DECLARATORY JUDGMENTS UNDER THE TEXAS ADMINISTRATIVE
PROCEDURE AND TEXAS REGISTER ACT: AN
UNDERUTILIZED WEAPON
Brian D. Shannon·
I.
II.
III.
60 I
12 ..... 603
INTRODUCTION.............. • • . . • . • . • . • • • • • • • • • • • • • • • ••
THE GENERAL ApPLICATION OF APTRA SECTION
BYPASSING THE AGENCY TO CONTEST AN AGENCY RULE:
607
Rutherford Oil and the Focus on Existing Rules
607
B. The Local Telephone Exchange Seroice Cases: An Improper
Application of the Primary Jurisdiction Doctrine? . . . . . . . .. 615
THE PROPER TIME TO PURSUE A SECTION 12 ACTION •••• 622
CONCLUSION... . • . • . • . • . • • • • . . . . . • . . • . . . . . . . . . . . . . . . . .. 628
AN EXAMINATION IN THE CONTEXT OF RECENT CASES ..••
A.
IV.
V.
I.
INTRODUCTION
Possibly in no branch oflitigation is the declaration more
useful than in the relation between the citizen and the administration. With the growing complexity of government
and the constantly increasing invasions of private liberty,
with ever widening powers vested in administrative boards
and officials, the occasions for conflict and dispute are rapidly augmenting in frequency and importance. Yet the very
fact that such disputes turn mainly upon questions of law,
involving the line marking the boundary between private
liberty and public restraint, between private privilege and
immunity, on the one hand, and public right and power, on
the other, makes this field of controversy peculiarly susceptible to the expeditious and pacifying ministrations of the
declaratory judgment. 1
Although Professor Borchard, who was one of the drafters of the
Uniform Declaratory Judgments Act,2 wrote these words many years
prior to the virtually unbounded expansion of federal and state
agencies' involvement in public law, his comments both presaged
that growth and reflected a thoughtful analysis of the usefulness of
declaratory judgments in the administrative arena. Now, almost fifty
• Assistant Professor of Law, Texas Tech University; B.S., Angelo State University
(1979); J.D.• University of Texas (1982). The author would like to express appreciation
to Alexander N. von Kreisler and Michelle P. Webb for research assistance.
'E. BORCHARD, DECLARATORY JUDGMENTS 875 (2d ed. 1941).
, See id. at iii.
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years later, section 12 of the Administrative Procedure and Texas
Register Act 3 encompasses the themes stated by Professor Borchard
and evidences a legislative intent that dec;:laratory judgments are to
be utilized in Texas in challenges to administrative actions. Despite
this legislative recognition of a policy favoring the use of declaratory
judgments in connection with administrative actions, practitioners
have seemingly underutilized this beneficial legal tool.
Section 12 of APTRA permits a plaintiff to seek and obtain a judicial declaration as to either the validity or the applicability of a state
administrative rule without first having to approach the agency.4 Almost a decade ago, a segment of a comprehensive legal commentary
addressing APTRA suggested that although section 12 could be a
"valuable and efficient tool," the section had "been largely ignored
by Texas practitioners."5 Although there has been additional scholarly analysis of section 12 since that statement was made,6 there is
little to indicate that Texas practitioners are making use of this valuable tool.
The bulk of the commentary on section 12 has focused on a litigant's ability to attack the validity of an agency rule and the standard
of review for such challenges;7 however, the ability of a litigant to
seek a judicial declaration concerning the applicability of a state administrative rule to that person,s or to other issues concerning both
standing and the timing of declaratory judgment cases in administrative actions has received little attention. This article will probe
'TEX. REV. CIV. STAT. ANN. art. 6252-13a (Vernon Supp. 1989) [hereinafter APTRA].
'Id. § 12. Section 12 of APTRA provides the following in pertinent part:
The validity or applicability of any rule. including an emergency rule ... may
be determined in an action for declaratory judgment in a district court ofTravis
County, and not elsewhere, if it is alleged that the rule, or its threatened application, interferes with or impairs. or threatens to interfere with or impair, the
legal rights or privileges of the plaintiff. The agency must be made a party to
the action. A declaratory judgment may be rendered whether the plaintiff has
requested the agency to pass on the validity or applicability of the rule in question. However, no proceeding brought under this section may be used to delay
or stay a hearing after notice of hearing has been given if a suspension. revocation, or cancellation of a license by an agency is at issue before the agency.
Id.
.•Shannon & Ewbank, The Texas Administrative Procedure and Texas Register Act Since
1976-Selected Problems, 33 BAYLOR L. REV. 392,421 (1981).
"See Beal, The Scope ofJudicial Review ofAgency Rulemaking: The Interrelationship ofLegislating and Rulemaking in Texas, 39 BAYLOR L. REV. 597 (1987); Watkins & Beck,Judicial Review of Rulemaking Under the Texas Administrative Procedure and Texas Register Act, 34 BAYLOR
L. REV. 1 (1982).
7 See generally Shannon & Ewbank, supra note 5, at 426-34; Beal, supra note 6; Watkins
& Beck. supra note 6.
"!Jut see Shannon& Ewbank, supra note 5, at 421-25.
1989]
DECLARATORYJUDGMENTS
603
the worthiness of section 12 as a tool for the litigant in challenging
the application or threatened application of administrative rules by
state agencies and suggest that practitioners are possibly overlooking a particularly efficacious method of protecting a client's best
interests. 9
II.
THE GENERAL ApPLICATION OF APTRA SECTION
12
The Texas APTRA was enacted lO primarily to provide a uniform
system of practice and procedure for state administrative agencies. I I
APTRA contains two distinct judicial review provisions applicable to
administrative agency actions: section 19, providing for the review
of contested cases, and section 12, governing the review ofrulemaking. A contested case is defined as "a proceeding, including but not
restricted to ratemaking and licensing, in which the legal rights, duties, or privileges of a party are to be determined by an agency after
an opportunity for adjudicative hearing."12 Section 19 then
prescribes a detailed method of judicial review of contested cases
and meticulously delineates the scope and standards of judicial review.J 3 By way of contrast, section 12 specifically permits a plaintiff
"As a necessary incident to addressing the utility of seeking declaratory judgments
regarding the application of administrative rules, this article will, in part, venture into
the subject of challenges to the validity of those rules. In particular, this article will
focus attention on problems encountered in several recent cases construing section 12
and other problems that have not been addressed by the courts.
10 APTRA became effective as ofJanuary I, 1976. See APTRA § 23.
"/d. § I. The purpose of APTRA is set forth in section I:
It is declared the public policy of this state to afford minimum standards of
uniform practice and procedure for state agencies, to provide for public participation in the rulemaking process, to provide adequate and proper public notice
of proposed agency rules and agency actions through publication of a state
register, and to restate the law ofjudicial review of agency action.
Id. See also Shannon &: Ewbank, supra note 5 (noting the purpose of APTRA and that the
Act is modeled after the 1961 REVISED MODEL STATE ADMINISTRATIVE PROCEDURE ACT).
'" APTRA § 3(2) (emphasis added). Thus, these procedures arise in matters contested
before the agency. In contrast, the procedures under section 12 arise in connection with
general rulemaking by an agency and the agency's application, or threatened application, of rules to individuals. The Act defines a "rule" as "any agency statement of general applicability that implements, interprets, or prescribes law or policy, or describes
the procedure or practice requirements of an agency/' but excluding "statements concerning only the internal management or organization of any agency and not affecting
priv.ate rights or procedures." APTRA § 3(7).
"See APTRA § 19. In particular, APTRA § 19(e) provides that with respect to the
judicial review of contested cases, administrative findings, inferences, conclusions, or
decisions can be struck down if they are:
(I) in violation of constitutional or statutory provisions;
(2) in excess of the statutory authority of the agency;
(3) made upon unlawful procedure;
(4) affected by other error of law;
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to seek a declaratory judgment concerning a rule without having to
ask the agency to pass on the matter, yet section 12, by its terms,
provides no guidance for judicial review of the rules challenged pursuant to the section. 14 There has been a paucity of reported decisions by the Austin Court of Appeals interpreting section 12,15 and
the Texas Supreme Court has yet to render a decision that explores
the issues in a section 12 case.
As in any lawsuit, the petitioner in a section 12 declaratory judgment action must demonstrate that he has sufficient standing to
maintain the action. To satisfy the standing requirements under
section 12, the petitioner must show some affirmative act by which
the agency has applied or threatened to apply an existing rule to the
party that would adversely affect the person's legal rights or privileges. 16 Section 12, however, probably will not permit mere interested parties to seek a declaratory judgment concerning a rule. 17 In
this regard section 12 is somewhat at variance from, and narrower
than, the provisions of the Uniform Declaratory Judgments Act,18
which permit a person "whose rights, status, or other legal relations
are affected by a statute, municipal ordinance, contract, or franchise"
to pursue a declaratory judgment action. 19
(5)
not reasonably supported by substantial evidence in view of the reliable
and probative evidence in the record as a whole; or
(6) arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.
[d. See also Watkins & Beck, supra note 6, at 1-2 & 24-25.
'"'APTRA § 12.
"Given that APTRA § 12 requires that any cases under its provisions be filed in the
district court of Travis County, all appeals involving the statute must be heard by the
Austin Court of Appeals.
"'See State Bd. of Ins. v. Deffebach, 631 S.W.2d 794, 797 (Tex. App.-Austin 1982,
writ ref'd n.r.e.); see also Shannon & Ewbank, supra note 5, at 422; and in.Jra notes 111-15
and accompanying text.
"See Shannon & Ewbank, supra note 5, at 422 n.195; see also infra notes 112-15 and
accompanying text.
.
'"TEX. CIV. PRAC. & REM. CODE ANN. §§ 37.001-.011 (Vernon 1986) [hereinafter Uniform Declaratory judgments Act].
'" [d. § 37.004(a). Thus, a person whose rights are affected by some agency action that
has been taken under the agency's alleged statutory authority could pursue an action
under the Uniform Declaratory judgments Act, but would not be able to pursue a section 12 action unless the agency were also applying or threatening to apply one of its
rules to that person. Cf Armentrout v. Texas Dep't of Water Resources, 675 S.W.2d
243 (Tex. App.-Austin 1984, no writ) (although the court of appeals upheld the district
court's denial of a declaratory judgment after finding no abuse of discretion, the court
recognized that the operator of a public project could pursue a challenge of an agency
order under the Uniform Declaratory judgments Act merely because of the public interest involved; although not an issue in the case, there would not have been sufficient
standing for section 12 action because of the lack of any issue of rule applicability or
validity-an agency order was at issue, not a rule). On the other hand, if a rule has been
1989}
DECLARATORYJUDGMENTS
605
A declaratory judgment suit filed under section 12 must also present an existing "case or controversy." Such was at issue in a challenge to a rule's validity in Texas Parks & Wildlife Department v. Texas
Association ofBass Clubs, 20 a case in which the petitioners claimed that
the agency had promulgated rules in violation of the rulemaking
procedures of APTRA.21 In that case the agency was concerned
about the control of an aquatic weed, hydrilla, in Lake Conroe, so
the agency amended certain rules to permit stocking the lake with
grass carp, a fish renowned for its hydrilla consumption. 22 The petitioners then challenged the rule under section 12 by alleging that
there had been an irregularity in the hearing which led to the adoption of the rule. 23 Although the district court agreed and declared
that the rule was voi<:i,24 on appeal the court learned from the parties that the Legislature had enacted a bill specifically allowing the
use of grass carp in Lake Conroe. 25 Nonetheless, the petitioners
argued that the appeal should not be considered moot because,
although the new statute applied only to Lake Conroe, the agency's
new rule had statewide application. 26 The court of appeals, however, refused to permit the declaratory judgment rendered by the
district court to stand on those grounds and held that the "validity
of the rule and any future permit can be challenged at that time
[presumably when issued]. Courts are not empowered to decide
cases predicated on future contingencies."27 Thus, the lesson to be
implicated and the agency has threatened to apply that rule, then section 12jurisdiClion
should certainly be presem.
c"622 S.W.2d 594 (Tex. App.-Austin 1981, writ ref'd n.r.e.).
•,/d. at 595. Section 5 of APTRA requires that "[p]rior to the adoption of any rule, an
agency shall give at least 30 days' notice of its imended action. Notice of the proposed
rule shall be filed with the secretary of slate and published ... in the Texas Register."
APTRA § 5(a). The section also sets forth the information that must be included in the
notice. ld. Moreover, section 5 requires that "an agency shall afford all interested persons reasonable opportunity to submit data, views, or arguments, orally or in writing"
and that public hearings are to be held in certain circumstances. /d. § 5(c). For an excellem discussion of these requiremems, see Beal, supra note 6, at 638-46.
'"622 S.W.2d at 595. The agency had to amend rules that previously restricted the
grass carp to public aquaria. /d.
"'ld. The petitioners' rights were allegedly impacted by the rule for purposes of
standing because the stocking of grass carp in Lake Conroe would harm the quality of
petitioners' bass fishing. /d. Thus, for purposes of standing, this case illustrates that a
rule need not have a great impact on a party before a section 12 action may be pursued.
"'ld.
"" /d. at 596. The court of appeals quite properly found that the act rendered the
appeal moot. /d.
"lild. The petitioners urged that the rule would allow the agency to issue additional
permits allowing the use of grass carp in any public waters of Texas. /d.
"'ld. Thus, the' case was not ripe for review. The petitioners argued that the case
should have been decided "because an important administrative law question is involved
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gleaned from Texas Association of Bass Clubs is that for a petitioner to
fulfill the standing and ripeness requirements of section 12, the
agency must have taken some action that will adversely affect the
petitioner's legal rights or privileges.
Aside from assuring that there is sufficient standing to bring the
section 12 action, the practitioner should consider whether injunctive relief should be sought in addition to the declaratory judgment. 28 Although section 12 of APTRA does not specifically
authorize injunctive relief as an available remedy, the Austin Court
of Appeals has recognized that such relief may be pursued along
with the request for declaratory judgment.29 The Uniform Declaratory Judgments Act specifically authorizes such requests for injunctive relief as an ancillary matter. 30 The practitioner should take
care, however, that other statutes do not impinge on the ability to
pursue injunctive relief.3'
and that a resolution of that question would be of assistance to administrative agencies
and the bar." [d. The court observed that to do so, however, would result in an unconstitutional advisory opinion: "[t]o decide this appeal, under these facts. would constitute nothing more than an advisory opinion... ,'. [d.
'"If the only intention is to pursue injunctive relief, the practitioner would do well to
consider pursuing a declaratory judgment instead of, or in addition to. the injunction.
Obtaining a declaratory judgment may well be an easier proposition. Professor Davis
has observed:
What is ofspecial practical importance to judicial review ofadministrative action is that
injunctive relief requires a showing of irreparable injury but declaratory relief does not. If,
as may be so more than ninety-nine percent of the time. an agency will comply
as readily with a declaratory judgment as with an injunction. declaratory relief
is a better remedy than injunction.
4 K. DAVIS. ADMINISTRATIVE LAw TREATISE § 23:6, at 153 (2d ed. 1983) (emphasis in
original).
""See. e.g.• Rutherford Oil Corp. v. General Land Office. 776 S.W.2d 232. 234-35 (Tex.
App.-Austin 1989. n.w.h.); Omniphone. Inc. v. Southwestern Bell Tel. Co.• 742 S.W.2d
523. 524 (Tex. App.-Austin 1987, no writ); see also Shannon Be Ewbank. supra note 5, at
421 n.186.
'''See TEX. CIV. PRAC. Be REM. CODE ANN. § 37.011 (Vernon 1986).
"For example. the Tax Code provides special provisions with respect to seeking an
injunction against a state tax. See TEX. TAX CODE ANN. § 112.101 (Vernon 1982). Thus.
if a person wished to challenge the validity of an agency rule that imposed a state tax.
one might opt to pursue a declaratory judgment under section 12 of APTRA, but not
seek ancillary injunctive relief. See, e.g., National Employee Benefit Admin., Inc. v. State
Bd. ofIns.• No. 437,120 (Dis!. Ct. of Travis County. 353dJudiciai Dist. of Texas, May
10, 1988) (appeal pending. No. 3-88-195-CV, Tex. App.-Austin) (in which a state tax
administered by the Board was declared unconstitutional in a declaratory judgment action, but no injunctive relief was pursued).
1989]
III.
DECLARATORYJUDGMENTS
607
BYPASSING THE AGENCY TO CHALLENGE AN AGENCY RULE: AN
EXAMINATION IN THE CONTEXT OF RECENT CASES
Can a party that is facing adverse agency action bypass the contested case hearing that is either offered by, or could be available at,
the agency and instead pursue a declaratory judgment action challenging the underlying agency regulations? This section will explore the issues connected with such an inquiry in the context of
several recent decisions of the Austin Court of Appeals.
A.
Rutherford Oil and the Focus on Existing Rules
In the recent case of Rutherford Oil Corp, v. General Land Office 32 the
Austin Court of Appeals considered such a utilization of section 12
of APTRA-at least in the context of certain agency rules that required an adjudicative hearing before an agency which was itself a
party to the underlying transaction. In Rutherford Oil the appellants
were several oil companies 33 that had leased mineral rights on state
land in exchange for paying the State of Texas a royalty.34 In 1986,
as part of its duties to review state mineral leases, the General Land
Office determined that Rutherford had provided inadequate royalty
payments, and sent Rutherford a notice to pay the additional sum
within thirty days or to request a hearing. 35 Rutherford initially requested a hearing, but then opted to file a declaratory judgment suit
pursuant to section 12 of APTRA challenging the validity of the applicable General Land Office rules and the underlying statutes. 36
The district court of Travis County initially granted Rutherford a
temporary injunction but later dissolved it.37 Rutherford then perfected an appeal from the order dissolving the temporary
injunction. 38
"776 S.W.2d 232 (Tex. App.-Austin 1989. n.w.h.).
'"Rutherford Oil Corp., Conoco, Inc., and the Ladd Petroleum Corp. [hereinafter
Rutherford]. Id. at 233 n.l.
"Id. at 233.
"Id.
"'Id. The rules and statutes in question were, respectively, Gen'l Land Office, 31 TEX.
ADMtN. CODE §§ 4.21-4.175 (West 1989), and TEX. NAT. RES. CODE ANN. §§ 52.135,
52.137 (Vernon Supp. 1989). See Rutherford Oil, 776 S.W.2d at 233. In particular, the
rule requiring either payment or a hearing provides the following:
Payment or request for hearing. A person receiving an audit billing notice shall
have 30 days after its receipt to pay the audit deficiency assessment or to request a hearing before the agency for redetermination of that assessment.
Gen'l Land Office, 31 TEX. ADMIN. CODE § 4.21(b) (West 1989).
"776 S.W.2d at 234.
""Id.
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On appeal Rutherford asserted that the General Land Office
could not properly adjudicate Rutherford's obligation to pay additional royalties through an administrative hearing conducted before
that agency.39 The court of appeals agreed and determined that the
administrative hearing, if conducted, would adjudicate the extent of
Rutherford's obligations under the mineral lease and, accordingly,
would constitute the improper exercise of judicial authority by an
executive agency.40 Accordingly, the court concluded that Rutherford had shown not only a probable right to recover, but also that
the mere occurrence of such a hearing would constitute a probable,
irreparable injury.41
The General Land Office asserted that there was no need to grant
declaratory relief because the district court's authority would remain
intact after the agency hearing was held. 42 The court of appeals
properly rejected that argument by observing that
[i]t is true that the district court's authority will remain to
review the results of the hearing, e.g., proper construction
of the lease and what sum of money if any is owed, but
what will be lost is appellant's present complaint, i.e., that
the administrative hearing is unlawful and may not be held.
An agency may always claim that the court's authority will
remain to review the issues decided in the agency hearing,
and that, accordingly, it should not be' restrained from conducting the hearing. To accept the [General Land Office's]
argument is to wholly nullify § 12.43
:'"[d. Rutherford further urged that the rules requiring a hearing to determine such
contract rights were probably invalid because "only courts may adjudicate property and
contract rights." [d. As with the review of any order granting or dissolving a temporary
injunction, the Austin Court of Appeals was reviewing whether the district court had
abused its discretion, and whether Rutherford had properly demonstrated "both a probable right to recover and a probable, irreparable injury which will occur if no injunction
is ordered." [d. Correspondingly, the court declared that it was not considering the
merits of the underlying lawsuit. [d. (citing Hertz Corp. v. State Dep't of Highways and
Pub. Transp., 728 S.W.2d 917, 919 (Tex. App.-Austin 1987, no writ)).
"'Rutherford Oil, 776 S.W.2d at 234. The court of appeals also determined that because the General Land Office was engaged in a non-sovereign activity (leasing minerals), the agency had to be "treated in the same manner as any other private party." [d. at
235 (citing Fristoe v. Blum, 92 Tex. 76,45 S.W. 998, 999 (1898); State v. Kroner, 2 Tex.
492, 494 (1847)). In addition, the court of appeals suggested that a decision by the
agency could implicate Rutherford's due process rights because it c,ould involve a decision by a potentially biased adjudicator. [d, at 235 (citing Gibson v. Berryhill, 411 U.S.
564,579 (1973); Tumey v. Ohio, 273 U.S, 510, 522-23 (1927)).
"776 S,W.2d at 235,
·"[d,
'" [d,
at 235-36 (emphasis added),
1989]
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609
Indeed, it appeared that the General Land Office was arguing that
Rutherford was required to exhaust all administrative remedies
prior to challenging the underlying regulations in a declaratory
judgment action. Section 12, however, by its very terms, permits a
plaintiff to seek a judicial declaration concerning the applicability or
validity of a rule without first having to pursue administrative remedies. 44 This statutory formulation indicates that the usual requirement of exhaustion of administrative remedies prior to seeking
judicial review is entirely inapt to a situation in which the plaintiff is
challenging the validity or applicability of a rule promulgated by an
agency.45 If a party has the requisite standing to pursue a section 12
action, then whether an action is pending or could be pursued at the
agency appears entirely irrelevant.46 By way of contrast, other states
require that an aggrieved person seek a declaratory ruling concerning a rule's applicability from the agency prior to seeking a judicial
declaration. 47 That the Texas Legislature chose not to require such
HAPTRA § 12.
See Shannon & Ewbank, supra note 5, at 423-24. It is worth noting, however, that
exceptions to the doctrine of exhaustion of administrative remedies prior to judicial review have traditionally been invoked in cases in which the relief sought by the aggrieved
party is beyond the power of the agency to grant or where exhausting administrative
remedies before raising the matter in court might result in irreparable injury. See B.
SCHWARTZ, ADMINISTRATtVE LAw § 8.31 (1984); 2 F. COOPER, STATE ADMINISTRATtVE
LAw 579 (1965) [hereinafler referred to as eilher I or 2 COOPER]. Aside from the consideration of section 12 of APTRA, these exceptions may have been apt in Rutherford Oil.
See also Shannon & Ewbank, supra note 5, at 424 n.208.
'''With respect to the standing requirement for ~ection 12 cases in general, see supra
notes 16-19 and accompanying text.
"See, e.g., ALA. CODE § 41-22-10 (1982); MICH. STAT. ANN. § 3.560(164) (Callahan
1985 Rev. Vol.); UTAH CODE ANN. § 63-46a-13 (1986) (which is comparable to section
12 of APTRA but forbids considering the applicability of a rule if the issue is under
consideration by the agency). The Alabama and Utah statutes, although not expressly
requiring prior agency review in all cases, have been interpreted to require exhaustion
when the agency is subject to other statutes necessitating prior review. See, e.g., Stuart v.
Historic Warehouse, Inc., 505 So. 2d 298 (Ala. 1987) (holding that although ALA. CODE
§ 41-22-10 provides for declaratory judgment actions regarding the v;didity and applicability of agency rules, a petitioner must petition the agency prior to seeking such relief
because ALA. CODE § 41-22-11 allows agencies the opportunity to issue a declaratory
ruling); Williams v. Public Servo Comm'n, 754 P.2d 41 (Utah 1988) (holding that
although the declaratory judgment section of Utah's Administrative Rulemaking Act,
UTAH CODE ANN. §§ 63-46a-I-63-46a-15 (1986), does not mention a requirement for
prior administrative review, such' review was required in a case involving a challenge to a
Utah Public;: Service Commission rule because of the requirement of UTAH CODE ANN.
§ 54-7-15 (1988), that there be an administrative review qf any commission order or
decision prior to any type ofjlldicial review). See also Shannon & Ewbaflk, supra note 5, at
424 n.207.
In addition, section 5-107 of the 1981 MODEL STATE ADMINISTRATIVE PROCEDURE ACT
provides generally that all available administrative remedies must be exhausted before
judicial review of agency action may be pursued, although an aggrieved person need not
H
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agency review is further evidence of the lack of any exhaustion hurdle under section 12.48
The General Land Office also argued in Rutherford Oil that the issues in the case were controlled by the Austin Court of Appeal's
previous opinion in Public Utility Commission of Texas v. City ofAustin. 49
In City of Austin the court had reviewed a section 12 action in which
the City of Austin had sought a declaratory judgment and a temporary injunction before the Public Utility Commission50 could enter a
final order in a pending electric rate case. 51 The district court had
"temporarily enjoined the agency from applying certain rate-making
standards to the City and from going forward with the proceeding
until the agency established new standards," from which the agency
and certain ratepayers appealed. 52 On appeal, the court held that
the temporary injunction issued by the district court should be dissolved because the city had failed to demonstrate irreparable
harm. 53 In general, the city alleged that because there were no statutory standards for the P.U.C. to follow in reviewing a case involving rates charged nonresident ratepayers by a municipally-owned
have participated in any rulemaking proceedings prior to seeking judicial review. See A:
BONFIELD, STATE ADMINISTRATIVE RULE MAKING § 9.2.4 (1986) [hereinafter BONFIELD].
The provisions of section 12 of APTRA, on the other hand, largely mirror those of section 7 of the 1961 REVISED MODEL STATE ADMINISTRATIVE PROCEDURE ACT, which did
not require such exhaustion. See Shannon Be Ewbank, supra note 5, at 420-21 n.185.
4"Whether having an exhaustion hurdle is a wise policy presents a different question.
Professor Bonfield has opined that "[a]n agency should have an opportunity to correct
its own errors in rule making prior to being required to do so in a judicial proceeding,"
and that it is "usually cheaper and more efficient for the agency to correct its errors than
for a court to order it to do so." BONFIELD, supra note 47, § 9.2.4. Although Professor
Bonfield's desire for judicial and administrative efficiency is noteworthy, this author is of
the view that the lack of an exhaustion requirement in section 12 of APTRA is worthwhile. Particularly with.respect to the applicability of a rule to a person, what better way
to get an agency's attention than to file an action for declaratory judgment in the district
court of Travis County? As the Austin Court of Appeals noted in Rutherford Oil:
[W)hen suit is filed challenging an agency rule, "the agency essentially is forced
to decide whether it intends to apply the rule to [the] petitioner. If the administrative body chooses not to apply the rule, it should so state in its pleading in
district court, and the suit should be dismissed for want ofjurisdiction."
776 S.W.2d at 235 n.3 (quoting Shannon Be Ewbank, supra note 5, at 425). Moreover,
efforts within an agency to obtain a determination (i.e., an admission by the agency) that
a particular rule is invalid are often likely to be fruitless.
"'710 S.W.2d 658 (Tex. App.-Austin 1986, no writ).
lIt'Hereinafter P.U.C.
"710 S.W.2d at 659.
'"/d.
"Id. at 662. The utility rates that had been set by the City of Austin, and which were
the subject of the challenge before the P.U.C., were to remain in effect pending the
resolution of the administrative case. Id. at 661. Thus, the city could not demonstrate
any tangible harm.
1989]
DECLARATORYJUDGMENTS
611
utility, the agency proceedings would violate the city's due process
rights. 54 The court of appeals rejected the city's due process argument observing that until the P.U.C. handed "down a final order,
the City is only speculating that i,t will be denied due process."55
In Rutherford Oil the Austin Court of Appeals held that the General
Land Office's reliance on City of Austin was misplaced. 56 The court
reasoned that City of Austin was not controlling
because the underlying dispute did not invoke § 12. The
dispute in City of Austin regarded the absence of agency
rules [regarding standards for agency consideration of that
, particular rate case]. Because § 12 only authorizes challenges to existing rules, City of Austin cannot be a § 12 case
and cannot be authority for § 12 cases. 57
In contrast, the court observed that the underlying dispute in Rutherford Oil was a challenge to an existing agency rule and, therefore, a
challenge under section 12 was proper.58 Thus, the court concluded that Rutherford had a right to resort to section 12 and challenge the agency hearing before it occurred,59 and the court
remanded the cause to the district court to reinstate the temporary
injunction. 60
·<ld. at 660. In effect, the city was alleging generally that the P.U.C. lacked the statutory authority to review the rates charged nonresident ratepayers by a municipallyowned electric utility. ld. at 659. '
"'ld. at 661. Until the P.U.C. handed down a final order that applied newly-announced standards to the city. there would be no violation of due process. ld.
""Rutherford Oil v. General Land Office, 776 S.W.2d 232, 236 (Tex. App.-Austin
1989, n.w.h.). Presumably, the General Land Office had argued that, like in City of Austin, the appellants would not suffer any irreparable harm if the temporary injunction
remained dissolved. The court of appeals did not elaborate on the basis of the
argument.
" ld.
""ld.
•"ld. The court also distinguished its earlier decision in Stockton v. Parks and Wildlife
Comm'n, 571 S.W.2d 338 (Tex. Civ. App.-Austin 1978, no writ), in which the court
had upheld a district court's denial of a temporary injunction in a § 12 case. The court
indicated that in Stockton the court had not reached "the question of what constitutes a
probable, irreparable injury in § 12 cases" because the court had determined "that there
was no probable right of recovery." Rutherford Oil, 776 S.W.2d at 236 n.4. In Stockton,
the agency had proposed a rule regulating redfish fishing. After public hearings the
agency published a final rule that had several changes frorb the proposed rule. Based on
an implicit finding of no probable right of recovery, the court rejected Stockton's request for injunctive relief and a declaration that the final rule was invalid because of an
alleged failure by the agency to republish and seek additional public comment. 571
S.W.2d at 342-43. See also Shannon & Ewbank, supra note 5, at 432.
'·'776 S.W.2d at 236. Although section 12 of APTRA speaks only to declaratory relief
and does not mention injunctive relief, it is apparent that the court-albeit without discussion-granted the injunctive relief as ancillary relief within the context of the section
12 declaratory judgment action. See Shannon & Ewbank, supra note 5, at 421 n.186. Cf
612
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ChiefJustice Shannon's analysis in Rutherford Oil that the holding
in City 'ofAustin was not controlling "because the underlying dispute
did not invoke § 12"61 warrants close scrutiny. There is no question
that the plaintiff City of Austin invoked section 12 of APTRA in its
petition for declaratory and injunctive relief (i.e., the city relied on
section 12 as the basis for bringing the action).62 The court's assertion that section 12 was not invoked, however, did not mean that the
plaintiff City of Austin did not assert the section as its basis for relief. Instead, the court of appeals was declaring that the underlying
challenge-whether the agency review of a novel electric rate case
could properly be maintained at the agency in the absence of any
rules or standards for review-did not itself constitute the consideration of the validity or applicability of a rule. 63 Because there was
no administrative rule in existence at the time of the district court's
review of the request for injunctive relief, City of Austin was not a
proper section 12 case. 64
TEX. CIY. PRAC. & REM. CODE ANN.§ 37.011 (Vernon 1986) (which specifically authorizes such ancillary injunctive relief as part of the Uniform Declaratory Judgments Act).
See also supra notes 28-30 and accompanying text.
'il Rutherford Oil, 776 S.W.2d at 236.
'''See City of Austin, 710 S.W.2d 658 (Tex. App.-Austin 1986, no writ); see also Public
Util. Comm'n v. City of Austin, 728 S.W.2d 907, 909 (Tex. App.-Austin 1987, writ
ref'd n.r.e.) (this was the appeal of the merits of the case which had been pursued after
the overturning of the temporary injunction in City of Austin) [hereinafter City of Austin
ll].
'''See Rutherford Oil, 776 S.W.2d at 236.
'H Id. Although not at issue in the case, implicit in the court's finding in Rutherford Oil
that s,ection 12 only authorizes challenges to existing rules is that challenges to proposed rules would similarly not invoke section 12. See Shannon & Ewbank, supra note 5,
at 422 n.196. Of course, if the agency has simultaneously promulgated an emergency
rule that is identical to the proposed rule, then the affected person could maintain a
section 12 action because section 12 specifically includes emergency rules within its purview. APTRA § 12. In that situation the substance of the proposed rule would be part
of an existing rule by means of its inclusion in the emergency rule.
In addition, a literal reading of Rutherford Oil's focus on existing rules would appear to
preclude the use of section 12 as a means of obtaining a judicial declaration regarding
the validity or applicability of an ad hoc rule (i.e., a "rule" that is followed by an agency,
but which was never formally promulgated) because an ad hoc rule may be treated as a
"non-rule" under APTRA. Cf Beal, Ad Hoc Rulemaking: Texas Style, 41 BAYLOR L. REV.
101, 131-32 n.211 (1989). But see id. at 128. Professor Beal has suggested that if an
agency has developed an ad hoc rule without complying with any of the notice and comment requirements of APTRA, then section 12 would permit the district court to declare
the ad hoc rule void. Id. A literal reading of section 12 and the term "rule" as defined in
APTRA, see supra note 12, when combined with Rutherford Oil's emphasis on 'existing
rules, however, might foreclose any such section 12 attack on an ad hoc rule. The skillfullitigator could, however, attempt to tie the court's review of the ad hoc rule to another existing rule or rules that are either being applied or being threatened with
application by the agency. The Austin Court of Appeals has stated that section 12 is to
be employed as a useful tool in resolving controversies and that the trial court is duty-
1989]
DECLARATORYJUDGMENTS
613
Although in Rutherford Oil the Austin Court ,of Appeals asserted
that City ofAustin was not a section 12 case,65 it is interesting to observe that when the district court later considered the underlying
merits of the case, that court determined that it had jurisdiction to
issue a declaratory judgment under section 12; subsequently, the
Austin Court of Appeals affirmed this finding on appea1.66 How
could the underlying action initially fail to invoke section 12 and
then later succeed based on section 12?
In City ofAustin II the agency and appellant ratepayers alleged that
the district court lacked jurisdiction to issue a declaratory judgment
under section 12. 67 Essentially, the agency urged that section 12 is
not appropriate in a case in which there is a pending action before
an agency between the same parties in which the issues involved in
the declaratory judgment case could be resolved. 68 The P.U.C. argued that the district court would continue to lack jurisdiction under
section 12 until the agency resolved which administrative standards,
if any, applied to the administrative appeal by the ratepayers of the
City of Austin's electric rates. 69 That argument by the agency in City
of Austin II would appear to be consistent with the Austin Court of
Appeal's later assessment in Rutherford Oil that City ofAustin 'was not
a section 12 case because the dispute regarded the absence of
agency rules or standards. 70 Yet, in City ofAustin II the court determined that the dispute did invoke section 12, which implies that the
bound to declare the rights of the parties "if a declaratory judgment will terminate the
uncertainty or controversy giving rise to the lawsuit." City of Austin Il, 728 S.W.2d at
910. See also Bellegie v. Texas Bd. of Nurse Examiners, 685 S.W.2d 431, 434 (Tex.
App.-Austin 1985, no writ). Consequently, the trial court should consider the validity
of the ad hoc rule along with the applicability or validity of the existing rule or rules
being challenged.
MRutherford Oil, 776 S.W.2d at 236.
I.' City ofAustin Il, 728 S.W.2d at 909-11. Indeed, the district court granted the declaratory judgment sought by the City of Austin. /d. at 909.
"7/d. The appellants also alleged that the district court lacked jurisdiction under both
the Uniform Declaratory Judgments Act, TEX. CIY. PRAC. & REM. CODE ANN. §§ 37.001.011 (Vernon 1986), and the doctrine of sovereign immunity. City of Austin Il, 728
S.W.2d at 909. The court of appeals quickly disposed of both arguments by observing
that the case met the prerequisites to obtaining declaratory relief under the Uniform
Declaratory Judgments Act-there was a real controversy between the parties, and the
entire controversy could be determined by judicial declaration-and that challenges to
an agency's actions as being outside the scope of its authority do not constitute actions
against the state shielded by sovereign immunity. /d. at 911 (citing ofthe latter proposition Director of the Dep't of Agric. and Env't v. Printing Indus. Ass'n, 600 S.W.2d 264
(Tex. 1980), and Cobb v. Harrington, 190 S.W.2d 709 (Tex. 1945».
"'City of Austin Il, 728 S.W.2d at 910. The other pending action was the administrative
appeal. /d.
I·'/d.
7nSee Rutherford Oil, 776 S.W.2d at 236.
614
BAYLOR LAW REVIEW
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court believed there were existing rules subject to a section 12 challenge. In fact, the court determined that any application by the
P.U.C. of the substantive rules implementing the ratemaking standards of the Public Utility Regulatory Act7l necessarily entailed a
threatened application of the agency's rules. 72 Because the P.U.C.
did not present any statement in its plea to the jurisdiction of the
district court that it did not intend to apply those standards to the
City of Austin, the court of appeals found there was a "threatened
application" of the P.U.C.'s rules within the meaning of section
12. 73
The apparent inconsistencies between the decision in City ofAustin
II and the explanation of City ofAustin in Rutherford Oil can be reconciled by focusing on the nature of the relief requested. In City of
Austin the court was reviewing the granting of the city's request for
injunctive relief, which had been premised on an alleged denial of
due process because of a lack of applicable rules and standards. 74 In
other words, the city was not complaining that the agency was
threatening to apply any particular rules, but that the city would be
denied due process if required to participate in a hearing without
any precisely defined rules. To the contrary, with regard to City of
Austin II, which focused on the merits of the request for declaratory
relief, the city sought a declaration that the specific rules which were
promulgated by the P.U.C. to implement PURA should not be applied by the agency because of the alleged inapplicability of PURA
and the rules to the city.75 Thus, in City ofAustin II there was a dis~
pute about the threatened application of certain existing rules.
In construing cases like City of Austin, City of Austin II, and Rutherlord Oil, it would be overly simplistic to focus solely on the presence
or absence of existing rules to ascertain the availability of a section.
12 challenge; instead, the practitioner should analyze both the rules
involved and the nature of the relief sought as part of the preparation of the section 12 case. Yet, the holding in Rutherford Oil and the
discussion of jurisdiction in City of Austin II are clear signals that a
"TEX. REV. elV. STAT. ANN. art. 1446c (Vernon Supp. 1989) [hereinafter PURA]. ,
"728 S.W.2d at 910-11. The court also observed that a hearing examiner's order
outlining standards for such rate appeals indicated that the agency rules were in fact
applicable. /d. at 911.
'"/d.
'·710 S.W.2d at 661.
"728 S.W.2d at 911.
1989]
DECLARATORYJUDGMENTS
615
party aggrieved by agency action need not linger before the agency
prior to asserting a judicial challenge under section 12 of APTRA.76
B.
The Local Telephone Exchange Service Cases: An Improper
Application of the Primary jurisdiction Doctrine?
Another somewhat recent Austin Court of Appeals decision appears-at first blush-to conflict with the premise that a litigant
need not'pursue relief at the agency before filing a section 12 case. 77
Closer scrutiny reveals, however, that the court's jurisdictional finding with respect to section 12 was correct. 78 In Southwestern Bell Telephone Co. v. Public Utility Commission of Texas ,79 Bell Telephone, whose
general operations and local exchange operations are regulated by
the P.U.C., was not happy with a P.U.C. rule that defined the term
"local exchange serviCe" in such a way that the operations of a
number of individuals and businesses, who had begun to install and
utilize local "switching systems" rather than dealing solely with Bell,
did not dearly fall within the ambit of the rule. 80 Accordingly, the
providers of such switching systems were not subject to the P.U.C.'s
regulatory authority over public utilities. 81 Bell petitioned the
agency to amend its rule defining "local exchange service" to bring
the providers of the switching systems under the regulatory auspices
of the P.U.C.82 The agency conducted the requisite public hearings
71iAdditionally, a person need not wait until an attempt has been made by an agency to
enforce a rule against him before he may pursue declaratory relief. See id. at 910; State
Bd. of Ins. v. Deffebach, 631 S.W.2d 794, 797 (Tex. App.-Austin 1982, writ ref'd
n.r.e.).
Of course, it should be noted that the agency involved in Rutherford Oil was engaged in
a non-sovereign activity-the leasing of mineral rights-and, accordingly, was found to
be in a position of attempting to adjudicate a matter in which it was a party to the underlying lease involved. 776 S.W.2d 232, 235 (Tex. App.-Austin 1989, n.w.h.). The court
of appeals acknowledged that although the General Land Office had proposed-improperly-to use its hearing procedures to construe a lease, "[s]tate agencies usually employ
hearings to construe and enforce regulatory requirements." [d. at 234. Thus, it would
be improper to rely on Rutherford Oil as authority for pursuing a section 12 declaratory
judgment action merely because an agency has set a hearing. The affected party must
still allege and show that the rule pursuant to which the agency has called for a hearing
is either invalid or inapplicable to the party. APTRA § 12.
77Southwestern Bell Tel. Co. v. Public Vtil. Comm'n, 735 S.W.2d 663 (Tex. App.Austin 1987, no writ).
7"The court correctly found that jurisdiction was lacking. Id. at 665. This author,
however, does not fully agree with the court's rationale for its decision regarding section
12. See infra notes 91-110 and accompanying text.
"'735 S.W.2d 663 (Tex. App.-Austin 1987, no writ).
"'Id. at 665.
"'Id.
".Id. at 665-66. APTRA § II specifically authorizes any interested person to petition
an agency to request the· adoption of a rule.
616
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[Vol. 41:601
but concluded that "it would not amend its rules in accordance with
Bell's request. Instead, it invited Bell to have the relevant issues
determined in a tariff-revision proceeding initiated by Bell."83 Bell,
obviously displeased with the agency determination not to amend its
rules, filed an action in the district court seeking, inter alia, a declaratory judgment pursuant to section 12 to the effect that the business
activities of the persons about which Bell complained were subject
to P.U.C. regulation. 84
The district court dismissed Bell's complaint for want of subject
matter jurisdiction,85 and the Austin Court of Appeals affirmed the
judgment.86 In affirming the district court's dismissal for lack ofjurisdiction under section 12 of APTRA, Justice Powers, writing for
the court, applied the doctrine of primary jurisdiction87 and determined that the underlying dispute should first be considered by the
·"735 S.W.2d at 666. This would entail having the agency make determinations on a
case-by-case basis regarding whether particular switching systems would be considered
"local exchange services:' rather than revising the agency's definitional rule of general
applicability. Id. at 667.
··Id. Bell also sought a declaratory judgment under the Uniform Declaratory Judgments Act, injunctive relief, and a writ of mandamus that would have compelled the
agency to regulate all such suppliers of switching systems. 735 S.W.2d at 667.
·"Id. at 665.
HHld.
H7/d. at 669-70. Like the doctrine of exhaustion of administrative remedies, primary
jurisdiction is another doctrine of administrative law that pertains to the interrelationships between administrative agencies and the courts. The Fifth Circuit has explained
that the judicially created doctrine of primary jurisdiction authorizes a court of competent jurisdiction to dismiss or stay an action before the court pending resolution of the
matter by an administrative agency. See Wagner & Brown v. ANR Pipeline Co., 837 F.2d
199,201 (5th Cir. 1988).
In Southwestern Bell, Justice Powers quoted at length from United States v. Western
Pac. R.R., 352 U.S. 59 (1956), the leading Supreme Court explanation of the doctrine of
primary jurisdiction. See 735 S.W.2d at 669-70 n.3. In Western Pacific Railroad, the
Supreme Court declared that the doctrine of primary jurisdiction
applies where a claim is originally cognizable in the courts, and comes into play
whenever enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, have been placed within the special competence of
an administrative body; in such a case the judicial process its suspended pending referral of such issues to the administrative body for its views.
352 U.S. at 63-64. In his lengthy quotation from Western Pacific Railroad, Justice Powers
also emphasized the Supreme Court's statement that "[i]n every case the question is
whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation." 735 S.W.2d at
670 n.3 (quoting UQited States v. Western Pac. R.R., 352 U.S. at 64). Indeed, the courts
have often invoked the doctrine of primary jurisdiction either to achieve uniformity in
certain kinds of administrative decisions or to seek the expertise of an agency. See, e.g.,
Wagne~ & Brown v. ANR Pipeline Co., 837 F.2d at 201.
1989]
DECLARATORYJUDGMENTS
·617
agency before the courts became involved. 88 Indeed, the court determined that the questions raised by the underlying dispute "manifestly and almost uniquely require[d] the exercise of administrative
discretion and the special knowledge, experience, and services of
the [P.U.C.] in determining technical and intricate matters of
fact."89 Moreover, the court determined that although Bell had initially committed the questions under review to the agency, the
agency's "decision not to decide those questions in a rulemaking
proceeding d[id] not deprive the primary':"jurisdiction doctrine of
the force and effect it would ordinarily have."9o
Although the Austin Court of Appeals' application of the doctrine
of primary jurisdiction may have been apt in Southwestern Bell with
respect to Bell's request for declaratory relief under the Uniform
Declaratory Judgments Act,91 the court's reliance on the doctrine as
a means of resolving the question ofjurisdiction under section 12 of
APTRA seems misplaced. With respect to the Uniform Declaratory
Judgments Act, the court first cited the oft-repeated rule that the
statute itself does not confer jurisdiction, but that it has created an
additional remedy for cases which otherwise fall within the court's
jurisdiction.92 The court then observed that "in the context of administrative proceedings, the court's jurisdiction under [the] Uniform Declaratory Judgments Act has derived from its inherent
power to hear and determine whether the agency action in controversy was ultra vires or unconstitutional"93 (i.e., whether the agency
had acted within its statutory limits or in a constitutional fashion).
··Southwestern Bell, 735 S.W.2d at 670. The court of appeals had already determined
that the doctrine of primary jurisdiction controlled the question ofjurisdiction with respect to the allegations raised under the Uniform Declaratory judgments Act. Id. at 66769. The application of the doctrine of primary jurisdiction with respect to jurisdiction
under the Uniform Declaratory judgments Act would appear to involve considerations
different from those involved with questions arising under section 12 of APTRA. See
infra notes 91-102 and accompanying text.
·"735 S.W.2d at 668.
'·'Id. at 669. Although the court rendered this precise holding in the context of reviewing the applicability of the doctrine of primary jurisdiction to the request for declaratory judgment under the Uniform Declaratory judgments Act, the court applied this
holding and rationale "equally to Bell's assertion of jurisdiction under APTRA § 12."
/d. at 670.
'" See supra note 18.
"2735 S.W.2d at 667 (citing Crawford v. City of Houston, 600 S.W.2d 891 (Tex. Civ.
App.-Houston [lst Dist.] 1980, writ ref'd n.r.e.); Marshall v. City of Lubbock, 520
S.W.2d 553 (Tex. Civ. App.-Amarillo 1975, writ ref'd n.r.e.».
'>:'735 S.W.2d at 667 (citing, inter alia, City of Sherman v. Public Util. Comm'n, 643
S.W.2d 681 (Tex. 1983); Roskey v. Texas Health Facilities Comm'n, 639 S.W.2d 302
(Tex. 1982); Texas Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891
(Tex. 1970».
618
BAYLOR LA W REVIEW
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Bell's independent basis for jurisdiction was, allegedly, that its
pleadings had sufficiently invoked the inherent power of the district
court to review whether the P.U.C. had :acted outside its statutory
and constitutional powers with respect to Bell's rights and privileges
as a regulated utility.94 Given that the company appeared merely to
be complaining that it should not have the burden of pursuing its
contentions regarding other suppliers on a case-by-case basis before
the agency, rather than through a change in the P.U.C. rules as Bell
had desired, the court could find no basis "to justify judicial intervention on due-process [sic] grounds, by-passing the administrative
process and the duties committed to the ... [P.U.C.]."95 Thus, the
court determined that the matter should be left within the primary
jurisdiction of the agency, finding that the issues involved fell "unquestionably ... within the exclusive jurisdiction of the [P.U.C.] to
determine initially."96
With respect to jurisdiction under section 12 of APTRA, the
Southwestern Bell court's similar invocation of the doctrine of primary
jurisdiction appears to raise other problems not addressed by the
Austin Court of Appeals in the case. Although this author does not
disagree in general with the court's view that the substantive issues
raised by Bell were matters that were more appropriate for initial
review and determination by the agency rather than before the district court,97 the court's employment of the doctrine of primary jurisdiction to dispose of the section 12 allegations raised in the case
was inappropriate. Section 12 plainly permits a person whose legal
rights or privileges are being interfered with, impaired, or even being threatened with such interference or impairment by an agency
!N [d. Recall that Bell's chief complaint was that other providers of switching systems
did not fall within the ambit of the P.U.C.'s rules, which meant that these persons were
not regulated; thus, the agency's refusal of Bell's APTRA § II invitation to amend its
rules had allegedly harmed Bell's property rights. See supra text accompanying notes 8082.
'''735 S.W.2d at 669. This decision seems quite proper given the terms of section II
which, although allowing interested persons to petition an agency to request the adoption
of a rul~, plainly gives the agency the discretion either to initiate rulemaking or to deny
the petition. See APTRA § II; if. I COOPER, supra note 45, at 203-06. Since the agency
in Southwestern Bell opted not to initiate rulemaking pursuant to its statutory discretion to
make such a decision, and Bell did not allege that the P.U.C. had abused that discretion,
see 735 S.W.2d at 669, then Bell's due process attack appears to have been specious at
best.
!"'735 S.W.2d at 668.
"7 Although questions regarding the nature of certain private entities' telephone
switching system operations would appear to be quite appropriate for initial review by
the Public Utility Commission as a general matter, whether the district court can opt to
bypass the terms of section 12 by means of invoking the doctrine of primary jurisdiction
is a very different matter if section 12 jurisdiction is otherwise present. See APTRA § 12.
1989]
DECLARATORYJUDGMENTS
619
rule to initiate a declaratory judgment action regarding the validity
of the rule or the applicability of the rule to that person. 98 In addition, section 12, by its terms, appears to require a different application in administrative cases from that called for by the Uniform
Declaratory Judgments Act. 99 Moreover, as noted above, a person
adversely affected by an invalid or inapplicable rule need not exhaust administrative remedies before bringing a section 12 action. lOo For a court, nonetheless, to invoke the doctrine of primary
jurisdiction merely, for example, because the agency has more expertise to address the subject matter at issue-thereby requiring the
person whose rights or privileges are being interfered with by a rule
to pursue administrative review before being heard by the courtresults in rendering section 12 largely nugatory. 101. Indeed, it appears that making the doctrine of primary jurisdiction generally applicable to cases raised pursuant to section 12 of APTRA is in
contravention of one of the legislative purposes behind the
statute. 102
""APTRA § 12.
'·'Section 12, of course, applies to administrative rules while the Uniform Declaratory
Judgments Act does not specifically mention either agencies or rules. But see supra notes
18-19 and accompanying text.
,..,See supra notes 45-48 and accompanying text.
"" Such would be a possible application of the doctrine of primary jurisdiction. Indeed, primary jurisdiction is a flexible doctrine that may be applied within the sound
discretion of the district court. See, e.g., Wagner & Brown v. ANR Pipeline Co., 837 F.2d
199,201 (5th Cir. 1988); EI Paso Natural Gas Co. v. Sun Oil Co., 708 F.2dlOlI, 1020
(5th Cir. 1983), mt. denied, 468 U.S. 1219 (1984). For example, suppose that an agency
has indicated that it intends to apply an onerous rule to a person who has sound reasons
for believing that the agency's rule is not applicable to that person. Suppose, also, that
the underlying subject matter of the rule involved is quite complicated and is something
that would clearly fall within the purview of the agency's expertise. If the aggrieved
person opted to file a declaratory judgment action pursuant to section 12 regarding the
applicability of the rule involved, a decision by the district court to apply the doctrine of
primary jurisdiction (thereby dismissing the cause for want of subject matterjurisdiction
because of the expertise of the agency) would be inconsistent with the plain wording of
section 12 and erroneous. Professor Cooper has stated the following:
In cases where the asserted right depends upon the appraisal of a complicated
.and technical factual situation, there is sometimes a sound reason for a court's
preferring to have the factual question resolved by an agency which has special
competence in that particular area, but the mere fact that some after-the-event
remedy would be available is not in itself a sound reason for denying plaintiff a
declaration-in-advance of his rights, where he would be benefitted [sic] by having them established before the administrative action is completed.
2 COOPER, supra note 45, at 638 (citation omitted). Thus, the general application of the
doctrine of primary jurisdiction in section 12 cases is inappropriate.
"'"The statute specifically authorizes the rendering of a declaratory judgment whether
the plaintiff has asked for agency review or not. APTRA § 12.
620
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Although this author disagrees with the Austin Court of Appeal's
broad application of the doctrine of primary jurisdiction to the section 12 allegations in Southwestern Bell, the result in the case-dismissal of the section 12 allegations-is nonetheless correct under the
analysis set forth in Rutherford 0i1.J° 3 Recall that in Rutherford Oil
Chief Justice Shannon focused on whether the underlying dispute
involved a challenge to existing agency rules as part of determining
whether jurisdiction over the subject matter was present. 104 If the
Austin Court of Appeals had applied this analysis in Southwestern Bell,
the court would certainly have found jurisdiction lacking, but for
reasons unrelated to the doctrine of primary jurisdiction.
In Southwestern Bell there is no question that there was an agency
rule involved that affected Bell. lo5 Bell perceived that the agency's
definitional rule was not written broadly enough to regulate certain
suppliers of telephone switching systems (i.e., indirect competitors
of Bell), although the agency regulated Bell's operations. 106 Yet,
merely being affected by an existing rule is not, in and of itself, sufficient to invoke the district court's jurisdiction under section 12.
The aggrieved party must also show that the rule is invalid or inapplicable and that the agency's application, or threatened application,
of the rule "interferes with or impairs, or threatens to interfere with
or impair, the legal rights or privileges of the plaintiff."107 Bell
neither made this showing nor pursued any of the recognized methods of attacking a rule's validity. lOB Instead, Bell urged that the
P.U.C. was not applying the rule to certain indirect competitors of
Bell and was refusing to change its rule to encompass such other
parties; this agency action (and inaction) was, presumably, thereby
"'"Rutherford Oil Corp. v. General Land Office, 776 S.W.2d 232 (Tex. App.-Austin
1989, n.w.h.).
''''Id. at 236. See supra text a~companying notes 56-60. Of course, Southwestern Bell
antedated Rutherford Oil.
"'''This was the rule diat defined "local exchange service" in such a way that Bell's
perceived competitors did not fall within the ambit of the rule. See Southwestern Bell
Tel. Co. v. Public Util. Comm'n, 735 S.W.2d 663, 665 (Tex. App.-Austin 1987, no writ)
(the court cited the 1986 version of the rule then in effect); Public Util. Comm'n, 16 TEX.
ADMIN. CODE § 23.61(a)(l8) (West 1988); see also supra text accompanying notes 80-81.
""'Southwestern Bell, 735 S.W.2d at 665.
"'7 APTRA § 12.
'''''The Austin Court of Appeals has listed three grounds for challenging a rule's validity by observing that "a rule is valid ifit is constitutional, within the granted power. and
promulgated pursuanlto the proper procedure." Helle v. Hightower, 735 S.W.2d 650,
654 (Tex. App.-Austin 1987, writ denied). See also Beal, supra note 6, at 673 (who has
delineated varying bases for attacking the constitutionality of a rule); Watkins & Beck,
supra note 6, at 25-26 (who comment on a possible fourth basis for attacking a rule's
validity by questioning the rule's factual basis); Shannon & Ewbank, supra note 5, at 42627.
1989]
DECLARATORYJUDGMENTS
621
impairing Bell's rights and privileges for purposes of section 12.
This latter argument apparently comprised Bell's sole basis for asserting that the district court had jurisdiction under section 12. 109
Thus, unlike the underlying dispute in Rutherford 0i1,11O which involved the direct challenge of the validity of an existing rule, the
dispute in Southwestern Bell did not involve an attack on the validity of
a rule or the applicability of an existing rule to Bell. Bell was not
actually challenging the existing rule but was, instead, seeking to
have the rule applied to others or changed. Section 12 of APTRA is
simply not that all-encompassing.
The Austin Court of Appeals could have disposed of the section
12 allegations raised in Southwestern Bell by considering whether Bell
had the requisite standing to bring the action. Bell was, in effect,
arguing that the district court had jurisdiction pursuant to section
12 to review issues involving the applicability of an agency rule not
to Bell itself, but to other parties. Recall that to establish standing
to challenge the applicability of a rule in a section 12 declaratory
judgment suit, the affected party must show "an affirmative act by
the agency to apply its rule to him and that the application of such
rule would adversely affect his legal rights or privileges... ." 111
Mere interested parties cannot seek judicial review of a rule or its
application under section 12. 112 In Southwestern Bell although (1) the
agency was applying its rule to Bell, and (2) the application of the
rule indirectly affected Bell's rights and privileges,113 Bell's complaint was not about an adverse application of an agency rule to
Bell. Instead, Bell was complaining about the lack of agency appli""'See 735 S.W.2d at 668-70. In addition, Bell never asserted that the rule was inapplicable to it.
''''Rutherford Oil Corp. v. General Land Office, 776 S.W.2d 232, 236 (Tex. App.Austin 1989, n.w.h.).
'" State Bd. oflns. v. Deffebach, 631 S.W.2d 794, 797 (Tex. App.-Austin 1982, writ
ref'd n.r.e.). See supra notes 16-19 and accompanying text. Such a requirement would
also preclude an agency official who questions the applicability of a rule to a particular
person from pursuing a declaratory judgment action regarding the rule. Of course, the
application of a rule to an affected person would not interfere with or impair the rights
or privileges of the disgruntled agency official. Cf Hill v. Texas Water Quality Bd., 568
S.W.2d 738, 739 (Tex. Civ. App.-Austin 1978;writ ref'd n.r.e.) (which held that the
Attorney General lacked standing under section 12 to attempt to set aside an agency
action which he believed was not in the public interest).
II·See Shannon & Ewbank, supra note 5, at 422 n.195. ChiefJustice Shannon and Mr.
Ewbank also posit that "[i]t is often a fact question whether an affirmative act by the
agency actually threatens or impairs a petitioner's rights or privileges." [d. at 422. See.
supra notes 16-17 and accompanying text.
'''This presumes that Bell has rights and privileges with respect to agency regulation
or non-regulation of other parties--'a matter not without question. Certainly Bell had an
economic concern.
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cation of the same rule to others. Under such facts, Bell was merely
an interested party; section 12 requires the injury to be more personal than mere loss of competitive posture because of agency inaction vis-a-vis others. 114 Bell simply lacked the requisite standing to
maintain a section 12 case in the district court. Accordingly, the
Austin Court of Appeals' holding in Southwestern Bell that the trial
court dismissal was proper is supported by grounds other than the
primary jurisdiction discussion relied on by the court. 115
IV.
THE PROPER TIME TO PURSUE A SECTION
12
ACTION
Can a person affected by a rule who has participated in a contested case proceeding bring an action for a declaratory judgment
pursuant to section 12 of APTRA even if the person has failed to
appeal in a timely fashion the agency's determination in the contested case to the district court?116 Unlike section 12 of APTRA,
which is silent with respect to when an action must be brought to
'14 See Shannon &: Ewbank, supra note 5, at 422 n.195. Moreover, if the constitutional
prohibition against advisory opinions has more than an ephemeral meaning, which it
must, a request for a court to review as an original matter the non-application of a rule
to competitors of a person affected by that rule must be denied as being merely a request for an advisory opinion. See TEX. CONST. art. V, § 8; see also infra notes 133-40 and
accompanying text.
.
It should be noted that ChiefJustice Shannon and Mr. Ewbank have opined that the
same elements of standing for rule applicability should apply in cases involving rule
validity. See Shannon &: Ewbank, supra note 5, at 426. Such a statement should not be
construed in an overly broad manner. Although this author has postulated that Bell
lacked standing to pursue a section 12 case concerning the lack of agency application of
a rule to competitors of the complainant, had Bell alleged that the rule in question was
invalid, then Bell would certainly have had standing to raise such a complaint given that
the rule did apply to Bell. Cf Rutherford Oil Corp. v. General Land Office, 776 S.W.2d
232,236 (Tex. App.-Austin 1989, n.w.h.). It will probably be rare that a person will
choose to contest a rule's validity unless the agency involved either has applied or
threatened to apply the rule to that party. If that is the case, of course, then the agency
will have undertaken "some affirmative act" to apply to threaten to apply the rule to that
party, thereby providing sufficient standing to maintain the action. See State Bd. of Ins. v.
DejJebach, 631 S.W.2d at 797. Otherwise, a merely interested party should lack standing
to seek a declaratory judgment concerning rule validity pursuant to section 12.
"'It is worth observing that after the dismissal of the action in Southwestern Bell, Bell
did pursue its concerns as part of a case-by-case review within the agency; the P.U.C.
nonetheless adjudicated Bell's concerns in a manner contrary to Bell's position. See
Southwestern Bell Tel. Co. v. Public Util. Comm'n, 745 S.W.2d 918 (Tex. App.-Austin
1988, writ denied). In that appeal the court of appeals upheld the P.U.C.'s "case-bycase" proceeding but suggested that fairness might be better served through an agency
rulemaking proceeding. Id. at 927. See also Beal, Ad Hoc Rulemaking: Texas Style, 41 BAYLOR L. REV. 101 (1989).
"..A similar issue would be present in a case in which a person attempted to file a
declaratory judgment action after an adverse decision in a contested case proceeding in
which the person did not timely file a motion for rehearing at the agency as required by
APTRA § 16(e). Another comparable issue could arise if a person did not comply with
1989]
DECLARATORYJUDGMENTS
623
seek a declaratory judgment concerning a rule's validity or applicability, APTRA provides strict deadlines for filing district court appeals of agency decisions in contested cases. 117 Although section
5(e) of APTRA provides that "[a] proceeding to contest any rule on
the ground of noncompliance with the procedural requirements of
this section [5] must be commenced within two years after the effective date of the rule," 118 section 12 and the remaining provisions of
APTRA are otherwise silent concerning whether there is any special
limitations period for filing a declaratory judgment action with respect to a rule. Thus, the question appears to be an open one.
Although no Texas case appears to have explored this issue, in
Conoeo, Inc. v. Department of Health 119 the Supreme Court of Oklahoma considered a question involving the timing of a declaratory
judgment suit in an administrative matter. In that case Conoco had
petitioned the Oklahoma Air Quality Council for a variance from
certain air pollution emission requirements imposed pursuant to an
agency regulation.t 20 After failing to obtain the relief it desired at
the agency, Conoco filed suit for declaratory relief under the
Oklahoma Administrative Procedure Act l21 challenging the validity
and applicability of the regulation. 122 On. appeal from a district
court ruling in favor of Conoco, the Oklahoma Supreme Court considered the issue of when a declaratory judgment suit could be
brought (i.e., "whether an action for declaratory relief may be
brought after the time for appeal from an adverse final order has
expired").t 23 Relying on two prior decisions by the court l24 and an
lime deadlines sel by an agency rule, but the person later filed a section 12 declaratory
judgment action challenging the validity or applicability of a rule.
117 See APTRA § 19(b) (which requires the petition for review to be filed within 30 days
after the agency decision is final and appealable); § 16(e) (which sets deadlines for filing
the motion for rehearing within the agency that is generally a prerequisite for appeal to
the district court).
II. APTRA § 5(e).
""651 P.2d 125 (Okla. 1982).
'~"Id. at 127. Conoco requested the variance to operate for four years so that it could
make certain required adjustments to its operations without necessitating an expensive
plant closure. Id.
"'OKLA. STAT. ANN. tit. 75, § 306 (1987 &: Supp. 1989). Note that this section of the
Oklahoma Act was substantially amended in 1987, but no changes were made with respect to the timing of filing a declaratory suit. Interestingly, the Oklahoma Act places
the burden of proof on issues involving rule validity on the promulgating agency. Id.
'''''651 P.2d at 127, 129. The Council had approved Conoco's request for a variance
but had made it conditional for only one year, subject to Conoco's submitting a compliance schedule within 120 days. Id. at 127. The action was approved two months later by
the Oklahoma Board of Health, and Conoco, instead of appealing the agency actions,
filed its declaratory judgment action about one year after the Council's decision-beyond the time in which an administrative appeal could have been pursued. Id.
,., Id. at 129.
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analysis of the 1961 Model State Administrative Procedure Act,125
the court held that the declaratory judgment provision did not "alIowan aggrieved party to seek a declaratory judgment after a final
order has been issued and the time to appeal from that order has
expired."126 Thus, the Oklahoma court held that the petitioner's
opportunity to pursue a declaratory judgment action had passed.
Whether the Texas courts should follow the Oklahoma decision
in Conoco is questionable. Although there is, of course, merit in pursuing a policy that encourages persons to satisfy the exhaustion requirements for contested case proceedings as a prerequisite to
judicial review, if the agency proceedings involved an agency rule
which was truly invalid or inapplicable to the plaintiff, it should not
matter that the declaratory judgment action was filed (1) before the
agency action was initiated, (2) after the agency action was initiated
but before a hearing was conducted l27 or a final order was entered,
or (3) after the time for timely appealing an adverse final order expired. By way of analogy, in City of Sherman v. Public Util. Comm'n 128
the Texas Supreme Court reaffirmed that one of the traditional exceptions to the general requirement of exhausting all administrative
remedies prior to seeking judicial review pertains to cases in which
"·Id. at 130-31. The court ciled two cases which suggested that a declaratory judgment action would not be available after a final order had been rendered by an agency.
See Tax Comm'n v. Smith, 610 P.2d 794, 802 (Okla. 1980) (allowing a declaratory judgment under the state's general declaratory judgment statute finding that the attack was
"prior to the issuance of an order. judgment or decree... ."); Associated Builders &
Contractors v. State ex rel. Oklahoma Dep't of Labor, 628 P.2d 1156, 1161-62 (Okla.
1981) (implying that an action for declaratory judgment is appropriate prior to an order
by the agency, but that subsequent to such an order, it can only be appealed as a contested case).
12>651 P.2d at 131. The court concluded that the history of the 1961 Model Act sug.gested that declaratory relief should not be allowed after a final order by an agency has
been rendered. The court determined this after considering the Commiuee Report accompanying the 1941 draft which stated that "one of the principles incorporated in the
act was a 'provision for advance determination or 'declaratory judgments' on the validity
of administrative rules.''' Id. (quoting Report of Committee on Tentative Draft of Uniform Act
on Administrative Procedure. HANDBOOK OF THE NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAws. 228 (1943» (emphasis added by the court).
I.IIId. at 132. The court observed that if such an action were allowed. it would render
meaningless the thirty-day limitation of the contested case provision. Id. The court also
stated that although declaratory relief could be rendered (like under section 12 of the
Texas APTRA) whether or not the plaintiff had requested the agency to pass on the
issue, "[t]his is a limited exception to the usual requirement that a person may not seek
relief from the courts until he has exhausted the ordinary administrative remedies; but it
does not eliminate all other procedural requisites for judicial review." Id.
I.' See Rutherford Oil Corp. v. General Land Office. 776 S.W.2d 232 (Tex. App.Austin 1989. n.w.h.).
'·'643 S.W.2d 681 (Tex. 1983).
1989]
DECLARATORYJUDGMENTS
625
an agency has exceeded its statutorily conferred powers. 129 And,
generally, a party has not exhausted all administrative remedies until the party files a motion for a rehearing with the agency and such
motion is denied. 130 But, given City of Sherman, if an agency has acted beyond its statutory powers, then fully exhausting all administrative remedies-including filing a motion for rehearing with the
agency-should not be necessary,131 Similarly, if a rule is invalid or
inapplicable, the affected party should not have to comply with the
rehearing or time requirements for contested case appeals, but
should be able to file the section 12 rule challenge at any time,132
'''''Id. at 683. Although City of Sherman was a case invoking the Uniform Declaratory
Judgments Act rather than § 12 of APTRA, its analysis is nonetheless probative. The
petitioners in the case chose to pursue a declaratory judgment action rather than participate in an evidentiary hearing ordered by the agency. /d. at 682.
""See Lindsay v. Sterling, 690 S.W.2d 560, 563 (Tex. 1985).
'" See Railroad Comm'n v. Bishop Petroleum, Inc., 736 S.W.2d 724, 736 (Tex. App.Waco 1987), rev'd in part and aff'd in part on other grounds per curiam, 751 S.W.2d 485 (Tex.
1988). This case involved, in part, Ihe failure of the adversely affected party to preserve
in its motion for rehearing the aIlegations regarding the lack of agency authority. [d. at
736-42.
""Except, of course, in a case in which the rule chaIlenge is based on the ground of
noncompliance with the rulemaking procedures prescribed by APTRA (i.e., when there
is a statutory time limit of two years after the rule's effective date). See APTRA § 5(e).
With respect to the timing of the section 12 action, see Sam Houston Elec. Co-op.,'
Inc. v. Public Util. Comm'n, 733 S.W.2d 905 (Tex. App.-Austin 1987, no writ). In Sam
Houston Electric Co-op the aggrieved utility appealed to the district court from an adverse
agency order and included in its pleadings a request for a declaratory judgment under
section 12 that an agency rule that had come into play during the administrative proceedings was invalid. [d. at 910. The district court dismissed the declaratory judgment
action as being improperly joined with the appeal. [d. On the appeal of this point, the
court of appeals declined to determine whether the district court had erred in dismissing
the section 12 case because the underlying merits of the issue had been resolved in the
context of the issues in the contested case appeal. [d. The court concluded that the
error, if any, in the district court's dismissal of the section 12 count was harmless. /d.
Despite the court of appeals' determination that it need not address the propriety ofthe
district court's dismissal ofthe section 12 count, such action by the district court appears
to have been plainly erroneous. If the appeal in a contested case involves a rule that may
be invalid, there is no sound reason for not allowing the declaratory judgment count to
be considered along with the appeal from the agency. Cf Cobb v. Harrington, 144 Tex.
360, 190 S.W.2d 709 (1945) (determining that the existence of another remedy did not
bar an action for declaratory judgment under the Uniform Declaratory Judgments Act);
Bellegie v. Texas Bd. of Nurse Examiners, 685 S.W.2d 431, 434 (Tex. App.-Austin
1985, no writ) (commenting that section 12 "was intended for use by the courts to make
a correct declaration of the matters at issue, once jurisdiction has attached... :').
It is also worth observing that section 5-108 of the 1981 MODEL STATE ADMINISTRATIVE PROCEDURE ACT permits the filing of a petition for judicial review of a rule at any
time except-like APTRA § 5(e)-with respect to a two-year limit for any rule validity
challenge based on the ground that the rule's adoption did not comply with the Model
Act's procedural requirements. See 1981 MODEL STATE ADMINISTRATIVE PROCEDURE ACT
§ 3-113(b). Professor Bonfield has observed:
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If the practitioner is considering the filing of a section 12 declaratory judgment action concerning a rule after agency contested case
proceedings have commenced, attention must be given to two decisions which appear to limit the scope of section 12 based on the
constitutional prohibition against advisory opinions. 133 Given that
APTRA section 12 authorizes the district court to provide a declaration regarding the applicability or validity of an agency rule, there is
necessarily some tension between the statutory authority to grant
such a declaration and the constitutional prohibition against advisory opinions. 134 With respect to both Wilson and Powell,
[B]oth sought to test only the validity of agency rules; both
were filed in district court prior to entry of final judgment
in judicial proceedings between the petitioner and the
agency in other district courts; and the parties in both
sought a declaration of rule validity in order to assert a
favorable declaration as a defense in the pending proceeding. In both cases, the Austin Court of Civil Appeals ...
pointed out ... that the only issue before the district court
in the section 12 lawsuit was the validity of the rule, while
the other district court had all issues of the case before it,
including the validity of the rule in question. The court ...
concluded . . . that the only court which could settle the
entire controversy by final judgment was the original court,
and the suit for declaratory judgment could only be an advisory opinion. 135
Thus, given Wilson and Powell, it is settled that a party cannot seek
a declaratory judgment concerning the validity of a rule if other judicial proceedings are pending in state court against the party. 136 The
question remains, however, as to whether· the prohibition against
advisory opinions would come into play if there were administrative
proceedings pending between an agency and the adversely affected
party which involved the same rule sought to be interpreted by
Of course, at the time ofjudicial review the petitioner must also satisfy alI other
prerequisites for such review, including standing requirements; in some situations the passage oflime may eliminate any prejudice caused by the rule to the
person seeking review, thereby denying that person standing because the issue
is moot.
BONFIELD, supra note 47, § 9.2.5.
'""See Powell v. EstelIe, 580 S.W.2d 169 (Tex. Civ. App.-Austin, writ ref'd n.r.e.), ccrt.
denied, 444 U.S. 892 (1979); Wilson v. Grievance Comm. of State Bar Dist. No.3-A, 565
S.W.2d 361 (Tex. Civ. App.-Austin 1978, writ ref'd n.r.e.).
'"~TEX. CONST. art. V, § 8.
'''Shannon & Ewbank, supra note 5, at 434-35 (emphasis in original) (citations
omitted).
,"lI/d. at 435.
1989]
DECLARATORYJUDGMENTS
627
means of the declaratory judgment action. 137 If the petitioner has
sufficient standing to bring the section 12 action and the district
court can settle the entire controversy, then there should be no advisory opinion problem. 138 Thus, if the rule involved is determined
to be· invalid or inapplicable to the petitioner, then the district court
could certainly settle the entire controversy between the parties because any further agency proceedings would be meaningless. It is
arguable, however, that if the district court were to declare the rule
at issue to be valid or applicable (or both), then the declaratory
judgment action would not have disposed of the entire controversy
between the agency and the petitioner. To the contrary, it could be
suggested that the declaratory judgment action in such a situation
would dispose of the entire controversy between the agency and the
petitioner with respect to the rule's validity or applicability, although, of
course, the agency proceeding would still be unresolved. Whether
Wilson and Powell will control in such a case remains to be resolved
by future cases. It is interesting to observe, however, that the Austin
Court of Appeals made no mention of any advisory opinion problem in the recent case of Rutherford Oil, 139 even though the petitioner
in that case had initially participated in an agency proceeding by
having requested a hearing before the agency prior to filing the section 12 declaratory judgment action. 140
,>7 But see id. (ChiefJustice Shannon and Mr. Ewbank have posited that the same result
as in Wilson and Powell should apply in such a situation. This author does not entirely
agree. See infra notes 138-40 and accompanying text).
"·See id.
'>!'Rutherford Oil Corp. v. General Land Office, 776 S.W.2d 232 (Tex. App.-Austin
1989, n.w.h.). In addition, in City of Austin II, the Austin Court of Appeals rejected an
argument that section 12 is inappropriate when there is another pending action between
the parties in which the issues could be adjudicated. 728 S.W.2d 907, 910 (Tex. App.Austin 1987, writ ref'd n.r.e.). See supra notes 68-69 and accompanying text.
''''776 S.W.2d at 233. It should also be noted that the Austin Court of Appeals made
no reference in Rutherford Ditto the pre-APTRA decision of the Texas Supreme Court in
Texas Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891 (Tex. 1970).
In that case, the plaintiffs filed suit to declare the Board's interpretation of an applicable
statute invalid even though, at the time the action was filed, there were license suspension proceedings pending before the Board involving the same penal statute. The
Texas Supreme Court held that a declaratory judgment action was not available because
the plaintiffs could have still appealed an adverse agency finding and because of the
court's view that the agency action should not have been delayed by the plaintiff's employment of a declaratory judgment action to obtain a construction of the statute involved. Id. at 895-96. See also Shannon & Ewbank, supra note 5, at 436 (who therein
embraced the pre-APTRA analysis in the case regarding whether a court can render an
advisory opinion under the auspices of section 12). The decision in Canyon Creek Land
Corp. is inapposite to Rutherford Oil, however, for several reasons, including: (I) the statute in Canyon Creek Land Corp. was a penal statute, (2) APTRA § 12 now recognizes that
declaratory judgment actions can be brought without having to pursue agency review,
and (3) section 12 includes an exception forbidding the filing of a proceeding under the
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CONCLUSION
Although the opportunity to challenge the validity or applicability
of agency rules through an action under section 12 of APTRA has
been available for well over ten years, the number of reported cases
in which this remedy has been utilized is minimal. It is hoped that
this article has pointed out some of the opportunities for filing such
actions, along with some of the problems of which practitioners
should be aware. Given that the growth of state agency rulemaking
is not likely to diminish in the near future, the able practitioner
should incorporate this useful weapon into the arsenal of actions
that can be taken when representing clients who have dealings with
Texas state agencies.
section to delay or stay a hearing if a license suspension, revocation, or cancellation
proceeding is pending before the agency-an exception that should be controlling in
cases arising today which are comparable to Canyon Creek Land Corp.
If a practitioner is overly concerned with whether a declaratory judgment action might
be found to be an advisory opinion. however, the attorney could pursue an opinion of
the Attorney General with respect to the pertinent rule's validity. See, e.g., Op. Tex. All'y
Gen. No. JM-lO 17 (1989) (which was a recent opinion of the Attorney General regarding the validity of a rule).