The scarecrow in McDonald's Farm: a fairy tale about administrative law.

• Author: Manry, Daniel
• Position: Florida

Editor's Note: A state agency that relies on policy to affect the substantial interests of a person must provide adequate notice of the underlying policy in order for agency action to be enforceable. The requirement for adequate notice in Ch. 120, the Administrative Procedure Act, or APA, initially required all agency policy to be promulgated as a rule in accordance with the rulemaking provisions prescribed in [sections] 120.54. Courts later determined that the requirement to promulgate agency policy applied only to policy which satisfied the statutory definition of a rule in [sections] 120.52(15). Policy excluded from the statutory definition was nonrule policy and was not required to be promulgated as a rule.

Judge Daniel Manry sees a significant inconsistency in the way nonrule policy is defined legislatively and judicially. In Judge Manry's view, the legislature divides the whole of agency policy into two parts. Agency policy is either policy-by-rule or nonrule policy. In relevant part, the legislative definition of a rule in [sections] 120.52(15) defines policy-by-rule as that part of agency policy which satisfies the requirement of general applicability. The remainder of agency policy, that part of agency policy which is not generally applicable, is nonrule policy.

Judge Manry notes that the judicial exception to rulemaking defines nonrule policy by reference to [sections] 120.54 rather than by reference to [sections] 120.52. Nonrule policy is judicially defined as any policy not promulgated as a rule in accordance with [sections] 120.54. Section 120.54, however, defines neither policy-by-rule nor nonrule policy.

In effect, the judicial definition of nonrule policy, according to Judge Manry, includes a portion of policy-by-rule already included in the statutory definition of a rule. Policy that is generally applicable, within the meaning of [sections] 120.52(15), and not promulgated as a rule, pursuant to [sections] 120.54, is legislatively defined as an unpromulgated rule but judicially defined as nonrule policy.

Prior to recent legislative amendments to the APA, unpromulgated rules were not required to be promulgated pursuant to [sections] 120.54 in order to be enforceable in court. Courts reasoned that the requirement for an agency to repeatedly prove up its unpromulgated rules in each case provided "other incentives for rulemaking." The judicial doctrine became known as the "prove-up exception to rulemaking."

The recent amendments to the APA have not resolved the debate within the administrative law community over what agency policy must be promulgated as a rule. The debate has existed for more than 20 years. Judge Manry suggests the debate will not end before the terms of the debate, such as "unpromulgated rules" and "nonrule policy," are clearly defined.

Judge Manry questions the conventional interpretation of early cases that gave rise to the prove-up exception and offers an alternative interpretation that is consistent with legislative intent and also preserves the viability of applicable case law. The article is presented in a fictional and humorous vein that allows Judge Manry to question the logic of the prove-up exception, without criticizing specific cases, and to expose issues of due process and separation of powers inherent in the prove-up exception. The views expressed in this article are purely those of Judge Manry.

--RALPH DEMEO, Special editor

This article is a farcical tale about a time in antiquity when unpromulgated rules were disguised as nonrule policy. The disguise resembled a scarecrow sewn together from scraps of fabric called "other incentives for rulemaking." In the course of time, the scarecrow came to be known as the "prove-up exception" to rulemaking.[1]

By most accounts, and all but a few are unwritten, unpromulgated rules were first disguised as a scarecrow long ago in a land known to its inhabitants as "the kingdom of Florida administrative law." The first citing of the scarecrow, quite naturally, occurred in one of the many farms in the kingdom. The legal description of the farm, as recorded in the official records of the realm, was O. McDonald v. Department of Banking and Finance, 346 So. 2d 569 (Fla. 1st DCA 1977). Most subjects of the realm, however, just called the place McDonald.

Administrative agencies were the first creatures to cite the scarecrow. Since the first days, agencies relied on the scarecrow. An understanding of the scarecrow, therefore, requires at least a cursory understanding of agencies and how the creatures evolved.

Agencies evolved from a written constitution that divided power to rule the kingdom equally among three rulers. No ruler had more power, sought to usurp power, or was more important than another. Thus, it is impossible to discuss the rulers in any order of importance.

The first ruler had sole authority to enact laws. Tragically, the first ruler had a bicameral head that was compromised in the middle.

The second ruler was a collection of blindfolded jurists, organized into a hierarchy, with special powers to hold court and to decipher laws enacted by the first ruler. Acronymic-lettered jurists, or ALJs, held quasicourt.

The third ruler had two heads. One head was an executive and the other a cabinet. The third ruler enforced the laws enacted by the first ruler and deciphered by the second ruler

The third ruler anointed agencies to administer the laws. In turn, the first ruler enacted Ch. 120.[2] The APA, as it was called, was intended to help agencies.

Agencies fabricated the scarecrow to help themselves comply with the APA. Agencies sometimes got more help than they needed.

Agencies used the scarecrow for more than 20 years to disguise unpromulgated rules as nonrule policy. The scarecrow thoroughly complicated the common understanding of agency policy. One day, a writer of the...