Court Opinion

ID: 4042347
Source: CourtListenerOpinion
Date Created: 2016-09-28 23:04:03.277312+00
Date Added: 2024-06-11T14:30:30.510576
License: Public Domain

ACCEPTED
                                                                                03-14-00661-CV
                                                                                       3720189
                                                                      THIRD COURT OF APPEALS
                                                                                 AUSTIN, TEXAS
                                                                           1/22/2015 3:41:48 PM
                                                                              JEFFREY D. KYLE
                                                                                         CLERK
                        No. 03-14-00661-CV

                  IN THE COURT OF APPEALS                      FILED IN
                  THIRD JUDICIAL DISTRICT               3rd COURT OF APPEALS
                                                            AUSTIN, TEXAS
                      AT AUSTIN, TEXAS
                                                        1/22/2015 3:41:48 PM
                                                          JEFFREY D. KYLE
                                                                Clerk
                         DEVVY KIDD, ET AL,
                            Appellants,

                                 v.

               PUBLIC UTILITY COMMISSION OF TEXAS,
                             Appellee.

              On Appeal from the 419th District Court
                    of Travis County, Texas

             BRIEF OF APPELLANTS DEVVY KIDD, ET. AL.

      ROGER B. BORGELT
      State Bar No. 02667960
      Borgelt Law
      614 S. Capital of Texas Hwy.
      Austin, Texas 78746
      (512) 600-3467 (Tel.)
      roger@borgeltlaw.com

      COUNSEL OF RECORD

ORAL ARGillvffiNT REQUESTED
                         Cause No. 03-14-00661-CV

Devvy Kidd, John Kidd, M.J. Shadden,       )
John Cole, R.M.Dailey, Tracy Stephens,     )
Patricia Stroyick, Dorothy Morrow,         )
Charles Morrow, Amy Williams,              )
David Williams, Norman Kuehn,              )
Elizabeth Theiss, Rebecca Gutierrez,       )
Marie Nugent, Steve G. Crutchfield,        )
Linda A. Crutchfield, Kendall C. Palmer,   )
MA Kirk, Kaydene Jordan, Bobby Jordan,     )
Tom Brazen, David J. Allen,Patt Allen,     )
David Scot Houlette,Denis Lullenkamp,      )   IN THE COURT OF
Kathy Lullenkamp, China Lanier             )
Donna Lee Wilson, Julia Nathan, M.D.,      )   APPEALS, THIRD
Giselle Ellis, Gerald Sawyer,              )
Beverely Hickman, Thomas Hickman,          )   DISTRICT OF TEXAS
Cindy Carriger, Deborah Wiseman,           )
Newly Sage, Russell Sage, Beth Biesel,     )
Lacy Crary, Dardine Roedel,                )
Harold Boenig, Joyce Kelley,               )
Brenda Denholm, Michael Denholm,           )
Mark Atkins, Robert Paul,                  )
Thelma Taormina, Nick Taormina,            )
Sherman Rogers, Judy Chambers,             )
Wayne Chambers, Jeffrey Emrich,            )
Jill Freidman, Dolores Bolock,             )
Bruce Bolock, Jackqulyn Bodenstedt,        )
Twyla Parsons, Amanda M. Voelkel,          )
Michelle T. Voelkel, Nell Reynolds,        )
Stanley Reynolds, Katrina Evenhouse,       )
Randall Evenhouse, Patricia Ignazio,       )
Joseph Ignazio, Gina Gentile,              )
James Gentile, John Tyson,                 )
Steve Gagnon, Thomas Bailey,               )
Alfreda Ballard, James Benge,              )
Linda Rund, Frank Harriss,                 )
Sam Harris, Lysbeth Warneke,               )
Ralph Shawver, Shelley McCoy,              )
Brian Dansby, Mo Bond, David Bond,         )
John Buffa, Melissa Gochnour,                )
Jeffrey Gochnour, Amy Watkins,               )
Donald Anderson, Carol Dean,                 )
Michelle Guy, Terry Guy,                     )
Evelyn Montalvo, Abel Montalvo,              )
Gay Armstrong, Dave Armstrong,               )
Diane Wilson, John Wilson,                   )
Beatrice Worley, Lawrence Worley,            )
Eva Finegan, Patti Glass, Ken Glass,         )
Dagne Florine, Ph.D., Cynthia Wilkes,        )
Michael Wilkes, Lolly Nayola,                )
John Tweedell, Carolynne Tweedel,            )
Marita Segal, Howard Segal, Rita Trauth,     )
Dr. Christopher Trauth, Toni White,          )
Janice Pearson, Ricky Pearson,               )
JoAnn Louise Zant, Nathan Lloyd Zant,        )
Hoi Heldt, Rochelle Wilkes, Corey Wilkes,    )
Daryl Hampton, Kathleen Grimes,              )
Brian Grimes, Cindy Schafer,                 )
Mary Stayton, Ellen Mickle, Ingrid Stassi,   )
Joe Stassi, Gaye Haehnel, Billy Haehnel,     )
Erin Konkel, Nancy Lochridge,                )
Byron Lockridge, Gemi Powell,                )
Gregory Johnson                              )
                                             )
      Appellants,                            )
                                             )
            v.                               )
                                             )
Public Utility Commission of Texas,          )
                                             )
      Appellee.                              )
                                             )

                                       2
                      APPELLANTS' INITIAL BRIEF

  I. Identity of Parties and Counsel

Devvy Kidd, John Kidd, M.J. Shadden, John Cole, R.M.Dailey, Tracy
Stephens, Patricia Stroyick, Dorothy Morrow, Charles Morrow, Amy
Williams, David Williams, Norman Kuehn, Elizabeth Theiss, Rebecca
Gutierrez, Marie Nugent, Steve G. Crutchfield, Linda A.
Crutchfield, Kendall C. Palmer, MA Kirk, Kaydene Jordan, Bobby Jordan,
Tom Brazen, David J. Allen, Patt Allen, David Scot Boulette, Denis
Lullenkamp, Kathy Lullenkamp, China Lanier, Donna Lee Wilson, Julia
Nathan, M.D., Giselle Ellis, Gerald Sawyer, Beverely Hickman, Thomas
Hickman, Cindy Carriger, Deborah Wiseman, Newly Sage, Russell
Sage, Beth Biesel, Lacy Crary, Dardine Roedel, Harold Boenig, Joyce Kelley,
Brenda Denholm, Michael Denholm, Mark Atkins, Robert Paul, Thelma
Taormina, Nick Taormina, Sherman Rogers, Judy Chambers, Wayne
Chambers, Jeffrey Emrich, Jill Freidman, Dolores Bolock, Bruce
Bolock, Jackqulyn Bodenstedt, Twyla Parsons, Amanda M. Voelkel,
Michelle T. Voelkel, Nell Reynolds, Stanley Reynolds, Katrina Evenhouse,
Randall Evenhouse, Patricia Ignazio, Joseph Ignazio, Gina Gentile, James
Gentile, John Tyson, Steve Gagnon, Thomas Bailey, Alfreda Ballard, James
Benge, Linda Rund, Frank Harriss, Sam Harris, Lysbeth Warneke, Ralph
Shawver, Shelley McCoy, Brian Dansby, Mo Bond, David Bond, John Buffa,
Melissa Gochnour, Jeffrey Gochnour, Amy Watkins, Donald Anderson,
Carol Dean, Michelle Guy, Terry Guy, Evelyn Montalvo, Abel Montalvo,
Gay Armstrong, Dave Armstrong, Diane Wilson, John Wilson,
Beatrice Worley, Lawrence Worley, Eva Finegan, Patti Glass, Ken Glass,
Dagne Florine, Ph.D., Cynthia Wilkes, Michael Wilkes, Lolly Nayola,
John Tweedell, Carolynne Tweedel, Marita Segal, Howard Segal, Rita
Trauth, Dr. Christopher Trauth, Toni White, Janice Pearson, Ricky
Pearson, JoAnn Louise Zant, Nathan Lloyd Zant, Hoi Heldt,
Rochelle Wilkes, Corey Wilkes, Daryl Hampton, Kathleen Grimes, Brian
Grimes, Cindy Schafer, Mary Stayton, Ellen Mickle, Ingrid Stassi, Joe
Stassi, Gaye Haehnel, Billy Haehnel, Erin Konkel, Nancy Lochridge, Byron
Lockridge, Gemi Powell, and Gregory Johnson, Appellants

                                       3
Roger B. Borgelt
Borgelt Law
614 S. Capital of Texas Hwy.
Austin, TX 78746
0: 512.600.3467
Mobile: 512.870.7533

SBN :02667960
E: roger@borgeltlaw.com
Attorney for Devvy Kidd, et.al.

Public Utility Commission of Texas, Appellee

Kellie E. Billings-Ray
Assistant Attorney General
kellie.billings-ray@texasattorneygeneral.gov
Environmental Protection Division
Office of the Attorney General
P.O. Box 12548, MC-066
Austin, Texas 78711
Attorney for Public Utility Commission of Texas

CenterPoint Energy Houston Electric LLC, Appellee

Jason M. Ryan
Assistant General Counsel
CenterPoint Energy Service Company LLC
1111 Louisiana Street
Houston, Texas 77002
Tele: 713.207.7261
Fax: 713.574.2261
jason.ryan@centerpointenergy.com
Dale Wainwright
dale.wainwright@bgllp.com
W. Stephen Benesh
steve.benesh@bgllp.com
                                     4
Davison W. Grant
davison.grant@bgllp.com
Lindsay Hagans
Lindsay.hagans@bgllp.com
BRACEWELL & GIULIANI LLP
111 Congress A venue, Suite 2300
Austin, Texas 78707-4061
Tele: (512) 472-7800
Fax: (800) 404-3970
Attorneys for CenterPoint Energy Houston Electric, LLC

Oncor Electric Delivery Co., Appellee

Jo Ann Biggs
Cortney C. Thomas
VINSON & ELKINS LLP
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201-2975
jbiggs@velaw.com
Tele: 214-220-7735
Fax: 214-999-773 5
Attorneys for Oncor Electric Delivery Co.

Texas-New Mexico Power Company, Appellee

Patrick R. Cowlishaw
Stephanie C. Sparks
JACKSON W ALKERL.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
Tele: 214-953-6000
Fax: 214-953-5822
pcowlishaw@jw.com
Scott Seamster
Corporate Counsel
State Bar No. 00784939
Texas-New Mexico Power Company
225 E. John Carpenter Fwy, Suite 1500
                                        5
Irving, Texas 75062
Tele: 469-484-8577
Fax: 469-484-8033
scott.seamster@pnmresources.com
Attorneys for Texas-New Mexico Power Company

AEP Texas Central Company and AEP Texas North Company, Appellee

Patrick Pearsall
DUGGINS WREN MANN & ROMERO
P.O. Box 1149
Austin, Texas 78767
ppearsall@dwmrlaw.com
Tele: 512-744-9300
Fax: 512-744-9399
cthomas@velaw.com
Rhonda Colbert Ryan
American Electric Power Company
400 W. 15th Street, Ste. 1500
Austin, Texas 78701
Tele: 512-481-3321
Fax: 512-481 -4587
Attorneys for AEP Texas Central
Company and AEP Texas North Company

                                 6
II. Table of Contents
IDENTITY OF PARTIES AND COUNSEL . .. .. .... . ...... . . 3

 TABLE OF CONTENTS ......................................................................... 7

 INDEX OF AUTHORITIES ....................................................................... 8

 STATEMENT OF THE CASE ................................................................ 9
REQUEST FOR ORAL ARGUMENT . .. .... ... . . ... . .. ... . ..... ......... . .... .9

ISSUES PRESENTED . . ............. . ... . ... .... .. . . ......... . .... . .... . .......... 10

STATEMENT OF FACTS . . . .. . .. . ............. . ............................. . .... 10
SUMMARY OF THE ARGUMENT .......................................................... 11
ARGUMENT ................................................................................ ............. 12
         POINT OF ERROR NO. 1: Sovereign immunity has been expressly

waived by law when rulemaking procedures are not substantially

followed ..... ........... ............ .. .. ........... .. ......... ........... ........ .......... 12

        POINT OF ERROR NO. 2: To have a right to a public hearing and then

raise sovereign immunity as a defense when that hearing is denied is to grant a

right without a remedy .. ...... ................... . .. .... ... ... .. ...... ....... ........... 20

PRAYER..................................................................................................... 22
CERTIFICATE OF SERVICE ................................................................... 23

APPENDIX ..... ... .. ... ............... ... .... . .. . . .. . ........... . .................... 26

                                                     7
        III. Index of Authorities

        Cases

Combs v. Entertainment Publications, Inc. 292 S.W.3d 712, 723(Tex. App. -
Austin 2009, rehearing overruled) .... .. ........... ............. ....... . ... . ...... .. ... ... 19

Gulf Coast Coalition of Cities v. Public Utility Com'n, 161 S.W.3d 706
(Tex.App.-Austin 2005) ... .............. ............. .. ............. ... ........... ..... .. 17

Miers v. Brouse. 271 S.W.2d 419 (Tex. 1954) ......................................... 21

National Association ofIndependent Insurers vs. Texas Department ofInsurance,
          d                             •
925 SW. 2n 667, 670 (Tex. 1996)............................................. ... ... 16, 17

State v. Rhine, 297 S.W.3d 301 (Tex.Crim.App. 2009) ............................ . ...20

Tex. Comm'n on Envtl. Quality v. Bonser-Lain, 438 S.W.3d 887 (Tex.App.-Austin
2014) .......................... .. .......................................................... 13,14

Texas Shrimp Association, et al. v. Texas Parks and Wildlife Department. No. 03-
04-00788-CV, (Tex. App. -Austin 2005) ..... ... .. ..... ....... ........... .... ... ..... 18

Texas State Board ofPharmacy v. Witcher, No. 3-12-00560-CV (Tex. App. -
Austin 2014) ............................................................................. 15,16

Unified Loans v. Pettijohn, 955 S.W. 2nd 649, 650-65 l(Tex. App. -Austin 1997,
rehearing overruled) ......... ......................................................... 17,18

       Statutes

Texas Government Code §2001.029 ..................................... 10,11,17,19,21

Texas Government Code 2001.035 .................. ......................... 12,13,14,19

      Rules

16 Texas Administrative Code§ 22.282(d) .......................... ....... ........ 10,11

                                                  -8-
      IV. Statement of the Case

      This appeal is taken from the Order Granting Defendant's Plea to the

Jurisdiction signed and entered on September 30, 2014 by Judge Darlene Byrne of

the 4 l 91h Judicial District of Travis County, Texas. (Appendix, Exhibit B).

Appellants had originally appealed the denial of their right to a hearing on The

Petition for Initiation of Rulemaking Proceedings filed with the Commission on

May 17, 2012. That Petition was assigned Project No. 40404 by the Commission.

Appellants' petition was denied in an order filed on or about July 13. 2012

(Appendix, Exhibit A; Order in Project No. 40404, July 13, 2012).

             Appellants subsequently filed a timely motion for rehearing, on which

no action was taken by the Commission. Appellants then filed their appeal to the

Travis County District Court on September 28, 2012. Appellee Public Utility

Commission filed its Plea to the Jurisdiction on September 4, 2014.

      V. Request for Oral Argument

      Appellants request oral argument, in the belief that this is a case of first

impression on the issue at hand which must be distinguished from the decision

establishing sovereign immunity upon which Appellees primarily rely. Appellants

believe oral argument will assist greatly in establishing that distinction.

                                          -9-
      VI. Issues Presented

      A. Sovereign immunity has been expressly waived by law when rulemaking

         procedures are not substantially followed, as they were not in this

         instance, as this is not an appeal of the denial of a rulemaking, but an

         appeal of the denial of mandated procedures for conducting a

         rulemaking.

      B. To have a right to a public hearing and then raise sovereign immunity as

          a defense when that hearing is denied is to grant a right with no

          remedy.

   VII. Statement of Facts

      Appellants, in their appeal, were originally requesting judicial review of

decisions by Appellee Public Utility Commission of Texas ("Commission" or

"Appellee") both denying their request for (1) a public hearing pursuant to 16

Texas Administrative Code §22.282 and Texas Government Code §2001.029; and

(2) the initiation of rulemaking proceedings. These requests were made in The

Petition for Initiation of Rulemaking Proceedings filed with the Commission on

May 17, 2012.

        16 Texas Administrative Code §22.282(d) provides that "[a]n opportunity

for public hearing shall be granted if requested by at least 25 persons ...."

(emphasis added) and Texas Government Code §2001.029 also provides that "(b)

                                         -10-
A state agency shall grant an opportunity for a public hearing before it adopts a

substantive rule if a public hearing is requested by: ... (3) an association having at

least 25 members." At least 25 Petitioners made the request for a public hearing in

Project 40404, and this has never been disputed. The language used in both the

statute and the rule (''shall") is mandatory, yet the Commission refused to grant a

public hearing on Appellant's proposed rule.

      Appellants' petition was denied in an order filed on or about July 13. 2012,

denying the petition solely on the grounds that there was another project in which

the Commission preferred to address the Petitioners' concerns about smart meters,

Project No. 40190. The Commission did not grant a hearing as required by 16

Texas Administrative Code§ 22.282(d) or Texas Government Code§ 2001.029,

or give any reasoning as to why there would be no hearing. Subsequently, Project

No. 40404 has never had a public hearing held as required by 16 Texas

Administrative Code§ 22.282(d) or Texas Government Code§ 2001.029.

      VIII. Summary of the Argument

       Sovereign immunity is specifically waived in the instant case with respect to

Appellants right to a public hearing. Appellants had an absolute procedural right to

an Administrative Procedures Act public hearing on the petition for rulemaking

they filed, provided by law, and the Government Code provides for a right of

appeal if these procedures are not strictly followed. The purported inability to

                                          -11-
appeal the denial of their requested public hearing, as espoused by the

Commission, provides a right with no remedy, a situation which is so inequitable

that it could not have been intended, and so must be remedied, as a matter of both

statutory construction and public policy.

      IX.Argument
       A. Point of Error No. 1- Sovereign immunity has been expressly waived by

            law when rulemaking procedures are not substantially followed.

      Nothing in the statutory or regulatory provisions under review allows the

Commission to completely ignore the requirement to hold a public hearing, yet the

Commission has done just that.       Specifically, it stated, "after considering the

petition and documents received, the Commission denies the Petition for Initiation

of Rulemaking Proceedings, because the Commission has another project to

address Petitioners' concerns about smart meters ... " (Order at 5-6). Appellants'

request for a public hearing on their proposed rule was completely ignored.

      This suit was then brought, in relevant part, on the basis of Texas

Government Code 2001.035, which states, in pertinent part:

      (a)     A rule is voidable unless a state agency adopts it m substantial

compliance with Sections 2001.0225 through 2001.034.

                                         -12-
       (b) A person must initiate a proceeding to contest a rule on the ground of

noncompliance with the procedural requirements of Sections 2001.0225 through

2001.034 not later than the second anniversary of the effective date of the rule.

       The Commission, its defense, relies primarily upon Tex. Comm'n on Envtl.

Quality v. Bonser-Lain, 438 S.W.3d 887 (Tex.App.-Austin 2014) in which this

Court held that "[a] person may obtain judicial review of an administrative action

only if a statute provides that right, or the action adversely affects a vested property

right or otherwise violates a constitutional right. Mega Child Care, 145 S.W.3d at

173. The legislature must provide a right to judicial review through " clear and

unambiguous language." See id. at 197 (noting that judicial-review provisions

waive sovereign immunity and concluding that section 2001.1 71 provides limited

waiver of sovereign immunity); see also IT-Davy, 74 S.W.3d at 853-54 (legislative

waiver of immunity " must be expressed in clear and unambiguous language" )

(citing Tex. Gov't Code § 311.034). Though the legislature has expressly

demonstrated its intent to allow judicial review of certain types of agency decisions

under the APA, it has not done so with respect to agency decisions on petitions for

rulemaking. Based on this deliberate silence, we conclude that the APA does not

provide a right to judicial review of an agency's refusal to adopt rules. See Houston

Mun. Emps. Pension Sys. v. Ferrell, 248 S.W.3d 151, 158 (Tex. 2007) ("There is

                                          -13-
no right to judicial review of an administrative order unless a statute explicitly

provides that right or the order violates a constitutional right."); see also 1 Ronald

L. Beal, Texas Administrative Practice & Procedure§ 3.1 (2009) (concluding that

silence " clearly implied the legislature intended to preclude judicial review of the

refusal to adopt the rule")."

       The Bonser-Lain case, cited by the Commission and decided in July of

2014, clearly applies to the ability of parties to appeal the denial ofpetitions for

rulemaking, however, that case did not also involve denying a specific request for a

public hearing on a petition for rulemaking, which is a procedural requirement of

conducting a rulemaking, in violation of Texas Government Code section

2001.035, and therefore has no effect on Appellants claim in that respect.

      Appellants were denied their legal rights and told that, though they had in

every way complied with the law regarding their right to have a public hearing on

their proposal; it simply would not be granted.

      No appellate court has yet been asked to interpret the plain meaning of the

words "[A] state agency shall grant an opportunity for a public hearing before it

adopts a substantive rule if a public hearing is requested by: ... (3) an association

having at least 25 members." Perhaps this is because there is precious little in this

provision that is subject to interpretation. No one has suggested that Appellants did

                                          -14-
not have at least 25 members or that the hearing request was not made. The basis

for denying the hearing as stated by the Commission, was that it "has another

project" in which it preferred to address these issues.      The Commission then

subsequently failed to hold a public hearing in the project assigned to Appellants'

petition.

      The Commission, in its plea, seems to suggest that because no rule was ever

adopted that was specifically based on the Petition filed by Appellants, there was

no right to a hearing, but that reading would allow the Commission to read away

the hearing rights of rulemaking petitioners through subterfuge, by simply denying

their petitions and then initiating its own rulemaking, as was done here.

Essentially, according to the Commission, the legal right to a public hearing on a

petitioned for rule can be completely eliminated through a procedural trick, and

Appellants are then deprived of their hearing.

      Texas courts have long held that the procedures for rulemaking be

substantially followed, or else the rules that were adopted can be voided.

Specifically, "[i]t is well established that a rule that is not adopted in accordance

with the APA's rulemaking procedures is typically invalid." Texas State Board of

Pharmacy v. Witcher, No. 3-12-00560-CV (Tex. App. - Austin 2014) at 24. "A

rule that is not properly promulgated under APA procedures is invalid". Witcher at

10. The court's preference for strict adherence to these procedural requirements is

longstanding, as the Witcher opinion continues in explaining the reasoning for this.

                                        -15-
      "The Board also complains that we are required to uphold the Board's

decision if there is a rational basis underlying the reciprocal-sanction policy and if

there is some evidence that it is applicable under the facts of Witcher's case.

However, an agency's legislative rule is binding on all concerned, including the

judicial department, only if the rule is (1) reasonable, (2) within the power

delegated to the agency, and (3) the product of proper procedure. (emph.

supp.)General Elec. Credit Corp. v. Smail, 584 S.W.2d 690, 694 (Tex. 1979)

(citing and quoting K. Davis, Administrative Law Treatise § 5.03 (1958 ed. and

Supps.)); Sharp v. Cox Tex. Publ'ns, Inc., 943 S.W.2d 206, 209 (Tex. App.-

Austin 1997, no writ). "When an agency promulgates a rule without complying

with proper rule-making procedures, the rule is invalid." El Paso Hosp. Dist. v.

Texas Health & Human Servs. Comm'n, 247 S.W.3d 709, 715 (Tex. 2008).

Having concluded that the rule here is not the product of proper procedure, it lacks

the force of law without regard to its reasonableness vel non." Witcher at 41.

Failing to follow procedure is thus fatal to the rulemaking process.

      In construing Texas Government Code section 2001.033, the Texas

Supreme Court held "if courts allow agencies to adopt conclusory rules such as

Rule 1000, the purposes of section 2001.033 - to provide a meaningful public

participation in the rulemaking procedure, to allow opponents of the rule to

formulate specific challenges, and to ensure that the agency carefully considers

and analyzes a rule before adopting it- will be eviscerated. We conclude therefore

                                         -16-
that the rule is invalid." National Association of Independent Insurers vs. Texas

Department ofInsurance, 925 SW. 2nct 667, 670(Tex. 1996). Again, failure to fully

follow the public participation requirements was held to be a fatal flaw.

       Although the Court was not construing specifically Texas Government Code

section 2001.029(b), the situation is analogous. A basic procedural right, granted

by the Legislature through the Administrative Procedures Act was ignored, and the

Court held that a rule adopted under these conditions was void. "An agency rule

not adopted in substantial compliance with the rulemaking provisions of the APA

is voidable." Tex. Gov't Code Ann. § 2001.035(a) (West 2000); State Office of

Pub. Util. Counsel, 131 S.W.3d at 327. Gulf Coast Coalition of Cities v. Public

Utility Com'n, 161 S.W.3d 706 (Tex.App.-Austin 2005).

       Decisions regarding the necessary application of these procedural safeguards

m rulemaking also address the necessity of adhering to the full panoply of

safeguards provided. "Section 2001.035 of the APA condemns as invalid an

agency rule not adopted in "substantial compliance" with the rulemaking

provisions set out in APA sections 2001.021 - .034." Unified Loans v. Pettijohn,

955 SW 2"d 649, 650-651(Tex. App. - Austin 1997, rehearing overruled). Those

statutory provisions encompass all of the statutes at issue here, from the initiation

of a petition for rulemaking, to the holding of a public hearing, to the adoption of a

final rule.

       In that same case the court went on to hold, in construing the objectives of

                                         -17-
the rulemaking requirements, "the second objective is to afford adequate notice -

to place the agency's assessment before interested persons in advance in order that

(1) interested persons might comment intelligently on the proposed rules and (2)

the agency might exercise intelligently its responsibilities in arriving at the

contents of the rule as finally adopted, in stating reasons for and against adoption ,

and in formulating the required contents of the adopting order, including a

reasoned justification for the rule. See APA 2001.029 (public comment)."Jd. at

652. The court here is emphasizing the strong objective of obtaining as much

relevant public comment as possible on a proposed rule, and who would have

more relevant comment on a proposed rule that the very parties petitioning for it?

    Yet in this instance, the Commission deliberately avoided that very input by

denying the petition without holding any hearing at all.    This does not constitute

substantial compliance with the public hearing provisions as this Court has more

recently held that "substantial compliance with a statutory requirement

contemplates acts that secure the legislative objectives while coming fairly within

the character and scope of each action or thing required in concise, specific and

unambiguous terms." Texas Shrimp Association, et al. v. Texas Parks and Wildlife

Department. No. 03-04-00788-CV, (Tex. App. - Austin 2005).

      The statute in this instance could not be more concise, specific or

unambiguous. If an association with more than 25 members requests a hearing, the

hearing shall be granted. To say that this only applies if the Commission ultimately

                                         -18-
adopts the rule is a disingenuous and overly narrow reading of the procedural

safeguards for rulemaking built into the APA and the court opinions construing

them. All of the provisions subject to a section 2001.035 appeal occur prior to the

adoption of a rule, they are safeguards intended to protect the process of

rulemaking.

      The Commission's reading of this provision, to allow it to avoid any public

hearing merely by denying the petition, allows it to vitiate any party's rights to a

hearing under this provision by simply failing to complete the adoption of the
                                 -
specific rule for which the hearing was requested. Then, as the Commission did in

this instance, it can propose its own rule on the same subject, and avoid a hearing.

In this manner, the Commission can avoid ever having to hold a public hearing

under section 200 l .029(b).

      Finally, this Court has reaffirmed the invalidity of rules not adopted m

conformity with the APA requirements. "when an agency promulgates a rule

without complying with the statutory rulemaking procedures, the rule is invalid."

Combs v. Entertainment Publications, Inc. 292 S.W.3d 712, 723(Tex. App. -

Austin 2009, rehearing overruled). In that case, the rule was remanded "to allow

reasonable time for the agency to either revise or readopt the rule through the

established procedures." Id. at 724. In the instant case, where no rule was adopted,

the proper remedy for failing to hold the validly requested public hearing would

simply be a remand to the Commission ordering it to hold the requested public

                                        -19-
hearing on the rule that was proposed by Appellants.

      B. Point of Error No. 2 - To have a right to a public hearing and then raise

sovereign immunity as a defense when that hearing is denied is to grant a right

without a remedy.

      In State v. Rhine, 297 S.W.3d 301 (Tex.Crim.App. 2009), the Texas Court

of Criminal Appeals explained the purpose of the pre-adoption public hearing as

follows:

"In addition, a number of courts have held that procedural safeguards must

accompany broad standards to ensure that the agency action conforms to those

standards.[73] The required procedural safeguards typically include a pre-adoption

public hearing and post-adoption judicial review. [74] Procedural safeguards

ensure that the administrative agency really is doing the will of the Legislature:

The pre-adoption public hearing ensures that the administrative agency takes the

legislative standards into account, engaging in factual determinations that relate to

the legislative standards rather than simply dictating policy, and judicial review

ensures that the administrative agency's rules and other actions actually conform to

the legislative standards.[75] Of course, for safeguards to have meaning, the

legislative standards must be sufficiently specific to allow the agency and the

courts to determine whether the agency is carrying out the intent of the

legislature. [76]" The purpose of the pre-adoption public hearing, then, is to ensure

that statutory requirements are being followed, if a hearing request that meets the

                                         -20-
statutory requirements can be ignored, then these built in safeguards have failed to

do their job.

      Under its interpretation of the law, the Commission can propose its own rule

on any subject and then fail to take final action adopting that specific rule should a

public hearing be requested. If the Commission's legal interpretation is correct, it

can thus, through a procedural shell game, avoid ever having to hold a public

hearing requested under Government Code section 200 l .029(b). "The first maxim

of equity is that it will not suffer a right to be without a remedy. As Lord Holt

early said: "If the appellant has a right, he must of necessity have a means to

vindicate and maintain it   * * *.   It is a vain thing to imagine a right without a

remedy." Miers v. Brouse. 271 S.W.2d 419 (Tex. 1954). The Commission's

reading of the law, while plausible in isolation, does not work in actual

application, and in fact frustrates the very statutory scheme that was instituted to

oversee its rulemaking process. Its reading would simply mean that no public

hearing on a rulemaking would ever have to be held at all.

      All it, or any other agency has to do, is fail to ultimately adopt a rule in any

particular proceeding in which a hearing was requested. Then, if sovereign

immunity is successfully asserted as argued by the Commission, and upheld by the

District Court, no appeal can proceed, and the right to a rulemaking hearing is

effectively gone.     Rights without remedies should always be disfavored,

particularly when they have bee specifically granted as procedural safeguards.

                                          -21-
      X. Prayer

      WHEREFORE PREMISES CONSIDERED, Appellants request that the

granting of the Plea to the Jurisdiction of the Public Utility Commission of Texas

be reversed, and this matter be remanded to the Public Utility Commission for

conduct of a public hearing in accordance with Appellants request and such other

and further relief to which the Appellant may be entitled at law or in equity.

                                       RE~M
                                       Roger B. Borgelt
                                       Borgelt Law
                                       SBN: 02667960
                                       614 S. Capital of Texas Hwy.
                                       Austin, TX 787 46
                                       0: 512.600.3467
                                       Mobile: 512.870.7533
                                       E: roger@borgeltlaw.com

                                         -22-
                       CERTIFICATE OF COMPLIANCE
      Pursuant to Tex. R. App. P. 9.4(i)(3), I certify that this document complies

with the type-volume limitations of Tex. R. App. P. 9.4(i)(2). I certify that this

document contains 4739 words.

                                                 Roger B. Borgelt

                          CERTIFICATE OF SERVICE
      I certify that on the 22nd day of January, 2015, a true and correct copy of the

foregoing instrument was served on all parties below by electronic or regular first

class mail.

                                        Roger B. Borgelt

Kellie E. Billings-Ray
Assistant Attorney General
kellie. billings-ray@texasattorneygeneral.gov
Environmental Protection Division
Office of the Attorney General
P.O. Box 12548, MC-066
Austin, Texas 78711
        Attorney for Public Utility Commission

Jason M. Ryan
Assistant General Counsel
CenterPoint Energy Service Company LLC
1111 Louisiana Street
Houston, Texas 77002

                                          -23-
Tele: 713.207.7261
Fax: 713.574.2261
j ason.ryan@centerpointenergy.com
Dale Wainwright
dale.wainwright@bgllp.com
W. Stephen Benesh
steve.benesh@bgllp.com
Davison W. Grant
davison.grant@bgllp.com
Lindsay Hagans
Lindsay.hagans@bgllp.com
BRACEWELL & GIULIANI LLP
 111 Congress A venue, Suite 2300
Austin, Texas 78707-4061
Tele: (512) 472-7800
Fax: (800) 404-3970
Attorneys for CenterPoint Energy Houston Electric, LLC

Jo Ann Biggs                              Patrick Pearsall
Cortney C. Thomas                         DUGGINS WREN MANN & ROMERO
                                          P.O. Box 1149
VINSON & ELKINS LLP                       Austin, Texas 78767
2001 Ross A venue, Suite 3700             ppearsall@dwmrlaw.com
Dallas, Texas 75201-2975                  Tele: 512-744-9300
jbiggs@velaw.com                          Fax: 512-744-9399
cthomas@velaw.com
Tele: 214-220-7735                        Rhonda Colbert Ryan
Fax: 214-999-7735                         American Electric Power Company
Attorneys for Oncor Electric Delivery Co. 400 W. 15th Street, Ste. 1500
                                          Austin, Texas 78701
                                          Tele: 512-481-3321
Patrick R. Cowlishaw                      Fax: 512-481 -4587
Stephanie C. Sparks                       Attorneys for AEP Texas Central
                                          Company and AEP Texas North
JACKSON WALKER L.L.P.                     Company
901 Main Street, Suite 6000
Dallas, Texas 75202
Tele: 214-953-6000

                                   -24-
Fax: 214-953-5822
pcowlishaw@jw.com
Scott Seamster
Corporate Counsel
State Bar No. 00784939
Texas-New Mexico Power Company
225 E. John Carpenter Fwy, Suite 1500
Irving, Texas 75062
Tele: 469-484-8577
Fax: 469-484-8033
scott. seamster@pnmresources.com
Attorneys for Texas-New Mexico Power Company

                                -25-
APPENDIX

EXHIBIT A - Order Denying Petition For Rulemaking

EXHIBIT B - Order granting Defendant's Plea to the Jurisdiction

EXHIBIT C - Statutes and rules

                              -26-
APPENDIX

EXHIBIT A - Order Denying Petition For Rulemaking

EXHIBIT B - Order granting Defendant's Plea to the Jurisdiction

EXHIBIT C - Statutes and rules

                              -24-
EXHIBIT A
·•   PETITION FOR INITIATION OF
     RULEMAKJNG PROCEEDINGS
     REGARDING SMART METERS
                                                       §
                                                       §
                                                       §                   OF TEXAS

                          QRDER DENYING PETITION FOR RULEMAKL'(G

     On May 17, 2012, Devvy Kidd. John Kidd, and 193 other signatories (Petitioners) tiled a

     Petition for Initiation of Rulemaking Proceedings with the Public Utility Commission of Texas

     (Commission).       Petitioners request that the Commission initiate and conduct rulemaking

     procedures. both emergency and ordinary, relating to the deployment of smart meters by

     dectrical utilities and others as part of their Advanced Metering System (AMS) program.

     Petitioners seek an emergency rule that would place a moratorium on continued installation of

•    smart meters until further study and evaluation pennits adoption of rules governing smart meters .

     In   additio~   Petitioners seek ordinary rulernaking to mandate the permanent prohibition and

     removal of smart meters and other devices that emit radio frequencies (Rf) or electromagnetic

     fields (EMF). Pleading in the alternative. Petitioners request that the Commission formulate and

     adopt rules to provide for sate implementation of smart meters, to allow customers to decline

     participation in the AMS program. and to protect those members of the public at increased risk

     of injury or  claimed that an dectric utility might remotely 1.:hange a resident's

                                                                                                              000000003
     PROJECT N0.-'0404                              ORDER                                    PAGE40F6

     thermostat during times of peak demand to reduce the level of air conditioning in the summer or

     to reduce the heat in the winter. Commenters aJso claimed that a smart meter may be used by an

     electric utility in the future to interfere with a customer's ability to use electricity as the customer

     desires.

     Fifth. commenten claimed that the inaccuracy of a newly installed smart meter resulted in a

     substantial increase in their electric utility bill. Commenters offered their own experience of

     higher than usual electric billing or cited news reports of specific instances of higher than usual

     electric bills.

     Six~   commenters stated concern that smart meters may cause damage to their property. Most

     commenters who expressed this concern claimed that smart meters caused electrical surges that

,.   ~aused appliances to fail.    Additionally, commenters cited news reports of house tires that that

     they claim may have been caused by smart meters.

     Seventh. commenters stated concern that smart meters would make it possible for an electric

     utility to use dynamic time-of-use pricing in the residential market. The commenters believe that

     such a pricing system would increase the cost of electric service, particularly for customers who

     are homebound.

     Eighth. commenters were concerned that the smart meters' automation of reading and

     transmitting electric   use   information would result in a reduction of jobs for meter-reading

                                                                                                                000000004
    PROJECT NO. 40404                                ORDER                                 PAGES OF6

•   employees and would have a negative effect on the meter-reading employees. thdr families, and

    the U.S. 1."Conomy.

    Four parties filed comments opposing the petition:          AEP Texas Central Company and AEP

    Texas North Company {together, AEP Texas); CenterPoint Energy Houston Electric, LLC

    (CenterPoint); Oncor Electric Utility Company, LLC (Oncor); and Texas-New Mexico Power

    Company (TNMP) (collectively, Electric Utilities).

    The Electric Utilities noted that the petition filed in this proceeding is nearly identical to the

    petition filed in Project No. 40199. The Electric Utilities therefore incorporated by reference or

    restated their comments filed in Project No. 40199. Additionally, the Electric Utilities stated that

    the Commission denied the petition filed in Project No. 40199 because the Commission was

•   already considering similar issued in Project No. 40190. The Electric Utilities concluded that the

    Commission should similarly deny this petition because the Commission previously determined

    that Project No. 40190 would be a more etficient and effective forum in which to address

    concerns raised by Petitioners.

    !n addition to the Electric Utilities' comments summarized above, Oncor discussed each of the

    s ix. proposed rules contained in the petition. Generally, Oncor argued that the proposed rules are

    l.!Ontrary to   the Public Utility Regulatory Act and outside of the Commission's authority .

    ..\tter considering the petition and comments received. the Commission denies the Petition fur

    [nitiation of Rulemaking Proceooings, because the Commission has another project to address

                                                                                                           000000005
    PROJECT NO. 40404                                        ORDER                                PAGE 60F6

•   Petitioners' c.:onccrns about smart mt!ters, Proje<;t No. 40190, PUC Proceeding tu Evaluate the

    Feasibility of lnstitt1ting a Smart Mt!ter Opt-Out Program. [n that project, the Commission has

    received extensive comments that raise conct..'lllS like those in the petition in this project. It will

    be more efficient and dfective for the Commission to consider smart meter concerns in one

    project As to the request for an emergency rule, the Commission denies that request for the

    additional reason that no emergency exists as to the issues raised in rhe petition. Therefore,

    consistent with Commission practice, the Commission denies the petition in this project. which

    will allow it to focus its consideration of concerns about smart meters to Project No. 40190.

              SIGNED AT AUSTIN, TEXAS on the                         I   Jf';;.fJUL Y 2012.

                                                     PUBLIC UTILITY COMMISSION OF TEXAS

                                                  CD_rvt:raci-v-d Cl-t--{f~-===-=-=-
                                                     DONNA L. NELSON, CHA1ki\1AN

                                                                                           _;:>
                                                                                 ( -")('71-\
                                                                       '
                                                     ROLANDO PABLOS, COMMISSIONER

    () ' CAOM\TXR-Rula Managcmcnt1Kula • pditiuns\-10404\411404FO docx

                                                                                                              OOOOOOOOE
EXHIBITB
Amalia Rodriguez - Mendoza
District Clerk, Travis Count y
Travis County Courthouse Complex
P . O. Box 679003
Austin, Tex a s 78767

DATE : October 03, 2014

ROGER B . BORGELT
614 S CAPITAL OF TEXAS HIGHWAY
AUSTIN , TEXAS 78746

                  ORDER GRANTING DEFENDANT 'S PLEA TO JURISDICTION

                                     D-1 - GN - 12 - 003059

  DEVVY KIDD, JOHN KIDD, M. J . SHADDEN, JOHN COLE, R . M. DAI LEY , TRACY
    STEPHENS, PATRICK STROYICK, DOROTHY MORROW , CHARLES MORROW, AMY
  WILLIAMS , DAVID WILLIAMS , WILL=AMS, DAVID WILLIAMS , THEISS , REBECCA
                                 GUTIERREZ ,
                                    VS.
                    TEXAS PUBLIC UTI LITIES COMMISSION

You are hereby notified that the above order has been signed and
entered SEPTEMBER 30, 2014 in the 419TH J UDICIAL DISTRICT COURT of
Travis County Texas in the above numbered and entitled cause.

,\1L.\LL..\. RODRIGIJEZ-J\IENDOZA,
District Clerk

L60 - 000042560                         D-1-GN-12-003059                 KAH
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