Court Opinion

ID: 4066081
Source: CourtListenerOpinion
Date Created: 2016-09-29 22:23:35.057205+00
Date Added: 2024-06-11T14:32:30.268824
License: Public Domain

ACCEPTED
                                                                                             03-14-00340-CV
                                                                                                     5205250
                                                                                  THIRD COURT OF APPEALS
                                                                                             AUSTIN, TEXAS
                                                                                         5/8/2015 9:45:51 AM
                                                                                           JEFFREY D. KYLE
                                                                                                      CLERK

                     No. 03-14-00340-CV
                                                                          FILED IN
                                                                   3rd COURT OF APPEALS
                                                                       AUSTIN, TEXAS
                                                                   5/8/2015 9:45:51 AM
                             In the Court of Appeals                 JEFFREY D. KYLE
                         Third District of Texas – Austin                  Clerk

Appellants, CPS Energy, Time Warner Cable Texas LLC, and Southwestern
Bell Telephone Company d/b/a AT&T Texas// Cross-Appellant, Public Utility
                          Commission of Texas

                                          v.

Appellee, Public Utility Commission of Texas// Cross-Appellee, CPS Energy,
Time Warner Cable Texas LLC and Southwestern Bell Telephone Company
                            d/b/a AT&T Texas

               On Appeal from 250th District Court, Travis County, Texas
                    Cause No. D-1-GN-13-001238 (Consolidated)

Joint Response of AT&T Texas and Time Warner Cable Texas LLC
to the April 20, 2015 Letter from the Attorney General to the Court

Len G. Briley, Jr.           J. David Tate                  Michael T. Sullivan
AT&T Legal Department        Katherine C. Swaller           (admitted pro hac vice)
1010 N. St. Mary's St.       Thomas Ballo                   Mayer Brown LLP
Room 14Q                     AT&T Legal Department          71 S. Wacker Drive
San Antonio, TX 78215         816 Congress Avenue Suite     Chicago, IL 60606
Phone: (210) 351-4832        1100                           Phone: (312) 782-0600
Fax: (210) 886-2127          Austin, TX 78701               Fax: (312) 706-8689
                             Phone: (512) 457-2304
                             Fax: (512) 870-3420
         Southwestern Bell Telephone Company d/b/a AT&T Texas (“AT&T”) and

Time Warner Cable Texas LLC (“TWC”) file this Joint Response to the April 20,

2015 letter from the Attorney General, on behalf of the Public Utility Commission

of Texas (“Commission”), to the Clerk of this Court (“April 20 Letter”), which

claims that this Court does not have jurisdiction over one of the issues on appeal.

In particular, the Commission claims that its determination that Public Utility

Regulatory Act (“PURA”) § 54.204 automatically incorporates revisions to the

Federal Communications Commission’s (“FCC”) Telecom Formula is an

“advisory opinion” that CPS Energy (“CPS”) does not have standing to appeal.

Respectfully, the Commission is mistaken.

                                      BACKGROUND

         PURA § 54.204 requires that CPS’ maximum pole attachment rate be

determined for each year through application of the FCC Telecom Formula

adopted under 47 U.S.C. § 224(e). CPS’ petition filed with the Commission

sought an order (1) requiring AT&T and TWC to pay pole attachment fees it had

calculated pursuant to PURA for certain years, and (2) finding “that the method

used by CPS Energy to calculate its pole attachment fees is reasonable and

consistent with the requirements of PURA.” 1 In response to motions to dismiss,

the Commission found that it did not have jurisdiction to compel payment of pole

1
    AR, Record Binder 1, Item 1 at 11 (Petition And Request For Enforcement Of CPS Energy).

                                               1
attachment fees, and therefore the case proceeded solely as a declaratory judgment

action.    The Commission explained: “CPS Energy has standing to seek a

declaratory order regarding the issue of whether its pole attachment rates comply

with section 54.204 of PURA,” and “may seek a declaratory order to clarify its

obligations under section 54.204.” 2

       During the course of the Commission proceeding, the FCC issued an order

that revised the Telecom Formula effective June 8, 2011.3 A dispute then arose

between the parties over whether PURA § 54.204 requires such revisions to be

automatically incorporated into PURA. At the parties’ request, the Administrative

Law Judge hearing the case certified the following issue to the Commission:

       Do the requirements of PURA § 54.204(c) incorporate revisions to the
       FCC's rules under 47 U.S.C. § 224(e) that are adopted subsequent to
       September 1, 2006, and if so, when do any such revisions become
       applicable to PURA § 54.204(c)?

       The issue certified was a pure legal issue of statutory interpretation, and the

parties’ briefs on the issue focused solely on the plain language of PURA § 54.204,

2
 AR, Record Binder 1, Item 25 at 1, 5 (PUC Docket No. 36633, Doc. 25, Order on Appeal of
Order No. 3, May 21, 2009).
3
  In the Matter of Implementation of Section 224 of the Act, a National Broadband Plan for Our
Future, WC Docket No. 07-245, Report and Order and Order on Reconsideration, FCC 11-50
(rel. April 7, 2011).

                                              2
legislative intent, and statutory construction. 4 After careful consideration, the

Commission concluded: 5

       The plain language of PURA § 54.204(c) indicates that the
       Legislature was aware that the FCC could possibly adopt new or
       modified rules under 47 U.S.C. § 224(e), and that it was the
       Legislature's clear intent that PURA § 54.204(c) incorporate these
       new or modified rules. Additionally, nothing in the language of
       PURA § 54.204(c) expressly excludes revisions to the FCC's rules
       under 47 U.S.C. § 224(e), and reading PURA § 54.204(c) to exclude
       revisions to the FCC rules would thwart the intent of the Legislature.

See also AR, Binder 13, Item 530 at Conclusion of Law No. 26 (PFD) (“Changes

in 47 U.S.C. § 224(e) are incorporated into PURA § 54.204 without legislative

action.”).6

4
  AT&T and TWC argued that the plain language of § 54.204 requires revisions to the FCC
Telecom Formula to be automatically incorporated into PURA—specifically, they argued that
the phrase “rules adopted by [the FCC]” plainly encompasses revisions to those rules. AR,
Binder 8, Item 391 at 3-5 (AT&T Texas’ Brief on Certified Issues, filed June 6, 2011); Id., Item
393 at 7-10 (TWC’s Brief on Certified Issues, filed June 6, 2011). AT&T and TWC also argued
that under the rules of statutory construction reference to a statute applies to all revisions or
amendments to that statute unless the statute expressly provides otherwise. And because §
54.204 does not expressly provide otherwise, they argued that the Legislature intended revisions
to the FCC Telecom Formula to be incorporated into PURA. Id. CPS also relied on the plain
language of PURA. But CPS argued that the absence of the phrase “as amended from time to
time,” or similar language, indicates the Legislature’s intent that revisions would not be
automatically incorporated into PURA and that the Telecom Formula would always be applied
as it existed in 2005 when PURA was enacted. Id., Item 394 at 13 (CPS Brief on Certified
Issues, filed June 6, 2011).
5
 AR, Binder 8, Item 402 at 2 (PUC Docket No. 36633, Doc. 753, Order on Certified Issues,
June 24, 2011).
6
  AR, Binder 13, Item 530 at 8-9 (PFD) “The Commission also determined that any revisions to
the FCC rules through FCC orders apply to MOUs under PURA § 54.204(c).”); Id. at Conclusion
of Law No. 27 (“The FCC's June 8, 2011 amendment to 47 C.F.R. 1.1409(e) applies to CPS
Energy under PURA § 54.204(c).”); Id. at Finding of Fact No. 31(d) (“The revisions to the
FCC's rules under 47 U.S.C. § 224(e) adopted on June 8, 2011, are incorporated into PURA
§ 54.204(c).”)

                                               3
                                    ARGUMENT

         The Commission’s determination that PURA § 54.204 automatically

incorporates any revisions to the FCC Telecom Formula was a declaratory

judgment, not an “advisory opinion,” and the Court has jurisdiction over CPS’

appeal of that issue.

         A declaratory judgment “is a remedial measure that determines the rights of

the parties and affords relief from uncertainty with respect to rights, status, and

legal relations.” Halliburton Energy Serv., Inc. v. Axis Tech., LLC, 444 S.W.3d
251, 262 (Tex. App.—Dallas 2014, no pet.).            Declaratory judgment actions

“determine the rights of the parties when a controversy has arisen, before any

wrong has actually been committed, and are preventative in nature.”            Bexar

Metropolitan Water Dist. v. City of Bulverde, 156 S.W.3d 79, 88 (Tex. App.—

Austin 2005, pet. denied). A declaratory judgment is appropriate if a “justiciable

controversy exists as to the rights and status of the parties” and the controversy

“will be resolved by the declaration sought.”        Juliff Gardens, L.L.C. v. Tex.

Comm’n on Envtl. Quality, 131 S.W.3d 271, 277 (Tex. App.—Austin 2004, no

pet.).

         Here, a controversy arose over the correct interpretation of a statute (PURA

§ 54.204) and the parties’ rights under that statute. AT&T and TWC consistently

have maintained that the language of PURA requires FCC revisions to the Telecom

                                           4
Formula to be automatically incorporated into PURA. CPS’ view has been that the

language does not automatically incorporate revisions. The Commission, at the

request of the parties, resolved that controversy by issuing a declaratory judgment

interpreting the statute. It is well settled that a “[d]eclaratory judgment is an

appropriate vehicle for clarifying a party’s rights under a statute.”                   State v.

Montgomery Cnty., 338 S.W.3d 49, 57-58 (Tex. App.—Beaumont 2011, pet.

denied); see also Metropolitan Water Dist., 156 S.W.3d at 88 (declaratory

judgment “may be used to clarify the meaning of statutes”); Brennan v. City of

Willow Park, 376 S.W.3d 910, 922 (Tex. App.—Fort Worth 2012, pet. denied) (the

Declaratory Judgments Act “grants any litigant whose rights are affected by a

statute the opportunity to obtain a declaration of those rights under the statute”).7

          The Commission, through the Attorney General, nevertheless claims that the

Commission’s determination is an “advisory opinion” because it purportedly is just

a “statement[] about the future.” 8 It made this claim for the first time in this Court

on the eve of oral argument, notwithstanding that the Commission has already

defended its Order on Rehearing on this issue before the trial court and fully

briefed the issue before this Court. At no point before the April 20 Letter did the

7
  In this respect, the Commission’s conclusion that CPS had the right to “seek a declaratory order
to clarify its obligations under section 54.204” is spot on. AR, Record Binder 1, Item 25 at 1, 5
(PUC Docket No. 36633, Doc. 25, Order on Appeal of Order No. 3, May 21, 2009).
8
    April 20 Letter at p.1.

                                                5
Commission ever suggest that its decision with respect to the meaning of PURA

§ 54.204 was an “advisory opinion.” And it is not.

         The Commission mischaracterizes both the nature of advisory opinions and

the nature of the Commission’s determination.         An advisory opinion is one

“advising what the law would be on a hypothetical set of facts.” Robinson v.

Parker, 353 S.W.3d 753, 756 (Tex. 2011). That is, an advisory opinion is one that

depends on uncertain or contingent future events that may or may not occur. R.R.

Comm’n of Tex. v. Centerpoint Energy Res. Corp., Nos. 03–13–00533–CV, 03–

13–00534–CV, 03–13–00535–CV, 2014 WL 4058727 *3 (Tex. App.—Austin

Aug, 14, 2014, no pet.). The Commission’s determination is not a statement about

the future, does not depend on hypothetical or theoretical future events, and will

not change regardless of any future facts. It is a pure legal determination about the

meaning of disputed statutory language, which courts have unequivocally held is a

proper subject for a declaratory judgment. Montgomery Cnty., 338 S.W.3d at 57-

58; Metropolitan Water Dist., 156 S.W.3d at 88; Brennan, 376 S.W.3d at 922.

One only needs to look at the briefs filed by the parties on the certified issue

(which focused solely on the plain language of the statute, legislative intent, and

statutory construction) to see that the relief requested was purely legal and did not

depend on the development of future facts. 9 “When a party seeks only a pure legal

9
    Supra, n.4.

                                         6
determination that is not contingent of the development of additional facts, the

relief requested is not advisory.” Complaint of Chermac Energy Corp. Regarding

Certain Qualifying Facilities Under PURPA, 2010 WL 3524026 *4 (Tex. P.U.C.

2010).

      In Chermac, the Commission reversed an Administrative Law Judge’s

determination that the relief sought by the complainant was not ripe and that a

decision in the case would therefore be an advisory opinion. 2010 WL 3524026

*4. The Commission explained that the complainant asked the Commission “to

determine, as a pure legal matter, the proper interpretation of Rule 25.242,” and

“specifically, whether the rule applies to purchases of energy from facilities

located in Oklahoma.” Id. The Commission further explained that “there is a

current dispute involving the legal interpretation of the Rule,” and “the dispute can

easily be resolved by the Commission in a manner that will bind the parties and

settle the controversy.” Id. Such pure legal determination is “not contingent of the

development of additional facts,” and therefore is “not advisory.” Id.

      Similarly, in City of Waco v. Texas Natural Resource Conservation

Commission, the City of Waco sought a declaratory judgment that section 122.4(i)

of the Code of Federal Regulation (which had been incorporated into state law)

prohibits the TNRCC from issuing permits until it complies with certain

requirements. 83 S.W.3d 169, 175 (Tex. App.—Austin 2002, pet. denied). The

                                         7
TNRCC argued that the City’s claim sought an advisory opinion and that the

agency’s compliance with the statute could only be determined in the context of an

application for a permit. Id. at 176. This Court rejected the TNRCC’s argument,

finding that “[t]he City’s claim poses a purely legal question—the interpretation of

section 122.4(i)—which will not benefit from the development of additional facts

in connection with a specific permit application.” Id. at 177. The Court further

found “[t]here is a judiciable controversy between the parties regarding the effect

of section 122.4(i) on the agency’s permitting process,” and “[a] declaration

regarding the effect of section 122.4(i) will resolve this controversy.” Id. at 178.

          As in Chermac and City of Waco, the Commission decided a pure legal issue

of statutory interpretation. The Commission’s determination did not depend on the

development of additional facts and fully resolved the controversy, and is therefore

a declaratory judgment, not an advisory opinion.

          The Commission now asserts that no controversy exists because the FCC

revision that gave rise to the legal issue became effective on June 8, 2011, several

months after the last year for which the Commission determined CPS’ maximum

allowable pole attachment rate (i.e., test/bill year 2009/2010).10 This new position

ignores the scope of the Commission proceeding. While the Commission did

apply the Telecom Formula to determine CPS’ maximum pole attachment rate for

10
     April 20 Letter at 1.

                                          8
certain years for which it had data (test/bill years 2004/2005 through 2009/2010) as

requested by CPS, that does not mean there were no other controversies for the

Commission to resolve. To the contrary, the parties agreed that the Commission

should resolve the legal issue of whether PURA automatically incorporates

revisions to the FCC Telecom Formula.                    In resolving that legal issue, the

Commission did not apply the June 8, 2011 revision to hypothetical future facts.

          The Commission’s late-in-the-game suggestion that pole attachment rates

after June 8, 2011 are not at issue is also factually wrong. The Commission issued

its final order in February 2013—well after the June 8, 2011 revision. By that

time, CPS had charged or was owed for pole attachments for years 2011 through

2013. And there was a live controversy between the parties over the rates during

that time frame.          Indeed, the parties presented arguments regarding how to

calculate pole attachment rates starting June 8, 2011, 11 and Staff calculated and

proposed a specific pole attachment rate of $5.08 to be charged starting June 8,

2011. 12 Although the Commission found that it could not calculate the final rate

for years after test/bill year 2009/2010 because the data specific to those years

necessary to calculate the maximum allowable pole attachment rate had not been

introduced into evidence, 13 the Commission issued associated findings regarding

11
     AR, Binder 13, Item 530 at 121-123 (PFD).
12
     Id. at 123.
13
     Id. at 43, Finding of Fact No. 31(g), Ordering Paragraph No. 1.

                                                  9
the methodology to be used for those years, thus making it clear that amounts owed

after June 8, 2011 were at issue:

          The rate charge by CPS Energy may not exceed the maximum
          allowable pole attachment rate calculated by the Telecom Formula
          adjusted by 66 % after June 8, 2011. 14

          Because this change became effective in the middle of the year,
          determining whether CPS has complied with PURA § 54.204(c) with
          respect to its 2011 pole attachment billings requires a "blended"
          approach to the calculating the maximum allowable pole attachment
          rate. For January 1 through June 7, 2011, multiply the maximum
          allowable rate [by] 158 (the number of days between January 1 and
          June 7). Do the same for June 8 through December 31, 2011, multiply
          the maximum allowable rate by 207 (the number of days between
          June 8 and December 31. Divide these two figures by 365 (the days of
          the year). 15

By addressing in its February 2013 Order on Rehearing the methodology for rates

starting June 8, 2011, the Commission was not making a determination about a

future, hypothetical event, but was ruling on the methodology applicable for years

that had already come to pass, based on a change to the FCC Telecom Formula that

had already been adopted and become effective.16

          The Commission also suggests that CPS does not have standing because it

was not aggrieved by the Commission’s so-called advisory opinion. The standing

14
     Id. at Finding of Fact No. 86.
15
     Id. at Finding of Fact No. 87.
16
  Of course, even if the parties had not litigated issues regarding rates after June 8, 2011, and
even if the Commission’s order had been issued before June 8, 2011, the Commission still could
have issued a declaratory judgment clarifying the parties’ rights under PURA § 54.204 as
explained in the text.

                                               10
doctrine, however, “reflects … the prohibition against court-issued advisory

opinions.” Thomas v. Cook, 350 S.W.3d 382, 389 (Tex. App.—Houston [14th

Dist.] 2011, pet. denied). To have standing, a controversy must exist between the

parties. Id. As explained above, there was a controversy between the parties

regarding their rights under § 54.204, and the Commission resolved that

controversy in a manner that bound the parties and settled the dispute. CPS

therefore has standing to appeal that determination. Contrary to the Commission’s

claim, a party “seeking a declaratory judgment need not have incurred actual

injury.” Bexar, 156 S.W.3d at 88. A declaratory judgment is “intended to provide

a means to determine, before any wrong has actually occurred, the right of parties

when a controversy has arisen and is remedial in nature.” Chermac, 2010 WL
3524026 at 4 (emphasis in original); Bexar, 156 S.W.3d at 88.17 Likewise, courts

can issue declaratory judgments construing statutes even “before the statute is

violated” (Bexar, 156 S.W.3d at 88-89) and “whether or not further relief is or

could be claimed” (Brennan, 376 S.W.3d at 922).

       Finally, if the Court were to conclude that the Commission’s determination

is an advisory opinion, then the parties would have to re-litigate the same issue of

statutory interpretation at the Commission (then likely on appeal). This dispute has

17
  The two decisions cited in the April 20 Letter are inapposite. Neither involved the use of a
declaratory judgment to resolve a dispute about the interpretation of a statute, which courts have
unequivocally held is permissible.

                                               11
been ongoing since 2008, with the proceeding at the Commission spanning more

than four years. Any re-litigation of the issue would be a mirror image of what has

already taken place: the parties would raise the same legal arguments regarding the

plain language of PURA, legislative intent, and statutory construction. There

would be nothing new for the Commission to consider. It is contrary to judicial

economy to force an additional administrative proceeding simply to have the

Commission reaffirm its current interpretation of PURA.

      For these reasons, the Court should find that CPS has standing to appeal the

Commission’s determination that PURA automatically incorporates revisions to

the Telecom Formula and that the Court has jurisdiction to review the issue.

May 8, 2015                           Respectfully submitted,
                                      /s/ Michael T. Sullivan
                                      Michael T. Sullivan
                                      (admitted pro hac vice)
                                      Mayer Brown LLP
                                      71 S. Wacker Drive
                                      Chicago, IL 60606
                                      Phone: (312) 782-0600
                                      Fax: (312) 706-8689
                                      msullivan@mayerbrown.com

                                      Len G. Briley, Jr.
                                      State Bar No. 00783723
                                      AT&T Legal Department
                                      1010 N. St. Mary’s St., 14th Floor
                                      San Antonio, Texas 78215
                                      Phone: (210) 351-4832
                                      Fax: (210) 886-2127
                                      len.briley@att.com

                                        12
J. David Tate
Katherine C. Swaller
Thomas Ballo
AT&T Legal Department
816 Congress Avenue, Suite 1100
Austin, Texas 78701
Phone: (512) 457-2304
Fax: (512) 870-3420
jon.david.tate@att.com
katherine.swaller@att.com
thomas.ballo@att.com

Attorneys for AT&T Texas

/s/ Valerie P. Kirk
Valerie P. Kirk
State Bar No. 11516900
Melissa Lorber
State Bar No. 24032969
ENOCH KEVER PLLC
600 Congress Ave., Suite 2800
Austin, Texas 78701
Phone: (512) 615-1200
Fax: (512) 615-1198
vkirk@enochkever.com
mlorber@enochkever.com

John Davidson Thomas
J. Aaron George
SHEPPARD MULLIN RICHTER &
HAMPTON LLP
2099 Pennsylvania Ave. NW, Suite 100
Washington, DC 20006
Phone: (202) 747-1900
Fax: (202) 747-1901
dthomas@sheppardmullin.com
ageorge@sheppardmullin.com

Attorneys for Time Warner Cable Texas
LLC

 13
                         CERTIFICATE OF SERVICE

       I hereby certify that a true and correct copy of this document was served
electronically and/or by regular U.S. mail upon the following attorneys of record
on this 8th day of May, 2015.

                                                /s/ Len G. Briley, Jr.

Counsel for Public Utility Commission Counsel for CPS Energy:
of Texas:

Douglas Fraser                                 Curt D. Brockmann
Megan M. Neal                                  CPS Energy
Office of the Attorney General                 145 Navarro
P.O. Box 12548, Capitol Station                P.O. Box 1771
Austin, Texas 78711-02548                      San Antonio, TX 78296
Phone: (512) 463-2012                          Phone: (210) 353-5689
Fax: (512) 457-4610                            Fax: (210) 353-6832
douglas.fraser@texasattorneygeneral.gov        cdbrockmann@cpsenergy.com
megan.neal@texasattorneygeneral.gov
                                               Alfred R. Herrera
                                               HERRERA & BOYLE, PLLC
                                               816 Congress Avenue, Suite 1250
                                               Austin, TX 78701
                                               Phone: (512) 474-1492
                                               Fax: (512) 474-2507
                                               aherrera@herreraboylelaw.com

                                          14