ACCEPTED
03-14-00340-CV
5205250
THIRD COURT OF APPEALS
AUSTIN, TEXAS
5/8/2015 9:45:51 AM
JEFFREY D. KYLE
CLERK
No. 03-14-00340-CV
FILED IN
3rd COURT OF APPEALS
AUSTIN, TEXAS
5/8/2015 9:45:51 AM
In the Court of Appeals JEFFREY D. KYLE
Third District of Texas – Austin Clerk
Appellants, CPS Energy, Time Warner Cable Texas LLC, and Southwestern
Bell Telephone Company d/b/a AT&T Texas// Cross-Appellant, Public Utility
Commission of Texas
v.
Appellee, Public Utility Commission of Texas// Cross-Appellee, CPS Energy,
Time Warner Cable Texas LLC and Southwestern Bell Telephone Company
d/b/a AT&T Texas
On Appeal from 250th District Court, Travis County, Texas
Cause No. D-1-GN-13-001238 (Consolidated)
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
Len G. Briley, Jr. J. David Tate Michael T. Sullivan
AT&T Legal Department Katherine C. Swaller (admitted pro hac vice)
1010 N. St. Mary's St. Thomas Ballo Mayer Brown LLP
Room 14Q AT&T Legal Department 71 S. Wacker Drive
San Antonio, TX 78215 816 Congress Avenue Suite Chicago, IL 60606
Phone: (210) 351-4832 1100 Phone: (312) 782-0600
Fax: (210) 886-2127 Austin, TX 78701 Fax: (312) 706-8689
Phone: (512) 457-2304
Fax: (512) 870-3420
Southwestern Bell Telephone Company d/b/a AT&T Texas (“AT&T”) and
Time Warner Cable Texas LLC (“TWC”) file this Joint Response to the April 20,
2015 letter from the Attorney General, on behalf of the Public Utility Commission
of Texas (“Commission”), to the Clerk of this Court (“April 20 Letter”), which
claims that this Court does not have jurisdiction over one of the issues on appeal.
In particular, the Commission claims that its determination that Public Utility
Regulatory Act (“PURA”) § 54.204 automatically incorporates revisions to the
Federal Communications Commission’s (“FCC”) Telecom Formula is an
“advisory opinion” that CPS Energy (“CPS”) does not have standing to appeal.
Respectfully, the Commission is mistaken.
BACKGROUND
PURA § 54.204 requires that CPS’ maximum pole attachment rate be
determined for each year through application of the FCC Telecom Formula
adopted under 47 U.S.C. § 224(e). CPS’ petition filed with the Commission
sought an order (1) requiring AT&T and TWC to pay pole attachment fees it had
calculated pursuant to PURA for certain years, and (2) finding “that the method
used by CPS Energy to calculate its pole attachment fees is reasonable and
consistent with the requirements of PURA.” 1 In response to motions to dismiss,
the Commission found that it did not have jurisdiction to compel payment of pole
1
AR, Record Binder 1, Item 1 at 11 (Petition And Request For Enforcement Of CPS Energy).
1
attachment fees, and therefore the case proceeded solely as a declaratory judgment
action. The Commission explained: “CPS Energy has standing to seek a
declaratory order regarding the issue of whether its pole attachment rates comply
with section 54.204 of PURA,” and “may seek a declaratory order to clarify its
obligations under section 54.204.” 2
During the course of the Commission proceeding, the FCC issued an order
that revised the Telecom Formula effective June 8, 2011.3 A dispute then arose
between the parties over whether PURA § 54.204 requires such revisions to be
automatically incorporated into PURA. At the parties’ request, the Administrative
Law Judge hearing the case certified the following issue to the Commission:
Do the requirements of PURA § 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 PURA § 54.204(c)?
The issue certified was a pure legal issue of statutory interpretation, and the
parties’ briefs on the issue focused solely on the plain language of PURA § 54.204,
2
AR, Record Binder 1, Item 25 at 1, 5 (PUC Docket No. 36633, Doc. 25, Order on Appeal of
Order No. 3, May 21, 2009).
3
In the Matter of Implementation of Section 224 of the Act, a National Broadband Plan for Our
Future, WC Docket No. 07-245, Report and Order and Order on Reconsideration, FCC 11-50
(rel. April 7, 2011).
2
legislative intent, and statutory construction. 4 After careful consideration, the
Commission concluded: 5
The plain language of PURA § 54.204(c) indicates that the
Legislature was aware that the FCC could possibly adopt new or
modified rules under 47 U.S.C. § 224(e), and that it was the
Legislature's clear intent that PURA § 54.204(c) incorporate these
new or modified rules. Additionally, nothing in the language of
PURA § 54.204(c) expressly excludes revisions to the FCC's rules
under 47 U.S.C. § 224(e), and reading PURA § 54.204(c) to exclude
revisions to the FCC rules would thwart the intent of the Legislature.
See also AR, Binder 13, Item 530 at Conclusion of Law No. 26 (PFD) (“Changes
in 47 U.S.C. § 224(e) are incorporated into PURA § 54.204 without legislative
action.”).6
4
AT&T and TWC argued that the plain language of § 54.204 requires revisions to the FCC
Telecom Formula to be automatically incorporated into PURA—specifically, they argued that
the phrase “rules adopted by [the FCC]” plainly encompasses revisions to those rules. AR,
Binder 8, Item 391 at 3-5 (AT&T Texas’ Brief on Certified Issues, filed June 6, 2011); Id., Item
393 at 7-10 (TWC’s Brief on Certified Issues, filed June 6, 2011). AT&T and TWC also argued
that under the rules of statutory construction reference to a statute applies to all revisions or
amendments to that statute unless the statute expressly provides otherwise. And because §
54.204 does not expressly provide otherwise, they argued that the Legislature intended revisions
to the FCC Telecom Formula to be incorporated into PURA. Id. CPS also relied on the plain
language of PURA. But CPS argued that the absence of the phrase “as amended from time to
time,” or similar language, indicates the Legislature’s intent that revisions would not be
automatically incorporated into PURA and that the Telecom Formula would always be applied
as it existed in 2005 when PURA was enacted. Id., Item 394 at 13 (CPS Brief on Certified
Issues, filed June 6, 2011).
5
AR, Binder 8, Item 402 at 2 (PUC Docket No. 36633, Doc. 753, Order on Certified Issues,
June 24, 2011).
6
AR, Binder 13, Item 530 at 8-9 (PFD) “The Commission also determined that any revisions to
the FCC rules through FCC orders apply to MOUs under PURA § 54.204(c).”); Id. at Conclusion
of Law No. 27 (“The FCC's June 8, 2011 amendment to 47 C.F.R. 1.1409(e) applies to CPS
Energy under PURA § 54.204(c).”); Id. at Finding of Fact No. 31(d) (“The revisions to the
FCC's rules under 47 U.S.C. § 224(e) adopted on June 8, 2011, are incorporated into PURA
§ 54.204(c).”)
3
ARGUMENT
The Commission’s determination that PURA § 54.204 automatically
incorporates any revisions to the FCC Telecom Formula was a declaratory
judgment, not an “advisory opinion,” and the Court has jurisdiction over CPS’
appeal of that issue.
A declaratory judgment “is a remedial measure that determines the rights of
the parties and affords relief from uncertainty with respect to rights, status, and
legal relations.” Halliburton Energy Serv., Inc. v. Axis Tech., LLC, 444 S.W.3d
251, 262 (Tex. App.—Dallas 2014, no pet.). Declaratory judgment actions
“determine the rights of the parties when a controversy has arisen, before any
wrong has actually been committed, and are preventative in nature.” Bexar
Metropolitan Water Dist. v. City of Bulverde, 156 S.W.3d 79, 88 (Tex. App.—
Austin 2005, pet. denied). A declaratory judgment is appropriate if a “justiciable
controversy exists as to the rights and status of the parties” and the controversy
“will be resolved by the declaration sought.” Juliff Gardens, L.L.C. v. Tex.
Comm’n on Envtl. Quality, 131 S.W.3d 271, 277 (Tex. App.—Austin 2004, no
pet.).
Here, a controversy arose over the correct interpretation of a statute (PURA
§ 54.204) and the parties’ rights under that statute. AT&T and TWC consistently
have maintained that the language of PURA requires FCC revisions to the Telecom
4
Formula to be automatically incorporated into PURA. CPS’ view has been that the
language does not automatically incorporate revisions. The Commission, at the
request of the parties, resolved that controversy by issuing a declaratory judgment
interpreting the statute. It is well settled that a “[d]eclaratory judgment is an
appropriate vehicle for clarifying a party’s rights under a statute.” State v.
Montgomery Cnty., 338 S.W.3d 49, 57-58 (Tex. App.—Beaumont 2011, pet.
denied); see also Metropolitan Water Dist., 156 S.W.3d at 88 (declaratory
judgment “may be used to clarify the meaning of statutes”); Brennan v. City of
Willow Park, 376 S.W.3d 910, 922 (Tex. App.—Fort Worth 2012, pet. denied) (the
Declaratory Judgments Act “grants any litigant whose rights are affected by a
statute the opportunity to obtain a declaration of those rights under the statute”).7
The Commission, through the Attorney General, nevertheless claims that the
Commission’s determination is an “advisory opinion” because it purportedly is just
a “statement[] about the future.” 8 It made this claim for the first time in this Court
on the eve of oral argument, notwithstanding that the Commission has already
defended its Order on Rehearing on this issue before the trial court and fully
briefed the issue before this Court. At no point before the April 20 Letter did the
7
In this respect, the Commission’s conclusion that CPS had the right to “seek a declaratory order
to clarify its obligations under section 54.204” is spot on. AR, Record Binder 1, Item 25 at 1, 5
(PUC Docket No. 36633, Doc. 25, Order on Appeal of Order No. 3, May 21, 2009).
8
April 20 Letter at p.1.
5
Commission ever suggest that its decision with respect to the meaning of PURA
§ 54.204 was an “advisory opinion.” And it is not.
The Commission mischaracterizes both the nature of advisory opinions and
the nature of the Commission’s determination. An advisory opinion is one
“advising what the law would be on a hypothetical set of facts.” Robinson v.
Parker, 353 S.W.3d 753, 756 (Tex. 2011). That is, an advisory opinion is one that
depends on uncertain or contingent future events that may or may not occur. R.R.
Comm’n of Tex. v. Centerpoint Energy Res. Corp., Nos. 03–13–00533–CV, 03–
13–00534–CV, 03–13–00535–CV, 2014 WL 4058727 *3 (Tex. App.—Austin
Aug, 14, 2014, no pet.). The Commission’s determination is not a statement about
the future, does not depend on hypothetical or theoretical future events, and will
not change regardless of any future facts. It is a pure legal determination about the
meaning of disputed statutory language, which courts have unequivocally held is a
proper subject for a declaratory judgment. Montgomery Cnty., 338 S.W.3d at 57-
58; Metropolitan Water Dist., 156 S.W.3d at 88; Brennan, 376 S.W.3d at 922.
One only needs to look at the briefs filed by the parties on the certified issue
(which focused solely on the plain language of the statute, legislative intent, and
statutory construction) to see that the relief requested was purely legal and did not
depend on the development of future facts. 9 “When a party seeks only a pure legal
9
Supra, n.4.
6
determination that is not contingent of the development of additional facts, the
relief requested is not advisory.” Complaint of Chermac Energy Corp. Regarding
Certain Qualifying Facilities Under PURPA, 2010 WL 3524026 *4 (Tex. P.U.C.
2010).
In Chermac, the Commission reversed an Administrative Law Judge’s
determination that the relief sought by the complainant was not ripe and that a
decision in the case would therefore be an advisory opinion. 2010 WL 3524026
*4. The Commission explained that the complainant asked the Commission “to
determine, as a pure legal matter, the proper interpretation of Rule 25.242,” and
“specifically, whether the rule applies to purchases of energy from facilities
located in Oklahoma.” Id. The Commission further explained that “there is a
current dispute involving the legal interpretation of the Rule,” and “the dispute can
easily be resolved by the Commission in a manner that will bind the parties and
settle the controversy.” Id. Such pure legal determination is “not contingent of the
development of additional facts,” and therefore is “not advisory.” Id.
Similarly, in City of Waco v. Texas Natural Resource Conservation
Commission, the City of Waco sought a declaratory judgment that section 122.4(i)
of the Code of Federal Regulation (which had been incorporated into state law)
prohibits the TNRCC from issuing permits until it complies with certain
requirements. 83 S.W.3d 169, 175 (Tex. App.—Austin 2002, pet. denied). The
7
TNRCC argued that the City’s claim sought an advisory opinion and that the
agency’s compliance with the statute could only be determined in the context of an
application for a permit. Id. at 176. This Court rejected the TNRCC’s argument,
finding that “[t]he City’s claim poses a purely legal question—the interpretation of
section 122.4(i)—which will not benefit from the development of additional facts
in connection with a specific permit application.” Id. at 177. The Court further
found “[t]here is a judiciable controversy between the parties regarding the effect
of section 122.4(i) on the agency’s permitting process,” and “[a] declaration
regarding the effect of section 122.4(i) will resolve this controversy.” Id. at 178.
As in Chermac and City of Waco, the Commission decided a pure legal issue
of statutory interpretation. The Commission’s determination did not depend on the
development of additional facts and fully resolved the controversy, and is therefore
a declaratory judgment, not an advisory opinion.
The Commission now asserts that no controversy exists because the FCC
revision that gave rise to the legal issue became effective on June 8, 2011, several
months after the last year for which the Commission determined CPS’ maximum
allowable pole attachment rate (i.e., test/bill year 2009/2010).10 This new position
ignores the scope of the Commission proceeding. While the Commission did
apply the Telecom Formula to determine CPS’ maximum pole attachment rate for
10
April 20 Letter at 1.
8
certain years for which it had data (test/bill years 2004/2005 through 2009/2010) as
requested by CPS, that does not mean there were no other controversies for the
Commission to resolve. To the contrary, the parties agreed that the Commission
should resolve the legal issue of whether PURA automatically incorporates
revisions to the FCC Telecom Formula. In resolving that legal issue, the
Commission did not apply the June 8, 2011 revision to hypothetical future facts.
The Commission’s late-in-the-game suggestion that pole attachment rates
after June 8, 2011 are not at issue is also factually wrong. The Commission issued
its final order in February 2013—well after the June 8, 2011 revision. By that
time, CPS had charged or was owed for pole attachments for years 2011 through
2013. And there was a live controversy between the parties over the rates during
that time frame. Indeed, the parties presented arguments regarding how to
calculate pole attachment rates starting June 8, 2011, 11 and Staff calculated and
proposed a specific pole attachment rate of $5.08 to be charged starting June 8,
2011. 12 Although the Commission found that it could not calculate the final rate
for years after test/bill year 2009/2010 because the data specific to those years
necessary to calculate the maximum allowable pole attachment rate had not been
introduced into evidence, 13 the Commission issued associated findings regarding
11
AR, Binder 13, Item 530 at 121-123 (PFD).
12
Id. at 123.
13
Id. at 43, Finding of Fact No. 31(g), Ordering Paragraph No. 1.
9
the methodology to be used for those years, thus making it clear that amounts owed
after June 8, 2011 were at issue:
The rate charge by CPS Energy may not exceed the maximum
allowable pole attachment rate calculated by the Telecom Formula
adjusted by 66 % after June 8, 2011. 14
Because this change became effective in the middle of the year,
determining whether CPS has complied with PURA § 54.204(c) with
respect to its 2011 pole attachment billings requires a "blended"
approach to the calculating the maximum allowable pole attachment
rate. For January 1 through June 7, 2011, multiply the maximum
allowable rate [by] 158 (the number of days between January 1 and
June 7). Do the same for June 8 through December 31, 2011, multiply
the maximum allowable rate by 207 (the number of days between
June 8 and December 31. Divide these two figures by 365 (the days of
the year). 15
By addressing in its February 2013 Order on Rehearing the methodology for rates
starting June 8, 2011, the Commission was not making a determination about a
future, hypothetical event, but was ruling on the methodology applicable for years
that had already come to pass, based on a change to the FCC Telecom Formula that
had already been adopted and become effective.16
The Commission also suggests that CPS does not have standing because it
was not aggrieved by the Commission’s so-called advisory opinion. The standing
14
Id. at Finding of Fact No. 86.
15
Id. at Finding of Fact No. 87.
16
Of course, even if the parties had not litigated issues regarding rates after June 8, 2011, and
even if the Commission’s order had been issued before June 8, 2011, the Commission still could
have issued a declaratory judgment clarifying the parties’ rights under PURA § 54.204 as
explained in the text.
10
doctrine, however, “reflects … the prohibition against court-issued advisory
opinions.” Thomas v. Cook, 350 S.W.3d 382, 389 (Tex. App.—Houston [14th
Dist.] 2011, pet. denied). To have standing, a controversy must exist between the
parties. Id. As explained above, there was a controversy between the parties
regarding their rights under § 54.204, and the Commission resolved that
controversy in a manner that bound the parties and settled the dispute. CPS
therefore has standing to appeal that determination. Contrary to the Commission’s
claim, a party “seeking a declaratory judgment need not have incurred actual
injury.” Bexar, 156 S.W.3d at 88. A declaratory judgment is “intended to provide
a means to determine, before any wrong has actually occurred, the right of parties
when a controversy has arisen and is remedial in nature.” Chermac, 2010 WL
3524026 at 4 (emphasis in original); Bexar, 156 S.W.3d at 88.17 Likewise, courts
can issue declaratory judgments construing statutes even “before the statute is
violated” (Bexar, 156 S.W.3d at 88-89) and “whether or not further relief is or
could be claimed” (Brennan, 376 S.W.3d at 922).
Finally, if the Court were to conclude that the Commission’s determination
is an advisory opinion, then the parties would have to re-litigate the same issue of
statutory interpretation at the Commission (then likely on appeal). This dispute has
17
The two decisions cited in the April 20 Letter are inapposite. Neither involved the use of a
declaratory judgment to resolve a dispute about the interpretation of a statute, which courts have
unequivocally held is permissible.
11
been ongoing since 2008, with the proceeding at the Commission spanning more
than four years. Any re-litigation of the issue would be a mirror image of what has
already taken place: the parties would raise the same legal arguments regarding the
plain language of PURA, legislative intent, and statutory construction. There
would be nothing new for the Commission to consider. It is contrary to judicial
economy to force an additional administrative proceeding simply to have the
Commission reaffirm its current interpretation of PURA.
For these reasons, the Court should find that CPS has standing to appeal the
Commission’s determination that PURA automatically incorporates revisions to
the Telecom Formula and that the Court has jurisdiction to review the issue.
May 8, 2015 Respectfully submitted,
/s/ Michael T. Sullivan
Michael T. Sullivan
(admitted pro hac vice)
Mayer Brown LLP
71 S. Wacker Drive
Chicago, IL 60606
Phone: (312) 782-0600
Fax: (312) 706-8689
msullivan@mayerbrown.com
Len G. Briley, Jr.
State Bar No. 00783723
AT&T Legal Department
1010 N. St. Mary’s St., 14th Floor
San Antonio, Texas 78215
Phone: (210) 351-4832
Fax: (210) 886-2127
len.briley@att.com
12
J. David Tate
Katherine C. Swaller
Thomas Ballo
AT&T Legal Department
816 Congress Avenue, Suite 1100
Austin, Texas 78701
Phone: (512) 457-2304
Fax: (512) 870-3420
jon.david.tate@att.com
katherine.swaller@att.com
thomas.ballo@att.com
Attorneys for AT&T Texas
/s/ Valerie P. Kirk
Valerie P. Kirk
State Bar No. 11516900
Melissa Lorber
State Bar No. 24032969
ENOCH KEVER PLLC
600 Congress Ave., Suite 2800
Austin, Texas 78701
Phone: (512) 615-1200
Fax: (512) 615-1198
vkirk@enochkever.com
mlorber@enochkever.com
John Davidson Thomas
J. Aaron George
SHEPPARD MULLIN RICHTER &
HAMPTON LLP
2099 Pennsylvania Ave. NW, Suite 100
Washington, DC 20006
Phone: (202) 747-1900
Fax: (202) 747-1901
dthomas@sheppardmullin.com
ageorge@sheppardmullin.com
Attorneys for Time Warner Cable Texas
LLC
13
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of this document was served
electronically and/or by regular U.S. mail upon the following attorneys of record
on this 8th day of May, 2015.
/s/ Len G. Briley, Jr.
Counsel for Public Utility Commission Counsel for CPS Energy:
of Texas:
Douglas Fraser Curt D. Brockmann
Megan M. Neal CPS Energy
Office of the Attorney General 145 Navarro
P.O. Box 12548, Capitol Station P.O. Box 1771
Austin, Texas 78711-02548 San Antonio, TX 78296
Phone: (512) 463-2012 Phone: (210) 353-5689
Fax: (512) 457-4610 Fax: (210) 353-6832
douglas.fraser@texasattorneygeneral.gov cdbrockmann@cpsenergy.com
megan.neal@texasattorneygeneral.gov
Alfred R. Herrera
HERRERA & BOYLE, PLLC
816 Congress Avenue, Suite 1250
Austin, TX 78701
Phone: (512) 474-1492
Fax: (512) 474-2507
aherrera@herreraboylelaw.com
14