Challenging Rule Repeals

Challenging Rule Repeals

by Stephen T. Maher [1]
From the Administrative Law Section Newsletter, published by the Administrative Law Section of The Florida Bar.

Note: This article concerns Florida Administrative Law, not Federal Administrative Law.

How do you react when a client informs you that the repeal of an agency rule is adversely affecting its substantial interests? Put aside what you thought you knew and read the First District Court of Appeal's recent decision in Federation of Mobile Home Owners of Florida, Inc. v. Florida Manufactured Housing Association, Inc., __ So.2d __, 21 Fla L. Wkly. D 2447 (1996). In the Mobile Homes case, the mobile home owners and the Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (the agency) sought to repeal an agency rule that they believed had been interpreted by the First District in a manner unfavorable to the mobile home owners. The rule at issue in the case governed the circumstances under which changes could be made to the prospectus, the document that must by law be given to a mobile home owner when the owner moves in to a mobile home park. This is a very important document in owner/park relations. The agency and the mobile home owners were trying to change the existing law by repealing the rule, and the manufactured housing industry association was fighting to keep the rule in place.[2]

The industry association challenged the repeal by filing a Section 120.54(4) rule challenge against the repeal in the Division of Administrative Hearings (DOAH) and by joining that challenge with a section 120.535 challenge. These section numbers have all changed with the adoption of the newest version of the APA in October, 1996, but the substance of the law has not changed.[3] The industry argued that the proposed rule was invalid because it was an invalid exercise of delegated authority in two respects. First, the repeal, in trying to change the law, conflicted with Court interpretations that everyone assumed had established the law in a pro-industry posture. Second, the repeal failed to establish adequate standards for agency decisions and vested unbridled discretion in the agency.

The Court began its analysis by stating:

"While Section 120.52(16), Florida Statutes (1993), provides that the term "rule" "includes the amendment or repeal of a rule," there are no reported Florida decisions addressing whether that provision makes the repeal of any rule subject to a rulemaking challenge, or simply entitles interested parties to seek repeal of a rule in rulemaking proceedings, and to receive notice of amendments and repeals as required by Section 120.54(1), Florida Statutes, thus permitting a challenge when the rule has the corollary effect of creating a new rule. Cf. All Risk Corp. of Florida v. Florida Dep't of Labor & Employment Sec., 413 So.2d 1200 (Fla. St.. DCA 1982)(rule challenge based upon a rule repeal and simultaneous substitution of new proposed rules)."

21 Fla L. Wkly at 2449. The suggestion that rule repeals are not clearly rulemaking under the act, subject to all the procedural requirements and protections of the act, including the ability to file proposed rule challenges against repeals, is not only unprecedented, it is contrary to the plain language of the act and to the policies that underlie the act. The language of the act is clear. The statutory definition of the term rule states that the term includes amendments and repeals. Also, there is clear direction, outside this definition section, that repeals are to be treated in the same procedural manner as rule adoptions. New section 120.54(3)(d)5. states: "After a rule has become effective, it may be repealed or amended only through the rulemaking procedures specified in this chapter." The policy behind including repeals within the term rule and treating both in the same procedural manner is strong. An agency's decision to repeal a rule can have as much, or more, impact on a substantially affected person than the decision to adopt a new policy. The same concerns about accuracy, acceptability and efficiency that underlie all rulemaking are concerns in the repeal of rules. There is no logical reason to limit the assurance of procedural regularity that the act requires in rulemaking to rule adoptions. It should be equally required in all rulemaking activity. To my knowledge, never before has anyone suggested that any rule repeals do not have to be noticed, processed and adopted in the same way that all rules are.[4] To my knowledge, for twenty three years everyone has acted as if all rule repeals are subject to the Florida Administrative Procedure Act (APA) in all respects.

The Court continued:

"To constitute 'rulemaking' a rule repeal is required to satisfy independently the remainder of the definition of a 'rule' in section 120.52(16): 'agency statement of general applicability that implements, interprets or prescribes law or policy or describes the organization, procedure, or practice requirements of an agency...' A repeal that does not have the effect of creating or implementing a new rule or policy is not a rule subject to challenge."

21 Fla L. Wkly at 2449. How can the Court require a repeal to independently satisfy the requirements within the definition of a rule when the definition itself states that the term rule "includes the repeal of a rule"? The quoted analysis is clearly wrong. The Court suggests that the "includes" language might have some lesser effect than making the repeal a rule. It explains that the "includes" language "simply entitles interested parties to seek repeal of a rule in rulemaking proceedings, and to receive notice of amendments and repeals as required by section 120.54(1)." But this analysis gives no effect whatsoever to the "includes" language, because section 120.54(1) and section 120.54(5) (which provides the method for seeking repeal of a rule alluded to by the Court) both mention repeals by name.[5]

Under the Court's interpretation, must repeals of this kind even go through the rulemaking process? The Court has stated that no proposed rule challenge can be brought against such rules. Must a rulemaking hearing be held upon request? Must any other step be taken to adopt the repeal as a final rule, other than the notice required in section 120.54(1)? Apparently not.[6] The other rulemaking requirements in the APA are for "rules" and do not specifically mention repeals, and the Court has determined that repeals of this kind are not rules.

Thus, it appears that under the Court's interpretation of the statute, rule repeals that do not create or implement a new rule or policy are not rules and therefore cannot be reviewed by the Legislature's Joint Administrative Procedure Committee (JAPC) (which is charged with examining proposed and existing rules), need not be adopted as rules after they are noticed for repeal (because only rules must be adopted), will no longer be the subject of rulemaking hearings of any kind and cannot even be published in the Florida Administrative Code, which is reserved for adopted rules. This is a clear departure from the way rule repeals have been handled by the executive and legislative branches of government for twenty three years.

If agencies follow this precedent, and notice but do not adopt certain repeals, how will the executive and legislative branches respond? The Secretary of State and the JAPC have routinely been involved in the day to day assurance that agencies are following the rulemaking requirements of the act. If called upon to do so, they will find the Court's test a difficult one to enforce. Whether a rule repeal will, or will not, have the effect of creating or implementing a new rule or policy cannot necessarily be determined on the face of the rulemaking materials that are required by statute to be submitted with the rule repeal. The Court in Mobile Home reached the conclusion that the repeal there had such an effect after two paragraphs of analysis, with the benefit of a hearing officer's findings, made after a trial. How can the Secretary of State and JAPC hope to determine whether an agency is properly noticing but refusing to adopt its repeal without benefit of such resources? The unworkable situation the Court's construction will create is one more reason for concluding that the Court's analysis is flawed.

This judicial hostility towards statutory protections in rule repeals is not only illogical and unprecedented, it could not come at a worse time. One of the most distinctive features of the administrative law landscape over the past few years has been an unusually large volume of rule repeals. In 1995, for the first time since the Florida APA was adopted in 1974, the majority of rules noticed for adoption were rule repeals, not new rules. To put that fact in clearer perspective, there were 5,777 rules noticed for repeal in 1995 and there had been only 8,627 rule repeals during the previous twenty years.[7] This reversal of a twenty year trend was no accident. Rule repeal has become a political imperative, the politician's way of demonstrating that they are tough on red tape. Both the Governor and Cabinet have established rule repeal quotas and have worked with agencies, by letter and telephone, to make those quotas produce results.[8]

In this respect, the rule repeal at issue in the Mobile Home case was not typical of the kinds of repeals that have been common in recent years. Most rule repeals in recent years have not been done to change the law. Rules have been repealed for political reasons, so elected officials could crow about the large number of agency rules they have repealed. These repeals are precisely the kind of repeals that the Mobile Home case, if followed, will insulate from challenge. Ironically, after making its analysis, the Court found that the challenger in the Mobile Home case properly challenged the repeal under section 120.54. The case hits hardest where protection is needed most: where the administrative process is being manipulated for political reasons.

One area of consistent legal weakness in the flood of rule repeals that we have seen in recent years are the published explanations of why the rules are being repealed that accompany the repeal in the "short and plain explanation of the purpose and effect of the proposed rule" required in the old section 120.54(1). Those statements rarely, if ever, explain the real reasons for the rule's repeal, in many cases, that rules are being repealed to meet Governor and Cabinet imposed rule repeal quotas. They also fail to indicate that the policy expressed in the repealed rule will continue to remain in force as an unpublished rule. Yet that has very often been the reality. Instead, the repeals generally explain that the rule is unnecessary, or something along those lines, even though that conclusion is not legally correct. Legally, where the policy that was in the rule will still remain in effect after repeal, section 120.535, even in its dispersed form in the new act, requires that such unpromulgated rule policy be adopted as a written, published rule. Such unpromulgated rule policy meets the definition of a "rule" in the APA. If an agency is repealing a rule that it intends to continue as an unpublished policy, and explains that fact in its rulemaking materials, the rule repeal would seem, on its face, to be invalid.

Before reading Mobile Home, I always assumed that any repeal could be successfully challenged pursuant to section 120.54(4) if the materials submitted with the repeal contained inaccurate statements concerning the reasons for the repeal, and could be successfully challenged if accurate statements in the rulemaking materials showed that the agency intended the repeal as a basis for circumventing the rule adoption requirements of the APA, even if no change in policy was intended by the repeal. That assumption was based on the language of section 120.52(8), the definition of an invalid exercise of delegated legislative authority, which is also the operative language of section 120.54(4). Providing inaccurate or untrue information in the rulemaking materials required by section 120.54(1), I had always assumed, was a material failure to follow the rulemaking procedures set out in section 120.54. Section 120.52(8)(a). Similarly, I had always assumed that an admission in those materials that the purpose and effect of the rule repeal was to remove rule policy from the Florida Administrative Code so it could be followed as unpromulgated rule policy was an admission that the repeal was a material failure to follow the rulemaking procedures in the act, section 120.52(8)(a), the creation of a rule that fails to establish adequate standards for agency decisions (inadequate in the sense that the rule that results from the repeal is unwritten and thus harder to locate and apply), section 120.52(8)(d), and arbitrary and capricious, section 120.52(8)(e).

I still believe that this should be the case. The First District will not allow a section 120.54(4) challenge in cases where the rule repeal does not create or implement a new rule or policy, even in a case where the rulemaking materials accompanying a rule repeal are clearly false, or even in a case where an agency admits in its rulemaking materials that the purpose of the repeal is to circumvent the rulemaking requirements of the act. These are precisely the kinds of cases where a preenforcement remedy like section 120.54(4) is most valuable. Hopefully, some other District Court of Appeal will hear this issue and interpret the statute in a way that will give the Supreme Court of Florida an opportunity to straighten out the law in this area.

In Mobile Home, the Court also reminded the bar that, in the First District, there can be no claim that the repeal was invalid under section 120.56 on the theory that the non-rule policy of the agency enlarges modifies, or contravenes the specific provisions of the law the rule was intended to implement, in light of the First District's decision in Christo v. Florida Department of Banking and Finance, 649 So.2d 318 (Fla. 1st. DCA 1995).

"In [Christo], the appellant had asserted that unpromulgated agency rules were invalid under both sections 120.535 and 120.56. The hearing officer held that there was no violation of section 120.56 "because the manuals did not enlarge, modify or contravene the specific provisions of law they were intended to implement. Id. at 319. However, this court held that 'the Legislature, in enacting section 120.535, intended section 120.535 to be used as the exclusive method to challenge an agency's failure to adopt agency statements of general applicability as rules.'" Id. at 321.

21 Fla. L. Wkly at D2450 n.1.

The First District's conclusion that the Legislature intended section 120.535 to be the exclusive method to challenge nonrule policy is certainly not the only way to read the statutes. I argued, in a 1992 law review article,[9] that section 120.56 had not been effectively limited in that way by the legislation that added section 120.535 to the APA.

While section 120.535(8) provides that "[a]ll proceedings to determine a violation of [section 120.535(1)] shall be brought pursuant to this section," it is still not clear whether relief is also available to challenge unpromulgated rules through section 120.56. It is possible that section 120.535 is not the exclusive remedy available under the APA to respond to an unpromulgated rule. The section 120.56 rule challenge may still be available to invalidate an unpromulgated rule on the basis that it has not been adopted through the formalities of section 120.54. While the Legislature may have intended to make section 120.535 the exclusive method to deal with this problem, it has not made the legislative adjustments necessary to accomplish that result. Section 120.52(8) still defines an "[i]nvalid exercise of delegated authority," the operative language in section 120.56, to include situations where "the agency has materially failed to follow applicable rulemaking procedures as set forth in section 120.54." [10]

In that article, I suggested that there may be a way to read the two sections together and give effect to both.

"Perhaps the section 120.56 rule challenge is still available to invalidate unpromulgated rules, subject to the defense that the challenged policy is not a rule, but rather an incipient policy. Thus, even if section 120.56 has vitality in this area, it has a very narrow reach. Section 120.535 has a broader reach as it is available against all agency policy, even incipient policy."[11]

Such a distinction harmonizes the sections, giving effect to both, leaving the section 120.56 remedy strong but narrow and the section 120.535 remedy broad but weak, since it does not invalidate policy, it merely forces the agency to initiate rulemaking or cease reliance on the policy.

This reading is consistent with the intent of the 1991 amendments that added section 120.535. That legislation was enacted to force recalcitrant agencies into rulemaking, not to give them a new way to avoid being forced to follow legal requirements. Agencies that still rely on unpromulgated but fixed agency rules should know better by now, and should have that policy invalidated. In recent years, agencies have intentionally been creating unpromulgated but fixed agency rules through massive rule repeals. Being thrown into the section 120.535 briar patch is hardly a punishment that agencies will fear enough to think twice when they are told by the Governor and Cabinet to remove all evidence of established rules from the Florida Administrative Code in order to create some impressive statistics for a campaign speech.

The level of repeal that the politicians have sought to achieve, repeal of fifty percent of agency rules, cuts deep into the heart of established rule policy except in those agencies which have been grossly negligent in keeping their published rules up to date. The situation has gotten so bad recently that a former agency lawyer now in private practice told me that he keeps a copy of his old agency's 1994 rules handy so he can easily refer to the policies now in force. Newer volumes of the Florida Administrative Code fail to include many of the rules that still exist in practice. I have described the mass repeals as creating policy icebergs, with large amounts of established rule policy unknown to all but agency staff and agency insiders, ready to sink passing constituents without warning. Ironically, this is the same situation that existed when the act was adopted in the 1970s,[12] the situation that motivated the very rulemaking provisions that the First District has been interpreting as providing no help against this political assault. But the Governor and Cabinet are happy with the results. The people know they are serious about the business of government.

Both the Mobile Home and the Christo cases limit the challenges that can be brought against rule repeals and the unpromulgated rule policy that results from the kind of repeals we have seen on a weekly basis over the last few years. The real world consequences of these decisions will be to insulate agencies who ignore the act's rulemaking requirements from challenges to their illegal actions. These consequences could have been foreseen, had the Court paid closer attention to the political climate in Tallahassee. Both decisions were handed down in the midst of the politically motivated rule repeals that they now serve to protect. The courts are the bulwark against the executive branch's refusal to follow the legislative mandate embodied in the APA. They must serve as the protector of the administrative process when it is being manipulated for political reasons. When they fail to provide such protection, the integrity of the process is threatened, and the people are left without an effective remedy.

Footnotes

[1] Past Chair, Administrative Law Section and author of numerous articles on the Florida Administrative Procedure Act. Return to [1]

[2] As it turned out, the First District found that none of the parties were correct in their interpretation of earlier First District precedent. The Court interpreted its own precedent not to have the pro-industry effect that everyone had assumed. The agency and the owners thus lost the battle (the repeal was found invalid) but won the war (the rule was not in need of repeal for them to prevail, given the Court's reading of precedent). Return to [2]

[3] Section 120.54(4) is now section 120.56(2). Section 120.535 has been dispersed to the four corners of the act, but still remains viable, if harder to find. It will probably continue to be called "the old 120.535" for lack of an easier handle. Parts of the old 120.535 can be found in sections 120.54(1), 120.56(1) and (4) and 120.595(4).Return to [3]

[4] Except those rules that are, by statute, subject to a modified process.Return to [4]

[5] The APA makes specific reference to "repeals" in several rulemaking contexts in the new act. There are specific references to "repeals" in the new 120.54(3)(a)(1)(the old 54(1)), the new 120.54(3)(b)(1) (statement of estimated regulatory cost), section 120.54(3)(b)(2)(the small county, city and business impact consideration), the new section 120.54(3)(d)5 discussed above, and section 120.54(7)(the new 120.54(5)). Return to [5]

[6] There is an argument that "intended action" language in the new section 120.54(3)(c)1. includes repeals and would require a rulemaking hearing on all repeals if requested. That language comes from the new 120.54(3)(a)(1), the successor to section 120.54(1), and seems to encompass both adoptions and repeals in that context. That language is repeated in the new 120.54(3)(c)1., the successor to section 120.54(3), the section that governs rulemaking hearings. Thus, a good argument could be made that, despite the Mobile Home ruling, there still is a right to a rulemaking hearing in connection with all repeals. However, under the logic of Mobile Homes, no further action would be required. Return to [6]

[7] Stephen T. Maher, The Death of Rules: How Politics is Suffocating Florida, 8 St. Thomas L. Rev. 313, 328 (1996). Return to [7]

[8] For a more detailed discussion of this topic, see The Death of Rules. Return to [8]

[9] 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 (!992). Return to [9]

[10] Id. at 399-400. Return to [10]

[11] Id. at 400-401. Return to [11]

[12] "The proposed act will cut down on the private knowledge of the policies that shape agency decisions which is now possessed only by small groups of agency specialists and agencies' staffs." Reporter's Comments on Proposed Administrative Procedure Act for the State of Florida, March 9, 1974 at 2.(c). Return to [12]

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