When the Assessment Coordination Division publishes a manual telling county assessors how to value poultry houses, does that count as a 'rule' that needs legislative approval?

Plain-English summary

State Representative Sarah Capp asked three connected questions about the Assessment Coordination Division (ACD) of the Arkansas Department of Finance and Administration and its poultry-house valuation guidelines. The guidelines came out of ACD's Assessors' Replacement Cost Real Estate Manual (ARCREM), one of four manuals ACD published for use by county assessors. ACD had been pushing assessors to apply new poultry-house numbers without first running the manual through legislative review under Amendment 92.

The AG worked through three answers:

1. Did ACD need legislative review under Amendment 92? Probably not. Amendment 92 and Act 1258 of 2015 required legislative review only of "rules," and a "rule" had to be a statement of general applicability and future effect that implements, interprets, or prescribes law or policy. Because ACD's own administrative code said the ARCREM was a guide that "may be used" rather than a mandatory directive, and because the Arkansas Supreme Court had confirmed in Kitchens v. Arkansas Appraisal Service that assessors could deviate from the manual, the AG read the optional ARCREM guidelines as not "rules."

2. Did the legislature have any oversight here? Yes in general. The Arkansas Constitution charges the General Assembly with setting valuation methods and ensuring uniform property values, and the General Assembly created ACD and assigned its supervisory role. But that general oversight power did not, by itself, force ACD to submit non-mandatory guidelines for prior approval.

3. Could ACD command a local assessor to use a particular valuation? No. Except for limited categories like agricultural, pasture, and timber land (where Article 16 § 15 of the Constitution makes a specific manual mandatory), valuation authority sits with the locally elected county assessor. ACD could supervise and audit but could not dictate how a county assessor must value a poultry house.

Currency note

This opinion was issued in 2020. 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.

Common questions

Q: What is ARCREM?
A: The Assessors' Replacement Cost Real Estate Manual, published by ACD under its statutory mission to publish valuation tables for county assessors. ACD has been publishing manuals like this since 1955.

Q: Why did "optional" matter so much in the AG's reasoning?
A: Because the Arkansas Administrative Procedure Act and Act 1258's definition of "rule" both require the agency statement to "implement," "prescribe," or "interpret" law. The AG borrowed Black's Law Dictionary and the American Heritage Dictionary to argue that "implement" and "prescribe" connote a mandatory requirement. An optional guideline does not prescribe.

Q: Does this mean assessors can ignore ACD entirely?
A: No. The opinion noted that assessors must still meet the constitutional requirement that property assessments be "equal and uniform" (Art. 16, § 5(a)) and the duties imposed on assessors by the Arkansas Code. If they deviate from ACD's suggested numbers, they must document the alternate sources they relied on, because ACD will need to consult those sources during audits.

Q: Are any ACD manuals mandatory?
A: Yes, exactly one. Article 16, Section 15 of the Constitution makes specific valuation rules mandatory for agricultural land, pasture land, and timber land. ACD's "Agricultural Land, Pasture Land and Timber Land Guidelines" is the manual used to implement that provision and is mandatory for assessors.

Q: What happens if ACD issues a mandatory poultry-valuation rule in the future?
A: Then it almost certainly would be a "rule" under Amendment 92 and Ark. Code Ann. § 10-3-309, requiring promulgation under the APA and legislative review and approval before it could take effect.

Background and statutory framework

Amendment 92, ratified in 2014 and codified at Ark. Const. art. 5, § 42, gave the General Assembly the power to review and approve all administrative rules of state agencies. Act 1258 of 2015 implemented Amendment 92 by amending Ark. Code Ann. §§ 10-3-309 and 25-15-204. The legislative-review step was added to the rulemaking sequence in the APA at § 25-15-204(f).

The definition of "rule" in § 10-3-309(b)(1)(A) tracks the APA's definition at § 25-15-202(9)(A): "a state agency statement of general applicability and future effect that implements, interprets, or prescribes law or policy." For Amendment 92 purposes, both definitions are nearly identical.

ACD itself is the successor to the Arkansas Public Service Commission's assessment-coordination role (Act 436 of 1997) and was reorganized into the Department of Finance and Administration by Act 910 of 2019. Ark. Code Ann. § 26-24-102 charges ACD with administering property tax laws and supervising county assessors and equalization boards "to the end that all assessments on property in the state are made in relative proportion to the just and true value thereof and in substantial compliance with the law."

The opinion relied on three case-law touchpoints. Brock v. Townsell, 2009 Ark. 224, 309 S.W.3d 179, supplied the canon that statutes are construed by giving words their ordinary meaning. Kitchens v. Arkansas Appraisal Service, 233 Ark. 384, 344 S.W.2d 853 (1961), held that assessors who deviated from the ACD manual still complied with the statute requiring "use" of the manual, which underwrote the AG's reading that the ARCREM is not mandatory. Ark. Pharmacist's Ass'n, Inc. v. Ark. State and Pub. Sch. Life and Health Ins. Bd., 352 Ark. 1, 98 S.W.3d 27 (2003), distinguished a mere internal policy from one that affects rights of people outside the agency, the latter being more "of general applicability."

Citations

• Ark. Const. amend. 92; art. 5, § 42; art. 16, § 5(a); art. 16, § 15(c); art. 19, § 20
• Ark. Code Ann. § 10-3-309 (definition of "rule" for legislative review)
• Ark. Code Ann. § 25-15-202(9)(A) (APA definition of "rule")
• Ark. Code Ann. § 25-15-204 (APA rulemaking procedure)
• Ark. Code Ann. § 25-28-104 (ACD subject to APA)
• Ark. Code Ann. § 26-24-102 (ACD supervisory authority)
• Ark. Code Ann. § 26-26-407 (valuation tables; agricultural-land mandatory)
• Ark. Code Ann. § 26-26-1904(4); § 26-26-1202(i)
• Ark. Code Ann. § 26-26-304; § 26-26-1902 (assessor documentation)
• Ark. Admin. Code 177.00.1-4.13
• Acts 1258 of 2015; 153 of 1955; 436 of 1997; 910 of 2019, § 3265
• Brock v. Townsell, 2009 Ark. 224, 309 S.W.3d 179
• Kitchens v. Arkansas Appraisal Service, 233 Ark. 384, 344 S.W.2d 853 (1961)
• Ark. Pharmacist's Ass'n, Inc. v. Ark. State and Pub. Sch. Life and Health Ins. Bd., 352 Ark. 1, 98 S.W.3d 27 (2003)
• Senn Park Nursing Center v. Miller, 470 N.E.2d 1029 (1984)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2019-053
February 7, 2020

The Honorable Sarah E. Capp
State Representative
P. O. Box 1184
Ozark, AR 72949-1184

Dear Representative Capp:

This is in response to your request for an opinion regarding the Assessment Coordination Division (ACD) of the Arkansas Department of Finance and Administration. Your correspondence sets out the following background information:

Arkansas voters approved Amendment 92 to the Arkansas Constitution during the 2014 General Election. Amendment 92 provides that the General Assembly review and approve all administrative rules of state agencies and other related bodies that promulgate such rules. The definition of "rule" is defined in Ark. Code Ann. § 25-15-202. In recent years, ACD has pursued new valuation models for poultry houses and related structures and instructed county assessors to implement them. It appears ACD has developed and possibly implemented these valuation models, or guidelines as they describe them, without any legislative oversight, approval, or review.

In light of the foregoing, you have asked the following questions:

1. What authority does ACD have to issue, implement, or utilize these valuation models or guidelines without submitting them initially for legislative approval or review?
2. Are these valuation models or guidelines subject to legislative oversight, approval, or review?
3. Does ACD have the authority to tell a locally elected assessor how to value properties?

RESPONSE

In response to your first question, the poultry house valuations issued by ACD are likely not "rules," meaning ACD is not required to submit these guidelines for legislative review and approval before issuing them. The answer to your second question is twofold: "Yes," the legislature has general oversight power with respect to ascertaining property tax valuations and ensuring equal and uniform valuations throughout the state. But "no," I do not believe ACD is required to submit optional guidelines to the legislature for review and approval prior to issuing them. The answer to your third question is "no," ACD may not tell county assessors how to value poultry houses.

DISCUSSION

Question 1: What authority does ACD have to issue, implement, or utilize these valuation models or guidelines without submitting them initially for legislative approval or review?

The foundation for this question is the General Assembly's authority (granted by Amendment 92 and its enabling legislation, Act 1258 of 2015) to review and approve rules promulgated by a state agency before such rules can take effect. Act 1258 established the process for legislative approval of agency rules and revised many rule-making provisions for individual state agencies. Additionally, Act 1258 defines what constitutes a "state agency" and a "rule." Act 1258's definition of "rule," which can be found in Ark. Code Ann. § 10-3-309, is virtually identical to the definition of "rule" that is used for purposes of the Administrative Procedure Act (APA). Indeed, given the aim of Act 1258 and the fact that it amended the APA's procedure for adopting rules by adding the legislative approval requirement, it is very likely that the legislature intended the "rules" mentioned in section 10-3-309 to refer to those same "rules" that are subject to the APA.

Thus, Amendment 92 and Act 1258 did not change the meaning of a "rule." Rather, they have essentially added an extra step (legislative approval) to the process an agency must go through to promulgate a rule under the APA. ACD, which is an agency with rulemaking authority that is subject to the APA, is undoubtedly a "state agency" for purposes of Ark. Code Ann. § 10-3-309 as well. The only question in this case, therefore, is whether ACD's poultry house valuation models, or guidelines, constitute "rules," such that they must first receive legislative review and approval before they can be implemented.

I gather from the information you provided in your inquiry that the poultry house valuation models are guidelines from a recent Assessors' Replacement Cost Real Estate Manual (ARCREM), one of the four types of assessment manuals created by ACD. Since 1955, ACD has published such manuals, which provide guidelines for county assessors to use in assessing property. In determining whether the guidelines set forth in ARCREM constitute "rules" for purposes of legislative review and approval, we must look to the statutory definition of "rule" and construe the definition "just as it reads, giving the words their ordinary and usually accepted meaning in common language."

To qualify as "rules," the ARCREM guidelines must be "statement[s] of general applicability and future effect that implement, interpret, or prescribe law or policy." The guidelines contain suggested valuations that assessors may use as a starting point for determining the value of a particular piece of property. Thus, they are meant to have "future effect," and a court would probably determine that they are "statements of general applicability" as well, given how their implementation by assessors could affect the rights and procedures available to individuals outside ACD.

However, the guidelines do not "interpret" law or policy, as they do not "ascertain the meaning and significance of thoughts expressed in words" (the general meaning of "interpret"). And because the guidelines in ARCREM are optional for assessors to follow, they likely do not "implement" or "prescribe" law or policy either, as the definitions of those terms connote a mandatory requirement.

In sum, I do not think that the optional guidelines contained in ARCREM meet the statutory definition of "rules," such that they must receive legislative review and approval before they can be issued.

Question 2: Are these valuation models or guidelines subject to legislative oversight, approval, or review?

The General Assembly plays an important role in overseeing property tax valuations. Specifically, the Arkansas Constitution charges the General Assembly with directing the manner by which real and tangible personal property values are to be ascertained and ensuring that such valuations are equal and uniform throughout the State. The General Assembly may, by a three-fourths supermajority vote, establish the methods and procedures for valuation of property for taxation purposes. While the General Assembly may not alter the method of valuation set forth in Article 16, Section 15 of the Constitution, it is charged with enacting laws providing for the administration and enforcement of Section 15 and with imposing penalties for violations of Section 15 or statutes enacted pursuant thereto. The General Assembly also created ACD by statute, directing the agency to administer the property tax laws of the state and to supervise the "valuation, assessment, and equalization" of property across the state.

Thus, the General Assembly does have legislative oversight power with respect to ascertaining property tax valuations and ensuring equal and uniform valuations throughout the state. However, to the extent you are asking whether the law requires ACD to submit its poultry valuations guidelines for legislative review and approval before issuing them, I believe the answer is "no," as explained above.

Question 3: Does ACD have the authority to tell a locally elected assessor how to value properties?

ACD has broad authority with respect to administering Arkansas tax laws, including the authority to oversee the "several county assessors, county equalization boards, and other officers charged with the assessment or equalization of property taxes throughout the state," to the end that all assessments on property in the state are "made in relative proportion to the just and true value" thereof and "in substantial compliance with the law." However, unless an exception applies, the authority to appraise, value, and assess real and personal property within a county lies with the individual county assessor. Because an exception does not apply here, ACD may not tell local county assessors how they should value poultry houses.

Of course, county assessors do not have unlimited free reign in assessing property. They must heed the constitutional requirement that property assessments be "equal and uniform," uphold their constitutional and statutory oaths of office, and meet the duties and requirements of assessors set forth in the Arkansas Code. Additionally, if county assessors deviate from ACD's suggested valuations, they should document the sources relied upon in valuing property, as ACD will need to consult these sources when conducting audits.

Sincerely,

LESLIE RUTLEDGE
Attorney General