10th Appeals Court Casts Out Lawsuit Against BRA

State agency does not meet waiver terms allowing lawsuit
Lost: A last chance to buy renewable hydroelectric power

Waco -- Electric consumers in Ft. Worth, Granbury,
Midlothian and Waxahachie lost their last chance at cheap,
renewable and environmentally friendly hydroelectric power
when an appeals court ruled in favor of the Brazos River
Authority.

The Brazos Electic Power Co-op, which has bought electricity
from the Brazos River Authority since 1941, cannot sue the
owner of the hydroelctric project at Possum Kingdom for
breach of contract, according to a recent holding of the
appeals court.

It is precluded from doing so by common law, which protects
the authority of a sovereign state from lawsuits, even
though the BRA has entered into three separate contracts
with Brazos Electrical Power Co-Op at the time the dispute
arose in 2007. The Co-Ops lawyers had argued that
constituted a waiver of sovereign immunity and the 414th
State District Court concurred.

The BRA appealed to the 10th Court of Appeals, which
released its holding on June 25.

At the time of the alleged breach of contract, the BRA
determined that operating and maintaining the Morris
Sheppard Dam was too cost prohibitive to allow further
exercise of its contract with Brazos Electric. The board
decided to take 25 megawatts of sustainable electrical power
off the grid and the Co-Op sued, alleging the 414th State
District Court at Waco had jurisdiction because the
Authority had entered into a Power Supply Contract in 1991,
a Facility Cost Agreement in 2007 and a Facility Use
Agreement also dated in 2007 - all subject to the approval
of the Federal Electric Regulatory Commission.

That regulatory agency has issued not one, but two operating
permits and its inspector wrote glowing reports about the
excellent condition of the electrical generating equipment
and powerhouse.

One operating permit was issued so that BRA could continue
to produce electrical power; they other was for BRA to turn
over its operations to Brazos Electric.

In fact, in all the years of its operation, the Morris
Sheppard Dam has never failed an inspection. It went on-line
in 1942.

In support of its allegation of jurisdiction, the Brazos
Electric stated "Even though BRA is a 'local government
entity' under the Local Government Code, the Texas
Legislature waived BRA's governmental immunity from
suit...Brazos Electric's claims involve BRA's material
breaches of three contracts each of which state essential
terms providing goods or services as set forth in Section
271.152 of the Local Government Code."

In his holding written for the Court, Mr. Justice Rex Davis
wrote, "We hold that Brazos Electric's claim for breach of
the Power Supply Contract and the Facilities Cost Agreement
do not come within Section 271.152's waiver."

The statute says, "A local governmental entity that is
authorized by statute or the constitution to enter into a
contract and that enteres into a contract subject to this
subchapter waives sovereign immuity to suit for the purpose
of adjudicating a claim for breach of the contract, subject
to the terms and condition of this subchapter."

There is further controversy stemming from the same decision
of the BRA because it sold multimillion dollar bond issues,
then failed to spend some $3.8 million of the funds thus
raised. The SEC has opened an investigation of the
practice.