Texas state agencies have a great deal of authority over governmental executive and licensing decisions across the state, including such ubiquitous activities as the issuance of drivers licenses and the regulation of multiple licensed professionals, such as doctors, attorneys, nurses, hairdressers, insurance agents, electricians, and plumbers.
How are state agencies defined?
Texas Government Code Section 2001.003(7) defines “state agency” as “a state officer, board, commission, or department with statewide jurisdiction that makes rules or determines contested cases. The term includes the State Office of Administrative Hearings for the purpose of determining contested cases.”
The term does not include:
(A) a state agency wholly financed by federal money;
(B) the legislature;
(C) the courts;
(D) the Texas Department of Insurance, as regards proceedings and activities under Title 5, Labor Code, of the department, the commissioner of insurance, or the commissioner of workers’ compensation; or
(E) an institution of higher education.
How are agency rules defined?
As shown above, the definition of “state agency” refers to “making rules” as one of the purposes of state agencies. Government Code Section 2001.003(6) defines an agency “rule” as:
(A) 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.
Why does it matter whether an agency has enacted a “rule” when taking certain actions?
As shown above, agency rules have “general applicability,” which means rules have statewide effect and can impact multiple people’s rights and legal obligations. For these reasons, rules cannot be enacted by agencies unless the agencies follow the proper promulgation procedures, including providing the public notice and the opportunity for comment before the rule is finalized and adopted. Tex. Gov’t. Code Section 2001.035(a).
Case law concerning improper agency rules:
While the statute above may be only a few sentences, it’s not always easy at first glance to determine whether an agency’s action or statement qualifies as a “rule.” In one such case, the Austin Court of Appeals found that a warning letter sent by the Texas Medical Board to a telemedicine company included an improperly established “rule” because the letter contained language that amended an existing rule by effectively imposing different patient-care requirements on the practice of telemedicine from what had been set forth in the text of existing rules. Teladoc, Inc. v. Tex. Med. Bd., 453 S.W.3d 606 (Tex. App.—Austin 2014). Additionally, the warning letter was also copied to the Texas Medical Association, which meant the Texas Medical Board intended for the letter’s message to reach the “regulated public,” that is, Texas physicians in general.
For these reasons, the appellate court agreed with Teladoc that: (1) the TMB had improperly established a rule through its warning letter and (2) the rule was invalid under Section 2001.035 of the Texas Government Code which invalidates agency rules that fail to follow the statutory framework for rules promulgation. Id.
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