Division of State Budget and Management; Budget Manual

Subject:

Requested By: Administrative Rules Review Committee of the General Assembly

Questions: Is the budget manual of the Division of State Budget and Management required to be filed with the Attorney General?

 

1.  
2. Is the budget manual of the Division of State Budget and Management subject to the adoption and amendment procedural requirements of the Administrative Procedures Act?

    

Conclusion: Yes, except for those parts already filed or which are not rules.

 

1.  
2. Yes, except for those parts already filed or which are not rules.

    

1. G.S. 150A-58, in relevant part, reads as follows:

(b) As used in this Article, "rule" means every rule, regulation, ordinance, standard, and amendment thereto adopted by any agency and shall include rules and regulations regarding substantive matters, standards for products, procedural rules for complying with statutory or regulatory authority or requirements and executive orders of the Government.

G.S. 150A-59, in relevant part, reads as follows:

Rules adopted by any agency on or after February 1, 1976, shall be filed with the Attorney General. All rules shall become effective 30 days after filing, unless the agency shall specify, an earlier or later effective date. An earlier effective date shall not precede the date of filing.

1 North Carolina Code 2A .0103 reads as follows:

The budget manual sets forth policies and procedures to be followed by state agencies in preparing, monitoring and executing the state’s budget. Copies of the budget manual shall be provided to the various departments of state government and are available for public inspection at the division office.

History Note: Statutory Authority G.S. Chapter 143,

Article 1; Eff. February 1, 1976;

Readopted Eff. February 27, 1979.

G.S. 150A-63, in relevant part, reads as follows:

(c) If the Attorney General determines that publication of any rule would be impracticable, he shall substitute a summary with specific reference to the official rule on file in his office.

Chapter 150A, the Administrative Procedures Act, has two separate and distinct definitions of "rule." The definition in Article 5, Publication of Administrative Rules, is more inclusive than the rule making definition in Article 2, Rule Making, Regulations exempt from the rule making article are not exempt from the publication article unless the regulation is exempted by G.S. 150A-58(b)(1-4). G.S. 150A-59 states no rule, as defined in G.S. 150A-58, may become effective any earlier than the date of filing with the Attorney General.

The budget manual is a compilation of rules and regulations developed by the Division of State Budget and Management which sets forth policies and procedures state agencies must follow in preparing, monitoring and executing the state’s budget. An examination of the contents of the manual discloses that it consists of (1) reprints of General Statutes, (2) reprints of other sections of the Administrative Code, and (3) regulations not contained in other sections of the code. This last category includes regulations developed by the Division of State Budget and Management which are necessary to provide more specific procedures for complying with the requirements of the General Statutes and the Executive Orders of the Governor. The last category also contains the portions of the budget manual which have not been filed with the Attorney General. The rule on file, 1 N.C.A.C. 2A.0103, describes the budget manual and states it may be inspected in the division office. G.S. 150A-63(c) allows for a summary rule if the publication of a rule would be impracticable, but it requires the official rule must be on file in the Attorney General’s Office. Those portions of the budget manual which are rules within the the meaning of G.S. 150A-58 and which have not previously been filed with the Attorney General must be filed with the Attorney General to be effective.

(2) In relevant part, G.S. 150A-9, reads as follows:

It is the intent of this Article to establish basic minimum procedural requirements for the adoption, amendment, or repeal of administrative rules . . . No rule hereafter adopted is valid unless adopted in substantial compliance with this article.

G.S. 150A-10, in relevant part, reads as follows:

As used in this Article, "rule" means each agency regulation, standard or statement of general applicability that implements or prescribes law or policy, or describes the organization, procedure, or practice requirements of any agency.

The term includes the amendment or repeal of a prior rule but does not include the following:

(1)

Statements concerning only the internal management of an agency and not affecting private rights or procedures available to the public;

(6)

Interpretative rules and general statements of policy of the agency.

G.S. 150A-12, in relevant part, reads as follows:

(f) No rule making hearing is required for the adoption, amendment or repeal of a rule which solely describes the organization of the agency or describes forms or instructions used by an agency.

G.S.

150A-14, in relevant part, reads as follows: An agency may adopt, by reference in its rules and without publishing the adopted matter in full, all or any part of a code, standard or regulation which has been adopted by any other agency of this State or any agency of the United States or by a generally recognized organization or association.

G.S.

150A-2, in relevant part, reads as follows:

(1) "Agency" means every . . . department, division, council, member of Council of State, or officer of the State Government of the State of North Carolina . . .

Article 2, Rule Making has a definition of "rule" which varies substantially from that of Article 5. The definition in G.S. 150A-10 determines which regulations are subject to the procedural requirements of Article 2, which include notice of hearing and public hearing prior to adoption. The two exemptions cited above, G.S. 150A-10(1) and (6), may include some of the unfiled portions of the budget manual. In applying the definition of "rule," the exemption created by G.S. 150A-10(1) should be limited to those regulations concerning the internal management of the Division of State Budget and Management. Some guidance on the exemption created by G.S. 150A-10(6) is provided by Professor Charles E. Daye in his 1975 article entitled "North Carolina’s New Administrative Procedures Act: An Interpretive Analysis," 53 N.C. Law Review 833-923, (1975). At page 853, it states:

"Generally speaking, interpretative rules carry no sanction, and if a sanction is involved, it is seen as emanating from the statute . . . It should be emphasized that careful scrutiny of the substance of the rule in question is critical, since the interpretive rule exclusion, if not confined to proper boundaries, could well subsume the rulemaking provision."

Finally, two separate statutory sections may exempt certain of the regulations of the budget manual from rulemaking or publication in full. G.S. 150A-12(f) exempts any regulations which describe "forms or instructions used by an agency." G.S. 150A-14 exempts from publication in full any regulations adopted by another agency of the State which are adopted by reference. It should be noted any regulations so adopted must be amended any time the promulgating agency alters a regulation for the adopting agency to maintain the same regulations or the promulgating agency.

Each regulation in the budget manual must be individually examined to determine (1) whether it is a rule within the meaning of G.S. 150A-10; (2) whether, although it is rule, it is exempted from the rule making requirements by G.S. 150A-12(f); and (3) whether it was adopted by reference and thereby exempt from publication.

When the manual was developed, the Division of State Budget and Management was a part of the Department of Administration. By Executive Order 38, that division was transferred to the Office of the Governor on September 10, 1979. Both the Governor’s Office and the Department of Administration are agencies within the statutory definitions of "agency" in G.S. 150A-2(1) and

G.S. 150A-58(c) and are required to comply with Article 2, Rule Making, and Article 5, Publication of Administrative Rules, to the same extent as are other agencies not specifically exempted.

Rufus L. Edmisten Attorney General

Daniel F. McLawhorn Assistant Attorney General