Rulemaking

implicitly or explicitly

then broadly and liberally construed

Texas Occupations Code 2051 (Gives Secretary of State authority to regulate athlete agents) (See, e.g., 2051.051 and 2051.101)• 1 Tex. Admin. Code 78 et seq. are the rules adopted by SOS (See, e.g., 78.152)

APA: A state agency statement of general applicability that (1) implements, interprets, or prescribes law or policy; or (2) describes the procedure or practice requirements of a state agency.

A statement regarding only the internal management or organization of a state agency and not affecting private rights or procedures.

1. Facts: Lottery Commission issues a letter to licensees saying that 8-liners are illegal gambling devices and will be enforced as such
2. Legal Issue: Brinkley says that the Commission's interpretation and policy of enforcement is a rule that is invalid because it was not adopted pursuant to the APA rule-making provisions
3. Ruling: Letter and policy is not a rule, at least not until it is enforced by Commission
4. Reasoning: It only applies to internal management of the agency (how its staff is to look at something and conduct investigations) until it actually is applied to a particular person

1. TABC issued an internal memorandum to its agents as to how to enforce regulations regarding 8-liners
2. AMOT challenged the memorandum as an invalid rule because it was not adopted pursuant to the APA rule-making provisions
3. Ruling: Memorandum could be considered a rule
4. Reasoning: Because the policy reflected in the memorandum had been applied, it was no longer just an internal management policy of the agency

1. Facts: HHSC adopted a rule that allowed reimbursement rates to be based on 12 months of Medicaid data; however, HHSC implemented a policy that included only claims paid within 6 months after the 12-month base period ended
2. Legal Issue: Hospitals challenged the policy as an invalid rule, because it had not been adopted through APA rule-making
3. Ruling: The policy was an invalid rule
4. Reasoning: The policy implemented law (was part of establishing reimbursement rates), affected private rights, and was generally applicable

1. Entertainment is a company that sells fundraising items through school fundraisers.
2. The issue is whether Entertainment is the seller of the items, or the school and its related entities (such as the PTA) are the actual sellers of the items, for purposes of determining sales taxes due.
3. Comptroller issued a letter stating that schools and PTA are viewed as agents of the seller, and Entertainment is the real seller (i.e., a single transaction theory)
4. Entertainment challenged it as an illegal rule• Court of appeals held that Comptroller letter was a rule and was invalid because it was not adopted under the APA's rule-making requirements.

it implements or interprets law, is generally applicable, and affects private rights

may not affect private rights until it is actually applied against people

Procedural Rules and Substantive Rules (this includes "Interpretive" and "Legislative" Rules)

an agency statement that describes its procedure or practice requirements, which are the methods the agency uses to implement its legislative mandate.

Rules that interpret the statutes which the agency is charged with enforcing
Rules that actually implement new substantive law or policy (i.e., they create new legal rights and duties).

(1) through an interpretive rule, or(2) through a final order in a contested case hearing (ad hoc rulemaking)

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APA Rulemaking (the presumed required method) or Ad Hoc Rulemaking (decisions made through the hearing process)

1. Agency decides to begin rulemaking process (on own initiative or on petition by interested person)or on petition by interested person)
2. Local Impact Analysis and Statement
3. Agency gives 30-Day notice of proposed rules (including detailed information required by APA)
4. Agency takes public comment
5. Agency issues order adopting rule; order must contain a reasoned justification, which includes:
A. Summary of public comments
B. Summary of factual basis for the rule, demonstrating a rational connection between the factual basis for the rule and the rule as adopted
C. Agency's response to public comments

1. TDI adopts rules 1000 and 1003
2. Insurance companies challenge them as lacking in a reasoned justification
3. Trial and appeals court upholds the rules
4. Supreme Court strikes down the rules as lacking in reasoned justification
5. Basically, the Supreme Court felt TDI needed to better justify its rules