Creedmoor Maha Water Supply Corp. v. Barton Springs-Edwards Aquifer Conservation Dist.

• Decision Date: 06 December 1989
• Docket Number: SPRINGS-EDWARDS,No. 3-88-256-CV,3-88-256-CV
• Citation: 784 S.W.2d 79
• Parties: CREEDMOOR MAHA WATER SUPPLY CORPORATION, et al., Appellants, v. BARTONAQUIFER CONSERVATION DISTRICT, et al., Appellees.
• Court: Texas Court of Appeals

Page 79

784 S.W.2d 79

CREEDMOOR MAHA WATER SUPPLY CORPORATION, et al., Appellants, v. BARTON SPRINGS-EDWARDS AQUIFER CONSERVATION DISTRICT, et al., Appellees.

No. 3-88-256-CV.

Court of Appeals of Texas Austin.

Dec. 6, 1989.

Rehearing Denied Feb. 28, 1990.

Wesley G. Ritchie, Kendall, Randle, Finch & Osborn, Austin, for appellants.

Doug Caroom, Bickerstaff, Heath & Smiley, Jim Mattox, Atty. Gen., Jack Carter, Asst. Atty. Gen., Austin, for appellees.

Before POWERS, CARROLL and SMITH, ^* JJ.

POWERS, Justice.

Creedmoor Maha Water Supply Corporation and Cimarron Park Water Company, Inc. appeal from a trial-court judgment, rendered after a bench trial, in their suit for declaratory relief against the Barton Springs-Edwards Aquifer Conservation District and the State of Texas. Tex.Civ.Prac. & Rem.Code Ann. §§ 37.001-37.011 (1986 & Supp.1989). We will affirm the judgment.

THE DISTRICT

The Barton Springs-Edwards Aquifer Conservation District is a subdivision of the State of Texas and an underground water district organized and validated under Chapter 52 of the Texas Water Code. 1987 Tex.Gen.Laws, ch. 429, at 1993. As such, the District received from the Legislature the powers and duties enumerated in Tex.Water Code Ann. §§ 52.151-52.173 (Supp.1989). These were granted the District

[i]n order to provide for the conservation, preservation, protection, recharging, prevention Id. § 52.021. The District, governed by a board of directors, may make rules; construct dams on land acquired by condemnation; drain surface waters; recharge underground reservoirs; sell, transport, and distribute surface and underground water; collect information; plan for its operations; employ engineers; grant permits for the drilling, equipping, completing, and altering of water wells; regulate the spacing and capping of water wells; and enforce by suit certain statutory obligations regarding water wells. The powers and duties of the District are confined to a geographical area delimited in the validating act of the Legislature. 1987 Tex.Gen.Laws, ch. 429, at 1993. The area lies over a part of the Edwards Aquifer in Central Texas and includes the well-known Barton Springs in Austin. The State's control over such waters, exercised by and through the District, recognizes the ownership and rights of landowners in underground waters. Tex.Water Code Ann. § 52.002 (Supp.1989).

of waste of the underground water of underground water reservoirs or their subdivisions, and to control subsidence caused by withdrawal of water therefrom, consistent with the objective of Article XVI, Section 59, of the Texas Constitution,....

THE CONTROVERSY

Soon after its validation by the Legislature, the District's Board of Directors held meetings for organizational and other purposes. They eventually promulgated comprehensive rules regulating various aspects of the water contained in the Edwards Aquifer underlying the geographical area committed to the District's authority. The rules deal with the prevention of waste and pollution, establish a permit system for all wells in the District, require the measurement by meters of water withdrawn through wells, and provide for certain other matters. Included in the rules are provisions which impose charges on water withdrawn through any "nonexempt" wells for which a permit is required, being basically those which have a daily production capacity in excess of 10,000 gallons. The charges are referred to as "user" fees. The amount of the charge is calculated according to a rate established annually by resolution of the Board of Directors. The act validating the District expressly permits such charges, provided they are "reasonable" in amount, while prohibiting the District to impose taxes, as a source of revenue, unless its power to impose the "user fees" is found to be unconstitutional.

Creedmoor and Cimarron obtain water from wells that are subject to the charges mentioned above. They sell, transport, and distribute the water, through their facilities, to customers within and adjacent to the District's boundaries. Believing the charges or "fees" amounted to taxation imposed in violation of the validating act, and in violation of various constitutional limitations and guarantees, Creedmoor and Cimarron sued the District praying for a declaratory judgment to that effect. They prayed as well for declarations that certain other actions of the District were invalid on specified grounds.

Following a bench trial, the court below denied Creedmoor and Cimarron all relief, and filed findings of fact and conclusions of law in support of the judgment. Creedmoor and Cimarron appeal on the several points of error discussed below.

VALIDITY OF THE "USER" FEES

In their first four points of error Creedmoor and Cimarron contend they established as a matter of law that the user fees are "taxes," or that the trial court's determination to the contrary is so against the great weight and preponderance of the evidence as to be manifestly wrong. See generally In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951); Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Texas L.Rev. 361, 363-64 (1960). Actually, the briefs furnished by Creedmoor and Cimarron make their contentions turn not upon evidentiary matters but upon the law applicable to the undisputed facts. We shall summarize their argument.

If the "primary purpose" of the charges is to raise revenue, as opposed to subsidizing The judgment below implies a determination that the primary purpose was regulation as opposed to the raising of revenue. Reed v. City of Waco, 223 S.W.2d 247, 255 (Tex.Civ.App.1949, writ ref'd). We must presume every reasonable intendment in favor of a constitutional assessment of the charges. Ex parte Cramer, 136 S.W. 61, 62 (Tex.Cr.App.1911); Prudential Health Care Plan v. Comm'r of Ins., 626 S.W.2d 822, 827 (Tex.App.1981, writ ref'd n.r.e.). Creedmoor and Cimarron labored under an obligation to demonstrate that the charges bore no reasonable relationship to the legitimate regulatory objectives set for the District by the Legislature. City of Fort Worth v. Gulf Refining Co., 125 Tex. 512, 83 S.W.2d 610, 618-19 (1935).

                the cost of regulation, the charges in question must amount to taxation.  This distinction is well established.  Conlen Grain & Mercantile, Inc. v. Texas Grain Sorghum Producers Board, 519 S.W.2d 620 (Tex.1975);  H. Rouw Co. v. Texas Citrus Commission, 151 Tex. 182, 247 S.W.2d 231 (1952);  Hurt v. Cooper, 130 Tex. 433, 110 S.W.2d 896 (1937);  Taxation-License Fee-Occupation Tax-Distinction, 14 Texas L.Rev. 278 (1936);  1 Cooley, Taxation (4th ed. 1924) § 1;  4 Cooley, Taxation (4th ed. 1924) § 1784.  Contending the charges in issue have the primary purpose of raising revenue, Creedmoor and Cimarron point out that the validating act authorizes the District to protect and recharge the underground water reservoirs, in addition to conserving and preserving them and preventing the waste of waters found there.  Tex.Water Code Ann. § 52.021 (Supp.1989).  The protection and recharging of the reservoirs is not, they imply, "regulation."   These "non-regulatory" powers are important, they say, because they enable the District lawfully to acquire land, construct dams, install equipment to recharge the reservoirs, drain lakes, and erect facilities to transport water, Id. § 52.155;  and the District is expressly authorized to expend revenue from the charges in question "to pay all or part of the principal of and interest on district bonds or notes."   1987 Tex.Gen.Laws, ch. 429, § 2(c)(3), at 1993.  Consequently, Creedmoor and Cimarron fear the revenues generated by the charges will be applied not to the "regulation" of water use alone, but to any number of expensive projects that the District might undertake outside the sphere of "regulation."   On a silent premise that discouraging water consumption is the only permissible act of "regulation," Creedmoor and Cimarron argue that the charges cannot have that discouraging effect because they, and other water-supply corporations, will merely pass the charges through to their customers in the form of proportionately higher rates;  and the other large user, the City of Austin, cannot be discouraged in its consumption because its maximum charge is fixed in all events at 40% of the total imposed against the other large users.  We disagree with the argument
                

The objectives assigned the District are "to provide for the conservation, preservation, protection, recharging, and prevention of waste of the underground water" in the parts of the Edwards Aquifer committed to the District's authority, and "to control subsidence caused by withdrawal of water therefrom...." Texas Water Code Ann. § 52.021 (Supp.1989). Creedmoor and Cimarron argue from a premise that "regulation" cannot, as a matter of law, encompass the protection and recharging of the underground waters in those parts of the Edwards Aquifer committed to the District's authority; consequently, the costs of such protection and recharging cannot be included in the cost of "regulation." Therefore, they reason, the statutory provisions authorizing the disputed charges to be allocated for those non-regulatory purposes must result in their being classified as "taxes." We disagree.

In the circumstances of the present case, the concept of "regulation" ¹ means simply The six objectives stated in § 52.021 are, of course, quite broad, and the entirety of Chapter 52 of the Texas Water Code manifests a plain intention on the part of the Legislature to give underground water conservation districts the powers necessary to achieve those objectives. Still, these objectives and powers are limited in the sense that they pertain ultimately to the underground waters within the District's boundaries. Should the District choose to acquire land by condemnation, build dams thereon for the impoundment of surface waters, recharge underground reservoirs, or...