The Arizona Legislature this year passed House Bill 2297, adding new A.R.S. section 41-1038.  Effective July 3, 2015, Arizona state agencies will be prohibited from adopting new rules unless the rules comply with the requirements of this new section.  The new section applies to all state agencies except those created by the Arizona Constitution (i.e. the Arizona Corporation Commission).

In most cases, in order to adopt a new rule, the rule must meet one of the following exceptions:

  • rules that govern public employees
  • rules that are necessary to protect public health and safety (defined narrowly as the immediate need to address or prevent an outbreak of an infectious disease, a disaster, or any other catastrophic event)
  • rules that are necessary to avoid sanctions that would result from a failure to take rulemaking action pursuant to a court order or federal law
  • rules that, although they increase regulatory burdens, are a component of a comprehensive effort to reduce regulatory restraints or burdens
  • rules that, although they increase regulatory burdens, are necessary to implement statutes or are required by a final court order or decision

The exceptions seem to implicate a lot of potential rulemaking actions, depending on interpretation of the language in this new law.  For example, I can imagine that there could be differing interpretations of what constitutes "sanctions" and "necessary to implement statutes" in the context of adoption of rules implementing federal environmental programs.

What happens if a state agency enacts a rule that does not fit one of the authorized exceptions? First, depending on the circumstances, there is a possibility that a court could find the rule invalid or ineffective as lacking Legislative authority.  Second, if the agency enforces the rule in a civil or criminal enforcement proceeding, the alleged violator can defend with an argument that the rule was unauthorized under the new law.  The new statute instructs the court or administrative body to give the agency no deference in its findings regarding the rule, and further authorizes either a court or the administrative body to award a prevailing party (other than the agency) attorney fees and costs.

The practical effect of this new law may be to provide rule opponents with additional leverage in rulemaking challenges, resulting in a need for agencies and stakeholders to pursue legislation more often to achieve certainty.