Escaping the Labyrinth: A Practical Guide to Rulemaking
In ancient Greek mythology, the labyrinth was a complex structure built to hold the Minotaur. At times, navigating the rule promulgation process may be as difficult as escaping a labyrinth. This article provides a brief guide to the rulemaking process and identifies some of the commonly encountered problems.
Notice of Rule Development
Once an agency determines that rulemaking is necessary, the publication of the notice of rule development is the first step in the rulemaking process. The publication of a notice of rule development is required for new rules and amendments to existing rules.1 F.S. §120.54(2)(a) states in part: “Except when the intended action is the repeal of a rule, agencies shall provide notice of the development of proposed rules by publication of a notice of rule development in the Florida Administrative Register before providing notice of a proposed rule….”2 The notice of rule development gives the public the opportunity to participate in the rulemaking process.3 The notice of proposed rule development must include the subject area of the proposed rule; a short explanation of the purpose and effect of the proposed rule; citation to the specific legal authority for the proposed rule; and the preliminary text of the proposed rule, if available, or a statement of how a person may obtain without a cost, a copy of the proposed rule.4
F.S. §120.54(2)(c) allows an agency to hold a rule development workshop. An agency is not required to hold a rule development workshop unless it is requested in writing by an affected person; however, a requested workshop is not required if the agency head explains in writing why the workshop is unnecessary.5 If a rule development workshop is held, notice must be published at least 14 days in advance in the Florida Administrative Register.6 F.S. Ch. 120 does not prescribe the time period that an agency must wait after the publication of the notice of rule development to publish the notice of rule proposed rulemaking. However, since §120.54(2)(a) requires the notice of proposed rule development to be published prior to the publication of the notice of proposed rulemaking, it appears that the earliest that a notice of proposed rulemaking may be published is the next day.
Notice of Proposed Rulemaking
A notice of proposed rulemaking is required “[p]rior to the adoption, amendment, or repeal of any rule other than an emergency rule.”7 A notice of proposed rulemaking8 must include a statement of the purpose and effect of the proposed rule; a summary of the proposed rule; citation to rulemaking authority and law implemented; the text of the proposed rule; the procedure for requesting a public hearing; a summary of the statement of estimated regulatory costs (SERC), if one has been prepared; and a statement that an individual may provide the agency with information regarding the SERC or submit a proposal for a lower cost regulatory alternative in writing within 21 days after the publication of the notice of proposed rulemaking. The notice of proposed rulemaking must also include a statement indicating whether legislative ratification is necessary based upon the SERC; however, if a SERC has not been prepared, the notice must describe the information used by the agency in determining that legislative ratification is unnecessary.9 Additionally, the notice of proposed rulemaking must include the name of the agency head that approved the rule and the date of approval.10 An agency head may not delegate or transfer the responsibility to approve the notice of proposed rulemaking.11 Finally, the notice of proposed rulemaking must include a reference to the date that the notice of proposed rule development was published in the Florida Administrative Register;12 this information is not required for a rule repeal.
An agency must file with the Joint Administrative Procedures Committee (JAPC), at least 21 days prior to filing the proposed rule for adoption, the following documents: the proposed rule; materials incorporated by reference; a statement of the facts and circumstances justifying the proposed rule; any SERC that has been prepared; and a statement describing the extent to which the proposed rule relates to federal standards or rules on the same subject.13 These documents assist JAPC in reviewing the proposed rule. F.S. §120.545 and Joint Rule 4.6 of the Florida Legislature authorize JAPC to examine a proposed rule to determine whether the rule adheres to the rulemaking requirements located in F.S. Ch. 120.
Section 120.54(3)(c)1 requires an agency to hold a hearing on the proposed rule if requested by an affected person, within 21 days after the publication of the notice of proposed rulemaking. The statute also allows an agency to hold a hearing even if not requested by an affected person. With regard to the purpose of the public hearing, the First District Court of Appeal has observed:
The purpose of a rule-making hearing under [F.S. §]120.54(3) is two-fold: (1) [t]o allow the agency to inform itself of matters bearing on the proposed rules or modifications thereof, and (2) [t]o allow the public, and specifically individuals and groups having particular interests and/or information, to participate in the rulemaking process.14
At the public hearing, agency staff must be present to explain the proposed rule and to respond to questions.15 An agency may hold multiple public hearings on the proposed rule.16
Changes to a Proposed Rule
After the publication of the proposed rule, an agency may find that it needs to make changes. If the changes to the proposed rule are only technical, the agency must provide notification of the changes in writing to JAPC at least seven days prior to filing the rule for adoption.17 Technical changes are “non-substantive changes, errors in punctuation, misspellings, corrections of tense, changes of address or telephone number, or similar changes that do not affect the construction or meaning of the rule.”18
However, if the changes to the proposed rule are nontechnical (substantive), the agency must publish a notice of change. The notice of change must be supported by the record of public hearings held on the rule; be in response to written material submitted to the agency within 21 days after publication of the notice of proposed rulemaking; be in response to written material received by the end of the final public hearing; or be in response to a proposed objection by JAPC.19 Section 120.54(3)(d)1 requires a notice of change to be published in the Florida Administrative Register and a copy of notice of change to be sent to JAPC. An agency must publish the notice of change prior to the expiration of the 90-day filing deadline for the proposed rule.20
Rule Adoption
Assuming that the proposed rule has not been challenged,21 the next step in the rulemaking process is filing the rule for adoption with the Department of State.22 An agency head must approve the proposed rule prior to adoption; this responsibility cannot be transferred or delegated.23 F.S. §120.54(3)(e)2 contains a number of time periods for filing a proposed rule for adoption. Generally, a rule may be filed for adoption between 28 to 90 days after the publication of the notice of proposed rulemaking. However, a rule may not be filed until 14 days after the final public hearing; 21 days after the SERC has been provided to all individuals who submitted a lower cost regulatory alternative; 21 days after the publication of notice of change; or until the administrative law judge (ALJ) has issued a final order in a proposed rule challenge.24 The 90-day filing deadline may be extended an additional 45 days after the publication of the notice of change;25 45 days after the adjournment of the final public hearing;26 21 days after the receipt of all material authorized to be submitted at the hearing, or 21 days after receipt of the transcript (if prepared), whichever is latest;27 60 days after the ALJ has issued a final order in a proposed rule challenge or 60 days after subsequent judicial review is completed;28 21 days if regulatory alternatives are offered by the rules ombudsman;29 or 21 days after the submission of a lower cost regulatory alternative.30 An agency must remain aware of the proposed rule’s filing deadline, as a court has held that the time period for filing a rule is mandatory.31 If the rule is not filed by the deadline, it must be withdrawn in the next available issue of the Florida Administrative Register.32 A proposed rule becomes effective 20 days after filing with the Department of State, on a later date specified in the notice of proposed rulemaking, or upon legislative ratification.33
The time period for filing a rule for adoption may be “tolled” in response to a proposed objection by JAPC.34 However, the agency must receive specific notification from JAPC in order to toll the proposed rule.35
Problem Areas
The following discussion identifies a few problem areas frequently encountered by agencies in rule promulgation. Since an article could be dedicated to this topic alone, this discussion is not exhaustive.
• Deficient Legislative Ratification Statement — Effective June 24, 2011, F.S. §120.54(3)(a)1 was amended to require a notice of proposed rulemaking to include a legislative ratification statement.36 Often, a notice of proposed rulemaking will either omit the legislative ratification statement or include a legislative ratification statement that fails to describe the information expressly relied upon by the agency in determining that legislative ratification is unnecessary. The legislative ratification statement must contain more than conclusory statements.37 In Florida Medical Association v. Department of Health, Bd. of Nursing, Case No. 12-1545RP at ¶92 (DOAH Nov. 2, 2012), the legislative ratification statement in the notice of proposed rulemaking only indicated that based on the expertise and experience of the board’s members, the board determined that neither a SERC nor legislative ratification was required. The ALJ found that this was insufficient explaining:
It is not enough to say that the [b]oard determined that no SERC or ratification was required. The [b]oard must explain why its decision was made and the information relied upon to make that decision. While the [b]oard is certainly invested with expertise and experience, the reference to this expertise is not “other information” as contemplated under the statute.38
Consequently, the ALJ found that the board’s failure to prepare an adequate legislative ratification statement was a material failure to comply with the rulemaking procedures outlined in F.S. §120.54.39
• Rulemaking Authority — An agency must have statutory authority to adopt a rule.40 In 2008, F.S. §120.52 was amended to provide a definition for the term “rulemaking authority.”41 The term “rulemaking authority” is defined as “statutory language that explicitly authorizes or requires an agency to adopt, develop, establish, or otherwise create any statement coming within the definition of the term ‘rule.’”42 According to §120.52(8)(b), a rule that exceeds an agency’s grant of rulemaking authority is an invalid exercise of delegated legislative authority. In Department of Financial Services v. Peter R. Brown Construction, Inc., 108 So. 3d 723, 724 (Fla. 1st DCA 2013), the court affirmed the ALJ’s decision, which invalidated the department’s rule, and which prohibited the expenditure of state funds for decorative items. The court agreed with the ALJ’s finding that the statute cited as rulemaking authority did not explicitly authorize the chief financial officer to create a rule to restrict expenditures.43
Furthermore, an agency does not have inherent rulemaking authority.44 “The necessity for, or the desirability of, an administrative rule does not, of itself, bring into existence authority to promulgate [a] rule.”45 For example, in Department of Health and Rehabilitative Services v. The Florida Psychiatric Society, 382 So. 2d 1280, 1282-83 (Fla. 1st DCA 1980), the court found that the department did not have authority to adopt rules pertaining to the establishment, regulation, and licensure of crisis stabilization and residential treatment facilities. In reaching its decision, the court noted that the department did not have “‘inherent’ authority, in the mental health field or any other, but only those powers specifically granted by statute.”46
• The Rule Enlarges, Modifies, or Contravenes the Law Implemented — A rule that enlarges, modifies, or contravenes the law implemented is an invalid exercise of delegated legislative authority.47 This problem may occur when a rule adds or removes requirements to a statute.48 In Costa Farms, LLC v. Department of Health, Case No. 14-4296RP at ¶81 (DOAH Nov. 14, 2014), the ALJ found that the use of a lottery selection process enlarged and modified the law implemented, which required the department to review applicants utilizing the statutory criteria. The ALJ also found that the proposed rule modified and enlarged the law implemented by imposing a qualification for applicants that was not found in the statute.49
A rule may also contravene a statute when it fails to make changes necessitated by statutory amendments. In Department of Health v. Bayfront Medical Center, 134 So. 3d 1017, 1020 (Fla. 1st DCA 2012), the court found that a rule allocating trauma centers in the state was an invalid exercise of delegated legislative authority because it failed to incorporate any of the amendments to the statutes cited as the law implemented. As such, the court upheld the ALJ’s finding that the rule contravened the department’s grant of rulemaking authority.50
• Penalties — An agency may not impose a penalty in a rule without specific statutory authority. Fla. Stat. art. I, §18 prohibits an agency from imposing a penalty “except as provided by law.” F.S. §120.54(1)(e) further provides: “No agency has…authority to establish penalties for violation of a rule unless the [l]egislature, when establishing a penalty, specifically provides that the penalty applies to rules.”51 In Continental Construction Co. v. Board of Trustees of the Internal Improvement Trust Fund, 464 So. 2d 204 (Fla. 1st DCA 1985), the court invalidated portions of a rule that allowed the board to assess a penalty for the unauthorized use of sovereignty submerged lands. The court rejected the board’s argument that a statute granting it general powers to protect state lands provided authority for the penalty, stating, “[Art.] I, [§]18 of the Florida Constitution prohibits administrative agencies from imposing any form of penalty ‘without specific legislative authority.’”52
• Incorporation by Reference — Occasionally, an agency may wish to adopt the requirements of another entity, such as a guide or regulation, in its rule. In order to do so, incorporation by reference is necessary. A rule may only incorporate by reference material as it exists when the rule is adopted; changes to incorporated material are not effective unless the rule is amended to incorporate the new material.53 As such, an agency cannot incorporate by reference “the current version” of a document or a document “as amended.” It is crucial that an agency review Department of State F.A.C.R. 1-1.013, which outlines the requirements for incorporating a document by reference into a proposed rule, prior to rule promulgation. ALJ John Van Laningham’s final order in Peek v. State Board of Education, Case No. 12-1111RP (DOAH Aug. 22, 2012), also should be reviewed by every practitioner encountering incorporation by reference issues. Judge Van Laningham’s 57-page order provides an extensive discussion of the Administrative Procedure Act’s requirements pertaining to incorporation by reference.
If a form meets the definition of a rule contained in F.S. §120.52(16), it must be incorporated by reference into the appropriate rule.54 It appears that is not sufficient to simply incorporate by reference a manual that contains a form, as F.S. §120.55 seems to require the form to be specifically incorporated by reference into the text of the rule. The statute requires the incorporative reference to “specifically state that the form is being incorporated by reference and…include the number, title, and effective date of the form and an explanation of how the form may be obtained.”55 A form incorporated by reference must include the number, title, effective date, and a reference to the rule(s) which incorporates by the form by reference.56
• The Rule Vests Unbridled Discretion in the Agency — A rule is also an invalid exercise of delegated legislative authority when the rule “vests unbridled discretion in the agency.”57 This problem is sometimes encountered when a rule fails to provide the criteria used by an agency in making a determination. In order to avoid this problem, “[a]n administrative rule which creates discretion not articulated in the statute it implements must specify the basis on which the discretion is to be exercised.”58 The court in Department of Financial Services v. Peter R. Brown Construction, Inc., 108 So. 3d 723, 728 (Fla. 1st DCA 2013), found that a rule that prohibited payment for decorative items was an invalid exercise of delegated legislative authority because the rule failed to include the standards used by the Department of Financial Services in determining whether an item is a “decorative item.” The court observed: “An administrative rule is invalid under [F.S. §]120.52(8)(d)…if it forbids or requires the performance of an act in terms that are so vague that persons of common intelligence must guess at its meaning and differ as to its application.”59
Similarly, in South Florida Racing Association, LLC v. Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, Case No. 14-6129RX (DOAH Mar. 25, 2015), the ALJ invalidated a proposed rule because the criteria to be used by the department failed to “include any standards that explain how any one of the identified criteria are to be applied in the evaluation of an application.”60 Accordingly, the ALJ found that the rule gave the department unbridled discretion to approve or disapprove a permit application.61
Conclusion
An individual responsible for drafting a rule should be familiar with the requirements in F.S. Ch. 120, particularly, the requirements in F.S. §§120.52, 120.525, 120.54, 120.541, and 120.55. Additionally, F.A.C.R. Ch. 1-1, which contains the Department of State’s requirements pertaining to rulemaking, should be reviewed prior to publishing any rulemaking notices. A meticulous review of the aforementioned statutes and rules will help an agency avoid many of the pitfalls associated with rulemaking.
1 The publication of a notice of rule development is not required for emergency rules or rules that adopt federal standards. See Fla. Stat. §§120.54 (4) and (6) (2014).
2 The template that must be used for a notice of rule development is found in F.A.C.R. 1-1.011(5)(a).
3 See Lawrence E. Sellers, Jr., The Third Time’s the Charm: Florida Finally Enacts Rulemaking Reform, 48 U. Fla. L. Rev. 93, 106-107 (1996).
4 See Fla. Stat. §120.54(2)(a) (2014).
5 See Fla. Stat. §120.54(2)(c) (2014).
6 See id.
7 See Fla. Stat. §120.54(3)(a)1 (2014).
8 See id. The template that must be used for a notice of proposed rulemaking is found in F.A.C.R. 1-1.011(5)(a).
9 See Fla. Stat. §120.54(3)(a)1 (2014).
10 Fla. Stat. §120.55(5) was amended in 2008 to expressly require a notice of proposed rulemaking to include the name of the agency head that approved the rule. See Ch. 2008-104, Laws of Fla.
11 See Fla. Stat. §120.54(1)(k) (2014). See also Financial Services Commission v. The Florida Insurance Council, Inc., 938 So. 2d 545 (Fla. 1st DCA 2006) (holding that the commission’s delegation of approval of a notice of proposed rulemaking to another entity constituted an invalid exercise of delegated legislative authority).
12 See Fla. Stat. §120.54(3)(a)1 (2014).
13 See Fla. Stat. §120.54(3)(a)4 (2014).
14 Balino v. Department of Health and Rehabilitative Services, 362 So. 2d 21, 24 (Fla. 1st DCA 1978).
15 See Fla. Stat. §120.54(3)(c)1 (2014).
16 Fla. Stat. §120.525 contains requirements for public hearings.
17 See Fla. Stat. §120.54(3)(d)1 (2014).
18 F.A.C.R. 1-1.010(10).
19 See Fla. Stat. §120.54(3)(d)1 (2014).
20 See Fla. Stat. §120.54(3)(e)2 (2014).
21 Fla. Stat. §120.56(2)(a) allows a substantially affected person to challenge a proposed rule by filing a petition with the Division of Administrative Hearings within 21 days after the publication of the notice of proposed rulemaking; 10 days after the final public hearing; 20 days after the preparation of the SERC; or 20 days after the publication of a notice of change.
22 The agency must request certification from JAPC prior to filing the rule for adoption. See Fla. Stat. §120.54(3)(e)4 (2014). If the changes to the proposed rule are only technical, the request for certification must occur at least seven days prior to filing the rule for adoption. See Fla. Stat. §120.54(3)(d)1 (2014). An agency does not have to request certification from JAPC seven days in advance if a notice of change has been published.
23 See Fla. Stat. §120.54(1)(k) (2014).
24 See Fla. Stat. §120.54(3)(e)2 (2014).
25 See id.
26 See id.
27 See id.
28 See id.
29 See Fla. Stat. §120.54(3)(b)2.b(II) (2014).
30 See Fla. Stat. §120.541(1)(a) (2014).
31 See Department of Transportation v. Foster and Kleiser, Inc., 365 So. 2d 224 (Fla. 1st DCA 1978).
32 See Fla. Stat. §120.54(3)(e)5 (2014).
33 If the proposed rule is not required to be filed with the Department of State, the rule becomes effective upon filing with the agency head, the date specified by statute, or upon legislative ratification. See Fla. Stat. §120.54(3)(e)6 (2014). An emergency rule becomes effective immediately upon filing or a date less than 20 days after filing if specified in the rule. See Fla. Stat. §120.54(4)(d) (2014).
34 See Fla. Stat. §120.54(3)(e)6 (2014).
35 See Florida Medical Association v. Department of Health, Bd. of Pharmacy, Case No. 06-2899RP at ¶61 (DOAH Nov. 1, 2006).
36 See Ch. 2011-225, Laws of Fla (Fla. Stat. §120.54(3)(a)1 requires a notice of proposed rulemaking to include “a statement as to whether, based on the statement of the estimated regulatory costs or other information expressly relied upon and described by the agency if no statement of regulatory costs is required, the proposed rule is expected to require legislative ratification pursuant to [§]120.541(3).”).
37 See Florida Medical Association v. Department of Health, Bd. of Nursing, Case No. 12-1545RP at ¶93 (DOAH Nov. 2, 2012).
38 Florida Medical Association, Case No. 12-1545RP at ¶93.
39 Id. at ¶ 95.
40 See Fla. Stat. §120.536(1) (2014).
41 See Ch. 2008-104, Laws of Fla.
42 See Fla. Stat. §120.52(17) (2014); see also Florida Elections Commission v. Blair, 52 So. 3d 9 (Fla. 1st DCA 2010) (examining the legislative history of Fla. Stat. §120.52(17)).
43 Peter R. Brown Construction, Inc., 108 So. 3d at 727.
44 See Fla. Stat. §120.54(1)(e) (2014).
45 4245 Corporation v. Division of Beverage, 371 So. 2d 1032, 1033 (Fla. 1st DCA 1978).
46 The Florida Psychiatric Society, 382 So. 2d at 1285.
47 See Fla. Stat. §120.52(8)(c) (2014).
48 See, e.g., The Florida Psychiatric Society, 382 So. 2d at 1285 (“Administrative regulations must be consistent with the statutes under which they are promulgated, and they may not amend, add to, or repeal the statute.”).
49 Costa Farms, LLC, Case No. 14-4296RP at ¶81.
50 See Bayfront Medical Center, 134 So. 3d at 1020.
51 See Department of Environmental Regulation v. Puckett Oil Company, Inc., 577 So. 2d 988, 993 (Fla. 1st DCA 1991) (observing that it “is clear that an agency’s authority to impose sanctions must be expressly delegated to the agency”).
52 Continental Construction Co., 464 So. 2d at 207.
53 See Fla. Stat. §120.54(1)(i)1 (2014).
54 See Fla. Stat. §120.55(1)(a)4 (2014).
55 Id.
56 See id. This requirement applies to rules noticed after December 31, 2007.
57 See Fla. Stat. §120.52(8)(d) (2014).
58 Cortes v. Board of Regents, 655 So. 2d 132, 138 (Fla. 1st DCA 1995).
59 Peter R. Brown Construction, Inc., 108 So. 3d at 728.
60 South Florida Racing Association, LLC, Case No. 14-6129RX at ¶ 48.
61 Id.
Jowanna Nicole Oates is a chief attorney with the Joint Administrative Procedures Committee. She is the secretary of the Administrative Law Section and serves as a co-editor of the Administrative Law Section newsletter. She earned her J.D. from the University of Florida Levin College of Law.
The views expressed herein are those of the author and not intended to reflect the views of the Joint Administrative Procedures Committee or the Florida Legislature.
This column is submitted on behalf of the Administrative Law Section, Richard Jerome Shoop, chair, and Stephen Emmanuel, editor.
