Bill to streamline regulations, reform GRRC, clears Senate

The Arizona state Senate last week, by a vote of 17-10, passed House Bill 2599, which eliminates the unilateral authority of regulatory agencies over businesses, streamlines the appeals process for agency-issued permits and allows businesses to recover the legal fees associated with appeals through the Office of Administrative Hearings (OAH).

The bill also includes reforms to the Governor’s Regulatory Review Council (GRRC), and it codifies the governor’s rulemaking moratorium that has been in place since 2015.

Marc Osborn, testifying on behalf of the Arizona Chamber of Commerce & Industry during a Senate Commerce Committee hearing in March, explained that the bill was the result of a “partnership between the Arizona Chamber, multiple business organizations, and the Governor’s office to take a holistic review of the Administrative Procedure Act, and make updates and reforms.”

“We touched on some of the key areas for this, OAH reform to make that process more streamlined and fair, making GRRC easier for people to access, and then allowing and adopting a number of the governor’s executive orders related to the rulemaking moratorium that has been around since the Brewer administration,” Osborne said . 

The legislation gives the right to the licensee to accept the OAH decisions as final agency action.

As the law currently stands, agencies involved in disputes being heard by the OAH may reject or modify the final OAH decisions. This leaves the door open for agencies to make biased “after-the-fact” alterations during the appeals process following the OAH judge’s decision.

The legislation mandates that third parties wishing to appeal the issuing of business permits through OAH must provide OAH with complete information relating to the basis for appeal, and must provide evidence of personal interest in the permit decision.

The bill also extends to successful appealing parties at OAH the same attorney fee reimbursement privileges that businesses enjoy for successful appeals in adverse agency actions. 

The lack of fair attorney fee reimbursement at OAH currently disuades potential appellants from seeking redress.

HB 2599 also modernizes and simplifies the procedures that are used for filing a petition through the Governor’s Regulatory Review Council that challenges an unauthorized agency policy or practice.

The bill changes the number of GRRC members required to authorize a hearing for a petition filed by a business against an agency from four to three. 

Secondly, it equalizes the page limit for petitions/responses filed by businesses and agencies respectively. 

The bill also prohibits the discounting of testimony by businesses that did not provide a public comment professing their disapproval of said agency rule. 

Finally, it makes clear that agencies cannot use unpublished regulatory actions to circumvent GRRC rulings that void an agency policy or practice.

As noted earlier, the bill would also codify the governor’s rulemaking moratorium, which encourages state agencies to conduct periodic reviews of administrative rules to ensure public policy is achieving its intended outcome. It requires that state agencies acquire written approval from the Office of the Governor before conducting rulemaking. 

The bill includes a “3:1” rule that requires a state agency to recommend for consideration at least three rules to be amended or eliminated before it can enact one new rule.

The legislation also eases regulatory burdens for military spouses, a priority of the Ducey administration. Agencies will be required to publicly display licensing information for military spouses, active duty service members and veterans. 

Because the bill was amended in the Senate, it now heads to the House for a final vote.