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Appellee= Motion for Rehearing is Overruled; Opinion of July 24, 2007 is withdrawn;
Reversed and Remanded and Substitute Opinion on Rehearing issued October
11,
2007.

In The

Fourteenth
Court of Appeals

____________

NO. 14-05-01272-CV

____________

MAGUIRE OIL
COMPANY, MAGUIRE ENERGY COMPANY, CARY M. MAGUIRE, CARY M. MAGUIRE AS
MANAGER FOR THE OIL FUND U/I/D 9/1/76, CARY M. MAGUIRE AS TRUSTEE FOR UTD
1/1/83 FBO CARY M. MAGUIRE, JR., CARY M. MAGUIRE AS TRUSTEE UTD 1/1/83 FBO
MELINDA AMBLER MAGUIRE, CARY M. MAGUIRE AS TRUSTEE UTD 5/1/84 FBO ANN
BLAINE MAGUIRE, DON R. HOLLOWAY AS CUSTODIAN OF THE MATTHEW HOLLOWAY
TUGTMA, DON R. HOLLOWAY AS CUSTODIAN OF THE SARAH L. HOLLOWAY TUGTMA, DON
R. HOLLOWAY AS CUSTODIAN OF THE BARBARA ANN HOLLOWAY TUGTMA, DON R.
HOLLOWAY AS CUSTODIAN OF THE TILLMAN R. HOLLOWAY TUGTMA, WILLIAM N.
COLLINS, JR. AS CUSTODIAN OF THE L. PAIGE COLLINS TUGTMA, WILLIAM N.
COLLINS, JR. AS CUSTODIAN OF THE HATTIE S. COLLINS TUGTMA, WILLIAM N.
COLLINS AS CUSTODIAN OF THE CHANDLER COLLINS TUGTMA, Appellants

V.

THE CITY OF
HOUSTON, Appellee

On Appeal from the County Civil Court at Law No. Four

Harris County, Texas

Trial Court Cause No. 817,512

S U B S T
I T U T E  O P I N I O N  O N   R E H E A R I N
G

We
withdraw our opinion issued on July 27, 2006.  The City=s Motion
for Rehearing is overruled and we issue this Substitute
Opinion.

In this
appeal from the grant of a plea to the jurisdiction, Maguire Oil Company,
et al (AMaguire@) seeks
reversal of a judgment in favor of The City of Houston (Athe
City@) on the
following grounds: (1) the trial court erred in determining the case was
not ripe for adjudication; alternatively (2) the trial court erred by
dismissing Maguire=s claims
because the City=s
jurisdictional plea did not implicate Maguire=s two
alternate theories of recoveryCinverse
condemnation and physical taking. Because the trial court erred by
granting the City=s plea to
the jurisdiction, we reverse and remand.

I.
Factual and Procedural Background

We outline
the facts in the light most favorable to Maguire, as the non-movant
below.  Maguire owns substantial mineral interests around and
underneath Lake Houston.  In the 1940=s, the
City acquired surface rights to the land which eventually was inundated
with water to form Lake Houston. During 1965, the City adopted an
ordinance that generally proscribed pollution. During 1967, the City
amended the ordinance to eliminate drilling in or around Lake
Houston.  In 1977, the City Council amended the definition of
Acontrol
area@ to cover
land in its extraterritorial jurisdiction.  The ordinance and
accompanying definitions that were effective during 1977 are at issue in
this case even though the City redefined Acontrol
area@ in
1997.

In the
late 1980=s, Maguire
began to investigate prospects for a gas well in an area near Houston
known as the AScanlan
Deep Prospect,@ a
substantial portion of which lies beneath Lake Houston.  Initially,
Maguire began to drill outside the city limits.  After a vertical
well failed, Maguire attempted to drill directionally.  This effort
also failed.  After spending more than three million dollars, Maguire
determined that the only feasible location to drill for natural gas in the
Scanlan Deep Prospect would be within 1000 feet from Lake Houston.
During 1991, Maguire decided to drill a vertical well inside the city
limits, approximately 300 feet west of Lake Houston.  Accordingly,
Maguire filed appropriate documents and requested that the City issue a
drilling permit.  On May 7, 1991, the City approved a permit to drill
at the chosen location. Later, the City ratified and extended that
permit.  Maguire spent approximately $200,000 building roads,
clearing the location, and moving in the rig and equipment.  On
October 31, 1991, the City issued a stop work order, and revoked the
permit pursuant to Houston Code of Ordinances Chapter 23, Article IV
section 23-102.  As it existed in 1991, Section 23-102
provided:

No well
shall be drilled within the control area of Lake Houston which is nearer
than 1,000 feet from the normal water=s edge of
Lake Houston or any of its drains, streams or tributaries.  In
addition, no well shall be drilled within such control area at an
elevation of less than 48 feet above sea level.

Maguire=s multiple
proposals to the City=s legal,
health, planning and development departments, as well as the water-quality
director were rejected.  The City=s
water-quality director steadfastly maintained the position that the a
drilling permit would not be issued. All of the City representatives
maintained the position that the ordinance provided blanket prohibition
drilling in the Acontrol
area.@ All City
personnel responsible for enforcement of the ordinance rejected
Maguire=s attempts
to proceed with drilling the previously permitted well.  Maguire
attempted to communicate with the Mayor, but these efforts were to no
avail.  Subsequently, Maguire filed suit for inverse condemnation,
negligent misrepresentation, and promissory estoppel in the 55th District
Court of Harris County.

This civil
action has been on a fourteen-year journey bouncing between federal and
state courts only to remain unresolved.  The City removed the case to
the United States District Court for the Southern District of Texas.
Subsequently, the federal district court determined it did not have
subject matter jurisdiction and it was remanded.  Following remand to
the 55th District Court of Harris County, the court granted the
City=s motion
for summary judgment. Maguire appealed to the Houston courts of
appeals.  Pursuant to a docket-equalization order, appellate review
was assigned to the Texarkana Court of Appeals.  That court upheld
the trial court=s summary
judgment in favor of the City relative to Maguire=s
negligent misrepresentation claim, but reversed and remanded the remaining
claims for further proceedings in the 55th District Court.
Maguire Oil Co. v. City of Houston, 69 S.W.3d 350, 372 (Tex.
App.CTexarkana
2002, pet. denied).  Notably, the Texarkana Court of Appeals
concluded that section 23-102 did not apply to Maguire=s drill
site.[1]

In the
interim, this court issued Taub v. Aquila Southwest Pipeline Corp.,
wherein we held that the county civil courts at law have exclusive
jurisdiction over condemnation and eminent domain cases.  93 S.W.3d
451, 456 (Tex. App.CHouston
[14th Dist.] 2002, no pet.).  Following Taub,
Maguire=s inverse
condemnation claim was dismissed from district court and re-filed in
County Civil Court at Law Number Four (Atrial
court@).
Both parties filed motions for summary judgment. Among its grounds for
summary judgment, the City urged that Maguire=s takings
claim was not ripe.  The trial court requested that the City
restyle its ripeness challenge as a plea to the jurisdiction, and
requested briefs.  On November 29, 2005, the trial court granted the
City=s plea to
the jurisdiction and dismissed Maguire=s entire
case.  On appeal, this court will answer the limited question whether
Maguire=s claims
are ripe for adjudication.

II. Ripeness

In its
first issue, Maguire contends the trial court erred by determining its
suit was not ripe for adjudication.  It is well settled that a
dispute must be ripe for adjudication before a court may exercise subject
matter jurisdiction.  See Mayhew v. Town of Sunnyvale, 964
S.W.2d 922, 928 (Tex. 1998).  We review a ripeness determination de
novo.  Id.  In context of an inverse condemnation case,
the matter is not ripe unless the governmental entity charged with
implementing the regulation that allegedly caused the taking has reached a
final decision.  See Williamson County Reg=l Planning
Comm=n v.
Hamilton Bank of Johnson City, 473 U.S. 172, 186 (1985); see
also Mayhew, 964 S.W.2d at 928B29
(stating that we look to federal jurisprudence to guide our review of
these disputes).

A final
decision is prerequisite to ripeness in the context of regulatory takings
and related constitutional claims.  Mayhew, 964 S.W.2d at
929.  That final and authoritative decision must be Aof the
type and intensity of development legally permitted on the subject
property [because a] court cannot determine whether a regulation has gone
>too
far= unless it
knows how far the regulation goes.@
Id. (citation and quotation omitted).  Stated differently, we
must have sufficient evidence in the record to compare prohibited uses
with any permissible uses that may be made with the affected
property.  Id.  The final decision requirement ordinarily
includes both a rejected proposed use and denial of a variance from
controlling regulations.  See id.  However, futile
variance requests or re-applications are not necessary.
Id.

It is also
important to note the difference between the Afinal
decision@
requirement and exhaustion of administrative remedies.  The finality
requirement concerns whether the initial decision maker has arrived at a
definitive position on the issue that inflicts an actual, concrete injury
whereas the exhaustion requirement generally refers to administrative
procedures available for review of an adverse decision.  Hamilton
Bank, 473 U.S. at 193. Thus, it is important not to confuse
availability of administrative remedies with the necessity of a final
decision.  Further, as the Hamilton Bank opinion highlights,
our focus for purposes of determining whether the governmental entity has
reached a final decision is on the procedure and regulations implemented
by the entity .  See id. at 186.

The City
contends Maguire did not receive a final decision because it did not
pursue an appeal to the City Council.  Maguire counters that it
received a final decision, and if further administrative appeals were
possible, they would have been futile.

A.
Section 23-102

We first
address section 23-102 and whether Maguire received a final decision from
the proper governmental entity prior to initiating suit.

1.
The City Council is not the Relevant Decision Maker

It is
undisputed that the City contended in all other forums, and contends on
appeal, that Chapter 23, Article IV, section 23-102 of the Code of
Ordinances prohibits Maguire from drilling its well.  Although the
City contends Maguire should have proceeded with an appeal to City
Council, its argument is unavailing for three reasons: (1) the regulations
governing Lake Houston denominate the Director of Public Works and
Engineering as the relevant administrative decision maker; (2) the
relevant regulations do not contemplate an appeal from permit denial; and
(3) even if an appeal were available, not proceeding with any appeal would
merely provide the City with an exhaustion of administrative remedies
defense. The articles of the Code of Ordinances under Chapter 23 prescribe
rules and procedures for appeal that vary from other articles under that
chapter.  For example, in Article IV, under definitions, the
Adirector@ means the
director of public works and engineering and his designees.  Any
person seeking to perform a permitable action under Article IV must obtain
a permit from the director.  In contrast, Article V, Division 2,
section 23-146 expresses that for purposes of Article V, the building
official must authorize any permit.  Section 23-150 further explains
that, under Article V, a permit will issue only after the building
official and utility official have given their approval.  The
differences in procedures for exhausting administrative remedies are even
more pronounced between the respective Chapters.

We turn
now to the applicable ordinances to identify the relevant decision maker
when a party seeks a drilling permit for a site near Lake Houston.
Under Section 23-100(2) of Article IV entitled AWater
Supply Protection,@ a
Adirector@ is
defined as A[t]he
director of public works and engineering and his designees.@
Section 23-104 is the only portion of Article IV that pertains to issuance
of a permit.  Under that section, the director is the only person
with authority to grant a drilling permit.  Therefore, the director
of public works and engineering is the relevant decision maker.

The record
clearly shows that the director rendered a final decision concerning the
application of section 23-102.  The original permit was revoked and a
stop work order was issued.  It is further clear that the director
was adamantly opposed to issuing any variance or concession that would
permit drilling at the proposed site.  Consequently, Maguire received
a final decision from the relevant decision maker.  However, the City
argues that an appeal to the City Council is prerequisite to a final
decision.  Although this argument confuses exhaustion of
administrative remedies with obtaining a final administrative decision, we
will nevertheless address the City=s
concerns.

2.
No Appeal Possible to the City Council

The City
argues that Maguire should have appealed under Chapter 31 of the Code of
Ordinances.  We disagree. Chapter 31-30 contemplates issuance of
permits for drilling and operation of a well Anot
prohibited by the terms of this chapter.@
Maguire=s drilling
permit was revoked pursuant to Chapter 23.   Therefore, we must
refer to that portion of the Code of Ordinances for guidance regarding
appeal procedures.  Chapter 23, Article IV, section 23-106, provides
as follows:

Permits
issued under any provision of this article shall not be
transferable.  Any refusal by the director to grant any consent or
permit provided for in this article may be appealed to the city
council.

(Emphasis
added).  That section clearly provides for appeals only if a permit
is provided for in Article IV.  Pursuant to section 23-102,
ANo well
shall be drilled within the control area of Lake Houston . . . . In
addition, no well shall be drilled within such control area . . .
.@
Roger Hulbert, the City=s
representative, testified that this provision had consistently been
enforced, and there is no procedure for a variance.  Therefore, under
the City Code, no discretion could be exercised.  See Palazzolo v.
Rhode Island, 533 U.S. 606, 620 (2001) (stating that once it is clear
the relevant authority lacks discretion to permit any development, a
takings claim is likely to have ripened).

3.
Maguire not Required to Exhaust Administrative Remedies

Even if an
appeal were possible, the City=s defense
would be predicated on exhaustion of administrative remedies.  As we
have explained already, resolution of this issue is not based on failure
to exhaust administrative remedies.  See Hamilton Bank, 473
U.S. at 193 (explaining the difference between a final administrative
decision and the exhaustion of administrative remedies).
Consequently, an appeal under the provisions of Chapter 31 would not be
determinative of ripeness.  Interestingly, the City seems to suggest
that Maguire should lobby for a new ordinance.  Certainly, a lobbying
effort was not required to render this dispute ripe for adjudication in
our courts.

Nonetheless,
Maguire requested and participated in meetings with city
administrators.  Maguire then unsuccessfully sought meetings with the
Mayor, who is a member of City Council. The City promulgated and enforced
regulations that foreclosed Maguire from pursuit of any additional
administrative remedies. Accordingly, Maguire received a final
administrative decision

B.
Chapter 31 and Futile Action

The City
contends the appeal provisions in Chapter 31are applicable to the proposed
drill site.  Thus, the City argues Maguire has not received a final
administrative decision.  However, during all times material to this
appeal, the drilling site contemplated by Maguire was expressly prohibited
under Chapter 23, Article IV section 23B102.
Accordingly, we have concluded that any further efforts to obtain a permit
to drill at the proposed site would be futile.  Moreover, relevant to
the City=s intent
prior to the date suit was filed, we note that the City has expanded the
scope of Article IV and there is still no provision for a permit under
section 23-102.[2]

According
to the City, before a court may determine whether further action is
futile, the party seeking a permit must seek variances, submit multiple
applications, and pursue numerous attempts to receive a permit.
Additionally, the City argues Maguire could identify a different drill
site.  While those arguments might be valid in other cases, they are
not valid in this case.

First,
issuance of a permit is proscribed by the City; therefore, seeking a
variance would be superfluous.  See Palazzola, 533 U.S. at 621
(noting that an agency=s
interpretation of regulations to bar a landowner from ever engaging in the
proposed activity satisfies the final decision requirement).  Second,
the law does not require citizens to continuously pursue a permit simply
for the exercise.  Id. at 622.  Finally, Maguire contends
there are no other feasible locations for drilling.  We must assume
Maguire=s
contention is valid given the procedural posture of this case.
See Tex. Dep=t of Parks
and Wildlife v. Miranda, 133
S.W.3d 217, 228 (Tex. 2004) (explaining that in an appeal from a plea to
the jurisdiction, we apply a standard similar to Texas Rule of Civil
Procedure 166a(c) and therefore take as true all evidence favorable to the
non-movant, here, Maguire).  Any further action by Maguire would have
been futile and not required under the ripeness doctrine.

C.  Whether Maguire Sought
the Proper Remedy

We also reject the
City=s contention that Maguire
should have sought a writ of mandamus or injunction to force the City to
issue the permit in light of Maguire=s contention that section
23-102 did not apply to the proposed drill site.  The City cites two
cases for this proposition: City of
Austin v. Teague, 570
S.W.2d 389 (Tex. 1978) and Kirschke v. City of Houston, 330 S.W.2d
629 (Tex. Civ. App.CHouston
1959, writ ref=d. n.r.e.)
disapproved by City of Austin, 570 S.W.2d at 394.  We agree
with the City that Kirschke seems to require pursuit of a writ of
either mandamus or an injunction.  However, we do not agree that
Kirschke is controlling authority.  Moreover, we disagree with
the City=s
contention that City of Austin requires such action.

In
City of Austin, landowners sued for damages resulting from inverse
condemnation.  570 S.W.2d at 390.  The landowners also sought an
order commanding the City to issue a permit.  Id.  The
trial court ordered the permit issued and awarded damages in the amount of
$109,939 for a taking.  Id.  The Texas Supreme Court
addressed only the takings question.  Id.  Although the
court reversed and remanded for a retrial on damages, its decision was
based on inadequacy of damages evidence.  Id. at 395.
However, the court never held that a landowner must seek an injunction or
a writ of mandamus before proceeding with an action for inverse
condemnation.  Indeed, the court noted that following permit denial,
the City of Austin had acquired a scenic easement for which it must pay
damages.  Id. at 394.  There was no further action the
supreme court required from the landowner prior to filing
suit.

In City
of Austin, the Texas Supreme Court=s
disapproval of Kirschke without noting the continuing viability of
the requirement for a writ of mandamus or injunction is significant.
We doubt the continuing vitality of that holding in light of City of
Austin. Moreover, even if Kirschke is applicable, the facts of
this case are sufficiently distinguishable.  In Kirschke, the
City of Houston denied a permit even though it agreed it had authority to
issue but for its desire to keep the property undeveloped.  330
S.W.2d at 629B30.
The permit application was rejected because of the possibility that the
City would later condemn  the property in order to build highway
infrastructure.  Id.  The Kirschke court concluded
that the proper remedy would be an injunction or writ of mandamus when a
permit has been wrongfully denied.  Id.  at 634.
Here, the City has absolutely proscribed drilling and vehemently held to
its position that there would be no exceptions under section
23-102.

III. Conclusion

We hold this case is ripe for
adjudication because Maguire received a final administrative decision from
the City and further action would be futile.  Accordingly, we sustain
Maguire=s first issue, reverse the
judgment of the trial court and remand for further proceedings consistent
with our opinion.[3]

/s/
Charles Seymore

Justice

Judgment
rendered and Substitute Opinion on Rehearing filed October 11, 2007.

Panel
consists of Chief Justice Hedges, and Justices Seymore and
Guzman.

[1]  The Texarkana Court of Appeals did not
considerCand we will not addressCthe effect of the 1997 amendment on this
litigation.  However, under that amendment, redefining Acontrol area,@ Maguire=s proposed drill site would be within the area
where drilling is absolutely prohibited.

[2]  In its Motion for Rehearing, the City
erroneously suggests that our opinion is based, in part, on what the Code
permitted or prohibited after suit was filed.

[3]  We do not reach
Maguire=s second issue because it is
rendered moot by our disposition of the first
issue.