HD51 - Review of Virginia's Administrative Process Act

  • Published: 1993
  • Author: Joint Legislative Audit and Review Commission
  • Enabling Authority: House Joint Resolution 397 (Regular Session, 1991)

Executive Summary:
Administrative process acts are developed to deal with the practical need of delegating certain law-making authority to administrative agency expertise, while structuring the exercise of that authority. The required structure or process is to serve as a substitute for detailed substantive guidance from the legislature, allow for public input into agency decisions, and thereby help legitimize the resulting regulation.

The Virginia Administrative Process Act (VAPA) is the act which generally governs the regulatory proceedings of State agencies. The Act applies to agency rulemaking and case decision processes. Rulemaking is the process by which an agency develops, receives input on, and promulgates a regulation. Case decisions occur when a regulation is applied to individual cases, such as the granting or revoking of a license or permit. VAPA provides for public participation in the regulatory process, as well as certain forms of executive, legislative, and judicial review of agency actions.

JLARC staff were directed by House Joint Resolution 397 of the 1991 Session to study whether amendments to VAPA are necessary. Specific issues raised in the study mandate include the efficiency and effectiveness of the Act, and the meaningfulness of public participation in the regulatory process.

There are two major findings of this report. First, VAPA does not appear to place an undue burden on agencies, and could be strengthened to meet certain objectives. Second, there have been compliance problems in meeting existing requirements that appear to be due to a lack of knowledge, priority, or effort rather than to any unreasonableness of the requirements.

VAPA provides a great deal of agency discretion over regulatory matters, including the conduct of the process to promulgate the regulations. A reason for a degree of caution in restricting agency discretion is that some restrictions could impair administrative efficiency. However, there are areas in which too much agency discretion or compliance problems can negatively impact the achievement of other important goals, such as overall effectiveness, public participation, and fairness.

This report summary highlights some of the key ways in which agencies currently exercise high levels of discretion that appear to be problematic. The General Assembly may be interested in modifying the current level of discretion to achieve various objectives.

Executive Order Published Only Recently

Agencies have a greater degree of discretion if they are not compelled to comply with existing VAPA requirements. The Governor is required by VAPA to have an executive order for the review of regulations. An executive order was published on November 30, 1992 - three years into the administration. Some agencies indicate that they were following the terms of the previous administration's executive order.

The lack of an executive order may contribute to confusion and a lack of compliance in meeting VAPA requirements among agencies. For example, timeframe and publication requirements of VAPA are not always met. Also, agencies seldom provide estimates of the impact of their regulations as required by VAPA (see figure on page ii of the report). There is no question that for many proposed regulations, it is difficult to provide an accurate estimate. However, in many cases, it does not appear that agencies are making a good faith effort to provide the required information.

Recommendation. The administration should review its work processes for the review of regulations, to ensure uniform compliance with the Administrative Process Act. Consideration should be given to designating one staff person in the Governor's office, the administrative secretariat, or the Department of Planning and Budget to oversee agency compliance with the Administrative Process Act.

Recommendation. Agencies should submit proposed regulation submission packages that include the estimated impact "with respect to the number of persons affected and the projected cost for the implementation and compliance thereof," as required by VAPA.

VAPA Frequently Does Not Apply

VAPA's ability to dictate the process to be used to promulgate regulations is reduced by the use of exemptions to its provisions. There are instances where exemptions are justified. However, JLARC analysis of 1990-91 data indicates that VAPA applied to only a minority of regulations (see figure, top of page iii of the report).

Areas of concern with regard to VAPA exemptions include total agency exemptions and the high usage of emergency regulations. The granting of total agency exemptions is discouraged by APA literature because blanket exemptions can be overly broad, and this appears to be the case with some of Virginia's total exemptions. Emergency regulations in Virginia are overused. In 1990-91, the ratio of VAPA regulations to emergency regulations was only 1.6 to 1.

Recommendation. The General Assembly may wish to consider eliminating or further restricting the use of total agency exemptions, and limiting the use of the emergency regulation process to situations with imminent danger to public health or safety.

VAPA Requirements Are Limited

Although regulations take an average of about 12.7 months to develop and promulgate, the key procedural requirements of VAPA are fair1y limited in scope and appear reasonable. For example, as shown in the figure (lower right corner on page iii of the report), VAPA requirements govern about one-third of average rulemaking time; almost two-thirds of average rulemaking time is accounted for by other factors, such as the time required by the agency to develop the regulation. Some of the burden associated with VAPA may be due to paperwork and other concerns surrounding the transmittal of documents that are part of the process, and lead times for publication. Efficiency goals for rulemaking might be promoted if some of the paperwork and publication lead times could be reduced, but this is a technical matter and not a flaw in VAPA itself. Efficiency goals could be promoted within VAPA, by clarifying VAPA provisions on regulation development and the need for public hearings.

There are areas in which VAPA and current agency public participation guidelines may not require enough to adequately promote public participation or achieve other goals. This report suggests a number of areas in which the General Assembly may wish to amend VAPA to address these limitations.

Recommendation. To promote administrative efficiency, the General Assembly may wish to amend VAPA to allow agencies to begin drafting regulations early in the process, and to clarify that oral proceedings are not always required.

Recommendation. To promote public participation, the General Assembly may wish to amend VAPA to: provide for petitioning for rulemaking, provide for petitioning for an initial public hearing and for a second hearing on substantive changes, require a minimum 30-day comment period prior to the filing of the proposed regulation, and require agencies to provide comments on participation to the public.

Recommendation. The General Assembly, in consultation with the executive branch, may wish to consider whether the potential value of agency public participation guidelines justifies an effort to seek to systematically improve them, or if they should be eliminated. If a decision is made to improve them, then minimum standards for their organization and subject matters should be developed and published in the Register Manual.

Elected Officials Cannot Stop a Regulation Except by Statute

Under VAPA, a regulation may become effective in Virginia despite legislative and Governor objections. A provision in VAPA for a legislative committee suspension of a regulation until the General Assembly could consider a veto resolution was eliminated subsequent to a 1982 Virginia Attorney General opinion and the 1983 decision of the U.S. Supreme Court in the "Chadha" case on the constitutionality of the federal legislative veto.

"Chadha" is influential but not controlling at the state level. The likelihood that a form of a "veto" by elected officials could survive a constitutional challenge depends on the specific terms of that veto provision and the interpretation of the state courts. It appears that the form of expanded review most likely to survive a constitutional challenge would enable a standing legislative committee, with the Governor's concurrence, to suspend the regulation's effective date until the next session. Then the regulation would become effective unless a bill were passed by the General Assembly and signed by the Governor to stop it. There are a number of states that provide for a suspension of the effect of regulations until the legislature can meet. However, it is not certain how Virginia courts would rule on the constitutionality of such a provision if challenged.

Recommendation. The General Assembly may wish to consider whether it wants to amend VAPA to provide a mechanism for legislative and executive suspension of the effective date of regulations.

Agencies Have Substantial Power In Case Decisions

Case decisions are made to implement regulations on a case-by-case basis. For example, case decisions may involve granting, revoking, or defining the terms of permits and licenses held by businesses, professionals, or others. VAPA contains some procedural requirements for the conduct of case decisions.

Agencies or boards have considerable authority in case decision matters. For example, in disciplinary matters, it is often the agency/board staff that do the investigatory work. The agency/board decides, in consultation with the Attorney General's office, whether to instigate a case decision proceeding. The agency/board may in many instances conduct the hearing and render the final decision. In other instances, an agency may, pursuant to VAPA, employ an independent hearing officer to conduct the hearing and make a recommendation. However, the agency/board may disregard the hearing officer's recommendation.

Because case decisions can affect the reputations and livelihoods of individuals or businesses, it is important that every reasonable effort is made by agencies and boards to define the process and the rules to be followed, and to be consistent, fair, objective, and timely in their application. The evidence available suggests that agencies and boards generally· attempt to exercise their case decision authority responsibly. However, there are some problem areas and instances when the process or agency implementation does not appear to do a good job of achieving fairness and efficiency goals.

Recommendation. The General Assembly may wish to amend VAPA to address certain case decision issues, including requiring agencies to provide consistent access to informal hearings, establishing continuance policies, providing an opportunity for parties to comment when all decision-makers were not present at prior hearings, adopting rules providing the basis for making case decisions to the extent practicable, considering alternatives to the current hearing officer system, and promoting timely decisions.

Judicial Review Affords Priority to Finality of Agency Decisions

The terms and implementation of judicial review in Virginia places a high priority on the finality and stability of agency decisions. A survey of administrative law attorneys found that 86 percent agreed with a statement that "judicial review as implemented in Virginia provides a high degree of stability and finality to the fact-findings of administrative agencies." Consistent with common administrative law practice. VAPA places the burden of proof upon those complaining of agency action. Also, with regard to findings of fact, the test is not of the ultimate accuracy or correctness of the agency, but rather with whether there is "substantial evidence in the agency record" upon which the agency could have reasonably reached its conclusion.

There are, however, a number of more controversial ways in which judicial review is restrictive or deferential to agencies. With regard to environmental matters, basic agency laws supersede VAPA and limit standing (access to court review) to owners of potential discharge sites. This has led to some controversy, as it appears that there is a lack of recourse when it is believed that permits have been granted unlawfully and the permittee is creating or is about to create environmental damage.

Also, the courts have declined to intervene when it has been alleged that agencies have sought to apply unpromulgated regulations, or are about to deprive individuals of due process rights in a case decision proceeding. And unlike the Commonwealth's general policy in litigation in favor or discovery, discovery is not provided for in case decision proceedings or in judicial review of case decisions. Perhaps as a net consequence of these restrictions, 53 percent of administrative law attorneys indicated disagreement with the statement that "judicial review as implemented in Virginia provides a high degree of protection to the public from potentially arbitrary or capricious agency case decisions."

While the tendency of the system towards stability and finality of agency decisions seems clear, the desirability of the current approach is primarily a policy or value judgment. This report provides recommendations suggesting policy options the General Assembly may wish to consider if it wishes to increase judicial review from its currently restrictive levels. One issue that it appears the General Assembly must address during the 1993 Session is the potential impact of federal Clean Air Act requirements on Virginia's standing provisions in the basic law of the Air Board.

Recommendation. The General Assembly may wish to consider options to expand access to judicial review, particularly in the environmental area. An item of particular priority for consideration is the potential impact of the federal Clean Air Act on Virginia standing requirements for judicial review.

Recommendation. The General Assembly may wish to amend VAPA to provide for judicial review of persons claiming the unlawfulness of unpromulgated or defacto agency rules. The General Assembly may also wish to consider amending VAPA to authorize courts to enjoin administrative hearings if there are reasonably supported claims of due process concerns, and to provide for discovery during the case decision process or in judicial review of VAPA appeals.