Green Valley Special Util Dist v. Donna Nelson, etGreen Valley Special Util Dist v. Donna Nelson, et
This appeal arose out of two orders of the Texas Public Utility Commission (“PUC”) decertifying territory from the certificate of convenience and necessity (“CCN”) issued to Green Valley Special Utility District (“Green Valley”) for sewer (wastewater) service. Green Valley sued, averring that, because it had “provided or made available” sewer service,
We granted en banc hearing to consider the meaning of “provided or made available” in
I.
Green Valley is a special utility district1 that provides water and sewer service in an area that includes parts of Bexar, Comal, and Guadalupe
In April 2016, Guadalupe Valley Development Corporation (“GVDC”) petitioned the PUC to decertify its approximately 160-acre parcel from Green Valley‘s sewer CCN. Shortly thereafter, the City of Schertz and its City Manager (jointly “Schertz”), after notifying Green Valley of its intent to provide sewer service, petitioned the PUC to decertify a separate 405-acre tract that fell within its corporate limits.
The PUC recognized that Green Valley “intend[ed] to build a regional wastewater-treatment plant” and had “an agreement to deliver waste to the city of Marion‘s wastewater-treatment plant.” Nevertheless, the PUC found that Green Valley hadn‘t “committed facilities or lines providing sewer service” or “performed acts or supplied anything” to the property. The PUC also determined that, as a matter of both law and fact, the tract wasn‘t “receiving sewer service from Green Valley.” Based on that conclu
Schertz‘s petition was similarly successful. The PUC found that Green Valley “provide[d] no retail sewer service,” had no contractual obligations to do so, and had not received any requests for such service in the tract that Schertz sought to decertify. Moreover, Green Valley “ha[d] made no physical improvements” to the tract, “ha[d] no existing retail sewer infrastructure anywhere within the boundaries of its CCN,” and “[wa]s not currently capable of providing sewer service to anyone in the decertificated area.” The PUC thus granted Schertz‘s petition and amended Green Valley‘s CCN to remove the decertified tract, concluding that TWC § 13.255(c) required it do so. The PUC also determined that Green Valley was not entitled to any compensation for future lost profits, because “[n]o property of Green Valley will be rendered useless or valueless . . . by the decertification.”
Green Valley sought relief related to those two orders—the GVDC Order and the Schertz Order, respectively—by (1) seeking judicial review in
The service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body, or by the granting of any private franchise for similar service within such area during the term of such loan . . . .
Green Valley also asserted that
Shortly after Green Valley filed its first amended complaint, the PUC Officials moved to dismiss.8 They asserted Eleventh Amendment immunity, averring that Ex parte Young, 209 U.S. 123 (1908), did not apply or, alternatively, that it did not entitle Green Valley to an injunction. The PUC Officials also averred that Green Valley had failed to state a claim; Schertz and GVDC
Six months later,9 every party moved for summary judgment. The district court denied GVDC‘s and Schertz‘s motions but granted Green Valley‘s and the PUC Officials’ motions in part. Relying on North Alamo, the court granted summary judgment to Green Valley on its
GVDC, Schertz, and the PUC Officials appealed as to the
II.
“This court has a continuing obligation to assure itself of its own jurisdiction, sua sponte if necessary.” United States v. Pedroza-Rocha, 933 F.3d 490, 493 (5th Cir. 2019) (per curiam), cert. denied, 2020 U.S. LEXIS 2749, 206 L. Ed. 2d 940 (2020). Before considering the merits, we address three jurisdictional issues: (1) whether Green Valley has standing to press its preemption claims as to TWC § 13.254(a-1); (2) whether the Green Valley‘s settlement with GVDC mooted any of its claims; and (3) whether state
A.
To have standing, Green Valley “must demonstrate (1) that [it] suffered an injury in fact that is concrete, particularized, and actual or imminent, (2) that the injury was caused by the defendant[s], and (3) that the injury would likely be redressed by the requested judicial relief.” Thole v. U.S. Bank N.A., 140 S. Ct. 1615, 1618 (2020).
Green Valley maintains that it has standing to challenge § 13.254(a-1) as preempted. Its theory is as follows: First, when “decertifying the Schertz Property, the PUC [Officials] incorporated by reference their prior legal analysis on [the City of] Cibolo‘s application for decertification.” Second, in that order, “the PUC [Officials] expressly relied on section 13.254(a-1) to decline to enforce
Green Valley misunderstands the Cibolo Order. There, the PUC determined that it lacked the authority to address whether
On its face, the Schertz Order relied only on § 13.255 to decertify the Schertz tract. It made no reference to § 13.254(a-1), which makes sense, given that that provision applies only to property-owner decertification, not single-service municipal decertification. Any injury Green Valley suffered
Based on that, the district court correctly opined that Green Valley lacked standing to challenge § 13.254(a-1). The court erred, however, by dismissing, with prejudice, Green Valley‘s claim that
B.
Next, we consider mootness. “A case becomes moot . . . when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013) (some quotation marks omitted). That happens “when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Knox v. Serv. Emps. Int‘l Union, Local 1000, 567 U.S. 298, 307 (2012) (quotation marks and alteration omitted). Generally speaking, a settlement can moot a dispute.11
Green Valley suggests that the fact that its petition for recertification remains pending—that is, has not yet been approved—means this case is not moot. We disagree. Green Valley filed that petition at GVDC‘s request, and no one—including Cibolo, which would have been the competing utility before settlement—contested it. Green Valley has approval from the Texas Commission on Environmental Quality to construct a regional wastewater treatment facility that will serve the GVDC tract, and Green Valley has started construction on other infrastructure to serve the property. Moreover, the PUC‘s staff has recommended that the recertification petition be approved. Based on those unique facts, the PUC‘s approving the settlement and recertifying the GVDC tract is routine,12 and, indeed, appears to be held
Green Valley maintains that, notwithstanding its settlement, its preemption claim as to TWC § 13.2541(d) survives. That is so, Green Valley posits, because “those claims are directed at the PUC Officials’ prospective compliance with
With Green Valley‘s settlement‘s having mooted any controversy as to its claims related to the GVDC Order, we next consider remedy. When a case becomes moot on appeal, the standard practice “is to reverse or vacate the judgment below and remand with a direction to dismiss.” United States v. Munsingwear, Inc., 340 U.S. 36, 39 (1950). Though “mootness by reason of settlement,” at least generally, “does not justify vacatur of a judgment under review,” U.S. Bancorp Mortg. Co. v. Bonner Mall P‘ship, 513 U.S. 18, 29 (1994), we still must examine “the equities of the individual case,” Staley v. Harris Cty., 485 F.3d 305, 312 (5th Cir. 2007) (en banc).
We decide in favor of vacatur, which the equities favor for three reasons. First, only part of this case is moot—there is still a live controversy as to the Schertz Order—which counsels in favor of vacating the portion that is no longer “live.” Second, though U.S. Bancorp, 513 U.S. at 26–28, suggests that the value of precedent might counsel against vacatur, that is not implicated (at least as acutely) where a district court‘s decision—whose precedential value is limited only to its persuasiveness—would be taken off the books.16 And third, none of the criteria that counseled against vacatur in Staley is present here.17
C.
The first two jurisdictional hurdles tripped up most of Green Valley‘s
1.
“In most cases, Eleventh Amendment sovereign immunity bars private suits against nonconsenting states in federal court.” City of Austin v. Paxton, 943 F.3d 993, 997 (5th Cir. 2019). That immunity “also prohibits suits against state officials or agencies that are effectively suits against a state.” Id.
There are two primary exceptions. First, Congress may expressly abrogate state sovereign immunity. See, e.g., AT&T Commc‘ns v. BellSouth Telecomms. Inc., 238 F.3d 636, 643 (5th Cir. 2001). And second, the Ex parte Young exception “permits suits for prospective . . . relief against state officials acting in violation of federal law.” Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 437 (2004). Here, Congress has not abrogated Texas‘s sovereign immunity, and the State has not consented to suit. Young is the whole ballgame.
For Young to apply, three criteria must be satisfied: (1) A “plaintiff must name individual state officials as defendants in their official capacities,” Raj v. La. State Univ., 714 F.3d 322, 328 (5th Cir. 2013); (2) the plaintiff must “allege[ ] an ongoing violation of federal law,” Verizon Md. Inc. v. Pub. Serv. Comm‘n of Md., 535 U.S. 635, 645 (2002); and (3) the relief sought must be “properly characterized as prospective,” id. To determine whether the exception applies, we conduct a simple, “straightforward inquiry,” Air Evac EMS, Inc. v. Tex., Dep‘t of Ins., 851 F.3d 507, 517 (5th Cir. 2017), and we do not consider the merits of the underlying claims, see Austin, 943 F.3d at 998.
But what qualifies as prospective? Merely requesting injunctive or declaratory relief is not enough; sovereign immunity does not turn entirely on the relief sought.19 Often, the line between the permissible and the forbidden is fuzzy.20 “In discerning on which side of th[at] line a particular case falls, we look to the substance rather than to the form of the relief sought and will be guided by the policies underlying . . . Young.” Papasan v. Allain, 478 U.S. 265, 279 (1986) (citation omitted). “Remedies designed to end a continuing violation of federal law are necessary to vindicate the federal interest in assuring the supremacy of that law[,] . . . [b]ut compensatory or deterrence interests are insufficient to overcome the dictates of the Eleventh Amendment.” Green v. Mansour, 474 U.S. 64, 68 (1985).
“It is true,” of course, “that a complaint must allege that the defendant is violating federal law, not simply that the defendant has done so.” NiGen Biotech, L.L.C. v. Paxton, 804 F.3d 389, 394 (5th Cir. 2015) (second emphasis added). But “[a]s long as the claim seeks prospective relief for ongoing harm, the fact that a current violation can be traced to a past action does not bar relief under . . . Young.” Williams ex rel. J.E. v. Reeves, 954 F.3d 729, 738 (5th Cir. 2020).
2.
The district court found Young satisfied, because “it is nearly axio
Green Valley‘s requests for injunctive relief against the PUC Officials present a close question. Specifically, Green Valley requested injunctions
- prohibiting [the PUC Officials] from decertifying [Green Valley‘s] certificated water or wastewater service area pursuant to [TWC] section 13.254(a-5) or section 13.255(b)–(c), as long as [Green Valley‘s] federal loan remains outstanding; . . . [and]
- prohibiting [the PUC Officials] from permitting or authorizing any entity other than . . . Green Valley . . . to provide or make available water or wastewater service to any area that was decertified from [Green Valley‘s] certificated water or wastewater service area pursuant to section 13.254(a-5) or 13.255(b)–(c) on or after December 31, 2003, as long as [Green Valley‘s] federal loan remains outstanding . . . .
On its face, that prayer satisfies Young: It requests relief prospectively requiring the PUC Officials to refrain from taking future actions to enforce an unlawful order.21
Though the ongoing harms that Green Valley alleges it suffers can be traced to the PUC‘s order decertifying the Schertz territory, that does not mean Young bars this suit. See Williams, 954 F.3d at 738–39. Green Valley‘s pleadings ask us to prohibit the PUC Officials from taking two actions going forward: (1) decertifying Green Valley‘s service territory and (2) allowing another utility to serve any area decertified from Green Valley‘s territory. That relief, if awarded, would redress an ongoing violation of Green Valley‘s rights under
The decision in Verizon Maryland is instructive. Verizon sought injunctive and declaratory relief from a state agency‘s order requiring it to pay compensation to another telecommunications carrier for exchanging certain*
The same applies here.22 Green Valley‘s complaint asks the district court to declare unlawful the defendants’ “continuing conduct” and to prohibit both “the PUC Officials’ grant of relief . . . [and Schertz‘s] pursuit of relief” arising from the PUC‘s orders. We thus construe the complaint as a request to restrain state officials from enforcing an unlawful order. Just as in Verizon Maryland.
But just because some of the relief Green Valley seeks is proper under Young does not mean that all of it is. The district court invalidated both the Schertz Order and the PUC‘s order recertifying the tract to the city. That relief—“the voiding of a final state” agency order—is “quintessentially retrospective” and thus out of bounds under Young. Republic of Paraguay v. Allen, 134 F.3d 622, 628 (4th Cir. 1998). But even if some of the relief sought is not available, it does not follow that Young bars Green Valley‘s entire suit. Because at least one form of prospective relief is possibly available to Green Valley, its claims against the PUC Officials are not barred by the Eleventh Amendment.
III.
With the jurisdictional questions resolved, we address one final antecedent issue that the PUC Officials (but not Schertz) raise: whether, under City of Safety Harbor v. Birchfield, 529 F.2d 1251 (5th Cir. 1976), Green Valley is a proper
“It is the general rule . . . that a federal appellate court does not consider an issue not passed upon below.” Singleton v. Wulff, 428 U.S. 106, 120 (1976). But it is within our discretion to determine whether to consider an issue presented for the first time on appeal. See Glass v. Paxton, 900 F.3d 233, 242–43 (5th Cir. 2018). Doing so might be appropriate for “purely legal questions” where (1) “the proper resolution is beyond any doubt” or (2) “injustice might otherwise result.” Id. at 243.
Immediately, it is important to draw a distinction between Schertz and the PUC Officials. Schertz never relied on Birchfield, even after (1) the PUC Officials invoked it in their initial brief on appeal and (2) Green Valley countered by saying the issue was forfeited. Just because we have discretion to address a forfeited argument that is later asserted doesn‘t mean that we can (or should) make a party‘s argument for it in the first place.23 By failing to bring Birchfield up even once on appeal, Schertz has forfeited any contention
Unlike Schertz, the PUC Officials did raise the issue, albeit in the eleventh hour.24 The PUC Officials do not (and frankly cannot) offer any persuasive reason why that position—which should have been obvious from the outset of the litigation—was not timely asserted. Though that limitation on
The PUC Officials correctly observe that Birchfield, 529 F.2d at 1253, held that municipalities and political subdivisions are not proper parties under
Ultimately, however, we need not decide whether to pull the PUC Officials back from the precipice. Birchfield stands as no obstacle to having this case proceed against the PUC Officials, because Green Valley has a cause of action against them at equity, regardless of whether it can invoke
IV.
We turn to the merits. “We review . . . summary judgments de novo.” In re IntraMTA Switched Access Charges Litig., 961 F.3d 691, 713 (5th Cir. 2020).
Under the Consolidated Farm and Rural Development Act, the USDA is “authorized to make or insure loans” to rural water and sewer utilities for the “the conservation, development, use, and control of water . . . primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents.”
[t]he service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body, or by the granting of any private franchise for similar service within such area during the term of such loan . . . .
The panel in North Alamo interpreted that language, relying mainly on state law.28 The panel correctly observed that, under Texas law, a CCN gives a utility both (1) “the exclusive right to serve the area within its CCN” and (2) an obligation “to serve every consumer within its certified area and render continuous and adequate service within the area . . . .” N. Alamo, 90 F.3d at 915–16 (ellipsis omitted). Based on that, the panel held that a utility‘s “state law duty to provide service is the legal equivalent to . . . ‘making service available’ under
North Alamo‘s state-law-duty rule finds no support in
In other words, “[i]nherent in the concept of providing service or making service available is the capability of providing service, or, at a mini-mum, of providing service within a reasonable time.” Sequoyah Cty. Rural Water Dist. No. 7 v. Town of Muldrow, 191 F.3d 1192, 1203 (10th Cir. 1999) (emphasis added). But under North Alamo, a utility can hang onto its government-sanctioned monopoly even if it does not serve anyone in its service territory or doesn‘t have the facilities to do so.
More consistent with the ordinary meaning of “provided or made available” is the so-called “pipes in the ground” or “physical ability” test. That inquiry asks whether the utility has (1) “adequate facilities within or adjacent to the area to provide service to the area within a reasonable time after a request for service is made” and (2) the legal right to provide service. Le-Ax Water Dist. v. City of Athens, 346 F.3d 701, 706 (6th Cir. 2003).
Every other circuit to consider
Undeterred, Green Valley counters with three points. First, it asserts that North Alamo was right on the merits, because Texas‘s duty requiring utilities to serve all customers in their territories provides an alternative means to make service available under
But Green Valley wholly fails to grapple with
In North Alamo‘s place, we adopt the “physical ability” test as articulated in Le-Ax Water, 346 F.3d at 705–07, albeit with one small alteration.34 To make the test easy to apply to both water and sewer service, we hold that a utility must show that it has (1) adequate facilities to provide service to the area within a reasonable time after a request for service is made and (2) the legal right to provide service.35 A utility cannot satisfy that test if it has no nearby infrastructure.36 But “pipes in the ground” is a colloquial shorthand, not a strict requirement.37 The test we adopt strikes the appropriate balance
Because the district court, bound by North Alamo, relied exclusively on Green Valley‘s state-law duty to conclude that Green Valley had made service available, we vacate the portion of the judgment rendered in favor of Green Valley on its
In sum, the en banc court rules as follows:
- We MODIFY the dismissal of Green Valley‘s preemption claim as to
TWC § 13.254(a-1) to make it without prejudice, and we AFFIRM it as so modified. - We VACATE the judgments invalidating the PUC‘s orders40 and REMAND with instruction to dismiss those claims as barred by state sovereign immunity.
We remind the parties and the district court that before permanent injunctive relief can be awarded, a plaintiff must satisfy the traditional four-factor test. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). And “[w]hen crafting an injunction, district courts are guided by the Supreme Court‘s instruction that the scope of injunctive relief is dictated by the extent of the violation established.” ODonnell v. Harris Cty., 892 F.3d 147, 163 (5th Cir. 2018) (quotation marks omitted). Accordingly, a “court must narrowly tailor an injunction to remedy the specific action which gives rise to the order.” John Doe #1 v. Veneman, 380 F.3d 807, 818 (5th Cir. 2004). Indeed, “an injunction must be vacated if it fails to meet th[ose] standards and is overbroad.” ODonnell, 892 F.3d at 163 (5th Cir. 2018) (quotation marks omitted).
The district court enjoined Schertz “from providing wastewater service to the Schertz Acreage, absent Green Valley‘s consent, for so long as the Schertz Acreage remains within Green Valley‘s Sewer CCN[.]” That injunction is overbroad for two reasons. First, Green Valley is entitled to
We offer no clue as to whether Green Valley may be entitled to injunctive relief under our new “physical capability” test. But any injunctive relief to which it might be entitled must be narrowly tailored to the protections that
We VACATE the remaining judgments related to the GVDC Order41 and REMAND with instruction to dismiss those claims as moot. - We OVERRULE North Alamo Water Supply Corp. v. City of San Juan, 90 F.3d 910 (5th Cir. 1996) (per curiam).
- We VACATE the judgments on Green Valley‘s
§ 1926(b) claims related to the Schertz Order and REMAND for further proceedings.42
We place no limitation on the matters that the conscientious district court may consider, consistent with this opinion, on remand. Nor do we suggest what decisions that court should make.
Green Valley Special Utility District (Green Valley) contends that, by virtue of
I would overrule the decision by a panel of this court in Green Valley Special Utility District v. City of Cibolo3 and hold that
As noted, Green Valley did not obtain a federal loan under
The question of whether having “pipes in the ground,” that is, existing facilities, “nearby” is a prerequisite to the protections of
I
The first of only two questions that the City of Schertz raises before the en banc court as an appellant is whether a prior opinion from a panel of this court, Green Valley Special Utility District v. City of Cibolo,6 was correctly decided. The City of Schertz contends that “[t]he monopoly protections afforded by
The en banc court‘s judgment vacates the district court‘s judgment as to, and remands for further consideration of, Green Valley‘s contention that it has provided or made available wastewater service to the 405-acre tract within the City of Schertz‘s boundaries. If the City of Schertz is correct that
Instead, the en banc court requires the City of Schertz to return to the district court to litigate whether Green Valley has existing facilities “nearby” to provide wastewater service to the 405-acre tract. If the City of Schertz is unsuccessful, it will have to once again press the dispositive issue that it raises in this appeal in yet another appeal. Any future appeal would in all likelihood be heard by a panel, which would be bound by our precedent in Cibolo. The City of Schertz would then have to obtain en banc review. The en banc majority‘s opinion offers no explanation as to why it is requiring the City of Schertz to incur the cost of litigating an issue on remand, to potentially incur the cost of pursuing a second appeal, the outcome of which is pre-ordained by this court‘s precedent, and to run the risk that this court will not grant en banc review. This result is not only a waste of judicial and private resources,9 it is also plainly unfair to the City of Schertz.
It is plainly unfair to the City of Schertz and a highly questionable judicial course of action for another reason. Green Valley is in the process of
At the very least, the City of Schertz and the public deserve an explanation for the en banc court‘s aberrant decision to refuse to address a dispositive issue on appeal. But no explanation is forthcoming. Only silence.
We are here en banc. We bypassed normal review by a panel when we directly took the case en banc. We cut through a veritable forest of procedural issues in order to reach only one of the two merits issues that the City of Schertz asks us to decide. We should answer the question that would end the case, and which I submit, is more important than the only merits issue the court decides, which results in a remand rather than resolution.
II
In order to determine whether the monopoly power bestowed by
The text of
So what else is there within
The statute further provides that “[t]he term ‘project’ shall include facilities providing central service or facilities serving individual properties, or both.”16 This language tells us that it is possible that a federal loan grant can be made for more than one type of facility (central or serving individual properties) and does not exclude the possibility that more than one type of service (water and wastewater service) may be included within a single “project.” The most natural reading of “[t]he service provided or made available through any such association” in
The text of
- “(i) will serve a rural area which, if such project is carried out, is not likely to decline in population below that for which the project was designed,”
- “(ii) is designed and constructed so that adequate capacity will or can be made available to serve the present population of the area to the
extent feasible and to serve the reasonably foreseeable growth needs of the area, and” - “(iii) is necessary for an orderly community development consistent with a comprehensive community water, waste disposal, or other development plan of the rural area.”18
Construing
It is difficult to believe that Congress intended such a statutory scheme. If Congress thought that it was necessary for an association to maintain its service area intact for services other than the service for which the loan was provided, it would have directed that proceeds from such other services be dedicated at least in part to servicing the federal loan. It did not. Reading
The provision of water service is a different animal than the provision of wastewater service, as the record in the present case confirms. A provider
In Cibolo, the panel found persuasive the wastewater provider‘s argument that its wastewater service was “integrated” with its water service, concluding that “Congress‘s use of ‘the’ in
Even assuming that a court could take upon itself the role of deciding whether a different-in-kind service was so “integrated” with the service for which a federal loan was granted that it should come within the protections of
(i) will serve a rural area which, if such project is carried out, is not likely to decline in population below that for which the project was designed, (ii) is designed and constructed so that adequate capacity will or can be made available to serve the present population of the area to the extent feasible and to serve the reasonably foreseeable growth needs of the area, and (iii) is necessary for an orderly community development consistent with a comprehensive community water, waste disposal, or other development plan of the rural area.24
This court‘s decision in Cibolo did not consider
The linchpin of the Cibolo decision‘s ultimate conclusion comes in its next sentence, which reveals both a gap in logic and an unawareness of the statutory scheme: The decision notes that “[i]f ‘service’ refers to a specific service but can be used iteratively, then both Green Valley‘s water and sewer service can be examples of ‘[t]he service made available through any such association.‘”28 But the term “the service” can only be used “iteratively” in the context of
The text of
The Eighth Circuit has considered how to construe
We should not hesitate to overrule Cibolo. It did not consider all of the nuances in
It should also be noted that in considering the petition for writ of certiorari filed in Cibolo, the Supreme Court called for the views of the Solicitor General.37 The Solicitor General took the position that our court‘s Cibolo “decision is incorrect and contrary to the decision of another court of
Among the reasons given to support his position, the Solicitor General offered these observations, which I quote fully in the interest of accuracy and attribution:
The first sentence of Section 1926(a)(1) provides the answer. See Jones v. United States, 527 U.S. 373, 389 (1999) (“Statutory language must be read in context and a phrase ‘gathers meaning from the words around it.‘“) (citation omitted). That sentence states:
The Secretary is *** authorized to make or insure loans to associations, including corporations not operated for profit, Indian tribes on Federal and State reservations and other federally recognized Indian tribes, and public and quasi-public agencies to provide for the application or establishment of soil conservation practices, shifts in land use, the conservation, development, use, and control of water, and the installation or improvement of drainage or waste disposal facilities, recreational developments, and essential community facilities including necessary related equipment, all primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents, and to furnish financial
Other statutory indicators support that reading. Section 1926(b) refers to “[t]he service provided or made available through any such association.”
The relevant statutory history reinforces that conclusion. The provisions that are now codified as Section 1926(a)(1) and (b) were enacted in 1961 as Section 306(a) and (b) of the [Consolidated Farmers Home Administration Act]. See § 306, 75 Stat. 308; p. 2, supra. As originally enacted, the provision authorizing loans for particular services and the provision protecting “[t]he service provided or made available” were separated by only a single sentence. § 306, 75 Stat. 308. A reader would thus have naturally read the two provisions together, understanding “[t]he service” to refer to the service that was the subject of a loan. Although Congress has since added dozens of paragraphs to Section 1926(a), see
In reaching a contrary conclusion, the court of appeals relied on the statute‘s purposes, reasoning that construing “[t]he service” to mean any service that respondent provides would give respondent greater protection from “municipal encroachment.” Pet. App. 8a. But “no legislation pursues its purposes at all costs.” Rodriguez v. United States, 480 U.S. 522, 525-526 (1987) (per curiam). And extending Section 1926(b)‘s territorial protection to services not funded by a federal loan may well discourage the very development in rural areas that Congress sought to foster, by “prohibit[ing] cities from providing [such] services to customers within a district‘s boundaries even when the city is perhaps better situated to do so.” Public Water Supply Dist. No. 3 v. City of Lebanon, 605 F.3d 511, 520 (8th Cir. 2010). In any event, the court‘s reliance on the statute‘s purposes was misplaced, where, as here, the statute‘s text and history make clear that “[t]he service” refers to the service funded by a Section 1926(a) loan.40
Because the en banc court today declines to consider whether to overrule Cibolo in this regard, and the City of Schertz and the PUC would be entitled to a more favorable judgment if Cibolo were overruled, I respectfully dissent in part.
III
As a factual matter, all agree that Green Valley has not obtained a federal loan under
Nor do any revenues from wastewater services provided by Green Valley secure the federal loan under
IV
Were I writing for a majority of the court, the question of whether Green Valley has “provided or made available” wastewater service to the 405-acre tract within the City of Schertz‘s boundaries would no longer be a live issue because, in my view, Green Valley‘s wastewater service is not protected at all, as matter of law, by
The en banc court‘s decision today overrules North Alamo in part and offers guidance as to how
[W]e hold that a utility must show that it has (1) adequate facilities to provide service to the area within a reasonable time after a request for service is made and (2) the legal right to provide service. A utility cannot satisfy that test if it has no nearby infrastructure. But “pipes in the ground” is a colloquial shorthand, not a strict requirement. The test we adopt strikes the appropriate balance between fidelity to
§ 1926(b) ‘s text and recognition of the realities of making water or sewer service available.47
The court‘s majority opinion observes in a footnote that “[a]s in many other legal contexts, what makes facilities ‘adequate’ or a time lag ‘reasonable’ will likely depend on the facts and circumstances surrounding the particular request for service.”48 Another footnote concludes that “[t]hough the en banc court need not tease out exactly what facilities are necessary or precisely how nearby they must be located, the utility must have something in place to merit
First, the concept of “nearby” cannot be found in
Similarly,
Second, and also critically, the requirement that there must be facilities in place before the protections of
The language “shall not be curtailed or limited” in
Provisions in
Green Valley‘s water service area covers approximately 76,000 acres. That is almost 119 square miles. Requiring Green Valley to build facilities throughout that vast service area such that it has facilities “nearby” enough to meet requests for service throughout this area or else lose parts of that area to competitors is a tall order. It would be an extremely expensive and, most importantly, uncertain undertaking. How many providers to rural areas will risk spending the enormous costs of infrastructure not knowing whether they have installed enough facilities in the places that will be deemed “nearby“?
The en banc court attempts to ameliorate the tremendous uncertainty it injects by adding the “nearby” requirement. In a footnote, the en banc court‘s opinion states the following:
The PUC Officials suggest that a utility has “made” service “available” only if it is “capable of immediate use.” That is incorrect. Service may be “available” even if it cannot be immediately used. See Ross, 136 S. Ct. at 1858 (suggesting that a remedy is “available” if it “is accessible or may be obtained“). No water or sewer utility can make service immediately available to rural, undeveloped land; providing
such service involves building or installing facilities, which necessarily takes time to accomplish.54
With respect, this is unhelpful in ascertaining how “nearby” is “nearby” enough.
By reading into the text of
V
I otherwise concur in Parts I, II, and III of the en banc court‘s opinion.
* * * * *
I respectfully concur in part and dissent in part.
With deep respect to my colleagues, I concur in both Judge Smith‘s decision overturning the North Alamo case and the resulting judgment and in Chief Judge Owen‘s opinion to the extent it would overturn the Cibolo decision. I explain briefly why I believe overruling both cases is compelled and judicially proper, and I emphasize the limitations of the judgment imposed here.
1. This case was separately appealed by the City of Schertz and the members of the Texas Public Utility Commission, both of which had been enjoined by the district court. The district court‘s judgment revoked Schertz‘s CCN for the 405-acre tract within its boundaries that had previously been encompassed by Green Valley‘s CCN, and ordered the PUC to retransfer the CCN to Green Valley.
In appealing, the defendants had different goals. To reverse the loss of its CCN for wastewater service, Schertz had two options. It could persuade this court to overrule the Cibolo case, which extended Green Valley‘s claim of monopoly protection for its federal water service loan, granted by
The PUC, in contrast, wanted to maintain the integrity of Texas‘s complex and carefully structured Texas Water Code. The PUC acted under its regulatory authority here and excised this small tract in the City of Schertz from Green Valley‘s wastewater CCN only after finding that the rural utility
This court can and should resolve both litigants’ appeals. This is not a classic case, as articulated by the Chief Judge, in which deciding one issue necessarily renders the other moot. But even if it were, whether to reach the additional issue is a matter of prudence, not jurisdiction. Compare McGirt v. Oklahoma, No. 18-9526, 2020 WL 3848063, at *39 (U.S. July 9, 2020) (Thomas, J.) (agreeing with Chief Justice‘s dissent but separately contending the Court lacked jurisdiction); June Med. Servs. L.L.C. v. Russo, No. 18-1323, 2020 WL 3492640, at *34 (U.S. June 29, 2020) (Thomas, J) (“Even if the plaintiffs had standing, the Court would still lack the authority to enjoin Louisiana‘s law, which represents a constitutionally valid exercise of the State‘s traditional police powers“). Accordingly, while it is correct that a decision by this court overruling Cibolo would authorize judgment in favor of both appellants, such a narrow focus would not aptly respond to the questions raised by the state‘s appeal relevant to the North Alamo case.
2. I have nothing to add to Judge Smith‘s excellent discussion of the issues preceding and culminating in the overruling of North Alamo, and likewise I cannot improve upon Chief Judge Owen‘s cogent explanation why this court‘s decision in Cibolo was unsupported by a proper reading of
First, this case will be controlled by its facts on remand. The PUC administrative record supporting the decertification of Green Valley‘s wastewater CCN was admitted in the district court. Green Valley does not challenge the PUC‘s findings that, in this tract comprising less than 1% of its territory, Green Valley had no infrastructure for waste removal, had made no investments in the Schertz tract or outside of it for that purpose, had no existing loans or debt service related to the design or construction of sewer service, and of course, had no lost revenue stream for a non-existent service. The PUC expressly found that Green Valley had notified the PUC of any lienholders and the amount of outstanding debts, and the PUC notified Green Valley‘s lienholders of the Schertz proceeding. The utility‘s efforts to begin building a wastewater treatment plant were in their infancy and in any event were not situated to serve the Schertz tract. The only evidence about Green Valley‘s ability to offer temporary “pump and haul” service to any customers surfaced in depositions for this case taken after the PUC ruling. Those agreements pertained to customers in a different part of the utility‘s territory who would be eventually connected by pipeline to a San Antonio-owned treatment plant, a plant not feasibly accessible from the Schertz tract. The district court should not find it difficult to decide whether Green Valley has “adequate facilities to provide service to the area within a reasonable time after a request for service is made,” as the en banc court‘s formulation of the “physical capability” test under
Second, proper application of the Texas Water Code need not conflict with the strictures of
Third, neither Green Valley nor the district court, much less this en banc court anticipates that our decision will interfere with the PUC‘s ability to decertify a rural utility‘s CCN “for cause.” As the district court put it, the PUC could still revoke or amend a CCN when, “to the extent a utility does not fulfill its state law duty to provide continuous and adequate service
With these observations, I concur in full in Judge Smith‘s opinion and resulting judgment and in Chief Judge Owen‘s opinion to the extent noted.
I concur in full in Judge Smith‘s thorough opinion. I write to briefly discuss Judge Oldham‘s concurring opinion. The concurring opinion ponders what the Framers would “think about an implied cause of action to challenge state law as preempted.” While interesting and well-researched, I think it presents somewhat of a red herring. The good news is that we do not have to worry about that problem in this case. The majority opinion does not allow Green Valley to challenge any state law as preempted,1 and Green Valley need not rely on an “implied” cause of action.2 That is good news indeed, because we must be careful when, without the benefit of adversarial briefing from the parties, we worry over hundred-year-old Supreme Court precedent that the parties have not challenged.3
Turning to the interesting problems posed by the concurrence, and putting aside questions of whether Ex parte Young itself created a new federal or implied cause of action,4 the concurring opinion overlooks a simpler
State equity law provides a cause of action.5
Federal ingredient jurisdiction supplies subject-matter jurisdiction.6
Problem solved.
I join the court‘s thoughtful opinion to correct our circuit precedent. I write separately about Green Valley‘s cause of action. The court says that “Green Valley has a cause of action against [state officials] at equity.” Ante, at 19 (citing Ex parte Young, 209 U.S. 123, 149 (1908)). That‘s a jarring sentence. After all, it‘s Congress—not a court—that creates a cause of action. And no party in this case ever asked us to find a cause of action under Ex parte Young. I nonetheless conclude that the court faithfully applies Supreme Court precedent, even if it raises other questions about the limits of Article III.
I.
A.
Courts are not legislatures with a free-ranging ability to correct mistakes—even our own. Broadrick v. Oklahoma, 413 U.S. 601, 610–11 (1973) (“[U]nder our constitutional system courts are not roving commissions assigned to pass judgment on the validity of the Nation‘s laws.“). That‘s why we start every case, as the court faithfully does here, by assuring ourselves of our own jurisdiction. Our constitutional jurisdiction requires that the parties present a “Case” or “Controversy” within the meaning of Article III. And we also must ensure that Congress gave us statutory jurisdiction, for instance under
While having jurisdiction is necessary, it‘s generally not sufficient to render judgment in any specific case. That‘s because Congress must also empower the specific parties to invoke our jurisdiction and to seek their specified remedy. In other words, plaintiffs must also show they have a “cause of action.” Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 89 (1998) (holding a cause of action is a non-jurisdictional requirement).
B.
In this case, the court says Ex parte Young provides Green Valley‘s cause of action.1 So let‘s talk about Ex parte Young.
It was an original habeas action in the Supreme Court. It arose out of nine derivative suits brought by railroad shareholders against their own
The shareholders sued their own railroad corporations to forbid them from following Minnesota‘s rate laws because the laws were allegedly unconstitutional under, inter alia, the Fourteenth Amendment. Young, 209 U.S. at 129–30. As part of that intra-corporate dispute, the shareholders also sued Young to stop him from enforcing those state laws. After a hearing, the district court found the rates indeed violated the Fourteenth Amendment and issued a preliminary injunction against Young from enforcing the rates. Id. at 132. Young disobeyed that injunction by filing suit against the railroads anyway. The court held Young in contempt, which of course is what he wanted. Id. at 133–34; Friedman, supra, at 264. Young then sought a writ of habeas corpus from the Supreme Court, arguing that the injunction he violated was invalid. Young, 209 U.S. at 126–27. Why? Young said he could not be haled into court because the suit against him was effectively a suit
The Supreme Court disagreed. The Supreme Court‘s opinion reached two conclusions relevant here. First, Young could be sued, notwithstanding the State‘s sovereign immunity. Id. at 159–60; see also Va. Off. for Prot. & Advoc. v. Stewart, 563 U.S. 247, 255 (2011) (“[W]hen a federal court commands a state official to do nothing more than refrain from violating federal law, he is not the State for sovereign-immunity purposes.“). Second, an equitable cause of action would open the federal courts to suits like the one against Young. Young, 209 U.S. at 165–166. The Court explained that “[t]he question of sufficiency of rates is important and controlling; and, being of a judicial nature, it ought to be settled at the earliest moment by some court.” Id. at 166 (emphasis added). And “when a Federal court first obtains
II.
The second of Ex parte Young‘s holdings—the implied cause of action sounding in equity—is interesting.4 In the years since 1908, the Supreme Court has told us that this equitable cause of action is “beyond dispute” and “federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983) (citing Young, 209 U.S. at 160–62). And in more recent years, the Court has reaffirmed this cause of action as accepted fact. See Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 326 (2015) (“[A]s we have long recognized, if an individual claims federal law immunizes him from state regulation, the court may issue an injunction upon finding the state regulatory actions preempted.“); Free Enter. Fund v. Pub. Co. Acct. Oversight
But the Court hasn‘t told us where this cause of action comes from. Nor is it clear how we should understand this cause of action alongside other federal-courts doctrines.
A.
The source of law for a cause of action generally differs in diversity and federal question cases. For diversity cases, state law provides it. See
We must look at statutes for federal causes of action because “there is ‘no federal general common law.‘” Rodriguez v. Fed. Deposit Ins. Corp., 140 S. Ct. 713, 717 (2020) (quoting Erie, 304 U.S. at 78). Instead, the “Constitution . . . vests the federal government‘s ‘legislative Powers’ in Congress and reserves most other regulatory authority to the States.” Ibid. As a consequence, federal courts cannot “formulate federal common law” causes of action merely because Congress “vested jurisdiction in the[m].” Tex. Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640–42 (1981); cf. Hernandez v. Mesa, 140 S. Ct. 735, 742 (2020) (“With the demise of federal general common law, a federal court‘s authority to recognize a damages remedy must rest at bottom on a statute enacted by Congress.“).
So, when a plaintiff brings a federal-question claim into court, we must “determine . . . whether a legislatively conferred cause of action encompasses [that] particular plaintiff‘s claim.” Lexmark Int‘l, Inc. v. Static Control
This inquiry helps courts stay in their lane: relying on Congressionally-enacted statutes forbids a court from “apply[ing] its independent policy judgment to recognize a cause of action that Congress has denied” or “limit[ing] a cause of action that Congress has created.” Id. at 128; cf. Sprint Commc‘ns, Inc. v. Jacobs, 571 U.S. 69, 77 (2013) (“Federal courts, it was early and famously said, have ‘no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given.‘” (quoting Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 404 (1821)).
It‘s usually a pretty straightforward inquiry to determine if a federal statute authorizes a cause of action. Simply put, we look at the text. For instance, the text of the cause of action provided by the Administrative Procedure Act is not hard to find: “A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.”
Sometimes the inquiry is less straightforward because the Supreme Court has inferred a cause of action from a statute that is silent on the issue. See, e.g., Cannon v. Univ. of Chicago, 441 U.S. 677, 709 (1979). Nevertheless, in these implied-cause-of-action cases, the text of the statute remains paramount. Alexander, 532 U.S. at 286. After all, “a plaintiff suing under an
No matter how the cause-of-action inquiry proceeds—explicitly or implicitly—the Congressionally-enacted text remains the lodestar. At times, the text has provided the slenderest of reeds. For instance, in interpreting the Alien Tort Statute, the Supreme Court held that this plainly “jurisdictional” statute was phrased in such a way as to show “the common law would provide a cause of action for [a] modest number of international law violations.” Sosa v. Alvarez-Machain, 542 U.S. 692, 724 (2004); see
B.
The Ex parte Young cause of action stands out because it does not rest on statutory text. Nor does it find its home in the text of the Constitution. For example, the Supreme Court has reaffirmed that causes of action do not come from the Supremacy Clause: “the Supremacy Clause is not the ‘source of any federal rights,’ and certainly does not create a cause of action.” Armstrong, 575 U.S. 320, 324–25, (quoting Golden State Transit Corp. v. Los Angeles, 493 U.S. 103, 107 (1989)) (emphasis added). Instead, the Supremacy Clause is a rule of decision: “It instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court, and in what circumstances they may do so.” Id. at 325.
C.
What‘s more, it‘s not obvious how we‘re supposed to square the implied equitable cause of action in Ex parte Young with federal statutes, other lines of Supreme Court precedent, and the limited role of federal courts in our constitutional system.
First, the cause of action seems at odds with
Of course, this circuit has previously held that political subdivisions or municipalities—like Green Valley—can‘t sue as plaintiffs under
And that‘s exactly how we approach causes of action in other contexts. Take Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388 (1971).5 When a federal statute, a state statute, or an administrative proceeding would provide an alternative form of relief, the Court has generally declined to recognize a Bivens action. See Ziglar v. Abbasi, 137 S. Ct. 1843, 1858 (2017) (“[I]f Congress has created ‘any alternative, existing process for protecting the [injured party‘s] interest’ that itself may ‘amoun[t] to a convincing reason for the Judicial Branch to refrain from providing a new and freestanding remedy in damages.‘” (quoting Wilkie v. Robbins, 551 U.S. 537, 550 (2007)). So, for example, there‘s no Bivens action against the United States for employment disputes because there are already “comprehensive procedural and substantive provisions giving meaningful remedies.” Bush v. Lucas, 462 U.S. 367, 368 (1983). Same for social security disputes, see Schweiker v. Chilicky, 487 U.S. 412, 426–27 (1988), and those against private prisons, see Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 72–74 (2001). The analysis doesn‘t change because the other avenues of relief don‘t provide the same remedies as Bivens would—still no Bivens. See Minneci v. Pollard, 565 U.S. 118, 129 (2011) (“State-law remedies and a potential Bivens remedy need not be perfectly congruent.“). And it still doesn‘t change when those avenues of relief can only be pursued in state, not federal, court. Id. at 129, 131.
It‘s therefore unclear why the Ex parte Young cause of action would not be interpreted similarly—especially when
The Supreme Court has expressed a wariness, however, about allowing declaratory judgment actions that raise only preemption questions. For example, the Court has denied jurisdiction over a case where a state regulatory authority sought a declaration that its own regulations were not preempted by federal law. See Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 19 (1983). This hesitancy reflects a centuries-old duty to avoid issuing advisory opinions about the validity of certain laws. Flast v. Cohen, 392 U.S. 83, 96 n.14 (1968); Letter from Chief Justice John Jay and the Associate Justices to President George Washington (Aug. 8, 1793), in 3 Correspondence & Public Papers of John
Moreover, even threatened injury by a State may not be sufficient for the federal courts to weigh in under the Declaratory Judgment Act. That‘s because federal courts should “not seize litigations from state courts merely because one, normally a defendant, goes to federal court to begin his federal-law defense before the state court begins the case under state law.” Id. at 249. As the Supreme Court later explained, “it is generally to be assumed that state courts and prosecutors will observe constitutional limitations as expounded by this Court, and that the mere possibility of erroneous initial application of constitutional standards will usually not amount to the irreparable injury necessary to justify [federal equitable proceedings].” Dombrowski v. Pfister, 380 U.S. 479, 484–85 (1965). In other words, the federal courts will steer clear of using declaratory judgments to interfere in state-law disputes—even if there are questions of federal law buried in the litigation. Cf. Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 154 (1908) (denying federal jurisdiction where the “Federal question” was merely what “the defense of defendants would be“).
Given this hesitancy to intervene in state-law disputes in declaratory judgment proceedings—where Congress textually authorized relief—one might reasonably wonder too about the judicially-created Ex parte Young cause of action in cases involving state-law disputes and same-State parties. Cf. Wycoff, 344 U.S. at 247 (“Declaratory proceedings in the federal courts against state officials must be decided with regard for the implications of our federal system.“). The Supreme Court has articulated that the power to craft
Third, a judicially created cause of action over the States creates some tension with our modern solicitude for state courts and state law in the post-Erie era. After all, “[i]t is the state courts which have the first and the last word as to the meaning of state statutes.” Wycoff, 344 U.S. at 247. And the Supreme Court has told us that state courts are equally competent to render constitutional decisions. See Haywood v. Drown, 556 U.S. 729, 735 (2009) (“[S]tate courts as well as federal courts are entrusted with providing a forum for the vindication of federal rights violated by state or local officials acting under color of state law.“). So it‘s no surprise that state courts often hear run-of-the-mill disputes about whether federal or state law controls an issue. And no one questions the state courts’ competence to do so. See, e.g., Levine v. Wyeth, 944 A.2d 179, 183–94 (Vt. 2006), aff‘d sub nom. Wyeth v. Levine, 555 U.S. 555, 563–64 (2008) (affirming Vermont Supreme Court on a preemption question).
In the end, there are plenty of reasons to worry about inferring “a cause of action against [state officials] at equity.” Ante, at 19 (citing Young, 209 U.S. at 149). During the debates on the ratification of the Constitution, the Anti-Federalists expressed deep fears that the federal courts would run roughshod over the States. For example, Brutus worried that federal “judges will be interested to extend the power of the courts, and to construe the constitution as much as possible, in such a way as to favour it.” Brutus XI, ¶ 2.9.140, in 2 The Complete Anti-Federalist 420 (Herbert Storing ed., 1981). This inevitable growth of federal judicial power, he
* * *
Does Green Valley have a cause of action? Our circuit‘s interpretation of the text enacted by Congress in
Notes
(b) Curtailment or limitation of service prohibited
The service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body, or by the granting of any private franchise for similar service within such area during the term of such loan; nor shall the happening of any such event be the basis of requiring such association to secure any franchise, license, or permit as a condition to continuing to serve the area served by the association at the time of the occurrence of such event.
The statute also authorizes the municipality and current holder of a CCN to make agreements for a transfer of service and delays any mandatory transfer hearing for 180 days in furtherance of negotiations.The decision in Opala v. Watt, 454 F.3d 1154 (10th Cir. 2006), also provides no help. Justice Opala, the former Vice-Chief Justice of the Oklahoma Supreme Court, sued after his colleagues “changed the rule of rotation for elevation of a Chief Justice.” Id. at 1156. That change had the effect both of permitting the incumbent Chief Justice‘s re-election and of barring Justice Opala from becoming Chief. See id. at 1156–57. The Tenth Circuit held that it was unable to reinstate the pre-amendment rule of rotation—i.e., “make Justice Opala Vice–Chief Justice again”—because that remedy was “precisely the type of retroactive equitable relief prohibited under the . . . Young doctrine.” Id. at 1160. But critically, and unlike the situation in Opala, Green Valley is not asking that we reinstate the pre-decertification status quo. Instead, it merely asks to be the serving utility going forward. Green Valley Special Util. Dist. v. City of Cibolo, 866 F.3d 339, 342 (5th Cir. 2017).
We have not formally overruled Birchfield, though one of the rationales undergirding it has been abrogated. Only two years after Birchfield, the Supreme Court overruled Monroe, holding instead that under certain circumstances, municipalities can be sued under
Other circuits have recognized that municipalities may be proper