Underground Regulations

If a state agency issues, enforces, or attempts to enforce a rule without following the Administrative Procedure Act (APA) when it is required to for purposes of formulating that rule, the rule is called an “underground regulation.” State agencies are prohibited from enforcing underground regulations.

Cappadocia - Kaymakli Underground City

Cappadocia – Kaymakli Underground City

What is a Regulation?

A regulation is defined in Government Code section 11342.600:

Regulation means every rule, regulation, order, or standard of general application or the amendment, supplement, or revision of any rule, regulation, order, or  standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it, or to govern its procedure.

State agencies, with few exceptions, are required to adopt regulations following the procedures established in the APA:

  • Compliance with the rule making requirements of the APA is mandatory.
  • All regulations are subject to the APA, unless expressly exempted by statute.
  • Any doubt as to the applicability of the APA should be resolved in favor of the APA.
  • If a rule looks like a regulation, reads like a regulation, and acts like a regulation, it will be treated by the courts as a regulation whether or not the issuing agency so labeled it.

Regulation Required?

Keep in mind that not every statute requires the adoption of an implementing regulation. In this regard, it is useful to think about three types of statutory provisions: self-executing; wholly-enabling; susceptible to interpretation.

  1. A self-executing provision is so specific that no implementing or interpreting regulation is necessary to give it effect. An example is a statutory provision that provides: “The annual licensing fee is $500.”
  2. In contrast, a wholly-enabling statutory provision is one that has no legal effect without the enactment of a regulation. An example is a statute that provides: “The department may set an annual licensing fee up to $500.” This type of statute cannot be legally enforced without a regulation setting the fee.
  3. The third type, a statutory provision that is susceptible to interpretation, may be enforced without a regulation, but may need a regulation for its efficient enforcement. An example is a statute that provides: “There shall be adequate space between hospital beds.” Conceptually, this statute could be enforced on a case-by-case basis, but such enforcement would probably present significant difficulties. Please note that it does not violate the APA to enforce or administer a statute on a case-by-case basis so long as no rule or standard of general application is used that should have been adopted pursuant to the APA.

Determine Whether APA Was Violated

The first step to determine whether the APA was violated is to research whether the particular policy or procedure has already been set out in an applicable statute or duly adopted regulation. Generally, duly adopted regulations are printed in the California Code of Regulations. The adoption of a policy or procedure as a “regulation” pursuant to the APA is not required if you find the specific policy or procedure in an applicable statute or duly adopted regulation.
If you determine that the policy or procedure (i.e., rule) is not set out in an applicable statute or duly adopted regulation, use the following three-step analysis to determine whether the policy or procedure must be adopted as a regulation pursuant to the requirements and procedures of the APA:

  1. First, is the policy or procedure either:
    • a rule or standard of general application, or
    • a modification or supplement to such a rule?
  2. Second, has the policy or procedure been adopted by the agency to either:
    • implement, interpret, or make specific the law enforced or
      administered by the agency, or
    • govern the agency’s procedure?
  3. Third, has the policy or procedure been expressly exempted by statute from the requirement that it be adopted as a “regulation” pursuant to the APA?

If the policy or procedure satisfies steps one and two, then it is a “regulation” as defined in the APA and must be adopted pursuant to the APA unless it falls within an express statutory exemption from the requirements of the APA.

How to Challenge an Underground Regulation

If you feel that a state agency is enforcing an underground regulation, you may submit a petition to the Office of Administrative Law (OAL) asking it to determine whether or not the agency is complying with section 11340.5 of the Government Code.
Once OAL receives the petition, it evaluates it and contacts the agency involved. It may contact the petitioner for additional information, if necessary.
If OAL accepts the petition, it will issue a written opinion as to whether the rule is or is not an underground regulation. In the alternative, it may also try to resolve the matter without issuing a formal opinion, perhaps by obtaining the agency’s agreement to change its practices or to adopt the disputed rule through formal rulemaking.
If it pursues a formal opinion, the state agency that is the subject of your petition has 45 days from the date of publication in the California Regulatory Notice Register (CRNR) to provide a formal response, if it chooses to do so. The petitioner will then have 15 days to file a rebuttal to the agency’s response. Members of the public also may submit comments to OAL on the issue.
OAL will review and consider the material submitted with the petition, along with information provided by the agency and the public or other information discovered during our review of the issue. Our decision will be made within 120 days after publication of the petition in the CRNR. We will send a copy of our decision to you and the state agency and we will publish it in the CRNR.
OAL may also decide not to accept the petition. If so, this has no legal significance. A decision not to accept a petition does not imply that the petition lacks merit. It may mean nothing more than that OAL does not have adequate staff to respond to the petition within the time limits set by our regulations.
Please keep in mind that a decision by OAL is not required before you may challenge the rule in court. First and foremost, OAL will not consider a petition regarding a matter that is already pending in court. So, petitioning at that point is too late. And even if you have not yet filed a lawsuit, whether or not you seek an opinion from OAL is entirely optional. Specifically, going to the OAL is not considered an “exhaustion of administrative remedies,” a legal term meaning you have tried all administrative ways to resolve the issue.
If you think that litigation is inevitable, the time and expense associated with filing a petition with OAL may not be useful.