# CPS Energy, Time Warner Cable Texas LLC, and Southwestern Bell Telephone Company D/B/A AT&T// Public Utility Commission of Texas v. Public Utility Commission of Texas// Cross-Appellee, CPS Energy, Time Warner Cable Texas LLC and Southwestern Bell Telephone Company D/B/A AT&T

> Texas Court of Appeals, 3rd District (Austin) · May 22, 2015

URL: https://www.frixlaw.com/law-library/cases/4066903

## Case

- **Court:** Texas Court of Appeals, 3rd District (Austin)
- **Decided:** May 22, 2015
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

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- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4066903

## Opinion text

ACCEPTED
03-14-00340-CV
5406063
THIRD COURT OF APPEALS
AUSTIN, TEXAS
5/22/2015 5:01:17 PM
JEFFREY D. KYLE
CLERK

No. 03-14-00340-CV
________________________________________________________________________
FILED IN
3rd COURT OF APPEALS
AUSTIN, TEXAS
In the Court of Appeals
5/22/2015 5:01:17 PM
Third District of Texas at Austin JEFFREY D. KYLE
Clerk
________________________________________________________________________

CPS E NERGY, ET AL.
Appellants,

V.

P UBLIC U TILITY C OMMISSION OF T EXAS, ET AL.
Appellees.
________________________________________________________________________

THE PUBLIC UTILITY COMMISSION OF TEXAS’
POST-SUBMISSION RESPONSE BRIEF
________________________________________________________________________

KEN PAXTON DOUGLAS FRASER
Attorney General of Texas Assistant Attorney General
State Bar No. 07393200
CHARLES E. ROY
First Assistant Attorney General MEGAN NEAL
Assistant Attorney General
JAMES E. DAVIS State Bar No. 24043797
Deputy Attorney General for Civil
Litigation O FFICE OF THE A TTORNEY G ENERAL
P.O. Box 12548, MC 066
JON NIERMANN Austin, Texas 78711-2548
Chief, Environmental Protection (512) 463-2012
Division (512) 457-4610 (fax)
douglas.fraser@texasattorneygeneral.gov
May 22, 2015 megan.neal@texasattorneygeneral.gov
TABLE OF CONTENTS

PAGE
FACTUAL BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

A. This Court lacks subject-matter jurisdiction to rule on
an advisory decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

B. The Commission is part of the executive branch and
can give advice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

C. Whether the FCC’s amendments will be applied in
the future is not ripe for adjudication. .. . . . . . . . . . . . . . . . . . . . . 6

D. AT&T and Time Warner are incorrect that this is a
declaratory judgment action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

E. This Court recently refused to adjudicate an advisory
decision under similar circumstances. .. . . . . . . . . . . . . . . . . . . . . 9

F. The Commission correctly found that the
amendments should apply prospectively. . . . . . . . . . . . . . . . . . 11

CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ii
INDEX OF AUTHORITIES

CASES PAGE

Alabama State Fed’n of Labor v. McAdory,
325 U.S.450 (1945).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Cal. Products, Inc. v. Puretex Lemon Juice, Inc.,
334 S.W.2d at 780, 783 (Tex. 1960). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

City of Garland v. Louton,
691 S.W.2d 603 (Tex. 1985). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 6

Complaint of Chermac Energy Corp. Regarding Certain Qualifying Facilities
Under PURPA,
2010 WL 3524026 (Tex. P.U.C. 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 8

Firemen’s Ins. Co. of Newark, N.J. v. Burch,
442 S.W.2d 331, 333 (Tex. 1969). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

In the Interest of S.K.A., M.A., and S.A., Minor Children,
236 S.W.3d 875, 885 (Tex. App.—Texarkana 2007, pet. denied). . . . . . . 6

Mayhew v. Town of Sunnyville,
964 S.W.2d 922 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Patterson v. Planned Parenthood of Hous. & Se. Tex., Inc.,
971 S.W.2d 439 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 7

Railroad Comm’n v. CenterPoint Energy Resources, Corp.,
Nos. 03-13-00533-CV, 03-13-00534-CV, 03-13-00535-CV,
2014 WL 4058727 (Tex. App.–Austin August 14, 2014, no pet.)
(mem. op.) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 11

iii
CASES PAGE

State Bar of Tex. v. Gomez,
891 S.W.2d 243 (Tex. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4

Tex. Ass’n of Bus. v. Tex. Air Control Bd.,
852 S.W.2d 440 (Tex. 1993). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 5

TXU Elec. Co. v. Pub. Util. Comm’n,
51 S.W.3d 275 (Tex. 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

FEDERAL STATUTES
47 U.S.C. § 224(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATE STATUTES
TEX. CIV. PRAC. & REM. CODE
§§ 37.001-37.011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

TEX. UTIL. CODE
§ 54.204.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 11
§ 54.204(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2

RULES
1 TEX. ADMIN. CODE
§ 217.3.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

iv
FACTUAL BACKGROUND

Prior to oral argument in this case, the Public Utility Commission of

Texas (the “Commission”) filed a letter to inform the Court that it lacked

subject-matter jurisdiction to rule on whether the Federal Communication

Commission’s (“FCC”) revisions to its rules are incorporated under Utilities

Code § 54.204(c).1 Effective June 8, 2011, the FCC amended its rules to

exclude depreciation, taxes, and rate of return expenses from the pole-

attachment fees because pole attachments do not cause these costs.2 The

result is a 66% reduction of the maximum pole-attachment rate for urban

areas and 44% for non-urban areas.3

The adoption of these amendments has no bearing on the issues CPS

Energy brought before the Commission in its January 22, 2009 enforcement

action under Utilities Code § 54.204. That enforcement action concerned the

maximum pole-attachment rates from test year 2005/billing year 2006 through

1
See Letter to Jeffrey D. Kyle from Megan Neal, Assistant Attorney General, filed in this
cause on April 20, 2015.
2
See AR, Binder 11, Item 449 at 120 (PFD).
3
Id.

1
test year 2009/billing year 2010. That time frame is prior to the June 8, 2011

effective date of the FCC’s amendments. Litigation of CPS Energy’s

enforcement action at the agency lasted from January 2009 until February of

2013. More than two years after litigation began, the FCC’s amendments

became effective. Although the adoption of the amendments was not initially

before the Commission, the parties asked the Administrative Law Judge

(“ALJ”) to certify the following question to the Commission:

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

The Commission opined that the plain language of the statute indicates

that the Legislature understood that the FCC could adopt new or modified

rules and it was the Legislature’s intent that these amendments be

incorporated by Utilities Code § 54.204.4

CPS Energy appealed the Commission’s opinion regarding the

4
AR, Binder 8, Item 402 at 2.

2
amendments. The Commission defended its order against CPS Energy’s

challenge on the merits in district court and in its Appellee’s brief in this

Court. But on further review, the Commission asserts that this Court lacks

jurisdiction to decide this issue because the Commission’s statement of

position is an advisory opinion regarding enforcement of future events that

have not yet come to pass.

ARGUMENT

A. This Court lacks subject-matter jurisdiction to rule on an
advisory decision.

This Court lacks subject-matter jurisdiction to render a decision based

on an appeal of an advisory opinion. Subject-matter jurisdiction must exist

for the Court to have authority to decide a case. Tex. Ass’n of Bus. v. Tex. Air

Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). “Subject matter jurisdiction is

never presumed and cannot be waived.” Id. at 443-44. Subject-matter

jurisdiction can be challenged for the first time on appeal. Id. at 444-45.

“Ripeness is an element of subject matter jurisdiction.” Mayhew v. Town of

Sunnyville, 964 S.W.2d 922, 928 (Tex. 1998) (citing State Bar of Tex. v. Gomez,

3
891 S.W.2d 243, 245 (Tex. 1994); City of Garland v. Louton, 691 S.W.2d 603, 605

(Tex. 1985)).

The Commission has a duty to inform the Court when it lacks

jurisdiction, as here, because the Commission merely gave advice on a matter

that is not ripe. “The distinctive feature of an advisory opinion is that it

decides an abstract question of law without binding the parties.” Tex. Ass’n

of Bus., 852 S.W.2d at 444 (citing Alabama State Fed’n of Labor v. McAdory, 325

U.S. 450, 461 (1945); Firemen’s Ins. Co. of Newark, N.J. v. Burch, 442 S.W.2d 331,

333 (Tex. 1969); Cal. Products, Inc. v. Puretex Lemon Juice, Inc., 334 S.W.2d at

780, 783 (Tex. 1960)). The Commission’s statement regarding the adoption of

the FCC’s amendments is advisory because it has no bearing on the current

controversy and could only apply to future complaints that have yet to occur.

B. The Commission is part of the executive branch and can give
advice.

CPS Energy, in a shift of its position, agrees with the Commission that

the Commission’s findings and conclusions on the issue are advisory. But

CPS Energy is wrong when it argues that the Commission somehow made a

4
concession of wrong-doing by stating that it issued an advisory opinion.5

Under the doctrine of separation of powers, the authority vested in one

department of the government “cannot be exercised by another department

unless expressly permitted by the constitution.” Tex. Ass’n of Bus., 852 S.W.2d

at 444. The separation of powers article “prohibit[s] courts from issuing

advisory opinions because such is the function of the executive rather than the

judicial department.” Id. The Commission is a state agency in the executive

branch of the state government.6 Therefore, the Commission is authorized to

issue advisory opinions giving advice to the parties it regulates.

Contrary to CPS Energy’s claims, the Commission’s advisory order is

in no way improper nor does it overstep the Commission’s jurisdictional

authority. Thus, there is no basis to reverse the Commission’s order or to

strip the Commission of its subject-matter jurisdiction as CPS Energy urges.

The Texas Supreme Court held that when the Commission makes an advisory

opinion concerning the future it is “superfluous to the Order and therefore

5
Post Submission Brief of Appellant CPS Energy at 2, 3, 5, 6, 8, & 9.

6
1 Tex. Admin. Code § 217.3.

5
[has] no res judicata effect.” TXU Elec. Co. v. Pub. Util. Comm’n, 51 S.W.3d 275,

287 (Tex. 2001). The order should not be reversed because of the advisory

findings.

C. Whether the FCC’s amendments will be applied in the future is
not ripe for adjudication.

CPS Energy concedes that this issue is unripe.7 Ripeness is a threshold

question that implicates subject-matter jurisdiction. Patterson v. Planned

Parenthood of Houston & Se. Tex., Inc., 971 S.W.2d 439, 442 (Tex. 1998). “A

court has no jurisdiction to render an advisory opinion on a controversy that

is not yet ripe.” City of Garland v. Louton, 691 S.W.2d 603, 605 (Tex. 1985).

“The ripeness doctrine conserves judicial time and resources for real and

current controversies, rather than abstract, hypothetical, or remote disputes.”

In the Interest of S.K.A., M.A., and S.A., Minor Children, 236 S.W.3d 875, 885

(Tex. App.—Texarkana 2007, pet. denied). Ripeness examines when a claim

may be filed and emphasizes the need for a concrete injury for a justiciable

claim to be presented. Patterson v. Planned Parenthood, 971 S.W.2d at 442. “At

7
Post Submission Brief of Appellant CPS Energy at 1, 5, 6, & 8.

6
the time a lawsuit is filed, ripeness asks whether the facts have developed

sufficiently so that an injury has occurred or is likely to occur, rather than

being contingent or remote.” Id.

CPS Energy’s appeal of this issue is not ripe. The question regarding the

adoption of the amendments developed two years into the proceeding

because the FCC’s amendments went into effect—not because they mattered

to the pending litigation. The Court’s decision on this issue would be

premature.

D. AT&T and Time Warner are incorrect that this is a declaratory
judgment action.

AT&T and Time Warner argue that if the question is purely legal, a

decision is not advisory.8 They are wrong. AT&T and Time Warner’s reliance

on Complaint of Chermac Energy Corp. Regarding Certain Qualifying Facilities

Under PURPA, 2010 WL 3524026 (Tex. P.U.C. 2010) to support this position

fails. AT&T and Time Warner mistakenly rely on the brief of a party to

Chermac to claim that the Commission reversed the ALJ and agreed with

8
Joint Response of AT&T Texas and Time Warner Cable Texas LLC to the April 20,
2015 Letter from the Attorney General to the Court at 6-7.

7
Chermac. Instead, the Commission concluded that the ALJ was correct and

dismissed the case because the issues were not ripe.9 The document AT&T

and Time Warner cite is Chermac’s brief to the Commission appealing the

dismissal, not the Commission’s order. That order is attached hereto as

Exhibit A.

AT&T and Time Warner’s reliance on the Uniform Declaratory

Judgments Act (“UDJA”)10 cases is equally misplaced. CPS Energy filed an

enforcement action, not a UDJA claim. An action under the UDJA could only

be brought in district court, it could not be brought at the Commission. The

UDJA case law is inapposite here. The Commission’s statement regarding its

position as to future enforcement proceedings is advisory and cannot be

appealed because it is not ripe. Ripeness is a question of when a case may be

determined. Here, the claim is ripe if the Commission applies the FCC’s

amendments to a municipal utility; only then will there be a properly

9
Complaint of Chermac Energy Corp. Regarding Certain Qualifying Facilities Under
PURPA, P.U.C. Docket No. 36763, Order on Appeal of Order No. 10, Sept. 27, 2010.
Attached hereto as Exhibit A.
10
Tex. Civ. Prac. & Rem. Code §§ 37.001–37.011.

8
justiciable claim for the courts to adjudicate.

E. This Court recently refused to adjudicate an advisory decision
under similar circumstances.

This Court recently held that it is improper to rule on issues that are

uncertain and could arise in the future. In Railroad Commission of Texas v.

CenterPoint Energy Resources, Corp., the Commission made certain findings of

fact and conclusions of law that disallowed expenses and implemented

certain evidentiary criteria the utilities must meet to recover similar expenses

in the future. Nos. 03-13-00533-CV, 03-13-00534-CV, 03-13-00535-CV, 2014

WL 4058727, at *1 (Tex. App.—Austin August 14, 2014, no pet.) (mem. op.).

The utilities claimed that an ordering paragraph concerning disallowed

expenses was a statement of new policy, not backed by an rule or guideline,

and was unlawful, arbitrary and capricious. Id. at *2. The Commission

argued that the claims were not ripe, and the utility sought advisory opinions.

Id. This Court agreed with the Commission.

The utilities argued that the Commission’s orders were not an advisory

opinion because they “expressly appl[y]...to the future COSA proceedings, “

9
”mandate the manner in which all future rate adjustments filed pursuant to

the applicable COSA tariff will be resolved,” and “fundamentally change the

way in which COSA adjustments are calculated in future COSA proceedings.”

Id. The utilities also argued that the orders imposed “obligations and burdens

on [them] now, and that failure to abide by these new obligations and burdens

could bar recovery in a future COSA proceeding” affecting “all COSA cases

[they] will file in the future.” Id. This Court disagreed.

“The courts of this state are not empowered to give advisory opinions

[, and] [t]his prohibition extends to cases that are not yet ripe.” Id. “A case is

not ripe when its resolution depends on contingent or hypothetical facts, or

upon events that have not yet come to pass.” Id. This Court held that

“[w]hether there may be an actual controversy between the Utilities and the

Commission is too uncertain and speculative to support the Utilities’

contention that their claims are ripe.” Id. at *3.

Like the CenterPoint case, the Commission’s order here could result in a

dispute about maximum pole attachment rates in the future. See id. This does

not rise to the level of an imminent or likely injury. Id. Nor have the parties

10
“presented any evidence that the Commission has taken any steps to impose

the requirements on them since issuing the final orders or that there is any

existing or continuing threat of liability or penalty.” Id. In fact, Utilities Code

§ 54.204 contains no penalties and the record does not contain the requisite

showing of hardship.

The Commission’s order simply advised what its position would be

regarding amendments to the statute going forward, and included these

findings in its Order under the heading “Methodology Going Forward.”11 There

was no harm to any of the parties by the findings of fact or conclusions of law

contained in the Order.

F. The Commission correctly found that the amendments should
apply prospectively.

Should this Court find that the Commission’s opinion is not advisory,

then it should affirm the district court and the Commission’s order finding

that the plain language of Utilities Code § 54.204 was intended to incorporate

any revisions to the FCC’s rules as fully discussed in the Commission’s

11
AR, Binder 13, Item 530 at 40-41.

11
Appellee Brief at pages 29-36.

CONCLUSION

The Commission issued an advisory order based on a certified question

at the parties’ request that had no bearing on the issues in CPS Energy’s

enforcement action. The claim is not ripe because there is no justiciable

controversy.

For all of the foregoing reasons, the Court should not adjudicate the

Commission’s advisory decision at this time for lack of jurisdiction.

Respectfully submitted,

KEN PAXTON
Attorney General of Texas

CHARLES E. ROY
First Assistant Attorney General

JAMES E. DAVIS
Deputy Attorney General for Civil
Litigation

JON NIERMANN
Division Chief

/s/ Megan Neal

12
MEGAN NEAL
Assistant Attorney General
Texas State Bar No. 24043797
megan.neal@texasattorneygeneral.gov

DOUGLAS FRASER
Assistant Attorney General
State Bar No. 07393200
douglas.fraser@texasattorneygeneral.gov

Office of the Attorney General
Environmental Protection Div. (MC-066)
P.O. Box 12548
Austin, Texas 78711-2548
Tel: (512) 463-2012
Fax: (512) 320-0911

ATTORNEYS FOR THE PUBLIC
UTILITY COMMISSION OF TEXAS

CERTIFICATE OF COMPLIANCE

I certify that the foregoing document has 2,126 words, calculated using
computer program WordPerfect 12, pursuant to Texas Rules of Appellate
Procedure Rule 9.4.

/s/ Megan Neal
Megan Neal

13
CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of this document was
electronically filed with the Court of Appeals for the Third District of Texas.
All counsel were served with a true and correct copy of this document
electronically or by email on the 22nd day of May, 2015, to the following:

Alfred R. Herrera Michael T. Sullivan
Felipe Alonso III MAYER BROWN LLP
Sean Farrell 71 S. Wacker Drive
HERRERA & BOYLE, PLLC Chicago, IL 60606
816 Congress Avenue, Suite 1250 (312) 782-0600
Austin, TX 78701 (312) 706-8689 (fax)
(512) 474-1492 msullivan@mayerbrown.com
(512) 474-2507 (fax) Attorneys for AT&T
aherrera@herreraboylelaw.com
falonso@herreraboylelaw.com
sfarrell@herreraboylelaw.com
Attorneys for CPS Energy

Lennon G. Briley, Jr. Joseph E. Cosgrove, Jr.
AT&T LEGAL DEPARTMENT Katherine C. Swaller
1010 N. St. Mary’s, Rm 14Q Thomas Ballo
San Antonio, TX 78215 AT&T LEGAL DEPARTMENT
(210) 351-4830 816 Congress Avenue, Suite 1100
(210) 886-2127 (fax) Austin, TX 78701
len.briley@att.com (512) 457-2304
Attorney for AT&T (512) 870-3420 (fax)
joseph.cosgrove.jr@att.com
katherine.swaller@att.com
thomas.ballo@att.com
Attorneys for AT&T

14
Valerie P. Kirk John Davidson Thomas
Melissa Lorber Paul A. Werner
ENOCH KEVER PLLC James Aaron George
600 Congress Avenue, Suite 2800 SHEPPARD MULLIN RICHTER &
Austin, TX 78701 HAMPTON LLP
(512) 615-1200 2099 Pennsylvania Ave., N.W.
(512) 615-1198 (fax) Suite 100
vkirk@enochkever.com Washington, D.C. 20006
mlorber@enochkever.com (202) 747-1900
Attorneys for Time Warner (202) 747-1901 (fax)
dthomas@sheppardmullin.com
pwerner@sheppardmullin.com
ageorge@sheppardmullin.com
Attorneys for Time Warner

/s/ Megan Neal
Megan Neal

15

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4066903. Public record. Not legal advice.