CREEDMOOR-MAHA WATER SUPPLY v. TCEQ.

• Decision Date: 03 March 2010
• Docket Number: No. 03-09-00460-CV.,03-09-00460-CV.
• Citation: 307 SW 3d 505
• Parties: CREEDMOOR-MAHA WATER SUPPLY CORPORATION, Appellant, v. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY and Jona Acquisition, Inc., Appellees.
• Court: Texas Court of Appeals

307 S.W.3d 505

CREEDMOOR-MAHA WATER SUPPLY CORPORATION, Appellant, v. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY and Jona Acquisition, Inc., Appellees.

No. 03-09-00460-CV.

Court of Appeals of Texas, Austin.

March 3, 2010.

Mark H. Zeppa, Law Office of Mark H. Zeppa, P.C., Marie Timmermann, Mary Alice Boehm-McKaughan, Austin, for Appellant.

Thomas H. Watkins, Kenneth Ramirez, Rachel L. Noffke, Brown McCarroll, L.L.P., Anthony C. Grigsby, Asst. Atty. Gen., Austin, for Appellees.

Before Chief Justice JONES, Justices PEMBERTON and WALDROP.

OPINION

BOB PEMBERTON, Justice.

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 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;

(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. § 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 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...