When developing a course, how to determine number of credits? I am a graduate student helping with the development of a course and will be teaching at least part of it.  However, I found out recently that the program wants to offer it as a 1-2 credit course.

It's being sold as a "journal club" format, but requires a lot more outside work than the typical journal club because it's being developed as a sort of flipped classroom style course.

Is the amount of in-class work used to determine credits?  Overall work?  Something else entirely?  I don't want to bring this up to them if it I'm not even understanding it properly.

So, how do you determine how many credits a course is "worth"?
Your institution almost certainly has guidelines for what constitutes a "credit" - you will have to rely on those guidelines.

For example: http://archive.catalog.arizona.edu/2015-16/policies/credit_definitions.htm

At US universities that I am familiar with, the common definition is that 1 credit = 1 weekly 'hour' of class time, and ~2 weekly hours of effort outside of class, giving a total of 36-45 hours a week for a full-time load of 12-15 credits. Of course for some types of classes, these numbers get shifted around, and they are totally different in courses not over a full semester (though the effort is the same, the time is much less).