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Aqua Texas, Inc. has initiated legal action against Hays Trinity Groundwater Conservation District (“Hays Trinity GCD”) and its Board of Directors concerning alleged unequal treatment and disregard for Aqua Texas’ state law duty to provide continuous and adequate water service to its customers. The dispute stems from penalties imposed on Aqua Texas for alleged overproduction, with the company claiming bias and unequal treatment compared to other water providers. The conflict intensifies as concerns about water service disruptions and conservation efforts come to the forefront, prompting legal intervention to address the alleged discrepancies.

Lawsuit Filed in Federal Court: Aqua Texas, Inc. v. Hays Trinity Groundwater Conservation District et al.
Plaintiff Aqua Texas, Inc. (“Aqua Texas”) has filed an Original Complaint in federal court against Defendants Hays Trinity Groundwater Conservation District (“Hays Trinity GCD”) and its Board of Directors, including Bruce Moulton, Linda Kaye Rogers, David Smith, Carlos Torres-Verdín, and Doc Jones. The lawsuit alleges the unlawful and unequal treatment of Aqua Texas by the Hays Trinity GCD, as well as the District’s disregard for Aqua’s state law duty to provide “continuous and adequate” water service to its customers.
Aqua Texas, which owns and operates wells in the district to serve the needs of its utility customers, asserts that its groundwater production is directly influenced by the voluntary demand for water service from its customers. Despite Aqua Texas’ vested ownership rights in wells and water rights, and its statutory obligation to provide water service, the Hays Trinity GCD has threatened to not renew Aqua Texas’ permit to produce groundwater due to a disputed penalty. This penalty, amounting to almost half a million dollars, was assessed by the District without due process and exceeds the state law cap by more than 99 percent.
Furthermore, the District forgave penalties assessed against similar utilities, while singling out Aqua Texas for disparate treatment and threatening not to renew its permit unless the purportedly unlawful penalty is paid. Aqua Texas asserts that these actions violate both the U.S. Constitution and Texas statutory law.
In response to the District’s actions, Aqua Texas has initiated legal proceedings seeking to preserve the status quo, specifically its use of its wells to serve its customers, during the pendency of the lawsuit. This case raises important questions regarding property rights, statutory obligations, and fair treatment under the law.
Alleged Factual Background – Aqua Texas, Inc. v. Hays Trinity Groundwater Conservation District et al.
Aqua Texas is a Texas retail public utility regulated by the Texas Public Utility Commission (“PUC”) under Certificates of Convenience and Necessity (“CCN”) No. 13254 for water and CCN No. 21116 for wastewater. This means it has a mandatory state law duty to provide continuous and adequate service to its customers, which generally prevents Aqua Texas from shutting down service except in limited circumstances.
Hays Trinity GCD is a political subdivision of the State of Texas governed by Chapter 36 of the Texas Water Code and the enabling legislation. Aqua Texas provides water and wastewater service to retail customers in three relevant systems within the Hays Trinity GCD jurisdictional boundaries—Woodcreek Phase I, Woodcreek Phase II, and Mountain Crest.
The dispute arises from the Hays Trinity GCD sending Aqua Texas a Notice of Alleged Violation (“NOAV”) for alleged overproduction, resulting in penalties of almost half a million dollars. While Aqua Texas was not the only water provider to receive a NOAV, it claims that the Hays Trinity GCD forgave penalties for other providers based on conservation efforts, setting a precedent for penalty forgiveness.
Aqua Texas alleges that it has made substantial efforts to promote conservation and protect groundwater resources, spending millions of dollars on projects, including reducing groundwater production and upgrading wastewater treatment facilities for irrigation purposes. Despite providing documented evidence of these efforts to the Hays Trinity GCD, it alleges that its request for penalty forgiveness based on conservation measures was denied with bias.
Furthermore, Aqua Texas claims that the Hays Trinity GCD violated rules of evidence by communicating settlement discussions to the media, presenting a one-sided and inaccurate account of the discussions. The District’s alleged bias and unequal treatment could potentially endanger the water supply to Aqua Texas’ customers.
Dispute Between Aqua Texas and Hays Trinity GCD Intensifies Over Alleged Violation
Aqua Texas, a Texas retail public utility regulated by the Texas Public Utility Commission, is embroiled in a heated dispute with the Hays Trinity Groundwater Conservation District (Hays Trinity GCD) over alleged violations and penalties, sparking concerns about water service and conservation efforts.
Tensions flared after the Hays Trinity GCD issued a Notice of Alleged Violation (NOAV) to Aqua Texas for exceeding its operating permit production limit in 2022, resulting in penalties totaling $448,710. This move triggered outcry as several water providers, including Aqua Texas, faced similar alleged violations and penalties during a period of drought curtailment.
A pivotal moment came during a Hays Trinity GCD Board of Directors meeting, where discussions revolved around penalty forgiveness policies. Notably, the Wimberley Water Supply Corporation successfully appealed for complete forgiveness of a $140,620 penalty, citing substantial investments in conservation efforts. This decision set a precedent for how penalties would be addressed in the future.
In response, Aqua Texas petitioned for similar penalty forgiveness, emphasizing its extensive commitment to conservation initiatives and substantial investments in infrastructure and water loss reduction. Aqua Texas notably undertook a voluntary project to curtail groundwater production, making significant investments in land acquisition, well drilling, and groundwater studies outside the Jacob’s Well Groundwater Management Zone.
Despite these efforts, the Hays Trinity GCD declined to grant penalty forgiveness, escalating the dispute further. Additionally, concerns have been raised about the Hays Trinity GCD’s alleged violation of communication protocols during settlement discussions, further complicating the situation.
The ongoing conflict has raised fears of potential water service disruptions for Aqua Texas customers, prompting calls for legal intervention to address the unequal treatment and ensure uninterrupted water supply for affected residents.
Disclaimer
The content provided in this publishing is based on publicly available information and is intended for informational and educational purposes only. The details presented here are not a comprehensive account of the events and should not be construed as a substitute for professional legal advice or a complete representation of the involved parties’ positions. The content reflects the information available at the time of publishing. Readers are advised to seek legal counsel for specific legal questions and to consider all relevant sources of information before forming any opinions or conclusions. The accuracy, completeness, and timeliness of the information presented cannot be guaranteed.
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