At its meeting on July 19, 1996, the Joint Legislative Committee on Administrative Rules (Committee) voted, pursuant to RSA 541-A:13, V(a), to enter a preliminary objection to Final Proposal 96-086 containing proposed rules Env-Ws 300 of the Department of Environmental Services (Department) relative to drinking water. The Commissioner of Environmental Services (Commissioner) responded by letter dated September 2, 1996, which was received by the Office of Legislative Services on September 3, 1996.

At a special meeting on November 14, 1996, the Committee voted, pursuant to RSA 541-A:13, V(c) to enter a revised objection to Final Proposal 96-086. The Commissioner responded by letter dated December 16, 1996 and received that same day by the Office of Legislative Services.

At its meeting on December 20, 1996, the Committee voted, pursuant to RSA 541-A:13, V(d), to enter a final objection to Final Proposal 96-086. The final objection has been filed with the Director of the Office of Legislative Services for publication in the New Hampshire Rulemaking Register. The effect of a final objection is stated in RSA 541-A:13, VI:

The following summarizes the bases for the Committee’s final objection:

The Committee objected that Env-Ws 300 is, pursuant to Committee Rule 401.04, beyond the authority of the Commissioner and, pursuant to Committee Rule 402.04, contrary to legislative intent by violating Part 1, Article 28-a of the New Hampshire Constitution.

The Committee objection was limited to whatever rules in Env-Ws 300 apply to a political subdivision under circumstances where:

Part 1, Article 28-a, effective November 28, 1984, provides that:

The Committee made the final objection after reviewing the preliminary and revised objections and the Department’s responses to them as described below:

The Committee had objected on July 19, 1996 that this proposal violated Part 1, Article 28-a because (1) the rules contain new or amended requirements on political subdivisions which will impose costs on those political subdivisions, and (2) the Department had not clearly shown (as required by RSA 541-A:27 and Ls-A 402.12(c) of the Rulemaking Manual) that these costs result from a pass-through of federal requirements.

RSA 541-A:25, I states that a state agency:

RSA 541-A:26 forbids such a mandate that is "additional to the federal mandate" when an agency is administering a federal program.

RSA 541-A:27 states that "any new, expanded or modified programs or responsibilities based upon a federal mandate and lawfully mandated or assigned to any political subdivision shall specifically state the federal statute and regulation requiring such new, expanded, or modified programs or responsibilities." In addition, Ls-A 402.12(c) of the Rulemaking Manual, with which compliance is mandated pursuant to 1994, 412:52, states that if a rule is based upon a federal mandate, "the federal statute or regulation requiring the rule shall be cited in a purpose statement at the beginning of the relevant chapter, part or section."

Department’s Response to Preliminary Objection

In its response to the preliminary objection, the Department identified in an attachment those rules in this proposal that are "not a pass-through of federal requirements directly reflected in state rules or requirements that pre-date 1984." The Department testified on November 14, 1996 that all of the rules listed are both, that is, they are neither federal pass-throughs nor pre-1984 requirements. In other words, in the Committee’s view these rules fell within the prohibition of Article 28-a and also did not come within the exception in RSA 541-A:26.

The Department stated that:

We are aware of the possible issues regarding unfunded mandates and understand your concern; while not conflicting with Part 1, Article 28-a, these rules may conflict with RSA 541-A:25. However, no provision can violate RSA 541-A:25 unless and until a municipality has been given the opportunity to comply and then refuses to provide funding for any new requirements. We feel that the listed rules are public health measures and should apply to all public water systems. For these reasons, we believe the correct course is to move ahead with adoption of these rules.

Committee’s Analysis of Response to Preliminary Objection

In the Committee’s view the prohibition against unfunded mandates is substantively the same in both RSA 541-A:25 and Part 1, Article 28-a. Both appeared to the Committee to be violated in the response to the preliminary objection to the extent that the rules contain new, modified, or expanded programs or responsibilities that (1) apply to political subdivisions with public water systems who must pay more to comply than before and (2) that are not a pass-through of federal requirements. Since the rules cited in the Department’s attachment were the rules that post-date 1984 and are not a pass-through, then in the Committee’s view a violation will have occurred if they necessitate additional local expenditures.

The Committee determined that the Department’s argument that RSA 541-A:25 (and, by implication, Part 1, Article 28-a) are not violated "unless and until a municipality has been given the opportunity to comply and then refuses to provide funding for any new requirements" conflicts with the statute and the Constitution.

First, the Committee decided that unless the rules recognize the exemption for political subdivisions as stated in Article 28-a, the state "mandates" or "assigns" in a legal sense when the rule is effective, that is, has the force of law pursuant to RSA 541-A:22, II. The political subdivision is therefore subject to the rule. In the Committee’s view the state does not "mandate" or "assign" only when a municipality affirmatively refuses to provide funding or the Department chooses to penalize for noncompliance.

Secondly, the Committee determined that both RSA 541-A:25 and Part 1, Article 28-a do not require the political subdivision to "refuse" to provide funding for the prohibition against unfunded mandates to apply. The prohibition against unfunded mandates applies unless the mandate is "approved for funding". The Department argued that there is no violation per se of RSA 541-A:25 (and implicitly Part 1, Article 28-a) unless the political subdivision asserts its right not to have the mandate imposed. However, in the Committee’s view you cannot waive this constitutional right by silence.

The Committee therefore concluded that Part 1, Article 28-a was violated despite the Department’s explanation in its written response. The Committee did not limit its revised objection only to those post-1984 rules identified in the Department’s attachment but wherever the rules in the proposal were not proposed pursuant to federal requirements or went beyond what is required by the federal requirements.

At the meeting on November 14, 1996, after considerable discussion, the Department representatives testified that the Department would amend the proposal to make it clear that the rules do not apply in those circumstances described above unless the political subdivision approves the mandate for funding.

In response to the Committee’s revised objection, the Department included an applicability rule Env-Ws 301.04 to exempt political subdivisions from compliance with those rules which would otherwise violate Part 1, Article 28-a.

Env-Ws 301.04(a) states that "a rule contained in Table 301-1" in Env-Ws 301.04(b) "shall not apply to a political subdivision pursuant to Part 1, Article 28-a" if compliance necessitates additional local expenditures compared to compliance with Env-Ws 300 prior to the effective date of the rule and if the state has not fully funded these expenditures or the local legislative body has not approved these expenditures for funding.

Env-Ws 301.04(b) states that, "The rules in Env-Ws 300 which were not effective prior to November 28, 1984 and are additional to any federal mandate pursuant to RSA 541-A:26 shall include" the rules in Table 301-1.

The Committee determined that the language chosen in Env-Ws 301.04(a) and (b) makes the list of rules in Table 301-1 an exclusive list, that is, the exemption for political subdivisions applies only to those rules identified in the list. However, after considering the testimony of the agency, the Committee decided that there may well be other rules in Env-Ws 300 which should be on the list. Therefore the Committee concluded that the exemption for political subdivisions should have applied to any rule in Env-Ws 300 under circumstances which would otherwise violate Part 1, Article 28-a. In the Committee’s view the list of rules in Table 301-1 should have clearly been a nonexclusive list of examples.

The Committee as a result limited the final objection to whatever other rules in Env-Ws 300 than those in Table 301-1 are additional to the federal mandate and mandate or assign new, modified, or expanded programs or responsibilities to political subdivisions in such a way as to necessitate additional local expenditures which have not been approved for funding by the political subdivision.