UPDATED: Texas Supreme Court issues ruling over San Jacinto River Authority, city of Conroe contracts case

The SJRA's surface water treatment plant was built as part of its Groundwater Reduction Plan, an effort to make Montgomery County use more surface water. (Eva Vigh/Community Impact Newspaper)
The SJRA's surface water treatment plant was built as part of its Groundwater Reduction Plan, an effort to make Montgomery County use more surface water. (Eva Vigh/Community Impact Newspaper)

The SJRA's surface water treatment plant was built as part of its Groundwater Reduction Plan, an effort to make Montgomery County use more surface water. (Eva Vigh/Community Impact Newspaper)

Updated 10:30 a.m. April 1: This story has been updated to include comments from the city of Conroe. It also incorrectly stated March 30 as the court ruling date instead of March 27.

The Texas Supreme Court ruled March 27 in favor of the San Jacinto River Authority in its dispute with the city of Conroe over the validity of existing Groundwater Reduction Plan contracts, according to an SJRA news release; GRP contracts refer to the contractual obligation the city of Conroe and other entities have to follow the SJRA's GRP plan.

But the court ruled in favor of the cities regarding the GRP rates. The court ruled that the expedited declaratory judgement act could not be used to validate rates established by the SJRA, according to a city of Conroe news release.

The court unanimously agreed that SJRA was entitled to file a lawsuit in Travis County—rather than Montgomery County, as the city of Conroe requested—and to use an expedited process to have its GRP contracts declared valid. The court also recognized current state law makes those contracts "incontestable" and "valid, binding and enforceable according to [their] terms," according to the news release.

“We are very pleased with the Supreme Court’s opinion,” SJRA General Manager Jace Houston said in the news release. “When 80-plus utilities join together to implement a regional project, it’s critical that everyone participates as agreed to in the contract. Every participant must fulfill its contract obligations; otherwise, it puts at risk the entire legal apparatus protecting Texas public bonds for regional projects."

The case before the Texas Supreme Court came after Conroe and Magnolia appealed a previous decision by the Austin Third Court of Appeals that determined SJRA was entitled to an expedited action declaring the validity of its GRP contracts and rates, according to the news release.

The SJRA and Conroe will have to head back to a trial court in Montgomery County on the rate issue, which has been in dispute since 2016, when Conroe refused to pay SJRA's increased rates. The city of Conroe issued a news release following the ruling, in which it stated:

"Conroe had opposed the SJRA efforts to use a bond validation process to grant summary approval of the rates in an Austin courtroom out of sight of the interested rate payers. Now the SJRA will have to justify those rates in a local courtroom in full view of the customers bearing the brunt of those inflated prices."

Houston had his own statement to issue.

“According to the Supreme Court’s ruling, the portion of the case related to water rates cannot be considered under the expedited time table,” Houston said. “If Conroe and Magnolia insist on not paying the rates owed under the GRP contract, that will have to go forward in a separate case, which will take longer and be more costly for all SJRA GRP participants in Montgomery County.”
By Eva Vigh
Eva Vigh joined Community Impact Newspaper in 2018 as a reporter for Spring and Klein. Prior to this position, she covered upstream oil and gas news for a drilling contractors' association.


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