CONSTITUTIONAL CHALLENGES TO STATE STATUTES AND RULES ©MARY A. KEENEY SUSAN G. CONWAY 401 Congress Avenue, Suite 2200 (512) 480-5682 Telephone (512) 480-5882 Facsimile State Bar of Texas 17TH ANNUAL ADVANCED ADMINISTRATIVE LAW COURSE September 22-23, 2005 Austin CHAPTER 16 MARY A. KEENEY Graves, Dougherty, Hearon & Moody, P.C. A Professional Corporation 401 Congress Ave., Suite 2200 Austin, TX 78701 phone: (512) 480-5682 [email protected] Mary Keeney is a shareholder in the Austin law firm of Graves, Dougherty, Hearon & Moody. Her law practice focuses on appellate law, administrative litigation, and general litigation involving a wide range of substantive law areas, including state electric and telecommunications utility regulation, state lands, insurance, and products liability. After spending 10 years in the Attorney General’s office defending state agencies, she has spent the last 5 and a half years both suing and representing them in a variety of matters. She is Board Certified in Civil Appellate Law. Education Vanderbilt University (B.A., magna cum laude, 1975) University of Texas (J.D., with honors, 1977) Experience Briefing Attorney to Chief Justice Joe R. Greenhill, Supreme Court of Texas, 1978-1979 Daugherty, Kuperman, Golden & Morehead, P.C., 1979-1987 Johnson & Gibbs, P.C., 1987-1989 Assistant Attorney General in Tax, Energy, and Natural Resources Divisions, 1990-2000 Graves, Dougherty, Hearon & Moody, February 2000 to present SUSAN G. CONWAY Graves, Dougherty, Hearon & Moody, P.C. A Professional Corporation 515 Congress Ave., Suite 2300 Austin, TX 78701 phone: (512) 480-5768 [email protected] Susan Conway is a shareholder in the Austin law firm of Graves, Dougherty, Hearon & Moody. Her law practice focuses on state regulation of insurance, health care, managed care, marketing and advertising practices, and various other government-regulated professional and business activities. Susan has handled regulatory investigations, enforcement actions, contested administrative cases; professional licensing and standards matters, open records disputes, ratemaking proceedings, and rulemaking proceedings involving numerous governmental agencies and officials, including the Texas Department of Insurance, Attorney General of Texas, Texas Health and Human Services Commission, Texas Department of Licensing and Regulation, and State Board of Pharmacy. Education Rice University (B.A. 1971) The University of Texas at Austin (M.A. 1979) The University of Texas School of Law (J.D. with honors 1982) Experience Graves, Dougherty, Hearon & Moody - Since April 2004 Vinson & Elkins, L.L.P. - 1982 - 2004 Chambers USA: America's Leading Business Lawyers 2003-2004, 2004, in insurance law President, Board of Directors, Lady Bird Johnson Wildflower Center Constitutional Challenges to State Statutes and Rules Chapter 16 TABLE OF CONTENTS I. Introduction ........................................................................ 1 II. Threshold Issues: Standing, Justiciability, Ripeness and Joinder ................................... 1 III. Nuts and Bolts ...................................................................... 3 A. Procedural Vehicles to Challenge the Constitutionality of a Texas Statute .......................... 3 B. Procedural Vehicles to Challenge the Constitutionality of an Agency Rule. ......................... 4 C. Recovering the costs of litigating: availability of attorneys’ fees. ................................ 5 IV. "Facial" versus "As Applied" Constitutional Challenges .......................................... 6 V. Challenges Based on the Texas Constitution .................................................. 7 A. Prohibition Against Retroactive Laws ................................................... 7 B. Right to Trial by Jury .............................................................. 7 C. Violation of the Open Courts Provision. ................................................. 8 D. Unconstitutional Takings .......................................................... 11 E. Restrictions on Abortions and the Texas Constitution’s Equal Rights Amendment, Equal Protection Clause and Right to Privacy ................................... 12 F. Unlawful Delegation of Legislative Authority to State Agencies and Private Entities .................. 13 1. Unlawful delegation to other governmental entities ..................................... 13 2. Unlawful delegation to private entities .............................................. 15 G. Unlawful Delegation of Powers Vested in the Judicial Branch to State Agencies .................... 16 H. Constitutional Prohibition Against Gratuitous Payment of Public Money to Individuals, Associations or Corporations ................................... 16 I. Constitutional Prohibition Against “Local” or “Special” Laws ................................. 17 VI. Challenges Based on the U.S. Constitution .................................................. 18 A. Challenges Under the Dormant Commerce Clause ......................................... 18 B. Preemption When a State Agency Misapplies the Federal Law It Implements ...................... 19 1. The federal Telecommunications Act of 1996 ........................................ 19 2. The federal Medicaid laws ...................................................... 19 3. Restrictions on Abortion Funding and Clinics ......................................... 20 C. Comprehensive and Express Preemption (or Not) ......................................... 20 1. The Broadest Preemption There Is– ERISA .......................................... 20 2. Importance of the Scope of the Federal Regulation – a FIFRA case ......................... 21 3. A Narrow Construction of Scope and Plain Language – a CERCLA Decision .................. 21 i Constitutional Challenges to State Statutes and Rules Chapter 16 CONSTITUTIONAL CHALLENGES County Underground Water Conservation Dist., 925 TO STATE STATUTES AND RULES S.W.2d 618, 626-27 (Tex. 1996). A person to whom a statute may constitutionally be 1 I. Introduction applied may not challenge the statute on grounds that it could be applied unconstitutionally to others. Garcia, 893 "The right to judicial review of acts of legislative and S.W.2d at 518. However, an association may sue on administrative bodies affecting constitutional or property behalf of its members if the members would have rights is axiomatic." City of Houston v. Blackbird, 394 standing to sue in their own right, and protection of the S.W.2d 159, 162 (Tex. 1965). Although curbed by many member interests at issue is germane to the organization's qualifications and circumscribed by many conditions, the purpose. Garcia, 893 S.W.2d at 518 (association has right of a person whose constitutionally protected rights standing to challenge Workers Compensation Act on are affected by a state statute or an agency rule to behalf of members "a large majority of" which are judicially challenge that statute or rule is firmly covered under the workers' compensation system and established and is an important fundamental check on may be assumed to have suffered a compensable injury governmental power. under the Act); Tex. Ass'n of Business, 852 S.W.2d at 447 (business association alleging some of its members II. Threshold Issues: Standing, Justiciability, subjected to administrative penalties assessed under Ripeness and Joinder challenged statute and others at substantial risk of penalty held to have standing). To challenge the constitutionality of a statute, a plaintiff must have standing, a necessary component of the A statute may be challenged even though a state court's subject matter jurisdiction. Standing requires a agency has not yet imposed a penalty or sanction under real controversy between the parties that will be actually the statute. A plaintiff may present justiciable determined by the judicial declaration sought. Texas controversies addressable by the courts upon a showing Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d that an injury “is likely to occur.” Texas Dep’t of 440, 446 (Tex. 1993) (quoting Board of Water Engrs v. Banking v. Mount Olivet Cemetery Ass’n, 27 S.W.3d City of San Antonio, 155 Tex. 111, 114, 283 S.W.2d 276, 282 (Tex. App.–Austin 2000, pet denied). 722, 724 (1955). (Emphasis added.) If action has previously been taken or threatened, unless the agency officials make a “binding Thus, to challenge a statute, a plaintiff must first admission or [take] extrajudicial action that would suffer some actual or threatened restriction prevent a recurrence of the challenged action,” a under that statute. Second, the plaintiff must declaratory judgment action remains justiciable. Texas contend that the statute unconstitutionally Health Care Info. Council v. Seton Health Plan, Inc., restricts the plaintiff's rights, not somebody 94 S.W.3d 841, 849 (Tex. App.–Austin 2002, pet. else's. denied). Texas Workers' Comp. Comm'n v. Garcia, 893 S.W.2d Statutory challenges, however, must still meet 504, 517-18 (1995) (citing Texas Ass'n of Business v. traditional standards of ripeness. “A court cannot pass Texas Air Control Bd., 852 S.W.2d at 445 (emphasis in on the constitutionality of a statute unless the facts have original). To show actual or threatened restriction under matured, forming the concrete basis against which the a statute, it is typically sufficient for plaintiffs to show statute may be applied.” Atmos Energy Corp. v. that they are subject to the statute in question and in Abbott, 127 S.W.3d 852, 857 (Tex. App.–Austin 2004, circumstances