In 1996 the passage of the much-anticipated amendments to Florida's Administrative Procedure Act (APA)[1] set the stage for a notable controversy surrounding the authority of state administrative agencies to promulgate rules. The amendments decidedly changed the prevailing standard for determining whether the Florida Legislature had properly delegated authority to administrative agencies. The revised APA rejected the long-applied standard that an administrative rule would be deemed valid if it was "reasonably related to the purposes of the enabling legislation and [was] not arbitrary or capricious."[2] The revised statute required more in that "[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."[3]
The meaning of the phrase "particular powers and duties," however, was unclear. Neither the statute nor the legislative history defined the specificity required in an agency's delegated powers and duties in order for the Legislature to validly grant rulemaking authority. The First District Court of Appeal recently addressed this issue in St. Johns River Water Management District v. Consolidated-Tomoka Land Co.,[4] in which a group of corporate and private landowners in the Tomoka River and Spruce Creek area challenged the St. Johns River Water Management District's (District) authority to create several proposed rules.[5] According to the District, the proposed rules were intended to do the following: (1) add the Tomoka River and Spruce Creek Hydrological Basins as new geographic areas of special concern and impose more stringent permitting standards and criteria for systems in those areas; and (2) set water recharge standards and establish riparian habitat protection zones.[6] The landowners argued, and an administrative law judge (ALJ) agreed, that the District had exceeded its rulemaking authority in violation of sections 120.52(8) and 120.536(1), Florida Statutes,[7] when it proposed these rules.[8] The landowners submitted that these rules went beyond the "particular powers and duties" delegated by the Legislature to the District.[9] The First District Court of Appeal, however, reversed the decision of the ALJ, finding that the agency had acted within the authority delegated by the Legislature in proposing the rules at issue.[10] In the wake of the new restrictions imposed on administrative agencies by the revised APA, the ruling scored an important victory for both the agency and proponents of administrative discretion and expertise.
This Note will discuss the policy implications of the new rulemaking standard and the impact of the Consolidated-Tomoka opinion on future rule promulgation and challenges. The new rulemaking standard has already significantly impacted the role of administrative agencies in the implementation of laws. First, as demonstrated in Consolidated-Tomoka, the text of the new standard, though obviously a restraint on existing rulemaking authority, was facially unclear.[11] The decision of the First District Court in Consolidated-Tomoka should assist agencies and those subject to agency rules in their future understanding of what "particular powers and duties" agencies must be granted in order to make rules. Second, the new rulemaking standard has rekindled criticism of the issuance of final orders by ALJs rather than by the agency.[12] Where a rule challenge alleges an invalid exercise of delegated authority, should reviewing courts defer to the ALJ's interpretation of the agency's "particular powers and duties," or to the agency's interpretation? In some situations, deferring to the ALJ's interpretation would directly conflict with the notion of administrative expertise in interpreting statutes. Third, the "look back" provision contained in section 120.536(2), Florida Statutes, requiring a review of all agency rules promulgated prior to the revisions,[13] potentially violates the separation of powers doctrine where the statute allows the Legislature to veto the executive branch through the elimination of undesirable rules.[14] Finally, despite the court's decision in Consolidated-Tomoka, the new rulemaking standard may cause agencies to avoid rulemaking in favor of nonrule processes such as adjudication and policy statements.[15] This result is in extreme conflict with the express desire in Florida for presumptive rulemaking, if at all feasible and practicable.[16]
Part II of this Note will examine the history of rulemaking authority in Florida prior to the 1996 APA revisions, giving special consideration to the strict separation of powers requirement in the Florida Constitution. Part III summarizes the standards of rulemaking authority by reviewing key rule challenge cases prior to the 1996 revisions. The legislative history and political background of the APA revisions are summarized in Part IV. Part V then provides the background of the Consolidated-Tomoka case and discusses the court's interpretation of the new rulemaking standard. Part V describes potential repercussions of the new rulemaking standard not directly at issue in Consolidated-Tomoka. Finally, Part VI concludes by predicting how the court's ruling is likely to impact agencies, courts, and those who challenge agency rules.
The principle that agencies may only act within the scope of their delegated authority is central to the study of administrative law.[17] Scholars have discussed and debated the rulemaking authority of agencies nearly as long as agencies have existed.[18] For a delegation of authority to an agency to be proper, the legislature must sufficiently guide the agency as to the purpose and intent of the laws to be implemented. The necessary degree of guidance can differ greatly vis-à-vis the federal and state governments. At the federal level, the United States Supreme Court has upheld congressional grants of broad and vaguely defined rulemaking power to the agencies.[19] However, in many of the individual states, including Florida, the nondelegation doctrine "retains a certain vitality."[20] Florida case law bears out this statement in word, if not by deed.[21]
Florida's separation of powers doctrine is far more stringent than that of the federal government.[22] The United States Constitution provides that "all legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives."[23] The Florida Constitution more explicitly declares: "The powers of the state government shall be divided into legislative, executive and judicial branches. No person belonging to one branch shall exercise any powers appertaining to either of the other branches unless expressly provided herein."[24] The Florida Constitution further states that the two houses of the Florida Legislature hold all lawmaking power.[25] While the Florida Constitution recognizes the presence of agencies, it does not grant any legislative or quasi-legislative authority to agencies.[26]
Even though agency rulemaking was not contemplated in the federal or state constitution, it has been allowed as a necessary delegation of legislative power.[27] The complexities of law and society make it impossible for legislatures to address and decide every issue presented.[28] Administrative agencies, for all their drawbacks,[29] are able to address regulation with greater experience, expertise, and flexibility than legislatures.[30] This notion is illustrated at the federal level in the functions of the Environmental Protection Agency (EPA). The EPA is charged with developing and enforcing national standards for air quality, water quality, and hazardous waste treatment and disposal, among other responsibilities.[31] In defining, monitoring, and enforcing these environmental standards, the EPA performs functions that Congress lacks the time or expertise to carry out. In this context, efficient lawmaking requires allowing agencies to relieve Congress of the burden of filling in the details of stated policy. Though the idea of delegation of authority to agencies has been accepted at both the federal and state levels for decades, proper delegation places constraints on the agency in the form of legislative guidelines.
By declaring that agencies have no inherent rulemaking authority,[32] and that all rules must be "authorized by law and necessary to the proper implementation of a statute,"[33] Florida's APA explicitly recognizes the need for agency constraint. These legislative guidelines ensure that agencies are carrying out the intent and purpose of the statute to be implemented.
The Florida APA, adopted in 1974,[34] was mainly geared toward combating the problem of "phantom government"[35] in which government "operates by rules known only to a select few and which are inconsistently applied."[36] Florida's first APA concentrated on rulemaking processes that included public participation,[37] rule challenges,[38] and rule publication.[39] The Act contained very little guidance for agencies, hearing officers, or courts to determine whether a rule was a valid exercise of the legislative authority delegated to the agency by the Legislature.[40]
As evidenced by the case law, a number of standards have been applied over the years. The Florida Supreme Court has directed the Legislature to provide agencies with "an intelligible principle,"[41] "adequate standards" for ministerial agencies,[42] "objective guidelines and standards,"[43] "adequate guidelines,"[44] and "reasonably definite standards."[45] Whatever the precise name for the standard, legislation should inform the agency of the "fundamental policy" necessary for rulemaking.[46] Equally important is the notion that courts must also be able to evaluate agency action in relation to the framework of articulated legislative policy:
The nature of lawmaking is not constant, however, and the very conditions that may require the use of agency expertise and flexibility may also make the drafting of detailed or specific legislation "impractical or undesirable."[48] While some statutes may be explicitly detailed by the Legislature, the subject matter of another area of legislation "may be such that only a general scheme or policy can with advantage be laid down by the Legislature, and the working out in detail of the policy indicated may be left to the discretion of administrative or executive officials."[49] In such cases, the Florida Supreme Court has opined that "greater discretion must be delegated."[50] With the necessary amount of specificity in the statute varying with the subject matter to be regulated, it is perhaps only natural that the distinction between filling in details and establishing public policy often becomes blurred.[51]
Prior to the 1996 revisions of the APA, any substantially affected person could seek an administrative determination of the validity of a rule on the ground that the rule was an invalid delegation of legislative authority pursuant to section 120.56, Florida Statutes.[52] A presumption of validity attached to all proposed and existing rules,[53] and the burden was placed on the party challenging a rule to demonstrate, based on a preponderance of the evidence, that one or more of the following was true: (1) the agency failed to follow applicable rulemaking procedures;[54] (2) the agency exceeded its grant of rulemaking authority;[55] (3) the rule enlarged, modified, or contravened the specific provisions of the law implemented;[56] (4) the rule was vague, failed to establish adequate standards for agency decisions or vested unbridled discretion in the agency;[57] or (5) the rule was arbitrary or capricious.[58]
Pre-revision courts ruled that administrative agencies were vested with Swide discretion in the exercise of their lawful rulemaking authority," whether it be clearly conferred or fairly implied, provided that the authority was consistent with the general statutory duties of the agency.[59] As stated by the First District Court of Appeal, "the agency's interpretation of a statute need not be the sole possible interpretation or even the most desirable one; it need only be within the range of possible interpretations."[60] The Florida Supreme Court, recognizing that the grants of authority given to agencies are often quite general in nature, supplied the oft-quoted pre-1996 standard of review for agency rulemaking:
Florida's APA has been amended every year since it was enacted in 1974,[64] yet none of the previous changes were as dramatic as the 1996 revisions. The revisions were not easily achieved—years of debate and proposed bills preceded the enactment of the new APA.[65] Many of the previous proposals and recommendations are reflected throughout the new APA, which is structurally and substantively different from the earlier Act. The structural changes are intended to simplify the administrative process,[66] and the substantive changes and additions are intended to add flexibility[67] and improve agency accountability.[68]
The impetus for the recent rulemaking reform can be traced back at least as far as the formation of the Florida House of Representatives Select Committee on Agency Rules and Administrative Procedures in 1992.[69] The Committee was organized for the purposes of "investigating allegations of agency abuse of delegated authority and recommending any necessary modifications" to the APA.[70] In 1993 the Florida Senate Select Committee on Governmental Reform was created to improve "'the effectiveness and efficiency of state government,'" and to "'ensure that all agency rules are based on statutory authority and that the rules do no more than the law requires.'"[71] In 1994 both the Florida Senate and House of Representatives presented comprehensive proposals for APA revisions through Senate Bill 1440[72] and House Bill 237.[73] Though the two houses were ultimately unable to agree on the extent of reform, both houses repeatedly passed provisions that contained some version of the reforms proposed in House Bill 237.[74]
Similar legislation was filed during the 1995 legislative session. Among the proposed changes was a provision designed to "level the playing field" in rule challenges by removing the judicially-created presumption of validity attached to rules.[75] All proposed and existing rules were to be presumed invalid and the burden would be placed on the agency to prove that the rule or portion thereof was a valid exercise of delegated authority.[76] If the agency failed to meet its burden, the rule or objectionable portion would be declared invalid and a judgment for attorneys' fees would be entered against the agency.[77]
The 1995 legislation passed both houses of the Legislature, but was vetoed thereafter by Governor Lawton Chiles.[78] Although the Governor was an outspoken proponent of regulatory reform, he viewed the bill as too burdensome on agencies.[79] The deciding factor in the Governor's decision to veto, however, was that the bill did not repeal section 120.535, Florida Statutes, which required rulemaking where practicable and feasible.[80] Although both the Legislature and executive branch pursued revisions to Florida's APA, disagreements about the revisions ensued in 1994 and 1995.
On the same day Governor Chiles vetoed the Second Committee Substitute for Senate Bill 536, he also issued an executive order reiterating his commitment to the reduction of rules, ordering administrative agencies to repeal obsolete rules, and at the same time establishing the Governor's Administrative Procedure Act Review Commission (Commission).[81] The fifteen-member Commission was comprised of members of the House of Representatives and Senate, attorneys practicing administrative law, the Governor's chief of staff, an ALJ, the president of the Florida Audubon Society, a representative of the business community, and the Director of the Center for Governmental Responsibility at the University of Florida.[82] The Governor directed the Commission to review the impact of the existing APA section 120.535, Florida Statutes,[83] and the viability of the Governor's efforts to reduce the number of administrative rules and restore "common sense"[84] to state governance.[85]
The Commission met over a six-month period in an attempt to resolve the sticking points that had held up previous legislative efforts.[86] The Commission's Final Report endorsed the "simplified APA" recommended by a committee of government and nongovernment attorneys formed by the Governor's office, and the addition of a waiver and variance provision.[87] With regard to rulemaking authority, the Commission reported: "The perception exists that state agencies sometimes adopt rules and policies that misinterpret legislative intent or go beyond specific statutory authorization. The response to such criticism often is that laws passed by legislators are so general that agencies have little choice but to develop their own implementation schemes."[88] To combat this problem, the Commission recommended that legislative staff analyses identify sections of proposed bills which would require agency implementation and "discuss whether the bill provides adequate and appropriate standards and guidelines to direct agency's implementation of the proposal".[89] The report also endorsed the inclusion of agency comments in staff analyses of bills.[90]
This recommendation was partially adopted in the revised APA. While there is no requirement that staff analyses include consideration of whether proposed legislation provides sufficiently clear rulemaking standards, the APA includes a statement of intent "to consider the impact of any agency rulemaking required by proposed legislation and to determine whether the proposed legislation provides adequate and appropriate standards and guidelines to direct the agency's implementation of the proposed legislation."[91] Though well-intentioned, this precatory language lacks the teeth of the requirement suggested by the Commission. Although some observers believe that agencies would benefit from legislative consideration of rulemaking at the bill analysis stage[92] and that agencies would be able to advise the Legislature on the clarity of the standards.[93] To date, the Legislature has not gone so far as to require this.
As stated in the final staff analysis, the intent of the Legislature in adding the language of section 120.536 was to expand the definition of an "invalid exercise of delegated legislative authority as found in section 120.58(8), Florida Statutes."[94] The change would require agency rules to be based upon specific statutes rather than general rulemaking authority.[95] The staff analysis expressly states that the new standard would overrule the line of cases standing for the proposition that "rules and regulations would be upheld so long as they are reasonably related to the purpose of the enabling legislation and are not arbitrary or capricious."[96]
After years of debate and stalled bills, the APA revisions passed without controversy in the spring of 1996.[97] The revisions incorporated many of the recommendations of the Governor's Review Commission and included many of the proposals included in the 1995 bill vetoed by Governor Chiles.[98] The inclusion of the new rulemaking standard contained in sections 120.52(8) and 120.536(1) did not cause much, if any, controversy within the Governor's APA Review Commission or the Legislature.[99] Though the legal community's reaction to the new standard was a bit delayed, several commentators noted the importance of the new language.[10]0 The Consolidated-Tomoka case involves some of the issues raised by commentators, while other potential problems have yet to be judicially reviewed.
Consolidated-Tomoka is one of the first cases to place the new rulemaking standard before a reviewing court.[101] The case highlights two of the problems inherent in the new standard. First, section 120.536 is facially unclear as to how specific a statute must be to denote the "particular powers and duties" of an agency. Second, applying the new rulemaking standard requires a new level of statutory interpretation, making it difficult to justify judicial deference to the ALJ rather than the administrative agency. Though not raised in Consolidated-Tomoka, other considerations are also discussed below, including the constitutionality of the legislative review of existing rules under section 120.536(2) and the impact of the new rulemaking standard on agency willingness to make rules.
West of the Intracoastal Waterway on the eastern side of Florida, the Tomoka River and Spruce Creek flow past the cities of Ormond Beach and Port Orange through farmland and undeveloped forests. Though some development is present, the area still supports habitat for many of the state's familiar wildlife—migratory birds, manatee, and white-tailed deer.[102] The development of the land bordering the Tomoka River and Spruce Creek was at the center of Consolidated-Tomoka. The case involved a dispute between the St. Johns River Water Management District and private landowners.[103]
The District, one of five in Florida,[104] operates under the authority of chapter 373, Florida Statutes, for the purposes of flood control, resource management, and water management.[105] The water management district maintains a permitting program through which the agency regulates development activity to protect water resources.[106] The Consolidated-Tomoka Land Company is based in Daytona Beach, Florida, and is engaged in the citrus and real estate industries, including property leasing, real estate development, and sales.[107] Consolidated-Tomoka and the other land owners, or trustees, all owned or oversaw real property within the Tomoka River and Spruce Creek area that would be affected by the water management district's proposed rules.[108]
The Consolidated-Tomoka case arose as a result of several proposed rules and amendments to the District's applicant permitting handbook. The proposed rules, which created more stringent standards for development in the Tomoka River and Spruce Creek areas, were seen by Consolidated-Tomoka and the other landowners as exceeding the District's rulemaking authority.[109] The landowners challenged the proposed rules on most of the grounds listed in section 120.52(8), including the new rulemaking standard.[110] The ALJ held that the statutes cited by the water management district as its rulemaking authority satisfied the portions of sections 120.52(8) and 120.536(1), which mandate that a grant of rulemaking authority is necessary.[111] The ALJ also found that the proposed rules were not arbitrary or capricious,[112] were supported by competent substantial evidence,[113] and did not vest unbridled discretion in the agency.[114] The ALJ concluded, however, that the proposed rules did not specify which "particular powers and duties" were being implemented, as required under the new rulemaking standard of section 120.536(1) and, as a result, most of the proposed rules and several of the related Handbook provisions were invalid exercises of delegated legislative authority.[115]
The primary problem with the new rulemaking standard is the ambiguity of section 120.536. The numerous briefs[116] filed in the Consolidated-Tomoka case focused mainly on this point, each urging the court to adopt a certain definition of the "particular powers and duties" language of section 120.536(1).[117] For example, the amicus brief submitted by the Florida Legislature stated that the new rulemaking standard is more clear because it further constrains agency action and provides a better understanding of what is required for rulemaking authority.[118] Yet, while it is obvious that the new rulemaking standard was meant to further constrain the rulemaking authority of agencies, more restrictions do not necessarily mean clearer standards.
Not all of the language in section 120.536(1), however, is ambiguous. The first sentence is plainly stated and understandable. It reads that "[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."[119] Thus, an agency must be granted general rulemaking authority in order to adopt rules in a certain area, and an agency may only adopt rules that implement statutes other than the general rulemaking authority statute. True to the statements made in the final bill analysis, this first sentence of section 120.536(1) would appear to overrule the earlier precedent that permitted agencies to make rules which were simply "reasonably related to the purpose of the enabling legislation, and . . . not arbitrary and capricious."[120] The rules promulgated by the District in Consolidated-Tomoka arguably meet this standard in that the water management district relied on the general rulemaking authority to adopt rules pursuant to sections 373.044,[121] 373.113,[122] and 373.418(3),[12]3 Florida Statutes, and the specific authority to promulgate the proposed rules addressing permitting criteria for the Tomoka River and Spruce Creek basins pursuant to sections 373.413(1)[124] and 373.416(1), Florida Statutes.[125]
The second sentence of section 120.536(1) is most troublesome, as it provides that "[a]n agency may adopt only rules that implement, interpret, or make specific the particular powers and duties granted by the enabling statute."[126] This language was the focus of the court's decision in Consolidated-Tomoka. The First District Court of Appeal acknowledged the possibility of two distinct interpretations of the phrase "particular powers and duties," offering that the "statute could mean that the powers and duties delegated by the enabling statute must be particular in the sense that they are identified (and therefore limited to those identified) or in the sense that they are described in detail."[127]
In his final order, the ALJ adopted the latter approach, interpreting the phrase to mean that the enabling statute must "detail" the powers and duties that would be the subject of the rule.[128] Under this interpretation, the ALJ concluded that the rules proposed by the agency were invalid because the language of the enabling statute was "merely a general, nonspecific description of the agency's duties."[129] According to the ALJ, in order to be valid, rules must implement "statutes which describe more specific programs."[130] The First District Court of Appeal, however, chose the former, less restrictive interpretation, finding that "the term 'particular' . . . restricts rulemaking authority to subjects that are directly within the class of powers and duties identified in the enabling statute. It was not designed to require a minimum level of detail in the statutory language used to describe the powers and duties."[131] In choosing the less restrictive interpretation of "particular powers and duties," the court stated that "[a] standard based on the sufficiency of detail in the language of the enabling statute would be difficult to define and even more difficult to apply."[132] The court stated that the concept of specificity is one that is relative and what is specific enough in one circumstance may be too general in another.[133]
This aspect of the First District's rationale is supported by a reading of B.H. v. State,[134] in which the Florida Supreme Court struck down a statute delegating authority to the Department of Health and Rehabilitative Services to define actions constituting a crime pursuant to a juvenile escape statute.[13]5 In B.H., the court held the statute unconstitutional because granting an administrative agency the authority to define a crime was found to be of a different magnitude than regulation in a noncriminal context.[136] Though the defect in the statutory delegation was quite obvious in B.H., the court stated that it would be "impossible to adopt a single bright-line test to apply to all alleged violations of the nondelegation doctrine. . . . [I]n some instances, the subject matter of the statute may be such that greater discretion must be delegated."[137] Citing the complexities of modern society, the court pointed out that flexibility in administering a legislatively articulated policy is essential, and that such flexibility is most necessary and permissible in areas such as land use regulations.[138]
It would follow that under the rationale of B.H., agencies such as the water management district should be granted greater flexibility to implement the Legislature's stated policies regarding land use issues, such as permitting and the designation of areas in which permitting would be required.[139] The actions of the Legislature since the enactment of the rulemaking provision support such a reading. Despite the presence of the new rulemaking standard and the statement of the Legislature that there should be consideration in staff analyses as to whether there would be enough guidance for agencies in proposed legislation,[140] the Legislature continues to enact legislation granting broad powers to a variety of agencies.[141] "'[S]pecific legislative direction,'" agrees administrative law professor Jim Rossi, "'just doesn't happen.'"[142]
The First District Court of Appeal also favored the less restrictive definition of "particular powers and duties" to avoid conflict with the presumptive rulemaking provisions contained in Florida's APA.[143] Under the Florida APA, rulemaking is not a matter of agency discretion.[144] Since 1991,[145] each agency statement of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of an agency must be adopted by the rulemaking procedure set forth in the APA as soon as feasible and practicable.[146] This legislative imperative was retained in the 1996 APA, despite pressure from Governor Lawton Chiles to remove the requirement.[147] Thus, with the creation of the more restrictive rulemaking language, agencies were faced with two almost polar imperatives: first, make rules as soon as practicable and feasible, but second, make only those rules that fall under the domain of the particular powers and duties granted by the Legislature.
Because the APA requires rulemaking even where there is an agency statement of general applicability, the Consolidated-Tomoka court reasoned that rulemaking authority could not be restricted to situations in which the enabling statute precisely details the subject of a proposed rule.[148] Therefore, the court concluded, the legislative presumption in favor of rulemaking necessarily implies that agencies have authority to adopt rules "within the class of powers conferred by the applicable enabling statute."[149] Having read sections 120.536 and 120.54, Florida Statutes,[15]0 in pari materia to reach the definition of the restriction contained in the phrase "particular powers and duties" as that of identifiable classifications within the enabling statute, the District Court of Appeal set forth the following test to determine the validity of a rule "based on the nature of the power or duty at issue":
Though inapposite to the central issue in Consolidated-Tomoka, the case has led some observers to revive the question of the correctness of allowing ALJs to issue final orders in rule challenge cases.[155] Under the Florida APA, challenges to rules or proposed rules are generally raised before the Division of Administrative Hearings (DOAH) prior to judicial review.[156] Rule challenges are significantly distinct from agency adjudication challenges. In rule challenges, the presiding ALJ issues a final order;[157] in adjudication challenges, the ALJ issues a recommended order which is then forwarded to the agency for issuance of a final order.[158] In a different context than in Consolidated-Tomoka, the practice of DOAH issuing a final order has been criticized but upheld by the First District Court of Appeal.[159] However, the practice of DOAH issuance of final orders coupled with the APA revisions and the scope of review in Florida courts, creates a key difference regarding who issues the final order effectively limits the ability of the agency to apply expertise to matters of statutory interpretation.
In Department of Administration v. Stevens,[160] the First District Court of Appeal found that the issuance of a final order by an ALJ did not usurp the role of the judiciary or violate the separation of powers doctrine.[16]1 In Stevens, the Department of Administration and the Department of Health and Rehabilitative Services challenged the ALJ's authority to decide whether agency guidelines were invalid rules because they were not adopted according to statutory procedure.[162] The court upheld the ALJ's final order on the grounds that the key in the control of administrative agencies is checked power. The court quoted Kenneth Culp Davis, "'As long as we continue to emphasize the principle of check, we may safely continue our increasingly deep-seated habit of allowing the blending of three or more kinds of power in the same agency.'"[163] In making its decision, the court also relied upon Article V, section 1 of the Florida Constitution and pronounced that "[c]ommissions established by law, or administrative officers or bodies may be granted quasi-judicial power in matters connected with the functions of their offices."[164]
Stevens is inapplicable to cases like Consolidated-Tomoka because Stevens speaks to the problem of executive encroachment on another branch of the government. In cases like Consolidated-Tomoka, executive encroachment is not a problem for the judiciary, but for another arm of the executive branch: the executive branch becomes split against itself. Thus, the Stevens court's reliance on Professor Davis's Administrative Law Treatise is erroneous because Professor Davis discusses different powers within the agency, not within the executive.[165]
In challenges to agency adjudication, the agency always has the ability to issue a final order inconsistent with the ALJ's recommended order.[166] This allows the agency to apply its experience and expertise by taking exception to the ALJ's recommended order. By contrast, when DOAH issues a final order in the context of rule challenges, the agency is deprived of the ability to revisit the issue and apply its expertise.
In addition to the problems already inherent in depriving the agency of the ability to issue final agency action in rule challenges, the recent APA revisions make a difficult situation even worse. With the expansion of the definition of an invalid exercise of legislative authority under section 120.536(1) and the express removal of a presumption of validity attached to proposed rules under section 120.56(2)(c),[167] agency discretion in matters of statutory interpretation are even more at risk. The new rulemaking standard of section 120.536 raises the issue of who is entitled to deference in matters of statutory construction when the agency's rules fall within the scope of the particular powers and duties delegated by the Legislature. In cases where interpretation is required, Florida courts have, to some degree, followed the federal doctrine articulated in Chevron, U.S.A., Inc. v. Natural Resources Defense Council,[168] which requires courts to give considerable weight to the agency's construction of the statutes the agency is entrusted to administer.[169]
In Chevron, the Supreme Court imposed a two-part test for judicial review of an agency's construction of the statutes it administers.[170] First, a court must determine whether the legislature has directly spoken to the precise question at issue.[171] If the court determines that the legislature has not directly addressed the precise question at issue, the court cannot simply impose its own construction on the statute, as it would in the absence of an administrative interpretation.[172] If the statute is silent or ambiguous with respect to a specific issue, the question for the court is whether the agency's interpretation is based on a permissible construction of the statute.[173]
Echoing the Chevron test, the First District Court of Appeal in Department of Health and Rehabilitative Services v. Framat Realty, Inc.[174] upheld an interpretive rule of the Department because it represented a "permissible interpretation" that was validated by the rulemaking process and designed to refine agency policy.[175] In delivering the opinion of the court, Chief Judge Robert Smith noted that the goal of the 1974 APA was "to encourage agencies of the executive branch to interpret statutes in their regulatory care deliberately, decisively, prospectively, and after consideration of comments from the general public and affected parties—that is, to interpret their statutes by rulemaking."[176] In upholding the agency's rule, the court placed particular value on the agency's permissible interpretation of a statute in which the APA provides incentives for rulemaking and further provides a deliberative process for the development of agency policy:
The question of which entity interprets the statute was put before the First District Court of Appeal again in Department of Insurance v. Insurance Services Office,[179] in which a rule of the Department of Insurance was found to have invalidly extended the statute.[180] The three judge panel was divided,[181] with Chief Judge Smith dissenting on the ground that there were twelve reasonable constructions of the term "unfairly discriminate," some of which would not have represented an "extension."[182] The Chief Judge favored deference in upholding the Department's construction:
Though the dissent in Insurance Services Office called for deference to the agency versus the judiciary, the need for agency deference is the same where individual ALJs, acting in a quasi-judicial capacity, are granted greater deference than the agency and where the individual ALJ's opinion is accorded greater deference by reviewing courts. This is precisely the result where, in cases like Consolidated-Tomoka, the ALJ, rather than the agency, issues a final order. The reviewing court applies a different standard of review dependent upon the route by which the administrative appeal reaches the court. As made clear in Adam Smith Enterprises, Inc. v. Department of Environmental Regulation:[187]
The implications of the new rulemaking authority standard are even greater due to the inclusion of a "look back" provision that imposed application of the new standard to existing agency rules as well as proposed rules.[189] In a state with close to 26,000 rules in place,[190] the look back provision immediately impacted agencies in three ways. First, upon the effective date of the APA revisions, each agency was given a year to review all of its existing rules and submit a list of rules of portions of rules which were in violation of the rulemaking standard to the Legislature's agency oversight committee, the Joint Administrative Procedures Committee (JAPC).[191] JAPC then combined and submitted the listings to the Legislature.[192] JAPC submitted approximately 5,850 rules to the President of the Senate and Speaker of the House of Representatives for determining whether specific legislation authorizing the rules or portions of rules should be considered during the 1998 session.[193]
Second, the agency was required to initiate proceedings by January 1, 1999, to repeal any rule which was submitted to the JAPC and the Legislature for more specific authorization and was not so authorized during the most recent session of the Legislature.[194] Third, if the Legislature did not enact a more specific authorization for a rule and an agency does not initiate repeal proceedings as of July 1, 1999, JAPC or any substantially affected person may petition the agency for repeal of the rule on the basis of a lack of legislative authority.[195]
The requirements of the look back provision raise potential separation of powers issues similar to that discussed in the landmark U.S. Supreme Court separation of powers case, Immigration and Naturalization Services v. Chadha,[196] in which a legislative body asserted a type of veto power over previously delegated executive authority.[19]7 In Chadha, a federal statute permitted one house of Congress, by resolution, to invalidate the decision of the executive branch to allow a particular deportable alien to remain in the United States.[198] The Supreme Court found the statute unconstitutional because the decision of the Attorney General was made pursuant to authority delegated by Congress.[199] To comply with constitutional requirements of separation of powers, the Court stated that Congress must abide by its delegations of authority until such delegation is legislatively revoked or altered.[200]
The look back provision of the APA is similar to the legislative veto in Chadha in that the Legislature has statutorily created a process in which rules that were previously considered valid exercises of delegated legislative authority may be repealed in cases where the Legislature does not enact new authorizing legislation.[201] This process allows the Legislature to revisit rules and potentially second-guess the agency's implementation processes without following the typical procedure for altering or revoking the enabling legislation in any way. Although the actual results of the look back provision and rule repeal activity are as yet unknown, the process is potentially devastating to the preservation of agency discretion in implementing statutes.
Florida is not the only state to seek greater accountability through the restriction of agency rulemaking authority. In 1995 the Washington Legislature passed a regulatory reform bill that, among other things, required agencies to have clearer statutory authority to write rules.[202] In adopting the law, the Washington Legislature pronounced, "[S]ubstantial policy decisions affecting the public [are to] be made by those directly accountable to the public; namely the legislature . . . state agencies [are] not to use their administrative authority to create or amend regulatory programs."[203] Several sections of the Washington Regulatory Reform Act impose a restriction on certain agency heads similar to that in section 120.536, Florida Statutes. In Washington the agency administrator "may not rely solely on a section of law stating a statute's intent or purpose, on the enabling provisions of the statute establishing the agency, or on any combination of such provisions, for statutory authority to adopt any rule."[204]
The number of new rules promulgated in Washington has declined since the adoption of the Regulatory Reform Act.[205] It has been suggested that the decline seems to be caused in part by uncertainty about how strictly courts will interpret the new requirements.[206] There is also some evidence that agencies are seeking alternatives to rulemaking—in the form of guidelines, interpretive rules, and adjudication—in order to formulate new policy.[207] A similar response has been predicted in Florida, where agencies may respond to the new rulemaking standard by employing nonrulemaking mechanisms, when possible, to the exclusion of traditional rulemaking.[208]
As a result of the APA revisions, administrative agencies in Florida now have two reasons to resort to alternatives to rulemaking. First, as in the Washington administrative system, Florida agencies rightfully may be unsure how ALJs and courts will interpret their "particular powers and duties" contained in the new rulemaking standard. Agencies are less likely to promulgate rules when there is uncertainty as to whether the rule will fail to meet the new rulemaking standard in the eyes of the ALJ or reviewing court. Second, with the inclusion of a new provision in Florida's APA for the award of attorney's fees in the event the agency loses a rule challenge,[209] agencies have reason to be doubly wary of initiating rulemaking where a rulemaking alternative may suffice. Not only will the agency rule or proposed rule be invalidated, but the agency could potentially lose financially as well. The budgets of most state agencies are not large enough to support a number of judgments for attorney's fees. Combined together, the new rulemaking standard and attorney's fees award provision produce a result that runs counter to the express desire of the Legislature and the community at large[210]—when an agency promulgates a statement of general applicability that "implements, interprets, or prescribes law or policy,"[211] the agency must adopt the statement by rulemaking "as soon as feasible and practicable."[212]
In a similar effort to curb agency abuse of rulemaking authority, the Minnesota Legislature enacted a provision in 1995 that requires agencies to publish a notice of intent to adopt rules within eighteen months of receiving new statutory authority to adopt rules.[213] Under the new law, if notice is not published within the time limit, the authority for the rule expires.[214] Additionally, agencies are prohibited from using laws existing at the time of the expiration of rulemaking authority as authority to adopt, amend, or repeal rules.[215] Although the statute prevents an agency from dragging its heels when rulemaking is necessary, it prohibits the agency from engaging in a period of incipient policy development longer than eighteen months. The statute may also create situations in which rules require amendment if a poorly drafted rule is noticed and adopted simply to meet the time limitations. Finally, if an agency is unable to notice a rule within the time limit, it will be forced to utilize rulemaking alternatives that are less efficient and clear than a rule. Like Minnesota, Florida also has a "use it or lose it" provision that requires rules to be drafted and formally proposed within 180 days of the enactment of any legislation requiring agency implementation, unless the statute provides otherwise.[216] The provision does not apply to emergency rules,[217] and existing rules may be modified without violating the provision.[218] Similarly, the APA allows agencies to develop the knowledge and experience necessary before a rule is proposed.[219] However, the situation may arise where a new rule needs to be made based upon long-standing statutory authority. Will a nonrule policy statement be sufficient where the rule could not practicably or feasibly be made, given the 180-day limitation? The answer is uncertain as no courts have ruled on this question.
Attempts to limit agency rulemaking have also occurred at the federal level, as evidenced by the stalled Federal Comprehensive Regulatory Reform Act introduced by Senator Bob Dole in 1995.[220]In the final analysis it is the courts, upon a challenge to the exercise or nonexercise of administrative action, which must determine whether the administrative agency has performed consistently with the mandate of the legislature. When legislation is so lacking in guidelines that neither the agency nor the courts can determine whether the agency is carrying out the intent of the legislature in its conduct, then, in fact, the agency becomes the lawgiver rather than the administrator of the law.[47]
Following the stated policy of the Legislature, agencies are able to fill in the details of legislative intent. Courts may then evaluate the validity of agency rulemaking in relation to the policy contained in the statute.
Where the empowering provision of a statute states simply that an agency may "make such rules and regulations as may be necessary to carry out the provisions of this Act," the validity of the regulations promulgated thereunder will be sustained as long as they are reasonably related to the purposes of the enabling legislation, and are not arbitrary or capricious.[61]
Some courts described the burden on challenging parties as a heavy one.[62] The 1996 revisions moved toward the goal shared by many in the Legislature and the business community by creating a "more level playing field."[63] As a result of the revisions, agencies were no longer able to rely upon the "reasonably related" test and would be pressed to show a stronger connection between rules and the statute implemented.
The question is whether the 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. This approach meets the legislative goal of restricting the agencies' authority to promulgate rules, and, at the same time, ensures that agencies will have the authority to perform the essential functions assigned to them by the Legislature.[151]
The court declared, "The Legislature gave the District authority to identify geographic areas that require greater environmental protection and to impose more restrictive permitting requirements in those areas, and the District did just that."[152] Thus, the enabling statutes[153] granted the District the following powers: (1) the power to regulate development activity in order to protect water resources; (2) the class of powers necessary to promulgate rules that classify areas of special concern; (3) the power to impose more stringent permitting standards; and (4) the power to set water recharge standards and riparian habitat protection zones.[154] Agencies, challengers, and ALJs may now focus on the class of powers granted to the agencies rather than the presence or absence of more specific programs or policy.
Otherwise, the elaborate statutory scheme, pressing for rulemaking and prescribing how it shall be accomplished with maximum public and private participation, has no productive purpose, and it has become only a snare for agency action, a device for the evasion, avoidance, or postponement of effective agency action in its authorized field of responsibility.[177]
The court noted that the remedy available to those opposed to the permissible interpretation of a statute was an appeal not to the judiciary, but to the politically responsive branches of the legislature and the executive.[178]
At this stage in the maturity of our judicial system, a modest disclaimer of judicial hegemony in matters of statutory interpretation would seem to be required by a decent respect for the executive as a coordinate branch of government, made more responsive to the public, and more disciplined, by APA processes.[183]
Chief Judge Smith based his dissent in part on the decisions in Department of Administration v. Nelson[18]4 and Framat.[185] In addition, he recognized the danger of allowing individual judges to select the single "correct" interpretation of a generally-worded statute that lends itself to several permissible interpretations: "[A]s we judges grow more numerous . . . the folly of three judges or a majority of them declaring the 'one right answer' to a question of statutory interpretation, when the executive branch has spoken another permissible answer through rulemaking, becomes more evident and more dangerous."[186]
[W]hen reviewing a hearing officer's determination arising out of . . . a quasi-judicial rule challenge proceeding, the appellate court's standard of review is whether the hearing officer's findings are supported by competent substantial evidence. . . . On the other hand, when reviewing on direct appeal an agency's adopted rule arising from a quasi-legislative rule enactment proceeding . . . the appellate court's standard of review is that the rule should be sustained as long as it is reasonably related to the purposes of the enabling legislation and is not arbitrary or capricious.[188]
Though the standard of review has been altered as far as the agency interpretation is concerned, there is still a difference in whose opinion is granted deference. Removing the agency's ability to issue a final order and granting great deference to the ALJ's final order creates the problem addressed in Chief Judge Smith's Insurance Services Office dissent—individual judges' interpretation of a statute is valued above that of the agency and the potential for meaningful review is essentially nonexistent.