What is a rulemaking: Rulemaking refers to the process of adopting final rules, as well the document that an agency files with the Arizona Secretary of State (SOS) to update the agency’s rules in the Arizona Administrative Code (A.A.C.). Rulemakings are governed by the Administrative Procedure Act (APA), Council rules, and SOS rules and guidelines.
Who files rulemakings with the Council: Most agencies are subject to the APA, and those agencies must follow the applicable rulemaking procedures in A.R.S. § 41-1001 et seq. However, some agencies are exempt from the APA by law and do not need to seek Council approval before filing final rulemakings with the SOS. In addition, legislation may exempt a specific rulemaking from the requirements of the APA.
How rulemakings are completed: The process for completing a rulemaking can vary depending on the rulemaking procedure selected by the agency, the type of agency, or specific session law instructions. However, most agencies complete the following steps:
1. The agency determines that it needs to complete a rulemaking action to address issues with rules, and is not entirely exempt or specifically exempted from the rulemaking moratorium based on the language in Executive Order 2016-03 (“moratorium”).
2. If the agency is not exempt from the moratorium, the agency must request an exception from the Governor’s Office before beginning the rulemaking process.
3. If the agency has authority to begin the rulemaking process, the agency files a Notice of Rulemaking Docket Opening (NDO) with the SOS. The NDO is published in the Arizona Administrative Register (Register) in order to provide an initial notice to the public that the agency plans to make changes to its rules. The information contained in the NDO is required by A.R.S. § 41-1021(C).
4. An agency will typically, but is not required to, have a period of informal stakeholder input. This period provides the agency with the opportunity to circulate the proposed version of the rule(s) to parties that may be affected by the rulemaking action. This stakeholder process is designed to garner input, and prompt changes to the rule(s) as needed.
5. The agency will file a Notice of Proposed Rulemaking (NPR) with the SOS. Under A.R.S. § 41-1021(A), agencies have one (1) year from the time the NDO is published in the Register to either terminate the rulemaking proceeding or file an NPR. The NPR is the beginning of a formal stakeholder process outlined in law. The NPR provides notice to the public that they may submit written comments to the agency about the proposed changes to the rules. A.R.S. § 41-1023(B) requires the agency to accept comments on the rule for at least 30 days before the agency closes the record. During that 30-day period, the public may also request an oral proceeding, to provide the agency with oral comments. Most agencies schedule an oral proceeding in the NPR to avoid the need to publish a separate Notice of Oral Proceeding.
6. After gathering stakeholder and interested public comments, the agency may decide to make additional changes to the rule(s). However, if those changes are a substantial, substantive change from the rule(s) as published in the NPR, the agency is required, under A.R.S. § 41-1025, to file a Notice of Supplemental Proposed Rulemaking (NSPR). An NSPR requires the record to be opened for an additional 30-day comment period before the close of record.
7. Within 120 days after the close of record, and within one (1) year from the publication of the NPR or NSPR, the agency must file a Notice of Final Rulemaking (NFR) with the Council. See A.R.S. §§ 41-1024(B) and 41-1021(A)(4), respectively. The NFR must comply with the SOS rulemaking requirements, as well as requirements contained in A.R.S. § 41-1024(E).
8. Council staff reviews and analyzes the cover letter, NFR, Economic Impact Statement (EIS), and works with the agency to make necessary changes (if any). The cover letter, NFR, EIS, and staff memoranda regarding the rulemaking are provided to the Council.
9. The Council must review and approve or return the NFR within 120 days of receipt. A.R.S. § 41-1052(C).
10. After the Council has approved the rulemaking, the NFR and EIS must be filed with the SOS. In accordance with law, the rules will become effective 60 days after the date of filing with the SOS. An agency may petition Council for an immediate or later effective date by demonstrating compliance with the applicable requirements of A.R.S. § 41-1032.
Why rules and rulemakings are necessary: Rulemaking authority must be specifically granted by the legislature, and provide specific substantive and procedural requirements based on legislative mandates in statute. “The primary purpose of rule-making is to give notice to the public of the substantive and procedural requirements that an agency has established for activities falling within its statutory authority.” See Arizona Attorney General Agency Handbook, Chapters 11-12. No rules are permitted by law that exceed statutory or constitutional authority. Council has a central responsibility to ensure that rulemakings are authorized and do not exceed the agencies authority.
An agency can create substantive policy statements to explain how the agency will enforce a rule, but the substantive policy statement itself cannot be enforced on the general public. See A.R.S. § 41-1033. Rules are generally favored over substantive policy statements, as the rulemaking process in the APA provides a formal avenue for public participation through the notice and comment process. Although an agency is required to give notice of, and post, substantive policy statements online, such statements may be drafted and posted without prior input from stakeholders or the public.
Why rulemakings are submitted to, and heard by, the Council: Agencies are required to submit rulemakings pursuant to the APA and A.A.C. R1-6-201 by filing paper and electronic copies of the items contained in A.A.C. R1-6-201(A). Agencies must also file supplemental documentation pursuant to A.A.C. R1-6-201(B).
Once a rulemaking is submitted to the Council, staff places details of the rulemaking on its “In-House Agenda” which is posted on the Council’s website to provide further notice to the public that they may comment to the Council on the rules pursuant to A.R.S. § 41-1052(I). Similarly, the rulemaking will be added to the agenda open at the time of submission to the Council based on the “GRRC Calendar.” According to office procedure, staff will log receipt of the rulemaking, determine whether the submission meets the requirements of A.A.C. R1-6-201, and assign the rulemaking to a staff attorney and economist for review.