Texas Court of Appeals, 15th District, 2025

AIRW 2017-7, L.P.; 600 Westinghouse Investments, LLC; 800 Westinghouse Investments, LLC; Texas Commission on Environmental Quality; And Jonah Water Special Utility District v. City of Georgetown, Texas

Texas Court of Appeals, 15th District · Decided November 14, 2025

Opinion

ACCEPTED 15-24-00132-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 11/14/2025 4:23 PM CHRISTOPHER A. PRINE CLERK FILED IN 15th COURT OF APPEALS AUSTIN, TEXAS WILLIAM A. FAULK, III 11/14/2025 4:23:09 PM DIRECT DIAL: (512) 840-4549 [email protected] CHRISTOPHER A. PRINE Clerk November 14, 2025 VIA e-Filing Court of Appeals for the Fifteenth Judicial District ATTN: Christopher A. Prine, Clerk of Court P.O. Box 12852 Austin, Texas 78711 Re: Court of Appeals No. 15-24-00132-CV; AIRW 2017-7, L.P.; 600 Westinghouse Investments, LLC; 800 Westinghouse Investments, LLC; Texas Commission on Environmental Quality; and Jonah Water Special Utility District v. City of Georgetown, Texas Dear Mr. Prine: Pursuant to your correspondence regarding the setting of oral argument dated October 2, 2025, the City of Georgetown, Texas hereby files the attached exhibit (“Exhibit 1”) to be offered to the Court during its oral argument on November 20, 2025.

Thank you for your attention to this matter. Please do not hesitate to contact the undersigned with any questions or concerns.

Respectfully submitted,

________________________________ William A. Faulk, III State Bar No. 24075674 [email protected] Counsel for the City of Georgetown, Texas

Enclosure

SPENCER FANE LLP | 816 CONGRESS AVENUE, SUITE 1200, AUSTIN, TX 78701 | spencerfane.com Georgetown Ex. City of Georgetown Ex. 1 – Summary of Authorities and Argument Standard of Review – Substantial Evidence Judicial review of an agency’s administrative action is governed by the Texas Administrative Procedure Act and Tex. Water Code § 5.351. Reviewing courts evaluate whether TCEQ’s decision violated statute or constitution, exceeded statutory authority, was made through unlawful procedure, was affected by legal error, lacked substantial evidence, or was arbitrary and capricious. 1 Substantial-evidence review asks two questions: 1. Do the underlying fact findings logically support TCEQ’s ultimate conclusions and authority to issue the permit?

2. Are those findings reasonably supported by the record?

An agency’s action is arbitrary or an abuse of discretion if it fails to consider a mandatory factor, considers an irrelevant factor, considers appropriate factors but reaches a completely unreasonable result, or fails to follow its own regulations. 2 Why the Court Should Rule for the City / Affirm the District Court A. Legal Error: TCEQ Misapplied the Legislature’s Regionalization Mandate Texas law requires TCEQ to “encourage and promote” regional wastewater systems and to use all reasonable methods to implement this policy under Tex. Water Code §§ 26.003 and 26.081.

TCEQ’s rules require applicants to request service, obtain cost information, and document those efforts, which AIRW did not do, and TCEQ did not enforce.3 TCEQ’s failure to apply statutory regionalization requirements constitutes unlawful procedure and arbitrary action.

B. Lack of Substantial Evidence: No Legally Supportable “Denial of Service” TCEQ’s conclusion that the City “denied service” lacks record support and is contrary to established law.

Where service is not denied for lack of capacity to serve, there was no final denial of service in the absence of a denial by the City Council.4 TCEQ’s finding to the contrary lacks substantial evidence and is against clear law.

C. Arbitrary & Capricious: TCEQ Considered an Irrelevant, Prohibited Factor TCEQ relied heavily on an alleged $20 million future “diminution in value” to the developer if annexed. This is not a permissible “cost of connection,” is speculative, and falls outside TCEQ’s jurisdiction, which does not include evaluating property-value impacts. 5 The real, documentable costs (construction costs) favored regionalization, as both parties’ evidence demonstrated connection to the City was less expensive than a standalone plant. 6 TCEQ ignored relevant statutory factors and relied on factors it has deemed irrelevant—classic arbitrary and capricious conduct.

1 Tex. Architectural Aggregate, Inc. v. Tex. Comm’n on Env’t Quality, No. 03-22-00169-CV, 2023 WL 8459511, at *4 (Tex. App. Dec. 7, 2023) (citing Tex. Gov’t Code § 2001.174(2)(A)–(F)); see Tex. Water Code § 5.351. 2 Tex. Gov’t Code Ann. § 2001.174(2); City of El Paso v. Pub. Util. Comm’n of Tex., 883 S.W.2d 179, 184 (Tex. 1994); Pub. Util. Comm’n v. Gulf States Utils., 809 S.W.2d 201, 207 (Tex. 1991); Heritage on the San Gabriel Homeowners Ass’n v. Tex. Comm’n on Env’t Quality, 393 S.W.3d 417, 423 (Tex. App.—Austin, 2012). 3 2 AR 146; 2 AR 74 at bates p. 00077. 4 See City of Denton v. Grim, 694 S.W.3d 210, 215 (Tex. 2024). All conversations between AIRW and the City were between parties unable to unilaterally bind the City. 2 AR 142; 2 AR 102; 2 AR 101. 5 See Concerns Outside of TCEQ’s Authority, available at: https://www.tceq.texas.gov/agency/decisions/participation/permitting- participation/concerns-outside-of-tceqs-authority (last visited Nov. 14, 2025).

6 2 AR 151; 2 AR 91.

D. District Court’s Reversal Fits APA § 2001.174 The district court reversed because TCEQ misapplied regionalization statutes, lacked substantial evidence for “denial of service,” and improperly relied on speculative property-value considerations. The Court applies the same standards de novo and should affirm the district court.

Automated Certificate of eService This automated certificate of service was created by the efiling system.

The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Olivia Oswald on behalf of William Faulk Bar No. 24075674 [email protected] Envelope ID: 108083646 Filing Code Description: Exhibit Filing Description: Letter to 15th Court of Appeals Clerk re Georgetown's Exhibit Status as of 11/14/2025 4:32 PM CST Case Contacts Name BarNumber Email TimestampSubmitted Status Patricia Carls 3813425 [email protected] 11/14/2025 4:23:09 PM SENT William Thompson 24088531 [email protected] 11/14/2025 4:23:09 PM SENT Edmond McCarthy 13367200 [email protected] 11/14/2025 4:23:09 PM SENT William Faulk 24075674 [email protected] 11/14/2025 4:23:09 PM SENT John Carlton 3817600 [email protected] 11/14/2025 4:23:09 PM SENT Michael Parsons 24079109 [email protected] 11/14/2025 4:23:09 PM SENT Carlota Hopinks-Baul 24094039 [email protected] 11/14/2025 4:23:09 PM SENT Helen Gilbert 786263 [email protected] 11/14/2025 4:23:09 PM SENT Kellie E.Billings-Ray [email protected] 11/14/2025 4:23:09 PM SENT Sara Ferris [email protected] 11/14/2025 4:23:09 PM SENT Colton Halter [email protected] 11/14/2025 4:23:09 PM SENT Erin K.Snody [email protected] 11/14/2025 4:23:09 PM ERROR Maris Chambers [email protected] 11/14/2025 4:23:09 PM SENT Andrew Davis [email protected] 11/14/2025 4:23:09 PM SENT Todd Disher [email protected] 11/14/2025 4:23:09 PM SENT John Carlton [email protected] 11/14/2025 4:23:09 PM ERROR Kelli Carlton [email protected] 11/14/2025 4:23:09 PM ERROR Erin Selvera [email protected] 11/14/2025 4:23:09 PM ERROR Yahaira De Lara [email protected] 11/14/2025 4:23:09 PM SENT Jennifer Jamison [email protected] 11/14/2025 4:23:09 PM ERROR Bobby Salehi [email protected] 11/14/2025 4:23:09 PM ERROR Jacob Beach [email protected] 11/14/2025 4:23:09 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system.

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