United Pharmacal Co. of Missouri v. Missouri Board of Pharmacy

RONNIE L. WHITE, Chief Justice,

concurring.

I concur with the principal opinion’s determination that United Pharmacal Company of Missouri, Inc. (Pharmacal) lacked standing to pursue its claim challenging the validity of the Missouri Board of Pharmacy’s (Board) rule. I write separately because the principal opinion’s analysis strays from what the legislature has clearly defined as being an administrative rule, and it blurs the distinction between the proper forums for challenges to the rule-making process.

Section 536.053 provides that: “Any person who is or may be aggrieved by any rule promulgated by a state agency shall have standing to challenge any rule promulgated by a state agency and may bring such an action pursuant to the provisions of section 536.050.” The standing statute allows a party to bring a court action any time it is “or may be aggrieved by” any promulgated, or procedurally valid, rule. No threatened enforcement action is required by an agency for an entity to have standing to initiate a lawsuit. All that is required is that an entity might be aggrieved by a promulgated rule. The standing issue in this case hinges totally on whether there was a promulgated rule that could aggrieve Pharmacal.

“Agency rulemaking occurs with the formulation, or repeal, of a ‘statement of general applicability that implements, interprets or prescribes law or policy, or that describes the organization, procedure, or practice requirements of any agency.’ ”1 *368The Board’s statement in its FAQ meets the statutory definition of a rule because it interprets and prescribes law or policy, and application of this rule would impact the “substantive or procedural rights” of the public.2 The Board’s newly created and announced policy of treating a business selling veterinary “legend drugs” as a “pharmacy” confirms the Board’s intention to change its statewide policy.3

It is not the act of promulgation; however, that converts an agency statement into a rule, rather it is the act of promulgation that conveys procedural validity to the rule allowing an agency to propose, adopt, amend or rescind it.4 The principal opinion errs when it holds that the Board’s rule was void ab initio for not having been promulgated. Once a rule is formulated it requires a judicial or quasi-judicial declaration to render it void or invalid.5

The Board’s FAQ statement is a rule, albeit a procedurally invalid one because it was not properly promulgated pursuant to sections 536.021 and 536.024. However, because the rule was not promulgated, Pharmacal lacked standing to bring its action to the circuit court pursuant to section 536.053. The proper forum for a challenge to a rule’s procedural validity for not having been promulgated is the Administrative Hearing Commission, whereas a challenge to a rule’s substantive validity, deciding legal rights, is a judicial function.6 The trial court erred in this case by not dismissing Pharmacal’s claim concerning *369the rule’s procedural validity.7

. Greenbriar Hills Country Club v. Director of Revenue, 47 S.W.3d 346, 357 (Mo. banc 2001); Section 536.010(6).

. Section 536.010(6); Baugus v. Director of Revenue, 878 S.W.2d 39, 42 (Mo. banc 1994). “Changes in statewide policy are rules." NME Hospitals, Inc. v. Department of Social Services, 850 S.W.2d 71, 74 (Mo. banc 1993).

. The fact that the FAQ was in a question and answer format is irrelevant. See Univ. of Iowa Hosp. & Clinics v. Shalala, 180 F.3d 943, 951 (8th Cir. 1999).

. Section 338.350. Nowhere in the statutory definition of a rule, section 536.010(6), is the requirement that it be promulgated. Section 536.014 defines the scope of substantive validity challenges to rules. The general assembly made a determination that procedural challenges to rule adoption could and should be initially made administratively. Once a rule is validly adopted procedurally, its substantive validity is only subject to challenge in court. This is why the administrative exhaustion exception was re-enacted in section 536.050.2 in 1996. See the history of section 536.050 in Kansas Ass'n of Private Investigators v. Mulvihill, 35 S.W.3d 425, 432 (FNs 10-13)(Mo.App.W.D.2000). See also State Tax Comm’n v. Administrative Hearing Comm’n, 641 S.W.2d 69, 75-77 (Mo. banc 1982). See also section 536.021 specifically addressing the availability of attorneys fees when procedural validity challenges are raised with the AHC.

. "Standing is a jurisdictional matter antecedent to the right to relief.” Farmer v. Kinder, 89 S.W.3d 447, 451 (Mo. banc 2002). If a party lacks standing, the court must dismiss the case because it does not have jurisdiction of the substantive issues presented. Id.; Rule 55.27(g)(3). "Lack of standing cannot be waived.” Id. “[I]f a party lacks standing, the court must dismiss the case because it does not have jurisdiction of the substantive issues presented.” Id.

. NME, 850 S.W.2d at 74 (Mo. banc 1993); R.E.J., Inc. v. City of Sikeston, 142 S.W.3d 744, 745-46 (Mo. banc 2004). See also footnote 6.

. Sections 338.055, 338.140, 338.350, 536.010(4), 536.021, 536.024, 536.041, 536.050.2(1), 536.063, 621.045; Missouri Board of Pharmacy v. John M. Finney, 2001 WL 34064270, Mo. Admin. Hrg. Comm., 00-0899 PH (Aug. 29 2001); Missouri Board of Pharmacy v. Sylvan Cohen, 2000 WL 33965955, Mo. Admin. Hrg. Comm., 98-2093 PH (Mar. 22 2000). The Administrative Hearing Commission decides procedural validity challenges to rules on a routine basis. See St. Anthony’s Medical Center v. Dept. of Social Services, Div. Of Medical Services, 2004 WL 1109578, Mo. Admin. Hrg. Comm., 3-0661 SP (Apr. 6, 2004); Charlotte V. Ijei, LPC v. Dept. of Social Services, Div. Of Medical Services, 2004 WL 3192712, Mo. Admin. Hrg. Comm., 3-1957 SP (Dec. 20 2004). See also Missourians for Separation of Church and State v. Robertson, 592 S.W.2d 825, 841 (Mo. App.1979). "The power to formulate rules to effect a policy of statute is legislative. The power to decide legal rights is judicial.” Id.