In May, I wrote about a rare bird – a request by a legislative committee for priority review of a regulation by the Office of Administrative Law. See “Not As Rare As An Ivory-Billed Woodpecker, But Still A Rara Avis“. Recently, the OAL completed its review and issued its decision.
Recall that the OAL does not review regulations from a policy perspective. It doesn’t pass judgment on whether a state agency’s rule is a good idea. Rather, the OAL’s review is confined to six statutory standards – Necessity Authority, Clarity, Consistency, Reference, and Nonduplication. Cal. Govt. Code § 11349.1(a). These standards may be far less interesting than the agency’s fundamental policy choices but meeting these standards is absolutely crucial to determining whether a rule can be adopted.
Typically, the OAL applies these standards when a state agency proposes the adoption of a rule. Id. In this case, the OAL reviewed an existing regulation. Because the regulation doesn’t have anything to do with corporate or securities law, I won’t describe it further. The interesting point is that in this case the OAL decided that this regulation failed to meet the necessity standard. The Administrative Procedure Act defines “necessity” as meaning that ”the record of the rulemaking proceeding demonstrates by substantial evidence the need for a regulation to effectuate the purpose of the statute, court decision, or other provision of law that the regulation implements, interprets, or makes specific, taking into account the totality of the record.” Cal. Govt. Code § 11349(a). For purposes of this standard, evidence includes, but is not limited to, facts, studies, and expert opinion.
Because the OAL determined that the agency had failed to meet the necessity standard, it issued an order to show cause why the regulation should not be repealed. The agency has sixty days to respond and interested parties may submit comments to the OAL within 30 days of publication of the order to show cause.