Summary:

 Senate Bill 423 (SB 423):  The bill substantially revises how New Mexico state agencies adopt and maintain rules. It grants new authority to the Legislative Finance Committee (LFC), creates a process for legislative approval of major rules, requires gubernatorial approval of all rules, and introduces automatic expiration of rules after five years unless the legislature renews them. The bill also sets notice and cost-benefit analysis requirements for proposed rules and clarifies standards for judicial review of new or existing rules. 

Legislation Overview:

 Senate Bill 423 (SB 423):  This legislative bill offers additional scrutiny from the Legislative Finance Committee and require legislative authorization before taking effect (absent certain emergencies). All rules must receive gubernatorial approval and will automatically expire after five years unless renewed by the legislature. The bill’s expanded notice, cost-benefit, and judicial review provisions significantly alter the rulemaking process, aiming to increase legislative oversight and transparency.
Major Rules and Impact Analyses - Definition of Major Rule - 
A rule or emergency rule is considered “major” if it is likely to result in:
a.	An annual effect on the state of $10 million or more;
b.	Costs to individuals or industries of $10 million or more;
c.	Significant adverse effects on competition, employment, investment, productivity, innovation, or industries/regions; or
d.	Significant social or cultural changes for certain populations (e.g., religious, ethnic, racial, or gender groups).
Legislative Finance Committee Involvement:
a.	If requested by legislative leadership or relevant committee chairs/ranking members, the LFC determines whether a proposed rule is “major.”
b.	The LFC must then perform a Rule Impact Analysis within 15 days of submission for any major rule, including statements of need, cost-benefit assessments, alternative approaches, and sources of data.
Legislative Authorization for Major Rules:
a.	Major rules cannot take effect unless authorized by the legislature.
b.	If the rule is not disapproved by the legislature, it may go into effect no later than 60 days after submission, unless an emergency requires earlier implementation.
Gubernatorial Approval of All Rules:
a.	All rules (including major and non-major) adopted by state agencies must receive written approval from the governor prior to publication in the New Mexico Register.
Notice and Cost-Benefit Requirements:
Notice of Proposed Rulemaking – 
a.	Agencies must post a summary of the proposed rule, explain its purpose, identify its statutory authority, and classify it as “major” or not.
b.	Agencies must also provide a cost-benefit analysis to the legislature when submitting their Notice of Proposed Rulemaking, including projected job gains or losses (both public and private sectors).
Public Comment and Hearing
a.	Interested persons have a right to comment and submit data regarding proposed rules.
b.	Agencies must consider these comments and provide a concise statement explaining their decision.
 Five-Year Automatic Expiration of Rules
Expiration Date - A newly adopted rule expires automatically on January 1 of the fifth year after it takes effect, unless it is renewed earlier or repealed sooner.
Legislative Renewal
a.	An agency may request the legislature to renew a rule for an additional 5-year term.
b.	The renewal request must include a cost-benefit analysis and explain why the rule is needed.
c.	If the legislature does not renew the rule within 60 days of receiving the request, the rule terminates.
Existing Rules
a.	All rules in effect on the effective date of this bill are considered adopted as of that date and thus will expire five years later unless renewed by the legislature.
Judicial Review
a.	The bill clarifies that district courts may conduct a de novo review to determine whether an agency or legislature has met all procedural prerequisites for a rule’s adoption.
b.	The court can declare a rule invalid if it exceeds the agency’s authority or if proper procedures (including legislative approval for major rules) were not followed.