Texas Natural Resource Conservation Commission v. Lakeshore Utility Company, Inc., Sentry Title Company, Inc., Alan D. Whatley, and Thelma J. Whatley

164 S.W.3d 368, 35 Envtl. L. Rep. (Envtl. Law Inst.) 20077, 48 Tex. Sup. Ct. J. 537, 2005 Tex. LEXIS 300, 2005 WL 784081
CourtTexas Supreme Court
DecidedApril 8, 2005
Docket02-0988
StatusPublished
Cited by72 cases

This text of 164 S.W.3d 368 (Texas Natural Resource Conservation Commission v. Lakeshore Utility Company, Inc., Sentry Title Company, Inc., Alan D. Whatley, and Thelma J. Whatley) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Texas Natural Resource Conservation Commission v. Lakeshore Utility Company, Inc., Sentry Title Company, Inc., Alan D. Whatley, and Thelma J. Whatley, 164 S.W.3d 368, 35 Envtl. L. Rep. (Envtl. Law Inst.) 20077, 48 Tex. Sup. Ct. J. 537, 2005 Tex. LEXIS 300, 2005 WL 784081 (Tex. 2005).

Opinion

Justice O’NEILL

delivered the opinion of the Court.

In this case arising from a Texas Natural Resource Conservation Commission 1 *370 enforcement action, we must decide whether the evidence is legally sufficient to support the trial court’s determination that a utility company knowingly violated the Water Code by charging its customers unauthorized fees, and whether the Water Code authorizes the Attorney General, at the Commission’s request, to seek customer refunds in district court to compel compliance with the Water Code’s statutory provisions. Answering both questions in the affirmative, we affirm in part and reverse in part the court of appeals’ judgment.

I. Facts

Lakeshore Utility Company, Inc., 2 is a water and sewer public utility providing service to customers in two residential subdivisions, Point La Vista and Esquire Estates II, adjacent to Cedar Creek Lake in Henderson County, Texas. Because Lakeshore’s customers reside on property just above the lake, a typical gravity- or gradient-flow sewer system cannot be used in the subdivisions. Instead, a more complex and expensive “pressure-effluent system” 3 is used.

As a public utility, Lakeshore is subject to the jurisdiction of the Commission, which is charged with exercising regulatory authority over public utilities and fixing and regulating utility rates. See Tex. Water Code §§ 13.041(a) (providing that the Commission “may regulate and supervise the business of every water and sewer utility”), 13.181(b) (authorizing the Commission to fix and regulate utility rates), 13.190(a) (mandating that utilities cannot “charge, demand, collect, or receive” a rate for service that is not authorized). Lake-shore’s monthly utility rates and tap fees — the fees charged to install water and sewer utility services — must be listed on its approved tariff schedule, or schedule of rates, that is filed with the Commission. Id § 13.136.

In 1977, the Commission accepted a tariff application from Lakeshore and approved monthly rates for both subdivisions as well as tap fees at a flat rate of $200 for water “Tap and Meter Installation” and $600 for sewer “Tap & Installation” at locations requiring “heavy-duty pump[ing] or excessive lift[ing].”

Between 1981 and 1989, Lakeshore submitted numerous tariff applications to the Commission requesting various changes to the Commission’s 1977 approved rates and tap fees. Relevant to this case are the tariff applications Lakeshore made in 1981 and 1989 to increase the amounts approved by the Commission in its original 1977 tariff. These applications requested that the Commission approve monthly rate and tap-fee increases at each subdivision. In each instance, while awaiting the Commission’s decision, Lakeshore charged its customers the increased amounts that it was requesting the Commission approve. In *371 response to each application, the Commission signed an order dismissing Lake-shore’s request and directing Lakeshore to refund the increased fees collected from its customers while the application was pending. Because of the importance of the 1981 and 1989 tariff applications — particularly the resulting Commission orders that required Lakeshore to refund its customers' — we detail the events surrounding each application below.

A. The 1981 Tariff Application and Resulting 1983 Orders

In 1981, Lakeshore sought the Commission’s authorization to increase its monthly utility rates and to increase its tap fees to $375 for water and $1,150 for sewer services. Lakeshore’s request noted parenthetically that the new sewer rate would include “pump[sj, tanks, valves, fittings, & controls.” Lakeshore charged its customers the increased amounts pending the Commission’s decision. In January 1983, the Commission issued an order denying the requested rate and fee increase and directing Lakeshore to charge tap fees no higher than “actual cost, not to exceed $200.00” for water and “actual cost, not to exceed $600.00” for sewer installation services. Accordingly, Lakeshore was not to charge amounts exceeding those formerly approved on its 1977 tariff. The Commission also ordered Lakeshore “to refund to its customers all monies collected in excess of the rates set forth [in its 1977 tariff],” and to provide the Commission with the name of each customer refunded and the amount within the next two months. Lakeshore was told its failure to comply would result in referral to the Attorney General’s office for prosecution. As will be seen, however, Lakeshore continued to charge customers the disapproved amounts.

Just two months after the Commission’s January 1983 Order denying Lakeshore’s requested increase, Lakeshore was involved in a dispute concerning the Commission’s certification of another public utility called the St. Paul Industrial Training School. As part of the certification process, the Commission undertook an examination and inquiry into Lakeshore’s tap fee charges and issued an order in March 1983 called the St. Paul Order. In the St. Paul examiner’s report, which was adopted by the Commission in its order, the examiner found that Lakeshore had been charging its customers sewer tap fees of $1,150 when the Commission had refused to approve this amount. The examiner noted that Lakeshore’s overcharges constituted a violation of the statutory provision providing that “[n]o public utility may, directly or indirectly by any device whatsoever or in any manner; [sic] charge, demand, collect, or receive from any person” any amount other “than that prescribed in the schedule of rates of the public utility.” See Tex. Water Code § 13.190(a). The examiner concluded that the Commission should monitor Lakeshore’s tap fee charges and “request the Attorney General to bring an action in District Court, in the Commission’s behalf’ to require Lakeshore’s compliance with the provision if the Commission’s monitoring revealed that rates other than tariffed rates were charged. It is unclear, though, whether the Commission took any further action to ensure Lake-shore’s compliance with either the Commission’s January 1983 Order or the St. Paul Order.

B. The 1989 Rate Application and Resulting Order

In January 1989, Lakeshore filed another request for authorization from the Commission to increase its monthly rates and to increase tap fees for both residential subdivisions to $375 for water and $1,350 for sewer services. While the request was pending, Lakeshore again charged its cus *372 tomers the proposed fees. On December 21, 1989, the Commission denied Lake-shore’s application and ordered Lakeshore to refund approximately $29,000 in overcharges collected during the pendency of Lakeshore’s request by crediting customers’ future bills.

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164 S.W.3d 368, 35 Envtl. L. Rep. (Envtl. Law Inst.) 20077, 48 Tex. Sup. Ct. J. 537, 2005 Tex. LEXIS 300, 2005 WL 784081, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texas-natural-resource-conservation-commission-v-lakeshore-utility-tex-2005.