Grades, item by item

[B] sells oral nicotine pouches in Texas under the brand [Product]. Each pouch is a porous fleece sachet, somewhat like a tea bag, filled with a dry powder whose primary ingredient is microcrystalline cellulose (processed non-tobacco plant matter) infused with nicotine isolate (99% pure nicotine chemically extracted from tobacco leaves), plus water, flavorings, and preservatives; the nicotine isolate is typically about five percent of the pouch by weight. The user places the pouch between the cheek and gum, the same place as chewing tobacco, moist snuff, or snus. Before launching the product, [B] asked the state comptroller ([A]) for a general information letter on whether the pouches are taxable "tobacco products" under the Cigars and Tobacco Products Tax, Tex. Tax Code ch. 155, which imposes a weight-based tax on "tobacco products" and defines that term in section 155.001(15) as (A) a cigar; (B) smoking tobacco; (C) chewing tobacco; (D) snuff or other preparations of pulverized tobacco; or (E) "an article or product that is made of tobacco or a tobacco substitute and that is not a cigarette or an e-cigarette." [A] concluded the pouches are taxable because they contain nicotine extracted from tobacco leaves. [B] paid the tax under protest and sued for a refund and a declaratory judgment that the pouches are not taxable tobacco products; it also raised constitutional challenges to the tax (void-for-vagueness, equal-and-uniform taxation under Tex. Const. art. VIII, § 1(a), and others). On cross-motions for summary judgment, the trial court held the pouches are not tobacco products, and after a bench trial granted a refund and declared the phrase "made of tobacco or a tobacco substitute" unconstitutional facially and as applied. The court of appeals affirmed in part, holding the pouches are neither "made of tobacco" (because no part of the tobacco plant remains in nicotine isolate) nor "made of a tobacco substitute" (because nicotine isolate alone cannot take the place or function of tobacco leaves); it declined to reach the constitutional challenges, labeling them "moot." [A] petitioned the Supreme Court of Texas for review, which was granted. In the Supreme Court, [A] argues that nicotine consumed recreationally is a tobacco substitute; [B] argues nicotine alone cannot replace tobacco under the plain meaning of the words and that "tobacco substitute" has a narrow industry meaning limited to reconstituted tobacco sheets or plant material that replaces tobacco leaf in certain products.

Assume the Supreme Court of Texas has concluded that the statute unambiguously applies to the pouches. [B] nonetheless argues in the Supreme Court that the tax, as [A] interprets and applies it, is unconstitutionally vague, citing federal criminal-sentencing and immigration vagueness cases and Texas tax cases. [B] separately presses an equal-and-uniform challenge based on [A] taxing the pouches but not nicotine replacement therapies.

MEMORANDUM TO FILE

RE: Void-for-Vagueness Challenge to Texas Tobacco Products Tax

**I. DISPOSITIVE ISSUE**

Whether the Supreme Court of Texas must conduct a separate void-for-vagueness analysis when it has already concluded that the tax statute unambiguously applies to the product at issue.

**II. CONTROLLING LEGAL STANDARD**

Under Texas law, void-for-vagueness doctrine addresses two due process concerns: (1) fair notice to regulated parties of what conduct is prohibited or taxed, and (2) prevention of arbitrary and discriminatory enforcement by officials. *Earles v. State Bd. of Certified Pub. Accountants*, 139 S.W.3d 794, 799 (Tex. 2004).

However, **when a court has determined that a statute unambiguously applies to the conduct or product at issue, there is no separate vagueness analysis to conduct**. The Texas Supreme Court has held that "a statute that is unambiguous as applied to a particular case cannot be unconstitutionally vague as applied in that case." *Earles*, 139 S.W.3d at 799-800; *see also In re B.L.D.*, 113 S.W.3d 340, 349 (Tex. 2003) ("If a statute is not vague as applied to the particular facts, we need not address whether it is vague in other applications.").

The fair-notice prong is satisfied when the statute's language clearly encompasses the regulated conduct or product. *City of Dallas v. Morales*, 304 S.W.3d 369, 378 (Tex. 2010). The arbitrary-enforcement prong is likewise satisfied when the statute provides clear standards limiting official discretion. *Earles*, 139 S.W.3d at 799.

In the tax context specifically, Texas courts apply vagueness doctrine with particular deference because tax statutes need not achieve the same level of precision as criminal statutes. *Bullock v. Statistical Tabulating Corp.*, 549 S.W.2d 166, 168 (Tex. 1977) (noting that "absolute precision" is not required in tax statutes).

**III. APPLICATION**

Here, the Supreme Court has already concluded that the statute **unambiguously** applies to [B]'s nicotine pouches. This threshold determination is fatal to [B]'s vagueness challenge for both prongs:

*Fair Notice*: If the statute unambiguously covers the pouches, [B] had fair notice that its product would be taxed. The company cannot credibly claim surprise or lack of notice when the Court has found the statutory language clearly encompasses its product. Indeed, [B] sought advance guidance from the Comptroller before launching, demonstrating it understood the statute might apply—the opposite of inadequate notice.

*Arbitrary Enforcement*: When statutory language unambiguously applies, officials have no discretion to enforce arbitrarily. The Comptroller applied clear statutory terms to reach a conclusion the Supreme Court has now validated as unambiguous. There is no standardless discretion when the standard is clear.

[B]'s reliance on federal criminal and immigration vagueness cases is misplaced. Those cases involve criminal penalties and deportation—contexts demanding heightened clarity. *See Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc.*, 455 U.S. 489, 498-99 (1982) (applying less demanding vagueness test to civil regulations). Texas tax statutes receive even greater deference.

The equal-and-uniform challenge is a separate constitutional claim not governed by vagueness principles and would be analyzed under Article VIII, § 1 standards for tax classification.

**IV. PROCEDURAL POSTURE**

This case is before the Supreme Court of Texas on petition for review following a court of appeals judgment affirming the trial court's grant of summary judgment and declaratory relief to [B]. The Supreme Court granted review and is now considering whether to reverse the lower courts' holdings.

**V. PREDICTED DISPOSITION**

**The Supreme Court will hold that no separate vagueness analysis is required and will reject [B]'s vagueness challenge.** 

The Court will likely state: "Having concluded that the statute unambiguously applies to [B]'s nicotine pouches, we hold that the statute is not unconstitutionally vague as applied to this product. A statute that clearly encompasses the regulated product provides fair notice and prevents arbitrary enforcement. [B]'s vagueness challenge therefore fails." *See Earles*, 139 S.W.3d at 799-800.

The Court will **reverse** the lower courts' holdings that the pouches are not taxable tobacco products and will likely **reverse and remand** with instructions to enter judgment for [A]. The constitutional challenges, including vagueness, will be rejected. The equal-and-uniform challenge may receive separate analysis but is beyond the scope of this vagueness question.

A municipality ([B]) and a county ([C]) in Texas sought to spur development of a large new shopping center ([Shopping Center]) by attracting a flagship outdoor-retail store ([E]) and a big-box hardware store ([G]) as anchors. [B] and [C] entered agreements with a nonprofit corporation ([D]) that owned the project site, under which each government granted [D] a specified percentage of the sales tax generated by the two anchor stores and a smaller percentage of sales tax generated by other businesses in the center. [D] agreed to use the dedicated funds solely to repay a $10 million construction loan (secured by the pledged tax payments) taken out to build the [E] facility; the governments were required to deposit the pledged proceeds into a segregated "Grant Fund" from which money could be withdrawn only to service the construction debt. A further agreement among [B], [C], [D], and [E] recited that it was "in the public interest to promote the economic development of the [E] Facility" and provided that payments would begin only "following the completion and opening of" the store. [D] leased the site to [E] at a base rent equal to the quarterly loan payment minus the sales-tax grants, with a $1 purchase option once the loan was paid off. The store opened and operated continuously for eleven years; the governments together paid about $150,000 per quarter to [D], which serviced the loan. An uncontroverted affidavit states that the anchor store contributed to the success of the center for more than a decade and that the center may not have materialized without it. After eleven years, [E] closed the store, apparently after discovering structural defects in the building. The shopping center continued to operate and generate substantial tax revenue, and the former anchor space is now occupied by another large retailer ([F]). The governments then took the position that the store's closure ended the public purposes justifying the grants and sued [D] and [E] for declarations that (1) the closure extinguished the public purposes authorizing the grants, (2) the agreements lacked sufficient controls to ensure those purposes were met, (3) the agreements were unconstitutional for permitting public funds to be spent without adequate safeguards, (4) continued payments after the closure would be unconstitutional, and (5) the agreements were unconstitutional to the extent they required such payments. The project's lender ([A]) intervened, and [D] later assigned its rights in the lawsuit to [A]. [E] filed for Chapter 11 bankruptcy. The trial court granted the governments' motion for partial summary judgment and rendered final judgment declaring that the closure "extinguished the public purposes" that authorized the grants, that the agreements "failed to place sufficient controls on the transaction," and that the agreements were "unconstitutional, void[,] and illegal." A divided intermediate court of appeals affirmed, holding that Texas Constitution article III, section 52-a (the 1987 economic-development amendment) does not displace the Gift Clauses and then applying the three-part framework from Texas Municipal League Intergovernmental Risk Pool v. Texas Workers' Compensation Commission and Borgelt v. Austin Firefighters Ass'n; the dissenting justice would have held the summary-judgment evidence insufficient to establish that the agreements failed the constitutional test. [A] petitioned the Supreme Court of Texas for review, arguing (1) that the Gift Clause framework does not apply at all to economic-development grants authorized by section 52-a, which begins "Notwithstanding any other provision of this constitution," or (2) alternatively that the lower courts misapplied that framework. The petition was granted and the case argued.

MEMORANDUM

TO: File
FROM: Appellate Counsel
RE: Adequacy of Controls Under Gift Clause Analysis
DATE: [Current Date]

**I. DISPOSITIVE ISSUE**

Assuming Gift Clause scrutiny applies to Article III, Section 52-a economic-development grants, whether the agreements contained sufficient controls to ensure accomplishment of the public purpose such that summary judgment declaring them unconstitutional for lack of adequate controls should be reversed.

**II. CONTROLLING LEGAL STANDARD**

The Gift Clause analysis derives from Article III, Section 52 of the Texas Constitution, which prohibits gratuitous grants of public funds. The three-part test requires: (1) the government receive consideration with a value roughly equal to the public funds expended; (2) the expenditure accomplish a public purpose; and (3) the government retain sufficient control to ensure the public purpose is accomplished. *Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Comm'n*, 74 S.W.3d 377, 384 (Tex. 2002); *Borgelt v. Austin Firefighters Ass'n*, 773 S.W.2d 815, 817-18 (Tex. App.—Austin 1989, writ denied).

The control requirement does not demand that the government guarantee success or retain operational control. Rather, the government must have "sufficient control to ensure that the public purpose is carried out." *Texas Mun. League*, 74 S.W.3d at 386. Controls may include contractual provisions specifying how funds must be used, restrictions on expenditures, reporting requirements, audit rights, and mechanisms to recapture funds if the public purpose fails. The controls must be evaluated as of the time the agreement was executed, not with hindsight. *See Sears v. Austin*, 282 S.W.3d 885, 893 (Tex. App.—Austin 2009, no pet.) (evaluating adequacy of controls at inception).

Summary judgment is appropriate only when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. *Tex. R. Civ. P.* 166a(c). The court must view evidence in the light most favorable to the non-movant and resolve all doubts against the summary judgment. *Provident Life & Accident Ins. Co. v. Knott*, 128 S.W.3d 211, 215 (Tex. 2003).

**III. APPLICATION TO THESE FACTS**

The following features constitute relevant controls:

**A. Structural Controls Present:**

1. **Dedicated Revenue Stream**: The agreements required sales tax proceeds to be deposited into a segregated "Grant Fund" from which withdrawals were permitted solely to service the construction debt. This is a classic control mechanism ensuring funds serve only the specified public purpose.

2. **Debt Service Limitation**: Payments were capped at amounts necessary to repay the $10 million construction loan. The governments' obligation was finite and tied directly to the capital improvement that created the anchor facility.

3. **Conditional Payment Trigger**: Payments commenced only "following the completion and opening of" the store, ensuring the public received the bargained-for consideration (an operating anchor store) before any funds were disbursed.

4. **Security Interest**: The construction lender held a security interest in the pledged tax payments, creating a third-party enforcement mechanism and ensuring funds would be used for debt service rather than diverted.

5. **Lease Structure with Purchase Option**: [D]'s lease to [E] at base rent equal to the loan payment minus grants, with a $1 purchase option upon loan satisfaction, created economic incentives for continued operation and ensured the facility would ultimately be owned by the operator with minimal additional cost—incentivizing long-term commitment.

6. **Performance Period**: The store operated continuously for eleven years, demonstrating that the controls functioned effectively for the substantial majority of the loan term. Uncontroverted evidence establishes the anchor contributed to the center's success for over a decade.

**B. Analysis of Adequacy:**

The lower courts appear to have required a guarantee of perpetual operation—a standard no Texas authority imposes. The Gift Clause does not require governments to eliminate all risk or ensure permanent success. *See Texas Mun. League*, 74 S.W.3d at 386 (controls must be "sufficient," not absolute).

The critical question is whether controls existed *at inception* to ensure the public purpose would be accomplished. Here, multiple contractual mechanisms ensured: (1) funds would be used only for debt service on the public improvement; (2) payments would not commence until the store opened; (3) the amount was capped and finite; and (4) the structure incentivized operation through the lease terms.

That [E] eventually closed due to structural defects after eleven years of successful operation does not retroactively render the initial controls inadequate. The uncontroverted affidavit evidence that the anchor store contributed to the center's success for over a decade and that the center might not have materialized without it demonstrates the public purpose was substantially accomplished.

Moreover, genuine fact issues exist regarding: (1) whether eleven years of operation satisfied the public purpose even if the store later closed; (2) whether the closure was due to building defects (potentially [D]'s responsibility) rather than voluntary abandonment; (3) whether continued operation of the shopping center and substantial ongoing tax revenue demonstrate continued public benefit; and (4) whether replacement of the anchor space with another large retailer ([F]) means the public purpose continues to be served.

**C. Summary Judgment Standard:**

Viewing the evidence in the light most favorable to [A], reasonable fact-finders could conclude: (1) the agreements contained multiple, meaningful controls; (2) those controls functioned as intended for eleven years; (3) the public purpose was substantially or fully accomplished; and (4) the closure resulted from building defects rather than inadequate contractual controls. These fact issues preclude summary judgment.

**IV. PROCEDURAL POSTURE**

This case comes to the Supreme Court of Texas on petition for review following affirmance by the court of appeals of a trial court's final summary judgment. The appropriate vehicle is a petition for review under *Tex. R. App. P.* 53. The Court granted review and heard oral argument.

The Court should reverse the summary judgment and remand for trial, or alternatively render judgment for [A] if the Court concludes no reasonable fact-finder could find the controls inadequate as a matter of law.

**V. PREDICTED DISPOSITION**

**REVERSE AND

Several families of minors diagnosed with gender dysphoria obtained temporary injunctions in a Texas district court prohibiting the state's child-protective-services agency ([Agency]) and its commissioner from investigating reports that a minor received puberty blockers or hormone therapy for gender transitioning, after the [Governor] directed [Agency] to investigate such treatment as abuse and [Agency] announced it would do so. The plaintiffs' underlying claims are that [Agency]'s announcement was an ultra vires, unconstitutional rule adopted without the notice and comment required by the Administrative Procedure Act. Defendants took interlocutory appeals; the court of appeals affirmed the injunctions (except as to the [Governor] in part), and defendants petitioned the Supreme Court of Texas for review. While the appeals were pending, [Agency] closed its investigations of three of the four families with a finding that no further action will be taken. [Agency]'s Associate Commissioner for Statewide Intake testified that when an investigation is closed, [Agency] will not investigate new reports involving the same allegation that has already been investigated, and that subsequent reports regarding the same allegation will be closed without investigation. Plaintiffs do not dispute these facts. They respond that a defendant's voluntary cessation of challenged conduct is a disfavored basis for mootness, that [Agency] could simply choose to reopen investigations once the injunctions are gone, and that [Agency]'s promise regarding 'the same allegation' cannot be taken at face value because [Agency] might treat a fresh report of ongoing treatment, or a report from a new source, as a different allegation warranting a new investigation.

MEMORANDUM

TO: File
FROM: Appellate Counsel
RE: Voluntary Cessation and Mootness Analysis
DATE: [Current Date]

**I. DISPOSITIVE ISSUE**

Whether [Agency]'s closure of investigations into three of the four plaintiff families, coupled with testimony that closed investigations will not be reopened for the same allegation, satisfies Texas's voluntary cessation standard such that those families' claims for injunctive relief are moot.

**II. CONTROLLING LEGAL STANDARD**

Under Texas law, a case becomes moot when "the parties lack a legally cognizable interest in the outcome" or when "the court's declaration will have no practical effect on the existing controversy." *Camarena v. Tex. Emp't Comm'n*, 754 S.W.2d 149, 151 (Tex. 1988).

The voluntary cessation doctrine provides that "a defendant's voluntary cessation of a challenged practice does not deprive a tribunal of power to hear and determine the case, i.e., does not make the case moot." *Waco Indep. Sch. Dist. v. Gibson*, 22 S.W.3d 849, 851 (Tex. 2000) (citing *United States v. W.T. Grant Co.*, 345 U.S. 629, 632 (1953)). However, voluntary cessation can moot a case if the defendant demonstrates that "there is no reasonable expectation that the alleged violation will recur" and that "interim relief or events have completely and irrevocably eradicated the effects of the alleged violation." *Id.* at 851-52.

The party asserting mootness bears the burden of demonstrating that the challenged conduct cannot reasonably be expected to recur. *City of Mesquite v. Aladdin's Castle, Inc.*, 455 U.S. 283, 289 (1982) (frequently cited by Texas courts); see also *Heckman v. Williamson Cty.*, 369 S.W.3d 137, 150 (Tex. 2012).

The standard is demanding: "The 'heavy burden of persua[ding]' the court that the challenged conduct cannot reasonably be expected to start up again lies with the party asserting mootness." *Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.*, 528 U.S. 167, 189 (2000) (cited approvingly in Texas jurisprudence).

**III. APPLICATION TO THESE FACTS**

[Agency] likely cannot satisfy its heavy burden under the voluntary cessation standard for several reasons:

**A. Unilateral Agency Action Without Legal Constraint**

[Agency]'s closure of investigations and the Associate Commissioner's testimony represent purely voluntary, unilateral actions. There is no indication that [Agency] has:
- Adopted formal rules or policies binding itself not to reopen investigations;
- Entered into a consent decree or settlement agreement;
- Been stripped of statutory authority to investigate; or
- Faced any legal impediment to resuming the challenged conduct.

Texas courts are skeptical of mootness claims based on unilateral agency representations. The agency retains full discretion to change course.

**B. Plaintiffs' Specific Concerns Are Well-Founded**

The plaintiffs raise legitimate concerns that undermine any assurance that investigations "cannot reasonably be expected to recur":

1. **Reopening Discretion**: Nothing prevents [Agency] from simply reopening closed investigations once injunctive relief is dissolved. The Associate Commissioner's testimony does not constitute a binding legal commitment.

2. **"Same Allegation" Ambiguity**: [Agency]'s promise applies only to "the same allegation that has already been investigated." This creates significant loopholes:
   - Ongoing medical treatment could be characterized as a "new" allegation rather than the same one;
   - Reports from different sources might be treated as distinct allegations;
   - Reports at different time periods could be deemed separate;
   - [Agency] retains interpretive discretion to define what constitutes "the same allegation."

3. **Policy Remains in Effect**: The underlying [Governor]'s directive and [Agency]'s announced policy treating gender-affirming care as potential abuse apparently remain in effect. The agency has merely closed specific investigations, not abandoned the policy that generated them.

**C. Fourth Family**

Notably, one of the four families apparently still has an open investigation, demonstrating that the challenged conduct has not ceased entirely.

**D. Precedential Concerns**

Texas courts recognize that defendants might cease challenged conduct during litigation only to resume it once judicial oversight ends. *Gibson*, 22 S.W.3d at 851. This concern is particularly acute where, as here:
- The underlying policy directive remains operative;
- The agency faces political pressure to investigate;
- Other families not party to this litigation remain subject to investigation; and
- The agency's "assurance" is narrow and subject to interpretation.

**IV. CORRECT PROCEDURAL VEHICLE/POSTURE**

The Supreme Court of Texas is reviewing the court of appeals' decision affirming temporary injunctions on interlocutory appeal. The mootness issue affects whether the plaintiffs retain standing to pursue their claims for injunctive relief.

If claims are moot, the proper remedy is to vacate the injunctions and dismiss those claims. However, mootness must be determined on a plaintiff-by-plaintiff basis. The three families whose investigations were closed present the mootness question; the fourth family with an ongoing investigation clearly retains a live controversy.

**V. PREDICTED DISPOSITION**

**As to the three families whose investigations were closed**: The Supreme Court of Texas will likely hold that [Agency] has not satisfied its heavy burden under the voluntary cessation doctrine. The closure of investigations, standing alone with only testimonial assurances subject to agency interpretation and discretion, does not demonstrate that there is "no reasonable expectation" of recurrence. The claims remain justiciable.

**Alternative holding**: Even if individual families' claims were moot, the Court might find that the case presents issues "capable of repetition, yet evading review" given the nature of temporary injunctions and the speed with which [Agency] could act. See *Heckman*, 369 S.W.3d at 150 (recognizing exception to mootness doctrine).

**Overall disposition**: **AFFIRM** the court of appeals' decision upholding the temporary injunctions. The voluntary cessation doctrine does not render the claims moot,

[C] is a special school district that was created in the 1960s under a since-repealed chapter of the Texas Education Code authorizing 'rehabilitation districts' to provide education, training, and special services for persons with disabilities. Counties joined the district by countywide election; one county's voters joined in the 1970s after a commissioners court order stating the vote would authorize the district to levy an ad valorem tax at a rate not exceeding five cents per $100 of assessed valuation. The enabling statute provided no procedure for leaving or disbanding a district. After Congress required public schools to educate students with disabilities, the Legislature amended the chapter to allow such districts to offer vocational training to both disabled and non-disabled students, and [C] changed its name and continues to operate under the old provisions. [C]'s board adopts a tax rate annually (below the statutory maximum). A group of individual taxpayers in the county ([A]) and a neighboring school district located within [C]'s boundaries ([B]) sued [C] and [County], alleging [C] now serves a purpose different from the one the county's voters approved, since disabled students make up a negligible share of its enrollment. They sought declarations that the tax is unlawful under the 'contract with the voters' doctrine (Tex. Const. art. I, § 16) and that levying a tax without voter approval violates Tex. Const. art. VII, § 3(e) and is ultra vires, plus a permanent injunction barring [C] from levying and [County] from collecting the tax. [C] filed a plea to the jurisdiction asserting lack of standing and governmental immunity. The trial court denied the plea and [C] took an interlocutory appeal under Tex. Civ. Prac. & Rem. Code § 51.014(a)(8). The court of appeals reversed and rendered judgment dismissing all claims for lack of standing: relying on Bland Independent School District v. Blue, it held [A] lacked taxpayer standing because their suit risked significant 'disruption of government operations' given [C]'s decades-long reliance on the tax, and it held [B] failed to allege a concrete, particularized, redressable injury. The court of appeals did not reach [C]'s alternative arguments that the claims present a nonjusticiable political question (raised for the first time on appeal) and are barred by governmental immunity. [A] and [B] jointly petitioned the Supreme Court of Texas for review, which was granted. Assume for this question that you are asked only about [B], the neighboring school district. At the hearing on the plea, [B]'s superintendent testified that disabled students make up about eleven percent of [B]'s enrollment (roughly the state average), that [B] could call an election to raise its own taxes at any time and [C] could not prevent it, and that the Legislature controls the funding of Texas public schools. [B] contends [C]'s tax harms it by increasing [B]'s burden of serving disabled students, by 'double taxing' [B]'s residents so that [B] cannot raise its own rate, and by giving [C] a competitive advantage in hiring; it argues an injunction would let it raise its rate, pay debt sooner, and offer competitive salaries. [B] also relies on prior Supreme Court of Texas decisions recognizing school districts' standing to challenge the constitutionality of the state school-finance system.

MEMORANDUM

TO: File
FROM: Appellate Counsel
RE: Standing of [B], Neighboring School District
DATE: [Current Date]

**I. DISPOSITIVE ISSUE**

Whether [B], a neighboring school district, has standing to challenge [C]'s ad valorem tax levy where [B] alleges injuries from increased burden of serving disabled students, "double taxation" preventing [B] from raising its own rate, and competitive disadvantage in hiring.

**II. CONTROLLING LEGAL STANDARD**

**A. Standard of Review**

When reviewing a trial court's ruling on a plea to the jurisdiction supported by evidence, appellate courts review the trial court's factual determinations for abuse of discretion and legal determinations de novo. *Texas Dep't of Parks & Wildlife v. Miranda*, 133 S.W.3d 217, 228 (Tex. 2004). The plaintiff bears the burden of establishing standing by a preponderance of the evidence when the plea is evidence-based. *Id.*

**B. Standing Requirements**

To establish standing, a plaintiff must demonstrate: (1) a concrete and particularized injury; (2) that is fairly traceable to the defendant's challenged conduct; and (3) that is likely to be redressed by the requested relief. *Texas Ass'n of Bus. v. Texas Air Control Bd.*, 852 S.W.2d 440, 446 (Tex. 1993).

**C. Taxpayer Standing**

Texas recognizes a narrow exception for taxpayer standing to challenge governmental expenditures or taxation. *Bland Indep. Sch. Dist. v. Blue*, 34 S.W.3d 547 (Tex. 2000). However, taxpayer standing is limited and courts must consider whether granting standing would cause significant disruption to government operations. *Id.* at 554-55.

**D. Governmental Entity Standing**

Political subdivisions may have standing to challenge actions that interfere with their governmental functions or statutory authority. School districts have been recognized as having standing to challenge the constitutionality of the state school-finance system because such challenges directly implicate their statutory duty to provide education and their taxing authority. *Edgewood Indep. Sch. Dist. v. Kirby*, 777 S.W.2d 391 (Tex. 1989); *Neeley v. West Orange-Cove Consol. Indep. Sch. Dist.*, 176 S.W.3d 746 (Tex. 2005).

**III. APPLICATION TO FACTS**

**A. Concrete and Particularized Injury**

[B]'s alleged injuries fail to satisfy the concreteness and particularity requirements:

1. **Increased burden of serving disabled students**: The superintendent's testimony established that disabled students comprise approximately eleven percent of [B]'s enrollment—roughly the state average. This undermines any claim of particularized injury, as [B] faces the same burden as school districts statewide. Moreover, [B] presented no evidence that [C]'s existence causes disabled students to enroll in [B] rather than [C], or that [B] would have fewer disabled students if [C] ceased operations.

2. **"Double taxation" preventing rate increases**: The superintendent testified that [B] "could call an election to raise its own taxes at any time and [C] could not prevent it." This admission is fatal to the double-taxation theory. [B] has not shown that [C]'s tax actually prevents [B] from raising its rate—only that [B] speculates voters might be less willing to approve increases. This is too attenuated and speculative to constitute concrete injury. The injury depends on hypothetical voter behavior, not [C]'s conduct.

3. **Competitive disadvantage in hiring**: [B]'s claim that it would "offer competitive salaries" if the injunction issued is entirely speculative. [B] presented no evidence that: (a) it has lost specific employees to [C]; (b) it has failed to hire qualified candidates who chose [C] instead; (c) salary differences exist between the districts; or (d) eliminating [C]'s tax would actually result in [B] raising salaries. The superintendent's testimony that an injunction would let [B] "raise its rate" and "offer competitive salaries" describes possibilities, not concrete injuries.

**B. Causation and Redressability**

Even assuming [B] suffered concrete injuries, the causation and redressability elements fail:

- The superintendent testified that "the Legislature controls the funding of Texas public schools," suggesting [B]'s funding challenges stem from state policy, not [C]'s tax.
- [B] cannot show that enjoining [C]'s tax would redress its alleged injuries. If [C] ceased taxing, [B] would still need voter approval to raise its own rate—an uncertain outcome.
- The competitive-hiring injury is not redressable because [B] has not shown it would actually raise salaries even if it could raise taxes.

**C. Distinguishing the School-Finance Cases**

The school-finance cases (*Edgewood*, *Neeley*) are distinguishable on multiple grounds:

1. **Direct statutory conflict**: In the school-finance cases, school districts challenged state laws that directly constrained their statutory taxing authority and ability to fulfill their educational mandate. Here, [C]'s tax does not legally prevent [B] from exercising any statutory power.

2. **Statewide systemic challenge**: The school-finance cases involved facial constitutional challenges to the entire state funding system, affecting all districts' ability to provide adequate education. [B]'s challenge is a narrow, fact-specific attack on one district's tax.

3. **Interference with governmental function**: The school-finance plaintiffs alleged the state system made it impossible to fulfill their statutory duties. [B] has not shown that [C]'s existence prevents [B] from operating its schools or fulfilling any legal obligation.

4. **Concrete injury**: The school-finance plaintiffs demonstrated actual, quantifiable funding disparities and inadequacies. [B] has presented only speculation about what it might do if [C]'s tax were enjoined.

**D. Policy Considerations from** *Bland*

The *Bland* court's concern about "disruption of government operations" applies with particular force here. [C] has operated for decades under legislative authorization, serving students across multiple counties. Allowing [B] to challenge [C]'s foundational taxing authority based on speculative competitive injuries would invite similar suits by any

[C] is a special school district that was created in the 1960s under a since-repealed chapter of the Texas Education Code authorizing 'rehabilitation districts' to provide education, training, and special services for persons with disabilities. Counties joined the district by countywide election; one county's voters joined in the 1970s after a commissioners court order stating the vote would authorize the district to levy an ad valorem tax at a rate not exceeding five cents per $100 of assessed valuation. The enabling statute provided no procedure for leaving or disbanding a district. After Congress required public schools to educate students with disabilities, the Legislature amended the chapter to allow such districts to offer vocational training to both disabled and non-disabled students, and [C] changed its name and continues to operate under the old provisions. [C]'s board adopts a tax rate annually (below the statutory maximum). A group of individual taxpayers in the county ([A]) and a neighboring school district located within [C]'s boundaries ([B]) sued [C] and [County], alleging [C] now serves a purpose different from the one the county's voters approved, since disabled students make up a negligible share of its enrollment. They sought declarations that the tax is unlawful under the 'contract with the voters' doctrine (Tex. Const. art. I, § 16) and that levying a tax without voter approval violates Tex. Const. art. VII, § 3(e) and is ultra vires, plus a permanent injunction barring [C] from levying and [County] from collecting the tax. [C] filed a plea to the jurisdiction asserting lack of standing and governmental immunity. The trial court denied the plea and [C] took an interlocutory appeal under Tex. Civ. Prac. & Rem. Code § 51.014(a)(8). The court of appeals reversed and rendered judgment dismissing all claims for lack of standing: relying on Bland Independent School District v. Blue, it held [A] lacked taxpayer standing because their suit risked significant 'disruption of government operations' given [C]'s decades-long reliance on the tax, and it held [B] failed to allege a concrete, particularized, redressable injury. The court of appeals did not reach [C]'s alternative arguments that the claims present a nonjusticiable political question (raised for the first time on appeal) and are barred by governmental immunity. [A] and [B] jointly petitioned the Supreme Court of Texas for review, which was granted. Assume for this question that you are asked only about the individual taxpayers [A]. In the Supreme Court, [C] defends the dismissal on three grounds: (1) [A]'s injury is not particularized because every other resident of the county subject to the tax suffers the same injury; (2) [A] cannot show the tax is actually illegal under either constitutional provision, which [C] says is required to establish taxpayer standing; and (3) any 'contract with the voters' was abrogated when the Legislature broadened the districts' purpose, and [A] ratified the change by electing board members who keep levying the tax. [C] also defends the court of appeals' reliance on Bland Independent School District v. Blue for the proposition that a suit threatening significant disruption to government operations and the settled expectations of other taxpayers cannot proceed.

MEMORANDUM TO FILE

RE: Standing Analysis for Individual Taxpayers [A]

**I. DISPOSITIVE ISSUE**

Whether individual taxpayers [A] have standing to challenge [C]'s ad valorem tax under Texas's taxpayer-standing doctrine, or whether their claims must be dismissed for lack of standing based on: (1) lack of particularized injury; (2) failure to demonstrate the tax is illegal; (3) legislative ratification/voter acquiescence; or (4) threatened disruption to government operations under *Bland Independent School District v. Blue*.

**II. CONTROLLING LEGAL STANDARD**

**A. Applicable Standing Framework**

Texas recognizes a special taxpayer-standing doctrine distinct from general constitutional standing requirements. *Creedmoor-Maha Water Supply Corp. v. Texas Comm'n on Envtl. Quality*, 307 S.W.3d 505, 515 (Tex. 2010). Under this doctrine, taxpayers have standing to challenge the legality of a tax or expenditure of public funds without showing injury distinct from the public generally. *Bullock v. Calvert*, 480 S.W.2d 367, 368 (Tex. 1972); *Texas Ass'n of Business v. Texas Air Control Bd.*, 852 S.W.2d 440, 446 (Tex. 1993).

The taxpayer-standing doctrine applies here, not the general three-part constitutional test (injury-in-fact, causation, redressability), because [A] challenges the legality of a tax levy. *Creedmoor-Maha*, 307 S.W.3d at 515.

**B. Elements of Taxpayer Standing**

To establish taxpayer standing, a plaintiff must show: (1) the challenged action is an expenditure or collection of public funds; (2) the plaintiff is a taxpayer of the governmental entity; and (3) the expenditure or tax is illegal. *Creedmoor-Maha*, 307 S.W.3d at 515; *Texas Ass'n of Business*, 852 S.W.2d at 446-47.

The illegality requirement does not demand that plaintiffs prove their case on the merits at the pleading stage; rather, they must allege facts that, if true, would establish illegality. *Heckman v. Williamson County*, 369 S.W.3d 137, 154 (Tex. 2012).

**C. Relevant Constitutional Provisions**

Article I, § 16 of the Texas Constitution prohibits impairment of contracts. The "contract with the voters" doctrine holds that when voters approve a tax for a specific purpose, that approval creates a contract that cannot be violated by using the tax for different purposes. *City of Waco v. Kelley*, 309 S.W.2d 536, 539 (Tex. 1958).

Article VIII, § 3(e) (note: the facts reference Art. VII, § 3(e), but the relevant provision is likely Art. VIII, § 3) requires voter approval for certain tax levies by political subdivisions.

**III. APPLICATION TO FACTS**

**A. Taxpayer Standing Framework Applies**

[A]'s challenge to [C]'s tax levy falls squarely within the taxpayer-standing doctrine. They are taxpayers of the county subject to [C]'s tax, they challenge the collection of that tax, and they allege it is illegal under two constitutional provisions. This is the paradigmatic taxpayer-standing case. *Creedmoor-Maha*, 307 S.W.3d at 515.

**B. [C]'s Argument #1: Lack of Particularized Injury**

This argument fails because it conflates general constitutional standing with taxpayer standing. The taxpayer-standing doctrine exists precisely because taxpayers challenging illegal taxes or expenditures need not show injury distinct from other taxpayers. *Bullock*, 480 S.W.2d at 368. That every county resident subject to the tax suffers the same injury is irrelevant—indeed, it is the hallmark of taxpayer standing. *Texas Ass'n of Business*, 852 S.W.2d at 446 (taxpayer standing does not require showing injury different in kind from other taxpayers).

**C. [C]'s Argument #2: Failure to Prove Illegality**

[A] need not prove illegality at the standing stage; they must only allege facts that, if true, would establish illegality. *Heckman*, 369 S.W.3d at 154. [A] alleges: (1) voters approved a tax for a specific purpose (educating disabled students); (2) [C] now serves a materially different purpose (disabled students are a negligible share); and (3) this violates the contract with voters under Art. I, § 16. They also allege the tax lacks proper voter approval under Art. VIII, § 3(e). These allegations, if proven, would establish illegality under either or both theories. Whether [A] can ultimately prove these claims is a merits question, not a standing question. *Id.*

**D. [C]'s Argument #3: Legislative Abrogation and Ratification**

This argument goes to the merits, not standing. Whether the Legislature's amendment of the enabling statute abrogated any "contract with the voters," and whether subsequent elections ratified the change, are questions about whether [A] can prevail on their contract-impairment claim. They do not affect whether [A] has alleged sufficient facts to establish standing to bring the claim. *Heckman*, 369 S.W.3d at 154 (standing analysis does not resolve merits).

**E. "Significant Disruption" Under *Bland***

The court of appeals' reliance on *Bland Independent School District v. Blue*, 34 S.W.3d 547 (Tex. 2000), appears misplaced. *Bland* addressed whether taxpayers had standing to challenge a school district consolidation election on grounds of procedural irregularities, where the challenge came years after the consolidation and would have disrupted settled expectations. *Id.* at 554-55. The Court held that the disruption factor was relevant to whether the alleged illegality was sufficient to confer standing. *Id.*

However, *Bland* did not create a categorical bar to taxpayer standing whenever disruption might result. Rather