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When Courts Bow to Bureaucrats:
How Florida’s Deference Doctrine
Lets Agencies Say What the Law Is
John G. Van Laningham*
|II. Judicial Deference to Agency Interpretations||4|
|A. Basic Statement of the Doctrine||4|
|B. Inconsistency with the Florida APA||13|
|C. Constitutional Concerns||24|
|III. ALJ Deference to Agency Interpretations||26|
|IV. Judicial Deference to Agency Fact-Findings||30|
As a longtime state administrative law judge (ALJ), I am accustomed to being questioned about what ALJs do. Many people, I’ve learned, are unfamiliar with—indeed, have never heard of—administrative law. In the summer of 2017, however, as I write this Article, that might be changing. Tensions between President Donald Trump and the federal bureaucracy have been vividly on display during the first months of the new administration, and with them, once obscure terms such as “administrative state” and “regulatory state,” not to mention the more sinister “dark state,” have crept into the public discourse. When, shortly after taking office, the President nominated Judge Neil Gorsuch for the position of Associate Justice of the U.S. Supreme Court, it was reported that Gorsuch might be willing to overturn Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,1 the seminal deference doctrine case. Administrative law was in the news, at last!
Although “Chevron deference” is unlikely to become as familiar as, say, “Miranda warning,” there are reasons to believe that the topic of judicial deference to administrative agencies will receive greater attention in the future, as some judges―including Justice Gorsuch―have started to push back, suggesting that this judge-made principle might be at risk.2 In Florida, opposition to deference has prompted an attempt to amend the organic law. As of this writing, the 2017-2018 Florida Constitution Revision Commission is considering a Proposal (P6) to create a section 21 of Article V of the Florida Constitution that would, if adopted by the Commission and approved by at least 60% of the voters in the 2018 general election, annul the state deference doctrine. This proposal provides as follows: “In interpreting a state statute or rule, a state court or an administrative law judge may not defer to an administrative agency’s interpretation of such statute or rule, and must instead interpret such statute or rule de novo.”3
* Administrative Law Judge, State of Florida, Division of Administrative Hearings.
1. 467 U.S. 837 (1984).
2. See Jowanna Nicole Oates, Saying Goodbye to Chevron and Auer? New Developments in the Agency Deference Doctrine, 91 Fla. B.J. 43, 44-45 (2017).
3. Commissioners Martinez and Solari, Proposal Analysis, Proposal 6, Const. Revision Comm’n Judicial Comm. (Oct. 30, 2017).
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So what is the deference doctrine, and why is it controversial? Here, in brief, are then-Judge Gorsuch’s answers:
[R]ather than “interpret[ing] . . . statutory provisions,” declaring what the law is, and overturning inconsistent agency action, Chevron . . . tells [the judiciary that it] must allow an executive agency to resolve the meaning of any ambiguous statutory provision. In this way, Chevron seems no less than a judge-made doctrine for the abdication of the judicial duty. Of course, some role remains for judges even under Chevron. . . . [J]udges decide whether the statute is “ambiguous,” and . . . they decide whether the agency’s view is “reasonable.” But where in all this does a court interpret the law and say what it is? When does a court independently decide what the statute means and whether it has or has not vested a legal right in a person? Where Chevron applies[,] that job seems to have gone extinct.4
Later in this cri de coeur, Gorsuch declared:
Under any conception of our separation of powers, I would have thought powerful and centralized authorities like today’s administrative agencies would have warranted less deference from other branches, not more. None of this is to suggest that Chevron is “the very definition of tyranny.” But on any account it certainly seems to have added prodigious new powers to an already titanic administrative state—and spawned along the way more than a few due process and equal protection problems . . . . It’s an arrangement, too, that seems pretty hard to square with the Constitution of the founders’ design and, as Justice Frankfurter once observed, “[t]he accretion of dangerous power does not come in a day. It does come, however slowly, from the generative force of unchecked disregard of the restrictions” imposed by the Constitution.5
The Chevron deference doctrine is a matter of federal administrative law; it does not control Florida courts when deciding issues arising under state law. Florida, however, has its own deference doctrine, which is similar―but not identical―to its federal counterpart. It, too, has received some judicial criticism of late. A Florida state appellate judge recently wrote:
I concur in the result in this case. I write only to rail once again, as I have on more than one prior occasion . . . that this Court should seriously consider the constitutional implications of blindly adhering to the mantra so regularly incanted by the Court to support, uphold, or
4. Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1152 (10th Cir. 2016) (Gorsuch, J., concurring) (second and third alterations in original).
5. Id. at 1155.
6. Pedraza v. Reemployment Assistance Appeals Comm’n, 208 So. 3d 1253, 1256-57 (Fla. 3d DCA 2017) (Shepherd, Sr. J., concurring) (footnote omitted).
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approve agency decision-making that “an agency’s interpretation of a statute, with which it is entitled with administering shall be accorded great weight and should not be overturned unless clearly erroneous, arbitrary, or unreasonable,” as well as the many variations on the theme.
. . . .
In my view, deference to an agency’s construction or application of a statute implicates important due process and separation of powers questions deserving of serious contemplation by future members of this and other courts around the state. The fundamental concern of keeping the individual branches separate is that the fusion of the powers of any two branches into the same department would ultimately result in the destruction of liberty. E.g., Ponder v. Graham, 4 Fla. 23, 42-43 (1851); The Federalist Nos. 47, 51 (James Madison). We should be reluctant to so readily abandon our judicial independence and alter the structure upon which our entire system of government is based. Moreover, we should not be so quick to embrace a course of conduct that results in systemic bias towards one of the parties.6
I am not a fan of the deference doctrine. Having served as an ALJ for the better part of my professional career, I have seen at close range the fearsome power of the administrative state. It is worrisome that the same hand which writes the law’s interpretation can also sign an administrative complaint based on that interpretation and, later, execute a final order enforcing that interpretation. I share the opinions on deference of the judges quoted above, but I have other concerns, as well, which relate to how the Florida deference doctrine undermines the state’s Administrative Procedure Act (Florida APA).7
Florida jurisprudence has left largely unexplored the following questions: (1) whether the state’s deference doctrine rests, albeit implicitly, on the notion that the executive branch enjoys some degree of lawmaking power; (2) if so, whether the Florida legislature has actually delegated legislative authority to the agency whose statutory interpretation the judiciary, out of deference, would insinuate into law; and finally, (3) even in situations where the legislature has, in fact, delegated lawmaking power to the agency, whether judicial deference circumvents the rulemaking procedures prescribed in section 120.54, Florida Statutes. These questions are considered in this Article.
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II. Judicial Deference to Agency Interpretations
A. Basic Statement of the Doctrine
[C]ase law requires the appellate courts to show greater deference to an administrative agency if the agency has interpreted a statute within its jurisdiction. In such a case, the interpretation may have been based on a history that is best known by the agency or special expertise the agency has in applying the statute. To account for these factors, the courts have held that an agency decision construing a statute within its substantive jurisdiction should not be reversed unless it is clearly erroneous.8
“An agency’s interpretation of an ambiguous statute or rule that it administers is not clearly erroneous if ‘it is within the range of possible and reasonable interpretations.’ ”9
The doctrine of judicial deference to an agency’s interpretation of a statute it administers or the rules that it promulgates is not in the Florida APA.10 To the contrary,
Section 120.68(7)(d) . . . states that an appellate court may set aside a final administrative order if the agency “has erroneously interpreted a provision of law and a correct interpretation compels a particular action.” [Thus, the Florida APA] incorporates the de no-vo standard of review, which applies generally to issues of law. By the terms of the statute, the appellate court need only determine that the agency made a legal error and that the error was one that affected the outcome of the case.11
Rather than being a statutory command, then, deference in Florida is—at least outwardly—a form of judicial self-restraint, whose defining principles are found in the cases decided by the courts,12 which, in exercising their authority to declare what the law is,13 have elected to privilege certain agency interpretations over the interpretations of others, including the courts’ own.
1. The Theory Behind the Doctrine
Although for decades Florida courts have turned to agencies for putatively authoritative (if not always binding) guidance as to the meaning of regulatory or administrative statutes,
8. Brown v. Comm’n on Ethics, 969 So. 2d 553, 557 (Fla. 1st DCA 2007).
9. Soc’y for Clinical & Med. Hair Removal, Inc. v. Dep’t of Health, 183 So. 3d 1138, 1145 (Fla. 1st DCA 2015).
10. See Fla. Stat. ch. 120 (2016).
11. Brown, 969 So. 2d at 556 (citations omitted).
12. Id. at 557.
13. Jackson Lumber Co. v. Walton Cty., 116 So. 771, 790 (Fla. 1928).
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for the most part this has been done uncritically and without much attempt to explain why other than to speak in general terms about agency expertise and experience. In an unusually thorough treatment of the subject, however, Justice Cantero expounded the deference doctrine in McKenzie Check Advance of Florida, LLC v. Betts,14 in a portion of his dissent which does not conflict with the holding of the majority, writing:
Courts defer to the implementing agency out of respect for the institutional competence and expertise of agencies charged with implementing legislation. Agencies have more expertise about matters within their jurisdiction than courts, which consider a wide variety of issues. While the courts always remain the final authority on the interpretation of statutes—an authority that, under the separation of powers in the Florida Constitution, no Legislature may remove—we certainly can benefit from an agency’s unique combination of technical knowledge and practical experience. The Legislature, by authorizing an agency to implement a statute, encourages us to “accord considerable persuasive force” to the agency’s judgments. We have done just that. Under our precedents, “deference usually will be accorded an administrative agency’s interpretation of matters entrusted by statute to its discretion or expertise.”
Although we occasionally depart from agency interpretations, it is only “for the most cogent reasons.” We do not defer to an agency’s interpretation that attempts “to enlarge, modify, or contravene a statute.” The Administrative Procedure Act, not to mention the separation of powers, prohibits such actions. See § 120.52(8)(c), Fla. Stat. (2005) (stating that a rule is invalid if it “enlarges, modifies, or contravenes the specific provisions of law implemented”). We also do not defer to an agency when it “exceeds its authority” by “act[ing] outside the scope of its powers and jurisdiction.” Only the agency charged with implementing the statute is entitled to our deference, and only when acting as the Legislature authorized it to act.15
Justice Cantero implies that the doctrine of judicial deference is grounded in the principle of comity, whereby courts recognize “the institutional competence” of the executive branch, and are “encourage[d]” voluntarily to defer, “out of respect,” to agency expertise (for, Cantero adds, no legislature may compel such deference), while nevertheless retaining “the final authority on the interpretation of statutes.”16 Justice Cantero simultaneously acknowledges not only the separation of powers issues that the deference doctrine raises but also—rarely mentioned in this context—the Florida APA’s limitations on agency rulemaking authority.17
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The mention of these concerns hints at the flip side of the apparent judicial humility behind the deference doctrine; namely, the aggrandizement of the bureaucracy, which adds fuel to the powerful administrative state. Such enlargement of executive power is inevitable because meaningful deference18 results in the substitution of the agency’s interpretation in place of the court’s own best judgment about the meaning of the statute or rule at issue, so that the agency, rather than the court, enjoys the power to say with authority what the governing principle (i.e., the law) shall be. Indeed, there is no exaggeration in the observation that “[j]udicial deference to agency ‘interpretation’ of law is simply one way of recognizing a delegation of law-making authority to an agency.”19
Federal courts have been far more forthcoming about this than have Florida courts, explicitly recognizing agencies as lawmakers or authoritative interpreters of federal statutes. For that reason, although I believe it is generally inadvisable to consult federal administrative law when working with Florida’s APA given the material differences between the two, a comparison of federal law with Florida law on the subject of deference allows us to understand and appreciate how thinly supported Florida’s deference doctrine is, in terms of its underlying rationale, relative to its federal counterpart.
a. Similar to, but Less Obedient Than, Federal Chevron Deference
Federal law recognizes several varieties of judicial deference, but the principal and most important of them is Chevron deference, which takes its name from the seminal case of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.20 In a nutshell, Chevron deference is premised on the notion that where a statute within an agency’s regulatory jurisdiction is ambiguous or silent, Congress is presumed to have delegated to the agency the ultimate interpretive authority, so that the agency—not the judiciary—holds the power to “say what the law is”21 by filling the statutory gaps, provided the agency’s construction is permissible or reasonable.22
18. It is likely that courts sometimes rely upon the deference doctrine to justify independently reached judicial conclusions about statutory constructions. In such situations, where the court’s best interpretation of the statute agrees with the agency interpretation, the “deference” is at best nominal.
19. Henry P. Monaghan, Marbury and the Administrative State, 83 Colum. L. Rev. 1, 26 (1983).
20. 467 U.S. 837 (1984).
21. Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803).
22. See generally William N. Eskridge, Jr. & Lauren E. Baer, The Continuum of Deference: Supreme Court Treatment of Agency Statutory Interpretations from Chevron to Hamdan, 96 Geo. L.J. 1083 (2008).
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Under Chevron, therefore, the agency is viewed not simply as an expert upon whom the court might rely, but rather as the “authoritative interpreter” (or lawmaker) whose statutory interpretations—made pursuant to an implied delegation of authority to interpret—the courts must follow. In the eyes of its exponents, “Chevron thus provides a stable background rule against which Congress can legislate: Statutory ambiguities will be resolved, within the bounds of reasonable interpretation, not by the courts but by the administering agency.”23
In a way, to refer to Chevron as a form of deference is somewhat misleading. It might be more accurate to call this federal doctrine “Chevron fidelity” because once a court determines that Chevron deference is owed, it ceases to engage in interpretation and merely applies the law as the agency has prescribed the law, just as the court would faithfully apply an unambiguous statute. The court, in other words, does not give the statute a judicial construction but implements the agency’s interpretation. This seeming passivity has been criticized, in my view persuasively, as an abdication of the judicial branch’s duty to say what the law is.24 But under the logic of Chevron, the courts see themselves as fulfilling, not shirking, the duty of the judiciary, giving “binding deference to permissible agency interpretations of statutory ambiguities because Congress has delegated to the agency the authority to interpret those ambiguities ‘with the force of law.’ ”25
The upshot of the Chevron theory of deference is that “a court’s opinion as to the best reading of an ambiguous statute an agency is charged with administering is not authoritative.”26 In other words, under federal law, a “court’s prior judicial construction of a statute trumps an agency construction . . . only if the prior court decision holds that its construction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion.”27 Where Chevron applies, an agency is not bound by a court’s previous interpretation of an ambiguous statute or even the agency’s own prior interpretation should the agency reverse course.
23. City of Arlington v. FCC, 133 S. Ct. 1863, 1868 (2013).
24. See, e.g., Philip Hamburger, Chevron Bias, 84 Geo. Wash. L. Rev. 1187, 1193 (2016).
25. City of Arlington, 133 S. Ct. at 1880 (Roberts, C.J., dissenting) (quoting United States v. Mead Corp., 553 U.S. 218, 229 (2001)).
26. Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 983 (2005).
27. Id. at 982.
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The presumption underlying Chevron—that statutory ambiguity in a regulatory statute is a warrant to the responsible agency to fill the statutory gaps and clarify uncertainties authoritatively—has not been explicitly incorporated into Florida administrative law. Moreover, Florida courts have not held that state agencies may disregard judicial interpretations of ambiguous regulatory statutes, as federal agencies may do pursuant to Chevron. Instead, under Florida law, when a court interprets an ambiguous regulatory statute, the court apparently impresses that statute with a judicial interpretation that carries judicial authority,28 even if in doing so the court defers to an agency’s view as to what the statute means. Once rendered, the court’s opinion is binding, pursuant to stare decisis, on the agency and others, regardless of whether the interpretation originated with the agency. Thus, while Chevron deference resembles Florida’s deference doctrine on the surface, the two might be materially different “under the hood.”
There is one final aspect of Chevron. While the Chevron analysis is often described as a two-step process (Step One: Is the statute ambiguous? Step Two: If so, is the agency’s interpretation reasonable?), there is a threshold question, sometimes called “Step Zero,” which focuses on whether the agency has rulemaking authority with respect to the statutory provision at issue. To qualify for Chevron deference, it must appear “that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.”29
Florida courts likewise will not give deference, at least in theory, to an agency’s interpretation that exceeds the agency’s authority, but will defer only to an interpretation made within the scope of the agency’s powers and jurisdiction.30 Yet, in practice, the state courts have paid little, if any, attention to whether an agency interpretation claiming deference was promulgated in accordance with the agency’s rulemaking authority.31 This is regrettable because, as argued below, applying a deferred-to interpretation (DTI) as a de facto administrative rule (and as if rulemaking were not indicated) upsets the Florida APA’s carefully crafted rulemaking procedures, which prohibit such use of agency positions that have not been properly adopted as de jure rules.32
28. See, e.g., Jackson Lumber Co. v. Walton Cty., 116 So. 771, 790 (Fla. 1928) (“[T]he [judicial] construction itself becomes as it were a part of the law.”).
29. Mead Corp., 533 U.S. at 226-27.
30. E.g., Level 3 Commc’ns, LLC v. Jacobs, 841 So. 2d 447, 450 (Fla. 2003).
31. The term “[r]ulemaking authority” means “language that explicitly authorizes or requires an agency to adopt, develop, establish, or otherwise create any statement coming within the definition of the term ‘rule.’ ” Fla. Stat. § 120.52(17) (2016).
32. An “[u]nadopted rule” is “an agency statement that meets the definition of the term ‘rule,’ but that has not been adopted pursuant to the [rulemaking] requirements of s. 120.54.” Id. § 120.52(20). The term “ ‘[r]ule’ means each agency statement of general applicability that implements, interprets, or prescribes law or policy . . . .” Id. § 120.52(16) (emphasis added).
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b. Similar to, But Less Rigorous Than, Federal Skidmore Deference
Before Chevron, the major case concerning judicial deference to federal agencies was Skidmore v. Swift & Co.33 in which the U.S. Supreme Court declared:
We consider that the rulings, interpretations and opinions of the [agency], while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance. The weight of such a judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.34
Under Skidmore deference, which remains vital as an alternative to Chevron when the latter does not apply, the judiciary retains its role as the authoritative interpreter of federal statutes.35 A court will defer to an agency’s interpretation in proportion to its persuasive power.36 The agency’s interpretation “may surely claim the merit of its writer’s thoroughness, logic, and expertness, its fit with prior interpretations, and any other sources of weight.”37
The Florida deference doctrine resembles Skidmore deference in that both varieties of deference view the courts as the branch of government having the constitutional power to authoritatively declare the meaning of a statute, placing the agencies in a subsidiary position slightly below the courts, but elevated above all other litigants. Additionally, both emphasize agency expertise, experience, and informed judgment rather than the presumed power to fill statutory gaps.
The difference is that in Florida, deference is not given only in proportion to the persuasive force of the agency’s interpretation but to any interpretation that is not clearly erroneous.38 Florida courts rarely speak of an agency’s actual expertise or experience, or how either of them truly informed the specific interpretation claiming deference, or of the relative persuasiveness of the agency’s position. Rather, expertise is assumed, and, as under Chevron, persuasiveness is nearly irrelevant, provided the interpretation is not so strained or faulty as to be deemed unreasonable or impermissible. Deference under Skidmore is a bit harder to come by, in theory at least, than deference under Florida law.
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c. Similar to Federal Seminole Rock (or Auer) Deference, But Equally Applicable to Statutes and Rules
A federal agency’s construction of its own regulation is given Seminole Rock39 or Auer40 deference. Unlike Florida law, federal law differentiates between the deference owed to an agency’s statutory interpretation, and the deference owed to an agency’s interpretation of its own ambiguous rules. The basic Seminole Rock/Auer doctrine is that “an agency’s interpretation need not be the only possible reading of a regulation—or even the best one—to prevail. When an agency interprets its own regulation, the Court, as a general rule, defers to it ‘unless [the] interpretation is plainly erroneous or inconsistent with [the unambiguous meaning of] the regulation.’ ”41
This principle sounds much like the Florida deference doctrine, except that the latter applies equally to all agency interpretations, regardless of whether the ambiguous language being interpreted is found in a statute or a rule. Seminole Rock/Auer deference is probably more permissive, however, in that a federal agency might freely change its mind over time about the meaning of a regulation and still receive deference. In contrast, although a state agency is not necessarily bound by its initial construction of a statute evidenced by the adoption of a rule, the agency must implement its changed interpretation only by validly amending the rule,42 unless it shows good reasons for an abrupt change of established policy.43 Seminole Rock deference has come under criticism in recent years by some Justices, including the late Justice Scalia, who was a champion of Chevron deference. In Justice Scalia’s view, allowing an agency to resolve ambiguities in its own regulations
[V]iolate[s] a fundamental principle of separation of powers—that the power to write a law and the power to interpret it cannot rest in the same hands.
[For t]hen the power to prescribe is augmented by the power to interpret; and the incentive is to speak vaguely and broadly, so as to retain a ‘flexibility’ that will enable ‘clarification’ with retroactive effect.44
39. Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945).
40. Auer v. Robbins, 519 U.S. 452 (1997).
41. Decker v. Nw. Envtl. Def. Ctr., 568 U.S. 597, 613 (2013) (internal quotation marks omitted) (quoting Chase Bank USA, N.A. v. McCoy, 562 U.S. 195, 208 (2011)).
42. Cleveland Clinic Fla. Hosp. v. Agency for Health Care Admin., 679 So. 2d 1237, 1242 (Fla. 1st DCA 1996).
43. Courts v. Agency for Health Care Admin., 965 So. 2d 154, 160 (Fla. 1st DCA 2007).
44. Decker, 568 U.S. at 619-20 (Scalia, J., dissenting).
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2. Limitations and Exceptions
The most obvious limitation on the deference doctrine in Florida is that it does not come into play unless the statute under consideration is ambiguous, which is a question of law exclusively for the court to decide.45 If the court, exercising its independent judgment, finds that the statute has but one plain meaning and therefore requires no interpretation, then the question of whether to defer never arises and should not be entertained; rather, in such an instance, the unambiguous statute should simply be applied as written. In practice, however, a determination that the statute is unambiguous is no guarantee that the deference doctrine will not be invoked.46
Occasionally, the courts will decline to defer on other grounds, including the following.
a. Decisions Not Requiring Agency Expertise
Although agency expertise for purposes of deference is usually assumed, sometimes it is not, as reflected in Schoettle,47 where the court rejected the agency’s strict construction of the statute. In doing so, the court noted that “[w]hen an agency urges a construction based on common, ordinary meanings, this mitigates, if it does not entirely eliminate, the rule calling upon the court to accord ‘great deference’ to the agency’s interpretation of the statute” because no “demonstrated agency expertise” is necessary to consult the dictionary, and because “[s]tatutory construction is ultimately the province of the judiciary.”48
45. See, e.g., Donato v. AT&T, 767 So. 2d 1146, 1153 (Fla. 2000) (noting deference is due only in the construction of a statute of doubtful meaning).
46. See, e.g., Murciano v. Agency for Health Care Admin., 208 So. 3d 130, 135-36 (Fla. 3d DCA 2016) (“Given the plain and unambiguous statutory language used, we must presume that the Legislature said what it meant and meant what it said, and conclude that AHCA’s interpretation of the statute, and its application to the undisputed material facts in this case, was ‘within the range of possible and reasonable interpretations.’ ” (quoting Brennan v. City of Miami, 146 So. 3d 119, 123 (Fla. 3d DCA 2014)).
47. Schoettle v. Dep’t of Admin., 513 So. 2d 1299 (Fla. 1st DCA 1987).
48. Id. at 1301; see also Bd. of Trs. of the Nw Fla. Cmty. Hosp. v. Dep’t of Mgmt. Servs., 651 So. 2d 170, 173 (Fla. 1st DCA 1995) (“[T]he determination of whether a person performs services as an employee or an independent contractor is not within that class of decisions requiring such agency expertise as to compel the court to defer to the Division’s construction.”).
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Similarly, an agency’s application of general principles of administrative law—over which the agency has no special expertise—is given no deference.49 Nor are the courts required to defer to an agency’s interpretation of a statute “if the statute is unrelated to the functions of the agency.”50 Finally, courts do not defer to agencies when the statute in question provides for an award of attorney’s fees.51
b. Beyond the Agency’s Power
As mentioned above, deference should not be given when the agency has acted outside of its delegated power. Thus, for example, because an agency has no power to declare a statute void or otherwise unenforceable, the court need not defer to an agency interpretation that results in a statute being voided by administrative fiat.52
c. Scope of Agency Jurisdiction
“In cases involving the scope of an agency’s regulatory jurisdiction, stricter scrutiny is undertaken by the reviewing court and less deference is given to the agency’s interpretation.”53
d. Special Interpretive Rules Requiring Strict Construction
Some types of statutes receive a strict interpretation against the agency as a matter of law. Although these special canons of strict construction are not usually described as exceptions to the deference doctrine, it is obvious as a matter of logic that an ambiguous statute cannot simultaneously be interpreted against the agency and in deference to the agency. Thus, where a special rule of interpretation requires strict construction, the general doctrine of deference must yield.
The most commonly encountered situation involving strict construction is the application of a disciplinary statute. When determining the meaning of disciplinary statutes, the law demands that the pertinent language “be construed strictly, in favor of the one against whom the penalty would be imposed.”54 “No conduct is to be regarded as included within a . . . statute [that provides for revocation of a license] that is not reasonably proscribed by it; if there are any ambiguities included, they must be construed in favor of the licensee.”55
49. See, e.g., S. Broward Hosp. Dist. v. Agency for Health Care Admin., 141 So. 3d 678, 681 (Fla. 1st DCA 2014) (involving the question of standing).
50. Chiles v. Dep’t of State, 711 So. 2d 151, 155 (Fla. 1st DCA 1998) (noting where the statute applies to all state agencies, not to any issue within the division’s jurisdiction, the division is in no better position than the court to interpret the statute, and so the court need not defer).
51. See, e.g., Brown v. Comm’n on Ethics, 969 So. 2d 553, 557 (Fla. 1st DCA 2007) (holding a court may reject an agency’s interpretation of an attorney fee statute even if the statute is one that applies exclusively to that agency).
52. Sec’y of State v. Milligan, 704 So. 2d 152, 157 (Fla. 1st DCA 1997).
53. And Justice for All, Inc. v. Fla. Dep’t of Ins., 799 So. 2d 1076, 1078 (Fla. 1st DCA 2001).
54. Munch v. Dep’t of Prof’l Regulation, 592 So. 2d 1136, 1143 (Fla. 1st DCA 1992).
55. McClung v. Criminal Justice Standards & Training Comm’n, 458 So. 2d 887, 888 (Fla. 5th DCA 1984).
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Clearly, if a penal statute is ambiguous, the court should not defer to the agency’s interpretation thereof, if such interpretation would result in the imposition of a penalty.56
Similarly, in applying taxing statutes, courts must be careful not to subject to tax anything which has not been clearly so burdened. “Taxes cannot be imposed except in clear and unequivocal language. Taxation by implication is not permitted.”57 The “authority to tax must be strictly construed.”58 As the Florida Supreme Court explained in Maas Bros., Inc. v. Dickinson:59
It is a fundamental rule of construction that tax laws are to be construed strongly in favor of the taxpayer and against the government, and that all ambiguities or doubts are to be resolved in favor of the taxpayer. This salutary principle is found in the reason that the duty to pay taxes, while necessary to the business of the sovereign, is still a duty of pure statutory creation and taxes may be collected only within the clear definite boundaries recited by statute.60
Thus, a court should not defer to an agency interpretation that would enlarge the taxing power.
B. Inconsistency with the Florida APA
Under “Step Zero” of Chevron, as held in Mead Corp., a federal court is supposed to determine, as a threshold matter, whether the agency interpretation claiming deference was promulgated in accordance with that agency’s authority to make rules having the force of law.61 To be sure, the bar for determining whether Congress has delegated lawmaking authority to a federal agency for Chevron purposes has been set surprisingly low: A general grant of rulemaking authority suffices “to support Chevron deference for an exercise of that authority within the agency’s substantive field.”62
56. Griffis v. Fla. Fish & Wildlife Conservation Comm’n, 57 So. 3d 929, 931 (Fla. 1st DCA 2011) (holding statutes imposing a penalty must never be extended by construction).
57. Fla. S & L Servs., Inc. v. Dep’t of Revenue, 443 So. 2d 120, 122 (Fla. 1st DCA 1983).
58. Dep’t of Revenue v. GTE Mobilnet of Tampa Inc., 727 So. 2d 1125, 1128 (Fla. 2d DCA 1999).
59. 195 So. 2d 193 (Fla. 1967); see also Mikos v. Ringling Bros.-Barnum & Bailey Combined Shows, Inc., 497 So. 2d 630, 632 (Fla. 1986) (“The courts are not taxing authorities and cannot rewrite the statute.”).
60. Maas Bros., Inc., 195 So. 2d at 198.
61. United States v. Mead Corp., 554 U.S. 218 (2001).
62. City of Arlington v. FCC, 133 S. Ct. 1863, 1874 (2013).
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Florida courts, too, have recognized that an agency interpretation should not be deferred to unless made in accordance with the agency’s delegated powers.63 But despite that recognition, in practice, Florida courts do not condition judicial deference on the proper exercise of delegated legislative (i.e., rulemaking) authority. If courts did this, the deference doctrine could not survive, for any agency interpretation that has not been adopted as a rule to which a court defers—in other words, every DTI, essentially—is an unadopted rule, and the Florida APA forbids the use of unadopted rules to authoritatively determine outcomes.64
The connection between the deference doctrine and rulemaking authority, which is openly acknowledged in the jurisprudence of Chevron, has never received the attention it deserves within the realm of Florida administrative law. The courts, however, should pay attention to this connection, for several reasons.
The Florida APA defines the term “rule” broadly and requires that every rule be formally adopted in accordance with detailed rulemaking procedures as a condition of legitimately acquiring the force of law. The term “rule” is defined in section 120.52(16), Florida Statutes, to mean “each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency and includes . . . the amendment or repeal of a rule.”65 As Florida’s First District Court of Appeal explained:
The breadth of the definition in Section 120.52(1) indicates that the legislature intended the term to cover a great variety of agency statements regardless of how the agency designates them. Any agency statement is a rule if it “purports in and of itself to create certain rights and adversely affect others,” [State, Dep’t of Admin. v.] Stevens, 344 So. 2d [290,] 296 [(Fla. 1st DCA 1977)], or serves “by [its] own effect to create rights, or to require compliance, or otherwise to have the direct and consistent effect of law.” McDonald v. Dep’t of Banking & Fin., 346 So. 2d 569, 581 (Fla. 1st DCA 1977).66
63. See, e.g., Sec’y of State v. Milligan, 704 So. 2d 152 (Fla. 1st DCA 1997).
64. Fla. Stat. §§ 120.57(1)(e)(1), 120.56(4) (2016).
65. Id. § 120.52(16).
66. Dep’t of Admin. v. Harvey, 356 So. 2d 323, 325 (Fla. 1st DCA 1977); see also Jenkins v. State, 855 So. 2d 1219, 1225-26 (Fla. 1st DCA 2003); Amos v. Dep’t of Health & Rehab. Servs., 444 So. 2d 43, 46-47 (Fla. 1st DCA 1983).
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[I]f the [agency] statement’s effect is to create stability and predictability within its field of operation; if it treats all those with like cases equally; if it requires affected persons to conform their behavior to a common standard; or if it creates or extinguishes rights, privileges, or entitlements, then the statement is a rule.67
The definition of the term “rule” expressly includes statements of general applicability68 that interpret law, e.g., statutory interpretations.69 Thus, while an agency statement that simply reiterates an unambiguous statutory mandate is not a rule, an interpretative statement that puts a spin on the statute’s literal reading and purports to create rights, require compliances, or otherwise has the direct and consistent effect of law, is a rule.70
Judicial deference is neither required nor even properly considered when addressing an agency “interpretation” that merely echoes an unambiguous statutory mandate; an accurate paraphrase is not really an interpretation, and in any event, an unambiguous statute needs no interpretation and should just be applied according to its plain meaning. The deference doctrine is only legitimately implicated when the statute is ambiguous, i.e., “when its language may permit two or more outcomes.”71 Thus, an agency statement that interprets an ambiguous statute (i.e., the only sort of interpretation to which a court properly would defer) necessarily chooses one permissible construction over another. Such an interpretive statement clearly would meet the definition of a “rule” under section 120.57(16), Florida Statutes, if it had the force and effect of law.72
67. Fla. Quarter Horse Racing Ass’n v. Dep’t of Bus. & Prof’l Regulation, No. 11-5796RU, 2013 Fla. Div. Adm. Hear. LEXIS 558, at *37-38 (DOAH May 6, 2013), aff’d, 133 So. 3d 1118 (Fla. 1st DCA 2014).
68. An agency “statement” is any declaration, expression, or communication. It does not need to be in writing. See Dep’t of Highway Safety & Motor Vehicles v. Schluter, 705 So. 2d 81, 84 (Fla. 1st DCA 1997). Nor does an agency statement need to be expressed publicly in words; a rule-by-definition may be found to exist based on agency conduct, where such conduct manifests an underlying policy of general applicability having the force and effect of law. See Fla. Quarter Horse Racing Ass’n, 133 So. 3d at 1119-20.
69. Fla. Stat. § 120.52(16).
70. Fla. Quarter Horse Racing Ass’n, 2013 Fla. Div. Admin. Hear. LEXIS at *39-40; see also State Bd. of Admin. v. Huberty, 46 So. 3d 1144, 1147 (Fla. 1st DCA 2010); Beverly Enters.-Fla., Inc. v. Dep’t of Health & Rehab. Servs., 573 So. 2d 19, 22 (Fla. 1st DCA 1990); St. Francis Hosp., Inc. v. Dep’t of Health & Rehab. Servs., 553 So. 2d 1351, 1354 (Fla. 1st DCA 1989).
71. Hess v. Walton, 898 So. 2d 1046, 1049 (Fla. 2d DCA 2005).
72. An agency’s interpretive statement construing an ambiguous statute is obviously generally applicable because the statute is generally applicable. The statute’s meaning, once deter-mined authoritatively, must be the same in all cases.
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Judicial deference closes the circuit and energizes the agency interpretation, satisfying the condition that the statement have the effect of law to be a “rule.” By requiring courts to give meaningful deference to agency interpretations, the deference doctrine effectively treats these interpretations as authoritative principles that the judiciary must apply in deciding cases. This, indeed, is exactly what the federal Chevron doctrine does. Florida courts, however, unlike their federal counterparts, do not openly acknowledge that they are accepting the agency interpretation as authoritative; but, in fact, that is what they are doing when they truly defer—when, that is, they apply agency interpretations irrespective of independent judicial interpretations.
With the deference doctrine behind them, agencies expect compliance with their statutory interpretations (and will take action to enforce compliance if necessary), and persons under agency jurisdiction are practically compelled to comply. At bottom, because courts apply and enforce all reasonable agency interpretations, such interpretations carry the force of law, which makes them “rules” by definition.
To emphasize, the DTI’s controlling nature makes it a “rule” as opposed to an argument or position. Litigating positions have the potential to persuade, i.e., the force of logic, but they lack the force of law. A court will accept a party’s position when it independently decides the position is persuasive and correct, and in that manner, may adopt a party’s view as the court’s ruling, but a court will not accept a party’s position out of deference to a party. DTIs, in contrast, are enforceable principles—formulated by agency parties, not courts—that establish norms and require compliance. A court accepts and applies an agency’s interpretation not because it independently decides such interpretation is correct, but out of deference to the agency that formulated the DTI. DTIs, in sum, are “rules” under the Florida APA’s criteria for identifying a rule.
The first reason, then, for courts to consider the connection between deference and rulemaking is that a DTI is a “rule” as the Florida APA defines that term.73 This is a consequential conclusion, for, to be able to adopt a rule lawfully, an agency must have been delegated the legislative authority to do so. It is well settled that
[R]ulemaking is a legislative function, not an executive function. When an agency promulgates a rule having the force of law, it acts in place of the legislature. Therefore, an agency has no power to adopt a rule apart from that power which has been properly delegated to it by the legislature.74
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The second reason for courts to consider the relationship between deference and rulemaking, accordingly, is that an agency interpretation that results from the invalid exercise of delegated legislative authority should not be granted deference. An agency’s interpretative statement that is not actually backed by legislative power is, at bottom, no more (and no less) than the argument of a party and thus should not be given the force of law by an independent judiciary.
The Florida APA defines “[i]nvalid exercise of delegated legislative authority” as:
[A]ction that goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one of the following applies:
(a) The agency has materially failed to follow the applicable rulemaking procedures or requirements set forth in this chapter;
(b) The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(3)(a)1.;
(c) The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(3)(a)1.;
(d) The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency;
(e) The rule is arbitrary or capricious. A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious if it is adopted without thought or reason or is irrational; or
(f) The rule imposes regulatory costs on the regulated person, county, or city which could be reduced by the adoption of less costly alternatives that substantially accomplish the statutory objectives.75
Presumably, most agency interpretations that would fall under paragraphs (c), (d), or (e) are found to be outside the range of permissible interpretations, or clearly erroneous. Consequently, such agency interpretations do not receive judicial deference even though the precise question of whether delegated legislative authority was validly exercised is not considered. Agency interpretations falling under paragraph (a), in contrast, are always going to be a problem in the context of judicial deference if the question of delegated legislative authority is examined, because if a DTI is a rule, it is necessarily an unadopted one.76 But let us put that concern to one side for the moment, and focus on paragraph (b) and the question of rulemaking authority.
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It is difficult to imagine why a court should ever treat as authoritative an agency interpretation that exceeds the agency’s rulemaking authority. On what authority does an agency interpretation rest, after all, if not delegated legislative authority? What gives this rhetorical question a sharper point is that the Florida APA evinces an unmistakable legislative intent not to confer rulemaking power upon agencies by implication or presumption arising from statutory ambiguity.
The Florida legislature has enacted statutes making clear its intent to strictly limit agency rulemaking authority to the confines of expressly delegated legislative authority. Specifically, sections 120.52(8) and 120.536(1), Florida Statutes, provide 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.”77 The term “[r]ulemaking authority” means “statutory language that explicitly authorizes or requires an agency to adopt, develop, establish, or otherwise create any statement coming within the definition of the term ‘rule.’ ”78 This definition of “rulemaking authority,” enacted in 2008, was found to be a “codification . . . of . . . existing law” by one district court, which explained:
There is nothing in the language of section 120.52(17) or its legislative history suggesting an intent to further restrict agency rulemaking authority beyond what was already expressed in the “flush left” paragraph in section 120.52(8), as construed by this court in Save the Manatee Club and subsequent cases. The use of the word “explicitly” in section 120.52(17) is consistent with the settled principle that agencies do not have implicit authority to adopt rules, and the legislative history explains only that section 120.52 was amended to define terms that “are not currently defined.” See Fla. Sen. Transp. & Econom. Dev. Approp. Comm. Staff Analysis for CS/CS/SB 704, at 8 (Apr. 15, 2008); and cf. Lawrence E. Sellers, The 2008 Amendments to the APA: The Open Government Act, 82 Fla. Bar J. 43, 46 (Dec. 2008) (explaining that the definition of “rulemaking authority” was merely intended to clarify that agencies have the authority to adopt rules in accordance with chapter 120 “where the statutory language directs or authorizes them to ‘adopt policies’ or ‘establish criteria’ or the like, even though the word ‘rule’ is not used in the authorizing statute”).79
Sections 120.52(8) and 120.536(1) provide further that an agency’s rules must “implement or interpret the specific powers and duties granted by the enabling statute.” An agency does not have the “authority to adopt a rule only because it is reasonably related to” the purposes of the enabling statute “and is not arbitrary and capricious,” or because it “is within the agency’s class of powers and duties.”80
77. Fla. Stat. §§ 120.52(8), 120.536(1). The term “[l]aw implemented” means “the language of the enabling statute being carried out or interpreted by an agency through rulemaking.” Id. § 120.52(9).
78. Id. § 120.52(17).
79. Fla. Elections Comm’n v. Blair, 52 So. 3d 9, 12 (Fla. 1st DCA 2010) (footnote omitted).
80. Fla. Stat. § 120.52(8).
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“Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than implementing or interpreting the specific powers and duties conferred by the enabling statute.”81 Furthermore, an agency does not have “the authority to implement statutory provisions setting forth general legislative intent or policy.”82 These provisions “require a close examination of the statutes cited by the agency as authority for the rule at issue to determine whether those statutes explicitly grant the agency authority to adopt the rule.”83
In short, the sort of general rulemaking grant that would suffice under federal law to support Chevron deference should not be sufficient under Florida law to justify judicial deference to an agency’s statutory interpretation, because the Florida APA reflects the legislature’s desire to place rulemaking authority under tighter control than that. As it is the legislature’s power that agencies exercise when authoritatively construing ambiguous statutes, the courts should respect the restrictions on the exercise of that authority which the legislature has imposed. Before deferring to an agency interpretation, therefore, courts should closely examine the relevant statutes to determine whether those statutes explicitly grant the agency authority to adopt the rule.
A separate question from that of the agency’s rulemaking authority is whether such authority has been exercised in accordance with the applicable rulemaking procedures. As mentioned above, the failure of an agency to follow the rulemaking procedures makes the agency’s action (here, its statutory interpretation) invalid pursuant to section 120.52(8)(a). Since no DTI will have been adopted as a full-fledged rule, the question arises whether every DTI is an invalid exercise of delegated legislative authority for that reason alone.
Agency rulemaking is not discretionary under the Florida APA. Section 120.54(1)(a) unambiguously declares that “[r]ulemaking is not a matter of agency discretion. Each agency statement defined as a rule . . . shall be adopted by the rulemaking procedure provided by this section as soon as feasible and practicable.”84 The legislature’s intention in enacting this rulemaking duty was “to remove from agencies the discretion to decide whether or not to adopt rules.”85
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In Whiley v. Scott,86 the Florida Supreme Court examined the rulemaking procedures set forth in chapter 120, Florida Statutes, in the context of a challenge to certain executive orders that Florida Governor Rick Scott had issued, which the Court held violated the separation of powers doctrine to the extent they operated to suspend agency rulemaking.87 Although he did not write for the Court, Justice Polston penned a primer on the rulemaking requirements, which provides a useful overview of the process by which rules are made in Florida.88 He explained:
The rulemaking process (with the exception of emergency rules) begins in one of three ways. First, an agency on its own must initiate the process “as soon as practicable and feasible” after an agency statement becomes a rule of general applicability. Second, the Legislature may require implementation of a statute by agency rules, and “such rules shall be drafted and formally proposed as provided in [the Florida APA] within 180 days after the effective date of the act, unless the act provides otherwise.” Finally, the process to adopt, amend, or repeal a rule can begin upon a petition to initiate rulemaking filed by a regulated person or a person having a substantial interest in a rule. An agency must initiate the rulemaking process or deny the petition in writing no later than thirty days after the petition is filed.
An agency must provide notice of the development of proposed rules (with the exception of an intention to repeal a rule) in the Florida Administrative Weekly. However, “[t]he [Florida] APA establishes no particular procedure to be followed by an agency during the original drafting of the proposed rule.” An agency may choose to develop a proposed rule on its own, or it may choose to hold a public workshop or to utilize negotiated rulemaking between interested parties. However, if an affected person requests in writing a public workshop, an agency must hold one unless the agency head explains in writing why a workshop is not necessary. Additionally, “[a]n agency head may delegate the authority to initiate rule development.”
At least twenty-eight days prior to adoption and upon the agency head’s approval, a notice of the proposed rule must be published in the Florida Administrative Weekly, including the proposed rule’s text and a reference to the statute being implemented. The agency may schedule a public hearing on the proposed rule and must do so if an affected party requests a public hearing within 21 days of the publication of intended agency action.
As a legislative check, the agency must also file the proposed rule with the Administrative Procedures Committee. If the Administrative Procedures Committee objects to the proposed rule, the agency must respond. And if the agency does not initiate administrative action to address the committee’s objection, the committee may recommend legislative action to address it. If the Administrative Procedures Committee objects to the proposed rule, the agency
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must respond. And if the agency does not initiate administrative action to address the committee’s objection, the committee may recommend legislative action to address it.
. . . .
A substantially affected person may also “seek an administrative determination of the invalidity of the [proposed rule or an existing] rule on the ground that the rule is an invalid exercise of delegated legislative authority.” . . . . [A]n administrative law judge (ALJ) must hold a hearing on the petition challenging the rule within a specified timeframe. If the ALJ determines that a proposed rule is partially or wholly invalid, the proposed rule may not be adopted unless the ALJ’s determination is reversed on appeal.
A proposed rule is adopted when it is filed, upon the agency head’s approval, with the Department of State. It cannot be filed for adoption less than 28 days or more than 90 days after the publication of the notice of proposed rulemaking, “until 14 days after the final public hearing, until 21 days after a statement of estimated regulatory costs . . . or until the administrative law judge has rendered a decision” in a challenge to a proposed rule, whichever is applicable.
Importantly, an agency has the discretion to withdraw or modify a proposed rule after the publication of the notice of the proposed rule but before the rule is adopted. An agency is required to withdraw a proposed rule if the time limits and other requirements of the [Florida] APA have not been satisfied. Thereafter, an agency must notice its withdrawal or modification in the Florida Administrative Weekly. But once a rule has become effective, it can only be repealed or amended through the rulemaking process.89
A third reason for courts to examine the nexus between deference and rulemaking is that the rulemaking procedures prescribed in section 120.54 (and summarized above) provide the only path by which an agency statement may become infused with the force of law pursuant to a valid exercise of delegated legislative authority. The adoption process subjects the agency statement to public scrutiny and places several important checks on the agency’s lawmaking power. These include the opportunity for a formal administrative hearing to challenge the validity of the proposed rule, during which—in response to the objections raised by the substantially affected party who initiated the proceeding—the agency must prove that its proposed rule is not an invalid exercise of delegated legislative authority. If the agency successfully completes the process and its proposed rule is adopted, the resulting, full-fledged rule is published in the Florida Administrative Code90 and, as a rule-in-effect, exerts the same control over the private conduct of affected persons as a statute.
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The agency’s ability to create a statute-like rule, upon which it can rely in the exercise of its regulatory authority, is a powerful incentive to agency rulemaking: a “carrot” for fulfilling the rulemaking duty of section 120.54(1)(a). The Florida APA, however, also includes a couple of “sticks” that serve as disincentives to disobedience of section 120.54(1)(a). One of these is the administrative proceeding authorized under section 120.56(4), which entitles any “person substantially affected by an agency statement that is an unadopted rule [to] seek an administrative determination that the statement violates s. 120.54(1)(a).”91 If the agency loses such a challenge, it not only must “immediately discontinue all reliance upon the unadopted rule or any substantially similar statement as a basis for agency action,”92 but also faces liability for potentially all of the petitioner’s reasonable costs and reasonable attorney’s fees.93
The other is section 120.57(1)(e)(1), which provides that “[a]n agency or an administrative law judge may not base agency action that determines the substantial interests of a party on an unadopted rule or a rule that is an invalid exercise of delegated legislative authority.”94 This section states further that “[i]n a matter initiated as a result of agency action proposing to determine the substantial interests of a party, the party’s timely petition for hearing may challenge the proposed agency action based on a rule that is an invalid exercise of delegated legislative authority or based on an alleged unadopted rule.”95 Thus, section 120.57(1)(e) expresses, in plain terms, the legislature’s intent that an agency’s interpretation of an ambiguous statute should not be regarded as authoritative and binding unless it has been formally adopted as a rule—and then, only if the full-fledged rule is a valid exercise of delegated legislative authority.
The Florida APA makes clear that all unadopted rules are necessarily invalid rules,96 and that an agency does not have the authority to determine the substantial interests of a party based on an unadopted rule or a rule that is an invalid exercise of delegated legislative authority.97 An agency interpretation that has not been adopted pursuant to the section 120.54 rulemaking procedures is, therefore, an invalid exercise of delegated legislative authority and, for that reason, not within the scope of the agency’s power and jurisdiction. For that reason alone, courts should not defer to agency interpretations of ambiguous statutes until such interpretations have been adopted as rules.
91. Id. § 120.56(4).
92. Id. § 120.56(4)(e).
93. Id. § 120.595(1)(b).
94. Id. § 120.57(1)(e)(1).
95. Id. § 120.57(1)(e)(2).
96. See id. § 120.52(8)(a). But not all invalid rules are unadopted rules. Id. § 120.52(8)(b)-(f). As a class, in other words, unadopted rules are a subset of the category comprising all invalid rules.
97. See id. § 120.57(1)(e)(1).
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When a court does defer to an agency interpretation that has not been adopted as a rule, however, it transforms that statement into a judicial holding having the force of stare decisis, even if the interpretation did not actually reflect the court’s best judgment as to the meaning of the statute. To repeat for emphasis a point made earlier, judicial deference turns an agency interpretation into a rule of law, which effectively circumvents the rulemaking process. A good example of such an end run around rulemaking is Trust Care Health Services v. Agency for Health Care Administration.98 That case arose from the denial of an application for a change of ownership (CHOW) of a licensed home health agency.99 The agency urged the court to adopt the agency’s expansive interpretation—consistently applied though never adopted as a rule—of the statutory term “controlling interest.” The agency’s interpretation treated disciplinary action taken previously against an entity as the equivalent of action taken against the entity’s controlling interest, even when, in fact, the controlling interest had not personally been disciplined.100 In other words, when reviewing CHOW applications, the agency attributed the guilt of an entity to its controlling interest, even where the controlling interest had never been found guilty, so that a CHOW application would be denied if the applicant’s controlling interest—who had never himself been terminated from the Medicare or Medicaid program—previously was a controlling interest in an entity that was terminated from participation in one or both programs.101 The court deferred to, and adopted, the agency’s statutory interpretation, following the doctrine of judicial deference.102 Deference allowed the court to approve an agency interpretation that few could reasonably regard as the best reading of the statute, even if the statute were ambiguous. As the court delicately put it: “There is no doubt that the statute could have been written in a manner that would more precisely describe the rules of attribution applied by [the agency].”103 In any event, by deferring to the agency’s interpretation, which clearly gave the statute a meaning not readily apparent from its literal terms, the court turned an unadopted rule into a rule of law, bypassing the rulemaking process.
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When courts adopt agency interpretations as law under the deference doctrine, agencies get to enjoy most of the benefits with none of the burdens of rulemaking.104 Worse, by providing an alternative route for endowing an unadopted statutory interpretation with the force of law, judicial deference actually creates perverse incentives not to adopt an interpretative statement as a rule. One such incentive stems from the fact that this alternative path denies substantially affected parties an opportunity to obtain an administrative determination of the invalidity of the agency interpretation (either as an unadopted rule, proposed rule, or existing rule) pursuant to section 120.56.105 Indeed, once judicial deference is granted, the question of whether the agency interpretation exceeded the agency’s rulemaking authority, or was otherwise an invalid exercise of delegated legislative authority (e.g., for failing to follow the rulemaking procedures), will likely never get decided. The ability to avoid administrative rule challenges is a powerful incentive to eschew rulemaking.
Deference also allows agencies to avoid another disincentive to disobey section 120.54(1)(a)’s rulemaking mandate; namely, the prohibition against using an unadopted rule as the basis for determining a party’s substantial interests.106 Without question, when a court determines the substantial interests of a party pursuant to a DTI rather than its (the court’s) own best understanding of the actual statutory language, the agency is rewarded for basing its intended action on an unadopted rule—the very thing it is forbidden from doing.
Courts faced with a decision of whether to give deference to an agency interpretation should stop to consider whether doing so would amount to the judicial approval of an unadopted rule. Because the Florida APA prohibits agencies from applying unadopted rules as authoritative grounds for decisions, it is difficult to defend a judicial doctrine that acquiesces to such a practice.
C. Constitutional Concerns
In the preceding Section, I argued that the deference doctrine conflicts with the Florida APA’s interrelated provisions regarding rulemaking because a DTI is a rule by definition, which ought to be adopted as a rule-in-effect before enjoying the full force of law. This argument assumes that the authority behind a DTI is delegated legislative authority, which is how federal administrative law justifies Chevron deference. But, as previously mentioned, Florida courts have not explicitly embraced this rationale for judicial deference to agency interpretations. If, however, the authority behind a DTI is not delegated legislative authority, but rather executive authority derived from the statutes, a pair of constitutional concerns arises.
104. To be sure, rulemaking gives an agency greater control over the interpretation—not to mention the ability, through modification or repeal—to retract or amend an interpretation, so deference does not confer all the benefits of rulemaking.
105. Fla. Stat. § 120.56(4)(a) (2016).
106. Id. § 120.57(1)(e)(1).
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The first is a separation of powers problem. Article II, section 3, of the Florida Constitution provides that “[n]o person belonging to one branch [of the state government] shall exercise any powers appertaining to either of the other branches unless expressly provided herein.”107 “Th[e Florida Supreme] Court has stated repeatedly and without exception that Florida’s Constitution absolutely requires a ‘strict’ separation of powers.”108 As Justice Cantero observed in McKenzie Check Advance of Florida, LLC v. Betts,109 in Florida, the judiciary always remains the final authority on the interpretation of statutes, and the legislature cannot delegate that authority to the executive, either expressly or (as Chevron assumes Congress does) implicitly by enacting an ambiguous statute.110
The nondelegation doctrine embodies this principle, which flows from the separation of powers provision of the Florida Constitution. This “doctrine essentially prohibits the legislature from delegating to another branch the power ‘to enact a law or to declare what the law shall be.’ ”111 It is true that the legislature may, by enacting standards and guidelines sufficient to prescribe “fundamental” policy decisions, delegate legislative authority to agencies without running afoul of the nondelegation doctrine,112 but agencies can lawfully exercise such authority only by complying with the rulemaking process and adopting valid rules.113 The idea that the Florida legislature could allocate the judicial power of “authoritative interpretation” to the executive flies in the face of Florida’s nondelegation doctrine.
Because statutory construction is ultimately the province of the judicial branch, it could be argued that when, and to the extent that, a court defers to the executive branch on a matter of statutory construction, the court allows the executive to exercise power properly belonging to the judiciary, in violation of the separation of powers. To defer, after all, is not simply to agree with, or be persuaded by, but to submit to another. Judicial deference, which permits another branch to decide a legal question, appears to compromise the independence of the judiciary.
107. Fla. Const. art. II, § 3.
108. B.H. v. State, 645 So. 2d 987, 991 (Fla. 1994).
109. 928 So. 2d 1204 (Fla. 2006).
110. Id. at 1215.
111. Brown v. Apalachee Reg’l Planning Council, 560 So. 2d 782, 784 (Fla. 1990) (internal quotation marks omitted) (quoting Conner v. Joe Hatton, Inc., 216 So. 2d 209, 211 (Fla. 1968)).
112. See, e.g., United Faculty of Fla. v. Fla. State Bd. of Educ., 157 So. 3d 514, 517-18 (Fla. 1st DCA 2015).
113. See Fla. Stat. § 120.52(8)(a) (2016).
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A separate concern relates to the quality of impartiality, the essence of which is equal treatment without favor. While obviously impartiality is an important component of the judicial mindset, it is more than that, for an impartial decisionmaker is a basic constituent of minimum due process.114
When a court defers to an agency interpretation, it certainly appears that one side in the dispute has received a special advantage in influencing the decision, at least when the agency is a party, as is typically true in administrative proceedings. Arguably, the deference doctrine creates a systemic bias in favor of agencies, which could be a due process violation.
III. ALJ Deference to Agency Interpretations
The focus of this Article is on judicial deference. This doctrine was made by the courts, for the courts. The Florida Division of Administrative Hearings (DOAH) is not a court,115 and ALJs are not members of the judiciary. By its terms, therefore, the deference doctrine does not apply to ALJs. Unfortunately, in my view, ALJs sometimes invoke the doctrine as if they, like courts, are required to defer to agency interpretations; they are not. For that reason, the existence of ALJ deference, and why it is a problem, merits brief attention.
Unlike the judiciary, ALJs are participants in the decisionmaking processes that lead to administrative interpretations of statutes and rules—the very administrative interpretations to which courts defer. ALJs are under no obligation to defer to an agency’s interpretation of any statute or rule, nor should they, because de novo administrative hearings (unlike judicial proceedings) “are designed to give affected parties an opportunity to change the agency’s mind.”116 Not only should an ALJ not defer, but an ALJ is also not authorized to defer to an agency interpretation. An ALJ’s duty is to conduct a de novo proceeding.117 In a typical Florida chapter 120 hearing to formulate final agency action, the agency’s preliminary decision is given no deference.118 An ALJ, therefore, has an affirmative duty not to defer to the agency’s interpretation of an ambiguous statute or rule because to do so would compromise the de novo nature of the proceeding the ALJ must provide.
114. See, e.g., Charlotte Cty. v. IMC-Phosphates Co., 824 So. 2d 298, 300-01 (Fla. 1st DCA 2002) (“[A]n impartial decision-maker is a basic component of minimum due process in an administrative proceeding.”); Cherry Commc’ns, Inc. v. Deason, 652 So. 2d 803, 805 (Fla. 1995) (“[I]n our adversarial system of justice, which places a premium on the fairness of the judicial or quasi-judicial procedure, the decisionmaker must not allow one side in the dispute to have a special advantage in influencing the decision.”); see also McAlpin v. Criminal Justice Standards & Training Comm’n, 120 So. 3d 1260, 1261-62 (Fla. 1st DCA 2013).
115. See Amendments to the Fla. Rules of Workers’ Comp. Procedure, 891 So. 2d 474, 477-78 (Fla. 2004).
116. Couch Constr. Co. v. Dep’t of Transp., 361 So. 2d 172, 176 (Fla. 1st DCA 1978).
117. See Fla. Stat. § 120.57(1)(k).
118. J.D. v. Fla. Dep’t of Children & Families, 114 So. 3d 1127, 1132 (Fla. 1st DCA 2013).
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Indeed, deferring to an agency interpretation in a formal hearing under chapter 120 deforms the administrative remedy and deprives the parties—including the agency—of the ALJ’s intended contribution to the process. This observation is based on the premise that “[t]he opportunity to ‘change the agency’s mind’ is one of the highest achievements of chapter 120 disciplines.”119 “The supreme goal of the [Florida APA] of 1974 is increased initiative and self-discipline within the executive branch. All its remedies press toward that goal . . . [of] promot[ing] agency responsibility, changing the agency head’s mind if that is indicated . . . .”120 The ALJ’s essential function is neither to further nor frustrate the agency’s proposed action, nor is it “merely [to] find the facts and supply the law, as would a court.”121 Rather, the ALJ is supposed to conduct a hearing that “independently serves the public interest by providing a forum to expose, inform[,] and challenge agency policy and discretion.”122 Performing this function, the ALJ must, when necessary, “subject agency policymakers to the sobering realization their policies lack convincing wisdom, and require them to cope with [his or her] adverse commentary.”123
Needless to say, if ALJs were required or allowed to defer to agency interpretations, little opportunity would exist, if any, for an ALJ to subject an agency to the “sobering realization” that its statutory interpretation lacks “convincing wisdom.”124 The opportunity to change the agency’s mind by forcing it to confront adverse commentary—the great achievement of the Florida APA—would be lost, at least in connection with disputes involving the meaning of the law. When an ALJ submits to an agency’s statutory interpretation simply because it is the agency’s interpretation, without deciding for himself or herself whether that interpretation conforms to the ALJ’s opinion as to the best reading of the statute, the parties are shortchanged, DOAH’s reputation for impartiality is tarnished, and the Florida APA is diminished. ALJs should be particularly mindful of these concerns, and avoid giving the appearance of partiality, because DOAH does not have the constitutional independence of the judiciary, and is, therefore, more vulnerable to being criticized as biased.
119. Dep’t of Envtl. Regulation v. Falls Chase Special Taxing Dist., 424 So. 2d 787, 813 (Fla. 1st DCA 1982) (Smith, C.J., dissenting).
120. Id. at 818.
121. McDonald v. Dep’t of Banking & Fin., 346 So. 2d 569, 583 (Fla. 1st DCA 1977).
122. State ex rel. Dep’t of Gen. Servs. v. Willis, 344 So. 2d 580, 591 (Fla. 1st DCA 1977).
123. McDonald, 346 So. 2d at 583.
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Although it should be clear, it is worth mentioning, nevertheless, that declining to defer is not the same as disapproving, disrespecting, deeming invalid, or subjecting to greater scrutiny. That is, a determination that an agency interpretation is owed no deference does not mean that the agency interpretation is wrong. Obviously, the agency’s interpretation should not be rejected or treated with skepticism simply because it is the agency’s interpretation; rather, the agency’s position should be evaluated on an equal footing with competing interpretations, allowing the ALJ to work out the best interpretation of the statute without favoring one side or the other. If the ALJ interprets an ambiguous statute as meaning what the agency says it means, without giving the agency interpretation a deferential “boost,” then the ALJ has done his or her job as the Florida APA requires. The agency should prevail when it has the better argument, and lose when it does not, the same as any other litigant.
The ALJ’s duty, in sum, is to provide the parties an independent and impartial analysis of the law with a view towards helping the agency make the correct decision. In fulfilling this duty, the ALJ should not defer to the agency’s interpretation of a statute or rule, as a court would; rather, the ALJ should make independent legal conclusions based upon his or her best interpretation of the controlling law, with consideration given to the agency’s legal interpretations as the positions of a party litigant, entitled to no more or less weight than those of the private party. Otherwise, whenever a private litigant is up against a state agency, and the outcome depends on the meaning of an ambiguous statute or rule administered by that agency, the agency’s thumb would always be on the scale—even during the putatively de novo administrative hearing—and the nonagency party’s interpretive arguments would never be heard by a judge who could be completely neutral in deciding such questions of construction.
The ALJ’s impartiality in this regard does not materially diminish the primary authority of the agency to formulate the administrative interpretation of a statute it is charged with enforcing, because an agency may reject an ALJ’s legal conclusions over which it has substantive jurisdiction if it “state[s] with particularity [the] reasons for rejecting or modifying such conclusion[s]” and finds, in each instance, “that its substituted conclusion of law . . . is as or more reasonable than that which was rejected or modified.”125
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Thus, an “agency is not required to defer to the administrative law judge on issues of law” within its area of expertise.126
That last statement perhaps overstates the case a bit, inasmuch as an agency is not entirely free to disregard an ALJ’s statutory interpretations. Rather, the agency is required to give a sliver of deference to the ALJ, because there exist, at least in theory, reasonable ALJ interpretations that the agency must accept—i.e., those which are more reasonable than the agency’s preferred interpretation.127 This is, to be sure, far less deference than the courts give agencies, for the courts will accept any reasonable agency interpretation—not just one which is more reasonable than the court’s best judgment about the statute’s meaning—but it is a modicum of deference, nonetheless.
It is doubtful, however, whether this peppercorn of deference has any practical significance. To the extent it does, logic suggests that there ought to be some friction between agency deference to “more reasonable” ALJ interpretations, on the one hand, and judicial deference to all reasonable agency interpretations, on the other. Consider, first, that when the agency head receives a recommended order, it “assume[s] the role of adjudicator of the legality of the hearing officer’s action” and “sits in a role similar to an appellate judge, determining whether the findings of fact are supported by competent substantial evidence and overturning incorrect applications of law when it explains its reasons for doing so.”128 In the role of adjudicator, the agency head is supposed to be impartial, as due process requires. Ironically, therefore, if the agency head faithfully discharges his duty as an impartial adjudicator not to reject the “more reasonable” conclusions of the ALJ, pursuant to section 120.57(1)(l), he cannot, where the ALJ has disagreed with the agency, give his own agency’s interpretation of an ambiguous statute the same great deference that the judiciary gives the agency. One imagines, however, that few agency heads, if any, are that disciplined. As a practical matter, the agency—not the ALJ—is ultimately in control of the administrative interpretation of a statute it enforces, which allows the ALJ to speak freely while examining the dispute from a disinterested perspective.
126. State Contracting & Eng’g Corp. v. Dep’t of Transp., 709 So. 2d 607, 609 (Fla. 1st DCA 1998).
127. Fla. Stat. § 120.57(1)(l).
128. Charlotte Cty. v. IMC-Phosphates Co., 824 So. 2d 298, 301 (Fla. 1st DCA 2002) (holding an agency head disqualified for comments regarding a recommended order, made in a press release, which touched on the merits of the case).
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A second point of possible tension arises when the agency does substitute its interpretation for that of the ALJ, on the grounds that its view is as or more reasonable than the ALJ’s contrary conclusion. In that situation, a reviewing court will (or should) reverse if the agency has erred by rejecting the ALJ’s more reasonable interpretation, in contravention of section 120.57(1)(l). This suggests that where the agency has rejected or modified the ALJ’s interpretation, a reviewing court should give less than the usual deference to the agency (because the court should reverse a reasonable agency interpretation in favor of what it determines, de novo, is a more reasonable ALJ interpretation). But, in practice, courts seem to reverse agencies for erroneously rejecting ALJ interpretations only when the agency interpretation is found to be clearly erroneous—and would not merit deference in any circumstance.129
IV. Judicial Deference to Agency Fact-Findings
Judicial deference is usually understood, correctly, as a doctrine under which agency conclusions of law, in the form of statutory interpretations, are accepted as authoritative by the courts (unless clearly erroneous). However, in Florida administrative law, there is another deference rule which is arguably more pernicious, pursuant to which courts sometimes defer to an agency’s findings of fact, notwithstanding that, under the Florida APA, the ALJ is the trier of fact, not the agency.
This particular deference rule, which like its companion the deference doctrine is judge-made, not statutory, law, was created to address the “difficulties [courts have encountered] when the administrative law judge’s findings[, which] are supported by substantial competent evidence . . . are rejected or modified by the agency’s adoption of its own findings which are also supported by substantial competent evidence.”130 “The deference rule recognizes that policy considerations left to the discretion of an agency may take precedence over findings of fact by an administrative law judge.”131 This notion that a policy-infused finding of fact (PIFF) is entitled to deference has its roots in McDonald v. Department of Banking & Finance,132 where the court formulated a standard of judicial review for findings of fact substituted by the agency in place of those made by the trier of fact.133 The McDonald deference rule, which I call the “PIFF Doctrine,” was misbegotten, the result of an ill-conceived reliance upon inapposite federal law, and it has been largely marginalized in the decades since its unfortunate inception. But, like a zombie, the PIFF Doctrine keeps shuffling on, still capable of causing mischief. As will be argued, it should be eliminated.
129. E.g., Green v. Fla. Dep’t of Bus. & Prof’l Regulation, 49 So. 3d 315, 318 (Fla. 1st DCA 2010); Costin v. Fla. A & M Univ. Bd. of Trs., 972 So. 2d 1084, 1087-88 (Fla. 5th DCA 2008).
130. Gross v. Dep’t of Health, 819 So. 2d 997, 1002 (Fla. 5th DCA 2002).
132. 346 So. 2d 569 (Fla. 1st DCA 1977).
133. Id. at 579.
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It should first be acknowledged, however, that, without question, McDonald is a seminal case. Decided in the early days of the “modern” Florida APA, McDonald enjoys near-canonical status, and for good reason. The opinion is chock-full of magisterial pronouncements on Florida administrative law, all of which are interesting and insightful, many of which have stood the test of time. But the court was not infallible, and its writ not inerrant. Moreover, today’s Florida APA is substantially different in many crucial respects from the Florida APA that existed when the McDonald court did its exegetical work. McDonald must be read with care and applied with caution in deciding current disputes.
In McDonald, which involved a quest for licensure, the applicant sought to organize a bank and applied, in 1973, for the necessary authority.134 After a long and winding process that included a trip to state circuit court, the agency declined to approve the application.135 This resulted in the referral of the matter, in 1976, to DOAH, then a fledgling agency which had only recently opened its doors.136 After conducting a formal hearing, the hearing officer (HO) entered a recommended order that included detailed findings of fact upon which she determined, ultimately, that the applicant met each of the six statutory criteria—(a) through (f)—for licensure.137
In its final order, the agency rejected “many of the hearing officer’s findings of fact as not based on competent substantial evidence” and denied the application.138 The agency agreed that the proposed bank satisfied criteria (a) and (c), as the HO had found, but it “displaced” the HO’s findings as to criteria (b), (d), (e), and (f), making substitute findings to the effect that the applicant had failed to satisfy these requirements.139 The applicant appealed the unfavorable decision.
The main issue on appeal was whether, as the appellant maintained, the agency had “erroneously discarded the hearing officer’s findings of fact which are supported by competent substantial evidence and erroneously based [its] decision on improperly substituted findings of fact.”140 It is important to note that, at the time of McDonald, unlike today, the Florida APA allowed an agency to reject any conclusions of law in a recommended order freely; however, as now, the Florida APA then forbade the agency from rejecting or modifying findings of fact without “first determin[ing] from a review of the complete record, and stat[ing] with particularity in the order, that the findings of fact were not based upon competent substantial evidence.”141 Thus, the question presented should have been answered in the affirmative if, as the appellant claimed, the HO’s findings of fact were supported by competent substantial evidence (CSE).
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Unfortunately for the development of Florida administrative law, however, the court identified a nonexistent problem and looked to federal administrative law for a solution. The “problem” arose from section 120.68(10), which then provided in relevant part:
If the agency’s action depends on any fact found by the agency in a proceeding meeting the requirements of s. 120.57 . . . the court shall not substitute its judgment for that of the agency as to the weight of the evidence on any disputed finding of fact.142
Instead of treating this section as in pari materia with section 120.57(1)(b)(9), and interpreting both sections in light of each other, the court imagined them to be in tension. The court described this purported tension as follows:
[T]he Department was required to honor the hearing officer’s findings of fact unless “not based upon competent substantial evidence.” Yet we as the reviewing court are required to sustain the Department’s findings of fact—those which petitioners urge were wrongfully submitted—if they are supported by competent substantial evidence. Section 120.68(10). The result is a conundrum: bound as we are to honor agency findings of fact supported by competent substantial evidence, how shall we determine whether the agency, as required, accorded similar respect to the hearing officer’s findings?143
The court should not have presupposed that section 120.68(10) gave agencies a warrant to make findings of fact in contravention of section 120.57(1)(b)(9), which established precisely two situations in which a fact might correctly be “found by the agency.”144 The first would occur when an agency adopted an HO’s finding of fact, either out of agreement with the finding or because there were no legitimate grounds for rejecting it, whereupon such finding would become a “fact found by the agency.”145 The second, when an agency rejected or modified a finding, as happened in McDonald.146 That second situation, however, could occur in accordance with the law only if the agency, following section 120.57(1)(b)(9), correctly found that the HO’s discarded finding was not based upon CSE. Inexplicably, the McDonald court assumed that all facts found by the agency (as opposed to all facts correctly found by the agency pursuant to section 120.57(1)(b)(9)) were equal in the eyes of section 120.68(10), so that fact-findings substituted by the agency in place of an HO’s contrary findings would be taken at face value and be upheld if supported by CSE—notwithstanding that the HO’s displaced findings were also supported by CSE.147
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For an example of how the court should have conducted its judicial review, see Venetian Shores Home & Property Owners v. Ruzakawski,148 a case decided nine months before McDonald. (Venetian Shores is cited—and rejected sub silentio—in McDonald.149) There, the Third District Court of Appeal reversed a final order because “the agency violated [section 120.57(1)(b)(9)] in that it did ‘reject or modify the findings of fact’ without ‘stat[ing] with particularity in the order, that the findings of fact were not based upon competent substantial evidence.’ ”150 Further, the court’s review of the record “compel[led it] to hold that there is competent, substantial evidence to support the finding of the examiner.”151 The court concluded:
[T]here is no provision [in the Florida APA] which suggests that the agency should make a new judgment upon the evidence. This relationship between agency and examiner is not new to the law. The rule long applied in chancery matters is that where a master is appointed to take the evidence and report the same, together with his findings of fact and conclusions of law, his findings should be approved by the chancellor unless clearly erroneous or it appears that the master has misconceived the legal effect of the evidence. We do not think that the Administrative Procedure Act can be read to grant to the head of an agency greater powers over an examiner’s findings than those of a trial judge over the findings of a master in chancery.152
The McDonald court’s purported conundrum was easily solved. The solution, as Venetian Shores had shown, was to determine whether CSE did not support the HO’s displaced findings of fact for the reasons stated with particularity in the final order and, if the agency had incorrectly rejected or modified a material finding, to reverse the final order on grounds of the agency’s erroneous application of section 120.57(1)(b)(9), but for which the “agency findings of fact” would not have been made. The court, in short, should have answered its own question by saying that “agency findings of fact” conceived in derogation of section 120.57(1)(b)(9) deserve no “honor” on appeal.153 But the court had other ideas.
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The court turned to federal law for guidance; specifically, Universal Camera Corp. v. National Labor Relations Board,154 which established important principles for the judicial review of a federal agency’s findings of fact. In Universal Camera, the U.S. Supreme Court examined the contention that the court of appeals had “erred in holding that it was barred from taking into account the report of the [hearing] examiner on questions of fact insofar as that report was rejected by the” agency.155 This contention, the Court explained, raised “serious questions,”156 due to several intersecting developments in federal law, which are too involved and too remote to recount here.
Take note, though, that the question presented in Universal Camera was whether a reviewing court may (or must) exclude from consideration the findings made by a hearing examiner to the extent the agency discarded them.157 In view of this issue, it comes as no surprise to learn that, under the federal APA, agencies possess the power to reverse a hearing examiner’s findings of fact without regard to whether CSE supported such findings.
Indeed, the Court forcefully rejected the notion that an agency has the “power to reverse an examiner’s findings only when they are ‘clearly erroneous,’ ” saying this idea represented “so drastic a departure from prior administrative practice that”158 an explicit statute would be required to impose such a limitation. In other words, unless otherwise clearly provided by statute, a federal agency has the power to reverse findings even when they are not clearly erroneous. This represents a significant difference between federal and Florida administrative law. A finding which is not clearly erroneous, after all, must, at a minimum, be based on CSE, because a finding not based on CSE would be clearly erroneous for that reason. (In contrast, a finding supported by CSE could nevertheless be deemed clearly erroneous if, for example, it were contrary to the overwhelming weight of other, conflicting CSE.) So, federal agencies, being authorized to reverse findings that are not clearly erroneous, are necessarily empowered to reverse findings based on CSE. Florida agencies, by comparison, may reverse findings only when they are not based on CSE.
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This deeply ingrained premise—i.e., that federal agencies, with relative freedom, may reject the findings of a hearing examiner—had led the lower court in Universal Camera to ignore the examiner’s discarded findings, even as it acknowledged that the agency would have been “wrong” to “totally disregard” those same findings.159 The court had declared the examiner’s discarded findings to be off limits for purposes of appellate review out of concern that reversing the agency for “wrong[fully]” disregarding the examiner’s findings effectively would undermine the agency’s statutory authority to reject such findings, even when the agency’s doing so might be wrong.160
It is worthwhile to pause here—before looking at the Supreme Court’s solution to this apparent dilemma—to observe that contrary to the McDonald court’s analysis, the circuit court of appeals in Universal Camera did not face the “same question” which the McDonald court asked itself; namely, how should the court determine whether the agency, as required by law, honored the HO’s findings of fact supported by CSE?161 Unlike the agency in McDonald, which under an explicit statute had only the limited power to reverse an HO’s findings when CSE did not support them, the agency in Universal Camera had the power to reverse such findings even if CSE supported them; that is, the federal agency was not required by law to honor the examiner’s legally correct findings.162 Nor were federal agencies required to state any grounds, with particularity or otherwise, explaining the reversal of an examiner’s findings of fact.163 The dilemma in Universal Camera thus was whether a court could reverse an agency’s substituted findings of fact without effectively limiting the agency’s indisputable statutory authority to disregard practically any fact found by an examiner where the evidentiary record provides at least some support for an alternative finding. The McDonald court asserted that it confronted the same “conundrum”—but it did not.164 Unlike the situation in Universal Camera, a reversal in McDonald on grounds of the agency’s noncompliance with section 120.57(1)(b)(9) would not have diminished the agency’s statutory authority to reverse an HO’s findings of fact; rather, a reversal on such grounds would simply have confined the agency to its statutorily limited authority in this regard. For this reason, Universal Camera was materially distinguishable.
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The Supreme Court solved the Universal Camera dilemma by, in effect, demoting the hearing examiner from trier of fact to something like a competent, experienced, and impartial expert witness—someone to whom attention must be paid, but not a person who must usually be obeyed. The Court reasoned as follows. As mentioned, the agency was not required to accept the examiner’s findings, even if they were legally correct.165 Moreover, under the federal standard for reviewing agency action, the findings of the agency were to be regarded as “conclusive” if supported by “substantial evidence” upon consideration of the whole record.166 But this did not warrant an “exclusionary rule” requiring courts to ignore an examiner’s discarded findings, as the lower court had done, because the “examiner’s report is as much a part of the record as the complaint or the testimony.”167 Therefore, the Court concluded, “a reviewing court [must] determine the substantiality of evidence on the record including the examiner’s report.”168
The Court hastened to add, however, that
[T]he examiner’s findings [need not] be given more weight than in reason and in the light of judicial experience they deserve. The “substantial evidence” standard is not modified in any way when the [agency] and its examiner disagree. We intend only to recognize that evidence supporting a conclusion may be less substantial when an impartial, experienced examiner who has observed the witnesses and lived with the case has drawn conclusions different from the [agency]’s than when he has reached the same conclusion. The findings of the examiner are to be considered along with the consistency and inherent probability of testimony. The significance of his report, of course, depends largely on the importance of credibility in the particular case. To give it this significance does not seem to us materially more difficult than to heed the other factors which in sum determine whether evidence is “substantial.”169
In other words, when a court must determine on appeal whether substantial evidence supports an agency’s findings of fact, the hearing examiner’s rejected findings are to be treated as just another piece of evidence in the record, sometimes meriting greater weight than the testimony (especially when dependent upon the credibility determinations of an “experienced” examiner), sometimes not, but always sufficiently relevant that “courts [may not] deny [them] the probative force they would have in the conduct of affairs outside a courtroom.”170
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The McDonald court believed that it was “free to . . . adopt Universal Camera’s standard of judicial review” because “Florida’s APA does not require that the reviewing court ignore the hearing officer’s findings to the extent they are displaced by agency findings.”171 This statement was true, as far as it went, but it was not a sufficient basis for conforming Florida law to federal law on the matter of judicial review. The court failed to consider whether the Florida APA required the reviewing court to (1) ignore the agency’s reasons for rejecting or modifying the HO’s findings of fact, which reasons were supposed to have been stated with particularity in the final order, and thus (2) not determine if those reasons were correct before reaching the question of whether CSE supports the agency’s substituted findings.172 Of course, the Florida APA did not require that, either.
To the contrary, the Florida APA required, at least by the strongest of implications, if not expressly, that the reviewing court determine as a threshold matter whether the agency exceeded its authority in rejecting or modifying a finding of fact. Read, again, the then-applicable statutory language:
The agency in its final order may reject or modify the conclusions of law and interpretation of administrative rules in the recommended order[. The agency] may not reject or modify the findings of fact unless the agency first determines from a review of the complete record, and states with particularity in the order, that the findings of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law.173
Observe the difference between the agency’s authority with respect to conclusions of law, on the one hand, and findings of fact, on the other. The agency “may reject or modify” legal conclusions without explanation.174 In contrast, the agency “may not reject or modify the findings of fact” without giving an explanation, the substance of which must be limited to either of just two grounds.175 The requirement of an explanation, together with the limitation on the permissible grounds, for discarding an HO’s findings of fact make sense only if the agency’s exercise of its narrow authority to discard findings is subject to judicial review as a distinct issue, separate from the question of whether the substituted findings are based on CSE. Otherwise, these statutory restrictions serve no meaningful purpose.
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In adopting Universal Camera, the court introduced a nonnative, invasive weed into the garden of Florida administrative law, which threatened to blot out the section 120.57(1)(b)(9) limitations on agency authority to reject or modify findings of fact. McDonald steered the focus of judicial review of substituted findings away from the sufficiency of the agency’s explanation for discarding the HO’s findings and placed it squarely on the sufficiency of the HO’s findings, which would need to be both evidentially supported and logically persuasive if the agency’s findings were to be disturbed. In this scheme, the burden was not on the agency to defend its rejection of the HO’s contrary findings, but on the other party to show that the rejected findings, considered in conjunction with corroborating CSE, had greater probative force than the evidence relied upon by the agency in support of its substituted findings. In Universal Camera the Court took care, in crafting a needed standard of judicial review, to avoid imposing nonstatutory limitations on the agency’s broad authority to reject findings of fact. The court in McDonald did the opposite, carelessly eliminating the need for judicial review, as a separate matter, of the agency’s exercise of its limited authority to reject findings of fact, thereby effectively easing the restrictions on such authority set forth in section 120.57(1)(b)(9).
The McDonald court did not adopt Universal Camera wholesale but adapted the federal standard of review to fit its purposes. Building upon Universal Camera, the court explained that the amount of probative force courts should give an HO’s finding, in determining the substantiality of evidence supporting the agency’s substituted finding, will generally depend on where the HO’s finding falls on a continuum of factual issues, ranging from disputes involving historical or objective facts (i.e. empirical facts), where the HO’s findings “carry relatively greater probative force,” to disagreements over PIFFs, i.e., “ultimate facts . . . infused [with] policy considerations for which the agency has special responsibility,” where the HO’s findings deserve “less weight.”177
176. “[U]ltimate facts are those ‘necessary to determine issues in [a] case’ or the ‘final facts’ derived from the ‘evidentiary facts supporting them.’ Ultimate facts are also regularly described as ‘mixed questions’ of law and fact . . . and must generally be made by the fact finder in an administrative proceeding because they are ‘necessary for proper review of administrative orders.’ ” Costin v. Fla. A & M Univ. Bd. of Trs., 972 So. 2d 1084, 1086-97 (Fla. 5th DCA 2008) (citations omitted).
177. McDonald, 346 So. 2d at 579.
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The idea of a factual continuum bounded at one end by ordinary historical facts and by PIFFs at the other did not, as it turned out, become deeply rooted in the law. In Heifetz v. Department of Business Regulation,178 the First District Court of Appeal substantially modified the McDonald standard of review, stating, “Factual issues susceptible of ordinary methods of proof that are not infused with policy considerations are the prerogative of the hearing officer as the finder of fact.”179 With that, the sliding scale of factual disputes was discarded. “[O]rdinary factual issues not requiring agency expertise” henceforth would be viewed as falling exclusively within the HO’s “fact-finding discretion.”180 The PIFF Doctrine, however, survived, and persisted.
To recap, the PIFF Doctrine, which is a subset of the larger McDonald holding on the judicial review of agency findings, is this: Agencies possess the “power,” which increases “as the ‘facts’ blur into opinions and opinions into policies . . . to substitute [PIFFs in place of HO] findings” with considerable leeway.181 This power is not unfettered, to be sure, but its exercise is not limited by section 120.57(1)(b)(9) to situations where the HO’s finding was not based upon CSE; rather, it is held in check by section 120.68, which imposes a “duty of exposition” on the agency to “explicate” in the final order the rationale behind its infusion of any “nonrule policy” into the PIFF.182 Under the Doctrine, PIFFs are reviewable pursuant to section 120.68(7), as “determinations of . . . policy within the agency’s exercise of delegated discretion.”183
The concept of a category comprising PIFFs, occupying a no-mans-land between the section 120.57(1)(b)(9) categories of “conclusions of law” and “findings of fact,” did not come from Universal Camera or the Florida APA, but was the McDonald court’s original creation. The McDonald court made it clear that under the PIFF Doctrine agencies would have more power over PIFFs than empirical facts. Less clear, however, if not buried under McDonald’s elaborate sliding scale of factual issues, was just how radical a revision of section 120.57(1)(b)(9) the court had slipped into the law.
By definition, a PIFF is an amalgam of empirical fact and policy. The PIFF Doctrine comes into play when the agency and the HO disagree over the policy component of the discarded finding—indeed, such disagreement is what puts the “P” in PIFF. This is because, when the agency and the HO are in accord on the policy, all that remains for dispute are matters of empirical fact, and disagreements concerning empirical facts are, certainly after Heifetz,184 wholly within the realm of the HO’s fact-finding discretion, which means that his or her findings will be conclusive if supported by CSE.
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When used in connection with the PIFF Doctrine, the term “policy” includes any principle upon which a decision depends; such outcome-determining principles are otherwise known, in the broad sense, as “law.” But “policy” here also means the result that follows from the application of general principle to empirical fact—what we would refer to, in other contexts, as the “holding” or “rule” of a judicial opinion. A holding establishes the outcome that a court should reach when, in the future, the same general principle is applied to the same or similar empirical facts.
The HO and the agency might disagree over the general principle or, alternatively, over the “holding” that the general principle requires. In the case of the former, the agency, under section 120.57(1)(b)(9), had a free hand to reject or modify the HO’s contrary legal conclusion regarding the controlling law. But what was the agency to do if the HO, having applied a different general principle of decision, had not made the findings of empirical fact necessary for the application of the agency’s substituted conclusion of law? The PIFF Doctrine supplied a handy solution: make substituted PIFFs. If the disagreement was over the correct holding, as opposed to the general principle, the PIFF Doctrine gave the agency a way to change the result. The agency’s substituted finding of, say, guilty in place of not guilty, would no longer be a common ultimate fact, which triers of fact like HOs ordinarily decide, but a PIFF.
Simply put, the PIFF Doctrine gave agencies a license to change the facts, including, especially, the ultimate facts, and to conform them to their substituted conclusions of law. Beneath the academic analysis, under layers of abstract concepts, the McDonald court thus gave birth to a dangerous new idea, one which seriously eroded the section 120.57(1)(b)(9) law/fact dichotomy where it most matters; namely, with respect to ultimate facts or “holdings.”
In 1996, the Florida legislature substantially revised the Florida APA.185 Two particular amendments put the PIFF Doctrine in the crosshairs. The first of these, an amendment to section 120.68, was subtle but significant in light of the McDonald court’s reliance on the “potentially conflicting  demands” of sections 120.57(1)(b)(9) and 120.68(10), the latter of which referred to “fact[s] found by the agency.”186 This phrase was deleted in 1996, with the result that the statute currently calls for the reviewing court to remand when it finds that
[T]he agency’s action depends on any finding of fact [found by the agency] that is not supported by competent, substantial evidence in the record of a hearing conducted pursuant to ss. 120.569 and 120.57; however, the court shall not substitute its judgment for that of the agency as to the weight of the evidence on any disputed finding of fact.187
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This change eliminated any implication that agencies have the authority to find facts qua a trier of fact.
The other relevant amendment, which replaced section 120.57(1)(b)(9) with a substantially reworded section 120.57(1)(j), took direct aim at the PIFF Doctrine, imposing two new restrictions on the authority of agencies to edit recommended orders. One limits agencies to rejecting or modifying only conclusions of law “over which [they] ha[ve] substantive jurisdiction.”188 The second restriction provides that “[r]ejection or modification of conclusions of law may not form the basis for rejection or modification of findings of fact.”189 The latter restriction, alone, is sufficient to overthrow the PIFF Doctrine, which is nothing if not a warrant to reject or modify findings of fact based upon substituted conclusions of law.
Regardless of whether the PIFF Doctrine was ever consistent with the Florida APA, it cannot be squared with today’s Florida APA. Forty years after McDonald was decided, the time has come to let go of the PIFF Doctrine, which is bad law and should be discarded, once and for all.
This Article began with a quotation from then Judge Gorsuch’s jeremiad on the effects of Chevron, and so, too, will it end that way:
All of which raises this question: what would happen in a world without Chevron? If this goliath of modern administrative law were to fall? Surely Congress could and would continue to pass statutes for executive agencies to enforce. And just as surely agencies could and would continue to offer guidance on how they intend to enforce those statutes. The only difference would be that courts would then fulfill their duty to exercise their independent judgment about what the law is. Of course, courts could and would consult agency views and apply the agency’s interpretation when it accords with the best reading of a statute. But de novo judicial review of the law’s meaning would limit the ability of an agency to alter and amend existing law.190
In Florida, if the deference doctrine were rescinded, agencies would still be able to construe ambiguous statutes authoritatively. The question in that event, as now, would not be whether Florida agencies possess the power to promulgate controlling constructions of ambiguous statutes; for clearly, they do—provided the Florida legislature has delegated sufficient rulemaking authority to them. Rather, the question would be how agencies are to exercise this power. Judicial deference provides a means to the end of authoritative agency interpretation, but it is an unnecessary shortcut which is not consistent with the Florida APA. Without deference, agencies could give their interpretations the force of law only by adopting rules expressing them, following the applicable rulemaking procedures. Which is how, after all, the Florida APA requires it be done.