   OFFICE   OF   THE   ATTORNEY      GEXERAL   . STATE   OF   TEXAS

   JOHN CORNYN




                                                         October 3,200l



The Honorable Frank Madla                                             Opinion No. JC-04 18
Chair, Senate Committee on
 Intergovernmental Relations                                          Re: Whether the Railroad Commission of Texas
Texas State Senate                                                    may promulgate a rule imposing standards of
P.O. Box 12068                                                        conduct on its members in a contested case
Austin, Texas 787 1 l-2068                                            hearing (RQ-0374-JC)


Dear Senator Madla:

        You have requested our opinion as to whether the Railroad Commission of Texas may
promulgate a rule that requires its members to observe certain standards of conduct in a contested
case hearing. For the reasons explained below, we conclude that it may not do so. We do not decide
whether the Commission may adopt aspirational, ethical guidelines designed to advance public
confidence in the Commission, since we deem the rule in question mandatory, despite conflicting
language in the rule and its preamble.

         The Railroad Commission (the “Commission”) is a statewide body established by article
XVI, section 30 of the Texas Constitution. It is “composed of three members, one of whom shall
be elected biennially at each general election for a term of six years.” TEX.REV.CIV. STAT.ANN. art.
6447 (Vernon Supp. 2001). Among its various delegated powers, the Commission is authorized to
“make all rules necessary for their government           and proceedings.”    Id.  Pursuant to the
latter authority, the Commission voted to adopt, by a 2-l vote, a new rule to be denominated as
section 1.10, title 16 of the Texas Administrative Code (“Rule 1.10”). Rule 1.10 became effective
May 28,200l and reads as follows:

                          lj 1.10.        Commissioner          Conduct.

                          (a) Participation       in Contested Cases.

                            (1) When considering contested case issues, a Railroad
                   Commissioner shall not allow any relationship, personal or pecuniary,
                   to influence decisions or policies, and shall not convey, or permit
                   others to convey, the impression that any person is in a special
                   position to influence commission decisions.
The Honorable Frank Madla - Page 2               (JC-0418)




                        (2) A commissioner will recuse himself or herself from a
               contested case issue any time his or her impartiality might reasonably
               be questioned, including but not limited to, any time he or she, or
               anyone within the third degree of kinship by affinity or consanguinity
               with the commissioner:


                               (4      is a party to the proceeding;

                               (B)     is acting as counsel to a party; or

                              (C)     has a financial or other interest in the matter in
               controversy that could be substantially affected by the outcome of the
               proceeding.

                       (3) A commissioner otherwise subject to the provisions of
               paragraph (2) of this subsection who elects not to recuse himself or
               herself will place in the record, and in the Texas Register, a written
               explanation of any potential conflict and a reasoned justification for
               not complying with paragraph (2) of this subsection.

                        (4) A commissioner who believes another commissioner has
               violated this section shall raise the issue in a posted meeting at the
               first opportunity.

                    (b) Interpretation guidance.    The following      commentary   is to
               assist in the application of this section.

                        (1) In considering whether to recuse himself or herself from
               deliberation    or decision in any particular contested case, a
               commissioner      should consult Rule 18b, Texas Rules of Civil
               Procedure, which pertains to judges.       Reference to this rule is
               appropriate for a commissioner acting in a quasi-judicial capacity.

                      (2) In subsection (a) of this section, the degree of relationship
               should be computed according to Texas Government Code, Chapter
               573.

26 Tex. Reg. 3737 (2001) (to be codified at 16 TEX.ADMIN.CODE9 1.lO) (Tex. Railroad Comm’n).
It has been suggested that the adoption of Rule 1.10 was beyond the Commission’s authority because
it is inconsistent with, and exceeds, the standards promulgated by chapter 572 of the Government
Code.
The Honorable   Frank Madla - Page 3               (Jc-0418)




        Before addressing this matter, we must first consider whether the directives of Rule 1.10 are
mandatory or permissive. The issue arises because of certain language in the order accompanying
the adoption of the proposed rule, to the effect that compliance with the rule is strictly voluntary.
See 26 Tex. Reg. 3737 (2001). In our opinion, this language is at variance both with the text of the
rule and the required “notice” proposing the rule.

        A “notice of proposed rule” must contain, inter alia, “a brief explanation of the proposed
rule.” Section 2001.024(a)(l), Government Code. The notice accompanying proposed Rule 1.10
contains the following language:

                Under the proposed rule, a commissioner will recuse himself or
                herself from a contested case issue any time his or her impartiality
                might reasonably be questioned, including but not limited to, any
                time he or she, or anyone within the third degree of kinship by
                affinity or consanguinity with the commissioner is a party to the
                proceeding; is acting as counsel to a party; or has a financial or any
                other interest in the matter in controversy that could be substantially
                affected by the outcome of the proceeding. Should the commissioner
                choose not to recuse himself or herself, the commissioner will place
                in the record, and in the Texas Register, a written explanation of any
                potential conflict and a reasoned justification for not complying with
                the recusal standards.      A commissioner      who believes another
                commissioner has violated this section is required to raise the issue
                in a posted meeting at the first opportunity.

(Emphasis   added).

       An “agency order finally adopting a rule must include,” in its entirety:

                (1) a reasoned justification   for the rule, as adopted consisting   solely
                Of:


                      (A) a summary of comments received from parties interested
                      in the rule that shows the names of interested groups or
                      associations offering comment on the rule and whether they
                      were for or against its adoption;

                      (B) a summary of the factual basis for the rule as adopted
                      which demonstrates a rational connection between the factual
                      basis for the rule and the rule as adopted; and

                      (C) the reasons why the agency           disagrees   with   party
                      submissions and proposals;
The Honorable Frank Madla - Page 4                (JC-04   18)




                (2) a concise restatement of the particular statutory provisions under
                which the rule is adopted and of how the agency interprets the
                provisions as authorizing the rule; and

                (3) a certification that the rule, as adopted, has been reviewed by
                legal counsel and found to be a valid exercise of the agency’s legal
                authority.

Section 2001.033, Government Code. The order adopting Rule 1.10 adds another “explanation” of
the rule that is not required by section 2001.033. Furthermore, this “explanation” is at variance with
the explanation offered in the notice of the proposed rule. In the first place, the second “explanation”
uses the word “would” instead of “will.” More significantly, the second explanation categorically
states:

                In addition, the commission re-states here what was stated during the
                February 6,2001, open meeting deliberations when new 9 1.10 was
                proposed; the provisions       of this rule are not binding on a
                commissioner.      They are offered as guidance to commissioners,
                whose constitutional and statutory duties necessarily combine the
                legislative and the judicial functions. And they are offered as a rule
                so that members of the public will know the standards of ethical
                conduct to which the cornmissioners, individually and voluntarily,
                hold themselves.

No similar language is to be found in the notice of proposed rule. The Commission states that the
rule is permissive.   However, this contradicts the language of the rule itself, and it is to an
examination of that language that we now turn.

        The portions of Rule 1.10 at issue here use the following language, in relevant part:

                (a) Participation   in Contested Cases:

                    (1) . . . .
                    (2) A commissioner will recuse himself or herself any time
                    his or her impartiality might reasonably be questioned . . . .

                    (3) A commissioner     . . . who elects not to recuse himself or
                   herself will place in the record, and in the Texas Register, a
                   written explanation of any potential conflict and a reasoned
                   justification for not complying . . . .
The Honorable Frank Madla - Page 5                   (JC-04    18)




                      (4) A commissioner who believes another commissioner has
                      violated this section shall raise the issue in a posted meeting
                      at the first opportunity.

(Emphasis   added).

         It is well established that the rules of an administrative agency are to be construed in the same
manner as statutes. Lewis v. Jacksonville Building & Loan Ass ‘n, 540 S.W.2d 307,3 10 (Tex. 1976);
City of Lubbock v. Public Utility Comm ‘n, 705 S.W.2d 329,330-3 1 (Tex. App.-Austin 1986, writ
ref d n.r.e.). Section 3 11.016 of the Government Code, part of the Code Construction Act, although
not strictly applicable to a rule adopted under a statute, as opposed to a code, states the long-standing
rule regarding the use of the word “shall”:            “‘shall’ imposes a duty,” while “‘may’ creates
discretionary authority.” See Lewis, supra, at 3 10. Thus, the requirement of subdivision (4), supra,
in using “shall,” appears to be mandatory. The term “will” is seldom used in rules or statutes in the
context of “mandatory” versus “permissive,” either in Texas or elsewhere. But see, Campbell v. Pan
American World Airways, Inc., 668 F.Supp. 139, 142 (E.D.N.Y. 1982) (“will,” like “shall,“is
mandatory).      But if subdivision (4), in its use of the word “shall,” is held to be mandatory, it
necessarily follows that subdivisions (2) and (3), upon which subdivision (4) is premised, must
themselves be mandatory.         In the first place, subdivision (4) speaks in terms of a “violation” of
section (a), language that is hardly conducive to a characterization of subdivisions (2) and (3) as
voluntary. Furthermore, in Jones v. Dodendorf, 546 N.E.2d 92,93 (Ill. App. 1989), the court said
that, when a statute prescribes what result will ensue if its terms are not complied with, the statute
is deemed mandatory. Conversely, if a statute does not prescribe what results will follow if specific
requirements are not met, the statute is considered permissive. Christian Disposal, Inc. v. Village
of Eolia, 895 S.W.2d 632,634 (Mo.App. 1995). Since Rule 1.10 prescribes the consequences that
must follow a violation of subdivisions (2) and (3), it seems clear that the use of “will” in those
provisions should be construed as mandatory.

         In sum, despite the disclaimer that accompanies the order adopting Rule 1.10, which
disclaimer is no part of the rule, we believe that the provisions of the rule under consideration here
should be deemed to impose mandatory requirements               upon the members of the Railroad
Commission.     We thus turn to a consideration of whether the Commission exceeded its statutory
authority in adopting the rule.

         Section 572.002 of the Government Code defines “elected officer” to include “an executive
or judicial officer elected in a statewide election.” TEX. GOV’T CODEANN. 0 572.002(4) (Vernon
Supp. 2001). It thus embraces members of the Railroad Commission. Section 572.058(a) provides:

                   (a) An elected or appointed officer, other than an officer subject
                to impeachment    under Article XV, Section 2,’ of the Texas


        ‘A member of the Railroad Commission   is not an officer subject to impeachment   under article XV, section 2
                                                                                                        (continued...)
The Honorable        Frank Madla - Page 6                 (JC-04   18)




                    Constitution, who is a member of a board or commission having
                    policy direction over a state agency and who has a personal or private
                    interest in a measure, proposal, or decision pending before the board
                    or commission     shall publicly disclose the fact to the board or
                    commission in a meeting called and held in compliance with Chapter
                    551. The officer may not vote or otherwise participate in the
                    decision.    The disclosure shall be entered in the minutes of the
                    meeting.

Id. 9 572.058(a) (Vernon 1994) (footnote added). The term “personal or private interest,” as used
in section 572.058, “has the same meaning as is given to it under Article III, Section 22, of the Texas
Constitution, governing the conduct of members of the legislature.” Id. 0 572.058(f). A person who
violates section 572.058 “is subject to removal from office on the petition of the attorney general on
the attorney general’s own initiative or on the relation of a resident or of any other member of the
board or commission.” Id. 9 572.058(b).

        Section 572.058 sets out the sole statutory requirements for a member of the Commission
who has a “personal or private interest” in any “measure, proposal, or decision” that is pending
before the Commission. A member must “publicly disclose the fact” in an open meeting, and refrain
from voting on or participating in any decision on the matter. Cf: TEX. REN. CIV. STAT. ANN. art 6447
(Vernon Supp. 2001) (“No commissioner shall hold any other office of any character, while such
commissioner,    nor engage in any occupation or business inconsistent with his duties as such
commissioner.“).2      Although subsection (f) adopts the meaning of “personal or private interest”
found in article III, section 22 of the Constitution, that provision does not itself define the term. The
commentary to article III, section 22 notes that “it is often difficult to define and distinguish
‘personal or private interest. “’ TEX. CONST. art. III, 0 22 interp. commentary (Vernon 1997).

         It is well established that a state agency has only those powers that are specifically
enumerated or that may reasonably be implied therefrom. Railroad Comm ‘n v. Lone Star Gas Co.,
844 S.W.2d 679, 685 (Tex. 1992). The Commission majority asserts that article 6447, which
permits the commissioners to “make all rules necessary for their government and proceedings,”
furnishes the authority for Rule 1.10. See 26 Tex. Reg. 3737,3738 (2001) (to be codified at 16 TEX.
ADMIN. CODE 9 1.10) (Tex. Railroad Comm’n). We need not determine, however, whether Rule 1.10
is “necessary” for the “government and proceedings” of the Commission, because the rule is both
inconsistent with, and imposes burdens in excess of, statutory requirements.


          ‘(. . .continued)
of the Texas Constitution.

          2Recently enacted legislation from Senate Bill 3 10 deletes this passage and adds: “The members are subject
to the provisions of Chapter 572, Government Code, that apply to elected officers, including the requirements governing
personal financial statements, standards of conduct, and conflicts of interest.” See Act of May 27,2001,77th  Leg., R.S.,
ch. 1233,200l    Tex. Sess. Law Serv., WL TX LEGIS 1233 (2001) (to be codified as an amendment to TEX.REV.CIV.
STAT.ANN. art. 6447) (eff. Sept. 1,200l).
The Honorable   Frank Madla - Page 7              (JC-0418)




         An agency may not impose additional burdens, conditions, or restrictions in excess of
relevant statutory provisions. Railroad Comm ‘n v. Arco Oil & Gas Co., 876 S.W.2d 473,481 (Tex.
App.-Austin 1994, writ denied). Neither may it enact regulations that are inconsistent with properly
enacted statutes. State v. Jackson, 376 S.W.2d 341, 345 (Tex. 1964). On the one hand, the
Commission rule requires less than the statute. Whereas section 572.058(a) states that an official
“shall publicly disclose” a conflict, and “may not vote or otherwise participate in the decision,” Rule
1.10 fails specifically to require disclosure of a personal or private interest. TEX.GOV’T CODEANN.
9 572.058(a) (Vernon 1994) (emphasis added). In addition, it seems to offer the official a choice
regarding recusal, by providing an alternative in the form of a “written explanation of any potential
conflict and a reasoned justification” for non-recusal.     On the other hand, the Commission rule
requires more than the statute. First, it lists examples of conflicts that may or may not be
contemplated by section 572.058(a). More significantly, Rule 1.10 requires the commissioner to
provide a “written explanation” and a “reasoned justification,” and thus imposes burdens clearly not
contemplated by the statute. Furthermore, it requires a commissioner “who believes another
commissioner      has violated this section [to] raise the issue in a posted meeting at the first
opportunity.”     Consequently,    Rule 1.10 both exceeds and is inconsistent with the legislative
directive.

          Rule 1.10 also attempts to give some meaning to “personal or private interest” as used in
section 572.058. -The vagueness and absence of guidance regarding this term might indicate a
legislative contemplation    that each agency delineate its intent. Rule 1.10 offers, first, certain
standards for recusal, and then suggests that commissioners considering doing so should reference
rule 18b of the Texas Rules of Civil Procedure, which is applicable to judges. Rule 18b provides
a detailed list of occasions for recusal, including those in which the judge is related within the third
degree of kinship to a party or to his counsel. TEX.R. CIV. P. 18b.

         The legislature has specifically committed the administration and enforcement of chapter 572
to the Texas Ethics Commission.         TEX. GOV’T CODEANN. 8 571.061 (Vernon Supp. 2001). The
Ethics Commission is empowered to “adopt rules to administer this chapter or any other law
administered and enforced by the commission.” Id. 8 571.062 (Vernon 1994) (emphasis added).
Furthermore, the Ethics Commission is directed to “prepare a written opinion answering the request
of a person subject to any of the following laws,” including chapter 572, “for an opinion about the
application of any of these laws to the person in regard to a specified existing or hypothetical factual
situation.” Id. 8 57 1.091 (Vernon Supp. 2001). A number of opinions issued by the Ethics
Commission have construed section 572.058. See, e.g., Tex. Ethics Comm’n Op. Nos. 3 16 (1996),
256 (1995), 2 18 (1994). In our view, because the Railroad Commission is not the proper body to
construe, administer, or enforce the statutory directive of chapter 572 of the Government Code, it
may not describe, by rule or by reference to the Rules of Civil Procedure, what standards are
applicable thereto.

         In summary, that portion of Rule 1.10 that requires a member of the Commission to provide
a written justification for his failure to recuse himself in a contested case imposes an additional
burden not authorized by statute and thus exceeds the authority of the Commission.     That portion
The Honorable Frank Madla - Page 8                (JC-04   18)




of Rule 1.10 that establishes standards for recusal in a contested case is invalid because it encroaches
upon authority properly granted by the legislature to the Texas Ethics Commission.
The Honorable Frank Madla - Page 9              (JC-0418)




                                       SUMMARY

                        That portion of Rule 1.10 adopted by the Railroad
               Commission of Texas that requires a member of the Commission to
               provide a “written explanation” and “reasoned justification” for his
               failure to recuse himself in a contested case imposes an additional
               burden not authorized by statute and thus exceeds the authority of the
               Commission. That portion of Rule 1.10 that establishes standards for
               recusal in a contested case is invalid because it encroaches upon
               authority properly granted by the legislature to the Texas Ethics
               Commission.




                                              JOl!?N   CORNYN
                                              Attorney General of Texas



HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN D. GUSKY
Chair, Opinion Comrnittee

Rick Gilpin
Assistant Attorney General, Opinion Committee
