In 2017 and 2019 the Legislature reduced the amount cities can charge telecommunications companies to run equipment on public property alongside city streets, and a group of cities, displeased with the lost revenue, sued to block the reductions on the theory that charging below-market rates is an unconstitutional gift to the telecom companies.¹ The two laws are SB 1004 (2017), which caps the annual right-of-way charge for wireless network nodes at $250 per node, and SB 1152 (2019), which lets a provider that offers both telecom and cable service pay only the larger of the two fees owed statewide, not both.² The State says it does not enforce either law.³

The cities sued in 2017 and named only the State of Texas as defendant, seeking a declaration that the reduced rates violate the Texas Constitution's Gift Clauses, and the district court issued the declaration in part.¹ The McAllen group of cities and the City of Houston, which intervened, won summary judgment on the SB 1152 claims, while the State won on SB 1004, and the Third Court of Appeals (Austin) went further than the trial court by essentially agreeing with the cities about the Gift Clauses.² The Supreme Court heard argument on March 5, 2026, with Justice Hawkins not participating.³ On June 5, 2026 it vacated the lower courts' judgments and the court of appeals' opinion and dismissed the case for lack of jurisdiction.⁴

Petition for review from the Third Court of Appeals (Austin), 706 S.W.3d 503; argued March 5, 2026; opinion by Chief Justice Blacklock issued June 5, 2026.⁵

• The State:¹ whether the McAllen Cities and Houston established subject-matter jurisdiction, and, if so, whether SB 1152 and SB 1004 violate the Gift Clauses facially and as applied to Houston.
• McAllen group of cities:² they agreed with the State's first two issues, the first being whether the McAllen Cities and Houston established subject-matter jurisdiction and the second whether SB 1152 violates the Gift Clauses facially and as applied.
• City of Houston:³ it objected to the State's issues as argument and substituted four, including whether SB 1152, as applied to Houston, violates article III, section 52(a) and article XI, section 3, and whether Houston has standing to assert its claims.

The Court treats the existence of jurisdiction as a threshold matter it must consider on its own whatever the parties say, because the parties cannot confer subject-matter jurisdiction through admission or waiver.¹

Whether the cities sued a proper defendant and established jurisdiction.

The State (Petitioner): The cities failed to satisfy the traceability and redressability elements of standing because they sued only the State, which does not enforce the laws, and the same lack of an enforcement connection means the UDJA's waiver of immunity, which reaches only the "relevant governmental entity," does not apply.¹ In reply the State added that the cities misread Nootsie, where the Attorney General was named as a third-party defendant and no one disputed traceability or redressability.²

City of McAllen, et al (Respondents): The State first raised its standing and sovereign-immunity defense in the Supreme Court, and political subdivisions have standing to challenge a statute that directs them to act in violation of the constitution, as the Court recognized in Neeley, Proctor and Nootsie, while traceability matters only in certain types of cases.³

City of Houston (Respondent): Texas judicially admitted in 2017 that it is a proper defendant when it filed a plea to the jurisdiction to dismiss the Attorney General and Governor, so it is barred from challenging that now, and Houston responded to the State's jurisdictional arguments only subject to that objection.⁴

Whether SB 1152 and SB 1004 violate the Gift Clauses.

The State (Petitioner): SB 1152 does not implicate the Gift Clauses because the State, not the cities, owns and controls the rights-of-way, and in any event it requires providers to pay for access and serves a legitimate public purpose.⁵

City of McAllen, et al (Respondents): SB 1004 and SB 1152 require cities to grant the right to use municipal rights-of-way to private corporations for little to no consideration and with no statutory controls to ensure a public benefit, which article III, section 52(a) forbids.⁶

City of Houston (Respondent): SB 1152 forces Houston to make an unconditional gift of public funds to telecom companies that admit they receive free rent of public rights-of-way under the statute's exemption.⁷

The State argued that the courts below never should have reached the merits because they lacked jurisdiction and that the court of appeals' Gift Clause holdings were wrong and consequential.¹

• Standing and redressability. Asked whether private and government plaintiffs differ on standing, the State's counsel said Zurawski applies equally to cities, and that redressability needs a judgment, not precedential force. (Oral Argument, 0:02:05; 0:03:40)
• Wrong defendant. Asked whether the State is the only defendant, the Cities' counsel said yes, since the legislature has no authority to pass an unconstitutional law. (Oral Argument, 0:19:28; 0:20:15)
• Adding the PUC. Asked if adding the PUC as a defendant fixes standing, the State's counsel said "Not entirely" and that the PUC probably has enforcement authority under Local Government Code section 283.058. (Oral Argument, 0:09:02)
• Valuing the easements. Asked how the real value would be found, the Cities' counsel said expert testimony; their expert put it between $1,500 and $2,500, varying by city. (Oral Argument, 0:28:28; 0:29:37)
• Ripeness. Asked how a dispute becomes ripe without a city violating the statute, the State's counsel said a city could seek a declaratory judgment that the network provider owes it fees. (Oral Argument, 0:05:52)
• Public purpose. Asked whether lower phone and cable bills could be the public purpose, the Cities' counsel said it might be, but the statute does not require savings to reach customers. (Oral Argument, 0:35:28)
• Zero-fee hypothetical. On rebuttal, asked if a zero fee would violate the gift clause, the State's counsel said no, given State ownership, and that no article III, section 51 violation was pleaded. (Oral Argument, 0:38:44; 0:41:32)
• Special solicitude. Asked whether cities get special solicitude in standing, the State's counsel said no, because municipalities have only authority derived from the State. (Oral Argument, 0:12:55)

None noted

Holding

Because the cities did not name the state officer or agency responsible for their claimed injury and sued only the "State of Texas," they sued the wrong defendant and the courts lacked jurisdiction from the beginning, so the Court did not reach the Gift Clauses.¹

Reasoning

The judicial power is the power to issue judgments redressing injuries traceable to the defendant, and the State is not automatically a proper defendant in a suit challenging a statute merely because the Legislature enacted it, so a plaintiff must at least identify and name the officer or agency with authority to enforce the law.² The cities made no attempt to identify one, and nothing in the record shows any officer or agency has taken or threatened adverse action against them, though the Court expressed no view on whether the Public Utility Commission could be a proper defendant.³ The real dispute is a monetary one between the cities and the telecom companies, a judgment against the State would not bind the non-party companies, and it would merely declare the judiciary's view of the law, which is not what courts are for.⁴ The Court found Nootsie unhelpful because it addressed the proper plaintiff and not the proper defendant, and held that the State's alleged judicial admission could not confer jurisdiction.⁵

Disposition

Judgments of the lower courts vacated, the court of appeals' opinion vacated so that it has no continuing precedential effect on the Gift Clauses, and the case dismissed for lack of jurisdiction.⁶

Subject-matter jurisdiction, including whether the plaintiff sued a defendant to whom its injury is traceable, is a threshold question the Court considers regardless of what the parties argue.¹

Chief Justice Blacklock delivered the opinion of the Court, with no separate writings and Justice Hawkins not participating.¹