BILL ANALYSIS

H.B. 5083

By: Patterson

Delivery of Government Efficiency

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that the current process for reviewing state agencies may not involve a careful analysis of an agency's rules and may not adequately incentivize agencies to reevaluate any cost-benefit analysis that supported the original regulation. The bill author has further informed the committee that the level of deference given to existing rules may be too high, making it difficult for rules that are no longer needed to be removed. H.B. 5083 seeks to establish responsible rulemaking practices for state agencies while ensuring that old, outdated, and overly burdensome regulations are set to expire when a public need for them can no longer be justified by providing for periodic reviews of a state agency's rules by the agency and by requiring state agencies to prepare a cost-benefit analysis for every proposed rule.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

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.

ANALYSIS

H.B. 5083 amends the Education Code, Government Code, and Occupations Code to revise statutory provisions governing the adoption and review of rules by state agencies under the Administrative Procedure Act.

Express Statutory Authority for Rules or Guidance Documents

H.B. 5083 prohibits a state agency from adopting a rule or issuing a guidance document, defined by the bill as any letter, opinion, compliance manual, or other statement issued by a state agency that explains or interprets one or more of the state agency's rules, unless the agency has been granted an express statutory delegation of authority to adopt the rule or issue the guidance document. For these purposes, a state agency does not have an express statutory delegation of authority to adopt a rule or issue a guidance document solely because the rule or guidance document is reasonably related to the purpose of the state agency's enabling legislation or to a general statutory power or duty of the state agency.

Certain Rules Prohibited Based on Costs of Compliance; Required Cost-Benefit Analyses

H.B. 5083 requires a state agency to prepare a cost-benefit analysis for each proposed rule. The cost-benefit analysis must include the following:

· a cost-benefit analysis estimating for each year of the first six years that the rule will be in effect the public benefits expected as a result of the rule's adoption and the expected economic costs to persons required to comply with the rule;

· an explanation of all assumptions, methods, supporting data, and, if any, discount rates used in preparing the cost-benefit analysis; and

· a clear statement of the total expected economic costs to persons required to comply with the rule and the total public benefits expected as a result of the rule's adoption.

The bill prohibits a state agency from adopting a proposed rule under the following scenarios:

· the cost-benefit analysis states that the total expected economic costs to comply with the rule exceeds the total public benefits expected as a result of the proposed rule's adoption; or

· there are alternative methods of regulation that could accomplish the legislature's intent in authorizing the rule and any statutory purposes provided by the legislature at a lower economic cost to persons required to comply with the rule.

H.B. 5083 requires a state agency, if the proposed rule takes effect and remains in effect at least six years, to do the following:

· solicit from interested stakeholders data regarding the stakeholders' experience and actual economic costs of compliance with the rule; and

· conduct a retrospective cost-benefit analysis that compares estimates made as part of the initial cost-benefit analysis regarding the economic costs of compliance and the actual economic costs of compliance based on the data solicited from stakeholders under these provisions and any other readily available data relevant to this purpose.

The bill requires a state agency to provide the following if the agency uses a discount rate in preparing a cost-benefit analysis for each proposed rule or a retrospective cost-benefit analysis under the bill:

· a reasoned justification for the use of the discount rate; and

· another cost-benefit analysis for the same rule that does not include the use of the discount rate.

The bill requires a state agency that prepares a cost-benefit analysis for each proposed rule or a retrospective cost-benefit analysis under the bill to publish on the agency's publicly accessible website all documentation and other materials used to prepare the analysis in a machine-readable format. The bill establishes that a reference to an existing rule under these provisions includes any amendments to the rule, and requires the state agency, to the extent feasible, to prepare the initial cost-benefit analysis based on the terms of the rule as amended.

Content of a Proposed Rule Notice

H.B. 5083 revises the required contents of a notice of a proposed rule under the Administrative Procedure Act as follows:

· removes from the contents a note about public benefits and costs showing the name and title of the officer or employee responsible for preparing or approving the note and stating the public benefits and probable economic cost for each year of the first five years that the rule will be in effect; and

· includes the cost benefit analysis required under the bill's provisions.

State Agency Order Adopting Rule

H.B. 5083 includes among the required contents of a state agency order finally adopting a rule the cost-benefit analysis required under the bill's provisions updated to reflect reasonable public commentary on the state agency's calculations of the costs and benefits of the rule or a reasoned justification for why the agency did not update the cost-benefit analysis based on the public commentary. The bill prohibits a state agency rule from being arbitrary or capricious.

Declaratory Judgments

H.B. 5083 authorizes a respondent subject to an enforcement action by a state agency for the violation of a rule to request a declaratory judgment from the court finding a rule invalid if the state agency lacks express statutory delegation of authority to adopt the rule on which the enforcement action is based, including if the state agency relies on a guidance document to interpret the rule for purposes of the enforcement action. The bill requires a court to award a respondent that prevails on such grounds reasonable attorney's fees and court costs.

Review and Expiration of Rules

H.B. 5083 repeals provisions that do the following with respect to state agency reviews of existing rules:

· require a state agency to review and consider for readoption each of its rules;

· require a state agency to review a rule not later than the fourth anniversary of the date on which the rule takes effect and every four years after that date;

· establish that the adoption of an amendment to an existing rule does not affect the dates on which the rule must be reviewed except that an amendment's effective date is considered to be the rule's effective date if the agency formally conducts a review of the rule in accordance with those provisions as part of the process of adopting the amendment;

· require the state agency to readopt, readopt with amendments, or repeal a rule as the result of reviewing the rule;

· establish that the procedures of provisions of the Administrative Procedure Act relating to the original adoption of a rule apply to the review of a rule and to the resulting repeal, readoption, or readoption with amendments of the rule, except that publishing the Texas Administrative Code citation to a rule under review satisfies the requirements of the act's provisions relating to publishing the text of the rule unless the agency readopts the rule with amendments as a result of the review; and

· require a state agency's review of a rule to include an assessment of whether the reasons for initially adopting the rule continue to exist.

The bill specifies that the provisions under which the Texas Department of Licensing and Regulation must conduct a review of each rule relating to the Texas Board of Veterinary Medical Examiners not later than December 31, 2026, are these former provisions repealed by the bill.

H.B. 5083 provides for the following regarding the expiration of rules:

· each state agency rule expires on the 12th anniversary of the rule's effective date unless the state agency that adopted the rule readopts the rule before the rule's expiration date in accordance with these bill provisions;

· the expiration date for a readopted rule is the 12th anniversary of the readopted rule's effective date;

· the adoption of an amendment to an existing rule does not affect the expiration date of the rule under these provisions unless the amendment is made as part of a readoption of the entire rule or chapter of the Texas Administrative Code containing the amended rule;

· the procedures of provisions of the Administrative Procedure Act relating to rulemaking required for the adoption of a rule apply to the readoption of a rule under these bill provisions, including the following:

o preparing a cost-benefit analysis, as required by the bill, for each proposed rule;

o providing opportunity for public comment;

o responding to substantive public comments under the requirement for a state agency order finally adopting a rule to include the reasons why the agency disagrees with party submissions and proposals as part of the reasoned justification for the rule; and

o providing an updated cost-benefit analysis, as required by the bill;

· in readopting a rule under these provisions, a state agency is required to also do the following:

o provide an assessment of whether the reasons for initially adopting the rule continue to exist;

o provide an assessment of whether the rule is obsolete, unnecessary, or duplicative or conflicts with other rules;

o consider public comments that provide data and information on the actual economic costs to persons required to comply with the rule;

o to the fullest extent practicable, base estimates on expected economic costs to persons required to comply with the rule on data and information solicited by the state agency from interested stakeholders regarding the stakeholders' experience and actual economic costs of compliance with the rule; and

o publish all notices, analyses, and responses to public comments on the state agency's publicly accessible website;

· each state agency must do the following with respect to the state agency's rules:

o publish on the state agency's publicly accessible website the expiration date for each rule; and

o make the expiration date of each rule available through an application programming interface that allows automated access and monitoring of the rules' expiration dates;

· the secretary of state must include a rule's expiration date in the online publication of the Texas Administrative Code in a standardized metadata field that accompanies each section of the code;

· a rule does not expire under these bill provisions if the governor in writing exempts a rule from the application of the provisions;

· on the written request from a state agency, the governor must exempt a rule that is authorized or required by the constitution, is necessary to comply with federal law, or is necessary because federal funding is conditioned on the rule remaining in effect;

· a state agency that administers a rule exempted by the governor must every 12 years after the date of the exemption consider less burdensome alternatives to the rule, solicit public commentary on those potential alternatives, and in determining whether to adopt less burdensome alternatives, calculate the expected economic costs to persons required to comply with the rule based on data and information provided by persons subject to the rule and bearing those costs;

· on written request by a state agency, the governor may extend a rule's expiration date for a period not to exceed one year following the date on which the extension is granted;

· such a written request must explain the reason the state agency cannot complete the readoption of the rule before the rule's expiration date and describe the harm to the public's health, safety, or welfare that would result if the rule expired; and

· any extension granted by the governor must be accompanied by findings affirming such an explanation and description.

Invalidity of Certain Enforcement Actions Regardless of Commencement Date

H.B. 5083 requires an enforcement action brought by a state agency to be dismissed if the enforcement action is based on the violation of a rule that expired, regardless of whether the enforcement action commenced before the date the rule expired.

Applicability to Certain State Board of Education Rules

H.B. 5083 makes the bill's provisions relating to the expiration of rules inapplicable to certain rules adopted by the State Board of Education under statutory provisions relating to a required curriculum.

Procedural Provisions

H.B. 5083 does the following, effective September 1, 2025:

· requires a state agency to assign the state agency's rules that exist on that date eight different expiration dates for the purpose of staggering the expiration dates of the rules and implementing the bill provisions providing for the expiration of rules;

· prohibits an expiration date assigned to a rule from being later than January 1, 2040;

· requires each state agency, not later than December 1, 2025, to report to the governor the assigned expiration dates; and

· requires the governor to publish on the office's publicly accessible website a schedule of all the expiration dates so assigned.

H.B. 5083 establishes that the bill's provisions revising the Administrative Procedure Act apply only to a proposed state agency rule for which notice is filed with the secretary of state on or after the bill's effective date.

Repealed Provisions

H.B. 5083 repeals Section 2001.039, Government Code.

EFFECTIVE DATE

Except as otherwise provided, January 1, 2026.