Court Opinion

ID: 6342884
Source: CourtListenerOpinion
Date Created: 2022-05-23 07:12:14.230391+00
Date Added: 2024-06-11T12:44:41.609755
License: Public Domain

Supreme Court of Texas
                              ══════════
                               No. 21-0049
                              ══════════

    Pape Partners, Ltd., Glenn R. Pape and Kenneth W. Pape,
                                Petitioners,

                                     v.

                       DRR Family Properties LP,
                                Respondent

   ═══════════════════════════════════════
               On Petition for Review from the
       Court of Appeals for the Tenth District of Texas
   ═══════════════════════════════════════

                         Argued March 24, 2022

      CHIEF JUSTICE HECHT delivered the opinion of the Court.

      By statute, the Texas Commission on Environmental Quality
(TCEQ) “has general jurisdiction over . . . water and water rights
including the issuance of water rights permits[] [and] water rights
adjudication”. 1 The question before us is whether this jurisdiction
includes the authority to adjudicate conflicting claims to ownership of
surface-water rights. We hold that the adjudication of such claims is for

      1   TEX. WATER CODE § 5.013(a)(1).
the courts, not the agency. We reverse the judgment of the court of
appeals 2 and remand this case to the trial court for further proceedings.
                                       I
                                      A
      In 2014, petitioners Pape Partners, Ltd., Glenn R. Pape, and
Kenneth W. Pape (collectively, Pape) 3 purchased from Lola Robinson
and her closely held corporation, Swirl Investments, a 1,086-acre farm
in McLennan County, including the right to use water diverted from the
Brazos River for irrigation under a permit issued by TCEQ. As explained
further below, TCEQ issues a surface-water-use permit—called a
certificate of adjudication—to a person whose ownership of “rights to the
waters of a stream” has been finally determined by a district court after
both an initial administrative process and then a final judicial process. 4
Robinson warranted to Pape that TCEQ had recognized her exclusive
right to the water covered by the permit.
      Robinson first obtained water rights for the farm in two permits
issued in 1986. The permits did not cover an adjacent 250-acre tract that
Robinson owned, which had no direct river access or any appurtenant
water rights. In 1990, Robinson conveyed the 250-acre tract to Swirl. In
1997, after proceedings initiated by Robinson, TCEQ replaced the two
1986 permits with a single amended permit. The amended permit
granted Robinson, individually, the authority to irrigate both the farm
and the adjacent tract from water-diversion points located on the farm.

      2   623 S.W.3d 436 (Tex. App.—Waco 2020) (2-1).
      3   Pape is pronounced like poppy.
      4   TEX. WATER CODE § 11.323(a).

                                      2
Pape alleges that Robinson failed to inform the commission that she no
longer owned the 250-acre tract. After the amended permit was issued,
the 250-acre tract changed hands several more times. In 2012, it was
conveyed to respondent DRR Family Properties, LP.
      TCEQ rules provide a process for updating the commission when
water rights have been transferred. The purchaser must record in the
county clerk’s office “[t]he written instrument evidencing a water right
ownership transfer” and then submit to the commission’s executive
director copies “of the recorded instruments establishing the complete
chain of title . . . along with a completed Change of Ownership Form and
an ownership recording fee”. 5
      After Pape submitted its ownership documentation, the executive
director updated the commission’s records to reflect that Pape owned the
water rights appurtenant to the farm. But later, TCEQ identified DRR
as the owner of the 250-acre parcel for which Robinson was granted
irrigation rights in the 1997 amended permit, and it invited DRR to
submit its own change-of-ownership application and documentation.
Other landowners who purchased nearby parcels with chains of title
traceable to Robinson also filed ownership documentation after being
notified by the commission of potential water rights.
      In late 2015, acting on DRR’s application, the executive director
changed TCEQ’s records again, this time to reflect that the water rights
recorded in the amended permit were owned proportionally by Pape,

      5   30 TEX. ADMIN. CODE § 297.83.

                                     3
DRR, and Robinson. The update had the effect of reducing the amount
of land Pape is authorized to irrigate from 1,086 acres to 821 acres.
      Pape filed a motion to overturn the director’s decision in
accordance with the commission’s rules. 6 The director’s office prepared
a response for the full commission, which stressed that “[t]he Executive
Director’s review for change of ownership requests is ministerial.” The
response explained:
      [I]t is unclear whether Pape Partners is entitled to any
      other relief at the agency level. There is no indication in
      statute or rule that a change of ownership request requires
      anything other than a ministerial act from the
      Commission, recognizing that ownership has changed.
      There is no right to a contested case hearing on a change of
      ownership request, which requires no public notice. . . .
      The determination of whether a complete chain of title has
      been established between an owner of record and a new
      owner is made by the Executive Director based upon the
      documentation submitted with a change of ownership
      request . . . .
Pape’s motion was overruled by operation of law in early 2016. 7
                                    B
      Pape sued DRR, Robinson, Swirl, and several individual
landowners seeking declarations that it is the sole owner of water rights
appurtenant to the 1,086-acre farm and that none of the defendants
possess water rights recognized by the 1997 amended permit. With
respect to the 250-acre tract now owned by DRR, Pape argues that
because Robinson did not own the tract when the amended permit was

      6   Id. § 50.139(a).
      7   See id. § 50.139(f)(2).

                                    4
issued, the surface-water rights granted her with respect to that tract
were personal to her and did not pass with subsequent conveyances of
the land. 8 Pape also pleaded alternative claims for adverse possession,
to quiet title, and for breach of contract and fraud.
       DRR moved to dismiss Pape’s claims for lack of subject-matter
jurisdiction, arguing that TCEQ has exclusive original jurisdiction to
determine water-ownership rights and that under TCEQ’s enabling
statute, Pape could have sued for judicial review of the commission’s
action on DRR’s application within 30 days but did not. 9 The trial court
granted DRR’s motion to dismiss and then severed all claims against it
into a separate suit to permit an immediate appeal. 10
       A divided court of appeals affirmed. The majority concluded, with
no supporting analysis, that “the regulatory scheme behind surface
water permits is pervasive and indicative of the Legislature’s intent that
jurisdiction over the adjudication of surface water permits is ceded to

       8 “[T]he right to use water for the purpose of irrigation is appurtenant
to the land authorized to be irrigated, and a conveyance of land with an
appurtenant water right also conveys the water right unless expressly
reserved or excepted; provided, however, that if the water right has been
granted for the irrigation of land not owned by the applicant, such a water right
is personal to the permittee and does not pass with a conveyance of the land.”
Id. § 297.81(a) (emphasis added).
       9 See TEX. WATER CODE § 5.351(a) (providing for judicial review of “a
ruling, order, decision, or other act of the commission”).
        An individual defendant, Champagne, filed a motion to dismiss on
       10

the same grounds as DRR, which was granted by the trial court. Champagne
appeared as an appellee in the court of appeals but was dismissed by
agreement before the court rendered judgment.

                                       5
the TCEQ.” 11 It thus agreed with DRR that Pape’s only remedy was a
suit for judicial review under Chapter 5 of the Water Code, which by
then was time-barred. We granted Pape’s petition for review, which is
supported by amicus submissions from TCEQ itself and three
agricultural associations. 12
                                       II
                                       A
       We start with the basic, constitutional rule that “[a] district court
has subject-matter jurisdiction to resolve disputes unless the
Legislature divests it of that jurisdiction.” 13 “District Court jurisdiction
consists of exclusive, appellate, and original jurisdiction of all actions,
proceedings, and remedies, except in cases where exclusive, appellate,
or original jurisdiction may be conferred by this Constitution or other
law on some other court, tribunal, or administrative body.” 14 Thus, “we
presume that [the] district court has subject-matter jurisdiction” to
resolve a claim. 15 And historically, “the power to determine controverted
rights to property” has been “vested in the judicial branch.” 16

       11   623 S.W.3d at 440.
       12The Texas Water Conservation Association, the Texas and
Southwestern Cattle Raisers Association, and the Texas Farm Bureau.
       13In re Oncor Elec. Delivery Co., 630 S.W.3d 40, 44 (Tex. 2021) (citing
In re Entergy Corp., 142 S.W.3d 316, 322 (Tex. 2004)).
       14   TEX. CONST. art. V, § 8.
       15   Oncor, 630 S.W.3d at 44.
       16Barshop v. Medina Cnty. Underground Water Conservation Dist., 925
S.W.2d 618, 635 (Tex. 1996) (citing Bd. of Water Eng’rs v. McKnight, 229 S.W.
301, 304 (Tex. 1921)).

                                       6
       By contrast, “there is no presumption that administrative
agencies are authorized to resolve disputes. Rather, they may exercise
only those powers the [Legislature], in clear and express statutory
language, [has] confer[red] upon them.” 17 “Courts will not imply
additional authority to agencies, nor may agencies create for themselves
any excess powers.” 18 Because of the presumption in favor of district-
court jurisdiction and the narrowness of administrative-agency
jurisdiction, “the burden to demonstrate that exclusive jurisdiction rests
with an administrative agency falls on the party resisting the district
court’s jurisdiction.” 19
       “Whether an agency has exclusive jurisdiction depends on
statutory interpretation.” 20 Specifically, we look for either an express
grant of exclusive original jurisdiction to the agency or a “pervasive
regulatory scheme” indicating that the Legislature intended “the
[administrative] process to be the exclusive means of remedying the
problem” presented. 21 The relevant statutes here are in Chapters 5 and

       17Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212,
220 (Tex. 2002) (collecting cases); see also Oncor, 630 S.W.3d at 45 (citing
Subaru).
       18   Subaru, 84 S.W.3d at 220.
       19   Oncor, 630 S.W.3d at 44-45 (citing Entergy, 142 S.W.3d at 322).
       20   Entergy, 142 S.W.3d at 322 (citing Subaru, 84 S.W.3d at 221).
       21   Id. (quoting Subaru, 84 S.W.3d at 221).

                                        7
11 of the Water Code. 22 Our analysis begins with their plain text. 23 But
“[w]hen construing statutes, or anything else, one cannot divorce text
from context.”     24

                                          B
       Chapter 5 is TCEQ’s enabling statute. It sets forth the
commission’s role as “the agency of the state given primary
responsibility for implementing the constitution and laws of this state
relating to the conservation of natural resources and the protection of
the environment.” 25 And it contains general but detailed rules about the
commission’s membership, governance, staff, and operations. DRR
argues that TCEQ’s exclusive original jurisdiction to decide conflicting
claims to surface-water rights is established in Section 5.013, titled
“General Jurisdiction of Commission”. Subsection (a) lists twelve areas
that the Legislature has granted the commission “general jurisdiction
over”. The first area is:
       water and water rights including the issuance of water

       22 Our opinion in City of Marshall v. City of Uncertain documented the
history of Texas water law from the Spanish or Mexican law that governed pre-
independence, to the English common law adopted post-independence, and on
through the series of statutory schemes the Legislature began adopting in the
late 1800s. 206 S.W.3d 97, 101-103 (Tex. 2006). We described this history as “a
hodge-podge of historical and contradictory water rights systems.” Id. at 101
(citation omitted). Fortunately, we need only examine two chapters of the
Water Code to decide the issue presented here.
       23 See, e.g., Energen Res. Corp. v. Wallace, 642 S.W.3d 502, 509 (Tex.
2022) (“In construing a statute, our objective is to determine and give effect to
the Legislature’s intent. We begin by examining the plain meaning of the
statute’s language.” (citations and quotation marks omitted)).
       24   In re Off. of the Att’y Gen., 456 S.W.3d 153, 155 (Tex. 2015).
       25   TEX. WATER CODE § 5.012.

                                          8
       rights permits, water rights adjudication, cancellation of
       water rights, and enforcement of water rights[.] 26
The other areas of the commission’s general jurisdiction are:
   •   supervision of conservation districts established under the Texas
       Constitution;
   •   determining “the feasibility of certain federal projects”;
   •   administering programs that regulate water quality, dam
       construction, hazardous waste, injection wells, underground
       water, and regional waste disposal;
   •   duties assigned to the commission in several chapters of the
       Health and Safety Code; and
   •   “any other areas assigned to the commission by this code and
       other laws of this state.” 27
       Seven subchapters later, Section 5.351 provides that “[a] person
affected by a ruling, order, decision, or other act of the commission” may,
within 30 days, file a suit for judicial review in Travis County district
court. 28 Because this section “does not specify the standard of review”,
we have applied an abuse of discretion standard to a suit under Section
5.351 that did not arise from a contested case. 29 DRR argues that the
reference to water rights adjudication in Section 5.013(a) grants TCEQ
exclusive jurisdiction to decide conflicting claims to water rights. DRR
also contends that Pape should have sought judicial review of TCEQ’s
actions on DRR’s application under Section 5.351 within the 30-day

       26   Id. § 5.013(a)(1) (emphasis added).
       27   Id. § 5.013(a)(2)-(12).
       28   Id. § 5.351(a)-(b).
        Brazos Elec. Power Coop., Inc. v. Tex. Comm’n on Env’t Quality, 576
       29

S.W.3d 374, 383 (Tex. 2019).

                                         9
window provided for in that section. 30
                                         C
       Water rights adjudication is not defined in Chapter 5 or even
mentioned again after Section 5.013. But Chapter 11 is entirely devoted
to water rights and their adjudication. Its opening provisions paint the
water-rights-ownership landscape: The water in or provided by rivers,
streams, lakes, bays, the Gulf of Mexico, storms, floods, rain, canyons,
ravines, depressions, and watersheds “is the property of the state.” 31
These waters “are held in trust for the public, and the right to use state
water may be appropriated only as expressly authorized by law.” 32
       Subchapter G codifies the Water Rights Adjudication Act. 33 Its
purpose is to promote “[t]he conservation and best utilization of the
water resources of this state” by “requir[ing] recordation with the
commission        of   claims   of   water     rights     which   are   presently
unrecorded . . . and . . . provid[ing]        for   the     adjudication     and

       30DRR makes an alternative argument that Pape could have requested
a contested-case hearing and then pursued judicial review under the
Administrative Procedure Act, TEX. GOV’T CODE §§ 2001.171-2001.176. The
commission’s rules address the procedure for requesting a contested-case
hearing, but they also make clear that a contested-case hearing must be
authorized by “other laws.” 30 TEX. ADMIN. CODE § 55.101(f)(6). DRR has not
pointed to any statutory authorization for a contested-case hearing on a change
of ownership submitted to the executive director, and we have found none.
Furthermore, as explained above, TCEQ took the position in its response to
Pape’s motion to overturn the director’s decision that a contested-case hearing
was not available to Pape.
       31   TEX. WATER CODE § 11.021(a).
        Id. § 11.0235(a); see also id. § 11.023(a)(2) (listing “agricultural uses”
       32

among the purposes for which water may be appropriated).
       33   Id. §§ 11.301-11.341.

                                         10
administration of water rights to the end that the surface-water
resources of the state may be put to their greatest beneficial use.” 34 The
provisions that follow explain the administrative process in which water
rights are adjudicated. Read together, they make clear that the
Legislature has used water rights adjudication as a term of art for the
commission’s process of allocating the rights to the water of a particular
source in a manner that is consistent with the public interest.
Adjudication is shorthand for the commission’s decision to issue water-
rights permits for a particular “stream or segment”. A stream or
segment that has been adjudicated is one for which the commission has
issued the permits known as certificates of adjudication.
      After        a       petition   for        adjudication   is   filed,   “the
commission . . . consider[s] whether the adjudication would be in the
public interest.” 35 “If the commission finds that an adjudication would
be in the public interest,” then its executive director gathers technical
data, which may include maps or plats showing “the course of the stream
or segment and the location of reservoirs, diversion works, and places of
use, including lands which are being irrigated or have facilities for
irrigation.” 36 The commission publishes a notice 37 after which “[e]very
person claiming a water right . . . from the stream or segment under
adjudication shall file a sworn claim with the commission” that includes

      34   Id. § 11.302.
      35   Id. § 11.305(a).
      36   Id. § 11.305(a)-(b).
      37   Id. § 11.306.

                                            11
the location of their property and other relevant information. 38 The
commission holds a hearing, 39 “make[s] a preliminary determination of
the claims to water rights under adjudication”, 40 holds another hearing
on any contests filed, 41 makes a final determination, 42 and considers
applications for rehearing. 43
      Finally, there are proceedings “in [the] district court of any county
in which the stream or segment under adjudication is located” 44—not
necessarily the Travis County district court, where an appeal taken
under Chapter 5 would be filed. 45 The commission files with the court
its final determination and all the evidence presented, any party to the
administrative proceedings can file exceptions, and the court will hold a
hearing. 46 But the statute mandates that the court “determine all issues
of law and fact independently of the commission’s determination.” 47
“The substantial evidence rule shall not be used.” 48 The district court’s
“final decree in every water right adjudication is final and conclusive as

      38   Id. § 11.307(a)(1)-(5).
      39   Id. § 11.308.
      40   Id. § 11.309(a).
      41   Id. §§ 11.313-11.314.
      42   Id. § 11.315.
      43   Id. § 11.316.
      44   Id. § 11.317(a).
      45   See id. §§ 5.351, 5.354.
      46   See id. §§ 11.317-11.319.
      47   Id. § 11.320(a).
      48   Id.

                                       12
to all existing and prior rights and claims to the water rights in the
adjudicated stream or segment of a stream.” 49 The decree is even
“binding on all claimants to water rights outside the adjudicated stream
or segment of a stream.” 50 After the district court proceedings are
completed and any appeals have been exhausted, 51 “the commission
shall issue to each person adjudicated a water right a certificate of
adjudication” 52—or permit—which is recorded in the county clerk’s
office. 53 After three years, the permit holder “acquires title” to the water
rights allocated him, 54 and they become permanent rights that “pass[]
with the title to land.” 55 The administrative and judicial processes
outlined in the Water Rights Adjudication Act are the same processes
that produced the permits that TCEQ issued to Robinson.
                                     D
      Reading these statutes’ plain text together and in context makes
clear that the Legislature’s grant of jurisdiction to TCEQ in
Section 5.013(a)(1) over “water and water rights including the issuance
of water rights permits, water rights adjudication, cancellation of water
rights, and enforcement of water rights” is a reference to Chapter 11 and
the Water Rights Adjudication Act specifically. Nothing in that Act gives

      49   Id. § 11.322(d).
      50   Id.
      51   See id. § 11.322(c).
      52   Id. § 11.323(a).
      53   Id. § 11.324(a).
      54   Id. § 11.029.
      55   Id. § 11.040(a).

                                     13
TCEQ authority to decide conflicting claims to water rights acquired
with the title to land. Indeed, the administrative process that Pape
initiated after purchasing Robinson’s farm is provided for not by statute
but by two of the commission’s administrative rules. All the rules say is
that “[a]n owner of a water right . . . shall promptly inform the executive
director of any transfer of water right or change of the owner’s address” 56
and then file a form, chain-of-title documents, and a fee with the
director. 57
       TCEQ agrees. In an amicus filing, the commission explains that
“[t]he term ‘water rights adjudication’ referenced [in Section 5.013(a)(1)]
is a term of art under the Texas Water Code and relates to the
Commission’s issuance of certificates of adjudication” that entail the
commission’s “determining the amount of use, place of use, purpose of
use, point of diversion, rate of diversion, and where appropriate, the
acreage to be irrigated.” 58 This is, in TCEQ’s own words, an
“administrative record-keeping function”. 59 Only a judicial process can
determine property ownership. 60

       56   30 TEX. ADMIN. CODE § 297.82.
       57   Id. § 297.83.
       58   Amicus Curiae Br. of TCEQ at 1.
       59   Id. at 2.
       60Pape also argues that the Legislature’s giving TCEQ jurisdiction over
disputes about the title of real property would violate the constitutional
doctrine of Separation of Powers. See TEX. CONST. art. II, § 1; McKnight, 229
S.W. at 307 (declaring unconstitutional a statute giving a TCEQ predecessor
agency the right to adjudicate conflicting claims to surface-water rights). In
the court of appeals’ view, the doctrine posed no obstacle to its interpretation
of the Water Code because another constitutional provision, Article 16,

                                      14
                         *       *        *     *       *
      We hold that TCEQ lacks jurisdiction to decide conflicting claims
of ownership to surface-water rights. Accordingly, we reverse the court
of appeals’ judgment and remand this case to the trial court for further
proceedings.

                                          Nathan L. Hecht
                                          Chief Justice

OPINION DELIVERED: May 20, 2022

Section 59, empowers the Legislature to delegate the resolution of property
disputes to TCEQ. See 623 S.W.3d at 441-442. Because we conclude that the
Water Code does not authorize TCEQ to resolve property disputes, we need not
address this part of the court of appeals’ analysis.

                                     15