                                                    R-794


                                  OFFICE       OF
                  THE ATTORNEY                  GENERAL
                               AUSTIN.TEXAS
PRICE  DANIEL
ATTORNEYGENERAL
                            October 24, 1947

        Hon. E. V. Spence, Chairman
        Board of Water Engineers
        Austin, Texas
                            Opinion No. V-411
                            Re:   Present status and
                                  relative priority of
                                  certain applications
                                  pending before the
                                  Board of Water Engi-
                                  neers.

        Dear Sir:
                     The facts and clrcmstances upon which your
        questions are predicated are, In part, set out in the
        opinion of the Court of Civil Ap eals In Clark v. Briscoe
        Irrlgati6n C-any, 200 S.‘W. (27 674, writ of error pend-
        ing, from which we quote as follows:
                       “This appeal is from a declaratory
                  judgment decreeing in effect that the
                  owner of a pendt granted by the Board
                  (Board of Water Engineers ,o,f
                                               the State
                  of Texas) $n April 1940 authorizingthe
                  appropriator (perndtteejto divert f&m
                  a Texas stream a specified amount of wa-,
                  ter for the purpose of lrrlgatlng specl-
                  fioally desctibed land (the right to which
                  appropriationhas ripened Into a title),
                  is not required to apply to the Board for
                  authortty to substitute other lands for
                  those des%gnated in the permit, or to
                  change the purpose of use of the water
                  from irrigation to other lawful uses; the
                  right of such appropriatorbeing free of any
                  regulation or control by the Board, so long
                  as the new use is a beneficial one authorized
                  by law, and does not (1) result In an in-
Hon. E. V. Spence - Page 2 -- v-411


     creased.appropriation
             .    _        or taking a great-
     er quantity of water than authorized in
     the permit; or (2) impair the vested
     rights of other appropriators.
          "The correctnessof this holding
     controls the decision of the case upon
     its merits.
          "Substantially,the facts are,these:
         "April 6, 1940, the Board, upon his
    applicationand after due notice and hear-
    ing granted to R. T. Brlscoe a pent&t to
    'divert,approptiate and use' not exceed-
    ing 75,000 acre-feet per annum of the uu-
    appropriatedwaters of the Brazos River,
    In Fort Bend,County,,,%henbeneficially
    used for the purpose of irrigation,mini
    and munkcipal use' . 0 * o August 13, 19"$'
                                              5,
    appellee f-fledwith the Board an application
    to amend the pezmdt so as to substituteother
    specified,landsfor those designated in the
    permit and to change the purpose of use so
    as to include mlnlng, manufacturing,and
    municipal. After proper notice and hearing
    the Board denied this applicationon Decem-
    ber 13, 1945. This suit was filed by ap-
    pellee on January 8, 1946, against the Board
    and others, in which it sought the follow-
    ing relief:
         "1. A declaratory judgment decreeing
    that it was not required to obtain an amend-
    ment of its permit from the Board as a pre-
    requisite:
         "a. To change the place of use of its
    waters in the manner alleged.
          "b. To change the purpose of use of.
     Its waters to Include minlng,.manufacturlng
     end municipal.
          "2. In the alternative,if it,were
     held that an amendment of the permit was
     required, a declaratory judgment decreeing
     that the functionof the Board was purely
Eon. E. V. Spence - Page 3 -- V-411


    ministerial,with no discretion to deny
    the application;and that mandamus to
    compel approval of the amendment be award-
    ed.
         “3. In the alternative,If the Board
    were held to have any discretion in the
    matter, a decree that the refusal of the
    Board was ~a gross abuse of.its discretion,
    and that mandamus Issue to compel approval
    of the application.
          "4. A decree (a) as between appellee
     and defendants other than the Board, and
     (b) a8 between appellee and the State that
     appellee has the right to extend its canal
     and supply its appropriatedwaters to lr-
     rlgate the lands described In the applica-
     tion and for Industrial and other lawful
     uses in or near Texas City or elsewhere in
     Galveston County.
          “5. A dec~reequieting appellee's
     vested title fn its appropriatedwaters,
     and its right Inherent therein to change
     the.place and purpose of use thereof with-
     out interferencefrom defendants,and that
     cloud upon its said title by~reason of
     claims of defendantsbe removed.
          "Burlng the course of the trial (to
     the court without a jury) all testimony
     offered by appellants Insupport of their
     contention that the Board had properly
     exercisedwhatever discretion it had In
     deny- the applicationto amend the per-
     mit, was excluded upon objection of ap-
     pelleels counsel upon the ground that the
     only Issue In the case was whether appellee
     had the right to use the water for other
     beneficial purposes than those stated in
     the permit, and whether the Board had any
     discretionat all In such matters. This
     statement of appelleets counsel and ruling
     of the court ellmlnated from the case the
     alternativerelief sought under paragraphs
Hon. E, V, Spence - Page 4 - V-411


     designated 2 and 3 above; and the court
     rendered judgment declaratoryof ap-.
     pelleels rights as sought under para-
     graphs 1 and 4 above, and quieted the
     title of appellee as against other defen-
     dants than the Board as sought in para-
     graph 5 above."
          American Canal Company, together with others,
protested the above described applicationof Driscoe
Irrigation Company, and it was made a party defendant
In the trial court. It became subject to those portions
of the judgmentwhich run to the defendants other than
the Board of Water Engineers. Amerfean did not join
In the appeal from this judgment.
          On March 17, 1947, American filed Its pending
applicationto change the purpose and place of use of
its permitted waters. On this same date, Briscoe filed
a Motion for Rehearing of the applicationdenied by you
on December 13, 1945.
          Predicatedupon the foregoing,you desire our
advice as to whether: (1) your Board may rehear Bris-
toe's application, (2) the effect upon American's pend-
ing application of fts failure toaIReal from the judg-
ment of the trial court, and (3) the relative prlorl-
ties between Briscoe and American as to their pending
applications.
         We will consider first the matter of rehearing,
the Briscoe application.
          The general policy in Texas concerningrehear-
ing of denied applicationsfor permits by admlnistratlve
boards has evolved, for the most part, as the result of
hearings conductedby Texas Railroad Commlsslon in con-
nection tith Its Rule 37. The law In this regard appears
to be as follows:
          1. Absent judicial ascertaksuent,the Com-
mission may rehear applicationscovering the same subject
matter as often as it wishes. Its action on the prior
application does not necessarilygovern any result it may
reach on succeedingapplications. The applicant is not
required to show that conditionshave changed in order to
secure rehearing by the Commission. Gulf Land Co. v,
Hnn. E. V. Spence -- Page 5 - V-411

Atlantic ReffnztngCo., Sup. Ct., 131 S. W. (2) 73;
   nolla v. Mew Process Co., Sup. Ct., 104 S. W.
    1106; Gulf Land Co. v. Atlantic, C.C.A., 113 F.

          2. After judicial ascertainmenthas been
had on the merits of granting or denying the appll-
cation, although such ascertainmentdoes not prevent
the aggrieved party from reapplying,nevertheless,
unless conditions are shown to have substantially
changed, the Commission is bound by the court18 judg-
ment. The Court in rendeting  its judgment looks only
to condltlons as they existed at the tl.meof the Com-
mission's decision and such judgment Is binding on the
subject matter only so long as conditions thereafter
do not change. The original jurisdictionIn such
cases to determlne If conditionshave, In fact, changed
so as to warrant rehearing rests with the Commission.
Magnolia v. Wew Process Co        . Ed ar v. Stanolind
T. C. A., writ refused, gO.$.~?p~~ 65E: Rumble v. Tua&
bow, T. C. A,, writ refused, 133 S.W. (2) 191; R. R.
Commission v. Wencker, Sup. Ct., 168 S.W. (2) 625;
R. R. Commission v. Humble, T. C. A., writ refused,
11 S. W. (2) 728; Gulf Land Co. v. Atlantic, 113 F.
(23   902.
          3. Pending judicial ascertainment,the same
rules Indicated In (2) above apply and the result ln
such cases may be to render moot the pending litigation
if the Commission reverses its decision. The reversal
must, of course, be based upon changed conditions:
Stewart v. Smith, Sup. ct.; 83 S. Y. (2) 945; Stanollnd
v. Sklar Oil Co., T.C.A., writ refused, 179 S. W. (2)
376; Edgar v. Stanolind, supra; Hagnolla v. New Process
co., supra.
          A reading of the above cases shows that empha-
sis Is placed upon the fact that judicial ascertainment
has been had on the merits of the Commission'saction In
denying or granting the permit, and this appears to be
the element upon which a res adjudicata effect is drawn
from the Judgment and applied to the rehearing appllca-
tion absent changed conditions. The very fact that judi-
cial considerationextends only to conditions as they
existed at the time of the Conmtlsslontsdecision and that
the judgment has a res adjudicata effect only so long
as conditions do not change Is indicative that the con-
ditions, circumstancesand transactionswhich are con-
sidered by the Commission in arriving at its decision
Hon. E. V. Spence - Page 6 -- V-411


on the merits, are decisive in applying res adjud-
lcata to the rehearing. If the litigation,pending
or concluded,is not predicated upon the merits of
the Commlsslon*saction but upon Its ability or
right to act at all, the situation,in our opinion,
is taken completely out of the above indicated rules
relating to permits subject to litigation. We have
quoted at length from the opinion in the Clark case
because we believe that the portions quoted show
clearly that both the trial and appellate courts have
been concernedwith only the right and jurisdiction
of your Board to entertain applicationsto change
purpose and place of use, and that the merits relating
to your denial of Briscoels applicationhave not been
Involved. For the purpose then of applying the fore-
going rules as they relate to rehearing of denied ap-
plications pending litigation,we hold that these rules
are not applicable to the situation which confronts
Briscoels application to rehear, and that Briscoe's
denied application occupies exactly the same status as
though no suit had been filed. We, therefore, con-
clude that you may rehear said applicationwithout a
finding of changed conditions.
          We now consider the effect of the trial court's
judgment on Americants pending application for change.
          The contentionsmade in the trial court and.the
relief granted by it are set forth In those portions of
the .opinionof the Court of Civil Appeals heretofore quoted.
Substantially,the trial court held that under existing law
neither BPiscoe nor permittees generally are required to
obtain from your Board amendments to existing permits in
order to change the place and purpose of use of permitted
waters; that as between Briscoe and the Board and as be-
tween Briscoe and the other defendants,Briscoe ham
right to extend its canal system and supply water In the
manner sought by it; and that Brlscoels title to 50 000
;z;f;;z of water be quieted as to all parties excipt
         0
          We assume for the purpose of this opinion, the
contentionmade by Briscoe relattve to the effect of such
judgment,I.e., that as between Brlscoe and American,
Briscoe obtained the exclusive right to "extend and SupplY"
and that American was expressly denied this right. We
must decide, therefore,whether American is bound to this
Hon. E. V. Spence - Page 7 - V-411



constructionof the judgment through its failure to
appeal.
            In our optnion the effect of the judgment
rendered by the Court of Civil Appeals, reversing and
rendering the judgment In all respects and affirming
it only in so far as it quieted Briscoels title to
50,000acre-feet of water, had the effect of deleting
for all purposes that portion of the judgment upon
which Brlscoels contentionsare based, not only for
the beneftt   of San Jacinto,Conservationand Reclamation
District, the only appealing defendant subject to the
portion of the judgment In question, but also for the
benefit of all non-appealingdefendants,including
American.
           We recognize the general rule that where one
party appeals from a judgment, the reversal as to him
will not justify a reversal against the other non-
appealing parties. 3 T. J. p. 1112. This rule, how-
ever, is subject to the rule that where the judgment
is entire and not severable, a reversal  by the appellate
court inures  to the benefit of those who do not appeal.
3 T.J. p. 1154, 5 C. J. S. p. '1423;Lockhart v. A. W.
Snyder % Co., Tex. Sup, ct., 163 S. W. (2) 385, 3923
Valee v. Joiner, Tex. Corn.App., 44 S. W. (2) 983;
Reeves v. McCracken, Tex. Sup. Ct., 128 S. W. 895; Irwin
v. Auto Flnance'Go.,T. C. A. 40 S. W. (2) 87l,reversed
on other grounds 60 S. W. (21 1 2; ffarrlsonv. Davis,
Utah Sup. Ct., 54 P. (2) 439, 44z .
          The foundation of the trial courtls judgment
here was the absence of jurisdictionIn your Board over
application for change. The trial court having found
no jurisdictionin your Board necessarily found that no
admlnlstratlvecontrol had been provided covering this
phase of our water law. It then performed what would
eraipaFily be the function of the administrativebody
bysupervising and allocating the right of change. Clear-
ly, the allocation of right made by It is untenable if, in
fact, your Board has jurlsalctionin the matter. In our
minds, the judgment is entirely dependent upon the question
of jurlsdlct~on;and since the court of Civil Appeals has
overturned the trial court on this point, it necessarily
follows that those portions of the judgmentwhich allo-
cate the right as between certain parties is overturned
whether such parties appeal or not. The major premise
which held Briscoels right in place was removed when the
Hon. E. V. Spence - Page 8 - V-411


Court of Civil Appeals found jurisdictionover the
subject matter in your Board, at which point we con-
clude that the attempted allocation failed for all
purposes. For the reasons stated, the judgment is
not severable and inures to the benefit of American
whose pending applicationIs in no way affected by
the judgment in question.
          The conclusions just arrived at result from
analogy to legal principles as those principleshave
evolved based upon the relationshipbetueen trial and
appellate court. Analogy to judicialrelatlonshLps
may not be applicable in deciding the questionspre-
sented here because the problem is one which, in its
final analysis, involves relationshipsbetween judi-
cial and administrativebranches of government.
           A related problem confronted the United States
Supreme Court in Federal CommunicationCommission v,
PottsvilleBroadcastingCompany, 309 U. S. 13%      In that
case, an applicant sought a permit for the construction
of a broadcastingstation and was denied because of fi-
nancial inability. This finding was based upon mlscon-
ception by the Cononission of Pennsylvanialaw. On ap-
peal, the court pointed out the error and returned the
case to the Commission for reconsideration. In the mean-
time, other applicants had applied for the same facili-
ties; and their applicationswere set down with that of
the denied applicant for hearing to determine wNch 'on
a comparativebasis in the judgment of the Commission
will best serve the public interest." The denied ap-
plicant clairnea priority aa objected to the setting
down of his application for hearing on a comparative
basis, He sought and obtained mandamus to set aside the
"comparativebasis" order of the Commission. With re-
spect to this action by the Court of Appeals, Justice
Frankfurter said:
         "This was not a mandate from court to
     court but from a court to an administrative
     agency. What is in issue is not the rela-
     tionship of federal courts inter se - a
     relationshipdefined largely by the courts
     themselves - but the due observanceby courts
     of the distributionof authoritymade by
     Congress as between its power to regulate
     commerce and the reviewing power which it has
     conferred upon the courts under Article III
Hon. E. V. Spence - Page 9 -- V-411


    of the Constitution. A review by a federal
    court of the action of a lower court is only
    one phase of a elngle unified process. But
    to the extent that a federal court is au-
    thorized to review an administrativeact,
    there is superimposedupon the enforcement
    of legislativepolicy through administrative
    control a different process from that out of
    which the administrativeaction under review
    ensued. The technkal rules derived from the
    interrelationshipof judicial tribunals forw-
    ing a hierarchicalsystem are taken out of
    their environmentwhen mechanically applied
    to determine the extent to which Congressional
    power, exercised through a delegated agency,
    can be controlledrithln the limited scope
    of 'judicialpower' conferredby Congress under
    the Constitution.
          ". . .

         "The Comndssionrsresponsibilityat all
    tlmes,ls to measure applicationsby the stan-
    dard of 'public convenience,interest, or
    necessity.' The Commission originally found
    respondent'sapplication Inconsistentwith
    the public interest because of an erroneous
    vien regarding the law of Pennsylvania. The
    Court of Appeals laid bare that error, and,
    in compelling obedience to its correction,
    exhausted the only power wNch Congress gave
    it. At this point the Commissionwas again
    charged with the duty of judging the appll-
    cation In the light of 'public convenience,
    interest, or necessity.1 The fact that In Its
    first dispositionthe Commission had committed
    a legal error did not create rights of priority
    In the respondent,as against the later appli-
    cants, which it would not have otherwlse poss-
    essed. Only Congress could confer such a
    priority. It has not done so. The Court of
    Appeals cannot write the principle of priority
    into the statute as an indirect result of its
    power to scrutinizelegal errors in the first
    of an allowable series of administrativeactions.
    Such an implicationfrom the curtailed revleu
    allowed by the CommunicationsAct is at war
    with the basic policy underlying the statute.
Hon. 33.V. Spence - Page 10 --V-411


    It would mean that~for practical purposes
    the contingenciesof judicial review and
    litigation,rather than the public interest,
    would be decisive factors in determining
    which of several pending applicationswas
    to be granted."
          No direct mandate from Court to Board is in-
volved here as it was in the cited case, nor was the
direct appellate problem presented here involved In that
case. Nevertheless,the basic problem of judicial con-
trol of adminAstrativediscretionis Involved here, as it
was there. The*prfnciplesannounced in that ease with
reference to control by the judiciary of administrative
discretion lead us to conclude that since the trial court
here has been found in error on the question of the Board's
jurisdiction,then it must follow that the attempted ex-
ercise of administrativediscretionby the court in allo-
cating as‘between the party defendants the right of change
was a matter beyond its province and was a matter which
It could not decide unless it had correctly decided the
jurisdictionquestion.
          This conclusionIs confirmed by Borchard in his
work on Declaratory Judgments, 2nd Ed., p. 878, from which
we quote:
         "The declaratory judgment cannot and
     is not designed to cut down the statutory
     reotirementsfor administrativereview.
     Again, no court by declarationor otherwise
     should attempt to control administratlve~
     discretion, th h the exercise of ads&n-
     istrative disc;%&    may~well be decreed
     either by declarationor mandamus. But'
     where administrativeauthority over a par-
     ticular transactionor business is in dis-
     pute, and, the facts being established,the
     issue of jurisdictionis purely one of law,
     there Is no reason why the courts cannot
     make a declaration,although in some of these
     cases an injunctionwould be refused."
     (Emphasisadded)
         In addition, it appears to be settled in Texas
that courts may not put themselves In the place of the
administrativebody and exercise the discretionwhich
the Legislaturehas committed to that body. The rule
 Hon. E. V. Spence - Page 11 - V-411


 is thus stated in Railroad Commission v. Shell,
 sup. ct. 1942, 161 s. v. (2) 1022:
          "If the matter covered by the order
      is one comm$tted to the agency by the
      Legislatufe, and involves the exercise
      of its sound judgment and discretion in
      the admzinistrationof the matter so com-
      inlttedto It, the court will not under-
      take tcrput itself in the position of the
      agency, and detenfdne the wisdom or advisa-
      bility of the particular ruling or order
      in question, but will sustain the action
      of the agency so long as its conclusions
      are reasonably supported by substantial
      evidence. This is so because since the




 See, also, Lone Star Qas Co. v. State, 137 Tex. 279 and
 Blair v. Trinity IndependentSchool District, TCA 1942,
 writ refused, 161 S. W. (2) 1030, 1033.
          Considerationwill now be given to the aueetlon
 of priorltXes.
            One of our purposes in citing ana quoting at
  length from Federal ColnmunicationsCommission v. Potts-
_ vllle Broadcasting~Co., supra, is the light which that case
  throws on the question of priorities. The Commisslonlsre-
  responsibilitythere and the Board's duty here Is to measure
  applicationsby the standard of public welfare. In that
  case no priority was found to exist as between various ap-
  plicants for the same facilities simply because one appli-
  cant had filed his applloation earlier than the others.
  Oni: C!ngreas could confer such priority and It had not
         . In consequenceneither the Court nor the Com-
  mlselon had authority to confer priority on that basis,
  the province of ~tfie
                      court being the limited review con-
  fhrred upon it, and the province of the CommZssionbeing to
  measure the applicationsin the light of public interest.
Hon.   E.   V.    Spence   -   Page’   12   -iV;:Q,l   I   : ” ‘:-:,;::   :




          In this State certain riotiitiesare created
by statute. For example, Art. 7fsn'# V:C. S., sets up
prioritiesbetween uses of water; Art. 7472, V. C. S.,
provides wlth reference to the original application to
appropriatewater that the first in ,timeis the first
in right; Art. 7496, V. C. S., raises priorities in con-
nection with presentations; and Article 7523, V. C. S.,
provides that the right to appropriatejshalldate from
the filing of the application. In none of these arti-
cles do we find any inference to sustain a theory that
priorities based upon date of filing'exist between appli-
cations for change. As we b.ave.already~pointed out in
our Opinion V-388, addressed to you,‘yourpHmary con-
siderationas regards applicationsto change is the pub-
lic welfare involved. Absent any statutory directive,
and we find none either express or Lmplled, that priorl-
ties attach because of date of filing-andin view of the
nature of your considerations,we advise you that no
priorities based upon date of,fil,lngexist between the
various applicationsfor change.nowpendgng relative to
furnishingwater to the Texas City-Galvestonarea.
                                   .~,
          For the same reasons, we conclude that no priori-
ties exist~by reason of one applicant having applied first
to extend his canal system in order to accomplish the
change, or his having first described,certainacreage which
he desires to irrigate by reason of the change. Again we
point out that your primarg considerationin the matter of
change is the public welfare involved, and we know of no
g00a reason, statutory or otherwise,which binds you on
grounds of priority to grant the applicationof one over
the application of another. In our opinion, you are free
to grant any or all of the pending applicationswithin your
sound discretion as to the arrangementwhich will best serve
the public welfare.




                         (1) The general rule that, absent
                 substantiallychanged conditions,adminlstra-
                 tive boards may not rehear denied applica-
                 tions In the face of concluded or pending
                 judicial ascertainmenton the merits of a
                 Board18 decision, is not applicableunder
                 the facts presented to the Board of Water
                 Engin-+, since It is apparent that both
Bon. E. V. Spence - Page 13 - V-411


          the trial court and the Court of Civil
          Appeals were concerned through aeclara-
          tory judgment,not with the merits of
          the Board of WaQer Engineers' decision,
          but only ppithits right and &risdiction
          to hear at all.applicationsfor change of
          purpose and place of use of permitted
          waters. Under such circumstancesthe
          Board may rehear the applicationwithout
          a finding of changed conditions. Hagno-
          ;p&v. Wew Process Company, lOJ+9. W. (2)
              .
                  (2) Under the facts presented
          the judgment of the trial court was entire
          and Inured to the benefit of non-appeal-
          ing parties. Lockhart v. A. W. Snyder
          Ikco., 163 9. W. (2) 385. The result
          reacbed'is fiarther supported by the rule
          that courts may not exercise the dlscre-
          tl.6nconferred by the Legislatureupon
          administrativebodies. Railroad Com-
          mlsslon V. Shell, 161 9. W. (2) 1022; Fed-
          eral CommunicationCommlsslon v. Pottsvllle
          Broadcasting Co., 309 U. 9. 134.
                  (3) No priorities based upon date
          of filing exist between applicationsto
          change purpose and place of use of per-
          mitted waters.
                                  Yours very truly
                             ATTORE'EYG~      OF TREAS




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