Texas Land Professionals Blog

TRWA Partners with Aqua WSC to challenge SB 573

The Texas Rural Water Association has partnered with Aqua Water Supply Corporation (Aqua) to challenge Senate Bill 573, passed by the 2011 Legislature. The law amends Section 13.254 of the Water Code, adding subsections (a-5) and (a-6) which allow a landowner with 25 acres or more in 33 specified counties to opt out of a certificate of convenience and necessity if the landowner is not “receiving” water or sewer service. TRWA’s goal in the case is to obtain a final federal court judgment holding that these provisions in the Water Code are preempted by federal law, which would lessen the impact of Senate Bill 573 on TRWA member systems. TRWA’s Legal Defense Fund is helping to finance the lawsuit and Lara Zent, TRWA’s General Counsel, is a co-counsel in the case.

Background: Austin Community College (ACC) filed a petition to decertify its property from Aqua’s CCN, where ACC plans to build a campus. Aqua responded that it has the capacity and infrastructure in place to serve the area, including fireflow, and therefore is “providing service” to the area. TCEQ nevertheless granted the petition. Aqua filed an appeal in the Texas Court of Appeals in Austin and filed a lawsuit challenging the TCEQ’s decertification action in federal court pursuant to Title 7, United States Code, Section 1926(b). This federal law protects a water system from decertification and encroachment of their service area if the system is indebted to the U.S. Department of Agriculture – Rural Development.

The federal lawsuit was filed against Austin Community College, the City of Elgin and the TCEQ on October 7, 2011, in the U.S. District Court, Western District of Texas, in Austin and was assigned to Judge Lee Yeakel. Aqua settled the service area issues with Austin Community College and the City, but is still pursuing the lawsuit against the TCEQ. Aqua’s argument in federal court is that the federal law preempts the state law and therefore the TCEQ did not have the legal authority to decertify Aqua. Aqua argues that they have been harmed by this law and if the court does not rule in their favor, they will continue to be harmed because another landowner in their service area may file a petition to get out of their service area at any time.

Current case status: Aqua has asked the federal court, in the form of a motion for summary judgment, to find that Texas Water Code Section 13.254 is preempted by the federal law. The TCEQ must respond to Aqua’s motion by September 10 and Aqua’s reply to TCEQ’s response is due September 25. TCEQ has filed a motion to dismiss and a motion to abstain. Judge Yeakel will hear oral argument on all three dispositive motions together sometime this fall.

If these motions are all denied, the Judge will schedule the case for trial in April, 2013. TRWA’s partnership with Aqua will continue to the federal appeals court level and to the U.S. Supreme Court, if necessary.

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