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NM Real Estate Appraisers Board goes rogue

Down deep in the plumbing of state government is a device that allows private codes and standards to be made enforceable. It’s a curious little feature called “incorporation by reference.” It isn’t used much, but if a New Mexico state agency wants to enforce, say, some group’s copyrighted technical standards, it can do it.

But enforcing copyrighted codes can be problematic, and that’s why state law requires safeguards. It’s unclear exactly how many private standards are referenced in state law and the practice is prone to abuse.

The legislative branch will sometimes authorize a private code in a statute, and then agency employees in the executive branch will draft a regulation defining how it will be enforced. To be enforceable by the executive branch, it must go through a rulemaking process that includes steps such as proclamation in the state register, a notice-and-comment period, a public hearing, a cost-benefit analysis and an analysis of how the regulation might affect small business.

It’s unclear exactly how many private codes and standards have been embedded in state law. No one seems to keep count. And it’s prone to abuse.

One agency, the New Mexico Real Estate Appraisers Board, incorporated the 2004 edition of an obscure private code of conduct called the “Uniform Standards of Professional Appraisal Practice,” a copyrighted standard used by real estate appraisers, employees of county assessor’s offices and practitioners of a few other specialties in the state. The standards are published by a Washington, D.C., nonprofit with 14 employees called the Appraisal Foundation. But the licensing agency has been enforcing every new version of the standards for the past 15 years – eight versions total – without following a required state rulemaking law.

In that regard, the state board has gone rogue. It’s operating in open violation of the New Mexico Administrative Code and the state’s Administrative Procedure Act, with no qualifiers.

I stumbled upon these miscreant activities while researching my recent book, “Dispatches from the Cosmic Cobra Breeding Farm.” The book deals with the rise of the practice of “incorporation by reference” among state and federal agencies. This foundation’s standards are a good test case. The feds put pressure on the states to adopt the current version of it every two years. The short lead time makes it a good test case for spotting chicanery. Agencies in states such as Kansas, Maine, Wisconsin, Kentucky and Montana seem to get it right. Others bluff it out.

What’s happening with this agency is everyone’s nightmare about the practice. On its own authority, the agency has effectively delegated the people’s work to a private organization on a carte blanche basis, seemingly in perpetuity. The nonprofit has learned to monetize the arrangement.

On its end, the nonprofit engages in a process that has a beguiling likeness to government rulemaking: a call for public input, discussion drafts, hearings, technical sessions and action by a standards council. Heavily stage-managed hearings are held in hotel banquet rooms in places such as Las Vegas, Kansas City and Denver. It’s like crack cocaine to a certain breed of state agency head. It makes them feel better about disregarding their own state laws. But the nonprofit’s process has no more bearing on New Mexico law than the musings overheard at the Bell Tower Rooftop Bar at La Fonda or witty repartee between the current grand exalted ruler and the past-grand exalted ruler at the Grand Lodge of the Benevolent and Protective Order of Elks. It may be interesting, but it’s not legally significant to New Mexico law.

For starters, no panelist with the nonprofit has taken an oath to faithfully execute the duties of any New Mexico office. But the state agency enforces the private standards year after year with no safeguards, as the law requires.

So, can a state agency continue to act in this manner? Yes. But strictly entre nous, such private standards aren’t enforceable unless there’s a state rulemaking process behind them. Someone who has taken an oath to faithfully execute the duties of a state office is the governor. It’s on her to keep her agencies in compliance with the law.

Jeremy Bagott is author of “Dispatches from the Cosmic Cobra Breeding Farm.” He can be reached at jbagott@gmail.com.

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