In the Courts

Water Cases

Crystal Clear Special Util. Dist. v. Jackson, 142 F.4th 351 (5th Cir. 2025).

On appeal from the United States District Court for the Western District of Texas, the 5th Circuit Court of Appeals (“5th Circuit”) held that 7 U.S.C.S. § 1926(b) does not expressly preempt Texas Water Code (“TWC”) § 13.2541 but remanded the case back to the district court to determine whether TWC § 13.2541 is preempted by conflict preemption.

Crystal Clear Special Utility District (“Crystal Clear”) holds a water certificate of convenience and necessity (“CCN”) that encompasses a proposed development in Hays County. The landowner of the proposed development petitioned the Public Utility Commission of Texas (“PUC”) for decertification of the property from Crystal Clear’s CCN under TWC § 13.2541, which provides that a landowner is entitled to the expedited release of property from a CCN if certain conditions are met. Before the PUC issued an order granting the decertification, Crystal Clear sued the PUC Chair and Commissioners in their official capacity, alleging that the PUC officials’ conduct deprived Crystal Clear of its rights under 7 U.S.C.S. § 1926(b), a federal law providing water and sewer utility service providers with federal loans protection for “the service provided or made available” by the indebted provider. The district court granted a preliminary injunction enjoining the PUC from granting the decertification, finding that Crystal Clear was likely entitled to the protections of § 1926(b) based on satisfaction of the “physical ability” test established in Green Valley Special Utility District v. City of Schertz, 969 F.3d 460 (5th Cir. 2020) (en banc) and finding that Crystal Clear was likely to succeed on the merits of its claim that § 1926(b) preempts TWC § 13.2541.

The 5th Circuit held that the district court did not err by concluding that Cystal Clear will likely satisfy Green Valley’s “physical ability test,” but the district court did err to the extent it held that § 1926(b) expressly preempts TWC § 13.2541 since § 1926(b) contains no such explicit preemptive language. Absent express preemption, Congress may nevertheless implicitly preempt state law by directly conflicting with state law such that complying with both federal and state law is impossible or state law creates an impermissible hindrance to the accomplishment of Congress’ objectives in passing the federal law. Because the district court did not perform an analysis of conflict preemption, the 5th Circuit declined to consider whether conflict preemption applies in this instance. The 5th Circuit summarizes, “[b]ecause conflict-preemption analysis may confirm that we face an unanswered but important question of law, we REMAND this case to the district court so that it can determine, in the first instance, whether § 1926(b) otherwise preempts TWC
§ 13.2541 and, relatedly, so that it may assess all relevant preliminary injunction factors as necessary.” The 5th Circuit issued an order staying the preliminary injunction and retaining jurisdiction over the limited remand.

Save the Cutoff v. Iron River Ranch II, L.L.C., No. 24-40717, 2025 U.S. App. LEXIS 20005 (5th Cir. 2025).

On appeal from the United States District Court for the Eastern District of Texas, the 5th Circuit affirmed the district court’s holding that movement of previously placed fill material by rainfall does not constitute a continuing discharge from a point source under the Clean Water Act.

Litigation Cases

The question before the 5th Circuit arises from a citizen suit brought by the non-profit organization Save the Cutoff (“STC”) against Iron River Ranch II and Ironhorse (“Defendants”) on the basis that Defendants violated 33 U.S.C. § 1311(a), which prohibits the “discharge of any pollutant by any person” that is not in compliance with the standards and effluent limitations for point sources established by the Clean Water Act. STC alleges that in February 2022, the Defendants illegally placed fill material in Cedar Creek without first obtaining the proper permits. STC further alleges that fill remains present in Cedar Creek and is discharged when it rains. The district court dismissed STC’s claim for lack of subject-matter jurisdiction, which the 5th Circuit reviewed de novo.

The 5th Circuit held that the district court did not err in granting Defendants’ motion to dismiss. Federal district courts have jurisdiction over citizen suits brought by a plaintiff against any person “who is alleged to be in violation of an effluent standard or limitation” under the Clean Water Act. The Supreme Court of the United States previously held that the language “to be in violation” creates the requirement that citizen-plaintiffs must allege “a state of either continuous or intermittent violation” and thus, “wholly past violations” do not suffice. STC argued that though no new fill has been placed in Cedar Creek since 2022, Defendants have engaged in a continuous violation by leaving the fill in place. The 5th Circuit disagreed—identifying the fatal flaw in STC’s argument as its failure to allege that Defendants continue to discharge fill from a point source. The 5th Circuit reiterated its previous finding that drainage over a broad area caused by rainfall is not a point source and found that the continued movement of fill material is a “residual effect” of a previous discharge rather than a continuing discharge. Accordingly, the 5th Circuit affirmed the district court’s judgment dismissing STC’s claim for lack of jurisdiction.

Morath v. Tex. State Tchrs. Ass’n, 717 S.W.3d 71, 73 (Tex. App.—Austin 2025, pet. filed).

The Third Court of Appeals addressed the validity of a Commissioner’s promulgated rule, which included a provision giving the an “operating partner” the “final authority” over its staffing. Because the Court construed “final authority” to effectively mean “unreviewable” by the Court, such a granting of authority was inconsistent with the Legislature’s organic statute that authorized the Commissioner’s power for administrative rulemaking—thereby declaring the applicable provisions invalid.

However, the provisions that granted the operating partners authority over their own employees were upheld because those employees did not have the same statutory protection as the public school district teachers.

Safelease Ins. Servs. LLC v. Storable, Inc., 2025 Tex. Bus. 28; 2025 TXBC LEXIS 31 (3rd Div. July 18, 2025).

SafeLease sued Storable claiming violation of antitrust law and requested production of the customer list in dispute. Generally, as discussed in detail in the case, production of a purported trade secret may be required if (1) the information is not a trade secret, or (2) if the information is a trade secret, the requesting party meets its burden showing that production of such information is “necessary for a fair adjudication of its claims.” In this case, the Court, in dicta, indicated that customer lists in Texas “are not inherently trade secrets,” because the customers may be a readily ascertainable class. Yet, the Court opined that even if in this case such a list was a trade secret, the requesting party sufficiently established the necessity of production and the Court had power to provide adequate protection against disclosure in any event.

Air and Waste Cases

Private Suit Against the Environmental Protection Agency (“EPA”) for Failure to Regulate Per- and Polyfluoroalkyl Substances (“PFAS”) Dismissed.

In June 2024, a group of property owners in Johnson County, Texas (“Plaintiffs”) filed suit against the EPA under the citizen suit provision of the Clean Water Act (“CWA”), alleging that the EPA has a non-discretionary duty to regulate PFAS in biosolids, which it failed to fulfill. The Plaintiffs further argued that the CWA directs the EPA to produce a biennial (every two years) report reviewing and discovering new toxins and to promulgate regulations on identified toxins within nine months.

After briefing on the claims, a federal judge dismissed the lawsuit against the EPA in its entirety in late September 2025, finding that the alleged two-year deadline applies only to the review itself, not to identifying or regulating newly identified pollutants, and that the court does not have jurisdiction over the case. The Plaintiffs are undecided on whether they will appeal at this time. Farmer et al. v. United States Environmental Protection Agency et al., No. 1:2024cv01654, (D.D.C. 2025).

The Plaintiffs also have an active case against Synagro Technologies, Inc. and Renda Environmental, Inc. for product liability, negligence, and private nuisance, alleging that the Defendant should have known the fertilizer that they produced, sold, and/or land applied was unreasonably dangerous and failed to provide adequate instructions or warnings. While a motion to dismiss arguing derivative governmental immunity and the right to utilize fertilizers under the Texas Right to Farm Act is pending, the case remains ongoing. Alessi v. Synagro Technologies Inc., No. 3:25-cv-00445. (Dist. Ct., N.D. Texas).

“In the Courts” is prepared by Samantha Tweet in the Firm’s Districts Practice Group, Nathan Marroquin in the Firm’s Litigation Practice Group, and Mattie Neira in the Firm’s Air and Waste Practice Group. If you would like additional information or have questions related to these cases or other matters, please contact Samantha at 512.322.5894 or stweet@lglawfirm.com, or Nathan at 512.322.5886 or nmarroquin@lglawfirm.com, or Mattie at 512.322.5804 or mneira@lglawfirm.com.