In August 2023, the Grace Community Church, a non-denomination Evangelical organization, was nearing the completion of its new church in Woodlands, Texas. One of the final tasks for the Church to complete was installing an eight-inch water tap connection to the main Woodlands water line; the water tap was necessary so that the fire suppression system of the church would be active, allowing for church goers to practice in their place of worship. For installation the Church had to use the Montgomery County Municipal Utility District. The District then, alleged by the Church, quoted them a fixed estimate of $24,900 for installation.
However, before installation, the District stated that the “tap fee” would actually amount to $61,500. When the Church protested the new bill and asked for an explanation for the adjusted price, the District said it's because that’s what the installation rate for commercial-entities is. The Church again protested and clarified to the District that they were a religious organization. The District responded with a recalculated bill of $147,938.85, explaining that a new price was the result of the Church being a tax-exempt entity.
Threatening legal action against the District, the Church said the “new amount was too high,” and the District in response proposed a final quote of $83,780. This new number was reached according to Water Code §49.212(d)(2)(B), which allowed for the district to charge non-taxable entities extra fees to cover the costs of building shared infrastructure, but only if the money spent by the District to build was raised by issuing bonds. It is unclear that the money for the tap installation was from bonds. In September 2023, the Church paid the fee, but claimed it was making the payment “‘under protest and duress.’”
In November 2023, Grace Community Church filed a lawsuit against Southern Montgomery County Municipal Utility District and its Directors. In the 457th District Court, the Church was challenging the local District’s tax as a non-neutral charge that was a disguised tax which imposed a “substantial burden” on the Church’s right to Free Exercise, and that the tax was paid under duress. They invoked two fronts to challenge the tax: 1) The 1999 Texas Religious Freedoms Restoration Act (TRFRA), which used guidelines on religious burden like those in the Sherbert test from Sherbert v. Verner (1963), and 2) 42 U.S.C. §1983, a federal law passed in 1871 to allow Americans to sue state actors in court (this is how the Church would challenge alleged violations of their right to Free Exercise).
The District responded to the Church’s allegations. The District first said, setting just foundations, that the Water Code §49.212 was lawful. In addition, the District argued the way that they charged the Church was consistent with how they charged all other non-taxable entities— the Church was not being singled out because it was religious.
After the District Court made a decision regarding immunity and jurisdiction (not merits of Free Exercise yet) on April 15, 2024, both parties cross-appealed on May 19, 2025, to the Court of Appeals, Ninth District of Texas at Beaumont. This was an interlocutory appeal, an appeal in the middle of a lawsuit rather than after a decision was made, on issues of governmental immunity which resulted in the Court of Appeals denying immunity of the District or the Directors and remanding the decision back to the District Court. The case is ongoing.
This creates the constitutional question: Did the Municipal Utility District's water tap fee violate Grace Community Church's Free Exercise of religion guaranteed under the First Amendment? I think yes, and I have a chain of reasons why:
Firstly, I think the tax-exempt status of the institution removes additional indirect-taxes levied against the Church. The increased price of $83,780 from $24,900 was justified by the District using Water Code §49.212(d)(2)(B), yet the District has provided no evidence that the project to install the tap had been paid for with bonds. If it wasn’t paid for with bonds, then the price of $83,780 seems more like a hostile action against the church than a neutral application of the policy.
Second, I think the means by which the District went about demanding the money was coercive; the church could not get the water tap that they needed to open, and therefore to provide its religious services to its community unless it paid the disputed charge in full. I think the option of either opening the church’s doors for religious services or keeping them shut imposes a substantial burden preventing free exercise.
Third, I think the non-neutral application of the Water Code policy and the substantial burden on the Church violate both the First Amendment's Free Exercise Clause and TRFRA.
Fourth, even if someone was to argue that the Church was nonetheless able to pay the fee, I ask, what kind of precedent does that set? Suppose there were a small religious group who needed to also connect their tax-exempt place of worship to a water line. Is the tax-exempt group supposed to be denied their ability to worship because they can only afford installation without a tax?
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