Appeals Court Upheld Ruling on Water Contract
The San Antonio Water System must continue to fulfill a 40-year water supply agreement despite previous legal challenges.
Updated on Sept. 29, 2026 in Law
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In September 2026, the Fourth Court of Appeals affirmed the dismissal of a lawsuit filed by the San Antonio Water System against the Bexar-Medina-Atascosa Water Control and Improvement District. The court cited governmental immunity in its decision to uphold the dismissal of the suit, which sought to void a long-term water contract.
Why it matters
The decision ensures that the San Antonio Water System remains obligated to pay for water from Medina Lake under a contract inherited in 2012. The utility had attempted to void the agreement citing poor water quality and alleged violations of the Texas Water Code.
The 40-year contract requires payment for up to 19,974 acre-feet of water annually, totaling over $14 million in payments since January 2023. The utility faces potential costs exceeding $150 million through the agreement's conclusion in 2049.
The players
San Antonio Water System
This is the municipally-owned water utility provider serving the San Antonio area.
Bexar-Medina-Atascosa Water Control and Improvement District
This is the regional water authority that manages water rights and distribution from Medina Lake.
Fourth Court of Appeals
This is the intermediate appellate court in Texas that issued the final ruling on the lawsuit.
The details
The dispute centers on a contract the San Antonio Water System inherited from the Bexar Metropolitan Water District, which mandates payments regardless of water delivery. While the utility stopped taking water from Medina Lake in 2013 and refused to build a $30 million treatment plant, the court ruled the district was protected by governmental immunity.
Timeline
The water supply contract spans a 40-year duration from 2008 to 2049.
The 288th District Court dismissed the utility's lawsuit in June 2025.
The Fourth Court of Appeals issued its ruling in September 2026.
Medina Lake was at 28% capacity on September 29, 2026.
Political Context
The San Antonio Water System cited violations of the Texas Water Code to justify voiding its contract, mirroring broader debates over municipal utility obligations. The ruling limits the scope of claims utility providers can make under the Texas Water Code when challenging established supply contracts.
The court's decision solidifies the financial obligations of the local water utility, which may impact future rate structures for residents. Taxpayers and utility customers remain tied to a contract that requires payments for water even when the supply is not utilized.
The takeaway
This case illustrates the binding power of long-term inter-governmental contracts even when operational needs change. Residents and local stakeholders should monitor utility budget reports to see how these ongoing payment obligations influence infrastructure investment decisions.
Further reading
For more information on legal precedents involving municipal utilities, visit San Antonio Law.
Source note: This article includes information reported by The Dallas Morning News.
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