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F I S C A L I M P A C T R E P O R T

SPONSOR Taylor

DATE TYPED 2/10/05

HB 705

SHORT TITLE Legislative Review of State Rules

SB

ANALYST Hanika-Ortiz

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative Recurring General Fund

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Environment Department (NMED)

Energy, Minerals and Natural Resources Department (EMNRD)

Public Education Department (PED)

Supreme Court Law Library

SUMMARY

Synopsis of Bill

House Bill 705 requires that rules proposed by executive agencies must be filed with the Legisla-

tive Council Service (LCS) prior to any public hearing conducted by the agency. The proposed

rules will be forwarded to the members of the appropriate interim committee or, if no committee

has been designated, the Legislative Council. The Legislative Council Director or a committee

member may then request a public hearing before the interim committee within 30 days of the

filing of the rule; the hearing must be held within 60 days of the request. The proposed rule

would not become effective until after the hearing is held. HB 705 excepts agencies subject to

the Uniform Licensing Act, provides for emergency rules that may take effect without a legisla-

tive hearing and contains a savings clause addressing existing rules filed prior to July 2, 2005.

Significant Issues

The NMED has the following comments:

The standards as codified by rule that protect New Mexico and its citizens are directed by the

House Bill 705-- Page 2

legislature to be established primarily by rule and regulation. Rule-making authority is gen-

erally vested in various bodies established by statute (e.g., boards and commissions) or in an

executive agency (e.g., the Department of Health or the State Engineer). The NMED is not

aware of any rules or regulations in state government that are subject to a legislative hearing

before becoming effective. By requiring such hearings, HB 705 may be contrary to Article

III, Section I of the New Mexico Constitution, regarding the separation of powers of gov-

ernment.

The statutes that set up New Mexico’s rule-making framework consider that public participa-

tion is a crucial component of effective rules. The legislature required that each rule-making

body provide ample public notice for each hearing, whether it is to adopt rules, hear appeals

of permit decisions, or gather information the body deems of interest. The notices must be

placed in newspapers of wide circulation as well as those that are local to the issue at hand.

The statutes also consider that many rules can be exceedingly complex and detailed. For ex-

ample, although the Water Quality Control Commission (WQCC) has had but three rule-

making hearings in the past two years, two of these hearings lasted more than seven days

each. The EIB has held 18 rule-making hearings in the same two years, several of which

were multi-day hearings due not just to the complexity of the subject but also to the level of

interest from the public. The executive agencies are constituent agencies of the boards and

commissions which are comprised of individuals with some expertise in the realm of busi-

ness, environment, or science, and can therefore digest the considerable amount of technical

information needed to make informed decisions about rule adoptions.

While many state regulations are adopted by boards or commissions, all require public hear-

ing that are widely noticed. Currently, interim legislative committees (e.g., the legislative in-

terim Radioactive and Hazardous Materials Committee) routinely hold public hearings on

environmental issues of their choosing, including matters subject to rule-making. As the leg-

islative branch already has this authority vested in it, no additional oversight is needed or ap-

propriate. To put this concept into law may subject the practice to scrutiny as an unconstitu-

tional impingement on the separation of powers between the legislative and executive

branches of government.

PERFORMANCE IMPLICATIONS

The Supreme Court Law Library reports it is not a completely settled area of law; arguments

could be made both contesting and affirming the validity of this proposed law. They further be-

lieve there may be a constitutional issue, and the Act may be challenged all the way up through

the Supreme Court.

The EMNRD reports if SB 705 grants any control over rulemaking to the LCS or the Interim

Committee, it will impede efforts of the affected agencies to carry our their statutory duties. If

the LCS and interim committee do not have control over rulemaking, HB 705 creates a duplica-

tion of effort by requiring two public hearings, with one of those hearings before a body that has

no authority to act.

Agencies are concerned the review process described in HB 705 may add delay, conflict and

confusion to the rule making process that now exists. Further concerns are costs associated with

duplicate hearings in terms of agency budget, resources, staff time, and meeting performance tar-

House Bill 705-- Page 3

targets.

FISCAL IMPLICATIONS

EMNRD reports HB 705 will create additional work for the LCS or interim committees to su-

pervise rulemaking, and it makes no appropriation to the affected agencies that might be required

to double their workload in rulemaking proceedings. NMED reports agencies are budgeted for

conducting rulemaking hearings once, and lack the budget to conduct hearings twice.

ADMINISTRATIVE IMPLICATIONS

The PED reports HB 705 will substantially lengthen the time necessary to promulgate a non-

emergency rule. They believe this may impede the ability of an agency to operate pursuant to

needed changes in rules and may ultimately be a public detriment.

The Supreme Court Law Library reports between 600 and 1600 rules being filed a year. The Su-

preme Court Law Library say there are no administrative implications for the judiciary, as this

bill primarily amends the State Rules Act, from which the judiciary is exempt.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

In conflict or duplicates HB 574, Legislative Hearing on Certain Rules, enacts a requirement that

any rule proposed by the State Engineer, Environmental Improvement Board, Water Quality

Control Commission, Oil Conservation Commission (if the rule would regulate statewide or ba-

sin-wide oil and gas activities) must be reviewed before the appropriate interim committee of the

New Mexico Legislative Council as specified. HB 574 also differs in that the hearing before the

Legislative Council or the interim committee is automatic; under HB 705 hearings are held upon

request by a legislator or the director of the legislative council.

Conflicts with HB 35 which seeks to eliminate duplicate hearings in front of the WQCC.

EMNRD says to the extent HB 705 gives control over rulemaking to the LCS or interim commit-

tee, in conflicts with New Mexico statutes granting rulemaking and enforcement authority to af-

fected agencies.

TECHNICAL ISSUES

The NMED says HB 705 provides no guidance to the LCS or interim committees concerning

procedures for public notice and participation. In contrast to the Environmental Improvement

Act, no guidance is given with respect to factors they must consider in approving or disapproving

rules. HB 705 also provides no guidance as to any action the legislature may take with respect to

a rule adoption, or what would happen if the legislature disagreed with the proposed rule.

The Supreme Court Law Library provides the following comments:

I.N.S. v. Chadha, (1983) held that legislative action with regard to executive function was

unconstitutional. There are over 60 cases that have followed the Chadha reasoning, and less than

20 which have distinguished their factual patterns so as to make it inapplicable.

Section 2 of the bill creates a new section of the State Rules Act with subsection B say-

House Bill 705-- Page 4

ing, “Concurrently with the publication of a proposed rule.” Currently most agencies are not re-

quired to publish their proposed rules. The PED reports executive branch agencies publish no-

tices of proposed rulemaking in the State Registrar and in a newspaper of general circulation.

OTHER SUBSTANTIVE ISSUES

The PED has the following comments:

Currently, executive branch agencies must publish the notice of proposed rulemaking in a

newspaper of general circulation at least 30 days prior to the hearing date and must mail

the notice hearing to all persons who have made a written request for advance notice of

hearing at least 30 days prior to the hearing. HB 705, if enacted, will afford legislators 30

days from receiving notice of the proposed rulemaking action to request a legislative

hearing, which must be held within 60 days of the request and which would be in addi-

tion to the public hearing conducted by the agency. This provision has the potential to

add 60 days to the rulemaking process.

HB 705 requires a legislative hearing; it does not, however, address the role of the com-

mittee beyond hearing the matter. If the Legislature assumes approval or veto authority

over the proposed rulemaking, the matter would require action of the full Legislature in

accordance with the constitutional process for enacting laws. This would effectively ne-

gate any legislative delegation of rulemaking authority to an agency that is the subject of

this bill.

The EMNRD has the following comments:

As written, the bill does not give the LCS or interim committee any power over the rule-

making; it just provides for a public hearing before one of those bodies. Therefore, the

bill creates a time-consuming and unnecessary layer of review. The agency promulgating

the rule must hold a public hearing. If the LCS or interim committee wishes to monitor

rulemaking, it can do so under current procedures by attending and participating in the

agency’s public hearing, or by reviewing the transcripts or minutes.

If HB 705 is interpreted to give the LCS or interim committee the power to reject or

amend rules, that will violate the separation of powers doctrine by giving a legislative

committee control over an executive agency. The affected agencies were created by the

legislature and delegated the power to adopt and enforce rules. Although the legislature

has the power to revoke or expand that authority (within constitutional limits), whether

the agency is exercising that authority correctly in a particular proceeding is a matter for

the judicial branch to decide.

The NMED has the following comments:

HB705 is inconsistent with the direction being taken in other legislation to reduce the

cost and burden of administrative hearings for the agency, the regulated community, and

the interested public. HB35 addresses duplicative hearings under the Water Quality Act.

Mandatory hearings are required under the Solid Waste Act, although these are not ad-

dressed in HB35. The Governor’s Performance Review identified both, however, as un-

necessary and costly wastes of taxpayer money. The trend in New Mexico is to stream-

House Bill 705-- Page 5

line government, not add additional layers of bureaucracy that could impede economic

development.

EPA requires that certain rules be promulgated by states in order to maintain primacy.

HB 705 could jeopardize primacy in air, surface water permitting, underground storage

tanks, hazardous waste, and drinking water if rulemaking is delayed or disapproved by

the legislature for political reasons.

ALTERNATIVES

The Supreme Court Law Library suggests the legislature could make the Administrative Proce-

dures Act applicable to state agencies. This would make proposed rules accessible to all New

Mexicans via the NM Register. Then without any further legislation, any interim committee

could request “on their own” a public hearing on the topic, not on the rule, or individual mem-

bers could attend the agency’s public hearing.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The current rulemaking requirement with respect to notice and hearing will remain in effect.

AHO/yr