Opinion
NO. 03-14-00501-CV
03-18-2016
The County of La Salle, Appellant v. Joe Weber, in his Official Capacity as Executive Director of the Texas Department of Transportation; The Texas Department of Transportation; Ted Houghton, in his Official Capacity as Chairman of the Texas Transportation Commission; and Jeff Austin, III, Jeff Moseley, Fred Underwood, and Victor Vandergriff, in their Official Capacities as Commissioners of the Texas Transportation Commission, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT
NO. D-1-GV-14-000500, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDINGMEMORANDUM OPINION
The County of La Salle sued Joe Weber, in his official capacity as Executive Director of the Texas Department of Transportation; the Texas Department of Transportation; Ted Houghton, in his official capacity as Chairman of the Texas Transportation Commission; and Jeff Austin, III, Jeff Moseley, Fred Underwood, and Victor Vandergriff, in their official capacities as Commissioners of the Texas Transportation Commission (collectively, the State Defendants), in connection with the Department's administration of the Transportation Infrastructure Fund grant program. The State Defendants filed a plea to the jurisdiction, contending that the County's suit was barred by sovereign immunity. The trial court granted the plea and dismissed the County's claims. This appeal followed. We will affirm the trial court's judgment.
BACKGROUND
In response to the demands placed on transportation infrastructure in the State of Texas as a result of increased oil and gas production, the Texas Legislature created the Transportation Infrastructure Fund (TIF), codified in Chapter 256, subchapter C, of the Texas Transportation Code. See Tex. Transp. Code §§ 256.101-.106. The TIF statute requires the Department to "develop policies and procedures to administer a grant program under this subchapter to make grants to counties for transportation infrastructure projects located in areas of the state affected by increased oil and gas production." Id. § 256.103. Any county seeking grant funds must provide certain documents to the Department, including the road condition report described by section 251.018 made by the county for the previous year and a copy of the order or resolution establishing a county energy transportation reinvestment zone (ETR zone) in the county. Id. § 256.104(a)(1)-(2)(A); see id. § 251.018 (road condition reports).
The term "transportation infrastructure project" is defined as "planning for, construction of, reconstruction of, or maintenance of transportation infrastructure . . . intended to alleviate degradation caused by the exploration, development, and production of oil and gas." Tex. Transp. Code § 256.101(2).
In addition, the applicant county must submit a plan that (a) lists and describes the transportation infrastructure projects to be funded, using best practices for prioritizing the projects, (b) identifies matching funds, as described in section 256.105, and (c) meets any other requirements imposed by the Department. Id. § 256.104(a)(2)(B). This requirement is not at issue in this case.
Pursuant to its statutory authority, the Department subsequently adopted rules "set[ting] forth the procedures for submission and review of applications, the allocation of funds to eligible counties, and the reimbursement to counties of allowable costs incurred under the [TIF] grant program." 43 Tex. Admin. Code § 15.180 (Tex. Dep't of Transp., Purpose); see Tex. Transp. Code § 256.103(a) ("The Department may adopt rules to implement this subchapter."). The Department promulgated the following rule regarding grant eligibility:
To be eligible for a grant from the fund, a county must:43 Tex. Admin. Code § 15.182 (Tex. Dep't of Transp., Eligibility); see Tex. Transp. Code § 222.1072 (creation of advisory boards to administer ETR zone). The Department also promulgated Rule 15.188, detailing the procedures for submitting an application. Like the statute, Rule 15.188 requires an applicant county to submit a road condition report and certain documentation concerning the creation of an ETR zone in the county. 43 Tex. Admin. Code § 15.188(c)(1)-(2) (Tex. Dep't of Transp., Application Procedure). The Department must "award a grant from the fund to each eligible county that submits a valid application in accordance with [Rule] 15.188" in the amount determined by the Department in accordance with the allocation formula set forth in Rule 15.185, which mirrors the allocation formula set forth in section 256.103 of the statute. Id. § 15.184.
(1) be entirely or partially in an area affected by increased oil and gas production;
(2) create a county [ETR] zone under Transportation Code [section] 222.1071; and
(3) create an advisory board for the zone under Transportation Code [section] 222.1072 for the county [ETR] zone.
In 2013, $225 million was appropriated to the TIF to be distributed among the various applicant counties. The Department then designated a request-for-application period and sent each county judge written notice specifying the application period, the estimated total amount of money available for grants from the fund, and the estimated allocation for each county in the state. See id. § 15.187(a), (b) (Tex. Dep't of Transp., Acceptance of Applications); see Tex. Transp. Code § 256.103 (statutory allocation formula); see also 43 Tex. Admin. Code § 15.185 (Tex. Dep't of Transp., Allocation to Counties). The original estimated allocation for La Salle County was $5,961,191. The County applied for $158,507,765 of the total $225 million allocated and was awarded $6,456,703.
Dissatisfied with its award, the County brought suit against the State Defendants, complaining that the Department had refused to exclude any county from the application pool and that, as a result, it had failed to enforce the statutory eligibility requirements for the TIF grant program. The County complained that the Department had "pressed forward without filtering out applications from the counties that failed to meet the eligibility requirements set by the Legislature and by the [Department] rule-making process, [diluting] the effect of the TIF program." According to the County, "the Legislature's purpose for these scarce road funds is being dissipated in a way contrary to law."
The County sought injunctive relief, based on claims of ultra vires conduct, to prevent the State Defendants "from moving forward on the current round of TIF program grants outside of strict compliance with the governing statutes and rules." Specifically, the County sought to enjoin Department officials "from countersigning any of the draft 'Standard Agreement' contracts that may be returned by ineligible counties or those whose initial applications were invalid." The County also sought declaratory and injunctive relief under Texas Government Code section 2001.038, concerning the "validity or applicability of a rule that interferes with or impairs and threatens to interfere with or impair [the County's] share of the grants and so as to remove any existing uncertainty about the requirements for county eligibility . . . and, alternatively, declaring any [Department] rules invalid to the extent they depart from the statute." See Tex. Gov't Code § 2001.038.
The State Defendants filed a plea to the jurisdiction, asserting that the County's claims were barred by sovereign immunity. Specifically, the State Defendants argued that the County's claims were barred because (1) the Department is neither required nor authorized to perform a fact-finding process with regard to the applications, (2) the County had failed to assert a valid ultra vires claim, and (3) the County's petition failed to invoke jurisdiction under section 2001.038 because the County did not specify any rule that it was challenging. Following a hearing at which evidence was presented by the parties, the trial court granted the plea and dismissed the County's claims. The County then perfected this appeal.
STANDARD OF REVIEW
A plea to the jurisdiction is a dilatory plea that seeks dismissal of a case for lack of subject-matter jurisdiction. Harris Cty. v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004). Because subject-matter jurisdiction is a question of law, we review a trial court's ruling on a plea to the jurisdiction de novo. Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). We begin our analysis with the plaintiff's live pleadings and determine whether the facts alleged affirmatively demonstrate the trial court's jurisdiction to hear the cause. Id. We construe the plaintiff's pleadings liberally, taking all factual assertions as true, and look to the plaintiff's intent. Id.
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 plaintiff should be afforded an opportunity to amend. Id. at 226-27. If, however, the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiff an opportunity to replead. Id. at 227.
In addition, we may also consider evidence that the parties have submitted and must do so when necessary to resolve the jurisdictional issues. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). "Our ultimate inquiry is whether the particular facts presented, as determined by the foregoing review of the pleadings and any evidence, affirmatively demonstrate a claim within the trial court's subject matter jurisdiction." Bacon v. Texas Historical Comm'n, 411 S.W.3d 161, 171 (Tex. App.—Austin 2013, no pet.).
To the extent resolution of the jurisdictional issues in this case turn on statutory construction, we review these questions de novo. See First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 632 (Tex. 2008). When construing a statute, our primary objective is to ascertain and give effect to the Legislature's intent. Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 868 (Tex. 2009). The plain meaning of the text is the best expression of legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or unless the plain meaning would lead to "absurd results." City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008); see Tex. Gov't Code § 311.011. "Where text is clear, text is determinative of that intent." Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009).
DISCUSSION
In two related issues on appeal, the County argues that the trial court erred in dismissing its suit on the ground that it is barred by sovereign immunity. First, the County contends that it has asserted valid ultra vires claims and, consequently, those claims are not barred by sovereign immunity. See City of El Paso v. Heinrich, 284 S.W.3d 366, 372-80 (Tex. 2009). According to the County, its ultra vires claims are based on an interpretation of the Department's authority under the TIF statute that is supported by the Department's own administrative rules. However, to the extent this Court would instead conclude that the County's interpretation of the statute is incorrect, the County conditionally raises a second issue on appeal. In its second issue, the County asserts that the trial court erred in dismissing its rule challenge under Government Code section 2001.038, which can also operate as a waiver of sovereign immunity. See Tex. Gov't Code § 2001.038; Texas Dep't of Transp. v. Sunset Transp. Inc., 357 S.W.3d 691, 700 (Tex. App.—Austin 2011, no pet.) (noting that section 2001.038 waives sovereign immunity "to the extent of creating a cause of action for declaratory relief regarding the 'validity' or 'applicability' of a 'rule'").
Ultra Vires
Absent legislative waiver, sovereign immunity deprives Texas courts of subject-matter jurisdiction over any suit against the State or its agencies or subdivisions. Texas Dep't of State Health Servs. v. Balquinta, 429 S.W.3d 726, 738 (Tex. App.—Austin 2014, pet. dism'd). Sovereign immunity serves an important purpose, "shield[ing] the public from the costs and consequences of improvident actions of their governments." Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006); see Bacon, 411 S.W.3d at 172 (explaining that "sovereign immunity generally shields our state government's 'improvident acts'—however improvident, harsh, unjust, or infuriatingly boneheaded these acts may seem" (citation omitted)).
A suit seeking to compel a government official "to comply with statutory or constitutional provisions" through prospective injunctive or declaratory relief is an ultra vires suit and is not barred by sovereign immunity. Heinrich, 284 S.W.3d at 372. Suits alleging ultra vires or unconstitutional conduct by a government official are not barred by sovereign immunity because they "do not seek to alter government policy but rather to enforce existing policy." Id. But, to assert a valid ultra vires claim the plaintiff "must not complain of a government officer's exercise of discretion." Id. Instead, the plaintiff must "allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act." Id.; Creedmoor-Maha Water Supply Corp. v. Texas Comm'n on Envtl. Quality, 307 S.W.3d 505, 515 (Tex. App.—Austin 2010, no pet.). Otherwise, the suit is an impermissible attempt to "control state action," seeking to dictate the manner in which officials exercise their delegated authority. Bacon, 411 S.W.3d at 173 (quoting Heinrich, 284 S.W.3d at 372).
In its live pleadings, the County alleges that Department officials acted ultra vires by failing to implement the TIF grant program in accordance with legislative directives. Liberally construing the County's pleadings, we discern that the County has presented two theories of ultra vires conduct by Department officials. First, the County claims that officials acted ultra vires by approving grants without first determining whether each applicant county was in fact eligible to receive a grant because it was "affected by increased oil and gas production." In its live pleadings, the County asserts that section 256.103 of the statute expressly restricts the availability of funds to those counties "located in areas of the state affected by increased oil and gas production," Tex. Transp. Code § 256.103(a), and similarly, that the Department's own rules require that an applicant county "be entirely or partially in an area affected by increased oil and gas production," 43 Tex. Admin. Code § 15.182. The County alleges that Department officials acted outside their legal authority by ignoring this statutory restriction on eligibility when awarding TIF grants to every county that applied. According to the County, "given that [the Department] has refused to exclude any county from the application pool, there is no indication that [Department officials] applied this rule or the underlying statute to actually determine county eligibility."
Second, the County claims that Department officials acted ultra vires by failing to ensure that applicant counties complied with the TIF statute by submitting certain documents with their applications. The County points out that section 256.104 of the TIF statute and Rule 15.188 of the Department's administrative rules both require the submission of a road condition report made by the county for the previous year and certain documents establishing the creation of an ETR zone. See Tex. Transp. Code § 256.104(a)(1)-(2)(a); 43 Tex. Admin. Code § 15.188. According to the County, the Department acted ultra vires by failing to ensure that county applicants in fact met these statutory and rule-based documentation requirements.
In support of its ultra vires claims, the County relies on evidence presented at the hearing on the plea to the jurisdiction. With respect to its claim that Department officials acted ultra vires by failing to ensure that county applicants met statutory eligibility requirements, the County points to the testimony of Mark Marek, the Department's director of engineering operations and the person who oversaw the office that handled the application process for the TIF grant program. At the hearing, Marek testified that a TIF grant application includes a "box," which if checked affirms that the "county is entirely or partially in area affected by increased oil and gas production" and that other than applying the statutory allocation formula, the Department did not take any steps to verify the truth of this statement with regard to any of the applicant counties. In addition, the County points to the testimony of Charles Graham, an expert engineer hired by the County, in part, to analyze oil and gas production in the state, identify which counties had experienced increased oil and gas production, and determine the effect of that increased production on those particular counties. Graham testified that many of the applicant counties that were awarded grants "had either declining production or no oil and gas production at all" during the grant fiscal year.
The County also relies on evidence presented at the hearing, including Marek's testimony, to support its claim that Department officials acted ultra vires by failing to ensure that applicant counties submitted the required road condition reports and county ETR zone documents. During his testimony, Marek acknowledged that the Department did not review the substance of the road condition reports to ensure that they included the information described in section 251.018 and that the Department did not review the ETR zone orders to determine whether they in fact were valid zones under Texas law. Marek also testified that the Department reviewed road condition reports only to confirm that they were current and reviewed ETR zone orders only to ensure that the orders indicated that the applicant county had created the zone. See Tex. Transp. Code § 256.104(a)(1)-(2)(A). According to Marek, the Department relied solely on the representations made by applicant counties in their applications.
In addition, the County relies on the testimony of its two experts, Michael Riojas and Duane Gordy, who were hired by the County to review all 191 TIF applications. At the hearing, Riojas testified that his review revealed that some of the road condition reports submitted by applicant counties failed to include specific information about each road in the county, did not include a complete list of every road in the county, assessed only the condition of the road that was the subject of the TIF grant, or were for the incorrect time period. Similarly, Gordy testified that some of the applicant counties submitted county ETR zone documentation that failed to adequately describe the ETR zone or showed that the zone included no taxable property.
In response, the State Defendants do not dispute that grant eligibility is limited to those counties "affected by oil and gas production" or that counties are required by statute to submit certain documentation with their applications. Instead, the State Defendants argue that nothing in the TIF statute requires the Department to independently verify, as a factual matter, whether an applicant county is "affected." In the view of the State Defendants, Department officials may rely on a county's own determinations and representations in its application that it is "affected" and that its supporting documentation is valid and sufficient.
In addition, the State Defendants take issue with the County's apparent assumption that only those counties with oil and gas production within its boundaries are "affected by increased oil and gas production." See id. § 256.103(a). The State Defendants assert that this assumption is not supported by the plain reading of the statute, which does not expressly limit eligibility to counties with actual production. Although the Department has not promulgated a rule defining the phrase "affected by increased oil and gas production," the State Defendants now suggest that even a county with no oil and gas production—for example, a neighboring county through which oil and gas product, or the equipment used to produce it, is transported—may be "affected by increased oil and gas production."
The State Defendants suggest, and we agree, that nothing in the plain language of section 256.103, or the TIF statute as a whole, strictly limits grant eligibility to those counties that are experiencing actual increased oil and gas production within their own boundaries. As previously discussed, section 256.103 of the TIF statute requires the Department "to make grants to counties for transportation infrastructure projects located in areas of the state affected by increased oil and gas production." Id. § 256.103. Similarly, Rule 15.182 of the Department's rules provides that "a county must be entirely or partially in an area affected by increased oil and gas production" to be eligible for a grant. There is no dispute that section 256.103 sets out a grant-eligibility requirement—that the applicant county be located in an area "affected by increased oil and gas production." However, nothing in the TIF statute suggests that only those counties that are experiencing actual oil and gas production within their boundaries are considered to be "affected" by such production. Thus, to the extent the County relies on allegations or undisputed evidence that the Department awarded grants to counties with no actual oil and gas production within their boundaries, we conclude that the County has failed to present facts that would support a valid ultra vires claim. See Creedmoor, 307 S.W.3d at 515.
This determination, however, does not end our jurisdictional inquiry. Instead, we must examine the broader jurisdictional question presented. That is, we must consider whether the County could otherwise invoke the trial court's jurisdiction based on any alleged failure by Department officials to verify whether an applicant county is "affected by increased oil and gas production" or to verify whether an applicant county's submitted road condition report and ETR zone documentation are substantively complete. The resolution of this issue turns on whether Chapter 256 authorizes Department officials (1) to accept a county's representation that it is "affected by increased oil and gas production" without independently verifying whether the representation is factually correct, and (2) to accept an applicant county's submitted road condition report and ETR zone documentation as substantively sufficient on their face.
The County asserts that the plain language of the TIF statute and the Department's own administrative rules require a "a meaningful initial screen for county eligibility." Although the County does not explain exactly what would constitute a "meaningful initial screen," it asserts that the State Defendants' interpretation—that the statute does not require the Department to independently verify the eligibility statements on a county's application—would effectively make every county in the state eligible and render the statutory language in section 256.103, limiting grant eligibility, meaningless. In effect, the County's complaint centers on the effectiveness of the Department's practice of screening for eligibility by relying on an applicant county's own representation that it is "affected" and in accepting an applicant's submitted road condition report and ETR zone documentation without independently verifying that the documents are substantively sufficient.
The Legislature has delegated broad authority to the Department to "develop policies and procedures to administer" the TIF grant program without limiting the methods available to the Department for doing so. See Tex. Transp. Code § 256.103(a). The statute does not require that the Department engage in any particular procedure or make any findings with respect to whether an applicant is "affected" or otherwise eligible to receive a TIF grant. In fact, the Legislature has placed very few specific limitations or requirements on the Department with regard to its administration of the TIF grant program. Most notably, the Department must review grant applications within 30 days or, upon extension, 60 days. Id. § 256.104(c); see also 43 Tex. Admin. Code § 15.189 (Tex. Dep't of Transp., Review of Application). In addition, the Department must allocate the grants distributed during a fiscal year in accordance with the statutory allocation formula.Id. § 256.103(b). Nothing in the statutory language prohibits the Department from relying on an applicant county's own determination that it is "affected by increased oil and gas production" and thus eligible to receive a TIF grant. Likewise, nothing in the statute prohibits the Department from relying on an applicant's representation that the documents submitted in compliance with Rule 256.104 are substantively complete. We will not read into a statute a limitation or prohibition that is not there. See Walker v. City of Georgetown, 86 S.W.3d 249, 256 (Tex. App.—Austin 2002, pet. denied).
This allocation is based on four criteria, each calculated as a ratio compared to the total for the State in that fiscal year and each related to oil and gas production or to transportation: (1) weight tolerance permits; (2) oil and gas production taxes; (3) well completions; and (4) volume of oil and gas waste injected. Tex. Transp. Code § 256.103(b). Consequently, the allocation formula itself ultimately determines the extent to which an applicant county is "affected," relative to the State as a whole. --------
In addition, while many of the County's arguments focus on the alleged failure by the Department to independently verify applicant eligibility, the injunctive relief requested by the County would necessarily require the trial court to review the applications and supporting documentation to judicially determine which applicants were eligible under the statute to be awarded TIF grants. This type of undertaking by the trial court would amount to a judicial review of each decision by the Department to award a grant to an applicant county. But the Legislature did not authorize any form of judicial review of any decision by the Department to award or not award TIF grants. See GeneralServs. Comm'n v. Little-Tex Insulation Co., 39 S.W.3d 591, 599 (Tex. 2001) (recognizing that there is no general right to judicial review). Moreover, the very absence of a right to judicial review confirms the Legislature's intent to delegate broad discretion to the Department in determining applicant eligibility. See Bacon, 411 S.W.3d at 180; see also Machete's Chop Shop, Inc. v. Texas Film Comm'n, No. 03-14-00098-CV, 2016 WL 368534, *8 (Tex. App.—Austin Jan. 29, 2016, no pet. h.).
Because the Transportation Code broadly authorizes the Department to administer the TIF grant program and to develop policies and procedures for doing so, we conclude that Department officials did not act beyond their statutory authority by relying on the applicant counties' own determinations that they were in fact eligible to receive TIF grants. Considering the allegations and the undisputed evidence presented, we conclude that the County has failed to present a valid ultra vires claim and, consequently, that the trial court did not err in determining that it lacked subject-matter jurisdiction to consider the County's attempted ultra vires claims. The County's first issue on appeal is overruled.
Rule Challenge
Next, we consider the County's alternative claim that the trial court erred in dismissing its claim under section 2001.038 of the Texas Government Code. Section 2001.038 allows a party to challenge the validity or applicability of an agency rule through a declaratory judgment action if it is alleged that the rule or its threatened application interferes with or impairs a legal right or privilege of the plaintiff. Tex. Gov't Code § 2001.038; see Combs v. Entertainment Publ'ns, Inc., 292 S.W.3d 712, 720 (Tex. App.—Austin 2009, no pet.). Section 2001.038, where appropriately applied, operates as a waiver of sovereign immunity. See Texas Logos, L.P. v. Texas Dep't of Transp., 241 S.W.3d 105, 114 (Tex. App.—Austin 2007, no pet.).
Here, the County broadly contends that it "believes that [the Department's] formal rules support its interpretation [that the statute is nondiscretionary with respect to eligibility]," but that "if those rules instead are held to contradict the statute," then the trial court has jurisdiction to make that determination under section 2001.038 of the Government Code. The County, however, does not specify which rule that it contends is invalid or inapplicable, and its challenge appears to be an argument correlative to its ultra vires claims. See Tex. Gov't Code § 2001.038(a) (plaintiff must allege that "rule or its threatened application interferes with or impairs, or threatens to interfere with or impair, a legal right or privilege of the plaintiff"). In any event, we have not held, impliedly or expressly, that any of the Department's rules conflict with the statute. Instead, we have concluded that sovereign immunity bars the County's claims seeking to enjoin the grant application and distribution process and that there is no right to judicial review of the Department's decisions concerning the award of TIF grants. As a result, any claim by the County under section 2001.038, seeking to invalidate the Department's rules under which the grant applications were processed, is moot. See Texas Logos, 241 S.W.3d at 114 (because relief provided under section 2001.038 does not extend to invalidating agency decision, challenge to validity of rules under which proceedings were conducted was moot when sovereign immunity barred claim seeking to invalidate agency decision); see also Bacon, 411 S.W.3d at 181 ("Further, absent a right of judicial review from the THC proceedings or other claim to challenge them that is within the district court's jurisdiction, Bacon's section 2001.038 claim for declaratory relief is moot."). Accordingly, we overrule the County's second issue.
CONCLUSION
Because the trial court did not err in granting the State Defendants' plea to the jurisdiction and dismissing the County's claims for lack of subject-matter jurisdiction, we affirm the judgment of the trial court.
/s/_________
Scott K. Field, Justice Before Chief Justice Rose, Justices Goodwin and Field Affirmed Filed: March 18, 2016