I already hired a team of lobbyists—why do I need a regulatory lawyer, too?

by | Oct 3, 2022 | Attorney General Opinions and Legislative Support

Texas government significantly impacts Texas businesses. Although Texas is well known for being a business-friendly state, every legislative session carries the promise and threat that newly-enacted laws (or the repeal of existing laws) will make or break companies doing business in the Lone Star State.

And while the Texas Legislature takes center stage for six months every two years, Texas agencies and courts operate all year round—interpreting, applying, and perhaps overturning laws passed during the legislative session.

When selecting your advisors, you need to assemble a team with the right relationships, keen political intelligence, and in-depth legal and regulatory knowledge.  Passing or blocking bills is simply insufficient to ensure legislative success. Engaging legal counsel with significant experience navigating clients across the intersection of legislation, agency rulemaking and enforcement, and judicial review is essential to secure victory on all fronts, before all three branches of Texas government.

Cobb & Counsel offers its clients more than 25 years of knowledge and experience in the Austin political, regulatory, and judicial arenas. Our understanding of the way Texas agencies and courts operate empowers us with the ability to craft and deploy a broader range of arguments and approaches to put pressure on policymakers and deliver solutions to our clients.

Case Study—Cobb & Counsel Legislative Support

When Berkshire Hathaway Inc. wanted to acquire the Van Tuyl Group (the nation’s largest privately-owned automotive dealer), they engaged Cobb & Counsel to provide legal analysis on the impact of Texas law regarding the ownership of auto repair facilities by insurance companies and their affiliates.

The Texas Department of Motor Vehicles (TxDMV) and others suggested that Berkshire Hathaway’s ownership of Forest River, an RV manufacturer, violated Texas’ motor vehicle cross-tier ownership prohibition, thereby precluding Berkshire’s ownership of auto dealerships in Texas.

During two legislative sessions, Cobb & Counsel support the efforts of Berkshire Hathaway’s lobby team to advance legislation to resolve a potential ambiguity in the auto repair facility ownership laws.

Legal Analysis—Providing solutions begins with understanding the problem—and we always begin by listening to our client’s legal and operational concerns. Armed with the knowledge of these constraints and imperatives, we conduct in-depth legal research and analysis of the specific regulation and the broader regulatory regime—including the law’s legislative history. First, with an eye toward demonstrating compliance, and then with a view toward remedial legislation, all the while contemplating and crafting creative non-legislative alternative strategies.

Agency Advocacy–Many Texas laws are initially interpreted, and enforced, by regulatory agencies—including Texas’ motor vehicle cross-tier ownership prohibition, which is administered by the TxDMV. Laws enacted by the Texas Legislature are frequently vague, sometimes intentionally so, and there is always room for interpretation, advocacy, and non-legislative solutions.

  • Informal Opinions—Sometimes, but not often, an agency will issue an informal opinion providing comfort and persuasion during the legislative effort.  After reducing our research and analysis into a brief 2-page analysis, we met with the TxDMV’s Executive Director and General Counsel seeking to persuade them of our client’s position and compliance with Texas law. 
  • Rulemaking—Agencies don’t make laws, but they have the power to promulgate rules interpreting the laws they enforce. Unable to convince the TxDMV to issue a favorable informal opinion, we proposed that the agency adopt a rule conforming to our client’s interpretation of compliance and provided them with a draft rule. After the agency declined, the client deferred this option to prevent a distraction from its legislative effort.
  • Enforcement Deferral—When an agency determines a law it administers is being violated, regulatory enforcement is the logical consequence. Although the TxDMV was not persuaded to promulgate a rule favoring our client’s legal interpretation, we successfully persuaded the agency to defer any regulatory enforcement action (to defer revocation of our client’s licenses) until the expiration of the legislative session, avoiding both the expense and diversion of proceeding to the State Office of Administrative Hearings (SOAH).

Bill Drafting—We know that every word we add or subtract from a statute has a price, so we draft proposed legislation with the twin goals of minimizing changes and maximizing clarity, frequently proposing several alternative bill drafts, each with different trade-offs with respect to style and substance. Sometimes, as was the case here, because stakeholder positions were evolving differently before each chamber as the session and hearing progressed, we provided multiple rounds of language and revisions to ensure consensus while securing our client’s objective.

Creativity & Strategy—Your lobbyists know the legislature, and we stay in our lane.  But we can craft alternative and overlapping avenues for advocacy, before an agency, court, the Attorney General, or something outside the box. Because the motor vehicle cross-tier ownership prohibition sought to avoid manufacturers exercising control over dealers, we devised a plan to contractually divest our client of such control. After negotiating for additions and revisions to the contract, the TxDMV agreed our client would be compliant with Texas law upon its execution (although later, reversed this decision).

Litigation—The Legislature is the first word on Texas law, and regulatory agencies are the second—but the judicial branch is the final word, and litigation is an ever-present backstop to legislation. As leverage to encourage legislation or an administrative compromise we drafted a Petition for Declaratory Judgment to challenge the TxDMV’s statutory interpretation and enforcement authority.

Advocacy—Most lawyers make regulations sound complex, but we make them sound simple, if we make any sound at all (we are a rare breed of lawyers that don’t need to hear themselves talk). But we are there when called upon to answer technical questions about implementation, enforcement, constitutionality, judicial review, and pending rules or lawsuits. On behalf of our client, we joined our lobby team at all meetings with key stakeholders and decisionmakers, concisely explaining our legislative and contractual solutions, with readily-accessible metaphors and analogies, while providing crisp and persuasive explanatory one-pagers.

Testimony—We aim to keep testimony short, simple, and to the point, while justifying the ask and addressing the opposition in advance.  But preparing witnesses for tough questions is paramount.  We drafted testimony, legislative FAQs, and potential Q&As for witnesses appearing before House & Senate committee hearings on our proposed and related legislation. With our help, they answered every question with confidence and provided the perfect metaphor justifying the bill.

Attorney General Opinion Requests—The Texas AG has the authority to interpret Texas law via Opinion Requests submitted by Agency Heads or Committee Chairs.  These are frequently advanced, crafted, and drafted by regulatory counsel on behalf of stakeholders. While AG Opinions are not binding on courts, they are binding on regulatory agencies, and are often overlooked as an avenue for effecting policy changes. While our client’s legislation was pending, the TxDMV requested an AG Opinion on our legal interpretation. We drafted responsive briefing supporting the Opinion Request, assisted allies with preparing and submitting briefs, and replied to opposition briefs.

Agency Enforcement Actions—Regulatory agencies typically initiate enforcement by issuing a Notice of Violation, Notice of Decision, or similarly-worded notice, which is in fact the agency’s determination of statutory non-compliance. Respondents are given the opportunity to negotiate with the agency and request a hearing, and should both fail, request litigation at SOAH.  After the 2017 session ended without remedial legislation for our client Berkshire Hathaway, we represented them before the TxDMV and SOAH during license revocation proceedings, ultimately settling the SOAH dispute after the client obtained remedial legislation in the 2019 session.

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