State agency rulemaking procedures and rule challenges.
With legislators enacting new rulemaking amendments in 1999(1) and the First District Court of Appeal now poised to interpret those new provisions,(2) the debate shows no sign of abating.(*)
Requiring agencies to articulate their policies as rules has always been a focus of the APA. Legislators created the modern APA in 1974 in large part to combat "phantom government," the idea that agency policies were neither widely known nor consistently applied.(3) Nonetheless, by the early 1990s many agencies eschewed rulemaking and chose to apply "incipient" policy, a means of implementing delegated legislative authority that was permitted by the courts but was frustrating to regulated persons and entities.(4)
Prodded by business groups, the legislature passed a series of laws in the 1990s designed to force agencies to adopt their policies as rules and to ensure that the rules were no more expansive than the statutes the rules were designed to implement.(5) The most significant change to rulemaking requirements occurred in 1996. Language was added to the definition of "invalid exercise of delegated legislative authority" in F.S. [sections] 120.52 that was designed to overrule a series of appellate cases holding that a rule was valid if it was reasonably related to its enabling statute and was not arbitrary and capricious. The new language provided:
A grant of rulemaking authority is necessary but not sufficient to allow an agency to adopt a rule; a specific law to be implemented is also required. An agency may adopt only rules that implement, interpret, or make specific the particular powers and duties granted by the enabling statute. No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious, nor shall an agency have the authority to implement statutory provisions setting forth general legislative intent or policy. Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than the particular powers and duties conferred by the same statute.
Initially hailed as a far-reaching new standard that would sharply reduce agency discretion,(7) the language was quickly limited by the First District Court of Appeal. In Consolidated-Tomoka Land Co. v. St. Johns River Water Management District, 717 So. 2d 72 (Fla. 1st DCA 1998), the court found valid proposed rules creating new standards for managing and storing of surface waters in two basins within the district. In upholding the rules, the court stated that the test is whether a particular agency rule "falls within the range of powers the Legislature has granted to the agency for the purpose of enforcing or implementing the statutes within its jurisdiction. A rule is a valid exercise of delegated legislative authority if it regulates a matter directly within the class of powers and duties identified in the statute to be implemented."(8)
The legislature was not pleased with the court's interpretation of the standard, and legislation was passed in 1999 to overturn the Consolidated-Tomoka analysis.(9) The language was amended to state:
A grant of rulemaking authority is necessary but not sufficient to allow an agency to adopt a rule; a specific law to be implemented is also required. An agency may adopt only rules that implement or, interpret the, or make specific the particular powers and duties granted by the enabling statute. No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious or is within the agency's class of powers and duties, nor shall an agency have the authority to implement statutory provisions setting forth general legislative intent or policy. Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than implementing or interpreting the specific the particular powers and duties conferred by the same statute.(10)
The 1999 amendments are expected to be interpreted in the cases now pending at the First District Court of Appeal. Southwest Florida Water Management District v. Save the Manatee Club, Inc., involves existing rules, while Board of Trustees of the Internal Improvement Trust Fund v. Day Cruise Association, Inc., involves a proposed rule. The rules in both cases were declared invalid by administrative law judges based on the 1999 rulemaking standard.(11) Although the court's interpretation of the new language will ultimately affect the amount of flexibility afforded state agencies in writing rules that interpret state statutes, the procedures for adopting rules and the means by which substantially affected persons may challenge them will likely remain largely unchanged.
Florida law provides that rulemaking is not a matter of agency discretion. Each agency statement defined as a rule in F.S. [sections] 120.52(15) must be adopted as soon as "feasible and practicable." Rulemaking is presumed feasible and practicable, but the presumption may be rebutted by the agency based on standards outlined in the statute.(12) Amendments to the APA in 1996 substantially increased the remedies that may be used when agencies do not comply with the mandatory rulemaking requirement.(13)
Agency rules must be prospective only. Retroactive application is not permitted, even if the agency's intent is to clarify existing law, unless such power is expressly authorized by statute.(14) Each agency rule may contain only one subject(15) and must be written in readable language.(16) Before adopting a rule, an agency is required to choose the regulatory alternative "that does not impose regulatory costs on the regulated person, county, or city which could be reduced by the adoption of less costly alternatives that substantially accomplish the statutory objectives."(17)
The APA provides numerous opportunities for citizens to participate in an agency's rulemaking process. Any person regulated by an agency or with a substantial interest in an agency rule may petition the agency to adopt, amend, or repeal a rule.(18) The agency must respond to the petition and can either agree to initiate rulemaking procedures or deny the petition with a written statement of its reasons.(19) An agency's decision on a petition to initiate rulemaking is final agency action that may be appealed pursuant to F.S. [sections] 120.68, although courts generally have deferred to the agency's decision to deny a petition.(20)
When an agency decides to propose a rule, the agency must publish a notice of rule development in the Florida Administrative Weekly.(21) The notice must state the subject area to be addressed, provide a short, plain explanation of the effect of the proposed rule, cite the specific legal authority for the proposed rule, and include the preliminary text of the proposed rule, if available, or a statement of how a person may obtain a draft of the rule.(22) An agency is required to hold a public workshop on the proposed rule if requested in writing by an affected person, unless the agency explains in writing why the workshop is unnecessary.(23)
Once an agency decides on the final version of its rule, it must publish formal notice of its proposed rule in the Florida Administrative Weekly.(24) This notice must include an explanation of the purpose and effect of the proposed rule, the full text of the proposed rule or amendment and an accompanying summary, the specific legal authority for the rule's adoption, and a reference to the section or subsection of the law being implemented. The notice also must include a summary of the agency's statement of estimated regulatory costs, if one has been prepared, and a statement that any person who wishes to provide the agency with information regarding the statement, or to provide a proposal for a lower-cost regulatory alternative, must do so in writing within 21 days after publication of the notice. The agency's notice also must state the procedure for requesting a public hearing on the proposed rule.(25) If an affected person requests a public hearing, the agency is required to hold one.(26)
Any person substantially affected by a rule or a proposed rule may seek an administrative determination of its invalidity on grounds that it is an "invalid exercise of delegated legislative authority."(27) As previously noted, the phrase is defined in F.S. [sections] 120.52(8). The definition includes not only the new language concerning an agency's legislative authority to adopt rules, but also a list of eight specific criteria. The statute makes clear that if any one of the listed criteria applies, the proposed or existing rule is invalid.
Rule challenge petitions are filed with the Division of Administrative Hearings and heard by an administrative law judge. The judge's order is final agency action that may be appealed to a district court of appeal pursuant to F.S. [sections] 120.68.28 In order to challenge a rule, a petitioner must demonstrate that he or she is "substantially affected," which means that the petitioner will suffer a substantial and immediate "injury in fact" within the "zone of interest" protected by the statute the challenged rule is implementing or by other related statutes.(29) A trade or professional association may qualify as a "substantially affected person" with standing to challenge rules on behalf of its members.(30)
Although the test of "invalid exercise of delegated legislative authority" applies in both proposed and existing rule challenges, other aspects of the challenge proceedings are different. The APA states that a proposed rule is not presumed to be valid or invalid,(31) while an existing rule enjoys a judicially created "presumption of correctness."(32) Additionally, in a proposed rule challenge the agency has the burden of proving by a preponderance of the evidence that the proposed rule is not an invalid exercise of delegated legislative authority.(33) In an existing rule challenge, the challenger has the burden of proof. Until the 1996 amendments to the APA, there were no procedural differences between challenges to proposed rules and existing rules. The amendments were designed to make it easier for challengers to succeed in invalidating proposed rules, a viewpoint that is often expressed as "leveling the playing field."(34) This concept was reinforced by the legislature in 1999 amendments to the APA.(35)
Variances and Waivers
When the APA was revised in 1996, a new provision authorizing agencies to grant variances from or waivers of their own rules was included.(36) The legislative intent behind the provision is expressed in its first subsection, which notes that strict application of uniformly applicable rule requirements can lead to unreasonable, unfair, and unintended results in particular instances. In order to provide relief in such cases, the legislature directed agencies to grant variances or waivers when a person subject to the rule demonstrates that he or she can achieve, or has achieved, the purpose of the underlying statute by other means and when application of the rule would "create a substantial hardship or would violate principles of fairness."(37) A "substantial hardship" is defined as "a demonstrated economic, technological, legal, or other type of hardship to the person requesting the variance or waiver." "Principles of fairness" are violated "when the literal application of a rule affects a particular person in a manner significantly different from the way it affects other similarly situated persons who are subject to the rule."(38)
The variance and waiver provision makes clear that agencies are not authorized to grant variances from or waivers to statutes.(39) This provision was included to avoid potential constitutional problems under the nondelegation doctrine encompassed within the separation of powers provision in Article II, [sections] 3 of the Florida Constitution.(40) Section 120.542 is supplemental to other variance and waiver provisions in substantive sections of Florida Statutes. Substantially affected persons, therefore, may seek redress either under the APA or under the specific substantive statutes. Only those subject to a rule may request a variance or a waiver; an agency is not permitted to grant either on its own motion.(41) Agencies must act on variance or waiver petitions within 90 days or the request is deemed approved, and an agency's decision on a variance and waiver petition constitutes an order that may be challenged in an adjudicatory proceeding pursuant to F.S. [subsections] 120.569 and 120.57.(42)
Agencies received approximately 1,100 petitions for either a variance or a waiver between October 1, 1996, when the provision became effective, and October 1, 2000.(43) The Public Service Commission alone received 369 petitions during that time period; other agencies receiving large numbers included the Department of Environmental Protection with 204; the Department of Health with 135; the Department of Community Affairs with 127; and the Department of Business & Professional Regulation with 74. Of the total number of petitions received, 473 had been granted, and 110 had been denied. The remainder either were pending at the time of publication or had been withdrawn.
Only one appellate case has been issued interpreting [sections] 120.542. In Mariner Properties Development, Inc. v. Board of Trustees of the Internal Improvement Trust Fund, 743 So. 2d 1121 (Fla. 1st DCA 1999), the court held that [sections] 120.542 pertains only to regulatory functions, not proprietary functions, of state agencies. Because the statute does not pertain to rules involving the exercise of proprietary power, the Board of Trustees of the Internal Improvement Trust Fund acted properly in dismissing a variance and waiver petition directed toward rules imposing standards and criteria relating to construction of a private docking facility on sovereignty submerged land.(44)
The First District Court of Appeal likely will provide guidance soon concerning interpretation of the 1999 amendments to the agency rulemaking standard. If recent history is any indication, however, rulemaking will continue to be controversial as legislators, regulated entities, and other interest groups continue to debate the proper role of state agencies in exercising powers that have been delegated to them by the legislature.
(1) See 1999 Fla. Laws ch. 379 at 3788 (amending FLA. STAT. [subsections] 120.52, 120.536, 120.54, 120.57, and 120.81).
(2) Southwest Florida Water Management District v. Save the Manatee Club, Inc., Case No. 99-4819 , 2000 WL 1760116 (Fla. 1st D.C.A. December 1, 2000); Board of Trustees of the Internal Improvement Trust Fund v. Day Cruise Association, Inc., Case. No. 00-1058 (Fla. 1st D.C.A.).
(3) Final Report of the Governor's Administrative Procedure Act Review Commission, Appendix L at 2, February 20, 1996.
(4) See McDonald v. Department of Banking and Finance, 346 So. 2d 569 (Fla. 1st D.C.A. 1977). McDonald and subsequent cases recognized an exception to the adoption of agency policy by rule when the policy was not yet fully developed, or "incipient." By the early 1990s, this exception had swallowed the rule and was the preferred means of policy articulation by many agencies. See Stephen T. Maher, Administrative Procedure Act Amendments: The 1991 and 1992 Amendments to the Florida Administrative Procedure Act, 20 FLA. ST. U. L. REV. 367, 374 (1992).
(5) See, e.g., David M. Greenbaum & Lawrence E. Sellers, Jr., 1999 Amendments to the Florida Administrative Procedure Act: Phantom Menace or Much Ado About Nothing?, 27 FLA. ST. U. L. Rev. 499 (2000); F. Scott Boyd, Legislative Checks on Rulemaking Under Florida's New APA, 24 FLA. ST. U. L. REV. 309 (1997); Wade L. Hopping & Kent Wetherell, The Legislature Tweaks McDonald (Again): The New Restrictions on the Use of "Unadopted Rules" and "Incipient Policies" by Agencies in Florida's Administrative Procedure Act, 48 FLA. L. REV. 135 (1996); Maher, supra note 4; Patricia A. Dore, Florida Limits Policy Development Through Administrative Adjudication and Requires Indexing and Availability of Agency Orders, 19 FLA. ST. U. L. REV. 437 (1991).
(6) Identical language was placed in FLA. STAT. [sections] 120.536(1).
(7) Boyd, supra note 5, at 341.
(8) Consolidated-Tomoka, 717 So. 2d. at 80 (emphasis supplied).
(9) Greenbaum & Sellers, supra note 5, at 507. The legislature specifically did not reverse the result of the case; rather, lawmakers stated that they intended to "reject the class of powers and duties analysis" in Consolidated-Tomoka. 1999 Fla. Laws ch. 379, [sections] 1, at 3789.
(10) FLA. STAT. [sections] 120.52(8) (1999) (showing amendments).
(11) See supra note 2. The cases at the Division of Administrative Hearings are styled Save the Manatee Club, Inc. v. Southwest Florida Water Management District, DOAH Case No. 99-3885RX, and Day Cruise Association, Inc. v. Board of Trustees of the Internal Improvement Trust Fund, DOAH Case No. 99-5303RP.
(12) FLA. STAT. [sections] 120.54(1)(a).
(13) Cathy M. Sellers and Lawrence E. Sellers, Jr., Nonrule Policy and the Legislative Preference for Rulemaking, 75 FLA. B.J. 38 (Jan. 2001).
(14) FLA. STAT. [sections] 120.54(1)(f).
(15) Id. at [sections] 120.54(1)(g).
(16) Id. at [sections] 120.54(2)(b).
(17) Id. at [sections] 120.54(1)(d).
(18) Id. at [sections] 120.54(7).
(20) Citizens of Florida v. Mayo, 357 So. 2d 731 (Fla. 1978).
(21) FLA. STAT. [sections] 120.54(2)(a).
(23) Id. at [sections] 120.54(2)(c).
(24) Id. at [sections] 120.54(3)(a).
(26) Id. at [sections] 120.54(3)(c).
(27) Id. at [sections] 120.56(1)(a). Challenges to proposed rules are governed by [sections] 120.56(2), while challenges to existing rules are governed by [sections] 120.56(3).
(28) FLA. STAT. [sections] 120.56(1)(e).
(29) E.g., Florida Medical Ass'n, Inc. v. Department of Professional Regulation, 426 So. 2d 1112 (Fla. 1st D.C.A. 1983).
(30) Florida Home Builders Ass'n v. Department of Labor & Employment Security, 412 So. 2d 351 (Fla. 1982).
(31) FLA. STAT. [sections] 120.56(2)(c).
(32) Final Report of the Governor's Administrative Procedure Act Review Commission, supra note 3, at 20-26 and at Appendix N.
(33) FLA. STAT. [sections] 120.56(2)(a).Although the agency has the ultimate burden of proof, the statute now makes clear that the petitioner has the burden of going forward.
(34) Greenbaum & Sellers, supra note 5, at 517; Final Report of the Governor's Administrative Procedure Act Review Commission, supra note 3, at 23.
(35) Greenbaum & Sellers, supra note 5, at 517-527.
(36) FLA. STAT. [sections] 120.542. The terms "variance" and "waiver" are defined in FLA. STAT. [sections] 120.52(18) and (19).
(37) Id. at [sections] 120.542(2). For a detailed discussion of this provision and its history, see Donna E. Blanton & Robert M. Rhodes, Loosening the Chains that Bind: The New Variance and Waiver Provision in Florida's Administrative Procedure Act, 24 FLA. ST. U. L. REV. 353 (1997).
(38) FLA. STAT. [sections] 120.542(2).
(39) Id. at [sections] 120.542(1).
(40) See Final Report of the Governor's Administrative Procedure Act Review Commission, supra note 3, at 9-15, and at Appendices H, I, and J.
(41) FLA. STAT. [sections] 120.542(5).
(42) Id. at [sections] 120.542(8).
(43) Joint Administrative Procedures Committee database, Variance Waiver Report, October 2, 2000 (on file with the committee).
(44) Mariner Properties, 743 So. 2d at 1122.
Editor's Note: The First District Court of Appeal issued its opinion in Southwest Florida Water Management District v. Save the Manatee Club, Case No. 1D99-4819, 2000 WL 1760116 (Fla. 1st DCA December 1, 2000), too late to be addressed in this article.
Donna E. Blanton of Steel Hector & Davis LLP, Tallahassee, received her J.D. in 1992 from Florida State University College of Law and her B.S. in 1977 from the University of Florida. Ms. Blanton is treasurer of the Administrative Law Section Executive Council.