Appeal from the Circuit Court of Cook County; the Hon. Arthur
L. Dunne, Judge, presiding.
JUSTICE PERLIN DELIVERED THE OPINION OF THE COURT:
Rehearing denied December 13, 1983.
On August 28, 1980, defendant, the Attorney General of Illinois, adopted comprehensive rules regulating the operation of buyers clubs *fn1 within Illinois. (4 Ill. Reg., No. 37, at 567-96 (1980).) The Attorney General based his authority to issue these rules on section 4 of the Consumer Fraud and Deceptive Business Practices Act (the Act), which provides:
"To accomplish the objectives and to carry out the duties prescribed by this Act, the Attorney General, in addition to other powers conferred upon him by this Act, may issue subpoenas to any person, administer an oath or affirmation to any person, conduct hearings in aid of any investigation or inquiry, prescribe such forms and promulgate such rules and regulations as may be necessary, which rules and regulations shall have the force of law." Ill. Rev. Stat. 1981, ch. 121 1/2, par. 264.
A violation of the Buyers Club Rules "constitutes an unfair method of competition and an unfair or deceptive act or practice within the meaning of Section 2 of the * * * Act [Ill. Rev. Stat. 1981, ch. 121 1/2, par. 262] subject to the penalties contained therein." Rule 108, 4 Ill. Reg., No. 37, at 572-73 (1980).
The Rules were made effective October 1, 1980 (4 Ill. Reg., No. 37, at 554 (1980).) On the same date, plaintiff, United Consumers Club, Inc., a corporation which derives its principal source of income from the sale of memberships in buyers clubs, filed an action in the circuit court seeking declaratory and injunctive relief against the Rules. Plaintiff claimed, inter alia, that the Attorney General has no power to issue binding substantive rules and regulations under section 4 of the Act, that the Rules unconstitutionally impair the obligation of contracts and that the Act unlawfully delegates legislative authority to the Attorney General. The parties thereafter filed cross motions for summary judgment on these issues.
In a final judgment order entered on March 26, 1982, the circuit court found that the Attorney General has authority under section 4 of the Act to promulgate binding substantive rules and regulations, that the Rules do not on their face unconstitutionally impair the obligation of contracts and that the Act contains a lawful delegation of legislative authority. Consistent with these findings, the court denied plaintiff's motion for summary judgment and granted defendant's motion for summary judgment. The court reserved ruling on the other issues presented in plaintiff's complaint, including the question as to whether the Attorney General exceeded his statutory authority in promulgating individual Buyers Club Rules. Plaintiff has appealed. Pursuant to an agreed order, the enforcement of the Rules has been stayed pending disposition of the appeal.
• 1 Plaintiff initially contends that section 4 of the Consumer Fraud and Deceptive Business Practices Act does not confer upon the Attorney General authority to promulgate binding substantive rules and regulations. In considering this contention, it is essential to recognize the fundamental distinction Professor Davis has articulated between legislative and interpretative rules: "A legislative rule is the product of an exercise of delegated legislative power to make law through rules. An interpretative rule is any rule an agency issues without exercising delegated legislative power to make law through rules." (2 K. Davis, Administrative Law Treatise sec. 7:8, at 36 (2d ed. 1979).) In Joseph v. United States Civil Service Com. (D.C. Cir. 1977), 554 F.2d 1140, the court elaborated upon this distinction:
"Interpretative rules may be substantive in the sense of addressing a substantive rather than procedural issue of law and legislative rules may be procedural. *fn2 The relevant distinction between legislative and interpretative or any other nonlegislative rules is not the nature of the questions they address but the authority and intent with which they are issued and the resulting effect on the power of a court to depart from the decision embodied in the rule." 554 F.2d 1140, 1153 n. 24.
"Legislative rules have the full force of law and are binding on a court subject only to review under an arbitrary and capricious standard. Interpretative rules do not have the force of law and even though courts> often defer to an agency's interpretative rule they are always free to choose otherwise." 554 F.2d 1140, 1154 n. 26.
• 2 Section 4 of the Consumer Fraud and Deceptive Business Practices Act provides in pertinent part that "[t]o accomplish the objectives and to carry out the duties prescribed by this Act, the Attorney General * * * may * * * promulgate such rules and regulations as may be necessary, which rules and regulations shall have the force of law." (Emphasis added.) (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 264.) In light of this explicit statutory language, it is clear that rules and regulations promulgated by the Attorney General under section 4 are legislative and thus are binding on the courts>. See General Electric Co. v. Gilbert (1976), 429 U.S. 125, 141, 50 L.Ed.2d 343, 357, 97 S.Ct. 401, 410-11, where the Supreme Court stated that administrative regulations which Congress has declared shall have the force of law are legally binding.
Plaintiff, however, points out that the Attorney General's authority to adopt rules and regulations having the force of law appears in a section of the Act which also confers authority to issue subpoenas, administer an oath or affirmation, conduct investigations and inquiries, hold hearings and prescribe forms. It is plaintiff's position that the Attorney General's rulemaking authority under section 4 is limited to the promulgation of procedural rules implementing his investigatory and subpoena powers. We cannot agree.
Whether section 4 invests the Attorney General with substantive rulemaking authority presents an issue of first impression in Illinois. We note, however, that five States have statutory provisions virtually identical to section 4 of the Illinois Act. (Iowa Code Ann., sec. 714.16 (West 1979); N.J. Rev. Stat. sec. 56:8-4 (1964); N.D. Cent. Code sec. 51-15-05 (1982); S.C. Code Ann. sec. 39-5-80 (Law. Co-op. 1977); S.D. Comp. Laws Ann. sec. 37-24-14 (1977).) Our research discloses that in only one of these jurisdictions, New Jersey, has the State attorney general promulgated substantive rules and regulations. His authority to adopt such rules was sustained by the New Jersey Supreme Court in Fenwick v. Kay American Jeep, Inc. (1977), 72 N.J. 372, 371 A.2d 13. *fn3
In Fenwick, an advertising agency challenged the validity of an administrative regulation which makes it an unlawful motor vehicle advertising practice to fail to disclose the bona fide odometer reading in an advertisement for the sale of a used automobile. The practice is deemed unlawful without regard to the intent of the advertiser. In reviewing this regulation, the Supreme Court of New Jersey, noting that the Consumer Fraud ...