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Click here for the full text of this decision FACTS:Lakeshore Utility Company Inc. is a water and sewer public utility providing service to customers in two residential subdivisions, Point La Vista and Esquire Estates II, adjacent to Cedar Creek Lake in Henderson County. Because Lakeshore’s customers reside on property just above the lake, a typical gravity- or gradient-flow sewer system cannot be used in the subdivisions. Instead, a more complex and expensive “pressure-effluent system” is used. As a public utility, Lakeshore is subject to the jurisdiction of the Texas Natural Resource Conservation Commission, which is charged with exercising regulatory authority over public utilities and fixing and regulating utility rates. In 1977, the commission accepted a tariff application from Lakeshore and approved monthly rates for both subdivisions as well as tap fees at a flat rate of $200 for water “Tap and Meter Installation” and $600 for sewer “Tap & Installation” at locations requiring “heavy-duty pump[ing] or excessive lift[ing].” Between 1981 and 1989, Lakeshore submitted numerous tariff applications to the commission requesting various changes to the commission’s 1977 approved rates and tap fees. Relevant to this case are the tariff applications Lakeshore made in 1981 and 1989 to increase the amounts approved by the commission in its original 1977 tariff. These applications requested that the commission approve monthly rate and tap-fee increases at each subdivision. In each instance, while awaiting the commission’s decision, Lakeshore charged its customers the increased amounts that it was requesting the commission approve. In response to each application, the commission signed an order dismissing Lakeshore’s request and directing Lakeshore to refund the increased fees collected from its customers while the application was pending. Both Lakeshore and the commission brought suit in district court concerning the 1989 Order. Believing the commission’s continued refusal to increase rates and tap fee amounts was unfair, Lakeshore sought judicial review of the commission’s decision denying its 1989 application. The commission, concerned that Lakeshore was refusing to comply with the 1989 Order, sought to enforce the order under 13.411 and 13.414 of the Water Code. The commission specifically alleged that Lakeshore was actively violating the 1989 Order by failing to refund customers for overcharges and by continuing to charge fees in excess of those approved by the commission. The commission sought civil penalties “for each day Lakeshore . . . has been in violation of the Water Code and the commission’s order since December 21, 1989,” and to enjoin Lakeshore from future violations. The court consolidated the cases and, in a single judgment, found in favor of Lakeshore, reversed the commission’s 1989 Order, and dismissed the commission’s enforcement action. The court of appeals reversed the district court’s judgment and reinstated the commission’s 1989 Order, which required Lakeshore to charge no more then $600 for sewer and $200 for water installation services, and to refund its customers approximately $29,000 in overcharges made during the pendency of Lakeshore’s 1989 tariff application. The commission’s reinstated enforcement action was remanded to the district court for further proceedings. On remand, the commission amended its original pleadings in the district court to seek customer refunds for overcharges dating back to 1981, when Lakeshore began to charge its customers amounts the commission had not approved. The commission claims it amended the original pleadings because it had learned through discovery that Lakeshore had been overcharging its customers for water and sewer services for that period of time. After a bench trial, the district court found that between 1981 and 2001 Lakeshore had knowingly violated the Texas Water Code by overcharging its customers and assessed civil penalties in the amount of $126,400, which related to tap fee overcharges that occurred both before and after the 1989 commission proceedings. The court also ordered Lakeshore to refund $106,417.66 to its customers for equipment, tap fee, and monthly rate overcharges between 1981 and 2001, and to pay its customers $68,851.43 in interest on overcharged amounts, plus attorneys’ fees and court costs. Lakeshore appealed only the parts of the trial court’s judgment that ordered it to 1. pay civil penalties for “knowing” Water Code violations that occurred prior to the 1989 Order; and 2. refund unauthorized charges to customers beyond those Lakeshore was obligated to refund by the 1989 Order. The court of appeals affirmed the civil-penalties portion of the judgment, concluding there was legally sufficient evidence in the record to support the trial court’s finding that Lakeshore knowingly violated the Water Code before the 1989 proceedings. But the court of appeals reversed that part of the judgment requiring Lakeshore to refund customer overcharges that occurred before the 1989 proceedings, holding that, absent a commission order directing a utility to refund or credit unauthorized charges, the Water Code does not authorize a district court action to recover those charges. HOLDING:The court affirms that portion of the court of appeals’ judgment that imposes civil penalties based on Lakeshore’s knowing violations of the Water Code. The court reverses that portion of the court of appeals’ judgment disallowing customer refunds and otherwise affirms the court of appeals’ judgment. Federal courts construing knowledge requirements in environmental regulatory statutes � which provide for criminal sanctions very similar to the Water Code’s civil penalty provision � fa have concluded that the proof necessary to establish a “knowing violation” of a regulation is merely proof that the violator had knowledge of the facts comprising the violation. The court sees no reason to depart from this principle when interpreting the proof required to show a knowing violation under 13.414(a) of the Water Code. The court agrees with the court of appeals that there is legally sufficient evidence in the record to support the trial court’s finding that Lakeshore knew it was charging fees that were not approved on Lakeshore’s tariff schedule by the commission. Accordingly, legally sufficient evidence supports the trial court’s conclusion that Lakeshore knowingly violated the Water Code. The court concludes that, whether or not the 1983 or 1989 Orders were sufficiently broad to cover refunds for the entire 20-year time period in dispute, the commission has statutory authority to pursue an enforcement action in district court to “require [a utility's] compliance with [the Water Code],” and that authority includes the ability to seek refunds when a utility charges fees that the Water Code prohibits. OPINION:O’Neill, J., delivered the court’s opinion.

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