Who had authority to set and review the Lakeway Municipal Utility District's water rates for customers living in the Village of Lakeway outside the district?
Apply this to your situation
This page answers the general question as of 1985. Ezel answers yours: what it means for your facts, under current Texas law, with citations.
Texas AG Opinion JM-297: Lakeway Water Rates
Plain-English summary
A state legislator asked which government body had jurisdiction over the water rates that the Lakeway Municipal Utility District charged customers outside its boundaries. Those customers lived in the Village of Lakeway, which had incorporated after the district began serving the area and had not undertaken to provide its own water service. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
JM-297 concluded that the district had authority to establish the initial retail rates for village residents. Section 54.519 authorized the district to serve nearby areas and “to establish, maintain, revise, charge, and collect” rates for service outside the district, including rates higher than those charged for comparable service inside it. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
The Village of Lakeway did not have jurisdiction to regulate the district's rates. The opinion instead said that village or district residents could petition the Texas Water Commission to review the charges and that the commission could determine whether they were reasonable. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
The opinion's summary divided the authority plainly: “The Lakeway Municipal Utility District is authorized pursuant to section 54.519 of the Water Code to fix water rates charged to residents of the Village of Lakeway,” while the Texas Water Commission had jurisdiction under sections 11.041 and 12.013 to review reasonableness. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Currency note
This opinion was issued in 1985. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Common questions
Could the Lakeway Municipal Utility District set rates for customers outside its boundaries?
Yes. JM-297 read section 54.519 as authorizing the district to provide water to nearby areas and set the rates for that outside service. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Could outside customers be charged more than district residents?
Yes. The quoted statute expressly allowed outside-customer charges that “may be higher than those charged for comparable service to residents within the district.” Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Could the Village of Lakeway regulate those rates?
No. The opinion stated that “the Village of Lakeway has no jurisdiction to regulate the rates charged by the District to its residents.” Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Who could challenge the rates?
JM-297 concluded that “any person residing within the District or the Village may petition the Texas Water Commission to review the rates charged by the District.” Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
What could the Texas Water Commission decide?
The commission could “fix reasonable rates” and determine whether the district's rates for village residents were reasonable. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Background and statutory framework
The Lakeway Municipal Utility District was formed in 1972 under chapter 54 of the Water Code. The Village of Lakeway incorporated in 1974 from an area outside the district, and its residents continued buying water from the district. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
JM-297 began from the rule that setting domestic utility rates was a legislative function that the legislature could delegate. It identified the Public Utility Commission, the Texas Department of Water Resources, municipal utility districts, and municipalities among the bodies receiving rate-setting or regulatory authority. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Section 54.519 supplied the district's initial rate authority. Sections 11.041 and 12.013 supplied the Texas Water Commission's petition and rate-review authority. The timing mattered because the district had begun serving the area before it became an incorporated municipality. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Citations and references
- V.T.C.S. article 1446c, sections 16, 17, and 22
- Texas Constitution article XVI, section 59
- Water Code sections 11.041, 11.061, 12.013, 54.001, and 54.519
- Railroad Commission v. Houston Natural Gas Corp., 289 S.W.2d 559 (Tex. 1956)
- Texas Water Rights Commission v. City of Dallas, 591 S.W.2d 609 (Tex. Civ. App. - Austin 1979, writ ref'd n.r.e.)
- Lower Colorado River Authority v. City of San Marcos, 523 S.W.2d 641 (Tex. 1975)
- Village of Lakeway v. Lakeway Municipal Utility District No. 1, 657 S.W.2d 912 (Tex. App. - Austin 1983, writ ref'd n.r.e.)
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Source
- Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0297
- Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0297.pdf
Original opinion text
Best-effort transcription from a scanned PDF. Minor errors may remain. The linked PDF is authoritative.
The Attorney General of Texas
March 5, 1985
Honorable Tom Craddick
Chairman
Natural Resources Committee
Texas House of Representatives
P. O. Box 2910
Austin, Texas 78769
Opinion No. JM-297
Re: Jurisdiction over rates charged to customers outside the boundaries of the Lakeway Municipal Utility District
Dear Representative Craddick:
You inform us that the Lakeway Municipal Utility District [hereinafter the District] was formed in 1972, and in 1974, a group of people living outside the District incorporated under general law provisions and became the Village of Lakeway [hereinafter the Village]. Since incorporation, the Village has not undertaken to provide water for its residents, but instead the Village residents purchase water from the District. In that regard you ask:
What governmental agency or body has jurisdiction over the rates charged to customers outside the boundaries of the Municipal Utility District of Lakeway?
The fixing of domestic utility rates is a legislative function; however, the state legislature may delegate the fixing of such rates to a subordinate body. See Railroad Commission v. Houston Natural Gas Corp., 289 S.W.2d 559 (Tex. 1956). The state of Texas has delegated the function of fixing and regulating domestic retail water rates to various state agencies and political subdivisions. Among these agencies and political subdivisions are the Public Utility Commission, the Texas Department of Water Resources, the municipal utility districts, and municipalities of the state. See V.T.C.S. art. 1446c, §§16, 17, 22; see also Water Code §54.519.
We believe that the District has the authority initially to fix rates charged to the residents of the Village. Lakeway Municipal Utility District is a political subdivision of the state organized under chapter 54 of the Water Code. The District was organized in 1972 by order of the Texas Water Rights Commission pursuant to article XVI, section 59 of the Texas Constitution. See Water Code §54.001 et seq. The District is given authority to supply water and set rates in areas contiguous to or in the vicinity of the district. See Water Code §54.519(a), (d). Section 54.519 of the Water Code provides in part:
(a) A district may purchase, construct, acquire, own, operate, repair, improve, or extend all works, improvements, facilities, plants, equipment, and appliances necessary to provide a water system and a sewer system for areas contiguous to or in the vicinity of the district provided the district does not duplicate a service of another public agency. A district shall not provide a water or a sanitary sewer system to serve areas outside the district which is also within a city without securing a resolution or ordinance of the city granting consent for the district to serve the area within the city.
. . . .
(d) A district is authorized to establish, maintain, revise, charge, and collect the rates, fees, rentals, tolls, or other charges for the use, services, and facilities of the water and sewer system which provide service to areas outside the district which are considered necessary and which may be higher than those charged for comparable service to residents within the district.
(e) The rates, fees, rentals, tolls, or other charges shall be at least sufficient to meet the expense of operating and maintaining the water and sewer system serving areas outside the district and to pay the principal of and interest and redemption price on bonds issued to purchase, construct, acquire, own, operate, repair, improve, or extend the system. (Emphasis added).
At the time the District began providing water to the areas now constituting the Village, the Village was not an incorporated municipality. Thus, it is our conclusion that the District has jurisdiction to establish the initial retail rates for water services to residents of the Village. See Texas Water Rights Commission v. City of Dallas, 591 S.W.2d 609 (Tex. Civ. App. - Austin 1979, writ ref'd n.r.e.); cf. Lower Colorado River Authority v. City of San Marcos, 523 S.W.2d 641 (Tex. 1975) (home rule city presents a different situation). We note that the Village of Lakeway has no jurisdiction to regulate the rates charged by the District to its residents. See Village of Lakeway v. Lakeway Municipal Utility District No. 1, 657 S.W.2d 912 (Tex. App. - Austin 1983, writ ref'd n.r.e.).
Section 11.041(a) of the Water Code authorizes “[a]ny person entitled to receive or use water from any . . . lake or from any conserved or stored supply [to] present to the [Texas Water Commission] a written petition” to contest the rates charged by the District. See Water Code §11.061(a)(1), (2), (3); see also Texas Water Rights Commission v. City of Dallas, supra at 612. The Texas Water Commission is further authorized “to fix reasonable rates” for the water supplied to the Village by the District. See Water Code §12.013. See also Texas Water Rights Commission v. City of Dallas, supra. Therefore, we conclude that any person residing within the District or the Village may petition the Texas Water Commission to review the rates charged by the District. The Texas Water Commission may then determine whether the rates charged by the District to the residents of the Village are reasonable.
SUMMARY
The Lakeway Municipal Utility District is authorized pursuant to section 54.519 of the Water Code to fix water rates charged to residents of the Village of Lakeway. In addition, the Texas Water Commission has jurisdiction, pursuant to sections 11.041 and 12.013 of the Water Code, to review the rates charged by the District as to reasonableness.
Very truly yours,
JIM MATTOX
Attorney General of Texas
TOM GREEN
First Assistant Attorney General
DAVID R. RICHARDS
Executive Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Tony Guillory
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Rick Gilpin, Chairman
Colin Carl
Susan Garrison
Tony Guillory
Jim Moellinger
Jennifer Riggs
Nancy Sutton
Get today's answer for your situation
You just read a 1985 opinion on this question. Ezel checks the current Texas statutes and case law and answers your specific situation, with citations.
Opens in Ezel Pro. Every answer cites the law it relies on.