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

SPONSOR Foley

ORIGINAL DATE

LAST UPDATED

02/01/08

HJR 12

SHORT TITLE Legislative Review of Regulatory Rules, CA

SB

ANALYST Escudero

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

DUPLICATES: SJR 7 & Portions of HJR 12 duplicate SJR 5.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Health Policy Commission (HPC)

Energy, Mineral & Natural Resources Department (EMNRD)

Public Education Department (PED)

Department of Environment Information Technology (DEIT)

SUMMARY

Synopsis of Bill

House Joint Resolution 12 would submit to the public, at the next general election or any special

election prior to that date, a proposed amendment to Article IV of the New Mexico Constitution.

That amendment, if approved, would allow the Legislature to, by law, prohibit regulatory rules

proposed by an agency or officer of the executive branch from taking effect until the proposed

rules were reviewed and approved by the appropriate interim or standing committees of the

Legislature.

The amendment, if approved, would further allow the Legislature to, by law, empower the

appropriate interim or standing committee to review a regulatory rule that has been adopted by

an agency or officer of the executive branch and to annul the rule if the committee finds that the

agency or officer of the executive branch was not authorized to adopt the rule

.

House Joint Resolution 12 – Page

2

FISCAL IMPLICATIONS

None to the Public Education Department (PED).

As stated by HPC, fiscal implications would depend on the nature of the regulations, the general

fund may be impacted if the regulations proposed have revenue generating intent and are delayed

by having the legislative review.

As stated by EMNRD, this point, the fiscal impacts of this Constitutional amendment can not be

determined. If the amendment passes and the legislature decide to act, the implementing

legislation will determine which agencies are covered and how the process will unfold.

As stated by DEIT, it is not possible at this time to quantify the fiscal implications House Joint

Resolution 12 would have on the Environment Department. However, if a regulation was stayed

until the Legislature could review and approve the rule or it was or annulled, there could be

severe impacts on the Department. The impacts include the potential withdrawal of federal

funding for projects that require rule revision, a hiring freeze for positions created or dissolved

through a regulation and increased employee time spent promoting the regulation to the

legislative committee after board or commission promulgation.

SIGNIFICANT ISSUES

According to PED, as this is a resolution to submit a proposed amendment to the New Mexico

Constitution at the next general or special election, the proposed change could only take effect if

the public voted in favor of it. Should the amendment be voted for in the affirmative, yet another

layer of bureaucracy would be added to the rulemaking process, resulting in a much lengthier

and more cumbersome process. Such an amendment would be inconsistent with the Executive

Reorganization Act, which authorizes cabinet secretaries to “…make and adopt such reasonable

and procedural rules and regulations as may be necessary to carry out the duties of the

department and its divisions." Moreover, such an amendment would implicate Article III,

Section 1 of the New Mexico Constitution relative to the separation of powers between the

executive, judicial and legislative branches of government.

Essentially, the proposed amendment would permit the Legislature to “micromanage" the

rulemaking authority of the state’s executive agencies. For the most part, rules could not be

adopted without legislative approval. Such a scheme is inefficient.

See e.g. I.N.S. v. Chadha, 462 U.S. 919, 954 (1983)(providing that executive action under

legislatively delegated authority that might resemble “legislative" action in some respects is not

subject to the approval of the Houses of Congress and the President

).

House Joint Resolution 12 is almost identical to SJR 5 with the exception of the inclusion of

paragraph B. Paragraph B on page 2 of House Joint Resolution 12 empowers an interim or

standing committee to annul a rule if it finds that the agency or officer of the executive branch

was not “authorized" to adopt the rule. It is unclear what “authorized" means in this context. It

is unclear whether an agency would be “authorized" only if it is specifically contemplated in

written statute or whether an agency would be “authorized" if an interim or standing committee

approved the rule prior to adoption. This provision clearly usurps the power of the judiciary

branch of government, resulting in the bill again implicating Article III, Section 1 of the New

House Joint Resolution 12 – Page

3

Mexico Constitution relative to separation of powers.

Paragraph B of House Joint Resolution 12 allows the interim or standing committees to

unilaterally annul existing rules if the committee found the rules were not “authorized". Such a

provision may allow interim or standing committees to undo existing regulatory rules.

According to EMNRD, House Joint Resolution 12 represents a fundamental change in the New

Mexico Constitution by allowing the legislature to review rules proposed by the Executive

Branch.

Under Article III, section 1 of the Constitution, New Mexico has always recognized and enforced

a strict separation of powers among the 3 branches of government:

The powers of the government of this state are divided into three distinct

departments, the legislative, executive and judicial, and no person or collection of

persons charged with the exercise of powers properly belonging to one of these

departments, shall exercise any powers properly belonging to either of the others,

except as in this constitution otherwise expressly directed or permitted.

This provision “generally bars one branch of government from performing a function reserved

for another branch of government". Old Abe Co. v. N.M. Mining Comm’n, 121 N.M. 83, 94 (Ct.

App. 1995). The power to adopt rules is housed in the Executive Branch. An Executive Branch

agency or official is granted powers to adopt specific rules by the legislature. After a public

process and based on a record, the agency or official adopts the rules which are then subject to

review by the Judicial Branch. The courts may overturn a rule if it conflicts with Legislative

laws, if the agency failed to follow the laws for adopting the rule or if the agency’s action is

arbitrary, capricious or not supported by the agency record.

If the amendment is adopted and the legislature inserts itself into the rulemaking process, the

roles of the other branches are diminished and perhaps rendered meaningless. If the legislature

or a legislative committee, can reject or modify a proposed rule for whatever reason, then the

process by which the agency obtains public comment on a rule and reaches a decision based on a

record becomes moot. Likewise, the role of the Judicial Branch becomes confused or perhaps

impossible if the legislature changes or rejects a rule. The courts will have no record and no

standard against which to judge the legislature’s decision on the rule. Thus, the legislature will

have usurped the power of the both the Executive and the Judicial Branches

PERFORMANCE IMPLICATIONS

This bill does not implement or support the PED’s core performance measures and benchmarks.

According to EMNRD, if the amendment passes, and if the legislature covers EMNRD rules in

the implementing legislation, the agency will experience significant delays in completing

rulemaking. Legislative committees, including interim committees, meet infrequently and not at

all during certain times of the year. Many rules adopted by EMNRD are required by federal

law, and compliance with federal requirements, including funding requirements, may be

impacted by delays.

House Joint Resolution 12 – Page

4

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

According to PED, HJR 12 duplicates SJR 7.

Portions of HJR 12 duplicate SJR 5. HJR 12 adds paragraph B, which empowers interim or

standing committees of the Legislature to review a rule adopted by an agency and to annul the

rule if the agency was not authorized to adopt the rule.

OTHER SUBSTANTIVE ISSUES

According to EMNRD, this fundamental change in rulemaking process may also create

significant fairness issues. Controversial rulemaking proceedings often involve two or more

competing interest groups seeking to have their concerns reflected in the final rule. Under the

current process, these groups participate in the administrative rulemaking and submit evidence

and testimony which becomes part of the record. If the legislature adopts a review and approval

process, then either some group will get two “bites at the apple", or some groups may decide to

bypass the administrative process and go directly to the Legislature. The agencies will be left

with an incomplete record if groups ignore their process.

Another fairness issue relates to judicial appeals. If the agency makes a decision on a rule, a

party may challenge that decision in court on various grounds including lack of substantial

evidence in the record, arbitrary or capricious actions or conflict with law. If the Legislature

changes a rule to benefit one interest, the other interest groups will have little or no recourse to

the courts to challenge the legislature. There will be no record to review and no standard to

apply.

Finally, an agency is generally prohibited from having “ex parte" contacts with the parties and

must make its decision on a record that all parties can contribute to, and can later use to

challenge the decision. The legislature allows lobbying and ex parte contacts and has no record

on which it must base

its decision.

According to HPC,

HJR 12 is a change in the rulemaking process. The Legislature is lobbied,

but boards and commissions are quasi-judicial in nature and ex parte contacts are prohibited.

The decision made by boards and commissions must be made on the evidence in the record, not

from ex parte contacts. This is another reason for the separation of powers between the branches

of government.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

As stated by DEIT, the consequences of not enacting HJR 12 would mean there would be no

delays in administrative rulemaking and the powers of legislative, judicial and executive

branches of government remain separate. Environmental rulemaking occurs within a structure

that requires commission or board approval and public participation remains within the confines

of the Separation of Powers clause of the New Mexico Constitution.

PME/nt