In a case involving the former Chapter 313 tax limitation statute, the 15th Court of Appeals has affirmed a trial court order granting the Comptroller’s plea to the jurisdiction in a case in which the Comptroller withdrew a certificate of limitation after the law expired.
ENGIE IR Holdings LLC and Hamlin Collegiate Independent School District v. Kelly Hancock, Acting Texas Comptroller of Public Accounts (No. 15-24-00058-CV; September 18, 2025) arose from ENGIE’s 2022 application to Hamlin Collegiate ISD to a Chapter 313 agreement for a solar powered electric generating facility. The estimated project cost was $520 million. The district approved the application and submitted it to the Comptroller. After some amendments to the application, the Comptroller issued a certificate of limitation, contingent on the district’s approval and execution of a value limitation agreement by Chapter 313’s expiration date of December 31, 2022. But when the district sent a draft contract to the Comptroller for review, it revealed that ENGIE had not yet established a right to transact business in Texas and did not have active franchise tax standing (a prerequisite for a 313 limitation). It turned out that when the district submitted the original application to the Comptroller, it showed ENGIE’s standing, but that information changed a few weeks later unbeknownst to the Comptroller.
ENGIE explained to the Comptroller that the entity applying for the limitation had merged into ENGIE IR and failed to update the application to replace its name and Texas Franchise Tax with that of the successor. For some reason, however, ENGIE decided not to amend the application because, it claimed, the Comptroller “disallowed” amendments after it had issued a certificate. It also declined to advise the Comptroller that the application only needed to be supplemented, rather than amended, to reflect ENGIE’s successor-in-interest. ENGIE cited the huge number of last minute 313 applications as the reason for that decision. ENGIE and the district argued that it didn’t have to do anything because since the new entity “stepped into [the applicant’s] shoes,” it became the applicant “by operation of law and without any transfer or assignment.” ENGIE and the district went ahead with the execution of the agreement on December 19, less than two weeks for Chapter 313 expired. But when the district sent the Comptroller a copy of the agreement in January, the Comproller informed the districr and ENGIE that the Comptroller was withdrawing the certificate because the agreement didn’t comply with Chapter 313. After the Comptroller denied a request to rescind its withdrawal, they sued on the basis that the Comptroller acted without legal authority (ultra vires). They moved for traditional summary judgment, while the Comptroller filed a plea to the jurisdiction. The trial court granted the plea but did not act on the motion. ENGIE and the district appealed.
In an opinion by Chief Justice Brister, the court of appeals affirmed. ENGIE and the district argued three ultra vires acts: (1) withdrawing the certificate outside the statutory deadlines; (2) withdrawing the certificate even though ENGIE IR was subject to franchise tax; and (3) depriving ENGIE IR of its statutory right to a contested case hearing. The court ruled that ENGIE and the district failed to allege a valid ultra vires claim. First, the Comptroller “could not have acted ultra vires by withdrawing a certificate that was invalid. The certificate here conspicuously stated that it was ‘no longer valid’ if ‘the information presented in the application changes.” That information changed when the applicant merged into ENGIE IR, which altered its taxpayer status. The court was unimpressed by ENGIE’s reference to Texas and Delaware corporate merger law to argue that the merger didn’t change the applicant’s tax status because the successor entity paid franchise tax and had a taxpayer ID. Even so, the court ruled, ENGIE didn’t update the information as Chapter 313 required. The burden lay on ENGIE to do it, not the Comptroller to suss it out.
Second, the Comptroller’s withdrawal of the certificate several weeks after Chapter 313 expired was neither here nor there because ENGIE and the district didn’t execute a valid limitations agreement in the first place. The Comptroller acted in strict accordance with its rules when it informed the parties on November 30 that the limitation agreement they submitted did not meet statutory requirements. The parties executed the agreement anyway, violating Chapter 313’s requirement that the Comptroller must approve the agreement before the parties execute it. Whatever the parties executed in December, it wasn’t a valid Chapter 313 limitations agreement, so the Comptroller’s withdrawal of the certificate after expiration of the Act was harmless. Additionally, the administrative rules gave the Comptroller discretion “whether to amend or withdraw a certificate when it does not comply with the law or comport with the application. When the Comptroller exercises his discretion not to amend or withdraw a certificate, that decision does not represent an implicit approval of the proposed agreement, especially when the Comptroller has timely notified the parties that the proposed agreement does not comply with chapter 313, as happened here.”
Third, as to ENGIE’s argument about the contested case hearing, the court held that the statute only required a contested case hearing when the Comptroller rejects an application within the 90-day deadline for determining whether to issue the certificate. Here the Comptroller issued the certificate within the deadline and later notified the parties that he couldn’t approve the non-complying agreement. ENGIE further argued that the Comptroller’s withdrawal of the certificate after expiration of the ACT “leaves the Comptroller free to selectively ignore the expiration of his authority, putting at risk every active Chapter 313 Agreement.” The court acknowledged that it was “troubled” by the Comptroller’s belated action “because he plainly ha[d] no statutory or other authority to turn back the clock and re-decide during a new 90-day and 20-day window that, respectively, a certificate of limitation should not issue or that a proposed value limitation agreement does not comply with chapter 313.” But since the agreement wasn’t valid anyway, the court didn’t have to face that problem. The court affirmed.
Justice Farris dissented. She would have held that Plaintiffs met their burden to state an ultra vires claim based on the Comptroller’s withdrawal of approval after the statute had expired. The question of whether the certificate was void ab initio, she argued, was a separate issue that could be resolved in a declaratory judgment action by the Comptroller.
This situation had to be a gut-shot for the applicant and the district. For whatever reason, they let a $520 million project walk out the door as a result of a minor defect that could easily have been timely remedied. And unfortunately, the new version of the law doesn’t apply to renewable energy projects like this one.
