Does the State Budget Manual, which dictates how agencies prepare and execute the budget, count as 'rules' under North Carolina's Administrative Procedures Act, and if so does it have to be filed with the Attorney General and go through the standard rulemaking procedure?
Plain-English summary
The Administrative Rules Review Committee of the General Assembly asked the AG two questions about the State Budget Manual, the document that sets out policies and procedures that state agencies must follow when preparing, monitoring, and executing the state budget. The two questions: (1) must the budget manual be filed with the Attorney General, and (2) is the budget manual subject to the adoption and amendment procedures of the Administrative Procedures Act (APA)?
The 1979 AG said yes to both, with carved-out exceptions for parts that are already filed or that fall under specific exemptions.
The APA at the time used two different definitions of "rule" in two different articles, and the AG worked through both.
Article 5 (Publication of Administrative Rules), G.S. 150A-58 to 63. The Article 5 definition of "rule" is the broader of the two. It includes "every rule, regulation, ordinance, standard, and amendment thereto adopted by any agency" and reaches both substantive matters and procedural rules. G.S. 150A-59 requires that rules adopted by any agency on or after February 1, 1976, be filed with the Attorney General, and that rules become effective 30 days after filing unless the agency specifies a different date. The exemptions in G.S. 150A-58(b)(1-4) carve out a few categories that need not be filed.
The Budget Manual consists of (a) reprints of General Statutes, (b) reprints of other Administrative Code sections, and (c) regulations developed by the Division itself to implement statutory and executive-order requirements. Categories (a) and (b) are reproductions of existing law and do not need separate filing. Category (c) is the operative original work of the Division, and to the extent those provisions are "rules" under G.S. 150A-58 they must be filed.
The existing rule 1 N.C.A.C. 2A.0103 (already on file) describes the budget manual and says it may be inspected at the Division office. G.S. 150A-63(c) allows the Attorney General to publish a summary of a rule with reference to the official rule on file when full publication would be impracticable. So the Division has used the summary-rule device for some portions. But the substantive rules within the manual that have not been filed must be filed to be effective.
Article 2 (Rule Making), G.S. 150A-9 to 14. The Article 2 definition of "rule" in G.S. 150A-10 is narrower than the Article 5 definition. It covers "each agency regulation, standard or statement of general applicability that implements or prescribes law or policy, or describes the organization, procedure, or practice requirements of any agency."
Article 2's definition has specific exemptions:
- G.S. 150A-10(1): statements concerning only internal management not affecting private rights or procedures available to the public.
- G.S. 150A-10(6): interpretative rules and general statements of policy.
For the budget manual:
- Internal management rules of the Division of State Budget and Management (rules that affect only its own operations) may be exempt under (1).
- Interpretative rules and policy statements may be exempt under (6), but the exemption must be construed narrowly so it does not "subsume the rulemaking provision" (citing Charles E. Daye's 1975 N.C. Law Review article).
Article 2 also has procedural exemptions:
- G.S. 150A-12(f): no rulemaking hearing required for rules that solely describe the agency's organization or describe forms or instructions used by the agency.
- G.S. 150A-14: agencies may adopt by reference (rather than publish in full) rules adopted by other state agencies, federal agencies, or recognized organizations.
The opinion's bottom-line guidance: each regulation in the budget manual must be examined individually for (1) rule status under G.S. 150A-10, (2) procedural exemption under G.S. 150A-12(f), and (3) reference-adoption status under G.S. 150A-14.
Agency status of the Division of State Budget and Management. Originally part of the Department of Administration, the Division was transferred to the Office of the Governor by Executive Order 38 on September 10, 1979. Both the Governor's Office and the Department of Administration are agencies under the APA's definitions in G.S. 150A-2(1) and G.S. 150A-58(c), so the same rulemaking and publication requirements apply regardless of which department houses the Division.
Currency note
This opinion was issued in 1979. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The North Carolina Administrative Procedures Act has been substantially restructured since 1979 (it is now Chapter 150B, not 150A, and the rule definitions and filing requirements have been revised multiple times). Modern questions about agency rulemaking and filing should be addressed under current Chapter 150B and the Rules Review Commission's procedures.
Historical context: what the AG concluded
The opinion's analytical work is to apply the APA's two-definition framework to a specific concrete document. The Budget Manual is a useful test case because it contains mixed material: some pieces are obviously substantive rules (procedures the agencies must follow), some are administrative instructions (how to fill out forms), some are interpretations of statutes, some are reprints of statutes themselves.
The AG's response is structured to give the Division operational guidance rather than a single bright-line answer. The opinion identifies the relevant categories and the legal status of each:
- Reprints of statutes: not original rules, no filing or rulemaking needed.
- Reprints of other Administrative Code sections: already filed by the original agency, no separate action needed (G.S. 150A-14 reference adoption).
- Original Division rules: must be filed under Article 5; subject to rulemaking under Article 2 unless an exemption applies.
- Internal management rules: possibly exempt from Article 2.
- Interpretative rules and policy statements: possibly exempt from Article 2, with narrow scope.
- Forms and instructions: exempt from rulemaking hearings under G.S. 150A-12(f).
The Daye citation is significant. Professor Charles E. Daye was a leading commentator on the new APA, and his 1975 N.C. Law Review article on the Act was the standard interpretive resource. The opinion borrows from Daye the warning that the interpretative rule exemption, if construed broadly, would defeat the entire rulemaking framework: "It should be emphasized that careful scrutiny of the substance of the rule in question is critical, since the interpretive rule exclusion, if not confined to proper boundaries, could well subsume the rulemaking provision." The AG endorses Daye's narrow-construction view.
The dual-definition feature of the APA (a broader Article 5 publication definition and a narrower Article 2 rulemaking definition) reflects the practical reality that publication serves public-notice purposes (the broader category should be made available to the public), while rulemaking serves participatory purposes (the narrower category warrants notice and hearing before adoption). The 1979 APA was structured to recognize this difference. Modern APA frameworks generally follow the same logic.
The transfer of the Division from the Department of Administration to the Office of the Governor (by Executive Order 38) is a footnote that the AG handled without difficulty. Both potential parent agencies are subject to the APA, so the transfer does not change the rulemaking and publication obligations.
The opinion's practical impact would have been to push the Division to systematically review the Budget Manual and file the portions that are substantive rules. That kind of housekeeping is exactly what the Administrative Rules Review Committee was set up to oversee.
Background and statutory framework
North Carolina enacted its modern Administrative Procedures Act in 1973, codified as Chapter 150A of the General Statutes (later recodified as Chapter 150B). The APA established uniform procedures for state agencies to adopt rules, publish them, and conduct adjudications.
Article 2 of the APA dealt with rule making. It required agencies to provide notice and a public hearing before adopting most rules, set out procedural standards for the rulemaking process, and identified categories of agency actions exempt from the rulemaking requirements.
Article 5 of the APA dealt with publication of administrative rules. It required rules to be filed with the Attorney General to be effective. The Attorney General published the rules in the North Carolina Administrative Code.
The two articles used different definitions of "rule" because they served different purposes. Article 2's narrower definition focused on substantive regulations that the public should have notice-and-comment input on. Article 5's broader definition focused on what the public needs access to in published form, which includes a wider range of agency standards and procedures.
The Division of State Budget and Management was the state agency responsible for budget preparation and execution. The Budget Manual was the operational document that set out procedures agencies must follow for budget submissions, expenditure controls, position management, capital projects, and related budget functions. The Manual contained both substantive policy choices and procedural instructions.
The Administrative Rules Review Committee was a legislative committee charged with reviewing agency rulemaking and identifying noncompliance with the APA. The Committee's inquiry to the AG was characteristic of its oversight role: identifying a major agency document of unclear status and asking for an authoritative interpretation.
Executive Order 38 (September 10, 1979) transferred the Division to the Office of the Governor. Such reorganizations were common in the 1970s as the state government restructured around the cabinet system.
Common questions
What's the difference between filing under Article 5 and going through rulemaking under Article 2?
Filing under Article 5 makes the rule effective and accessible. Rulemaking under Article 2 requires notice and a public hearing before adoption. A rule that goes through Article 2 rulemaking will then be filed under Article 5; but some rules (interpretative rules, internal management rules) may need to be filed under Article 5 without going through Article 2 rulemaking.
Can the Division refuse to file rules it considers internal management?
The Division has to make a good-faith judgment about which rules qualify for which exemption. If the Division characterizes a rule as internal management to avoid rulemaking and the rule actually affects private rights or public procedures, the Division is exposed to challenge. The Daye article's warning about narrow construction applies.
What happens if a rule that should have been filed is not filed?
Under G.S. 150A-59, a rule is not effective until filed. An unfiled rule that the agency tries to apply could be challenged as void or unenforceable. The agency would need to file the rule to make it effective going forward.
How does the summary-rule device under G.S. 150A-63(c) work?
The Attorney General can publish a summary of a rule with a reference to the official rule on file. This is used when full publication of the rule would be impracticable (because of length or complexity). The official rule must still be on file. 1 N.C.A.C. 2A.0103 was an example: the codified text describes the Budget Manual and says where it can be inspected, while the Manual itself sits on file.
Has the dual-definition framework survived in modern APA?
Modern Chapter 150B has restructured the definitions. The general principle (more public access required than active participation required) persists, but the specific definitions and exemptions have been revised. Practitioners should consult current Chapter 150B rather than the 1979 framework.
Source
Citations
- G.S. 150A-2
- G.S. 150A-9
- G.S. 150A-10
- G.S. 150A-12(f)
- G.S. 150A-14
- G.S. 150A-58
- G.S. 150A-58(b)
- G.S. 150A-58(c)
- G.S. 150A-59
- G.S. 150A-63(c)
- 1 N.C.A.C. 2A .0103
- Chapter 143, Article 1
- Executive Order 38
Original opinion text
Requested By: Administrative Rules Review Committee of the General Assembly
Questions: Is the budget manual of the Division of State Budget and Management required to be filed with the Attorney General?
- Is the budget manual of the Division of State Budget and Management subject to the adoption and amendment procedural requirements of the Administrative Procedures Act?
Conclusion: Yes, except for those parts already filed or which are not rules.
- Yes, except for those parts already filed or which are not rules.
- G.S. 150A-58, in relevant part, reads as follows:
(b) As used in this Article, "rule" means every rule, regulation, ordinance, standard, and amendment thereto adopted by any agency and shall include rules and regulations regarding substantive matters, standards for products, procedural rules for complying with statutory or regulatory authority or requirements and executive orders of the Government.
G.S. 150A-59, in relevant part, reads as follows:
Rules adopted by any agency on or after February 1, 1976, shall be filed with the Attorney General. All rules shall become effective 30 days after filing, unless the agency shall specify, an earlier or later effective date. An earlier effective date shall not precede the date of filing.
1 North Carolina Code 2A .0103 reads as follows:
The budget manual sets forth policies and procedures to be followed by state agencies in preparing, monitoring and executing the state's budget. Copies of the budget manual shall be provided to the various departments of state government and are available for public inspection at the division office.
History Note: Statutory Authority G.S. Chapter 143, Article 1; Eff. February 1, 1976; Readopted Eff. February 27, 1979.
G.S. 150A-63, in relevant part, reads as follows:
(c) If the Attorney General determines that publication of any rule would be impracticable, he shall substitute a summary with specific reference to the official rule on file in his office.
Chapter 150A, the Administrative Procedures Act, has two separate and distinct definitions of "rule." The definition in Article 5, Publication of Administrative Rules, is more inclusive than the rule making definition in Article 2, Rule Making, Regulations exempt from the rule making article are not exempt from the publication article unless the regulation is exempted by G.S. 150A-58(b)(1-4). G.S. 150A-59 states no rule, as defined in G.S. 150A-58, may become effective any earlier than the date of filing with the Attorney General.
The budget manual is a compilation of rules and regulations developed by the Division of State Budget and Management which sets forth policies and procedures state agencies must follow in preparing, monitoring and executing the state's budget. An examination of the contents of the manual discloses that it consists of (1) reprints of General Statutes, (2) reprints of other sections of the Administrative Code, and (3) regulations not contained in other sections of the code. This last category includes regulations developed by the Division of State Budget and Management which are necessary to provide more specific procedures for complying with the requirements of the General Statutes and the Executive Orders of the Governor. The last category also contains the portions of the budget manual which have not been filed with the Attorney General. The rule on file, 1 N.C.A.C. 2A.0103, describes the budget manual and states it may be inspected in the division office. G.S. 150A-63(c) allows for a summary rule if the publication of a rule would be impracticable, but it requires the official rule must be on file in the Attorney General's Office. Those portions of the budget manual which are rules within the the meaning of G.S. 150A-58 and which have not previously been filed with the Attorney General must be filed with the Attorney General to be effective.
(2) In relevant part, G.S. 150A-9, reads as follows:
It is the intent of this Article to establish basic minimum procedural requirements for the adoption, amendment, or repeal of administrative rules . . . No rule hereafter adopted is valid unless adopted in substantial compliance with this article.
G.S. 150A-10, in relevant part, reads as follows:
As used in this Article, "rule" means each agency regulation, standard or statement of general applicability that implements or prescribes law or policy, or describes the organization, procedure, or practice requirements of any agency.
The term includes the amendment or repeal of a prior rule but does not include the following:
- (1) Statements concerning only the internal management of an agency and not affecting private rights or procedures available to the public;
- (6) Interpretative rules and general statements of policy of the agency.
G.S. 150A-12, in relevant part, reads as follows:
(f) No rule making hearing is required for the adoption, amendment or repeal of a rule which solely describes the organization of the agency or describes forms or instructions used by an agency.
- G.S. 150A-14, in relevant part, reads as follows: An agency may adopt, by reference in its rules and without publishing the adopted matter in full, all or any part of a code, standard or regulation which has been adopted by any other agency of this State or any agency of the United States or by a generally recognized organization or association.
- G.S. 150A-2, in relevant part, reads as follows:
(1) "Agency" means every . . . department, division, council, member of Council of State, or officer of the State Government of the State of North Carolina . . .
Article 2, Rule Making has a definition of "rule" which varies substantially from that of Article 5. The definition in G.S. 150A-10 determines which regulations are subject to the procedural requirements of Article 2, which include notice of hearing and public hearing prior to adoption. The two exemptions cited above, G.S. 150A-10(1) and (6), may include some of the unfiled portions of the budget manual. In applying the definition of "rule," the exemption created by G.S. 150A-10(1) should be limited to those regulations concerning the internal management of the Division of State Budget and Management. Some guidance on the exemption created by G.S. 150A-10(6) is provided by Professor Charles E. Daye in his 1975 article entitled "North Carolina's New Administrative Procedures Act: An Interpretive Analysis," 53 N.C. Law Review 833-923, (1975). At page 853, it states:
"Generally speaking, interpretative rules carry no sanction, and if a sanction is involved, it is seen as emanating from the statute . . . It should be emphasized that careful scrutiny of the substance of the rule in question is critical, since the interpretive rule exclusion, if not confined to proper boundaries, could well subsume the rulemaking provision."
Finally, two separate statutory sections may exempt certain of the regulations of the budget manual from rulemaking or publication in full. G.S. 150A-12(f) exempts any regulations which describe "forms or instructions used by an agency." G.S. 150A-14 exempts from publication in full any regulations adopted by another agency of the State which are adopted by reference. It should be noted any regulations so adopted must be amended any time the promulgating agency alters a regulation for the adopting agency to maintain the same regulations or the promulgating agency.
Each regulation in the budget manual must be individually examined to determine (1) whether it is a rule within the meaning of G.S. 150A-10; (2) whether, although it is rule, it is exempted from the rule making requirements by G.S. 150A-12(f); and (3) whether it was adopted by reference and thereby exempt from publication.
When the manual was developed, the Division of State Budget and Management was a part of the Department of Administration. By Executive Order 38, that division was transferred to the Office of the Governor on September 10, 1979. Both the Governor's Office and the Department of Administration are agencies within the statutory definitions of "agency" in G.S. 150A-2(1) and G.S. 150A-58(c) and are required to comply with Article 2, Rule Making, and Article 5, Publication of Administrative Rules, to the same extent as are other agencies not specifically exempted.
Rufus L. Edmisten
Attorney General
Daniel F. McLawhorn
Assistant Attorney General