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# The Attorney General of Texas

**JIM MAllOX**  **Attorney General**  Xawh 5, 1985

Su~rem Cowl Bulldin **P. 0.**  **Box**

12548 *uatln.lx

?0?11- 254s 5121475.2501 Telex 91~574.1357 1IIecppi.f 5121475.9255 EonorablcTom Craddick opinionNo.Jl4-2g7 **chairmalI** NaturalResourccs~

Comittec ' RW Jurisdiction over rstes Texas Eouae of Rqreseotatives charged to customers outside P. 0. Box 2910 the boundariesof the Lakevay Austin,Texas 18,769 WunicipalUtilityDistrict

714 Jackwn. Suite 700 Dalles. TX. 75202M.05 2W742.5944

4S24 Albelt Ave.. suite 150 El Pas.. lX 799052793 QlY533-34S4

901 Teaas. Suite 700 Houstoti.D(.

77002-3111 ?13&?23-5555 Dear Representat!.ve Craddick:

You inform us that the Lakeway Municipal Utility District [hereinafter

the Diatrictl

was formed in 1972. and in 1974, a group of people living artside the District incorporatedunder general law provisions and **‘ beceme**  the Village of Lakeway [hereinafter the Village]. Since~

incorporation,

the Village has not undertaken to provide water for ita residents.but instead the Village residents purchasevster fcom the District. In that regardyou ask:

What governments1

agency or body has jurisdiction aver the rates charged to customersoutside

BM Broadway. Suite 312 Lubbock. TX. 79491.3479 K%i74?-5235 the bc'undaries of the Municipel Utility District of Lakeuay?

4309 N. Tenth. Suite 6 McAllwl. lx. 75501-1555 512m24547 The fixing of domesticutility ratea is a legislativefunction: however, the st~lte leaislature

na~~delenatethe fixinn of such rates to a subordinate

body, See RailroadCo&issiou v. %&ton NaturalGas &o-, 289 S.U.:!il 559 (Tu. 1956). The state of Texaa has delegated

209 Main Ptua. SuIta 1w San Antonio. **TX. 782C5.2797**  5121225-4191 .the functionof ~fixing and regulatingdomestic retailwater rates to various state s.gencies and political subdivisions. Among these agenciesand politicalsubdivisions are the PublicUtility Commission, **the** Texas Depcutnent of **Water** Resources, the municipal utility districts,sod rmmicipalitiaa of **the stats.**  **See** V.T.C.S. **art. 1446~.**  9Il6, 17, 22; see alsoWater Code 554.519. -

--- We believe that the Districthas the authorityinitiallyto fis rates charged ':othe residents of the Village. **Lakavay** Nunicipal Utility District is a political subdivisionof the state organizei under chapter !~4of the Water Code. The District vae organized lr 1972 by order o:E

the TexasWater Rights Commission pursuantto article XVI. section59 .of the Texas Constitution. See Water Code 654.001et * The Distr,Lct is given authorityto supplywater and set rates5 areas contiguousto or in the vicinity of the district." See Wats1 -

p. 1336NonorablaTom Craddick- Page 2 (Jn-297)

Code 154.519(a).(d). Section 54.519 of the Water Code provides in part: (a) A diatrl~ct **may purchase,**  construct,

acquire,own. operate. repair,improve,or extend all **vorka,** imp!:ovemeuts, facilitias. plants. aquipmut, sad a~@iauces oacassazyto provide a water system and e sewer system for areas conti**guous** to or in -the vicinity of the dietrict provided the diat;lctdoss **not** duplicate a service of **another** publish agence. A district shall not prwide a water or a sanitary sewer system to seIva areas outelde **the** districtwhich is also within a city w:lthoutsecuringa reeolutiou or ordinance of the; city granting **consent** for the districtto serve the area within the city.

. . . . (d) A district is authorized to asteblish. maintain, revise, **charge,** and collect the rates. fees. rentals. C:olla. or other charaea for the
**use.** services; **I~- -~**  **~~**

,md facilitiesof the water and
eawer system which provide service to areas outside the d,iatrict which are considered hacessary and \Rlichmay be higher than those chargedfor comparableservice to residents

within the district.
(e) The rates. fees. rentals,tolls, or other charges shall b#!at least sufficiautto meet the expanseof operatingand maintainiug the wstar and sewer system **serving** areas outside the district and to pay tL: principal of and **iotaraat** and redemption price 011 bonds issued to **purchase,** construct,

acquire.own, operate, repair. improve,
or axtend the ayetam. (Enphasia added).

**At** the time the District began providing wster to **the areas**  **now** constituting **the** Vlllag~~ , the Village was not an incorporated municipality. Thus, it **is** our couclusion **that the**  District has jurisdiction

to establish the initialretailrates for water cervices to residmts of the Vill.age. See Taxes Water Rights Commission I. City **of** Dallas, 591 S.V.Zb 609Tex. Civ. **App.** - Austin 1979. writ ref'd n.r.e.1; ef. LoweI:Colorndo River Authority v. City of San Uarcos, 523 S.U.2d 6ra45 (Tex. different situation). 1975) (home rule city presents a We **note** that the Village of Lakaway has no jurisdictionto regulate the ratee chsrgedby the District to its residents. See Village of Lakeway v. Lakeway Municipal Utility

p. 1337Rouorable Tom Craddick- Puile 3 (m-297)

DistrictNo. 1, 657 S.U.Z#I 912 (Tex.App. - Austin 1983. writ **ref ’** **d** n.r.6.).
Sectiou 11.041(a) of the Water Code authorizes “Ia]ny person entitled to receive or uae water from any
. . . lake or **from any**  conserved or stored auuply [to] present to the [Texas Water Comeission]a written pet Lotion” to contest the rates charged by the District. See Water Code 111.061(a)(l. 2. 3); see also Texas **Water** Rights ComGion v. City;of Dallas,suprcl at 612. The Texas **Water** Commission is further auth,orizad “to fix reasonable rates” for the water supplied to the Village by the District. See Water Code 112.013. Sea also Texas Water Rights Comissiou v. zy of Dallas,
a. Therefore.we conclude that any person residing within the District or the Village my petition the Texas Water Commission to review the rates chargedlty’ the District. The Texas Water Commission may then determine whether the rates chargedby the District to the residents

of the Villagearc reasonable.
SUMMARY

The Lakeway Municipal Utility District is authorized

pursuantto section54.519 of the Water Code to fix water rates charged to residents of the Village of Lakeway. In addition, the Texas Water Cossslssio~

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.

JIM HATTOX **Attorney** General of Texas

TOM GRRRN First Assistant

AttorneyGeneral

DAVID R. RICRARDS Executive

Assistant

Attorney General

RICK GILPIN Chairman,

**Opinion** Committee Prepared

by Tony Guillory **Assistant Attorney**  General.

p. 1338EonotabloTom Ctaddick - @&)a 4 (J?+297)

APPROVED: OPINION COtQlITTEE
Rick Gilpin, Ckairmnn Colin Carl Susan Garrison Tony Cuillory Jim Woellingct Jennifer Riggs Nancy Sutton

p. 1339