REGULATIONS, STATEMENTS OF POLICY, INTERPREATONS AND ... · cases under the Due Process Clause of...
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1 REGULATIONS, STATEMENTS OF POLICY, INTERPREATONS AND GUIDANCE DOCUMENTS: What Is the Difference and What Difference Does It Make? Raymond P. Pepe 1 August 29, 2012 I BASIC CONSTITUTIONAL, STAUTORY AND REGULATORY PROVISIONS A. Procedural Due Process Rights 1. It appears to be a basic tenant of Federal administrative agency law that when agencies adopt rules and regulations pursuant to delegated statutory authority, there are no procedural due process requirements for agency action except for the requirements imposed by law. i. Bi-Metallic Investment Co. v. State Bd. of Equalization, 239 U.S. 441. 445-46 (1915) (rejecting a claim that “all individuals have a constitutional right to be heard before a matter can be decided in which all are equally concerned, and holding that “[w]here a rule of conduct applies to more than a few people it is impracticable that every one should have a direct voice in its adoption,” but recognizing in instances in which a small number persons “were exceptionally affected,” additional due process rights may arise). ii. United States v. Florida East Coast R. Co., 410 U.S. 224, 244-245 (1973) (“The basic distinction between rulemaking and adjudication is illustrated by this Court's treatment of two related cases under the Due Process Clause of the Fourteenth Amendment. In Londoner v. Denver, 210 U.S. 373 (1908), the Court held that due process had not been accorded a landowner who objected to the amount assessed against his land as its share of the benefit resulting from the paving of a street. … But in the later case of Bi- Metallic Investment Co. v. State Board of Equalization, the Court held that no hearing at all was constitutionally required prior to a 1 Mr. Pepe is a partner in the Harrisburg Office of K&L Gates LLP, 17 North Second Street, Harrisburg, PA, 17101-1507, (717) 231-5988, [email protected] . Additional information about Mr. Pepe and K&L Gates is available at www.KLGates.com . This article is provided for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with a lawyer. ©K&L Gates LLP. All Rights Reserved.
Transcript of REGULATIONS, STATEMENTS OF POLICY, INTERPREATONS AND ... · cases under the Due Process Clause of...
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REGULATIONS, STATEMENTS OF POLICY, INTERPREATONS AND GUIDANCE DOCUMENTS:
What Is the Difference and What Difference Does It Make?
Raymond P. Pepe1 August 29, 2012
I BASIC CONSTITUTIONAL, STAUTORY AND REGULATORY PROVISIONS
A. Procedural Due Process Rights
1. It appears to be a basic tenant of Federal administrative agency law that when agencies adopt rules and regulations pursuant to delegated statutory authority, there are no procedural due process requirements for agency action except for the requirements imposed by law.
i. Bi-Metallic Investment Co. v. State Bd. of Equalization, 239 U.S. 441. 445-46 (1915) (rejecting a claim that “all individuals have a constitutional right to be heard before a matter can be decided in which all are equally concerned, and holding that “[w]here a rule of conduct applies to more than a few people it is impracticable that every one should have a direct voice in its adoption,” but recognizing in instances in which a small number persons “were exceptionally affected,” additional due process rights may arise).
ii. United States v. Florida East Coast R. Co., 410 U.S. 224, 244-245 (1973) (“The basic distinction between rulemaking and adjudication is illustrated by this Court's treatment of two related cases under the Due Process Clause of the Fourteenth Amendment. In Londoner v. Denver, 210 U.S. 373 (1908), the Court held that due process had not been accorded a landowner who objected to the amount assessed against his land as its share of the benefit resulting from the paving of a street. … But in the later case of Bi-Metallic Investment Co. v. State Board of Equalization, the Court held that no hearing at all was constitutionally required prior to a
1 Mr. Pepe is a partner in the Harrisburg Office of K&L Gates LLP, 17 North Second Street, Harrisburg, PA, 17101-1507, (717) 231-5988, [email protected]. Additional information about Mr. Pepe and K&L Gates is available at www.KLGates.com. This article is provided for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with a lawyer. ©K&L Gates LLP. All Rights Reserved.
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decision by state tax officers in Colorado to increase the valuation of all taxable property in Denver by a substantial percentage.”
iii. Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 542, n. 16 (1978) (describing as a “well settled: and “long standing” the principle that in rulemaking proceedings “additional procedural devices” are not required).
2. Under the Constitution of Pennsylvania, when statutory requirements create a “combination of dependency and reliance” on agency rules, particularly in circumstances which affect the ability of commercial enterprises to remain in business, procedural due process rights arise. At a minimum, agencies must provide (1) notice in a manner “reasonably calculated to inform interested parties of the pending action;” (2) “information necessary to provide an opportunity to present objections;” and (3) “a reasonable opportunity to present written objections.” These procedural protections, moreover, “should be given before the government takes action which threatens to deprive a citizen of an interest, unless important governmental interests, or the preservation of the interests of others, require otherwise.” Pennsylvania Coal Mining Association v. Insurance Dep't, 471 Pa. 437, 448-55, 370 A.2d 685, 690-95 (1977). Pennsylvania courts have only rarely been called upon to clarify the scope of these due process rights, however, because the Commonwealth Documents Law establishes procedural requirements for the adoption of administrative regulations which satisfy constitutional requirements.
B. Commonwealth Documents Law
1. Definitions and General Requirements
The Commonwealth Documents Law classifies agency documents which set forth substantive or procedural personal or property rights, privileges, immunities, duties, liabilities or obligations of the public or any part thereof as “adjudications,” “regulations” or “statements of policy.”
a. The term “regulation” is defined as “any rule or regulation, or order in the nature of a rule or regulation, promulgated by an agency under statutory authority in the administration or any statute administered by or relating to the agency, or prescribing the practice or procedure before such agency.” 45 P.S. § 1102.
b. “Administrative regulations” are defined as any regulation, except a proclamation, executive order, executive directive or other similar document promulgated by the Governor, including regulations which may be promulgated by agencies only with the approval of the Governor. 45 P.S. § 1102.
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c. A “statement of policy” is “any document, except an adjudication or regulation, promulgated by an agency which sets forth substantive or procedural personal or property rights, privileges, immunities, duties, liabilities or obligations of the public or any part thereof,” including “any document interpreting or implementing any act of Assembly enforced or administered by such agency.” 45 P.S. § 1102.
d. Notice of proposed rulemaking is required whenever an agency intends to “promulgate, amend or repeal” any administrative regulation. Notice of proposed rulemaking must include the text of proposed regulation, a statement of “statutory or other authority,” a “brief explanation” of the regulation, a “request for written comments” and any other information required by law. 45 P.S. § 1201.
e. Prior to final rulemaking, agency must “review and consider” any written comments received, may (but is not-required to) hold public hearings, and must conform to any other regulatory procedures established by the particular law under which the regulations are proposed. 45 P.S. § 1202.
f. The text of a final regulation may contain modifications to proposal “as do not enlarge its original purpose,” but any other modifications require a new notice of proposed rulemaking. 45 P.S. § 1202.
g. The effective date of a final order adopting an administrative regulation shall be not less than 30 days following notice of proposed rulemaking. 45 P.S. § 1203.
h. Prior to publication of any administrative regulation, approval as to legality must be obtained pursuant to the Commonwealth Attorney’s Act. 45 P.S. § 1205.
i. Text of regulations must conform to all form and format requirements of the Joint Committee on Documents of the Legislative Reference Bureau. 45 P.S. § 1206.
j. Text of all administrative regulations must be “certified” by the executive officer, chairman or secretary of the agency, deposited with the Legislative Reference Bureau, and “shall not be valid for any purpose” until “filed” by the Bureau for public inspection. 45 P.S. §§ 1207,1208.
2. Exceptions to Basic Provisions
a. Pursuant to 45 P.S. § 1204, notice of proposed rulemaking is not required in the following circumstances:
If administrative regulations relate to military affairs; agency organization; management or personnel; agency practice or procedure; state property,
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loans, grants, benefits or contracts; or the interpretation of self executing acts.
If all persons subject to the administrative regulation “are named therein” and are served with or provided actual notice.
If the agency finds that publishing notice of proposed rulemaking is “in the circumstances impracticable, unnecessary, and contrary to the public interest.”
b. Pursuant to 45 P.S. § 1203, an effective date sooner than 30 days after publication for notice and comment is possible in several circumstances:
If an administrative regulation grants or recognizes an exemption or relieves a restriction.
If an agency finds deferral of the effective date “impractical or contrary to public interest.”
To qualify for an exception to either the requirement of publication for notice and comment, or the requirement that an effective date be not less than 30 days following publication for notice and comment, the agency must incorporate into its rulemaking document “a brief statement” which justifies the exception.
C. Title 45 Pennsylvania Consolidated Statutes: Publication and Effectiveness of Commonwealth Documents
1. Basic Provisions
a. The Joint Committee on Documents (Documents Committee) consists of Attorney General, General Counsel, Director of Legislative Reference Bureau (LRB), President pro tempore of Senate, Speaker of House, Secretary of General Services and two public members appointed by the Governor. 45 Pa. C.S. § 502; 71 P.S. § 732-302.
b. The Documents Committee prescribes by regulation the manner of printing and distribution of the Pennsylvania Code and Bulletin and the form and format of all documents deposited with the LRB. 45 Pa. C.S. §§ 503, 505. Actual printing is the responsibility of the LRB through the Department of General Services, 45 Pa. C.S. § 721.
c. Publication in the Pennsylvania Code is required for executive orders and gubernatorial proclamations which are general and permanent in nature, administrative and other regulations, statements of policy which are general and permanent in nature, all other documents required by law to be codified, judicial documents, and other documents which the Governor,
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the Documents Committee, or the Director of the LRB finds to be permanent and general in nature. 45 Pa. C.S. § 702.
d. Preliminary publication of documents is provided in the Pennsylvania Bulletin. The Pennsylvania Bulletin is published once a week and contains all material required or permitted in the Pennsylvania Code, plus executive orders and proclamations not required to be codified agency notices regarding proceedings the cost of which is assessed against the persons regulated there under (i.e. basically Insurance and Banking Department notices), other documents required by law to be published but not codified, documents which agencies pay to have published, and other documents approved for publication by the Director of the LRB. 45 Pa. C.S. §§ 724, 725(a).
e. If documents deposited with LRB are found by Bureau to have been approved for form and legality and in proper form and format, the Bureau is required to “file” the document for public inspection. 45 Pa. C.S. § 722(a).
f. Any disagreements between the LRB and an agency regarding the form or format of documents may be referred to the Documents Committee, which may revise the text to conform to the format of the Pennsylvania Code, eliminate “obsolete, unnecessary or unauthorized material,” or to “lend . . . uniformity of style and clarity of expression.” The Documents Committee may not change the substance of the deposited text. Any revisions made by the Committee became the agency text 10 days after notice to the agency unless the agency objects. 45 Pa. C.S. §§ 722(b), 723.
g. The Joint Committee may by regulation require the publication of any documents after notice to the agency affected and an opportunity for hearing. The Committee may also mandate the publication of notices concerning agency “proceedings. ” The failure of an agency to prepare and deposit any notices required will cause any affected agency proceedings to “not be valid for any purpose.” 45 Pa. C.S. § 725(b).
h. The text of documents as published in the Code and Bulletin is the only “valid and enforceable text” regardless of discrepancies between the agency text and official text. Corrections must be by a new publication of corrective amendments, but corrective amendments may be effective as of date of defective official text. Prior to publication of the corrective amendments, only persons who have actual knowledge of the discrepancy are affected by the correction. 45 Pa. C.S. § 901.
i. The publication of documents is effected upon deposit in U.S. Mail of the Pennsylvania Bulletin for distribution. The face date of the Bulletin is the date of deposit. Prior to publication “no otherwise valid document which
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is required . . . to be published . . . shall be valid as against any person who has not had actual knowledge thereof.” 45 Pa. C.S. § 905.
j. Publication constitutes constructive notice of the contents of a document to any affected persons, “except in cases where notice by publication is insufficient in law.” 45 Pa. C.S. § 904.
k. Publication creates a “rebuttable presumption” that a document was duly issued, approved as to legality, and conforms to the Documents Law. 45 Pa. C.S. § 905. Courts must take judicial notice of the contents of the Pennsylvania Code and Bulletin. 45 Pa. C.S. § 506.
l. Published documents, or copies of documents certified by the Director of LRB, may be offered as evidence and are admissible for any purpose. The Director of LRB may be requested to search the files of LRB to determine whether a document has been filed, and a written statement of the Director that no documents have been filed is admissible as evidence. See notes to 45 Pa. C.S. Chapter 9 and Section 3 of the Act of July 9, 1976 (P.L. 877, No. 160).
2. Exceptions
a. Uncodified Documents.
i. Prior to adoption of the Administrative Agency Law and the Pennsylvania Register Act of 1945, there was no uniform rule governing adoption and publication of regulations. The 1945 laws required publication of all regulations within 90 days in a Pennsylvania Register, and unpublished documents were to thereafter expire in 100 days.
ii. In 1947, the Pennsylvania Register Law was repealed and the Administrative Agency law was amended to require filing of all regulations with the Department of State and publication by individual agencies. Regulations not filed by July 1, 1952, were to expire. Court decisions, however, interpreted this provision as applying only to prior regulations adopted under the Administrative Agency Law or the Administrative Code, Whitehall Laboratories v. Wilbar, 73 Dauph. 234 (1960).
iii. Act 107 of 1963 transferred the filing responsibility to the LRB and required codification of all regulations by February 27, 1972. In 1968, the Commonwealth Documents (CDL) required all documents to be filed within 60 days or become void, but eliminated mandatory codification. Instead, 45 Pa. C.S. Section 902 requires the LRB to certify upon publication of supplements to the Pennsylvania Code that the “supplement . . . contains all documents required . . . to be codified . . . [and) filed for public inspection prior to the closing date of such . . . supplement.”
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Publication of the Pennsylvania Code and Bulletin began pursuant to the Documents Law in 1969.
iv. At this time, there are three potential classes of documents not found in the Pennsylvania Code:
Unfiled documents adopted prior to July 1, 1952, and not adopted under the Administrative Code or the Administrative Agency Law. (Note: Section 402 of the CDL makes these documents of questionable validity.)
Documents filed prior to initiation of the Pennsylvania Bulletin and not subsequently codified in the Pennsylvania Code. (Note: there are no known documents currently in this category.)
Documents published in the Pennsylvania Bulletin in uncodified format and not subsequently reformatted and codified. (Note: The Department of Public Welfare is the only agency with uncodified documents. Efforts are currently underway to codify all DPW regulations.)
3. Implementing Regulations. - 1 Pa. Code, Part I
a. Statements of policy are defined to include guidelines and interpretations. 1 Pa. Code § 1.4.
b. Guidelines are defined as documents, other than adjudications, interpretations or regulations, which announce the policy an agency intends to implement in the future or which will guide the agency in the exercise of administrative discretion, provided the document does not amend, suspend or repeal a published regulation or effectively circumscribe administrative choice, but instead which establishes a framework within which an agency exercises administrative discretion. Guidelines include plans for agency operation and administration which establish important policies to be utilized in the future exercise of administrative discretion; general policies and plans for the award and administration of discretionary grants and public monies; and announcements of principles and standards to be applied in future adjudications. 1 Pa. Code § 1.4.
c. Interpretations are defined as statements of policy other than guidelines issued without reliance upon express or implied rulemaking authority, including explanations or interpretations of agency regulations; procedures governing applications, awards and administration discretionary grants of public monies; and generalized rulings announcing an interpretation of law or regulation to be applied in future adjudications or other administrative actions. If it is unclear whether an agency intended to rely upon rulemaking authority in adopting a document, a document with
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substantial impact upon the public must be classified as a regulation rather than an interpretation. Interpretations may not amend, repeal or suspend published regulations. 1 Pa. Code § 1.4.
d. Gubernatorial regulations are defined as regulations which are not administrative regulations. 1 Pa. Code § 1.4.
e. The Statutory Construction Act (1 Pa.C.S. §§ 1501-1911) applies to the interpretation of all documents in the Pennsylvania Code, except for legislative, judicial and home rule charter documents. 1 Pa. Code § 1.7.
f. Gubernatorial regulations are required to be published in the Pennsylvania Code and Bulletin 1 Pa. Code, §§ 3.1, 3.13.
g. Provision is made for filing but not publishing documents the LRB finds to be “excessively voluminous and applicable only to agency organization, management or personnel or Commonwealth property or contracts.” 1 Pa. Code, §§ 3.1(b), 3.13(b)&(c) and 7.8. The third issue of the Pennsylvania Bulletin each month lists filed, but not published, documents.
h. Provision is made for the optional publication in the Pennsylvania Bulletin of an official synopsis of a document in lieu of the full text, if the document will be published in the Pa. Code within 120 days. 45 Pa. C.S. § 724(c); 1 Pa. Code § 3.31.
i. Emergency suspension of publication requirements is permitted upon proclamation of the Governor and order of the Director of the LRB. 1 Pa. Code § 3.41(b).
j. Documents, other than administrative regulations, for which publication is required (mainly statements of policy of permanent and general nature adopted after July 1, 1969), are not valid unless deposited with LRB. 1 Pa. Code § 13.1.
k. Administrative regulations filed, but not published, are effective only against persons with actual knowledge of the document, 1 Pa. Code § 13.1.
l. Documents relating to quarantines, embargos and emergencies must be deposited with Bureau prior to their effectiveness or on first business day after effective date of action, but if not filed-shall not be valid. 1 Pa. Code§ 13.3.
m. Blank forms, reports, contracts and instructions for completing such are not to be published in the Code and Bulletin. 1 Pa. Code § 13.42.
n. Documents may be deposited on any business day, and are filed for public inspection on the working day preceding the publication day of the issue
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of the Bulletin in which the document is published. Documents to be published in the Code only, which are filed but not published, or which are intended to be effective prior to publication, are filed by the LRB for public inspection “upon completion of preliminary processing and examination. 1 Pa. Code § 13.74.
o. The deadline for the deposit of documents is the close of business each Wednesday (i.e., 4:00 p.m.). The regular schedule for the filing and publication is to file documents nine days after deposit, i.e. on the second following Friday, and to publish documents on the tenth day, i.e., the second following Saturday, 1 Pa. Code § 13.72. A longer special schedule is provided for documents for which technical printing problems require extra time. 1 Pa. Code § 13.73.
p. Documents may have an effective date prior to publication as to individuals who have actual notice of the document, and filing of such documents may occur upon completion of preliminary examination and processing. 1 Pa. Code, Section 13.74.
q. Documents are available for public inspection between 9:00 a.m. and 4:00 p.m. in Room 641 of the Main Capitol. No formal inspection requirements or procedures exist. 1 Pa. Code § 17.33.
r. Disagreements regarding the form or format of documents between the agency and the LRB and among agencies, including the Regulatory Review Commission, may be referred to the Joint Committee on Documents for resolution and shall be brought immediately to the attention of the Secretary of the Committee. 1 Pa. Code § 17.58(a). In instances of disagreement between an agency with an interest and another agency regarding form or format, the dispute shall be brought to the LRB’s attention immediately. 1 Pa. Code § 17.58(b). The Documents Committee is required to defer to the technical expertise, special competence and administrative judgment of an agency promulgating or adopting a document.
D. Commonwealth Attorney's Act
1. The General Counsel for executive agencies or the chief counsel for independent agencies must "review and approve" for form and legality all regulations prior to submission to LRB as required by the CDL, Section 301(10) and 402(5), 71 P.S. 732-301, 732-401.
2. The Attorney General "reviews" all regulations following approval by the General Counsel or the Chief Counsel of an independent agency-
3. If Attorney General fails to act within 30 the regulation "shall be deemed to have been approved."
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4. If the Attorney General finds that a regulation "is in improper form, not statutorily authorized or unconstitutional" he must notify the agency, the General Counsel and the General Assembly within 30 days.
5. The agency may either revise and resubmit the regulation, or may publish the regulation with a copy of the Attorney General's objection.
6. The Attorney General may appeal the decision of the agency to the Commonwealth-Court and may request a stay or supersedeas, Section 204(b), 71 P.S. 732-204. Upon request, the Attorney General’s right to a stay or supersedes arises automatically upon compliance with the procedural requirements of the law. Zimmerman v. O'Bannon, 442 A.2d 674 (Pa. Cmwlth 1982).
E. Regulatory Review Act
1. Basic Provisions
a. The Independent Regulatory Review Commission is an agency performing “quasi-administrative or quasi-legislative” activities agency consisting of four commissioners appointed by members of the General Assembly and one gubernatorial appointee. Commissioners may not be members of the General Assembly or officers or employees of state government. Except for the Governor's appointee, commissioners serve fixed three year terms and may be removed from office only for serious misconduct upon a gubernatorial recommendation and with approval of two-thirds of the State Senate. 71 P.S. § 745.4; Concerned Citizens of Chestnuthill Township v. Department of Environmental Resources, 622 A.2d 1 (Pa. Cmwlth. 1993).
b. The Speaker of the House and the President pro tempore of the Senate are required to designate jurisdiction over the regulations of various agencies to standing legislative committees. 71 P.S. § 745.3 (definition of “committee”).
c. The Regulatory Review Act provides a comprehensive process for the review or agency regulations. Except for emergency regulations, an agency may not promulgate a regulation until the completion of review as provided by the Act. 71 P.S. § 745.5a(l).
d. Proposed regulations must be delivered to the IRRC and the designated standing committees at the same time the regulations are submitted to the LRB for publication for notice and comment. 71 P.S. § 745.5(a). Regulations for which notice of proposed rulemaking is omitted must be delivered to the IRRC and the designated standing committees at the same time the regulations are submitted to the Attorney General for review pursuant to the Commonwealth Attorneys Act. 72 P.S. § 745.5a(c).
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e. Agencies adopting regulations are required to submit to the IRRC and designated standing committees a “regulatory analysis form” which includes estimates of the direct and indirect costs imposed by the regulations upon the Commonwealth, political subdivisions and the private sector; an evaluation of legal, accounting and record keeping requirements arising due to the regulations; an identification of the financial, economic and social impacts of regulations; a description of any special provisions developed to meet the need of affected groups; a description of alternative regulatory provisions considered and rejected; and a plan for evaluating the effectiveness of the regulation after its adoption. 71 P.S. § 745.5(b).
f. From the date of submission of proposed regulations, agencies must submit to the IRRC and the designated legislative committees copies of comments received by the agency relating to the proposed regulation and must, upon request, submit copies of reports from advisory groups and other documents received from or disseminated to the public relating to proposed regulations and public notices or announcements relating to the solicitation of public comments or meetings which the agencies hold or will hold relating to proposed regulations. 71 P.S. § 745.5(c).
g. Each standing committee may within 20 days of the closing date of the public comment period for proposed regulations submit comments and objections regarding the regulation to the agency adopting the regulation. 71 P.S. 745.5(d). Within 10 days of after the expiration of the committee review period for proposed regulations, the IRRC must notify the agency of any objections to the proposed regulation. If the IRRC fails to object to a provision of a regulation, it is deemed to have approved that portion of the regulation. 71 P.S. § 745.5(g). These requirements are not applicable to regulations for which notice of proposed rulemaking is omitted. 71 P.S. 745.5a(c).
h. Agencies proposing regulations are required to review and consider public comments and the comments of legislative committees and the IRRC regarding proposed regulations. Upon completion of the consideration of comments, the agency must submit to the legislative committees and the IRRC its response to the comments together with text of the “final form” of the regulation. If an agency fails to submit its response to comments and the final form regulation to the legislative committees and the IRRC within two years of the close of the public comment period, the agency must republish a notice of proposed rulemaking. 71 P.S. § 745.5(a) & (b).
i. Within 20 days of receiving a final-form regulation or a regulation for which notice of proposed rulemaking is omitted, designated legislative committees are required to approve or disapprove the regulations and notify the IRRC of the action taken. If a committee disapproves a
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regulation, it must provide a report stating the committee’s objections to the regulation. 71 P.S. § 745.5a(d).
j. Within 10 days after the expiration of the committee review period for final-form regulations or regulations for which notice of proposed rulemaking is omitted or at the next regularly scheduled meeting of the IRRC, the Commission must approve or disapprove the regulation. If the IRRC fails to disapprove a regulation, the IRRC is deemed to have approved the regulation. 71 P.S. § 745.5a(e). A decision by the Commission approving or disapproving a regulation is not an adjudication by an administrative agency. Concerned Citizens of Chestnuthill Township v. Department of Environmental Resources, 622 A.2d 1 (Pa. Cmwlth. 1993).
k. The IRRC may accept public comments and agency comments only up to 48 hours prior to the Commission’s public meeting at which it approves or disapproves a regulation, but may receive comments from legislative committees at any time. All documents received concerning a regulation must be made a part of the public record of the Commission and must be retained for four years. 71 P.S. § 745.5a(j).
l. In deciding whether to approve or disapprove regulations, the IRRC must consider whether the agency has statutory authority to promulgate the regulation; the economic and fiscal impacts of the regulation; the impact of the regulation on public health, safety, welfare and natural resources; the clarity, feasibility and reasonableness of the regulation; whether the regulation represents a policy decision of such a substantial nature that it requires legislative review; and whether the regulation has been approved or disapproved by designated standing committees. 71 P.S. § 745.5(h) & (i). In addition, the IRRC may only disapprove a final-form regulation based upon objections raised concerning the proposed regulation by the commission; changes which the agency made to the proposed regulation; or based upon recommendations, comments or objections which a designated legislative committee conveys to the agency or the Commission. 71 P.S. § 745.5(g).
m. Agencies are prohibited for making changes to final-form regulations or regulations for which notice of proposed rulemaking is omitted after submission of the regulations to the IRRC and the designated legislative committees, unless the agency, with the approval of the commission, tolls the running of the periods of review for up to a single 30 day period for the purpose of considering revisions. A notice tolling the review period must be submitted prior to the 20 day review period provided for designated legislative committees or prior to action by either designated committee approving or disapproving a regulation. Prior to the end of the 30 day tolling period, the agency must resubmit the regulations for continued review either with revisions or with an explanation that the
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agency has decided not to change the regulation. Regulations not resubmitted within 30 days are deemed withdrawn. After the resubmission of a regulation, the remainder of the review period continues. 71 P.S. § 745.5a(g).
n. If the IRRC and the legislative committees do not disapprove a regulation by the end of their respective review periods, the agency may promulgate the regulation. On the other hand, if the IRRC disapproves a regulation, it must notify the agency adopting the regulation and the legislative committees of its objections to the regulation. 71 P.S. § 745.6(a). An order of the IRRC disapproving a regulation bars final promulgation of the regulation pending further review of the regulation under the Regulatory Review Act. 71 P.S. 745.6(b).
o. If the IRRC approves a regulation, but a standing committee has disapproved a regulation, the standing committee may within 14 days of being advised of the IRRC’s approval, report a concurrent resolution disapproving the regulation. 71 P.S. §§ 745.6(c); 745.7(d). If a concurrent resolution is not reported by a committee within the 14 day period, the agency may promulgate the regulation. 71 P.S. § 745.6(c). An agency is prohibited from promulgating a regulation for 10 legislative days, or 30 calendar days, whichever is longer, following the reporting of a concurrent disapproval resolution. If during this period, both the House and Senate adopt the concurrent resolution, the agency is permanently barred from promulgating the regulation, unless the Governor vetoes the disapproval resolution and the veto is not overridden within 10 legislative days, or 30 calendar days, whichever is longer, of the veto.
p. Within seven days after receiving an order from the IRRC disapproving a regulation, the agency must notify the Governor, the designated legislative committees and the IRRC whether it wishes to revise the regulation, insist upon the regulation without revisions or withdraw the regulation. If the agency elects to either revise the regulation or insist upon the regulation without revisions, it must submit a report within 40 days to the IRRC and the legislative committees, or else withdraw the regulation from further consideration. Upon receipt of a report, the designated legislative committees must approve or disapprove the regulation within ten days. Within seven days of the completion of the committee review period, the IRRC must approve or disapprove the regulation. 71 P.S. § 745.7.
q. If the IRRC disapproves a report submitted regarding a disapproved regulation, or if the IRRC approves the report, but has received a notice of disapproval from a designated legislative committee, the Commission must submit either a disapproval order or a notice of approval to the designated legislative committees. If either committee within 14 days of receiving the report or notice, reports a concurrent disapproval resolution, the agency will be barred from promulgating the regulation for 10
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legislative days or 30 calendar days, whichever is longer. If both the House and Senate approve the resolution within this period, the agency is permanently barred from promulgating the regulation, unless the Governor vetoes the resolution and the veto is not overridden (pursuant to the deadlines as described above). 71 P.S. § 745.7.
r. In addition to reviewing regulations, the IRRC or designated legislative committees may evaluate whether a published or unpublished document of an agency should be promulgated as a regulation. If the Commission concludes that a document should be published as a regulation, it may present the matter to the Joint Committee on Documents which must determine whether to order the agency to promulgate the document as a regulation within 180 days or desist from use of the document. 71 P.S. § 745.7a.
s. Upon the request of any person or member of the General Assembly, the IRRC may review any regulation which has been in effect for at least three years and submit recommendations for changes to the regulation. An agency is not required, however, to act upon any such suggestions. 71 P.S. § 745.8.
t. The Regulatory Review Act is intended to provide a system for legislative and gubernatorial oversight of the regulatory process and "is not intended to create any right or benefit, substantive or procedural, enforceable at law by a party against the Commonwealth, its agencies officers or any person" 71 P.S. § 745.2(b).
u. The IRRC is authorized to appoint an executive director and other staff and a chief counsel not subject to supervision by the General Counsel or the Attorney General. 71 P.S. § 745.9.
v. The IRRC may issue subpoenas for the purpose of requiring the attendance of persons or the production of documents relating to any function of the Commission. The IRRC must apply to the Commonwealth Court for an order to enforce a subpoena. 71 P.S. § 745.10.
w. The IRRC is authorized to adopt regulations “to carry out the purposes” of the Regulatory Review Act. Regulations of the Commission are subject to review the Joint Committee of Documents in the same manner in which regulations of other agencies are subject to review by the Commission. 71 P.S. § 745.11(a).
x. Prior to April 1st of each year, the IRRC must file an annual report with the Governor and the General Assembly. 71 P.S. § 745.11(b).
y. The IRRC is required to act as a “clearinghouse” for “complaints, comments and other input from members of the General Assembly and from the public regarding ... regulations” and must maintain “accurate
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records regarding complaints and comments it receives.” A summary of public complaints and comments received must be included in the annual report of the Commission. 71 P.S. § 745.12.
2. Exceptions to Basic Provisions
a. The IRRC may not issue an order barring publication of a regulation to the extent the Attorney General certifies that the regulation is required pursuant to the decree of any court or to implement the provisions of a statute of the United States or regulations issued thereunder by a federal agency or if the Governor certifies that the regulation is required to meet an emergency, which includes conditions which may cause a significant budget deficit or create need for supplemental or deficiency appropriations of greater than $1 million. 71 P.S. § 745.6(d).
b. Emergency regulations may take effect on the date of publication, but must be reviewed after adoption by the IRRC and designated legislative committees. If the emergency regulation is disapproved pursuant to the Regulatory Review Act, the regulation is rescinded after 120 days or upon final disapproval, whichever occurs later. 71 P.S. § 745.6(d).
c. Agencies subject to the Regulatory Review Act do not include the General Assembly, the Fish Commission, the Game Commission, any court, political subdivision or municipal or local authority. 71 P.S. § 745.3 (definition of “agency”).
d. Regulations subject to the Regulatory Review Act do not include proclamations, executive orders, directives or similar documents issued by the Governor, but include regulations which may only be adopted by agencies with the approval of the Governor. 71 P.S. § 745.3 (definition of “regulation”).
e. The time deadlines established for the review of regulations are modified substantially whenever the General Assembly adjourns sine die or upon the expiration of legislative sessions. 71 P.S. §§ 745.5(e) & (f); 745.5a(f), 745.7(a.1).
3. Implementing Regulations
a. The IRRC has adopted regulations establishing rules of procedure for operation of the Commission and standards for the review of regulations codified at 1 Pa. Code Part III, § 301.1 et seq.
b. The regulations of the IRRC require proposed regulations to be delivered to the Commission and designated legislative committees accompanied by a “face sheet” signed by the Office of Attorney General and the Office of General Counsel or the chief counsel of an independent agency, but require final-form regulations only to accompanied by a face sheet signed
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by the Office of General Counsel or the chief counsel of an independent agency. 1 Pa. Code §§ 305.1, 307.2. Accordingly, final regulations are reviewed for form and legality by the Office of Attorney General following the completion of review pursuant to the Regulatory Review Act.
c. In addition to copies of public comments which agencies are required by the Regulatory Review Act to deliver to the IRRC and designated legislative committees, the regulations of the IRRC require the delivery of reports from advisory groups and public notices or announcements regarding solicitation or public comments or information regarding the meetings agencies have held or will hold regarding regulations. 1 Pa. Code § 305.2.
d. The regulations of the IRRC authorize agencies to toll the review period for final regulations for the consideration of revisions recommended by the Commission or designated standing committees, but provide that the Commission may object to the tolling of the review period “if the agency indicates in its intent to toll that it is considering revisions that are broader than or inconsistent with those recommended by the Commission or a committee.” 1 Pa. Code § 307.4. Because tolling must occur prior the completion of the 20 day committee review period or approval or disapproval of regulations by either committee, agencies may not make changes to regulations to respond to suggestions for revisions to regulations made after committee review or at the IRRC meeting unless the IRRC disapproves the regulation.
e. The regulations of the IRRC require a request to toll the review period for final regulations to be accompanied by a written notice providing a description of the revisions an agency is considering and an explanation of how the revisions will satisfy concerns of the IRRC or designated legislative committees. 1 Pa. Code § 307.5. This provision calls into question the ability of an agency to toll the review period to act upon suggestions received from other persons or to correct problems identified by agencies unless the matters are identified as concerns by the IRRC or designated legislative committees.
f. The regulations of the IRRC provide that the Commission is to approve or object to requests to toll the review period for final regulations within two days of receipt of tolling request and clarifies that if the IRRC disapproves a tolling request, review will proceed under the originally established time period. 1 Pa. Code § 307.5.
g. Prior to completion of its review period for final-form regulations, the regulations provide that the IRRC will be deemed to have approved a regulation if Commission has not objected to the regulation as proposed, the agency has not made changes in the final-form regulation and a
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designated legislative committee has not conveyed to the Commission any recommendations, comments or objections to the regulation, or if the Commission meets to a consider a regulation and its vote to approve or disapprove the regulation results in a tie. 1 Pa. Code § 309.1.
h. Emergency regulations as certified by the Attorney General or the Governor as exempt from pre-adoption review for which notice of proposed rulemaking is omitted are required to be submitted to the IRRC and legislative committees for review on the same date the regulations are submitted to the Attorney General for review. 1 Pa. Code § 313.1. This rule appears to require the Attorney General to decide that a regulation qualifies as an emergency rule prior to formally receiving the regulation for consideration pursuant to the Commonwealth Attorneys Act. The rule also appears to make it impossible for the Attorney General or the Governor to decide that an emergency justifies immediate adoption of a regulation for which notice of proposed rulemaking is omitted after its initial submission without withdrawal and resubmission of the regulation.
i. The IRRC has not adopted any meaningful substantive or procedural regulations regarding complaints that agencies are improperly relying upon documents which should be published as administrative regulations. The Commission’s regulations do nothing more than restate the requirements of the Regulatory Review Act. 1 Pa. Code § 315.1.
j. The IRRC has not adopted any regulations to implement its responsibility to function as a “clearinghouse” for complaints and comments regarding regulations. Instead, the Commission has adopted a primarily passive role with respect to its clearinghouse responsibilities.
I. DISTINCTIONS AMONG REGULATIONS, STATEMENTS OF POLICY AND ADJUCIATIONS
A. What Is An Administrative Regulation?
1. The basic definitions used to determine whether a document is an administrative regulation as set forth in the Commonwealth Documents Law, Title 45 of the Pennsylvania Consolidated Statutes and the regulations of the Documents Committee have been supplemented by various judicial interpretations, including the following which clarify when documents constitute regulations:
a. A regulation is a rule of general applicability which could have been enacted by the legislature without violating the provision against special legislation. Elkin v. Dept. of Public Welfare, 419 A.2d 202 (Pa. Cmwlth. 1980); Pa. Const., Art. 3, Sec. 32.
b. A regulation is an order of general applicability and future effect which either affects all of the citizens of the state or a reasonable class of persons
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in society. Pittsburgh v. Insurance Commissioner, 286 A.2d. 475 (Pa. Cmwlth. 1971).
c. A regulation is a governmental agency’s exercise of delegated legislative power to create a mandatory standard of behavior. Central Dauphin School District v. Department of Education, 608 A. 2d 576, 580 (Pa. Cmwlth. 1992).
d. A regulation is a statement, generic rather than factually specific in nature, that binds the agency. Department of Environmental Resources v. Rushton Mining, 591 A.2d 1168 (Pa. Cmwlth. 1991). If a pronouncement or document satisfies the “binding norm test,” it is considered a regulation. See R. M. v. Pennsylvania Housing Finance Agency, 740 A.2d 302 (Pa. Cmwlth. 1999).
i. The binding norm test was first articulated in Pennsylvania Human Relations Commission v. Norristown Area School District, 374 A.2d 671 (Pa. 1977) which followed the reasoning of Pacific Gas & Electric Co. v. Federal Power Commission, 506 F.2d 33 (D.C.Cir. 1974).
ii. Pennsylvania courts have defined a “binding norm” as a statement the agency is bound by “and if the statement is binding on the agency, it is a regulation . . . [I]n determining whether an agency action is a regulation or a statement of policy, one must look to the extent to which the challenged pronouncement leaves the agency free to exercise discretion to follow the announced policy in an individual case.” Central Dauphin School District v. Department of Education, 608 A. 2d 576, 581 (Pa. Cmwlth. 1992) (quoting Department of Environmental Resources v. Rushton Mining, 591 A.2d 1168, 1173 (Pa. Cmwlth. 1991)).
iii. “‘Binding norm’ means that the agency is bound by the statement until the agency repeals it, and if the statement is binding on the agency, it is a regulation.” Physicians Insurance Co. v. Callahan, 648 A.2d 608, 614 (Pa. Cmwlth.1994).
e. Management Directives addressed to two or more state agencies are published pursuant to 4 Pa. Code, Sections 1.2 and 1.4, which announce detailed policies, programs, responsibilities and procedures relatively permanent in nature, and which are signed by the Governor, Lieutenant Governor, or other departmental head under the Governor’s jurisdiction, may in some circumstances have the same status as administrative regulations, (i.e. they may have the force and effect of law). See, e.g., Pennsylvania Institute of Health Services v Commonwealth, 649 A2d 190 (Pa. Cmwlth 1994). Management directives, which are regulatory in nature, however, do not require publication in the Pennsylvania Code and
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Bulletin because the Commonwealth Documents Law exempts from publication documents not required to be published pursuant to regulations of the Joint Committee. 45 Pa. C.S. §§ 702, 725. See, e.g., Housing Authority v. Pa. Civil Service Commission, 730 A.2d 935, 942 (Pa. 1999).
2. Courts have also clarified several types of agency documents which do not constitute administrative regulations:
a. Executive orders and directives are not administrative regulations.
i. Shapp v. Butera, 348 A.2d 910, 913 (Pa. Cmwlth. 1975) The Commonwealth Court dismissed a petition seeking an order authorizing the examination and copying of financial disclosure forms submitted by cabinet members pursuant to an Executive Order. The Court concluded there are three types of executive orders: (1) formal, ceremonial, or political orders, usually issued as proclamations; (2) orders which communicate to subordinate officials requested or suggested directions for the execution of the duties of the Executive Branch of Government; and (3) orders which serve to implement or supplement the Constitution or statutes, and that only “the third class of orders create legally enforceable rights.” Because the Executive Order in question was found to fall into the second category, the court concluded that because the disclosure had been “voluntarily submitted, solely for the Governor's purposes,” their disclosure could not be compelled.
ii. Robinson v. Shapp, 350 A.2d 464 (Pa. Cmwlth. 1976), aff’d per curiam 374 A.2d 533 (Pa. 1976). The Commonwealth Court dismissed as non-justiciable a challenge to an Executive Order “committing this administration to work towards ending discrimination against persons solely because of their affectional or sexual preference.” The Court held that the order set forth “a broad statement of public or political policy and thus within the sole discretion of the elected Executive.”
iii. Wilt v. Department of Revenue, 406 A. 2d 1217 (Pa. Cmwlth. 1979). The Commonwealth Court refused to dismiss a complaint for alleged violations of gubernatorial directives regarding the dismissal of employees based on an assertion by the Revenue Department that the directives were not legally binding. The court held that it could not dismiss the complaint based on preliminary objections because, “The Governor as head of the Executive Branch [appears to] have inherent power to make rules concerning the procedures to be employed in the dismissal of non-civil service management level employees.”.
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iv. Sever v Pennsylvania Office of Administration, 514 A.2d 656 (Pa. Cmwlth. 1986) (Executive Order 1980-18, which adopted a Code of Conduct for Commonwealth officials and employees, required prior approval of any supplementary employment from the head of the agency in which an official or employee serves. To implement the Executive Order, the Office of Administration issued a Management Directive which required supplemental requests for employment to be acted upon within 15 days. When an engineer working for the Department of Environmental Resources had a supplemental employment request denied after being reviewed for more than eight months, he sought an order compelling the approval of his application, or the award of damages. The Commonwealth Court dismissed the complaint by concluding that neither the Executive Order nor the Management Directive had the force and effect of law because neither were adopted pursuant to a statutory delegation of power, and therefore did not confer legally enforceable rights on the petitioner.).
v. Werner v. Zazyczny, 545 Pa. 570, 681 A.2d 1331 (Pa. 1996). At at-will employee of the Office of Inspector General challenged his dismissal without a hearing by alleging that the Governor’s Code of Conduct adopted pursuant to Executive Order 1980-18 gave him a right to continued employment. The relevant provisions of the Code of Conduct required the suspension without pay of an employee during a period of time in which charges against the employee were pending accusing the employee of a felony. After the charges against the employee were dismissed, a request to regain his position in the OIG’s Office was denied without a hearing. The Supreme Court upheld a decision of the Commonwealth Court dismissing the claim by concluding that Executive Order does not have the force and effect of law because “the portion of the Governor's Code of Conduct which appellant relies upon was not promulgated to either implement or supplement the Governor's powers under the Pennsylvania Constitution … or a statute that authorizes the Governor to issue a directive granting a governmental employee an entitlement of continued employment to a non-union position not included within the civil service system.”
b. Instructions or directives which are “directory” rather than “mandatory” do not have the force of law and do not constitute regulations. Wilt v. Department of Revenue, 436 A.2d 713 (Pa.Cmwlth. 1981); Marks v. Civil Service Commission., 299 A.2d 691 (Pa. Cmwlth. 1973); Central Dauphin, 608 A.2d at 582 (budget reopening instructions providing guidance to schools constitute a response to a legislative directive and will proceed on a case-by-case basis; the requirement is established by the
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statute while the instructions provide guidance for abiding by the statutory requirement).
c. If the General Assembly requires an agency to promulgate guidelines to implement provisions of a law, the guidelines do not constitute regulations, but instead are policy statements. Zerbe v. Unemployment Compensation Board of Review, 681 A.2d 740 (Pa. 1996) Mid-Atlantic Power Supply Ass’n v. Public Utility Commission, 746 A.2d 1196, 1201 (Pa. Cmwlth. 2000); Bowe v. Unemployment Compensation Board of Review, 477 A.2d 587 (Pa. Cmwlth. 1984); Ging v. Unemployment Compensation Board of Review, 479 A.2d 37 (Pa. Cmwlth. 1984).
d. Documents embodying business decisions “which are not amenable to the normal public participation process” are not regulations. See e.g., Independent State Store Union v. Pennsylvania Liquor Control Board, 432 A.2d. 1375 (Pa. Cmwlth 1981); Small v. Horn, 722 A.2d 664 (Pa. 1998) (rules of internal prison management are subject to modification and fall outside the scope of prison regulations).
e. Purely internal manuals or instructions for agency employees are not regulations. In re C.J., 729 A.2d 89 (Pa. Super. 1999); Appeal of Calabrese Club, 374 A.2d 764 (Pa. Cmwlth. 1977).
f. Documents dealing with agency personnel, practice and procedure are not regulations. Soja v. Pennsylvania State Police, 402 A.2d 281 (Pa. Cmwlth. 1979), aff’d, 455 A.2d. 613 (Pa. 1982).
g. Rules and regulations of state-owned colleges and universities are not administrative regulations. Attorney General’s Opinion, 1971-32; but see, Kusnir v. Leach, 439 A.2d 223 (Pa. Cmwlth. 1982).
3. The following federal laws and precedents also offer helpful guidance in determining whether a document is an administrative regulation:
a. The Federal Administrative Procedures Act (APA) defines a rule as “the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret or prescribe law or policy or describing the organization, procedure or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefore or of valuations, costs or accounting, or practices bearing on any of the foregoing.” 5 U.S.C. § 551(4). The APA, however, exempts from rulemaking procedures regulations involving “military or foreign affairs,” and matters “relating to agency management or personnel, or to public property, loans, grants, benefits or contracts.” 5 U.S.C. § 553(a).
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b. One of the better federal judicial definitions of rulemaking can be found in PBW Stock Exchange Inc. v. SBC, 485 F.2d 718 (3d Cir. 1973), cert. den. 416 U.S. 969 (1974) in which rulemaking is defined as “the promulgation of concrete proposals, declaring generally applicable policies binding upon the affected public generally, but not adjudicating the rights and obligations of parties before it.” The court also held that “rules ordinarily look to the future and are applied prospectively only” unlike orders which “are applied retrospectively, typically applying law and policy to past facts.” Id. See also Laborers’ Int’l Union v. Foster Wheeler Corp., 26 F.3d 375 (3d Cir. 1994). Several specific types of documents have been found by judicial or administrative determinations not to be regulations.
B. How Are Statements Of Policy Distinguished From Regulations?
1. As specified by the regulations of the Documents Committee, statements of policy consist of guidelines and interpretations.
2. Guidelines.
a. “[I]n determining whether an agency action is a regulation or a statement of policy, one must look to the extent to which the challenged pronouncement leaves the agency free to exercise discretion to follow the announced policy in an individual case.” Central Dauphin School District v. Department of Education, 608 A. 2d 576, 581 (Pa. Cmwlth. 1992) (quoting Department of Environmental Resources v. Rushton Mining, 591 A.2d 1168, 1173 (Pa. Cmwlth. 1991)).
b. A statement of policy does not establish a binding norm, but announces the agency’s tentative future intentions, and provides the agency with the flexibility to follow the announced policy or modify it as circumstances require. Mid-Atlantic Power Supply Association v. Pennsylvania Public Utility Commission, 746 A.2d 1196, 1201 (Pa. Cmwlth. 2000).
c. The factors a court considers in determining whether a document is a regulation or a statement of policy include the document’s plain language, the manner it has been implemented by the agency, and whether the document restricts agency discretion, Pennsylvania Housing Finance Agency R.M., 740 A.2d 302.
d. In order to distinguish substantive rules from statements of policy, the starting point is generally the agency’s own characterization of the rule, although the agency’s characterization alone is not dispositive of the issue. R.M. v. Pennsylvania Housing Finance Agency, 740 A.2d 302, 306 (Pa. Cmwlth. 1999). Consistent with this view, Norristown has been cited for the proposition that “the General Assembly did not intend for the agency to have sole discretion in determining when a statement of policy would be settled enough to become a regulation.” Physicians Insurance Co. v.
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Callahan, 648 A.2d 608, 614 (Pa. Cmwlth.1994). Although an agency may expressly state that its Bulletin is not intended to have the force of law, thereby not qualifying as a binding norm binding itself, the court may interpret a statement of policy differently than the agency intended. See Eighty-Four Mining v. Three Rivers Rehab., 721 A.2d 1061, 1066 (Pa. 1998).
e. In the judicial review of policy statements, the Norristown court found that policy statements are “entitled to less deference” than a regulation or adjudication and that “the reviewing court has some leeway to assess the underlying wisdom of the policy and need not affirm a general statement of policy that merely satisfies the test of reasonableness.” See Central Dauphin School District v. Department of Education, 608 A. 2d 576 (Pa. Cmwlth. 1992); Prudential v. Department of Insurance, 595 A.2d 649, 655 (Pa. Cmwlth. 1991) (a statement of policy is subject to challenge and must be supported by evidence). A statement of policy is “a governmental agency’s statutory interpretation which a court may accept or reject depending on how accurately the agency’s interpretation reflects the meaning of the statute.” Central Dauphin, 608 A.2d at 581.
3. Interpretations.
a. In Pennsylvania Human Relations Commission v. Uniontown Area School District, 313 A.2d 156 (Pa. 1973), the Pennsylvania Supreme Court held that interpretative regulations are exempt from the various procedural requirements of the CDL as they are statements of policy rather than regulations with the force and effect of law. See also Montgomery Co. Geriatric Center v. Department of Public Welfare, 462 A.2d 325, 329 (Pa.Cmwlth) (noting that similarly federal interpretative regulations are exempt from the procedural requirements of the APA).
b. In Uniontown, the Pennsylvania Supreme Court first enunciated the “well-recognized distinction” between legislative and interpretative rules. Legislative rules are “the product of an exercise of legislative power . . . pursuant to a grant of legislative power” by the General Assembly. 313 A.2d at 171. The Uniontown distinction between legislative and interpretative rules continues to be cited with favor. See Philadelphia Suburban Corp. v. Commonwealth, 635 A.2d 116 (Pa. 1993); Central Dauphin School District v. Department of Education, 608 A. 2d 576 (Pa. Cmwlth. 1992); Reynolds Inc. v. Department of Labor, 661 A.2d 494 (Pa. Cmwlth. 1995); Mid-Atlantic Power Supply Association v. Pennsylvania Public Utility Commission, 746 A.2d 1196, 1201 (Pa. Cmwlth. 2000).
c. A pronouncement deemed an interpretive rule merely construes a statute and does not “improperly expand upon its terms.” Borough of Pottstown v. Retirement Board, 712 A.2d 741 (Pa. 1998). Pronouncements that modify substantial rights by expanding upon the plain meaning of the
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statute are legislative rules, a.k.a., regulations. Borough of Pottstown, 712 A.2d at 746.
d. Although interpretative rules are not controlling upon the courts, they “constitute a body of experience and informal judgment to which courts and litigants may properly resort for guidance,” Montgomery Co. Geriatric Center, 462 A.2d at 331; accord Appalachian States Low Level Radioactive Waste Commission v. O’Leary, 93 F.3d 103, 112 (3d Cir. 1996). The weight afforded an interpretative rule “depends upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, all of those factors which give it the power to persuade, if lacking the power to control,” Id., (quoting Skidmore v. Swift, 323 U.S. 134 (1944)).
e. In determining the whether an interpretative rule has the force of law the court considers the following factors: (i) whether the court agrees or disagrees with the rule; (ii) the extent to which the subject matter is within special administrative competence and beyond general judicial competence; (iii) whether the rule is a contemporaneous construction of the statute by those who are assigned the task of construction of the statute; (iv) whether the rule is one of long standing; and (v) whether the statute has been reenacted by legislators who know the content of the rule,” Uniontown 313 A.2d at 169.
f. A legislative rule is binding upon a court as a statute if it is: (i) within the granted power; (ii) issued pursuant to proper procedure; and (iii) reasonable. Housing Authority v. Pennsylvania Civil Service Commission, 730 A.2d 935, 942 (Pa. 1999). An interpretative rule on the other hand depends for its validity not upon a law-making grant of power, but rather “upon the willingness of a reviewing court to say that it in fact tracks the meaning of the statute it interprets.” Borough of Pottstown v. Retirement Board, 712 A.2d 741 (Pa. 1998).
g. While courts accord agency interpretations “some deference,” the meaning of a statute is a question of law for the court, and, when convinced that the interpretative regulation adopted by an administrative agency is unwise or violative of legislative intent, courts disregard the regulation. Cleary ex rel. Cleary v. Waldman, 167 F.3d 801, 808 (3d Cir. 1999) (holding agency’s informal views provided by agency with the statutory mandate to administer the act, when in line with other pronouncements of the agency and reasonable given the purpose of the Act are entitled to deference by a reviewing court despite the lack of notice and comment procedures).
h. The interpretation of a legislative regulation by an interpretative regulation or guideline is of controlling weight, unless (i) that interpretation is plainly erroneous or inconsistent with the regulations or (ii) unless the regulations are inconsistent with the underlying legislative intent. State Police v.
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American Serbian Club, 750 A.2d 405 (Pa. Cmwlth. 2000); Syncor International Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997). However, the courts are not bound by the agency’s interpretation when it conflicts with the governing statute. Id. To be upheld, the interpretive rule must track the meaning of the underlying statute rather than establish an extrinsic standard. Borough of Pottstown v. Retirement Board, 712 A.2d 741, 743 (Pa. 1998).
4. Federal precedent provides additional guidance in distinguishing regulations from policy statements and interpretative rules because the seminal Uniontown decision was expressly based on several important U.S. Supreme Court cases, most notably Skidmore v. Swift & Co., 323 U.S. 134 (1944).
a. The term “statement of policy” is not defined in the Federal Administrative Procedures Act, but the Attorney General’s Manual on the Administrative Procedures Act defines the term to mean “statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power.”
b. A seminal decision for determining when a document is a statement of policy rather than a rule is Pacific Gas & Electric Co. v. Federal Power Commission, 506 F.2d 33, 38-39 (D.C. Cir. 1974).
“A general statement of policy ….is not finally determinative of the issues and rights to which it is addressed. The agency cannot apply or rely upon a general statement of policy as law because a general statement of policy only announces what the agency seeks to establish as policy. A policy statement announces the agency’s tentative intentions for the future. When the agency applies the policy in a particular situation, it must be prepared to support the policy just as if the policy statement had never been issued. An agency cannot escape its responsibility to present evidence and reasoning supporting its substantive rules by announcing binding precedent in the form of a general statement of policy.”
c. “[T]he primary distinction between a substantive rule— really any rule – and a general statement of policy, then, turns on whether an agency intends to bind itself to a particular legal position.” Syncor International Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997). (citing United States Telephone Association v. Federal Communications Commission, 28 F.3d 1232 (D.C. Cir. 1994).
d. Interpretive rules are different from policy statements because interpretive rules seek to elaborate upon the meaning of a legal norm while statements of policy inform the public about a position it takes with respect to enforcement/implementation of a particular issue. Syncor, 127 F.3d at 94.
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e. If it is unclear whether an agency intended to make its rules legislative or interpretative, the presence of a substantial impact upon the public caused by the regulation may lead to the conclusion that the regulation was intended to be legislative. The distinction between legislative and interpretative rules, however, is not based on the “substantial impact” of such rules, but is solely based on whether or not an agency relies upon delegated legislative power in issuing the rules; substantial impact is only relevant insofar as it determines issues of agency intent. Shell Oil v. Federal Power Commission, 491 F.2d 82 (5th Cir. 1974).
f. If a statement of policy or interpretative rule amends or is inconsistent with an existing legislative rule, the document must be adopted through notice and comment procedures. State of Ohio Dep’t of Human Services v. U.S. Dep’t of Health & Human Services, 862 F.2d 1228, 1234 (6th Cir. 1988); Guardian Federal Savings and Loan Ass’n v. Federal Savings and Loan Insurance Corp., 589 F.2d 6a58, 668 (D.C.Cir. 1978); Warder v. Shalala, 149 F.3d 73, 81 (1st Cir. 1998), cert. denied, 526 U.S. 1064 (1999). Conversely, so long as an interpretive rule does not effect a substantial change in existing regulations, notice and comment rulemaking is not required. Visiting Nurses Ass’n Gregoria Auffant, Inc. v. Thompson, 447 F.3rd 68, 75 (1st Cir. 2006).
g. The particular label placed upon a document is not necessarily conclusive in determining whether the document is a substantive rule or a statement of policy of interpretive rule, instead it is the substance of the agency action that is “decisive.” Columbia Broadcasting System v. U.S. 316 U.S. 707, 417 (1942). The agency’s characterization, however, is the starting point of analysis and generally given much weight. Mejia-Ruiz v. I.N.S., 51 F.3rd 358, 363 (2nd Cir. 1995); Chief Probation Officers of California v. Shalala, 118 F.3rd 1327, 1333 (9th Cir. 1997). “The general test is whether the agency intended to bind itself with the pronouncement.” Chiron Corp. and PerSeptive Biosystems, Inc. v. National Transportation Safety Bd., 198 F.3rd 935, 944 (D.C. Cir. 1999).
h. In American Mining Conference v. MSHA, 995 F.2d 1107, 1109-12 (D.C. Cir. 1998) a four factor test was established to determine if guidance documents, i.e., “program policy letters,” were interpretative or substantive rules:
Whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties;
Whether the agency published the rule in the Code of Federal Regulations;
Whether the agency explicitly invoked its legislative rulemaking authority; and
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Whether the rule amends a prior legislative rule.
i. A somewhat similar three factor test was established in National Family Planning and Reproductive Health Ass’n Inc. v. Sullivan, 979 F.2d 227, 237038 (D.C. Cir. 1992):
Does the document “more than clarify or explain a regulatory term, or confirm a regulatory requirements, or maintain a consistent agency policy;’
Was the document motivated by “a previously unacknowledged concern;” and
Does the document grant rights, impose obligations, or produce other significant effects on private interests..
j. The language of a document can be indicative of whether it constitutes a substantive legislative rule. Documents creating “action levels” or which “define” or “prohibit conduct” and are intended to have a present effect on conduct typically constitute legislative rules. Community Nutrition v. Young, 818 F.2d 943, 947-48 (D.C. Cir. 1987).
k. In applying federal precedents, care should be taken to note that the federal term “statement of policy” differs from the equivalent term in Pennsylvania law because, unlike under Pennsylvania law, interpretive rules are not considered a subset of policy statements under federal law. The federal Administrative Procedures Act includes within the definition of regulations, “interpretative rules” and “statements of policy,” but exempts these documents from the requirement of publication for notice and comment prior to final adoption, 5 U.S.C. §553(b). The Commonwealth Documents Law, in contrast, exempts these documents from the definition of a “regulation.” In addition, the Commonwealth Documents Law clearly defines statements of policy as including “any document interpreting . . . any act of assembly,” but the APA treats interpretative rules and statements of policy separately, 5 U.S.C. §§ 552 (a) (1) (d), 552 (a) (2) (B), 553 (b) (3) (A) and 553 (d) (3). Finally, although federal precedents establish that statements of policy may not set forth substantive or procedural rights, the definition contained in the Commonwealth Documents Law clearly permits these documents to have such an impact.
C. What Are the Consequences of Document Classifications?
1. Pa. Human Relations Comm’n v. Norristown Area Sch. Dist, 374 A.2d 671 (Pa. 1977). The Norristown Area School District appealed a decision of the Commonwealth Court affirming an order of the Human Relations Commission requiring the District to develop and submit a plan to
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eliminate racial segregation in its schools. Norristown asserted that the Commission's definition of a segregated school, which recommended that desegregation plans achieve a racial composition for each grade within 30% of the racial composition within the school district, constituted an invalid regulation because the Commission did not comply with the publication requirements of the Administrative Agency Law. The Supreme Court held that the Commission’s desegregation guidelines constituted general statements of policy rather than administrative rules because (1) the 30% recommendation in Pa. Human Relations Comm’n v. Uniontown Area School District, 455 Pa. 52, 313 A.2d 156 (1973) was found by a plurality of the Court to reasonable when reviewing a prior desegregation order of the Co9mmission; (2) the Commission had approved desegregation plans for several other school district which deviated from the 30% recommendation; and (3) the Commission had advised Norristown that it could deviate from the standard if a persuasive justification was presented.
2. Lopata v. Unemployment Compensation Bd. of Review, 507 Pa. 570, 493 A.2d 657 (1985). An applicant for unemployment compensation appealed a decision of the Commonwealth Court upholding an order of the Unemployment Compensation Board of Review denying the applicant benefits because he failed to earn qualifying wages in 18 credit weeks during 1981. The Board concluded that the week ending January 3, 1981, could not be counted as a credit week based on provisions of an Unemployment Compensation Bulletin that defined a credit week that overlaps a calendar quarter as falling in the quarter which includes at least four days of the week. Rejecting a claim that the Bulletin was an unlawful unpublished regulation, the Commonwealth Court upheld the Board by concluding the Bulletin constituted a statement of policy which the Court concluded constituted a reasonable interpretation of the Unemployment Compensation Law. Upon review, the Supreme Court concluded that the Bulletin was an invalid rule because “the standard articulated therein is completely and unequivocally determinative of the issue of how to count a credit week which overlaps two quarters.” Rather than vacating the Board decision, however, the Court proceeded to consider whether the standard set forth in the Bulletin could be upheld as an exercise of the Board’s adjudicative function, but vacated the Board’s decision by concluding that because the applicant both worked during the week in 1981 and was paid in 1981, there was “no valid basis for disqualifying claimant from benefits.”
3. Dep’t of Environmental Resources v. Rushton, 591 A.2d 1168 (Pa. Cmwlth. 1991); appeal denied 600 A.2d 541 (Pa. 1991). The Department appealed an order of the Environmental Hearing Board declaring invalid 15 standard permit conditions contained in 46 coal mining permits issued to 11 different mining companies as invalid unpublished regulations. Upon appeal to the Commonwealth Court, the Department argued that the
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standard permit conditions were not an invalid regulation because (1) the standard conditions constituted a statement of policy because Department did not intend the conditions to have the force of law, but instead to merely require record keeping and notification requirements regarding certain types of information necessary to determine if particular types of mining practices would cause unacceptable risks of mine subsidence; and (2) even if regulatory in nature, the conditions could be upheld as a valid exercise of the Department’s adjudicative power to interpret mining laws in the manner provided by Lopata v. Unemployment Compensation Bd. of Review. The Commonwealth Court rejected the Department’s claim that the standard conditions were mere statements of policy because the conditions were “ministerially applied to all 46 permits,” were “generic in nature and not at all related to facts,” were “intended to be binding on the agency,” and none of the Department’s employees had “any discretion in applying the conditions to any individual case.” The Court distinguished Lopata by concluding that the Department was “not interpreting a statute, but rather, is setting forth supplemental provisions to an existing statute.”
4. Prudential Property and Casualty Insurance Company v. Insurance Department, 595 A.2d 649 (Pa. Cmwlth. 1991). Prudential Insurance appealed a decision of the Insurance Commissioner denying relief based on “extraordinary circumstances” to automobile insurance rate reductions of 10% mandated by law for policyholders electing “the full tort option” and 22% for policyholder electing the “partial tort option” made available by Act 1990-6. Prudential Insurance argued that the Insurance Commissioner’s denial of its request was based on a policy providing that only insurers making less than a 12% after-tax rate of return on statutory surplus would be eligible for relief which constituted an invalid unpublished regulation. The Commonwealth Court rejected this claim by concluding that Prudential Insurance failed to present evidence to support is claim that the 12% standard was “applied in a way which precludes any adjustment for individual circumstances through adjudication on a case-by-case basis,” but nonetheless vacated the decision of the Insurance Commission by concluding that substantial evidence was not presented on the record by the Insurance Department to support its use of the 12% standards.
5. Central Dauphin Sch. Dist. v. Dep’t of Educ., 608 A.2d 576 (Pa. Cmwlth. 1992). Central Dauphin and several other school district sought post trial relief from an order issued by a single judge of the Commonwealth Court in a declaratory judgment proceeding addressing a variety of issues involving the interpretation of Act 1991-25 which directed school boards in certain circumstances to re-open their budgets to provide property tax reductions to reflect additional allocations of appropriations provided to the school districts by the General Assembly. Among the issues raised was whether administrative procedures which the Secretary of Education was required by Act 1991-25 to establish to audit compliance with the
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laws tax relief requirements constituted invalid unpublished regulations because the instructions threatened penalties for failure to comply with the specified procedures. The Commonwealth Court concluded that the audit procedures did not constitute invalid administrative rules because the procedures merely constituted “guidance” which “present[ed] a series of questions concerning a school district's budget reopening and adjustment as a means of allowing a school district to gauge whether its revised budget comports with Act 25's tax relief requirements,” and because any; determination regarding compliance would be made “on a case-by-case basis” which may be “geared to each district’s particular needs.” The Court also concluded that the instructions constituted an interpretation of the legislation by the Secretary of Education, and not an exercise of administrative rule making, and that any penalties threatened were not for failure to comply with the administrative instructions, but instead for failure to comply with the substantive requirements of Act 1991-25.
6. Chimenti v. Pennsylvania Dep't of Corrections, 720 A.2d 205 (Pa. Cmwlth. 1998). A prison inmate challenged as an unlawful unpublished regulation a policy statement adopted by the Bureau of Corrections to implement provisions of the Wiretapping Law which authorized the department to intercept, record, and disclose the telephone communications between inmates and members of the public. The Wiretapping law authorized the interception, recording and disclosure of inmate calls, except for calls between inmates and their attorneys, pursuant to guidelines adopted by the department. The guidelines were required to provide inmates notice that their calls may be intercepted, recorded and disclosed; provide a similar notice was provided to members of the public calling inmates; prohibit divulging the contents of calls except as necessary “to safeguard the orderly operation of the facility,” in response to a court order, or in the prosecution of investigation of a crime; and to limit access to recordings only the warden or his designee. The Commonwealth Court concluded that the guidelines constituted valid statements of policy because they interpreted relevant provisions of the Wiretapping Law; did not have the force and effect of law; granted discretion to the department with respect to the application of the policy in individual cases; and were expressly authorized by the General Assembly to be adopted as guidelines rather than regulations.
7. Millcreek Manor v. Dep't of Pub. Welfare, 796 A.2d 1020 (Pa. Cmwlth. 2001). Following the General Assembly’s termination of the certificate of need program for health care facilities, the Long Term Care Bureau of the Department of Public Welfare established a policy in which it declared that “as a general rule, the present complement of nursing facilities participating in the Medicaid Program results in a more than adequate, if not an overabundant, supply of nursing facility services,” and as a result, it would not enroll additional providers of nursing services in the Medicaid program, and would terminate existing providers from the program who
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added additional beds to their facilities, but would consider on a case-by-case basis requests for exceptions from the policy based on guidelines set forth in a separate statement of policy. Millcreek Manor, which operated a nursing facility in Erie, submitted an exception request to relocate and expand its nursing facility. The LTC Bureau granted Millcreek permission to relocate its existing beds, but denied Millcreek's request to expand its Medicaid bed capacity because it found there was a surplus of beds in Millcreek's primary service area, and “more appropriate and less costly options were available to meet the needs of the Medicaid population.” Pursuant its Statement of Policy, the LTC Bureau advised Millcreek that its participation in the MA Program would be terminated if it added additional beds to its facility. Millcreek challenged the decision before the Department’s Bureau of Hearings and Appeals by arguing the statement of policy was an invalid unpublished rule and was contrary to federal law. The ALJ hearing the case, however, precluded Millcreek from challenging the validity of the SOP and did not address whether the SOP was consistent with Federal law. Upon appeal, the Commonwealth Court concluded that the exception policy was a “binding norm” because agency officials had no discretion to decide whether or not to follow policy in an individual case. As a result, the Court vacated the BHA's order and remanded the case to the ALJ to conduct a de novo hearing and issue a proper adjudication fully addressing the legality of the policy.
8. Home Builders Ass’n of Chester & Del. Counties v. Dep’t of Environmental Protection, 828 A.2d 446 (Pa.Cmwlth. 2003). The Home Builder’s Association alleged that a “comprehensive storm water management policy” issued by the Department and a Settlement Agreement entered into between the Department and a coalition of environmental organizations to settle administrative litigation constituted invalidly adopted regulations. The Association challenged the policy because it created new permitting requirements and the settlement agreement because of concerns its terms would be binding on anyone attempting to develop property in the watershed. Relying on an “express disclaimer” contained in the policy document stating that it did not constitute an adjudication or regulation to which the Department will give “weight or deference,” the Court found the new storm water policy to be merely a statement of policy even though it established new permitting requirements. On the other hand, relying on City of Chester v. Public Utility Commission, 773 A.2d 1280 (Pa. Cmwlth. 2001), the Court concluded that it would violate due process of persons not parties to the settlement to apply its provisions to them and that “an agency cannot create new regulation through negotiations that are binding on the agencies without formally adopting the regulation through the procedures set forth in the Commonwealth Documents Law; nor can an agency enter into settlement agreements that are de facto regulations.” Because there were no allegations that the Department had attempted to impose the terms
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of the settlement agreement on the Association, however, the granted dismissed the appeal because the issue “was not ripe for appeal.”
9. Eastwood Nursing v. Department of Public Welfare, 910 A.2d 134 (Pa. Cmwlth. 2006). Eastwood, a licensed nursing facility located in Northampton County, which had been in operation for more than 40 years, submitted an exception request to the Long Term Care Bureau of the Department of Public Welfare to participate in the Medicaid program in order to ensure continued access for current residents who wish to remain in the facility after becoming Medicaid-eligible and to fill a need for additional Medicaid nursing beds. The LTC Bureau denied the request concluding there was no need for additional Medicaid nursing facility services in the County; and more appropriate and less costly options were available to meet any Medicaid need that existed. Taking into consideration the same statement of policy previously considered in Millcreek Manor v. Dep't of Pub. Welfare, the Bureau of Hearings and Appeals after hearing two days of hearings upheld the LTC Bureau’s decision. Eastwood appealed the BHA’s decision to the Commonwealth Court arguing that same long term care policy constituted an invalid unpublished regulation. The Commonwealth Court concluded that to determine whether the statement of policy was a rule or statement of policy, it needed to consider (1) its plain language, (2) the manner in which it was implemented by the Department, and (3) whether it restricts the Department's discretion. In applying these factors, the Commonwealth Court concluded that although the policy “was purposefully written to include pertinent terminology more characteristic of a statement of policy, … the application and effect of the language in the provision, taken as a whole, shows the provision to be restrictive, directive, substantive, and, thus, more characteristic of a regulation.” In addition, the Court concluded that the statement of policy did not “accurately reflect” provisions of the Public Welfare Code because it conflicted with previously adopted rules providing that “eligibility and participation requirements for beneficiaries and providers are prescribed in regulations,” and reflected a fundamental change in pre-existing policies that granted automatically enrolled licensed facilities in the Medicaid program.
10. Richardson v. Beard, 942 A.2d 911(Pa. Cmwlth. 2008). A prison inmate challenged as an invalid unpublished rule the Department of Corrections' Release of Information Policy which charged $1.25 per-page to copy the first 20 pages of an inmates medical records, $0.93 per-page for next 40 pages, and $0.31 for any additional pages, plus the costs of first class postage and a flat fee of $18.54. The Commonwealth Court rejected the inmates challenge because it interpreted the policy as not establishing a standard of conduct which has the force and effect of law and because the policy granted the department discretion to apply or not apply its provisions in individual cases.
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11. Insurance Federation of Pa., Inc. v. Insurance Dep’t, 929 A.2d 1243 (Pa.Cmwlth. 2007) aff’d 970 A.2d 1108 (Pa. 2009). After the Insurance Department published a notice declaring that under Act 1989-106 group health insurers must provide specified minimum coverage for alcohol and drug abuse treatment once an insured receives a certification and a referral for treatment from a licensed physician or a licensed psychologist, the Insurance Federation challenged the policy articulated in the notice as contrary to provisions of the Insurance Company Law authorizing managed care plans to conduct utilization review and require the prior authorization of services and alleged that the Department’s notice constituted an invalid unpublished rule. The Court substantively upheld the Department’s interpretation of the law as an appropriate interpretation of Act 106 and rejected as “entirely meritless” the Federation’s challenge to the validity of the notice. The Court held that, “The Department did not err in issuing the notice as a statement of policy,” because “a straightforward reading of the plain language of the notice demonstrates that it was meant to advise and to provide guidance as to the legal obligations of those entities subject to Act 106,” and did not place any “additional or more specific duties on any entity,” but instead “merely announced the policy that the Department planned to apply in the future, based on the plain text of Act 106.”
12. Cash America Net of Nevada, LLC v. Dep’t of Banking., 607 Pa. 432, 8 A.3d 282 (2010). Cash America, a payday lender, challenged as an invalid unpublished rule a policy announcement published in the Pennsylvania Bulletin by the Secretary of Banking announcing that the intent of the Department to treat the offering of consumer loans to Pennsylvania residents by internet or by mail as constituting doing business in the Commonwealth subject to the Consumer Discount Company Act. The Department countered that it issued the notice under authority granted by the Department of Banking Code to “issue statements of policy and interpretive letters necessary and appropriate to administer this act or any other statute within the department's jurisdiction to administer or enforce” and as merely an interpretation of the CDCA which revised the Department's interpretation in prior interpretive letters. The Supreme Court upheld the Department’s position holding that where an agency has the option to proceed by adopting binding rules which have the force and effect of law or statements of policy which do not, “we see no reason to require the Department to reinterpret [the CDCA] trough a binding regulation.” The Supreme Court also upheld the Department’s interpretation of the law as consistent with the plain language of the CDCA.
13. Northwestern Youth Services v. Dep’t of Pub. Welfare, 1 A.3d 988 (Pa. Cmwlth. 2010). Northwestern Youth Services together with several other youth services agencies sought to invalidate administrative bulletins issued by the Office of Children, Youth and Families (OCYF) of the Department
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of Public Welfare on the ground that the bulletins are unpromulgated regulations. The bulletins imposed new cost-reporting requirements on County Agencies and providers and set maximum reimbursement limits for out-of-home residential placement services. In response, OCYF argued that the bulletins were not invalid administrative rules because the other rules adopted by the Department authorized maximum levels of reimbursement to be established “by regulation, directive or memorandum” and because the bulletins constituted mere guidelines for program administration. The Commonwealth Court rejected these claims because it found the bulletins to be “replete with mandatory, restrictive language,” which did not grant discretion to agency officials, but instead “precluded the Department from granting any state or federal funds to a County agency if a contracted provider fails to comply with its specific cost-reporting requirements.” The Court also rejected the claim the other department rules authorized reliance on the bulletins because, although OCYF was authorized by set maximum reimbursement levels by directive or "memorandum, the rules did not authorize OYCF to condition such reimbursement on the providers’ submission of detailed cost data, expenditure data and upon the completion of prescribed forms.
14. Pa. Associated Builders & Contractors., Inc. v. Dep’t of General Services., 996 A.2d 576 (Pa. Cmwlth. 2010). The PA Associated Builders and Contractors, Inc. (ABC) challenged on a variety of grounds the Best Value Policy adopted by the Department of General Services' (DGS) allowing the use of RFPs rather than competitive sealed bids for complex construction projects or projects with allocations in excess of $ 5,000,000 if the Department determined that the use of competitive sealed bidding is either not practicable or advantageous to the Commonwealth. Among the issues raised by ABC was a claim that the policy constituted an improperly adopted administrative regulation. The Commonwealth Court rejected the claim holding that the policy did not “establish binding norms, but only indicated that internally, DGS should consider using this procurement method when competitive sealed bidding is either not practicable nor advantageous to the Commonwealth.”
D. How Are Adjudications Distinguished From Regulations?
1. Generally, adjudications have been distinguished from regulations based on four criteria: (1) Regulations possess quasi-legislative characteristics whereas adjudications possess quasi-judicial characteristics; (2) Regulations express the “general purpose” of an agency while adjudications represent findings based on a specific factual record; (3) Regulations, like laws, are of general application, or apply to a “reasonable class in society, “but adjudications render decisions regarding only specific parties to proceedings, and could be implemented by law only through special legislation; and (4) Adjudications, unlike regulations, typically substantially affect the rights, duties and obligations of a small
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group of persons appearing before an agency. Pittsburgh v. Insurance Commissioner, 286 A.2d 475 (Pa.Cmwlth. 1971), rev. on other grounds 294 A.2d 892; LaFarge Corporation. v. Pennsylvania Insurance Department, 690 A.2d 826 (Pa. Cmwlth. 1997) (adjudications affect the rights and duties of the parties to the proceeding in which the adjudication is made); Newport Homes v. Kassab, 332 A.2d 568 (Pa.Cmwlth. 1975); Redmond v. Pennsylvania Milk Marketing Board, 363 A.2d 840 (Pa.Cmwlth. 1976).
2. Rate-making decisions of the Insurance Department if “directed to a specific rate increase affecting a specific geographic area” are adjudications. Pittsburgh v. Blue Cross of Western Pennsylvania, 286 A.2d 475 (Pa. Cmwlth. 1971).
3. Orders of the Milk Marketing Board establishing prices for milk marketing areas and PUC rate-making decisions are adjudications. Redmond v. Milk Marketing Board, 363 A.2d 840 (Pa. Cmwlth. 1976).
4. Federal precedents generally distinguish rules from adjudications by noting that a rule involves “concrete proposals, declaring generally applicable policies binding on the affected parties generally, but not adjudicating the rights or obligations of parties” appearing in proceedings before the agency. A rule ordinarily looks to the future and applies prospectively only, whereas an order is directed retrospectively, typically applying law and policy to past facts. Laborers’ International Union v. Foster Wheeler Corp., 26 F.3d 375 (3d Cir. 1994); PBW v. Securities Exchange Commission, 485 F.2d 718.
