A unanimous Texas Supreme Court has reversed two El Paso Court of Appeals’ decisions holding that it lacked jurisdiction to consider a landowner’s appeal of the district’s denial of its request for party status to contest a permit application.
Cockrell Investment Partners, L.P. v. Middle Pecos Groundwater Conservation District; Ty Edwards, in His Official Capacity as General Manager of the Middle Pecos Groundwater Conservation District; and Fort Stockton Holdings, L.P. (No. 23-0593, 23-0742) arose from a dispute over a groundwater-production permit application that would allow a landowner, Fort Stockton Holdings, to pump twice the water from the Edwards-Trinity Aquifer so that it could sell the water to Midland, Abilene, and San Angelo. Cockrell, an adjoining landowner, objected but didn’t seek party status or participate in the proceeding. Though the District eventually denied the application, the applicant leased its groundwater rights to Republic Water Company of Texas, which applied for a new permit to expand pumping. This time Cockrell obtained party status in the administrative proceeding. When Republic sued the District for determining that its application was administratively incomplete, Republic, Fort Stockton, and the District reached a settlement under which Fort Stockton would get some expanded capacity but not as much as originally requested. Republic thus withdrew its application.
In 2017 Fort Stockton asked the District to amend its prior application to conform to the settlement agreement. The agreement treated the 2017 amendment as a continuation of the original proceeding commenced in 2009. Cockrell, a non-party to the 2009 proceeding, sought party status, but the District denied it because Cockrell missed the deadline to seek party status. It then approved Fort Stockton’s amended permit. When Fort Stockton sought to renew the permit in 2020, Cockrell again sought party status. The District approved the renewal without acting on Cockrell’s request. Cockrell filed several lawsuits for judicial review but lost all of them, including one on the basis of sovereign immunity. The El Paso Court of Appeals affirmed in all of them. Cockrell petitioned for review, which SCOTX granted.
In an opinion by Justice Sullivan, the court reversed. First, the court addressed with the question of whether § 36.251, Water Code, waived the District’s immunity from suit. The statute requires a protestant to be “affected by and dissatisfied with” the District’s rule or order,” be an “applicant” or a “party” to the hearing or else appealing a rule or order other than the District’s decision on an application, and exhaust all administrative appeals to the District. The court held that Cockrell satisfied all three requirements. As to the first prong, there was no question that Cockrell was “dissatisfied” with the District’s refusal to confer party status. Moving to the second prong, the court noted that the statute applies only if the District issued the permit after a contested hearing. But in this case, Cockrell didn’t challenge the permit, but the District’s refusal to confer party status. The statute thus allows a non-party to challenge rules or orders other than a permit granted after a contested case proceeding.
Turning to the third requirement, the court observed that “[u]nder the exhaustion-of-remedies doctrine, an aggrieved party generally must seek all available relief from an agency before seeking any relief from a court.” Under the District’s rules, a “litigant must wait a certain amount of time after it requests rehearing of a decision before it files suit.” Once the District denies rehearing, either by order or operation of law, “a litigant’s administrative remedies are considered ‘exhausted,’ satisfying Section 36.251(c)’s finality requirement.” Here District rules variously required either a 45-day or 90-day waiting period from the date of the rehearing request. Here Cockrell didn’t wait 90 days because it thought the 45-day rule applied. But, the court ruled, it didn’t matter because those deadlines only applied to
“the appeal of a decision ‘on a permit.’” Because Cockrell challenged a denial of party status, not the decision on the permit, the rules didn’t apply. The non-party Cockrell “didn’t have to follow Section 36.412’s procedures to exhaust its administrative remedies. In contrast, an applicant or a party not just can, but must, use Section 36.412 to exhaust its remedies before suing the District.”
Moreover, the District’s rules provided a rehearing process for “any matter not covered under any other section of these rules.” Since the rule entitled Cockrell to make a request for reconsideration of the denial of party status and he properly did so, the District “implicitly denied Cockrell’s underlying requests for party status when it issued its final decisions granting [Fort Stockton’s] permit applications. After all, the final decisions effectively denied as moot Cockrell’s outstanding requests for intervention.” The deadline was thus 20 days after the District granted the permits. Cockrell requested rehearing 10 days after the District granted the permits in 2017, and 20 days after it renewed the permits in 2020. And if the District doesn’t do anything about such a request, the request is denied by operation of law after 45 days. In this case, those dates came up on September 11, 2017, and August 20, 2020. Since Cockrell waited until after those dates to sue, it exhausted its administrative remedies. Cockrell met the three statutory requirements.
The court reversed the court of appeals’ judgments and remanded the cases to that court to determine the District’s and Fort Stockton’s remaining jurisdictional arguments. If that court determines it has jurisdiction, the court directed, it must determine the merits of Cockrell’s appeals.
