§ 8505. Rules and operating procedures; rulemaking functions of the Commission and opting
out of uniform standards
(a) Rulemaking authority. The Commission shall adopt reasonable rules, including uniform standards, and operating
procedures in order to effectively and efficiently achieve the purposes of this compact.
Notwithstanding the foregoing, in the event the Commission exercises its rulemaking
authority in a manner that is beyond the scope of the purposes of this chapter, or
the powers granted under this chapter, such an action by the Commission shall be invalid
and have no force and effect.
(b) Rulemaking procedure. Rules and operating procedures shall be made pursuant to a rulemaking process that
conforms to the Model State Administrative Procedure Act of 1981 as amended, as may
be appropriate to the operations of the Commission. Before the Commission adopts a
uniform standard, the Commission shall give written notice to the relevant state legislative
committees in each compacting state responsible for insurance issues of its intention
to adopt the uniform standard. The Commission in adopting a uniform standard shall
consider fully all submitted materials and issue a concise explanation of its decision.
(c) Effective date and opt out of a uniform standard. A uniform standard shall become effective 90 days after its adoption by the Commission
or such later date as the Commission may determine; provided, however, that a compacting
state may opt out of a uniform standard as provided in this section. “Opt out” means
any action by a compacting state to decline to adopt or participate in an adopted
uniform standard. All other rules and operating procedures, and amendments to such
rules and operating procedures, shall become effective as of the date specified in
each rule, operating procedure, or amendment.
(d) Opt out procedure.
(1) A compacting state may opt out of a uniform standard, either by legislation or rule
duly adopted by the insurance department under the compacting state’s Administrative
Procedure Act. The Vermont Department of Financial Regulation may adopt an emergency
rule for the purposes of this subsection. If a compacting state elects to opt out
of a uniform standard by rule, it must give written notice to the Commission not later
than 10 business days after the uniform standard is adopted, or at the time the state
becomes a compacting state and finds that the uniform standard does not provide reasonable
protections to the citizens of the state, given the conditions in the state. The Commissioner
shall make specific findings of fact and conclusions of law, based on a preponderance
of the evidence, detailing the conditions in the state that warrant a departure from
the uniform standard and determining that the uniform standard would not reasonably
protect the citizens of the state. The Commissioner must consider and balance the
following factors and find that the conditions in the state and needs of the citizens
of the state outweigh both the intent of the legislature to participate in, and the
benefits of, an interstate agreement to establish national uniform consumer protections
for the products subject to this chapter and the presumption that a uniform standard
adopted by the Commission provides reasonable protections to consumers of the relevant
product.
(2) Notwithstanding the foregoing, a compacting state may, at the time of its enactment
of this compact, prospectively opt out of all uniform standards involving long-term
care insurance products by expressly providing for such opt out in the enacted compact,
and such an opt out shall not be treated as a material variance in the offer or acceptance
of any state to participate in this compact. Such an opt out shall be effective at
the time of enactment of this compact by the compacting state and shall apply to all
existing uniform standards involving long-term care insurance products and those subsequently
adopted.
(e) Effect of opt out.
(1) If a compacting state elects to opt out of a uniform standard, the uniform standard
shall remain applicable in the compacting state electing to opt out until such time
as the opt out legislation is enacted into law or the opt out rule becomes effective.
(2) Once the opt out of a uniform standard by a compacting state becomes effective as
provided under the laws of that state, the uniform standard shall have no further
force and effect in that state unless and until the legislation or regulation implementing
the opt out is repealed or otherwise becomes ineffective under the laws of the state.
If a compacting state opts out of a uniform standard after the uniform standard has
been made effective in that state, the opt out shall have the same prospective effect
as provided under section 8512 of this chapter for withdrawals.
(f) Stay of uniform standard. If a compacting state has formally initiated the process of opting out of a uniform
standard by rule, and while the regulatory opt out is pending, the compacting state
may petition the Commission, at least 15 days before the effective date of the uniform
standard, to stay the effectiveness of the uniform standard in that state. The Commission
may grant a stay if it determines the regulatory opt out is being pursued in a reasonable
manner and there is a likelihood of success. If a stay is granted or extended by the
Commission, the stay or extension thereof may postpone the effective date by up to
90 days, unless affirmatively extended by the Commission, provided a stay may not
be permitted to remain in effect for more than one year unless the compacting state
can show extraordinary circumstances that warrant a continuance of the stay, including
the existence of a legal challenge that prevents the compacting state from opting
out. A stay may be terminated by the Commission upon notice that the rulemaking process
has been terminated.
(g) Not later than 30 days after a rule or operating procedure is adopted, any person
may file a petition for judicial review of the rule or operating procedure, provided
that the filing of such a petition shall not stay or otherwise prevent the rule or
operating procedure from becoming effective unless the court finds that the petitioner
has a substantial likelihood of success. The court shall give deference to the actions
of the Commission consistent with applicable law and shall not find the rule or operating
procedure to be unlawful if the rule or operating procedure represents a reasonable
exercise of the Commission’s authority. (Added 2005, No. 70, § 2; amended 2021, No. 105 (Adj. Sess.), § 275, eff. July 1, 2022.)