OPINION BY
Judge LEAVITT.
The Commonwealth of Pennsylvania, Department of Corrections and Department of Public Welfare (Commonwealth), petition for review of an interest arbitration award issued by a panel of arbitrators (Panel) pursuant to Section 805 of the Public Employe Relations Act (Act 195).1 The award set forth the terms of a collective bargaining agreement effective July 1, 2005, between the Commonwealth and the Pennsylvania State Corrections Officers Association (Association). In this case we consider whether the Panel exceeded its authority by directing the Commonwealth to provide legal representation to correc[362]*362tions employees in any legal proceeding arising from employment-related conduct, even criminal and malicious conduct, and to indemnify them against civil judgments resulting from such conduct. For the reasons set forth below, we vacate this part of Panel’s award.
The Association represents approximately 9400 corrections personnel, who are employed in the care, custody and control of inmates at State Correctional Institutions and patients at state mental hospitals. The Association and the Commonwealth were parties to a collective bargaining agreement effective from July 1, 2001, to June 30, 2004 (2001 CBA). Pertinent to this appeal is Article 33, Section 21 of the 2001 CBA, which provided bargaining unit members legal representation and indemnification for civil judgments in some, but not all, proceedings brought against them.
In civil cases brought against members of the bargaining unit, Article 33, Section 21 of the 2001 CBA provided as follows:
The Employer [Commonwealth] shall provide liability coverage and legal defense in civil suits as detailed in Title 4 PA Code Chapter 39 [Defense of Suits Against Commonwealth Employees] and Management Directives 205.6 and 630.2.
Reproduced Record at 59a (R.R. -). Under Chapter 39, employees are provided counsel in civil cases where their conduct is alleged to be unintentional, but if their conduct is alleged to be malicious or intentional, it is discretionary with the General Counsel whether to provide the employee defense and indemnification.2
In criminal cases brought against members of the bargaining unit, the 2001 CBA authorized the Commonwealth to provide the member with counsel; if it did not, then the Commonwealth was required to advance reasonable attorney fees. Were the member convicted of the crime, legal fees advanced would be recovered from the member employee’s retirement account. Id. If the member was acquitted by the jury, the Commonwealth was responsible for all reasonable attorney fees. If the employee’s criminal defense was successful on some other basis, then attorney fees were reimbursable to the extent determined by the Commonwealth to be appropriate.
Prior to the expiration of the 2001 CBA, the parties engaged in collective bargaining. When they were unable to reach an [363]*363agreement on a successor contract, they submitted their dispute to binding interest arbitration in accordance with Section 805 of Act 195, 43 P.S. § 1101.805.3 Interest arbitration hearings were held over fourteen days between March and June 2005. Each side presented evidence on a number of issues, including the one that led to this petition for review.
The Association was unhappy with Article 38, Section 21 of the 2001 CBA, arguing that it gave the Commonwealth unfettered discretion to decide whether to provide employees with legal representation and indemnification, making the benefit almost illusory. The Association presented evidence that in 2002 over 1,500 lawsuits were filed against employees in the bargaining unit. Some of these suits included criminal charges that were dismissed; however, the requests for reimbursement of legal fees were denied by the Commonwealth because the 2001 CBA required acquittal after a full jury trial. The Association also presented two examples where two bargaining unit members each spent over $25,000 to defend civil complaints filed by inmates that were eventually settled or dismissed without trial. However, the employees were not reimbursed for their attorney fees. The Association proposed changes to Article 33, Section 21 of the 2001 CBA that would require the Commonwealth to provide legal representation to employees in any civil or criminal case, regardless of whether the conduct in the workplace was alleged to be malicious or negligent.
The Commonwealth opposed the Association’s proposed changes. The Chief Counsel for the Department of Corrections testified, inter alia, that the proposed changes were contrary to the regulations of the Executive Board, the agency responsible for determining when a Commonwealth employee’s expenses can be reimbursed. The Chief Counsel explained that “4 PA Code Section 39.1 simply prohibits Commonwealth lawyers from representing employees in criminal matters.” Notes of Testimony (N.T.) 6/14/05, at 7; R.R. 446a. This prohibition aims to avoid the conflict of interest presented by the Commonwealth prosecuting a defendant of alleged crimes and, at the same time, defending against those charges. Nevertheless, where a prosecution is found to be unfounded, the Commonwealth will pay the legal fees of a private attorney. The Chief Counsel testified that it was rare that a Commonwealth employee was not reimbursed for his legal expenses under 4 Pa.Code § 39.1.
The Chief Counsel also testified that employees are almost always defended and indemnified in civil cases, explaining the circumstances behind the two cases cited by the Association where the employee was denied attorney fees. These were the only two cases where, in the Chief Counsel’s experience over the last seven years, attorney fees were denied. In the first case, the General Counsel disapproved Corrections Officer Kenneth Klaus’ request for reimbursement because the Commonwealth had a videotape of Klaus [364]*364striking an inmate in the face with his knee during a strip search.4 In the second case, involving an inmate’s allegations of sexual harassment against, inter alia, Corrections Officer Carlos Riera, the General Counsel disapproved Riera’s counsel fees because they were excessive. The Chief Counsel refuted the Association’s argument that Chapter 39 gave unfettered discretion to the Commonwealth. He explained that the General Counsel’s denial of indemnification and reimbursement for legal representation can be appealed to an administrative hearing. Thereafter, it is renewable by the Commonwealth Court and the Pennsylvania Supreme Court.5
The Panel issued its award on January 31, 2006. In Paragraph 18 of its award, the Panel adopted verbatim the Association’s proposed amendatory language to Article 33, Section 21 of the 2001 CBA. The award states as follows:
a.If a bargaining unit member is charged with a criminal action arising from the performance of his/her duties, he/she shall select local counsel in consultation with the Commonwealth. The Commonwealth shall pay for the fees of such counsel to the extent the fees are in line with prevailing rates.
b. If a bargaining unit member is a defendant in a civil suit arising from the performance of his/her duties, the Commonwealth shall immediately furnish counsel and defend the member.
c. The Commonwealth shall be responsible for judgments rendered against the member in job-related suits where the bargaining unit member has acted within the scope and responsibility of his/her office.
Award at 10, Paragraph 18.6 The Commonwealth now petitions this Court to vacate Paragraph 18 of the interest arbitration award.
Before this Court,7 the Commonwealth argues that the Panel exceeded its authority by requiring the Commonwealth to do that which is specifically prohibited by law as set forth in 4 Pa.Code §§ 39.1-39.3. The Association counters that the Commonwealth has waived this issue and, alternatively, that the provisions contained in 4 Pa.Code §§ 39.1-39.3 are statements of policy, not regulations, and as such do not have the force and effect of law.
We address, first, the Association’s threshold argument that the Commonwealth never argued before the Panel that adopting the Association’s proposed [365]*365changes would exceed the Panel’s authority. We conclude that this waiver argument lacks merit.
The record reveals that the Commonwealth objected to the legality of the language proposed by the Association at several points in the arbitration proceedings. The Chief Counsel explained in detail the requirements of the Pennsylvania Code and stated that the Commonwealth is “prohibited” from representing employees in criminal matters. R.R. 460a-461a. The Commonwealth provided copies of 4 Pa. Code § 39.1 to the Panel, which specifically states that “[t]he Commonwealth will not provide an attorney to defend a present or former official or employe in a criminal case....” R.R. 583a. The Commonwealth raised the issue in its post-hearing brief and stated again that Chapter 39 “prohibited” it from representing employees in criminal matters. R.R. 813a-814a. These arguments were made to advance the claim the Panel lacked authority to issue an award that would compel the Commonwealth to violate the law. Finally, and perhaps most significantly, the Commonwealth’s appointed arbitrator dissented from Paragraph 18 of the award as being, inter alia, “contrary to law.” In sum, the issue of the Panel’s authority was raised, not waived, by the Commonwealth.
We turn, next, to the merits of the Commonwealth’s issue on appeal: whether the Panel’s award requires the Commonwealth to perform acts prohibited by law. It is well settled that an arbitration panel’s powers are limited; it may not mandate that a public employer perform an illegal act, ie., an act that is prohibited by law or is not within the employer’s authority. Appeal of Upper Providence Police Delaware County Lodge No. 27 Fraternal Order of Police, 514 Pa. 501, 513, 526 A.2d 315, 321 (1987). In addition, a panel may only require a public employer to do that which the employer could do voluntarily. Pennsylvania State Police v. Pennsylvania State Troopers’ Association (Betancourt), 540 Pa. 66, 79, 656 A.2d 83, 90 (1995).
The crux of this case is the precise nature of Chapter 39 of Title 4 of the Pennsylvania Code. The Commonwealth contends it is a regulation with the force of law, and the Association contends it is a mere statement of policy.
We begin with a consideration of the differences between a regulation and statement of policy. Section 102 of the act commonly referred to as the Commonwealth Documents Law8 defines a “regulation” to be
any rule or regulation, or order in the nature of a rule or regulation, promulgated by an agency under statutory authority in the administration of any statute administered by or relating to the agency, or prescribing the practice or procedure before such agency.
45 P.S. § 1102(12). Conversely, a “statement of policy” is defined as:
any document, except an adjudication or a regulation, promulgated by an agency which sets forth substantive or procedural personal or property rights, privileges, immunities, duties, liabilities or obligations of the public or any part thereof and includes ... any document interpreting or implementing any act of Assembly enforced or administered by such agency.
45 P.S. § 1102(13).
Whether a provision in the Pennsylvania Code9 is a regulation or statement of poli[366]*366cy has important implications for a reviewing court. As our Supreme Court recently explained in Tire Jockey Service, Inc. v. Department of Environmental Protection, 591 Pa. 73, 108-09, 915 A.2d 1165, 1186 (2007) (footnote and citations omitted),
when an agency adopts a regulation pursuant to its legislative rule-making power, as opposed to its interpretive rule-making power, it is valid and binding upon courts as a statute so long as it is (a) adopted within the agency’s granted power, (b) issued pursuant to proper procedure, and (c) reasonable.
By contrast,
a statement of policy is a governmental agency’s statutory interpretation, which a court may accept or reject depending upon how accurately the agency’s interpretation reflects the meaning of the statute.
Central Dauphin School District v. Department of Education, 147 Pa.Cmwlth. 426, 608 A.2d 576, 581 (1992) (footnote omitted).
In analyzing whether an agency pronouncement is a statement of policy or a regulation, “the starting point is generally the agency’s own characterization of the rule.” Id. In this case, the agency promulgating Chapter 39 has always characterized Chapter 39 as a regulation. Indeed, as will be further developed in this opinion, the Executive Board can act only through a formal rule or regulation. In addition, application of all three Tire Jockey Service criteria leads to the inescapable conclusion that Chapter 39 is a regulation.
First, the Executive Board acted within its legislatively granted power. Section 709(f) of the Administrative Code of 192910 authorizes the Executive Board
[t]o make rules and regulations providing for travel, lodging and other expenses for which all officers and employes of the executive branch of the State Government may be reimbursed.
71 P.S. § 249(f) (emphasis added). Legislative rule-making is “the product of an exercise of legislative power by an administrative agency, pursuant to a grant of legislative power by the Legislative body.” Girard School District v. Pittenger, 481 Pa. 91, 95, 392 A.2d 261, 262 (1978) (citing Kenneth C. Davis, 1 AdministRATive Law Treatise § 5.03, at 299 (1958 ed.)).11 Here, the Executive Board promulgated Chapter 39 in accordance with its express legislative authority to establish the rules by which Commonwealth employees will be reimbursed for expenses incurred “in the performance of their public duties.” 71 P.S. §§ 76, 249(f).12 In the absence of [367]*367such rule-making, expense reimbursement cannot take place.
Second, the Executive Board followed the proper procedure for adopting a regulation. Agency regulations must be promulgated pursuant to the notice and comment procedures contained in the Commonwealth Documents Law in order to have the force and effect of law. R.M. v. Pennsylvania Housing Finance Agency of the Commonwealth, 740 A.2d 302, 306 (Pa.Cmwlth.1999).13 Here, the Executive Board published Chapter 39, entitled “Executive Board Regulations,” in the Pennsylvania Bulletin on February 28, 1976, stating that it was promulgating Chapter 39 under the authority of Section 709(f) of the Administrative Code of 1929.14 6 Pa. Bull. 389.15 The prefatory language stated unequivocally that “[t]he following regulation shall be effective immediately upon publication in the Pennsylvania Bulletin.” 6 Pa. Bull. 389 (emphasis added). The Executive Board further advised that it had omitted the notice of proposed rule making required under Sections 201 and 202 of the Commonwealth Documents Law, 45 P.S. §§ 1201-1202, in accordance with Section 204(l)(ii) of the Commonwealth Documents Law, 45 P.S. § 1204(l)(ii), because “this regulation relates only to Commonwealth organization, management or personnel matters.” 6 Pa Bull. 389 (emphasis added).16
Each amendment to Chapter 39 has followed the procedures prescribed for formal rule-making. In 1994, Chapter 39 was amended to vest requests for legal representation in the General Counsel, whose duties were established in the then recently enacted Commonwealth Attorneys Act. The Executive Board made this amendment “under the authority of section 709(f) of The Administrative Code of 1929 (71 P.S. Sec. 249(f)),” and stated that it had complied with all of the requirements of the Commonwealth Documents Law and the Regulatory Review Act.17 24 Pa Bull. [368]*3685656. The Executive Board again followed these procedures when it amended Chapter 39 in 1996. 26 Pa. Bull. 993.
Third, Chapter 39 is reasonable. Generally, appellate courts will find a regulation to be unreasonable only if it constitutes “a manifest or flagrant abuse of discretion or a purely arbitrary execution of the agency’s duties or functions.” Tire Jockey Service, 591 Pa. at 109, 915 A.2d at 1186. Under this deferential standard, the provisions at 4 Pa.Code §§ 39.1-39.3 establish standards for the provision of legal representation to, and indemnification of, Commonwealth employees. Under those standards, the Commonwealth bears the expense of a legal action unless the employee’s conduct is intentional, malicious or not job-related.
Notably, even before the Tire Jockey Service decision, this Court consistently considered Chapter 39 to be a regulation. In In re Request for Reimbursement on Behalf of Plevyak, 83 Pa.Cmwlth. 81, 476 A.2d 487 (1984), attorneys who had successfully defended an employee of the Department of Public Welfare against criminal charges sought payment of their fees by the Department. We stated that the operative provision at 4 Pa.Code § 39.1(b) was a regulation “promulgated pursuant to the Administrative Code of 1929.” Id. at 488. In a subsequent case involving a claim by prison guards for reimbursement of attorney fees, this Court referred to “Executive Board regulations at 4 Pa. Code §§ 39.1-4, which indeed do create a conditional entitlement in state employees to reimbursement for counsel fees.” Burroughs v. Zimmerman, 94 Pa.Cmwlth. 307, 503 A.2d 1014, 1015 (1986) (emphasis added).
In sum, following our Supreme Court’s directive in Tire Jockey Service and in accordance with this Court’s precedent, we hold Chapter 39 to be a regulation, not a statement of policy. The provisions at 4 Pa.Code §§ 39.1-39.3 have the force and effect of law.
We consider, next, whether Paragraph 18 of the Panel’s award compels the Commonwealth to violate the regulation at 4 Pa.Code §§ 39.1-39.3. We find that it does.
For criminal cases involving a member of the bargaining unit, Paragraph 18 of the Panel’s award provides:
a. If a bargaining unit member is charged with a criminal action arising from the performance of his/her duties, he/she shall select local counsel in consultation with the Commonwealth. The Commonwealth shall pay for the fees of such counsel to the extent the fees are in line with prevailing rates.
Award at 10, Paragraph 18. The Panel’s award conflicts with the regulation at 4 Pa.Code § 39.1 in two ways.
First, with respect to legal representation, the regulation states that [t]he Commonwealth will not provide an attorney to defend a present or former official or employee in a criminal case arising from acts or omissions occurring while in the service of the Commonwealth.
4 Pa.Code § 39.1(a) (emphasis added). Requiring the Commonwealth to consult with its employee on selecting an attorney and then paying that attorney’s fee is tantamount to providing an attorney. To require the Commonwealth to do so for every Association member charged with a crime “arising from acts” occurring at the workplace violates 4 Pa.Code § 39.1(a).
Second, the regulation divests the General Counsel of discretion. The General Counsel must approve an employee’s request for attorney fees in cases where she determines that there is not a basis for the [369]*369prosecution in law or fact. 4 Pa.Code § 39.1(a).18 However, under Paragraph 18, the Commonwealth must “pay for the fees of [local] counsel to the extent the fees are in line with prevailing rates” even where the General Counsel concludes that the prosecution is meritorious. Award at 10; Paragraph 18.
For civil cases involving an Association member, Paragraph 18 of the Panel’s award provides:
b. If a bargaining unit member is a defendant in a civil suit arising from the performance of his/her duties, the Commonwealth shall immediately furnish counsel and defend the member.
c. The Commonwealth shall be responsible for judgments rendered against the member in job-related suits where the bargaining unit member has acted within the scope and responsibility of his/her office.
Award at 10, Paragraph 18. Paragraph 18 effectively compels the Commonwealth to provide counsel and indemnify a member of the bargaining unit in any civil action arising from job-related conduct, even malicious and intentional conduct.
However, Chapter 39 mandates legal representation of a Commonwealth employee only where “sued in his official or individual capacity for alleged negligence or other unintentional misconduct occurring while in the scope of employment.” 4 Pa.Code § 39.2 (emphasis added). Where the conduct is alleged to be intentional or malicious, the Commonwealth will defend and indemnify the employee only where the General Counsel finds that “the defendant’s conduct giving rise to the cause of action was within the scope of his employment and a good faith exercise of his authority.” 4 Pa.Code § 39.3(a) (emphasis added). If the General Counsel “determines that the defendant’s conduct was a bad faith exercise of his authority, malicious or outside the scope of his employment,” the General Counsel may not authorize the payment of either a legal defense for the employee or a judgment entered against the defendant. 4 Pa.Code § 39.3(b)(1) (emphasis added).19 In sum, paragraph 18 completely disregards the mandate in 4 Pa.Code §§ 39.2-39.3 that the General Counsel assess the nature of the employee’s conduct before deciding whether it is appropriate to defend and indemnify an employee who is the subject of civil litigation.
The Panel exceeded its authority by divesting the General Counsel of the decision making she is required to undertake under Chapter 39. The Association’s argument that there is a risk that the General Counsel will abuse her discretion rings hollow because every bargaining unit member can challenge the determination of the General Counsel. The member has an administrative appeal that is reviewable by this Court and by our Supreme Court, where further appeal is allowed.
We turn, then, to the dissenting opinion. Two issues were presented by the parties for decision by this Court: (1) whether Chapter 39 was a regulation or a statement of policy and (2) whether the arbitration award conflicted with Chapter 39. The dissent does not disagree with the majority’s analysis on those two issues, the [370]*370only ones this Court has been requested to decide. The dissent quarrels with the majority’s • holding by raising a brand new issue: whether the arbitration award “requires a legislative enactment” to implement its terms. Dissenting Opinion at 374. It is error for an appellate court to raise an issue sua sponte.20
The dissent directs us to Section 805 of Act 195, which limits the power of arbitrators by stating that “the decisions of the arbitrators which would require legislative enactment to be effective shall be considered advisory only.” Section 805 of Act 195, 43 P.S. § 1101.805. Section 805 has not been raised by the arbitrators, the Association or the Commonwealth, and it is beyond our purview to base our holding in this case upon Section 805. It is not just a theoretical concern. We do not have the benefit of the parties’ briefs on this question, and there may be tactical reasons why the parties have not raised Section 805. The dissent oversteps the bounds of appellate review by opining in this regard.
That said, the award requires an amendment to the Administrative Code of 1929. Section 709(f) of the Administrative Code vests exclusive authority in the Executive Board to define, by regulation, what are “necessary expenses” that can be reimbursed. 71 P.S. § 249(f). Unless the Executive Board acts, in its sole discretion, to identify those “necessary expenses” that may be reimbursed, an expense associated with work is not reimbursable. In that situation, it must be assumed that the employee’s salary covers his work-related expenses, whether for commuting, parking, dry-cleaning or defense of criminal charges brought for crimes committed in the workplace.21
In support of its Section 805 analysis, the dissent contends that the majority violates the principles of State System of Higher Education (Cheyney University) v. State College University Professional Association (PSEA-NEA), 560 Pa. 135, 743 A.2d 405 (1999). Again, the Association did not raise State College or invoke its principles. However, we disagree that either legal representation or indemnification is a “term” of employment that must' be negotiated under Section 701 of Act 195, 43 P.S. § 1101.701 (requiring collective bargaining “with respect to wages, hours and other terms and conditions of employment.”).22
Expense reimbursements are not “forms of compensation” because at best they ensure a zero gain. Expenses are costs borne by employees that are incidental to work, and, as explained above, are reimbursable only “if actually incurred in the performance of their public duties .... ” and defined by the Executive Board as necessary. Section 216 of the Administrative Code of 1929, 71 P.S. § 76. Reimbursement for attorney fees is not a “term” or “condition” of employment be[371]*371cause malicious or criminal conduct giving rise to the need for an attorney can never have been done “in the performance of public duties.”23 Under the dissent’s logic, any provision that a bargaining unit might seek in a CBA is a “term or condition” of employment and, thus, must be negotiated.24
Pennsylvania State Police v. Pennsylvania State Troopers’ Association (Betancourt), 540 Pa. 66, 79, 656 A.2d 83, 90 (1995), teaches that arbitrators may compel the public employer to do only what the public employer can do voluntarily. If any provision in a CBA is a term that must be negotiated, then Betancourt could never be invoked. Here, the public employer cannot be compelled to pay expenses unless, and until, they are defined as “necessary” by the Executive Board. Section 709(f) of the Administrative Code of 1929, 71 P.S. § 249(f).
For all the above-stated reasons, we hold that Paragraph 18 of the award exceeded the arbitrators’ powers and must be vacated.
ORDER
AND NOW, this 10th .day of September, 2007, Paragraph 18 of the Act 195 Interest Arbitration Award of the Panel of Arbitrators in the above-captioned matter, dated January 31, 2006, is hereby VACATED.