Rulemaking Reforms and Nonrule Policies: A Catch-22 for State Agencies
March 5, 1997
Lawrence Sellers- Tallahassee
By Kent Wetherell and Lawrence E. Sellers, Jr. and Wade L. Hopping*
“Catch-22?” Yossarian was stunned. “What the hell does Catch-22 got to do with
it?”
“Catch-22 . . . says you’ve always got to do what your commanding officer tells
you to do.”
“But the Twenty-seventh Air Force says I can go home with forty missions.”
“But they don’t say you have to go home. And regulations do say you have to obey
every order. That’s the catch. Even if the colonel were disobeying a
Twenty-seventh Air Force order by making you fly more missions, you’d still have
to fly them, or you’d be guilty of disobeying an order of his. And then
Twenty-seventh Air Force would really jump on you.”
“That’s some catch, that Catch-22,” [Yossarian] observed.
“It’s the best there is,” Doc Daneeka agreed.[1]
From an agency perspective, the 1996 amendments to Florida’s Administrative
Procedure Act (APA) must seem
somewhat like “Catch-22.” On one hand, agencies’ rulemaking authority has been
significantly restricted;[2] it is
easier for affected parties to challenge proposed rules;[3] agencies are liable
for attorneys’ fees and costs if their
proposed rules are held invalid;[4] and agencies remain under the Governor’s
mandate to reduce their rules by 50
percent.[5] On the other hand, the rulemaking mandate in former F.S. §120.535 is
retained,[6] and the ability of agencies to apply nonrule
policy on a case-by-case basis has been narrowed.[7]
This article focuses on these amendments and other provisions of the revised APA
that are intended to increase agency accountability in the exercise of delegated
legislative authority.
Background
The political climate surrounding the 1996 APA amendments helps to explain the
arguably mixed policy signals described above. Put simply, the Governor and the
legislature wanted less bureaucracy and more accountability from state agencies.
The revisions discussed in this article are infused with these different, but
interrelated, policies.
As a means to eliminate agency bureaucracy, the Governor called for the repeal
of F.S. §120.535, which he blamed for the dramatic increase in agency rules
since 1991. The legislature and the regulated community, however, objected to
the repeal of F.S. §120.535, claiming that it would result in the return of
“phantom government” and, therefore, would reduce agency accountability in the
implementation of legislative policy.
Enhancing agency accountability was the focus of many of the rulemaking reforms
in the 1996 legislation supported by the business and regulated communities. For
example, the new F.S. §120.536 was based, in part, on the testimony received by
legislative committees during the past three sessions describing various agency
abuses in the exercise of delegated legislative authority. The regulated
community also called for reforms to the rulemaking process. These reforms are
designed to reduce bureaucracy in the rulemaking process and to help agencies
make better rules by encouraging agencies to provide early and meaningful
opportunities for public participation and by requiring agencies to evaluate the
economic impacts of the proposed rule and to consider requested lower cost
alternatives.
Rulemaking Reform
Many of the rulemaking reforms in the 1996 legislation were modeled after
rulemaking procedures already employed by some of the more prolific rulemaking
agencies to ensure that these changes do not unduly discourage rulemaking or
upset the balance between efficiency and accountability in the rulemaking
process.
• Agencies Must Publish Notice of Rule Development
The 1996 legislation makes several changes that are designed to further
encourage informed public participation in the rulemaking process, particularly
during the early stages. One change requires agencies to provide advance notice
of the development of proposed rules by publishing a “notice of rule
development” in the Florida Administrative Weekly.[8]
The “notice of rule development” is designed to facilitate early public
participation. The notice must describe the subject area to be addressed. It
must include a short explanation of the purpose and effect of the rule
development and cite the specific legal authority for rule development. The
notice of rule development thus provides the public with considerable
information at an early stage, and it affords interested persons an opportunity
to learn more about the proposal and to inform the agency of relevant matters
while the agency is still developing its proposed rule.
• Agencies May Be Required to Hold Public Workshops
Public workshops provide agencies with an opportunity to explore alternatives
with interested persons and gather necessary information in an informal setting.
Agencies have long been authorized to conduct public workshops.[9] The 1996
legislation recognizes the benefits of providing an early opportunity for public
participation by requiring the agency to hold public workshops if
requested in writing by any affected person, unless the agency head explains in
writing why a workshop is unnecessary.[10] The legislation also
requires that, when a workshop or public hearing is held, the agency must ensure
that the persons responsible for preparing the proposed rule are available to
explain the agency’s proposal and to respond to questions or comments regarding
the rule being developed.[11]
• Agencies May Choose to Use Negotiated Rulemaking
Some agencies routinely make use of variously constituted advisory committees,
working groups, or other forms of negotiated rulemaking to generate a consensus
among interested parties prior to promulgating a proposed rule. These agencies
have found that negotiated rulemaking often results in faster rulemaking,
greater consensus among interested parties, and less litigation.
The 1996 legislation formally authorizes agencies to use negotiated rulemaking
in developing and adopting rules, and the legislation encourages agencies to
utilize negotiated rulemak- ing when rules are complex or controversial.[12]
“Negotiated rulemaking” uses a committee of designated representatives to draft
a mutually acceptable proposed rule.[13] An agency that intends to utilize this
specific negotiated rule- making process must publish notice of the
representative groups that will be invited to participate in the process. Other
persons may apply to participate. All meetings of the negotiating committee must
be noticed and open to the public. The negotiating committee must be chaired by
a neutral facilitator or mediator.
• Notice of Proposed Rule Must Include Additional Information
Once an agency settles on its proposed rule, the agency publishes notice of its
intended action. The notice includes a short, plain explanation of the purpose
and effect of the proposed action, the full text of the proposed rule or
amendment, and a summary thereof. In another effort to enhance public
participation in the rulemaking process, the 1996 legislation requires this
notice to include certain additional information. The notice must include a
summary of the agency’s statement of the estimated regulatory costs, if one has
been prepared.[14] The notice also must include a statement
that any person who wishes to provide the agency with information regarding the
statement of estimated regulatory costs, or to provide any proposal for a lower
cost regulatory alternative, must do so in writing within 21 days of the notice.[15]
Finally, the notice must include a description of the procedure for requesting a
public hearing on a proposed rule.
• Agencies Must Choose Lower Cost Alternative
Since 1992, agencies engaged in rulemaking have been required to evaluate
alternative approaches to any regulatory objective.[16] To the extent allowed by
law, agencies also have been required to choose the alternative that imposes the
lowest net cost to society or to provide a statement of the reasons for
rejecting that alternative in favor of the proposed rule. However, there has
been no sanction for an agency’s failure to comply with the requirement, so it
was often ignored.
Accordingly, the 1996 legislation seeks to put some teeth into this requirement
by requiring the agency to consider a good faith written proposal for a
lower cost regulatory alternative to the proposal that substantially
accomplishes the objectives of the law being implemented.[17] Such a proposal must be submitted by
a substantially affected person within 21 days of publication of the notice of
proposed rulemaking. The proposal may include the alternative of not adopting
any rule, so long as the proposal explains how the lower costs and objectives of
the law will be achieved by not adopting any rule.
The submission of the lower cost regulatory alternative triggers a requirement
that the agency prepare a statement of estimated regulatory costs (SERC) or
revise any previously prepared SERC.[18] The agency then must
adopt the proposed alternative or give a statement of its reasons for rejecting
the alternative in favor of the proposed rule.[19]
• New Statement of Estimated Regulatory Costs
Administrative rules often impose significant regulatory burdens on affected
persons. For this reason, the APA has long required agencies to prepare economic
impact statements under certain circumstances.[20] The quality and utility of
these economic impact statements have varied greatly, no doubt in part because
agencies often lacked or failed to provide adequate resources to prepare
meaningful analyses of the economic impacts of proposed rules.
The 1996 legislation replaces the old “economic impact statement” with the new
SERC.[21] Agencies are encouraged to prepare a statement
in appropriate cases,[22]
and they must prepare a statement if a substantially affected person
submits a good faith written proposal for a lower cost regulatory alternative to
a proposed rule.[23] The 1996 legislation also seeks to make the new SERC more
meaningful by narrowing the scope of the required economic analysis. For
example, the new SERC requires an analysis of specific “transactional costs”
likely to be incurred by those required to comply with the requirements of the
proposed rule.
• New SERCs Are Subject to Legal Challenge
The 1996 legislation also seeks to make it easier for affected persons to
enforce the requirement to prepare the new SERC. The legislation provides that
the failure of the agency to prepare or revise a SERC as required is a material
failure to follow the applicable rulemaking requirements of the APA and is,
therefore, grounds for determining the related proposed or adopted rule to be
invalid.[24] This provision is intended to overrule
legislatively earlier court decisions that limited the effectiveness of the
economic impact statement requirement by requiring only substantial compliance,
absent a showing of prejudice by an affected person.[25]
• Agencies Must Consider Impact on Small Counties and Small Cities
Agencies already are required to consider the impact of a proposed rule on small
businesses.[26] The 1996 legislation requires agencies also to consider the impact
of the proposed rule on small counties and small cities.[27] Whenever possible,
agencies are required to tier a proposed rule to reduce disproportionate impacts
on these small entities and to avoid regulating those that do not contribute
significantly to the problem the rule is designed to regulate.
• New Public Hearing Requirem