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Click here for the full text of this decision The court reverses that portion of the district court’s judgment that Marshall’s interbasin transfer request required notice and the opportunity for a contested-case hearing and renders judgment that, without the necessity for notice and hearing, the executive director was empowered to amend the permit providing for the interbasin transfer. TWC determined that neither the request for the interbasin transfer or for the industrial-use request were subject to the procedures for general notice and hearing. On March 25, 2002, TWC’s executive director then approved both of Marshall’s request without published or mailed notice of the application. On April 4, 2002, representatives from the city of Uncertain, the Caddo Lake Area Chamber of Commerce and Tourism, the Greater Caddo Lake Association and the Caddo Lake Institute sought to overturn that decision, but their efforts were denied. The plaintiffs then sued Marshall and the TWC in district court and won. The lower court ruled that neither of Marshall’s amendment applications could be approved without notice or the opportunity for a contested case hearing. The TWC and Marshall now appeal, arguing that the executive director was right in not requiring notice, and right in approving the amendments. HOLDING:Affirmed in part; reversed and remanded in part. The court first examines the amendment application for the interbasin transfer under Water Code �11.085. Subsection (a) says that no person may transfer water from one river basin to another river basin without receiving authorization; however, subsection (v)(4) says (a) does not apply to “a proposed transfer from a basin to a county or municipality or the municipality’s retail service area that is partially within the basin for use in that part of the county or municipality and the municipality’s retail service area not within the basin.” Though “retail service area” is not defined, the court rejects the plaintiffs’ argument that Marshall’s retail service area is restricted to its city limits and that Marshall should not be allowed to reach new customers outside its limits. “What this argument overlooks, however, is that the amendment request was designed to recognize Marshall’s historical practice of selling water in both the Cypress Creek Basin and the Sabine River Basin. Acceptance of appellees’ argument that a municipality’s retail service area must be the same both before and after an amendment would vitiate the underlying purpose of section 11.085(v)(4), which is to streamline the approval process and forego unnecessary hearings where a municipality seeks authorization for interbasin transfers within the municipality’s retail service area.” Consequently, �11.085(v)(4) applies, and no notice or hearing requirement applied to the amendment application for the interbasin transfer, and the trial court erred in holding otherwise. Turning to the amendment application for industrial use, the court examines Water Code �11.122(b), which says, “Subject to meeting all other applicable requirements of this chapter for the approval of an application, an amendment, except an amendment to a water right that increases the amount of water authorized to be diverted or the authorized rate of diversion, shall be authorized if the requested change will not cause adverse impact on other water right holders” and others in any greater magnitude than under the circumstances of the original permit. The plaintiffs focus on the first phrase of the statute and says normal notice and contested-case hearing requirements apply in order to resolve whether there will be an increase in diverted water. Meanwhile, the TWC focuses on the words “shall be authorized,” arguing that if the amendment application does not increase the amount of water to be diverted, then it is required to grant the amendment. The court rules that TWC’s argument is premised on a faulty premise that it can dispense with notice and contested-case hearing requirements if it determines the application will eventually approved. There is nothing to suggest that the requirements are applicable to all new permit applications but not to applications for amendments. “Indeed, evidence presented at a contested-case hearing and an examination of whether one party or the other has shouldered its burden of proof are the exact foundational requirements that allow the Commission to make a reasoned decision regarding the requested application.” Finally, the court rules TWC’s executive director had the authority to grant the application for the interbasin transfer without notice, but not the amendment application for industrial use. OPINION:Kidd, J.; Law, C.J., Kidd and Puryear, JJ.

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