Untitled Texas Attorney General Opinion

The Attorney General of Texas
May 7, 1981

MARK WHITE
Attorney General

Honorable James E. Nugent Opinion No. MW-335
Chairman
Railroad Commission of Texas Re: Whether an individual citizen
P. 0. Box 12967 ratepayer may appeal from a
Austin, Texas 78711 municipal gas rate ordinance as a
party under section 26(a) of article
1446c, V.T.C.S.

Dear Chairman Nugent:

You have asked the following questions:

1. May an individual citizen ratepayer appeal
from a municipal gas rate ordinance as a “party to a
rate proceeding before the governing body of a
municipality” under section 26(a), article 1446c,
V.T.C.S., or is such individual limited to the appellate
procedure set forth in section 26(b)?

2. If said individual can appeal from a municipel
gas rate ordinance under section 26(a), is such appeal
dependent upon a showing of special injury not
common to other ratepayers?

3. If said individual can appeal from a municipal
gas rate ordinance under section 26(a), can said
individual, without formal party designation by the
city council, attain party status within the meaning
of section 26(a) through active participation before
the city council, i.e., by submitting written state-
ments of position, cross-examining utility witnesses,
and engaging in informal discovery with the utility?

The facts are as follows: after considering on nine occasions a
proposal for a rate increase submitted by Entex, Inc., the San Marcos city
council passed a rate ordinance setting Entex’s rates. Thereafter, a San
Marcos resident contested the ordinance by filing with the Railroad
Commission an instrument entitled “In re: The Appeal of Lena Green, on
behalf of Residential Consumers of Natural Gas Services Supplied by Entex,
Inc., in the City of San Marcos, from action by the City of San Marcos,
Texas.” This instrument alleged that the commission had jurisdiction to

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entertain the appeal wider article 1446c, section 26(a), V.T.C.S. (The Public Utility
Regulatory Act, or “PURA”), which provides that:

(a) Any party to a rate proceeding before the governing
body of a municipality may appeal the decision of the governing
body to the commission or railroad commission.

The ratepayer had not complied with section 26(b), which provides that:

(b) Citizens of a municipality may appeal the decision of
the governing body in any rate proceeding to the commission or
railroad commission through the filing of a petition for review
signed by the lesser of 20,000 or 10 percent of the number of
qualified voters of such municipality.

Entex filed a plea to the jurisdiction of the Railroad Commission asserting that
the ratepayer lacked standing to appeal under section 26(a) because she was not a
“party” to the rate proceeding. The stipulated facts reveal that although Ms. Green’s
attorney participated in several council hearings on the Entex matter, no motion
requesting intervention as a party to the proceeding was filed with the city council and
the ratepayer’s name does not appear in the minutes of the council hearings Because
the ratepayer was not an original party to the proceeding and was not later designated
as a party by the city council, Entex contends that she is not a party under section
26(a). Ms. Green, on the other hand, takes the position that active participation in the
proceeding before the council is sufficient to confer party status upon her.

Your fist question is whether a citizen ratepayer may appeal from a municipal
gas rate ordinance as a “party” under section 26(a) or whether such individual is in all
. instances limited to the appellate procedure set forth in section 26(b). We do not think
the legislature intended to preclude citizens from ever qualifying as parties and are
therefore of the opinion that a citizen may qualify as a party and appeal under section
26(a). The critical inquiry concerns the criteria that must be satisfied in order for a
citizen to become a party within the meaning of that section.

The PURA does not define the term “party. I’ However, section 4 of article 1446~
states that “[tl he Administrative Procedure and Texas Register Act applies to all
proceedings under this Act except to the extent inconsistent with this Act.” The
Administrative Procedure and Texas Register Act (hereinafter “APTRA”) defines a
‘party” as “each person or agency named or admitted as a party.” V.T.C.S. art. 6252-
13a, S3(5). Considering these sections together, we conclude that the definition of
“party” in APTRA also applies to the PURA; accordingly, a “party” under section 26(a)
is “each person or agency named or admitted as a party. I’ In this context, we note that
although APTRA does not apply to proceedings before municipal governing bodies, we
are concerned with determining who may appeal decisions of those bodies to the Public
Utilities Commission or to the Railroad Commission, which are governed by APTRA.

Having concluded that a “party” is “each person or agency named or admitted as
a party,” we must ascertain the meaning of the phrase “named or admitted.” May an

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Honorable James E. Nugent - Page Three (~9-335)

individual not originally named as a party to a proceeding be “admitted” as a party only
by formally requesting and receiving designation as a party by the governing body? Or
may one become a party through active participation in the proceeding?

Absent any indication of the meaning of “named or admitted as a party” in either
the PURA or APTRA, we must resort to outside sources to assist us in determining the
meaning that the le&lature most likely intended to ascribe to the phrase. See
Huntsville Ind. School District v. McAdams, 221 S.W. 2d 546 (Tex. 1949). One such
source is case law. Texas case law, however, affords little help in this inquiry.
Several cases have dealt with attempts bv citizen rateoavers to aooeal municioal rate
ordinances, see e. San Antonio Independent School Di.&rict v. City of San Antonio,
550 S.W. 2d --Y
262 Tex. 1976); Tuck v. Texas Power and Light Co., Inc., 543 S.W. 2d 214
(Tex. Civ. App. - Austin 1976, writ refd n.r.e.); Schenker v. City of-San Antonio, 369
S.W. 2d 626 (Tex. Civ. App. - San Antonio 1963, writ rePd n.r.e.1, but these cases
involved attempted appeals to the courts rather than to administrative agencies.
Moreover, each case was decided on the basis of whether the complainant had
exhausted his administrative remedies, was a proper representative ln a class action,
or had a justiclable interest in the controversy sufficient to permit suit in state court.
In our view, they offer little help in determining what the legislature intended when it
authorized appeak to the Public Utility Commission or the Railroad Commission by
persons “named or admitted as a party” to a rate proceeding.

State v. Gutschke, 233 S.W. 2d 446 (Tex. 1950), is cited in the briefs submitted to
us for the proposition that the failure to file pleadings or to otherwise indicate a desire
to become a party at the municipal level &es not preclude an individual from
qualifying as a “party” under section 26(a). In Guts&&e, a county judge denied an
application for a retailer’s on-premises beer license and the applicant appealed under
former article 667-6 of the Penal Code. The district court granted the application,
and the Texas Supreme Court held that the citizen-protestants could challenge that
ruling in the Court of Civil Appeals. The court noted that article 667-6 “evidently
contemplates that [proceedings before the county judge1 shall be of less than judicially
formal character, without requirement of any written. . . pleadings [as al prerequisite
to. . . becoming a party to the cause. . . .‘I 233 S.W. 2d at 448.

In our opinion, however, Gutschke is not dispositive of the issue before us. First,
article 667-6 set up an entirely different regulatory scheme and employed different
terminology than that involved in the PURA, which was enacted 25 years later. This is
important in view of the Gutschke court’s emphasis upon the fact that its decision
turned upon the precise wowarticle 667-6. Second, the significance, if not the
validity, of Gutschke has since been undercut by the Texas Supreme Court’s decision in
Stone v. Texas Liquor Control Board, 417 S.W. 2d 385 (Tex. 1967L Stone, which also
construed former article 667-6, pointed out that Gutschke did “not hold that the
statutory authorization to participate in the hearingthe county judge carries
with it the right of appeal to the courts” 417 S.W. 2d at 386. Whatever limited
assistance Gutschke might have provided in this inquiry has, in our view, been eroded
by the Stone decision.

The federal counterpart to APTRA, the Administrative Procedure Act, 5 U.S.C.
sections 551-576 define a “party” as:

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Honorable James E. Nugent - Page Four (~~-335)

. . . a person or agency named or admitted as a party, or
properly seeking and entitled as of right to be admitted as a
party, in an agency proceeding, and a person or agency admitted
by an agency as a party for limited purposes. (Emphasis addedX

Section 551(3). Unfortunately, the Administrative Procedure Act also falls to shed any
light on the meaning of the phrase “named or admitted as a party.” Federal case law
does indicate that federal courts have expanded the class of persons who may
intervene as parties in administrative proceedings and have allowed agencies broad
discretion in determining whom they will admit as interveners, see Office of
Communication of United Church of Christ v. P.C.C., 359 F. 2d 994 (Dx. m
appeal after remand, 425 F. 2d 543 (D. C. Cir. 1969), but the cases do not indicate
whether formal designation by an agency is an absolute prerequisite to becoming an
intervenor party.

In its brief, counsel for Entex asserts that:

[Tl he requirement that parties be expressly named or
expressly admitted in pleadings (is] important and obvious.
Otherwise, others in the proceeding would be unable to
determine from the record who their adversaries are or whether
the adversaries are in fact entitled to intervene. Indeed, if
named parties are unable to determine who the proposed
lntervenors are, then the named parties would be unable to even
object to the admission of interveners. Further, the tribunal
itself may be unable to determine the identity of the parties; a
test based upon the degree of participation in a given instance
would lead to situations, such as this one, in which there is a
serious fact issue of whether a person is a party.

Brief for Entex, at page 12. Counsel also correctly pointed out that both the Railroad
Commission and the Public Utility Commission require formalized pleadings in their
administrative hearings See 4 West’s Texas Forms Administrative Practice and
Procedure S36.52 (1977); 5 West’s Texas Forms Administrative Practice and Procedure
B7 . 95 (m77). On the other hand, the hearing examiner in this case, while he did not
agree that the degree of participation in a proceeding should necessarily determine
whether a person has been admitted as a party, did observe that the degree of
participation by Ms. Green’s attorney was such that Entex could not claim surprise and
concluded that equity dictated a jurisdictional finding in her favor. It is important to
note, however, that the hearing examiner also stated that normally “it is incumbent
upon a participant desiring party status to do all things necessary to insure a
determination of that status, particularly when all that is required is a simple oral or
written motion.” Railroad Commission Jurisdictional Ruling, Docket No. 1907, at 5-6,
January 3, 1980.

After reviewing the available authorities and considering the briefs submitted in
this case, we conclude that the legislature, ln employing the phrase “named or
admitted as a party,” most likely intended that an individual not originally named as a

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Honorable James E. Nugent - Page Five (m-335)

party to a rate proceeding before a municipal governing body may be “admitted” as a
party only if he requests party status and is then designated as a party by the
governing body. Mere participation in the proceeding, in other words, is insufficient to
confer party status upon an individual such as the ratepayer in this case. One desiring
party status must request the governing body to confer such status upon him, and that
body may then accept or reject such request in accordance with its own rules.

This interpretation fathers the legislature’s intent as we perceive it. If a
ratepayer could qualify as a party merely by participating in rate hearings before
municipl governing bodies, the express requirements of article 1446c, section 26(b),
V.T.C.S., would, in an instance such as this, be abrogated. There would be no reason
for a ratepayer to attempt to comply with the petition requirements of section 26(b) if
he could accomplish the same result by appearing at council meetings and thereafter
filing an “appeal on behalf of residential consumers.” Additionally, if “degree of
participation” is to be the applicable standard in determining whether an individual has
attained party status, each case would ultimately require a decision after the fact as
to whether enough participation had occurred. Finally, allowing an individual to
become a party through active participation would mean that the governing body would
have little control over who could intervene as a party. We therefore answer your
third question in the negative.

The remaining question is whether an appeal under article 1446c, section 26(a),
V.T.C.S., is further dependent upon a showing of special injury not common to other
ratepayers.

Prior to the enactment of the PURA, courts held that ratepayers had no standing
to challenge in the courts utility rates set by a governing bcdy when the ratepayer
could not show any damage peculiar to himself. Tuck v. Texas Power and Light Co.,
Inc., supra; Schenker v. City of San Antonio, supra; Hazelwood v. City of Cooper, 87
S.W. 2d 7767Tex. Civ. App. - Texarkana 1935, writ rePd). These holdings were based
on the principle that the complaining party must have a justiciable interest in the
controversy distinguishable from the public in generaL It has abo been held in motor
carrier cases that a right to appeal presupposes standing to appeaL Lake Transport,
Inc. v. Railroad Commission of Texas, 505 S.W. 2d 781 (Tex. 1974); Permian Basin
Coaches, Inc. v. Railroad Commission of Texas, 531 S.W. 2d 374’!(Tex. Civ. App. -
Austin 1975, no writ).

These cases, however, involved attempts to obtain judicial review of final agency
action, rather than agency review of action taken by a munlctpal governing body. We
have found no authority for the proposition that an individual must demonstrate
specialized injury in order to have standing to appeal in the latter instance. On the
contrary, language in a recent court of civil appeals decision bolsters the view that the
opposite is true. In Hooks v. Texas Department of Water Resources, 602 SW. 2d 389,
391-92 (Tex. Civ. App - Austin 19801, rev’d on other grounds, 611S.W. 2d 417 (Tex. 19811,
the court stated that:

There is a distinction between the right to participate ln an
administrative proceeding and the right to a judicial review of

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Honorable James E. Nugent - Page Six (Mu-335)

final agency action. Stone v. Texas Liquor Control Board, 417
S.W. 2d 385 (Tex. 1967). The necessity of a justiciable interest
has loig been recognized in obtaining judicial review of
administrative action.

The Texas Supreme Court haa, moreover, recently cast some doubt on the
question of whether a party must even demonstrate special injury in order to be
entitled to judicial review of agency action under the PURA. In City of Houston v.
610 S.W. 2d 732 (Tex. 1980), which refused writ of error,
f Houston v. Public Utilities Commission, 599 S.W. 2d 667
, the Supreme Court stated that:

In refusing the City’s application for writ of error, no reversible
error, our action is not to be interpreted as approving or
disapproving the holding of the court of civil appeals that a
party must demonstrate “special injury” to be entitled to
judicial review under the Public Utility Regulatory Act.

We have observed that section 26(a) of the PURA states that “[al ny party to a
rate proceeding before the governing body of a municipality may appeal the
decision. . . to the commission or railroad commission.” Neither this section, the
remaining sections of the PURA, nor the Administrative Procedure and Texas Register
Act expressly limit the right of someone who has qualified as a party under section
26(a) to appeal a municipal governing body’s decision to either commission. We decline
to read into section 26(a) an additional requirement that in order to appeal to either
commission, an individual must demonstrate some special injury, especially in light of
the Supreme Court’s recent decisions in City -of Houston vi Public Utilities
Commission, supra, and Hooks v. Texas Department of Water Resources, supra We
therefore answer your second question in the negative.

SUMMARY

An individual citizen ratepayer may appeal from a municipal
gas rate ordinance as a “party to a rate proceeding before the
governing body of the municipellty” provided he was originally
named 8s a party to the proceeding or was subsequently
admitted as a party by the governing body. An individual may
not attain party status merely by participating actively in the
proceeding before the city council. Once an individual has been
named or admitted as a party at the municipal level, his right to
appeal under section 26(a) is not further dependent upon a
showing of special injury not common to other ratepayers.

MARK WHITE
Attorney General of Texas

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Honorable James E. Nugent - Page Seven (~~-335)

JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY III
Executive Assistant Attorney General

Prepared by Jon Bible
Assistant Attorney General

APPROVED:
OPINION COMMlTTEE

Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Bruce Youngblood

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