2023’s “Death Star Bill” on Preemption has June Interim Hearing

On June 4, the Texas House Select Committee on Governmental Oversight held an interim hearing to review both the Texas Regulatory Consistency Act and the Texas Tort Claims Act.

The Texas Regulatory Consistency Act came into existence in 2023 with the passage of H.B. 2127, which was later labeled the "Death Star Bill" by cities and local government advocates who opposed the legislation.

Arguably, H.B. 2127 was the most significant state preemption law ever enacted in Texas.

Immediately after its passage, several cities challenged the constitutionality of the law. During the past three years, additional legal challenges have been filed by local jurisdictions, while many Texas cities have continued to push back against its implementation.

The litigation has not been limited to cities challenging the law. Lawsuits have also been filed against cities for allegedly failing to comply with and faithfully implement the Act. These cases are currently working their way through the Texas appellate courts.

The June 4 hearing was held to:

"Conduct a full-scale review of local ordinances repealed or modified since the effective date of the Texas Regulatory Consistency Act. Investigate and identify local ordinances that conflict with the Act and determine whether local governments are unlawfully enforcing such ordinances. Review any suits filed to enforce preemption and explore the need for alternative means of enforcement. Identify additional regulatory areas where local governments have sought to supplant the state as the exclusive or primary regulator, directly or indirectly, and make recommendations to help small businesses by reducing regulatory inconsistency."

A major topic of discussion during the hearing was the distinction between express preemption and field preemption.

Express preemption occurs when a state law specifically identifies a subject matter and explicitly prohibits local governments from regulating it. A good example within our industry is the state's express preemption of local permitting requirements related to the transportation and installation of manufactured homes.

One takeaway from the hearing was that express preemption has existed for decades and is generally better understood by courts, regulators, and local governments. As a result, it is often easier to implement and more difficult for a local jurisdiction to ignore or delay compliance while awaiting the outcome of pending litigation.

The downside of express preemption is that it is inherently limited in scope. As new issues arise—or as local governments engage in what some might characterize as "creative compliance"—the Legislature may be required to revisit the issue repeatedly through a continuing game of legislative whack-a-mole.

H.B. 2127 introduced the newer concept of field preemption in Texas. Under this framework, local governments may not regulate within entire fields of law that are governed by certain state statutes. In other words, if the Legislature has occupied a particular field, cities and counties may be prohibited from adopting regulations that conflict with or intrude upon that field.

The central question is what it actually means for a field to be preempted.

As one might expect, the answer can vary significantly depending on one's perspective, with some interpreting field preemption broadly and others taking a much narrower reading.

We have written previously about H.B. 2127, but as a reminder, the law established field preemption in certain areas governed by the following Texas codes: the Agriculture Code, Business & Commerce Code, Finance Code, Insurance Code, Labor Code, Section 229.901 of the Local Government Code, Natural Resources Code, Occupations Code, and Property Code.

Of those, the codes most relevant to the manufactured housing industry are the Occupations Code, Property Code, Finance Code, and Business & Commerce Code.

At the conclusion of last week's hearing, the key question remains: What comes next in providing greater legal clarity regarding the scope of field preemption?

That clarity could come from the courts as pending cases move through the appellate process. Alternatively, the Legislature could revisit the issue in a future session and attempt to further define field preemption in - Death Star 2.0.