# 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 > Texas Court of Appeals, 3rd District (Austin) · January 22, 2015 URL: https://www.frixlaw.com/law-library/cases/4042347 ## Case - **Court:** Texas Court of Appeals, 3rd District (Austin) - **Decided:** January 22, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4042347 ## Opinion text 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 SW 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 ( -")('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 l:iigd jr, The U r•·, 1 .. :lfftavis G!'.ytir