Prospective and Retroactive Effect of Rules


Retroactivity is the process of applying laws to events that took place earlier, i.e., even before the law was passed.

U.S. jurisprudence does not favor retroactivity.[i] Generally, rules and regulations are not retroactive.  Hence, the applicability of administrative rules and regulations are limited to the time following their passage into law.[ii]

Generally, Congress does not provide administrative agencies authority to create rules that have retroactive effect.[iii]  However, if the statute conferring the rule making powers to administrative agencies provides that certain rules can have apply retroactively, the agencies can create retroactive rules.  All administrative rules will have only prospective effect, unless the language of the parent statute provides for a retroactive effect.  A statutory grant of legislative rule making authority to an administrative agency will not grant the power to promulgate rules having retroactive effect unless that power is conveyed by Congress in express terms.[iv]

Pursuant to the Federal Administrative Procedure Act (APA), rules created by administrative agencies should only possess a prospective effect.  Under the Federal APA, rules are defined as agency statements having general or particular applicability and future effect.[v]

The U.S. Supreme Court has established a long standing presumption against retroactive rules as they are generally result in unjust results.  Retroactive legislation is said to be unfair because it deprives citizens of notice and can create economic uncertainty.[vi]

In most U.S. states, retroactive application is discussed in the procedural rules created by administrative agencies.[vii] However, retroactive application of procedural rules should not apply to steps already taken in pending actions.

In the case of regulations that clarify or codify an existing rule, retroactive application is allowed.  However, a statute or administrative regulation cannot be conferred retroactive effect just because the statute or regulation applies to prior conduct.[viii]  The federal APA prohibits retroactive application of rules on past actions because that alters the consequences of those actions after the fact.  Therefore, courts are bound to apply administrative regulations prospectively.  However, if congress expressly provides for retroactive application of certain regulations, the courts can give effect to the legislature’s intent.

[i] Criger v. Becton, 902 F.2d 1348 (8th Cir. Mo. 1990)

[ii] Hem v. Maurer, 458 F.3d 1185 (10th Cir. Colo. 2006)

[iii] Patterson v. McLean Credit Union, 784 F. Supp. 268 (M.D.N.C. 1992)

[iv] Portlock v. Barnhart, 208 F. Supp. 2d 451 (D. Del. 2002)

[v] 5 USCS § 551

[vi] United States v. Ubaldo-Figueroa, 347 F.3d 718 (9th Cir. Cal. 2003)

[vii] Ex parte East State Healthcare Auth., 814 So. 2d 260 (Ala. 2001)

[viii] Monoson v. United States, 516 F.3d 163 (3d Cir. V.I. 2008)