Kidd v. Texas Public Utility Commission
Kidd v. Texas Public Utility Commission
Opinion of the Court
OPINION
This appeal’ can be considered a sequel of sorts to this Court’s recent Bonser-
BACKGROUND
While the underlying controversy encompasses a more diverse array of issues, the facts material to the narrow jurisdictional questions before us are straightforward and undisputed. The appellants are approximately 135 individuals who, with others, joined in filing a May 17, 2012 petition to the Public Utilities Commission requesting that the Commission initiate rulemaking processes to address a number of perceived concerns related to the ongoing deployment of so-called “Smart Meters” by Texas electric utilities. In their petition, appellants also prayed that the Commission convene a public hearing at which they could present evidence of what they regarded as the compelling need for the rules they had requested. The Commission docketed appellants’ -petition as “Project No. 40404,” published notice of the petition, afforded an opportunity for public comment, and received over 120 written comments, most of which favored the petition. However, the. Commission did not additionally convene the public hearing that appellants had requested.
On July 13, 2012, the Commission issued an order denying appellants’. rulemaking petition. In the order, the Commission explained that it already had another project pending, No. 40190, in which it had been studying the feasibility of an opt-out program “to address [Petitioners’] concerns” about Smart Meters and in which it had received' “extensive comments that raise concerns like those in the petition in this project.” The Commission deemed it “more efficient and effective ... to consider smart meter concerns in one project,” and opted to “focus its consideration of concerns about smart meters [in] Project No. 40190” instead of 40404.
Seeking to challenge this administrative order in the Judicial Department, appellants filed suit against the Commission in Travis County district court. As the suit originated, appellants’ claims sought primarily to compel the Commission,to proceed with;Project 40404 and initiate the
During the pendency'of appellants’ suit, this Court issued its decision in Bonser-Lain. That ruling prompted the Commission, with the briefing Support of the other appellees, to filé a plea to the jurisdiction seeking dismissal of all of appellants’ claims based on Bonser-Lain’sholámg that the APA’s remedies do1 not authorize claims seeking to challenge an agency’s decision not to promulgate rules.
The district court granted the Commission’s plea in its entirety and dismissed all of appellants’ claims for want of subject-matter jurisdiction. It is’from that final judgment that this appeal is taken.'
ANALYSIS
Appellants seek reversal of the portion of the district court’s judgment that dismissed their claims seeking a public hearing. As refined by the briefing and oral argument on appeal, appellants’ position rests upon two sets of basic contentions: (1) the APA and Commission rules entitled them to a public hearing at which they could presént evidence and argument to justify the rules they had requested, and this “absolute procedural right” is not dependent upon, nor limited by, the Commission’s decision not to grant their rule-making petition; and (2) the remedy and accompanying waiver of sovereign immunity provided by APA section 2001.038 authorizes appellants to sue the Commission to enforce this right and obtain judicial relief compelling the Commission to hold the hearing. Both sets of contentions rest principally upon construction of the APA, which presents a question of law that we review de novo,
As the statutory basis for the “absolute procedural right” to a public hearing that appellants claim, they cite section 2001.029 of the APA. That provision, titled “Public Comment,” states:
(a) Before adopting a rule, a state agency shall give all interested persons a reasonable opportunity to submit data, views, or arguments, orally or in writing.
(b) A state agency shall grant an opportunity for a public hearing before it*393 adopts a substantive rule if a public hearing is requested by:
(1) at least 25 persons;
(2) a governmental subdivision* or agency; or ■
(3) an association having at least 25 members.
(c) .A state agency shall consider fully all written and oral submissions about a proposed rule.15 -
Appellants emphasize subsection (b) and insist that because more than 25 of them joined in requesting a public hearing, the provision requires that- the Commission “shall”'—a term of mandatory obligation
As for how section 2001.038 of the APA authorizes them to seek judicial enforcement of this claimed right to a public hearing, appellants emphasize that courts have employed this remedy with some frequency to invalidate rules based on agency noncompliance with the procedural requirements for APA notice-and-comment rulemaking,
While appellants are correct about the salutary overarching objectives of the APA’s notice-and-co'mment rulemaking requirements, they cannot quite connect their observations and reasoning to the actual statutory language that controls the district court’s subject-matter jurisdiction here. Most critical is the text of section 2001.038, the waiver of sovereign immunity
(A) ... a state agency statement of general applicability that:
(i) implements,' interprets, or prescribes law dr policy; or
(ii) describes the procedure or practice requirements of a state agency;
,(B) includes the amendment or repeal of a prior rule; and
(C) does not include a statement regarding only the internal management or organization of a state agency and not affecting private rights or procedures.23
Appellants’ claims at issue do not complain of- any Commission “rule”—rather, they arise, in the admitted absence of a “rule,” and focus on the procedure the Commission employed prior to its.decision not to adopt a “rule.”
In maintaining otherwise, appellants advocate in essence that we should broadly construe section 2001.038’s “rule” element so as to authorize suits challenging the “rulemaking process”. .even . where no “rule” has been adopted, those challenging “agency consideration of rulemaking petitions,” or those challenging other agency action that does not precede or concern, an adopted “rule.” The Legislature has instructed us to do precisely the opposite— “a statute shall not be construed as a waiver of sovereign immunity unless the waiver is effected by clear and unambiguous language”
Nor is this jurisdictional defect susceptible to being cured.
As appellees emphasize,- the public-hearing requirement under APA section 2001.029 comes into play only if and when an agency decides to promulgate certain types, of .rules. This is readily apparent from the face of the requirement, found in subsection (b) of section 2001.029—“A state agency shall grant an.opportunity for a public .hearing before it adopts a substantive rule if a public hearing is requested....”
On the other hand, another subsection of section 2001.029, (c), requires' that “[a] state agency shall-consider fully all written and oral submissions = about a proposed rule,”
• Section ’2001.021 provides that an “interested person by petition to a state agency may' request the adoption of a rule.”36
,• In the event a rulemaking petition is submitted to an agency, section 2001.021 also, requires that the agency “shall,” within sixty days, either (1) “deny the petition in writing, stating its reasons for--.the denial”;.,or (2) “initiate a rule-making proceeding under this subchap-ter.”37
• No succeeding provision of the sub-chapter refers explicitly to an agency’s denial- of a rulemaking petition. However, several provisions impose additional requirements in the event an agency decides to take further steps toward making or adopting a rule. Per section 2001.023, an agency “shall give at least 30 days’ notice of its intention to adopt a rule before 'it adopts the rule,” and shall file such notice with.the. Secretary of State for publication in the Texas Register,38 Section 2001.024 specifies the required content of the notice, which must include, among other requisites, “a brief explanation of the proposed rule,” the rule’s text,, “a statement of the statutory or other authority under which the rule is proposed to be adopted,” “note[s]” concerning fiscal .impact and “public benefits and costs,” and “a request for comments. on the proposed rule from any interested person.”39
• From here, section 2001.027 addresses one possible conclusion of this rule-making process: if an agency has not adopted, adopted as amended, or withdrawn the “proposed rule” within six months after the date of publication of notice in the Texas Register, the “proposed rulé is withdrawn.”40
• However, in the event the agency decides to “finally adopt[ ] a rule,” section 2001.033 requires that it must issue a written order that includes a “reasoned justification for the rule as adopted”; a restatement of the “statutory provisions under which the rule is adopted and of how the agency interprets” those provisions so as to require or permit the rule; and “a certification that the rule, as adopted, has been reviewed by legal counsel and found to be a valid exercise of the agency’s legal authority.”41 The “reasoned justification” must consist of “a summary of comments received from parties-interested in the rule,” “a summary of the factual basis for the rule as adopted which demonstrates a rational connection between the factual basis for the rule and the rule as adopted,” and “the*397 reasons why the agency disagrees with party submissions and proposals.”42
It is within this framework that section 2001.029 requires that “[a] state agency shall consider fully all written and oral submissions about a proposed rule”; that “[bjefore adopting a rule,” an agency “shall give , all interested persons a reasonable opportunity to submit data, views, or arguments”; and that, in specified instances, an agency “shall grant an opportunity, for a public hearing before it adopts a substantive rule.”
In sum, section 2001.029 does not, as a matter of law, impose any duty on the part of the Commission to afford appellants a public hearing. That conclusion would be fatal to any attempt to replead their claims under the ultra vires rubric.
CONCLUSION
We affirm the district court’s judgment granting the Commission’s plea to the jurisdiction and dismissing appellants’ claims.
. Texas Comm'n on Envtl. Quality v. Bonser-Lain, 438 S.W.3d 887 (Tex.App.-Austin 2014, no pet.).
. Tex. Gov’t Code §§ 2001.001-.902.
. See Bonser-Lain, 438 S.W.3d at 893-94.
. Ultimately, the Commission’s study of the issue would take the form of a third project, No. 41111, which yielded rule provisions providing consumers a means of opting out of metering by Smart Meters. See 38 Tex. Reg. 1328 (proposed Mar. 1, 2013), adopted 38 Tex. Reg. 5452 (Aug. 23, 2013), codified at 16 1 Tex. Admin. Code § 25.133 (eff.Sept. i, 2013) (Non-Standard Metering Service); 38 Tex. Reg. 1328 (proposed Mar. 1, 2013), adopted 38 Tex. Reg. 5452 (Aug. 23, 20Í3), codified as an amendment to 16 Tex. Admin. Code § 25.214 (eff.Sept. 1, 2013) (Terms and Conditions of Retail Delivery Service Provided by Investor Owned Transmission and Distribution Utilities). Unless otherwise indicated, all cites to 38 ‘Tex. Admin. Code are to rules promulgated by the Commission.
. See, e.g., Bacon v. Texas Historical Comm’n, 411 S.W.3d 161, 172 (Tex.App.-Austin 2013, no pet.) ("Absent Legislative waiver, sovereign immunity deprives Texas courts of subject-matter jurisdiction over any suit against the State or its agencies or subdivisions.” (citing Texas Dep't of Transp. v. Sefzik, 355 S.W.3d 618, 620-21 (Tex. 2011) (per curiam))).
. Tex. Gov’t Code § 2001.038(a); see Slay v. Texas Comm’n on Envtl. Quality, 351 S.W.3d 532, 544 (Tex.App.-Austin 2011, pet. denied) (observing that section 2001.038 waives sovereign immunity to the extent of the remedy the statute provides). Appellants’ pleading similarly purported to invoke the right of judicial review provided under Subchapter G of the APA, which operates with respect to a state-agency decision in a "contested case.” Tex. Gov’t Code § 2001.171; see Texas Dep’t of Prot. & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 197 (Tex. 2004) (concluding that section 2001.171, by providing right of judicial review of agency order in a "contested cáse," waives sovereign immunity to extent of permitting that claim). At this juncture, appellants do not appear to rely on Subchapter G as a basis for jurisdiction, and it is plainly unavailing. See Tex. Gov't Code § 2001.003(1) (defining "contested case” as "a proceeding, including a ratemaking or licensing proceeding, in which the legal rights, duties, or privileges of a party are to be determined by a state agency after an opportunity for adjudicative hearing”).
.See Bonser-Lain, 438 S.W.3d at 893-94.
. See State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006).
. See id.; Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83, 85 (Tex. 2006).
. TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 438 (Tex. 2011) (citing Texas Dep't of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 642 (Tex. 2004)).
. See id. (citing In re M.N., 262 S.W.3d 799, 802 (Tex. 2008)).
. Texas Lottery Comm’n v. First State Bank of' DeQueen, 325 S.W.3d 628, 635 (Tex. 2010); Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009); City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008) (citing Mega Child Care, 145 S.W.3d at 177)).
. Tex. Gov't Code § 311.034,
. Id. § 2001.029.
. See id. § 311.016 (“shall” generally "imposes a duty”).
. See, e.g., El Paso Hosp. Dist. v. Texas Health & Human Servs. Comm’n, 247 S.W.3d 709, 714-15 (Tex. 2008) (holding that "rule” not properly promulgated under APA procedures is invalid); Texas State Bd. of Pharmacy v. Witcher, 447 S.W.3d 520, 534-36 (Tex.App.-Austin 2014, pet. filed) (same).
. See generally Tex. Gov’t Code §§ 2001.0225-.034 (APA’s notice-and-comment rulemaking procedures).
. See id. § 2001.035.
.Unified Loans, Inc. v. Pettijohn, 955 S.W.2d 649, 650-51 (Tex.App.-Austin 1997, no writ); see National Ass’n of Indep. Insurers v. Texas Dep’t of Ins, 925 S.W.2d 667, 670 (Tex. 1996) (noting that "purposes of [APA] section 2001.033 [reasoned justification and other required contents of agency order adopting rule] [are] to provide 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”), superseded on other grounds by statute as noted in Lower Laguna Madre Found v. Texas Nat. Res. Conservation Comm’n, 4 S.W.3d 419, 421 n. 8 (Tex.App.Austin 1999, no pet.).
. Tex. Gov’t Code § 2001.038(a).
. Slay, 351 S.W.3d at 544-45 (citing Combs v. City of Webster, 311 S.W.3d 85, 100-01 (Tex.App.-Austin 2009, pet. denied)).
. Tex. Gov’t Code § 2001.003(6); see Slay, 351 S.W.3d at 545 (recognizing that this is the operative definition of "rule” when applying APA section 2001.038);
. See also Slay, 351 S.W.3d at 548 (observing that a "rule” must necessarily have some independent legal effect (citing Tex. Gov’t Code § 2001.003(6))).
. Tex. Gov’t Code § 311/034 (emphasis added).
. Slay, 351 S.W.3d at 544-45 (citing City of Webster, 311 S.W.3d at 100-01).
. See, e,g., Bacon, 411 S.W.3d at 172 (‘‘Simply described, sovereign immunity generally shields our state government's ‘improvident acts'—however improvident, harsh, unjust, or infuriatingly boneheaded these ■ acts, may seem—against the litigation and judicial remedies that would be available if the same acts were committed by private persons.” (citing Tooke v. City of Mexia, 197 S.W.3d 325, 331-32 (Tex. 2006)).
. See, e.g., Acker v. Texas Water Comm’n, 790 S.W.2d 299, 301 (Tex. 1990) (courts presume that the Legislature was aware of the background law and acted with reference to it).
. See, e.g., Bacon, 411 S.W.3d at 172-73 (emphasizing judicial deference to Legislature’s policy judgments in deterpiining whether or how to waive sovereign immunity).
. See Texas A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007) (‘‘a pleader must be given an opportunity to amend in response to a plea to the jurisdiction only if it is possible to cure the pleading defect”).
. See City of El Paso v. Heinrich, 284 S.W.3d 366, 372-73 (Tex. 2009); see also Sefzik, 355 S.W.3d at 623 (permitting repleading in ultra vires- context to substitute official-capacity defendants for agency).
. See Heinrich, 284 S.W.3d at 372-73 (to invoke ultra vires exception, claimant "must allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act”); see also Texas Dep’t of Transp. v. Sunset Transp., Inc., 357 S.W.3d 691, 701-02 (Tex.App.-Austin 2011, no pet.) (to make that determination, we ■ "construe the provisions of the [statutes]'that define the scope of [the governmental body’s] legal authority, apply them to the facts [the claimant has presented], and ascertain whether those facts constitute acts beyond [the agency's] legal authority” (citing Heinrich, 284 S.W.3d at 372-73; Creedmoor-Maha Water Supply Corp. v. Texas Comm’n on Envtl. Quality, 307 S.W.3d 505, 516 n. 8 (Tex.App.Austin 2010, no pet.))).
. Tex. Gov't Code § 2001.029(b) (emphasis added).
. Id. § 2001.029(a) (emphasis added);
. Id.§ 2001.029(c).
. Id. § 2001.021(a).
. Id. § 2001.021(c). ,
. Id. § 2001.023(a), (b).
. Id. § 2001.024(a).
. Id. § 2001.Ó27.
. Id. § 2001.033(a).
.’ Id,
. Id. § 2001.029.
. Similarly unavailing is appellants' reliance on the Commission’s rules to support their contention that the submission of a petition for rulemaking invokes an "absolute procedural right” to a public hearing. Compare 16 Tex. Admin. Code § 22.282 (Notice and Public Participation in Rulemaking Procedures) (providing that, an "opportunity for public hearing shall be granted” if the commission initiates a rulemaking project by publishing notice of the proposed rule in accordance with the APA), with 16 Tex. Admin. Code . § 22.281(a) (Initiation of Rulemaking) (providing that while "[a]ny interested person may petition the commission requesting the adoption ■ of a new rule,” the Commission “either shall deny the. petition .....or shall initiate rulemaking proceedings”) (emphases added),
. Appellees also urge that sovereign immunity would independently bar appellants’ claims ■..because the relief.they seek would.effectively "undo” the Commission’s final order denying their rulemaking petition, as opposed to seeking the sort of "prospective” relief authorized within the ultra vires exception. See Heinrich, 284 S.W.3d at 372-73, 375-76 (explaining that claim under ultra vires exception to sovereign immunity must seek only "prospective” rather than "retrospective” relief); Southwest Pharmacy Solutions, Inc. v. Texas Health & Human Servs. Comm’n, No., 2013 WL 3336868, at *7, 2013 Tex.App. LEXIS 7815, at *28-29 (Tex.App.-Austin June 27, 2013, no pet.) (recognizing 'that ultra vires claim that would "undo” previously-concluded agency . -action independently implicates sovereign immunity by seeking retrospective relief (citing Texas Logos, L.P. v. Texas Dep’t of Transp., 241 S.W.3d 105, 119-20 (Tex.App.Austin 2007, no pet.)). In light of our preceding holdings, we need, not address whether, for this reason, sovereign immunity would independently bar appellants’ claims.
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