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 BiMetallic 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, Raymond.Pepe@KLGates.com. 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.
1
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
5
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.
3.
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.)
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
8
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.
D.
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.
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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E.
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).
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).
10
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
11
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
12
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
13
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
14
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
15
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
16
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
17
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).
e.
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).
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
18
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.”.
19
b.
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.”
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
20
statute while the instructions provide guidance for abiding by the statutory
requirement).
3.
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).
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).
21
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.
22
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.
3.
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.
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 “wellrecognized 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
23
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.
24
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.
25
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
26
C.

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.
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
27
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
28
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 caseby-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
29
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
30
added additional beds to their facilities, but would consider on a case-bycase 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
31
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.
32
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
33
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.
D.
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.”
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
34
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.
35