SB0423

SENATE BILL 423

57th legislature - STATE OF NEW MEXICO - first session, 2025

INTRODUCED BY

Larry R. Scott and James G. Townsend and David M. Gallegos and Jay C. Block

AN ACT

RELATING TO RULES; REQUIRING THE LEGISLATIVE FINANCE COMMITTEE TO CONDUCT RULE IMPACT ANALYSES OF MAJOR RULES; PROVIDING PROCEDURES; AMENDING THE ADMINISTRATIVE PROCEDURES ACT; DEFINING TERMS; REQUIRING MAJOR RULES TO BE AUTHORIZED BY LAW IN CERTAIN CIRCUMSTANCES; PROVIDING THAT ALL RULES PROMULGATED BY A STATE AGENCY SHALL BE SUBJECT TO THE APPROVAL OF THE GOVERNOR; PROVIDING PROCEDURES FOR JUDICIAL REVIEW OF RULES; AMENDING AND ENACTING SECTIONS OF THE STATE RULES ACT; PROVIDING NOTICE REQUIREMENTS; PROVIDING FOR THE AUTOMATIC EXPIRATION OF RULES FIVE YEARS AFTER THE ADOPTION OF THE RULES; PROVIDING A PROCESS FOR THE LEGISLATIVE RENEWAL OF RULES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 2-5-4 NMSA 1978 (being Laws 1967, Chapter 267, Section 1) is amended to read:

"2-5-4. LEGISLATIVE FINANCE COMMITTEE--ADDITIONAL DUTIES.--

A. The legislative finance committee, in addition to all other duties prescribed by law, shall annually review budgets and appropriations requests and the operation and management of selected state agencies, departments and institutions and shall make recommendations with respect thereto to the legislature.

B. To carry out the purposes of this section, the legislative finance committee shall establish a budget analysis division staffed with persons knowledgeable and proficient in budget analysis and budget preparation.

C. Each state agency, department and institution shall furnish to the legislative finance committee a copy of its appropriation request made to the department of finance and administration at the same time [such] the request is made [to such department]. Each state agency, department or institution shall also furnish to the legislative finance committee and its staff any other supporting information or data deemed necessary to carry out the purposes of this section.

D. The legislative finance committee or, when it deems necessary, its staff may hold such hearings and require such testimony from officers and employees of each state agency, department or institution as is necessary to carry out the purposes of this section.

E. Not later than the first week of any regular legislative session, the legislative finance committee shall furnish a document containing its budget recommendations to each member of the senate finance committee and the house appropriations and finance committee and to those other members of the legislature [which] who may request it. A copy shall also be furnished to the governor and to the department of finance and administration.

F. The legislative finance committee shall determine whether an agency rule constitutes a major rule pursuant to the Administrative Procedures Act, if requested by the president pro tempore of the senate, the speaker of the house of representatives or the chair or ranking minority member of any legislative committee with jurisdiction over the subject matter of the rule. The legislative finance committee shall:

(1) provide a rule impact analysis within fifteen days of submission of a major rule as determined pursuant to this subsection, which shall include:

(a) an impact analysis of any grants received from the federal government or from other sources external to state government when requested by the president pro tempore of the senate, the speaker of the house of representatives or any chair or ranking minority member of any legislative committee with jurisdiction over the subject matter of the grant;

(b) a statement of need;

(d) an examination of alternatives to the rule;

(e) an evaluation of the costs and benefits of the rule, which shall include an estimation of: 1) direct benefits of the rule; 2) cost savings or financial benefits to the public; 3) cost compliance for entities affected by the rule; 4) secondary or indirect costs; 5) effect on state revenue; 6) effect on state expenditures, including estimated administrative expenses; and 7) opportunity costs, including the opportunity cost of compliance as a result of any private capital from the market;

(f) the sources relied upon in conducting the rule impact analysis; and

(g) any key assumptions and sources of uncertainty;

(2) undertake such analysis during a legislative session, as necessary; and

(3) make each rule impact analysis publicly available and provide, at the end of each calendar year, the president pro tempore of the senate and the speaker of the house of representatives a report summarizing the rules evaluated in that year."

SECTION 2. Section 12-8-2 NMSA 1978 (being Laws 1969, Chapter 252, Section 2) is amended to read:

"12-8-2. DEFINITIONS.--As used in the Administrative Procedures Act:

A. "agency" means any state board, commission, department or officer that is authorized by law to make rules, conduct adjudicatory proceedings, make determinations, grant licenses, impose sanctions, grant or withhold relief or perform other actions or duties delegated by law and [which] that is specifically placed by law under the Administrative Procedures Act;

B. "adjudicatory proceeding" means a proceeding before an agency, including but not limited to ratemaking and licensing, in which legal rights, duties or privileges of a party are required by law to be determined by an agency after an opportunity for a trial-type hearing; but does not include a mere rulemaking proceeding as provided in Section [3 of the Administrative Procedures Act] 12-8-3 NMSA 1978. It also includes the formation and issuance of any order, the imposition or withholding of any sanction and the granting or withholding of any relief, as well as any of the foregoing types of determinations or actions wherein no procedure or hearing provision has been otherwise provided for or required by law;

C. "license" includes the whole or part of any agency permit, certificate, approval, registration, charter, membership, statutory exemption or other form of permission required by law;

D. "licensing" includes the agency process respecting the grant, denial, renewal, revocation, suspension, annulment, withdrawal, amendment, limiting, modifying or conditioning of a license;

E. "major rule" means a rule or an emergency rule that will result in or is likely to result in:

(1) an annual effect on the state of ten million dollars ($10,000,000) or more;

(2) costs to individuals or industries of ten million dollars ($10,000,000) or more;

(3) significant adverse effects on competition, employment, investment, productivity, innovation or individual industries or regions; and

(4) significant changes in social or cultural relations among citizens, including significant impact on religions and ethnic, racial or gender populations;

[E.] F. "party" means each person or agency named or admitted as a party or properly seeking and entitled as of right to be admitted as a party, whether for general or limited purposes;

[F.] G. "person" means any individual, partnership, corporation, association, governmental subdivision or public or private organization of any character other than an agency;

[G.] H. "rule" includes the whole or any part of every regulation, standard, statement or other requirement of general or particular application adopted by an agency to implement, interpret or prescribe law or policy enforced or administered by an agency, if the adoption or issuance of such rules is specifically authorized by the law giving the agency jurisdiction over such matters. It also includes any statement of procedure or practice requirements specifically authorized by the Administrative Procedures Act or other law, but it does not include:

(1) advisory rulings issued under Section [9 of the Administrative Procedures Act] 12-8-9 NMSA 1978;

(2) regulations concerning only the internal management or discipline of the adopting agency or any other agency and not affecting the rights of, or the procedures available to, the public or any person except an agency's members, officers or employees in their capacity as such member, officer or employee;

(3) regulations concerning only the management, confinement, discipline or release of inmates of state penal, correctional, public health or mental institutions;

(4) regulations relating to the use of highways or streets when the substance of the regulations is indicated to the public by means of signs or signals; or

(5) decisions issued or actions taken or denied in adjudicatory proceedings;

[H.] I. "rulemaking" means any agency process for the formation, amendment or repeal of a rule;

[I.] J. "order" means the whole or any part of the final or interim disposition, whether affirmative, negative, injunctive or declaratory in form, by an agency in any matter other than rulemaking but including licensing;

[J.] K. "sanction" includes the whole or part of any agency:

(1) prohibition, requirement, limitation or other condition affecting the freedom of any person or [his] the person's property;

(2) withholding of relief;

(3) imposition of any form of penalty;

(4) destruction, taking, seizure or withholding of property;

(5) assessment of damages, reimbursement, restitution, compensation, taxation, costs, charges or fees;

(6) requirement, revocation, amendment, limitation or suspension of a license; or

(7) taking or withholding of other compulsory, restrictive or discretionary action;

[K.] L. "relief" includes the whole or part of any agency:

(1) grant of money, assistance, license, authority, exemption, exception, privilege or remedy;

(2) recognition of any claim, right, interest, immunity, privilege, exemption or exception; or

(3) taking of any other action upon the application or petition of, and beneficial to, any person;

[L.] M. "agency proceedings" means any agency process in connection with rulemaking, orders, adjudication, licensing, imposition or withholding of sanctions or the granting or withholding of relief; and

[M.] N. "agency action" includes the whole or part of every agency rule, order, license, sanction or relief, or the equivalent or denial thereof, or failure to act."

SECTION 3. Section 12-8-4 NMSA 1978 (being Laws 1969, Chapter 252, Section 4) is amended to read:

"12-8-4. RULEMAKING PREREQUISITES.--

A. Prior to the adoption, amendment or repeal of any rule, the agency shall, within the time specified by law or, if no time is specified, then at least thirty days prior to its proposed action:

(1) publish notice of its proposed action in the manner specified by law or, if no manner is specified, then in newspapers or trade, industrial or professional publications as will reasonably give public notice to interested persons; [and]

(2) notify any person specified by law and, in addition, any person or group filing written request, the request to be renewed yearly as the agency directs by rule, for notice of proposed action which may affect that person or group, notification being by mail or otherwise to the last address specified by the person or group. The notice shall:

(a) give the time and place of any public hearing or state the manner in which data, views or arguments may be submitted to the agency by any interested person;

(b) either state the express terms or adequately describe the substance of the proposed action or adequately state the subjects and issues involved; and

(c) include any additional matter required by any law, together with specific reference to the statutory authority under which the rule is proposed; and

(3) afford all interested persons reasonable opportunity to submit data, views or arguments orally or in writing and examine witnesses, unless otherwise provided by law. If the agency finds that oral presentation is unnecessary or impracticable, it may require that presentation be made in writing. The agency shall consider fully all written and oral submissions respecting the proposed rule. Upon adoption of a rule contested at hearing or otherwise, the agency shall issue a concise statement of its principal reasons for adoption of the rule and a statement of positions rejected in adopting the rule together with the reasons for the rejections. All persons heard or represented at any hearing or who submit any writing to be considered in connection with the proposed rule shall promptly be given a copy of the decision, by mail or otherwise.

B. Subject to the exceptions of this section, a major rule shall not take effect before the legislature authorizes the major rule by law. A major rule may take effect no later than sixty days, if so specified in the proposed major rule and if such major rule was not disapproved by the legislature before its effective date. The legislative finance committee shall provide a report on each major rule to each chamber of the legislature by the end of the tenth regularly scheduled legislative day during a regular legislative session after the major rule's submission. The report shall include an assessment of the agency's compliance with the procedure required pursuant to Subsection B of Section 14-4-5.2 NMSA 1978.

[B.] C. If the agency finds that immediate adoption, amendment or suspension of a rule is necessary for the preservation of the public peace, health, safety or general welfare, or if the agency for good cause finds that observance of the requirements of notice and public hearing would be contrary to the public interest, the agency may dispense with such requirements and adopt, amend or suspend the rule as an emergency. The agency's finding and a brief statement of the reasons for its finding shall be incorporated in the emergency rule, amendment or suspension filed under Section [5 of the Administrative Procedures Act] 12-8-5 NMSA 1978. Upon adoption of an emergency rule, amendment or suspension which shall remain in effect for longer than sixty days, notice shall be given within seven days as required in this section for proposed rules.

D. A major rule may go into effect earlier than specified in Subsection B of this section if the governor publishes a statement with the rule:

(1) explaining why an emergency exists that requires an earlier effective date for the rule or why a federal requirement or federal funding requires an earlier effective date; and

(2) explaining why the issuance of the major rule otherwise complies with the emergency powers laws of this state or is otherwise required pursuant to federal law or for federal funding purposes.

E. A major rule promulgated pursuant to Subsection D of this section shall remain in effect until the succeeding regular legislative session, after which the rule shall expire unless the rule is authorized by law during that regular legislative session.

F. The adoption of any rule proposed by an agency shall be subject to the approval of the governor. An agency shall not submit for publication in the New Mexico register any required notice of adoption of a rule or the amendment of an existing rule without first receiving from and including a copy of the written approval of the adopted or amended rule from the governor."

SECTION 4. Section 12-8-8 NMSA 1978 (being Laws 1969, Chapter 252, Section 8) is amended to read:

"12-8-8. JUDICIAL REVIEW BY DECLARATORY JUDGMENT--GRANTING RELIEF NOT OTHERWISE PROVIDED FOR.--

A. Unless otherwise provided by law, the validity or applicability of a rule may be determined in an action for declaratory judgment in the district court of Santa Fe county if the rule, or its threatened application, interferes with or impairs, or threatens to interfere with or impair, the interests, rights or privileges of the plaintiff. Any representative association, including but not limited to trade associations, labor unions or professional organizations, may file the action if one or more of its members could qualify as a plaintiff. The agency shall be made a party to the action. A declaratory judgment may be rendered whether or not the plaintiff has requested the agency to pass upon the validity or applicability of the rule in question. The district court may determine whether an agency or the legislature has completed the necessary requirements for a rule to take effect, including de novo review of whether a rule is a major rule that requires delayed legislative consideration or approval by the legislature before it takes effect.

B. The district court of Santa Fe county may enter orders after reasonable notice and hearing upon any matter not otherwise provided for in the Administrative Procedures Act, including but not limited to procedural or substantive matters of law or equity. This right may be utilized at any stage of a proceeding, and failure to utilize the right until final decision, action or order shall not be deemed a waiver [thereof] of that right. If such questions are raised upon review or appeal in the court of appeals, the court of appeals may enter any orders which could have been entered by the district court.

C. Legislation authorizing the promulgation of a major rule pursuant to Section 12-8-4 NMSA 1978 shall not be interpreted to serve as a grant or modification of statutory authority by the legislature for the promulgation of a rule. The court shall not extinguish any substantive or procedural claim against any alleged defect in a rule on the basis of the rule's authorizing statute, and the authorizing statute shall not form part of the record before the court in any judicial proceeding concerning a rule except for purposes of determining whether or not the rule is in effect violating that statutory authority."

SECTION 5. Section 14-4-2 NMSA 1978 (being Laws 1967, Chapter 275, Section 2, as amended) is amended to read:

"14-4-2. DEFINITIONS.--As used in the State Rules Act:

A. "agency" means any agency, board, commission, department, institution or officer of the state government except the judicial and legislative branches of the state government;

B. "major rule" means a rule or an emergency rule that will result in or is likely to result in:

(1) an annual effect on the state of ten million dollars ($10,000,000) or more;

(2) costs to individuals or industries of ten million dollars ($10,000,000) or more;

(3) significant adverse effects on competition, employment, investment, productivity, innovation or individual industries or regions; and

(4) significant changes in social or cultural relations among citizens, including significant impact on religions and ethnic, racial or gender populations;

[B.] C. "person" includes individuals, associations, partnerships, companies, business trusts, political subdivisions and corporations;

[C.] D. "proceeding" means a formal agency process or procedure that is commenced or conducted pursuant to the State Rules Act;

[D.] E. "proposed rule" means a rule that is provided to the public by an agency for review and public comment prior to its adoption, amendment or repeal, and for which there is specific legal authority authorizing the proposed rule;

[E.] F. "provide to the public" means for an agency to distribute rulemaking information by:

(1) posting it on the agency website, if any;

(2) posting it on the sunshine portal;

(3) making it available in the agency's district, field and regional offices, if any;

(4) sending it by electronic mail to persons who have made a written request for notice from the agency of announcements addressing the subject of the rulemaking proceeding and who have provided an electronic mail address to the agency;

(5) sending it by electronic mail to persons who have participated in the rulemaking and who have provided an electronic mail address to the agency;

(6) sending written notice that includes, at a minimum, an internet and street address where the information may be found to persons who provide a postal address; and

(7) providing it to the New Mexico legislative council for distribution to appropriate interim and standing legislative committees;

[F.] G. "rule" means any rule, regulation or standard, including those that explicitly or implicitly implement or interpret a federal or state legal mandate or other applicable law and amendments thereto or repeals and renewals thereof, issued or promulgated by any agency and purporting to affect one or more agencies besides the agency issuing the rule or to affect persons not members or employees of the issuing agency, including affecting persons served by the agency. An order or decision or other document issued or promulgated in connection with the disposition of any case or agency decision upon a particular matter as applied to a specific set of facts shall not be deemed such a rule, nor shall it constitute specific adoption thereof by the agency. "Rule" does not include rules relating to the management, confinement, discipline or release of inmates of any penal or charitable institution, the New Mexico boys' school, the girls' welfare home or any hospital; rules made relating to the management of any particular educational institution, whether elementary or otherwise; or rules made relating to admissions, discipline, supervision, expulsion or graduation of students from any educational institution; and

[G.] H. "rulemaking" means the process for adoption of a new rule or the amendment, readoption or repeal of an existing rule."

SECTION 6. Section 14-4-5.2 NMSA 1978 (being Laws 2017, Chapter 137, Section 4) is amended to read:

"14-4-5.2. NOTICE OF PROPOSED RULEMAKING.--

A. Not later than thirty days before a public rule hearing, the agency proposing the rule shall provide to the public and publish in the New Mexico register a notice of proposed rulemaking. The notice shall include:

(1) a summary of the full text of the proposed rule;

(2) a short explanation of the purpose of the proposed rule;

(3) a citation to the specific legal authority authorizing the proposed rule and the adoption of the rule;

(4) information on how a copy of the full text of the proposed rule may be obtained;

(5) information on how a person may comment on the proposed rule, where comments will be received and when comments are due;

(6) information on where and when a public rule hearing will be held and how a person may participate in the hearing; [and]

(7) a citation to technical information, if any, that served as a basis for the proposed rule, and information on how the full text of the technical information may be obtained;

(8) a classification of a rule as a major rule or a rule that is not a major rule, including an explanation for why the rule is or is not a major rule;

(9) a list of any other proposed rulemaking intended to implement the same authorizing statute or other objective and individual and aggregate economic effects of those rulemaking actions; and

(10) the proposed effective date of the proposed rule.

B. On the date of submission of a notice pursuant to this section, the agency shall submit to the legislative finance committee and to each chamber of the legislature a cost-benefit analysis of the proposed rule, including an analysis of any employment positions added or lost, differentiating between public and private sector employment.

[B.] C. An agency may charge a reasonable fee for providing any records in nonelectronic form when provided to a person pursuant to this section. An agency shall not charge a fee for providing any records in electronic form when provided to a person pursuant to this section.

[C.] D. An internet link providing free access to the full text of the proposed rule shall be included on the notice of proposed rulemaking.

[D.] E. If the agency changes the date of the public rule hearing or the deadline for submitting comments as stated in the notice, the agency shall provide notice to the public of the change.

[E.] F. The state records administrator or the administrator's designee shall timely publish the notice of proposed rulemaking in the next publication of the New Mexico register."

SECTION 7. A new section of the State Rules Act is enacted to read:

"[NEW MATERIAL] AUTOMATIC RULE EXPIRATION--RULE RENEWAL BY LEGISLATIVE AUTHORIZATION.--

A. Except as otherwise provided by law, a rule or major rule adopted pursuant to the State Rules Act shall expire on January 1 of the fifth year after the rule takes effect, unless the rule expires or is repealed on an earlier date.

B. The legislature may authorize by law the renewal of a rule or a major rule. If the legislature does not renew a rule for an additional term of five years by law within sixty days of receiving an agency's review of the rule, the rule shall terminate. Nothing in this subsection shall preclude the legislature from repealing a rule prior to the expiration date of the rule.

C. An agency may request the renewal by the legislature of a rule subject to expiration. The request shall be submitted no more than two years prior to the expiration of the rule, shall demonstrate why the rule is required for another five years and shall include a cost-benefit analysis of the rule. The agency shall publish the request on its website at the time that the agency submits the request to the legislature.

D. The state records administrator shall provide notice to the promulgating agency at least eighteen months prior to a rule's expiration date."

SECTION 8. Section 14-4A-6 NMSA 1978 (being Laws 2005, Chapter 244, Section 6) is amended to read:

"14-4A-6. PERIODIC REVIEW OF RULES.--

A. By July 1, 2010, each agency shall have reviewed all of its rules that existed on the effective date of the Small Business Regulatory Relief Act to determine whether the rules should be continued without change or should be amended or repealed to minimize the economic impact of the rules on small businesses, subject to compliance with the stated objectives of the laws pursuant to which the rules were adopted.

B. Rules adopted and promulgated after [the effective date of the Small Business Regulatory Relief Act] July 1, 2005 shall be reviewed every five years to ensure that they continue to minimize economic impacts on small businesses while implementing the state objectives of the laws pursuant to which the rules were adopted.

C. In reviewing its rules to minimize economic impacts on small businesses, an agency shall consider the following factors:

(1) continued need for the rule;

(2) the nature of complaints or comments received from the public concerning the rule;

(3) the complexity of the rule;

(4) the extent to which the rule overlaps, duplicates or conflicts with other federal, state and local government rules; and

(5) the length of time since the rule has been evaluated or the degree to which technology, economic conditions or other factors have changed in the topical area affected by the rule.

D. After conducting a review pursuant to this section, an agency shall submit the agency's review findings to the legislature."

SECTION 9. TEMPORARY PROVISION--EXPIRATION OF EXISTING

RULES.--All existing rules adopted by state agencies pursuant to the State Rules Act shall be considered adopted on the effective date of this act.

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