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

Opinion

ACCEPTED

03-14-00661-CV

4504897

THIRD COURT OF APPEALS

AUSTIN, TEXAS

3/16/2015 9:48:17 AM

JEFFREY D. KYLE

CLERK

No. 03-14-00661-CV

IN THE COURT OF APPEALS FILED IN 3rd COURT OF APPEALS

THIRD JUDICIAL DISTRICT AUSTIN, TEXAS AT AUSTIN, TEXAS 3/16/2015 9:48:17 AM JEFFREY D. KYLE

Clerk

DEVVY KIDD, ET AL,

Appellants,

v.

PUBLIC UTILITY COMMISSION OF TEXAS, Appellee.

On Appeal from the 419th District Court ofTravis County, Texas

REPLY BRIEF OF APPELLANTS DEVVY KIDD, ET. AL.

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

COUNSEL OF RECORD

ORAL ARGUMENT 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. )

)

APPELLANTS'REPLY BRIEF

3

I. Table of Contents

TABLE OF CONTENTS ......................................................................... 3

INDEX OF AUTHORITIES ........................ ...............................................4 SUMMARY OF TilE ARGUMENT ................................................ .......... 5 ARGUMENT ............................................................................................. 5 An appeal of the denial of a public hearing is not, and should not be, the same in

legal effect as an appeal of the denial of a petition for rulemaking.

PRAYER ..... ................................................................................................ 10

CERTIFICATE OF SERVICE ........ ........................................................... 11

4

II. Index of Authorities

Cases

McMaster v. Pub. Util.Comm 'n, No. 03-11-00571-CV, 2012 WL 3793257 (Tex. App.-Austin Aug.31, 2012, no pet.) .......................... ... .... . ............. . ....6

Tex. Comm'n on Envtl. Quality v. Bonser-Lain, 438 S.W.3d 887 (Tex.App.-Austin 2014) ................................................................. ................ ..... 5,8,9

Statutes

Texas Government Code §2001.021 ........................ ... .. ..... .. ......... . .... .... 8

Texas Government Code §200 1.0225 . .... ..... ......... .... .. .. .......... .... ... ...... ... 8

Texas Government Code §2001.029 ............. .............. ..... ..... ........... 7,8,10

Texas Government Code §2001.034 ..... ...... ... ... ........... ... .. .... ..... ............. 8

Texas Government Code 2001.035 ......................................... ... .......... 8,9

5

III. Summary of the Argument

As stated in Appellants' Initial Brief, sovereign immunity is specifically

waived in the instant case only with respect to Appellants right to a public hearing.

Appellees contend, primarily based on the case law cited in Tex. Comm 'n on Envtl.

Quality v. Bonser-Lain, 438 S.W.3d 887 (Tex.App.-Austin 2014), the fact that

there is no right to appeal the denial of a petition for rulemaking automatically

means that there is also no right to appeal the denial of a request for a public

hearing on a publicly initiated rulemaking. This reading of the law would, as

previously stated, provide 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.

IV.Argument

Appellants give scant real analysis to the practical effect of their argument

regarding the effect of the Bonser-Lain case. That case dealt only with the right to

appeal the final result of an agency rulemaking process, and this court held that

once that process had been finished, there was no right to appeal the fmal result.

But that is not our case here. Appellant's both petitioned for a rulemaking and

requested a public hearing on that proposed rulemaking. That hearing request was

summarily denied along with denial of the rulemaking petition. This denied

Appellant's the right and ability to fully explain and argue for their proposed

rulemaking.

6

Appellees argue "[b]ecause the Administrative Procedure Act-as Bonser-

La in makes clear-does not provide for judicial review of the denial of a

rulemaking petition, it cannot be reasonably read to allow for judicial review of

interim decisions within a petition for rulemaking proceeding." Appellee

Commission's Brief at 16. (emph. supp). Yet Appellants actually seek redress for

the procedural violations which occurred during the rulemaking process, and are

not appealing the final result of that process. Thus, it is not an interim decision,

but rather the denial of both a statutory and procedural right that is being appealed.

Likewise, the McMaster case cited by the Commission also does not apply

here because there is no interim order being appealed. McMaster v. Pub.

Util.Comm 'n, No. 03 -11-00571 -CV, 2012 WL 3793257, at *4 (Tex. App.-Austin

Aug.31, 2012, no pet.) (mem. op.) !d. at 16. Appellants learned of the denial of

their public hearing request at the same time as the denial of their rulemaking

petition, in the same Commission final, not interim, order. This does not mean, as

Appellees seem too suggest, that the denial of the petition and the denial of the

hearing request are the same thing, or that those two actions must necessarily be

identical in legal effect.

The statutory provisions under review do not allow the Commission to

completely ignore the requirement to hold a public hearing on a publicly initiated

7

rulemaking, as there are no exceptions to 2001.029 once a valid request is made,

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' completely valid request for a public hearing on their own proposed

rule was completely ignored.

Appellees also seem to suggest that a rulemaking is initiated only if the

agency decides that it has been, and this rules out the possibility of the adoption of

a rule initiated by a public petition for rulemaking. While that process is probably

less common than an agency initiated rulemaking, it is nevertheless explicitly

provided for by statute, in Texas Government Code §2001.029. In spite of this,

Appellee Commission argues "Further, the plain language of the statute itself

shows that the requirement to have a hearing only attaches once a rulemaking is

initiated. If no rulemaking is initiated, no hearing is required, regardless of the

number of people who request it." Appellee Commission's Brief at 17.

But Appellants had already initiated the rulemaking proceeding, and

therefore had a right to a public hearing on their petition for rulemaking, as

provided by Texas Government Code §2001.029. The Government Code, as

8

conceded by Appellee Commission, provides for a right of appeal if these

procedures are not strictly followed. The Commission readily concedes this point.

"Section 2001.035 provides that an adopted rule is voidable unless it is adopted "in

substantial compliance with Sections 2001.0225 and 2001.034." Tex. Gov't Code

§ 2001.035(a). Non-compliance with the procedural requirements of Section

2001 .029 can be a basis for judicially invalidating an adopted rule." Appellee

Commission Brief at 17. Appellants' suit was actually brought on the basis of

Texas Government Code Sections 2001.029 and 2001.035.

Texas Government Code Section 2001.021, incorrectly cited by the

Commission in its brief as the basis for our request for review, refers to the

rulemaking petition itself, not the hearing request in section 2001.029, which falls

squarely within the parameters of the statutory requirements for substantial

compliance in a rulemaking proceeding. Appellee Commission Brief at 18.

Both Appellee briefs rely heavily upon the analysis in Bonser-Lain, in

which this Court held that "[t]hough 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." Bonser-Lain at 894. This

9

analysis misses the primary point of Appellants' argument, which was clearly not

an appeal of the denial of its petition, but rather an appeal of the denial of its

procedural right to a hearing on it's own initiation of a rulemaking proceeding.

The Bonser-Lain case only applies to the ability of parties to appeal the denial of

petitions for rulemaking, not to appeal the denial of a specific request for a public

hearing on a petition for rulemaking.

Appellee Intervenors also seem to suggest that because 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, and because some Appellants

participated in that proceeding, they somehow waived their right to have a hearing

on their self-initiated rulemaking. It is an obvious conclusion that, under the

circumstances, the Commission initiated proceeding was the only avenue open to

them to continue to participate at all, given the denial of their request for a hearing.

Appellee Intervenors, in five pages of briefing regarding Appellants participation

in various alternative proceedings, cite no case or statute as to why or how this

participation was a waiver of their right to a hearing on their own self initiated

rulemaking petition. Appellee Intervenors Brief at 10-14.

As stated in Appellants Initial Brief, all of the provisions subject to a

Texas Government Code section 2001.035 appeal occur prior to the adoption of a

rule, they are safeguards intended to protect the process of rulemaking. This

10

appeal is not an attack on the sovereign immunity of the Commission to deny a

rulemaking petition, which we concede has not been waived, but rather on its

denial of the legal process required in considering such a petition. To allow the

Commission to avoid any public hearing merely by ultimately 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 petitioned for rule for which

the hearing was requested. As we have said, in this way, it will never have to hold

a public hearing under Texas Government Code section 2001.029(b).

V. 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 on the proposed rulemaking in accordance with

Appellants request and such other and further relief to which the Appellant may be

entitled at law or in equity.

Respectfully submitted,

fij()(~ Roger B. Borgelt Borgelt Law

11

SBN: 02667960 614 S. Capital of Texas Hwy. Austin, TX 78746 0 : 512.600.3467 Mobile: 512.870.7533 E: roger@borgeltlaw.com

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 2229 words.

Roger B. Borgelt

CERTIFICATE OF SERVICE

I certify that on the 16th day of March, 2015, a true and correct copy of the

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

class mail.

/?v4M

Roger B. Borgelt

Kellie E. Billings-Ray Assistant Attorney General kellie. billings-ray@texasattorneygeneral. gov Environmental Protection Division Office of the Attorney General

12

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 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 Ill Congress Avenue, Suite 2300 Austin, Texas 78707-4061 Tele: (512) 472-7800 Fax: (800) 404-3970 Attorneys for CenterPoint Energy Houston Electric, LLC

JoAnn Biggs Patrick Pearsall Cortney C. Thomas DUGGINS WREN MANN & ROMERO P.O. Box 1149

VINSON & ELKINS LLP Austin, Texas 78767 2001 Ross Avenue, 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

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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 90 1 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 Irving, Texas 75062 Tele: 469-484-8577 Fax: 469-484-8033 scott.seamster@pnmresources.com Attorneys for Texas-New Mexico Power Company