Rule or No Rule? An Examination of Recent Unadopted Rule Challenge Decisions
Florida law requires that each agency statement defined as a rule be adopted via the administrative rulemaking process.1 When an agency fails to adhere to this requirement, it faces the possibility of an unadopted rule challenge. Under F.S. §120.56(4), any person substantially affected by an agency statement that is an unadopted rule may seek an administrative determination that the statement violates the rulemaking requirements of the Administrative Procedure Act.2 However, in order to determine whether such a violation has occurred, it is first necessary to determine whether the statement in question is an unadopted rule.
What Is an Unadopted Rule?
An unadopted rule is an agency statement that meets the definition of the term rule but hasn’t been adopted in accordance with the requirements of the Administrative Procedure Act.3 Under F.S. §120.52(16), a rule is an “agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency….” Also included in this definition are “the amendment or repeal of a rule” and “any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule.”4 Excluded from this definition are certain types of internal memoranda, contractual provisions, and financial information.5
Florida’s district courts of appeal have provided guidance on this topic. In Jenkins v. State, 855 So. 2d 1219, 1225 (Fla. 1st DCA 2003), the court indicated that in order to determine whether an agency statement is a rule, one must consider its effect. Specifically, the court held that “[a]n agency statement or policy is a rule if its effect requires compliance, creates certain rights while adversely affecting others, or otherwise has the direct and consistent effect of law.”6 In State Board of Administration v. Huberty, 46 So. 3d 1144, 1147 (Fla. 1st DCA 2010) (quoting St. Francis Hospital, Inc. v. Department of Health & Rehabilitative Services, 553 So. 2d 1351, 1354 (Fla. 1st DCA 1989)), the court expounded upon F.S. §120.52 (16), stating:
“[A]n agency interpretation of a statute which simply reiterates the legislature’s statutory mandate and does not place upon the statute an interpretation that is not readily apparent from its literal reading, nor in and of itself purport to create certain rights, or require compliance, or to otherwise have the direct and consistent effect of the law, is not an unpromulgated rule, and actions based upon such an interpretation are permissible without requiring an agency to go through rulemaking.”
In addressing the statutory requirement that administrative rules be generally applicable, the court in Department of Highway Safety & Motor Vehicles v. Schluter, 705 So. 2d 81, 82 (Fla. 1st DCA 1997), held that a statement is not generally applicable if its application is subject to the discretion of the agency. Similarly, in Agency for Health Care Administration v. Custom Mobility, Inc., 995 So. 2d 984, 986 (Fla. 1st DCA 2008), the court found general applicability lacking in statements that are applied solely on a case-by-case basis. In addition, Florida’s district courts have indicated that a statement need not apply to every person or activity within an agency’s jurisdiction in order to be considered generally applicable.7
Given these statutory and judicial guidelines, one might expect the identification of administrative rules to be a simple exercise. However, as is the case with most legal issues, the gray areas of rule identification tend to outnumber the black and white, and it is for this reason that the Florida Legislature has established a method by which disputes in this area may be resolved — the unadopted rule challenge.
The Unadopted Rule Challenge Process
Any person substantially affected by an agency statement alleged to be an unadopted rule may challenge its validity by filing a petition with the Division of Administrative Hearings (DOAH).8 The petition must include, at a minimum, a description of the challenged statement and facts sufficient to demonstrate that the statement is an unadopted rule.9 If an administrative law judge determines that all or part of a challenged statement is an unadopted rule, then the agency must immediately discontinue its reliance on the same.10 In addition, the prevailing party in an unadopted rule challenge may be entitled to reasonable costs and attorneys’ fees under F.S. §120.595(4).
Recent Unadopted Rule Challenge Decisions
As noted above, unadopted rule challenges provide parties with a method of opposing agency statements alleged to be unpromulgated rules.11 reviewing the final orders from such cases, legal practitioners are provided with guidelines from which to work when initiating or defending similar actions. The following recent DOAH decisions are instructive in their examination and application of the principles discussed above.
In Williams v. Department of Highway Safety & Motor Vehicles, Case No. 16-6127RU (DOAH Mar. 3, 2017), the court was called upon to determine whether two policy statements issued by the Department of Highway Safety and Motor Vehicles were unadopted rules.12 Specifically, the petitioner challenged portions of the department’s procedure manual and technical advisory.13 The challenged language in the manual stated: “NOTE: All USED vehicles coming into Florida from a foreign country, including dealer transactions, MUST have the VIN verified by a DMS Compliance Examiner.”14 The advisory contained a similar statement with slightly different wording.15 In determining whether the manual and advisory were unadopted rules, the court first examined their applicability, stating:
“[B]y their plain terms, [the Manual and Advisory] apply uniformly to a class of persons or activities over which Respondent exercises authority — here, all used motor vehicles coming into Florida from a foreign country for which certificates of title are sought. Further, both of these challenged statements impose the requirement — to which all persons seeking to obtain a certificate of title for a used vehicle being brought from a foreign country into the state of Florida must conform — that the VIN on the vehicle be verified by an examiner with [r]espondent’s Motor Vehicle Field Office. Thus, both [the Manual and Advisory] treat all those with like cases equally and require the affected persons or activities to conform to a common standard.”16
The court then addressed the issue of whether the agency statements were interpretations of law, holding:
“It is also noted that nowhere in chapter 319, or in any other statute, are the specific terms, provisions, and requirements of either [the Manual or Advisory] expressly codified. Thus, [the Manual and Advisory] impose requirements that are not expressly contained in the statutes’ plain language or readily apparent from the statutes’ literal reading. As such, these agency statements interpret those statutes.”17
In finding that the challenged agency statements were unadopted rules, the court concluded:
“[It] is determined that both [the Manual and Advisory] are agency statements of general applicability that implement, interpret, and prescribe law or policy, and that they impose conditions, require compliance, and have the effect of law. Accordingly, it is concluded that [the Manual and Advisory] are rules, as that term is defined in 120.52 (16).”18
In American Residential Development, LLC v. Florida Housing Finance Corp., Case Nos. 16-6610RU and 16-6611RU (DOAH Jan. 18, 2017), petitioners alleged that a request for application (RFA) was an unadopted rule.19 The RFA “invit[ed] applications for the award of up to $14,669,052.00 in housing tax credits for the development of affordable, multifamily housing located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas [c]ounties.”20
In examining the RFA, which the court described as “tailored to a very narrow class of persons in the six-county area who seek tax credits to build affordable low-income rental property in that area,” the court focused solely on whether its requirements were generally applicable within the meaning of F.S. §120.52(16).21 In finding a lack of general applicability, the court held:
“The challenged statements [in the RFA] are not statements of general applicability. They are specific to the solicitation process for affordable rental housing tax credits in a small geographic area. They have no applicability other than to the specific persons who submit an application in response to [the RFA]. The record also shows that in applying and evaluating various provisions within the RFA, the evaluation committee may exercise discretion. Given these circumstances, the statements are not rules.”22
In Ocala Herlong, LLC v. Department of Transportation, Case No. 17-3348RU (DOAH Sept. 6, 2017), the petitioner challenged a statement in the Department of Transportation’s 2014 Median Handbook as an unadopted rule.23 The handbook language, which referred to CS/CS/SB 1842,24 stated:
“This bill applies to any proposed work program project beginning design on or after November 17, 2010. The language of the bill states ‘whenever the Department of Transportation proposes any project,’ so this language does not apply to permit applications. However, for permit applications that affect medians and median openings, the effected [sic] people and businesses should be informed and involved by the permittee as soon as possible.”25
The court first examined the applicability of the handbook language, holding: “Here, the evidence establishes that the [c]hallenged [s]tatement is generally applicable. As discussed above, [r]espondent’s districts statewide are uniformly required to adhere to the [c]hallenged [s]tatement; they do not have the discretion to choose whether to follow or disregard the [c]hallenged [s]tatement.”26
After establishing the general applicability of the statement, the court addressed the issue of statutory interpretation, saying:
“Section 335.199 is susceptible to multiple reasonable interpretations that result in different outcomes, and, thus, is ambiguous….[T]he statute can reasonably be read to apply only to work program projects; to projects that entail both work program projects and non-work program projects; and also to projects that arise in the context of connection permit applications where [r]espondent — which has sole control over the placement of median barriers and the location of median openings — decides to close existing median openings or create new median openings to maintain required traffic and safety standards.”27
The court continued:
“Tasked with administering this ambiguous statute, [r]espondent was placed in the position having to determine its meaning. The evidence shows that [r]espondent’s staff, in an earnest effort to administer and implement the statute in a manner that was consistent with its existing transportation programs and regulatory processes and timeframes, engaged in extensive dialogue about the types of projects to which the statute applied and whether (or not) the statute applied to projects resulting in median changes that arise in the permit application project.”28
After noting that the respondent “ultimately determined that 335.199 should be read as imposing the 180-day statutory notice requirement only on [r]espondent’s ‘work program’ projects,”29 the court held that the handbook language was an unadopted rule due to its generally applicability and interpretation of the aforementioned statute.30
With the exception of American Residential Development, which was decided solely on the issue of general applicability, the court in each of the above cases based its unadopted rule determination on an examination of the following factors: 1) whether the challenged statements interpreted current law or policy; and 2) whether the challenged statements were generally applicable within the meaning of F.S. §120.52(16).
Of these factors, the former arguably presents fewer analytical difficulties than the latter, as the courts in both Williams and Ocala Herlong easily disposed of the interpretation issue via the straightforward application of F.S. §120.52(16) and Huberty. In Williams, the court found that the challenged statements interpreted current law based on the absence in Ch. 319 of the specific requirements expressed in the manual and advisory. In Ocala Herlong, the court cited the ambiguity of the statute at issue and the respondent’s attempts to determine its meaning as proof that the handbook statement was an interpretation of current law.
The issue of general applicability, however, is slightly more nuanced. In Williams, agency statements that applied to all used motor vehicles coming into Florida from foreign countries for which certificates of title were sought were found to be generally applicable because they applied uniformly to a class of persons or activities over which the department exercised authority. Similarly, in Ocala Herlong, the challenged handbook language was held to be generally applicable since the department’s districts statewide were uniformly required to adhere to its requirements. In American Residential Development, the court found that the statements contained in the RFA were not generally applicable due to the discretion afforded the agency in applying and evaluating its provisions. However, in explaining its reasoning, the court also stated, “[The challenged statements in the RFA] are specific to the solicitation process for affordable rental housing tax credits in a small geographic area. They have no applicability other than to the specific persons who submit an application in response to [the RFA].”31 This indicates that, in addition to its finding of agency discretion, which alone was sufficient to negate general applicability under Schluter, the court considered the size of the affected class, the size of the geographic area, and the prospective application of the challenged statementsin reaching its determination. Though not included among the general statutory and judicial guidelines discussed above, Florida caselaw has indicated that such considerations may negate general applicability under limited circumstances. Specifically, in State, Department of Commerce, Division of Labor v. Matthews Corp., 358 So. 2d 256, 258 (Fla. 1st DCA 1978), general applicability was found lacking in agency statements that applied to a single party, in a single geographic location, for a single project. In reaching its decision, the court cited the “temporal [and] geographical limitations” of the challenged agency statements as evidence that they were not generally applicable.32 However, later caselaw appears to limit the aforementioned decision to its particular facts.33 Therefore, while a detailed examination of this issue is beyond the scope of this article, it is sufficient for our purposes to recognize that these factors may affect a court’s general applicability determination under circumstances similar to those described in the aforementioned case.
All administrative law attorneys should develop the ability to accurately classify agency statements as rules. For the agency attorney, this ability functions as a shield — reducing the threat of litigation via the preemptive adoption of agency statements deemed to be rules. For the private legal practitioner, it is a sword — a weapon used to challenge agency statements and policies deemed unfavorable to one’s clients. However, whether exercised by an agency attorney in the form of rulemaking or by a private practitioner as an unadopted rule challenge, this ability ultimately benefits the citizens of the state of Florida by increasing agency compliance with the mandates of the Administrative Procedure Act.
1 Fla. Stat. §120.54(2018).
2 These requirements are beyond the scope of this article. For our purposes, it is only necessary to recognize that such requirements exist.
3 Fla. Stat. §120.52(20) (2018).
4 Fla. Stat. §120.52(16) (2018).
6 Jenkins v. State, 855 So. 2d 1219, 1225 (Fla. 1st DCA 2003).
7 See Dep’t of Highway Safety & Motor Vehicles v. Schluter, 705 So. 2d 81 (Fla. 1st DCA 1997).
8 Fla. Stat. §120.56(4)(a) (2018).
10 Fla. Stat. §120.56(4)(e) (2018).
11 Fla. Stat. §120.56(4) (2018).
12 Williams, Case No. 16-6127RU at 18.
14 Id. at 19.
15 Id. at 20.
16 Id. at 41.
17 Id. at 42.
18 Id. at 43.
19 Numerous statements in the RFA were challenged as unadopted rules. However, it is sufficient for the purposes of this article to consider the challenge as being applicable to the RFA in its entirety.
20 American Residential Development, Case Nos. 16-6610RU and 16-6611RU at 4.
21 Id. at 23.
22 Id. at 42 (citation omitted).
23 Ocala Herlong, Case No. 17-3348RU at 6.
24 C.S./C.S./S.B. 1842 created Fla. Stat. §335.199. The statutory language at issue states in pertinent part: “Whenever the Department of Transportation proposes any project on the State Highway System which will divide a state highway, erect median barriers modifying currently available vehicle turning movements, or have the effect of closing or modifying an existing access to an abutting property owner, the department shall notify all affected property owners, municipalities, and counties at least 180 days before the design of the project is finalized.”
25 Id. at 8 (alteration in original).
26 Id. at 45.
27 Id. at 48 (citation omitted).
28 Id. at 49.
29 Id. at 50.
30 Id. at 54.
31 Am. Residential Dev., LLC v. Fla. Hous. Fin. Corp., Case Nos. 16-6610RU and 16-6611RU at 42 (DOAH Jan. 18, 2017).
32 State, Dep’t of Commerce, Div. of Labor v. Matthews Corp., 358 So. 2d 256, 258 (Fla. 1st DCA 1978).
33 See Balsam v. Dep’t of Health & Rehab. Servs., 452 So. 2d 976, 978 (Fla. 1st DCA 1984).
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, Garnett Wayne Chisenhall, Jr., chair, and Lyyli Van Whittle, editor.