What Is a Rule? Or What Have the Courts Declared Is a Rule?
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What is a Rule? Or What Have the Courts Declared is a Rule? Nichole Bunker‐Henderson, Office of the Texas Attorney General 8/29/2013 The views expressed in this paper are those of the author and do not reflect the official opinions of the Office of the Texas Attorney General. The objective of this paper is to take a comprehensive look at the burgeoning jurisprudence regarding the determination of when an agency statement constitutes a rule under the Texas Administrative Procedure Act (APA). While there were a steady number of substantive rule challenges1 brought pursuant to section 2001.038 of the APA during the past twenty years, the number of recent procedural challenges alleging illegal ad hoc rulemaking has increased since the Texas Supreme Court issued its opinion in El Paso Hospital District v. Texas Health and Human Services Commission2 in 2008. In that case, the court held that the agency engaged in impermissible ad hoc rulemaking when the cut-off date that the agency used to calculate certain claims conflicted with the cut-off date in the agency’s formal rule.3 The court’s finding of illegal ad hoc rulemaking in that case appears to have reinvigorated interest in this area of the law. During the past five years, there has been a steady increase in procedural rule challenges filed and numerous opinions written by the Texas courts of appeals about whether certain agency statements amount to unpublished rules and thereby violate the APA. One of the earliest court of appeals opinions citing to the Supreme Court’s 2008 El Paso Hospital District opinion was the Third Court of Appeals’ opinion in Combs v. Entertainment Publications.4 The Entertainment Publications opinion examined and applied the El Paso Hospital District opinion to conclude that letters sent by the Comptroller informing businesses of the Comptroller’s revised interpretation of a Tax Code provision met the definition of a rule.5 The court of appeals rejected the Comptroller’s assertion that these were statements pertaining to internal management or organization because they were “aimed at placing the regulated public 1 For the purpose of this discussion, “substantive rule challenge” refers to a suit challenging the validity of a rule on other than procedural grounds. 2 El Paso Hosp. Dist. v. Tex. Health & Human Servs. Comm’n, 247 S.W.3d 709 (Tex. 2008). 3 Id. 4 Combs v. Entm’t Publ’ns, Inc., 292 S.W.3d 712 (Tex. App.—Austin 2009, no pet.). 5 Entm’t Publ’ns, Inc., 292 S.W.3d at 723-24. 1 on notice of the Comptroller’s prospective, blanket application of section 151.024 of the tax code.”6 Following the courts’ opinions in El Paso Hospital District and Entertainment Publications, numerous other cases have examined the nuances of when an agency is required to engage in formal rulemaking. A review of these cases suggests that the question of what a rule is under the Texas APA is perhaps best answered in the negative by looking at what agency statements or actions the courts have said are not rules. The cases also suggest that the Third Court of Appeals may be more likely to apply the broader view of what constitutes a rule, as set out in Entertainment Publications,7 as opposed to the narrower view articulated in the Third Court’s 1999 holding in Brinkley v. Texas Lottery Commission.8 Here we sort through what the courts have declared is or is not a (procedurally invalid) rule in those opinions and attempt to identify guideposts for future cases. I. The APA Definition The APA definition of “rule” is extremely broad, and does not provide much textual guidance about its parameters beyond those listed in subsection (C), which is also quite broad. The APA defines a rule as: Section 2001.003(6) “Rule”: (A) means a state agency statement of general applicability that: (i) implements, interprets, or prescribes law or policy; or (ii) describes the procedure or practice requirements of a state agency; (B) includes the amendment or repeal of a prior rule; and (C) does not include a statement regarding only the internal management or organization of a state agency and not affecting private rights or procedures. 6 Id. at 722. 7 Entm’t Publ’ns, Inc., 292 S.W.3d 712. 8 Brinkley v. Tex. Lottery Comm’n, 986 S.W.2d 764, 771 n.9 (Tex. App.—Austin 1999, no pet.). 2 .