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Moratorium on administrative rules leads to uncertainty

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Indiana Lawyer Focus
romig Romig

It’s taking some time to see just what the effects of a relatively new executive order will be on state agencies, such as the Indiana Department of Environmental Management, and the Hoosiers affected by those agencies’ work. On Jan. 14, one of Gov. Mike Pence’s first actions was to sign Executive Order 13-03 which placed a moratorium on the promulgation of any new administrative rules by Indiana’s agencies. Gov. Pence believes the moratorium will free the Office of Management and Budget from the burden of reviewing new rules and give it more time to examine existing regulations to determine which rules impose unnecessary and burdensome costs on Indiana business owners and, therefore, hinder job creation. As a follow-up to his moratorium, Gov. Pence introduced his “Cut Red Tape” initiative with a new website in July. The website – www.in.gov/cutredtape – solicits suggestions about which regulations should be simplified or eliminated. Hoosiers are asked which regulations they consider “most burdensome.” Their suggestions are sent directly to OMB staff members.

There are certain exceptions to the moratorium, such as rules which the agency had announced an intent to adopt before the moratorium took effect on Jan. 14, as well as rules which:

• are related to job creation;

• repeal existing rules;

• reduce state spending;

• reduce agency waste;

• are emergency rules; or

• those necessary to implement federal or court mandates.

If an agency wishes to promulgate a rule within one of these exceptions, it must notify the OMB that it is promulgating the rule under the exception – and presumably satisfy the OMB that such promulgation is necessary.

In February, a document was circulated to agencies notifying them how to proceed under the moratorium. If an agency believes that it needs to promulgate a rule, and it fits one of the exceptions listed in the moratorium, its head must submit a written request via email to the OMB director including the reasons why the proposed rule fits an exception. The OMB director will review the request and make a written determination of whether an exception applies and if the rulemaking may go forward. If the OMB director determines that an exception does not apply, the rulemaking is officially suspended. The document doesn’t discuss how an agency may proceed if it strongly disagrees with the OMB director’s assessment. Only after the OMB determines an exception applies may the agency file a notice of intent to adopt a rule and proceed under Indiana Code 4-22. It appears the moratorium is actually building an additional layer into the rulemaking process for agencies by making the OMB director a “gatekeeper” to determine whether rules meet the governor’s exceptions necessary for good government. The document does not specify any time limits or deadlines by which the OMB must make a determination.

Even before Gov. Pence signed the moratorium, Indiana legislators had addressed a need to constantly review regulations to ensure that stale, inapplicable rules didn’t remain on the books. Under Indiana law, many administrative rules expire seven years after they take effect. (IC 4-22-2.5-2). Certain rules necessary for federal approval of programs delegated under federal law don’t expire, but must still be readopted after seven years. (IC 4-22-2.5-1.1). A few subcategories of rules are excepted from expiration. (IC 4-22-2.5-1). When rules are readopted, agencies must go through the full rulemaking process. (IC 4-22-2.5-3). The rulemaking process includes a review in which the agency must consider other alternatives that are less “costly” or “intrusive” including whether there is even a continued need for the rule. (IC 4-22-2.5-3.1). The public has an opportunity to comment during this procedure. This “sunsetting” policy where rules must be readopted ensures that agencies are constantly reviewing (at least on a seven-year cycle) whether rules are necessary and what effect these rules might have on small businesses.

Gov. Pence’s moratorium doesn’t address how the OMB’s review of all existing regulations will proceed in light of the statutory sunsetting provisions. Many agencies, such as the Indiana Department of Environmental Management, are required to promulgate rules to maintain their “delegated” status under various federal laws such as the Clean Air Act and Clean Water Act. Since any rules passed by such agencies to comply with federal law fit one of the moratorium’s exceptions – presumably the OMB will approve such promulgation. However, seeking such permission and determination adds additional time to the already lengthy rulemaking process. When these agencies must also readopt rules – and follow the same time-added process – they’re likely facing an additional demand on resources that are already spread thin by reduced budgets.

State Budget Director Chris Atkins stated in June that notices of intent to file new rules had drastically dropped in the first part of 2013, compared to the same time period in 2012.

Although the public has always had an opportunity to comment on proposed rulemaking and readoptions, Gov. Pence has provided an additional opportunity for any regulated entity, such as a business with environmental emissions, to vent its frustrations and to suggest which regulations should be reviewed first by the OMB.

But, eight months after signing the moratorium, it is still unclear what effect the governor’s order will have on simplifying Indiana’s regulatory systems in light of existing statutory safeguards against stale, outdated and burdensome rules. It is also unclear how the OMB will cope with its ordinary job of reviewing pending regulations that are excluded from the moratorium while reviewing the approximately 11,000 pages of existing regulations and how it will juggle the suggestions coming in from the “Cut Red Tape” website. The environmental legal community will be closely watching to see how these uncertainties are clarified.•

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Amy Romig is a partner at Indianapolis-based Plews Shadley Racher & Braun LLP, who focuses on environmental law. She can be reached by email at aromig@psrb.com or by calling 317-637-0700. More information about Amy is available at www.psrb.com.

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

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  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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