Does One State Agency Have The Power To Declare Another State Agency's Regulation To Be Invalid?
Thursday, December 7, 2023

As a former teacher of Administrative Law, I am interested in a recent request to the California Attorney General for an opinion whether the California Office of Tax Appeals has the authority to declare  regulations adopted by another state agency to be invalid and to refuse to enforce them.  I found the request interesting for three reasons.  First, I had not previously encountered the issue; second, the request was made by the OTA itself; and third the OTA took the position that it lacked the authority.  If nothing else, this seemed to be a rare case of a government agency arguing that it had lesser, not greater, powers.

 The OTA hears appeals of tax and fee programs administered by various tax agencies.  Effective July 1, 2017, many of the SBE's responsibilities were transferred to the OTA.  Cal. Stats. 2017, ch. 16.  See The Taxpayer Transparency and Fairness Act of 2017 - A Little Bill May Soon Make Big Changes.  The issue of the OTA's authority was raised when the OTA proposed a regulation abjuring the authority to declare invalid another state agency's regulation.  After receiving negative comments, the OTA withdrew its proposed regulation but the question remained.  

In arguing that it lacks the authority to declare other agency regulations invalid, the OTA points out that it is neither a court nor a constitutional body.  See Gov't Code § 15672(b).  The SBE, in contrast, is established by Article XII, Section 17 of the California Constitution but its duties are limited to those prescribed in the Constitution.  The OTA also argues that the legislature has not conferred this authority on it and the Administrative Procedure Act is "the only appropriate method for overturning a duly enacted [sic] regulation".

It may seem counterintuitive that that there was public opposition to the OTA's proposed rule declaring its wont of authority.  However, adoption of the regulation would have effectively favored agencies by immunizing their regulations from challenges before the OTA.  As a result taxpayers would be forced to challenge regulations in court.

The OTA submitted its opinion request in June and the Attorney General has not yet issued an opinion.  


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