Texas’ Supreme Court has ordered a Travis County judge to quit avoiding a critical question in the fight over Austin’s troubled rail construction plan, known as Project Connect.
In a May 22 ruling, the Court said trial courts can’t simply refuse to rule on jurisdictional challenges to avoid triggering appeals. Chief Justice James Blacklock didn’t mince words, writing that “nothing about this scenario is as it should be.”
The ruling clarifies that courts may not ignore jurisdictional challenges while proceeding to trial, something that will be relevant to a similar case in which the City of McKinney is suing its own citizens to expeditiously validate its airport expansion bonds.
Background
In 2020, Austin voters approved Proposition A, which authorized a property tax increase to fund Project Connect. The original plan promised 20.2 miles of light rail, subway, rapid bus routes, and connections to the airport.
The City of Austin formed a corporation called Austin Transit Partnership (ATP) to implement the project and issue the bonds.
However, the project was significantly scaled back by 2022.
What remained was a 9.8-mile surface line with no subway and no airport link. Community members argued the new plan constituted a “bait and switch,” since voters never approved the scaled-down version.
This led a group of taxpayers to file a lawsuit in 2023 to stop ATP’s bond issuance.
In response, the City of Austin and ATP filed a lawsuit against its own citizens under the Texas Expedited Declaratory Judgement Act (EDJA), seeking to validate the bonds and throw out any legal challenges they may face—including the pending taxpayer lawsuit.
This little-known law allows bond issuers—including cities—to file an expedited declaratory bond-validation lawsuit against a very broad group of defendants, including all taxpayers, property owners, or residents whose rights might be affected by the bonds.
The Office of the Attorney General (OAG) is automatically served in EDJA cases and is tasked with informing the court whether the bonds comply with Texas law.
The OAG responded by filing a plea to the jurisdiction, arguing that neither the City of Austin nor ATP qualifies as an “issuer” under the EDJA. While Austin could meet EDJA’s definition of issuer, it did not issue the relevant bonds. Although ATP issued the bonds, a local government corporation does not qualify as an issuer.
Rather than ruling on this jurisdictional challenge, the City of Austin and ATP urged the court to merely take it under advisement and let the case proceed to trial. If the court affirmed or denied the jurisdictional challenge, it would have triggered an appeal and automatic stay, delaying the expedited process.
Judge Eric Shepperd (D), despite hesitancy, would accept this argument and took the jurisdictional challenge under advisement—skipping the step and proceeding to trial. Interestingly, Judge Shepperd is the same judge who dismissed a separate class-action lawsuit against Project Connect in December 2024.
The OAG appealed Judge Shepperd’s refusal to rule on jurisdiction, arguing this was an implicit denial of the plea. The Fifteenth Court of Appeals dismissed the appeal, finding there was never an order on the jurisdiction for it to review.
The issue was then taken to the Supreme Court of Texas.
The Ruling
Last week, Texas’ Supreme Court ruled in the OAG’s favor, finding that a jurisdictional challenge must always be addressed before proceeding to the merits.
“Proceeding to trial without first resolving the State’s challenge to the court’s authority to do so was an abuse of the district court’s otherwise broad discretion to manage the progress of the case,” reads the opinion.
Chief Justice James Blacklock did not hold back in writing the opinion of the Court.
“Nothing about this scenario is as it should be,” wrote Blacklock. “A court may not withhold a ruling on the government’s properly presented plea to the jurisdiction in order to prevent the government from appealing. And the government may not appeal from an interlocutory order that does not exist.”
The Court therefore construed the OAG’s petition for review as a petition for writ of mandamus that would order the lower court to issue a ruling on the jurisdictional challenge.
“The writ will issue only if the court does not do so. The judgment of the court of appeals is undisturbed,” wrote Blacklock.
Now, the trial court must rule on the OAG’s jurisdictional challenge. If the court denies the plea, the OAG gets an automatic appeal that pauses everything. If the court grants it, ATP’s bond validation suit gets tossed.
The Court acknowledged that defendants can abuse the appellate process to stall cases, but that doesn’t give courts license to ignore the procedural rules created by the Legislature.
Related Litigation
This is not the only case to make recent headlines utilizing the EDJA for a bond-validation lawsuit.
As previously reported, the City of McKinney recently filed a lawsuit against its own citizens to validate airport bonds that its voters have twice rejected. The suit was filed in Travis County, over 200 miles from the affected taxpayers.
In that case, the OAG also argued that the city and its development corporation did not qualify as “issuers” under the EDJA.
The Court’s decision in the Project Connect case directly impacts how courts must handle the OAG’s jurisdictional challenge in the City of McKinney case, requiring the trial court to rule on whether it has authority to hear the bond validation suit before proceeding to trial.
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