Legacy Education v. Asbcs ( 2018 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
LEGACY EDUCATION GROUP, et al., Plaintiffs/Appellants,
v.
ARIZONA STATE BOARD FOR CHARTER SCHOOLS,
Defendant/Appellee.
No. 1 CA-CV 17-0023
FILED 5-8-2018
Appeal from the Superior Court in Maricopa County
No. CV2016-051845
The Honorable John R. Hannah, Jr., Judge
VACATED AND REMANDED
COUNSEL
Buchalter, Scottsdale
By Roger W. Hall
Co-Counsel for Plaintiffs/Appellants
Osborn Maledon, P.A., Phoenix
By Lynne C. Adams, Eric M. Fraser
Co-Counsel for Plaintiffs/Appellants
Arizona Attorney General’s Office, Phoenix
By Karen J. Hartman-Tellez, Kim S. Anderson, Kathleen Sweeney
Counsel for Defendant/Appellee
Scharf-Norton Center for Constitutional Litigation at the
Goldwater Institute, Phoenix
By Timothy Sandefur
Counsel for Amicus Curiae Goldwater Institute
MEMORANDUM DECISION
Presiding Judge Lawrence F. Winthrop delivered the decision of the Court,
in which Judge Jennifer B. Campbell and Judge Paul J. McMurdie joined.
W I N T H R O P, Presiding Judge:
¶1 Legacy Education Group doing business as East Valley High
School and Tucson Preparatory School (collectively, “the Schools”) operate
charter schools sponsored by the Arizona State Board for Charter Schools
(“the Board”). Under Arizona Revised Statutes (“A.R.S.”) section 15-
183(R),1 charter school sponsors such as the Board must adopt a
performance framework to serve as a basis for the actions they take in
implementing their oversight and administrative responsibilities with
respect to the schools they sponsor. The Schools filed a complaint against
the Board, seeking in part, a determination that some or all the academic
and financial performance frameworks (collectively, “Frameworks”)
adopted by the Board were rules subject to the rulemaking process
provided for in Arizona’s Administrative Procedure Act (“APA”). See
A.R.S. §§ 41-1001 to -1093.02. The superior court concluded the APA did
not apply to the Frameworks—and thus, the Board was not required to
utilize the APA’s rule-making process—and dismissed the Schools’
complaint with prejudice pursuant to Arizona Rule of Civil Procedure
(“Rule”) 12(b)(6). The Schools appealed, and we conclude the Frameworks
generally constitute rules that must be promulgated in compliance with the
APA.2 Accordingly, we vacate the judgment and remand for further
proceedings consistent with this decision.
1 We refer to the current version of the statutes unless otherwise
noted. Statutes marked with the “(†)” symbol refer to the version in place
before August 1, 2012.
2 Our decision is limited to this determination.
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FACTS AND PROCEDURAL HISTORY
I. Background on Charter Schools and the Board
¶2 In Arizona, charter schools are public, state-funded schools
designed to provide “additional academic choices for parents and pupils”
and “a learning environment that will improve pupil achievement.” A.R.S.
§ 15-181(A). Applicants seeking to establish a charter school must apply to
and contract with an authorized sponsor. A.R.S. §§ 15-101(4), -183(A). Only
(1) the Board, (2) the State Board of Education, (3) a university under the
jurisdiction of the Arizona Board of Regents, (4) a community college
district, or (5) a group of community college districts may sponsor a charter
school. A.R.S. § 15-183(C). The Board sponsors the clear majority of
Arizona charter schools, has the authority to determine policy, and can sue
and be sued. See A.R.S. § 15-182(E)(6), (F)(2).
¶3 A charter school must comply with the terms of its charter
contract (the agreement between the school and its sponsor), some state
laws governing traditional school districts, laws applying specifically to
charter schools, and policies adopted by the school’s sponsor. See generally
A.R.S. § 15-183(E), (G), (I), (R). A school’s sponsor has “oversight and
administrative responsibility” for the charter schools it sponsors, and in
implementing those responsibilities, the sponsor must “ground its actions
in evidence of the charter holder’s performance in accordance with the
performance framework adopted by the sponsor.” A.R.S. § 15-183(R). “The
performance framework shall be publicly available, shall be placed on the
sponsoring entity’s website[,] and shall include” enumerated performance
expectations. Id.
II. Pre-2012 Supervision of Charter Schools
¶4 In 1994, the legislature authorized charter schools and formed
the Board as a state agency. See 1994 Ariz. Sess. Laws, ch. 2, § 2 (9th Spec.
Sess.). Between 1994 and 2012, the Board and several other statutory
sponsors supervised charter schools.3 Each sponsor, including the Board,
3 Initially, only the Board, the State Board of Education, and a school
district governing board could be a sponsor. See 1994 Ariz. Sess. Laws, ch.
2, § 2 (9th Spec. Sess.). In 2010, the legislature added as sponsors (1) a
university under the jurisdiction of the Arizona Board of Regents, (2) a
community college district with enrollment of more than fifteen thousand
full-time equivalent students, and (3) a group of community college
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had oversight and administrative responsibility for each charter school it
sponsored. A.R.S. § 15-183(R) (†). As part of that oversight and
administrative responsibility, a sponsor was required to review every
charter school at five-year intervals and could revoke a charter at any time
if the charter school breached one or more provisions of its charter. A.R.S.
§ 15-183(I)(3) (†). In addition to those powers and responsibilities
applicable to all sponsors, the Board had specific authority and obligation
to “[e]xercise general supervision over” the charter schools it sponsored.
A.R.S. § 15-182(E)(1) (†).
¶5 The Board exercised its authority and obligations through (1)
rules applicable to all schools, and (2) individual adjudications specific to a
school. The rules applicable to all charter schools appeared in the Arizona
Administrative Code (“A.A.C.”) and were subject to the administrative
rulemaking process. See A.A.C. R7-5-101 to -504. For individual
adjudications, the Board generally followed specific statutory procedures,
including, in the case of revoking a charter, notice to the school of the intent
to revoke the charter, a period of at least ninety days to correct the identified
problems, and a public hearing. A.R.S. § 15-183(I)(3) (†).
III. The Legislative Requirement for the Board to Create Frameworks
¶6 In 2012, the Arizona Legislature expanded subsection (R) of
A.R.S. § 15-183, requiring sponsors to adopt a performance framework to
govern each sponsored charter school. Revised subsection (R) read as
follows (with the newly added language in italics):
The sponsoring entity of a charter school shall have
oversight and administrative responsibility for the charter
schools that it sponsors. In implementing its oversight and
administrative responsibilities, the sponsor shall ground its actions
in evidence of the charter holder’s performance in accordance with
the performance framework adopted by the sponsor. The
performance framework shall include:
1. The academic performance expectations of the charter school and
the measurement of sufficient progress toward the academic
performance expectations.
districts with a combined enrollment of more than fifteen thousand full-
time equivalent students. See 2010 Ariz. Sess. Laws, ch. 332, § 3 (2nd Reg.
Sess.). In 2016, school district sponsorship of new charter schools was
discontinued. See 2016 Ariz. Sess. Laws, ch. 124, § 3 (2nd Reg. Sess.).
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2. The operational expectations of the charter school, including
adherence to all applicable laws and obligations of the charter
contract.
3. Intervention and improvement policies.
See 2012 Ariz. Sess. Laws, ch. 155, § 1 (2nd Reg. Sess.). Thus, the
performance framework required a sponsor to address three topics: (1)
“academic performance,” (2) “operational expectations,” and (3)
“[i]ntervention and improvement.” A.R.S. § 15-183(R). In 2013, the
legislature amended A.R.S. § 15-183(R) to require that sponsors make the
frameworks publicly available on the internet. See 2013 Ariz. Sess. Laws,
ch. 68, § 1 (1st Reg. Sess.).
¶7 When the legislature amended A.R.S. § 15-183(R) in 2012 to
require charter school sponsors to adopt the performance frameworks, the
APA’s rulemaking requirements did not apply to charter school sponsors
that were school district governing boards, community college districts, or
groups of community college districts because those entities are political
subdivisions of the state and therefore not “agencies” subject to the APA. 4
See A.R.S. §§ 15-101(21) (†), -1401(6) (†), 41-1001(1) (†), -1002(A) (†). Further,
both the State Board of Education and the Board of Regents and institutions
under its jurisdiction were expressly exempted from the APA’s rulemaking
requirements “[u]nless otherwise required by law.” See A.R.S. § 41-1005(D),
(F) (†). Thus, as of 2012, the Board was the only charter school sponsor not
expressly exempted from the APA’s rulemaking requirements, and neither
the 2012 nor the 2013 legislation exempted the Board from following the
APA or its rulemaking requirements. The underlying statutory provisions
providing the exceptions for each of those other sponsors remain essentially
in effect, see A.R.S. §§ 15-101(23), -1401(7), 41-1001(1), -1002(A), -1005(D),
4 In 2012, articles one through five of the APA applied “to all agencies
and all proceedings not expressly exempted,” see A.R.S. § 41-1002(A) (†),
and this provision remains in effect, see A.R.S. § 41-1002(A). Articles two
through five of Title 41 (“State Government”), Chapter 6 (“Administrative
Procedure”), address APA rulemaking. See Art. 2, “Publication of Agency
Rules,” A.R.S. §§ 41-1011 to -1014; Art. 3, “Rule Making,” A.R.S. §§ 41-1021
to -1038; Art. 4, “Attorney General Review of Rule Making,” A.R.S. § 41-
1041; Art. 4.1, “Administrative Rules Oversight Committee,” A.R.S. §§ 41-
1046 to -1048; Art. 5, “Governor’s Regulatory Review Council,” A.R.S.
§§ 41-1051 to -1057.
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(F), meaning that, at the time this appeal was filed, the Board was the only
charter school sponsor not expressly exempted from the rulemaking
requirements of the APA.5
IV. The Board’s Creation of the Frameworks
¶8 Following the 2012 legislation, the Board created an
Academic Performance Framework and a Financial Performance
Framework (the Frameworks at issue).6 By September 2013, the Board had
opened a rulemaking docket, ostensibly to formally codify the Frameworks,
or some portion of the Frameworks, as rules. See 19 Ariz. Admin. Reg. 2857
(Sept. 20, 2013); A.A.C. R1-1-205.
¶9 Also in September 2013, Arizona’s Auditor General issued a
report (“the Auditor General’s Report”) to the legislature, expressing
concern about existing charter school contracts that did not reflect the new
requirements and recommending the Board “adopt rules to define board
standards for academic, financial, and operational performance” to ensure
the Board could exercise appropriate oversight of charter schools based on
its performance standards. Ariz. Auditor General’s Report No. 13-12, at 20-
22, 33 (Sept. 2013).7 The Board responded that it agreed with the finding of
the Auditor General and would implement the recommendation to adopt
rules to define Board standards, sufficient progress toward those standards,
5 The governor recently signed legislation that will exempt the Board
from the APA’s rulemaking requirements. See infra note 14.
6 After the Schools filed their complaint, the Board issued new
Frameworks on June 13, 2016. The issuance of the new Frameworks does
not affect our limited decision.
7 The Schools’ subsequent complaint referenced the Auditor General’s
Report; accordingly, that report could be considered in addressing the
motion to dismiss. See Coleman v. City of Mesa, 230 Ariz. 352, 356, ¶ 9 (2012)
(recognizing that public records regarding matters referenced in a
complaint are not “outside the pleading,” and courts may consider such
documents without converting a Rule 12(b)(6) motion into a motion for
summary judgment (citing Strategic Dev. & Constr., Inc. v. 7th & Roosevelt
Partners, LLC, 224 Ariz. 60, 63-64, ¶¶ 10, 13 (App. 2010))).
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and consequences for not meeting standards or making progress toward
those standards.8
¶10 By February 2014, the Board had issued a notice of proposed
rulemaking. See 20 Ariz. Admin. Reg. 307-23 (Feb. 14, 2014). In the notice,
the Board explained it was “amending its rules to implement changes made
in 2012 and 2013 to the Arizona Revised Statutes relating to charter
schools,” and further explained that “[t]hree new Sections added by this
rulemaking (R7-5-403, R7-5-404, R7-5-405) establish the Board’s academic
and financial performance expectations for charter holders as required by
A.R.S. § 15-183(R).”9 20 Ariz. Admin. Reg. at 308, § 5. The proposed
administrative code sections, however, were not finalized as rules.
¶11 Approximately two years later, on January 21, 2016, counsel
for the Schools filed a petition under then-A.R.S. § 41-1033(C)10 with the
Governor’s Regulatory Review Council (“the Council”), arguing the
Board’s academic, financial, and operational performance Frameworks
should have been adopted as rules under the APA. The Council chose not
to hear the petition after the Board informed the Council a rulemaking
process had been started to address the issue raised in the petition.
¶12 By April 2016, the Board had opened another rulemaking
docket. See 22 Ariz. Admin. Reg. 823-24 (Apr. 15, 2016). The notice stated
that “the Board intends to place in rule Board guidance regarding
performance, financial, and operational standards, measures of sufficient
progress, and Board monitoring and oversight of charter holders,” and
8 Contrary to the Schools’ representation, we do not read the Auditor
General’s Report as necessarily advising the Board that it needed to
formally adopt the Frameworks as rules.
9 Proposed A.A.C. R7-5-403 was entitled and outlined “Academic
Performance Expectations,” proposed A.A.C. R7-5-404 was entitled and
outlined “Demonstrating Sufficient Progress Toward the Board’s Academic
Performance Expectations,” and proposed A.A.C. R7-5-405 was entitled
and outlined “Financial Performance Expectations.” 20 Ariz. Admin. Reg.
at 312-15, § 13.
10 In 2017, the legislature amended A.R.S. § 41-1033, adding a new
subsection (C), amending former subsection (C), and moving that
subsection to subsection (D). See 2017 Ariz. Sess. Laws, ch. 138, § 1 (1st Reg.
Sess.).
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noted that an exemption to Executive Order 2015-0111 had been obtained
from the Governor’s Office. 22 Ariz. Admin. Reg. at 824, § 2.
V. The Schools’ Lawsuit
¶13 Meanwhile, the Schools filed their complaint in superior court
on March 22, 2016, seeking declaratory and injunctive relief against the
Board. Specifically, the Schools sought a declaration that (1) the Board’s
academic and financial performance Frameworks are rules under the APA,
(2) the Board’s failure to adopt the Frameworks in compliance with the APA
renders the Frameworks void and unenforceable, and (3) any and all past
or future actions taken by the Board in reliance on the Frameworks are also
void and without any legal effect or consequence. The Schools also sought
to enjoin the Board from using the Frameworks as the basis for any actions
regarding charter schools the Board sponsors.
¶14 On April 28, 2016, the Board moved to dismiss the complaint
pursuant to Rule 12(b)(6), arguing, in part, that the Board did not have to
follow the APA because it did not have to promulgate the Frameworks as
rules. That motion was briefed in parallel with cross-motions for summary
judgment filed by the Schools and the Board, and the court scheduled oral
argument for October 14.
¶15 On October 7, 2016, the Board asked the court to take judicial
notice that the Board had on October 6 filed a new notice of proposed
rulemaking related to its April docket opening. See 22 Ariz. Admin. Reg.
3057-80 (Oct. 28, 2016). The Board noted that it was seeking to add several
proposed administrative rules, which would incorporate elements of the
Frameworks.12
11 Executive Order 2015-01 provided in part that state agencies “shall
not conduct any rulemaking, whether formal or informal, without the prior
written approval of the Office of the Governor.”
12 The Board specifically directed the court’s attention to the following
proposed A.A.C. provisions: (1) R7-5-101, providing definitions of the
Academic, Financial, and Operational Performance Frameworks; (2) R7-5-
401(A), describing the Board’s use of the Academic Performance
Framework to “assess a charter holder’s achievement of the minimum
academic performance expectations”; (3) R7-5-402(B), describing the
Board’s use of the Financial Performance Framework; (4) R7-5-403(B),
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¶16 At conclusion of oral argument on October 14, the superior
court granted the Board’s motion to dismiss, ruling from the bench that the
APA did not apply to the performance Frameworks described in § 15-
183(R) and, consequently, the Board was not required to promulgate its
Frameworks as rules.13 As a result, the court also found the parties’ cross-
motions for summary judgment were moot.
¶17 In November 2016, the court issued its judgment granting the
Board’s motion to dismiss. We have jurisdiction over the Schools’ timely
appeal pursuant to A.R.S. § 12-2101(A)(1).14
describing the Board’s use of the Operational Performance Framework; and
(5) R7-5-404(A), requiring the Board to “revise the academic, financial, and
operational performance frameworks as needed,” using a notice and
comment process. 22 Ariz. Admin. Reg. at 3060-62, 3070-72.
13 Although the Board made other arguments in support of its motion
to dismiss, those arguments were not addressed by the superior court and
are not addressed by this decision.
14 After briefing began in this appeal, the Board filed a notice of final
rulemaking to complete the 2016 proposed rulemaking and incorporate
much of the Frameworks in or through A.A.C. provisions, see 23 Ariz.
Admin. Reg. 693-721 (Mar. 31, 2017), and the proposed rules have since
been incorporated into Arizona’s current administrative code, see A.A.C.
R7-5-101 to R7-5-607 (current through rules published in 23 Ariz. Admin.
Reg. Issue 52 (Dec. 29, 2017)). Also, in 2017, the Arizona Legislature passed
legislation that would have amended the APA to exempt the Board from
much of the APA’s core rulemaking obligations. See S.B. 1036, 53d Leg., 1st
Reg. Sess. (Ariz. 2017). In place of those obligations, the legislation required
notice and two opportunities for public comment, and it established a
mechanism for any member of the public to file a petition challenging all or
part of any policy or rule the Board enacted. See id. at § 2 (adding
subsections (G) and (H) to A.R.S. § 41-1005). The governor vetoed that
legislation, however, noting that although he supported exempting the
Board from rulemaking, he found the additional requirements of the bill
“onerous.” In 2018, the legislature again passed—and the governor
signed—legislation amending the APA, this time expressly exempting the
Board from the APA’s rulemaking obligations without all the additional
requirements. See S.B. 1055, 53d Leg., 2nd Reg. Sess. (Ariz. 2018) (adding
subsection (G) to A.R.S. § 41-1005). The 2018 legislation does not have an
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ANALYSIS
¶18 The Schools argue the superior court erred in determining
that, before the 2018 legislation, see supra note 14, the Frameworks were not
subject to the APA’s rulemaking procedures.
I. Standard of Review and Applicable Law
¶19 We review de novo the superior court’s dismissal of a
complaint under Rule 12(b)(6). Coleman, 230 Ariz. at 355, ¶ 7. We also
review de novo whether an action is a rule within the meaning of the APA
and, thus, whether an agency is required to comply with the APA’s
rulemaking procedures. Ariz. State Univ. ex rel. Ariz. Bd. of Regents v. Ariz.
State Ret. Sys. (“ASU”), 237 Ariz. 246, 250, ¶ 14 (App. 2015).
¶20 “Dismissal is appropriate under Rule 12(b)(6) only if ‘as a
matter of law [] plaintiffs would not be entitled to relief under any
interpretation of the facts susceptible of proof.’” Coleman, 230 Ariz. at 356,
¶ 8 (quoting Fid. Sec. Life Ins. Co. v. State Dep’t of Ins., 191 Ariz. 222, 224, ¶ 4
(1998)) (alteration in original). “[C]ourts must assume the truth of all well-
pleaded factual allegations and indulge all reasonable inferences from those
facts, but mere conclusory statements are insufficient.” Id. at ¶ 9 (citing
Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7 (2008)).
¶21 The goal of statutory construction is to determine and give
effect to legislative intent. State v. Korzep, 165 Ariz. 490, 493 (1990). A
statute’s language is the best indicator of that intent, Hosp. Corp. of Nw., Inc.
v. Ariz. Dep’t of Health Servs., 195 Ariz. 383, 384, ¶ 4 (App. 1999), and unless
the language is ambiguous, its plain meaning governs, Harris Corp. v. Ariz.
Dep’t of Revenue, 233 Ariz. 377, 381, ¶ 13 (App. 2013).
II. The APA’s Applicability to the Frameworks
¶22 As previously recognized, under A.R.S. § 41-1002(A), the
APA’s rulemaking provisions “apply to all agencies and all proceedings not
expressly exempted.” See supra note 4. The legislature created the Board as
a state agency, see 1994 Ariz. Sess. Laws, ch. 2, § 2 (9th Spec. Sess.), and with
emergency clause, however, meaning it will not take effect until ninety days
after the legislature adjourns. See Ariz. Const. art. 4, pt. 1, § 1(3). Moreover,
because the legislation also does not contain a retroactivity clause, we agree
with the parties that the legislation does not moot all issues raised by the
Schools’ complaint.
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regard to the Frameworks, no statute has expressly exempted the Board
from the APA’s rulemaking provisions—at least until the 2018 legislation
takes effect. Accordingly, the APA currently applies to the Board, and if
the Frameworks qualify as rules, the Board must follow the APA’s
rulemaking provisions in promulgating them.15 See ASU, 237 Ariz. at 252,
¶ 24.
¶23 Under A.R.S. § 41-1001, a “rule” is “an agency statement of
general applicability that implements, interprets or prescribes law or policy,
or describes the procedure or practice requirements of an agency.” A.R.S.
§ 41-1001(19). Thus, two requirements exist for agency action to qualify as
a rule: (1) it must be generally applicable, and (2) it must implement,
interpret or prescribe law or policy, or describe the procedure or practice
requirements of an agency. ASU, 237 Ariz. at 250, ¶ 16.
¶24 In general, the Frameworks satisfy both requirements. First,
the terms of the Frameworks confirm they satisfy the general applicability
requirement. See A.R.S. § 41-1001(19). Both the Academic and Financial
Frameworks expressly apply to all charter holders in the Board’s portfolio.
In other words, they apply to every charter school to which they could
possibly apply, and the Board does not dispute this. Consequently, the
Frameworks are “statement[s] of general applicability” that meet the first
element of a rule. See Carondelet Health Servs., Inc. v. Ariz. Health Care Cost
Containment Sys. Admin. (AHCCCS), 182 Ariz. 221, 227 (App. 1994) (“The
first element is met since AHCCCS admits that its methodology is generally
applied to all hospitals.”).
¶25 Second, the Frameworks are generally intended to interpret
and guide the implementation of state law. See A.R.S. § 41-1001(19). The
Frameworks expressly implement the Board’s statutory directive to
measure and evaluate charter schools’ performance under A.R.S. § 15-183(I)
and (R), and they interpret A.R.S. § 15-183(R), which otherwise leaves much
to the Board’s discretion. See ASU, 237 Ariz. at 251, ¶¶ 18-19; Sw.
Ambulance, Inc. v. Ariz. Dep’t of Health Servs., 183 Ariz. 258, 261 (App. 1995),
15 That the Board (1) started to follow the APA’s rulemaking
requirements regarding the Frameworks in 2014 and again in 2016, (2)
ultimately incorporated much of the Frameworks into Arizona’s current
administrative code, and (3) has sought and now obtained an express
exemption from the APA’s rulemaking requirements suggests the Board
never considered itself to be—and was not—exempt from the APA. See City
of Phoenix v. Glenayre Elecs., Inc., 242 Ariz. 139, 144-45, ¶¶ 20-21 (2017).
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superseded by statute as stated in ASU, 237 Ariz. at 251, ¶ 18. The Academic
and Financial Frameworks also describe procedure or practice
requirements of the Board. Accordingly, the Frameworks generally meet
the second element of a rule and qualify as rules, and under the pre-2018
statutory scheme, the Board’s promulgation of the Frameworks triggered
rulemaking requirements.16
III. The Board’s Responsive Arguments
¶26 The Board argues the legislature did not intend for charter
school sponsors to adopt the Frameworks as rules and therefore, even
absent the 2018 legislation, it has not been required to do so.
¶27 As support for its argument, the Board notes the legislature
knows how to require entities to adopt rules when it wants them to do so,
and § 15-183(R)’s plain language establishes that the legislature intended
charter school sponsors to adopt performance frameworks rather than
performance rules. Citing Duke Energy Arlington Valley, LLC v. Arizona
Department of Revenue, 219 Ariz. 76 (App. 2008), the Board argues that when
the legislature specifically uses a word or phrase other than “rule” to
describe something that it wants an agency to adopt, we should conclude
the legislature intended that the agency adopt that something in the form
the legislature specified rather than in the form of a rule. See id. at 77-79,
¶¶ 6-12.
¶28 Contrary to the Board’s argument, however, the legislature
need not use the word “rule” to invoke the APA’s rulemaking
requirements. See ASU, 237 Ariz. at 249, 252, ¶¶ 6, 22 (holding that a “Policy
on Employer Early Termination Incentive Programs” was a rule within the
meaning of the APA); Sw. Ambulance, 183 Ariz. at 261 (holding that a
schedule of rates and charges for ambulance services qualified as a rule);
Carondelet, 182 Ariz. at 226-28 (holding that a methodology for computing
hospital charges was a rule under the APA). Moreover, Duke Energy is
distinguishable because the tables at issue in that case “function[ed] more
like a guideline than a rule” because they did not “implement, interpret or
prescribe law or policy,” but were tools for economic valuation—something
not susceptible of reduction to a rule. 219 Ariz. at 79-80, ¶¶ 13-15. By
contrast, the Frameworks at issue here deal with the interpretation of the
16 The Board’s prior rulemaking efforts make clear that promulgating
much of the Frameworks through rulemaking is not impracticable, and as
the Schools concede, the Board need not promulgate rules covering every
aspect of overseeing charter schools.
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state’s educational standards and the governing of charter school laws in
Arizona, i.e., rules.
¶29 Further, the legislature does not have to expressly invoke the
rulemaking requirement every time it requires agency action, and this court
has previously rejected the argument that one can infer from legislative
silence that “the legislature never envisioned the need for an explanatory
rule.” Carondelet, 182 Ariz. at 228; accord ASU, 237 Ariz. at 252, ¶¶ 23-25.
The question whether the Frameworks are rules turns on what the
Frameworks are and do, and with respect to the Board, if the Frameworks
are in substance rules—which they generally are—then the APA applies by
default, even if the other entities the legislature authorized to serve as
charter school sponsors are generally exempt from the APA’s rulemaking
requirements.17
¶30 The Board also argues that the legislature’s 2013 amendment
to A.R.S. § 15-183(R) requiring charter school sponsors to make their
performance frameworks publicly available “on the sponsoring entity’s
website,” would have constituted superfluous legislation if the legislature
intended charter school sponsors to promulgate their performance
frameworks as rules in accordance with the APA because the APA requires
that all final agency rules be made publicly available by being published in
the A.A.C. The 2013 legislation is not superfluous, however, because it
applies to all sponsors, including those exempt from the APA, whose
performance frameworks need not be published in the A.A.C. Moreover,
requiring the Board to publish the Frameworks in both the A.A.C. and its
own website merely provides greater public access to the Frameworks.
¶31 Finally, the Board argues that some aspects of the
Frameworks do not meet the APA’s definition of a rule, and if we reject its
argument that the legislature did not intend to require the Board to
promulgate the Frameworks as rules, we should also reject any argument
that the Board must promulgate the Frameworks verbatim as rules. The
Schools concede the Board was not required to promulgate the Frameworks
verbatim as rules, and we agree. The extent to which the Board’s final rules
satisfy the APA’s rulemaking requirements is not a question currently
before this court.
17 We will not infer from the legislature’s general exemptions for other
sponsors that the legislature intended to specifically exempt the Board with
respect to the Frameworks.
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LEGACY EDUCATION, et al. v. ASBCS
Decision of the Court
IV. Attorneys’ Fees and Costs
¶32 The Schools request costs and attorneys’ fees on appeal. The
Schools filed their complaint pursuant, in part, to A.R.S. § 41-1034(B), and
under A.R.S. § 12-348(A)(3), “a court shall award fees and other expenses
to any party . . . that prevails by an adjudication on the merits in . . . [a]
proceeding pursuant to § 41-1034.” Although we vacate the dismissal in
favor of the Board, this case is not over and must be remanded for
resolution in the superior court. Accordingly, we defer any award of fees
to the superior court pending resolution of the case. We award the Schools
taxable costs upon compliance with Arizona Rule of Civil Appellate
Procedure 21.
CONCLUSION
¶33 Until the 2018 legislation exempting the Board takes effect, the
Board is (and has been) subject to the APA’s rulemaking requirements, and
in general, at least some of the Frameworks qualify as rules subject to
rulemaking under the APA. We therefore vacate the superior court’s
judgment dismissing the case on the sole basis that the APA does not apply
to any of the Frameworks and remand for further proceedings consistent
with this decision. We express no opinion on any other issues—including
the parties’ cross-motions for summary judgment—on remand.
AMY M. WOOD • Clerk of the Court
FILED: AA
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