BILL ANALYSIS C.S.H.B. 812 By: Duncan May 2, 1995 Committee Report (Substituted) BACKGROUND The Administrative Procedure Act (APA) is the statute that sets forth the minimum standards for uniform practice and procedure for state agencies. This statute is currently codified as Chapter 2001 of Title 10 of the Government Code. Experience under this Act has developed the need for modification and updating as has been pointed out by court opinions, legal writers and those who deal with such statutes on a daily basis. PURPOSE HB 812 would enact improvements in the APA to clarify certain rule making procedures as well as standards for judicial review of agency rules, and will facilitate the administrative adjudication of disputed matters. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 2001.024 relating to requirements for initial publication of a proposed rule by an agency and insures the agency informs interested persons of the purpose of and authority for the rule. Requirements that notice of the proposed rule contain a fiscal note and public cost/benefit analysis are eliminated. Instead, a regulatory analysis which may contain a fiscal note, public cost/benefit analysis, and other information must be provided by the agency if requested by at least 25 people, a governmental subdivision or agency or an association having at least 25 members. SECTION 2. Amends Section 2001.033 of the APA to insure that agency orders adopting rules set out full explanations of the reasons and factual bases for the rule. These amendments are also intended to bring the APA in line with the Austin Court of Appeals decision in Railroad Commission of Texas v. Arco Oil and Gas Company, et al., 876 S.W.2d 473 (Tex. App.--Austin 1994, writ req'd 8/3/94). The language of this amendment is based on § 3-110 of the Uniform Law Commissions Model Administrative Procedure Act (1981) to insure careful agency consideration of proposed rules and comments of the public. SECTION 3. Amends Section 2001.035 to clarify the standards for invalidation of rules upon judicial review. The Courts have held that the APA does not set out standards for judicial review of agency rules. The proposed standards are based on reported court decisions. SECTION 4. Amends Section 2001.091 relating to discovery. The amendments would provide that all parties appearing before agencies in contested case proceedings are entitled to utilize the discovery forms authorized by the Texas Rules of Civil Procedure. Unless provided otherwise by order of the presiding officer or by agency rule, the procedures, deadlines and other discovery requirements of the Texas Rules of Civil Procedure will also apply. In addition, sanctions for abuse of discovery or failure to obey an agency order relating to discovery are provided. SECTION 5. Amends Section 2001.103 relating to the issuance of subpoenas and to mileage and per diem of witnesses and deponents. The amendments authorize an agency to compel the attendance of witnesses and the production of documents at hearings, allow for the payment of reasonable witness fees for compelled attendance at hearings and depositions, and provide for enforcement of agency-issued subpoenas. SECTION 6. Amends Section 2001.141 relating to orders entered in contested case proceedings. Under this section, the ability of agency to state a final decision in the record has been deleted. This will address the problems presented in El Paso Electric Co. v. Public Utility Commission of Texas, 715 S.W.2d 734 (Tex. App. -- Austin 1989, writ ref'd n.r.e.). SECTION 7. Amends Section 2001.142 to clarify issues that resulted after the decisions in Commercial Life Insurance Co. v. Texas State Board of Insurance, 774 S.W.2d 650 (Tex. 1989), and English v. Central Education Agency, 866 S.W.2d 73 (Tex. App. -- Austin 1993, no writ). The amendment clearly establishes how notice is to be given of an agency decision and who is to receive it. The proposed amendments make it clear that notice is to be given by first class mail or certified mail, and that the party, the parties' attorney of record or designated representative, will be given notice to their accurate mailing address. The agency would be required to certify the date of mailing and the names and addresses of those to whom the decision or order was mailed. SECTION 8. Amends Section 2001.146 relating to motions for rehearing to conform Section 2001.146 to Section 2001.142, which was amended in the preceding section of the bill. This will clarify and give certainty to the times for filing motions for rehearing, replies thereto, and for agency action. SECTION 9. Amends Section 2001.175 relating to procedures for appellate review of agency decisions. It provides that portions of an administrative record sealed by the agency shall not be considered "court records" for purposes of the Texas Rules of Civil Procedure. Thus, if an administrative agency has ordered that records be sealed, such records are not presumed to be public and open records upon appeal of the final agency order. SECTION 10. Amends to Section 2001.176 to require a party seeking judicial review to have the agency served with citation and to mail copies of the petition by certified mail to all attorneys of record in the proceeding before the agency. This insures proper notice to all parties and eliminates the unnecessary expense associated with the prior requirement to have citation served on all parties appearing before the agency. SECTION 11. Repeals Sections 2001.030, 2001.089, 2001,092 through 2001.094, 2001.096 through 2001.102, and 2001.143. Section 2001.030 is repealed to eliminate the duplication that came into the statute when APA Section 2001.033 was enacted. The duplication was identified in Methodist Hospital of Dallas v. Texas Industrial Accident Board, 798 S.W.2d 651 (Tex. App. -- Austin 1990, writ dism'd). Section 2001.089 is repealed. Its provisions are added to the section 2001.103 (See Section 5 of the bill) Certain outdated sections (2001.092 through 2001.94 and 2001.96 through 2001.102) relating to subpoenas, commissions to take depositions and other procedural requirements are repealed. Section 2001.143 relating to the time for rendering an agency decision is repealed as unnecessary. The courts have found the time limits imposed by this section to be directory only. SECTION 12. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE As substituted, H.B. 812 would: require notice of proposed rules to state the type of "probable" economic cost and "probable" costs for enforcement of the rule, as well as a "summary of alternative methods" for achieving the purpose of the proposed rule. (Section 1); eliminate the outdated reference to rules adopted before January 1, 1976, and provide that a rules is not valid if procedures followed by the agency are not in substantial compliance with the APA and any other applicable statutory provision or an agency rule regarding procedure (Section 3) and; put back existing language in Section 2001.103, Government Code, regarding payment of witness fees, that was inadvertently left out of the original bill (Section 5). SUMMARY OF COMMITTEE ACTION Pursuant to notice posted on April 6, 1995, the House Committee on State Affairs convened in a public hearing on April 11, 1995 to consider HB 812. The Chair laid out HB 812 and recognized Rep. Duncan to explain the bill. A complete committee substitute was considered which was not adopted. The following person testified for the bill: Catherine Fryer representing herself. The Chair recognized Rep. Duncan to close. The Chair left HB 812 pending. HB 812 was considered by the committee in a formal meeting on April 27, 1995. The Chair laid out HB 812. The committee considered a complete committee substitute for the bill. The substitute was adopted without objection. The bill was reported favorably as substituted with the recommendation that it do pass and be printed and be sent to the Committee on Local and Consent Calendars, by a record vote of 14 ayes, 0 nay, 1 pnv, and 0 absent.