The Texas Real Estate Commission held an executive committee training on administrative contested-case practice that focused on when and how the agency may change an administrative law judge's Proposal for Decision (PFD).

The session explained why a PFD matters: "a PFD is a recommendation by the ALJ to [the] commission," Presenter, a staff member, told attendees, and the commission's ability to alter that recommendation is constrained by statute and precedent.

Commissioners and staff heard that PFDs typically contain three core parts: findings of fact, conclusions of law and recommended sanctions. The presenter distinguished among those categories and described how the agency's authority to change each differs. Basic facts (the who, what, when and where) are generally considered the ALJ's province; ultimate facts and conclusions of law can be altered only in limited circumstances; and agencies have the most discretion to adjust recommended sanctions.

Under the Texas Administrative Procedure Act, the presenter said, an agency may change a finding of fact or conclusion of law only if it determines one of three statutorily enumerated bases applies: that the ALJ incorrectly applied or interpreted the law or rules the agency administers; that a prior administrative decision relied on by the ALJ is incorrect or should be reconsidered; or that a technical error (for example, a typographical mistake) exists in the PFD. The presenter said the agency must state the legal basis and reasons for any change in writing before issuing a final order.

Staff described the practical workflow the commission follows when a contested case could result in changes to a PFD. General counsel and enforcement attorneys "review the case and try to anticipate whether you all will have any changes that you want to make," the presenter said, noting counsel sometimes pre-draft several versions of proposed final orders so the commission can act promptly if it chooses to alter the PFD. Any amendment discussed in executive session must be moved and voted on in open session and the chair signs the final order.

The training included a real-life example: a license holder who pleaded guilty to multiple felony offenses and failed to notify the commission; staff had sought revocation and a penalty, the ALJ recommended only an administrative penalty, and the commission later revoked the license and increased sanctions. The presenter said the commission's decision did not change the ALJ's basic factual findings but altered the sanction and, where necessary, related conclusions of law; the district court later upheld the commission's order on appeal.

Presenter cautioned that changing a PFD carries legal risk. If a reviewing court finds the ALJ's decision was a reasonable determination and the agency has not demonstrated one of the statutory grounds, the court may set an unfavorable precedent. "Does the risk of unfavorable precedent outweigh the change to the administrative policy in this case?" the presenter asked, urging commissioners to weigh policy benefits against appellate exposure.

Attendees asked about appeals and standards of review. The presenter explained that district court review can require showing substantial evidence or demonstrating that an agency action was arbitrary and capricious depending on the posture of the appeal; in rare cases a respondent may seek injunctive relief and post a bond to remain active while litigation proceeds.

The presenter also emphasized that even without altering a PFD, commissioners may register policy views in open meeting. Those remarks are public and can influence future enforcement or rulemaking, the trainer said.

The session closed with a brief question period, a request for future workshop topics and a short discussion about agency travel to external conferences.

Topics covered: how PFDs are structured; statutory standards under the Texas Administrative Procedure Act allowing changes to PFDs; the commission's internal practice for drafting orders and preparing for potential votes; a case example in which the commission revoked a license after the ALJ recommended only a penalty; appellate risks and standards for judicial review.