PUCT Staff Opposes Glacial Request for Stay of Revocation Proceeding

Staff of the Public Utility Commission of Texas has opposed Glacial Energy of Texas, Inc.'s request for a stay of a PUCT proceeding (see 1/10) concerning a Notice of Violation and petition for revocation of the Glacial REP certificate, and Staff also offered a statement of position on Glacial's application for injunctive and declaratory relief in Travis County District Court.

Glacial had moved for the PUCT to stay the revocation proceeding pending resolution of its suit for temporary and permanent injunction against enforcement of the NOV (see 1/24).

Staff notes that Tex. Gov't Code §2001.038, under which Glacial's suit was brought, may not be used to delay or stay a hearing in which a suspension, revocation or cancellation of a license by a state agency is at issue before the agency after notice of the hearing has been given.

Notice of hearing had not been given prior to Glacial's filing of the suit, but Staff says this is because Glacial filed the district court action before it requested a hearing, and prior to its deadline to request a hearing before the Commission.

"Staff finds that this provision demonstrates that a request for declaratory action should not be strategically used to collaterally attack and delay the enforcement functions of a state agency tasked with the regulation of a particular industry. The fact that a hearing on the merits is not yet scheduled simply underscores that there is no imminent harm at issue in this matter. Should the district court determine it will issue a declaratory ruling regarding the constitutionality of the Commission's substantive rules, the proceedings may run concurrently with the Commission's adjudication of Staff's NOV and Petition for Revocation," Staff said.

Furthermore, Staff argues that Glacial's request for declaratory relief is based on a mischaracterization of Staff's purported application of P.U.C. Subst. R. 25.107(g)(1)(D).

Glacial asserts that the application of P.U.C. Subst. R. 25.107 contemplated under the NOV is an, "impermissible retroactive application of law." because Glacial received its REP certification under the prior certification rules, as they existed in 2006.

Staff responded that, "Staff's NOV and Petition for Revocation relating to violations of P.U.C. Subst. R. 25.1 07(g)(1)(D) are strictly related to Glacial's failure to achieve compliance with the commission's rules by the end of the grace period, from April 23, 2010 to the present time. Staff does not allege Glacial violated the rule prior to its effective date, nor does it seek to impose any penalty for that time period."

"This does not constitute 'retroactive application' of the rule in violation of the Texas Constitution because the rule is being applied prospectively rather than retroactively to all REPs," Staff said.

"This rule, like a multitude of rules enacted by the Commission, simply places another condition that must be satisfied to maintain a REP license in Texas; it does not, however, constitute retroactive application of commission rules," Staff said.

Glacial has further argued that the application of Subst. R. 25.1 07(g)(1)(D) under the NOV would adversely affect Glacial's "long-standing, vested property rights," contrary to the Texas Constitution.

However, Staff countered that its petition for revocation, "seeks to revoke [the] Glacial REP license, not to force Glacial's representative, Gary Mole, to divest his interest in Glacial to comply with the 10% ownership limitation," and thus Staff is not attacking a vested right.

"Mr. Mole is free to own 100% of Glacial and conduct business in any area that does not require a REP license in Texas. While the Commission's rules and requirements for continued possession of a REP license are not agreeable to Mr. Mole, they do not implicate a vested property right. A license is a mere expectation and is granted for the purpose of regulation. It is a mere personal privilege and is, in its nature, a temporary or revocable permission. The sale of electricity is subject to the Commission's oversight and enforcement pursuant to PURA. The Commission may suspend, revoke, or amend a REP certification for significant violations of PURA or the rules adopted under PURA. As such, there is not a vested property right; a REP license is, at best, an expectation that is temporary and revocable. Accordingly, the revocation of a REP license does not impermissibly affect Glacial's vested rights nor does it constitute an impermissible retroactive application of P.U.C. Subst. R. 25.107," Staff said (emphasis in original).

With regard to Glacial's petition for injunctive and declaratory relief, Staff asserts that the appropriate manner to challenge the interpretation and application of the substantive rules is through a Certified Issue to the Commission. Staff also argued that Glacial's challenge to the validity of P.U.C. Subst. R. 25.107's ownership limitations is out of time and should be dismissed, and that Glacial's challenge to the application of P.U.C. Subst. R. 25.107 is not ripe until the Commission has addressed this issue.