Who pays the State Office of Administrative Hearings for a contested case hearing in Texas?

Plain-English summary

The State Office of Administrative Hearings, known as SOAH, holds "contested case hearings" to resolve certain contract claims against the state. When a contractor is unhappy with the result of negotiating a claim with a state agency, the contractor can ask SOAH to hold a hearing. The chief administrative law judge can set a fee for the hearing and either charge it to the party that loses or split it "in an equitable manner." The chief administrative law judge asked the Attorney General how SOAH should bill the various agencies for these fees.

The wrinkle was a budget rider. A rider to SOAH's appropriation in the General Appropriations Act (Rider 7c) names 34 agencies that do not get their own money to pay SOAH for hearings; instead, SOAH's own appropriation includes funding to cover hearings for those agencies. Agencies not on that list receive their own appropriations to contract with SOAH. So the same hearing fee might be handled two different ways depending on whether the agency is one of the 34.

The opinion read the statute and the rider together. Nothing in the Appropriations Act limits the chief judge's authority to set fees under section 2260.103 just because one of the 34 listed agencies is involved. Working through the scenarios where the judge charges the loser, the opinion laid out the answer this way: if the state agency wins, SOAH bills the non-governmental party. If the non-governmental party wins, SOAH bills the state agency, but only when the agency is not one of those named in Rider 7c; if the agency is on the Rider 7c list, SOAH should instead use its own appropriated funds to offset the hearing costs rather than bill the agency. And if costs are charged to the non-governmental party, neither the Act nor section 2260.103 lets SOAH use its own appropriation to cover them.

The opinion limited itself to the situation where the judge assesses fees against the non-prevailing party. It expressly did not address the standards for the other option, splitting the fee in an equitable manner.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

SOAH and its chief administrative law judge (as the opinion described it): The opinion gave SOAH a billing map for the assess-against-the-loser scenario: bill the contractor when the agency wins; bill a non-Rider-7c agency when the contractor wins; and for a Rider 7c agency that loses, draw on SOAH's own appropriation rather than billing the agency.

State agencies (as the opinion described it): The opinion treated whether an agency appears on the Rider 7c list as the deciding factor for whether it gets billed directly or whether SOAH absorbs the cost from its own funds.

Government contractors and other non-governmental parties (as the opinion described it): The opinion concluded that when the non-governmental party loses, SOAH bills that party, and SOAH's own appropriation cannot be used to cover costs charged to that party.

Common questions

Who pays for a SOAH contested case hearing?
When the chief judge charges the fee to the losing side, the opinion said the bill goes to whichever party did not prevail, with a special rule for agencies on the Rider 7c list.

What is the Rider 7c list?
It is a list of 34 agencies in a rider to SOAH's appropriation that do not receive their own funds to pay SOAH. For those agencies, SOAH's own appropriation includes funding to cover their hearings.

What happens if a Rider 7c agency loses a hearing?
The opinion concluded SOAH should use money from its own appropriation to offset the hearing costs rather than bill that agency.

Did the opinion cover splitting the fee between the parties?
No. The opinion addressed only the option of charging the loser. It expressly declined to address the standards for apportioning a fee in an equitable manner.

Background and statutory framework

Subchapter C of chapter 2260 of the Government Code governs SOAH contested case hearings on certain contract claims against the state. A dissatisfied contractor may request a hearing (Tex. Gov't Code Ann. § 2260.102(a)), and the chief administrative law judge may set a fee and either assess it against the non-prevailing party or apportion it in an equitable manner (§ 2260.103(a)-(b)). A rider to SOAH's appropriation (Rider 7c) in the General Appropriations Act, 82d Leg., R.S., ch. 1355, lists 34 agencies funded through SOAH's own appropriation rather than their own.

The opinion read the statute and rider together under ordinary construction principles, citing Exxon Corp. v. Emerald Oil & Gas Co. for starting with plain language and Calvert v. Fort Worth Nat'l Bank for reading statutes on the same subject together. It also noted the interagency-contract requirement in section 2003.024 for agencies not named in SOAH's appropriation that have referred matters to SOAH. Tex. Gov't Code Ann. § 2003.024(a), (a-2) (West 2008).

Citations

Cases:

• Exxon Corp. v. Emerald Oil & Gas Co., 331 S.W.3d 419, 422 (Tex. 2010)
• Calvert v. Fort Worth Nat'l Bank, 356 S.W.2d 918, 921 (Tex. 1962)

Statutes:

• Tex. Gov't Code Ann. § 2260.102(a) (West 2008)
• Tex. Gov't Code Ann. § 2260.103(a)-(b)
• Tex. Gov't Code Ann. § 2003.024(a) (West 2008)
• Tex. Gov't Code Ann. § 2003.024(a-2)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0947
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2012/ga0947.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

June 4, 2012

The Honorable Cathleen Parsley Opinion No. GA-0947
Chief Administrative Law Judge
State Office of Administrative Hearings Re: Manner in which the State Office of
Post Office Box 13025 Administrative Hearings is authorized to bill
Austin, Texas 78711-3025 certain agencies under the terms of section
2260.103, Government Code (RQ-1032-GA)

Dear Judge Parsley:

You ask about the billing practices of the State Office of Administrative Hearings ("SOAH") with regard to specific state agencies.[1]

Subchapter C, chapter 2260 of the Government Code relates to "contested case hearings" conducted by SOAH to resolve certain contract claims against the state. A contractor who "is not satisfied with the results of negotiation with a unit of state government" may request SOAH to initiate a contested case hearing. TEX. GOV'T CODE ANN. § 2260.102(a) (West 2008). The chief administrative law judge of SOAH is authorized to set a hearing fee for a contested case, and to either (1) assess the fee against the non-prevailing party, or (2) apportion the fee "in an equitable manner." Id. § 2260.103(a)-(b).

You indicate that a rider to SOAH's appropriation in the most recent General Appropriations Act (the "Act") provides, in relevant part:

7. Billing Rate for Workload

c. Amounts appropriated above in Strategy A.1.1, Conduct Hearings, to SOAH from the General Revenue Fund include funding in each year of the biennium for billable casework hours performed by SOAH for conducting administrative hearings at the rate determined by SOAH and approved by the Legislature for those agencies that do not have appropriations for paying SOAH costs for administrative hearings and are not subject to subsection (a) of this Section:

General Appropriations Act, 82d Leg., R.S., ch. 1355, 2011 Tex. Gen. Laws 4025, 4740-41. There follows a list of 34 agencies that are subject to subsection 7c. and thus do not receive funds from their own appropriations to pay SOAH to conduct administrative hearings. See id. Agencies other than those named in SOAH's Rider 7c receive specific appropriations to contract with SOAH to perform administrative hearings.[2] You ask how SOAH should bill the various agencies under these two different circumstances.

In construing a statute, courts begin with the statute's plain language. Exxon Corp. v. Emerald Oil & Gas Co., 331 S.W.3d 419, 422 (Tex. 2010). Statutes relating to the same subject matter are to be read and construed together in determining legislative intent. Calvert v. Fort Worth Nat'l Bank, 356 S.W.2d 918, 921 (Tex. 1962). Because section 2260.103 and Rider 7c relate to the same subject matter, we read them together.

Nothing in the Act limits the chief judge's authority under section 2260.103 of the Government Code to set fees when the hearing involves one of the 34 specified agencies. Nor does the statute address how assessed fees are to be satisfied. But if fees are assessed against one of the agencies named in the Act, Rider 7c clearly contemplates that the funds appropriated to SOAH should be used to offset the costs of the hearing. On the other hand, if an agency is not one of those named in Rider 7c, SOAH should bill that agency for its share of the costs incurred in the hearing.[3] If, by contrast, costs are assessed against the non-governmental party, neither the Act nor section 2260.103 permits the use of SOAH's appropriation to satisfy those costs.

In conclusion, if the State Office of Administrative Hearings assesses its fee for a contested case hearing to the party that does not prevail in the hearing, it should bill the non-governmental party when the state agency prevails. If the non-governmental party prevails, SOAH should bill the state agency if the agency is not one of those listed in Rider 7c of SOAH's 2012-13 appropriation. If the agency is, on the other hand, one of those listed in Rider 7c, SOAH should use funds from its own appropriation to offset the costs of the hearing.[4]

SUMMARY

If the State Office of Administrative Hearings assesses its fee for a contested case hearing to the party that does not prevail in the hearing, it should bill the non-governmental party if the state agency prevails. If the non-governmental party prevails, SOAH should bill the state agency if the agency is not one of those listed in Rider 7c of SOAH's 2012-13 appropriation. If the agency is, on the other hand, one of those listed in Rider 7c, SOAH should use funds from its own appropriation to offset the costs of the hearing.

Very truly yours,

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

JASON BOATRIGHT
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee

[1] Letter from Hon. Cathleen Parsley, Chief Admin. Law Judge, State Office of Admin. Hearings, to Hon. Greg Abbott, Tex. Att'y Gen. at 2 (Dec. 21, 2011), http://www.texasattorneygeneral.gov/opin ("Request Letter").

[2] As an example, the appropriation for the Commission on Environmental Quality provides the following as a rider: "Included in the amounts appropriated above is $1,000,000 in each fiscal year ... to cover the cost of contracting with [SOAH] ... for the purpose of conducting administrative hearings and for related expenses." General Appropriations Act, 82d Leg., R.S., ch. 1355, 2011 Tex. Gen. Laws 4025, 4635.

[3] Section 2003.024 of the Government Code provides that, in the event that an agency is not one of the 34 agencies named in SOAH's appropriation, but the agency has "referred matters" to SOAH "during any of the three most recent state fiscal years," SOAH and the relevant agency "shall enter into an interagency contract for the biennium under which the referring agency pays [SOAH] a lump-sum amount to cover the costs of conducting all hearings and procedures during the fiscal year." TEX. GOV'T CODE ANN. § 2003.024(a) (West 2008). If the agency did not refer matters to SOAH during any of the three prior fiscal years, "the referring agency shall pay the office the costs of conducting hearings or procedures for the agency based on the hourly rate" set by SOAH. Id. § 2003.024(a-2).

[4] These standards apply when the chief administrative law judge chooses to assess fees against the non-prevailing party. In the alternative, the chief administrative law judge may choose to apportion fees "in an equitable manner." TEX. GOV'T CODE ANN. § 2260.103(b) (West 2008). You do not ask, and we do not address, the standards that apply to an equitable apportionment of fees.