TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03
- 18
- 00364
- CV

Low Income Consumers, Mary Wilson and Hipolita Lutz, Appellant s

v. Public Utility Commission of Texas, Appellee

DIREC T APPEAL FROM THE PUBLIC UTILITY COMMI SSION OF TEXAS RULEMAKI NG PROCEEDING N O. 47343

C O N C U R R I N G A N D D I S S E N T I N G O P I N I O N

I respectfully dissent from the Court ’s determination that th e Public Utility Commission complied with the Administrative Procedures Act ’s notice requi rements as to the proposed r ule regarding the split

- deposit provision in former Rule 2 5.478(e)(3). See 16 Tex. Admin. Code § 25.478 (Pub. Util. Comm’n, Credit Requirements and Deposits) ; see also Tex.
G o v ’ t Code § 2001.023 (Notice of Proposed Rule)

. T he Texa s Supr eme Court has des c ribed two standards that c ourts have applied to determine whether an agency ’ s notice compli es with the
APA

. Tex as Workers ’ Comp. Comm ’ n v. Patient Advocates , 136 S.W.3d 643, 649

- 50 (Tex. 2004) . Fir st, t he Supreme Court explained this C o urt ’ s sta ndard in State B oard of Ins urance v. Deffebach that “ if a proposed rule is changed to incorporate public comments and no new subjects of regulation or persons besides those previously given noti ce are affected, then no further purpose would be served by requir ing r epublication of the proposed rule

. ” Patient Advocates , 136 S.W.3d at 650 ( citing Deffebach , 631 S.W.2d 794, 801 (Tex. App.

— Austin2 1982, writ ref ’ d n .r.e. ) )

. Deffe bach premised its standard on the und isputed understanding that the “ basic pu rpose s ” of t he notice req uirements “ are to info rm the public of the content s of the proposed rule and to give persons sufficient advance notice of the rule ’ s content to permit them to ascertain whether protection of their interests r equires them to request a hearing a nd participate therein. ” 631 S.W.2d at 800

. Second, the Supreme Court ana lyzed federal c ourt preced ents construing the federal A dministrative Pr ocedure Act , which contain s notice requir ements similar to those in Texas ’ s APA. Patient Advocate s , 136 S.W.3d a t 650

. The

“ majority of federal courts of appeals have held that under the federal APA the original notice is adequate if the modified final rule is a ‘ logical outgrowth ’ of the published provisions. ” Id. Th e Supreme Court concluded, “ T he rel evant inqui ry under both standards is w hether the agency ’ s notice fai rly apprises affected parties of the pertinent issues to allow them to comment and participate in the rulemaking process in a meaningful and informed manner

. ” Id. U lti mately, becaus e th e rule chan ge at issue in Patient Advoca tes “ did not materially alter the issues raised in the proposed rule or affect persons other than those previously on notice , ” it “ was a logical outgrowth of the published provisions

. ” Id. at 651

. The PUC pro vide d notice of its change to the spl it

- deposit provision by publishing t he following proposed change to former Rule 25.478(e) :

(e) Amount of deposit.
(1)

- (2) (No change.)
(3) A [If a customer or applicant qualifies for the rate reduction program under § 25. 454 of this tit le (relating to Rate Reduction Program), then such] custom er or3 applicant shall be eligible to pay a ny deposit that exceeds $50 in two equal installments. Notice of this option [for customers eligible for the rate reduction program] shall be incl uded in any written notice to a customer from whom [requesting] a depo sit is requested. [ The customer shall ha ve the obligation of providing sufficient information to the REP to demonstrate that the customer is eligible for the rate reduction program.] The first inst allment shall be due no sooner than ten days, and the seco nd installment no sooner than 40 days, af ter the issuance of written notification to the applicant of the deposit requirement.

42 Tex. Reg. 7495, 7506 (Dec. 2017)

. The PUC ’ s notice t hus proposed ex pand ing the class of
custom ers eligible to split deposits from th ose “ eligible for the rate redu ction program ” to all
customers paying “ any deposit that exceeds $50

. ” The persons affected by the proposed change
were customers not previously eli gib le for t he rate reduction pro gram. However, b y repealing the entirety of Rule 25.478(e) (3), the PUC provided fo r remo v al of the split

- deposit opt ion

— a significantly different issue than the ex pan sion of customers eligi ble to split deposits

— thereby affect ing c ust o m ers who were previously el igib le for the rate reduction program. Becau se the adopted rule “ affect [ ed ] persons other than those previously on notice , ” i t was not a logical outgro wth of the proposed rule

. See Patient Advocates , 136 S.W.3d a t 65 1

. Nothing in the proposed rule suggested t he possibility of sub section (e) (3) being deleted in its entirety. To the contrary, the PU C provide d notice of its intent to repeal some sections entirely, but expressly provided notice of an intent to m erel y “ amend 16 TAC

. . . § 25.478 , relating to Cr edit Requirements and Deposits , ” by making it applicable to all customers

. 42 Tex. Reg. 7495. Under the PUC ’s theory that notice of expanding a rule ’s applicability to other customers4 cons t itutes notice that the entire rule might disappear, the PUC coul d also justify expanding a rule to apply to any number of p eople after p ro posing that the rule be repealed in its entirety. While APA notice req uir ements s hou ld not be construed to automatically afford “ a new

o pportunity for comment simply because the ru le, as promulgated by the agency, differs from the rule the agency propose d , ” Deffenbach , 631 S.W.2d at 80 1 , the PUC ’s concept of notice renders the APA ’s notice requirements all but meaningless , s ee Tex. Gov ’t C ode § 2001.024 ( requ iring, inter alia, “ a b rief explanation of the proposed rule ” and “ the text of the proposed rule, except any portion omitted under Section 2002.014, prepared in a manner to indicate any words to be added or deleted from the current text ” ). The Court asserts that t he statutory expiration of the SBF and the corresp onding notice proposing repeal of the rate reduction program notified customers eligible for that
program that they would not be entitled to sp lit deposits “based on their prev ious enro llment in the rate reduction pro gr am , ” and the Court goes a step further, inferring that those customers

wer e therefore “necessarily on notice that the y . . . might or might not be entitled to the split deposit option going forwar d. ” But being in eligible to spl it deposits on a particular basis is not the same as being ineligible to split deposits at all , and th e effect of the proposed amendment misle d customers previously el igible for the rate reduction program to believe that the sp lit

deposit op tion under § 25 .478 (e)(3) would remain avai lable to them

. Under the circ umstances, customers previously e ligible for the rate reduction program were not given “sufficient advance notice of the rule’s content to permit them to ascertain whether protection of their intere sts require[d] them to reque st a hearing and participate t herein.” Deffenbach , 631 S.W.2d at 800

. The PUC therefore failed to comply with the APA’s notice requirements . As a result, I would conclude that the PUC had to republish notice of the proposed d eletion of section 17.004(e) (3).5 Although I concur in the Court ’ s determination that the PUC had a reasoned justification for adopting changes to Rule 25.478(e), I do not agree that section 17.007(c)
pro hibits a split

- deposit op tion for al l customers. G enerally, I agree that remov ing provisions relating to the expired SB F was a reasoned justi fication f or the PUC ’ s rule changes. However, removing the split

- deposit option entirely was not required in order to alig n the rule with the expirat i on of the SBF, as evidenced by the PUC ’ s p roposed rule language that removes re ference to the rate reduct ion program while leav ing intact the split

- deposit option , albeit f or an expanded class of customers

. In fact, s ection 17.004 of the Utilities Code e xpressly allows the PUC to provide for a s plit

- deposit option by allowing the PUC to adopt and enforce ru les “relating to customer deposits

. ” Tex. Util. Code § 17.004(b). The bill s creating s ection 17.004 and the SBF were enacted during the same legi slat ure ; section 17 .004 provide d general custo mer pro tection standards, while the SBF aimed to assist low

- inc ome customers, to provide cus tomer education, and to fund schools through a funding loss mechanism

. See Act of May 30, 1999, 76th Leg. , R.S., ch. 1579 , § 3, 1999 Tex . Gen. Laws 5421, 5423 ( S.B . 86, codified at Tex. Util. Code § 17.004); Act of May 27 , 19 99, 76th Leg., R.S., ch. 405 , § 3 9 , 1999 Tex. Gen. Laws 2543 , 2597 ( S.B. 7, codified at Tex. Util. Code § 39.9 03 )

. The expiration of the SBF did not im pact the
P UC ’ s un related authority under section 17.004 to provide for split de posits

. N or would the
sp lit

- deposit option have run a foul of section 17.007(c)

. Section 17.007 (c) pr ohibits requiring retail electr ic providers to offer customer service benef its “ for which the provider or utility is not reimbursed

. ” Tex. Util. Code § 17.007(c). Despite asserting that “ t here would be costs that would not be reimbursed, ” the PUC did not ident ify what those costs w ere. In the absence of costs that would not be reimbursed, se ctio n 17.007(c) does not apply

.6 I also concur with t he Court ’s conclusion that the PUC was not statutorily obligate d to retain the customer pro tections at is sue in this case becau se the PUC has discretion over whether to offer these prot ections

. Howev er, I do not read section 17.004 ’s protections as incons istent with section 17.007 ’s treatment of customer service bene fits

. In the bill that created section 17.004, the legislat ure expressly identified an “ increased [] need for minimum sta n dards of servi ce quality, customer service, and fair business practice s to ensure high

- quality service to customers and a healthy mar ketplace where competition is permitted by law. ” Tex. Util. Code § 11.002(c). The legi slature further provided, “ It is t he purpose of [ chapters 11

- 17 of the Utility Code] to grant the Public Utility Commission of Texas authority to make and enforce rules necessary to protect customers of telecommunications and electric services consistent with the public interest. ” Id

. Th e protections e nacted in section 17.004 authorized the PUC to provide “minimum standards of service quality , ” including rules relatin g to cus tomer depos its. These protections are not inconsistent with se ction 17 .007 ’s directive tha t any benefits required by the
PUC must be reimbursed , even if we were to assume that “ be nefit s ” were synonymous w ith

“ protections ” and that the protections a t issue were shown to have had some additi onal cost

. For the foregoing reasons, I respectfully dissent from the C o urt ’ s determination that the PUC complied with the notice provisions of the APA and, although I concur with the Court’s other conclusions , I do not join the Court’s reasoning related to s ection 17.007(c).

__________________________________________ Gisela D. Triana , J ustice Before Justices Goodwin, Baker , and Triana Filed: April 30, 2020