I'd say you were fishing with a fly but not fly fishing.
As to who makes the rules, I think it is generally the state fish and game commission. I have a bigger beef with the "why" than the "who."
To me, the only valid reason to have "fly fishing only" restrictions is to preserve the fishery (and definitely NOT to preserve a way of fishing). I can understand why they would restrict bait fishing and even spin fishing with lures that have treble hooks. Both can cause increased mortality in released fish. But to prevent someone from fishing with a spinning rod, casting bubble and fly is just wrong in my view. If a fish is caught on a fly, it causes no more damage to the fish if the fly is cast with a spinning rod and casting bubble than if it was cast with a fly rod. I'm all for reasonable regulations that preserve the health of the fishery. I have nothing against "fly only" as long as all that is required is a fly. Whether the delivery mechanism is a fly rod or spinning rod doesn't matter to the fish and shouldn't matter to the regulators.
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