In the Courts

Water Cases

Florida v. Georgia, 141 S. Ct. 1175 (2021).

This case concerns the Apalachicola-Chattahoochee-Flint River Basin (the “Basin”), an area spanning more than 20,000 square miles in Georgia, Florida, and Alabama, and composed of three rivers. The Chattahoochee River and the Flint River start in Georgia and empty into Lake Seminole, which straddles the Georgia-Florida border. The Apalachicola River begins at the southern end of Lake Seminole and flows south through the Florida Panhandle, emptying into the Apalachicola Bay, near the Gulf of Mexico. The Apalachicola River supports a wide range of river wildlife and plant life in the Florida Panhandle, and its steady supply of fresh water makes the Bay a suitable habitat for oysters. For many years, Florida’s oyster fisheries were a cornerstone of the regional economy.

Many factors influence Apalachicola River flows, including precipitation, air temperature, and Georgia’s upstream consumption of Basin waters. The U.S. Army Corps of Engineers (the “Corps”) regulates Apalachicola flows by storing water in, and releasing water from, its network of reservoirs in the Basin. In recent years, low flows in the Apalachicola River have become increasingly common during the dry summer and fall months, particularly during droughts.

In 2013, Florida accused Georgia of overconsuming water from the Basin, causing low flows in the Apalachicola River, which allegedly caused Florida’s oyster fisheries and river ecosystem to suffer. Operating under the riparian doctrine of a water law, Florida and Georgia have an equal right to make reasonable use of the Apalachicola River’s waters. To obtain an equitable apportionment of interstate waters, Florida must show (1) Georgia’s upstream consumption caused a threat or actual injury of serious magnitude; and (2) the benefits of the equitable apportionment substantially outweighed the harm that resulted.

Having original jurisdiction over suits between states, the U.S. Supreme Court granted Florida leave to file its complaint and referred the case to a Special Master. After 18 months of extensive discovery and a 5-week trial, the Special Master recommended in his report that Florida be denied relief, because—although the Florida had suffered serious injuries that were at least in part due to Georgia’s upstream water use—Florida failed to prove by clear and convincing evidence that any remedy would redress its asserted injuries. This was because a remedial decree would not bind the Corps, which could operate its reservoirs to offset any added streamflow produced by the decree.

On review of Florida’s exceptions to the Special Master’s Report, the Supreme Court remanded, concluding that the Special Master’s clear and convincing evidence standard for the question of redressability was “too strict,” at least absent further findings. The Supreme Court then directed the Special Master to make definitive findings and recommendations on several additional issues, including: (1) whether Florida had proved any serious injury caused by Georgia; (2) the extent to which reducing Georgia’s water consumption would increase Apalachicola River flows; and (3) the extent to which any increased Apalachicola flows would redress Florida’s injuries.

Soon after that decision, the original Special Master retired, and the Court appointed a new Special Master, who issued an 81-page report recommending that the Supreme Court deny Florida relief and concluding that Florida failed to prove by clear and convincing evidence that Georgia’s alleged overconsumption caused serious harm to Florida’s oyster fisheries or its river wildlife and plant life.

Florida filed exceptions to the Supreme Court, arguing that Georgia’s excessive agricultural water consumption caused sustained low flows in the Apalachicola River leading to the Bay’s increased salinity. Florida believed that the high salinity attracted saltwater predators who attacked oysters and brought diseases. Georgia declined responsibility and asserted that Florida’s mismanagement of its oyster fisheries led to the decline in oysters. Moreover, documents from Florida and its witnesses revealed that Florida allowed unprecedented levels of oyster harvesting in the years before the collapse. The Supreme Court then conducted an independent review of the record and assumed the ultimate responsibility for deciding all matters of fact and law.

The Supreme Court evaluated the parties’ arguments in light of the record evidence, and held for Georgia because the evidence did not show a high probability that Florida’s oyster fisheries suffered a serious injury as a direct result of Georgia’s overconsumption.

Canadian River Mun. Water Auth., Appellant v. Hayhook, LTD., No. 07-20-00196-CV, 2021 WL 1202346 (Tex. App.—Amarillo Mar. 30, 2021, no pet.)(mem. op).

This case involves a takings claim by Hayhook, LTD (“Hayhook”), owner of the Hayhook Ranch (the “Ranch”) surface estate, asserted against the Canadian River Municipal Water Authority (“Canadian”), the owner of the Ranch groundwater estate.

In 1976, the prior owners of the Ranch conveyed all the water rights under the Ranch to Southwestern Public Service. Canadian became the successor to those rights in 1996, and acquired all of the groundwater rights associated with the Ranch, including easements for underground pipelines reasonably necessary and desirable to permit full and complete use of the groundwater rights. In 1999, Canadian began developing a water well field on the Ranch, which resulted in litigation with the then surface estate owners, and ended with a settlement (the “2000 Agreement”). Hayhook came to own the surface estate of the Ranch in 2004.

In 2008, Canadian tendered an agreement offering $85,320 to Hayhook, in exchange for permission to install a 54-inch pipeline to carry water produced from offsite locations to a pumping station on the Hayhook Ranch. Hayhook declined, but Canadian commenced installation anyway, clearing a 120-foot right-of-way across the eastern portion of the Ranch and excavating a ditch 10- to 12-feet deep and wide over 2.6 miles. The project, completed in March of 2010, disturbed approximately 38.78 acres of Hayhook’s land. No wells or pipelines drawing water from the Ranch were connected to its
54-inch pipeline.

Haycook sued, alleging inverse condemnation. The trial court found that transporting offsite water across the Ranch was not reasonably necessary and desirable to permit the full and complete utilization of the water rights in and under the Ranch—as provided by the 2000 Agreement. Nor was the pipeline reasonably necessary to produce and remove groundwater from the Ranch. Therefore, the trial court granted Hayhook compensation for inverse condemnation, and Canadian appealed, asserting that it operated under color of right—thereby negating the requisite intent to engage in a taking.

An inverse condemnation requires the government intentionally take private property without just compensation. Government entities have a constitutional obligation to reasonably compensate those whose property it takes. To commit inverse condemnation, the governmental entity must know a specific act will cause harm or that the result is substantially certain to arise from the governmental action. Conversely, a taking does not exist when the government acts pursuant to colorable contract rights.

Here, Canadian’s use of the Ranch to transport water produced from fields other than those underlying that of the Ranch triggered the initial suit. The pipeline across the Ranch only transports water produced offsite. The 2000 Agreement permitted Canadian to construct water pipelines, but not to burden the Ranch for that purpose.

The Amarillo Court of Appeals affirmed the trial court’s holding that Canadian’s pipeline construction solely for transporting offsite water constituted a physical taking of part of the Hayhook Ranch.

San Antonio Bay Estuarine Waterkeeper v. Formosa Plastics Corp. Tex., No. 20 40575, 2021 WL 1726813 (5th Cir. Apr. 30, 2021).

In 2019, San Antonio Bay Estuarine Waterkeeper (“San Antonio Bay”) sued Formosa Plastics Corporation Texas and Formosa Plastics Corporation U.S.A. (collectively, “Formosa”) under the Clean Water Act (“CWA”) for illegally discharging plastic pellets and other materials into Cox Creek and Lavaca Bay in violation of Formosa’s Texas Pollutant Discharge Elimination System (“TPDES”) permit. Eventually, San Antonio Bay and Formosa agreed to settle San Antonio Bay’s CWA claims with a Consent Decree to regulate Formosa’s discharge by a designated third-party Monitor.

The parties dispute the interpretation of paragraphs 36, 37, and 38 of the Consent Decree. Formosa argued that paragraph 36 required Formosa to pay if the Monitor finds it discharged plastic after the Consent Decree’s effective date. San Antonio Bay believed that paragraph 36 means the presence of plastics proves discharge occurred from Formosa, regardless of the discharge date. The district court agreed with San Antonio Bay. Formosa filed an appeal of the district court’s decision.

Upon review, the Fifth Circuit highlighted the forward-looking language in the Consent Decree to determine the meaning of paragraph 36. Paragraph 36 has many words in the present tense, suggesting that San Antonio Bay and Formosa contemplated only active discharges rather than those from the past. Also, in paragraph 36, the penalty schedule includes payments for the years following the Consent Decree. The Fifth Circuit found the parties did not contemplate discharges occurring prior to the Consent Decree as a trigger for Formosa’s payment and reporting obligations. The Court concluded that paragraphs 37 and 38 aligned with paragraph 36.

Therefore, the Fifth Circuit ruled in favor of Formosa, reversed the District Court’s decision, and remanded for further proceedings.

San Jacinto River Auth. v. Ray, No. 14-19-00095-CV, 2021 WL 2154081 (Tex. App.—Houston [14th Dist.] May 27, 2021, no pet. h.)(mem. op.).

Hurricane Harvey made landfall in Southeast Texas in August 2017. As a result, the San Jacinto River Authority (“SJRA”) released rising water from Lake Conroe into the San Jacinto River. Downstream property owners sued SJRA in state district court, contending that the release of water from Lake Conroe flooded their properties, and asserted inverse condemnation claims under Article I, Section 17 of the Texas Constitution.

SJRA filed a plea to the jurisdiction, arguing that the district court lacked subject matter jurisdiction for two reasons:
(1) under Government Code section 25.1032, county civil courts at law have exclusive jurisdiction over constitutional inverse condemnation claims filed in Harris County; and (2) appellees failed to plead sufficient facts demonstrating a statutory takings claim under Chapter 2007.

Addressing SJRA’s first reason, the Houston Court of Appeals cited its own decision issued in early 2020 in San Jacinto River Auth. v. Ogletree, 594 S.W.3d 833, 839-40 (Tex. App.—Houston [14th Dist.] 2020, no pet). There, numerous property owners downstream from Lake Conroe alleged that SJRA, by releasing water from Lake Conroe in the immediate aftermath of Hurricane Harvey, intentionally flooded their properties to protect the integrity of the Lake Conroe dam and other properties. The Ogletree claimants asserted constitutional inverse condemnation claims against SJRA in a Harris County district court. Similar to this case, SJRA filed a plea to the jurisdiction, which the trial court denied. On appeal, the Houston Court of Appeals held that, pursuant to Texas Government Code section 25.1032(c), Harris County civil courts at law have exclusive jurisdiction over the property owners’ constitutional inverse condemnation claims. Consequently, as in Ogletree, the district court lacks subject matter jurisdiction over the constitutional inverse condemnation claims.

With regard to SJRA’s second argument the district court lacked subject matter jurisdiction, the property owners contend that the trial court has such jurisdiction because they alleged alternative claims for a statutory taking under Chapter 2007, and district courts possess jurisdiction over such claims.

The Court of Appeals held that pleadings must give reasonable notice of the claims asserted. Since the property owners’ petition neither cited Chapter 2007 nor asserted a waiver of governmental immunity under Chapter 2007, the Court ruled that property owners never asserted Chapter 2007 statutory condemnation claim. As a result, their petition negates the district court’s jurisdiction over their claims. Accordingly, the Court reversed the trial court’s order denying SJRA’s plea to the jurisdiction and rendered judgment dismissing appellees’ claims for lack of subject matter jurisdiction.

Litigation cases

SCOTUS holds regulation permitting third-party access to property is per se physical taking.

In Cedar Point Nursery v. Hassid, agricultural employers brought an action against members of California’s Agricultural Labor Relations Board (“the Board”) alleging that California’s regulation granted labor organizations a “right to take access” to agricultural employers’ property in order to solicit support for unionization triggered an unconstitutional per se physical taking under the Fifth and Fourteenth Amendments by appropriating without compensation an easement for union organizers to enter their property. No. 20-107, 2021 WL 2557070 (U.S. June. 23, 2021). The regulation mandated that agricultural employers allow union organizers onto their property for up to three hours per day, 120 days per year. The employers sought declaratory and injunctive relief prohibiting the Board from enforcing the regulation against them.

The District Court denied the employers’ motion for preliminary injunction and granted the Board’s motion to dismiss, holding that the access regulation did not constitute a per se physical taking because it did not allow the public to access the growers’ property in a permanent and continuous manner. A divided panel of the Court of Appeals for the Ninth Circuit affirmed. The Supreme Court reversed the Ninth Circuit’s opinion holding the regulation constitutes a per se physical taking.

Notably, the Supreme Court made it clear that the holding of this case does not efface the distinction between trespass and takings. Isolated physical invasions, not undertaken pursuant to a granted right of access, are properly assessed as individual torts rather than appropriations of a property right. Many government authorized physical invasions will not amount to takings because they encompass traditional common law privileges to access private property. Unlike a mere trespass, the regulations grant a formal entitlement to physically invade the employers’ land. Importantly, the Court made clear—the government regulation constitutes a per se physical taking (even as granting access to a third-party) reasoning that the regulation appropriates a right to physically invade the growers’ property—to literally “take access”— and therefore constitutes a per se physical taking under the Court’s precedents.

In case of first impression SCOTX rules constitutional takings claim cannot be asserted when the State commits copyright infringement.

In Jim Olive Photography v. University of Houston System, Jim Olive, a professional photographer sued the University of Houston for the unauthorized use of his copyright image alleging an unlawful takings claim. No. 19-0605, 2021 WL 2483766 (Tex. June 18, 2021). In 2012, Olive discovered the University had downloaded a copyrighted image from Olive’s website, removed all identifying copyright and attribution material, and displayed it on its webpage as a promotional image. Olive filed suit against the University for an unlawful taking and sought compensation under Article I, Section 17 of the Texas Constitution and under the Fifth Amendment of the United States.

The District court denied the University’s Plea to the Jurisdiction holding that Olive had pleaded a viable takings claim. The Court of Appeals disagreed. It reasoned that the University’s single act of copyright infringement was not a taking and the University’s actions did not take away Olive’s right to use, license, or dispose of the underlying creative work and therefore the University maintained immunity from suit.

The Supreme Court of Texas affirmed the Court of Appeals rationale. The Court, in a matter of first impression, held that copyright infringement by the State cannot support a viable takings claim. It reasoned that an infringer violates the copyright owner’s rights, but it does not confiscate or appropriate those rights. The copyright owner still retains the right to possess, use, and dispose of the copyrighted work.

Air and Waste Cases

Territory of Guam v. U.S., 141 S. Ct. 1608 (2021).

On May 24, 2021, the U.S. Supreme Court issued a unanimous decision in Territory of Guam v. U.S., clarifying a question under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), or Superfund law, regarding the right to seek contribution, reversing a decision of the D.C. Circuit Court of Appeals.

The D.C. Circuit Court of Appeals ruled in 2020 that Guam waited too long to file a Superfund contribution claim against the U.S. Navy for the cleanup of a landfill on the island, known as the Ordot Dump, where the Navy disposed of dangerous munitions and chemicals, including agent orange and DDT. The Navy began using the landfill in the 1940s and throughout the Korean and Vietnam Wars. The landfill was unlined and released contaminants into nearby rivers flowing into the Pacific Ocean.

In 2002, EPA sued Guam as the site owner for violating the Clean Water Act for discharging pollutants into the Waters of the U.S., leading to a consent decree into 2004. In turn, Guam sued the Navy in 2017, seeking to recoup its landfill-closure and remediation costs, which it estimated would exceed $160 million.

The D.C. Circuit Court ruled that the 2004 consent decree triggered a three-year statute of limitations for Guam to pursue a Superfund Contribution Claim; therefore, Guam’s claims against the Navy were time-barred. However, the U.S. Supreme Court reversed the D.C. Circuit’s decision that a contribution claim was triggered (and consequently, that a statute of limitations had run) based on the consent decree, which was founded in the Clean Water Act, not CERCLA. Instead, the Court ruled that “a party may seek contribution under CERCLA only after settling a CERCLA-specific liability, as opposed to resolving environmental liability under some other law.” Based on this decision, a settlement with EPA based on an environmental statute other than CERCLA will not trigger the statute of limitations, and by implication, may not trigger the right to request contribution under Section 113(f) of CERCLA without an express resolution of CERCLA liability. The decision leaves open the question of what language in EPA consent decrees will be sufficient to settle “a CERCLA-specific liability.”

Utility Cases

Elec. Reliability Council of Tex., Inc. v. Panda Power Generation Infrastructure Fund, LLC, 619 S.W.3d 628 (Tex. 2021).

On March 19, 2021, the Texas Supreme Court issued an opinion in a case centering on questions of the Electric Reliability Council of Texas (“ERCOT”) ability to be sued, in this instance, by a power generator, Panda Power Generation Infrastructure Fund (Panda). Panda claimed that after it used ERCOT’s 2011-12 reports that predicted generating capacity shortfalls as a basis to build power plants in Temple and Sherman at the cost of $2.2 billion, ERCOT revised its forecasts and predicted an excess of generation. Panda filed causes of action in district court alleging that ERCOT misled Panda, as well as accusing ERCOT and three of its officers of fraud, negligent misrepresentation, and breach of fiduciary duty. ERCOT filed a Plea to the Jurisdiction claiming PUC has exclusive jurisdiction over Panda’s claims, and PUC filed an amicus brief supporting ERCOT, but the trial court denied it. In this proceeding, Panda originally filed two petitions, one for a writ of mandamus and the other for review, where Panda sued ERCOT, alleging fraud and fiduciary breach. The cases were consolidated and appealed to the Supreme Court, where Justice Boyd, joined by Justices Blacklock, Busby, Bland, and Huddle, delivered the opinion on March 19, 2021.

Since the court of appeals held that sovereign immunity applied, it had ordered the trial court to dismiss Panda’s claims within 30 days. Panda filed a petition for writ of mandamus challenging the court of appeals holding, and ERCOT filed a conditional petition for review challenging the same court’s holding that ERCOT is not a governmental unit under the Tort Claims Act. Despite pleadings from both sides alleging either mootness or a lack of plenary power, both parties agreed that they sought final resolution to the case and the Supreme Court granted ERCOT’s conditional petition for review and set it and Panda’s mandamus petition for argument on September 15, 2020.

After both parties briefed whether the subsequent entry of the trial court’s order rendered these proceedings moot, the Supreme Court analyzed and applied the mootness doctrine, which is a constitutional limitation that prohibits courts from issuing advisory opinions. The Court’s opinion discussed the difference in procedural mootness and substantive mootness, indicating that sometimes parties’ controversy over the substantive issue remains live after the trial court issues a final judgment, even though typically the final judgment would render the appeal from the interlocutory order procedurally moot. When this happens, the complaining party’s remedy is to raise the live substantive issue in an appeal from the final judgment.

The Court further held that the trial court’s entry of a final judgment rendered the causes Panda illustrated as procedurally moot, and parties must seek final resolution of their pending controversies by appeal from the trial court’s final judgment. Consequently, the Supreme Court concluded this proceeding is moot. However, despite the trial court’s entry of final judgment, the live controversy exists over whether the court of appeals erred by ordering the trial court to vacate its interlocutory order denying ERCOT’s jurisdictional plea, even though the Court’s resolution of that issue required them to decide whether the trial court erred by entering that interlocutory order. The Court reasoned that the Court could not grant effective relief because the trial court lost its plenary power after 30 days following its final judgment granting ERCOT’s jurisdictional plea and dismissing Panda’s claims. Citing section 329(b)(f) of the Texas Rules of Civil Procedure, the Supreme Court held that the trial court no longer had the power to act; if it acted, that action would be void. And so, the Court reasoned that it had no authority to order another court to perform a void act.

Regarding the mandamus relief, the Supreme Court’s mandamus power does not allow it to decide moot cases or issues any more than its power of appellate review. The Court said it will not exercise mandamus jurisdiction if the parties have an adequate remedy by appeal. An appeal is inadequate when parties are in danger of permanently losing substantial rights which occurs when the appellate court would not be able to cure the error, when the party’s ability to present a viable claim or defense is vitiated, or when the error cannot be made part of the appellate record.

The Court acknowledged that this may not be convenient, and it was somewhat sympathetic to that, but held that this is a mandate of the Constitution, not a matter of convenience. The Court ultimately held that the entry of a final judgment mooted Panda’s manadamus petition and the need for ERCOT’s conditional petition for review, dismissing both the mandamus petition and conditional petition for review for want of jurisdiction.

Tex. Tel. Ass’n v. Pub. Util. Comm’n, 03-21-00294-CV (Tex. App.—Austin).

Almost 50 rural telephone companies have sued Public Utility Commission (“PUC”) in Travis County District Court, requesting an emergency restraining order for a judge to declare “void” PUC’s funding reductions. In June 2020, the PUC rejected a proposal by PUC Staff to increase the assessment rate from 3.3% to 6.4%, and instead recommended that the Legislature address the issue with Texas Universal Service Fund (“TUSF”) funding. The Commissioners decided to leave the TUSF as-is, but limit TUSF funding to lifeline projects.

The purpose of the TUSF is to enable all residents of Texas to obtain basic local telecommunications services needed to communicate with other residents, businesses, and governmental entities. The TUSF accomplishes this by assisting telecommunications providers in providing baseline services at reasonable rates to customers in high-cost, rural areas, and to qualifying low income and disabled customers. The TUSF is funded by a statewide uniform charge, payable by each telecommunications provider, based on a percentage of each provider’s actual intrastate telecommunications services receipts. Since 2015, the TUSF has been funded by a 3.3% charge on the Texas intrastate taxable telecommunications receipts. This is relatively low, compared to previous rates as high as 5.65%.

In response to PUC’s decision, the Texas Telephone Association and the Texas Statewide Telephone Cooperative, Inc. (the “Associations”) filed a petition for rulemaking in Project No. 51020, asking the PUC to reconsider (1) its inaction to adjust the assessment rate and (2) its decision to only fund lifeline projects, leaving high-cost programs unfunded. The Associations claimed that PUC’s inaction on the impending TUSF shortfalls was unprecedented and illegal.

At the August 27, 2020 open meeting, the PUC shot down the Associations’ petition, in accordance with a memorandum filed by PUC Chairman Deanne Walker. Her memo explained that the PUC already made clear its intent to let the Legislature handle the TUSF shortfall, due to the magnitude of the decision and the importance of the related policy issues. She emphasized that nothing had occurred since their initial decision to leave the TUSF untouched, and therefore, nothing had changed her mind on their decision.

In January 2021, Associations filed suit in Travis County against PUC for declaratory judgment, temporary restraining order, temporary injunction, writ of mandamus and request for compensation for regulatory taking. In their argument, Associations claimed that they are small and rural telephone providers that build, maintain, and operate the state’s wireline network and cannot operate without adequate TUSF funding. Despite PUC staff’s recommendations to adequately fund TUSF, PUC Executive Director and TUSF Administrator made a decision to reverse its policy through a contract amendment, which was not implemented through a duly noticed rulemaking proceeding or through orders in a contested case. Associations seek relief to compel the PUC to keep making TUSF disbursements or, as they argue, risk losing up to $10 million dollars per month.

In response, PUC defended its decision to seek direction from the Legislature on these issues but also claimed sovereign immunity against the claims. Associations filed a Motion for Summary Judgment, and PUC filed a Plea to the Jurisdiction and Cross-Motion for Summary Judgment. On June 7, 2021, the court granted both of PUC’s motions, and the case was dismissed. Associations appealed on June 24, 2021.

Texas Supreme Court Addresses PUC Exclusive Original Jurisdiction

The Texas Supreme Court issued opinions on three cases involving the PUC’s exclusive original jurisdictional powers. In each of the cases, summarized below, plaintiffs brought causes of action involving tort claims against an electric utility company. In all three cases, the utility companies relied upon the Texas Supreme Court’s previous holding in Oncor Elec. Delivery Co. v. Chaparral Energy, LLC, 546 S.W.3d 133 (Tex. 2018) in asserting PUC had original jurisdiction over the claims. In Oncor, the Texas Supreme Court agreed with the utility company, and held that the Legislature intended disputes regarding utility rates, operations, and services to begin at PUC. However, that case was centered on a breach of contract cause of action, where the facts of the underlying case fell within the scope of “utility rates, operations, and services.” The issues before the Texas Supreme Court in the following cases are distinguishable because they are related to tort-related causes of action. In each case, the Court carefully relied upon the Oncor analysis to distinguish its ruling in that case from the case under review. Likewise, in each case, the Court holds that PUC’s exclusive original jurisdiction is not all-encompassing; it is limited in nature based upon the constraints that the legislature placed upon it.

In re Tex.-New Mexico Power Co., 19-0656, 2021 WL 2603683 (Tex. June 25, 2021).

The underlying facts involve a suit for damages, where property owners claimed they suffered water damage during Hurricane Harvey due to negligent actions by Texas-New Mexico Power Company’s (“TNMP”) general contractor when the contractor was moving power lines during construction.

TNMP was the defendant in the trial court, where the court denied TNMP’s motion to dismiss the case for lack of subject-matter jurisdiction. A petition for writ of mandamus was filed in the 1st Court of Appeals, requesting it to order the trial court to vacate its order denying TNMP’s motion and enter an order dismissing the case against it for want of subject-matter jurisdiction. The Court of Appeals denied the mandamus.

After the Court of Appeals denied relief, on August 1, 2019, TNMP filed a petition for writ of mandamus requesting the same relief as it did in its appellate filing. This case centers on the interpretation of the Oncor opinion based upon section 32.001 of the Texas Utilities Code regarding the exclusive original jurisdictional powers of PUC.

TNMP argued in its petition that the Oncor decision bolsters its argument that PUC has original jurisdiction of these claims. Citing to the Court’s previous holding, TNMP argued that the Public Utility Regulatory Act does not define “operation,” and thus the underlying facts in the case related to the contractor moving power lines could fall within the ordinary meaning of the word “operation.” Plaintiffs alleged that the negligence was unrelated to any activities of TNMP that could be considered as an operation or service. Thus, the Texas Supreme Court was left with the question as to whether its opinion regarding PUC’s exclusive original jurisdiction in the Oncor case was limited to contractual claims, or if its holding extended to other causes of action including torts.

Chief Justice Hecht delivered the opinion on June 25, 2021, and held that the original plaintiffs’ claims against TNMP did not involve TNMP’s “rates, operations, or services,” and did not fall within the PUC’s exclusive jurisdiction. The Court differentiated between the facts from the Oncor case and this case, as well as clarified the scope of the word “service.” The Court reasoned that in the Oncor case, the breach of contract claim involved a contract to provide electricity, which was a complaint about Oncor’s “services.” Here, the claim was too far removed from the services TNMP provides to fall within the exclusive original jurisdiction of PUC. This holding is not specific as to whether tort claims are within the exclusive original jurisdiction of PUC; the holding focuses on applying the “utility rates, operations, and services” standard to the specific facts of a proceeding.

In re Oncor Elec. Delivery Co., 19-0662, 2021 WL 2605852 (Tex. June 25, 2021).

In this case, Oncor claimed the trial court abused its discretion by denying its plea to the jurisdiction. The appellate court denied Oncor’s petition for writ of mandamus.

Here, a customer brought a personal injury cause of action against Oncor, alleging negligence and consumer-protection violations stemming from the customer being electrocuted while trimming a tree. The customer alleged the tree needed to be trimmed due to a hazard from a drop line crossing the customer’s property.

The question the Court considered was whether an electric utility may compel a plaintiff who alleges a common law personal injury claim to appear before PUC before appearing in court. Similar to the two companion cases, the Court held that the customer’s claims did not fall within PUC’s exclusive jurisdiction. The Court stated that “negligence alleged in a context merely coincidental to utility activities does not create Commission jurisdiction.” The Court concluded that the proper venue to hear the underlying facts of this case was the district court, which has subject-matter jurisdiction to resolve the dispute.

In re CenterPoint Energy Houston Elec., LLC, 19-0777, 2021 WL 2671808 (Tex. June 30, 2021).

The history of this case involves a person who was electrocuted while helping victims of a car accident which caused a CenterPoint power line to fall. In the trial court, CenterPoint filed a plea to the jurisdiction on the issue as to whether the exclusive jurisdiction of PUC over an electric utility’s rates, operations, and services extends to claims involving common-law torts against utilities.

The Supreme Court issued an opinion which held that PUC does not have exclusive jurisdiction because the plaintiffs are not “affected persons” authorized by statute to bring a complaint in PUC. Additionally, the Court held that a court, not a state agency, is the proper forum to decide whether there was a breach of the common-law duty of reasonable care. Thus, the Court denied CenterPoint’s petition for writ of mandamus, and agreed with the trial court’s denial of CenterPoint’s plea to the jurisdiction.

The Court performed a similar analysis as in Oncor. In its holding, the Court stated that an administrative agency only has the powers that have been conferred upon it and are necessary to accomplish its duties. Specifically, PUC has the authority to exercise its powers of enforcement and adjudication. Within those powers are resolving complaints by an “affected person” alleging an “act or omission by a public utility in violation or claimed violation” of a law, order, ordinance, or rule. Because the plaintiffs cannot initiate complaints at PUC, they are not within the definition of “affected persons” and PUC cannot adjudicate their claims. Additionally, PUC does not adjudicate compliance with common-law negligence standards. As opposed to the holding in the TNMP case, this case specifically addresses the lack of jurisdiction PUC has regarding common-law negligence claims.

Impact of Winter Storm Uri

In response to Winter Storm Uri, several suits were filed attributable to the short-pay and uplift mechanisms implemented by ERCOT. ERCOT acts as a sort of clearing house or middleman between wholesale energy buyers and sellers; under the current system, the amounts that ERCOT collects from the market must equal the amounts that ERCOT pays out to wholesale sellers. This system is disrupted when a market participant defaults on an amount due to ERCOT. To make up the shortfall of market participants’ failure to pay the amount owed for the extreme cost of power during Winter Storm Uri, ERCOT implemented a measured termed “uplift.” In such an instance, other participants, such as several of the plaintiffs in the following suits, share those unpaid bills when the costs are shifted to them.

In re Elec. Reliability Council of Tex., Inc., 04-21-00244-CV, 2021 WL 2814899 (Tex. App.—San Antonio July 7, 2021, no pet. h.).

CPS Energy is a municipally-owned gas and electric utility provider, owned by the City of San Antonio. In its Original Petition and Application for Temporary Injunction and Permanent Injunction filed on March 12, 2021, CPS Energy (“Plaintiff”) alleges that ERCOT (“Defendant”) materially breached its contractual obligations under an effective market agreement by failing to pay CPS Energy. Plaintiff also claims ERCOT made an acknowledged error by not coming down from the system-wide offer cap on February 18 and February 19, 2021, breaching ERCOT’s fiduciary duty. Plaintiff claims that both the PUC and ERCOT have not corrected the overcharge, and that ERCOT should not be allowed to charge short-pay or default uplift invoices resulting from these overcharges until this error is resolved. The suit also claims, similar to other pending suits in various courts, that forcing CPS Energy to pay the debts of other failed market participants violates the Texas Constitution and constitutes a taking. Defendant’s plea to the jurisdiction was denied, as was the motion to transfer venue. On June 15, 2021, ERCOT filed an interlocutory appeal, assigned Cause Number 04-21-00242-CV, as well as a petition for writ of mandamus, Cause Number 04-21-00244-CV. Both appeals challenged the trial court’s order, which denied ERCOT’s plea to the jurisdiction. The petition for writ of mandamus also challenged the trial court’s order which denied ERCOT’s amended motion to transfer venue. ERCOT requested that both proceedings be consolidated, but the Fourth Court of Appeals denied that request. CPS Energy requested that the Temporary Restraining Order be extended, but also argued in an emergency motion that the expiration of the Temporary Restraining Order was automatically stayed during the pendency of the interlocutory appeal. CPS Energy filed a motion to dismiss on June 23, 2021, which claimed that the Fourth Court of Appeals lacked jurisdiction over the interlocutory appeal alleging ERCOT is not a governmental unit. On July 7, 2021, the Fourth Court of Appeals denied the petition for writ of mandamus and held that ERCOT was not entitled to the relief sought.

City of Denton v. Elec. Reliability Council of Tex., Inc., No. D-1-GN-21-001227 (353rd Dist. Ct., Travis County, Tex. June 4, 2021).

The City of Denton (“City” or “Plaintiff”) owns Denton Municipal Electric, which is a utility that sells the electricity its plant produces to the electric grid operated by Electric Reliability Council of Texas, Inc. (“Defendant” or “ERCOT”). On February 25, 2021, the City filed suit against ERCOT seeking to prevent it from having to pay the “uplift” charge, alleging an illegal and unconstitutional process by ERCOT due to this mechanism forcing city-operated utilities to cover other market participants’ debts. The City cited to the Texas Constitution, Articles III, Section 52(a) and Article XI, Section 3, where both reflect the limitations of a city related to lending its credit, granting public money or a thing of value in aid of, or to any individual, association, or corporation. ERCOT responded that it is protected from suit based upon sovereign immunity, and that the Court does not have jurisdiction because ERCOT falls exclusively under the Public Utility Commission’s (“PUC’s”) jurisdiction. On the same day, the Court granted the Temporary Restraining Order (“TRO”) through March 11, 2021. Contemporaneously with the district court’s Order related to a motion to transfer venue, the Court extended the TRO through April 30, 2021. On March 18, 2021, the Court issued an agreed Order to transfer venue to Travis County. Subsequently, parties agreed to extend the TRO through June 4, 2021, which prevented ERCOT from implementing the uplift mechanism. On May 10, 2021, the Court held a remote hearing based upon defendants’ previously filed plea to the jurisdiction and alternative plea in abatement. Defendants argued that the PUC retains exclusive jurisdiction, there was no pleading of viable ultra vires claim so as to waive immunity, and the City failed to join necessary parties. In its order filed on June 4, 2021, the Court ultimately held that the City did not exhaust all of its administrative remedies before the PUC, dismissing Plaintiff’s claims pursuant to Defendants’ plea to the jurisdiction and request for dismissal. As a result, the TRO under which the City was not assessed short payments was dissolved, and ERCOT has stopped reallocating the City’s share of short payments to other market participants. The appellate deadline was July 6, 2021, and there has been no appeal filed.

Luminant Energy Company, LLC v. Public Utility Commission of Texas, 03-21-00098-CV (Tex. App.—Austin).

Luminant Energy Company, LLC v. Public Utility Commission of Texas, 03-21-00108-CV (Tex. App.—Austin).

Luminant Energy Company, LLC v. Public Utility Commission of Texas, 03-21-00126-CV, 2021 WL 1567883 (Tex. App.—Austin Apr. 22, 2021, no pet. h).

Luminant Energy Company, LLC v. Public Utility Commission of Texas, 03-21-00139-CV (Tex. App.—Austin).

Luminant Energy Company, LLC (“Luminant”) filed a total of four direct appeals in the Third Court of Appeals regarding the validity of PUC orders as a result of Winter Storm Uri. On March 30, 2021 Luminant filed a motion to dismiss No. 03-21-00126-CV, and that motion was granted on April 22, 2021. In the remaining direct Third Court of Appeals proceedings involving Luminant (“Luminant Appeals”), Luminant seeks to invalidate PUC’s orders and force PUC to engage in retroactive repricing of the electricity sold during Winter Storm Uri. While Exelon Generation Company, LLC, DGSP2, LLC, Distributed Generation Solutions, LLC, Talen Energy Corporation, and others joined as intervenors, supporting Luminant’s position, Calpine Corporation and TexGen Power, LLC filed interventions in support of PUC. Luminant and supporting intervenors claim that ERCOT adopted its pricing rule without notice, publication, public comment, reasoned justification, or any of the essential requirements for issuing or amending a rule. Intervenors supporting PUC claim that they would be substantially harmed if the orders were reversed, and Calpine specifically argued that it responsibly hedged its generation on the Intercontinental Exchange based upon ERCOT’s daily prices. Several parties have already filed briefs in No. 03-21-00098-CV, and oral arguments have been requested. Briefs were filed in No. 03-21-00108-CV, and are due for No. 03-21-00139-CV on July 26, 2021. These cases are still pending.

Exelon Generation Company, LLC, and Constellation NewEnergy, Inc. v. the Public Utility Commission of Texas, No. D-1-GN-21-002099 (261st Dist. Ct., Travis County, Tex.).

Exelon Generation Company, LLC, and Constellation NewEnergy, Inc. v. the Public Utility Commission of Texas, No. D-1-GN-21-001772 (53rd Dist. Ct., Travis County, Tex.).

In Travis County District Court, several suits, including those filed by Constellation NewEnergy, Inc. and Exelon Generation Company, LLC, alongside intervenors in support of the same actions, were filed to challenge the procedure that ERCOT used to deviate from the uplift rule and the PUC’s action to permit ERCOT to retain discretion in taking action under its ERCOT Nodal Protocols to resolve financial obligations between a market participant and ERCOT. Plaintiffs alleged that PUC failed to obtain written approval from the Governor prior to promulgating this uplift rule, and eliminated default uplift invoice caps. The causes of action challenged the action pursuant to the requirements listed under several sections of the Texas Administrative Procedures Act and alleged an ultra vires claim under the Uniform Declaratory Judgment Act. In both cases, plaintiffs filed motions to abate, requesting the proceeding be abated pending the outcome of the related appeal to the Third Court of Appeals for the Third District of Texas. Subsequently, on June 8, 2021, the Court granted the plaintiffs’ unopposed motion to abate for No. D-1-GN-21-002099, but the Court has not yet ruled on No. D-1-GN-21-001772.

RWE Renewables Americas LLC v. the Public Utility Commission of Texas, No. D-1-GN-21-001839 (201st District Court, Travis County).

RWE Renewables Americas LLC, TX Hereford Wind, LLC, Miami Wind I, LLC, Goldwaithe Wind Energy LLC, and Ector County Energy Center LLC (“Plaintiffs”) filed a lawsuit in Travis County District Court against the PUC and Commissioners in their official capacities. This suit alleges similar causes of action to the above suits, and also includes a count regarding improper emergency rulemaking. Plaintiffs seek to reverse PUC’s orders from February 15 and 16, 2021. Plaintiffs also request the court issue a declaration that PUC’s orders constitute invalid rulemaking, thus vacating the orders. Plaintiffs request specific additional relief, including a request that the court issue a declaratory judgment that the Commissioners acted ultra vires in promulgating the orders, issue a declaratory judgment that PUC and Commissioners in their individual capacity acted outside the scope of their legal authority in allowing ERCOT to exceed the orders and refuse to correct pricing, and issue a writ of mandamus or injunction directing PUC to rescind the orders. This case is still pending.

“In the Courts” is prepared by Cole Ruiz in the Firm’s Water Practice Group; Lindsay Killeen in the Firm’s Litigation Practice Group; Sam Ballard in the Firm’s Air and Waste Practice Group; and Robyn Katz in the Firm’s Energy and Utility Practice Group. If you would like additional information or have questions related to these cases or other matters, please contact Cole at 512.322.5887 or cruiz@lglawfirm.com, Lindsay at 512.322.5891 or lkilleen@lglawfirm.com, Sam at 512.322.5825 or sballard@lglawfirm.com, or Robyn at 512.322.5855 or rkatz@lglawfirm.com.