TMHA Supported TRCA In Effect Despite Recent Court Ruling

Before moving too far ahead in 2024, we need to address a lingering issue from 2023 that has carried over into the new year.  Recall that during the 2023 regular Texas Legislative Session, the most significant and wide sweeping state preemption law over local government control was passed.  TMHA, along with many other interest groups, took on the lobbyists and strong opposition mounted by cities, and we strongly advocated for the passage of H.B. 2127.  More than seven years in the making and having failed to pass in several prior sessions, this past session was a fundamental breakthrough with ultimate passage and the bill became the law in Texas on September 1, 2023.

Recall this critical legislation, named the Texas Regulatory Consistency Act, explicitly preempts all local laws and ordinances for the following subjects matters that are covered by state law – Agriculture Code; Business & Commerce Code; Finance Code; Insurance Code; Labor Code; Natural Resources Code; Occupations Code; and Property Code. 

For the manufactured housing industry, we are interested in the preemption impact for Business and Commerce and Finance, which covers all aspects of consumer and commercial lending for MH in Texas; Insurance; Occupations; and Property Codes.

The Property Code preemption, in particular, ended the growing and confusing patchwork of local ordinances and specific court requirements layered on top of the state’s long standing eviction laws in Chapter 24, Property Code.  This ended when H.B. 2127 became the law, and we have already seen its positive impact in cities like Austin and Dallas who have since ended their local and confusing requirements that tried to go above and beyond what is required in state law. 

Now the rules of the game are simple, longstanding, and apply universally across the entire state.

However, all is not completely settled.  As anticipated with the level of backlash and opposition, when those advocates opposing H.B. 2127 were unsuccessful in defeating the bill’s passage in the legislature, their next action was to go to the courts.  The City of Houston started the litigation off, but was later joined by several other cities (San Antonio and El Paso), claiming in court that the new law was unconstitutional.

So, what is the status of the law now?

The quick answer is that the law is still in full effect today.

The more detailed answer to get to that conclusion is a bit more complicated.  A district judge ruled in Houston’s favor and declared the new law unconstitutional.  However, this ruling sparked an immediate appeal by the Texas Attorney General’s Office, which under state’s appellate rules and the Civil Practice and Remedies Code supersedes the district court’s ruling until the matter is heard, in this case, in the Third Court of Appeals in Ausitn.  The matter has not yet been heard at the appellate level, but TMHA will keep our members apprised of when it is heard and the outcome.

However, for members possibly facing issues at the local level where this new preemption law could benefit them, we want to make sure you are up to date with the correct facts and legal analysis. 

Especially, if you are confronted (as TMHA was made aware of recently from a member) by a local government official possibly only disclosing a half-truth or being genuinely confused about the current legal status of the law.  Said differently, if a local official tells you, “Well, that law was ruled unconstitutional,” that is technically correct, but far from the whole story.  To which you can now politely respond, “Well, actually the AG’s office appealed it, this supersedes that district court’s ruling, and the law is in effect currently pending appeal.”

Also, for those facing a local government potentially in violation of the new law, remember that also included in the law are remedies for a “claimant,” which would be a person or company seeking to challenge a cities local ordinance they think is in violation to the law’s preemption provisions, who can win declaratory and injunctive relief, as well as costs and reasonable attorney's fees. 

And cities are not shielded under these types of challenges by any governmental immunity because their typical governmental immunity is explicitly waived in the new law for liability created by the Texas Regulatory Consistency Act.