An Introduction to Negotiated Rulemaking
Administrative rulemaking is a collaborative effort between the state and public undertaken in the interest of promulgating administrative rules.1 Typically, this effort takes the form of what will be referred to herein as the traditional rulemaking process. This process mandates that public input, received in the form of comments offered at various forums and via written submissions, be considered by the promulgating agency as a rule progresses toward final adoption.2 The traditional rulemaking process is an adequate vehicle for the promulgation of most rules. However, rules occasionally present challenges that the traditional process is ill-equipped to address.It is for these situations that the legislature has provided agencies with an alternative mechanism of rule promulgation: negotiated rulemaking.
What is Negotiated Rulemaking?
Negotiated rulemaking is the process by which an agency-appointed committee, consisting of both members of the public and agency personnel, negotiates in the interest of drafting a mutually acceptable rule.3 Arguably, this process involves a greater level of direct public participation than its traditional counterpart. While both methods rely on public input, the majority of discourse regarding final rule language in the traditional context takes place among agency personnel behind closed doors.4 This isn’t meant to imply that the traditional rulemaking process lacks transparency, as the rulemaking records of all active rules must be maintained and open to public inspection pursuant to F.S. §§120.54(8) and 119.07, but simply reflects the reality that, following the submission of public comments, it is ultimately the promulgating agency’s task to determine the effect that such feedback will have on a rule’s final language.5
In contrast to the traditional process, negotiated rulemaking invites interested members of the public, in both a figurative and literal sense, to take seats at the negotiating table. It is here that these individuals, typically representing different interested groups, negotiate among themselves and with agency personnel in an attempt to reach consensus on a rule’s content.6
Circumstances of Utilization and Committee Selection
F.S. §120.54(2)(d) states that an agency “should consider the use of negotiated rulemaking when complex rules are being drafted or strong opposition to the rules is anticipated.” Following this initial determination, the agency “should consider, but is not limited to considering, whether a balanced committee of interested persons who will negotiate in good faith can be assembled, whether the agency is willing to support the work of the negotiating committee, and whether the agency can use the group consensus as the basis for its proposed rule.”
It is important to note that negotiated rulemaking is never required to be used, no matter how complex or controversial the rules to be promulgated may appear. Conversely, nothing in the statute limits the use of this process. Therefore, an agency is free to use negotiated rulemaking as seldom or often as it deems necessary. In addition, based on the statute’s permissive language, it doesn’t appear that the legislature intended for the factors listed to be either mandatory or exhaustive, giving agencies the leeway to consider factors in addition to, or at the exclusion of, those detailed. However, agencies would be well-advised to take them into account, particularly in light of the case study below.
Mandatory Requirements and Additional Considerations
In contrast to the ostensibly permissive factors listed above, §120.54(2)(d) contains additional provisions that agencies are required to follow. The first of these requirements relates to the publication of notice. An agency that chooses to use negotiated rulemaking must publish a notice of the same in the Florida Administrative Register. This notice must include a list of the representative groups that will be invited to take part in the negotiated rulemaking process. Those individuals who believe that their interests are not being adequately represented may apply for participation within 30 days following publication of the notice. The above statute also requires that all meetings of the negotiating committee, which must be chaired by a neutral facilitator or mediator, be noticed and open to the public.
In addition, an agency’s decision to use negotiated rulemaking, its selection of the representative groups comprising the committee, and the approval or denial of a committee participation application are not considered agency action and, therefore, are not valid grounds for a rule challenge. A party’s inability to base a rule challenge on any of the aforementioned items appears to strengthen the author’s conclusion that the factors discussed in the previous section are permissive. However, an affected individual may still challenge a proposed rule developed through negotiated rulemaking in accordance with F.S. §120.56(2).
Case Study: Baywood
Cases addressing negotiated rulemaking are sparse. This is likely due to the fact that a majority of administrative rules are promulgated using the traditional rulemaking process. In addition, as discussed above, several of the negotiated rulemaking factors are statutorily precluded from being relied upon as bases for a rule challenge. We are, however, provided with some guidance on this subject in Baywood Nurseries Co., Inc. v. Dep’t of Health, Case No. 15-1694RP (DOAH May 27, 2015), in which the Department of Health’s use of negotiated rulemaking was challenged and upheld.
• Background — In Baywood, the department promulgated rules pursuant to S.B. 1030, titled the “Compassionate Medical Cannabis Act of 2014,” which provided for the regulation of low-THC cannabis for medical purposes.7 The petitioner, Baywood Nurseries, challenged these rules on several grounds, but relied primarily on allegations relating to the department’s use of the negotiated rulemaking process.8 Specifically, the petitioner challenged the department’s selection and composition of the rulemaking committee, the petitioner’s alleged exclusion from the negotiated rulemaking process, and the negotiating rulemaking process itself.9
• The Department’s Use of the Negotiated Rulemaking Process — After an initial, unsuccessful attempt to adopt rules implementing the act, the department reinitiated the rulemaking process and held a rule development workshop.10 Following the workshop, due to the complexity of the rules to be developed and strong opposition anticipated, the department decided to eschew the traditional rule development process in favor of negotiated rulemaking.11 In reaching its decision, the department also considered and concluded that a balanced committee would be of assistance in the development of mutually acceptable proposed rules.12
The department announced its decision in a notice of rule development published in the Florida Administrative Register.13 Included in the notice were the categories of representatives to be selected for the negotiated rulemaking committee, which consisted of the following: a nursery meeting the criteria in F.S. §318.986(5)(b); a qualified patient or patient representative; a testing laboratory; a member of The Florida Bar experienced in administrative law; an individual with demonstrated experience in sound agricultural practices and necessary regulation; a physician authorized to order low-THC cannabis products for qualified patients; an individual with demonstrated experience establishing or navigating regulatory structures for cannabis in other jurisdictions; and department representatives.14 In addition, the notice invited individuals who believed their interests weren’t being adequately represented to apply for participation.15
Upon expiration of the application period, the department selected the committee, which was composed of the following members: a qualified grower from each of the five dispensing regions; a patient’s parent who was involved in passage of the act; a testing laboratory representative with relevant experience; a physician authorized to order low-THC cannabis products who was also experienced in horticulture and cannabis education; two experienced Florida attorneys certified as experts in federal and state administrative law; and two experienced and knowledgeable regulated cannabis growers.16 The ALJ noted that the growers chosen for the committee varied in size and ranged from the largest nursery in Florida to at least one grower smaller than the petitioner.17 In addition, the ALJ described the committee as “balanced,” stating that its members represented different interests and were not all “of the same mind.”18
The negotiated rulemaking sessions were held over the course of two days and lasted approximately 26 hours.19 The department provided committee members with all relevant materials necessary for reaching a decision, including a binder containing all public comments received to that point, the statute, and the DOAH final order from the department’s previous attempt to adopt rules implementing the act.20 A professional mediator presided over the sessions and ensured that each committee member’s viewpoints and concerns were sufficiently addressed.21 The committee methodically examined and discussed each rule at issue, and input from each individual committee member eventually made its way into the proposed rules.22 In describing the proposed rules that resulted from the negotiated rulemaking sessions, the ALJ again emphasized the balance of the committee, stating: “No stakeholder group represented by any committee member, the department included, got everything it wanted in the proposed rules — which underscores that the committee was balanced, that the negotiated rulemaking process worked properly, and that the developed rules reflect the interests of all represented groups.”23
• Holding —As noted above, the department’s use of the negotiated rulemaking process in Baywood was upheld. In addressing the petitioner’s challenges to the selection and composition of the committee, the negotiated rulemaking process, and Baywood’s alleged exclusion from the same, the administrative law judge (ALJ) first addressed the statute itself, stating: “The statute’s plain language addressing negotiated rulemaking unequivocally evidences the [l]egislature’s intent that the selection and composition of a negotiated rulemaking committee, the negotiated rulemaking process, and a party’s exclusion from the negotiated rulemaking process cannot be grounds for challenging or invalidating a proposed rule.”24 The ALJ then discussed the discretion granted to agencies during the negotiated rulemaking process, stating: “[T]he [l]egislature has not imposed any specific requirements that an agency must comply with when drafting a proposed rule…” and “the agency has considerable discretion in how it drafts the rule, and a discretionary process like negotiated rulemaking is not one that imposes ‘rulemaking procedures or requirements’ that an agency must follow to avoid invalidly exercising its delegated legislative authority.”25
On the department’s use of the negotiated rulemaking process, the ALJ stated:
“[T]he evidence established that the [d]epartment considered whether a balanced committee could be assembled, and indeed did assemble such a committee. The [d]epartment worked to support the committee and used the committee consensus as the basis for the [p]roposed [r]ules. The [d]epartment published the required notice of negotiated rulemaking and of committee meetings, and the meetings were chaired by a neutral mediator. The negotiated rulemaking committee the [d]epartment selected was balanced and composed of a diverse group of stakeholders with wide-ranging experience and expertise, including persons representing the interests of nurseries like Baywood. Over the course of some 26 hours the negotiated rulemaking committee conducted a reasoned, thoughtful, rational rulemaking process and helped develop a similarly reasoned, thoughtful regulatory framework for implementing the [a]ct.”26
• Analysis —With its detailed description of the process from start to finish, Baywood provides an excellent blueprint to agencies interested in utilizing the negotiated rulemaking option. However, the Baywood decision is also instructive in that the ALJ’s treatment of certain issues appears to conflict with the plain language of §120.54(2)(d). The first of these issues concerns committee composition. As discussed above, the statute clearly identifies this issue as an improper basis for a rule challenge. Yet, despite this language, in Baywood the ALJ repeatedly refers to the committee as “balanced,” citing several reasons for its assessment as such.27 The ALJ’s approach to the composition issue, which could reasonably be interpreted as a substantive review, appears to be in direct conflict with statutory language precluding such action.28 Baywood’s balance analysis is particularly interesting in light of the court’s treatment of the same issue one month earlier in the case of Barnhart v. Dep’t of Health, Case No. 15-1271RP (DOAH April 10, 2015). In Barnhart, a case that was ultimately dismissed due to a lack of standing, the petitioner cited the composition of the negotiating rulemaking committee as one reason for its objection to the proposed rule at hand.29 In contrast with Baywood, the Barnhart court dismissed this issue outright, stating:
“As section 120.54(2)(d)3. makes clear, the [d]epartment’s decisions regarding use of the negotiated rulemaking process, selection of the representative groups, and approval or denial of individual applications to participate are deemed “not agency action,” meaning that they are not subject to challenge. While the use of negotiated rulemaking to develop a proposed rule does not preclude an otherwise proper proposed rule challenge, [p]etitioner’s complaints about that process are not grounds for challenging the proposed rule.”30
As is clear from this excerpt, Barnhart’s dismissal of the committee composition issue appears to be in stark contrast to the approach taken in Baywood. Notwithstanding these apparent differences in approach, it remains possible that the balance analysis in Baywood was offered for contextual purposes only. However, given the frequency with which this subject is broached throughout the decision, one must at least consider the possibility that committee composition factored into the final ruling. In any event, and despite the apparent inconsistency between the above cases, the Baywood decision serves to put agencies on notice that this issue may be afforded some weight during the course of a rule challenge proceeding.
An additional issue presented by the Baywood decision is the ALJ’s examination of the petitioner’s compliance with the enumerated factors of §120.54(2)(d), an analysis that raises the question of whether these factors are permissive or mandatory. As discussed above, the statutory language suggests that these factors are of a permissive nature and not indicative of legislative mandates. However, the ALJ’s willingness to examine the petitioner’s compliance with the same, even in a perfunctory manner, indicates that such factors may be afforded more weight than a plain reading of the statute might suggest. Of course, as is the case with Baywood’s balance analysis, it is uncertain how much weight, if any, the [d]epartment’s compliance with these factors was given in the final decision.
In summary, although §120.54(2)(d) appears to allow ample leeway regarding the implementation of the negotiating rulemaking process, agencies would be well-served to adhere to the statutory guidelines as closely as possible, including those passages appearing permissive or optional. Not only will strict statutory adherence assist in the avoidance of unnecessary complications, but it will aid agencies and the public in reaching mutually acceptable rulemaking outcomes.
1 Fla. Stat. §120.54 (2016).
2 Fla. Stat. §§120.54(2)-(3) (2016).
3 Fla. Stat. §120.54(2)(d) (2016).
4 Fla. Stat. §§120.54(2)-(3) (2016).
5 Fla. Stat. §120.54(3) (2016).
6 Fla. Stat. §120.54(2)(d) (2016).
7 Baywood Nurseries Co., Case No. 15-1694RP at ¶4.
8 Id. at ¶94.
10 Id. at ¶¶8-9.
11 Id. at ¶10.
13 Id. at ¶11.
15 Id. at ¶12.
16 Id. at ¶13.
17 Id. at ¶14.
19 Id. at ¶15.
23 Id. at ¶16.
24 Id. at ¶96.
25 Id. at ¶97.
26 Id. at ¶100 (citations omitted).
27 See, e.g., id. at ¶14.
28 Fla. Stat. §120.54(2)(d) (2016).
29 Barnhart,Case No. 15-1271RP at ¶2.
30 Id. at ¶26.
Gregory L. Pitt, Jr., is the rules coordinator for the Agency for Health Care Administration. He holds a B.S. from Florida State University, a J.D. from the University of Michigan Law School, and is currently pursuing an M.P.A. from Florida Gulf Coast University. Please note that the opinions expressed in this article are not necessarily those of the Agency for Health Care Administration or the State of Florida.
This column is submitted on behalf of the Administrative Law Section, Jowanna Nicole Oates, chair, and Stephen Emmanuel, editor.