FM Properties Operating Co. v. City of Austin, No. 98-0685

• Court: Supreme Court of Texas
• Writing for the Court: Justice Baker delivered the opinion of the Court in which Chief Justice Phillips, Justice Enoch, Justice Hankinson
• Citation: 22 S.W.3d 868
• Parties: (Tex. 2000) FM Properties Operating Company, et al., Appellants v. The City of Austin, Appellee
• Decision Date: 24 August 2000
• Docket Number: No. 98-0685

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22 S.W.3d 868 (Tex. 2000) FM Properties Operating Company, et al., Appellants
v.
The City of Austin, Appellee No. 98-0685 IN THE SUPREME COURT OF TEXAS Argued on December 9, 1998
Decided June 15, 2000
Rehearing Overruled August 24, 2000.

On Direct Appeals from the 345th District Court, Travis County

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Copyrighted Material Omitted

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Justice Baker delivered the opinion of the Court in which Chief Justice Phillips, Justice Enoch, Justice Hankinson, Justice O'Neill and Justice Gonzales joined.

The primary issue in this direct appeal is whether section 26.179 of the Texas Water Code, which allows certain private landowners to create "water quality protection zones" in certain cities' extraterritorial jurisdictions, violates the Texas Constitution. We conclude that it does because it unconstitutionally delegates legislative power to private landowners. Therefore, we affirm the trial court's judgment on the merits as well as on attorney's fees.

I. BACKGROUND

The Texas Legislature enacted section 26.179 of the Texas Water Code in 1995.¹ See Tex. Water Code § 26.179. This statute allows landowners of contiguous tracts of at least 500 acres within certain municipalities' extraterritorial jurisdictions (ETJs) to designate their property as "water quality protection zones." See Tex. Water Code § 26.179(c), (d). The purpose of a water quality protection zone is to "provide the flexibility necessary to facilitate the development of the land within the zone, but which also is intended to result in the protection of the quality of water within the zone." Tex. Water Code § 26.179(d). Section 26.179's legislative history clarifies that the statute was intended to relieve large landowners and developers in certain cities' ETJs from "regulatory chaos." Hearings on S.B. 1017 Before the Senate Comm. on Natural Resources, 74th Leg., R.S. (Apr. 4, 1995); Hearings on H.B. 2471 Before the House Natural Resources Comm., 74th Leg., R.S. (Apr. 10, 1995). Accordingly, the statute exempts the landowners from a variety of otherwise applicable regulations, including water quality regulations, and allows the landowners to create and implement a water quality plan for the zone.

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The landowners designate a zone by filing a water quality plan and a general description of water quality protection facilities and proposed land uses for the zone in the applicable county deed records. See Tex. Water Code § 26.179(e), (f). Landowners owning 500 to 1,000 contiguous acres must secure approval of their water quality protection zones from the Texas Natural Resource Conservation Commission before designating a zone. See Tex. Water Code § 26.179(d). Landowners owning 1,000 acres or more may designate a zone without pre-approval from the TNRCC. See Tex. Water Code § 26.179(d). Zones and their corresponding water quality plans are effective immediately upon recordation in the applicable county deed records. See Tex. Water Code § 26.179(f), (g). A zone's water quality plan is a covenant running with the land. See Tex. Water Code § 26.179(h).

Section 26.179 allows landowners to choose between two general objectives in formulating their water quality plans: (1) to maintain background levels of water quality in waterways; or (2) to capture and retain the first 1.5 inches of rainfall from developed areas. See Tex. Water Code § 26.179(a). For each zone, a registered professional engineer must certify that the water quality plan is designed to achieve one of these objectives. See Tex. Water Code § 26.179(g). For zones purporting to maintain background levels of water quality, the landowners determine the water quality levels to be maintained by setting up monitoring sites within the zone and collecting water quality data from the sites. See Tex. Water Code § 26.179(b). If such data are unavailable, the landowners must hire a professional engineer to calculate background levels using methods the statute specifies. See Tex. Water Code § 26.179(b).

The TNRCC reviews water quality plans, but it must approve a plan unless the TNRCC finds that implementing the plan will not reasonably attain one of the two water quality objectives. See Tex. Water Code § 26.179(g). Zones are presumed to satisfy all other state and local requirements for water quality protection. See Tex. Water Code § 26.179(k). But development in the zone must comply with all state laws and commission rules regulating water quality which are in effect on the date the landowner designates the zone. See Tex. Water Code § 26.179(k)(1). In addition to section 26.179's two water quality objectives, the TNRCC may require and enforce water quality protection measures to comply with mandatory federal water quality requirements. See Tex. Water Code § 26.179(m).

Landowners may amend a plan from time to time. See Tex. Water Code § 26.179(g). The TNRCC may deny such amendments only if the TNRCC finds that the amended plan will impair the attainment of section 26.179(a)(1) or (a)(2)'s requirements. See Tex. Water Code § 26.179(g).

In reviewing the water quality plan, the TNRCC may not require public hearings and must complete its review and approval of a plan or amendment within 120 days after receiving the plan. See Tex. Water Code § 26.179(g). Landowners may appeal a TNRCC denial of a plan or amendment in a court of competent jurisdiction. See Tex. Water Code § 26.179(g). On appeal, the TNRCC has the burden of proof. See Tex. Water Code § 26.179(g). For zones of 1,000 acres or more, a plan or amendment remains effective during an appeal of a TNRCC denial. See Tex. Water Code § 26.179(g).

The statute requires landowners that choose to maintain water quality background levels to monitor water quality for three years after each phase of development is complete and to submit annual technical reports to the TNRCC for the same three years. See Tex. Water Code § 26.179(b). If the reports show that the landowner did not maintain background levels the previous year, the landowner must modify the water quality plans for future phases of development in the zone

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and operational and maintenance practices in existing phases of the zone "to the extent reasonably feasible and practical." Tex. Water Code § 26.179(b)(1), (2). For plans purporting to retain 1.5 inches of rainfall, water quality monitoring is not required. See Tex. Water Code § 26.179(b).

Once a zone is designated, a municipality may not enforce in the zone any "ordinances, land use ordinances, rules, or requirements including, but not limited to, the abatement of nuisances, pollution control and abatement programs or regulations, water quality ordinances, subdivision requirements, other than technical review and inspections for utilities connecting to a municipally owned water or wastewater system, or any environmental regulations" that are inconsistent with or impair the ability to implement and operate the land use plan and water quality plan as filed. Tex. Water Code § 26.179(i).

In addition, a city may not collect fees or assessments or exercise powers of eminent domain within a zone until it annexes the zone. See Tex. Water Code § 26.179(i). And, a city cannot annex a zone until ninety percent of the zone's facilities and infrastructure described in the water quality plan as being necessary to carry out the plan are completed, or until twenty years from the designation date has passed, whichever occurs first. See Tex. Water Code § 26.179(i).

After the Legislature enacted section 26.179, several landowners designated zones in the City of Austin's ETJ. Zones were not designated in any other municipality's ETJ. The City sued several of the landowners who had designated zones in the City's ETJ, seeking a declaration that section 26.179 is unconstitutional. The City alleged that section 26.179 violates various provisions of the Texas Constitution because it: (1) unconstitutionally delegates legislative power to private landowners in violation of article II, section 1 and article III, section 1; (2) is an unconstitutional local and special law targeting the City of Austin in violation of article III, section 56; (3) unconstitutionally infringes on municipal home rule powers conferred to the City by article XI, section 5; (4) retroactively impairs the City's vested property rights in violation of article I, section 16; and (5) allows private landowners to suspend laws in violation of article I, section 28. The Landowners counterclaimed for a declaration that section 26.179 is constitutional and sought attorney's fees. The State of Texas intervened to defend the statute's constitutionality. The City and the defendants filed cross-motions for summary judgment. The trial court rendered a final judgment declaring section 26.179 unconstitutional, without specifying the grounds for its judgment, and permanently enjoined the Landowners from designating new zones or adding land to existing zones. The trial court also denied the Landowners' attorney's fees claims. The Landowners brought this direct appeal asserting that section 26.179 is constitutional and that they are entitled to attorney's fees.

II. APPLICABLE LAW

A. Standard of Review -- Cross -Motions for Summary Judgment

When both sides move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both sides' summary judgment evidence and determine all questions presented. See Commissioners Court of Titus County v. Agan, 940 S.W.2d 77, 81 (Tex. 1997); Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988). The reviewing court should render the judgment that the trial court should have rendered. See Agan, 940 S.W.2d at 81; Members Mut. Ins. Co. v. Hermann Hosp., 664 S.W.2d 325, 328 (Tex. 1984). When a trial court's order granting summary judgment does not specify the grounds relied upon, the reviewing court must affirm summary judgment if any of the summary judgment grounds are meritorious.

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