*1 AUTHORITY, RIVER LOWER COLORADO Petitioner, MARCOS, Texas, SAN
CITY OF Respondent. No. B-4663. Supreme Texas. Court of
May 7, 1975.
Small, Craig Werkenthin, Small, & C. C. Austin, Smith, pe- Lawrence for S. Jr. titioner. McGinnis, Lochridge Kilgore, & James Wilson, Austin, respondent.
W. WALKER, Justice. opinion delivered case on withdrawn,
December
following is substituted therefor: brought by City
This suit was of San against Colorado Lower Authority judgment (1) obtain: de- claring reg- San Marcos has charged by ulate the rates LCRA for electricity city sale of retail within at limits LCRA’s resolutions increasing Directors were noncompliance the open void for law, 6252-17,1 meeting (2) for an Art. injunction restraining LCRA from collect- ing rates excess of those authorized San Marcos. LCRA counterclaimed declaratory contrary and an relief to adjudication City’s rate ordinance that the was void for lack notice LCRA. judgment The trial court entered declar- ing jurisdiction that San has no charged by LCRA for sale over electricity, City’s rate ordinance void, ordered and that rate increases in 1972 are invalid. Both and 1973 although parties perfected appeals, San complain of the trial Marcos did not holding court’s action in its rate ordinance Appeals: invalid. The of Civil Court judgment reversed trial court’s (1) jurisdiction respect to regulatory judgment that Marcos and rendered San power, no- Marcos has exclusive after appear they Ann. Vernon’s article under which 1. number All statutes referred Tex.Civ.Stat. period January ordinance after On hearing, tice and Decem- electricity passed LCRA’s rates for sold within ber Council limits; reading trial an (2) regulating affirmed the first ordinance elec- respects. judgment city. prescribed in all other trical rates in The rates court’s modify being Tex.Civ.App., 403. We ordinance are those that were Appeals of Civil judgment of the Court Marcos at that time. *3 or- finally adopted rate increase on to declare 1973 ordinance was Decem- invalid, as by and dered the LCRA is not ber and LCRA was notified of judgment following day. reply of the Court so modified the LCRA made but Appeals put its Civil is affirmed. increased effect in rates into Janu- ary, brought shortly and this action stipulated All the material facts were of thereafter. in the Marcos is a munic- trial court. San The brief of in LCRA the Court of Civil Hays County, ipal corporation located in Appeals “the power by refers to claimed city is a un- incorporated as home rule 12 San Marcos under of Article 1175.” § 5, XI, of the Texas der Article Section argued “person, that the words firm or city Constitution, Vernon’s Ann.St. corporation” as in used not statute do City expressly charter authorizes municipal corporation embrace a such as regulate by to ordinance the Council LCRA, and that the statute does con- not public utility city. operating in the every of template regulation charged by of rates a by as Article LCRA was created 8280-107 governmental by agency. This was treated un- a conservation and reclamation district Appeals “implied of an Court Civil as XVI, authority der the of Section Article argument, good reason limitation” 59, It is autho- of the Texas Constitution. since Article could have no other develop generate rized water to bearing on the case. The intermediate energy and electric within its boundaries 12 Ar- court concluded that Subdivision of distribute and sell the same within simply ticle 1175 makes clear the constitu- its boundaries. San without tional home rule cities Hays County are not within utilities, LCRA, including all rates of ac- boundaries LCRA. In LCRA rendering their service to We inhabitants. Compa- Light quired from Texas Power & attempt explore question, do not be- system ny distribution serv- the electrical recognizes, properly cause LCRA now Marcos, including ing the residents San so, “any construction of Article 1175 City in 50-year granted franchise present is immaterial” in the case. operated system is now 1925. granted 10-year under a franchise pow city A home rule derives City in 1967. Legislature er not from the but Arti from at- made no Prior to San Marcos XI, of5, cle Section the Texas Constitu tempt charged by LCRA more Accepting tion. cities and towns of service, but it has from time for electric 5,000 population than “full have regulatory jurisdiction over time claimed is, authority self-government, that full consistently denied rates. has anything legislature could thereto do respect to any power with San has re them do. The fore have authorized continuing con- rates, and there has been necessary to now it is look sult ques- parties on that troversy between the grants for the acts of tion. October On only limita power to such cities but adopted a resolution Directors Board of City powers.” tions their Forwood v. substantially increasing its retail electric Taylor, 282. Mar- rates, including those that a Article 1175 indicates Where “governing au- cos, billing monthly be exercised effective first procedure any agree- fulfill the terms of thority” specifies (d)to to be followed, may statutory provisions be ments made with the holders of such least, person regarded, at as lim- in their some instances bonds and/or to dele- itations on the behalf. or act gate the to other officials may Out which re- of the revenues manner. Burch other See required in excess of those ceived Antonio, Tex.Sup., 518 purposes specified subparagraphs of Arti- explicit provisions In view of the above, the Board (c) and (a), (b), (d) 1176,however, pow- cle the enumeration may in its discretion establish a reason- construed ers in Article never be fund, depreciation emergency able implied an limitation on the exercise purchase (by retire and cancellation powers city of all incident a home rule Act, redemption) bonds issued under enjoyment self-government. of local *4 any corporate pur- apply or the same to pose. are home rule cities powers of by only their subject may be limited to and is Act the intention this by gen or by charters or the Constitution charges rates and of the District shall limi is no instance there In this eral law. may not be in excess of what be neces- or the in either the Constitution tation imposed sary obligations to fulfill the charter, parties that the case agree the and upon by Nothing it herein Act. turns on whether Section depriving shall be as construed State 8280-107, legisla Act, constitutes Article power regulate and Texas of upon power of San tive limitation charges control fees to be collect- and/or respect city with as a home rule water, ed the use of water connec- pro the Act 8 of LCRA rates. Section tions, power, energy, or other electric follows:
vides as service, provided that the of Texas State hereby pledge agree to and with does and establish The Board shall Sec. 8. purchasers of the and successive holders charges for the other collect rates and bonds hereunder that the State issued connections, water, water sale use of or hereby power will not limit or alter the or other services energy power, electric and in the District to establish vested sold, supplied by the Dis- furnished, or pro- charges and as will collect such fees charges shall fees and trict which pay the items revenues sufficient to duce nondiscriminatory and and reasonable (c) (b), specified subparagraphs (a), in adequate; produce revenues sufficient way or in and of this Section (d) impair rights or remedies necessary expenses pay all (a) bonds, any person in or of holders of the of the operation and maintenance bonds, behalf, together their until District; of the properties and facilities thereon, interest with the interest princi- on and pay the interest (b) to and all unpaid installments of interest on this Act pal issued under of all bonds expenses in connection and costs due become and the same shall be- proceedings when as or on any action or payable; ob- and all other and half of the bondholders in connection the District ligations of re- pay sinking all fund (c) to and/or dis- fully met and such bonds made agreed to be payments serve fund charged. bonds, pay- respect in such provision (1) the revenues, emphasizes: as when able out of collect establish and payable; that the Board shall due and the same shall become use sale or charges for the other rates and District, says, i.e., that the energy supplied by precisely means what it of electric pledge rates and statutory establish (2) State LCRA will instance, power charges that its action not limit or alter the vested the first will respect to the District to establish and collect such in that is at all times State, produce charges regulation revenue reserved to fees and will pay specified in sub- not be sufficient to the items and that this reserved will prejudice paragraphs (b), (c) (d) exercised in a manner that will (a), Sec- any way impair rights prevent or in tion 8 bondholders or the collection of purposes desig- required LCRA then revenues for the remedies bondholders. argues provisions subparagraphs. these view of nated the four proviso holding only express under our in Lower limitation Colorado McCraw, regulate Authority v. 83 S. of home rule cities to Legislature in- W.2d clear that LCRA for service to cus- limits, corporate from rule cities tended to withdraw home within their tomers compelled charged by clearly LCRA no additional limitation is provisions energy sale of electric within even warranted of the agree. Legislature limits. We do not statute. The reserved State LCRA rates sub- power of A limitation on the ject only proviso, the terms by general home rule cities char law this reserved be exercised *5 express ter be either an limitation respect San Marcos with for elec- rates arising by implication. one a limita “Such tricity sold the within limits. however, implied, tion will not unless be present thus The case is somewhat simi- provisions general the the of the law of Trinity Authority lar to River v. Texas compelling to that charter are clear and Commission, Rights Tex.Civ.App., Water Smith, 632, 244 150 end.” v. Glass (wr. n.r.e.). The ref. Legisla the 645. The intention of S.W.2d original creating Trinity statute the “ap impose ture to such limitations must provided Authority nothing River that clarity.” City of pear with unmistakable impair authority granted therein the would Geron, Tex.Sup., 380 S.W. Sweetwater v. Engineers to the State Board un- Water authorizes (1) 2d 550. The statute here: prescribe der the rates laws and rates the Board to establish and collect by governing sale of surface water nothing provides that charges; (2) other Authority. provided It that to the further deprive the therein shall construed to outstanding, bonds where revenue were power rates its State duty Board Directors were under provides charges; (3) further charges rates and for sales and serv- fix not be ex to the State will reserved pay expenses, bond sufficient to meet ices impair the as to ercised in manner maturities, comply the resolution with de rights bondholders or and remedies of authorizing, and the trust indenture secur- right to fix and collect prive of the The statute was amended ing, bonds. rev produce as will charges such fees and acquisition of the in 1969 to authorize specified certain to meet enue sufficient System” but the re- “Devers Canal obligations. quirement only bonds be used revenue by the purpose. decision in Lower Colorado It contended was McCraw, Authority Authority bondholders Commission, helpful Rights here. The successor Texas Water had Engineers, LCRA was question there not whether to the Board Water was by Authori- exempt regulation rate but whether to fix rates from ty system. The court con- delegation unlawful the Devers there was opinion Legislature had In the statute established the Board. our cluded regulatory “a in which two rate ment that the Board consider scheme would other concerning Authority’s opera- making jurisdiction.” matters bodies have serial seq. “including tions observed that under Article 7560 et the ratification of the prior fix action of the Board taken on October Commission authorized to reason- was 19, 1972, peti- furnishing response changes of water on able rates for [sic] improve- by anyone by tion electric sold served water for electric Nothing was within the of the irrigation ment or district. boundaries of San Marcos, original creating adopted Author- in the statute Texas.” Two resolutions ity subsequent by con- Board at meeting or in the amendments the 1973 purported ratify, flicting regulatory to: confirm rea- (1) or inconsistent with Commission, dopt and it was ac- “all actions heretofore taken of the respect Board on held that water rates fixed October cordingly retail”; Authority subject electricity to revision rates for the sale of at were that, petition (2) the Authori- order the event it the Commission on should competent ty’s be determined customers. court jurisdiction that the action of the at conflict or incon- There is no essential meeting the earlier ineffective sistency regulation pro- in the scheme of reason, adopted rate increases be same by the Lower Colorado River Au- vided changes be effective June rate thority Act. In the absence of valid Marcos, adopted by ordinance set rates LCRA Board will continue meeting notice of past. in the If when San open law, comply meeting did not with the ordinance, adopt it will a rate 6252-17, 3A, wishes Art. in so far as § LCRA, notify give due consideration concerned, of rates is and the trial court requested by fixed or properly held invalid the action of the Directors, de- prescribe rates Board of purporting meeting Board at that to in proper under the circum- termined to be approve holding in crease rates. We *6 exercise stances. If San Marcos should Toyah Ind. Sch. Dist. v. Pecos-Barstow provi- power in a manner that the violates Dist., Tex.Civ.App., Ind. Sch. 466 S.W.2d 8280-107, the so in of Article Section 8 open (no that a violation of the writ), 377 subject in to attack the ordinance will be meeting subjects the action taken to law the just regulating courts as an ordinance judicial invalidation. private utility may be attacked
rates of a meeting The notice of 1973 confiscatory or that it ground on the is be, it might clear as it but would is not as provide does not a reasonable return. that action a reader to the fact some alert respect with complained the would be considered San Marcos has not of in charges for electric sold holding trial court’s that its rate ordinance 19, 1972, opinion In notice was of is void for lack of Marcos. our December statute. The LCRA, comply with the question notice that will not sufficient taken of the action complain attempted of ratification be considered. LCRA does ineffective, attempts meeting how holding that its and 1973 at the was 1972 1972 place, ever, the first increase rates ineffectual. The for two reasons. In were given at a purported effort to increase was made ratification cannot first increase rates retrospective operation Directors on meeting of the Board of Oc- meeting. 19, meeting tober 1972. The notice of that before the 1973 sold Houston Nat Another v. made no reference rates. Railroad Commission See 502, May 24, day 289 S.W.2d meeting 1973, Corp., held on 155 Tex. was ural Gas City trial, present 559; no- v. and the Utilities case went to Texas Natural Gas Tex.Civ.App., meeting Campo, tice of this with a state- 135 S.W.2d concluded of El
647
always lim-
133;
City Amarillo,
is clear
can
of
that
Amarillo Gas Co. v.
power by general law."
writ).
that
Tex.Civ.App.,
(no
208
239
In
it
withdraw
S.W.
314,
finally
Fall,
Tex.
City
of Beaumont v.
116
place,
the second
has now been
Davidson,
Dry
competent juris-
(1927);
by a
291
202
v.
determined
court
S.W.
the 1972
(Tex.Civ.App.
that
the action taken at
Craw, 268, 279-280, opinion (1935). majority McGEE, (dissenting). Justice Therefore, suggest does otherwise. agree respectfully I I dissent. cannot possess of San Marcos cannot holding the court’s the LCRA Act. inconsistent legislative upon Act is not a limitation Marcos, city, power of as a home rule notes, As the court Section 8 of utility charged to its provides expressly Act residents. “shall establish Directors *7 charges for rates and other collect XI the Texas Section 5 of Article of energy the sale of electric Amendment, Constitution, the Home Rule power interprets . . ..” court provides: narrowly concludes to rates “establish” having “Cities more than thousand five power that not such does conflict with San may adopt . . (5,000) inhabitants . power “regulate” Marcos’ rates. How- to charters, subject to such or amend their ever, ignores the fact that the court by the may prescribed be limitations as power given to expressly LCRA is also providing char- Legislature, and that no it established. “collect” the rates which has passed ter under said any ordinance empowered the Surely legislature when provision in- charter shall contain rates,” it LCRA to “establish collect general . consistent with . . merely to gave power than more Legislature this laws enacted initially suggest rates which San ” State-, [Emphasis . . . added]. grant may accept reject. This broad be power to me to seems expansive power as the home rule to As a Marcos’ re- clearly San may it inconsistent with legislation, in the be absence taining right why I regulate to LCRA rates. There a further reason feel provision legislature The same constitutional under did not intend for pow- general regulated by which to be rule derives LCRA rates home legislate ers to expressly proviso forbids cities. That is the additional action which is . that: “inconsistent with 8 of LCRA Act Section Legislature laws enacted “ . here- . . State of Texas does of this State.” by pledge purchas- and agree to with the
The court proviso relies on the ers and of the bonds successive holders “[n]othing herein shall be construed de- issued hereunder that the State will priving power the State of Texas of its hereby or alter the power limit vested regulate charges and control fees the District to establish and collect such and/or ” . since the reasons that state charges produce reve- fees as will right reserves the rates and nues pay operating sufficient to ex- [all any leg- since home rule exercise cities can penses principal and the interest and them, islative not forbidden ef- all bonds issued].” proviso fect regulatory reserve held in Lower Author- We Colorado River rule This rea- home cities. McCraw, supra, ity pledge v. is a that this soning does not account the “well take into promoting valid method of the marketabili- always
settled rule that held to statutes ty says of LCRA that if bonds. The court operate prospectively, contrary a unless approve Marcos refuses suffi- rates required by is evidently construction their keep necessary cient raise the revenue plain unequivocal language.” Pied- pledge “the ordinance will be Arlington Ray, mont & Life Ins. Co. to attack in the just courts as an ordinance 511, Person- (1878); Government regulating utility private a Wear, nel Life Mut. Ins. Co. v. ground be attacked that it is on the 529 (1952). confiscatory provide or does not a reason- Finding language Act in the LCRA in- It is able return.” fact in legislative provi- well known dicating a intent prospective the commercial world that a operate retrospectively, so I would follow purchaser buy po- bond is hot anxious to operates pro- the above rule that it and hold tential lawsuit. The court’s construction spectively only. Thus, may, very purpose future, Section defeats the in the invoke its reserved legislative pledge ignores the es- regulate LCRA and either exercise private utility, sential difference between a delegate itself regulated operates which should since any appropriate leg- But until the agency. LCRA, which, profit, and the no less islature chooses that reserved to activate city, than a rule to serve the home exists proviso power, I find in the indi- nothing public higher and can than charge rates no cating an intent the LCRA’s ex- to restrict necessary pay operating costs retire rates.” press power to and collect “establish pos- indebtedness. raises the Further, unwelcome proviso, reserves to which widely sibility collecting of the LCRA di- the State Texas *8 vergent service in dif- rates identical charges, in it- control LCRA rates ex- incurring ferent cities and additional negates self the court’s construction penses, corresponding in- utility rate effectively power to the home reserves that creases, justify rates to attempts in its its rule cities served the LCRA. res- a reve- various councils and maintain assumption ervation is to state and statutory nue level sufficient fulfill the such pledge Again, inconsistent with reservation I cannot be- such to bondholders. result legislature state. lieve the intended govern- as a it created the LCRA when express gave it agency and
mental collect rates suffi- power to establish and its only to maintain existence. cient reasons, hold I foregoing For the would Act, which law establish grants to in- energy, is and collect rates for electric authority that any previous consistent un- had to such general powers in it as der the vested city and, therefore, any home rule by the previous authority superseded that the I further hold LCRA Act. would can and collect its establish ever, time, regulation if without until to exercise decides such rates. reserved DANIEL, GREENHILL, J., J., C. join this dissent. WACO, Petitioner,
The CITY OF McGREGOR, Respondent. The CITY OF No. B-4748. Supreme Court of Texas.
Feb. 1975. Opinion Dissenting Rehearing 7,May