Green Valley Special Utility District v. Nelson et al

Filing 124

ORDER GRANTING IN PART AND DENYING IN PART 100 Green Valley's Motion for Summary Judgment. ORDER DENYING 106 Schertz's Motion for Summary Judgment. ORDER DENYING 120 GVDC's Motion for Summary Judgment. ORDER GRANTING IN PART AND DENYING IN PART 121 PUC's Motion for Summary Judgment. Signed by Judge Sam Sparks. (lt)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

GREEN VALLEY SPECIAL UTILITY
DISTRICT,
Plaintiff,

2fl!UPjüy

CAUSE NO.:
AU-17-CA-00819-SS

-vs-

28

P!1 3:

5

DEANN T. WALKER, ARTHUR C.
D'ANDREA, and SHELLY BOTKIN, in
their official capacities as Commissioners of
the Public Utility Commission of Texas;
JOHN PAUL URBAN, in his official
capacity as Executive Director of the Public
Utifity Commission of Texas; CITY OF
SCHERTZ, TEXAS; JOHN KESSEL, in his
official capacity as City Manager of the City
of Schertz, Texas; and GUADALUPE
VALLEY DEVELOPMENT

CORPORATION,
Defendant.

r1
LWJ

1 ii
PJ

'iIi
III

BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause,
and specifically Plaintiff Green Valley Special Utility District (Green Valley)'s Motion for

Summary Judgment [#100]; Defendant Guadalupe Valley Development Corporation (GVDC)'s
Response [#102] in opposition; Defendants Deann T. Walker, Arthur C. D'Andrea, Shelly
Botkin, and John Paul Urban, in their capacity as officials of the Public Utility Commission of
Texas (collectively, the PUC)'s Response [#103] in opposition; Defendants Brian James, in his
official capacity as City Manager of the City of Schertz, and the City

of Schertz

(collectively,

Schertz) ' s Response [#104] in opposition; and Green Valley's Reply [#115] in support; as well
as Schertz's Motion for Summary Judgment [#106]; GVDC's Motion for Summary Judgment

1

[#120]; the PUC's Motion for Summary Judgment [#121]; Green Valley's Responses [#122]

thereto; and GVDC's Reply [#123] in support. Having reviewed the documents, the governing
law, and the file as a whole, the Court now enters the following opinion and orders.

Background

Introduction

I.

This is a federal preemption case. Green Valley is a special utility district formed to

provide water and sewer service to portions of Bexar, Comal, and Guadalupe Counties. Green

Valley Mot. Sunmi. J. [#100-2] Ex. 1A (Water CCN) at 1; id. [#100-2] Ex. lB (Sewer CCN) at
2.1

Towards this end, Green Valley has acquired two Certificates of Convenience and Necessity

(CCNs)issued by the PUCwhich give Green Valley an exclusive right to provide water and
sewer service to a designated service area within these counties. Water CCN; Sewer CCN.
In part, Green Valley has funded its operations with a federal loan obtained under
7 U.S.C. § 1926. Green Valley Mot. Summ. J. [#100-2] Ex. 1C at

3-75. Section 1926(b)

provides that, during the term of this loan, "the service provided or made available" by utility

associations such as Green Valley "shall not be curtailed or limited by inclusion of the area
served

. . .

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." 7 U.S.C.

II.

§

1926(b).

The Schertz Decertification Application
In October 2014, Schertz notified Green Valley that it intended to provide sewer service

to approximately 405 acres of land within Schertz's corporate limits but encompassed by Green

Valley's Sewer CCN (the Schertz Acreage). Green Valley Mot. Sunmi. J. [#100-7] Ex. 2J
(Schertz Deáertification Order) at 28. Schertz then filed an application under Texas Water Code
§

13.255(b) requesting the PUC decertify this acreage from Green Valley's Sewer CCN and
1111

the interest of consistency all page number citations refer to CMIECF pagination.

2

recertify the same acreage to Schertz. Id. at 29. Section 13.255(b) allows municipalities to apply
for certification to provide water or sewer service to areas falling within the municipalities'

corporate limits.

TEX.

WATER CODE

applications sought under

§

§

13.255(b). PUC officials lack discretion to deny

13.255 because § 13.255 states the PUC "shall grant single

certification to the municipality" upon receipt of an application. Id

§

13.255(c). Relying on this

statutory language, the PUC concluded it must grant Schertz's

application.2

Schertz

Decertification Order at 37. The PUC then decertified the acreage in question from Green

Valley's Sewer CCN and recertified the acreage to Schertz. Id. at 40. The practical effect of this
maneuver was to revoke Green Valley's exclusive right to provide sewer service to the Schertz
Acreage.

III.

The GVDC Decertification Petition
GVDC owns a tract of land (the GVDC Tract) within Green Valley's service area. Green

Valley Mot. Summ. J. [#100-7] Ex. 2H (GVDC Decertification Order) at 9, 12. In October 2014,
GVDC informed Green Valley that it planned to begin development on this Tract and would
require water and sewer service as its development

progressed.3

GVDC Resp. [#102-1] Ex.

1

(GVDC Service Request) at 1-18. GVDC further requested that Green Valley produce "a

definitive commitment and agreement" by September 28, 2015 regarding the provision of sewer
service. Id. [#102-1] Ex. 2 (GVDC Commitment Demand) at 19-20.
In response, Green Valley informed GVDC that Green Valley was "committed to serving

[customers] within its CCNs" and had recently taken several steps to facilitate the provision of
2

Schertz has at times suggested the PUC granted Schertz's application for decertification under
13.254(a), rather than under § 13.255. See Schertz Mot. Summ. J. [#106] at 7, 10. This suggestion appears to be in
error, as the Schertz Decertification Order relies solely on § 13.255. Schertz Decertification Order at 24, 37 ("The
Commission must grant single certification to the municipality under [ 13.255(c)].").
§

Green Valley contends the GVDC Tract was entirely undeveloped when GVDC requested service in
October 2014. See Green Valley Reply [#115] at 3 (alleging the GVDC property is "dry cropland" with "no building
or infrastructure").
3

wastewater services, such as purchasing

65

acres of land for construction of a wastewater

treatment facility and applying for a discharge permit4 in order to provide service to GVDC on
an "expedited basis." Id.

[#102-1] Ex. 3

(Green Valley Commitment) at

21-23.

Green Valley

further explained there were currently no wastewater facilities near the GVDC Tract because

"sparse development" within Green Valley's Sewer CCN had historically rendered the
construction of such facilities impractical. Id. at 2 l-22. As development of the area accelerated,
however, Green Valley aimed to construct "a permanent facility.
growth." Id. at

22.

. .

to serve current and future

Green Valley also assured GVDC that it would pursue various options to

provide interim service to GVDC on an "expedited basis" until a permanent wastewater facility
was constructed. Id. In all, Green Valley estimated that, after a "fair sharing of costs and

responsibilities," GVDC would need to pay roughly
service. See id. at 21-22

("This

$3.6

million in order to receive sewer

cost would contract and reserve the capacity provided in your

application for service."); GVDC Resp.

[#1021

at

5

(alleging Green Valley "quoted GVDC a fee

of $3.6 million to provide wastewater services to the GVDC property")
Instead of pursuing a service agreement with Green Valley, GVDC submitted an
identical request for sewer service to the City of Cibolo, Texas (Cibolo). Green Valley Mot.
Summ. J. [#100-9] at

roughly

$1.6

2.

Cibolo responded by offering to provide sewer service to GVDC for

million under the terms of an Economic Development Agreement. Cibolo

Green Valley received a draft permit from the Texas Commission on Environmental Quality (TCEQ) in
October 2015 indicating that Green Valley's requested permit complied "with all statutory and regulatory
requirements." Green Valley Mot. Sunmi. J. [#100-3] Ex. iF at 16-18. Nevertheless, Green Valley did not receive
the final permit until July 2018 because Cibolo and Schertzalready engaged in independent efforts to decertify
portions of Green Valley's CCNscontested Green Valley's discharge application. See id. [#100-1] Ex. 1 (Allen
Aff.) at 5-6; GVDC Resp. [#102-1] Ex. 4 (Cibolo Preliminary Offer) at 24 ("The City has filed a request with the
[PUC] for single decertification of wastewater [that includes the GVDC tract"); Green Valley Mot. Summ. J.
[#100-7] Ex. 21 (Schertz Preliminary Decertification Order) at 1 (seeking to decertify land from Green Valley's
CCN and then recertify the same land to Schertz).
See also Allen Aff. at 4 ("Historically, there was no demand for wastewater service . . . [because] the
CCN service area lacked the population density typically necessary for a wastewater collection system, resulting in
resident preference for on-site septic instead.").

4

Preliminary Offer at 24-25. Cibolo did not specify when it would ostensibly begin providing
service. Id.

After receiving the preliminary offer from Cibolo, GVDC withdrew its request that Green
Valley provide sewer service and filed a petition with the PUC under Texas Water Code
§

13.254(a-5) requesting decertification of GVDC's property from Green Valley's Sewer CCN.

Green Valley Mot. Sunmi. J. [#100-9] at

11

(GVDC Request Withdrawal); id. [#100-6] Ex. 2B

(GVDC Decertification Petition) at 18. Section 13.254(a-5) allows the owner of a qualifying6

tract of land not "receiving" water or sewer service to petition the PUC for expedited release
from a CCN.

TEX.

WATER CODE

§

13.254(a-5). If the tract in question is not receiving service,

the owner of the tract of land is "entitled" to be released from the CCN upon request. Id.
The PUC concluded that the GVDC Tract was "not receiving sewer service under
[

13.254(a-5)]" and that Green Valley had neither "committed facilities nor lines providing

sewer service" nor "performed acts or supplied anything" to the GVDC Tract. GVDC
Decertification Order at 11, 13. The PUC further determined that it could not consider whether

removal of the GVDC Tract from Green Valley's CCN might violate federal law because
§ 13 .254(a-6)

prohibits the PUC from denying a petition "based on the fact that a certificate

holder is a borrower under a federal loan program."
Decertification Order at 11;

see

TEX.

WATER CODE

§

13.254(a-6); GVDC

also Green Valley Mot. Summ. J. [#100-7] Ex. 2G (Cibolo

Preliminary Certification Order) at 2-4 (concluding PUC lacks authority to adjudicate federal
preemption issues). On these bases, the PUC approved GVDC's petition and decertified the
GVDC Tract from Green Valley's CCN under

13.254(a-5). GVDC Decertification Order at 11.

§

Section 13.254(a-5) imposes several conditions on release which are not relevant for the purposes of this
§ 13.254(a-5).

suit. See TEX. WATER CODE

5

The practical effect of this decertification was to revoke Green Valley's exclusive right to
provide sewer service to the GVDC Tract.
IV.

The Present Federal Action
In August 2017, Green Valley brought this action under 42 U.S.C.

§

1983 alleging

GVDc, Schertz, and the PUC violated federal law by decertifying portions of Green Valley's
CCN and thereby revoking Green Valley's exclusive right to provide service to the decertified
areas. Compi. [#1]. Specifically, Green Valley contends the PUC cannot decertify land from

Green Valley's Sewer CCN because, under

§

1926(b), the PUC may not "curtail[] or limit[]"

service "provided or made available" by Green Valley under its Sewer CCN. Third Am. compl.
[#89] at 9.

On this basis, Green Valley seeks declaratory and injunctive relief to restore the

decertified areas to its Sewer CCN and to protect its Sewer CCN from further encroachment. For
starters, Green Valley asks the Court to declare that provisions of the Texas Water Code

prohibiting the PUC from considering "the fact that a certificate holder is a borrower under a
federal loan program" are preempted by

§

1926(b). Id. at 9; TEx. WATER CODE

§

13.254(a-1)

("The fact that a certificate holder is a borrower under a federal loan program is not a bar to a

request under this subsection for the release of the petitioner's land and the receipt of services
from an alternative provider."); id.

petition received under

[

§ 13 .254(a-6)

("The utility commission may not deny a

13.254(a-5] based on the fact that a certificate holder is a borrower

under a federal loan program."). Green Valley also asks the Court to enjoin the PUC from
enforcing these provisions; to invalidate the GVDC and Schertz Decertification Orders; to
command the PUC to reverse the GVDC and Schertz Decertification Orders; and to enjoin the

PUC from further decertifying portions of Green Valley's Sewer CCN under Texas Water Code

§

13.254(a-5) and 13.255(b)-(c). Third Am. Compi. [#89] at 14-16. Finally, Green Valley

requests the Court enjoin GVDC from seeking sewer service from any service provider other
than Green Valley and enjoin Schertz from either providing service to areas decertified from
Green Valley's Sewer CCN or seeking to decertify additional areas of Green Valley's Sewer

CCN under Texas Water Code

§

13.254(a-5) or 13.255(b)-(c). Id.

All parties now move for summary judgment on Green Valley's claims. Green Valley
Mot. Summ. J. [#100]; Schertz Mot. Sunmi. J. [#106]; GVDC Mot. Summ. J. [#120]; PUC Mot.

Sunm. J. [#12 1]. These pending motions are ripe for review.
Analysis
The Court proceeds by first laying out the applicable legal standard. It then considers (1)

whether
§

§

1926(b) preempts Texas Water Code

13.254(a-1) and 13.254(a-6); (2) whether

1926(b) bars Schertz's encroachment on the Green Valley Sewer CCN under Texas Water

Code

§

13.255; and (3) whether

§

1926(b) bars decertification of the GVDC tract from Green

Valley's Sewer CCN under Texas Water Code
I.

§

§

13.254(a-5).

Legal Standard
A.

Summary Judgment

Summary judgment shall be rendered when the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter of law.
Celotex Corp.

v.

Catrett, 477 U.S. 317, 323-25 (1986); Washburn

v.

FED. R. Civ. P.

56(a);

Harvey, 504 F.3d 505, 508

(5th Cir. 2007). A dispute regarding a material fact is "genuine" if the evidence is such that a

reasonable jury could return a verdict in favor of the nonmoving party. Anderson

v.

Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the

7

court is required to view all inferences drawn from the factual record in the light most favorable
to the nonmoving party. Matsushita Elec. Indus. Co.

v.

Zenith Radio, 475 U.S. 574, 587 (1986);

Washburn, 504 F.3d at 508. The court "may not make credibility determinations or weigh the

evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477
U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support

the nonmoving party's case, the party opposing the motion must come forward with competent

summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at
586. Mere conclusory allegations are not competent summary judgment evidence, and thus are

insufficient to defeat a motion for summary judgment. Turner

v.

Baylor Richardson Med. Ctr.,

476 F.3d 337, 343 (5th Cir. 2007). Unsubstantiated assertions, improbable inferences, and

unsupported speculation are not competent summary judgment evidence. Id. The party opposing

summary judgment is required to identify specific evidence in the record and to articulate the
precise maimer in which that evidence supports his claim. Adams

v.

Travelers Indem. Co. of

Conn., 465 F.3d 156, 164 (5th Cir. 2006). Rule 56 does not impose a duty on the court to "sift

through the record in search of evidence" to support the nonmovant's opposition to the motion
for summary judgment. Id.

"Only disputes over facts that might affect the outcome of the suit under the governing
laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248.

Disputed fact issues that are "irrelevant and unnecessary" will not be considered by a court in
ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing

sufficient to establish the existence of an element essential to its case and on which it will bear
the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

II.

Application
A.

Texas Water Code § 13.254(a-1) and 13.254(a-6)

Under the Supremacy Clause of the Constitution, "federal law supersedes or

supplants... inconsistent state law or regulation." United States

v.

Zadeh, 820 F.3d 746, 751

(5th Cir. 2016). Though there are several types of preemption, only one is relevant here. Under

the doctrine of conflict preemption, state law is preempted where (i) compliance with both state
and federal law is impossible, or (ii) state law "stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress." Id. "What is a sufficient obstacle [to

trigger conflict preemption] is a matter of judgment, to be informed by examining the federal
statute as a whole and identifying its purpose and intended effects[.]" Crosby

Trade Council, 530 U.S. 363, 372-73 (2000) (citing Savage

v.

v.

Nat '1 Foreign

Jones, 225 U.S. 501, 533 (1912)).

The party asserting federal preemption bears the burden of persuasion. Elam v. Kansas City

S.

Ry. Co., 635 F.3d 796, 802 (5th Cir. 2011).

Green Valley contends Texas Water Code

§

13.254(a-1) and 13.254(a-6) are subject to

conflict preemption and "directly conflict" with 7 U.S.C.

§

1926(b) because they prohibit the

PUC from denying decertification requests based on a certificate holder's federal borrower status

under

§

1926(b). Green Valley Mot. Sunmi. J. [#100] at 6, 7. According to Green Valley, these

provisions "declare" that state law "should supersede and preempt federal law." Id. at 6.
As an initial matter, Green Valley lacks standing to challenge

§ 13 .254(a- 1)

because

neither of the decertification orders complained of by Green Valley rely on or even cite
§ 13 .254(a- 1).
§

See GVDC Decertification Order at 11 (ordering decertification in reliance on

13.254(a-5) and 13.254(a-6)); Schertz Decertification Order at 21 (ordering decertification

under

§

13.255). Absent any connection between the complained-of decertification orders and

§

13.254(a-1), Green Valley lacks standing to challenge

an injury fairly traceable to this provision.

See Lujan

v.

§

13.254(a-1) because it has not suffered

Defs.

of Wildlife,

504 U.S. 555, 560-61

(1992) ("[T]here must be a causal connection between the injury and the conduct complained

of...
By contrast, the GVDC Decertification Order does cite and rely on
Decertification Order at 13 ("Under

[

§

13.254(a-6). GVDC

13.254(a-6)], the Commission may not deny the petition

based on the fact that [Green Valley] is a borrower under a federal loan program.") Thus, the
remaining question is whether

§

PUC not deny petitions under

13.254(a-6) conflicts with 7 U.S.C.
§ 13 .254(a-5)

§

1926(b) by mandating the

"based on the fact that a certificate holder is a

borrower under a federal loan program."
In evaluating, whether § 13 .254(a-6) is subject to conflict preemption, the Court first turns
to the text of

§

1926(b). That provision provides only that "{t]he service provided or made

available" through a utility association indebted under

§

1926(b) "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." 7 U.S.C.

§

1926(b). It does not mention or address

the manner in which state governments should go about managing utility certification. Id. Nor
does it command that state administrative agencieswhich are often ill-equipped to decide

complex legal issues such as preemptionmust take into account federal indebtedness when
certifying and decertifying land from utility districts. Id.
This textual inquiry makes clear that it is not impossible to comply with both
and

§ 13 .254(a-6)

§

1926(b)

because the provisions do not directly conflict. For example, the PUC might

ignore a certificate holder's federal indebtedness under

10

§

1926(b) but nevertheless deny a request

for decertification, thereby complying with both state law (by ignoring the federal loan) and

federal law (by declining to curtail or limit the borrower's service area).8
Still,

§ 13 .254(a-6)

might be subject to conflict preemption if it "stands as an obstacle to

the accomplishment and execution of the full purposes and objectives of Congress" in enacting
§

1926(b). Zadeh, 820 F.3d at 751. Relevant here, Congress enacted

§

1926(b) with the goal of

"safeguard[ing] the viability and financial security" of federally indebted utility associations "by

protecting them from the expansion of nearby cities and towns. Green Valley Special Util. Dist.
v.

City of Cibolo, Tex., 866 F.3d 339, 343 (5th Cir. 2017).

Section 13 .254(a-6) creates a two-step process for reviewing decertification requests:
certification questions are initially addressed by the PUC, while preemption issues and questions

of federal law are addressed by the state district court upon appçal.9 In similar fashion, federal
administrative agencies are often tasked with leveraging agency expertise to interpret particular

statutes, while nevertheless remaining unfit to adjudicate adjacent statutory or constitutional
issues. See, e.g., Thunder Basin Coal Co.

v.

Reich, 510 U.S. 200, 213-15 (1994) (noting

adjudication of constitutional issues "has generally been thought beyond the jurisdiction of

administrative agencies"); Whitney Nat '1 Bank in Jefferson Parish

v.

Bank

of New

Orleans &

Trust Co., 379 U.S. 411 (1965) (observing Congress often "provide[s] statutory review
procedures designed to permit agency expertise to be brought to bear on particular problems");

see also Shalala

v.

Ill. Council on Long Term Care, Inc., 529 U.S. 1, 22-24 (2000) (upholding

statutory provision requiring certain actions be "channeled" through administrative agency on

8

Cf Wyeth v. Levine, 555 U.S. 555, 589-90 (2009) (Thomas, J., concurring) ("The Court has generally
articulated a very narrow 'impossibility standard' ...

Indeed, the PUC has previously suggested it is institutionally incompetent to consider or apply any federal
law, irrespective of § 13.254(a-6). See Green Valley Mot. Summ. J. [#100-7] Ex. 2G at 3-4 (concluding the state
legislature has not given the PUC authority to adjudicate federal preemption questions).
11

the ground that courts retained "adequate authority to resolve any statutory or constitutional
contention that the agency does not, or cannot, decide"). Texas has likewise seen fit to allocate
and distribute decision-making authority among multiple state adjudicators. Though in theory a
state might assemble a multi-step review process so elaborate and labyrinthine as to create a
substantial obstacle to the ability of federal borrowers to protect their certificated area, this is not
such a case,'° and in light of the principles of federalism undergirding our constitutional system,
this Court declines to dictate the manner in which Texas may structure administrative review of
state utility certifications.
In sum, the Court concludes

neither directly conflicts with
Congress in enacting

§

§

§ 13 .254(a-6)

is not subject to conflict preemption because it

1926(b) nor poses an obstacle to the goals and purpose of

1926(b). The Court thus denies Green Valley's motion for summary

judgment on its preemption claims relating to

§ 13 .254(a-6)

and grants summary judgment to the

PUC as to the same.

Decertification of the Schertz Acreage Under Texas Water Code § 13.255

B.

Green Valley argues

Water Code

§

§

1926(b) bars decertification of the Schertz Acreage under Texas

13.255. Green Valley Mot. Summ. J. [#100] at 10-12. Under

§

1926(b), the

service area of utility association may not be curtailed or limited so long as (1) the association
has an outstanding loan under
Alamo Water Supply Corp.

v.

§

1926; and (2) the association has "made available" service. N.

City

of San Juan,

curiam); see also Green Valley Special Util. Dist.

Tex., 90 F.3d 910, 915 (5th Cir. 1996) (per
v. City

of Cibolo,

Tex., 866 F.3d 339, 341 (5th

Cir. 2017).

10

Cf Shalala, 529 U.S. at 23 (finding two-step review process requiring plaintiffs to appeal statutory and
constitutional questions unaddressed by initial agency review to present nothing more than "potentially isolated
instances of the inconveniences sometimes associated with the postponement ofjudicial review").
12

Schertz and Green Valley dispute the circumstances under which an association makes
service available under

§

1926(b). Green Valley argues, in reliance on North Alamo and Cibolo,

that its state law duty to provide "continuous and adequate service" to its certificated area under

Texas Water Code

§

13.250(a) is tantamount to making service available under

§

1926(b). See

N Alamo, 90 F.3d at 915-16 ("We hold that the

Green Valley Mot. Summ. J. [#1001 at 11-12;

Utility's state law duty to provide service is the legal equivalent to the Utility's 'making service
available' under

§

1926(b)."); Cibolo, 866 F.3d at 341 ("Where a CCN imposes a duty on a

utility to provide a service, that utility has 'provided or made available' that service under
§

1926(b)

.

.

.

."). In turn, Schertz argues that North Alamo created a "two-prong test" for

assessing whether utilities have, made service available under
this test requires a utility seeking refuge under

§

§

1926(b). According to Schertz,

1926(b) to demonstrate (a) that the utility has

incurred a legal duty to provide service; and (b) that the utility is capable, as a factual matter, of
providing service to those who request it. Schertz Mot. Sunmi. J. [#106] at 7-8; see also PUC
Resp. [#103] at 3-4 ("North Alamo rests on two prongs.").

In North Alamo, the lower court had held the utility had "made service available" under
§

1926(b) as a matter of law by incurring a state law duty to provide continuous and adequate

service to its certificated area. N Alamo, 90 F.3d at 914. The lower court had also held, in the
alternative, that the utility had made service available as a factual matter because it had sufficient

infrastructure to provide service and had not refused any requests for service within its
certificated area. Id. at 916. On appeal, the Fifth Circuit explicitly held "that the Utility's state
law duty to provide service is the legal equivalent" of making service available under

§

1926(b).

Id. It then affirmed "on the strength of [the lower court's] alternative legal and factual

determinations." Id.

13

At no point did the Fifth Circuit suggest in North Alamo that it was fusing the lower

court's alternative holdings into some sort of misbegotten legal chimera. See id. To the contrary,
the Fifth Circuit subsequently reiterated in Cibolo that so long as a utility's state law duty to

provide service remains intact, that utility has provided and made available service under
§

1926(b). See Cibolo, 866 F.3d at 341 (making no mention of North Alamo's alternative factual

holding nor of a second, factual prong). Though neither North Alamo nor Cibolo are binding
precedent on this

pointthe

pronouncements are

dictaboth opinions are persuasive.

former was issued per curiam and the latter's relevant

Given this persuasive authority, the Court again concludes, as it did in the context of

Defendants' prior motions to dismiss, that a utility provides or makes available service under
§

1926(b) so long as its state law duty to provide service remains intact. See Order of Feb. 9,

2018 [#71] at 17. Concomitantly, of course, to the extent a utility does not fulfill its state law

duty to provide continuous and adequate service under
or made available service under

§

§

13.250(a), that utility has not provided

1926(b) and is not entitled to federal protection of its service

area. In such circumstances, the PUC may "revoke or amend" the utility's CCN on the ground

the utility "has failed to provide continuous and adequate service in the area, or part of the area,
covered by the certificate."

TEX.

WATER CODE

§

13.250(a)(1); see also id.

§

13.250(a-1)(3)

(authorizing decertification where utility has failed to provide service or is incapable of

providing service on a continuous and adequate basis "in the manner reasonably needed or
requested by current and projected service demands in the area").
Here, the PUC did not determine that Green Valley had failed to fulfill its state law duty
to provide continuous and adequate service to Schertz." Rather, the PUC determined that it was

Schertz concedes the PUC is the proper arbiter of whether or not Green Valley has met its state law duty
to provide continuous and adequate service. Schertz Mot. Summ. J. [#106] at 10.

14

required to grant Schertz's request for decertification regardless of whether Green Valley had
fulfilled its state law duty or not. Schert Decertification Order at 37. Because the PUC did not

determine that Green Valley had failed to uphold its state law duty to provide service under
§

13.250, Green Valley's state law duty remains intact. And as long as Green Valley's state law

duty remains intact, Green Valley is providing and making available service within the meaning

of § 1926(b).

See Cibolo,

866 F.3d at 341; N. Alamo, 90 F.3d at 916. Under

§

1926(b), such

service may not be curtailed or limited by inclusion of the area served within the boundaries of
any municipal

corporationin this case, Schertz. The Court therefore grants Green Valley's

motion for summary judgment on its

§

1983 claim alleging GVDC and the PUC interfered with

Green Valley's exclusive right to provide service to the GVDC Tract under § 1926(b).

C.

Decertification of the GVDC Tract Under Texas Water Code § 13.254(a-5)

Green Valley also argues

§

1926(b) bars decertification of the GVDC Tract. Green

Valley Mot. Summ. J. [#100] at 10-12. And again, the parties' dispute centers on whether Green
Valley made service available to the GVDC Tract under

§

1926(b).

As the Court explained above in the context of the Schertz Decertification Order, a utility
makes service available under

§

1926(b) by incurring and upholding a state law duty to provide

such service. See supra Section II.B. Green Valley argues it has incurred a state law duty under

Texas Water Code

§

13.250 to provide "continuous and adequate service" within its service area.

Green Valley Mot. Summ. J. [#100] at 3. Further, Green Valley contends the GVDC Tract

cannot be decertified from Green Valley's service area unless the PUC determines Green Valley
has failed to fulfill its state law duty to provide continuous and adequate service. Id. at 12. In
turn, GVDC argues that when the PUC found the GVDC Tract was not "receiving" service, it
also implicitly concluded Green Valley had breached its state law duty to provide service.

15

GVDC Mot. Summ. J. {#120] at 5-7. Alternatively, GVDC argues the PUC's findings and Green

Valley's discovery responses in this case demonstrate that Green Valley has not met its state law
duty to provide continuous and adequate service under § 13.250. Id. at 7-8.
The first question is whether the PUC implicitly concluded Green Valley had breached its
state law duty to provide service to the GVDC Tract. It is undisputed that the PUC did not

explicitly conclude Green Valley breached its state law duty to provide continuous and adequate
service. The PUC did find, however, that the GVDC Tract was not "receiving service" as that

term is used in Texas Water Code

§

13.254(a-5). GVDC Decertification Order at 12-13. The

Texas Water Code defines "service" as "any act performed, anything furnished or supplied, and

any facilities or lines committed or used by a retail public utility in the performance of its

duties.. . ." TEX. WATER CODE

§

13.002(21). Although Green Valley had purchased 65 acres of

land for construction of a permanent wastewater facility and applied for a discharge permit, the

PUC concluded the GVDC Tract was not "receiving service" because Green Valley had neither
"performed acts or supplied anything" to the GVDC Tract nor conmiitted facilities or lines to

providing service to the GVDC Tract. GVDC Decertification Order at 12-13.

Of course, the immediate reason Green Valley did not perform any acts or supply
anything to the GVDC Tract is that GVDC withdrew its request for service from Green Valley.
On July 29, 2015, GVDC informed Green Valley that it had sixty days to produce "a definitive

commitment and agreement" regarding the provision of wastewater service. GVDC Commitment
Demand at 19-20. When Green Valley proved unable to produce such an

agreement

presumably because GVDC was unwilling to agree to pay $3.6 million for sewer

service

GVDC withdrew its request for service and pursued a nearly identical request for service with

Cibolo in hopes of receiving cheaper sewer service. Green Valley Mot. Summ. J. [#100-9] at 2;

16

GVDC Request Withdrawal; GVDC Resp. [#102-1] Ex. 4 (Cibolo Offer) at 24-25 (suggesting
GVDC and Cibolo pursue an "economic development agreement" whereby Cibolo would

provide a wastewater line to the GVDC Tract for an initial outlay of $1.3 million).
This context makes clear that a failure to receive service does not necessarily entail a
breach in a utility's duty to provide service. Green Valley avers that it stood ready to
accommodate GVDC's wastewater needs as they arose, both an on expedited basis and through

construction of a permanent wastewater treatment facility. Green Valley Commitment at 21-23.
During the time GVDC's request for service was outstanding, the GVDC Tract did not receive
service because GVDC had not agreed to pay for it. It is difficult to contemplate how, in these

circumstances, GVDC's refusal to accept service might constitute a per se breach of Green

Valley's duty to provide continuous and adequate service to consumers.
Even more to the point, it is immaterial whether the PUC's findings might support the

conclusion that Green Valley did not meet its state law duty to provide service to the GVDC
Tract, because the PUC did not reach that conclusion here. As explained above, North Alamo and
Cibolo both suggest that a utility makes service available under

duty to provide service remains intact.

See

§

1926(b) so long as its state law

supra Section II.B. In this instance, the PUC did not

address whether Green Valley violated this duty, and as a result, Green Valley's state law duty

remains inviolate.

See

GVDC Decertification Order at 12-13. Until the PUC determines Green

Valley has breached its state law duty to provide service, the existence of that duty means Green
Valley is making service available to the GVDC Tract under

§

1926(b). See supra Section II.B.

GVDC argues that even if the PUC did not conclude Green Valley breached its state law

duty, the PUC's findings and Green Valley's discovery responses in this case demonstrate that

Green Valley has not provided continuous and adequate service to the GVDC Tract. GVDC Mot.

17

Summ. J. [#120] at 7-8. According to GVDC, it is irrelevant whether the PUC actually

determined a breach of duty has occurred, because this Court can step into the shoes of the PUC
and determine that Green Valley has not met its state law duty.
It is not this Court's place to substitute its judgment on state law matters for that of the
PUC. This case is not an appeal from the GVDC Decertification Order. Rather, it is a federal

action brought under
§

§ 1983

to halt Defendants' interference with a federal right created by

1926(b). Thus, while this Court might plausibly award equitable relief on the ground the

GVDC Decertification Order interferes with a federal right, it lacks authority to adjudicate under
state law the question of whether or not Green Valley has upheld its state law duty to provide
service. Further, it is immaterial whether the facts are such that the PUC might have concluded

Green Valley did not uphold its duty to provide service because in this instance, the PUC did not
do so. As the GVDC Decertification Order did not consider whether Green Valley had upheld its

duty to provide service, that duty remains intact and Green Valley is making service available

under

§

1926(b).

See Cibolo,

866 F.3d at 341.

This holding leaves GVDC with several avenues of recourse through which the GVDC
Tract might be released from Green Valley's Sewer CCN. Most obviously, the PUC might

revoke or amend the Sewer CCN on the ground Green Valley has violated its state law duty to

provide service because it has "never provided, is no longer providing, is incapable of providing,
or has failed to provide continuous and adequate service" to consumers within its Sewer CCN.
Tex. Water Code

§

13.254(a)(1). Of course, the PUC did not make such a finding here. Under a

similar statutory provision, the GVDC may petition the PUC for expedited release of the GVDC
Tract from Green Valley's Sewer CCN upon a showing that Green Valley has either refused to

provide or is incapable of providing service on a continuous and adequate basis as "reasonably

II

needed or requested by current and projected service demands in the area." Id.

§ 13 .254(a-1 )(3).

GVDC did not seek release under this provision, either.

Instead, GVDC sought decertification under Texas Water Code

§ 13 .254(a-5),

and the

resulting PUC order decertifying the GVDC Tract under § 13.254(a-5) did not consider whether
or not Green Valley had fulfilled its state law duty to provide service. In this context, Green

Valley's state law duty to provide service remains intact, and thus, Green Valley is making
service available under

§

1926(b). Such service may not be curtailed or limited by decertifying

the GVDC Tract and then recertifying it to Cibolo. For this reason, the Court grants Green

Valley's motion for summary judgment on its

§

1983 claim alleging Schertz and the PUC

interfered with Green Valley's exclusive right to provide service to the Schertz Acreage under
§

1926(b).

Conclusion
The Court dismisses Green Valley's claim that
§ 13 .254(a- 1)
§

§

1926(b) preempts Texas Water Code

and grants summary judgment in favor of Defendants on Green Valley's claim that

1926(b) preempts Texas Water Code

§ 13 .254(a-6).

Additionally, the Court grants summary

judgment in favor of Green Valley on Green Valley's

§

1983 claims and concludes the

decertifi cation of the GVDC Tract and Schertz Acreage violated Green Valley's exclusive right
to provide service under

§

1926(b).

Accordingly,
IT IS ORDERED that Green Valley's Motion for Summary Judgment [#100] is

GRANTED IN PART and DENIED IN PART as described in this opinion;
IT IS FURTHER ORDERED that Schertz's Motion for Summary Judgment
[#106] is DENIED as described in this opinion;

19

IT IS FURTHER ORDERED that GVDC's Motion for Summary Judgment

[#120] is DENIED as described in this opinion;
IT IS FINALLY ORDERED that the PUC's Motion for Summary Judgment

[#12 1] is GRANTED IN PART and DENIED IN PART as described in this opinion.

SIGNED this the

c

day of November 2018.

SA SPARKS
SENIOR UNITED STATES DISTRICT JUDGE

20