03-004776RP Bowling Centers Association Of Florida, Inc. vs. Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco, Status: Closed Settled and/or Dismissed prior to entry of RO/FO on Wednesday, May 19, 2004.

Summary: Proposed rules regarding Florida Clean Air Act constitute invalid exercise of delegated legislative authority.

Case No. 03-4776RP

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BOWLING CENTERS ASSOCIATION OF ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

FLORIDA, INC.,

FINAL ORDER

Petitioner,

and

ST. PETERSBURG KENNEL CLUB,

INC.,

Intervenor,

vs.

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

DIVISION OF ALCOHOLIC

BEVERAGES AND TOBACCO,

Respondent.

Pursuant to notice, a formal hearing was held in this case

on January 27, 2004, in Tallahassee, Florida, before the Division

of Administrative Hearings, by its designated Administrative Law

Judge, Barbara J. Staros.

APPEARANCES

For Petitioner: Harold F. X. Purnell, Esquire

and Rutledge, Ecenia, Purnell & Hoffman, P.A.

Intervenor: Post Office Box 551

Tallahassee, Florida 32302-0551

For Respondent: Michael A. Martinez, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-1020

STATEMENT OF THE ISSUE

Whether proposed Rules 61A-7.003, 61A-7.007, 61A-7.008, and

61A-7.009 constitute invalid exercises of delegated legislative

authority, pursuant to Section 120.52(8), Florida Statutes, 1/ for

the reasons described by Petitioner in its Petition.

PRELIMINARY STATEMENT

Petitioner, Bowling Centers Association of Florida, Inc.,

filed a Petition challenging proposed Rules 61A-7.003, 61A-7.007,

61A-7.008, and 61A-7.009 with the Division of Administrative

Hearings on December 19, 2003, and was assigned to the

undersigned on December 30, 2003.

A Notice of Hearing was issued on December 31, 2003,

scheduling a formal hearing for January 27, 2004. On January 12,

2004, St. Petersburg Kennel Club, Inc., filed a Motion to

Intervene which was granted. The parties filed a Pre-hearing

Stipulation on January 24, 2004.

At hearing, Petitioner presented the testimony of Sanford

Finkelstein. Petitioner’s Exhibit numbered 1 was admitted into

evidence. The parties offered the deposition testimony of

Deborah Pender and Marie Carpenter which were admitted as Joint

Exhibits 1 and 2. Respondent did not introduce any evidence

other than the joint exhibits.

A Transcript consisting of one volume was filed on

February 10, 2004. The parties requested 15 days from the filing

of the Transcript in which to submit proposed final orders.

The request was granted and the parties timely filed Proposed

Final Orders which have been considered in the preparation of

this Final Order.

FINDINGS OF FACT

1. Petitioner and Intervenor are companies whose

substantial interests will be affected by the proposed rules and

they have standing to bring this rule challenge.

2. The State of Florida, Department of Business and

Professional Regulation (the Department), is the state agency

responsible for adopting the proposed rules which are the subject

matter of this proceeding.

3. The Division of Alcoholic Beverages and Tobacco (the

Division) is vested with general regulatory authority over the

alcoholic beverage industry within the state.

4. The Division issues both general and special alcoholic

beverage licenses. See Chapters 561-565, Fla. Stat.

5. The general licenses which permit consumption on the

premises are: 1COP licenses which permit consumption of beer and

certain wine and distilled spirit products; 2COP licenses which

permit consumption of beer, wine, and certain distilled spirit

products; and 4COP licenses which permit the consumption of beer,

wine, and all distilled spirits. See §§ 563.02(1)(b)-(f),

564.06(5)(b), and 561.20(1), Fla. Stat.

6. The 4COP licenses are known as quota licenses, are

issued based on the population of the county, and are limited in

number. § 561.20(1), Fla. Stat. Quota liquor licenses range in

value, depending on the county involved, from a low of

approximately $20,000, to a high of approximately $300,000.

(stipulation of parties)

7. The SBX or special bowling license is issued by the

Division pursuant to Section 561.20(2)(c), Florida Statutes. The

owner or lessee of a bowling establishment having 12 or more

lanes and necessary equipment to operate them may obtain this

special license which permits consumption of beer, wine, and

distilled spirits. Alcohol can only be sold for consumption on

the licensed premises.

8. Another special alcoholic beverage license listed in

proposed Rule 61A-7.003 is the 12RT license. The holder of such

a license must be a caterer at a dog track, horse track, or jai

alai fronton. In this context, Section 565.02(5), Florida

Statutes, reads in pertinent part as follows:

(5) A caterer at a horse or dog racetrack or

jai alai fronton may obtain a license upon

the payment of an annual state license tax of

$675. Such caterer’s license shall permit

sales only within the enclosure in which such

races or jai alai games are conducted, and

such licensee shall be permitted to sell only

during the period beginning 10 days before

and ending 10 days after racing or jai alai

under the authority of the Division of Pari-

mutual Wagering of the Department of Business

and Professional Regulation is conducted at

such racetrack or jai alai fronton. . . .

9. Petitioner participated, to some degree, in the rule

development process. The extent of that participation is unclear

from the record.

10. The text of the proposed rules as published in their

final form in the Florida Administrative Weekly on October 10,

2003, is as follows:

61A-7.003 Premises Not Eligible For Smoking

Designation.

Licensed premises shall not be designated as

a stand-alone bar if the qualifications for

licensure require the premises be devoted

predominantly to activities other than the

service of alcohol. The following licenses

are not eligible for a stand-alone bar

designation:

S = Special Hotel

SH = Special Hotel in counties with

population of 50,000 or less

SR = Special Restaurant issued on or

after January 1, 1958

SRX = Special Restaurant

SBX = Special Bowling

SAL = Special Airport

SCX = Special Civic Center

SCC = Special County Commission

SPX = Pleasure, Excursion, Sightseeing, or

Charter boats

X = Airplanes, Buses, and Steamships

IX = Railroad Cars

XL = Passenger Waiting Lounge operated by

an airline

PVP = Passenger Vessels engaged in foreign

commerce

FEX = Special Public Fairs/Expositions

HBX = Special Horse Breeders

HBX = Special County Commission

11AL = American Legion Post permitted to

sell to general public

11C = Social, Tennis, Racquetball, Beach,

or Cabana Club

11CE = Licensed vendors exempt from payment

of surcharge tax

11CS = Special Act Club License

11CT = John and Mable Ringling Museum

11GC = Golf Club

11PA = Symphony, Live Performance Theatre,

Performing Arts Center

12RT = Dog or Horse Track or Jai Alai

Fronton

13CT = Catering

Specific Authority 386.2125, 561.695(9) FS.

Law Implemented 386.203(11), 561.695 FS.

History--New

61A-7.007 Formula For Compliance With

Required Percentage of Gross Food Sales

Revenues.

In order to determine compliance, the

division shall use the formula of gross food

sales revenue, including but not limited to

non-alcoholic beverages, divided by gross

total sales revenue, in any consecutive six-

month period. The results of the formula

will represent the percentage of food sales

revenues as defined herein and in s. 561.695,

Florida Statutes.

Specific Authority 386.2125, 561.695(9) FS.

Law Implemented 386.203(11), 561.695(6) FS.

History--New

61A-7.008 For Percentage of Gross Alcohol

Sales Revenue Formula.

In order to determine compliance, the

division shall use the formula of gross

alcohol sales revenue divided by gross total

sales revenue, in any consecutive six-month

period.

Specific Authority 386.2125, 561.695(9) FS.

Law Implemented 386.203(11), 561.695(6) FS.

History--New

61A-7.009 Method Used to Determine Whether

an Establishment is Predominantly Dedicated

to the Serving of Alcoholic Beverages.

In order to determine whether an

establishment, other than one holding a

specialty license designated in Rule 61A-

7.003, F.A.C., is predominantly dedicated to

the serving of alcoholic beverages, the

division shall compare the percentage of

gross food sales revenue with the percentage

of gross alcohol sales revenue. If the

percentage of gross alcohol sales revenue is

greater than that of the gross food sales

revenue, an establishment is deemed

predominantly dedicated to the serving of

alcoholic beverages.

Specific Authority 386.2125, 561.695(9) FS.

Law Implemented 386.203(11), 561.695(1)(9)

FS. History--New

11. Article X, Section 20, Florida Constitution, was

adopted by the electorate in 2002, and generally prohibits

smoking in enclosed indoor workplaces. This constitutional

provision includes certain exceptions from this general

prohibition including the "stand-alone bar" exception. Section

20(d) instructs the Florida Legislature to adopt legislation to

implement its provisions and specifies that the Legislature is

not precluded from enacting any law constituting or allowing a

more restrictive regulation of tobacco smoking than is provided

in Section 20.

12. The legislature implemented the constitutional

amendment by amending Part II, Chapter 386, Florida Statutes.

Section 386.204 prohibits smoking in enclosed indoor workplaces,

except as provided in Section 386.2045. Section 386.2045

enumerates exceptions to the general prohibition, including the

exception of a stand-alone bar. Section 386.2045(4), Florida

Statutes, reads as follows:

(4) STAND-ALONE BAR- A business that meets

the definition of a stand-alone bar as

defined in s. 386.203(11) and that otherwise

complies with all applicable provisions of

the Beverage Law and this part.

13. A stand-alone bar is defined in Section 386.203(11) as

follows:

(11) 'Stand-alone bar' means any licensed

premises devoted during any time of operation

predominately or totally to serving alcoholic

beverages, intoxicating beverages, or

intoxicating liquors, or any combination

thereof, for consumption on the licensed

premises; in which the serving of food, if

any, is merely incidental to the consumption

of any such beverage; and the licensed

premises is not located within, and does not

share any common entryway or common indoor

area with, any other enclosed indoor

workplace, including any business for which

the sale of food or any other product or

service is more than an incidental source of

gross revenue. A place of business

constitutes a stand-alone bar in which the

service of food is merely incidental in

accordance with this subsection if the

licensed premises derives no more than 10

percent of its gross revenue from the sale of

food consumed on the licensed premises.

14. Deborah Pender is the chief of licensing for the

Division. According to Ms. Pender, the Division included the SBX

or special bowling license in the list of special licenses that

cannot qualify for stand alone bar status in proposed Rule 61A-

7.003 because its predominant business is a bowling alley.

Similarly, the 12RT license was included because its predominant

business is a racetrack: "Because that’s a specialty license

that is issued at race tracks, and if it wasn’t a race track

business, the caterer . . . couldn’t have a license anywhere

else."

15. Marie Carpenter is the chief of the Bureau of Auditing

of the Division. According to Ms. Carpenter, the provision

regarding the six consecutive months in proposed rules 61A-7.007

and 61A-7.008 was intended to give the Division enough of a

period of time to get a good picture of whether the business met

the criteria for compliance and to give licensees an opportunity

to build up business records that were not previously required to

be kept. 2/ The licensee would be required to keep daily records.

16. Ms. Carpenter acknowledged that in using the six month

auditing period in the proposed rule, a licensee could exceed the

10 percent requirement on one or more occasions during the audit

period.

17. Sandy Finkelstein is President of Petitioner and is the

operating partner of Shore Lanes Bowling Center in Merritt

Island, Florida. According to Mr. Finkelstein, there is at least

one bowling facility in Florida that was issued a 4COP license.

18. A bowling facility with a 4COP license is not

automatically excluded from the stand-alone bar designation,

whereas a bowling facility with an SBX license is automatically

excluded from the stand-alone bar designation by virtue of

proposed rule 61A-7.003.

CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

proceeding pursuant to Section 120.56(1) and (2), Florida

Statutes.

20. Petitioner and Intervenor have standing to challenge

the proposed rules which is the subject of this dispute.

21. The Division of Alcoholic Beverages and Tobacco is

vested with general regulatory authority over the alcoholic

beverage industry in Florida. Chapter 561, Fla. Stat.

22. In a challenge to a proposed rule, the party attacking

the proposed rule has the burden of going forward. The agency

then has the burden to prove by a preponderance of the evidence

that the proposed rule is not an invalid exercise of delegated

legislative authority as to the objections raised. The proposed

rule is not presumed to be valid or invalid. § 120.56(2)(a) and

(c), Fla. Stat.

23. The Petition challenging the proposed rules alleges

that the proposed rules constitute an invalid exercise of

delegated authority. Petitioner asserts that the proposed rules

violate subsections (b), (c), (d), and (e) of Section 120.52(8)

in that they exceed the Department's rulemaking authority;

enlarge, modify, or contravene the specific provisions of law

implemented; vest unbridled discretion in the agency; and are

arbitrary and capricious. 3/

24. Section 120.52(8), Florida Statutes, reads in pertinent

part as follows:

(8) 'Invalid exercise of delegated

legislative authority' means action which

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:

* * *

(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 . . . .

25. "The authority to adopt an administrative rule must be

based on an explicit power or duty identified in the enabling

statute . . . [T]he authority for an administrative rule is not

a matter of degree. The question is whether the statute contains

a specific grant of legislative authority for the rule, not

whether the grant of authority is specific enough ." (Emphasis in

original) Florida Board of Medicine v. Fla. Academy of Cosmetic

Surgery , 808 So. 2d 243, 253, quoting Southwest Florida Water

Management District v. Save the Manatee Club, Inc. , 773 So. 2d

594, 599 (Fla. 1st DCA 2000).

26. In this instance, the publication of the proposed rules

references the Department’s grant of rulemaking authority found

in Sections 386.2125, and 561.695(9), Florida Statutes. Section

386.2125, Florida Statutes, reads as follows:

The [Department of Health] and the Department

of Business and Professional Regulation,

shall, in consultation with the State Fire

Marshall, have the authority to adopt rules

pursuant to ss. 120.536(1) and 120.54 to

implement the provisions of this part within

each agency’s specific areas of regulatory

authority. Whenever assessing a smoking

cessation program for approval, the

department shall consider whether the smoking

cessation program limits to the extent

possible the potential for exposure to

second-hand tobacco smoke, if any, to

nonparticipants in the enclosed indoor

workplace.

27. Section 561.695(9) reads as follows:

561.695 Stand-alone bar enforcement;

qualification; penalties.--

(9) The division shall adopt rules governing

the designation process, criteria for

qualification, required recordkeeping,

auditing, and all other rules necessary for

the effective enforcement and administration

of this section and part II of chapter 386.

The division is authorized to adopt emergency

rules pursuant to s.120.54(4) to implement

the provisions of this section.

28. Petitioner argues that proposed Rules 61A-7.007, 7.008,

and 7.009 exceed the grant of rulemaking authority in violation

of Section 120.52(8)(b), Florida Statutes.

29. Sections 386.2125 and 561.695, as well as Section

386.203(11), Florida Statutes, gave the Department sufficiently

specific rulemaking authority regarding the designation process,

criteria for qualification, required record keeping, auditing,

and all other rules necessary for the effective enforcement of

Chapter 561 and Part II of Chapter 386, but that authority was

exceeded.

30. Petitioner argues that proposed Rule 61A-7.003 violates

Section 120.52(8)(c) and (d) in that it enlarges, modifies, or

contravenes the specific provisions of law implemented and vests

unbridled discretion in the agency by impermissibly excluding

SBX and 12RT licenses from the definition of stand-alone bar.

Petitioner argues that the appropriate premise for the rule

should be a question of law and not fact, i.e. , do the statutory

requirements for holding the special license enumerated in the

rule absolutely preclude the licensee from complying with the

stand-alone bar exception.

31. Petitioner asserts that there is nothing in the

statutory provisions creating the SBX and 12RT special licenses

that preclude as a matter of law compliance with the statutory

requirements of a stand-alone bar. Petitioner further argues

that Section 386.203(11) does not contain any express

disqualification for any category of alcoholic beverage license.

32. The undersigned is unpersuaded that the inclusion of

SBX or 12RT licenses in a list of types of licenses that are not

eligible for stand-alone bar designation in proposed rule 61A-

7.003 enlarges, modifies, or contravenes Section 386.203(11),

Florida Statutes. While the Department presented extremely

limited facts, Ms. Pender’s testimony in this regard, as well as

the statutory language authorizing the issuance of the specialty

licenses at issue herein, is persuasive. That is, the license is

issued based upon the nature of the business. The special

alcoholic beverage license could not have been issued but for the

nature of the underlying business, i.e. , a bowling center or a

racetrack. Moreover, the inclusion of SBX and 12RT in the list

of special licenses does not vest unbridled discretion in the

agency. In administering the proposed rule, the agency will have

no discretion regarding licensees with the designations

enumerated in the rule.

33. Regarding proposed Rules 61A-7.007 and 7.008,

Petitioner argues that the provision of a six-month averaging

process contravenes the requirement of Section 386.203(11),

Florida Statutes, that the licensed premises be devoted "during

any time of operation" to the sale of alcoholic beverages for

consumption on the premises with the further limitation that only

incidental sales of food of 10 percent or less for consumption on

the premises occur.

34. Petitioner further asserts that proposed Rules 61A-

7.007, 7.008, and 7.009 contravene Section 386.203(11), by

permitting the receipt of gross revenues from sources other than

the sale of food and alcoholic beverages for consumption on the

premises. Petitioner argues this renders the “predominately or

totally devoted” language of Section 386.203(11) to be

meaningless.

35. Petitioner’s arguments in this regard are well founded.

In proposed Rule 61A-7.007, which would be used to determine the

percentage of gross revenues from food sales, and proposed Rule

61A-7.008, which would be used to determine the percentage of

total gross revenues from alcoholic beverage sales, the total

gross revenues in each rule includes revenues received by the

licensee from any source. Proposed Rule 61A-7.009 then compares

the resulting percentage of alcoholic beverage sales to the

percentage of food sales. This comparison then results in a

determination that a licensed premises whose alcoholic beverage

sales exceed food sales to be predominately dedicated to the sale

of alcoholic beverages.

36. This end result is in direct conflict with the

definition of stand-alone bar which the Legislature provided in

Section 386.203(11), Florida Statutes. That definition has three

components. The first sentence of Section 386.203(11) states

that a stand-alone bar means any licensed premises devoted during

any time of operation “predominately or totally” to serving

alcoholic beverages. The middle portion of the statutory

definition requires that the licensed premises is not located

within, and does not share any common entryway or common indoor

area with any other enclosed indoor workplace including any

business for which the sale of food or any other product or

service is more than an incidental source of gross revenues. The

last sentence states that a place of business constitutes a

stand-alone bar if the licensed premises derives no more than 10

percent of its gross revenues from the sale of food consumed on

the premises.

37. While the Department acknowledges the predominant

business aspect of licensees in proposed Rule 61A-7.003, it

ignores that same component in proposed Rules 61A-7.007, 7.008,

and 7.009. These proposed rules focus on the last sentence of

the statutory definition of "stand-alone bar" thereby allowing

businesses which are not necessarily predominately or totally

serving alcoholic beverages for consumption on the premises to

qualify for the stand-alone bar exception. An exemption from a

statute enacted to protect the public welfare is strictly

construed against the person claiming the exemption. Heburn v.

Department of Children and Families , 772 So. 2d 561, 563 (Fla.

1st DCA 2000), rev.den. 790 So. 2d 1104 (Fla. 2001).

38. Finally, Petitioner asserts that all four of the

proposed rules are arbitrary and capricious in violation of

Section 120.52(8)(e), Florida Statutes, in that a bowling

facility which obtains a quota license is capable of meeting the

stand-alone bar designation, whereas a bowling facility with an

SBX license cannot. Both parties acknowledge that a bowling

center could obtain a general alcoholic beverage license for its

facility.

39. Proposed Rules 61A-7.007, 7.008, and 7.009 are

arbitrary by failing to take into consideration a licensee’s

predominate business in fact and, therefore, are not supported by

the necessary facts. Proposed Rule 61A-7.003 standing alone is

not arbitrary or capricious.

40. Based upon the evidence presented and the statutory

authority outlined above, the Department has exceeded its grant

of rulemaking authority in that proposed Rules 61A-7.007, 7.008,

and 7.009 enlarge, modify, or contravene the specific provisions

of law implemented and are arbitrary.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED:

1. The Petition challenging proposed Rules is granted as to

proposed Rules 61A-7.007, 7.008, and 7.009 and is dismissed as to

proposed Rule 61A-7.003.

2. Jurisdiction of the Division of Administrative Hearings

is retained for consideration of Petitioner’s request for

reasonable costs and attorney’s fees pursuant to Section

120.595(2), Florida Statutes.

DONE AND ORDERED this 26th day of March, 2004, in

Tallahassee, Leon County, Florida.

S

___________________________________

BARBARA J. STAROS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 26th day of March, 2004.

ENDNOTES

1/ All references to Fla. Stat. will be to Florida Statutes

(2003), unless otherwise indicated.

2/ The parties stipulated that proposed Rule 61A-7.007 will be

amended to reflect that sales of food to go and not for

consumption on the premises will be included in gross total sales

revenue but not in gross food sales revenue. The parties further

stipulated that proposed Rule 61A-7.008 will be amended to

reflect package sales for consumption off the premises will be

included in gross total sales revenue but not in gross alcohol

sales. Notwithstanding the parties' stipulations, these future

amendments cannot support or invalidate the rules under

consideration in this case.

3/ The Petition also asserts that the proposed rule is not

supported by competent substantial evidence. This ground was

apparently abandoned in Petitioner’s Proposed Final Order. In

any event, this language, which was found in Section

120.52(8)(f), Florida Statutes (2002), was repealed by Section 1,

Chapter 2003-94, Laws of Florida, and became effective June 4,

2003. Accordingly, that argument will not be addressed in this

Final Order.

COPIES FURNISHED :

Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

Post Office Box 551

Tallahassee, Florida 32302-0551

Michael A. Martinez, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-1020

Liz Cloud, Chief

Bureau of Administrative Code

Department of State

The Elliott Building, Room 201

Tallahassee, Florida 32399

Scott Boyd, Acting Executive Director

and General Counsel

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to Section 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing the original

notice of appeal with the Clerk of the Division of Administrative

Hearings and a copy, accompanied by filing fees prescribed by

law, with the District Court of Appeal, First District, or with

the District Court of Appeal in the Appellate District where the

party resides. The notice of appeal must be filed within 30 days

of rendition of the order to be reviewed.