Thursday, December 03, 2009

admin. law - regulations - type, adoption, validity

Slippery Rock School District v. UCBR - Pennsylvania Supreme Court - November 30, 2009

This case concerns the adoption by the Pennsylvania Dept. of Labor and Industry (DOLI) of a UC regulation concerning benefits for teachers and other educ. employees, who are disqualified from receiving benefits if they have a "reasonable assurance" of continuing employment during the ensuing regular school period, UC Law sec. 402.1, 43 P.S. sec. 802.1.

The regulation involved established a new test of "economic equivalency" -- that there is reasonable assurance only if the "economic terms and conditions" offered for the ensuing academic period are "not substantially less that the terms and conditions of the individual's employment" prior to being laid off at the end of the first academic period. 34 Pa. Code sec. 65.161(a)

In holding that the DOLI regulation in question was valid, the court discussed several important features of state administative law concerning the types, adoption, and validity of regulations.

Pennsylvania courts have developed a two-step process for determining whether an administrative regulation is mandatory and binding. First, a court must determine what type of regulation it is examining (legislative or interpretive) and second, whether the regulation is valid.
Depending on what type it is, the regulation may be either binding (legislative) or merely entitled to deference (interpretive). Id. Generally, a legislative regulation establishes “a substantive rule creating a controlling standard of conduct.”

Legislative regulation - validity - A legislative regulation is valid if adopted pursuant to delegated legislative power, in accordance with the appropriate administrative procedure, and is reasonable. By comparison, an interpretive regulation merely construes and does not expand upon the terms of a statute.

Interpretive regulation - validity - An interpretive regulation is valid if it “genuinely track[s] the meaning of the underlying statute.” Id. If the interpretive regulation “is unwise or violative of legislative intent, courts disregard [it].” The test for determining the validity of an interpretive regulation is also applied to a regulation that establishes a substantive rule in two other circumstances: if the regulation was adopted by a Commonwealth agency without lawmaking power or if it was adopted without meeting the appropriate procedural requirements.

Scope of DOLI power and authority to adopt regulations
Under Section 201 of the Act, 43 P.S. § 761(a), the Department shall have power and authority to adopt, amend, and rescind such rules and regulations . . . as it deems necessary or suitable. Such rules and regulations shall not be inconsistent with the provisions of [the Act.]

The court rejected the school district’s argument that the Section 201(a) limitation regarding regulations inconsistent with the statute should be given the broad interpretation that the Department may not adopt any legislative regulations. Such an interpretation "leads to the absurd result that enabling statutes that do not contain the limiting language permit the adoption of regulations inconsistent with those statutes. Clearly the legislature would not authorize agencies to adopt binding regulations inconsistent with the applicable enabling statutes. . . .Indeed, all regulations, whether legislative or interpretive “must be consistent with the statute under which they were promulgated.” The sec. 201(a) limitation merely codifies this requirement by stating that only Department regulations consistent with the provisions of the Act are valid.

The court also rejected the school district’s argument that the complex nature and “detailed statutory scheme” of the UC Act suggests that the Department’s regulatory authority is limited. Indeed, the Act specifically grants the Department “power and authority to adopt, amend, and rescind such rules and regulations . . . as it deems necessary or suitable.” 43 P.S. § 761(a). If the complex nature of a statute (the Act) were a criterion for denying a Commonwealth agency (the Department) the power to promulgate legislative regulations, then the intent of the legislature that the Department adopt regulations “as it deems necessary or suitable,” as expressed by the plain language of the Act, would be thwarted. Indeed, the logical consequence of the School District’s argument is that the Department would not be able to adopt any regulations because the legislature had spoken on every issue. The rules of statutory interpretation do not permit such a conclusion.

The court also refused to consider the complexity of a statutory scheme as an element in determining the ambit of an agency’s statutory power and authority to adopt regulations where the language of the statute is clear and unambiguous in its direction that the agency may adopt such regulations.

What is a "reasonable regulation"?
In deciding whether an agency action, such as promulgation of a legislative regulation, is reasonable, a court is "not at liberty to substitute its own discretion for that of administrative officers who have kept within the bounds of their administrative powers. To show that these have been exceeded in the field of action involved, it is not enough that [the agency’s regulation] shall appear to be unwise or burdensome or inferior to another. Error or unwisdom is not equivalent to abuse. What has been ordered must appear to be so entirely at odds with fundamental principles as to be the expression of a whim rather than an exercise of judgment." Similarly, the Court has held that “appellate courts must accord deference to the agency and may only overturn an agency determination if the agency acted in bad faith or the regulations constituted a manifest or flagrant abuse of discretion or a purely arbitrary execution of the agency's duties or functions.”

The regulation in question was reasonable and consistent with the UC Law as a whole and corrected an "inequity" in the UC Law
The court held that the regulation was not inconsistent with the language of the state and that it was "reasonable, because it is not so at odds with [the statute's] “fundamental principles as to be the expression of a whim rather than an exercise of judgment.”

According to the school district, the regulation conflict with the legislative intent of sec. 402.1(1) because the purpose of that section is “to eliminate the payment of benefits to school employees during summer. However, the court found that that "view fails to acknowledge that sec. 402.1(1), when read in its entirety and in the context of the Unemployment Compensation Act, offers a limited right to avoid paying unemployment benefits." [emphasis added]

It is true that "intent of the legislature in passing sec. 402.1 was to eliminate the payment of benefits to school employees during summer months and other regularly scheduled vacations, on the rationale that such employees are able to anticipate and prepare for these nonworking periods. The law thus recognizes that these employees are not truly unemployed or suffering from economic insecurity during scheduled recesses."

However, this "rationale breaks down with respect to school employees like the claimant. The decrease in her income was not caused simply by the summer vacation but by the school district’s decision to offer her a position with fewer hours, salary, and benefits. The regulation addresses the inequitable gap created for school employees like claimant when her position disappears during the second academic year and her only option is to be unemployed or accept a position with less or possibly no compensation."

The Department’s regulation thus "remedies the inequity pursuant to the stated purposes of the Unemployment Compensation Act. The first stated goal is humanitarian: to provide “[s]ecurity against unemployment and the spread of indigency.” 43 P.S. § 752 (Declaration of public policy). The Regulation extends unemployment benefits to persons who have suffered a loss of income." [emphasis added]

The Act’s second stated and equally important goal is to cooperate fully with USDOL so as “to secure to this Commonwealth and its citizens all advantages available under the provisions of the Social Security Act that relate to unemployment compensation.” 43 P.S. § 767(a)(1). As the Pa. Bulletin publication recounts, USDOL notified the Commonwealth of its failure to conform to federal law in its interpretation of “reasonable assurances.” The Department’s regulation adjusted Pennsylvania unemployment law to conform to USDOL’s requirement and, as a result, met its statutory mandate. Placed into context, the regulation is clearly consonant with Section 402.1(1) and the rest of the Act so it is therefore reasonable.