Texas high court weighs whether DSHS rule can be challenged by landowners with abandoned radioactive material

At oral argument before the Supreme Court of Texas, counsel for petitioner Kensington Title Nevada LLC urged justices to allow a pre-enforcement declaratory challenge under Texas Government Code §2001.038 to a Department of State Health Services rule governing radioactive material.

Kensington’s counsel argued the rule could force landowners to become “accidental licensees” when licensed users abandon radioactive material (RAM) on private property, leaving owners exposed to regulatory liability and enforcement. "If the court sides with DSHS in this case, then licensed users of radioactive material will be permitted to abandon RAM, leaving innocent landowners to clean up the mess," counsel said.

The dispute centers on whether Kensington — which foreclosed on the real property in 2018 but says it never held or sought a license to possess the radioactive material — may seek a court declaration that the agency rule does not apply to landowners in its situation without first exhausting administrative proceedings. Kensington told the court it attempted to have DSHS take possession, began limited decommissioning under a DSHS‑approved plan, and then stopped after Denton County taxing entities added Kensington to an existing tax collection lawsuit. Counsel said the taxing entities hold judgment liens on the radioactive material, and that the threat of enforcement left Kensington unable to complete cleanup efforts.

Respondent counsel for the Texas Department of State Health Services countered that Kensington’s petition seeks more than a generalized applicability ruling and instead asks the court to control agency action in Kensington’s specific factual circumstances. The state argued the petition attempts to assign decommissioning responsibility to another entity (the prior licensee, identified in the record as USR) or to require DSHS to act, placing the petition squarely within “application” rather than a permissible “applicability” challenge under §2001.038. "Kensington is likewise seeking to have the department assign decommission responsibilities to someone else," respondent counsel said during argument.

The court and counsel debated whether the statutory waiver in §2001.038 permits a plaintiff to seek a declaration that a rule does not apply to a particular party (a fact‑specific determination about ownership or possession) or only to a broader category of persons. Justices pressed both sides about redressability, whether antecedent title or ownership questions can be decided in a §2001.038 action, and about the interplay between the petition and parallel administrative proceedings at the State Office of Administrative Hearings (SOAH). The ALJ below had issued a final order to decommission and imposed an administrative penalty; counsel for Kensington said the penalty has not been paid and enforcement has not proceeded.

Key factual points surfaced during argument: Kensington foreclosed on the property in 2018; DSHS issued a notice of violation in October 2020 citing 25 TAC 289.25282; taxing authorities in Denton added Kensington to a tax suit in 2019 and hold judgment liens (counsel referenced an amount of about $773,000 tied to the radioactive material); and another party, identified in the record as USR, had previously been the licensed user subject to a DSHS final decommissioning order. Counsel for Kensington also referenced a licensed contractor, identified in the record as Trace Life Sciences, that received DSHS correspondence about the material as recently as February of the year in the record.

Petitioners urged the court that landowners who reasonably did not acquire or intend to possess RAM should be able to obtain a pre‑enforcement, class‑style declaration that the agency rule does not apply to “parties like them,” while the state argued Kensington’s detailed prayer for relief sought specific outcomes tied to the agency’s enforcement decisions and therefore exceeds the limited waiver in §2001.038. Counsel and justices discussed precedent from intermediate appellate courts (including cases counsel referenced as LNV, D Houston, and BP) on the scope of applicability challenges under the Administrative Procedure Act and how those precedents bear on the proper framing of a §2001.038 claim.

The justices asked multiple questions about the practical consequences of allowing or denying the challenge: would a favorable declaration eliminate the administrative action below; whether the trial court or the court of appeals should make factfindings on possession or ownership; and how the statute’s legislative history and comparable provisions in other states ought to be read. The state argued the SOAH final agency order and a pending trial‑court judicial‑review case in Travis County bear on jurisdiction and finality.

The court took the case under submission after rebuttal argument. No decision was announced at argument.