the County of La Salle v. Joe Weber, in His Official Capacity as Executive Director of the Texas Department of Transportation The Texas Department of Transportation Ted Houghton, in His Official Capacity as Chairman of the Texas Transportation Commission

ACCEPTED
03-14-00501-CV
4682638
THIRD COURT OF APPEALS
AUSTIN, TEXAS
3/27/2015 11:28:47 PM
JEFFREY D. KYLE
CLERK
No. 03-14-00501-CV

In the
FILED IN
Third Court of Appeals 3rd COURT OF APPEALS
AUSTIN, TEXAS

at Austin 3/30/2015 4:51:00 PM
JEFFREY D. KYLE
Clerk
COUNTY OF LA SALLE,
Appellant,
v.
JOE WEBER, in his official capacity as Executive Director
of the Texas Department of Transportation; 

THE TEXAS DEPARTMENT OF TRANSPORTATION; 

TED HOUGHTON, in his official capacity as Chairman of
the Texas Transportation Commission; and 

JEFF AUSTIN III, JEFF MOSELEY, FRED UNDERWOOD, and
VICTOR VANDERGRIFF, in their official capacities as
Commissioners of the Texas Transportation Commission,
Appellees.


On Appeal from the 353rd District Court

of Travis County, Texas

R EPLY B RIEF 


Donato D. Ramos Don Cruse

Bar No. 16508000 Bar No. 24040744

Donato D. Ramos, Jr. LAW OFFICE OF DON CRUSE

Bar No. 24041744 1108 Lavaca Street, 

LAW OFFICES OF DONATO RAMOS, PLLC Suite 110-436

Texas Community Bank Building, Austin, Texas 78701

Suite 350 (512) 853-9100

6721 McPherson Road (78041) (512) 870-9002 fax

Laredo, Texas 78045 don.cruse@texasappellate.com
(956) 722-9909
(956) 727-5884 fax
 TABLE OF CONTENTS
Table of Contents .......................................................................................ii

Index of Authorities...................................................................................iv

Summary of the Reply .................................................................................1

Argument ....................................................................................................4

I. The Ultra Vires Claim Does Not Offend 

Administrative-Law Principles ................................................................4

A. The statute doesn’t give ‘discretion’ for this agency 

(or its officials) to disregard legislative criteria ..................................4

B. Administrative principles protect legislative decision-making, 

not state officials who disregard law. .................................................6

C. This talk of ‘fact-finding’ and ‘extrinsic’ evidence 

misapprehends what the statute asks TxDOT to do .........................9

D. Even under administrative principles, it would be arbitrary 

and capricious for officials to disregard unambiguous rules 

or to ignore criteria set by the Legislature .......................................10

II. Statutory Interpretation ........................................................................12

A. The County’s interpretation is the most coherent ...........................12

1. That the statute doesn’t give TxDOT discretion to award 

grants more broadly is an intended feature, not a bug. ................12

2. This does not require fact-finding about the truth of a 

county's application. ...................................................................13

3. Nor must counties prove up their energy production. .................14

B. The competing interpretations are fragmentary, 

contradictory, and unreasonable. .....................................................16

1. Weight-tolerance permits are not dispositive. ..............................16
 2. Counties do not control their own eligibility for any 

particular funding round. ...........................................................18

3. The phrase ‘affected by’ is not a grant of unfettered 

discretion and, in any event, no discretion was exercised...........20

C. Deference to agency rules ................................................................21

III. The Ultra Vires Claims Should Not Have Been Dismissed

on a Plea. .............................................................................................22

A. It is not disputed that, under the County’s statutory 

interpretation, the record is sufficient to move forward...................23

B. Agency rules can impose additional restrictions on 

officials, but they cannot remove statutory limits ............................23

IV. A Section 2001.038 Claim Is Presented. ..............................................24

A. The petition challenges specific rules. .............................................25

B. The ‘applicability' aspect of this challenge is proper........................26

C. The County states a sufficient interest ............................................28

V. An Injunction Is Appropriate. ...............................................................30

Prayer ........................................................................................................33

Certificate of Service .................................................................................34

Certificate of Compliance ..........................................................................34


ii
 INDEX OF AUTHORITIES
Cases

AEP Tex. Commer. & Indus. Retail, Ltd. v. PUC,

426 S.W.3d 890 (Tex. App.—Austin 2014, no pet.) .............................11

Bacon v. Tex. Hist. Comm’n,

411 S.W.3d 161 (Tex. App.—Austin 2013, no pet.) ...............................7

Carpenter v. Hausman,

601 S.W.2d 88 (Tex. App.—San Antonio 1980, no writ) .....................32

City of El Paso v. Heinrich, 

284 S.W.3d 366 (Tex. 2009) .................................................................31

City of El Paso v. PUC,

883 S.W.2d 179 (Tex. 1994) ................................................................10

Creedmor-Maha Water Supply Corp. v. TCEQ,

307 S.W.3d 505 (Tex. App.—Austin 2010, no pet.)............................6-7

Davis v. Lubbock,

326 S.W.2d 699 (Tex. 1959) ...................................................................8

ERS v. Jones,

58 S.W.3d 148 (Tex. App.—Austin 2001, no pet.) .................................4

Fiess v. State Farm Lloyds, 

202 S.W.3d 744 (Tex. 2006) ............................................................21-22

General Servs. Comm’n v. Little-Tex Insulation Co.,

39 S.W.3d 591 (Tex. 2001) ..................................................................8n.

Gerst v. Nixon,

411 S.W.3d 350 (Tex. 1966) .................................................................10

In re Nalle Plastics Family, LP,

40 S.W.2d 168 (Tex. 2013) ...................................................................21

iii
McLane v. Strayhorn,

148 S.W.3d 644 (Tex. App.—Austin 2004, pet. denied) ........................7

PUC v. Gulf States Utilities Co.,

809 S.W.2d 201 (Tex. 1991) .................................................................11

PUC v. South Plains Elec. Coop.,

635 S.W.2d 954 (Tex. App.—Austin 1982, no writ) ............................11

R.R. Comm’n of Tex. v. Citizens for a Safe Future and Clean Water,

336 S.W.3d 619 (Tex. 2011) ...................................................................3

R.R. Comm’n of Tex. v. Lone Star Gas Co.,

844 S.W.2d 679 (Tex. 1992) .................................................................23

Southwestern Bell Telephone, LP v. Emmett,

No. 13-0584, 2015 Tex. LEXIS 274 (Mar. 20, 2015) ...........................28

Starr County v. Starr Indust. Servs., Inc.,

584 S.W.2d 352 (Tex. 1979) ...........................................................10-11

Tex. Dep’t of Parks & Wildlife v Miranda, 

133 S.W.3d 217 (Tex. 2004) .................................................................23

Tex. Health Facilities Com. v. Charter Medical-Dallas, Inc.,

665 S.W.2d 446 (Tex. 1984) .................................................................11

Tex. Mut. Ins. Co. v. Vista Comty. Med. Ctr., LLP,

275 S.W.3d 538 (Tex. App.—Austin 2008, pet. denied) ......................11

United Servs. Auto Ass’n v. Brite,

215 S.W.3d 400 (Tex. 2007) ...................................................................5

iv
Statutes and Rules

TEX. GOV’T CODE §2001.038..........................................3, 4, 15, 21, 24-29

TEX. R. APP. P. 24.2 .............................................................................31-32

TEX. TRANSP. CODE §222.1071 ..............................................14, 18-19, 20

TEX. TRANSP. CODE §251.018 .................................................................26

TEX. TRANSP. CODE §256.101(2) ............................................................14

TEX. TRANSP. CODE §256.103(a)....................................4, 6, 12, 15, 18, 21

TEX. TRANSP. CODE §256.103(b) .......................................................17-18

TEX. TRANSP. CODE §256.104(a) .............................................5, 12, 14, 20

TEX. TRANSP. CODE §256.104(b) ..................................................5, 8n., 14

Administrative Code

43 TEX. ADMIN. CODE §15.182 ......................................................2, 20, 25

43 TEX. ADMIN. CODE §15.184 ............................................................2, 25

43 TEX. ADMIN. CODE §15.188 ......................................................2, 25, 26


v
 SUMMARY OF THE REPLY
When the Legislature directed TxDOT to administer this grant

program, it provided criteria for what it would take to qualify. The claim

here, confirmed by evidence at the hearing, is that TxDOT officials

willfully ignored those legislative criteria.

Mindful of ultra vires principles, the charge is not that the officials

made factual errors in applying these criteria. The trial court is not being

asked to sort through applications. Rather, the remedy is ordering state

officials to apply governing law instead of their own divergent preferences.

The broad administrative-law principles that the State Defendants

discuss, such as separation of powers and how “common law” restricts

review of agency discretionary decisions, are not about keeping the judicial

branch out of the executive branch’s business. To the contrary, the cases

explain administrative discretion as protecting the small spark of legislative

power that the Legislature can pass to an executive agency. When an

agency is given policy-making authority, that creates a zone of discretion in

which to exercise that legislative power. Naturally, that zone of discretion is

bounded by statute. And keeping an agency and its officials within its zone

of discretion is essential to maintaining the careful balance that the

Legislature has struck. Thus, even in the pure administrative context,

courts can determine that an agency acts “arbitrarily and capriciously” by
ignoring or replacing statutory criteria. Similarly, in the ultra vires context,

courts can say whether officials are exceeding the bounds of their authority.

What gives this case an “administrative” flavor is that the agency rules

are invoked to aid in the court’s statutory construction. Those rules agree

with the County’s view that the statute limits who can receive grant funds:

1. As the rules interpret the statute, there is an initial filter
to determine whether a county is “eligible” and has
submitted a “valid” application before it ever reaches the
allocation formula. 43 TEX. ADMIN. CODE §15.184(a).

2. The rules clarify that “eligible” counties are limited to
those in areas of the state affected by increased energy
production. 43 TEX. ADMIN. CODE §15.182.

3. The rules confirm the required elements for a county to
have a “valid” application, including the road-condition
reports and the creation of a reinvestment zone (CETRZ).
43 TEX. ADMIN. CODE §15.188.

The officials’ statutory interpretation cannot be squared with that in the

agency’s formal rules. If the rules are right, the officials are violating the

statute. If the officials are right, then the program rules are invalid.

TxDOT does not pick a horn of that dilemma. Instead, it suggests

carving a third path that bypasses both meaningful rules and judicial

oversight. TxDOT reasons that asking an agency to follow its rules would

unduly limit its “flexibility.” See State Br. 26. Although formal written rules

would, under this model of the world, bind neither the agency nor its

2
officials, TxDOT says rules nonetheless prevent ultra vires suits because

rules “are themselves a source of legal authority” independent of statute.

State Br. 12. To the extent TxDOT also contends that courts hearing an

ultra vires claim cannot examine if the rules cited to defend officials’

actions are valid, see State Br. 37 (Ҥ2001.038 encompasses all claims that

an administrative rule is invalid” (emphasis in original)), the combined

effect would let agencies opt their officials out of oversight. But an agency

cannot by rule grant its officials more power that the agency possesses, and

the courts’ legitimate role is to enforce the boundaries set by the

Legislature.

The one thing TxDOT urges the Court not to do with its rules is the

one thing that the Texas Supreme Court has approved in this context,

namely, giving them “serious consideration” when construing an

ambiguous statute. R.R. Comm'n v. Citizens for a Safe Future and Clean

Water, 336 S.W.3d 619, 624-25 (Tex. 2011) (choosing that standard instead

of similar federal doctrines). TxDOT hints that, not only should courts not

use its rules for such an interpretation, they should perhaps refrain from

resolving ambiguous statutes affecting agencies, lest there be “judicially-

imposed administrative sclerosis ... by locking one view of the statute in

stone.” State Br. 26. TxDOT’s view of agency deference would erode the

rule of law, undermine the notice-giving function of rules, and render

3
statutes such as §2001.038 idle curiosities. If neither agencies nor their

officials care about rules, why bother litigating about them?

Texas courts can interpret statutes to ensure state officials stay within

the outer bounds of discretion. The County brought this ultra vires claim

and §2001.038 claim precisely so the courts can clarify the applicable law

and officials can, moving forward, behave in compliance with that law.

ARGUMENT

I. THE ULTRA VIRES CLAIM DOES NOT OFFEND
ADMINISTRATIVE-LAW PRINCIPLES.

A. The statute doesn’t give “discretion” for this agency (or its
officials) to disregard legislative criteria.

The brief opens by accusing the County of “[i]gnoring the discretion

granting language in the statute,” which TxDOT says “gives the

Department full discretion over the application requirements and process.”

State Br. 1. The brief ends, however, without saying where the Legislature

authorizes TxDOT to ignore statutory criteria.

There is no such language. The statute tells TxDOT to “administer”

the program, including making needed rules (such as setting deadlines and

the like). TEX. TRANSP. CODE §256.103(a); e.g., ERS v. Jones, 58 S.W.3d

148, 151 (Tex. App.—Austin 2001, no pet.) (rules must comply with the

4
statute’s general objectives). This does not grant power to modify or

disregard the substance of the statute.

When the Legislature grants power to modify substantive policy, it

does so explicitly. This statute contains two examples. The first involves

the statutory requirement that a county submit paperwork regarding its

energy-reinvestment zone (CETRZ). The statute says that it must include

“a copy of the order or resolution establishing a county energy

transportation reinvestment zone in the county, except that the department

may waive the submission until the time the grant is awarded.” TEX. TRANSP.

CODE §256.104(a)(2)(A) (emphasis added). The discretion for TxDOT to

adjust this one requirement’s timing is both narrow and explicit.

Second, the statute lets TxDOT add more requirements to the “plan”

that each county must submit about its “transportation infrastructure

projects to be funded.” See TEX. TRANSP. CODE §256.104(b)(2)(D) (“a

plan that… (iv) meets any other requirements imposed by the

department”). It does not authorize TxDOT to ignore or modify the other

criteria. To the contrary, that the Legislature made these very narrow

grants of discretion confirms, by negative implication, that it did not intend

to grant TxDOT unfettered discretion to modify the other statutory

requirements. United Servs. Auto Ass'n v. Brite, 215 S.W.3d 400, 403 (Tex.

2007) (applying expressio unius est exclusio alterius).

5
 The context confirms that TxDOT’s discretion is qualified, not broad.

The sentence is a familiar one: “The department shall develop policies and

procedures to administer a grant program under this subchapter to make

grants to counties for transportation infrastructure projects located in areas

of the state affected by increased oil and gas production.” TEX. TRANSP.

CODE §256.103(a). TxDOT asks the Court to stop reading at the word

“administer,” treating that word as an unqualified grant of power to reset

policy. But the Legislature kept writing. It qualified that authority as bound

by the statutory criteria (“under this subchapter”), bound to narrowly

defined terms (“transportation infrastructure projects”), and bound to the

geographic scope that reflected the legislative purpose (“located in areas of

the state affected by increased oil and gas production.”). Power to

“administer a grant program under this subchapter,” id, is not power to

ignore or rewrite this subchapter.

B. Administrative principles protect legislative decision-
making, not state officials who disregard law.

TxDOT says that this Court “has repeatedly held” that “an ultra vires

claim is barred if it involves issues committed to an agency’s discretion.”

State Br. 11. But the very cases cited by TxDOT confirm that, where the

Legislature did not grant that discretion, ultra vires review is proper.

Creedmor-Maha Water Supply Corp. v. TCEQ, 307 S.W.3d 505, 514 & 517-18

6
(Tex. App.—Austin 2010, no pet.) (no immunity when the claim alleges

“facts demonstrating that the agency’s action is … ultra vires of the

agency’s authority”).

In Bacon, the Court observed that the governing statute—unlike the

statute here—had no substantive criteria and “left the material features …

to the agency’s discretion.” Bacon v. Tex. Hist. Comm’n, 411 S.W.3d 161,

179-80 (Tex. App.—Austin 2013, no pet.).

And in McLane, the “disputed provision” told the Comptroller to

accept “‘certificates of deposits, treasury bills, or other similar types of

collateral acceptable to the comptroller.’” McLane v. Strayhorn, 148 S.W.3d

644, 647 (Tex. App.—Austin 2004, pet. denied) (emphasis in original;

citation omitted). The Court held that this granted the Comptroller

“authority to decide what collateral to accept … other than certificates of

deposit, treasury bills and notes…” Id. at 250 (emphasis added). The

Court did not say that the Comptroller had discretion to categorically

reject the specifically listed items but, instead, what other items to accept.

Our case is the opposite, focusing on disregard of criteria specified by the

Legislature rather than some catch-all provision.

The State’s discussion of administrative appeals, it acknowledges,

presumes that “a matter is conferred to agency discretion.” State Br. 14.

7
TxDOT had no discretion to disregard the statutory criteria, and complete

disregard of those criteria is the essence of this ultra vires claim.1

To bolster its argument that judicial oversight is inappropriate, TxDOT

summons broad principles about the separation of powers, the

constitutional order, and principles of the common law that generally bar

court oversight of past agency action. State Br. 1-2 & 29. It notes that

“[t]he APA maintains the common law’s concern about balancing the

respective roles of the judicial and executive departments.”2 State Br. 30.

That framing is telling. It suggests that these doctrines are about

protecting agency power rather than, as TxDOT’s leading case explains,

the legislative department’s primacy in policy-making. E.g., Davis v.

Lubbock, 326 S.W.2d 699, 714 (Tex. 1959) (after observing that courts

cannot second guess the Legislature on pure policy, the Court concludes

that they also cannot second-guess “a similar decision made for the

Legislature, at its special behest, by one of its agencies” (emphasis added)).

1This statute does have a narrow discretion-granting provision similar to the one in
McLane, permitting TxDOT to require that the “plan” included with county
applications have additional elements other than those listed. See TEX. TRANSP. CODE
§256.104(a)(2)(b)(iv). That does not authorize TxDOT to ignore the rest of the statute.
2TxDOT locates this “common law” bar in Little-Tex. State Br. 30 (citing General
Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591 (Tex. 2001)). That case held
that Chapter 2260’s system for resolving certain contract claims against the State did
not violate the separation of powers. Id. 600. Little-Tex did not address whether the
common-law bars judicial oversight generally. To the contrary, it noted Chapter 2260
had a statutory bar on review. Id. at 599 (“expressly precluded”). There is no broader
principle in Little-Tex that would insulate officials from an ultra vires suit when they
disregard the Legislature’s statutory criteria.

8
The superstructure of administrative law protects the Legislature’s ability

to delegate a policymaking role to agencies. An ultra vires claim serves the

complementary goal of enforcing limits the Legislature places when it

delegates power to the executive.

C. This talk of “fact-finding” and “extrinsic” evidence
misapprehends what the statute asks TxDOT to do.

Trapped inside a metaphor of an administrative appeal, the State

Defendants observe that the statute does not ask them to do more fact-

finding, that the courts cannot second-guess any such administrative fact-

finding even if they had been asked, and that in any event the courts cannot

look to “extrinsic” evidence when evaluating administrative fact findings.

See State Br. 17 & 32-33. In effect, the State Defendants prove the point

that this is no administrative appeal.

This ultra vires claim focuses on the legal criteria applied. The petition

alleges, and the testimony at the hearing confirms, that the state officials

here applied wholly different criteria than the governing law. CR266. This

is not a case where officials claim to have made mistakes of fact or even of

inadvertence. The officials chose to apply criteria contrary to law. In doing

so, the officials stepped outside any legitimate zone of discretion.

9
 D. Even under administrative principles, it would be arbitrary
and capricious for officials to disregard unambiguous rules
or to ignore criteria set by the Legislature.

If anything, the analogy to administrative appeals confirms the need for

courts to police the outer bounds of agency discretion. Asking if an official

acted ultra vires is roughly akin to asking if an agency’s order was arbitrary

and capricious.

There is no discretion for an agency to disregard the criteria set by law

or to substitute its own. City of El Paso v. PUC, 883 S.W.2d 179, 184 (Tex.

1994) (“An agency’s decision is arbitrary … if the agency: (1) failed to

consider a factor the legislature directs it to consider; [or] (2) considers an

irrelevant factor…”); Gerst v. Nixon, 411 S.W.2d 350, 360 n.8 (Tex. 1966)

(an agency that considers factors beyond what the statute permits exceeds

its statutory mandate).

The Legislature can delegate zones of discretion to an agency, but

when the agency ignores those criteria and thus “has not actually taken a

look at the hard problems” identified by the Legislature, reversal and

remand is appropriate. Starr County v. Starr Indust. Servs., Inc., 584 S.W.2d

352, 355-56 (Tex. 1979). Requiring the agency to consider enumerated

criteria also ensures that “parties [are] able to know what is expected of

them in the administrative process.” Id. When an agency strikes out on its

own to consider other criteria, that notice breaks down. Id. Thus,

10
“[a]rbitrary and capricious agency action may also be found when an

agency improperly bases its decision on non-statutory criteria.” Tex. Health

Facilities Com. v. Charter Medical-Dallas, Inc., 665 S.W.2d 446, 454 (Tex.

1984); see also PUC v. South Plains Elec. Coop., 635 S.W.2d 954, 957 (Tex.

App.—Austin 1982, no writ) (where agency “improperly considered non-

statutory standards,” it abused its discretion and must redo the process).

In the administrative context, courts have also recognized that officials

overstep their legal authority by violating rules as well as statutes. While an

agency is given a measure of discretion about how to interpret latent

ambiguities in its own formal rules, its officials must follow their plain

words. Rules, after all, are construed as statutes. Tex. Mut. Ins. Co. v. Vista

Cmty. Med. Ctr., LLP, 275 S.W.3d 538, 548 (Tex. App.—Austin 2008, pet.

denied); see also State Br. 13 (noting that rules have the legal force of

statutes). So long as rules are valid, they are legally binding upon both the

public and state officials. AEP Tex. Commer. & Indus. Retail, Ltd v. PUC,

436 S.W.3d 890, 905-06 (Tex. App.—Austin 2014, no pet.) (“force and

effect of statutes”). When an agency “fail[s] to follow the clear,

unambiguous language of its own regulation, we must reverse its action as

arbitrary and capricious.” PUC v. Gulf States Utilities Co., 809 S.W.2d 201,

207 (Tex. 1991); Tex. Mut. Ins. Co., 275 S.W.3d at 548 (same).

11
 ⁂

The statute represents the Legislature’s policy choices, with specific

criteria for applicants—such as projects being in certain “areas of the

state” and having made road condition reports “for the previous year” that

meet the statute’s heightened substantive requirements for such reports.

TEX. TRANSP. CODE §§256.103(a) & 256.104(a)(1). To the extent there

might be any ambiguity, TxDOT has spoken as an agency through its

formal rules. Even had the agency been granted some zone of policy-

making “discretion” under the statute, as now urged on appeal, see State

Br. 13, those formal rules would represent the agency’s exercise of that

discretion as an agency. Officials have no discretion to substitute their own

divergent policy choices, either for the agency or the Legislature.

II. STATUTORY INTERPRETATION

A. The County's interpretation is the most coherent.

The State Defendants’ criticisms of the County’s statutory

interpretation are unfounded.

1. That the statute doesn’t give TxDOT discretion to award
grants more broadly is an intended feature, not a bug.

The State Defendants’ principal complaint about the County’s

interpretation is that it does not give wide discretion to the agency, such as

12
is commonly conveyed by contested case or other fact-finding procedures.

This statute indeed lacks that sort of discretion-granting language. See Part

I.A., supra. From the lack of such provisions in the statute, TxDOT would

infer that it has broad discretion to make policy choices about where to

award grants, unfettered by oversight. See State Br. 13-14. That does not

follow. The Conference Committee took out language that would have

given the agency the kind of discretion it now covets. See Appellant Br.

24-26 (discussing). Removing that discretion from the final bill was no

oversight. It was the bargain between the two houses.

2. This does not require fact-finding about the truth of a
county’s application

The State Defendants recast the County as demanding a fact-finding

procedure. See State Br. 14-16. They note that the statute does not

explicitly tell “the Department to investigate the truth of each application,

or to engage in a fact-finding process” comparing applications to “other

information” that might be “extrinsic” to the applications themselves. See

State Br. 9, 16, 28. TxDOT says it could not possibly investigate local road

conditions to “verify the contents” of the applications. See State Br. 16.

But no formal fact-finding procedure is needed. The law is crafted such

that TxDOT can enforce the legislative criteria using the paper record that

the statute requires to be assembled. The statute requires that an applicant

13
include the road-condition report made for the prior year (a comprehensive

official report on road status, made under oath by county officials); it

requires that these official road-condition reports include information

about the causes of that observed road degradation; and it further requires

that applicants submit detailed plans for road projects using a defined term

(“transportation infrastructure projects”) that the statute ties to road

degradation from energy production. TEX. TRANSP. CODE §§256.101(2) &

256.104. The statute also describes what constitutes a valid transportation-

reinvestment zone. Id. §§256.104(a)(2)(A) & 222.1071. The TIF grant

program requires a county to submit substantive documents—the actual

road-condition report, the actual documentation of the reinvestment zone,

details about the plans—precisely so TxDOT can assess compliance using

the applications themselves. By refusing to follow these legislative criteria,

TxDOT has undermined the statute’s purpose.

3. Nor must counties prove up their energy production.

Perhaps through the same administrative lens, the State Defendants

question whether the “plain text of SB 1747 … require[s] a county to show

that it has oil and gas production within its territory.” State Br. 8. The

question is misplaced. There is no contention here that individual county

applicants should try to prove up their level of energy production, or their

14
proximity to "areas of the state" experiencing those effects. A county's

geographic location is not something about which proof is needed. And

whether there is overlap with “an area of the state affected by increased

production of oil and gas” is something TxDOT can see from official data.

In an ideal world, TxDOT would have offered more concrete guidance

in its formal rules. It could have set out a formula or clarified the specific

data series on which it intended to rely (much as it clarified the allocation

formula). TxDOT has drawn the same connection before using such data,

overlaying its road degradation knowledge with official data about areas of

energy production. E.g., 8RR43. It is unsurprising that the Legislature saw

TxDOT as competent to do the same when administering this program.

That TxDOT did not include this in its rules does not strip the phrase

“increased oil and gas production” from the statute. That phrase is part of

the very sentence directing TxDOT to administer the program. TEX.

TRANSP. CODE §256.103(a). If TxDOT suggests that its own rules should

be interpreted as insufficient to the task, it raises deep questions about their

validity over which the court independently has jurisdiction under Section

2001.038. See CR265-66 (contending that TxDOT’s failure to specify the

criteria for this assessment might make its rules governing the TIF grant

program invalid); CR239 (trial court rejecting this argument).

15
 B. The competing interpretations are fragmentary,
contradictory, and unreasonable.

The State Defendants take inconsistent positions about the statute,

even on the threshold question of who decides eligibility:

1. Does no one have power?: TxDOT reads the four-part
allocation formula to mean that the Legislature has already,
implicitly but conclusively, declared that every county is
eligible, see State Br. 18-19; or

2. Do counties alone decide?: TxDOT reads one
provision to mean that, by applying, a county conclusively
determines its own eligibility such that not even TxDOT can
disagree, see State Br. 15-16; or

3. Does TxDOT alone decide?: TxDOT would read the
words “affected by” to let it treat whatever counties it
wishes as eligible, regardless of geography or geology, see
State Br. 17-18.

The Court’s guidance in resolving this uncertainty is sorely needed.

1. Weight-tolerance permits are not dispositive.

The State’s principal argument is that the Legislature itself dictated

that all counties are always and automatically eligible for grant funds. See

State Br. 3-4 & 18-21. That’s also what their witness told the Texas

Legislature. See CR268-70, ¶¶38-41 (quoting this testimony).

16
 Where is such a purportedly consequential provision located in this

statute? The State Defendants would locate it in subpart (b)(1) of

§256.103, one of the factors listed in the allocation formula:

(b)(1) 20 percent according to weight tolerance permits,
determined by the ratio of weight tolerance permits issued in
the preceding fiscal year for the county that designated a
county energy transportation reinvestment zone to the total
number of weight tolerance permits issued in the state in that
fiscal year, as determined by the Texas Department of Motor
Vehicles;

Some context is needed to even find it. Most weight-tolerance permits are

issued for specific counties or named groups of counties.3 For convenience,

a trucking company can also obtain a single permit good statewide. The

State reasons that because some permits are issued on that basis rather

than for specific counties, the Legislature must have meant to make every

county eligible for funding. See State Br. 20.

Notably, the statute does not say to count statewide permits toward any

particular county. To the contrary, it talks about “permits issued … for the

county.” TEX. TRANSP. CODE §256.103(b)(1) (emphasis added). Even

3TxDOT posted the raw data it received on a webpage devoted to this program. The
table showing weight-tolerance permits is available at: http://ftp.dot.state.tx.us/pub/
txdot-info/energy/sb1747/weight-tolerance-permit.pdf

This document says there were a total of 46.978 weight-tolerance permits. For each
county, it shows a number for “permit selections,” counting both statewide and county-
specific permits. Although the document does not break out the total number of
“statewide” permits, the lowest county total (3941) is, logically, a ceiling on that figure.

17
TxDOT’s rules are silent on this point; the way TxDOT officials chose to

count them reflected only their own judgment, not legislative command.

The conclusion TxDOT would draw—that all counties are necessarily

eligible—does not follow. The statute does not say that the allocation

formula in §256.103(b) says which counties can participate in the pool.

Consider how TxDOT’s rules interpret this provision. They describe an

initial filter about whether counties are “eligible” before counties would

even reach the allocation formula in §256.103(b). 43 TEX. ADMIN. CODE

§15.184(a) (only “eligible counties” are included in the pool). That reading

is correct. The statute having an initial filter is perfectly consistent with

weight-tolerance permits being part of the formula for dividing the pie

proportionately among the successful applicants.

2. Counties do not control their own eligibility for any
particular funding round.

TxDOT also suggests that, if the Legislature did not itself decide, it

gave counties the final say over whether or not they are eligible for grants.

See State Br. 17. TxDOT cites a provision describing what counties must do

when forming a CETRZ. See TEX. TRANSP. CODE §222.1071(b). That

provision says a county’s creation of a CETRZ must come “after

determining that an area is affected because of oil and gas exploration and

production activities and would benefit from funding under Chapter 256.”

18
Id. TxDOT argues this shows legislative intent to have counties be the only

ones who speak to this question. See State Br. 17.

This is a strange reading. These zones have a purpose beyond applying

for grants. Counties can form a CETRZ on their own schedule. Doing so

dedicates a portion of the tax base to energy-related projects, whether or

not the county applies for these grants.4 TEX. TRANSP. CODE §222.1071(i)

(1)(B), -(m), -(n) (can use for local “transportation infrastructure projects”,

for certain state highway projects, and for certain road-utility districts). A

county government might devote local taxes for such purposes even when

local energy production is flat or declining.

But that does not mean that the Legislature meant for state resources

to follow the same path. While counties need only determine that “an area

is affected because of oil and gas,” TEX. TRANSP. CODE §222.1071(b), the

criteria for being eligible for TIF grants is that projects be “located in areas

of the state affected by increased oil and gas production,” id. §256.103(a).

The difference is focus. By including the word “increased,” the Legislature

was directing scarce state funds to the areas of increased need. TxDOT’s

rules agree. They make the first element of “eligibility” that “a county

4Creating a zone like this, if done with care, has other benefits related to management
of local county tax rates. E.g., 2RR113-14.

19
must … be entirely or partially in an area affected by increased oil and gas

production.” 43 TEX. ADMIN. CODE §15.182.

Nor does this argument fit the timelines permitted by statute. Although

counties may form zones at any time, the statute contemplates that they

might (with TxDOT’s permission) defer that until after grant applications

are processed. See TEX. TRANSP. CODE §256.104(a)(2)(A). The statute

thus contemplates that TxDOT can make grant-eligibility decisions before

counties form zones—and therefore without the benefit of any implicit

county finding under §222.1071(b).

3. The phrase “affected by” is not a grant of unfettered
discretion and, in any event, no discretion was exercised.

On appeal, TxDOT suggests that the phrase “affected by” is so

amorphous that it would, hypothetically, have permitted the agency to

declare every county eligible because it is at least theoretically possible that

some local road might have been traversed by some oil or gas truck. See

State Br. 20-21. In an ultra vires suit, whether officials disregarded criteria

is a fact question. There is no evidence that TxDOT officials made such an

analysis. To the contrary, the claim is that they made no inquiry into

geographic links, instead treating every county as automatically eligible;

their testimony confirms it. 8RR24 (they in fact used “the [allocation]

20
formula that was stipulated in the statute,” which the witness agrees,

“results in every county in the state that applies, receiving funds”).

Had TxDOT issued a rule to that effect, it would have been open to

attack under §2001.038 for invalidity, both for undermining the statute’s

purpose and for resting on a construction that renders so much of the

scheme—and even the sentence in which those words appear—pointless.

The statute contemplates that there is some geographic limit, describing

“projects located in areas of the state affected by increased oil and gas

production.” TEX. TRANSP. CODE §256.103(a) (emphasis added). The

geographic focus is placed not on county borders but where “projects” are

“located,” and whether those “projects” are in “areas of the state affected

by increased production of oil and gas” rather than merely affected by

some baseline level of production. Id. Letting the phrase “affected by” rob

the meaning from the sentence’s more concrete words does violence to

legislative purpose. In re Nalle Plastics Family, LP, 406 S.W.3d 168, 173-74

(Tex. 2013) (construing word narrowly to avoid rendering others surplus).

C. Deference to agency rules

The State Defendants are understandably vexed that their formal rules

are being used against them. In Texas, agency deference attaches to fixed,

formal agency rules, not the vacillating views of officials. Fiess v. State Farm

21
Lloyds, 202 S.W.3d 744, 747 (Tex. 2006). They say that deference against

their wishes would “frustrate the purpose of deference by locking in one

view of the statute,” citing “flexibility” as “the heart of the deference

doctrine.” State Br. 26. But there is no legitimate tension here. Courts

“lock[] in one view of the statute” by resolving statutory ambiguities all

the time. Until that definitive answer, if an agency desires “flexibility,” it

can always adopt new formal rules. While the agency is correct that it is not

judicially estopped from advancing whatever statutory construction

arguments it wishes in court, arguments have consequences. The logical

consequence of its position here may be that its own rules are invalid.

Either an agency’s formal rules are a meaningful guide to help resolve

ambiguities in a statute, or they are not. If they are, then they must guide

the court even when agency officials later deem them inconvenient.

III. THE ULTRA VIRES CLAIMS SHOULD NOT HAVE
BEEN DISMISSED ON A PLEA.

The essence of this ultra vires claim is that the state officials refused to

apply the legislative criteria to filter applications at the outset, before

applying the allocation formula. As they readily admitted below, they

applied no initial filter. 8RR24.

22
 A. It is not disputed that, under the County’s statutory
interpretation, the record is sufficient to move forward.

If the Court accepts the County’s statutory construction, the plea

should be denied if the State Defendants’ alleged conduct exceeds those

bounds. The pleadings allege that it does. See CR264-71. To the extent this

is a factual question, the evidence developed at the hearing far exceeds the

minimum threshold of proof to survive a plea on the question. Tex. Dep’t of

Parks & Wildlife v Miranda, 133 S.W.3d 217, 227-28 (Tex. 2004) (summary-

judgment standards and burdens apply).

B. Agency rules can impose additional restrictions on
officials, but they cannot remove statutory limits

TxDOT says “there cannot be an ultra vires claim if a defendant entity

has complied with its own administrative rules, because those rules are

themselves a source of legal authority.” State Br. 12. But rules are not an

independent source of authority. Rules follow from statutes; if rules exceed

statutory bounds, the rules are invalid. Railroad Comm'n of Texas v. Lone

Star Gas Co., 844 S.W.2d 679, 685 (Tex. 1992).

TxDOT suggests that the existence of rules makes this ultra vires claim

a covert administrative appeal. The State says that because some rules

involve contested cases, any official action that “do[es] not contravene an

administrative rule” becomes about the rules and thus “not a proper ultra

23
vires suit.” State Br. 14. The premise is wrong, because the Legislature is

free to grant agencies a smaller zone of discretion, as it did here. And

TxDOT makes an analytical leap to conclude that only rules and not

statutes bind state officials. State officials are bound by both constraints.

A question that TxDOT does not address is whether an official who

violates an unambiguous aspect of agency rules acts ultra vires. It hints that

such a claim might be proper. State Br. 14 (“if a defendant’s actions do not

contravene an administrative rule, the suit is … not a proper ultra vires

claim”). The formal written rules adopted by TxDOT present the most

reasonable interpretation of the statute. As such, whether to label this a

violation of statute or rule is immaterial. The officials are violating both.

But even if TxDOT’s wish that rules displace statutes were entertained,

the outcome is the same. Its officials are still acting outside controlling law.

IV. A SECTION 2001.038 CLAIM IS PRESENTED.

The State Defendants say that “the proper forum” for complaints should

have been a Section 2001.038 claim. See State Br. 35. In defending their

narrow view of ultra vires, the officials say their view “does not leave the

County without a forum” because it could, instead, seek review under

§2001.038. See also State Br. 9 & 27. This pleading is sufficient to do so.

24
 A. The petition challenges specific rules

TxDOT says that the petition “does not identify a particular rule;

rather, it conditionally seeks §2001.038 relief regarding ‘any TxDOT rules

… to the extent that they depart from the statute.’” State Br. 37 (citing

CR272).5 The excerpt it quotes is from a closing summary. The body of the

pleading does specify rules involved in the challenge:

• Rule 15.184 describes an initial filter, specifying that only
“eligible” counties (a term defined in Rule 15.182) who
submit “valid” applications (as defined by Rule 15.188) will
enter the grant pool. See CR263-65, ¶22 & ¶28. If TxDOT
officials believed this rule to be applicable, this dispute
might never have arisen. Instead, TxDOT officials have
stated that they believe controlling law prohibits this kind
of filter—calling into question both the rule's applicability
and its validity. See CR269-70, ¶¶41-42 (discussing this
testimony); see also CR265, ¶28 (noting that, if the rule is
interpreted not to include this substantive filter, it
contravenes the grant of authority to TxDOT).

• Rule 15.182 defines which counties are “eligible,” with the
first listed element being that See CR263 ¶22 & CR266
¶29. The petition discusses whether this rule is applicable
or, if now interpreted to mean something other than a filter
focusing funds on certain parts of the state, is invalid. See
CR266, ¶¶29-30.

5The live petition begins at CR257. The fact statement in the State’s brief cites to a
previous version of the pleading, but the differences are not material.

25
 • Rule 15.188 enumerates requirements for a “valid”
application, including that a county attach “a road
condition report described by Transportation Code,
§251.018 made by the county for the preceding
year.” (Section 251.018 was added to the Transportation
Code by SB1747 and instructs counties to specify the
causes of road degradation in these official reports.) The
petition discusses whether this rule is applicable or, if now
interpreted to permit funds to go to counties who failed to
comply, is invalid. See CR263 ¶22 & CR266 ¶¶29-30.

The uncertainty surrounding these rules permeates the whole case

and, if anything, is heightened by the ongoing uncertainty surrounding the

statute. See CR271-72, ¶46 (asking for a declaration to remove this

uncertainty); see also CR266 ¶30 & CR269-70 ¶¶41-42. As the case has

proceeded, even TxDOT has advanced multiple, competing views—some

of which contradict its own rules. This states a §2001.038 claim, and the

declaration sought can resolve this uncertainty.

B. The “applicability” aspect of this challenge is proper.

TxDOT points to a distinction between “applicability” and “that

rule’s application.” See State Br. 31. The distinction is somewhat elusive.

Section 2001.038 actually uses both of those words, explaining that

declaratory relief is available “if it is alleged that the rule or its threatened

26
application” interferes with the plaintiff’s legal rights. TEX. GOV’T CODE

§2001.038(a) (emphasis added).

In other contexts, a declaratory judgment is used to interpret texts. A

court’s role in regard to agency rules is slightly different. An agency has

wide latitude to interpret its own agency rules (unlike the more limited

deference its views are sometimes accorded for statutory questions). Thus,

a court cannot simply step in to resolve ambiguous rules. But as §2001.038

recognizes, courts can say if a rule (which the agency has liberty to

interpret) is “valid” under the statute (which only courts can definitively

interpret). And the court can also say whether the rule is “applicable.”

Both TxDOT and the County agree that there is some line to be drawn

between proper and improper “applicability” challenges. The power to

speak to a rule’s “applicability” should be informed by the context of

overseeing an agency. At one extreme, if a party is merely dissatisfied with

the fact-intensive resolution of a hearing conducted under undisputed

rules, second-guessing how the rules are applied is not the proper subject

of declaratory relief. But if an agency applies wholly the wrong legal

framework—if it does not treat its own rule as “applicable”—then a

challenge is proper. That’s because, just as state officials lack the power to

disregard the criteria set by the Legislature, an agency exceeds its power by

disregarding its own unambiguous rules.

27
 This accords with how the Texas Supreme Court has viewed more

conventional declaratory judgments. A declaratory judgment that certain

officials acted ultra vires in repudiating the requirements imposed under

controlling law has been held not barred by governmental immunity.

Southwestern Bell Telephone, LP v. Emmett, No. 13-0584, 2015 Tex. LEXIS

274, at *20-21 (Tex. Mar. 20, 2015) (declaratory judgment against city

commissioners was not barred in this situation, even though the practical

effect would be to compel prospective payments). The same result should

hold when an agency exceeds the law by disregarding the criteria set out in

its formal rules. That “applicability” challenge is perfectly consistent with

the judicial role. An agency has no discretion to disregard its own formal

rules. See Part I, supra. The courts have a tool, through §2001.038, to

declare the boundaries of such a rule. The declaration can speak to the

“applicability” of a rule as a rule, leaving precise fact-by-fact matters to the

discretion of the agency.

C. The County states a sufficient interest.

TxDOT suggests that the “petition does not articulate a ‘right or

privilege’.” State Br. 38. It acknowledges that the County does invoke a

statutory right to payment, but says that is “not tied to the actual legal

28
complaint” in the case, “all of which have to do with the acceptance of

applications.” State Br. 38.

TxDOT seems to suggest that only counties disapproved for the grant

pool might have standing to seek a declaration. State Br. 38-39. But as

TxDOT’s trial witness agreed, the zero-sum nature of this grant pool

means that each incremental county reduces the allocation to each other

county. 2RR23. Thus, an approved county suffers a mathematically precise

degree of injury when ineligible counties are included in the pool. It is,

economically, the same as if part of a county’s own grant request had been

wrongly disapproved. The County has a sufficient stake to seek a

declaration about the validity or applicability of these rules.

If §2001.038 is to be the right “forum” for these complaints, see State

Br. 9, 27, 35, the Court should be very reluctant to embrace TxDOT’s

suggestion that only a county denied funds can bring a claim. Today, there

are no such counties precisely because TxDOT officials disregarded

applicable agency rules and controlling law. So long as they adhere to the

same path, the judiciary could never speak to these rules.

If anything, TxDOT seems more concerned with whether a §2001.038

declaration would speak in the present tense. TxDOT acknowledges, as it

must, that the County can seek “a declaration that the rule is inconsistent

with the text of SB 1747, the result of which would control future

29
allocations.” State Br. 39. The declaration the County seeks is certainly

broad enough to cover future funding rounds under this statute. It would

also, naturally, resolve the present uncertainty about whether the rules

governing the funding round now underway are valid or applicable.

V. AN INJUNCTION IS APPROPRIATE.

The County is not requesting any court to sort applications into categories.

Rather than any “separate judicial determination” of the specific outcome,

see State Br. 17, the County asks for injunctive relief forcing TxDOT

officials to follow the law in their own administration of this program.

Quite obviously, holding a new grant round to deal with unspent funds

is not retroactive relief. The State Defendants say that “[t]he allocation has

already occurred, and disbursement of the $225 million … is mandated by

it” State Br. 29 (emphasis added). But under TxDOT’s own design this

program proceeds in small steps, thereby preserving for itself a measure of

control. Before a county begins each individual project, it must obtain

TxDOT’s approval on a discrete form; without that incremental approval,

a county cannot receive reimbursement. See Appellant Br. 31-32

(discussing this process). TxDOT is not “mandated” to keep approving

new individual projects as each county requests them. Immunity would not

be offended by enjoining that future act.

30
 The County suggests that an appellate injunction focused on this

specific, forward-looking decision by TxDOT offers a graceful way to

freeze future unauthorized state spending without undue interruption of

projects underway. If TxDOT officials are enjoined from these approvals,

spending will stop, and funds not already expended in violation of the

statute can ultimately be disbursed consistent with Texas law. City of El

Paso v. Heinrich, 284 S.W.3d 366, 372 & 376 (Tex. 2009) (immunity does

not bar relief that effectively compels future payments consistent with law).

With regard to an appellate injunction, the State Defendants protest

that it “improperly seeks the judgment the County wants, rather than

preserving a legal right the County already has.” State Br. 42. The relief

sought through an appellate injunction is merely to stop ongoing spending,

protecting the ability of Texas courts to later order meaningful relief

ensuring funds are distributed consistent with Texas law.

The State Defendants also muddy the water by hinting, in a footnote,

that some enormously large bond might be required for an appellate

injunction. See State Br. 42n.19 (“it remains the case that the appellant is

required to assume the financial risk inherent in leaving the judgment in

place, see TEX. R. APP. P. 24.2(a)(3). It is unclear that a single plaintiff

could necessarily propose a sufficient bond to address the financial

problems inherent in delaying a state wide road-funding measure through

31
the entire appellate process.”). The cited rule discusses supersedeas; there

is no merits judgment here. Nor does Rule 24.2 control appellate

injunctions, which protect jurisdiction. Carpenter v. Hausman, 601 S.W.2d

88, 89 (Tex. App.—San Antonio 1980, no writ) (statute does not require

bond for appellate injunction). Rule 24.2 also discusses “loss or damage”

to “the judgment creditor.” TEX. R. APP. P. 24.2(a)(3). It strains the

analogy to treat TxDOT or its officials as “judgment creditors” who might

suffer “loss or damage.” And there is no suggestion that TxDOT has a

financial stake, either way, in which counties receive funds. Any “loss or

damage” to TxDOT from freezing this program for the remaining duration

of the appeal is both speculative and far below the magnitude hinted by this

ominous footnote.


32
 PRAYER
The Court should reverse the trial court’s judgment of dismissal and

remand for merits proceedings on these claims. The Court should also

issue a writ of injunction to protect jurisdiction over this controversy until

the appellate mandate returns it to the trial court.

Respectfully submitted,

/s/ Don Cruse
_____________________
Don Cruse
SBN 24040744
LAW OFFICE OF DON CRUSE
1108 Lavaca St. #110-436
Austin, Texas 78701
(512) 853-9100
(512) 870-9002 fax
don.cruse@texasappellate.com
Donato D. Ramos
Bar No. 16508000
mrodriguez@ddrlex.com
Donato D. Ramos, Jr.
Bar No. 24041744
donatoramosjr@ddrlex.com
LAW OFFICES OF DONATO RAMOS, PLLC
Texas Community Bank Building

Suite 350
6721 McPherson Road (78041)
Laredo, Texas 78045
(956) 722-9909
(956) 727-5884 fax

33
 CERTIFICATE OF SERVICE
I certify that on March 27, 2014, this Reply Brief was served on

counsel under Texas Rule of Appellate Procedure 9.5(b):

Kristofer D. Monson
Assistant Solicitor General
Susan Desmarais Bonnen
Assistant Attorney General
Office of the Attorney General
P.O. Box 12548
Austin, Texas 78711-2548
kristofer.monson@texasattorneygeneral.gov
susan.bonnen@texasattorneygeneral.gov

COUNSEL FOR APPELLEES

/s/ Don Cruse
____________________
Don Cruse

CERTIFICATE OF COMPLIANCE
This brief complies with Texas Rules of Appellate Procedure 9.4

because the sections covered by the rule contain no more than 7324 words.

The font used in the body of the brief is no smaller than 14 points, and the

font used in the footnotes is no smaller than 12 points.

/s/ Don Cruse
____________________
Don Cruse

34