Lone Star GCD Settles Lawsuit with Conroe & Utilities Over Validity of Rule
The litigation began in August 2015, when the City of Conroe (“Conroe”), Quadvest, L.P., and other utilities (collectively, “Utilities”) sued the District, the General Manager, and former board members in Cause No. 15-08-08942 in the 284th Judicial District Court of Montgomery County, Texas over the validity of certain provisions of the District’s Regulatory Plan requiring Large Volume Groundwater Users (“LVGU”) to reduce their groundwater production by thirty-percent (30%) (“LVGU Rule”), among other claims (the “District Court Litigation”).
In September 2018, Senior Visiting District Judge Lamar McCorkle issued an interlocutory order in the District Court Litigation declaring the LVGU Rule invalid based on arguments from Conroe and the Utilities that the rule exceeds the District’s statutory authority granted by the Legislature. Before the election and the newly elected board took office, the District perfected a permissive interlocutory appeal challenging Judge McCorkle’s order in Cause No. 09-18-00383-CV in the Court of Appeals for the Ninth District of Texas at Beaumont (the “Interlocutory Appeal”).
When the newly elected board took office on November 16, 2018, it was faced with spending more money in an appeal attempting to overturn Judge McCorkle’s order with an uncertain outcome knowing that when the appellate process on the rule ran its course, Conroe and the Utilities’ takings claims would still need to be resolved causing further expense with an unknown outcome. After extensive negotiations with the City and Utilities, and based on a desire to end the risk, disruption, and expense being incurred, the District approved a settlement agreement effective January 24, 2019 that ended the protracted litigation.
The Compromise and Settlement Agreement results in a dismissal of the Interlocutory Appeal with Prejudice, and eventually a Final Judgment in the District Court Litigation declaring the LVGU Rule void and unenforceable and dismissing with prejudice all other claims by all parties including the City’s and Utilities’ takings claims. When the Final Judgment takes effect, the LVGU Rule will become void and unenforceable.
You can read the District’s Motion to Dismiss the Interlocutory Appeal on the Basis of Settlement here.
Federal court dismisses challenges to Brazos Valley GCD’s permitting program and takings claim
In Stratta/Fazzino v. Brazos Valley GCD, plaintiffs requested the federal court to (1) to render the District’s permitting and spacing rules void, (2) enjoin the District from implementing its production permitting and spacing rules for new users, (3) assess takings damages, and (4) award mandatory attorneys’ fees under federal law (42 U.S.C. § 1988). Plaintiffs relied on oil-and-gas “correlative rights” allocation law and singled out all permit holders who had received either existing well or historic use permits, including Cities of Bryan and College Station, and utilities Wickson Creek SUD, Brazos Valley WSC and OSR WSC. The rules at issue were adopted in 2004 and implemented to award dozens of historic use and existing well permits for several uses, including agricultural, public utility, industrial and commercial. The District underscored to the court that it relied on express authority in Chapter 36 of the Texas Water Code, enacted under Article XVI of the Texas Constitution and consistent with Texas groundwater case law.
Plaintiff Fazzino owns a 25% undivided interest in a 26.7-acre tract, and requested pumping rights similar to the permit allocation granted to existing well owner City of Bryan. The District’s rules allow “new users” like Fazzino up to 821 ac-ft of annual pumping rights from property his size and configuration. Fazzino alleged that Bryan was draining his groundwater, although in an earlier proceeding before SOAH sworn testimony was offered that Bryan’s pumping for nearly a decade “has not drained water from storage under the Fazzino, Jr. property other than in a de minimis amount.” Fazzino’s own consultant concluded that there was plenty of water for Fazzino’s own proposed withdrawal of 3,000 gpm, which “will not cause depletion of the aquifer, as all water will come from a reduction in artesian pressure.”
In its 38-page set of orders and final judgment, the federal court observed that the Texas Legislature had enacted a groundwater permitting framework different from oil-and-gas allocation law. Recognizing the applicability of Chapter 36 of the Texas Water Code and Section 59, Article XVI of the Texas Constitution, the court also concluded that “the mere fact that the Texas Supreme Court has used oil and gas law to resolve some groundwater disputes does not necessarily mean that it intended oil and gas law to resolve all such disputes.” The court disposed of the case by granting the District’s two motions to dismiss plaintiffs’ Equal Protection and First Amendment claims brought under 42 U.S.C. § 1983 by applying 11th Amendment immunity and qualified immunity. The sole remaining issue (takings claim) was dismissed under the Burford abstention doctrine – meaning it shouldn’t be heard in federal court – and because it was not ripe for adjudication. Plaintiffs have filed a notice of appeal.
This lawsuit was the third round of litigation initiated by Anthony Fazzino with backing from his member-association Brazos Valley Groundwater Rights Association. The District prevailed at SOAH aligned with City of Bryan on pleas to the jurisdiction and motions for summary disposition. The District prevailed in state court when, on the eve of the hearing on the District’s plea to the jurisdiction requesting dismissal, Fazzino dismissed his claims and filed in federal court.
From Gregory M. Ellis, Attorney at Law
Boulware et al v Kinney County Groundwater Conservation District
This case started in July 2005 when a group of applicants appealed the permit decisions made by the Board of Directors. Additional issues were added related to whether the District could require payment of fees prior to issuing the final permits, whether the District Court could hear a Motion to Strike an intervenor with less than 3-days’ notice of the motion, and interventions filed by five different parties. The plaintiffs, the District, and two intervening parties (the “Early Intervenors”) reached a settlement agreement in 2007, but that settlement was invalidated by the 4th Court of Appeals in 2009 when three additional intervenors (the “Late Intervenors) filed an appeal challenging the settlement and the District Judge’s decision to strike those intervenors. When the case was returned to the District Court the Plaintiffs and the District jointly filed a Motion to Strike the Late Intervenors. That Motion was granted in June 2018.
The two Early Intervenors joined the settlement; two Late Intervenors withdrew, and the final Late Intervenor was stricken by order of the District Court Judge last June. That intervenor has filed an appeal of that decision and the plaintiffs and the District have each filed claims for attorney’s fees against the intervenor. That part of the case is continuing as a severed Cause.
Settling this case was complicated because while the Court considered the second Motion to Strike the Third Court of Appeals heard and decided a case limiting a District Court Judge’s authority to sign an agreed judgment (settlement) that orders a district to issue permits at certain amounts. The decision in the case was the Courts are limited to either upholding the District’s action or finding the decision was incorrect and then remanding the matter back to the District for a final decision. As a result the original Settlement Agreement could not be made part of an Agreed Judgment. Instead, the Court remanded the case back to the District for final action on the permit.
The KCGCD Board of Directors met on November 8th to consider the remanded permits. The Board then ratified the 2007 settlement agreement and voted to issue each of the permits at the amount agreed to in the settlement.
From Kemp Smith
On June 18, 2018, a decision was made in favor of the EAA in the League of United Latin Am. Citizens v. Edwards Aquifer Auth. No. SA-12-CV-620-OG (W.D. Tex. filed June 21, 2012).
The case involves a claim by LULAC, three Bexar County minority plaintiffs and intervenor the San Antonio Water System under the one person, one vote doctrine of the Equal Protection Clause of the U.S. Constitution that the EAA’s board of directors are required to be elected from districts that equally apportioned by population, rather than by the regionally balanced districts established by the Texas Legislature.
There is also a claim by LULAC under Section 2 of the Voting Rights Act, which has been stayed in the case.
On June 18, 2018, Judge Orlando Garcia of the Western District of Texas granted the EAA’s motion for summary judgment and denied Plaintiffs’ motion for summary judgment, finding that the EAA is a special purpose district with a limited purpose and scope to fulfill the EAA Act, and not a general purpose governmental body, and, therefore, the EAA is not subject to one person, one vote. Further, the judge found that the EAA’s directors’ districts have a rational basis as they are balanced to reflect the different water interests in the region that are disproportionately impacted by the EAA.
The Final Judgment rendered by Judge Campbell of the 21st Judicial District Court in Bastrop County, Texas in Meyer et al. v. Lost Pines Groundwater Conservation Dist. et al., Cause No. 29,696, has been appealed to the 3rd Court of Appeals in Austin.
On January 4, 2018, Judge Campbell signed a Final Judgment in favor of landowners Andrew Meyer, Bette Brown, Darwyn Hanna, and Environmental Stewardship (the “Landowners”) reversing the District’s order that denied the Landowners party status and issued permits to End Op, L.P., and remanding the matter back to the District for proceedings consistent with the Court’s decision. The Court’s decision effectively revokes End Op’s permits, which authorized a withdrawal of up to 46,000 acre feet from the Simsboro, and orders the District to conduct a new proceeding that allows the Landowners to participate as parties.
The Court did not provide specific reasons as to why it decided the District “erred” in denying party status to the Landowners. The District and End Op argued the Landowners did not meet the legal test for standing to participate as parties, which requires demonstrating ownership of groundwater plus a particularized injury not common to the public that is fairly traceable to the permits. The parties agreed the Landowners had demonstrated ownership of groundwater. The crux of the dispute, rather, was whether the Landowners had satisfied the injury elements of the test.
On January 24, 2018, End Op filed a notice of appeal of the Final Judgment. In the notice, End Op requested an accelerated appeal pursuant to section 36.252 of the Texas Water Code, which mandates expeditious judicial review at the district court level. Although the District’s Board held a meeting on January 17, 2018, to consider and take possible action on the Final Judgment, the Board voted to “table the matter pending further research by its law firm” and has not yet reconvened. The District has until February 7, 2018 to timely file a notice of appeal.
Read a full summary here.
The lawsuits and SOAH hearing involving Edwards-Trinity aquifer permit applications filed by Fort Stockton Holdings, LP (FSH) and its partner, Republic Water Co. of Texas, LLC (Republic) have been settled with the Middle Pecos Groundwater Conservation District. Under this settlement Republic will withdraw its application and FSH will reduce its request for production from 47,418 to 28,400 acre feet per year and retire historic use rights. Due to the District’s and other local constituents’ concerns about impacts to the primary local source of supply, the Edwards-Trinity aquifer, FSH also agreed to enhanced monitoring of groundwater levels; dedicating its own wells for monitoring; accepting a permit condition governing production restrictions based on aquifer-level triggers in certain monitor wells; not seeking more Edwards-Trinity water for five years and instead focusing future production on the development of the Capitan Reef aquifer. FSH also agreed to request that legislation subjecting the District to “sunset review” be pulled down and not to pursue legislation targeting the MPGCD during the 86th Legislative Session in 2019. The District agreed to initiate rulemaking to propose changing boundaries and operating conditions within the management zone surrounding FSH’s wells. The District will recover its court costs and fees for experts and attorneys in the FSH and Republic state court lawsuits and work leading up to the SOAH hearing on Republic’s application.
There were seven (7) other parties in the FSH lawsuit aligned in support of the District, including Pecos County, City of Fort Stockton, Pecos County Water Control and Improvement District No. 1, Brewster County Groundwater Conservation District, and the Beard, McKenzie, and Ryan Families. All of these parties had protested FSH’s application and had unique concerns about how FSH’s proposal would adversely impact them. Many of these parties as well as Belding Farms had protested Republic’s application. Some of these parties have reached or are negotiating an agreement separately with FSH and/or Republic.
On June 14th, the El Paso Court of Appeals transferred jurisdiction over FSH’s application back to the District for a remand hearing consistent with the parties’ settlement. The hearing will be held on July 18th.
From SledgeLaw Group PLLC
In 2015, the City of Conroe and a group of investor-owned utilities (collectively, “Plaintiffs”) filed suit against the Lone Star Groundwater Conservation District (the “District”) and its directors and general manager in their official capacities. In their original petition, the Plaintiffs asserted several claims under the Uniform Declaratory Judgment Act (“UJDA”), challenging the validity of the District’s DFCs and rules, as well as multiple claims under the Texas Real Property Rights Preservation Act.
In response to these claims, the District and its directors filed pleas to the jurisdiction, challenging the court’s subject-matter jurisdiction over all of the Plaintiff’s claims. However, before the trial court ruled on the pleas, the Plaintiffs amended their petition several times, removing the majority of their original claims from the case. As a result, the only remaining original claims before the court included the Plaintiffs’ UDJA claims against the District and its directors challenging the validity of the District’s rules, for which the Plaintiffs claimed attorneys fees under the UDJA. Nonetheless, the trial court issued a blanket denial of all the District’s and its directors’ pleas to the jurisdiction, which the District and its directors appealed.
On February 2, 2017, the 9th Court of Appeals in Beaumont issued its opinion on the pleas to the jurisdiction in favor of the the District and its directors. The Court of Appeals ruled that the trial court abused its discretion by failing to grant the directors’ plea to the jurisdiction. The court held that because Section 36.066(a) of the Texas Water Code provides groundwater conservation district directors immunity from suit for official votes and actions, except in certain limited instances of nonconformance with laws relating to conflicts of interest, abuse of office, or constitutional obligations, which were not alleged by the Plaintiffs, the directors are immune from being sued by the Plaintiffs. Thus, the Court of Appeals reversed the trial court’s order denying the directors’ plea and rendered judgment dismissing the Plaintiffs’ claims against the directors, with prejudice.
The Court of Appeals also ruled that the trial court erred when it failed to grant the District’s plea to the jurisdiction with respect to the Plaintiffs’ claims for attorneys fees. The court held that while Section 36.251 of the Texas Water Code waives the District’s immunity from suit in a challenge to the validity of its rules, which may be asserted in conjunction with a claim under the UDJA in seeking a declaration that the District’s rules are invalid, the Plaintiffs cannot recover attorneys fees in such a claim because it is not authorized under Chapter 36, the more specific of the two statutes on the issue of attorneys fees. Therefore, the court affirmed the trial court’s decision in part by rejecting the District’s plea to dismiss the Plaintiffs claims challenging the validity of the District’s rules, but the court reversed the trial courts decision in part by dismissing the Plaintiffs claims for attorneys fees, with prejudice.
From Lloyd Gosselink
The pending lawsuits and contested permit hearing involving Clayton Williams’ and his partners’ permit applications are headed to mediation at the State Office of Administrative Hearings. On January 11, 2017, the El Paso Court of Appeals ordered Williams’ contractual partner Republic Water Co. of Texas, LLC and Middle Pecos GCD to mediate Republic’s pending appeal. In that appeal, the trial court granted the District’s plea to the jurisdiction and awarded court costs and fees for legal counsel and experts.
On January 17, 2017, Republic requested mediation of its contested permit application pending before the District. Republic’s application requests 28,500 acre feet from the Edwards-Trinity aquifer proposed to be withdrawn from wells and related to property and water rights tied to historic use permits issued previously to Williams’ affiliate Fort Stockton Holdings, L.P. (FSH). Republic’s application has been protested by Pecos County, City of Fort Stockton, Pecos County Water Control and Improvement District No. 1, Kennedy Ranch, the Riggs Family, and Cockrell Investment Partners, L.P.
On January 20, 2017, in a separate appeal by FSH, oral arguments set for February 9th were vacated to allow mediation among FSH and appellees Middle Pecos GCD, Pecos County, City of Fort Stockton, Pecos County Water Control and Improvement District No. 1, and Brewster County GCD. FSH is appealing the trial court’s grant of the District’s motion for summary judgment and award of court costs and legal fees. FSH’s application requests 47,418 acre feet from the Edwards-Trinity aquifer tied to the same water rights, property, and wells linked to FSH’s previously issued historic use permits.
From Lloyd Gosselink
The federal lawsuit filed by Fort Stockton Holdings, LP and its partner, Republic Water Co. of Texas, LLC, against Middle Pecos GCD, has been dismissed. In response to the District’s motion to dismiss and the “case management conference and docket call” set for November 17th, Plaintiffs filed a motion to dismiss, which was granted on November 10, 2016 (see attached final judgment).
Republic and FSH filed the suit against the District, its Board and senior staff alleging tortious interference with contract and a violation of their civil rights under the U.S. Constitution. Republic and FSH alleged that the District had failed to process Republic’s groundwater production permit application. The first claim involved the contract entered among Republic, FSH, and Clayton Williams Farms. That lease agreement provided for a joint plan to develop and market 9.2 billion gallons of Edwards-Trinity groundwater per year from Williams’ farm. The second claim alleged the District deprived plaintiffs of equal protection and due process during the permitting process. Republic’s permit application claimed (1) an interest in water rights owned by Williams and (2) an entitlement to a permit from the District. FSHLP and Republic sought damages of $400 million plus punitive damages, court costs and legal fees from each defendant jointly and severally.
In a related state-court lawsuit reported in last month’s TAGD newsletter, the court determined that the District was properly processing Republic’s application and that Republic had failed to provide aquifer drawdown maps and related data necessary to set a hearing on the application. The District won that lawsuit and Republic was ordered to reimburse the District’s court costs and fees for experts and attorneys. Republic subsequently provided the maps and data, after which the District set a permit hearing.
From Lloyd Gosselink
Middle Pecos GCD Wins Lawsuit Filed by Republic Water Co. of Texas, LLC
On October 27, 2016, final judgment was issued in favor of Middle Pecos Groundwater Conservation District in a lawsuit filed by Republic Water Company of Texas, LLC. On April 5, 2016, Republic filed a permit application requesting 28,500 acre feet of groundwater from the Edwards-Trinity Aquifer. On May 10th, Republic initiated its lawsuit in state court when the District would not declare Republic’s application administratively complete and set a permit hearing. The District took the position that Republic’s application was not administratively complete under Sections 36.113, 36.1131 and 36.114 of the Texas Water Code and its rules because Republic had not provided drawdown maps and other scientific information based on USGS modeling results. Republic argued that this scientific information is not required for an application to be administratively complete and that districts are restricted in requesting only the information listed in Sections 36.113(c) and 36.1131(b). The Court agreed with the District’s interpretation of the statutory administrative completeness requirements. Republic also argued that it was inappropriate for the District to have abated review of its application. The Court concluded that abatement was not yet at issue because the application was not administratively complete. During the pendency of the lawsuit, Republic provided the information requested by the District and the District then declared the application administratively complete and set it for hearing.
The Court’s final judgment dismisses all of Republic’s claims with prejudice and orders Republic to reimburse the District its expenses of attorneys, experts, and other court costs incurred to defend against Republic’s lawsuit.
Coyote Lake Ranch, LLC vs. City of Lubbock Case Update
The Texas Supreme Court denied the Motion for Rehearing on September 23, 2016. It did, however, issue a new opinion that addresses the City of Lubbock’s requested clarification and includes two small non-substantive changes to the original opinion on page 8, paragraph 2. Read the letter sent to parties from the Supreme Court here , the Supreme Court opinion with changes here, and the appellate briefs here.
From Lloyd Gosselink
Earlier this week, on August 17th, Republic Water Company of Texas, LLC’s (RWCLLC) Request for Issuance of Mandamus was heard in state district court. At issue was whether RWLLC’s application ought to be declared administratively complete and set for hearing before the Middle Pecos Groundwater Conservation District’s Board. The District urged its plea to the jurisdiction and motion to dismiss, arguing that the application was not administratively complete under Sections 36.113, 36.1131 and 36.114 of the Texas Water Code because RWLLC had not provided drawdown maps based on USGS modeling results. RWLCC argued that this scientific information is not required for an application to be administratively complete and that districts are restricted in requesting only the information listed in Sections 36.113(c) and 36.1131(b). The Court agreed with the District’s interpretation of the statutory administrative completeness requirements. RWLCC also argued that it was inappropriate for the District to have abated review of its application. The Court concluded that abatement was not yet at issue because the application was not administratively complete. The Court granted the District’s plea and motion, set a deadline for the District to file an application for court costs and expert witness and attorney fees pursuant to Section 36.066 of the Texas Water Code, and ordered that a hearing be held within 60 days.
On April 8, 2016 the Austin Court of Appeals decided an interesting case of first impression involving the Public Information Act (PIA). In Austin Bulldog v. Leffingwell, No. 03-13-00604-CV, 2016 WL 1407818, (Tex. App. – Austin Apr. 8, 2016, no pet. h) (not yet released for publication), the court ruled that government officials are not “members of the public” and when they use private e-mail accounts to conduct public business they will forfeit the right to keep their e-mail addresses concealed from the public.
At issue was Government Code section 552.137 which excepts from disclosure under the Act the email address of a member of the public unless the owner affirmatively consents to its release. The Austin Bulldog submitted a PIA request for public information contained in emails between the mayor, council members, and the city manager of the City of Austin. An attorney general decision required production of some of the requested emails, but allowed for the redaction of the personal email addresses of City Officials in accordance with section 552.137. The City made the redactions, and the Bulldog sued contending that the personal email addresses of City Officials were not excepted from disclosure where the email account was used for official business. The trial court (Sulak) granted summary judgment to the City and the Bulldog appealed.
The Third Court reversed and rendered judgment in favor of the Bulldog. Although the Officials argued for a broad interpretation of “member of the public” to mean “members of the community as a whole,” the Court found the phrase “member of the public,” in the context of the PIA, meant anyone who is not a part of the governmental entity. As such, the Third Court has reversed the prior interpretation of the AG that official’s personal email addresses could be redacted from official communications. Just another reason why governmental officials and employees should avoid transacting business on personal devices and/or from private email accounts.