TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-18-00364-CV

Low Income Consumers, Mary Wilson and Hipolita Lutz, Appellants

v.

Public Utility Commission of Texas, Appellee

DIRECT APPEAL FROM THE PUBLIC UTILITY COMMISSION OF TEXAS

RULEMAKING PROCEEDING NO. 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 the Public Utility 

Commission complied with the Administrative Procedures Act’s notice requirements as to the 

proposed rule regarding the split-deposit provision in former Rule 25.478(e)(3). See 16 Tex. 

Admin. Code § 25.478 (Pub. Util. Comm’n, Credit Requirements and Deposits); see also Tex. 

Gov’t Code § 2001.023 (Notice of Proposed Rule). The Texas Supreme Court has described two 

standards that courts have applied to determine whether an agency’s notice complies with the 

APA. Texas Workers’ Comp. Comm’n v. Patient Advocates, 136 S.W.3d 643, 649-50 (Tex. 

2004). First, the Supreme Court explained this Court’s standard in State Board of Insurance 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 notice are affected, then no 

further purpose would be served by requiring republication of the proposed rule.” Patient 

Advocates, 136 S.W.3d at 650 (citing Deffebach, 631 S.W.2d 794, 801 (Tex. App.—Austin 
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1982, writ ref’d n.r.e.)). Deffebach premised its standard on the undisputed understanding that 

the “basic purposes” of the notice requirements “are to inform the public of the contents 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 requires them to request a hearing and 

participate therein.” 631 S.W.2d at 800. Second, the Supreme Court analyzed federal court 

precedents construing the federal Administrative Procedure Act, which contains notice 

requirements similar to those in Texas’s APA. Patient Advocates, 136 S.W.3d at 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. The 

Supreme Court concluded, “The relevant inquiry under both standards is whether the agency’s 

notice fairly 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. Ultimately, 

because the rule change at issue in Patient Advocates “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 provided notice of its change to the split-deposit provision by 

publishing the 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 title (relating to Rate Reduction Program), then such] customer or 
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applicant shall be eligible to pay any deposit that exceeds $50 in two equal 

installments. Notice of this option [for customers eligible for the rate reduction 

program]shall be included in any written notice to a customer from 

whom[requesting] a deposit is requested.[ The customer shall have the obligation 

of providing sufficient information to the REP to demonstrate that the customer is 

eligible for the rate reduction program.] The first installment shall be due no 

sooner than ten days, and the second installment no sooner than 40 days, after the 

issuance of written notification to the applicant of the deposit requirement.

42 Tex. Reg. 7495, 7506 (Dec. 2017). The PUC’s notice thus proposed expanding the class of 

customers eligible to split deposits from those “eligible for the rate reduction program” to all 

customers paying “any deposit that exceeds $50.” The persons affected by the proposed change 

were customers not previously eligible for the rate reduction program. However, by repealing 

the entirety of Rule 25.478(e)(3), the PUC provided for removal of the split-deposit option—a 

significantly different issue than the expansion of customers eligible to split deposits—thereby

affecting customers who were previously eligible for the rate reduction program. Because the

adopted rule “affect[ed] persons other than those previously on notice,” it was not a logical 

outgrowth of the proposed rule. See Patient Advocates, 136 S.W.3d at 651. Nothing in the 

proposed rule suggested the possibility of subsection (e)(3) being deleted in its entirety. To the 

contrary, the PUC provided notice of its intent to repeal some sections entirely, but expressly 

provided notice of an intent to merely “amend 16 TAC . . . § 25.478, relating to Credit 

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 customers 
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constitutes notice that the entire rule might disappear, the PUC could also justify expanding a 

rule to apply to any number of people after proposing that the rule be repealed in its entirety. 

While APA notice requirements should not be construed to automatically afford “a new 

opportunity for comment simply because the rule, as promulgated by the agency, differs from the 

rule the agency proposed,” Deffenbach, 631 S.W.2d at 801, the PUC’s concept of notice renders 

the APA’s notice requirements all but meaningless, see Tex. Gov’t Code § 2001.024 (requiring, 

inter alia, “a brief 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 the statutory expiration of the SBF and the corresponding 

notice proposing repeal of the rate reduction program notified customers eligible for that 

program that they would not be entitled to split deposits “based on their previous enrollment in 

the rate reduction program,” and the Court goes a step further, inferring that those customers 

were therefore “necessarily on notice that they . . . might or might not be entitled to the split 

deposit option going forward.” But being ineligible to split deposits on a particular basis is not 

the same as being ineligible to split deposits at all, and the effect of the proposed amendment 

misled customers previously eligible for the rate reduction program to believe that the splitdeposit option under § 25.478(e)(3) would remain available to them. Under the circumstances, 

customers previously eligible 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 interests 

require[d] them to request a hearing and participate therein.” 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 deletion of section 17.004(e)(3).
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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) 

prohibits a split-deposit option for all customers. Generally, I agree that removing provisions 

relating to the expired SBF was a reasoned justification for the PUC’s rule changes. However, 

removing the split-deposit option entirely was not required in order to align the rule with the 

expiration of the SBF, as evidenced by the PUC’s proposed rule language that removes reference 

to the rate reduction program while leaving intact the split-deposit option, albeit for an expanded 

class of customers. In fact, section 17.004 of the Utilities Code expressly allows the PUC to 

provide for a split-deposit option by allowing the PUC to adopt and enforce rules “relating to 

customer deposits.” Tex. Util. Code § 17.004(b). The bills creating section 17.004 and the SBF 

were enacted during the same legislature; section 17.004 provided general customer protection 

standards, while the SBF aimed to assist low-income customers, to provide customer 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, 1999, 76th Leg., R.S., ch. 405, § 39, 1999 Tex. Gen. Laws 2543, 2597

(S.B. 7, codified at Tex. Util. Code § 39.903). The expiration of the SBF did not impact the 

PUC’s unrelated authority under section 17.004 to provide for split deposits. Nor would the 

split-deposit option have run afoul of section 17.007(c). Section 17.007(c) prohibits requiring 

retail electric providers to offer customer service benefits “for which the provider or utility is not 

reimbursed.” Tex. Util. Code § 17.007(c). Despite asserting that “there would be costs that 

would not be reimbursed,” the PUC did not identify what those costs were. In the absence of 

costs that would not be reimbursed, section 17.007(c) does not apply. 
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I also concur with the Court’s conclusion that the PUC was not statutorily 

obligated to retain the customer protections at issue in this case because the PUC has discretion 

over whether to offer these protections. However, I do not read section 17.004’s protections as 

inconsistent with section 17.007’s treatment of customer service benefits. In the bill that created 

section 17.004, the legislature expressly identified an “increased [] need for minimum standards 

of service quality, customer service, and fair business practices to ensure high-quality service to 

customers and a healthy marketplace where competition is permitted by law.” Tex. Util. Code 

§ 11.002(c). The legislature further provided, “It is the 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. The protections enacted in section 17.004 authorized the PUC to provide 

“minimum standards of service quality,” including rules relating to customer deposits. These 

protections are not inconsistent with section 17.007’s directive that any benefits required by the 

PUC must be reimbursed, even if we were to assume that “benefits” were synonymous with 

“protections” and that the protections at issue were shown to have had some additional cost.

For the foregoing reasons, I respectfully dissent from the Court’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 section 17.007(c).

__________________________________________

Gisela D. Triana, Justice

Before Justices Goodwin, Baker, and Triana

Filed: April 30, 2020