Opinion ID: 4537908
Heading Depth: 4
Heading Rank: 2

Heading: Source of Funding

Text: The second Clark factor looks at the source of BVGCD’s funding. We have consistently held that the “second factor is given the greatest weight because one of the principal purposes of the Eleventh Amendment is to protect state treasuries.” Vogt, 294 F.3d at 693; see also Cozzo v. Tangipahoa Par. the CWA has the power to operate outside of its geographic boundaries. Act of May 17, 1967, 60th Leg., R.S., ch. 601 Section 3, Tex. Gen. Laws 1381, 1385. 13 Case: 18-50994 Document: 00515433679 Page: 14 Date Filed: 05/29/2020 No. 18-50994 Council--President Gov’t, 279 F.3d 273, 282 (5th Cir. 2002); Hudson, 174 F.3d at 687 (“It bears repeating that this is the most important factor in our Eleventh Amendment arm of the state analysis.”). “In assessing this second factor, we conduct inquiries into, first and most importantly, the state’s liability in the event there is a judgment against the defendant, and second, the state’s liability for the defendant’s general debts and obligations.” Hudson, 174 F.3d at 687. “The state’s liability for a judgment is often measurable by a state’s statutes regarding indemnification and assumption of debts.” Vogt, 294 F.3d at 693. The Texas Water Code does not explicitly render the state liable for judgments against GCDs or their general debts and obligations. GCD’s are funded by locally assessed taxes and fees. TEXAS WATER CODE §§ 36.201–250. BVGCD points out that GCDs may receive grants or loans from the state, TEXAS WATER CODE §§ 36.158–61, 36.3705–374, and urges that state funds may thus be implicated in an action against the district. This observation ignores the limited statutory purposes for such infusions of state money. 6 None of these provisions permit state funds to indemnify or assume the debts of BVGCD, nor is there evidence that such grants or loans have ever been used to satisfy a judgment. Indeed, the law speaks to satisfaction of judgments against a GCD in only one way, by an order requiring the district’s board “to levy, assess, and collect taxes or assessments to pay [judgments].” TEX. WATER CODE § 36.066(b). No parallel provision references the state treasury. On the contrary, in Edwards Aquifer Authority v. Bragg, the court held that the Edwards Aquifer Authority (“EAA”) was responsible for its permitting decisions and liable for any judgment. 421 S.W.3d 118, 126–131 (Tex. App.— 6 Some provisions strictly proscribe the use of certain funds while others are largely related to startup and research costs. TEXAS WATER CODE §§ 36.158–61. The state is under no obligation to provide such funding. 14 Case: 18-50994 Document: 00515433679 Page: 15 Date Filed: 05/29/2020 No. 18-50994 San Antonio 2013, pet. denied). A judgment was later entered against the EAA for over $4.5 million. The EAA satisfied this judgment in full without any portion being paid by the state of Texas. And in Edwards Aquifer Authority v. Day, the State disclaimed takings liability for the actions of the EAA. 369 S.W.3d 814, 821 n.24 (Tex. 2012). In Day, the State took the position that a takings judgment entered against the EAA would have to be satisfied from the EAA’s own coffers. Id. As a last resort, BVGCD relies on a provision which states, “[t]he Texas Water Development Board, the commission, the Parks and Wildlife Department, the Texas Agricultural Extension Service, and institutions of higher education may allocate funds to carry out the objectives of this chapter.” TEXAS WATER CODE § 36.160. Coupled with the statutory statement of purpose—GCDs may be created “to protect property rights, balance the conservation and development of groundwater to meet the needs of this state, and use the best available science in the conservation and development of groundwater through rules developed, adopted, and promulgated by a district”—the district argues that the Texas Legislature created a mechanism for GCDs to obtain funding in the event of an adverse judgment. Id. § 36.0015. At best, this argument suggests that state agencies may volunteer to pay off a judgment debt by means of a grant. 7 But the second Clark factor concerns whether the state is “directly responsible for a judgment” or “indemnif[ies] the defendant.” Ex rel. Barron, 381 F.3d at 440. Evaluated against the position that similar entities are responsible for their own judgments, this contention is virtually frivolous. See Bragg, 421 S.W.3d at 130–31; Day, 369 F.3d at 821 n.24. In the absence of any meaningful financial relationship between GCDs 7 Loans could not be used to satisfy a judgment because their statutorily stipulated uses are limited to start-up expenses. TEXAS WATER CODE §§ 36.3705, 36.371–374. 15 Case: 18-50994 Document: 00515433679 Page: 16 Date Filed: 05/29/2020 No. 18-50994 and the Texas treasury, the second factor weighs heavily against finding Eleventh Amendment immunity.