Public Utility Commission of Texas v. City of Sherman

632 S.W.2d 624, 1981 Tex. App. LEXIS 4632, 1981 WL 638543
CourtCourt of Appeals of Texas
DecidedDecember 23, 1981
DocketNo. 13453
StatusPublished
Cited by1 cases

This text of 632 S.W.2d 624 (Public Utility Commission of Texas v. City of Sherman) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Public Utility Commission of Texas v. City of Sherman, 632 S.W.2d 624, 1981 Tex. App. LEXIS 4632, 1981 WL 638543 (Tex. Ct. App. 1981).

Opinions

POWERS, Justice.

Luella Water Supply Corporation (Luella) is a public utility. It is regulated by the Public Utility Commission of Texas and operates under a certificate of public convenience and necessity issued by that agency. The corporation furnishes water to the City of Luella, Texas, under a “franchise agreement” with that municipality. The City of Sherman, Texas, operates its own municipal water system. Luella complained to the Commission that the City of Sherman had embarked upon a plan to produce, for its own use, water contained in the same underground “sands” or strata as those from which Luella draws water. Luella admits that the City of Sherman does not intend to sell water to customers within the area assigned to Luella under its certificate. The City of Sherman plans instead to transport the water for use in its own water system. Nevertheless, Luella complains, the action of the City of Sherman in drawing water from the common source of supply will deplete that supply and thus interfere with the operation of Luella’s water supply system in violation of Tex.Rev.Civ. Stat.Ann. art. 1446c, § 60 (Vernon 1980), the Public Utility Regulatory Act (PURA). Section 60 provides as follows:

If a public utility in constructing or extending its lines, plant, or system interferes or attempts to interfere with the operation of a line, plant, or system of any other public utility, the commission may issue an order prohibiting the construction or extension or prescribing terms and conditions for locating the lines, plants, or systems affected. PURA § 60 (emphasis added).

[626]*626After a hearing on Luella’s complaint, the Commission’s examiner concluded the Commission possessed no subject-matter jurisdiction to determine the issues raised by the complaint, saying:

Section 60 of the PURA does not empower the Commission to regulate the production of groundwater by one utility even when that production would have an adverse effect on the water supply available to another public utility, since the Commission would thereby be directly adjudicating competing property rights to underground water.

Accordingly, the examiner recommended dismissal of Luella’s complaint. Disagreeing with the examiner, the Commission entered the following order:

The Commission .. . hereby REMANDS the case for an evidentiary hearing on the questions of (1) whether the City’s [City of Sherman] actions will interfere with the Complainant’s utility operations in such a manner and to such an extent that the Complainant’s ability to render continuous and adequate utility service to customers in its service area, as required by Section 58(a) of the Public Utility Regulatory Act, Tex.Rev.Civ.Stat.Ann. art. 1446c (Supp.1979), will be impaired; and (2) if so, whether an order prohibiting such interference should be issued by this Commission pursuant to Section 60 of said act.

The City of Sherman immediately sought declaratory and injunctive relief in the district court, contending the Commission lacked jurisdiction to enter the order in question. The district court agreed and entered its judgment restraining the Commission from proceeding further with respect to Luella’s complaint. The district court held as follows: (1) the Commission lacks jurisdiction over municipalities under PURA for the reason that municipalities, such as the City of Sherman, are not included within the term “public utility” as that term is employed in the applicable parts of the statute;1 (2) the Commission lacks jurisdiction to prohibit, condition or control the water development activities of municipally-owned water utilities under section 58(a) of PURA or any other provision of that statute;2 and (3) the Commission lacks statutory authority to prohibit or otherwise directly regulate the production of groundwater, including the power to adjudicate correlative rights to groundwater. From this judgment Luella appealed to this Court.

This appeal presents a conflict between a privately-owned public utility (Luella) and a municipally-owned utility (City of Sher[627]*627man). It is obvious that PURA makes a general division between utilities that are municipally-owned and those which are not. For example, a municipality may be the initial rate-setting and regulatory body with respect to intra-city utilities which are privately owned. PURA article IV. While a municipality may not issue certificates of convenience and necessity under the Act, its jurisdiction within municipal limits, in the ordinary case, is said to be both “exclusive” and “original.” PURA § 17(a). This grant of regulatory authority to municipalities is expressly made subject to limitations imposed elsewhere in PURA. Id. With respect to utility “operations” and “services” outside municipal limits, the jurisdiction of the Commission is said to be “original” and “exclusive,” with no distinction being made as to privately and municipally-owned utility operations or services. PURA § 17(e). Nevertheless, the City of Sherman contends it is not subject to Commission regulatory power because of its status as a municipally-owned utility, even with respect to its extra-territorial utility operations.

We note, however, that a municipally-owned utility rendering a retail utility service outside its municipal limits and in competition with another retail public utility may do so only under a certificate of convenience issued by the Commission. City of Coahoma v. Public Utility Commission, 626 S.W.2d 488 (Tex.1981). By including municipally-owned utilities within the definition of a “retail public utility,” the legislature compelled this result, although it left an ambiguity with respect to the use of the more general term “public utility” in PURA § 53 which governs grandfather certificates. Id. We observe that the jurisdiction granted the Commission in PURA § 17(e) is not delegated in terms of the status or character of the entity which conducts utility operations or renders utility services in an area outside the limits of a municipality exercising exclusive original jurisdiction. It is sufficient for the Commission’s jurisdiction if the activity (1) is merely a “utility” operation or service and (2)it occurs outside municipal limits:

The commission shall have exclusive original jurisdiction over ... utility .. . operations and services not within the incorporated limits of a municipality .... PURA § 17(e) (emphasis added).

The word “utility” is merely an adjective. It is important to note that § 17(e) is found within a section which carefully provides a detailed division of jurisdiction, original and appellate, between the Commission and municipalities, the original jurisdiction of each being divided along the line of the city or town limits.

It is undisputed that the water “sands” or strata here in issue lie outside the municipal limits of the City of Sherman. Thus any utility operations at that site by the City would lie within the exclusive original jurisdiction assigned to the Commission under PURA § 17(e). We hold, therefore, that PURA § 17(e) expressly gives the Commission jurisdiction to determine questions touching upon “utility .. . operations .. .

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City of Sherman v. Public Utility Com'n of Texas
643 S.W.2d 681 (Texas Supreme Court, 1983)

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Bluebook (online)
632 S.W.2d 624, 1981 Tex. App. LEXIS 4632, 1981 WL 638543, Counsel Stack Legal Research, https://law.counselstack.com/opinion/public-utility-commission-of-texas-v-city-of-sherman-texapp-1981.