THE ADMINISTRATIVE PROCEDURE AND TEXAS REGISTER ACT AND
ADR: A NEW TWIST FOR ADMINISTRATIVE PROCEDURE
IN TEXAS?
Brian D. Shannon·
I. EMPLOYING ADR PROCEDURES IN ADMINISTRATIVE
PROCEEDINGS
A. What is ADR' . . . . . . . •. . . . •. . . . . . . . . •. . . . . . . . . . . . . ..
B. Federal Agency Use of ADR . . . .. . . . . . . . . . . . . . . . . . . . . . ..
C. State Agency Use ofADR in Other States. . . . . . . . . . . . . ..
II. DOES ADR CURRENTLY HAVE A ROLE IN TEXAS ADMINISTRATIVE PROCEEDINGS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
A. The 1987 Texas ADR Procedures Act
B. Informal Disposition of Contested Cases Under APTRA
C. Specific Statutory Authorizations for Agency Use ofADR ..
D. Rule7naking ................•.......................
III. TEXAS STATE AGENCY USE OF ADR: WHERE SHOULD WE
Go FROM HERE? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . ..
A. Contested Cases. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . ..
B. Rule7naking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
IV. CONCLUSION
707
707
709
713
715
716
720
725
728
730
731
734
735
"It is the policy of this state to encourage the peaceable resolution
of disputes... :'.
Although the Texas Legislature enunciated this policy .as part of
legislation encouraging the use of alternative dispute resolution
(ADR) procedures to resolve pending litigation, 2 recent developments make it evident that Texas legislators, courts, administrative
agencies, and practitioners will also need to consider both the possibility and desirability of employing ADR procedures in various
stages of the administrative process. For example, the Administrative Conference of the United States (Administrative Conference)
has recommended that federal agencies use ADR techniques for
both facilitating the settlement of disputes' and in the creation of
• Assistant Professor of Law, Texas Tech University School of Law; B.S., Angelo State
University, 1979; J.D., The University of Texas School of Law, 1982.
'TEX. CIV"PRAC. Be REM. CODE ANN. § 154.002 (Vernon Supp. 1990).
lId. §§ 154.001-.078 [hereinafter 1987 Texas ADR Procedures Act].
"Su 1 C.F.R. § 805.86-8 (1990) (recommending agency employment of ADR methods). Su also id. § 805.87-5 (recommending the use of arbitration in federal programs);
id. § 805.87-11 (recommending the use of ADR techniques to resolve government contract disputes).
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[Vol. 42:705
new agency rules. 4 In addition. Congress is considering legislation
to amend the Federal Administrative Procedure Act5 to authorize
federal agencies to use ADR procedures to aid in resolving disputes6 and in negotiating new agency rules. 7 At the state level. state
legislatures and agencies are also experimenting with ADR techniques. For example. the Texas Legislature has recently authorized
cenain state agencies to use selected ADR techniques.8 Additionally. although the 1987 Texas ADR Procedures Act does not include
authorization for state agencies to use ADR procedures to assist in
resolving disputes at the agency level. that statute does permit state
courts to refer any matter pending in litigation to an ADR procedure for resolution;9 thus. an administrative appeal residing in the
courts would appear to be subject to the statute. IO
As the foregoing examples illustrate. ADR procedures are beginning to playa pan in the administrative process at both the federal
and state levels. lI The earlier articles in this symposium series l !
have explored various aspects of the development of Texas state administrative law since the adoption of the Administrative Procedure
and Texas Register Act in 1976. 15 The purpose of this anicle is to
look forward - in the context of current trends - and explore one
direction that administrative procedure might take as Texas state
'See itt §§ 505.82-4•.85-5 (recommending agency use of procedures for negotiated
rulemaking).
"5 U.S.C. §§ 551-59,701-06 (1988) [hereinafter Federal APA].
°H.R. 2497, lOlst Cong., 2d Sess., 156 CONGo REC. H5152-57 (1990) [hereinafter
H.R.2497].
7H.R.745, lOlst Cong., 2d Sess., 1S6 CONGo REc. HI857·60 (1990) [hereinafter H.R.
745]; see also NEGOTIATED RULEMAKING Acr OF 1990, H.R. REP. No. 461, lOlst Cong., 2d
Sess. (1990) [hereinafter H.R. REp. No. 461].
'See, e.g., TEX. AGRlc. CoDE ANN. §§ 64.001-.007 (Vernon Supp. 1990) <authorizing
the Texas Department of Agriculture to adopt rules to require arbitration of certain
vegetable seed warranty claims); Texas Workers' Compensation Act, ch.I, 2d Called
Sess., §§ 6.21·.28, 1989 Tex. Sess. Law Servo 55-57 (Vernon) (authorizing the arbitration of workers' compensation benefits); see also infra notes 116-55 and accompanying
text.
81987 Texas ADR Procedures Act § 154.021(a).
'0 See infra notes 65-87 and accompanying text.
II In addition, ADR procedures might also be appropriate for use at the local government level. See, e.g., McAdoo Be Bakken, Local Government Use of Mediotion for Resolution of
Public Disputes, 22 URB. LAw. 179 (1990).
'"This Article is the fifth article in the Texas Administrative Law Symposium Series.
For the first four articles in the series, see Shannon, Declaratory judgments Under tM Texas
Administrative Procedure and Texas Register Act: An Underutiliud Weapon. 41 BAYLOR L. REV.
601 (1989); Eissinger,judicial Review of Findings of Fact in Contested Coses Under APTRA, 42
BAYLOR L. REV. I (1990); Cofer,jUf1icia1 Review of Agent:} Law Decisions on Scope ofAgent:}
Autlwrity, 42 BAYLOR L. REV. 255 (1990); Beal, Ad Hoc Rulemalring in Texas: The Scope of
judicial Review, 42 BAYLOR L. REV. 459 (1990).
'"TEX. REV. Cw. STAT. ANN. art 6252-15a (Vernon Supp. 1990) [hereinafter APTRA].
1990]
ADMINISTRATIVE PROCEDURE
707
agencies proceed toward the year 2000 and beyond. This article will
probe the worthiness of incorporating ADR procedures at the
agency level as a part of the Texas administrative process.
I.
EMPLOYING
ADR
PROCEDURES IN ADMINISTRATIVE PROCEEDINGS
Before analyzing whether ADR procedures might be efficacious
tools for Texas state agencies, it would be worthwhile to explore the
extent to which other jurisdictions have incorporated or are incorporating ADR techniques as part of their administrative procedures.
This section will first describe the ADR movement in general terms
and then examine the efforts of both the federal government and
other states in employing ADR methods in their administrative
proceedings.
A.
What is ADRr
The Texas Legislature has described an ADR procedure generally
as "a nonjudicial and informally conducted forum for the voluntary
setdement of citizens' disputes through the intervention of an impartial third party.... "14 Indeed, the term "ADR" is now popularly
employed to describe a vast array of nonjudicial proceedings varying from more widely known processes such as arbitration and mediation to newer techniques such as summary jury trial, mini-trial,
and moderated setdement conference. 15 One author has observed
that disputants have employed these methods to address "the gamut
of disputes, from neighborhood justice centers that work to resolve
pesky controversies from barking dogs and trash in alleys, to more
14
1987 Texas ADR Procedures Act § 154.02l(a)(5).
laThe literature is now replete with scholarship analyzing the various types and aspects of ADR procedures as alternatives to traditional litigation. For several general
guides to these various processes, see S. GOLDBERG, E. GREEN &: F. SANDER, DISPUTE
RESOLurION (1985);J. MURRAY, A. RAu &: E. SHERMAN, PROCESSES OF DISPUTE RESOLUTION: THE ROLE OF LAWYERS (1988); L. RISKIN &:J. WESTBROOK, DISPUTE RESOLurION
AND LAWYERS (1987). In addition, the 1987 Texas ADR Procedures Act provides statutory definitions for processes such as mediation (a forum in which an impartial person
facilitates communications between parties to promote settlement), mini-trial (a process
in which each party and counsel for the party present the position of that party to the
other party or parties, sometimes before an impartial third party, to develop a basis for
realistic settlement discussions), moderated settlement conference (a forum for case
evaluation in which each party and counsel for the party present the party's position to a
panel of impartial third parties, which may provide an advisory opinion), summary jury
trial (a forum in which each party and counsel for the party present the party's position
to a panel ofjurors, which provides an advisory opinion), and nonbinding arbitration (a
process in which each party and counsel for the party present the position of the party to
an impartial third party, who renders a nonbinding award). See 1987 Texas ADR Procedures Act §§ 154.025-.027. See also Lexicon of Alternative Means of Dispute Resolution,
I C.F.R. § 505.86-5 (app.) (1990) (providing descriptions of various ADR procedures).
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serious social infractions. to major corporate matters. "16 By and
large. however. the ADR movement has primarily provided alternative procedures to the traditional litigation model. Proponents of
ADR offer a number of rationales for the need to provide alternatives to traditional litigation. including the savings of time and
money. promoting judicial economy. providing more flexible
processes for particular disputes. and achieving results that better
serve the needs of the participants" 7 Moreover. not only have disputants been turning to ADR procedures voluntarily. but in the last
several years. there have been a number of legislative efforts to require litigants in certain cases to pursue nonbinding ADR procedures
prior to being allowed to press their claims in court. 18 Indeed. the
so-called ADR movement is rapidly becoming an accepted part of
our modem jurisprudence - at least with respect to alternatives to
litigation. 19
Given both the explosion in the use of ADR procedures and the
similarity between the adjudicative aspects of administrative procedure and traditional litigation. it is not surprising that administrative
16Harter, Points on a ConIinuum: Dispute Resolution Proat:ltms and the Administrative Process.
1986 ADMINISTRATIVE CONFERENCE OF THE U.S.: RECOMMENDATIONS AND REPORTS 165.
172-7S (1986) (citations omitted) (subsequently published in 1 ADMIN. LJ. 141 (1987».
I'S« L. RISKIN BeJ. WESTBROOK. supra note 15. at2 (the authors also list other motives
for the encouragement of the use of ADR procedures including the enhancement of
community involvement in the settlement process and broadening the access to
'justice").
16S«, e.g., 1987 Texas ADR Procedures Act; 28 U.S.C. §§ 651-58 (1988) (authorizing a
number of federal judicial districts - including the Western District of Texas - to require parties to submit to nonbinding arbitration for a range of causes ofaction). See also
Walker, Court-OrdtrtdArlJitraIion Comes to NortII Carolina and the Nation, 21 WAKE FOREST L.
REv. 901. 902 n.2 (1986) (delineating some twenty states' statutes requiring the preliminary consideration of many lawsuits by mandatory. nonbinding arbitration). In addition
to such legislative initiatives. some federal courts have construed Rule 16 of the Federal
Rules of CiVil Procedure as authorizing federal district courts to require litigants to submit to nonbinding ADR proceedings. S«. e.g.• Federal Reserve Bank v. Carey-Canada.
Inc.• 12S F.R.D. 60S. 607 (D. Minn. 1988); Arabian Am. Oil Co. v. Scarfone, 119 F.R.D.
448,449 (M.D. Fla. 1988). But see Strandell v. Jackson County, 8S8 F.2d 884, 886-88
(7th Cir. 1987) (holding that Rule 16 does not specifically authorize a district judge to
order a non-willing litigant to participate in a summary jury trial). The Federal Courts
Study Committee has recommended that Congress should take steps to eliminate any
doubt that federal courts can adopt local rules to require litigants to submit to ADR
procedures. See REPORT OF THE FEDEIW. COURTS STUDY COMMrITEE 81-85 (April 2,
1990).
IUThe ADR movement is becoming entrenched in Texas. For example, the State Bar
ofTexas' standing committee on ADR has now been in existence for a decade. See STATE
BAR OF TEXAS 1989-90 DIRECTORY OF ORGANIZATIONS 61 (the committee was created in
1980). The State Bar of Texas ADR committee played a large role in the enactment of
the 1987 Texas ADR Procedures Act. See Krier Be Nadig. 1987 Alternative Dispute Resolution Proat:ltms Act: An Overview, 51 TEX. BJ. 22 (1988).
1990]
ADMINISTRATIVE PROCEDURE
709
agencies and practitioners are beginning to consider applying ADR
techniques to the administrative process. 20 Of course, the administrative process is itself an ~ternative to the traditional litigation
model - particularly with respect to agency disputes arising before
the filing of any administrative appeals to the courts. Nonetheless,
given the growing complexities and burdens of public law, agencies
will increasingly confront issues concerning whether to incorporate
flexible, less formal ADR procedures within their other processes. 2 )
B. Federal Agency Use ofADR
The progression of federal agenCy use of ADR techniques can be
traced, in part, to the series of recommendations published during
the last decade by the Administrative Conference.22 Beginning in
1982, the Administrative Conference began to set forth a number of
recommendations relating to agency employment of ADR techniques to augment the two relatively distinct areas of federal administrative procedure: adjudicative hearings 28 and rulemaking. 24
With respect to adjudication, in 1986 the Administrative Conference provided recommendations and guidelines for agency use of a
number of ADR techniques, including voluntary and mandatory arbitration, mini-trials, setdement methods using mediation, and negotiation. 25 In explaining the need for agency use of such ADR
procedures, the Administrative Conference observed:
!OSte Haner, supra note 16, at 171-73; Bruff, Public Programs, Private DeciI:krs: The Constitutionality of Arbitration in Federal Programs, 67 Texas.L. Rev. 441, 442 (1989) (suggesting
that agencies began experimenting with ADR procedures becaU$e of the problems of
increased formality in agency proceedings).
"See gmerall, J. MURRAY, A. RAu "E. SHERMAN, supra note 15, at 673-701.
"Ste itt. at 692.
"Ste I C.F.R. § 305.86-3 (1990) (recommending agency use of ADR techniques to
resolve disputes); itt. § 305.86-8 (suggesting methods in which agencies could acquire
the services of neutral experts to conduct ADR proceedings); itt. § 305.81-11 (recommending Congressional action to authorize the resolution of govemment contract disputes by ADR methods); itt. § 305.88-5 (encouraging agency use of settlement judges to
monitor settlement negotiations); itt. § 305.88-11 (recommending the protection of mediator confidentiality to encourage agency ADR settlements).
24Ste itt. § 305.82-4 (suggesting that agencies use negotiations as a means of drafting
the proposed text of new agency regulations); itt. § 305.85-5 (recommending that agencies sponsoring negotiated rulemaking proceedings shotild take part in the
negotiations).
.
uSteid. § 305.86-3. SeealsoJ. MURRAY, A. RAu" E. SHERMAN, supra note 15, at 692. In
particular, the Administrative Conference recommended:
[that federal] agencies, where not inconsistent with statutory authority, should
adopt the a1temative methods discussed in this recommendation for resolving a
broad range of issues. These include many matters that arise as a part of formal or informal adjudication, in rulemaking, in issuing or revoking permits,
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[t]he formality, costs and delays incurred in administrative
proceedings have steadily increased, and in some cases
now approach those of courts. Many agencies act pursuant
to procedures that waste litigants' time and society's resources and whose formality can reduce the chances for
consensual resolution. The recent trend toward elaborate
procedures has in many cases imposed safeguards whose
transaction costs, to agencies and the public in general, can
substantially outweigh their benefits.26
Because agency hearing procedures, which at one time were intended as efficient substitutes for litigation, have become increasingly complex, costly, and time-consuming, both agencies and
regulated parties are seeking simplified alternatives to the Federal
APA's requirements for adjudicative hearings. 27 Given that much
administrative practice has traditionally been entirely informal, occurring outside the hearing process,28 it is none too surprising that
agencies and practitioners, generally accustomed to such informality, want to tum to ADR procedures to achieve a comparable level of
informality and efficiency with respect to agency hearings. 29 Indeed, federal agencies already employ ADR procedures to resolve
disputes in many contexts ranging from government contracts disputes to environmental problems. so
and in settling disputes, including litigation brought by or against the government. Until more experience has been developed with respect to their use in
the administrative process, the procedures should generally be offered as a voluntary, alternative means to resolve controversy.
I C.F.R. § S05.86-S(A)(I) (1990) (footnote omitted).
'l6 Ill. § S05.86-S.
27 See Riggs & Dorminey, Federal Agencies' Use of Alternative Means of Dispute Resolution, I
ADMIN. LJ. 125, 127-S0 (1987). For a thorough examination of the reasons for federal
agency use of ADR procedures, see the materials compiled in the ADMINISTRATIVE CONFERENCE OF THE U.S., SOURCEBOOK: FEDERAL AGENCY USE OF ALTERNATIVE MEANS OF
DISPUTE RESOLunON (1987). Although ADR techniques can also be expensive, they can
serve to resolve disputes more quicldy and satisfactorily. See Pou, Federal Agency Use of
"ADR": The bperience to Date, ill. at 101, 1M.
28S" W. GELlJIORN, C. BVSE, P. STRAUSS, T. RAKOFF, & R. SCHOTI..AND, ADMINISTRATIVE LAw CAsES AND COMMENTS 2-S (8th ed. (987) (discussing a Washington practitioner's estimate that at one time over 90 percent of his administrative practice did not
involve hearings).
to As an example of such informality, agencies have used as simple an ADR procedure
as employing disinterested "settlement judges" to moderate traditional settlement conferences. See Joseph & Gilbert, BreaAing the Settlement lee: The Use of Settlement Judges in
Administrative Proceedings, 3 ADMIN. LJ. 571 (1990); 1 C.F.R. § 305.88-5 (1990) (recommending same).
lIOSee Brittin, Alternative Dispute Resolution in Government Contract Appeals, 19 PuB. CONT.
LJ. 210 (1990); Crowell & Pou, Appealing Government Contract Decisions: RetJuang the Cost
and Delay of Procurement Litigation with Alternative Di.spute Resolution Techniques, 49 MD. L.
REV. 18S, 198-238 (1990); Kubasek & Silverman, Environmental Mediation, 26 AM. Bus.
1990]
ADMINISTRATIVE PROCEDURE
711
Congre,s has also been involved with issues concerning federal
agency use of ADR methods as alternatives to adjudicative hearings.
Congress has not only enacted legislation authorizing particular
agencies to employ ADR procedures,81 but is also considering legislation to amend the Federal APA that would generally authorize and
encourage federal agencies to use ADR techniques for the prompt
and informal resolution of disputes. 82 If enacted, H.R. 2497 would
authorize any federal agency to use a dispute resolution proceeding
for the resolution of any issue in controversy relating .to an administrative program upon the agreement of the parties to the dispute. 58
The bill includes several findings that support utilizing ADR procedures: (1) although administrative procedure as embodied by the
Federal APA is intended to provide a prompt and inexpensive alternative to litigation, administrative proceedings have become increasingly marked by formality, costs, and delay, and (2) to provide
a means of yielding faster, less expensive, and less contentious decisions, agencies might use ADR techniques advantageously in a wide
variety of administrative programs. 84 Thus, Congress is taking steps
LJ. 533 (1988). Some experts, however, have been less than enthusiastic about the use
ofADR procedures, or even settlement, to dispose of matters in the public interest. See,
I.g., Fiss, Against Settlement, 93 YALE LJ. 1073 (1984); Edwards, Altemative Dispute &solution: Pa7lfKlfJ or Anat!IemI.J, 99 HAav. L. REv. 668 (1986) (urging caution in the use of
ADR). On the other hand, the American Bar Association has adopted the recommendation of its Section on Administrative Law to support the increased use of ADR procedures by federal administrative agencies. See Administrative Dispute Resolution Act of 1989:
Hearing on S.971 Before tile SulJcomm. on Oversight of Government Managemenl of tAe Sen4te
Committee on Governmental Affairs, IOlst Cong., 1st Sess. 198 (1989) (ABA resolution on
the use of ADR by federal agencies).
"See, e.g., 12 U.S.C.A. §§ 1787(b)(7)(B), 1821(d)(7)(B) (West Supp. 1990) (authorizing the National Credit Union Administration Board and the FDIC, respectively, to establish ADR processes as alternatives to adjudicated hearings to resolve claims against
failed financial institutions).
uSee H.R. 2497, supra note 6. See also Spirits in Collision, 12 Nat'l LJ., Feb. 5, 1990, at 1,
col. 1 (reporting on Congressional consideration of same).
"See H.R. 2497, supra note 6, at sec. 4(b), § 582(a). The bill defines an "alternative
means of dispute resolution" as any procedure used instead of adjudication "to resolve
issues in controverSy, including settlement negotiations, conciliation, facilitation, mediation, fact-finding, minitrials, ... arbitration, or any combination thereof...." Ido. sec.
4(b), § 581(3). The bill also sets forth provisions specifically addressing arbitration procedures, id. sec. 4(b), §§ 585-90, including a section that would allow the head of an
agency. to vacate an arbitration award before the award becomes final. Ido. sec 4(b),
§ 590(c). This latter provision was the result of a compromise reached between the
Department ofJustice and the ABA. See Administrative Dispute Resolution Act: Hearing on
H.R. 2497 Before tile SulJcomm. on Administrative Law and Governmental Relations of tAe Howe
Committee on tile ju.dil:UJ.ry, IOlst Cong., 2nd Sess. 47-48 (1990) [hereinafter Hearing on
H.R. 2497] (statement of William P. Barr, Assistant Attomey General) (who speculated
that agency heads would seldom vacate arbitration awards).
"See H.R 2497,.a note 6, at §§ 2(1)-(5).
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BAYLOR LAW REVIEW
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to authorize federal agencies to employ ADR techniques as alternatives to adjudication on a large scale.
The federal government is also considering the employment of
ADR methods in another significant aspect of administrative procedure: the promulgation of rules. 55 In general, an agency formulates
proposed rules based entirely on intra-agency consultations, expertise, and judgment; the public, accordingly, does not normally have
the opportunity,to participate in proposed agency rulemaking until
after the agency publishes a formal notice of proposed rulemaking
in the Federal Register. 56 Thus, under the Federal APA, persons
affected by a proposed rule do not ordinarily get to participate in
the initial drafting stage of agency rulemaking. 57 This lack of initial
participation in the rulemaking process may result in increased challenges to agency rules. In fact, major substantive rulemaking is
often the subject of litigation, 58 and the adversarial nature of the
normal rulemaking process contributes to much expense and delay
in regulatory proceedings. 59 An alternative approach might be
worth considering.
As a means of producing better, m~re acceptable rules, the Administrative Conference has proposed that agencies engage in "negotiated rulemaking" as an altem.ative to the traditional method of
promulp:ting rules. 40 Negotiated rulen:taking involves convening a
group of persons representing all interests that would be affected by
an agency's contemplated rulemaking, including agency personne1.41 Often, this negotiation committee will seek the assistance of
an impartial, trained facilitator to moderate the negotiation session.42 The goal of the committee is to reach a consensus on the
""See gmerally ADMINISTRATIVE CONFERENCE OF THE U.S., NEGOTIATED IlULEMAKlNG
SOURCEBOOK (1990) [hereinafter NEGOTIATED IlUUMAKlNG SoURCEBOOK].
06St, A. BONFIELD &: M. AsIMOV, STATE AND FEDERAL ADMINISTRATIVE LAw 286 (1989).
"NEGOTIATED IlULEMAKlNG SoURCEBOOK, supra note 35, at l.
06 See Riggs &: Donniney, supra note 27, at 13 l.
...See NEGOTIATED IlULEMAKlNG SOURCEBOOK, supra note 35, at 2.
4OS" 1 C.F.Il. §§ 305.82-4, .85-5 (1990). The recommendations of the Administrative
Conference to encourage negotiation of proposed rulemaking between the agencies and
parties regulated by those agencies are based on a premise that regulations which are
developed by persons substantially affected by such rules will be more acceptable to
those regulated parties than rules imposed by agencies. See Harter, Dispute Resolwion and
Administrative Law: The History, Needs, and Futur,
Complex ReIatitmsAip, 29 VILL. L. REv.
1S93, 1405'(1984). For detailed discussions of the possible advantages of negotiated
rulemaking, see Harter, Negotiating Regulations: A Cure/or MaIois" 71 CEO LJ. 1,28-31
(1982); Note, R,thinAing Regulation: Negotiation as an Altemative to Traditional RuIemaking,
94 MARv. L. IlEV. 1871,1876-78 (1981); NEGOTIATED IlULEMAKlNG SOURCEBOOK, supra
note 35, at 3-5.
4'See NEGOTIATED IlULEMAKlNG SOURCEBOOK, supra note 35, at 7.
4·S" id.
ora
1990]
ADMINISTRATIVE PROCEDURE
?IS
provisions of draft regulations, which the agency can then fonnally
publish as a proposed rule.4s
To date, a number offederal agencies - such as the Environmental Protection Agency, the Federal Aviation Agency, the Occupational Safety and Health Administration, and the Department of
Transportation - have experimented successfully with negotiated .
tulemaking. 44 Despite a few expressed concerns regarding negotiated rulemaking,45 Congress is considering legislation that would
specifically authorize agencies to establish negotiated rulemaking
committees, with the guidance of trained facilitators, for the consensus.drafting of new rules in appropriate matters.46 Although federal
agencies already have the inherent authority to implement negotiated rulemaking, Congress is considering this broad legislation because of concern that the ad hoc use of negotiated rulemaking
would lead to non-unifonn results, without general agreement on
what the process involves.47
C. State Agency Use of ADR in Other States
Although to a much lesser extent than at the federal level, several
states other than Texas have experimented with incorporati~g ADR
procedures into part of their administrative practices as alternatives
to adjudicative hearings or litigation. These states have enacted a
variety of statutes specifically authorizing or requiring agencies to
employ ADR practices. For example, Arizona authorizes state agen~es and other political subdiviSions the discretion to engage in arbi- .
1ration to resolve disputes.48 The California Legislature decreed
4'See id. at 8. Thus, negotiated rulemaking serves as a preliminary supplement to the
ordinary notice and comment procedures prescribed by the Federal APA. See id. at 2.
"See id. at 8-9,827-48; Riggs·8c Dorminey, supra note 27, at 181-82.
.
4. See, e.g., NEGOTIATED RUUMAKtNG SOURCEBOOK, supra note 85, at 5-6; Funk, When
Smoke GeLs in Your Eyes: lUgulatory Negotiations and the Public Interest - EPA:S Woodstove
Standards, 18 ENVrL. L. 55, 89-98 (1987).
46See H.R. 748, supra note 7.
4'See H.R. REP. No. 461, supra note 7, at 9. The Administrative Conference has supported this legislation, which is consistent with their earlier recommendations. See id. at
10; Negotiated RuJemalring Act of 1989: Heating on H.R. 74J Before the Sulx:omm. on Adminis.trative Law and Governmental Relations of the HoWe Comm. on the Judiciary, 101st Cong., 1st
Sess. 2.5-26 (1989) (statement of MarshallJ. Breger, Chairman, Administrative Conference). In· addition, the House Committee on the Judiciary has reported that more federal agencies should use negotiated rulemaking. but that the process is not suitable for
all rulemaking situations. See H.R. REP. No. 461, supra note 7, at 10.
48See ARIZ. REv. STAT. ANN. § 12-1518 (West Supp. 1989) (authorizing ADR if set forth
• at the time of contract formation or by mutual agreement). Moreover, Arizona state
agencies must include arbitration provisions in public works contracts to address disputes in which the amount in controversy is less than one hundred thousand dollars. Id. .
§ 12-1518(C).
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BAYLOR LA W REVIEW
[Vol. 42:705
that "administrative agencies should encourage greater use of alternative dispute resolution techniques whenever the administration of
justice will be improved."49 Minnesota authorizes various social
work and mental health boards to encourage regulated persons to
submit fee disputes to binding arbitration, and all other disputes to
voluntary mediation, except those involving issues of professional
misconduct. 5O New Mexico requires agencies to employ ADR procedures to resolve "bid shopping" or "bid peddling" claims in public construction contracts. 51 Iowa authorizes its dental examining
board to provide for mediation of disputes between licensed dentists and their patients by appointing a disinterested third party to
mediate the dispute. 52 In addition, some states utilize farm loan mediation programs,58 and other states incorporate ADR procedures
to address consumer complaints about motor vehicle purchases.54
Finally, Oklahoma has enacted broad ADR legislation authorizing
state agencies to establish mediation programs55 and specifically
recognizing that governmental agencies can constitute parties subject to participation in medition proceedings. 56
49CAL. Bus. Be PROF. CODE § 465(d) (Deering Supp. 1990) (also finding that courts,
prosecuting authorities, and law enforcement agencies should employ ADR techniques).
This legislation is a part of the California Legislature's effort to authorize counties to
establish ADR programs, with the legislative intent of, inter alia, encouraging administrative agencies to work with, and make referrals to, dispute resolution programs. See id.
§ 465.5(e). Despite the expressed intent of the legislature to make the legislation apply
to administrative agencies, however, this California legislation appears to be largely
geared to implementing local dispute resolution centers. See Coleman, lmpkmentation of
California's IJispuIe Resolution Programs Act: A State-Local Government Partnership, 16 PEpPERDINE L. REV. S75 (1989). But see CAL. CIV. CODE § 1670 (Deering Supp. 1990) (authorizing state agencies to submit certain construction contract disputes to arbitration).
ooSee MINN. STAT. ANN. § 148B.15 (West 1989).
•,See N.M. STAT. ANN. § 18-4-43 (1988) (requiring resolution of disputes arising under
the state's Subcontractors Fair Practices Act, id. §§ 13-4-31 to -43, through either informal dispute resolution hearings or by arbitration).
·"See 1990 Iowa Legis. Servo 115 (West).
··See, e.g., IOWA CODE ANN. ch. 654A (West Supp. 1990) (as amended by 1990 Iowa
Legis. Servo 143 (West»; S.D. CODIFIED LAws ANN. ch. 54-13 (Michie 1989). See also 7
U.S.C.A. §§ 5101-06 (West 1988 and West Supp. 1990) (authorizing the federal government to approve and provide matching funds to state farm loan mediation programs).
""See, e.g., 1990 Ga. Laws 1245 (enacting legislation authorizing agency arbitration of
motor vehicle warranty disputes); see also J. MURRAY, A. RAu Be E. SHERMAN, supra note
15, at 432-33. In addition, several states have created central dispute resolution agencies that consult with interested state agencies, mediate public disputes, and build
agency and public awareness ofADR options. See Hearing on H.R. 2497, supra note 33, at
66-67 (statement of Marshall J. Breger, Chairman, Administrative Conference) (referring to Hawaii, Massachusetts, Minnesota, and New Jersey).
··See OKLA. STAT. ANN. tit. 12, § 1802-3 (West Supp. 1990).
MIld. § 1802(4). A governmental agency can also be the initiator ofa mediation proceeding between itself and an aggrieved party under the Oklahoma Dispute Resolution
Act. ld. § 1802(1).
1990]
ADMINISTRATIVE PROCEDURE
715
Most of the state statutes delineated above either authorize or
prescribe that state agencies employ ADR procedures for particular
agency functions or for specific types of disputes. Unlike the ADR
legislation that Congress is considering to amend the Federal
APA,5'1 none of the aforementioned state legislative initiatives reflects a broad approach of generally amending a state's administrative procedure act to authorize the agency to employ a variety of
ADR procedures for all types of administrative proceedings. 58 Instead, they provide specific grants of power to agencies to engage in
ADR techniques for more narrowly defined purposes. If Congress
enacts broad changes to the Federal APA authorizing the use of
ADR procedures at the agency level as alternatives to acljudicated
hearings, it is quite likely that some states will follow the federal
lead. 59
II.
DOES
ADR CURRENTLY HAVE A ROLE IN TEXAS
ADMINISTRATIVE PROCEEDINGS?
Although there has been much recent activity regarding agency
employment of ADR techniques, most of this development has been
at the federal level of administrative practice. This recent expansion
of ADR usage by federal agencies has resulted, in large measure,
because federal administrative procedure has become increasingly
formalized and judicialized.60 Certainly, Texas has not experienced
See sv.pra notes 52-34 and accompanying text.
Although the Arizona and Oldahoma statutes identified above are broad enough to
apply to all of each respective state's governmental agencies, they are limited in the
types of ADR procedures that the agencies may apply. See ARIZ. REv. STAT. ANN. § 121518 (West Supp. 1989) (arbitration); OKLA. STAT. ANN. tit. 12, § 1802-5 (West Supp.
1990) (mediation).
"Not oniy have some states been enacting legislation to add certain ADR procedures
as alternatives to adjudicated agency hearings, but - like the federal government some states have been employing negotiated rulemaking. See NEGOTIATED RULEMAKING
SOURCEBOOK, sv.pra note 55, at 515. Indeed, a number of states have employed negotiated rulemaking procedures comparable to the federal efforts, particularly for resolving
environmental disputes. Id. States have also employed consensus-building techniques
in which the agencies have convened groups of persons interested in proposed rulemaking to obtain advice or to engage in a policy dialogue to identify issues of concern and
then work cooperatively to address those issues. Id. The Administrative Conference's
Negotiated Rulemaking Sourcebook identifies a number of state efforts in negotiated
rulemaking. Id. at 515-18. For example, New Mexico has employed negotiated
rulemaking techniques, including the use of professional mediators as negotiation
facilitators, to help develop rules concerning underground petroleum storage tanks. See
UJ. at 516; New Mexico is Negotiating Ruk on Underground Storage TanIu, I ADR Rep. 260
(BNA) (Oct. 29, 1987).
-See Harter, sv.pra note 40 (first reference), at 1405 n.46.
$7
118
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BAYLOR LA W REVIEW
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as many years offormalized administrative procedure as has the federal government. Texas did not make uniform its administrative
practice and procedure until the adoption and implementation of
APTRA on January I, 1976,61 whereas the original version of the
Federal APA first became effective in 1946.62 Accordingly, the federal bureaucracy has had many more years in which to experiment
with its procedures,68 and for those procedures to become more
rigid and judicialized.. As Texas state government continues to expand, so will the number and complexity of state administrative disputes and the proliferation of agency rules. Hence, like the federal
government, Texas state agencies may need the flexibility to devise
procedures that go beyond those now available under APTRA to
meet future demands. 64 This section will explore the extent to
which ADR currently has a role in the Texas administrative process,
and Section III will then address potential directions for administrative procedure in Texas with respect to the possibility of employing
ADR procedures.
The 1987 Texas ADR Procedures Act
As described above,65 the Texas Legislature encouraged the use
of ADR procedures as alternatives to traditional litigation by enact':'
ing the 1987 Texas ADR Procedures Act. Significantly, section
154.021 of that Act authorizes a court, on the motion of a party or
on its own motion, to refer a pending matter for resolution by certain enumerated ADR methods. 66 The statute does not, however,
contain any reference to its potential application to administrative
cases. To the contrary, the Act provides that "[ilt is the policy of
this state to encourage the peaceable resolution of disputes . . . including ... the early settlement of pending litigation through voluntary settlement procedures,"67 Thus, the stated legislative purpose
of the statute relates to the use of ADR procedures as alternatives to
A.
GI See AYfR.A § 2S.
lI2See Administrative Procedure Act, ch. S24, 60 Stat. 2S7 (1946).
uSee Harter, supra note 40 (first reference), at 140S (observing that administrative law
has been a "laboratory" in which many alternative procedures have been the subject of
experimentation).
""Indeed, Professor Verkuil, although not discussing Texas per se, has observed that
"[t]he new thinking on administrative law is coming from the states," and that "state
regulation will become more interesting and relevant, simply because Gramm-Rudman
and limited resources for new federal initiatives will force more public decisions upon
state treasuries and regulatory mechanisms." Verkuil, Welcome to tile Constantl, Evolving
Field of Administrative Law, 42 ADMIN. L. REV. I, S-4 (1990).
uSee S1I.f1ra notes 1-2 and accompanying text.
001987 Texas ADR Procedures Act, supra note 2, at § 154.021(a).
G'ld. § 154.002 (emphasis added).
1990]
ADMINISTRATIVE PROCEDURE
717
litigation, not as alternatives to contested administrative matters.
Despite the Act's lack of any specific authori~ation for the employment of ADR procedures at the state agency level, the legislature's
exclusion of any reference to administrative agencies 'should not be
construed as reflecting a policy against the use of ADR at the agency
level. Indeed, section 311.005 of the Code Construction Act instructs that the legislature's use of the term "including" in a code
section "does not create a presumption that components not expressed are excluded:'68 Accordingly, the 1987 Texas ADR Procedures Act should not be construed as expressing legislative intent
hostile to agency use of ADR procedures, although the Act plainly
does not provide specific authorization for Texas administrative
agencies to employ ADR procedures to resolve c9ntested cases.
Despite the 1987 Texas ADR Procedures Act's lack of applicabIlity to matters at the agency level of the administJ;'ative process, the
Act appears to be clearly applicable to those administrative cases
that have reached the courts. The statute plainly authorizes any
court to refer an, pending dispute to an ADR procedure for resolution of that dispute.69 Moreover, the Act broadly defines "court" to
include both the district courts and appellate courts,70 and no exceptions are stated for administrative disputes before the courts.
Appellate courts have had little opportunity to construe the Texas
ADR Procedures Act because of its recent enactment in 1987.
Courts have yet to consider whether the statute applies to an administrative case that has reached the courts. However, the few cases
reported to date broadly apply and construe the new law and contain no indication that the statute will not continue to receive broad
construction. InJBJ. Distributors, Inc. v. Jaikaran,71 Houston's First
Court of Appeals invoked the 1987 Texas ADR Procedures Act on
its own, and not pursuant to a motion by either party.72 Mter filing
lI8TEX. GoV'T CODE ANN. § Sll.oo5(IS) (Vernon Supp. 1990) (provided that the statute or context does not require a different definition). Thus, although the 1987 Texas
ADR Procedures Act does not authorize agency use of ADR procedures, it does not
preclude such a policy by omitting ,any reference to administrative proceedings. Of
coune, as a general rule, Texas state agencies may only exercise those specific powers
conferred upon them by statute. See Sexton v. Mount Olivet Cemetery Ass'n, 720
S.W.2d 129, IS7 (Tex. App.-Austin 1986, writ r#"d n.r.e.). See also Beal, The Scope of
]udi.t:i.al Review of AgtflC'J RuI.tmaIrifIg: The IntemlatWnship of Legislating and RuJemaking in
TtmS, S9 BAYLOR L. REv. 597, 6SS-M (1987); Bruff, Separatiun of Powers Under the TtmS
COfIStituIion, 68 TEXAS L. REv. ISS7, IS49-5O (1990).
t»See 1987 Texas ADR Procedures Act § 154.021.
70See id. § 154.001(1).
71
744 S.W.2d S79 (Tex. App.-Houston [1st Dist.] 1988, no writ).
72 See id. at S8O. The underlying dispute involved a number of allegations concerning
the authenticity of a Rolex watch. See id. at S79.
.
718
BAYLOR LAW REVIEW
[Vol. 42:705
of the appeal, submission of briefs, and setting of the case for oral
argument, the court of appeals contacted the parties and suggested
that the case might be appropriate for reference to ADR procedures. 75 After the court conducted a telephone conference with the
parties, the parties agreed to participate in a moderated setdement
conference, which eventually resulted in setdement of the case. 74
Thus, the Jaikaran court broadly construed the statute to authorize
the court to suggest, sua sponte, that the parties submit their dispute
to an ADR procedure.
Likewise, in Downey v. Gregory,75 the Houston First Court of Appeals broadly interpreted the 1987 ADR Procedures Act when confronted with an issue concerning whether it was error for a probate
court judge to decline to refer a pending dispute to an ADR proceeding. 76 The moving party had not sought such a referral until
after the trial court's entry of an adverse summary judgment.77 The
court found that the probate court had not abused its discretion in
refusing to refer the dispute to an ADR procedure. However, the
court observed that the timing of the motion was not improper78
and stated:
We interpret this new statute as authorizing the .referral of
a pending dispute to an alternative dispute resolution procedure at any point in the trial or appellate process. The
trial court retains authority to refer a case to an alternative
dispute resolution procedure as long as it retains plenary
jurisdiction over the case. 79
7"1d. at 380.
741d.
75
757 S.W.2d 524 (Tex. App.-Houston [1st Dist.] 1988, no writ).
76See id. at 525. The unsuccessful party filed a written motion with the probate court
seeking to have the court vacate an adverse summary judgment and then refer the matter to an ADR procedure. Id. Mter the probate court denied the motion for referral
without a hearing, the unsuccessful party filed a writ of mandamus to the court of appeals to require the probate court judge to vacate the final judgment and refer the matter to an ADR procedure. Id.
77 A court has the statutory discretion to determine that a dispute is not appropriate
for referral to an ADR procedure. See 1987 Texas ADR Procedures Act § 154.022.
7SDoumey, 757 S.W.2d at 525.
78/d. The court also delineated certain factors that a court may consider in determining whether referral to ADR is appropriate in a particular case; these factors include:
[T]he nature of the dispute, the complexity of the issues, the number of parties,
the extent of past settlement discussions, the postures of the .parties, . . .
whether there has been sufficient discovery to permit an accurate case evaluation ... [,] the status of the case on its [the court's] docket and whether a
referral would be appropriate at that particular time.
Id. These factors could have equal merit in the appeal of an administrative case.
1990]
ADMINISTRATIVE PROCEDURE
719
Thus, both DO'W1Ie'J andJaikaran reflect broadjudiq... interpretations
of the 1987 Texas ADR Procedures Act. 80
Whether Texas courts will apply the 1987 Texas ADR Procedures
Act to APTRA remains an open question. APTRA provides for two
basic types of judicial review: (1) the judicial review of contested
cases,81 and (2) actions for declaratory judgments concerning the
validity or applicability of a rule. 82 Although APTRA section 19 sets
forth the general scheme for judicial review of contested cases (with
most administrative appeals to be filed in the district courts of
Travis County), the statute specifically states that section 19 "is cumulative of other means of redress provided by statute."811 Thus,
section 19, by its very terms, does not appear to foreclose the application of the 1987 Texas ADR Procedures Act to administrative appeals pending in the district courts of Travis County or to any
subsequent appeals. Moreover, as a rule of legislative construction,
courts construe statutes so as to harmonize with other relevant laws,
if possible.84 Given that the stated legislative purpose of the 1987
Texas ADR Procedures Act is to encourage the peaceable resolution
80Given his efforts to encourage Texas courts and practitioners to accept and employ
ADR procedures, it is wonh noting that ChiefJustice Evans wrote the opinion injailraran
and was a member of the panel that decided iJowrIey. See Bart & Ostermeyer, A Tribute to
thejudge: Franlc G. Evans, 51 TEX. BJ. 19,20 (1988).
8'APl'RA § 19. Section 19 authorizes an aggrieved person who has exhausted all administrative remedies within the agency to appeal the agency's final decision to the district court of Travis County (unless otherwise provided by statute). It/. §§ 19(a), (b)(I).
APl'RA defines a "contested case" as "a proceeding, including but not restricted to
ratemaking and licensing, in which the legal rights, duties, or privileges of a party are to
be determined by an agency after an opportunity for adjudicative hearing." It/. § S(2).
For thorough discussions of the judicial review of contested cases under APl'RA, see
Eissinger, supra note 12; Hamilton &Jewett, Administrative Procedure and Tt:I«IS Register Act:
Contested Cases andjudicioJ. Review, 54 TEXAS L. REV. 285 (1976); Powers,judU:ioJ Review of
Findings 01 Fact Made ", Tt:I«IS Administrative Agencies in Contested Cases, 16 TEX. TECH. L.
REv. 475 (1985); Spears & Sanford, Standing to Appeal. Administrative Decisions in Tt:I«IS, SS
BAYLOR L. REV. 215 (1981).
81APl'RA § 12. Section 12 authorizes a person to file an action for a declaratory judgment in the district courts of Travis County if the rule, or its threatened application,
allegedly interferes with or impairs, or threatens to ,interfere with or impair, that person's legal rights or privileges. It/. For additional general discussions of declaratory
judgment actions pursuant to APl'RA section 12, see Beal, supra note 68; Shannon, supra
note 12; Shannon & Ewbank, The Tt:I«IS Administrative Procedure and Tt:I«IS Register Act Since
1976 - Selected Problems, SS BAYLOR L. REv. 421-34 (1981); Watkins & Beck,judicial Review 01 Rulema/cing Under the Tt:I«IS Administrative Procedure and Tt:I«IS Register Act, 34 BAYLOR
L. REv. 1 (1982).
'
lIS APl'RA § 19(a) (emphasis added).
"See La Sara Grain Co. v. First Nat'l Bank of Mercedes, 67S S.W.2d 558, 565 (Tex.
1984); see also Acker v. Texas WaterComm'n, 790 S.W.2d 299, SOl (Tex. 1990) (harmonizing facially confticting language between section 17 of APl'RA and provisions of the
Texas Open Meetings Act, TEX. REV. ClY. STAT. ANN. art. 6252-17 (Vernon Supp.
1990».
720
BAYLOR LAW REVIEW
[Vol. 42:705
of disputes pending in the courts of this state, and that the scheme
ofjudicial review set up under APTRA section 19 is cumulative of
other statutory means of redress, these two statutes should be harmonized to authorize referral of appropriate administrative appeals
from the courts to ADR proceedings.
With regard to declaratory judgment actions filed pursuant to section 12 of APTRA concerning the validity or applicability of agency
rules, section 12 directs that such actions be filed in the district
courts of Travis County "and not elsewhere."85 In adhering to the
rule of construction that potentially conflicting statutes should be
harmonized when possible,86 section 12's language limiting declaratory judgment actions to the district court of Travis County and not
elsewhere should not be viewed as precluding the potential application of the 1987 Texas ADR Procedures Act in an appropriate case.
To achieve a harmonious interpretation, the language "and not
elsewhere" should be considered as a limitation on the proper court
to bring such an action, but not as a limitation on how the court may
entertain the dispute once it is properly filed. Given this construction, section 12 does not appear to forbid the application of the
1987 Texas ADR Procedures A.ct. 87
B. Informal Disposition
of Contested Cases Under APTRA
Although the 1987 Texas ADR Procedures Act is arguably applicable to administrative cases that have reached the courts,88 the Act
does not provide agencies with the authority to refer a contested
case pending before the agency to an ADR method. On the other
hand, APTRA may itself provide some statutory authority for the
use of ADR procedures by agencies that desire to invoke creative
procedures to resolve administrative disputes. Section 13(e) of
··APTRA § 12.
...See supra note 84 and accompanying text.
•, On the other hand, an action for declaratory relief may be particularly ill-suited for
referral to an ADR procedure if it primarily involves questions of law. For example,
Congress has authorized those judicial districts which maintain mandatory nonbinding
arbitration 'programs to exempt from arbitration any case that involves complex or novel
legal actions or in which the legal issues predominate over the factual issues. See 28
U.S.C. § 652(c) (1988). Of course, if the coun determined that referral to an ADR procedure might foster the settlement of a section 12 action, then the coun could invoke
the 1987 Texas ADR Procedures Act.
...See supra notes 66-68 and accompanying text.
1990]
ADMINISTRATIVE PROCEDURE
721
APTR.A89 provides that U[u]nless precluded by law, informal disposition may be made of any contested case by stipulation, agreed settlement, consent order, or default."90 Of course, that section does
not specifically authorize an agency to employ particular ADR procedures such as mediation or arbitration. Moreover, the language
concerning informal disposition is based on identical language contained in the 1961 Model State Administrative Procedure Act,91
which long antedated the ADR movement of the last decade. But,
section 18(e) does provide specific authority to state agencies to dispose of contested cases informally through agreed settlements.
Given this specific grant ofpower, an agency may impliedly have the
authority to conc;{uct nonbinding ADR procedures that might lead to
agreed settlements.92
Although no agency has promulgated rules pursuant to APTRA
section 13(e) specifically embracing the employment of multiple
ADR procedures, a number of state agencieS have adopted rules
that expand upon the section 13(e) authorization to engage in the
informal disposition of contested cases.95 For example, the Texas
Board of Architectural Examiners authorizes informal dispositions
...APTRA § 15(e).
fIOfd.
'USee MODEL STATE ADMINISTRATIVE PaOCEDVllE Acr § 9(d) (1961).
9lIAlthough Texas state agencies may, in general, exercise only those specific powers
conferred upon them by statute, once the legislature has actually granted an agency a
particular power, a Texas court will give due regard to the rule that an agency has by
implication all the authority necessary to carry out the specific power so delegated. See
Sexton v. Mount Olivet Cemetery Ass'n, 720 S.W.2d 129, 157 (Tex. App.-Austin 1986,
writ ref'd n.r.e.). See also Cofer, supra note 12, at 271. Thus, because section 15(e) of
APTRA specifically authorizes an agency to engage in informal disposition efforts including agreed settlements, the agency should, by necessary implication, have the authority to carry out that power through informal means such as various ADR
procedures.
9SSee, e.g., Texas Bd. of Architectural Examiners, 22 TEX. ADMIN. CODE §§ 1.165,
5.145 (West Nov. 15, 1988) (authorizing informal hearings of disciplinary actions before
one board member or a delegee); Texas Cosmetology Comm'n, 22 TEX. ADMIN. CODE
§ 89.66 (West Nov. 15, 1988) (same); Texas State Bd. of Medical Examiners, 22 TEX.
ADMIN. CODE § 187.24 (West Supp. Nov. I, 1989) (same - including detailed procedures for informal settlement conferences); Board of Vocational Nurse Examiners, 22
TEX. ADMIN. CODE § 251.95 (West Nov. 15, 1988) (same); Board of Tax Professional
Examiners, 22 TEXADMIN. CODE § 629.12(d) (West Nov. 15, 1988) (authorizing preliminary informal hearings for the purpose of investigating, clarifying, or mediating complaints); if. Public Vtil. Comm'n, 16 TEX. ADMIN. CODE § 21.109(c)(4) (West Sept. I,
1988) (authorizing informal conferences and consultations with interested persons concerning contemplated rulemaking; see infra notes 156-47 and accompanying text). These
agency interpretations ofAPTRA section 15(e) are significant because the "construction
placed upon a statutory provision by the agency charged with its administration is entitled to weight" upon judicial review. See Texans to Save the Capitol, Inc. v. Board of
Adjustment, 647 S.W.2d 775, 776 (Tex. App.-Austin 1985, writ ref'd n.r.e.).
722
BAYLOR LA. W REVIEW
[Vol. 42:705
of disciplinary actions by means of informal hearings before a single
board member or a repre~entative of the Board.94 The Board
adopted these rules pursuant to the authority given in section 13(e)
of APTRA observing that "[t]he informal proceedings should lessen
the load of formal hearings on the board, while facilitating the enforcement of the Architect Registration Law."95 Another licensing
board, the Texas State Board of Medical Examiners; adopted detailed rules authorizing informal settlement conferences for any
contested cases arising in the agency.96 The rules state that any
such "settlement conference shall be informal and will not follow
the procedure established . . . for contested cases."97 The Board
adopted these rules pursuant to APTRA section U(e) purportedly
because "[s]uch informal dispositions will facilitate the expeditious
change or correction of medical practice patterns."98 Similarly, the
Texas Water Commission adopted a rule authorizing the Commission to conduct certain proceedings as informal proceedings.99 The
Commission may conduct these informal proceedings when the presiding officer determines that "informal procedures will: (I) result
in savings of time or costs to all parties; (2) lead to a negotiated or
agreed settlement of facts or issues in controversy; and (3) not prejudice the rights of any party."IOO The rule further provides that if
the parties reach a negotiated or agreed settlement during the informal proceeding, then the matter will not constitute a contested case
under APTRA.IOI
Thus, the three agencies described above have promulgated
rules, pursuant to APTRA section 13(e), effectively authorizing
those agencies to engage in certain ADR procedures as alternatives
to contested case hearings. All three of these alternative procedures, which each of the respective agencies promulgated t~ facilitate informal disposition of contested matters, are nonbinding
procedures. lo2 Of course, if an agency conducts such an informal
HTexas Bd. of Architectural Examiners, supra note 93, §§ 1.165, 3.143.
9"Texas Bd. of Architectural Examiners, 10 Tex. Reg. 4527 (1985) (comments regarding the adoption of 22 TEX. ADMIN. CODE § 1.165).
"Texas State Bd. of Medical Examiners. supra note 93, § 187.24.
911d. § 187.24(D).
HId. § 187.24 (introductory paragraph).
WTexas Water Comm'n, !SI TEX. ADMIN. CODE § 263.32 (West Oct. I, 1988).
100 Id. § 263.32(a).
IOI/d. § 263.32(b).
1000Informal proceedings before the Texas Board of Architectural Examiners are not
final until the full board accepts any proposed agreement. Texas Bd. of Architectural
Examiners, supra note 93, §§ 1.165, 3.143. If the parties do not resolve the controversy
through the informal proceeding, the informal hearing is without prejudice to the later
1990]
ADMINISTRATIVE PROCEDURE
723
proceeding and makes mandatory any interested party's participation in the informal proceeding, the proceeding should be nonbinding. Otherwise, the agency action might violate the party's statutory
and constitutional rights to an adjudicative hearing. lOS
Texas courts have yet to construe the breadth of APTRA section
13(e) with respect to the extent to which an agency may establish
ADR procedures for the informal disposition of contested matters
before the agency.l04 Although not addressing the question of
whether section 13(e) authorizes an agency to employ an ADR procedure as a method of achieving ali agreed settlement with an aggrieved party, the Austin Court of Appeals observed that section
13(e) undoubtedly authorizes an agency to dispose informally ofany
contested case by stipulation, agreed settlement, consent order, or
default provided that such disposition is not precluded by law.l°5 .
holding of a fonnal hearing. Id. With respect to the Texas state Board of Medical Examiners, a licensee's participation in an informal settlement conference is voluntary,
Texas State Bd. of Medical Examiners, suflm note 95, § 187.24(2)(B), and if the licensee
later rejects any settlement recommendations, "the matter shall be referred ... for appropriate disposition."- Id. § 187.24(2)(1). Presumably, such "appropriate disposition"
would be a formal adjudicative hearing. Finally, with regard to the Texas Water Commission, if the parties do not reach a negotiated or agreed settlement through an informal proceeding, the presiding officer may "convene a contested case hearing under
standard hearing procedures...." Texas Water Comm'n, suflm note 99, § 265.52(c).
lOS Section 15(a) of APTRA requires that parties in a contested case be afforded an
opportunity for a hearing after reasonable notice. APTRA § 18(a). A "contested case"
is defined as a proceeding in which an agency determines a party's legal rights, duties, or
privileges after an opportunity for an adjudicative hearing. See id. Moreover, a party has
certain constitutional due process rights to be afforded some degree of hearing if the
party's liberty or property interests are at stake. See Mathews v. Eldridge, 424 U.S. 519
(1976). Thus, if the agency mandates that a party participate in an informal proceeding
against the wishes of the party, and if the resolution of the infonnal proceeding is both
binding and not agreed to by the party, then the agency would have effectively denied
the party the opportunity for an adjudicative hearing in contravention of the party's
statutory rights under APTRA (and possibly violated constitutional rights as well). For a
discussion of the constitutional implications of binding ADR, see Bruff, supra note 20;
Galann, Making Alternative Dispute Resolution Mandatory: The Constitutional Issues, 68 OR. L.
REV. 487, 521-48 (1989).
""'Indeed, the courts have given little attention to section 15(e). Of course, this may
be none too surprising. If agencies and aggrieved parties are infonnaUy settling many
disputes under the aegis of section 18(e), then there would be few candidates for further
legal challenges to any informal disposition procedures established pursuant to APTRA
section 18(e).
10'S" Statewide Convoy Transports, Inc. v. Railroad Comm'n, 755 S.W.2d 800, 805
(Tex. App.-Austin 1988, no writ). In Statewide Convoy, the dispute concerned the Texas
Railroad Commission's granting of a motor-carrier license to Interstate Adjusters, Inc.
Id. at 801-02. Statewide Convoy Transports, Inc. initially opposed the application in a
contested case proceeding before the Commission; however, upon reaching an "understanding" with Interstate, Statewide withdrew from the proceedings, and the agency
then considered the case as an "unprotested matter." Id. at 802-05. Subsequent to the
agency's issuance of a final order granting a license to Interstate, Statewide sought a
724
BAYLOR LAW REVIEW
[Vol. 42:705
Similarly, in an earlier case involving section HS(e),l06 the Austin
Court of Appeals recognized an agency's power to engage in informal dispositions of contested matters. In Asbury v. Texas State Board
ofPublk Accountancy, 107 Asbury had appealed the trial court's affirmance of the Board of Public Accountancy's order suspending Asbury's license to practice as a certified public accountant. lOS Before
the commencement of a contested case hearing, attorneys for Asbury and the Board reached a preliminary settlement of the case and
reduced the agreement to writing. loo Prior to signing the agreement, however, Asbury decided, pro se, to withdraw from the agreed
disposition. llo Nevertheless, the full Board subsequently approved
the agreed, yet unsigned, proposal for decision without granting Asbury an opportunity to introduce evidence. I I I The court of appeals
found the Board's action to be in error, observing that under
APTRA, the Board "must follow one of two procedures before it
may exercise its disciplinary powers. It must provide the accused
with a full contested evidentiary hearing, or it may enter an informal
disposition of contested cases" under APTRA section 13(e).1I2
Under the Board's own rules, for an informal disposition to be valid
there needed to be a proposal for decision signed by all parties. lIs
Because Asbury did not sign the proposal for decision, the Board's
action was invalid as an informal disposition, and because the Board
did not otherwise afford Asbury an opportunity for a full contested
case hearing, the Board violated the provisions of APTRA.114 Thus,
Asbury instructs that an agency must either resolve a dispute through
rehearing, stating that its earlier withdrawal had been due to a mistake. Id. at 80S. The
Commission overruled the motion for rehearing, and Statewide sought judicial review.
Id. at 805-04. As one of its bases for appeal, Statewide asserted that the agency had
abused its discretion in adjudicating the proceeding as an uncontested matter after
Statewide had "mistakenly" withdrawn from the earlier contested case proceeding. Id.
at 805. The court of appeals determined that the Commission "had undoubted legal
authority" under APTRA section IS(e) to adjudicate the proceeding as an uncontested
matter and found no abuse of discretion by the agency. Id.
""'Asbury v. Texas State Bd. of Public Accountancy, 719 S.W.2d 680 (Tex. App.Austin 1986, no writ).
07
• /d.
108/d.
IWld. at 681. A panel of the board then convened a hearing, and the agency's enforcement attorney presented a prima facie case for the record in support of the agreed disposition. Id. Asbury's attorney presented no adversary position, and the panel prepared
a proposal for decision. /d.
I.O/d. Ms. Asbury also never signed the proposal. Id.
1II/d. at 682.
IItld. (emphasis in original).
·1S/d. (citing State Bd. of Public Accountancy, 22 TEX. ADMIN. CODE §§ 519.26(d),
519.27(d)(S) (West Nov. 15, 1988».
1I°1d. at 682-85.
1990]
.ADMINISTRATIVE PROCEDURE
725
infonnal disposition procedures or afford a contested case hearing.
Although Asbury did not involve a challenge of the extent of an
agency's authority under section 13(e) of APTRA to adopt infonnal
disposition procedures, it does serve as judicial recognition of the
validity of an agency's authority to engage in some infonnal disposition procedures for contested matters. 115
C. Specific Statutory Authorizations for Agency Use ofADR
Although the courts have not specifically addressed the question .
of whether Texas state agencies have the authority under APTRA to
employ various ADR procedures as a means of infonnaUy disposing
of contested matters, recent statutory enactments plainly give certain agencies the authority to resolve some disputes through the use
of ADR proceedings. For example, in the recently enacted Texas
Workers' Compensation Act, I 16 the legislature authorized the use of
two distinct ADR methods for resolving disputes concerning workers' compensation claims: "benefit review conferences"U7 and arbitration. lls The statute describes a benefit review conference as:
[A] nonadversarial, infonnal dispute resolution proceeding
designed to:
(I) explain orally and in writing, the rights of the respective
parties to a workers' compensation claim and the procedures necessary to protect those rights;
(2) discuss the facts of the claim, review available infonnation in order to evaluate the claim, and delineate the disputed issues; and
(3) mediate and resolve disputed issues by mutual agreement of the parties in accordance with this [Texas Workers'
"&The Asbury coun's consideration of and reliance on the Board's rules concerning
infonnal disposition (albeit without comment on the validity of such rules) provide some
tacit recognition that an agency has the authority to promulgate procedural rules which
apand on, or amplify, section l3(e)'s terse authorization to dispose informally of matters
by stipulation, agreed settlement, consent order, or default. Moreover, the state attorney general, in opining that section IS(e) does not expand an agency's authority to impose sanctions against a regulated pany beyond those otherwise authorized by law, has
recently observed that the "purpose of subsection [lS](e) appears to be purely procedural, i.,., to allow, where the panies agree, for the settlement or other infonnal disposition ofcontested matters without the need offonnal proceedings," Op. Tex. Att'y Gen.
No.JM-IOM, at 2 (1989).
...·Texas Workers' Compensation Act, ch.I, 2d Called Sess., am. 1-11, 1989 Tex.
Sess. Law Servo I (Vernon).
"TId. 116.11-.15.
lIald. II 6.21-.28.
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Compensatism] Act and the policies of the [Texas Workers'
Compensation] [C]ommission. 119
Thus, the statute authorizes the agency and the claimant to engage
in informal mediation of disputed issues rather than immediately
undertaking an adjudicative hearing. 12o Then, U[i]f issues remain
unresolved after the benefit review conference, the parties by mutual agreement, may elect to engage in arbitration" in the manner
prescribed in the Act. 121 The statute directs that the parties can
agree to participate in arbitration to resolve disputed benefit issues
as Uan alternative to a contested case hearing."122 If a party elects
to proceed by arbitration, however, there is no longer an opportunity to participate in a contested case hearing. 12S Thus, as part of
the overall effort to address problems with the workers' compensation system in Texas, the legislature has authorized the new Texas
Workers' Compensation Commission and injured claimants to engage in two types of ADR procedures as alternatives to contested
case hearings.l 24 Although the sections of the new statute authorizing these ADR proceedings have not yet become effective,I2s they
should be innovative experiments in Texas administrative procedure once they become operative.
1191d. § 6.11.
'20Moreover, as a general matter, unless the partie~ first participate in a benefit review
conference, they are not entitled to a contested case hearing (or arbitration). Id.
§ 6.12(c). The Texas Workers' Compensation Commission can, however, promulgate
rules setting forth guidelines describing those claims that do not require a benefit review
conference and which can proceed directly to a contested case hearing or arbitration.
Id. Otherwise, the benefit review conference is a form of mandatory ADR procedure
(albeit nonbinding).
'·'/d. § 6.21 (a). The Act describes several purposes of arbitration:
(l) to enter into formal, binding stipulations on issues on which the parties
agree;
(2) to resolve issues on which the parties disagree; and
(S) to render a final award with respect to all issues in dispute.
Id.§ 6.22.
tnld. § 6.21(a).
'iS/d. § 6.21(c). In addition, the arbitrator's award is final and binding on the parties,
and there is no right to appeal. Id. § 6.26(d). A party may, however, seek to have an
award vacated on grounds such as fraud, corruption, or lack of agency jurisdiction. Id.
§ 6.28.
'"The new statute also diverges from AYfRA with respect to contested cases in that
the act prescribes its own form of internal appeals and judicial review. See id. §§ 6.32,
6.41-.45,6.61-.64.
1·'The vast majority of the Texas Workers' Compensation Act, including the provisions for benefit review conferences, becomes effective on January I, 1991. See id.
§ 17.18. The sections permitting parties to participate in arbitration, however, do not
become effective until January I, 1992. See id. § 17.18(b).
1990]
ADMINISTRATIVE PROCEDURE
727
In addition to the changes to the Texas Workers' Compensation
Act, the legislature recently enacted other legislation authorizing
state agencies to incorporate ADR methods as part of their arsenal
of procedures to resolve disputes. First, in 1989 the legislature enacted the Texas Fair Housing Act,l26 which - although making
APTRA applicable to any hearings regarding housing discrimination complaints127 - includes provisions requiring the Texas Commission on Human Rights to engage in conciliation with the
complainant and the party allegedly engaging in discriminatory
practices}28 The Act defines "conciliation" as "the attempted resolution of issues raised by a complaint or by the investigation of the
complaint, through informal negotiations involving the aggrieved
person, the respondent, and the commission:'129 Accordingly,
once an aggrieved party files a housing discrimination complaint
with the Texas Commission on Human Rights, the Commission
must engage in conciliation techniques to resolve issues raised by
the complaint. The statute further provides that any conciliation
agreement between the parties may provide for arbitration or some
other method of dispute resolution. ISO Thus, by including conciliation as part of the administrative process with respect to fair housing complaints, the legislature statutorily mandated agency use of
ADR techniques prior to the pursuit of contested case hearings.
In 1989 the legislature also amended the Agriculture Code to require arbitration of vegetable seed warranty claims}'l Chapter 64
of the Agriculture Code now requires mandatory arbitration before
the State Seed and Plant Board as a prerequisite to any legal action
by an aggrieved purchaser of vegetable seeds against the seed seller
IIOTEX. REV. ClV. STAT. ANN. art. If (Vernon Supp. 1990).
•17/d. § 4.15(b).
'18 /d. § 4.05.
•29 /d. § 1.05(4). This definition is drawn from federal fair housing legislation. See 42
U.S.C.A. § 5602(1) (West Supp. 1990). The Texas Fair Housing Act does not become
fully effective until the United States Department of Housing and Urban Development
[HUD] certifies the statute as being substantially equivalent to federal legislation. See
TEX. REv. ClV. STAT. ANN. art. If. § 11.01 (Vernon Supp. 1990). See also 24 C.R.F.
§§ 115.1-.11 (1990) (setting forth the federal standards for certification). Although
HUD has not provided full certification to date. HUD has determined that. on its face.
the Texas legislation appears "to provide rights and remedies that are substantially
equivalent to those provided by federal law:' Telephone interview with Loretta Dixon.
HUD Fair Housing Assistance Program Office. Washington. D.C. (July 27. 1990).
'''''TEX. REv. ClV. STAT. ANN. art. If. § 4.05(c) (Vernon Supp. 1990).
"'See TEX. ACRIe. CODE ANN. §§ 64.001-.007 (Vernon Supp. 1990). These statutes
relate to claims by purchasers ofvegetable seed who assert that they have been damaged
by the failure of the seed to produce or perform as represented by the warranty or label
attached to the vegetable s~ bag or package. /d. § 64.002.
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BAYLOR LA. W REVIEW
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or labeler. ls2 Accordingly, the vegetable seed arbitration required
by the Agriculture Code is not an alternative to an agency administrative hearing, but a mandatory process required by statute as a
prerequisite to litigation. ISS The Agriculture Code also provides
that once an aggrieved seed buyer commences litigation, any party
may introduce the arbitration report as evidence in the case, and the
court may also consider agency findings with respect to a party's
good faith in participating in the arbitration proceedings. 1M Thus,
the amendments to the Agriculture Code serve to establish yet another form of ADR procedure to be employed at the agency level as
a variant from traditional procedures. ISS
D. Rulemaking
In addition to adjudication, rulemaking is the other major type of
administrative process. In Texas, section 5 of APTRA sets forth the
procedures for agency adoption of rules,ls6 and that section generally provides for a notice and comment type of rulemaking process
which is very similar to that set forth in section 553 of the Federal
APA.IS7 Unlike the Federal APA, however, section 5(1) of APTRA
provides:
[a]n agency may use informal conferences and consultations as means of obtaining the viewpoints and advice of
interested persons concerning contemplated rulemaking.
Each agency also is authorized to appoint committees of
experts or interested persons or representatives of the general public to advise it with respect to any contemplated
'SlId. §§ 64.oo2(a), 64.005(a).
'SOln this regard tJie Agriculture Code's vegetable seed arbitration is unlike the ADR
procedures prescribed by the Texas Workers' Compensation Act or the Texas Fair
Housing Act. '
...Id. § 64.004.
IsoFor still another form of agency ADR procedure, see Texas Motor Vehicle
Comm'n, 16 TEX. ADMIN. CODE §§ 107.5-.6 (West Sept. I, 1988) (authorizing mediation, informal settlement conferences, and informal hearings to resolve automobile
"lemon law" warranty complaints purportedly under the authority of section 6.07(e) of
the Texas Motor Vehicle Commission Code, TEX. REv. CIV. STAT. ANN. art. 4415(56),
§ 6.07(e) (Vernon Supp. 1990» .
•56 See APTRA § 5.
'57S" 5 U.S.C. § 555 (1988). Under section 5 of APTRA, except for emergency rules,
an agency must first provide at least 50 days' notice of a proposed rule by posting the
rule in the Texas Register. APTRA § 5(a). Then, prior to the adoption of the rule, the
agency must afford interested persons an opportunity to submit data, views, or arguments to the agency either orally or in writing. Id. § 5(c). If at least 25 persons, an
association having at least 25 members, or a governmental subdivision or agency so
request, the agency must hold a public hearing concerning the proposed rule. Id. For a
thorough discussion of rulemaking under APTRA, see BeaI, supra note 68, at 658-46.
1990]
. ADMINISTRATIVE PROCEDURE
729
rulemaking. The powers of these committees are advisory
only.1!S8
Section 5(f) does not have a counterpart in the 1961 Model State
Administrative Procedure Act,1S9 but instead was adapted from a
like provision in the Wisconsin Administrative Procedure Act. l40
Thus, AYTRA provides specific authorization for Texas state agencies to engage in informal conferences and consultations prior to
the promulgation of new rules,141 and the section also authorizes
agencies to create advisory committees of experts, interested persons, or members of the general public to provide advice concerning contemplated rulemaking. 142
Accordingly, through these informal conferences and rulemaking
advisory committees, unlike the Federal APA, section 5(f) ofAYTRA
sets forth two methods by which agencies can include persons affected by contemplated rulemaking as participants. in the drafting
118 APTRA § 5(t). Section 555 of the Federal APA does not provide any mechanism
for public involvement in rulemaking at the initial drafting stage.
IS9MODEL STATE ADMINISTRATIVE PROCEDURE ACT (1961).
•40 See McCalla, The Administrative Procedure and Texas Register Act, 28 BAYLOR L. REv. 445,
450 (1976); WIS. STAT. ANN. art. 227.1S (West Supp. 1989) (current codification offormer art. 227.018). The National Conference of Commissioners on Uniform State Laws
has subsequently drafted a comparable provision as part of the 1981 Revised Model
State Administrative Procedure Act. See MODEL STATE ADMINISTRATIVE PRQCEDURE ACT
§ 5-101 (1981). Section 5-101 of the 1981 Model Act allows the agency to solicit public
comments on a subject matter of possible rulemaking by issuing a notice or to appoint a
committee to comment on the subject matter ofpossible rulemaking that is under active
consideration by the agency. Id. The Commissioners explained that
fa] voluntary prerule-making notice publication of the type authorized . . .
will often save time in the long run for an agency. Such a notice will alert the
agency very early in the rule-making process to problems which might later
cause the agency to rewrite drastically the terms of a rule it has formally proposed by publication ... or to regret that it had been formally proposed in the
first place. A prerule-making notice publication will also facilitate public access
to the rule-making process before the agency commits itself psychologically to
a specific text.
Id. (official comment). Like section 5(t) of APTRA, the committee consultation concept
in this section of the 1981 Model Act is derived from the Wisconsin Administrative Procedure Act. See id.
141 For an example of an agency rule promulgated pursuant to section 5(t) of APTRA
acknowledging the authority to engage in such informal conferences and consultations
to obtain the viewpoints and advice of interested persons concerning contemplated
rulemaking, see Public Util. Comm'n, 16 TEX. ADMIN. CODE § 21.109(c)(4) (West Sept.
I, 1988).
•42 APTRA § 5(t). For example, the State Board of Insurance has used an advisory
committee to provide recommendations regarding the planned revisions of certain rules
concerning the administration of employee benefit plans. See State Bd. oCIns., IS Tex.
Reg. 2122 (1988) (comments regarding emergency rules affecting State Bd. of Ins., 28
TEX. ADMIN. CODE §§ 7.1601-.1622 (West Sept. I, 1988».
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stage of agency rulemaking. 14S Thus, the Texas Legislature has already taken steps to address some of the concerns raised at the federallevel regarding the lack of public participation in rulemaking at
the drafting stage by appearing to authorize techniques comparable
to negotiated rulemaking. 144 Unlike the recommendations and proposed legislation concerning negotiated rulemaking at the federal
level, however, section 5(f) does not provide for impartial
facilitators to aid in the discussions and negotiations among the
members of an advisory, committee appointed to provide advice
concerning the development of a new rule. 145 Indeed, section 5(f)
does not employ the phrase "negotiated rulemaking." Of course,
this is none too surprising given that the 1976 enactment of APTRA
preceded the Administrative Conference's recommendations concerning negotiated rulemaking by several years,146 On the other
hand, section 5(f)'s broad language authorizing agencies to (I) use
informal conferences and consultations with interested persons or
(2) appoint advisory committees, which can include interested persons, to provide advice concerning contemplated rulemaking would
appear to invest an agency with the authority to engage facilitators
or to take other steps consistent with the purpose of the section: to
provide public viewpoints and advice in the preparation of contemplated rulemaking. 147
III. TEXAS STATE AGENCY USE OF ADR: WHERE SHOULD WE Go
FROM HERE?
The ADR movement is fast becoming an accepted part of modem
administrative procedure at both the federal and state levels.
Although much more ADR activity has taken place at the federal
agency level than in Texas, there have been some efforts to augment
'0'APTRA § 5(1). See also NEGOTIATED RULEMAKING SOURCEBOOK, supra note S5, at I
(commenting that the Federal APA does not require public participation in the drafting
stage of agency rulemaking).
'''The extent to which Texas agencies have actually pursued the options offered by
section 5(f) of APTRA is unclear, however. Indeed, there are no reported cases interpreting section 5(1). Nevertheless, the section offers useful tools to Texas state agencies
to assist in preparing new rules, and provides persons affected by agency rulemaking
with opportunities to seek to participate in the formulation of agency rulemaking.
'''S" supra text accompanying notes 42, 46.
'06The Administrative Conference made Recommendations 82-4 and 85-5 concerning
the negotiation of proposed rules in 1982 and 1985, respectively. See I C.F.R.
U S05.82-4, .85-5 (1990).
'47Of course, the agency must still proceed with the other notice and comment requirements of section 5 of APTRA after the agency and any such advisory committee
develop the proposed rules.
1990]
ADMINISTRATIVE PROCEDURE
731
current Texas administrative practice by incorporating various alternative procedures.l 48 However, the extent to whichADR procedures should be employed to complement the current processes
afforded by AYTRA remains a question in Texas. This section will
explore possible avenues that Texas agencies, legislators, courts,
and practitioners may pursue with respect to s~te agency use of
ADR procedures.
A. Contested Cases
As the population of Texas continues to expand, the state will no
doubt experience a concomitant growth both in state government
and in the number of disputes between Texas state agencies and the
persons they regulate. As the number and complexity of state administrative disputes continue to increase, full adjudication of contested cases pursuant to AYTRA may become increasingly timeconsuming and inefficient. 149 As has been recognized with respect
to Texas litigation,l50 ADR procedures could offer informal methods to resolve disputes that would otherwise require fully contested
case hearings and, possibly, subsequent judicial review. Indeed,
AYTRA's provisions setting forth the procedures for conducting
contested cases are much like civil litigation, requiring trial-like procedures such as the application of the rules of evidence 1S1 and provisions for extensive discovery.ls2 Thus, the reasons for authorizing
courts to refer pending litigation matters to ADR proceedings are
equally applicable to agencies. Accordingly, if agencies have the authority to engage in ADR procedures as a means of resolving some
of these disputes prior to the adjudicative hearing stage, then both
agencies and regulated persons may benefit through cost savings
and greater efficiency.
ADR procedures are already available as alternatives to litigation
for contested cases that have been appealed. ISS Additionally, with
respect to contested matters that are still at the agency level,
AYTRA's provision authorizing the informal disposition of contested matters by agreed setdement l54 offers some basis for urging
See supra Section II.
See SU/fra notes 26-27 and accompanying text.
IIlOSee 1987 Texas ADR Procedures Act, supra note 2.
lOiSe, AYfRA § 14(a). In this aspect, the Texas requirements are more formal than
federal procedures because the Federal Rules of Evidence are not applicable to federal
administrative hearings. See 5 U.S.C. § 556(d) (1988).
10tSee AYfRA §§ 14, 14a.
I . . See supra notes 69-84 and accompanying text.
I..See AYfRA § 13(e).
148
149
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that Texas agencies have the authority to engage in ADR procedures as preliminary means of reaching agreed settlements prior to
holding contested case hearings. u5 However, given the lack of direct authority for agencies to engage in ADR procedures, there may
be problems of both agency authority and willingness to engage in
such processes.
As a means of providing Texas state agencies with the clear discretion to engage in ADR proceedings at the agency level, the legislature could amend APTRA to provide specific authority to employ
such processes. One possible method of providing such authority
would be to amend section 13(e) to provide the following:
(e) Unless precluded by law, informal disposition may be
made of any contested case by stipulation, agreed settlement, consent order, or default. An agency may engage in an
informal settlement conference with affected parties or refer a pending
dispute to an alternative dispute resolution procedure, including such
alternative dispute resolution procedures as those described in Sections 154.023 - .025. & .027, Civil Practice & Remedies Code,
for purposes offacilitating an informal disposition of a contested case
by agreed settlement. The failure of an informal settlement conference or an alternative dispute resolution procedure to result in an
informal disposition of a contested case by agreed settlement shall be
without prejudice to a party S right to an adjudicative hearing under
this Act. 156
This language would directly authorize both informal settlement
conferences and agency use of nonbinding ADR procedures to facilitate the resolution of contested cases. It also would provide a
means by which a party could still pursue an adjudicative hearing if
the ADR procedure did not result in an agreed settlement of the
dispute. Concerns remain, however. For example, a person adversely affected by agency action might not want to participate in
proceedings other than a contested case hearing. Also, an agency
might employ ADR procedures as a form of delay. One possible
solution to these concerns would be to condition the use of ADR
IUSee supra notes 88-i 15 and accompanying text.
"'''This proposed language includes all the ADR procedures set forth in the 1987
Texas ADR Procedures Act except for section 154.026 relating to summary jury trials.
See 1987 Texas ADR Procedures Act § 154.026. Summary jury trials would be inappropriate for matters still pending before an agency because they involve the use ofjuries
through the court system. See id. §§ 154.026(b),(c).
1990]
ADMINISTRATIVE PROCEDURE
733
procedures within the agency on agreement to pallicipate by all parties to a dispute. 157 The amendatory language suggested above
does not require agreement of the parties to engage in an ADR proceeding but, by providing a permissive grant of power to agencies,
does not preclude an agency from limiting its use of ADR procedures to such cases.
Another concern with Texas state agency use of ADR procedures
relates to issues of open government. There is a natural tension
between open government concerns and maintaining the confidentiality of ADR processes. The Texas Open Meetings Act158 requires
that any meeting involving public business at which a quorum or
majority of the members of a governmental body are present must
be open to the public except for certain delineated exceptions. 159
On the other hand, ADR procedures, to be successful, must involve
certain levels of confidentiality.l60 Of course" the Texas Open
Meetings Act, by its terms, only applies to meetings of a quorum of
the actual governing body of the agency,161 Accordingly, the Act
would not literally apply to ADR procedures unless they were conducted before a quorum of the governing body of an agency, an
unlikely scenario. On the other hand, the resolution of largely public disputes through an agency's use of ADR procedures may run
counter to policies of open government. But, given that agencies
can now informally dispose ofcontested matters through non-public
U>7The proposed amendments to the Federal APA require ~t the parties agree to
participate in an ADR procedure. See H.R.2497, supra note 6, at sec. 4(b), § 582(a). By
way of contrast, however, the 1987 Texas ADR Procedures Act permits ajudge to refer a
pending lawsuit to an ADR procedure over the objection of some or all the parties to the
dispute. See 1987 Texas ADR Procedures Act §§ 154.021(a), 154.Q22.
I08TEX. REV. ClV. STAT. ANN. art 6252-17 (Vernon Supp. 1990)'.
1&9 /d. § 2(a).
'
"'0 As variations on settlement negotiations, "many of the benefits of ADR can be
achieved only if the proceedings are held confidential. Confidentiality assures the parties that what is said in the discussions wiD be limited to the negotiations alone so they
can be free to be forthcoming." I C.F.R. § S05.88-11 (1990) (remarks of the Administrative Conference accompanying recommendations that agencies protect the confidentiality of the proceedings and of the neutral third party participants). See also Ritter,
ADR: What About CtmfidentioJity1, 51 TEX. BJ. 26 (1988). Because of this need for confidentiality,legislation authorizing agency use ofADR procedures may weD need to incorporate language directly addressing confidentiality issues. One possibility is an express
incorporation of the confidentiality provisions set forth in 1987 Texas ADR Procedures
Act § 154.07S. The Administrative Conference has also provided a model rule for federal agency use of ADR techniques that contains provisions regarding confidentiality.
See 1 C.F.R. § S05.88-11 (Appendix) (1990). See also H.R.2497, supra note 6, at sec. 4(b),
§ 584 (setting forth confidentiality provisions as part of proposed amendments to the
Federal APA to encourage agency use of ADR procedures).
10'S" TEX. REv. ClV. STAT. ANN. art 6252-17 §§ I, 2(a).
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BAYLOR LAW REVIEW
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settlement discussions and agreements,162 extending those settlement discussions into the realm of nonbinding ADR procedures
should not necessitate making such proceedings public. 16s
B. Rulemaking
Unlike its current provisions for contested cases, APTRA includes
an innovative section on rulemaking that offers Texas state agencies
and regulated parties much flexibility in developing draft regulations. As described above,l64 section 5(f) of APTRA authorizes
agencies to (1) use informal conferences and consultations to obtain
interested persons' advice and viewpoints concerning contemplated
rulemaking and (2) appoint committees of interested persons, members of the general public, and experts to provide advice concerning
contemplated rulemaking.I 65 Thus, Texas state agencies, as well as
regulated persons, already possess a useful tool for effectively engaging in negotiated rulemaking between agency members and the
interested public at the drafting stage of contemplated rulemaking.
Given the direct authority provided by section 5(f) of APTRA, state
agencies need not remain wedded solely to the use of traditional
notice and comment rulemaking, but may employ the mechanisms
afforded by section 5(f) to augment and ,complement the rulemaking
process at the drafting stage.
In view of the authority set forth in section 5(f) of AYfRA, no
further legislation is necessary to allow Texas state agencies to engage in the process of negotiated rulemaking.I 66 On the other
hand, as at the federal level, the lack of specific legislation setting
forth procedures for Texas state agency use of negotiated rulemaking could resUlt in non-uniform, ad hoc negotiated rulemaking efforts, with mixed results. 167 Moreover, the language of section 5(f)
'""See APTRA § 18(e).
,oThe Texas Legislature spoke directly to this question in the recently enacted Texas
Workers' Compensation Act by specifically excluding benefit review conferences, arbitration proceedings, and contested case hearings from the purview of the Texas Open
Meetings Act. See Texas Workers' Compensation Act, ch.l, 2d Called Sess., § 1.02(2),
1989 Tex. Sess. Law Servo 1 (Vernon).
'64See supra notes 186-47 and accompanying text.
•0
APTRA § 5(f)•
Negotiated rulemaking has been the subject of much federal and other state agency
experimentation to date. See supra note 44 and accompanying text; note 59.
• 67 See supra note 47 and accompanying text.
•86
1990]
ADMINISTRATIVE PROCEDURE
735
predates the more recent advent of negotiated rulemaking actiVity.l68 Accordingly, although section 5(f) is consistent with the recent negotiated rulemaking activity given its provisions allowing for
consensus-building in the drafting of proposed rules, the section's
language is sketchy and does not provide specific authorization for
certain aspects of the negotiated rulemaking mechanism - such as
the authority to use impartial facilitators to assist the advisory committees in their activities. Although agencies certainly appear to
have implicit authority under section 5(f) to pursue all avenues of
negotiated rulemaking,l69 additional legislation may be desirable
for the sake of both uniformity and clarity. The lack of added legislation, however, should not deter either Texas state agencies from
actively taking advantage of the procedures in section 5(f) in drafting contemplated rules, or regulated persons from seeking more
participation with agencies when anticipating additional rules. Indeed, the active use of section 5(f) could lead to greater harmony
between agencies and regulated persons with respect to the
rulemaking process.
IV.
CONCLUSION
APTRA has been part of the landscape of Texas government and
jurisprudence for a scant decade and one-half. Despite its relatively
short period of existence, the Act has become an integral part of
Texas practice and procedure. As Texas' population and government continue to grow, however, the problems of high costs and
inefficiency which have beset the administrative processes of federal
agencies 170 will no doubt infect the Texas administrative process.
Moreover, just as all civil disputes need not be the'subject of the full
litigation process, not every administrative dispute needs to be resolved through the full panoply of procedures set forth in APTRA.
The use ofADR should not be viewed as a panacea but, for the same
reasons that it is now the policy of this state to encourage "the early
IfI8Section 5(f) was part of the initial enactment of APTRA, which' was effective as of
January I, 1976. See APTRA § 2~. On the other hand, the concept of negotiated
rulemaking did not receive much attention prior to the Administrative Conference's
1982 recommendations. See 1 C.F.R. § ~05.82-4 (1990); Ina see Harter, supra note 40
(second reference) (detailed 1982 article discussing negotiated rulemaking concept);
Note, supra note 40 (1981 article discussing same).
'"Of course, this authority is in the context of using negotiated rulemaking as a complement to the other required aspects of notice and comment rulemaking under section
5 of APTRA. In addition, section 5(f) of APTRA specifically provides that the powers of
any rulemaking advisory committee "are advisory only:' APTRA § 5(f).
110 See supra notes 26-27 and accompanying text.
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settlement of pending litigation through voluntary settlement procedures,"171 Texas administrative agencies and regulated persons
should have the flexibility in appropriate cases to resolve disputes
through informal means short of the full process delineated by
APTRA.
17'1987 Texas ADR Procedures Act, supra note 2, at § 154.002.