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                                        The Attorney General of Texas
     JIM MAllOX                                       Xawh 5, 1985
     Attorney General


         Su~rem    Cowl Bulldin        EonorablcTom Craddick                   opinion No.Jl4-2g7
         P. 0. Box12548                chairmalI
         *uatln.lx
                ?0?11-
                    254s               Natural Resourccs~Comittec    '         RW    Jurisdictionover rstes
         5121475.2501                  Texas Eouae of Rqreseotatives           charged to customers outside
         Telex 91~574.1357
         1IIecppi.f 5121475.9255
                                       P. 0. Box 2910                          the boundariesof the Lakevay
                                       Austin, Texas 18,769                    WunicipalUtility District
         714 Jackwn. Suite 700         Dear Representat!.ve
                                                         Craddick:
         Dalles. TX. 75202M.05
         2W742.5944
                                           You inform us that the Lakeway Municipal Utility District
                                       [hereinafterthe Diatrictlwas formed in 1972. and in 1974, a group of
         4S24 Albelt Ave.. suite 150   people living artside the District incorporated under general law
         El Pas.. lX 799052793         provisions and ‘beceme the Village of Lakeway [hereinafter the
         QlY533-34S4                   Village]. Since~incorporation,the Village has not undertaken to
                                       provide water for ita residents. but instead the Village residents
          901 Teaas. Suite 700         purchasevster fcom the District. In that regard you ask:
         Houstoti.D(.
                 77002-3111
         ?13&?23-5555                                 What governments1agency or body has jurisdic-
                                                   tion aver the rates charged to customers outside
                                                   the bc'undariesof the Municipel Utility District
         BM Broadway. Suite 312
         Lubbock. TX. 79491.3479
                                                   of Lakeuay?
         K%i74?-5235
                                          The fixing of domestic utility ratea is a legislativefunction:
                                     however, the st~lteleaislaturena~~delenate the fixinn of such rates
          4309 N. Tenth. Suite 6
          McAllwl. lx. 75501-1555
                                     to a subordinatebody, See Railroad Co&issiou v. %&ton Natural Gas
          512m24547                  &o-,   289 S.U.:!il
                                                       559 (Tu. 1956). The state of Texaa has delegated
                                    .the function of ~fixingand regulatingdomestic retail water rates to
                                     various state s.genciesand political subdivisions. Among these
          209 Main Ptua. SuIta 1w    agencies and politicalsubdivisionsare the Public Utility Commission,
          San Antonio. TX.782C5.2797
                                     the Texas Depcutnent of Water Resources, the municipal utility
          5121225-4191
                                     districts,sod rmmicipalitiaaof the stats.   See V.T.C.S. art. 1446~.
                                     9Il6, 17, 22; ---
                                                   see also Water Code 554.519. -

                                            We believe that the District has the authority initially to fis
                                       rates charged ':o the residents of the Village. Lakavay Nunicipal
                                       Utility District is a political subdivision of the state organizei
                                       under chapter !~4of the Water Code. The District vae organized lr
                                       1972 by order o:Ethe Texas Water Rights Commissionpursuant to article
                                       XVI. section 59 .ofthe Texas Constitution. See Water Code 654.001 et
                                       *     The Distr,Lctis given authorityto supplywater and set rates 5
                                         areas contiguousto or in the vicinity of the district." -See Wats1




                                                                 p. 1336
NonorablaTom Craddick - Page 2   (Jn-297)




Code 154.519(a).(d). Section 54.519 of the Water Code provides in
part:

            (a)  A diatrl~ct may purchase,       construct,
         acquire, own. operate. repair, improve, or extend
         all vorka,    imp!:ovemeuts,facilitias. plants.
         aquipmut, sad a~@iauces oacassazy to provide a
         water system and e sewer system for areas conti-
         guous to or in -the    vicinity of the dietrict
         provided the diat;lct doss not duplicatea service
         of another publishagence. A district shall not
         prwide a water or a sanitary sewer system to
         seIva areas outelde the district which is also
         within a city w:lthoutsecuring a reeolutiou or
         ordinance of the; city granting consent for the
         district to serve the area within the city.

             .   .   .   .

             (d) A district is authorized to asteblish.
          maintain, revise, charge, and collect the rates.
                                              I~-
          fees. rentals. C:olla.or other charaea    -~ the
                                                  for  ~~
          use. services; ,md facilitiesof the water and
          eawer system which provide service to areas
          outside the d,iatrict which are considered
          hacessary and \Rlich may be higher than those
          charged for comparableserviceto residentswithin
          the district.

             (e) The rates. fees. rentals,tolls, or other
          charges shall b#!at least sufficiautto meet the
          expanse of operating and maintainiugthe wstar and
          sewer system serving areas outside the district
          and to pay tL: principal of and iotaraat      and
          redemption price 011 bonds issued to purchase,
          construct,acquire. own, operate,repair. improve,
          or axtend the ayetam. (Enphasiaadded).

     At the time the District began providingwster to the areas now
constituting the Vlllag~~, the Village was not an incorporated
municipality. Thus, it   is our couclusion that    the District has
jurisdictionto establish the initial retail rates for water cervices
to residmts of the Vill.age. See Taxes Water Rights Commission I.
City of Dallas, 591 S.V.Zb 609Tex. Civ. App. - Austin 1979. writ
ref'd n.r.e.1; ef. LoweI: Colorndo River Authority v. City of San
Uarcos, 523 S.U.2d 6ra45     (Tex. 1975) (home rule city presents a
different situation). We note that the Village of Lakaway has no
jurisdictionto regulate the ratee chsrged by the District to its
residents. See Village of Lakeway v. Lakeway Municipal Utility




                                  p. 1337
RouorableTom Craddick- Puile 3    (m-297)




District No. 1, 657 S.U.Z#I912 (Tex. App. - Austin 1983. writ ref’d
n.r.6.).

    Sectiou 11.041(a) of the Water Code authorizes “Ia]ny person
entitled to receive or uae water from any . . . lake or from any
conserved or stored auuply [to] present to the [Texas Water
Comeission]a written pet Lotion”to contest the rates charged by the
District. See Water Code 111.061(a)(l.2. 3); see also Texas Water
Rights ComGion    v. City;of Dallas, suprclat 612. The Texas Water
Commission is further auth,orizad“to fix reasonable rates” for the
water supplied to the Village by the District. See Water Code
112.013. Sea also Texas Water Rights Comissiou v. zy      of Dallas,
a.      Therefore. we conclude  that any person residing within  the
District or the Village my petition the Texas Water Commission to
                            the District. The Texas Water Commission
review the rates charged lty’
may then determinewhether the rates charged by the District to the
residentsof the Village arc reasonable.

                               SUMMARY

             The Lakeway Municipal Utility District is
          authorizedpursuant to section54.519 of the Water
          Code to fix water rates charged to residents of
          the Village of Lakeway. In addition, the Texas
          Water Cossslssio~has jurisdiction, pursuant to
          sections 11.041 and 12.013 of the Water Code, to
          review the rates charged by the District as to
          reasonableness.




                                         JIM        HATTOX
                                         Attorney    General of Texas

 TOM GRRRN
 First AssistantAttorneyGeneral

 DAVID R. RICRARDS
 ExecutiveAssistantAttorney    General

 RICK GILPIN
 Chairman,Opinion Committee

 Preparedby Tony Guillory
 Assistant Attorney General.




                                   p. 1338
EonotabloTom Ctaddick - @&)a 4   (J?+297)




APPROVED:
OPINION COtQlITTEE

Rick Gilpin, Ckairmnn
Colin Carl
Susan Garrison
Tony Cuillory
Jim Woellingct
Jennifer   Riggs
Nancy Sutton




                                  p. 1339
