In the September 11, 2019 edition of Billboard Insider, I discussed the Texas administrative rules making process, including how the Texas Administrative Procedures Act (“APA”) encourages public participation and transparency throughout this process, by mandating where and when to publish proposed rules, and opportunity for public comment on them in hearings and writings. I went on to explain, however, that sometimes government agencies, like the Texas Transportation Commission, attempt to implement the types of rules covered by these procedural safeguards, by calling them mere “guidance” or “policy memos.” In doing so, the agency argues, it need not involve the public as required under the APA, thereby taking a short cut to the implementation of the regulation.
Texas billboard operators are painfully aware of such an example in the March 2016 “Guidance” on the relocation and compensation due for billboards displaced by TxDOT highway projects. This two page memo was authored by the former Director of the Right of Way Division of TxDOT, and most importantly, it did not follow the notice, hearing, publication, and other due process protections mandated by the APA. It did, however, drastically change the procedure in the condemnation of billboards, including by eliminating sign relocation rights if the owner failed to agree with TxDOT’s offer for the cost of his sign before the condemnation special commissioners’ hearing. The practical result, therefore, is the grossly unfair bargaining power afforded TxDOT in dealing with owners who are losing their billboards to accommodate TxDOT’s highway projects.
A Texas billboard operator, John Gannon, Inc., challenged this Guidance in a lawsuit against TxDOT filed in Travis County District Court in 2018. In the case, Gannon argued that the APA (in Section 2001.038) itself explains when some sort of agency enactment will still be subject to its procedural safeguards, even where the agency attempts to disguise an administrative rule as a mere guidance: “The validity or applicability of a rule…may be determined in an action for declaratory judgment if it is alleged that the rule or its threatened application interferes with or impairs, or threatens to interfere with or impair, a legal right of privilege of the plaintiff.” Gannon also cited the Texas Courts that have attempted to preserve public participation and transparency in reviewing these agency efforts under the APA: “The Legislature, through the APA, has enabled affected citizens to invoke judicial jurisdiction… to test the ‘validity’ or ‘applicability’ of agency pronouncements that rise to the level of ‘rules’-including those that ‘interpret’ law or policy-and required that the further checks of transparency, public participation, and reasoned justification must precede such assertions of agency authority.” Teladoc, Inc vs Texas Medical Board.
TxDOT filed a plea to the jurisdiction on sovereign immunity grounds, and without discussing the merits of Gannon’s challenge, the trial court granted TxDOT’s motion and dismissed the case. Gannon appealed to the Texas Court of Appeals, Third District at Austin, which reversed and remanded in an opinion rendered on October 9, 2020. In reversing the trial court’s dismissal, the appellate court found that the Guidance was a “Rule” under the APA, which in turn expressly confers jurisdiction against governmental entities like TxDOT to determine whether such rules were enacted with the procedural safeguards mandated by the APA. The appellate court also remanded the case “for further proceedings consistent with this opinion” back to the trial court, where Gannon will continue to argue the Guidance was improperly passed without the checks and balances of notice, hearing, publication, and comment required by the APA. If Gannon is successful, the Guidance, including its requirement that the owner of the displaced billboard must agree with TxDOT’s offer for the cost of the billboard or forfeit relocation permits, will be held void and unenforceable.
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