Case Information
United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED August 7, 2020 Lyle W. Cayce Clerk Green Valley Special Utility District,
Plaintiff — Appellee Cross — Appellant , versus
City of Schertz, Texas; DeAnn T. Walker, in her official capacity as Chairman and Commissioner of the PUC; Arthur C. D ’ Andrea, in his official capacity as a Commissioner of the PUC; John Paul Urban, in his official capacity As Executive Director of the Public Utility Commission of Texas; Brian James, in his official capacity as the City Manager of the City of Schertz, TX; Shelly Botkin,
Defendants — Appellants Cross — Appellees . Appeal from the United States District Court for the Western District of Texas USDC No. 1:17-CV-819 Before Owen, Chief Judge , and Jones, Smith, Stewart, Dennis, Elrod, Southwick, Haynes, Graves, Higginson, Costa, Willett, Ho, Duncan, Engelhardt, and Oldham, Circuit Judges . [*]
Jerry E. Smith, Circuit Judge , joined by Jones, Stewart, Dennis, Elrod, Southwick, Haynes, Graves, Higginson, Costa, Willett, Ho, Duncan, Engelhardt, and Oldham, Circuit Judges :
This appeal arose out of two orders of the Texas Public Utility Com- mis sion (“PUC”) decertifying territory from the certificate of convenience and neces sity (“CCN”) issued to Green Valley Special Utility District (“Green Valley”) for sewer (wastewater) service. Green Valley sued, aver - ring that, because it had “provided or made available” sewer service, 7 U.S.C. § 1926(b) protected that service from encroachment.
We granted en banc hearing to consider the meaning of “provided or
made available” in § 1926(b). We hold that a utility has “provided or made avail able” service if it (1) has adequate facilities to provide service to the rele -
vant area within a reasonable time after a request for service is made and
(2) has the legal right to provide service. The panel opinion in
North Alamo
Water Supply Corp. v. City of San Juan
,
I. Green Valley is a special utility district that provides water and sewer service in an area that includes parts of Bexar, Comal, and Guadalupe Counties. Green Valley’s mostly rural service territory is east of San Antonio, near the Cities of Schertz and Cibolo. Green Valley provides ser- vice under two CCNs issued and regulated by the PUC. Under Texas law, CCNs “give holders the exclusive right to provide water or sewer service within particular service areas.” “In 2003, Green Valley obtained a $584,000 loan from the [U.S. De partment of Agriculture “(USDA”)] to fund its water service. That loan, which remains outstanding, is secured by Green Valley’s water utility revenues.”
In April 2016, Guadalupe Valley Development Corporation (“GVDC”) pe titioned the PUC to decertify its approximately 160-acre par- cel from Green Valley’s sewer CCN. Shortly thereafter, the City of Schertz and its City Man ager (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 re - gional wastewater- treatment plant” and had “an agree ment 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 con clu- sion, the PUC ruled that, under Texas Water Code (“TWC”) § 13.254(a -5), GVDC was entitled to have its petition approved. Finally, the PUC noted that, under TWC § 13.254(a-6), it could not deny GVDC’s “petition based on the fact that Green Valley . . . [wa]s a borrower under a federal loan program.” The PUC granted the petition, removing GVDC’s 160 -acre prop- erty from Green Valley’s sewer CCN.
Schertz’s petition was similarly successful. The PUC found that Green Valley “provide[d] no retail sewer service,” had no contractual obliga- tions 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 improve ments” to the tract, “ha [d] no existing retail sewer infra- structure anywhere within the boundaries of its CCN,” and “[wa ]s not cur- rently capable of providing sewer service to anyone in the decertificated area.” The PUC thus granted Schertz’s petition and amended Green Val - ley’ 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 enti- tled 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 state court [6] and (2) suing GVDC, Schertz, and several PUC commissioners in their official capacities (collectively, “PUC Officials”) in this action under 42 U.S.C. § 1983. Green Valley averred that its 2003 USDA loan protected its service territory from encroachment. The key federal statute, 7 U.S.C. § 1926(b), confers that protection:
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 dur- ing the term of such loan . . . .
Green Valley also asserted that § 1926(b) preempted TWC §§ 13.254(a-1) and 13.2541(d). [7] Green Valley sought, inter alia , declaratory and injunctive relief to prevent (1) the PUC from enforcing §§ 13.254(a-1) and 13.2541(d), (2) the PUC from decertifying any portion of its service ter- ritory, and (3) any other utility from making service available within its ser- vice territory.
Shortly after Green Valley filed its first amended complaint, the PUC
Officials moved to dismiss. They asserted Eleventh Amendment immunity,
averring that
Ex parte Young
,
Six months later, every party moved for summary judgment. The district court denied GVDC’s and Schertz’s motions but granted Green Val - ley’s and the PUC Officials’ motions in part. Relying on North Alamo , the court granted summary judgment to Green Valley on its § 1926(b) claims, finding that the PUC had not determined that Green Valley had failed to fulfill its state-law duty to provide service to the Schertz and GVDC tracts. Conversely, the court granted summary judgment to the PUC Officials on the preemption claims, holding (1) that Green Valley lacked standing to chal- lenge TWC § 13.254(a-1) and (2) that § 13.2541(d) was not preempted “because it neither directly conflict[ed] with § 1926(b) nor pose[d] an obsta- cle to the goals and purpose of Congress in enacting § 1926(b).”
GVDC, Schertz, and the PUC Officials appealed as to the § 1926(b) claims, and Green Valley cross-appealed as to both the § 1926(b) and pre- emption claims. Shortly thereafter, GVDC settled with Green Valley and dis missed its appeal. We granted Schertz’s and the PUC Officials’ petitions for hearing en banc.
II.
“This court has a continuing obligation to assure itself of its own juris -
diction, sua sponte if necessary.”
United States v. Pedroza-Rocha
, 933 F.3d
490, 493 (5th Cir. 2019) (per curiam),
cert. denied
,
A.
To have standing, Green Valley “must demonstrate (1) that [it] suf -
fered 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.
,
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 analy sis on [the City of] Cibolo’s application for decertification.” S econd, in that order, “the PUC [Officials] expressly relied on section 13.254(a -1) to decline to enforce § 1926(b).” And third, that necessarily means that the PUC Officials relied on § 13.254(a-1) when decertifying the Schertz tract.
Green Valley misunderstands the Cibolo Order. There, the PUC de- termined that it lacked the authority to address whether § 1926(b) preempted § 13.255, because no “provision within the [TWC] permit[ed] [it] to abdicate its statutory duties regarding service-area certification based upon preemp- tion concerns.” For support, the PUC alluded to § 13.254(a -1) as an example of a separate provision that prohibited it “from denying applications to re - voke all or part of a CCN . . . on the basis that a certificate holder is a borrower of a federal loan program.” The PUC did not find that § 13.254(a-1) applied to § 13.255 petitions, and the TWC makes clear that those sections apply to distinctly different situations.
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 related to the Schertz Order is not traceable to § 13.254(a-1), so holding that § 1926(b) preempts § 13.254(a-1) would provide Green Valley with no redress.
Based on that, the district court correctly opined that Green Valley lacked standing to challenge § 13.254(a-1). The court erred, however, by dis- missing, with prejudice, Green Valley’s claim that § 1926(b) preempted § 13.254(a- 1). “Ordinarily, when a complaint is dismissed for lack of juris - dic tion, including lack of standing, it should be without prejudice.” There- fore, we modify the judg ment dismissing Green Valley’s preemption claim as to § 13.254(a-1) to make it without prejudice, and we affirm that portion of the judgment as so modified.
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.
,
Green Valley’s settlement with GVDC deprives us of jurisdiction over Green Valley’s claims related to the GVDC Order. The settlement agree - ment provides for the following: (1) GVDC and Green Valley have com- mitted to Green Valley’s providing “high -capacity, industrial- level” water and sewer service to the GVDC tract; (2) the parties ceased litigation in favor of mutual cooperation on all matters, including obtaining recertification of the GVDC tract; (3) GVDC dismissed its appeal; and (4) Green Valley waived its claims for attorney’s fees and costs. Green Valley described that compromise as “the very agreement [it] insisted all along it was ‘willing and able’ to enter into . . . .” In other words, Green Valley and GVDC have com- pletely settled their differences, and there is no relief left for us to award.
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 ap - proved. Based on those unique facts, the PUC’s approving the settlement and recertifying the GVDC tract is routine, and, indeed, appears to be held up only by this litigation. [13] The mere fact that the PUC has not approved it yet isn’t enough to maintain a “live” controversy in federal court.
Green Valley maintains that, notwithstanding its settlement, its pre- emption 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 § 1926(b) in any other § 13.2541 proceedings, beyond just the GVDC tract.” But Green Valley does not challenge any other § 13.2541(d) decertification order in this litigation , nor does it point to any ongoing § 13.2541(d) proceeding in which it is involved. [14] Any hypothetical future decertifications are not before us. Speculation that the PUC could apply § 13.2541(d) against Green Valley sometime in the future is not enough to prevent this case from being moot today .
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.
,
We decide in favor of vacatur, which the equities favor for three rea-
sons. 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
,
C. The first two jurisdictional hurdles tripped up most of Green Valley’s claims, and only its § 1926(b) claim related to the Schertz Order remains. With that in mind, we turn to the last jurisdictional bar: sovereign immunity.
1.
“In most cases, Eleventh Amendment sovereign immunity bars pri -
vate suits against nonconsenting states in federal court.”
City of Austin v.
Paxton
,
There are two primary exceptions. First, Congress may expressly
abrogate state sovereign immunity.
See, e.g., AT&T Commc’ns v. BellSouth
Telecomms. Inc.
,
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.
,
But what qualifies as prospective? Merely requesting injunctive or
declaratory relief is not enough; sovereign immunity does not turn entirely
on the relief sought. Often, the line between the permissible and the for-
bidden is fuzzy. “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 t o 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
,
“It is true,” of course, “that a complaint must allege that the defen -
dant
is violating
federal law, not simply that the defendant
has done so
.”
NiGen Biotech, L.L.C. v. Paxton
,
2. The district court found Young satisfied, because “it is nearly axio - matic that an injunction prohibiting state administrative officials from en- forcing preempted state regulations qualifies as prospective relief under . . . Young .” Bas ed on the above, we do not have jurisdiction to consider Green Valley’s pre emption claims.
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 Val ley’s] certificated water or wastewater service area pursuant to [TWC] sec- tion 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 pursu - ant 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 out - standing . . . .
On its face, that prayer satisfies Young : It requests relief prospectively requir- ing the PUC Officials to refrain from taking future actions to enforce an unlawful order.
The PUC Officials vehemently disagree. In their view, there is no ongoin g violation of which to speak: Green Valley’s CCN has already been altered , and that decertification was a discrete event. Any prospective harm that the decertification causes merely identifies collateral effects of a past act, not a continuing violation of federal law. Accordingly, the PUC Officials maintain, the remedies Green Valley wants are inherently retrospective, because they are targeted at undoing the decertification.
Though the ongoing harms that Green Valley alleges it suffers can be
trace d to the PUC’s order decertifying the Schertz territory, that does not
mean
Young
bars this suit.
See Williams
,
The decision in Verizon Maryland is instructive. Verizon sought in- junc tive and declaratory relief from a state agency’s order req uiring it to pay compensation to another telecommunications carrier for exchanging certain At this stage, however, we need not determine whether Green Val ley’s request for recertification is impermissible under Larson ’s foot note 11. To proceed under Young , Green Valley needs only one form of available prospective relief, and its two other requests for injunctive relief pass muster. Accordingly, we leave for another day the question whether recertification is impermissible under Larson .
calls. See Verizon Md. , 535 U.S. at 640. The court found that Verizon’s requests for injunctive relief, which would prevent the state agency from enforcing its or der that ran counter to federal law, “clearly satisfie[d] our straightforward inquiry” under Young . Id . at 645 (quotation marks omitted).
The same applies here. 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
retrospec tive” and thus out of bounds under
Young
.
Republic of Paraguay v.
Allen
,
III.
With the jurisdictional questions resolved, we address one final ante-
cedent issue that the PUC Officials (but not Schertz) raise: whether, under
City of Safety Harbor v. Birchfield
,
“It is the general rule . . . that a federal appellate court does not consider an issue not passed upon below.”
Singleton v. Wulff
,
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 coun- tered 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. By failing to bring Birchfield up even once on appeal, Schertz has forfeited any contention relying on that decision.
Unlike Schertz, the PUC Officials did raise the issue, albeit in the elev- enth hour. [24] The PUC Officials do not (and frankly cannot) offer any per- suasive reason why that position — which should have been obvious from the outset of the litigation — was not timely asserted. Though that limitation on § 1983’s cause of action is non -jurisdictional, [25] the PUC Officials contend that we have the duty to correct this flaw in the judgment, which they maintain is “clearly at variance” with Birchfield . Meadows v. Cohen , 409 F.2d 750, 753 (5th Cir. 1969).
The PUC Officials correctly observe that
Birchfield
,
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 § 1983. Because, as we discussed above, Green Valley has satisfied Young ’s require - ments, its suit for injunctive relief against the PUC Officials may go forward.
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 util - i ties for the “the conservation, development, use, and control o f water . . . primarily serving farmers, ranchers, farm tenants, farm laborers, rural bus- inesses, and other rural residents.” 7 U.S.C. § 1926(a)(1). To ensure that federally indebted utilities repay their loans, Congress enacted a provision protecting utilities from curtailment and encroachment by municipalities and Other circuits have recognized that municipalities may be proper § 1983 plaintiffs, even though they “receive[ ] no protectio n from the Equal Protection or Due Process Clauses vis-a- vis its creating state.” S. Macomb Disposal Auth. v. Twp. of Washington , 790 F.2d 500, 505 (6th Cir. 1986). That approach may well be more faithful to § 1983’s text than is Birchfield . But given that the parties do not ask us to overrule Birchfield , we leave it, as unnecessary to decide here, for another day. See Young , 209 U.S. at 149; see also Armstrong v. Exceptional Child Ctr., Inc. ,
575 U.S. 320, 327 (2015) (“What our cases demonstrate is that, in a proper case, relief may be given in a court of equity to prevent an injurious act by a public officer.”) (cleaned up)). other public bodies. That subsection states that
[t]he service provided or made available through any such associ- ation shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any muni- cipal 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 . . . .
7 U.S.C. § 1926(b) (emphasis added). At issue is the italicized “provided or made available.”
The panel in
North Alamo
interpreted that language, relying mainly on
state law. 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 ren -
der 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 availa ble’ under § 1926(b).”
Id
. at 916. The only reasoning the panel
offered was that “[w]hen confronted with a similar issue, other courts have
reached the same result . . . .”
Id
. (citing only
Glenpool Util. Servs. Auth. v.
Creek Cty. Rural Water Dist. No. 2
,
North Alamo
’s state -law-duty rule finds no support in § 1926(b)’s
text, which is unsurprising given that the panel did n’t analyze the statutory
language at all. Because § 1926 and related statutory provisions do not define
“provided” or “made available,” we afford those terms their “ordinary
mean ing.”
Taniguchi v. Kan Pac. Saipan, Ltd.
,
In other words, “[i]nherent in the con cept 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
,
More consistent with the ordinary meaning of “provided or made
availa ble” 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
,
Every other circuit to consider § 1926(b) has adopted some variation
of the “physical capability” test. Texas courts have too.
See, e.g.
,
Creedmoor- Maha Water Supply Corp. v. Tex. Comm’n on Envtl. Quality
,
Undeterred, Green Valley counters with three points. First, it asserts that North Alamo was right on the merits, because Texas’s duty requir ing utilities to serve all customers in their territories provides an alternative means to make service available under § 1926(b). Second, and relatedly, Green Valley contends that there is no circuit split on that issue because of that unique state-law duty. And third, it maintains that Texas state law pro- vides another means —“for cause” decertification— to hold recalcitrant util- ities accountable.
But Green Valley wholly fails to grapple with § 1926(b)’s text. Nor
does it recognize that “allowing a water district to meet [§ 1926(b)’s] re -
quirement simply by showing a legal duty to serve may undermine”
§ 1926(b)’s goal of “encourag[ing] water development by expanding the
num ber of potential users of such systems.”
Sequoyah
, 191 F.3d at 1203
(quoting
City of Madison v. Bear Creek Water Ass’n, Inc.
,
2010);
Chesapeake Ranch
,
Oklahoma water districts have a legal duty to provide service.”
Sequoyah
,
Green Valley cannot offer a persuasive reason why § 1926(b) should provide more protection to a federally financed utility in Texas than to a sim- ilarly financed utility in Mississippi or Louisiana, especially if neither can provide service . As a matter of common sense, a state-law duty to provide service is not the same as being physically able to provide it. Because § 1926(b)’s text requires the latter while our precedent requires the f ormer, North Alamo must be overruled.
In
North Alamo
’s place, we adopt the “physical ability” test as artic -
ulated in
Le-Ax Water
,
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 § 1926(b) claims. We remand for the district court to consider whether Green Valley satisfies the “physical capability” test in the first instance.
by which human waste is stored on site, intermittently pumped out of a holding tank, and then hauled away.” United States v. Cty. of Culpeper , No. 3:16-CV-00083, 2017 WL 3835601, at *1 n.1 (W.D. Va. Sept. 1, 2017). Though pump-and-haul service is generally meant to be a temporary stopgap, wastewater can be disposed of and treated under such a system. We need not decide whether the ability to furnish pump-and-haul means that a utility has “provided or made available” sewer service. But, at the very least, the ability to provide “pump and haul” service while more per manent infrastructure is installed is relevant to whether a utility has the “physical capability” to serve. The PUC Officials suggest that a utility has “made” service “available” o nly 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 s ewer utility can make
service immediately available to rural, undeveloped land; providing such service involves
building or installing facilities, which necessarily takes time to accomplish. The cases on
which the PUC Officials rely — which primarily involve funding, not infrastructure — do not
alter that calculus.
See Tex. Educ. Agency v. U.S. Dep’t of Educ.
,
of review, not of first view.”). With North Alamo overruled, Green Valley’s North Alamo - based cross-appeal for additional injunctive relief necessarily fails. And because we vacate and remand based on our overruling of North Alamo , it is unnecessary to address the parties’ other the ories supporting vacatur. Accordingly, we decline to consider (1) the PUC Officials’ contentions that § 1926(b) governs only local regulation and (2) Schertz’s request that we overrule Cibolo . But to the extent that Cibolo relied on North Alamo ’s legal - duty test, that portion, of course, has now been abrogated.
* * * * *
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 orders 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 injunc tion,
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
,
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 re mains within Green Valley’s Sewer CCN[.]” That injunction is overbroad for two rea sons. First, Green Valley is entitled to § 1926(b)’s protection only if it either pro vides service or makes it available. Yet, the injunction forbids Schertz from providing service for any reason , even if Green Valley refused to provide service and the PUC decertified the territory “for cause.” Second, the injunction continues in definitely, even though § 1 926(b)’s protection exists only for the life of Green Valley’s federal loan.
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 § 1926(b) provides. The following portions of the judgment are vacated: (1) the judgments invali-
dating “the GVDC Decertification Order and the Schertz Decertification Order . . . for interference w ith Green Valley’s federal rights under § 1926(b)”; and (2) the judgments invalidating “any PUC orders recertifying the GVDC Tract or the Schertz Acreage . . . for interference with Green Valley’s federal rights under § 1926(b).”
• We VACATE the remaining judgments related to the GVDC Order 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 re - lated to the Schertz Order and REMAND for further proceedings. 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.
Priscilla R. Owen, Chief Judge , concurring in part and dissenting in part, in which Jones, Willett, Duncan, and Oldham, Circuit Judges , join as to parts II and III :
Green Valley Special Utility District (Green Valley) contends that, by virtue of 7 U.S.C. § 1926(b), [1] a federal loan it obtained in 2003 to provide only water service protects it from competition in that service area for wastewater service. When the federal loan was made for water service, Green Valley was not authorized under Texas law to provide any wastewater service in its water service area. Green Valley was required by Texas law to obtain a certificate of convenience and necessity for wastewater service, which it did not do until 2005. Green Valley did not obtain a federal loan under § 1926(a) to fund wastewater service. The record is also clear, and Green Valley has admitted, [2] that revenue from the wastewater services it provides is not pledged or otherwise encumbered to secure its federal loan for water service.
I would overrule the decision by a panel of this court in Green Valley Special Utility District v. City of Cibolo and hold that § 1926(b)’s monopoly protection for “[t]he service provided or made available through any such association” means that only the type of service for which a federal loan was obtained is shielded from competition. I would leave open the question of whether § 1926(b)’s monopoly power extends to a type of service that is different from the service for which the federal loan was granted, if the proceeds from the differing type of service have been expressly pledged or encumbered to secure the federal loan.
As noted, Green Valley did not obtain a federal loan under 7 U.S.C. § 1926(a) in order to provide wastewater service. Accordingly, Green Valley should not be protected from competitors in seeking to provide wastewater service to the 405-acre tract annexed by the City of Schertz. I would therefore reverse the district court’s judgment as to the City of Schertz and render judgment in favor of the City.
The questi on of whether having “pipes in the ground,” that is, existing facilities, “nearby” is a prerequisite to the protections of § 1926(b) would no longer be a live issue in this case, based on my construction of § 1926(b). There would be nothing further for the district court to decide since § 1926(b) would not apply to Green Valley’s wastewater service. It is therefore unnecessary to consider whether the decision in North Alamo Water Supply Corp. v. City of San Juan should be overruled. Since the court’s ma jority opinion does reach the issue, I part company with that opinion’s analysis to the extent it requires “pipes” to exist “in the ground,” somewhere, at the time service is requested. Based on various provisions in § 1926, competition should be foreclosed if an association has a legal right to provide the service and can do so within a reasonable amount of time after a request for service is made. The “existing” “pipes” requirement engrafted on to § 1926(b) today eliminates the protections from competition afforded to a new association who has not yet placed a first “pipe in the ground” or an existing association with a newly-minted service area, even if the association is actively pursuing construction plans. It is unreasonable to construe § 1926(b) as stripping protections in such circumstances.
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 7 U.S.C. § 1926(b) to the ‘service provided or made available,’ are limited to the service funded by the 7 U.S.C. § 1926(a) loan, contrary to this Court’s prior opinion in Cibolo .” [7] Today, the en banc court’s opinion dodges this question, concluding in footnote 39 that it need not decide the issue. With great respect, that disposition runs roughshod over principles of judicial economy and fairness.
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 § 1926(b)’s protections are limited to the type of service for which Green Valley received the federal loan, then the City of Schertz would be entitled to rendition of judgment in its favor in this court or an equivalent disposition, including a judgment vacating the district court’s judgment with instructions to dismiss Green Valley’s claims against the City of Schertz, and consequently instructions to dismiss claims against the Public Utility Commission (PUC) regarding its City of Schertz order. There would be nothing left for the district court to adjudicate. That is a decidedly more favorable outcome for the City of Schertz, and therefore, the en banc court must decide the issue if it is going to make a principled disposition of this appeal.
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, 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 obtaining a federal loan under § 1926(b) for wastewater service. That fact may alter the course of further proceedings in this case because the City of Schertz would lose the ability to raise the Cibolo issue once again in our court. Once Green Valley is authorized to provide wastewater service in the 405- acre tract within the boundaries of the City of Schertz, the Cibolo issue presently before this en banc court will be off the table and cannot be asserted in a future appeal.
At the very least, the City of Schertz and the public deserve an explanation for the en banc court’s aberrant decisi on 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 7 U.S.C. § 1926(b) can extend to a type of service other than the type of service funded by the federal loan, we, of course, begin with the text of § 1926(b) and consider the text of § 1926 as a whole.
The text of § 1926(b) says in part that “[t]he service provided or made available through any such association shall not be curtailed or limited.” To what does “the service” refer? The term “service” is not defined in the statute. With one exception pertaining to broadband service, [11] the uses of “service” or “services” elsewhere within § 1926 are in distinctly different contexts that shed no light on the meaning of “the service” in § 1926(b). [12] It is at least debatable whether the monopoly provisions of § 1926(b) apply to the broadband service described in § 1926(a)(20)(E), but, in any event, it is clear from § 1926(b)’s text that it was intended to reach more that broadband “service.”
So what else is there within § 1926 that helps us to discern the meaning of “[t]he service provided or made available through any such association”? If we look at the central operative provisions in § 1926(a) regarding a particular water, waste disposal, or wastewater facility grant to an association, we will see that the term “the project” is the key. [13] Leading up to subsection (3) regarding specific grants to an association, subsection (2) of § 1926(a) provides that “[t]he Secretary is authorized to make grants t o such associations to finance specific projects for works for the development, storage, treatment, purification, or distribution of water or the collection, treatment, or disposal of waste in rural areas.” [14] Then, subsection (3) of § 1926(a) directs that “[n]o grant shall be made under paragraph (2) of this subsection in connection with any project unless the Secretary determines that the project [meets certain requirements].” [15]
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 § 1926(b) is that it refers to “[t]he service” provided or made available in accordance with “the project” for which federal funds were granted under § 1926(a)(3).
The text of § 1926(a)(3) provides another compelling reason for concluding that only a service for which federal funding is provided under § 1926(a) is entitled to the monopoly protection extended by § 1926(b). No loan can be made (and accordingly, no monopoly power can be granted) unless at least three findings are made at the federal level in accordance with § 1926(a)(3). These are that “the project”:
• “(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 § 1926(b) to grant a monopoly for a service that is not the same type of service as the service for which the federal loan was granted allows an association like Green Valley to bypass completely these requirements. Under our court’s decision in Cibolo , associations are able to obtain monopoly power in their water service areas for wastewater services without meeting the requirements of § 1926(a)(3). The same is true if associations have received federal loans only for wastewater. They may obtain monopoly power for water service without federal authorization of that service and the prerequisite findings required by § 1926(a)(3).
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 § 1926(b) as the court does to foreclose competition in such a backhanded way is tantamount to concluding that Congress has hidden an elephant in a mousehole. [19] Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions.”
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 of water service must have a source or means of supplying potable water for residential and other users. The facilities by which potable water is delivered are not the same facilities that would be used to carry wastewater away from residential or other properties. The number of customers who desire water service may be very different than the number of customers who desire wastewater service, and present and future demands for a service are key factors under § 1926(a)(3). For example, the amicus brief of North Alamo Water Supply Corporation tells us that currently, it has approximately 49,000 water meters through which it provides water service, compared to its 3,600 wastewater connections. Meeting the requirements under § 1926(a)(3) for one type of service does not mean that the requirements for another type of service are met.
In Cibolo , the panel found persuasive the wastewater provider’s argument that its wastewat er service was “integrated” with its water service, concluding that “Congress’s use of ‘the’ in § 1926(b) . . . is consistent with ‘service’ referring to an integrated water -and- sewer service.” But the service was not so “integrated” that the provider in Cibolo , who coincidentally was Green Valley, included a request for federal funds for providing wastewater in its request for federal funds for water service. Indeed, Green Valley could not have done so. Green Valley was not authorized to provide any wastewater services in 2003 when it obtained a federal loan for water services — the same federal loan at issue in both Cibolo and the present appeal. There could not have been a determination by a federal administrator under § 1926(a)(3) that wastewater service proposed to be provided by Green Valley, many years after the water service loan closed, was so “integrated” with its water service that “the service” under § 1926(b) should be deemed to include the wastewater service.
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 § 1926(b), the only evidence of integration that the panel opinion in Cibolo cited was Green Valley’s assertion that “its water and sewer services share employees, a board of directors, a general manager, and an operating account.” That is no evidence whatsoever to justify extending monopoly power. It is no evidence that the wastewater services are so integrated with water service that the statutory reasons for granting monopoly power are present. I come back, once again, to the requirements under § 1926(a)(3) that justify conferring the cloak of protection from competition under § 1926(b). Sharing employees, management, and an operating account says nothing about whether the wastewater service
(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.
It is these criteria, among others, that Congress has said justify the monopoly power granted by § 1926(b). Congress did not say that if you provide a service that meets these requirements, you can later tack on other, different types of services and obtain monopoly power with no further showing at the federal level. Although Congress certainly has an interest in protecting a federal loan recipient’s ability to repay a loan, there is no indication that Congress intended a loan recipient who provides water service, for example, to exclude all providers of wastewater services from its water service area.
This court’s decision in Cibolo did not consider § 1926(a)(3) at all, much less its express definition of a “project” as potentially including more than one type of service. Nonetheless, the Cibolo decision correctly stated (for the wro ng reason) that “if ‘service’ [in § 1926(b)] refers to a specific service, it must be possible to read it as referring to more than one service.” The Cibolo decision’s reasoning in this regard veered off the rails in the next sentence when it said, “[o]t herwise, if an association received federal loans [plural] for both its water and sewer service, only one of them would be able to receive § 1926(b)’s protection.” This is obviously incorrect. If two separate loans were granted, one for water and another for wastewater, each loan would independently give rise to the protections of § 1926(b). If the Cibolo decision meant to say that if an association received a single loan for both its water and sewer service, only one of them would be able to receive § 1926(b)’s protections, that too would be incorrect. As discussed above, a “project” for which a loan is granted can include more than one type of service. [27]
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 Val ley’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 § 1926(a)(3), which employs the concept of “the project.” It is on ly when “the project” for which a loan is granted involves more than one type of service that “the service” as used in § 1926(b) may be “iterative.” [29] There is no textual basis for concluding that “the service provided or made available” within the meaning of § 1926(b) is “iterative” for services that are not part of “the project” for which a federal loan is approved.
The text of § 1926(b) also expressly refers to “[t]he service provided or made available through any such association.” [30] It does not say service provided or made available by “any such association.” [31] The monopoly power granted in § 1926(b) lasts only “during the term of such loan.” [32] Taken together, the requirements that “the service” must be provided “through,” not just by, the association , and that § 1926(b) applies only during “the term of such loan,” strongly imply that the monopoly power is only granted for the type of service for which federal loan funds have been or are being passed “through” the association.
The Eighth Circuit has considered how to construe § 1926(b), ultimately holding “we interpret ‘the service provided or made available’ to be limited to the financed service.” [33] In that case, an association had obtained a loan under 7 U.S.C. § 1926(a) for extending and improving its sewer system. [34] That association asserted “that the USDA loan also triggers § 1926(b) protection with respect to . . . water service.” [35] The Eighth Circuit concluded that “divorcing the type of service underlying a rural district’s qualifying federal loan from the type of service that § 1926(b) protects would stretch the statute too far.” [36]
We should not hesitate to overrule Cibolo . It did not consider all of the nuances in § 1926(b), and Cibolo wholly failed to consider the barriers erected by § 1926(a)(3) to the attainment of monopoly power.
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 o ur court’s Cibolo “decision is incorrect and contrary to the decision of another court of appeals.” The Solicitor General asserted that “[t]he court of appeals erred in construing ‘[t]he service’ in Section 1926(b) as referring to any service provided or made available through an association, regardless of whether that service is funded by a Section 19 26(a) loan.”
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 assistance or other aid in planning projects for such purposes.
7 U.S.C. 1926(a)(1). Section 1926(a)(1) thus authorizes the Secretary to make loans to “associations” to “provide for” a particular service, such as “water” or “waste disposal” (i.e., sewer) service. Ibid . When Section 1926(b) is read together with Section 1926(a)(1), the meaning of “[t]he service” becomes clear: “The service” refers to the service “provide[d] for” (i.e., funded) by a loan under Section 1926(a)(1).
Other statutory indicators support that reading. Section 1926(b) refers to “[t]he service provided or made available through any such association .” 7 U.S.C. 1926(b) (emphasis added). The word “such” means “of the sort or degree previously indicated.” Webster’s Third New International Dictionary of the English Language 2283 (1981). The phrase “such association” in Section 1926(b) t hus refers naturally to one of the “associations” previously described in the first sentence of Section 1926(a)(1). It follows that “[t]he service” in Section 1926(b) should be read in light of that sentence as well.
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 togethe r, 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 7 U.S.C. 1926(a)(1)-(26) (2012 & Supp. V 2017), Congress has not modified Section 1926(b) or its relationship to the first sentence of Section 1926(a)(1). “The service” in Section 1926(b) thus retains the same meaning it had in 1961: the service funded by a Section 1926(a) loan.
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 foste r, 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.
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 7 U.S.C. § 1926(a) to fund any part of its wastewater services. The record also reflects that Green Valley’s proposed wastewater treatment plant is not being constructed with any other federal loans, federal guarantees, or federally backed bonds. [41]
Nor do any revenues from wastewater services provided by Green Valley secure the federal loan under 7 U.S.C. § 1926 for its water services. The bonds that Green Valley issued to repay the federal loan obtained under § 1926 for water service reflect that they specifically exclude revenue from a sewer system. [42] Similarly, in requests for admission in the present case, Green Valley admitted that its “federal loan is not secured by revenues received from wastewater collection services.” [43] Accordingly, there is no viable basis, I submit, for shielding Green Valley’s wastewater services under § 1926(b) from competition.
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 7 U.S.C. § 1926(b). But the en banc court does not address that issue, [44] as noted above. Instead, it addresses the request by the City of Schertz and others that we overrule a prior decision of our court, North Alamo Water Supply Corp. v. City of San Juan , [45] regarding how to determine if “the service” has been “provided or made available” within the meaning of § 1926(b), even though “the service” at issue is not the same type of service for which a federal loan was obtained under § 1926. [46]
The en banc court’s decision today overrules North Alamo in part and offers guidance as to how § 1926(b) should be construed. The following is the core holding in the en banc court’s opinion:
[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 § 1926(b)’s protection.” [49]
I agree that the text “[t]he service provided or made available through any such association,” found in 7 U.S.C. § 1926(b), contemplates that the association is or will be able to provide service to the area within a reasonable time after a request for service is made, and that the association has the legal right to provide that service. My basic disagreement with the en banc court’s opinion is its requirement that “the utility must have something in place to merit § 1926(b)’s protection,” and similarly, that “[a] utility cannot satisfy that test if it has no nearby infrastructure.” This engrafts upon § 1926(b) requirements that the text does not support.
First, the concept of “nearby” cannot be found in § 1926. To the contrary, that concept is expressly rejected. The requirement that facilities be “nearby” necessarily means that the nearby facilities must be capable of extension and therefore, that that the request for new service must be satisfied by interconnecting with existing facilities. But § 1926(a)(2)(A)(i) authorizes a loan “to finance specific projects for works,” and § 1926(a)(4)(B) says that “[t]he term ‘project’ shall include facilities providing central service or facilities serving individual properties, or both.” This scuttles any notion that interconnection of facilities is required in order for the protections of § 1926(b) to apply. Why would Congress authorize a loan for facilities scattered throughout an association’s service area, including standalone facilities, but limit the monopoly protection to only interconnected facilities? The obvious answer is that it would not and did not.
Similarly, § 1926(a)(3)(ii) provides that a loan cannot be made unless the project will or can serve not only present needs in a rural area, but reasonably foreseeable future growth needs as well. The statute contemplates “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.” This means that additional capacity c an or will be added or made available at “facilities providing central service,” “facilities serving individual properties, or both.” Additional capacity does not have to be provided through interconnected facilities. It can be provided through new facilities.
Second, and also critically, the requirement that there must be facilities in place before the protections of § 1926(b) materialize would permit a municipal corporation or a private landowner seeking a private franchise for similar service to strip all or part of a recently formed association’s service area when the ink on the association’s federal loan is barely dry, a certificate of convenience and necessity has been obtained from the appropriate state agency, and designs and construction plans have been finalized. The association could lose portions of its service area simply because no facilities have yet been constructed. Congress would not have left such a gaping hole in its statutory scheme to provide loan-repayment protections. The issue should not be whether there are actually facilities in place, but whether the requested service can be provided within a reasonable time.
The language “shall not be curtailed or limited” in § 1926(b) does not change this analysis. Service that is authorized and that can be commenced within a reasonable time is service that is “made available.” That service is “limited” if the area that was to be served is stripped away before the service can commence.
Provisions in § 1926 clearly reflect that the rural area to be served is to be considered as a whole, not as a pie that can be divided up by competitors unless the association immediately builds enough facilities throughout the rural area such that every tract within its service area will be “nearby” when n ew needs arise. Yet, by interjecting the “nearby” and “existing facilities” requirements, the en banc court’s decision allows competitors to strip away parts of a service area for the same type of service for which the association has obtained a federal loan before any service for which the loan was made can possibly commence in any part of the service area.
Green Valley’s water service area covers approximately 76,000 acres. That is almost 119 square miles. Requiring Green Valley to build facilities t hroughout 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
,
With respect, this is unhelpful in ascertaining how “nearby” is “nearby” enough.
By reading into the text of § 1926(b) the requirement that there must be existing facilities that are “nearby,” the en banc court has injected a factor that will most certainly lead to arbitrary and widely varying results. Again, Green Valley’s water service area covers approxima tely 76,000 acres. The tract at issue has 405 acres that were being used to grow crops with no residence on it at the time the PUC issued its order. There is a lot of room for interpretation as to the meaning of “nearby.” Too much room for interpretation, I submit.
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.
Edith H. Jones , Circuit Judge, joined by Willett , Duncan , and Oldham , Circuit Judges, concurring in Judge Smith’s opinion and in part in Chief Judge Owen’s opinion:
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 Judg e 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 7 U.S.C. § 1926(b), to a merely hypothetical provision of wastewater service not covered by that loan. Or it could ask this court to overrule the North Alamo case, which held that such a federally protected rural utility “provided or made available” utility service to customers solely by virtue of a state-issued CCN and irrespective of the actual provision of services.
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 neither provided nor could provide sewer service in that tract. The state’s objective, in this case and for the broader purpose of preserving regulatory authority to assure water and wastewater service in the public interest, could be fulfilled only by overruling North Alamo . It is immaterial to the state how the claim of federal monopoly protection for Green Valley’s service claim arose, whether from a direct loan for a certain type of service or from Cibolo ’s novel extension beyond the actual federal loan for water service; consequently, the state neither briefed nor argued concerning Cibolo .
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)(Th omas, 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 7 U.S.C. § 1926(a) and (b).
3. The limitations of the majority opinion overruling North Alamo need to be noted, however. This court’s decision does not forecast inevitable conflict between the PUC in its application of the Texas Water Code and rural utilities that have federal loans pursuant to Section 1926.
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 compr ising 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 Section 1926(b) now requires.
Second, proper application of the Texas Water Code need not conflict with the strictures of Section 1926(b). As applied here, Section 13.255(a) specifies, generally, that if a municipality annexes or incorporates an area already served by a water or wastewater utility holding a CCN and wishes to provide the service itself, it may petition the PUC and the CCN “shall” be granted. However, the PUC is required to determine whether any property of the retail public utility would thereby be rendered “valueless or useless,” and it shall award adequate and just compensation for the loss of property as well as damages for the property retained by the utility. TWC § 13.255(c), (g). Subsection (g) extensively describes the items for which compensation may be sought and, significantly, includes the “impact on existing indebtedness of the retail public utility and its ability to repay that debt” and “fact ors relevant to maintaining the current financial integrity of the retail public utility….” It is possible to conceive of cases in which the PUC could award a CCN to a municipality under this provision and essentially monetize the repayment of some or al l of the rural utility’s federal indebtedness. In any event, the final PUC decision is reviewable de novo in state courts, which would have to enforce Section 1926(b) pursuant to the Supremacy Clause. TWC § 13.255(e).
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 under [TWC] § 13.250(a), that utility has not provided or made available service under Section 1926(b) and [it] is not entitled to federal protection of its service are a.” And Green Valley states, “What [ North Alamo , 90 F.3d at 916] meant was that if the Utility was not yet factually making service available, the PUC should have the first opportunity to correct the situation, and thus, until the PUC intervenes and decertifies a CCN for cause ( i.e. , for not actually making service available after a request and within a reasonable time), the federal courts need not step in and review the factual adequacy of the service provided for purposes of a Section 1926(b) review.” (s econd emphasis added).
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. Jennifer Walker Elrod, Circuit Judge , concurring , joined by Higginson and Costa, Circuit Judges :
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 potential resolution of the Ex parte Young riddle. A plaintiff seeking to restrain a state official from violating federal law can rely on state equity doctrine for its cause of action, and (in appropriate cases) federal ingredient jurisdiction to get into federal court.
State equity law provides a cause of action.
Federal ingredient jurisdiction supplies subject-matter jurisdiction. [6] Problem solved.
(observing that “[a]t the time of
Young
[the cause of action] was probably not even federal,
though in light of
Erie
and
Guaranty Trust
it likely would be so character ized today”). If
the cause of action did not come from state or federal equity law, then it came from the
“general” law of equity, just as today we recognize that a cause of action for
unseaworthiness arises under the “general maritime law.”
See The Dutra Grp. v. Batterton
,
139 S. Ct. 2275, 2278 (2019);
Luwisch v. Am. Marine Corp.
, 956 F.3d 320, 326 (5th Cir.
2020),
reh ’ g denied
(May 22, 2020).
See City of Beaumont v. Bouillion
,
equitable remedies for violation of constitutional rights are not prohibited.”);
Kaufman Cty.
v. McGaughey
,
(explaining that a state cause of action case can raise a federal question for the purposes of
subject- matter jurisdiction “if a well -pleaded complaint establishe[s] that its right to relief
under state law requires resolution of a substantial question of federal law in dispute
between the parties” );
see also Verizon Md., Inc. v. Pub. Serv. Comm ’ n of Md.
,
Andrew S. Oldham, Circuit Judge , concurring :
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
,
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. 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
railroads and the Attorney General of Minnesota, Edward T. Young.
See
Young
,
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
,
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
,
jurisdiction it ought, on general principles of jurisprudence, to be permitted to finish the inquiry and make a conclusive judgment, to the exclusion of all other courts. ” Ibid . In other words, a federal cause of action was available to seek equitable relief against state officers.
II.
The second of
Ex parte Young
’s holdings— the implied cause of action
sounding in equity — is interesting. In the years since 1908, the Supreme
Court has told us that this equitable cause of action is “beyond dispute” and
“f ederal courts have jurisdiction over suits to enjoin state officials from
interfering with federal rights. ”
Shaw v. Delta Air Lines, Inc.
,
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
28
U.S.C. § 1652;
Erie R.R. Co. v. Tompkins
,
We must look at statutes for federal c auses 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.
,
So, when a plaintiff brings a federal-question claim into court, we must
“determine . . . whether a legislatively conferred cause of action encompasse s
[that] particular plaintiff ’s claim.”
Lexmark Int ’l , Inc. v. Static Control
Components, Inc.
, 572 U.S. 118, 127 (2014). In other words, “w e ask[]
whether this particular class of persons ha[s] a right to sue under this
substantive [federal] statute.”
Ibid
. (quotation omitted) (emphasis added).
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
,
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. ”
5 U.S.C. § 702. And the text of the Clean Water Act provides, among other
things, a capacious cause of action for “any citizen” “against any person . . .
who is alleged to be in violation” of “an effluent standard or limitation” or
“an order issued” about such “standard or limitation.” 33 U.S.C. § 1365. In
the main, “using traditional tools of statutory interpretation,” the statutes
tell the courts who can sue, who can be sued, and the remedies available.
Lexmark
,
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
,
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
,
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
,
If the
Ex parte Young
cause of action is not from a statute and not from
the Constitution, perhaps it stems from a vestigial form of “judicially
recognized common law.”
See
R. Fallon, J. Manning, D. Meltzer,
& D. Shapiro, Hart and Wechsler’s The Federal Courts
and the Federal System 745 (7th ed. 2015) [“ Hart &
Wechsler ”]. That’s not a particularly satisfying answer. Whatever the
propriety of such federal common lawmaking in 1908 (when
Ex parte Young
was decided), the Supreme Court has since “correct[ed]” the
“unconstitutional as sumption of [lawmaking] powers by the Courts of the
United States.”
Erie
,
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 42 U.S.C. § 1983. As the
complaint in this very case recognizes, § 1983 — like an
Ex parte Young
action — is a vehicle for arguing that a federal statute preempts a state law or
regulation.
See Golden State Transit Corp.
, 4 93 U.S. at 107 n.4 (“[A]
Supremacy Clause claim based on a statutory violation is enforceable under
§ 1983 only when the statute creates ‘rights, privileges, or immunities’ in the
particular plaintiff.”). If a preemption claim can be brought under § 1983, it’s
not obvious why we need a non-statutory cause of action that does the same
thing.
Cf. Seminole Tribe of Fla. v. Florida
,
Of course, this circuit has previously held that political subdivisions
or municipalities — like Green Valley —can’t sue as plaintiffs under § 1983.
City of Safety Harbor v. Birchfield
,
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). 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
,
It’s t herefore unclear why the Ex parte Young cause of action would not be interpreted similarly — especially when § 1983 exists and the state courts provide alternative avenues for relief.
Second
, it’s not clear how to reconcile the
Ex parte Young
cause of
actio n with the Supreme Court’s precedents under the Declaratory
Judgment Act. Obviously, that Act does not create a standalone cause of
action. Rather, “the operation of the Declaratory Judgment Act is procedural
only.”
Aetna Life Ins. Co. of Hartford, Conn. v. Haworth
,
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
,
Jay 488 – 89 (Johnston ed. 1891). And as Justice Jackson once explained,
federal courts cannot be used to “establish” legal defenses— such as
preemption —“to hold in readiness for [future] use.”
Pub. Serv. Comm ’ n of
Utah v. Wycoff Co.
,
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, “i t 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
,
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
,
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
,
* * * Does Green Valley have a cause of action? Our circuit’s interpretation of the text enacted by Congress in 42 U.S.C. § 1983 says no, but a long line of cases dating back to Ex parte Young says yes. As between them, we’re obviously bound to follow the latter. Therefore, I concur.
Notes
[*] Judge Cory T. Wilson joined the court on July 3, 2020, and did not participate in the consideration of this matter, which was submitted May 20, 2020.
[1] As a special utility district, Green Valley is a political subdivision of Texas.
See
Tex. Water Code § 65.011 (“A special utility district may be created under a nd subject
to the authority, conditions, and restrictions of, and is considered a conservation and
reclamation district under Article XVI, Section 59, of the Texas Constitu tion.”);
Bennett
v. Brown Cty. Water Imp. Dist. No. 1
,
[2]
Green Valley Special Util. Dist. v. Cit y of Cibolo (“Cibolo”)
,
[3]
Cibolo
,
[4] TWC § 13.254(a-5) has since been re-designated as § 13.2541(b). See Act of May 25, 2019, 86th Leg. R.S., ch. 688, § 4, 2019 Tex. Sess. Law Serv. ch. 688 (West) (codified at TWC §§ 13.254, 13.2541).
[5] TWC § 13.254(a-6) has since been re-designated as § 13.2541(c) – (d), (f). See id . The Texas Legislature also added a new requirement — § 13.2541(e) —that “[t]he certifi- cate holder may not initiate an application to borrow money under a federal loan program after the date the petition is filed until the utility commission issues a decision on the petition.” Id .
[6] The Travis County District Court has since abated those proceedings in favor of this litigation.
[7] Importantly, Green Valley did not seek a declaration that either § 13.2541(b) or § 13.255 was preempted.
[8] Green Valley filed a second amended complaint while the motion to dismiss was pending.
[9] Green Valley filed its third amended complaint in the meantime.
[10]
Williams v. Morris
,
[11]
See, e.g.
,
Commonwealth Oil Ref. Co. v. EPA (In re Commonwealth Oil Ref. Co.)
,
805 F.2d 1175, 1181 (5th Cir. 1986) (“If a dispute has been settled or resolved, . . . it is con-
sidered moot.” (quoting
Lamonica v. S.L.E., Inc. (In re S.L.E., Inc.)
,
[12] The PUC regularly approves and incorporates agreements for serving customers into utilities’ CCNs. See TWC § 13.248. Moreover, because Green Valley’s application is unopposed, there is no other utility competing to provide the service that the GVDC tract needs. Cf. id . § 13.246(c) (noting that relevant factors for the PUC to consider include, among other things, “the adequacy of service currently provided to the requested area,” “the need for additional service,” and “the feasibility of obtaining service from an adjacent retail p ublic utility”).
[13] Though it does not affect our conclusion, we take judicial notice that on July 16, 2020, the PUC remanded Green Valley’s recertification petition to Docket Man agement to determine whether the petition should be dismissed without prejudice. The PUC did so for three reasons, none of which relates to the merits of Green Valley’s petition. First, the PUC observed that “the dis trict court explicitly invali dated [its] order” decertifying the GVDC tract. Second, because this en banc co urt has not yet ruled on the PUC Officials’ appeal, “the district court’s decision currently stands.” And third, on account of that, the PUC could not order recertification be cause, in effect, the district court’s order meant that the decertification never occurred in the first place. Our decision removes all those obstacles.
[14] The controversy as to the Schertz Order cannot save this claim, because, like TWC § 13.254(a-1), § 13.2541 applies only to property-owner decertification.
[15] Green Valley’s claims related to the GVDC Order are moot, so we need not consider whether Green Valley has standing to press its claim that § 1926(b) preempts TWC § 13.2541(d).
[16] See Russman v. Bd. of Educ. of Enlarged City Sch. Dist. of City of Watervliet , 260 F.3d 114, 121 n.2 (2d Cir. 2001); see also Staley , 485 F.3d at 318 (DeMoss, J., dissenting).
[17] The case was mooted through the joint actions of Green Valley and GVDC, not
the
unilateral
action of the losing party.
See Staley
,
[18]
See Union Pac. R.R. v. La. Pub. Serv. Comm’n
,
[19]
See Seminole Tribe of Fla. v. Florida
,
[20]
See, e.g.
,
Edelman v. Jordan
,
[21] Green Valley also requests an injunction “requiring [the PUC Officials] to re -
certify into [Green Valley’s] CCN No. 20973 the property decertified therefrom by
Novembe r 17, 2017 order in PUC Docket No. 45956.” The PUC Officials suggest that it
is impermissible for us to order them to take affirmative action. For support, they rely on
the following discussion: “ [A] suit may fail, as one against the sovereign, . . . if the relief
requested cannot be granted by merely ordering the cessation of the conduct complained
of but will require affirmative action by the sovereign or the disposition of unquestionably
sovereign property.
Larson v. Domestic & Foreign Commerce Corp.
,
[22]
Cantu Services, Inc. v. Roberie
,
[23] “In our adversarial system of adjudication, we follow the principle of party
presen tation.”
United States v. Sineneng-Smith
,
[24] The PUC Officials did not assert this issue until they filed a Rule 60(b) motion, almost five months after final judgment. That Rule 60(b) motion is not part of the record on appeal, so asserting the position now is tantamount to raising it for the first time on appeal.
[25] Non-jurisdictional rules are subject to waiver and forfeiture.
See Nutraceutical
Corp. v. Lambert
,
[26]
Birchfield
rested on two independent justifications. First, applying
Monroe v.
Pape
, 365 U.S. 167 (1961), the court found that municipalities were not proper § 1983
plaintiffs, given that they also were not subject to suit under that provision.
See Birchfield
,
[28]
See N. Alamo
,
[29]
Provide
, American Heritage Dictionary , https://ahdictionary.com/
word/search.html?q=provide (last visited Nov. 26, 2019);
see also Chesapeake Ranch Water
Co. v. Bd. of Comm’rs
,
[30] Available , American Heritage Dictionary , https://ahdictionary.com/ word/search.html?q=available (last visited Nov. 26, 2019); see also Ross v. Blake , 136 S. Ct. 1850, 1858 (2016) (“[T]he ordinary meaning of the word ‘available’ is cap able of use for the accomplishmen t of a purpose,’ and that which ‘is accessible or may be obtained.” (some quotation marks omitted)).
[31]
See Rural Water Sewer & Solid Waste Mgmt., Dist. No. 1, Logan Cty. v. City of
Guthrie (RWS Dist. No. 1)
,
[34] The other circuits that have applied this test have generally done so in the con-
text of
water
, rather than
sewer
, service.
See, e.g., RWS Dist. No. 1
, 654 F.3d at 1061;
Chesapeake Ranch
,
[35] As in many other legal contexts, what makes facilities “adequate” or a time lag “rea son able” will likely depend on the facts and circumstances surrounding the particular request for service.
[36] See PWS Dist. No. 3 , 605 F.3d at 523 (“We have not found any cases where a rural district has satisfied the ‘physical ability to serve’ requirement in the absence of any facilities whatsoever.”); cf. Lexington – S. Elkhorn Water Dist. v. City of Wilmore , 93 F.3d 230, 238 (6th Cir. 1996) (“[A]n association’s ability to serve is predicated on the existence of facilities within or adjacent to a disputed property.”). Though 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 § 1926(b)’s protection.
[37] The parties’ disagreement about “pump -and- haul” service crystallizes the prob - lem with applying a strict “pipes in the ground” condition. “‘Pump -and- haul’ is a proc ess
[41] The following portions of the judgment are vacated: (1) the judgment granted “in favor of [the] [d]efendants on Green Valley’s claim that § 1926(b) preempts Texas Water Code § 13.254(a- 6)”; (2) the judgment granted “in favor of Green Valley on Green Valley’s § 1983 claims” as it relates to the GVDC Order; and (3) the judgement enjoining GVDC “from re ceiving wastewater service at the GVDC Tract from the City of Cibolo, absent Green Val ley’s consent, for so long as the GVDC Tract remains within Green Valley’s Sewer CCN.”
[42] The following portions of the judgment are vacated: (1) the judgment granted “in favor of Green Valley on Green Valley’s § 1983 claims” as it relates to the Schertz Order; and (2) the judgment enjoining Schertz “from providing wastewater service to the Schertz Acre age, absent Green Valley’s consent, for so long as the Schertz Acreage remains within Green Valley’s Sewer CCN.”
[1] 7 U.S.C. § 1926(b) provides: (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.
[2] See Requests for Admissions, ROA.2644.
[3]
[4] 7 U.S.C. § 1926(b).
[5]
[6]
[7] “Appellants -Cross Appellees City of Schertz and Brian James’ Supplemental En Banc Brief” at 12.
[8] Ante at 24 n.39 (“[B] ecause we vacate and remand based on our overruling of North Alamo , it is unnecessary to address the parties’ other theories supporting vacatur. Accordingly, we decline to consider . . . Schertz’s request that we overrule Cibolo. ”).
[9]
See, e.g.
,
Nat. Gas Pipeline Co. of Am. v. Pool
,
[10]
See 21st Mortg. Corp. v. Glenn (In re Glenn)
,
[11] See 7 U.S.C. § 1926(a)(20)(E) (“ Notwithstanding subparagraph (C), the Secretary may make grants to State agencies for use by regulatory commissions in states with rural communities without local broadband service to establish a competitively, technologically neutral grant program to telecommunications carriers or cable operators that establish common carrier facilities and services which, in the commission ’ s determination, will result in the long-term availability to such communities of affordable broadband services which are used for the provision of high speed Internet access. ”).
[12] See, e.g. , id. § 1926(a)(2)(B)(i)(II) (“ The Secretary may make grants to qualified private, nonprofit entities to capitalize revolving funds for the purpose of providing financing to eligible entities for . . . short-term costs incurred for replacement equipment, small-scale extension services, or other small capital projects that are not part of the regular operations and maintenance activities of existing water and wastewater systems. ”).
[13] Id. § 1926(a)(3).
[14] Id. § 1926(a)(2)(A)(i) (emphasis added).
[15] Id . § 1926(a)(3) (emphasis added).
[16] Id . § 1926(a)(4)(B).
[17] Id . § 1926(b).
[18] Id . § 1926(a)(3).
[19]
See, e.g.
,
Whitman v. Am. Trucking Ass ’ns , Inc
.,
[20] Id.
[21] See “Unopposed Brief for Amicus Curiae North Alamo Water Supply Corporation in Support of Plaintiff- Appellee Cross Appellant” at 7 -8.
[22]
Green Valley Special Util. Dist. v. City of Cibolo
,
[23] Id . at 342 n.7.
[24] 7 U.S.C. § 1926(a)(3).
[25]
Cibolo
,
[26] Id.
[27] See 7 U.S.C. § 1926(a)(4)(B) (“The term ‘project’ shall include facilities providing central service or facilities se rving individual properties, or both.”).
[28]
Cibolo
,
[29] See 7 U.S.C. § 1926(a)(4)(B) (defining “project”).
[30] Id . § 1926(b) (emphasis added).
[31] See id.
[32] Id .
[33]
Pub. Water Supply Dist. No. 3 v. City of Lebanon
,
[34] Id . at 514.
[35] Id . at 519.
[36] Id . at 521.
[37]
See
“ Brief for the United States as Amicus Curiae ,”
City of Cibolo. v. Green Valley
Special Util. Dist.
,
[38] Id . at *9.
[39] Id .
[40] Id . at *10-12.
[41] ROA.2931.
[42] The bonds provide that Green Valley “covenants and agrees that its Net Water System Revenues are hereby pledged for repayment of the Bonds.” ROA.3150. The term “Net Water System Revenues” is defined to include “all gross revenues of the District Water S ystem” with reservations not pertinent here. ROA.3142. But the definition of “Water System” provides that it “shall not include any . . . sanitary sewer system.” ROA.3143.
[43] ROA.2644.
[44] See ante at 24 n.39.
[45]
[46] See ante at 19-24, Part IV.
[47] Ante at 23-24 (citations and footnotes omitted).
[48] Ante at 23 n.35.
[49] Ante at 23 n.36 (emphasis in original).
[50] Ante at 23 n.36 (emphasis omitted).
[51] Ante at 23.
[52] 7 U.S.C. § 1926(a)(3)(ii) (emphasis added).
[53] Id . § 1926(a)(4)(B).
[54] Ante at 24 n.38.
[1] 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. TWC § 13.255(b). The record shows that Green Valley had made several such agreed transfers in the past.
[2] The compensation requirement explains, in part, the PUC’s extensive findings concerning the impact on Green Valley’s assets and finances referenced in the preced ing section.
[1] See Majority Op. at 13 (“[W]e do not have jurisdiction to consider Green Valley’s preemption claims.”).
[2] The cause of action that Green Valley asserts is not “implied,” because it exists
in the body of equitable doctrine in the same way that a cause of action for breach of contract
is not “implied” from the contract but exists in the body of common law. And the court
did not
sua sponte
supply a cause of action: Green Valley pleaded it, and a complaint need
not include “magic words
.” St. P aul Mercury Ins. Co. v. Williamson
,
[3]
Cf. United States v. Sineneng-Smith
,
[4] But cf. John Harrison, Ex parte Young , 60 Stan. L. Rev. 989, 1014 (2008)
[1] As
Steel Co.
makes clear,
jurisdiction
and a
cause of action
are two independent
requirements to invoke the judicial power: “ It is firmly established in our cases that the
absence of a valid (as opposed to arguable) cause of action does not implicate subject-matter
jurisdiction,
i.e.
, the courts ’ statutory or constitutional power to adjudicate the case. ” 523
U.S. at 89. Even so, when a plaintiff lacks a cause of action — and a defendant timely points
that out to the court —it’s still fa tal to the claim.
See Bell v. Hood
,
[3] It’s unclear how the
Young
Court reached the conclusion that a freestanding
federal equity cause of action existed. Many of the Court’s statements lack citations. And,
in many of the cases the Court cites, state law supplied the cause of action.
See, e.g.
,
Chi.,
Milwaukee & St. Paul Ry. Co. v. Minnesota ex rel. R.R. & Warehouse Comm ’ n
,
[4] As noted above,
Ex parte Young
itself was a habeas proceeding in the Supreme
Court. But the underlying railroad litigation arrived in the lower federal court as a “bill in
equity.”
Young
,
[5] In
Bivens,
“the [Supreme] Court broke new ground by holding that a person
claiming to be the victim of an unlawful arrest and search could bring a Fourth Amendment
claim for damages against the responsible agents even though no federal statute authorized
such a claim.”
Hernandez
,
[6] Judge Elrod argues that the “state equity doctrine” provides the solution to the
[7] Judge Elrod critiques even asking these questions because our court did not have “the benefit of adversarial briefing from the parties.” Ante , at 1 (Elrod, J., joined by Higginson & Costa, JJ., concurring). The reason we don’t have that briefing is because it was our court that — without invitation or argument from the parties — invoked Ex parte Young to supply Green Valley’s cause of action. In both the district court and our court, Green Valley argued only that § 1983 supplied its cause of action; it said nothing about “state equity law,” id. at 2, “state equity doctrine,” ibid. , “federal equity law,” id. at 2 n.4, “the ‘general’ law of equity,” ibid. , “the body of common law,” id. at 1 n.2, “the body of equitable doctrine,” ibid. , Ex parte Young , or any other thing that conceivably provides a court-created cau se of action. So our court’s sua sponte invocation of Ex parte Young gave me pause. Having studied the issue, I am now satisfied that we’re faithfully applying Supreme Court precedent. You might reasonably have thought that federal judges could, would, and should perform such inquiries. As then-Professor Scalia once put it, it is “inherited wisdom” that “responsible professional comment and criticism are the principal restraints upon judicial arbitrariness at the highest level.” Antonin Scalia, Sovereign Immunity and Nonstatutory Review of Federal Administrative Action: Some Conclusions from the Public-Lands Cases , 68 Mich. L. Rev. 867, 867 (1970).