Opinion
NO. 03-17-00160-CV
05-11-2018
Johnson County Special Utility District, Appellant v. Public Utility Commission of Texas, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. D-1-GN-16-000898 , HONORABLE DARLENE BYRNE, JUDGE PRESIDING MEMORANDUM OPINION
The Public Utility Commission of Texas (the Commission) granted the petition of a landowner for expedited release of property from the certificated service area of Johnson County Special Utility District (the District). See Tex. Water Code § 13.254(a-5) (providing expedited release of property not receiving water or sewer service from holder of certificate of public convenience and necessity). The District filed a suit for judicial review of the order, and the trial court affirmed the Commission's order. For the following reasons, we affirm the trial court's final judgment.
Background
The District is a conservation and reclamation district operating as a special utility district pursuant to Article 16, Section 59 of the Texas Constitution and Chapters 49 and 65 of the Texas Water Code. See Tex. Const. art. XVI, § 59; Tex. Water Code §§ 49.001-.512, 65.001-.731. The District is the holder of water certificate of convenience and necessity (CCN) No. 10081 and, pursuant to its CCN, it has the exclusive right to provide water service within the CCN territory or certificated service area.
HMP Ranch Ltd. owns an approximately 1,022-acre property (the Property) within the District's certificated service area under CCN No. 10081 (the CCN area). In August 2015, HMP Ranch filed a petition to have the portions of the Property that were within the District's CCN area released pursuant to section 13.254(a-5) of the Texas Water Code on the basis that it was not "receiving water service." Section 13.254(a-5) provides that the owner of a tract of land that is 25 acres or larger and located in certain counties may petition for, and is entitled to, expedited release of that tract from a certificated service area if the tract "is not receiving water or sewer service." See Tex. Water Code § 13.254(a-5); see also id. § 13.002(21) (defining "service"); 16 Tex. Admin. Code § 24.113(r) (Public Util. Comm'n of Tex., Revocation or Amendment of Certificate). The Commission "shall grant a petition received under Subsection (a-5) not later than the 60th day after the date the landowner files the petition." Tex. Water Code § 13.254(a-6). Upon decertification of the property, the CCN holder no longer has the exclusive right to provide service to the property.
Although this Court received an amicus brief from HMP Ranch, it is not a party to this appeal.
The District intervened in the administrative proceeding shortly after HMP Ranch filed its petition, opposing the petition. After HMP Ranch amended and filed a supplement to its petition, the Commission deemed HMP Ranch's petition administratively complete on November 2, 2015, and its administrative law judge ultimately ordered the following deadlines through the statutory 60-day period: (i) the deadline for Commission staff's recommendation on final disposition was November 20, 2015, (ii) HMP Ranch's deadline to respond to staff's recommendation was November 23, 2015, and (iii) the 60-day administrative approval period ended on December 29, 2015. See id.; 16 Tex. Admin. Code § 24.8(d) (Public Util. Comm'n of Tex., Administrative Completeness) (stating that applications under Subchapter G of chapter 24 are not considered filed until Commission makes determination that application is administratively complete).
In early November 2015, the District filed a response to HMP Ranch's supplemental petition. The District disputed HMP Ranch's position that the Property was not receiving water service and submitted an affidavit from its general manager with attachments. The general manager averred about the District's contacts with a representative from HMP Ranch about the feasibility of providing water service for a proposed residential subdivision that was being planned for the Property, the District's ability to serve its current customers and to accommodate future growth, the portion of the District's water supply that it obtained by contract, its current facilities near the Property, and its "numerous lines near the [Property] which serve active meters on all sides of the [Property]." As to the Property, the general manager specifically averred:
• "[T]here is a six-inch water line and a two-inch water line which cross the south-western portion of the [Property] . . . , and there is a three-inch water line which runs adjacent to the [Property] in a northeast-southwest direction. All of these lines are active and could supply water to the [Property]. At least two of these lines were installed to serve water to the [Property]."
• "There is a water meter box, which is currently inactive on the southwest side of the [Property] which was installed in 1970 to provide service to . . . the owner of the land [at the time]. The account for this meter remained active for 35 years until the meter was locked and the account designated 'inactive.' The water meter box and associated waterlines and facilities were installed to serve the property known today as the HMP Ranch."Concerning the District's contracts for portions of its water supply, the general manager averred that the District "has planned to use treated water" obtained under these contracts "to serve" the Property.
• "Another inactive water meter box and tap, which included a road bore . . . from the three-inch water line to the [Property], is located on the northeast part of the [Property]. The tap is also currently inactive. The water box, tap, road bore, and associated waterlines were installed to serve the [Property]."
HMP Ranch filed a reply and submitted an affidavit from a broker with Lands Advisor Organization. The broker, as the designated representative of HMP Ranch, averred:
• "The Property does not receive water or sewer utility service from any retail water or sewer service provider. There has been no active water or sewer service connection on the Property since HMP Ranch, Ltd. acquired the Property in 2006. HMP Ranch, Ltd. has never requested service from [the District]. HMP Ranch, Ltd. has never consented to [the District] conducting any activities on the Property. To the best of my knowledge, [the District] has not conducted any activities on the Property as long as HMP Ranch, Ltd. has owned the Property."
• "HMP Ranch, Ltd. intends to develop the Property into a subdivision with approximately 3,000 to 3,500 single family residences."
• "On November 11, 2015, I personally inspected the Property in an attempt to locate the water meter boxes described in the affidavit of [the District's general manager] . . . . After a diligent search of the Property over multiple hours, I was not able to locate anything matching [the general manager]'s description. To my knowledge, no representative of HMP Ranch, Ltd. has ever accessed the described facilities or has even been aware of their existence. If any such facilities exist, they are not visible from the surface of
the Property, and they are likely decrepit. Regardless, there are no [District] facilities on the Property that are capable of providing water service to the Property, and certainly not to the level required for the planned 3,000 to 3,500 connections on the Property. [The District] has admitted this, as well."
• "In my attempt to locate any water-related infrastructure on the Property, I found only two shuttered groundwater well heads and a former windmill location. Also located on the Property is evidence of the remains of a dwelling structure evidently destroyed by a fire prior to HMP Ranch, Ltd. acquiring the Property. All indications are that this dwelling has been uninhabitable for many years. Regardless, anyone that ever lived on the Property clearly relied on groundwater from the windmill and two private groundwater wells. There is also a small, elevated water storage tank on the Property in proximity of the former windmill location and the two groundwater wells, implying that any dwelling on the Property required that water pressure be generated locally and not from a retail water utility service provider."
• "At least as long as HMP Ranch, Ltd. has owned the Property, and likely for a considerable length of time prior to HMP Ranch, Ltd.'s acquisition of the Property in 2006, there has not been any activity conducted on the Property that required potable water utility service. The Property today, and for at least as long as HMP Ranch, Ltd. has owned the Property, is not receiving water service from [the District]."
On November 20, 2015, Commission staff filed the final recommendation. The staff recommended that the petition be approved, concluding that the "maps, digital data, and affidavit provided by HMP Ranch presented adequate information to demonstrate that HMP Ranch satisfie[d] the requirements of TWC § 13.254(a-5) and 16 TAC § 24.113(r)." Consistent with the final recommendation, Commission staff filed a proposed order on November 24, 2015, to approve the petition. On December 9, 2015, the District filed exceptions to the proposed order and, a few days later, a supplemental affidavit with attachments and, in the alternative, motion for leave. The District's general manager averred that he had directed District employees "to uncover the water meter boxes on the [Property]" and that they had located them "just recently." The attachments included maps and photographs showing the location of the two water meter boxes on the Property. HMP Ranch responded by filing a response to the supplemental affidavit, arguing that it was untimely and that, even if the Commission considered it, the affidavit corroborated HMP Ranch's position that the Property was not receiving water service. See 16 Tex. Admin. Code § 22.78(a) (Public Util. Comm'n of Tex., Responsive Pleadings and Emergency Actions) (generally requiring responsive pleadings to be filed within five working days after receipt of pleading to which response is made).
The general manager explained that the delay in locating the water meter boxes on the Property was "[d]ue to the Thanksgiving holidays, the duties of these employees to maintain the [District] system, and difficulties with a metal detector."
According to the general manager, one of the water meter boxes had a water meter that was connected through a valve to the 6-inch water line that traverses the Property on the northern side of a county road and the other one along with a tap involved a road bore under a county road "from an existing three-inch water line." He averred that the water meter boxes were "not decrepit and could be readily used to supply retail water to the property." Concerning the water meter connected to the 6-inch water line, the general manager averred that "all that would be necessary to provide water to the property [would be] to set up an account through which the customer could be billed for water service" and that "[t]here [was] sufficient pressure in the water lines and all the necessary facilities to immediately provide potable water upon request." As to the other water meter box, the general manager averred that "all that would be necessary to provide water to the property [would be] to insert a water meter in the water meter box and flush the lines" and that "[t]here [was] sufficient pressure in the water lines to immediately provide potable water upon request."
In its response to the District's supplemental affidavit, HMP Ranch argued:
The length of time [the District] took to file its latest responsive pleading indicates either a pattern of deliberately delaying submissions of new evidence until after reasonable deadlines for doing so or that locating the decades-old infrastructure referred to in the responsive pleadings was such a significant undertaking that it took an experienced utility service provider like [the District] a month to find it. . . . [The District] claims it was only able to locate the infrastructure using a metal detector and then had to uncover the infrastructure, presumably digging earth to access it.
On December 17, 2015, the Commission discussed HMP Ranch's petition during an open meeting and approved the petition, as amended. The findings of fact in the Commission's final order included:
The Commission approved the petition, as amended, by two votes to one. One of the commissioners dissented to the approval of the petition.
22. HMP Ranch provided an affidavit stating that the area is not receiving water service from [the District].The findings of fact also included that no request for a hearing was filed that had not been "dealt with in this proceeding." The order does not expressly address the affidavit of the District's general manager that was filed in December 2015 or the District's motion for leave.
23. Consistent with the Commission's other recent decisions, even though a utility has facilities available and capable of providing water service, that does not mean the facilities are committed and dedicated to serving that particular tract.
24. The property has not been receiving water service since 2005, and it was not receiving water service at the time the petition was filed.
The Commission's conclusions of law included:
4. The approximately 1,022-acre property is not "receiving water service" from [the District] under TWC § 13.254(a-5).
5. HMP Ranch is entitled to approval of the Petition having sufficiently satisfied the requirements of TWC § 13.254(a-5) and 16 TAC § 24.113(r) and (s) by adequately demonstrating ownership of a tract of land that is at least 25 acres, is located in a qualifying county, and is not receiving water service.
6. The requirements in 16 TAC § 22.35(b)(2) have been met in this proceeding.
7. The time that the petition is filed is the only relevant time period to consider when evaluating whether a tract of land is receiving water service under TWC § 13.254(a-5). Whether a tract might have previously received water or sewer service is irrelevant.
The District filed a motion for rehearing that was overruled and a suit for judicial review of the Commission's order. Following briefing by the parties and a hearing on the merits in November 2016, the trial court denied the District's administrative appeal and affirmed the Commission's final order. This appeal followed.
Analysis
Timeliness of Appeal
We begin our analysis by addressing the Commission's pending motion to dismiss this appeal for want of subject matter jurisdiction. See Crites v. Collins, 284 S.W.3d 839, 840 (Tex. 2009) (explaining that jurisdictional questions must be addressed before merits). The Commission argues that this Court does not have jurisdiction over this appeal because the trial court's order extending the District's appellate deadlines under rule 306a of the Texas Rules of Civil Procedure was entered outside its plenary power to do so and, thus, that the order was void. See Tex. R. Civ. P. 306a(4), (5) (providing procedure for extending post-judgment deadlines when party did not receive notice of judgment); see also Tex. R. App. P. 4.2 (authorizing additional time to file documents when, pursuant to Texas Rule of Civil Procedure 306a, party proves no notice of final judgment more than 20 days but less than 90 days from date that judgment was signed). Because the trial court's rule 306a order was void, according to the Commission, the District's notice of appeal, filed more than 30 days after the final judgment was signed, was untimely. See Tex. R. App. P. 26.1 (generally requiring notice of appeal to be filed within 30 days after judgment is signed).
The trial court signed the final judgment on November 23, 2016. Representing that it did not receive notice of the final judgment until February 16, 2017, the District filed its sworn motion to extend appellate deadlines pursuant to rule 306a(4) and (5) on March 1, 2017, filed its notice of appeal on March 2, 2017, and set the hearing on its motion to extend the appellate deadlines for March 28, 2017. On that day, the trial court held the hearing and granted the District's motion, finding that the District first received notice of the judgment on February 16, 2017, and that this date was more than 20 days but fewer than 90 days after the trial court signed the final judgment. See Tex. R. App. P. 4.2(c) (requiring trial court, after hearing 306(a) motion, to "sign written order that finds the date when the party or the party's attorney first either received notice or acquired actual knowledge that the judgment or order was signed").
The Commission does not dispute that the District timely filed its motion pursuant to rule 306a, technically complied with the rule's requirements for the motion, requested a hearing on the motion, and filed its notice of appeal within 30 days of February 16, 2017. See Tex. R. Civ. P. 306(a)(4), (5) (requiring party adversely affected "to prove in the trial court, on sworn motion and notice, the date on which the party or his attorney first either received a notice of the judgment or acquired actual knowledge of the signing and that date was more than twenty days after the judgment was signed"); In re Lynd Co., 195 S.W.3d 682, 685 (Tex. 2006) (orig. proceeding) (explaining requirements of rule 306a). Rather the Commission argues that the trial court did not have plenary power on March 28, 2017, the date that it held the hearing and signed its order with its finding of when the District received actual notice, because the date of the hearing and order was more than 30 days after February 16, 2017. According to the Commission, the 30 day window for the trial court to rule on the motion closed March 20, 2017, when its plenary power expired.
We acknowledge that there is authority, including a 1998 opinion from this Court, that supports the Commission's position. See Wells Fargo Bank, Nat'l Ass'n v. Erickson, 267 S.W.3d 139, 148 (Tex. App.—Corpus Christi 2008, no pet.) (stating that rule 306a motion "must be filed and ruled upon while the [trial] court retains plenary power, and the time for the [trial] court's plenary power is counted from the date of notice of the judgment as alleged in the rule 306a motion"); Moore Landrey, L.L.P. v. Hirsch & Westheimer, P.C., 126 S.W.3d 536, 541-43 (Tex. App.— Houston [1st Dist.] 2003, no pet.) (dismissing appeal after concluding that trial court's 306a order was void because it was signed outside its plenary power); Grondona v. Sutton, 991 S.W.2d 90, 91-92 (Tex. App.—Austin 1998, pet. denied) (stating that complying with provisions of rule 306a was "jurisdictional requisite" and concluding that, even if motion with prima facie evidence had been filed during trial court's plenary power, trial court's order overruling rule 306a motion was of "no effect" because trial court heard and signed order "beyond the time it would have had power to determine the date of notice of judgment").
Although our opinion in Grondona v. Sutton contains language that is favorable to the Commission, we find the language to be dicta and its facts distinguishable. See 991 S.W.2d 90, 91-92 (Tex. App.—Austin 1998, pet. denied). In contrast with the facts before us, the movant in Grondona failed to establish a prima facie case of lack of timely notice to invoke the trial court's jurisdiction for the limited purpose of holding a hearing and determining the date of notice. Id.
The Texas Supreme Court, however, has since explained that a sworn motion in compliance with rule 306a "establishes a prima facie case that the party lacked timely notice and invokes a trial court's otherwise-expired jurisdiction for the limited purpose of holding an evidentiary hearing to determine the date on which the party or its counsel first received notice or acquired knowledge of the judgment." In re Lynd Co., 195 S.W.3d at 685; see Lubbock Cty. v. Trammel's Lubbock Bail Bonds, 80 S.W.3d 580, 585 (Tex. 2002) (explaining that intermediate appellate courts are required to follow supreme court precedent); Law Offices of Windle Turley, P.C. v. French, 140 S.W.3d 407, 413 (Tex. App.—Fort Worth 2004, no pet.) (op. on reh'g) (explaining that court of appeals is bound by supreme court precedent); cf. Tex. R. Civ. P. 329b(d) (addressing trial court's "plenary power to grant a new trial or to vacate, modify, correct, or reform the judgment"); John v. Marshall Health Servs., 58 S.W.3d 738, 741 (Tex. 2001) (requiring rule 306(a) motion to be filed within trial court's plenary power as determined by date movant received notice of judgment).
The Texas Supreme Court also has found that the trial court's duty to hold the hearing and make a determination was subject to mandamus review and conditionally granted mandamus relief to require a trial court to make a determination under the predecessor rule to rule 306a after the trial court's plenary power had otherwise already expired. See Cantu v. Longoria, 878 S.W.2d 131, 132 (Tex. 1994) (orig. proceeding) (per curiam) (granting mandamus relief in June 1994 to require trial court to hold hearing and make requested finding under predecessor rule to rule 306(a) where motion was filed on October 21,1993, based on allegation that movant did not become aware of judgment until September 21,1993, and trial court failed to hold hearing on motion); see also Legends Landscapes LLC v. Brown, No. 06-13-00129-CV, 2014 Tex. App. LEXIS 3276, at *9 (Tex. App.—Texarkana Mar. 27, 2014, no pet.) (mem. op.) (describing rule 306a process and explaining that order granting 306a motion "does not result in substantive change in the judgment entered" but "merely permits the timely filing of post-judgment motions").
We also observe that rule 306a and Texas Rule of Appellate Procedure 4.2 do not prescribe when the trial court must conduct the hearing or enter the written order with its finding of actual notice, and Texas Rule of Appellate Procedure 4.2 expressly requires the trial court to enter a written order with its finding of actual notice. See Tex. R. Civ. P. 306a; Tex. R. App. P. 4.2; see, e.g., Garza v. Texas Alcoholic Beverage Comm'n, 89 S.W.3d 1, 8 (Tex. 2002) (assuming that "Legislature did not intend to deprive a party of appellate remedies on the sole ground that the district court was unable or unwilling to perform its statutory duty"). And the trial court's jurisdiction in this context is limited to determining the date of notice for purposes of post-judgment procedural timetables, and its finding of the actual date of notice does not alter or modify the final judgment. Compare Tex. R. Civ. P. 329b (addressing trial court's plenary power to set-aside or modify judgment) with id. R. 306a (resetting post-judgment procedural deadlines based on actual notice without modifying or setting aside judgment); see San Angelo Cmty. Med. Ctr. v. Nelson, No. 03-16-00146-CV, 2016 Tex. App. LEXIS 3671, at *2-3 (Tex. App.—Austin Apr. 8, 2016, no pet.) (mem. op.) (per curiam); Brown, 2014 Tex. App. LEXIS 3276, at *9.
Bound by the Texas Supreme Court's directives, we conclude that the trial court had jurisdiction on March 28, 2017, for the limited purpose of holding a hearing to determine the date on which the District or its counsel first received actual notice or acquired knowledge of the judgment and to enter its finding in an order. See In re Lynd Co., 195 S.W.3d at 685; see also Trammel's Lubbock Bail Bonds, 80 S.W.3d at 585. Thus, we conclude that the District's notice of appeal was timely, deny the Commission's motion to dismiss, and turn to the merits of the District's appeal.
The District's Appeal
In two issues, the District argues that this Court should reverse the Commission's final order because (i) the Commission erred in concluding that the Property was not "receiving water service" under section 13.254(a-5) of the Water Code and (ii) the Commission's failure to hold an evidentiary hearing was arbitrary and capricious and violated its own rules and the District's due process rights.
Standard of Review
Judicial review of the Commission's final order is under the substantial evidence standard of review. See Tex. Water Code §§ 13.002(16) (defining "proceeding" to include "any hearing, investigation, inquiry, or other fact-finding or decision-making procedure" under chapter 13 of Water Code), .381 (providing that party to "proceeding" before Commission is entitled to judicial review under substantial evidence rule); Texas Gen. Land Office v. Crystal Clear Water Supply Corp., 449 S.W.3d 130, 135 (Tex. App.—Austin 2014, pet. denied) (describing standard of review from Commission's order granting expedited release under section 13.254(a-5) of Water Code).
Under this standard, "a court may not substitute its judgment for the judgment of the state agency on the weight of the evidence or questions committed to agency discretion." Tex. Gov't Code § 2001.174; see Firemen's & Policemen's Civil Serv. Comm'n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex. 1984) ("The reviewing court is concerned only with the reasonableness of the administrative order, not its correctness."). But we must reverse or remand the case to the state agency for further proceedings:
If substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:Tex. Gov't Code § 2001.174(2).
(A) in violation of a constitutional or statutory provision;
(B) in excess of the agency's statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
(E) not reasonably supported by substantial evidence considering the reliable and probative evidence in the record as a whole; or
(F) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.
"Substantial-evidence analysis entails two component inquiries: (1) whether the agency made findings of underlying facts that logically support the ultimate facts and legal conclusions establishing the legal authority for the agency's decision or action and, in turn, (2) whether the findings of underlying fact are reasonably supported by evidence." AEP Tex. Commercial & Indus. Retail, Ltd. P'ship v. Public Util. Comm'n of Tex., 436 S.W.3d 890, 905 (Tex. App.—Austin 2014, no pet.). An agency's decision "is supported by substantial evidence if the evidence in its entirety is sufficient to allow reasonable minds to have reached the conclusion that the agency must have reached to justify the disputed action." Crystal Clear Water Supply, 449 S.W.3d at 135 (citing Texas State Bd. of Dental Exam'rs v. Sizemore, 759 S.W.2d 114, 116 (Tex. 1988)). The evidence in the record may preponderate against the agency's decision but still provide a reasonable basis for the agency's decision and thereby meet the substantial evidence standard. Id. (citing Texas Health Facilities Comm'n v. Charter Med.-Dal., Inc., 665 S.W.2d 446, 452 (Tex. 1984)). "The question of whether an agency's decision is supported by substantial evidence is a question of law, and we owe no deference to the district court's decision." Id. (citing Brinkmeyer, 662 S.W.2d at 956).
The District's issues further concern questions of statutory construction, which we also review de novo. See First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 631 (Tex. 2008). Our primary concern in construing a statute is the express statutory language. See Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009). "We thus construe the text according to its plain and common meaning unless a contrary intention is apparent from the context or unless such a construction leads to absurd results." Presidio Indep. Sch. Dist. v. Scott, 309 S.W.3d 927, 930 (Tex. 2010) (citing City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008)). We also "'read the statute as a whole and interpret it to give effect to every part.'" Railroad Comm'n of Tex. v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 628 (Tex. 2011) (quoting City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003)); Scott, 309 S.W.3d at 930 (explaining that courts give meaning to "language consistent with other provisions in the statute"). With these standards in mind, we turn to the District's issues.
Was the Property not "receiving water service"?
In its first issue, the District argues that HMP Ranch failed in its burden to demonstrate that the Property was not "receiving water service" and, therefore, that the Commission erred in concluding that the Property was not "receiving water service" under section 13.254(a-5) of the Water Code. See Tex. Water Code § 13.254(a-5). The District also argues that the Commission's finding that the Property "was not receiving water service" was a finding of ultimate fact and that the Commission erred by failing to make findings of "underlying, supporting facts" to support this finding of ultimate fact. See Charter Med.-Dal., Inc., 665 S.W.2d at 451 (explaining generally that "underlying findings of fact must be such that the reviewing court can fairly and reasonably say that the underlying findings support the statutorily required criteria"). The District further challenges the Commission's conclusions of law that the only relevant time period for consideration is the time that the petition was filed and that "[w]hether a tract might have previously received water or sewer service is irrelevant." According to the District, the Commission erred by "ignor[ing] the fact that [the District] had provided water service to the property for 35 years and that the facilities to provide that service were and are still in good working order and capable of providing service on demand."
As previously stated, section 13.254(a-5) of the Water Code provides that the owner of a tract of land that is 25 acres or larger and located in certain counties may petition for, and is entitled to, expedited release of that tract from a certificated service area if the tract "is not receiving water or sewer service." Tex. Water Code § 13.254(a-5); see also id. § 13.002(21) (defining "service"); 16 Tex. Admin. Code § 24.113(r). The District's challenge is limited to the considerations establishing whether the tract of land is "receiving water service." Section 13.002 defines "service" in relevant part as "any act performed, anything furnished or supplied, and any facilities or lines committed or used by a retail public utility in the performance of its duties under this chapter." See Tex. Water Code § 13.002(21). Because "receiving" is not defined statutorily, we apply its plain and common meaning—"tak[ing] possession or delivery of" or "knowingly accept[ing]." See Webster's Third New Int'l Dictionary 1894 (2002); see also Scott, 309 S.W.3d at 930.
The District does not challenge the Commission's findings that the Property was at least 25 acres and within a qualifying county.
We also are informed by this Court's analysis in Crystal Clear Water Supply. In that case, we faced a similar challenge to a Commission order that approved an expedited decertification petition under section 13.254(a-5). See 449 S.W.3d at 132. Although we recognized the "intentionally broad scope" of the definition of "service," we framed the question before the Commission to be not "whether Crystal Clear was providing water services to customers within the certificated area . . . but whether the Decertified Property was receiving water service from Crystal Clear." Id. at 137. Relevant to this inquiry was whether Crystal Clear had water facilities or lines "committed to serving" the particular property or "'used' to provide water to that tract" or had performed any act or supplied anything to the particular property related to providing water to the property. Id. at 137, 140. As to the "mere existence of water lines or facilities on or near a tract," we explained that they "would not necessarily mean that the tract was 'receiving water service'" and that "such a determination is essentially a fact-based inquiry." Id. at 140. We further explained that: (i) "it [was] essential that any qualifying services are being 'received' by the property"; (ii) a dedicated water line that was installed to serve the particular property even if the line was not currently operative might be sufficient to constitute a line or facility used to provide water to a particular tract; and (iii) "a tract of land would not necessarily be 'receiving' water service simply because the retail public utility [had] performed an act, such as entering into a contract to secure water supply, unless the act was performed in furtherance of providing water to the tract seeking decertification." Id. And we further explained that "[a]ll of these considerations are matters committed to the Commission's sound discretion and authority to decide issues of fact." Id. at 141; see also Mountain Peak Special Util. Dist. v. Public Util. Comm'n of Tex., No. 03-16-00796-CV, 2017 Tex. App. LEXIS 10261, at *13-17 (Tex. App.—Austin Nov. 2, 2017, pet. filed) (mem. op.) (discussing and applying analysis from Crystal Clear Water Supply). Guided by this analysis and applying the plain language of the statute, we turn to the District's arguments.
The District focuses on the alleged lack of underlying findings of fact in the Commission's order to support its finding that the Property "was not receiving water service" and on evidence that it contends was undisputed—its general manager's affidavits with attachments that identified the water lines and water meter boxes on the Property that District employees were able to locate in December 2015, additional water lines and facilities near the Property that could supply water to the Property, and the District's contracts for obtaining portions of its water supply. Because this evidence was undisputed, according to the District, the Commission had no room to exercise its discretion to resolve conflicting facts.
According to the District, the evidence established that it "was and is capable of providing service [to the Property] upon literally a moment's notice."
But, even if we consider all of the District's evidence, including the affidavit with its attachments that was not filed until after the staff's final recommendation and proposed order, and agree with the District that whether a tract has previously received water service is relevant to the determination, other evidence showed that there was no water service or District facilities located on the Property capable of providing water service at the time that HMP Ranch filed its petition with the Commission in August 2015 and that the District had not provided water service to the Property during the time that HMP Ranch owned the Property. The representative of HMP Ranch averred that the Property did not receive water or sewer utility service from any retail water or sewer service provider and that, to his knowledge, the District had not conducted any activities on the Property as long as HMP Ranch owned it.
The deadline for the Commission staff to file a recommendation was November 20, 2015, and HMP Ranch's deadline to respond to the recommendation was November 23, 2015. The District did not file exceptions to the proposed order until December 9, 2015, and the supplemental affidavit, a few days after that. The record does not reflect whether the District's motion for leave was granted.
As conceded by the District, "flowing water was not available on the . . . Property at the moment HMP Ranch filed its petition." Cf. Texas Gen. Land Office v. Crystal Clear Water Supply Corp., 449 S.W.3d 130, 140 (Tex. App.—Austin 2014, pet. denied) ("Certainly an active water tap on the Decertified Property would constitute a facility or line 'used' to supply water to the tract on which it was located.").
The representative also averred about his efforts to locate the water meter boxes identified in the District's general manager's initial affidavit. After a "diligent search," the broker averred that he was unable to locate water meter boxes on the Property, finding only "two shuttered groundwater well heads and a former windmill location" near the remains of a dwelling structure and a "small, elevated water storage tank on the Property in proximity of the former windmill location and the two groundwater wells, implying that any dwellings on the property required that water pressure be generated locally and not from a retail water utility service provider." He further averred that: (i) no activity conducted on the Property required potable water utility service during the time that HMP Ranch owned the Property "and likely for a considerable length of time prior to HMP Ranch's acquisition of the Property in 2006"; (ii) no representative of HMP Ranch "[had] ever accessed the described facilities or [had] even been aware of their existence"; (iii) any facilities of the District, if they exist, "are not visible from the surface of the Property, and they are likely decrepit"; and (iv) "there are no [District] facilities on the Property that are capable of providing water service to the Property."
The District questions the significance and weight to be given HMP Ranch's evidence in its briefing. The District also focuses on the evidence of its facilities near the Property and contracts that it had obtained to provide portions of its water supply. In his initial affidavit, the District's general manager averred that the District "also owns numerous other facilities near the HMP Ranch, including a 1 million gallon elevated storage tank" and that the District "has planned to use treated water" obtained from 2009 and 2012 contracts "to serve the HMP Ranch." But we may not substitute our judgment for the Commission's judgment "on the weight of the evidence." See Tex. Gov't Code § 2001.174. In addition to HMP Ranch's evidence cited above, the Commission could have found significant the delays during the administrative proceeding in the District's submissions of evidence as support for the Commission's conclusion that the Property was not receiving water service. HMP Ranch filed its petition in August 2015, but the District did not raise the issue of water service to the Property or file any evidence to support its position that the Property was receiving water service until November 2015. After HMP Ranch filed the broker's affidavit in response, it was another month—and after staff's final recommendation and proposed order were already due and filed—before the District was able to locate the water meter boxes.
For example, the District challenges the broker's credentials, arguing that the record does not show that he had the necessary knowledge, training, or experience to locate the water meters or to "opine about their condition or usability." The District also refers to the broker as "untrained."
As to the District's evidence of contracts for portions of its water supply and its facilities near the HMP Ranch, the Commission reasonably could have concluded that the contracts and facilities were secured for or served its entire certificated area and that they were not "dedicated to or reserved to serve" or "committed" to the HMP Ranch. See Crystal Clear Water Supply, 449 S.W.3d at 138-39, 141 (discussing "conflicting evidence regarding whether the water supply contracts were secured in order to provide water to the Decertified Property" and concluding that "the evidence presented to the Commission regarding Crystal Clear's then-existing facilities and lines and water supply contracts provided a reasonable basis for the Commission's finding that the Decertified Property was not 'receiving water service'"); see also Mountain Peak Special Util. Dist., 2017 Tex. App. LEXIS 10261, at *16-17 (discussing facilities and water supply near decertified property and concluding that it was reasonable for Commission to find that property was not receiving water service).
Applying the applicable standard of review, we conclude that the evidence provided a reasonable basis for the Commission's finding of fact that the Property "has not been receiving water service since 2005, and it was not receiving water service at the time the petition was filed." See Crystal Clear Water Supply, 449 S.W.3d at 141 (concluding that "Commission could reasonably have declined to attribute any evidentiary weight" to certain evidence in context of conflicting evidence); see also Mountain Peak Special Util. Dist., 2017 Tex. App. LEXIS 10261, at *16-17 (concluding that evidence presented to Commission regarding facilities and water lines "provided a reasonable basis for the Commission's finding that the Park Property was not 'receiving water service'"); Webster's at 1894 (defining "receiving" to mean "tak[ing] possession or delivery of" or "knowingly accept[ing]").
Further, this finding of fact, along with other findings, provided a reasonable basis for the Commission's conclusions that the Property "[was] not 'receiving water service' from [the District] under TWC § 13.254(a-5)" and that "HMP Ranch [was] entitled to approval of the Petition having sufficiently satisfied the requirements of TWC § 13.254(a-5) and 16 TAC § 24.113(r) and (s) by adequately demonstrating ownership of a tract of land that is at least 25 acres, is located in a qualifying county, and is not receiving water services." See Charter Med.-Dal., 665 S.W.2d at 451-52; AEP Tex. Commercial & Indus. Retail, 436 S.W.3d at 905; see also Mountain Peak Special Util. Dist., 2017 Tex. App. LEXIS 10261, at *16-17 ("Because there was substantial evidence to support the Commission's finding that the Park Property was not receiving water service, the three criteria for expedited decertification pursuant to section 13.254(a-5) were met."); Crystal Clear Water Supply, 449 S.W.3d at 137 (framing question before Commission to be not "whether Crystal Clear was providing water services to customers within the certificated area . . . but whether the Decertified Property was receiving water service from Crystal Clear"). Thus, we conclude that HMP Ranch met its burden to establish that it was not receiving water service pursuant to section 13.245(a-5) and overrule the District's first issue.
Was the Commission's failure to hold an evidentiary hearing arbitrary and capricious?
In its second issue, the District argues that the Commission's failure to hold an evidentiary hearing was arbitrary and capricious because the failure to do so violated the plain and unambiguous language of its own rules and violated its due process rights. See Tex. Const. art. I, § 19. As support for its position, the District cites Commission Rule 22.35 that addresses applications before the Commission that are qualified for informal disposition, specifically focusing on subsection (a)(2) of Rule 22.35 that authorizes informal disposition when "the decision is not adverse to any party other than the commission staff." See 16 Tex. Admin. Code § 22.35(a)(2) (Public Util. Comm'n of Tex., Informal Disposition). Here the District, as an intervenor, was a party at the Commission, and the Commission's order was "adverse" to it. See id.; see also id. § 22.102(3) (Public Util. Comm'n of Tex., Classification of Parties) (classifying intervenors as parties to proceedings before Commission). The Commission did not cite subsection (a)(2) of Rule 22.35 in its final order, but its conclusions of law included that "[t]he requirements in 16 TAC § 22.35(b)(2) have been met in this proceeding." See id. § 22.35(a)(2), (b)(2) (requiring presiding officer to prepare proposed order for certain applications "which shall be served on all parties no less than 20 days before the commission is scheduled to consider the application in open meeting").
We conclude that the District has not preserved its argument based on Rule 22.35(a)(2) for judicial review. Relevant here, the Commission's unchallenged findings of fact in its final order included that "[n]o . . . request for hearing [was] filed that [was] not dealt with in this proceeding." The District did not request an evidentiary hearing until it filed its motion for rehearing with the Commission, and its argument to support its request for an evidentiary hearing was based on its Texas constitutional due process rights, not Rule 22.35. See Buddy Gregg Motor Homes, Inc. v. Motor Vehicle Bd., 156 S.W.3d 91, 104 (Tex. App.—Austin 2004, pet. denied) ("When an agency or board has not had the opportunity to consider claims or arguments, they are waived on appeal."); BFI Waste Sys. of N. Am., Inc. v. Martinez Envtl. Grp., 93 S.W.3d 570, 578 (Tex. App.—Austin 2002, pet. denied) (explaining that sufficiency of content of motion for rehearing goes to preservation of error and that, to preserve error, motion must set forth particular action of agency that claiming was error and "legal basis upon which the claim of error rests"); see also 16 Tex. Admin. Code § 22.264(a) (Public Util. Comm'n of Tex., Rehearing) (stating that motions for rehearing shall be governed by Administrative Procedure Act). The District first raised the Commission's failure to follow Rule 22.35 in its briefing with the trial court, which was too late.
As to the District's contention that it had the right to an evidentiary hearing based on its due process rights, this Court has concluded that a CCN is not a vested property right entitled to due process protections. See Crystal Clear Water Supply, 449 S.W.3d at 145 (citing Creedmore Maha Water Supply Corp. v. Texas Comm'n on Envtl. Quality, 307 S.W.3d 505, 525-26 (Tex. App.—Austin 2010, no pet.)); see also 16 Tex. Admin. Code § 24.116 (Public Util. Comm'n of Tex., Exclusiveness of Certificates) ("Any certificate granted under this subchapter shall not be construed to vest exclusive service or property rights in and to the area certificated."). Further the Commission's final order has no effect on the District's title to any of its property or facilities, whether located on the Property or elsewhere. See Crystal Clear Water Supply, 449 S.W.3d at 144. And we observe that section 13.015 of the Water Code expressly authorizes informal proceedings involving retail public utilities, see Tex. Water Code § 13.015, and that section 13.254 does not require a hearing of expedited release proceedings as compared with other proceedings in that section, compare id. § 13.254(a) (authorizing Commission "at any time after notice and hearing" to revoke or amend CCN) with id. § 13.354(a-5), (a-6). We overrule the District's second issue.
Conclusion
For these reasons, we affirm the trial court's final judgment that affirmed the Commission's order.
/s/_________
Melissa Goodwin, Justice Before Chief Justice Rose, Justices Pemberton and Goodwin Affirmed Filed: May 11, 2018