South-Western Legal Studies in Business

When Authorized by State, Local Governments May Adopt State Standards
Description

Washington high court held that agencies that have the power to write and enforce legislative regulations have the power to write interpretive regulations. However, such regulations are not binding, they are only advisory to the public and the courts.

Topic Administrative Law
Key Words

Interpretive Regulations; Tax Code; Validity

C A S E   S U M M A R Y
Facts

The Washington Department of Revenue (DOR) issued three interpretive regulations concerning portions of the state tax code. The Association of Washington Business (AWB) challenged the regulations, contending they were invalid because DOR did not have statutory authority to adopt such regulations and because the public was misled into believing that the regulations were binding rather than merely interpretive. The trial court invalidated the three rules. The appeals court reversed and upheld the rules; AWB appealed.

Decision

Affirmed. An agency rule is invalid if it: 1) violates constitutional provisions; 2) exceeds statutory authority of the agency, 3) was adopted without compliance to statutory rule-making procedures, or 4) is arbitrary and capricious. DOR has authority to adopt interpretive regulations explaining specific sections of the tax code. Statutes authorized DOR to make and publish rules of procedure and legislative rules, and since DOR was charged with enforcing the tax code, it has the authority to interpret it. Interpretive rules are not binding on the public. They serve as advance notice of the agency’s position should a dispute arise and the matter results in litigation. The public cannot be penalized for breaking interpretive rules, and they are not binding on the courts.

Citation

Assn. of Washington Business v. State of Washington, Dept. of Revenue, ---P.3d--- (2005 WL 2296946, Sup. Ct., Wash., 2005)

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