_- l 

3 

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 

Eonorablc Tom Craddick opinion No.Jl4-2g7 

chairmalI 

Natural Resourccs~ Comittec ' RW Jurisdiction over rstes 

Texas Eouae of Rqreseotatives charged to customers outside 

P. 0. Box 2910 the boundaries of the Lakevay 

Austin, Texas 18,769 Wunicipal Utility District 

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 incorporated under 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 

purchase vster fcom the District. In that regard you ask: 

What governments1 agency or body has jurisdiction aver the rates charged to customers outside 

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 domestic utility ratea is a legislative function: 

however, the st~lte leaislature na~~delenate the fixinn of such rates 

to a subordinate body, See Railroad Co&issiou v. %&ton Natural Gas 

&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 function of ~fixing and regulating domestic retail water rates to 

various state s.gencies and political subdivisions. Among these 

agencies and political subdivisions are the Public Utility 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 also Water Code 554.519. - 

We believe that the District has the authority initially to fis 

rates charged ':o the residents of the Village. Lakavay Nunicipal 

Utility District is a political subdivision of the state organizei 

under chapter !~4 of the Water Code. The District vae organized lr 

1972 by order o:E the Texas Water Rights Commission pursuant to article 

XVI. section 59 .of the Texas Constitution. See Water Code 654.001 et 

* The Distr,Lct is given authority to supplywater and set rates 5 

areas contiguous to or in the vicinity of the district." - See Wats1 

p. 1336 
Nonorabla Tom 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 oacassazy to provide a 

water system and e sewer system for areas contiguous to or in -the vicinity of the dietrict 

provided the diat;lct doss 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 district which is also 

within a city w:lthout securing a reeolutiou or 

ordinance of the; city granting consent for the 

district to 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 facilities of the water and 

eawer system which provide service to areas 

outside the d,iatrict which are considered 

hacessary and \Rlich may be higher than those 

charged for comparable service to residents within 

the district. 

(e) The rates. fees. rentals, tolls, or other 

charges shall b#! at least sufficiaut to meet the 

expanse of operating and 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 initial retail rates 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 

jurisdiction to regulate the ratee chsrged by the District to its 

residents. See Village of Lakeway v. Lakeway Municipal Utility 

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

District No. 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 charged lty’ the District. The Texas Water Commission 

may then determine whether the rates charged by the District to the 

residents of the Village arc 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 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 Attorney General 

DAVID R. RICRARDS 

Executive Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Tony Guillory 

Assistant Attorney General. 

p. 1338 
Eonotablo Tom 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