164 S.W.3d 368 | Tex. | 2005
IN THE SUPREME COURT OF
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No. 02-0988
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v.
Lakeshore
Utility Company, Inc., Sentry Title Company, Inc.,
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On Petition for Review from the
Court of Appeals for the
Third District of
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Argued
Justice O’Neill delivered the opinion of the Court.
In this case arising from a Texas Natural Resource Conservation Commission[1] enforcement action, we must decide whether the evidence is legally sufficient to support the trial court’s determination that a utility company knowingly violated the Water Code by charging its customers unauthorized fees, and whether the Water Code authorizes the Attorney General, at the Commission’s request, to seek customer refunds in district court to compel compliance with the Water Code’s statutory provisions. Answering both questions in the affirmative, we affirm in part and reverse in part the court of appeals’ judgment.
I. Facts
Lakeshore
Utility Company, Inc.,[2]
is a water and sewer public utility providing service to customers in two
residential subdivisions, Point La Vista and Esquire Estates II, adjacent to
As
a public utility, Lakeshore is subject to the jurisdiction of the Commission,
which is charged with exercising regulatory authority over public utilities and
fixing and regulating utility rates. See
In 1977, the Commission accepted a tariff application from Lakeshore and approved monthly rates for both subdivisions as well as tap fees at a flat rate of $200 for water “Tap and Meter Installation” and $600 for sewer “Tap & Installation” at locations requiring “heavy-duty pump[ing] or excessive lift[ing].”
Between 1981 and 1989, Lakeshore submitted numerous tariff applications to the Commission requesting various changes to the Commission’s 1977 approved rates and tap fees. Relevant to this case are the tariff applications Lakeshore made in 1981 and 1989 to increase the amounts approved by the Commission in its original 1977 tariff. These applications requested that the Commission approve monthly rate and tap-fee increases at each subdivision. In each instance, while awaiting the Commission’s decision, Lakeshore charged its customers the increased amounts that it was requesting the Commission approve. In response to each application, the Commission signed an order dismissing Lakeshore’s request and directing Lakeshore to refund the increased fees collected from its customers while the application was pending. Because of the importance of the 1981 and 1989 tariff applicationsCparticularly the resulting Commission orders that required Lakeshore to refund its customersCwe detail the events surrounding each application below.
A. The 1981 Tariff Application and Resulting 1983 Orders
In 1981, Lakeshore sought the Commission’s authorization to increase its monthly utility rates and to increase its tap fees to $375 for water and $1,150 for sewer services. Lakeshore’s request noted parenthetically that the new sewer rate would include “pump[s], tanks, valves, fittings, & controls.” Lakeshore charged its customers the increased amounts pending the Commission’s decision. In January 1983, the Commission issued an order denying the requested rate and fee increase and directing Lakeshore to charge tap fees no higher than “actual cost, not to exceed $200.00” for water and “actual cost, not to exceed $600.00” for sewer installation services. Accordingly, Lakeshore was not to charge amounts exceeding those formerly approved on its 1977 tariff. The Commission also ordered Lakeshore “to refund to its customers all monies collected in excess of the rates set forth [in its 1977 tariff],” and to provide the Commission with the name of each customer refunded and the amount within the next two months. Lakeshore was told its failure to comply would result in referral to the Attorney General’s office for prosecution. As will be seen, however, Lakeshore continued to charge customers the disapproved amounts.
Just
two months after the Commission’s January 1983 Order denying Lakeshore’s
requested increase, Lakeshore was involved in a dispute concerning the
Commission’s certification of another public utility called the
B. The 1989 Rate Application and Resulting Order
In
January 1989, Lakeshore filed another request for authorization from the
Commission to increase its monthly rates and to increase tap fees for both
residential subdivisions to $375 for water and $1,350 for sewer services. While
the request was pending, Lakeshore again charged its customers the proposed
fees. On
C. The Lawsuit
Both
Lakeshore and the Commission brought suit in district court concerning the 1989
Order. Believing the Commission’s continued refusal to increase rates and tap
fee amounts was unfair, Lakeshore sought judicial review of the Commission’s
decision denying its 1989 application. The Commission, concerned that Lakeshore
was refusing to comply with the 1989 Order, sought to enforce the order under
sections 13.411 and 13.414 of the Water Code. The Commission specifically
alleged that Lakeshore was actively violating the 1989 Order by failing to
refund customers for overcharges and by continuing to charge fees in excess of
those approved by the Commission. The Commission sought civil penalties “for
each day Lakeshore . . . has been in violation of the Water Code and the
Commission’s order since
D. First Appeal and Remand
The court of appeals reversed the district court’s judgment and reinstated the Commission’s 1989 order, which required Lakeshore to charge no more then $600 for sewer and $200 for water installation services, and to refund its customers approximately $29,000 in overcharges made during the pendency of Lakeshore’s 1989 tariff application. The Commission’s reinstated enforcement action was remanded to the district court for further proceedings. Tex. Water Comm’n v. Lakeshore Util. Co., 877 S.W.2d 814 (Tex. App.BAustin 1994, writ denied).
On remand, the Commission amended its original pleadings in the district court to seek customer refunds for overcharges dating back to 1981, when Lakeshore began to charge its customers amounts the Commission had not approved. The Commission claims it amended the original pleadings because it had learned through discovery that Lakeshore had been overcharging its customers for water and sewer services for that period of time.
After a bench trial, the district court found that between 1981 and 2001 Lakeshore had knowingly violated the Texas Water Code by overcharging its customers and assessed civil penalties in the amount of $126,400, which related to tap fee overcharges that occurred both before and after the 1989 Commission proceedings. The court also ordered Lakeshore to refund $106,417.66 to its customers for equipment, tap fee, and monthly rate overcharges between 1981 and 2001, and to pay its customers $68,851.43 in interest on overcharged amounts, plus attorneys’ fees and court costs.
E. The Second Appeal
Lakeshore
appealed only the parts of the trial court’s judgment that ordered it to (1) pay
civil penalties for “knowing” Water Code violations that occurred prior to the
1989 Order, and (2) refund unauthorized charges to customers beyond those
Lakeshore was obligated to refund by the 1989 Order. The court of appeals
affirmed the civil-penalties portion of the judgment, concluding there was
legally sufficient evidence in the record to support the trial court’s finding
that Lakeshore knowingly violated the Water Code before the 1989 proceedings. 92
S.W.3d 556, 563. But the court of appeals reversed that part of the judgment
requiring Lakeshore to refund customer overcharges that occurred before the 1989
proceedings, holding that, absent a Commission order directing a utility to
refund or credit unauthorized charges, the Water Code does not authorize a
district court action to recover those charges.
Both the Commission and Lakeshore petitioned this Court to reverse portions of the court of appeals’ judgment. Lakeshore contends the court of appeals erred in holding there was legally sufficient evidence that Lakeshore knowingly violated the Water Code before 1989. The Commission argues the court of appeals erred in reversing the trial court’s refund order. We granted both petitions for review to consider the issues presented.
II. Water Code Violations
We
first consider whether there is legally sufficient evidence to support the trial
court’s finding that Lakeshore knowingly violated sections 13.135 and 13.190 of
the Texas Water Code before 1989 by charging customers fees higher than those
the Commission approved.[4]
Section 13.135 provides that “[a] utility may not charge, collect, or receive
any rate for utility service . . . other than as provided in this chapter.”
The
Water Code does not define “knowingly,” and we have never interpreted the term
as it is used in section 13.414(a); however, “‘unless the text of a statute
dictates a different result, the term “knowingly” merely requires proof of
knowledge of the facts,’” and not knowledge of the law. United States v.
Ho, 311 F.3d 589, 605 (5th Cir. 2002) (quoting Bryan v. United
States, 524 U.S. 184, 193 (1998)); see also Osterberg v. Peca, 12 S.W.3d 31, 38 (Tex. 2000) (holding
as a general proposition that ignorance of the law is not a defense to a
statute’s violation; the term “knowingly” in the Election Code refers only to a
person’s knowledge of the act of making or accepting a contribution, and not to
whether the contribution violated the Election Code). Our Penal Code recognizes
this principle in providing that “[a] person acts knowingly, or with knowledge,
with respect to the nature of his conduct or to circumstances surrounding his
conduct when he is aware of the nature of his conduct or that the circumstances
exist.”
Lakeshore admits it routinely charged customers amounts that exceeded the tap fees filed with and approved by the Commission. But relying on General Electric Co. v. United States Environmental Protection Agency, 53 F.3d 1324, 1329 (D.C. Cir. 1995), Lakeshore contends it did not knowingly violate the Water Code in charging these amounts because it was not given “fair notice” that the tanks, pumps, and equipment necessary to effectively transfer wastewater from each home within its pressure-effluent system were included within its designated “tap fee,” nor did it know that the Water Code prohibited charging separately for these items. Specifically, Lakeshore claims it lacked “fair notice” because prior to 1987, the Commission’s rules failed to define the term “tap fee”[6] and Lakeshore could not “knowingly” violate Commission rules that did not exist during the relevant time period. Lakeshore further argues that the definition of “tap fee,” once adopted, was unclear because it provided that a utility company could charge customers for “extraordinary expenses” in addition to their approved tap fee amounts, but the definition failed to explicitly define what “expenses” qualified as “extraordinary.” As a result, Lakeshore argues it mistakenly believed that the pumps and equipment necessary to operate its pressure-effluent system qualified as “extraordinary expenses”; therefore, Lakeshore did not “knowingly” violate the Water Code in charging for these items in addition to its approved tap fee.
Lakeshore
makes a similar argument about an emergency regulation the Commission adopted in
1986 that allowed utility companies to charge residential customers for “unique”
and “non-standard” costs in addition to their approved tap fees under certain
exceptional circumstances. 11
We find Lakeshore’s argument unpersuasive. Lakeshore admits knowing that it was charging rates and fees that the Commission had not approved, and as we have stated, its subjective interpretation of the Water Code’s provisions is immaterial. See Ho, 311 F.3d at 606. To prove a knowing violation of the Water Code, the Commission needed to prove only that Lakeshore knew that it was charging more than its approved tariff. We hold that the evidence is legally sufficient to support the trial court’s finding that Lakeshore knew it was charging unapproved amounts. To begin, since the inception of Lakeshore’s pressure-effluent system in 1977, every Lakeshore customer within the system has been required to install the same or similar pumps and equipment. Lakeshore’s approved 1977 tariff listed its “Tap and Meter Installation” fee at $200 for water and “Tap & Installation” fee at a “maximum” of $600 for sewer locations “requiring heavy-duty pump or excessive lift.” Because Lakeshore’s approved amounts were for “Tap & Installation” and “Tap and Meter Installation” and specifically included a maximum amount to be charged in areas requiring “heavy-duty pump[ing] or excessive lift[ing],” Lakeshore must have understood that the $200 and $600 amounts were meant to include all installation costsCincluding those for the specialized pumps and equipment necessary to operate its pressure-effluent systemCwithin a single installation fee.
In 1981, Lakeshore sought to increase its water and sewer tap installation fees to $375 and $1,150, respectively. Lakeshore’s rate application specifically stated that the $1,150 sewer installation amount was for “pump[s], tanks, valves, fittings, & controls.” Lakeshore, therefore, must have understood its tap fee was meant to include each of these costs. In 1983, the Commission rejected Lakeshore’s proposed increases, ordered Lakeshore to charge a maximum of $200 for water and $600 for sewer installation services, and ordered Lakeshore to refund customers any charges it had received for unapproved amounts. Because the Commission specifically ordered Lakeshore to refund any unauthorized charges above approved amounts, specified the maximum amounts that could be charged, and rejected any additional charges for “pump[s], tanks, valves, fittings, & controls,” Lakeshore must have known the Commission disapproved of any charges above those explicitly stated and was prohibited from charging separately for the “pump[s], tanks, valves, fittings, & controls” necessary to operate its pressure-effluent system. Nevertheless, the record reflects that Lakeshore continued to overcharge customers exactly the prohibited amounts at least through 1989, despite a specific warning from the examiner in the St. Paul Order that “charging a tap fee of $1,150, despite the fact that a fee of that magnitude ha[d] not been approved by the Commission[,] . . . constitutes a violation of [the Water Code’s provisions].”
We agree with the court of appeals that there is legally sufficient evidence in the record to support the trial court’s finding that Lakeshore knew it was charging fees that were not approved on Lakeshore’s tariff schedule by the Commission. 92 S.W.3d at 563. Accordingly, legally sufficient evidence supports the trial court’s conclusion that Lakeshore knowingly violated the Water Code.
We next consider the scope of relief the Attorney General may seek in an enforcement action brought at the Commission’s request under section 13.411(a) of the Water Code. Section 13.411(a) defines the nature of that relief as follows:
If the commission has reason to believe that any retail public utility or any other person or corporation is engaged in or is about to engage in any act in violation of this chapter or of any order or rule of the commission entered or adopted under this chapter or that any retail public utility or any other person or corporation is failing to comply with this chapter or with any rule or order, the attorney general on request of the commission, in addition to any other remedies provided in this chapter, shall bring an action in a court of competent jurisdiction in the name of and on behalf of the commission against the retail public utility or other person or corporation to enjoin the commencement or continuation of any act or to require compliance with this chapter or the rule or order.
The court of appeals held that, although refunds were recoverable under section 13.411(a), before requesting refunds in district court the Commission had to first issue its own administrative order compelling refunds. Specifically, the court of appeals held that “[a]t most the code gives the Commission, through the attorney general, the authority to seek a district court judgment enforcing a Commission order commanding refunds.” 92 S.W.3d at 565.
The Commission contends the court of appeals’ holding was erroneous. First, the Commission argues that it did issue its own administrative order compelling refunds in 1983 and 1989, and that the district court could, and did, enforce these orders by its judgment. Those orders required Lakeshore to refund customer overcharges made during the pendency of Lakeshore’s rate applications and either explicitly or implicitly forbade Lakeshore from charging amounts exceeding those that the Commission had approved. Accordingly, the Commission claims, the 1983 and 1989 Orders are sufficiently broad to support the district court’s judgment ordering refunds from 1981 to 2001. Lakeshore, on the other hand, argues that the 1983 and 1989 Orders were not broad enough to encompass overcharges from 1981 to 2001 because the orders only required Lakeshore to refund the unapproved amounts Lakeshore had charged during the pendency of its rate applications.
The
Commission next contends that, even if the 1983 and 1989 Orders were not
sufficiently broad to cover customer refunds for the twenty-year time period in
issue, the court of appeals was wrong in making the district court’s power to
“require compliance with [the Water Code]” entirely dependent on a prior agency
refund order. See
We conclude that, whether or not the 1983 or 1989 Orders were sufficiently broad to cover refunds for the entire twenty-year time period in dispute, the Commission has statutory authority to pursue an enforcement action in district court to “require [a utility’s] compliance with [the Water Code],” and that authority includes the ability to seek refunds when a utility charges fees that the Water Code prohibits. See id.
We
begin with the well-established principle that, as an administrative agency, the
Commission may exercise only those powers that the Legislature confers upon it
in clear and express language, and cannot erect and exercise what really amounts
to a new or additional power for the purpose of administrative expediency.
Pub. Util. Comm’n v. City Pub. Serv. Bd. of San Antonio, 53 S.W.3d 310, 316
(
One of the Legislature’s express purposes in enacting the Water Code was to ensure rates, operations, and services that are just and reasonable to consumers:
The purpose of this chapter is to establish a comprehensive regulatory system that is adequate to the task of regulating retail public utilities to assure rates, operations, and services that are just and reasonable to the consumers and retail public utilities.
Our
primary objective in construing the proper scope of an enforcement action under
section 13.411(a) is to ascertain and give effect to the Legislature’s intent by
first looking at the statute’s plain and common meaning. Tex. Workers’ Comp.
Comm’n, 136 S.W.3d at 652; see also
As
we have said, the Legislature’s intent in conferring enforcement power through
the district court was, at least in part, to ensure that consumers would not be
charged unapproved rates. See
In
sum, we agree with the Commission that the customer refunds it sought were
within its express statutory enforcement powers. Accordingly, we reverse that
portion of the court of appeals’ judgment restricting refunds to only those
amounts specifically provided for in the Commission’s
IV. Conclusion
We affirm that portion of the court of appeals’ judgment that imposes civil penalties based on Lakeshore’s knowing violations of the Water Code. We reverse that portion of the court of appeals’ judgment disallowing customer refunds and otherwise affirm the court of appeals’ judgment.
__________________________________________
Harriet O’Neill
Justice
OPINION DELIVERED:
