal nullity and can be given
no force and effect in light of the Open Courts guarantee of the Texas State
constitution.
On appeal, Creedmoor characterizes these allegations as complaining of both section 13.254(a-4)’s
prohibition against judicial review and its exemption of TCEQ proceedings on expedited release
petitions from the APA’s contested-case hearing requirement. Appellees urge that Creedmoor has
not stated an Open Courts violation because it does not allege any deprivation of a “well-established
common-law cause of action.” See Texas Ass’n of Bus., 852 S.W.2d at 448. We agree.
As we have previously observed, “there is no common-law cause of action for
judicial review of an agency’s administrative act.” City of Port Arthur v. Southwestern Bell Tel. Co.,
13 S.W.3d 841, 845 (Tex. App.—Austin 2000, no pet.). Nor has the legislature abrogated any well-
established common-law right of Creedmoor by its delegation of authority to TCEQ under water
code subsections 13.254(a-1) through (a-4). Creedmoor argues that these procedures and limitations
supplant a common-law trespass claim for deprivation of its rights under its CCN. However, such
a claim would be “common law in name only” because Creedmoor’s rights under its CCN are
entirely a function of statute. See Texas Mut. Ins. Co. v. Eckerd Corp., 162 S.W.3d 261, 266 (Tex.
28
App.—Austin 2005, pet. denied) (worker’s compensation pharmacy reimbursement claims were
“common law in name only” because such rights were based solely on statute and rules). In fact,
CCNs expressly do not confer property rights. See 30 Tex. Admin. Code § 291.116 (2009) (CCN
“shall not be construed to vest exclusive service or property rights in and to the area certificated”);
Southwestern Bell, 735 S.W.2d at 668 (rights under CCN “arise, and are held under and subject to”
statutory and regulatory limitations). Consequently, Creedmoor has failed to allege any Open Courts
violation.13
Due Process
On appeal, Creedmoor maintains that it alleged “[t]he TCEQ Approval Order,
the TWC Section 13.254(a)(1-4), and 30 TAC Section 291.113 violates Creedmoor’s Constitutional
Due Process Rights under the Fourteenth Amendment of the U.S. Constitution.”14 In its briefing,
Creedmoor urges that it had “a protectable property interest in its CCN,” and that water code
subsections 13.254(a-1) through (a-4) and their implementing rules render the CCN “useless
and valueless, while blocking Creedmoor’s legal recourse to the administrative and district courts
by denying Creedmoor the right to a contested case proceeding or [] rights to an appeal.” Appellees
urge that Creedmoor waived such a theory of inherent jurisdiction by failing to plead it in its petition.
See Continental Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393, 404-05 (Tex. 2000)
13
Appellees further argue that even if Creedmoor had alleged a valid Open Courts claim as
to subsection 13.254(a-4)’s prohibition against judicial review, the claim would be moot because it
failed to timely perfect its claim for judicial review and later non-suited that claim. We need not
address that assertion.
14
See U.S. Const. amend. XIV, § 1 (“No State shall make or enforce any law which shall
abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any
person of life, liberty, or property, without due process of law . . . .”).
29
(plaintiff waived inherent jurisdiction argument by failing to raise it in trial court). And even if
Creedmoor purported to plead a Fourteenth Amendment Due Process claim, appellees add,
Creedmoor failed to allege facts that would demonstrate a violation. We agree with appellees.
To support its assertion that it pled a Fourteenth Amendment Due Process claim,
Creedmoor points to a single allegation in its live petition that water code subsections 13.254(a-1)
through (a-4) “violate[] Petitioner’s rights to due process.” However, bare conclusions, again, are
not sufficient—the pleader must allege facts that affirmatively demonstrate the trial court’s subject-
matter jurisdiction. See Miranda, 133 S.W.3d at 226. The sole facts that Creedmoor alleges in
regard to any “due process” issue are those it pleads in support of its Open Courts claim, quoted
above. Creedmoor has not purported to allege any “due process” theory beyond its Open Courts
claim. And, even if Creedmoor had purported to plead such a claim, the “property interest” it
claims—its CCN—is not a vested property right entitled to due-process protection, as previously
explained. 30 Tex. Admin. Code § 291.116; Southwestern Bell Tel. Co., 735 S.W.2d at 668; see also
KEM Tex., Ltd., 2009 Tex. App. LEXIS 4894, at *18-20 (rights under easement to erect or maintain
outdoor advertising were not “vested rights implicating due process” because such rights were
statutorily contingent on state regulatory decisions to grant required licenses and permits).
Creedmoor has not invoked the district court’s inherent jurisdiction with any Fourteenth Amendment
due-process claim.
CONCLUSION
We conclude that Creedmoor has failed to affirmatively allege facts that invoke
the district court’s inherent jurisdiction to protect against ultra vires or unconstitutional agency
30
actions.15 Nor has Creedmoor suggested any way it could cure these jurisdictional defects through
repleading, and we are not aware of any. See Texas A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835,
839-40 (Tex. 2007).16 In fact, as noted, Creedmoor’s pleadings and the jurisdictional
evidence affirmatively negate the facts it would be required to plead to support its claim under the
Supremacy Clause and 7 U.S.C. § 1926(b). Miranda, 133 S.W.3d at 227 (if pleadings affirmatively
negate existence of jurisdiction, then plea to the jurisdiction may be granted without allowing
opportunity to amend). Accordingly, we hold that the district court did not err in granting appellees’
pleas to the jurisdiction, overrule Creedmoor’s issue, and affirm the judgment.
_________________________________________
Bob Pemberton, Justice
Before Chief Justice Jones, Justices Pemberton and Waldrop
Affirmed
Filed: March 3, 2010
15
We thus need not address whether Creedmoor’s complaints regarding TCEQ’s rules
can properly be asserted under the UDJA, as opposed to section 2001.038 of the
Administrative Procedures Act. See Tex. Gov’t Code Ann. § 2001.038 (West 2008).
16
To the extent Creedmoor’s allegations regarding TCEQ’s rules could sound under
section 2001.038, see id., the justiciable controversy that could support such a claim was rendered
moot by TCEQ’s final, unappealable order. See Friends of Canyon Lake v. Guadalupe-Blanco River
Auth., 96 S.W.3d 519, 528-29 (Tex. App.—Austin 2002, pet. denied); KEM Tex., Ltd., 2009 Tex.
App. LEXIS 4894, at *20-21 n.6.
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