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 ( 2015 )


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  •                                                                                        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