In August, I submitted a petition to the Office of Administrative Law alleging that the California Public Employees Retirement System had “issued, used enforced, or attempted to enforce an underground regulation”. Specifically, I challenged CalPERS’ Statement of Investment Policy for External Investment Resource Conflict of Interest. In CalPERS’ argot, an “external investment resource” is someone who provides CalPERS with technical expertise and advice in specialized areas. The purpose of CalPERS is to identify “actual, perceived or potential conflicts of interest”.
However laudable this purpose may be, CalPERS can not adopt a standard of general application without complying with the rule making provisions of the California Administrative Procedure Act, Govt. Code § 11340 et seq. These procedures ensure that the public has an opportunity to participate in the adoption of regulations. When an agency ignores these requirements, the rule is referred to as an “underground regulation” and may not be enforced. Cal. Govt. Code § 11340.5(a).
The OAL will publish the petition in the California Notice Register this Friday (Nov. 2, 2012) and the deadline for public comment will expire on December 3, 2012.
For background on the purpose of the Notice Register, see “What is, What Will Be & What’s Past – The CCR, Z-Register and Register“.