These rules alter the argument structures of lexical items (for example verbs and declensions) in order to alter their combinatory properties.
Lexical rules affect in particular specific word classes and morphemes.
An example of a lexical rule in spoken English is the deletion of /n/.
This rule applies in damn and autumn, but not in hymnal.
Because the rule of n-deletion apparently needs information about the grammatical status of the word, it can only be lexical.