Opinion

CP&LRHG

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

ON MOTION FOR REHEARING

NO. 03-95-00093-CV

Central Power and Light Company, Appellant

v.

John Sharp, Comptroller of Public Accounts of the State of Texas;

and Dan Morales, Attorney General of the State of Texas, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 147TH JUDICIAL DISTRICT

NO. 91-2800, HONORABLE JERRY DELLANA, JUDGE PRESIDING

The opinion issued by this Court on December 6, 1995 is withdrawn and the

following opinion is substituted in its place.

Appellant Central Power and Light ("CP&L") appeals from a summary judgment

rendered in favor of appellees ("the Comptroller"). The dispute centers around the Comptroller's

interpretation of a provision within the Franchise Tax Act governing the computation of a

company's surplus. See Tex. Tax Code Ann. §§ 171.001 (a), 171.109(b) (West 1992). We will

affirm the judgment of the trial court.

Background

CP&L is a corporation organized under Texas law, subject to state regulation as

an electric utility company. See Tex. Rev. Civ. Stat. Ann. art. 1446c, § 3(c)(1) (West Supp.

1995). As a corporation doing business in Texas, it is required to report and pay an annual

franchise tax to the State. See Tex. Tax Code Ann. § 171.001 (West 1992 & Supp. 1995). The

franchise tax is one imposed on the value of the privilege of transacting business in Texas.

Bullock v. National Bancshares Corp. , 584 S.W.2d 268, 270 (Tex. 1979). The amount of tax due

is based on the company's taxable capital, which consists of surplus and stated capital. Tex. Tax

Code Ann. § 171.002 (West Supp. 1995). Surplus is net assets, or total assets minus total debts.

Code § 171.109 (West 1992 & Supp. 1995). The computation of surplus is governed by Tax

Code section 171.109. That section provides in pertinent part that "a corporation must compute

its surplus . . . according to generally accepted accounting principles." Code § 171.109(b) (West

1992). The Comptroller has interpreted "generally accepted accounting principles" to include

"those broad rules of accounting formally accepted by the American Institute of Certified Public

Accountants (AICPA) . . . ." 34 Tex. Admin. Code § 3.547 (d)(1) (West 1995). The rules of

accounting formally accepted by AICPA are set forth in the pronouncements of the Financial

Accounting Standards Board ("FASB"); the individual rules are referred to as Financial

Accounting Standards.

During the relevant time period, CP&L was involved in building the South Texas

Nuclear Power Plant ("STNP"). A company's cost of financing a long-term construction project

such as STNP is referred to as Allowance for Funds Used During Construction, or "AFUDC."

According to Financial Accounting Standard 34, all interest owed to lenders on

amounts borrowed for construction purposes must be capitalized as an asset. This interest expense

is known as AFUDC-debt. According to Financial Accounting Standard 71, a regulated utility

that uses its own funds for construction purposes must capitalize the imputed cost of using those

funds (for example, the foregone interest that could have been earned on the funds used for

construction). This cost of using a company's own funds, or equity, is known as AFUDC-equity.

Thus, for a regulated utility, the cost of acquiring capital, whether from an outside lender or from

internal funds, is treated the same as the cost of acquiring nails, cement and construction labor:

all are capitalized as an asset. Once the project is completed and placed in use, all capitalized

costs are added to the cost basis of the project, and are then depreciated over the life of the

structure.

The Controversy

Because CP&L used its own funds to finance the nuclear plant, it capitalized its

AFUDC-equity in its 1990 franchise tax report pursuant to Financial Accounting Standard 71 and

paid its tax accordingly. CP&L then sought a refund of the difference between its tax as reported

and paid, and its tax as it would have been computed without capitalizing its AFUDC-equity. See

Tex. Tax Code Ann. § 111.104 , .105 (West 1992). This difference amounted to approximately

three million dollars. The Comptroller denied CP&L's request for a refund, maintaining that

generally accepted accounting principles reflected in Financial Accounting Standard 71 required

CP&L to capitalize its AFUDC-equity.

CP&L contends that Tax Code section 171.109(b) does not require it to capitalize

its AFUDC-equity as an asset in computing its franchise tax, and attacks the Comptroller's

interpretation to the contrary as unconstitutional. CP&L argues that the Comptroller's

interpretation of Tax Code section 171.109(b) results in unequal taxation because it requires

utilities to capitalize AFUDC-equity, but does not require private companies to do so. CP&L also

claims that the Comptroller's interpretation of Tax Code section 171.109(b) forces it to compute

franchise tax liability using the "books and records" method of accounting, a circumstance which

this Court found to violate the state constitutional requirement that all taxes be equal and uniform.

See Tex. Const. art. VIII, § 1; Bullock v. Sage Energy Co. , 728 S.W.2d 465, 468 (Tex.

App.--Austin 1987, writ ref'd n.r.e.). Finally, CP&L asserts that the Comptroller's reliance on

FASB pronouncements as "generally accepted accounting principles" results in an unconstitutional

delegation of legislative power to an unofficial agency. See Tex. Const. art. III, § 1.

Discussion and Holding

CP&L contends in its third point of error that the Comptroller's interpretation of

"generally accepted accounting principles" to comprise Financial Accounting Standards results in

tax classifications that afford disparate treatment to similarly situated taxpayers. See Tex. Tax

Code Ann. § 171.109 (b) (West 1992); 34 Tex. Admin. Code § 3.547 (d)(1) (West 1995).

Financial Accounting Standard 71 provides that regulated companies must capitalize AFUDC-equity, while Financial Accounting Standard 34 does not require non-regulated companies to

capitalize AFUDC-equity. CP&L argues that because there is no rational basis justifying this

disparate treatment, the Comptroller's interpretation runs afoul of the state constitutional provision

requiring equal and uniform taxation. See Tex. Const. art. VIII, § 1.

Administrative rules are constitutional if they are consistent with the statute and are

reasonable. Bullock v. Hewlett-Packard , 628 S.W.2d 754, 756 (Tex. 1982). CP&L essentially

attacks the Comptroller's interpretation of Tax Code section 171.109(b) as unreasonable because

it results in an unequal and non-uniform tax, in violation of the state constitution. When an

agency interpretation is in effect at the time the legislature amends the law without making

substantial change in the statute, the legislature is deemed to have accepted the agency's

interpretation. Bullock v. Marathon Oil Co. , 798 S.W.2d 353, 357 (Tex. App.--Austin 1990, no

writ). The Comptroller's Franchise Tax Rule 3.547 was in effect when the legislature amended

Tax Code section 171.109. See 34 Tex. Admin. Code § 3.547 (West 1995); Tex. Tax Code Ann.

§ 171.109 (West 1992 & Supp. 1995). We therefore conduct our analysis as if the interpretation

under attack were set forth by the legislature.

Tax classifications are constitutional unless there is no reasonable basis for the

attempted classification. Hurt v. Cooper , 110 S.W.2d 896, 901 (Tex. 1937). The party attacking

the tax has the burden to show discrimination by negating every conceivable basis which might

support it. Marathon Oil Co. , 798 S.W.2d at 359 . We indulge a strong presumption of

constitutional validity when reviewing statutes relating to taxation. Vinson v. Burgess , 773

S.W.2d 263, 266 (Tex. 1989).

We begin our discussion by noting that "the legislature of the state has frequently

placed public utilities within a class by themselves for the purpose of taxation." State v.

Southwestern Gas & Elec. Co. , 193 S.W.2d 675, 678 (Tex. 1946). The Comptroller advances

this rational basis for the challenged tax classification: that regulated utilities, unlike private non-regulated enterprises, are substantially assured of recovering and earning a return on AFUDC-equity through the rate-making process. This Court has recognized that, once a constructed plant

is placed in service, a utility can recover AFUDC-equity by adding it as a cost of construction to

the utility's rate base. City of El Paso v. Public Util. Comm'n , 839 S.W.2d 895, 912-13 (Tex.

App.--Austin 1992), rev'd in part on other grounds , 883 S.W.2d 179 (Tex. 1994). Furthermore,

Financial Accounting Standard 71 provides for the capitalization of AFUDC-equity only upon

CP&L's determination that the AFUDC-equity would probably be included as a cost in its rate

base. (1)

AFUDC-equity is valuable to CP&L and improves its true financial condition because it

is repaid through rates.

Unlike regulated companies, non-regulated enterprises do not enjoy this high

probability that a return will be realized on their AFUDC-equity; they must depend on market

forces for any such return. AFUDC-equity therefore does not represent the same value for a non-regulated company as it does for a regulated company. The Comptroller's rule at issue here does

nothing more than recognize and account for this difference. We conclude that this difference in

value provides more than sufficient justification for the disparate treatment of AFUDC-equity

between regulated and non-regulated companies.

CP&L urges that because regulated companies are not always allowed to recover

costs incurred in the construction of major plants, the tax does not operate equally within the

class. We disagree. When the Public Utility Commission fails to find that utility construction

costs are prudent, the Commission may disallow the inclusion of those costs in the utility's rate

base. See, e.g., El Paso v. Public Util. Comm'n , 883 S.W.2d 179, 186 (Tex. 1994); Gulf States

Utils. v. Coalition of Cities , 883 S.W.2d 739 , 743 n.2 (Tex. App.--Austin 1994, no writ). This

is because "[i]t is neither just nor reasonable for a utility's customers to bear the cost of inefficient

management or poor planning." Coalition of Cities , 883 S.W.2d at 743 n.2 (citing Long Island

Lighting Co. v. Public Serv. Comm'n of the State of New York , 134 A.D.2d 135 (1987)). The

disallowance of AFUDC-equity on this basis has nothing to do with the inherent value that

AFUDC-equity represents to the company; it is simply a means of protecting ratepayers from the

financial consequences of a utility's poor decision-making. This does not change the

distinguishing feature that a regulated utility's rates are cost-based and not subject to market

pricing. Any likelihood that a regulated company's AFUDC-equity will not yield a return on the

basis of imprudence is attributable to the improper decisions of the company itself. A tax

classification that reasonably discriminates between regulated and non-regulated companies does

not lose its rationality when it fails to take into account a variable largely in control of the

company itself.

CP&L also contends that the tax classification is unreasonable because of recently

passed legislation which affects regulated companies. The statute states in part:

The legislature finds that public utilities are by definition monopolies in many of

the services they provide and in many of the areas they serve, and that therefore

the normal forces of competition that operate to regulate prices in a free enterprise

society do not always operate , and that therefore utility rates, operations, and

services are regulated by public agencies where competition does not operate, with

the objective that this regulation shall operate as a substitute for competition .

Act of May 12, 1995, 74th Leg., R.S., ch. 765, art. 2, § 2.001, Tex. Gen. Laws 3972, 3988-89

(West Supp. 1995) (emphasis added). This bill maintains regulatory pricing as a substitute for

market-based pricing in most cases. It therefore does not defeat the rational basis for the tax

classification at issue--regulated companies still enjoy a far greater likelihood that they will realize

a return on their AFUDC-equity because of cost-based rate setting.

CP&L next argues that the classification results in unequal taxation because

companies performing services under cost-reimbursement contracts are not required to capitalize

AFUDC-equity in computing their franchise tax. Thus, CP&L argues, these companies and

regulated enterprises are similarly situated with respect to AFUDC-equity, but the classification

treats them differently. We are not persuaded by this argument. First, the probability that such

a company will recover its AFUDC-equity depends on the operation of a contract, while a

regulated company's likelihood of recovery is substantially assured by operation of law. See Tex.

Civ. Stat. Ann. art. 1446c, § 39 (West Supp. 1995). This distinction alone would provide a

reasonable basis for requiring regulated companies to capitalize AFUDC-equity, while not

imposing the same requirement on companies operating under cost-reimbursement contracts. See

Fairmont Dallas Restaurants, Inc. v. McBeath , 618 S.W.2d 931, 933 (Tex. Civ. App.--Waco

1981, no writ) (if any reasonable distinction can be found, court must sustain tax classification).

Second, CP&L has not offered any proof that this challenged classification has been applied to

a large class of companies operating under cost-reimbursement contracts. See Southern Clay

Prods. Inc. v. Bullock , 753 S.W.2d 781, 784 (Tex. App.--Austin 1988, no writ) (to warrant court

intervention under Texas Constitution article VIII, section 1 in a tax assessment, complaining

party must show challenged rule as construed by taxing authority has been applied to large class

of other individuals).

CP&L offers as a final argument that the tax is unequal because a regulator cannot

value a regulated company's AFUDC-equity with any greater accuracy than an unregulated

company could value its AFUDC-equity. CP&L asserts that a regulator's valuation is necessarily

arbitrary because it is based upon estimates and derived by using any one of several economically-based algorithms. This argument ignores the fact that the classification is based on the recognition

that AFUDC-equity, whatever its specific value, represents a benefit to the company because that

value will be recovered through the rate-making process. The determined value of AFUDC-equity

as capitalized for purposes of the franchise tax will equal the value added to the company's rate

base.

We hold this disparate tax treatment of regulated and non-regulated enterprises does

not violate the Texas Constitution, and we overrule CP&L's third point of error.

CP&L contends in its second point of error that the Comptroller's interpretation

of "generally accepted accounting principles" in Tax Code section 171.109(b) resurrects the

Comptroller's former "books and records" rule, which we held to violate our Constitution's

prohibition against unequal taxation. See Bullock v. Sage Energy Co. , 728 S.W.2d 465 (Tex.

App.--Austin 1987, writ ref'd n.r.e.). In that case, Sage attacked the Comptroller's rule which

required a corporation to compute its franchise tax based on its financial condition as shown in

its books and records of account. Id. at 465 . Because Sage's shares were publicly traded, the

Securities and Exchange Commission required it to capitalize its intangible drilling costs on its

books and records. Under the Comptroller's rule, Sage was accordingly required to capitalize its

intangible drilling costs for purposes of computing its franchise tax liability. Corporations whose

shares were not publicly traded were not subject to this Securities and Exchange Commission

regulation; they were able to treat intangible drilling costs as expenses on their books and records,

and accordingly excluded those expenses from their taxable capital in computing their franchise

tax liability.

This Court concluded that although intangible drilling costs have the same value

to all corporations, their value was ascertained by different standards under the Comptroller's

"books and records" rule. Id. at 468 . Sage's intangible drilling costs were capitalized at full

value, while these same costs for similar corporations were not capitalized at all, simply by virtue

of the accounting method employed by the corporation. Id. "Accordingly, Sage was denied the

right to equal and uniform taxation provided by the Constitution." Id. Sage dealt with a rule

which essentially imposed a different "value" on costs which held the same actual value to all

parties subject to the rule. As previously discussed, AFUDC-equity does not hold the same value

for unregulated companies as it does for regulated companies. The tax classification assailed by

CP&L here does nothing more than recognize that difference. We overrule CP&L's second point

of error.

CP&L asserts in its first point of error that the Comptroller's interpretation of

"generally accepted accounting principles" in Tax Code section 171.109(b) as including

pronouncements by the Financial Accounting Standards Board violates the state constitutional

prohibition against delegating legislative power to authority outside the legislature. See Tex.

Const. art. III, § 1; Tex. Tax Code Ann. § 171.109 (b) (West 1992); 34 Tex. Admin. Code

§ 3.547 (d)(1) (West 1995). In its cross-point of error, the Comptroller urges that this claim is

jurisdictionally barred because CP&L failed to raise it in its motion for rehearing before the

Comptroller. See Tex. Tax Code Ann. § 112.152 (West 1992). We must address the

Comptroller's claim first.

In a tax refund action, the Tax Code provides the exclusive waiver of sovereign

immunity. Hammerman & Gainer, Inc. v. Bullock , 791 S.W.2d 330, 331 (Tex. App.--Austin

1990, no writ); Bullock v. Marathon Oil Co. , 798 S.W.2d 353, 360 (Tex. App.--Austin 1990, no

writ). Thus in order to maintain an action against the Comptroller for a refund of taxes, a party

must meet the procedural requirements of the tax protest law. Marathon Oil , 798 S.W.2d at 360 .

Compliance with these procedures is a jurisdictional prerequisite for the trial court to hear and

decide the merits of a tax refund suit. See Robinson v. Bullock , 553 S.W.2d 196, 198 (Tex. Civ.

App.--Austin 1977, writ ref'd n.r.e.), cert. denied , 436 U.S. 918 (1978)

Tax Code section 112.152 provides that the "grounds of error contained in the

motion for rehearing are the only issues that may be raised in a suit" seeking a refund of taxes

paid. Tex. Tax Code Ann. § 112.152 (West 1992). CP&L failed to include its delegation

argument in the motion for rehearing, and so cannot raise it in its action for a refund. The Tax

Code procedures for seeking a refund "created a right not existing at common law and prescribed

a remedy to enforce the right; therefore the courts may act only in the manner provided by the

statutes which created the right." Robinson , 553 S.W.2d at 197 (citing Union Central Life

Insurance Co. v. Mann , 158 S.W.2d 477, 481 (Tex. 1941). We accordingly hold that the trial

court erred in denying the Comptroller's plea to the jurisdiction on CP&L's delegation argument.

The Comptroller's cross-point of error is sustained.

Were we to reach appellant's delegation complaint, we would overrule it on the

merits. The legislature has delegated to the Comptroller the power to adopt rules for the

enforcement and collection of the franchise tax. Tex. Tax Code Ann. § 111.002 (a) (West 1992);

see In re Johnson , 554 S.W.2d 775, 779-80 (Tex. Civ. App.--Austin 1977), writ ref'd n.r.e. , 569

S.W.2d 882, 883 (Tex. 1978) (legislature may delegate duty to administer and enforce legislative

functions). This delegation of power is particularly appropriate where, as here, "the legislature

itself cannot practically and efficiently exercise the power" it has delegated. In re Johnson , 554

S.W.2d at 780 . The Comptroller's adoption of Franchise Tax Rule 3.547, interpreting "generally

accepted accounting principles" in the Franchise Tax Act, falls within this delegated authority.

CP&L does not attack the power delegated by the legislature to the Comptroller;

instead it claims that the Comptroller's interpretation of "generally accepted accounting principles"

confers legislative power onto FASB. As previously noted, the legislature is deemed to have

accepted this interpretation. Marathon Oil Co. , 798 S.W.2d at 357 . CP&L argues that this

interpretation, which allegedly renders the statute unconstitutional, must be rejected in favor of

one consistent with the constitution.

Tax Code section 171.109(b) states:

Except as otherwise provided in this section, a corporation must compute its

surplus, assets, and debts according to generally accepted accounting principles.

If generally accepted accounting principles are unsettled or do not specify an

accounting practice for a particular purpose related to the computation of surplus,

assets, or debts, the comptroller by rule may establish rules to specify the

applicable accounting practice for that purpose.

Tex. Tax Code Ann. § 171.109 (b) (West 1992). The Comptroller has interpreted "generally

accepted accounting principles" to mean, "unless the context clearly requires otherwise, those

broad rules of accounting formally accepted by the American Institute of Certified Public

Accountants (AICPA) or its designees . . . ." 34 Tex. Admin. Code § 3.547 (d)(1) (West 1995).

This Court has approved the delegation of legislative authority to private entities

when the legislative purpose is discernible and there is protection against the arbitrary exercise

of the entity's power. Public Ins. Counsel v. Texas Auto. Ins. Plan , 860 S.W.2d 231, 237 (Tex.

App.--Austin 1993, writ denied); see also Oxford v. Hill , 558 S.W.2d 557, 560 (Tex. Civ.

App.--Austin 1977, writ denied) (legislature may delegate authority to establish rules to carry out

express purpose of law in question). However, FASB operates without reference to any

legislative purpose, and it does not make its pronouncements in order to fulfill or effectuate any

statute. Nor does FASB exercise any direct power or authority over Texans; its pronouncements

are effective only by virtue of legislative action adopting them as accounting standards.

In addition to FASB's lacking any legislative power, numerous protective

mechanisms insure that Financial Accounting Standards are not unconditionally binding on

taxpayers. According to the same interpretive rule assailed by CP&L, Financial Accounting

Standards are not to be used when "the context clearly requires otherwise." 34 Tex. Admin. Code

§ 3.547 (d)(1) (West 1995). Indeed, evidence in the administrative record reflects that the Rules

of Ethics for Certified Public Accountants require a departure from generally accepted accounting

principles when compliance with the principle would result in a misleading financial statement.

Furthermore, any danger that Financial Accounting Standards will work harm or unfairness on

taxpayers is removed by procedures through which a taxpayer may go before the Comptroller to

contest the imposition of the tax. See Tex. Tax Code Ann. § 111.104 , .105 (West 1992)

(outlining procedures for taxpayer to seek refund from comptroller). These procedures also

demonstrate that the Comptroller, not FASB, holds and exercises the properly delegated power

to interpret and apply tax laws.

Based on these considerations, we would hold that the contested interpretation of

Tax Code section 171.109(b) does not confer any legislative power on FASB; the interpretation

simply incorporates the Board's pronouncements as standards to be used in computing taxes under

the laws set forth in the Franchise Tax Act. The supreme court has approved the legislature's

incorporation of standards promulgated by an unofficial agency into statutes. Texas Workers'

Compensation Comm'n v. Garcia , 893 S.W.2d 504, 522 (Tex. 1995); Dudding v. Automatic Gas

& Co. , 193 S.W.2d 517, 520 (Tex. 1946).

In light of these same considerations, we disagree with CP&L's contention that the

legislature's incorporation of future pronouncements by FASB bestows legislative authority on

that body. In Garcia , the court dealt with the incorporation of the American Medical

Association's Guides to the Evaluation of Permanent Impairment (the "Guides" ) into the Texas

Workers' Compensation Act. Garcia , 893 S.W.2d at 521, 525 . The legislature adopted a

particular edition of the Guides as the basis for rating "impairments" under the Act, as part of an

effort to provide more objectivity in determining long-term compensation awards. Id. at 522-523,

n.12 ., 526. In upholding the use of the Guides' standards against a due-course-of-law challenge,

the court suggested that the specification of a particular edition of the Guides "creates a potential

administrative problem." Id.

The legislature in the Franchise Tax Act directed taxpayers to employ "generally

accepted" principles in computing their tax liability; it did not freeze these principles in time. Nor

did the legislature, in implicitly accepting the Comptroller's interpretation, incorporate a particular

edition of FASB pronouncements into the Franchise Tax Act. Thus, the legislature avoided the

"potential administrative problem" identified in Garcia . Given the Comptroller's ongoing

oversight of the application of these Standards, we do not see how the incorporation of future

Standards provides any basis--other than that we have already disposed of--for the proposition that

FASB wields any legislative power.

Having overruled CP&L's points of error, we affirm the judgment of the trial

court.

Bea Ann Smith, Justice

Before Chief Justice Carroll, Justices Jones and B. A. Smith

Affirmed

Filed: April 3, 1996

Publish

1. Indeed, in its response to interrogatories, CP&L stated that the Public Utility

Commission "sometimes allows a utility to recover all or a portion of the AFUDC that is

capitalized during a construction period."

uate any

statute. Nor does FASB exercise any direct power or authority over Texans; its pronouncements

are effective only by virtue of legislative action adopting them as accounting standards.

In addition to FASB's lacking any legislative power, numerous protective

mechanisms insure that Financial Accounting Standards are not unconditionally binding on

taxpayers. According to the same interpretive rule assailed by CP&L, Financial Accounting

Standards are not to be used when "the context clearly requires otherwise." 34 Tex. Admin. Code

§ 3.547 (d)(1) (West 1995). Indeed, evidence in the administrative record reflects that the Rules

of Ethics for Certified Public Accountants require a departure from generally accepted accounting

principles when compliance with the principle would result in a misleading financial statement.

Furthermore, any danger that Financial Accounting Standards will work harm or unfairness on

taxpayers is removed by procedures through which a taxpayer may go before the Comptroller to

contest the imposition of the tax. See Tex. Tax Code Ann. § 111.104 , .105 (West 1992)

(outlining procedures for taxpayer to seek refund from comptroller). These procedures also

demonstrate that the Comptroller, not FASB, holds and exercises the properly delegated power

to interpret and apply tax laws.

Based on these considerations, we would hold that the contested interpretation of

Tax Code section 171.109(b) does not confer any legislative power on FASB; the interpretation

simply incorporates the Board's pronouncements as standards to be used in computing taxes under

the laws set forth in the Franchise Tax Act. The supreme court has approved the legislature's

incorporation of standards promulgated by an unofficial agency into statutes. Texas Workers'

Compensation Comm'n v. Garcia , 893 S.W.2d 504, 522 (Tex. 1995); Dudding v. Automatic Gas

& Co. , 193 S.W.2d 517, 520 (Tex. 1946).

In light of these same considerations, we disagree with CP&L's contention that the

legislature's incorporation of future pronouncements by FASB bestows legislative authority on

that body. In Garcia , the court dealt with the incorporation of the American Medical

Association's Guides to the Evaluation of Permanent Impairment (the "Guides" ) into the Texas

Workers' Compensation Act. Garcia , 893 S.W.2d at 521, 525 . The legislature adopted a

particular edition of the Guides as the basis for rating "impairments" under the Act, as part of an

effort to provide more objectivity in determining long-term compensation awards. Id. at 522-523,

n.12 ., 526. In upholding the use of the Guides' standards against a due-course-of-law challeng