International Ins. Agency, Inc. v. Railroad Com'n of Texas

• Decision Date: 01 February 1995
• Docket Number: No. 3-94-060-CV,3-94-060-CV
• Citation: 893 S.W.2d 204
• Parties: INTERNATIONAL INSURANCE AGENCY, INC.; Bert Whisenant, Jr. d/b/a Bert Whisenant Insurance; Gregg L. Carter d/b/a R.B. Carter Agency; Insurance Express, Inc.; Hector Villarreal; and Maude Lette, Elmer Lette, and James Lette, Individually, Jointly, and d/b/a Lette Insurance Agency, Appellants, v. RAILROAD COMMISSION OF TEXAS, Appellee.
• Court: Texas Court of Appeals

Page 204

893 S.W.2d 204

INTERNATIONAL INSURANCE AGENCY, INC.; Bert Whisenant, Jr.

d/b/a Bert Whisenant Insurance; Gregg L. Carter d/b/a R.B.

Carter Agency; Insurance Express, Inc.; Hector Villarreal; and Maude Lette, Elmer Lette, and James Lette, Individually, Jointly, and d/b/a Lette Insurance Agency, Appellants, v. RAILROAD COMMISSION OF TEXAS, Appellee.

No. 3-94-060-CV.

Court of Appeals of Texas,

Austin.

Feb. 1, 1995.

Rehearing Overruled Feb. 22, 1995.

Rex H. White, Jr., Hutcheson & Grundy, L.L.P., Austin, for appellant.

Dan Morales, Atty. Gen., Douglas Fraser, Norma K. Scogin, Asst. Attys. Gen., Austin, for appellee.

Before JONES, KIDD and B.A. SMITH, JJ.

ON MOTION FOR REHEARING

JONES, Justice.

The opinion issued herein on December 7, 1994, is withdrawn, and the following opinion is filed in lieu thereof.

International Insurance Agency, Inc. and other insurance agents and brokers ¹ (collectively "Plaintiffs") filed suit in district court pursuant to the Administrative Procedure Act, Tex. Gov't Code Ann. § 2001.038 (West 1994), challenging the validity of a Railroad Commission rule providing an alternative method for registering intermittent international commercial carriers. See 16 Tex.Admin. Code ("TAC") § 5.507(c) (1994). Plaintiffs appeal from a declaratory judgment upholding the rule. We will affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Texas law requires all commercial motor vehicles to register annually with the Railroad Commission ("the Commission"). See Tex.Rev.Stat.Ann. art. 911b, § 4(a)(13) (West Supp.1994). All commercial motor carriers are also required to maintain liability insurance, at limits set by the Commission, and file proof of such insurance with the Commission. Tex.Rev.Civ.Stat.Ann. art. 6701d, § 139(c) (West Supp.1994). Typically, commercial motor vehicles meet these requirements through annual registration, documenting compliance with a "cab card." These cab cards, issued by the Commission, evidence both registration with the Commission and compliance with the liability insurance requirements. See 16 TAC §§ 5.501-5.506.

In 1988, in response to insurance industry concerns, the Commission determined that the cab-card procedure posed unacceptable burdens on intermittent international commercial carriers that enter the United States under temporary insurance policies frequently referred to as "trip insurance." See 13 Tex.Reg. 1501 (1988). To respond to this problem, the Commission developed a special alternative registration system for international carriers entering the country on a temporary and irregular basis. In lieu of maintaining commercial motor vehicle registration through use of annual registration and the cab-card procedure, these carriers were permitted to register through an international registration stamp program. See 16 TAC § 5.507.

This alternative compliance program works in the following manner. Participating insurance agents file evidence of a master insurance policy with the Commission. Only The Commission also established procedures for insurance agents to procure the stamps. An agent who has filed evidence of a master policy with the Commission may purchase the stamps in advance in lots of five, or may obtain them on consignment by posting a bond in the amount of twice the total value of stamps held on consignment. 16 TAC §§ 5.507(c)(2), (7). Agents must remit fees collected from the sale of international stamps on consignment within thirty days of sale. 16 TAC § 5.507(c)(8). For stamps not held on consignment, agents must submit evidence of sale of the stamp within ninety days. 16 TAC § 5.507(c)(9).

                agents who file this documentation may obtain and sell international registration stamps.  The Commission assigns each master policy an identification number.  The international registration stamps bear the number of the corresponding master policy.  16 TAC §§ 5.507(c)(2)-(3).  When an international motor carrier uses this alternative procedure, the insurance agent selling the policy is required to record certain basic information about the insured and, within thirty days, file this information with the Commission on a form provided. 2  16 TAC §§ 5.507(c)(4)-(5).  To document the registration and temporary trip insurance, the international commercial carrier must purchase a ten-dollar international registration stamp from the insurance agent. 3  16 TAC § 5.507(c)(1).  This stamp must be affixed to the temporary insurance policy and be carried in the vehicle at all times.  16 TAC § 5.507(c)(6)
                

Plaintiffs brought a declaratory judgment action against the Commission seeking to declare invalid these provisions embodied in section 5.507(c). They challenged the rule on two grounds: exceeding statutory authority and federal preemption. The district court concluded that the Commission did not exceed its statutory authority in promulgating section 5.507(c) and, further, that the registration fee required by the rule was not preempted by federal law. Plaintiffs appeal the trial-court judgment in seven points of error.

DISCUSSION

A. STATUTORY AUTHORITY

In their first point of error, Plaintiffs contend the trial court erred in declaring that section 5.507(c) did not exceed the Commission's statutory authority. The essence of this challenge is that section 5.507(c) extends the Commission's regulatory power over insurance agents without legislative authorization to do so. We disagree.

The test for whether an agency rule exceeds statutory authority is whether the rule is in harmony with the general objectives of the statute. Railroad Comm'n v. Lone Star Gas Co., 844 S.W.2d 679, 685 (Tex.1992); Gerst v. Oak Cliff Sav. & Loan Ass'n, 432 S.W.2d 702, 706 (Tex.1968). To make this determination, we must look not only to a particular provision of the act, but to all applicable provisions. Gerst, 432 S.W.2d at 706; Chrysler Motors Corp. v. Texas Motor Vehicle Comm'n, 846 S.W.2d 139, 141 (Tex.App.--Austin 1993, no writ). As in all questions of statutory interpretation, we are guided by the intent of the legislature. See Tex. Gov't Code Ann. § 312.005 (West 1988); Monsanto Co. v. Cornerstones Mun. Util.Dist., 865 S.W.2d 937, 939 (Tex.1993).

The legislature has vested the Commission with power and authority to "supervise and regulate the transportation of property for compensation or hire by motor vehicle on any public highway in this State...."

Tex.Rev.Civ.Stat.Ann. art. 911b, § 4(a)(1) (West Supp.1994). This broad grant of authority is intended to enhance public safety and to physically protect the highways. Tex.Rev.Civ.Stat.Ann. art. 911b, § 22b (West 1964) (declaration of policy); Great Nat'l Life Ins. Co. v. Chapa, 377 S.W.2d 632, 634-35 (Tex.1964).

To accomplish these general objectives, the Commission has specific legislative authorization over commercial vehicles. All commercial motor vehicles are required to register with the Commission. Tex.Rev.Civ.Stat.Ann. art. 911b, § 4(a)(13) (West Supp.1994). Additionally, all motor carriers must maintain proof of liability insurance at levels established by the Commission. Tex.Rev.Civ.Stat.Ann. art. 6701d, § 139(c) (West Supp.1994). The Commission is also authorized to "adopt regulations necessary to ensure that motor carriers maintain proof of liability and property damage insurance." Id. While these legislative authorizations do not specifically mention insurance agents, the Commission determined that they provide sufficient authority for its rule in the context of a voluntary, alternative compliance program for intermittent international commercial carriers. We agree.

The alternative program simply requires insurance agents who choose to sell trip insurance to infrequent international carriers to record basic information about the carrier and to affix a stamp that identifies the temporary trip insurance policy with a master policy on file with the Commission. These requirements are "in harmony" with the statutory authorization that the Commission register and require proof of insurance of commercial carriers. The program is certainly consistent with the general objective of enhanced public safety. Moreover, if the Commission cannot require insurance agents who voluntarily agree to participate in this alternative registration program to comply with section 5.507(c) requirements, there may be no effective alternative to ensure that these temporary visitors are properly registered and insured as required by statute. Section 5.507(c) does impose some burdens on insurance agents; however, those agents who find this voluntary alternative program too burdensome have an easy solution: They can simply decline to participate in the program.

Plaintiffs rely on language in a 1939 opinion from this Court that the Commission is powerless to impose additional burdens on insurance companies. See Railroad Comm'n v. Highway Ins. Underwriters, 124 S.W.2d 413, 414 (Tex.Civ.App.--Austin 1939, no writ). In Highway Insurance, the Commission required insurance companies writing liability policies for motor carriers to deposit $50,000 in cash or securities with the Commission before it would approve the insurance carrier. We held that, because former section 13 of the Motor Carrier Act required only that the insurance be issued by a company "authorized by law to transact business in Texas," forcing a company to meet an additional $50,000 deposit requirement after it had already been authorized to do business by the Board of Insurance exceeded the Commission's statutory authority. Id. at 413-14.

The present case, however, is distinguishable. First, when Highway Insurance was decided, the Commission was operating without the statutory authorization to register and require proof of insurance present today. These specific grants of authority now provide the Commission with authority it did not possess in 1939. Further, unlike Highway Insurance, the Commission here is not imposing an additional burden on insurance agents under circumstances...