Texas Department of Licensing and Regulation v. John Thompson, 455 S.W.3d 648

The Department licenses tow truck operators and Denies Thompson’s license under Occupations Code Chapter 53.
Thompson applied for a Tow Truck Operator Incident Management license in 2008; SOAH hearing held in June 2009.
Department staff sought denial based on 1988 convictions: sodomy with a child and assault; Thompson claimed innocence and lacked evidence of other crimes.
ALJ recommended granting the license, finding no preponderance of evidence showing unfitness and noting Thompson’s post-conviction rehabilitation.
Commission denied the license, deleting ALJ findings and conclusions and stating Thompson was not fit due to nature of offenses and alleged lack of rehabilitative effort.
District court reversed, but the court of appeals ultimately sustained the Department, reversing the district court and affirming the Commission’s denial.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Commission properly modified the ALJ’s findings under § 2001.058(e).	Thompson argues the modifications violated procedures and misapplied law.	Department contends modifications reflect proper interpretation of law and cases.	Modifications proper; consistent with law and supported by substantial evidence.
Whether the Commission’s denial is supported by substantial evidence.	Thompson asserts evidence showed fitness and rehabilitation.	Department asserts weighted factors show lack of rehabilitation nexus to conduct.	Yes; substantial evidence supports denial.
Whether the Department reasonably interpreted rehabilitation to require nexus to underlying conduct.	Thompson argues rehabilitation must be general and not tied to conduct.	Department's interpretation uses a nexus to the underlying conduct to assess risk to the public.	Department interpretation reasonable and aligned with statutory scheme.
Whether due process or allocution concerns invalidated the Department’s approach.	Thompson raises due process about new policy and allocution requirements.	Department did not adopt a new policy and Thompson had notice of legal standards.	No due process violation; notice and statutory framework complied.

Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170 (Tex. 2003) (agency discretion in deference to agency judgments within statutory framework)
Pierce v. Texas Racing Comm’n, 212 S.W.3d 745 (Tex. App.—Austin 2006, pet. denied) (agency may modify ALJ conclusions under § 2001.058(e))
Tex. Citizens for a Safe Future & a Clean Water v. Texas, 336 S.W.3d 619 (Tex. 2011) (statutory construction and deference to agency interpretation)
20801, Inc. v. Parker, 249 S.W.3d 392 (Tex. 2008) (consider broader statutory scheme when interpreting statutes)