Legislative rule ratification: lessons from the first four years.

Author:Miller, Eric H.
Position::Florida
 
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"No agency has inherent rulemaking authority.... "--F.S. [section]120.54(1)(e)

On November 17, 2010, the legislature voted to override the governor's veto of House Bill 1565, thereby enacting several changes to the rulemaking procedures in F.S. Ch.120, the Administrative Procedure Act (APA). (1) One provision received a great deal of attention: the creation of F.S. [section]120.541(3), which requires legislative ratification of agency rules having adverse economic impacts or regulatory costs exceeding the threshold established by that same legislation in [section]120.541(2)(a). (2)

This article examines the implementation of legislative rule ratification since the enactment of the new law. In addition to a brief review of the development and enactment of ratification legislation, this article will provide information, insights, and practical guidance helpful to applying the ratification requirement in both rulemaking and rule challenges. As will be discussed, the keys to successful ratification are early and accurate identification of the need for ratification, prompt engagement on the issue with both the House and the Senate, and continued attention through passage of a ratification bill and its consideration by the governor.

Legislative Application of the Ratification Requirement

Following the enactment of [section]120.541(3), the Florida House of Representatives established a basic procedure for legislative ratification to be managed by the House Rulemaking and Regulation Subcommittee (rulemaking subcommittee). (3) The procedure had to reflect a reliable interpretation and application of [section]120.541(3) while seeking to maintain the status of a rule after ratification as a rule under the APA. The procedure included the means by which the legislature would act on ratification requests and a determination of how agencies should submit such requests.

* Preliminary Interpretation of [section]120.541(3)--As codified in F.S. [section]120.541(3), the ratification requirement reads:

(3) If the adverse impact or regulatory costs of the rule exceed any of the criteria established in paragraph (2)(a), the rule shall be submitted to the President of the Senate and Speaker of the House of Representatives no later than 30 days prior to the next regular legislative session, and the rule may not take effect until it is ratified by the [legislature.

Unlike past ratification statutes applicable to particular rulemaking exercises, (4) [section]120.541(3) applies broadly to any rule of an agency if the economic impact of the rule exceeds a specific threshold. Essentially, [section]120.54(3) makes ratification a condition precedent for such a rule to take effect. However, this requirement does not alter the definition of "rule," F.S. [section]120.52(16), (5) the substantive authority of any agency to make rules, or the APA rulemaking procedure. The last step in adopting a "rule" under the APA rulemaking procedure, F.S. [section]120.54, is filing the rule for adoption with the secretary of state. For this reason, the House requires a rule to be filed for adoption before being considered for ratification.

Under [section]120.541(3), only rules that exceed the statutory economic impact and regulatory cost threshold must be submitted to the legislature for ratification. Ch. 2010-279, Laws of Florida, also added a requirement that agencies must prepare a statement of estimated regulatory costs (SERC) if a rule is expected to increase regulatory costs by more than $200,000 within one year of implementation. Each SERC was also required to include an economic analysis showing whether the proposed rule is likely to have, within the first five years after implementation of the rule, adverse impacts of more than $1 million on any of three categories of factors: economic growth, employment, or investment; business competitiveness; or regulatory and compliance costs. (6) Section 120.541(3) incorporates this million-dollar impact as the threshold for ratification. Consequently, a SERC should be a primary indicator whether a rule likely requires ratification.

* Review Procedure in the Florida House of Representatives--Section 120.541(3) requires agencies to initiate the ratification process by submitting separate requests to the Senate president and House speaker. From 2011-2014, the House speaker's office forwarded each ratification request to the rulemaking subcommittee for initial review. After scrutiny of the request, rulemaking history, and supporting documents, the ratification request was circulated to the House substantive committee(s) with oversight responsibility for the subject matter of the rule. After such consultation, the rulemaking subcommittee chair would make an informal recommendation on whether and how to proceed on the request. Based on all committees' input, the speaker would assign formal consideration of the ratification request to appropriate committees.

* The Form of Rule Ratification Legislation--The statutory phrase "ratified by the legislature" might have been susceptible to various interpretations. Clearly, the legislature may ratify some things by expressing its will in a concurrent or joint resolution rather than by enacting a general law. (7) Nonetheless, the creation of general law is governed by the constitutional process for enacting bills into law. (8) Valid administrative rules have the general effect of law. (9) It follows that legislative ratification under [section]120.541(3) constitutes an act having that effect. (10) Because of this clearly intended effect, the House determined to utilize passage of a general bill in order to ratify any rules submitted under [section]120.541(3).

A rule unconditionally ratified by enactment of a law may be treated as a statute, amendable thereafter only by the legislature. This likelihood is highest if the substance of the rule is incorporated in the enactment. (11) A related concern was that unconditional ratification of a rule could have the effect of curing all rulemaking defects and depriving interested parties of their rights under the APA to challenge the validity of a rule. To avoid converting ratified rules into statutes and to preserve all substantive and procedural limitations on rulemaking, the House determined that each ratification bill should be drawn narrowly and precisely, expressly limited to the legal determination that the rule may take effect, in satisfaction of the condition of [section]120.541(3) on effectiveness.

After consultation with a number of agency general counsels and bill drafting experts, a model template was developed for a general bill limited in scope and purpose to ratifying a specific rule or rules. The first section specified the rule(s) being ratified, identified by the F.A.C. rule number. (12) The second section expressed legislative intent limiting the bill's legal effect only to ratifying the rule, expressly disclaiming any alteration of any delegated rulemaking authority or of the status of the adopted rule under the APA, and expressly disclaiming any cure of any rulemaking procedural defect or preemption of any challenge to the rule. (13) The incorporated conditions are intended to leave the rule in the exact same legal circumstances as if adopted without a ratification requirement. The model template also directs that the ratification law not be codified in Florida statutes. This is to reinforce that a ratification law is not a continuing law, but a one-time limited validation of a rule whose continuance depends on the provisions of the APA and the substantive law authorizing the rulemaking.

From 2011 through the 2014 regular session, the legislature consistently used the recommended template, avoiding both enacting the substance of any rule into law or...

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