Devvy Kidd John Kidd M. J. Shadden John Cole R.M.Daiey Tracy Stephens Patricia Stroyick Dorothy Morrow Charles Morrow Amy Williams David Williams Norman Kuehn Elizabeth Theiss Rebecca Gutierrez Marie Nugent Steve G. Crutchfield v. Texas Public Utility Commission AEP Texas Central Company AEP Texas North Company CenterPoint Energy Houston Electric, LLC Texas-New Mexico Power Company And Oncor Electric Delivery Company, LLC ( 2015 )

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
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( -")('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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