A divided 15th Court of Appeals has dismissed a utility’s petition for judicial review of a PUC rate order on the basis that the utility didn’t file a second motion for rehearing after the agency, in response to the utility’s original motion for rehearing, made some requested non-substantive changes but did not address the disallowances that were the subject of the utility’s original motion and its subsequent appeal to district court.
Oncor Electric Delivery Company LLC v. Public Utility Commission of Texas (No. 15-24-00042-CV; August 14, 2025) arose from a rate case. In 2022 Oncor filed a petition with the PUC requesting a 4.5% rate increase. A panel of ALJs held a hearing and issued a proposal for decision recommending a decrease in Oncor’s requested annual base rate revenue. Oncor and several intervenors filed exceptions. After lengthy public discussion, the PUC split the baby, awarding Oncor a smaller increase than it asked for but still greater than the ALJs’ recommendation. Oncor timely filed a motion for rehearing challenging certain disallowances. The PUC voted to grant Oncor’s motion in part, agreeing to make “technical corrections” to its order’s findings of fact and conclusions of law, but denying rehearing of its decision on the disallowances. Oncor filed a petition for judicial review in a Travis County district court. The PUC moved to dismiss for lack of jurisdiction because Oncor didn’t file a second motion for rehearing. Oncor responded that it wasn’t required to do that because the PUC’s order on rehearing “did not address substantive issues raised by Oncor in its first motion for rehearing and in its petition for review.” The trial court agreed with the PUC, granted the plea, and dismissed Oncor’s petition. Oncor appealed.
In an opinion by Justice Field, joined by Houston [14th] Court of Appeals Chief Justice Christopher (sitting by assignment), the court of appeals affirmed. The question was whether Oncor had to file a second motion for rehearing in order to exhaust administrative remedies and demonstrate subject-matter jurisdiction in its petition for judicial review of PUC’s order on rehearing. Under § 2001.146(h)(1), Government Code (Administrative Procedures Act), a subsequent motion for rehearing is not required after an agency ruling on the motion unless the order “modifies, corrects, or reforms in any respect the decision or order,” other than correcting typos, grammatical, or other clerical changes identified by the agency in the order, “including any modification, correction, or reformation that does not change the outcome of the contested case[.]” Oncor first argued that the PUC’s changes in the order on rehearing were clerical in nature and thus exempted from the statutory requirement of a second motion for rehearing. The PUC countered that “a second motion for rehearing is required any time the agency modifies, corrects, or reforms its order in any respect,” except clerical errors specifically designated by the agency as such. The court agreed, pointing to the plain language of the statute, which requires the agency to identify the “typographical, grammatical, or other clerical change” that the agency makes in the order. Although the commissioner who made the changes referred to them as assuring the “accuracy” of the order, neither he nor the order said anything about clerical errors, so that’s the end of the inquiry.
Oncor then argued that the PUC’s order on rehearing didn’t “modify, correct, or reform” the “decision or order that is the subject of the complaint” and that the agency’s changes “did not change the ultimate outcome of the case.” But, as the court pointed out, the statute requires a second motion for rehearing if the agency “modifies, corrects, or reforms in any respect the decision or order that is the subject of the complaint . . ., including any modification, correction, or reformation that does not change the outcome of the contested case.” Put another way, it doesn’t matter whether the agency’s modifications change the outcome, only that the agency modified the order in “a non-clerical way.” Oncor argued that if the order on rehearing doesn’t modify the specific portions of the order that it challenged in the first motion, it doesn’t have to file a second motion as to those portions of the order. The court didn’t buy it because the statute clearly precludes such a reading by using the term “the subject of the complaint,” meaning that, as Justice Field wrote, “the operative consideration in deciding whether a party must file a second motion for rehearing is whether the party made a particular complaint in its motion for rehearing and then whether the agency modified its initial decision or order in any respect on the subject matter of that complaint.”
Oncor asserted that since its motion for rehearing sought only changes to the ALJs’ findings of fact and conclusions of law for the sake of “accuracy” and not on any issues for which it intended to seek judicial review, the statute didn’t require a second motion. Again, based on the plain text of the statute, the court ruled that “if a party moves for rehearing and the agency modifies its decision or order in any respect, even favorably, on the subject of a complaint made in that motion for rehearing, then the party must file a second motion for rehearing to preserve its right to judicial review.” In this case, “Oncor moved for rehearing, and it is undisputed that the PUC modified its Initial Order on a subject raised in that motion by modifying its order favorably to Oncor in some respects and not modifying it in other respects.” The statute thus required a second motion, which Oncor didn’t file. Case dismissed.
Justice Farris dissented. She read the statute to “establish[] a default rule that a subsequent motion for rehearing is not required.” The Legislature than created two exceptions to that rule, one of which is the subject of this dispute (the other requires a second motion if the agency’s order disposing of the original motion for rehearing vacates the decision or order and substitutes a new decision or order). According to Justice Farris, the majority’s reading permits “the exception to swallow the rule” since it effectively mean that a party will always have to file a second motion if the agency makes any modifications, whether substantive or not. In her reading of the statute, since the PUC made no changes to its initial order with respect to individual decisions Oncor complained of in its original motion. Oncor didn’t challenge the entire order, only parts of it. It shouldn’t have to file a second motion for rehearing when the agency decided not to reconsider the challenged decisions. If the purpose of a motion for rehearing, Justice Farris added, is to put the agency on notice of the complainant’s disagreement with parts of an order and the agency doesn’t do anything about it, requiring the complainant to repeat the same allegations in another motion is futile.
As in the sovereign immunity case we reported yesterday, the court of appeals’ division on an important matter of statutory construction means that this case will shortly be winging its away to SCOTX.
