Billion-dollar San Antonio suit against LCRA dismissed by judge

Feb 3, 2010 | Austin American-Statesman by Asher Price | Related Press

The Lower Colorado River Authority scored a major victory over the San Antonio Water System on Monday when a Travis County district judge threw out a lawsuit against the river authority.

San Antonio had sued the LCRA, which provides water to more than a million Central Texans, after a multi-billion dollar water-sharing agreement fell apart last year. San Antonio was seeking $1.23 billion.

But Judge Stephen Yelenosky, in a ruling from the bench following the first public squaring-off between the two sides in court Monday morning, effectively short-circuited the suit, agreeing with an argument from LCRA that it was protected by sovereign immunity rules, which limits suits against governmental authorities.

San Antonio Water System CEO Robert Puente said he would recommend to the SAWS board that they appeal.

“We can’t walk away from this,” Puente said.

In court, San Antonio Water System lawyer Jim George told the judge that LCRA’s “intention was to steal from the people of San Antonio.”

George argued that LCRA was in breach of contract and never intended to follow through on the proposed water deal. In its suit, the San Antonio system claims the river authority killed the project to keep water in its basin for lucrative power plant deals. The system is seeking $1.23 billion, a figure it bases largely on the cost of finding an equal amount of water from desalination.

George said San Antonio had spent at least $42 million to study the feasibility of the water-sharing project, to reserve the water and to pay its own staff working on the deal.

He asked the judge for more time so that SAWS could depose current and former LCRA board members and staff members, state Sen. Glenn Hegar, R-Katy, whose district includes the LCRA’s lower basin, power industry officials, and Matagorda County Judge Nate McDonald.

“This is a complete fishing expedition,” Pete Schenkkan, a lawyer for LCRA, told the judge. “This discovery is enormously expensive and time consuming, delaying resolution of this issue.”

LCRA argued that it is protected by sovereign immunity meant to shield the public from the costs and consequences of improper actions by a government agency and deprives courts of the authority to hear a case at all.

Yelenosky agreed, saying that there was no “explicit waiver” to the sovereign immunity rule that would allow SAWS to press forward.

“The judge’s view of law in this case was that LCRA was right,” said Robert Cullick, a spokesman for the river authority.

But George said the ruling had important negative consequences since LCRA could pull out of contracts with other entities, including the City of Austin.

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