# The Attorney General of Texas May7, 1981

MARK WHITE Attorney General Honorable James E.Nugent Chairman Railroad Commission ofTexas P. 0. Box 12967 Austin, Texas 78711 Opinion No. MW-335
Re: Whether an individual citizen ratepayer may appeal from a municipal gas rate ordinance as a party under section 26(a) of article 1446c,V.T.C.S.
Dear Chairman Nugent:
Youhave asked the following questions:

1. May an individual citizen ratepayer appeal from a municipal gas rate ordinance as a “party to a rate proceeding before the governing body of a municipality” under section 26(a), article 1446c, V.T.C.S., or issuch individual limited to the appellate procedure set forth insection 26(b)?
2. If said individual can appeal from a municipel gas rate ordinance under section 26(a), is such appeal dependent upon a showing of special injury not common to other ratepayers?
3. If said individual can appeal from a municipal gas rate ordinance under section 26(a), can said individual, without formal party designation by the city council, attain party status within the meaning of section 26(a) through active participation before the city council, i.e., by submitting written statements of position, cross-examining utility witnesses, and engaging ininformal discovery with the utility?
The facts are as follows: after considering on nine occasions a proposal for a rate increase submitted by Entex, Inc., the San Marcos city council passed a rate ordinance setting Entex’s rates. Thereafter, a San Marcos resident contested the ordinance by filing with the Railroad Commission an instrument entitled “In re: The Appeal of Lena Green, on behalf of Residential Consumers of Natural Gas Services Supplied by Entex, Inc., in the City of San Marcos, from action by the City of San Marcos, Texas.” This instrument alleged that the commission had jurisdiction to

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entertain the appeal wider article 1446c, section 26(a), V.T.C.S. (The Public Utility Regulatory Act, or“PURA”), which provides that:

(a) Any party to a rate proceeding before the governing body ofa municipality may appeal the decision ofthe governing body to the commission orrailroad commission.
The ratepayer had not complied with section 26(b),which provides that:

(b) Citizens of a municipality may appeal the decision of the governing body in any rate proceeding to the commission or railroad commission through the filing of a petition for review signed by the lesser of 20,000 or 10percent of the number of qualified voters ofsuch municipality.
Entex filed a plea to the jurisdiction of the Railroad Commission asserting that the ratepayer lacked standing to appeal under section 26(a) because she was not a
“party” to the rate proceeding. The stipulated facts reveal that although Ms.Green’s attorney participated in several council hearings on the Entex matter, no motion requesting intervention asaparty to the proceeding wasfiled with the city council and the ratepayer’s name does not appear in the minutes of the council hearings Because the ratepayer was not an original party to the proceeding and wasnot later designated as a party by the city council, Entex contends that she is not a party under section 26(a). Ms.Green, onthe other hand, takes the position that active participation inthe proceeding before the council is sufficient to confer party status uponher.
Your fist question is whether a citizen ratepayer may appeal from a municipal gas rate ordinance as a “party” under section 26(a) or whether such individual is in all

. instances limited to the appellate procedure set forth insection 26(b). Wedonot think

the legislature intended to preclude citizens from ever qualifying as parties and are therefore of the opinion that a citizen may qualify asaparty and appeal under section 26(a). The critical inquiry concerns the criteria that must be satisfied in order for a citizen to become aparty within the meaning ofthat section.
The PURA does not define the term “party. I’However, section 4of article 1446~ states that “[tlhe Administrative Procedure and Texas Register Act applies to all proceedings under this Act except to the extent inconsistent with this Act.” The Administrative Procedure and Texas Register Act (hereinafter “APTRA”) defines a
‘party” as “each person or agency named or admitted as a party.” V.T.C.S. art. 6252- 13a, S3(5). Considering these sections together, we conclude that the definition of

“party” in APTRA also applies to the PURA; accordingly, a“party” under section 26(a) is “each person or agency named or admitted as aparty. I’Inthis context, wenote that although APTRA does not apply to proceedings before municipal governing bodies, we are concerned with determining whomay appeal decisions ofthose bodies to the Public Utilities Commission orto the Railroad Commission, which are governed byAPTRA. Having concluded that a “party” is “each person or agency named or admitted as a party,” we must ascertain the meaning of the phrase “named or admitted.” May an

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individual not originally named as aparty to aproceeding be “admitted” asaparty only by formally requesting and receiving designation as aparty bythe governing body? Or may one become aparty through active participation inthe proceeding?
Absent any indication of the meaning of“named or admitted asaparty” ineither the PURA or APTRA, wemust resort to outside sources to assist usindetermining the meaning that the le&lature most likely intended to ascribe to the phrase. See Huntsville Ind. School District v. McAdams, 221S.W. 2d 546 (Tex. 1949). One such source is case law. Texas case law, however, affords little help in this inquiry. Several cases have dealt with attempts bvcitizen rateoavers to aooeal municioal rate ordinances, see e. San Antonio Independent School Di.&rict v. City of San Antonio, 550 S.W. 2d 262 Tex. 1976);Tuck v.Texas Power and Light Co., Inc., 543 S.W.2d 214

--Y (Tex. Civ. App. - Austin 1976, writ refd n.r.e.); Schenker v. City of-San Antonio, 369 S.W. 2d 626 (Tex. Civ. App. - San Antonio 1963, writ rePd n.r.e.1, but these cases involved attempted appeals to the courts rather than to administrative agencies. Moreover, each case was decided on the basis of whether the complainant had exhausted his administrative remedies, was a proper representative ln a class action, or had ajusticlable interest in the controversy sufficient to permit suit instate court. In our view, they offer little help in determining what the legislature intended when it authorized appeak to the Public Utility Commission or the Railroad Commission by persons “named or admitted asaparty” to arate proceeding.
State v. Gutschke, 233 S.W.2d446 (Tex. 1950),iscited inthe briefs submitted to usfor the proposition that the failure to file pleadings or to otherwise indicate adesire to become a party at the municipal level &es not preclude an individual from qualifying as a “party” under section 26(a). In Guts&&e, a county judge denied an application for a retailer’s on-premises beer license and the applicant appealed under former article 667-6 of the Penal Code. The district court granted the application, and the Texas Supreme Court held that the citizen-protestants could challenge that ruling in the Court of Civil Appeals. The court noted that article 667-6 “evidently contemplates that [proceedings before the county judge1 shall be ofless than judicially formal character, without requirement of any written.

..pleadings [as al prerequisite to.

. .becoming aparty to the cause.
...‘I 233S.W.2dat 448.
In our opinion, however, Gutschke isnot dispositive ofthe issue before us. First, article 667-6 set up an entirely different regulatory scheme and employed different terminology than that involved inthe PURA, which wasenacted 25years later. This is important in view of the Gutschke court’s emphasis upon the fact that its decision turned upon the precise wowarticle 667-6. Second, the significance, if not the validity, of Gutschke has since been undercut bythe Texas Supreme Court’s decision in Stone v. Texas Liquor Control Board, 417S.W. 2d 385 (Tex. 1967L Stone, which also construed former article 667-6, pointed out that Gutschke did “not hold that the statutory authorization to participate in the hearingthe county judge carries with it the right of appeal to the courts” 417 S.W. 2d at 386. Whatever limited assistance Gutschke might have provided in this inquiry has, in our view, been eroded by the Stone decision.
The federal counterpart to APTRA, the Administrative Procedure Act, 5U.S.C. sections 551-576define a “party” as:

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. .. a person or agency named or admitted as a party, or properly seeking and entitled as of right to be admitted as a party, inan agency proceeding, and aperson or agency admitted byan agency asaparty for limited purposes. (Emphasis addedX
Section 551(3). Unfortunately, the Administrative Procedure Act also falls to shed any light on the meaning of the phrase “named or admitted as aparty.” Federal case law does indicate that federal courts have expanded the class of persons who may intervene as parties in administrative proceedings and have allowed agencies broad discretion in determining whom they will admit as interveners, see Office of Communication of United Church of Christ v. P.C.C., 359 F. 2d994 (Dx. m appeal after remand, 425 F. 2d 543 (D. C. Cir. 1969),but the cases do not indicate whether formal designation by an agency is an absolute prerequisite to becoming an intervenor party.
Inits brief, counsel for Entex asserts that:

[Tlhe requirement that parties be expressly named or expressly admitted in pleadings (is] important and obvious. Otherwise, others in the proceeding would be unable to determine from the record whotheir adversaries are orwhether the adversaries are in fact entitled to intervene. Indeed, if named parties are unable to determine who the proposed lntervenors are, then the named parties would beunable to even object to the admission of interveners. Further, the tribunal itself may be unable to determine the identity of the parties; a test based upon the degree of participation in a given instance would lead to situations, such as this one, in which there is a serious fact issue of whether aperson isaparty. Brief for Entex, at page 12. Counsel also correctly pointed out that both the Railroad Commission and the Public Utility Commission require formalized pleadings in their administrative hearings See 4 West’s Texas Forms Administrative Practice and Procedure S36.52 (1977);5West’sTexas Forms Administrative Practice and Procedure B7 95

. (m77). On the other hand, the hearing examiner in this case, while he did not agree that the degree of participation in a proceeding should necessarily determine whether a person has been admitted as a party, did observe that the degree of participation by Ms. Green’s attorney wassuch that Entex could not claim surprise and concluded that equity dictated ajurisdictional finding in her favor. It is important to note, however, that the hearing examiner also stated that normally “it is incumbent upon a participant desiring party status to do all things necessary to insure a determination of that status, particularly when all that is required isa simple oral or written motion.” Railroad Commission Jurisdictional Ruling, Docket No. 1907,at 5-6, January 3, 1980. After reviewing the available authorities and considering the briefs submitted in this case, we conclude that the legislature, ln employing the phrase “named or admitted as a party,” most likely intended that an individual not originally named asa

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party to a rate proceeding before a municipal governing body may be “admitted” as a party only if he requests party status and is then designated as a party by the governing body. Mere participation inthe proceeding, inother words, isinsufficient to confer party status upon an individual such as the ratepayer inthis case. One desiring party status must request the governing body to confer such status upon him, and that body may then accept or reject such request inaccordance with its ownrules.
This interpretation fathers the legislature’s intent as we perceive it. If a ratepayer could qualify as a party merely by participating in rate hearings before municipl governing bodies, the express requirements of article 1446c, section 26(b), V.T.C.S., would, in an instance such as this, be abrogated. There would be no reason for a ratepayer to attempt to comply with the petition requirements ofsection 26(b)if he could accomplish the same result by appearing at council meetings and thereafter filing an “appeal on behalf of residential consumers.” Additionally, if “degree of participation” isto be the applicable standard indetermining whether an individual has attained party status, each case would ultimately require a decision after the fact as to whether enough participation had occurred. Finally, allowing an individual to become aparty through active participation would mean that the governing body would have little control over who could intervene as a party. Wetherefore answer your third question inthe negative.
The remaining question is whether an appeal under article 1446c, section 26(a), V.T.C.S., is further dependent upon a showing of special injury not common to other ratepayers. Prior to the enactment ofthe PURA, courts held that ratepayers had nostanding to challenge in the courts utility rates set by a governing bcdy when the ratepayer could not show any damage peculiar to himself. Tuck v. Texas Power and Light Co., Inc., supra; Schenker v. City of San Antonio, supra; Hazelwood v. City of Cooper, 87 S.W. 2d 7767Tex. Civ. App. - Texarkana 1935,writ rePd). These holdings were based on the principle that the complaining party must have a justiciable interest in the controversy distinguishable from the public ingeneraL It has abo been held in motor carrier cases that a right to appeal presupposes standing to appeaL Lake Transport, Inc. v. Railroad Commission of Texas, 505 S.W. 2d 781 (Tex. 1974); Permian Basin Coaches, Inc. v. Railroad Commission of Texas, 531S.W. 2d 374’!(Tex. Civ. App. - Austin 1975,no writ).
These cases, however, involved attempts to obtain judicial review offinal agency action, rather than agency review of action taken by a munlctpal governing body. We have found no authority for the proposition that an individual must demonstrate specialized injury in order to have standing to appeal in the latter instance. On the contrary, language inarecent court of civil appeals decision bolsters the view that the opposite is true. In Hooks v. Texas Department ofWater Resources, 602SW. 2d 389, 391-92(Tex. Civ. App- Austin 19801,rev’d on other grounds, 611 S.W.2d417(Tex. 19811, the court stated that:

There is a distinction between the right to participate ln an administrative proceeding and the right to ajudicial review of

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final agency action. Stone v. Texas Liquor Control Board, 417 S.W. 2d 385 (Tex. 1967). The necessity of ajusticiable interest has loig been recognized in obtaining judicial review of administrative action.
The Texas Supreme Court haa, moreover, recently cast some doubt on the question of whether a party must even demonstrate special injury in order to be entitled to judicial review of agency action under the PURA. In City of Houston v. 610S.W. 2d 732 (Tex. 1980),which refused writ of error, fHouston v.Public Utilities Commission, 599S.W.2d667

,the Supreme Court stated that:
Inrefusing the City’s application for writ of error, noreversible error, our action is not to be interpreted as approving or disapproving the holding of the court of civil appeals that a party must demonstrate “special injury” to be entitled to judicial review under the Public Utility Regulatory Act.
Wehave observed that section 26(a) of the PURA states that “[alny party to a rate proceeding before the governing body of a municipality may appeal the decision.

. . to the commission or railroad commission.” Neither this section, the remaining sections of the PURA, nor the Administrative Procedure and Texas Register Act expressly limit the right of someone who has qualified as a party under section 26(a) to appeal a municipal governing body’sdecision to either commission. Wedecline to read into section 26(a) an additional requirement that in order to appeal to either commission, an individual must demonstrate some special injury, especially in light of the Supreme Court’s recent decisions in City -of Houston vi Public Utilities Commission, supra, and Hooks v. Texas Department of Water Resources, supra We therefore answer your second question inthe negative.
SUMMARY
An individual citizen ratepayer may appeal from a municipal gas rate ordinance as a “party to a rate proceeding before the governing body of the municipellty” provided he was originally named 8s a party to the proceeding or was subsequently admitted as a party by the governing body. An individual may not attain party status merely by participating actively in the proceeding before the city council. Once an individual has been named or admitted asaparty at the municipal level, hisright to appeal under section 26(a) is not further dependent upon a showing ofspecial injury not common to other ratepayers.

MARK WHITE Attorney General ofTexas

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JOHN W.FAINTER, JR. First Assistant Attorney General
RICHARD E.GRAY III Executive Assistant Attorney General Prepared byJon Bible Assistant Attorney General
APPROVED: OPINION COMMlTTEE
Susan L.Garrison, Chairman Jon Bible Rick Gilpin Bruce Youngblood

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