OFFICE OF THE ATTORNEY GEXERAL

. STATE OF TEXAS

JOHN CORNYN

October 3,200l

The Honorable Frank Madla Chair, Senate Committee on Intergovernmental Relations Texas State Senate P.O. Box 12068 Austin, Texas 787 1l-2068 Opinion No. JC-04 18 Re: Whether the Railroad Commission of Texas may promulgate a rule imposing standards of conduct on its members in a contested case hearing (RQ-0374-JC)
Dear Senator Madla:
You have requested our opinion as to whether the Railroad Commission of Texas may promulgate arule that requires its members to observe certain standards of conduct in a contested case hearing. For the reasons explained below, we conclude that itmay 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 ofthree members, one of whom shall be elected biennially ateach general election for aterm of sixyears.” 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 16of 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 anyrelationship, personal orpecuniary, 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 orher impartiality might reasonably be questioned, including but not limited to, any time he or she, or anyone within the third degree ofkinship by affinity orconsanguinity with the commissioner:



### (4 is aparty to the proceeding; 

### (B) is acting as counsel to aparty; or (C) has afinancial or other interest inthe matter in controversy that could be substantially affected by the outcome ofthe 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, awritten explanation of any potential conflict and areasoned justification for not complying with paragraph (2) ofthis subsection. (4) A commissioner who believes another commissioner has violated this section shall raise the issue in aposted 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 acommissioner acting in aquasi-judicial capacity. (2) In subsection (a)ofthis section, the degree ofrelationship should be computed according to Texas Government Code, Chapter 573. 26 Tex. Reg. 3737 (2001) (tobe codified at 16TEX. ADMIN.CODE9 1.lO) (Tex. Railroad Comm’n). Ithas been suggested that the adoption ofRule 1.10was 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 ofRule 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 atvariance both with the text ofthe 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 aparty; or has a financial or any other interest in the matter in controversy that could be substantially affected by the outcome ofthe proceeding. Should the commissioner choose not to recuse himself or herself, the commissioner will place in the record, and in the Texas Register, awritten explanation of any potential conflict and areasoned 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 aposted meeting atthe first opportunity. (Emphasis added).
An “agency order finally adopting arule must include,” in its entirety: (1) areasoned justification for the rule, as adopted consisting solely Of: (A) asummary 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 arational 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) aconcise restatement ofthe 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 avalid 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 isnot required by section 2001.033. Furthermore, this “explanation” is atvariance with the explanation offered inthe notice ofthe proposed rule. Inthe 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 91.10 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 thejudicial functions. And they are offered as arule 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 ofproposed rule. The Commission states that the rule is permissive. However, this contradicts the language of the rule itself, and it is to an examination ofthat 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)Acommissioner

. . .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 areasoned 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 aposted meeting at the first opportunity. (Emphasis added).
Itiswell established that the rules ofan administrative agency aretobe construed inthe same manner asstatutes. Lewis v.Jacksonville Building &Loan Ass ‘n,540 S.W.2d 307,3 10(Tex. 1976); City ofLubbock v.Public Utility Comm ‘n,705 S.W.2d 329,330-3 1(Tex. App.-Austin 1986, writ ref dn.r.e.). Section 311.016 ofthe Government Code, part ofthe Code Construction Act, although not strictly applicable to arule adopted under astatute, asopposed to acode, states the long-standing rule regarding the use of the word “shall”: “‘shall’ imposes a duty,” while “‘may’ creates discretionary authority.” See Lewis, supra, at310. 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 inTexas orelsewhere. 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, inJones v.Dodendorf, 546 N.E.2d 92,93 (Ill. App. 1989), the court said that, when a statute prescribes what result will ensue ifits terms are not complied with, the statute is deemed mandatory. Conversely, ifastatute does not prescribe what results will follow ifspecific requirements are not met, the statute is considered permissive. Christian Disposal, Inc. v. Village ofEolia, 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 ofthe rule, we believe that the provisions ofthe 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 ofthe Government Code defines “elected officer” to include “an executive orjudicial officer elected in a statewide election.” TEX.GOV’TCODE ANN.0 572.002(4) (Vernon Supp. 2001). Itthus embraces members ofthe 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 astate agency and who has apersonal orprivate interest in ameasure, proposal, or decision pending before the board or commission shall publicly disclose the fact to the board or commission in ameeting 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 asis given to itunder Article III, Section 22, ofthe Texas Constitution, governing the conduct ofmembers ofthe legislature.” Id. 0572.058(f). Aperson who violates section 572.058 “is subject to removal from office on the petition ofthe attorney general on the attorney general’s own initiative or on the relation of aresident 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. Amember must “publicly disclose the fact” in an open meeting, and refrain from voting on orparticipating in any decision onthe 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 ofthe 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, 022 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 ‘nv.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) (tobe codified at 16TEX. ADMIN. CODE9 1.10) (Tex. Railroad Comm’n). Weneed not determine, however, whether Rule 1.10 is “necessary” for the “government and proceedings” ofthe 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 310 deletes this passage and adds: “The members are subject tothe provisions of Chapter 572, Government Code, that apply toelected officers, including the requirements governing personal financial statements, standards ofconduct, and conflicts ofinterest.” See Act ofMay 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 ‘nv.Arco Oil & Gas Co., 876 S.W.2d 473,481 (Tex. App.-Austin 1994, writ denied). Neither may itenact 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” aconflict, and “may not vote orotherwise participate inthe decision,” Rule 1.10 fails specifically to require disclosure ofapersonal orprivate interest. TEX.GOV’TCODE ANN. 9 572.058(a) (Vernon 1994) (emphasis added). In addition, it seems to offer the official achoice regarding recusal, by providing an alternative in the form ofa“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 tojudges. Rule 18b provides adetailed list of occasions for recusal, including those in which thejudge isrelated within the third degree ofkinship to aparty or to his counsel. TEX.R. CIV.P. 18b. The legislature has specifically committed the administration and enforcement ofchapter 572 to the Texas Ethics Commission. TEX.GOV’TCODE ANN.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 isdirected to “prepare awritten opinion answering the request of aperson subject to any ofthe following laws,” including chapter 572, “for an opinion about the application of any ofthese laws to the person inregard to aspecified existing orhypothetical 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. 316(1996), 256 (1995), 218 (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 ofRule 1.10 that requires amember ofthe 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 portionThe Honorable Frank Madla - Page 8 (JC-04 18)

ofRule 1.10 that establishes standards forrecusal in acontested case isinvalid because itencroaches 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 amember 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 ofthe Commission. That portion ofRule 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