City of Austin v. City of Cedar Park And Wilson Land and Cattle Company

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-96-00209-CV

City of Austin, Appellant

v.

City of Cedar Park; and Wilson Land and Cattle Company, Appellees

FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 368TH JUDICIAL

DISTRICT

NO. 95-317-C368, HONORABLE BURT CARNES, JUDGE PRESIDING

The City of Austin ("Austin") appeals a declaratory judgment upholding the constitutionality

of Senate Bill 421, enacted during the 1995 regular session of the Texas Legislature and now codified as

section 42.024 of the Texas Local Government Code. (1) See Tex. Loc. Gov't Code Ann. § 42.024 (West

Supp. 1997). In a single point of error, Austin contends section 42.024 is a local law regulating the affairs

of Austin in violation of article III, section 56 of the Texas Constitution. We will reverse the trial court's

judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In 1963, the Texas Legislature enacted legislation to resolve conflicting claims between

expanding cities. See Municipal Annexation Act, 58th Leg., R.S., ch. 160, art. I, 1963 Tex. Gen. Laws

447 (since repealed and codified at Tex. Loc. Gov't Code Ann. §§ 42.001 -.902 (West 1988 & Supp.

1997)); see also City of Waco v. City of McGregor , 523 S.W.2d 649, 653 (Tex. 1975). The legislature

declared that extraterritorial jurisdiction ("ETJ") would be designated in order to further the state's policy

of promoting and protecting the general health, safety, and welfare of persons residing in and adjacent to

municipalities. See Tex. Loc. Gov't Code Ann. § 42.001 (West 1988) (hereinafter "Code"). Thus, a

municipality is granted as its ETJ a designated amount of unincorporated area adjacent and contiguous to

the municipality's corporate boundaries. Code § 42.021 (West 1988). The area designated as a

municipality's ETJ is determined by the municipality's population. The statutorily defined ETJ ranges from

one-half mile for municipalities with fewer than 5,000 inhabitants to five miles for municipalities with

100,000 or more inhabitants. Id . In the case of neighboring cities, however, these rules do not always

work harmoniously due to overlapping ETJ areas. In these situations, the legislature has provided for

modification of the ordinary statutory ETJ's to resolve conflicting claims. See Code § 42.903 (West Supp.

1997).

The Code also establishes procedures to be followed when an existing municipality's ETJ

is reduced or expanded. In general, a municipality's ETJ cannot be reduced unless its governing body

consents to the reduction in writing. (2) Code § 42.023 (West 1988). Likewise, the expansion of one

municipality's ETJ through annexation, request, or increase in the number of inhabitants cannot include any

area that extends into the existing ETJ of another municipality. Code § 42.022(c) (West 1988). Senate

Bill 421, now codified as section 42.024 of the Code, creates a limited change in the legislative rules

governing municipal transfers of ETJ.

Unlike other provisions of the Code, section 42.024 permits a municipality to compel the

transfer of ETJ if the statute's idiosyncratic requirements are met. The statute provides that in particular

circumstances a portion of the ETJ of a "releasing municipality" must be transferred into the ETJ of an

"adopting municipality." An adopting municipality includes any home-rule city with a population of less than

25,000 that purchases and appropriates raw water through a transbasin diversion permit from one or two

river authorities in which the municipality has territory. Code § 42.024(a)(1) (West Supp. 1997). A

releasing municipality includes any home-rule city with a population exceeding 450,000 that owns an

electric utility, has a charter provision allowing for limited-purpose annexation, and has annexed territory

for a limited purpose. Code § 42.024(a)(2).

The adopting municipality may force the transfer of an area of the releasing municipality's

ETJ into its own ETJ when specified conditions are satisfied:

(i) the releasing municipality does not provide utility services to the area to be released;

(ii) the owners of a majority of the land within the area to be released request the

transfer of the ETJ of the adopting municipality;

(iii) the adopting municipality has water pollution standards in place for the area to be

released that are in conformity with those of the Texas Natural Resource

Conservation Commission applicable to the released area on January 1, 1995; and

(iv) the adopting municipality has an acceptable service plan in place for water and sewer

service to the area to be released.

Code § 42.024(b)(1-5).

In order to be transferred to the ETJ of the adopting municipality, the area eligible for

release must be adjacent to the territory of the adopting municipality. Code § 42.024(b)(3)(A). All of the

eligible area must also be within a county where both municipalities have territory. Code §

42.024(b)(3)(B). Further, one or more school districts in the released area must have a majority of its

territory outside the territory of the releasing municipality. Code § 42.024(b)(3)(C). Finally, the area

transferred into the adopting municipality cannot exceed the difference between (1) the amount of ETJ that

the adopting municipality would have but for the intruding ETJ of the releasing municipality and (2) the

amount of ETJ the adopting municipality actually has. Code § 42.024(b)(6).

From these conditions it is evident that close geographic proximity between the two eligible

municipalities is necessary to trigger the dictates of section 42.024; a releasing municipality must be very

near an adopting municipality with an eligible area between the two of them. In the entire state, only the

cities of Austin and Cedar Park, and a small area of land between them, meet the criteria of section 42.024.

No other Texas city can fall within the statute's classification of releasing municipality until at least the year

2001, and it is unlikely that any other area in Texas will ever meet section 42.024's requirements. (3) This

fact is not surprising considering that the legislative history of section 42.024 indicates the statute was

intended to apply only to Austin and Cedar Park. Senate Bill 421 "would allow the governing body of

Cedar Park (as defined in the bill) to adopt a resolution including in its ETJ an area within the ETJ of Austin

(as defined in the bill) . . . ." House Research Organization, Bill Analysis, Tex. S.B. 421, 74th Leg., R.S.

(1995). Moreover, section 42.024's House sponsor, Representative Mike Krusee, told the House Land

and Resource Management Committee that section 42.024 "simply grants the authority to Cedar Park to

adopt some ETJ which is not in the City of Austin which is adjacent to Cedar Park." Section 42.024's

Senate sponsor, Senator Jeff Wentworth, explained that section 42.024 "simply transfers land from the

extraterritorial jurisdiction of the City of Austin . . . to the extraterritorial jurisdiction of the City of Cedar

Park."

On August 25, 1995, three days before section 42.024 became effective, the City of Cedar

Park ("Cedar Park") brought suit in Williamson County against Austin, seeking a declaratory judgment that

section 42.024 is constitutional, that Cedar Park qualified as an adopting municipality under the statute, and

that Austin qualified as a releasing municipality under the statute. (4) Austin counterclaimed seeking a

declaratory judgment that section 42.024 is unconstitutional. (5)

The case was tried entirely on stipulated facts. The parties filed the stipulations with the

district court on January 18, 1996. On January 11, 1996, before the stipulations were filed, Austin agreed,

pursuant to section 42.023 of the Code, to voluntarily release approximately 6,845 acres of its ETJ in the

area adjacent to Cedar Park. See Code § 42.023 (West 1988). The release was to take place in three

stages. The first stage, involving a release of 2,976 acres, was effective on January 4, 1996. The transfer

of the second stage contemplated the release of 3,187 acres. The second stage, however, was not to be

released until the trial court rendered a final judgment in the present case. The release of the third and final

stage of 683 acres depended on the decision of the trial court. If the trial court ruled in Austin's favor, the

683 acres would be released upon rendition of a final decision by the court of appeals. If the trial court

ruled in Cedar Park's favor, the remaining acreage would be released upon rendition of the trial court's

judgment along with the land from the second stage.

On March 4, 1996, the trial court ruled in favor of Cedar Park, adjudging section 42.024

constitutional. Austin then released its ETJ contained in stages two and three in accordance with the

January 11th agreement. Austin appeals the trial court's judgment.

DISCUSSION

Cedar Park's Motion to Dismiss Appeal for Lack of a

Justiciable Case or Controversy

Cedar Park has filed in this Court a motion to dismiss this cause, arguing that a viable case

or controversy no longer exists. (6) Specifically, Cedar Park asserts that for a city to be eligible to invoke

section 42.024, its actual ETJ may not equal or exceed the amount of its ETJ as defined by section 42.021

of the Code. See Code § 42.024(b)(6). Cedar Park contends it exceeded that amount when Austin

released its ETJ in compliance with the January 11th agreement. (7) Thus, Cedar Park argues it is not eligible

to utilize section 42.024, and the dispute between it and Austin is moot. We disagree.

Under section 42.024(b)(6), the area of ETJ released pursuant to section 42.024 may not

exceed "the difference between the total area within the extraterritorial jurisdiction of the adopting

municipality, exclusive of the extraterritorial jurisdiction of the releasing municipality . . . , as determined by

Section 42.021, and the total area within the adopting municipality's extraterritorial jurisdiction . . . ." Id .

In mathematical terms, the minuend of the formula is the total area of ETJ an adopting municipality could

have under section 42.021 of the Code, but for the interference of the releasing municipality's ETJ (and

arguably but for any intruding territory within the releasing municipality's actual corporate boundaries). The

subtrahend is the adopting municipality's actual total area of ETJ. Thus, if an adopting municipality's actual

ETJ exceeds the ETJ it is allotted under section 42.021 of the Local Government Code, the adopting

municipality is not eligible to transfer ETJ using section 42.024.

Although the 42.024(b)(6) formula seems convoluted, its application is relatively simple.

The formula takes the adopting municipality's theoretical ETJ as calculated under section 42.021 and

reduces it by the larger releasing municipality's intrusion into that area. The maximum amount of acreage

the adopting municipality may acquire pursuant to section 42.024 is the difference between the amount of

ETJ to which it is statutorily entitled under section 42.021 and the amount of acreage actually in its ETJ.

The result is simply to restore to the smaller municipality no more than the amount of ETJ acreage it would

have under section 42.021 of the Local Government Code but for the interference of the ETJ (and perhaps

municipal territory) of its larger neighbor.

According to the stipulated facts, the largest possible area in Cedar Park's section 42.021

ETJ, excluding Austin's ETJ within that area, is 9,300 acres. (8) Cedar Park contends its actual ETJ, before

the January 11, 1996 agreement between the parties, was 6,000 acres, and Austin's release of ETJ in

accordance with the January 11th agreement added 6,845 acres, raising Cedar Park's actual ETJ to

12,845 acres. Thus, Cedar Park asserts it has 3,545 more acres of ETJ than its hypothetical ETJ

calculated under section 42.021 and, therefore, cannot obtain any additional land under section 42.024.

However, in calculating the subtrahend of the section 42.024(b)(6) formula-- i.e., Cedar Park's actual

ETJ--Cedar Park ignores two important factors: (1) the stipulations were filed with the trial court after

Austin's stage-one release of ETJ, and (2) not all the ETJ released by Austin as a result of the January 11th

agreement became part of Cedar Park's ETJ. Taking these factors into account, it is evident that Cedar

Park has not exceeded the amount of land it is eligible to adopt under section 42.024.

On January 4, 1996, employing the general ETJ release provision of section 42.023 of the

Local Government Code, Austin released 2,976 acres of its ETJ in stage one of the agreement. On

January 18, 1996, Austin and Cedar Park filed a set of 177 stipulations with the trial court. According to

those stipulations, the total area actually in Cedar Park's ETJ was approximately 6,000 acres. Because

the stipulations were filed after the stage-one release, we must presume that the 6,000 acres to which the

parties stipulated included the 2,976 acres of ETJ released by Austin on January 4, 1996. It was also

stipulated that, according to the section 42.024(b)(6) formula, the difference between Cedar Park's actual

ETJ and the total area of its potential ETJ, as defined by section 42.021, was approximately 3,300 acres.

On March 4, 1996, when the trial court rendered judgment in favor of Cedar Park, an

additional 3,870 acres of Austin's ETJ was released in stages two and three of the January 11th agreement.

Cedar Park contends the entire 3,870 acres became part of its ETJ. Based on the evidence before us,

however, only a portion of the ETJ released by Austin on March 4, 1996 actually became part of Cedar

Park's ETJ. Under section 42.021(2) of the Local Government Code, Cedar Park's ETJ extends outward

only one mile from its municipal boundaries. See id. at § 42.021(2). Of the ETJ that Austin released under

the January 11th agreement, only a portion is within one mile of Cedar Park's city limits and is thus

automatically part of Cedar Park's statutorily defined ETJ. According to an affidavit of Luther Polnau, the

Manager of Community Information and Planning in the Planning Department of the City of Austin, only

1,140 of the 3,870 acres released by Austin in stages two and three of the agreement automatically fell

within Cedar Park's ETJ under section 42.021(2). (9) Therefore, assuming that federal obstacles have been

cleared, (10) and that all the other requirements of section 42.024 have been met, approximately 2,160 acres

(3,300 minus 1,140) of Austin's ETJ remain available for Cedar Park to adopt under section 42.024.

Even assuming that the ETJ released by Austin in stage one on January 4, 1996 was not

included in the stipulations filed with the trial court on January 18, 1996, there is still land subject to transfer

under section 42.024. Of the 2,976 acres released on January 4th, only 1,475 acres are within the one-mile ETJ of Cedar Park as determined under section 42.021(2) of the Code. Thus, if the total area within

Cedar Park's potential ETJ, as determined by section 42.021(2), is 9,300 acres and Cedar Park's actual

ETJ is 6,000 acres, Austin's release of its ETJ under the January 11th agreement added only a total of

2,615 acres to Cedar Park's ETJ, leaving approximately 685 acres of Austin's ETJ still available for Cedar

Park to adopt under section 42.024.

Cedar Park contends that all of the land released pursuant to the January 11th agreement,

including land more than a mile from Cedar Park's corporate boundaries, is part of its ETJ because ETJ

may include land outside the area dictated by section 42.021 when a municipality has acquired ETJ from

another city that released its ETJ under section 42.023. Section 42.023, however, only authorizes a

municipality to release ETJ. It does not authorize a municipality to automatically "receive" the released area

and thereby increase its ETJ beyond the boundaries of section 42.021. See Code § 42.023 (West 1988).

Moreover, the amount of ETJ a municipality can have is a function of population, and the

only section we are aware of that allows a municipality's ETJ to extend beyond the boundaries enunciated

in 42.021 is section 42.022(b) of the Code, which states: "The extraterritorial jurisdiction of a municipality

may expand beyond the distance limitations imposed by Section 42.021 to include an area contiguous to

the otherwise existing extraterritorial jurisdiction of the municipality if the owners of the area request the

expansion ." Code § 42.022(b) (West 1988) (emphasis added). Thus, a municipality's ETJ may extend

beyond the boundaries set forth in section 42.021 only when the owners of the affected area request the

expansion. See City of Murphy v. City of Parker , 932 S.W.2d 479, 482 (Tex. 1996). There is no

evidence in this record that the owners of the land released by Austin pursuant to the January 11, 1996

agreement requested or even consented to the expansion. Therefore, we cannot consider the portion of

Austin's released ETJ that is outside Cedar Park's one-mile ETJ boundary to be part of Cedar Park's ETJ.

Accordingly, Cedar Park's current ETJ has not exceeded its theoretical "section 42.021 ETJ" so as to

preclude it from using section 42.024 to force a transfer of Austin's ETJ.

While additional land appears to be subject to section 42.024, another jurisdictional

question arises: since Cedar Park has never actually used section 42.024, is this case ripe for a declaration

of the statute's constitutionality? We conclude it is. The Texas Uniform Declaratory Judgments Act

provides:

A person interested under a . . . written contract or other writings constituting a contract

or whose rights, status, or other legal relations are affected by a . . . contract . . . may have

determined any question of construction or validity arising under the instrument . . . [or]

contract . . . and obtain a declaration of rights, status or other legal relations thereunder.

Tex. Civ. Prac. & Rem. Code Ann. § 37.004 (a) (West 1988). The purpose of a declaratory action is to

establish existing rights, status, or other legal relation. Bonham State Bank v. Beadle , 907 S.W.2d 465,

467 (Tex.1995); Republic Ins. Co. v. Davis , 856 S.W.2d 158, 164 (Tex.1993). An actual controversy

or the "ripening seeds" of one must exist, however, before a declaratory judgment is proper; ripening seeds

means a set of facts that show that, rather than a hypothetical or abstract conflict, litigation is imminent and

inevitable. Peacock v. Schroeder , 846 S.W.2d 905, 912 (Tex. App.--San Antonio 1993, no writ);

Wolfe v. Schuster , 591 S.W.2d 926, 929 (Tex. Civ. App.--Dallas 1979, no writ); Gray v. Bush , 430

S.W.2d 258, 263 (Tex. Civ. App.--Fort Worth 1968, writ ref'd n.r.e.); Ainsworth v. Oil City Brass

Works , 271 S.W.2d 754, 760-761 (Tex. Civ. App.--Beaumont 1954, no writ).

In the present case, although Cedar Park has not made actual use of section 42.024, we

believe the ripening seeds of a genuine controversy are present. It was, after all, Cedar Park that filed this

suit in the first place, seeking a declaration that section 42.024 is constitutional, that Austin is a releasing

municipality, and that Cedar Park is an adopting municipality as those terms are defined in section 42.024.

Moreover, at the time Austin released a portion of its ETJ pursuant to the January 11, 1996, agreement,

Cedar Park was in the process of adopting a service plan for the affected area, a necessary prerequisite

to the implementation of section 42.024. See Code § 42.024(b)(4). Finally, Cedar Park's own attorney

noted in oral argument that, if there was any land left to be transferred under section 42.024, Cedar Park

would be "very interested" in knowing about it. Certainly Cedar Park believed that a "real controversy"

existed when it filed this suit. Because we have concluded that the January 11, 1996 agreement has not

rendered that controversy moot, it still exists. Cedar Park's interest in utilizing the provisions of section

42.024 is not so speculative and hypothetical as to render this Court's opinion merely advisory. We

conclude, therefore, that the controversy is ripe for adjudication. We overrule Cedar Park's "Motion to

Dismiss Appeal for Lack of a Justiciable Case or Controversy."

Section 42.024's Violation of Article III, Section 56

In a single point of error, Austin contends section 42.024 is an unconstitutional local law

that targets a single geographic area and is of no statewide significance. Article III, section 56 of the Texas

Constitution provides in relevant part:

LOCAL AND SPECIAL LAWS. The Legislature shall not, except as otherwise

provided in this Constitution, pass any local or special law . . . [r]egulating the affairs of

counties, cities, towns, wards or school districts. . . .

And in all other cases where a general law can be made applicable, no local or

special law shall be enacted.

Tex. Const. art. III, § 56. The purpose of article III, section 56 is to "prevent the granting of special

privileges and to secure uniformity of law throughout the State as far as possible." Miller v. El Paso

County , 150 S.W.2d 1000, 1001 (Tex. 1941). A leading commentator on the Texas Constitution, using

language more blunt than the supreme court's, describes the provision's purpose as being "to stop the

legislature from meddling in local matters." 1 George D. Braden, The Constitution of the State of Texas:

An Annotated and Comparative Analysis 276 (1977). In particular, article III, section 56 prevents

lawmakers from engaging in the "reprehensible practice of trading and 'logrolling,'" i.e. , trading votes to

advance personal rather than public interests. Miller , 150 S.W.2d at 1001 .

A law is not a prohibited local law merely because it applies only in a limited geographic

area. The legislature has broad authority to make classifications for legislative purposes. See id. When

a law is limited to a particular class or affects only the inhabitants of a particular locality, however, "the

classification must be broad enough to include a substantial class and must be based on characteristics

legitimately distinguishing such class from others with respect to the public purpose sought to be

accomplished by the proposed legislation." Id. at 1001-02 . "The primary and ultimate test of whether a

law is general or special is whether there is a reasonable basis for the classification made by the law, and

whether the law operates equally on all within the class." Maple Run at Austin Mun. Util. Dist. v.

Monaghan , 931 S.W.2d 941, 945 (Tex. 1996) (quoting Rodriquez v. Gonzales , 227 S.W.2d 791, 793

(Tex. 1950)). Under this test, we conclude that section 42.024 is an unconstitutional local law.

As discussed above, in order for section 42.024 to be applicable, a multitude of precise

conditions must be met. Cedar Park contends that each of the restrictions contained in section 42.024 is

reasonably related to the classifications created therein; it argues that the classifications further the statute's

purpose of allowing a small city, the otherwise lawful ETJ of which is blocked by the abusive ETJ practices

of a nearby large city, the opportunity to expand to adjacent areas with which the small city has a more

natural community of interest, so long as the small city is willing and able to provide utility services that the

large city does not provide to the area. We can find no fault with the statute's general purpose. However,

we believe the classifications made by section 42.024 relating to limited-purpose annexation, owning an

electric utility, and appropriating water via a transbasin diversion permit have no reasonable basis and do

not legitimately distinguish Austin and Cedar Park from other municipalities with regard to the public

purpose the statute seeks to accomplish. Although Austin asserts that section 42.024 contains other

unreasonable classifications, we will address only these three.

(i) Limited-Purpose Annexation

For a city to qualify as a releasing municipality under section 42.024, it must have "a charter

provision allowing for limited-purpose annexation, and have annexed territory for a limited purpose." Code

§ 42.024(a)(2). As far as we are able to determine, limited-purpose annexation has nothing to do with

abusive ETJ practices by large cities, because this form of "annexation" does not and cannot extend a

municipality's ETJ.

Limited-purpose annexation allows a home-rule city with a population of more than

225,000 persons to "annex" an area for the limited purposes of applying its planning, zoning, health, and

safety ordinances. Code § 43.121 (West 1988). Limited-purpose annexation is often used as a first step

in preparing an area for full annexation and ensures that the area will develop in a manner that is compatible

with a city's standards for development. In 1985, the legislature amended the Local Government Code

to expressly provide that limited-purpose annexation does not extend a municipality's ETJ. See Code

§ 43.131 (West Supp. 1997). (11) Although a municipality could, before 1985, use limited-purpose

annexation if its city charter permitted, it appears doubtful that such limited-purpose annexation ever had

the effect of extending ETJ. We are unaware of any court holding that limited-purpose annexation before

1985 extended ETJ at all. (12)

Cedar Park contends limited-purpose annexation may be used as a legislative proxy for

limiting ETJ acquisition of cities that have experienced "rapid and uneven municipal growth." Limited-purpose annexation, however, does not equate with either rapid or uneven municipal growth. As discussed

above, limited-purpose annexation has generally been used as a tool to control a city's growth and ensure

that, prior to full annexation, the area to be annexed develops in a manner that is compatible with the city's

standards for development. There is simply no logical nexus between limited-purpose annexation and rapid

or uneven municipal growth.

Moreover, the mere fact that a city's charter allows for limited-purpose annexation, and

that the city has exercised that power, has nothing to do with abusive ETJ practices. Section 42.024's

broadly written classification does not require that a city's prior exercise of its limited-purpose annexation

power have any relation to the area eligible for release under section 42.024. Thus, even if limited-purpose

annexation could extend ETJ, the releasing municipality might have annexed land for a limited purpose on

the opposite side of its boundary from the area eligible for release under section 42.024, yet still be subject

to section 42.024 as a result of such annexation. The statute does not provide any reasonable relation

between the prior limited-purpose annexation and the area eligible for release under section 42.024.

General terms regarding limited-purpose annexation that have no rational link to an eligible area and abusive

ETJ practices are unreasonable and violate article III, section 56 of the Texas Constitution.

Arguably, a more reasonable classification might have been to limit section 42.024's

application to municipalities that had extended their ETJ through strip annexation . Now outlawed, strip

annexation allowed a municipality to annex extremely narrow "strips" of land extending outward from its

boundary, often along highways or waterways. See, e.g., City of Pasadena v. State ex rel. City of

Houston , 442 S.W.2d 325, 328-30 (Tex. 1969); May v. City of McGivney , 479 S.W.2d 114, 117 (Tex.

Civ. App.--Dallas 1972, writ ref'd n.r.e.); s ee also Robert R. Ashcroft & Barbara K. Bulghur , Home

Rule Cities and Municipal Annexation in Texas: Recent Trends and Future Prospects , 15 St. Mary's

L. J. 519, 531 (1984). Strip annexation added only minimal municipal territory, thereby minimizing the

city's obligation to provide the municipal services it is required to supply within its corporate boundaries.

Unlike limited-purpose annexation, however, strip annexation allowed the municipality's ETJ to be

extended from the narrow strip that had been annexed. Austin, like many other Texas cities, used strip

annexation to extend its ETJ. (13) Realizing the abuses taking place with strip annexation, the legislature in

1989 effectively prohibited it. See Code §§ 43.054, 43.122 (West Supp. 1997). In spite of the

legislature's apparent intent to limit cities that abused strip annexation to extend their ETJ's, a municipality's

prior abuse of strip annexation is not one of section 42.024's criteria for a city to be a releasing

municipality.

(ii) Ownership of an Electric Utility

In order to qualify as a releasing municipality under section 42.024, a city must also own

an electric utility. See Code § 42.024(a)(2). Like limited-purpose annexation, owning an electric utility

has no reasonable relation to abusive ETJ tactics by large cities. Cedar Park contends, however, that the

requirement that the releasing municipality own an electric utility is rationally related to the purpose of

section 42.024 because the failure to provide utility services to an area in need of services is particularly

egregious when the releasing municipality is capable of offering services, but refuses to provide them. We

disagree. A municipality is not obligated to provide electrical services to its ETJ. The mere ownership of

an electric utility, therefore, does not evince any culpable activity by the releasing municipality that would

justify the "punishment" of losing a portion of its current ETJ to an adjacent adopting municipality.

Accordingly, we can discern no rational basis for the conclusion that when a municipality's population is

greater than 450,000 and it owns an electric utility, yet does not provide electrical service to a portion of

its ETJ, it may be forced to release that portion of its ETJ.

Moreover, ownership of an electric utility by the releasing municipality does not relate to

an adopting municipality's ability to provide electrical services for the area affected by section 42.024. For

example, no part of the area between Austin and Cedar Park affected by section 42.024 is deprived of

electrical service. Austin provides service to a portion of the affected area, and Pedernales Electric

Cooperative and Texas Utilities provide service to other parts. Electric service areas are regulated by the

Texas Public Utility Commission, and if Austin attempted to extend its utility service to parts of the affected

area already serviced by other electric providers, it could be threatened with extensive litigation before the

Public Utility Commission. The inclusion of this requirement, therefore, is not reasonably related to the

purpose of section 42.024 and has no reasonable basis other than to single out a particular area of central

Texas--land between Cedar Park and Austin--in violation of article III, section 56 of the Texas

Constitution.

(iii) Transbasin Diversion Permit

Among the factors necessary to qualify as an adopting municipality under section 42.024

is that a city must appropriate water through a transbasin diversion permit from a river authority in which

it has territory. See Code § 42.024(a)(1) (West Supp. 1997). A transbasin diversion permit is obtained

in order to transfer water from one watershed to another. Tex. Water Code Ann. § 11.085 (West 1988).

See, e.g., Corwin W. Johnson & Larry D. Knippa, Transbasin Diversion of Water , 43 Tex. L. Rev.

1035 , 1046 (1965). A diversion permit allows a municipality to receive or appropriate surface water from

a source outside its own watershed. See, e.g., Halsell v. Texas Water Comm'n , 380 S.W.2d 1, 3 (Tex.

Civ. App.--Austin 1964, writ ref'd n.r.e.). Cedar Park defends the reasonableness of this classification

by arguing that having a transbasin diversion permit makes it more likely that an adopting municipality will

have access to a water supply sufficient to meet the needs of the eligible area. Having a transbasin

diversion permit, however, does not guarantee an adequate supply of water. For example, Cedar Park,

which has a transbasin diversion permit from the Texas Natural Resource Conservation Commission to

obtain water from the Lower Colorado River Authority, has repeatedly received millions of gallons of water

from Austin to alleviate water shortages. (14)

In addition, one consideration in determining whether a transbasin diversion permit should

be granted in the first place is the extent to which the applicant will be benefitted by the diversion. See City

of San Antonio v. Texas Water Comm'n , 407 S.W.2d 752, 758-59 (Tex. 1966). Thus, a city that had

no need of a transbasin diversion permit ( i.e. , had no water shortage problem) might well be unable to get

one. As a result, the requirement of a transbasin diversion permit would accomplish the illogical result of

preventing smaller cities from qualifying as adopting municipalities under section 42.024 if they had such

an abundance of available water from their own watersheds that they had no need of a transbasin diversion

permit. In light of the statute's purported purpose of providing quality utility services to an area currently

without utility services, there is no reasonable basis for including a restriction that by definition implies the

adopting municipality's inability to adequately supply water from its own watershed.

While the wisdom or expediency of a law is the legislature's prerogative, singling out a

particular local area for special treatment without a reasonable basis for doing so violates the Texas

Constitution. While the unreasonableness of any one of the classifications discussed above would be

sufficient to render section 42.024 unconstitutional, viewed in toto the classifications clearly indicate that

section 42.024 is, within the meaning of article III, section 56, a prohibited local law.

Section 42.024 Does Not Have a Statewide Purpose

Cedar Park argues in the alternative that, even if section 42.024's requirements are

unreasonable, making it a local law within the meaning of article III, section 56, the law is still constitutional

because it affects a matter of statewide interest. See Lower Colorado River Auth. v. McCraw , 83

S.W.2d 629, 636 (Tex. 1935) (law is not unconstitutional, even though restricted to local area, if it affects

a matter of statewide interest). Specifically, Cedar Park argues that section 42.024 is designed to curb

abusive ETJ practices, a matter of statewide interest. This argument mirrors the "statewide interest"

argument recently rejected by the supreme court in Maple Run at Austin Municipal Utility District v.

Monaghan , 931 S.W.2d 941, 947 (Tex. 1996). The statute at issue in Maple Run involved another

matter of apparent statewide interest: conservation. Nonetheless, the supreme court held that "one may

[not] simplistically conclude that any law having a . . . [general] purpose is ipso facto not a local or special

law." Id. The obvious basis for this holding is that adopting such an exception to article III, section 56

would swallow the constitutional rule against such legislation, since any statute can be vaguely described

in general terms. Similarly, generally describing section 42.024 as curbing "abusive ETJ practices" does

not save an otherwise unconstitutional local law. To bring what would appear to be a local law within

"statewide interest" protection, the statute must "affect[] a substantial class of persons over a broad region

of the state." Id. Section 42.024, which applies to a small area of land in central Texas, does not meet that

test. Moreover, as the supreme court has stated, "the ultimate question under Article III, Section 56 is

whether there is a reasonable basis for the legislature's classification[s]." Id. In the present case, we

conclude there is no reasonable basis for the classifications discussed above. Accordingly, we sustain

Austin's point of error.

CONCLUSION

Having sustained Austin's point of error, we reverse the judgment of the trial court and

render judgment declaring section 42.024 of the Texas Local Government Code unconstitutional as

violating article III, section 56 of the Texas Constitution.

J. Woodfin Jones, Justice

Before Justices Powers, Aboussie and Jones

Reversed and Rendered

Filed: August 14, 1997

Publish

1. See Act of May 29, 1995 , 74th Leg., R.S., ch. 766, § 1, 1995 Tex. Gen. Laws 4010 . Senate

Bill 421 appears as the first of two 1995 regular session enactments codified as section 42.024 of the Local

Government Code.

2. An exception to this rule, which is inapplicable to this case, occurs in the cases of judicial

apportionment of ETJs under Tex. Loc. Gov't Code Ann. § 42.901 (West 1988).

3. The parties stipulated that in order for another Texas city to meet the definition of a releasing

municipality, many contingencies must occur. For example, Houston, Dallas, or El Paso would have to buy

an electric utility, amend its city charter to include limited purpose annexation powers, and exercise those

powers. San Antonio already owns an electric utility, but it would have to amend its city charter to permit

limited-purpose annexation and exercise that power. Other than the above cities, no municipality could join

Austin as a releasing municipality until at least 2001, after the results of the next federal decennial census

are released. See Tex. Gov't Code Ann. § 311.005 (3) (West 1988).

The parties' stipulations list fourteen other Texas towns that could possibly meet the definition

of an adopting municipality. Four of the towns, Joshua, Rose City, O'Donnell, and Tahoka, are not home-rule cities. Five of the towns, Brownfield, Lamesa, Levelland, Plainview, and Slanton, do not have

transbasin diversion permits like Cedar Park, and the entity from which they do purchase water, the

Canadian River Municipal Water Authority, is not a "river authority" as defined in section 30.003(4) of the

Texas Water Code. See Tex. Water Code Ann. § 30.003 (4) (West 1988). Finally, any theoretically

possible releasing municipality must develop in close proximity to an adopting municipality, and there must

be "eligible area" between them that would be subject to the adopting municipality's water quality standards

that conform with those of the Texas Natural Resource Conservation Commission as of January 1, 1995.

See Code § 42.024(b)(4). In sum, Austin and Cedar Park are, as a practical matter, the only cities that

could qualify to use section 42.024.

4. Wilson Land and Cattle Co., Carolville, Ltd., and Aldine, Ltd., land development interests,

intervened and aligned themselves with Cedar Park. Carolville, Ltd. and Aldine, Ltd. declined to

participate in this appeal.

5. Although receiving notice of the constitutional challenge, the Attorney General declined to

intervene in the proceedings. See Tex. Civ. Prac. & Rem. Code Ann. § 37.006 (b) (West 1986).

6. See Texas Workers' Compensation Comm'n v. Garcia , 893 S.W.2d 504, 517-18 (Tex.

1995) (appellate court may not review the constitutionality of a statute unless there is a real controversy

between the parties that will be determined by the judicial declaration sought).

7. The Local Government Code contains a procedure by which a municipality's ETJ can expand

beyond the limitations imposed by section 42.021. See Code § 42.022(b).

8. The parties could not agree on whether section 42.024's ceiling on the size of the released area

requires that the adopting municipality's hypothetical ETJ be calculated by subtracting from its maximum

section 42.021 ETJ only the intruding area of the releasing municipality's ETJ , or by subtracting both the

intruding area of the releasing municipality's ETJ and any intruding area actually within its corporate

boundaries. Accordingly, the parties stipulated to the number of acres under both methods of calculation,

yielding results of 12,400 acres and 9,300 acres, respectively. The discrepancy does not affect our

decision. For purposes of this issue, we will assume the proper calculation under section 42.024 is 9,300

acres, because that figure seems most favorable to Cedar Park on the mootness issue.

9. Each court of appeals may, on affidavit or otherwise, as the court may determine, ascertain

certain matters of fact that are necessary to the proper exercise of its jurisdiction. Tex. Gov't Code Ann.

§ 22.220 (West 1988); Willard v. Davis , 881 S.W.2d 907, 910 (Tex. App.--Fort Worth 1994, orig.

proceeding).

10. As a matter of law, none of Austin's ETJ released through the January 11, 1996 agreement can

be treated as being outside Austin's ETJ and inside Cedar Park's ETJ until the preclearance requirements

of section 5 of the Federal Voting Rights act are met. See 42 U.S.C.A. § 1973c (West 1994).

11. The law that became section 43.131 originated in 1985, when the legislature enacted SB 967,

which amended the Municipal Annexation Act of 1963 to provide specifically that "the area of a city's

extraterritorial jurisdiction may not be extended by any annexation except for full purposes." Act of May

27, 1985 , 69th Leg., R.S., ch. 649, § 2, 1985 Tex. Gen. Laws 2398 , 2399. The provision expired on

June 1, 1987, but the legislature extended the prohibition permanently through section 5 of SB 962. See

Act of June 1, 1987, 70th Leg., R. S., ch. 1077, § 5, 1987 Tex. Gen. Laws 3674 , 3679 (Tex. Rev. Civ.

Stat. Ann. art. 970c, § 8, since repealed and codified at Tex. Loc. Gov't Code Ann. § 43.131 (West

Supp. 1997)).

12. Indeed, the parties stipulated that in 1985, before the effective date of Act of May 27, 1985 ,

69th Leg., R.S., ch. 649, § 2, 1985 Tex. Gen. Laws 2398 , 2399 (predecessor to section 43.131 of the

current Local Government Code), State District Judge Joseph Hart of Travis County ruled that limited-purpose annexation did not extend or change the limits of an annexing municipality for any purpose other

than for zoning and planning and for sanitation and health protection. Judge Hart's decision was not

appealed.

13. Indeed, Austin's use of strip annexation to extend its ETJ appears to have been the legislature's

primary focus in enacting section 42.024. The parties stipulated that, in referring to what became section

42.024, Senator Jeff Wentworth stated to the Senate Intergovernmental Relations Committee on March

8, 1995: "I'd like to point out that the only reason this area [affected by section 42.024] is currently in the

ETJ of the City of Austin is because of strip-annexation that occurred years ago that is now illegal." State

Representative Mike Krusee, in discussing what ultimately became section 42.024, stated to the House

Land & Resource Management Committee on March 7, 1995, that "at the time when Austin really annexed

this land, got this land in their ETJ by virtue--I shouldn't really say virtue, by vice maybe--of having strip

annexed this land in order to get the valuable commercial property." Additionally, Mr. Terry Bray, who

represented some intervenors in the district court, testified before the Senate Intergovernmental Relations

Committee that, "[The land affected by section 42.024] would be part of the Cedar Park ETJ already but

for the fact that Austin through some strip annexation that occurred a number of years ago extended its ETJ

far north."

14. The reason for this is that Cedar Park's permit allows diversion of water only to the portion of

the city that lies within Travis County, while the vast majority of Cedar Park is in Williamson County.

Tex. Civ. Prac. & Rem. Code Ann. § 37.006 (b) (West 1986).

6. See Texas Workers' Compensation Comm'n v. Garcia , 893 S.W.2d 504, 517-18 (Tex.

1995) (appellate court may not review the constitutionality of a statute unless there is a real controversy

between the parties that will be determined by the judicial declaration sought).

7. The Local Government Code contains a procedure by which a municipality's ETJ can expand

beyond the limitations imposed by section 42.021. See Code § 42.022(b).

8. The parties could not agree on whether section 42.024's ceiling on the size of the released area

requires that the adopting municipality's hypothetical ETJ be calculated by subtracting from its maximum

section 42.021 ETJ only the intruding area of the releasing municipality's ETJ , or by subtracting both the

intruding area of the releasing municipality's ETJ and any intruding area actually within its corporate

boundaries. Accordingly, the parties stipulated to the number of acres under both methods of calculation,

yielding results of 12,400 acres and 9,300 acres, respectively. The discrepancy does not affect our

decision. For purposes of this issue, we will assume the proper calculation under section 42.024 is 9,300

acres, because that figure seems most favorable to Cedar Park on the mootness issue.

9. Each court