Tex. Propane Gas Ass'n v. City of Hous.

622 S.W.3d 791

TEXAS PROPANE GAS ASSOCIATION, Petitioner,

v.The CITY OF HOUSTON, Respondent

NO. 19-0767

Supreme Court of Texas.

Argued October 29, 2020

Opinion delivered: April 16, 2021

Rehearing Denied June 11, 2021

Brent Webster, Houston, Natalie D. Thompson, Ryan Lee Bangert, Atty. Gen. W. Kenneth Paxton Jr., Kyle D. Hawkins, for Amicus Curiae.

Tiffany Sue Bingham, Judith L. Ramsey, Ronald C. Lewis, Houston, Collyn A. Peddie, Suzanne Reddell Chauvin, Houston, for Respondent.

Mary Elizabeth Smith, Austin, for Other interested party.

Leonard Barton Smith, Jane M. N. Webre, Austin, William C. Cochran, Elizabeth G. Bloch, Austin, for Petitioner.

Chief Justice Hecht delivered the opinion of the Court, in which Justice Guzman, Justice Lehrmann, Justice Devine, Justice Busby, Justice Bland, and Justice Huddle joined.

Texas comprehensively regulates the liquefied petroleum gas (LPG)¹ industry through the LPG Code² and agency regulations³ that "preempt and supersede any [city] ordinance".⁴ The Texas Propane Gas Association (TPGA)⁵ has sued the City of Houston for a declaratory judgment that its ordinances regulating the LPG industry, to include imposing criminal fines for violations, are preempted by state law. Two jurisdictional challenges the City has made to the suit are the only issues before us in this interlocutory appeal. First, the City argues that civil courts lack subject-matter jurisdiction to adjudicate TPGA's preemption claim because the local regulations it challenges carry criminal penalties. We conclude that TPGA's claim is not a "criminal law matter" that must be raised in defense to prosecution. Second, the City argues that TPGA cannot challenge the City's LPG regulations "en masse" but only those that have injured at least one of its members. Although the City frames this argument as a challenge to TPGA's standing, we conclude that it is really a merits challenge and that TPGA has demonstrated standing to bring the singular preemption claim it has pleaded. We reverse the judgment of the court of appeals⁶ and remand the case to the trial court for further proceedings.

I

The State has regulated the LPG industry for more than 60 years. In 1959, the Legislature enacted the LPG Code,⁷ which directed the Railroad Commission to "promulgate and adopt ... adequate rules, regulations, and/or standards pertaining to any and all aspects or phases of the LPG industry ... which will protect or tend to protect the health, welfare, and safety of the general public."⁸ In response, the Commission has adopted comprehensive statewide LPG regulations⁹ that the parties refer to as the LP-Gas Safety Rules. The LP-Gas Safety Rules prescribe various monetary penalties for violations.¹⁰ In 2011, the Legislature added Section 113.054 to the LPG Code:

The rules and standards promulgated and adopted by the commission under Section 113.51 preempt and supersede any ordinance, order, or rule adopted by a political subdivision of this state relating to any aspect or phase of the liquefied petroleum gas industry. A political subdivision may petition the commission's executive director for permission to promulgate more restrictive rules and standards only if the political subdivision can prove that the more restrictive rules and standards enhance public safety.¹¹

Four years later, the City adopted three ordinances amending its Fire Code,¹² which is modeled on the 2012 International Fire Code. The amended Code now includes Chapter 61, entitled "Liquefied Petroleum Gases".¹³ This was the City's first venture into regulating activities involving LPG. The Code imposes monetary penalties for a violation that range from $500 to $2,000 per day.¹⁴

TPGA brought a declaratory judgment action against the City of Houston and several other cities,¹⁵ asserting the defendants' local LPG regulations have not been approved by the Commissioner's executive director and, under Section 113.054, are therefore preempted by the LP-Gas Safety Rules. In response, all defendants but the City either adopted the LP-Gas Safety Rules or settled with TPGA. Only the City contested TPGA's assertions. TPGA asserts that under Section 113.054, the LP-Gas Safety Rules "preempt and supersede any ordinance, order, or rule adopted by a political subdivision of this state relating to any aspect or phase of the liquefied petroleum gas industry" (emphasis in original), whether in Chapter 61, other provisions of the Fire Code, or other City regulations, such as those in its Building Code. "Alternatively," TPGA asserts that the LP-Gas Safety Rules preempt the City's regulations that are more restrictive than the LP-Gas Safety Rules.¹⁶

TPGA's pleadings recount the history of Section 113.054's enactment from its perspective. The LPG industry, TPGA explains "is heavily regulated", both by the State and also "by local governments that [have] ... adopted local rules that substantially differ[ ] from the ... LP-Gas Safety Rules." TPGA asserts in its pleadings that "one of the challenges facing the LP-Gas industry [is] local rules that deviate from internationally and nationally accepted LP-Gas standards for no rhyme or reason". "The inconsistent, hodge-podge nature of local rules, especially local rules that deviate substantially and irrationally from the rules adopted by" the State burden the industry. The goal of Section 113.054, TPGA alleges, is a "consistent regulatory scheme for the LP-Gas industry" to relieve the industry of "the burden of inconsistent local regulation". TPGA further alleges that in a meeting between its representatives and the City's mayor and attorney, the City officials "made clear that Houston would continue to regulate the LP-Gas industry within its jurisdiction as it wished without regard to § 113.054".

TPGA's pleadings assert that "[o]ne or more of [its] members have been adversely affected by" the City's enactment of local regulations that differ from the LP-Gas Safety Rules and describe five instances in which the City has enforced LPG regulations that differ from the LP-Gas Safety Rules. In four of the five, it is unclear whether the incident involved one of TPGA's members. The fifth example involves a member who was charged $2,180 in permit fees for installing an LPG tank in a manner that violated the amended Fire Code, even though the installation complied with the LP-Gas Safety Rules.

The parties filed cross-motions for summary judgment on the merits. The City's motion also included a plea to the jurisdiction. The trial court denied both sides' motions and the City's plea to the jurisdiction. The City appealed the trial court's refusal to dismiss for lack of jurisdiction.¹⁷ On appeal, the City argued that because its regulations can result in the imposition of fines, they are criminal in nature and beyond challenge in a civil action. The City also argued that TPGA lacks standing to challenge the City's regulations without showing injury to a TPGA member for each discrete regulation challenged. The court of appeals disagreed with the former argument¹⁸ but agreed with the latter¹⁹ and remanded the case to the trial court for TPGA to amend its pleadings.

We granted TPGA's and the City's petitions for review. We begin with the City's criminal law argument and then turn to its standing argument. It bears emphasizing that the merits of TPGA's preemption claims are not at issue here—only its right to proceed on them.

II

A

The Texas Constitution prohibits city ordinances that conflict with state law.²⁰ In City of Laredo v. Laredo Merchants Association , we held that "a local antilitter ordinance prohibiting merchants from providing ‘single use’ plastic and paper bags to customers for point-of-sale purchases" was preempted by the Texas Solid Waste Disposal Act and therefore invalid.²¹ We concluded that the Merchants Association challenging the ordinance was entitled to declaratory relief.²²

Just like the LPG ordinances in the present case, the City of Laredo's ordinance punished violations with monetary fines.²³ The City of Laredo did not contest the trial court's jurisdiction over the suit, but the City of Houston did, as amicus curiae, making exactly the same argument it makes now: that because the ordinance was "penal in nature", it could be challenged "only in defense to a criminal prosecution for violating it."²⁴ The City centered its argument on our decision in State v. Morales , where we held that the trial court lacked jurisdiction over a declaratory judgment action challenging the constitutionality of the Texas statute criminalizing sodomy.²⁵ "It is well settled," we wrote, "that courts of equity will not interfere with the ordinary enforcement of a criminal statute unless the statute is unconstitutional and its enforcement will result in irreparable injury to vested property rights."²⁶ "The underlying reason for this rule," we explained, "is that the meaning and validity of a penal statute or ordinance should ordinarily be determined by courts exercising criminal jurisdiction."²⁷ "For the same reasons that equity courts are precluded from enjoining the enforcement of penal statutes," we concluded, the trial court lacked "jurisdiction to render a declaratory judgment regarding the constitutionality of [the sodomy statute]."²⁸

Morales distinguished our decision a century earlier in City of Austin v. Austin City Cemetery Association .²⁹ There, the Cemetery Association challenged an ordinance prohibiting burials within the Austin city limits north of the Colorado River except in the State Cemetery, the Austin City Cemetery, and the Mount Calvary Cemetery.³⁰ We held that the trial court had jurisdiction to enjoin enforcement of the ordinance, despite the "general rule" that "the aid of a court of equity cannot be invoked to enjoin criminal prosecutions."³¹ Though the ordinance could be challenged in a criminal prosecution or on habeas corpus, we acknowledged, "[a] criminal prosecution is unpleasant to all people who have due respect for the law, and almost...