## Facts

- The Texas State Board of Insurance adopted two rules on August 31, 1993: 28 Tex. Admin. Code §§ 21.1000 (Rule 1000) and 21.1003 (Rule 1003), after proposing and publishing them in the Texas Register in July 1993.
- Rule 1000 barred insurers from refusing to sell certain insurance based solely on the fact that a prior insurer canceled or did not renew the applicant’s policy, targeting consumer “blacklisting.”
- Rule 1003 prohibited (1) conditioning issuance of an automobile policy on the purchase of additional coverage from the same insurer (“tying”) and (2) denying automobile insurance, or a preferred rate, based on the applicant owning only one vehicle.
- Multiple automobile insurers and industry associations sued state insurance regulators, asserting the rules were invalid because the agency exceeded its statutory authority under the Texas Insurance Code and failed to comply with Texas Administrative Procedure Act (APA) rulemaking requirements.

## Issues

1. Whether Rules 1000 and 1003 were adopted in substantial compliance with the Texas APA’s notice, comment, and reasoned-justification requirements.
2. Whether the Board had statutory authority under the Texas Insurance Code to regulate these underwriting and marketing practices by rule.
3. Whether the rules conflicted with, or impermissibly expanded upon, legislative policy governing unfair discrimination and automobile insurance regulation.

## Decision

- The Supreme Court of Texas affirmed the judgments upholding Rules 1000 and 1003.
- The Court held the Board acted within its statutory authority under the Texas Insurance Code to address unfair or discriminatory insurance practices and related market conduct.
- The Court held the Board substantially complied with the Texas APA’s procedural requirements in adopting the rules.
- The insurers’ requests for declaratory and injunctive relief were denied, leaving the rules valid and enforceable.

## Legal Principles

- Texas courts review APA rulemaking challenges under a “substantial compliance” standard that focuses on whether affected parties received meaningful notice and an opportunity to comment and whether the agency provided an adequate statement of basis and purpose.
- An agency with broad statutory responsibility over a regulated field may adopt rules identifying and restricting particular practices as unfairly discriminatory or anticompetitive when the rules reasonably implement legislative policy and do not conflict with express statutory limits.
- Courts generally defer to a responsible agency’s reasonable construction of ambiguous statutory provisions within its regulatory domain, especially in technical and economic regulatory contexts.

## Conclusion

The Texas Supreme Court sustained the validity of two insurance rules aimed at blacklisting, tying, and single-vehicle underwriting discrimination, concluding the Board acted within its Insurance Code authority and that the rulemaking process satisfied the Texas APA through substantial compliance.


Nat'l Ass'n of Indep. Insurers v. Tex. Dep't of Ins., 925 S.W.2d 667 (Tex. 1996)