noting that "purposes of [APA] section 2001.033 [reasoned justification and other required contents of agency order adopting rule] [are] to provide meaningful public participation in the rulemaking procedure, to allow opponents of the rule to formulate specific challenges, and to ensure that the agency carefully considers and analyzes a rule before adopting it”
How later courts described this case
- noting that "purposes of [APA] section 2001.033 [reasoned justification and other required contents of agency order adopting rule] [are] to provide meaningful public participation in the rulemaking procedure, to allow opponents of the rule to formulate specific challenges, and to ensure that the agency carefully considers and analyzes a rule before adopting it”
- “Requiring an agency to demonstrate a rational connection between the facts before it and the agency’s rules promotes public accountability and facilitates judicial review.”
- “[T]he agency must explain how and why it reached the conclusions it did.”
Written by the judges who cited it.
Later courts went against this
Superseded by statute, as recognized in Lower Laguna Madre Foundation, Inc. v. Texas Natural Resource Conservation Commission
925 S.W.2d 667, 670 (Tex. 1996) (noting that “purposes of [APA] section 2001.033 [reasoned justification and other required contents of agency order adopting rule] [are] to provide meaningful public participation in the rulemaking procedure, to allow opponents of the rule to formulate specific challenges, and to ensure that the agency carefully considers and analyzes a rule before adopting it”), superseded on other g…
Texas Court of Appeals, 3rd District (Austin)Oct 21, 1999by statuteother groundsmedium confidenceRead it
The opinion
SPECTOR, Justice,
joined by PHILLIPS, Chief Justice and GONZALES, Justice,
concurring in part and dissenting in part.
I concur in the Court’s judgment that the Board of Insurance failed to state a reasoned justification for Rule 1003 (28 TexAd-min.Code § 21.1003). I respectfully dissent, however, from the Court’s judgment invalidating Rule 1000 (28 TexAdmin.Code § 21.1000).
The insurers challenged the rules under section 2001.035 of the Administrative Procedure Act (APA). Under that statute, a rule is not valid unless the agency’s order is in substantial compliance with section 2001.033 of the APA, which requires that an order adopting a rule set forth a reasoned justification. See Tex.Gov’t Code § 2001.035. I believe that the majority opinion requires more than substantial compliance by invalidating Rule 1000 based on a single phrase — “in part.”
The Board’s order adopting Rule 1000 stated that the prohibited actions are “anti-competitive and result[] in blacklisting of some consumers from the insurance market.” 18 Tex.Reg. 6329, 6330. It further provided that the rule would “result in greater fairness ..., increased competition, and better informed consumers,” while allowing insurers to base decisions on the same factors underlying another insurer’s adverse decision. Id. The order also noted that “[a]n underwriter’s function is to underwrite risk based on an individual company’s underwriting guidelines” and that the rule was intended to ensure the “fair and equitable application of existing guidelines.” 18 Tex.Reg. at 6330, 6331.
From its use of the term “blacklisting” in conjunction with references to the “equitable application of existing guidelines,” the Board’s reasoning is readily apparent. An insurer should not be free to reject out of hand an applicant who meets the company’s own risk-based underwriting guidelines simply because another insurer previously rejected the applicant or cancelled the applicant’s coverage. The order repeatedly made clear that an insurer is not required to act without knowledge of another insurer’s decision. In fact, the Board incorporated a provision that specifically allows insurers to ask about an applicant’s adverse experiences with other companies, so long as the insurer makes a decision based upon its own underwriting criteria.
Even though the Board’s order identifies a justification for the rule as a whole, the majority holds the rule invalid based upon the agency’s failure to address a single phrase. I agree with the Austin Court of Appeals, however, that “the reasoned justification requirement was not intended to be applied clause by clause but rather to the rule as a whole.” See Chrysler Motors v. Texas Motor Vehicle Comm’n, 846 S.W.2d 139, 143 (Tex.App.—Austin 1993, no writ). I believe that the result of the majority opinion will be to require administrative agencies to provide *672 justification for virtually every word in adopted rules in order to sustain their validity. This would, in effect, “impose a requirement under § [2001.033] for detailed findings of fact and conclusions of law.” Id. Nothing in the language of section 2001.033 hints that the Legislature intended to impose such an unworkable requirement.
Because I believe that the Board substantially complied with the reasoned justification requirement, I dissent from that portion of the Court’s judgment invalidating Rule 1000. I concur in the remainder of the Court’s judgment.