07-000603RX Jm Auto, Inc., D/B/A Jm Lexus vs. Department Of Highway Safety And Motor Vehicles Status: Closed DOAH Final Order on Friday, April 20, 2007.

Summary: Petiitoner has demonstrated that Florida Administrative Code Rule 15C-7.005 is an invalid exercise of legislative delegated authority in violation of Section 120.52(8)(b) and (c), Florida Statutes.

Case No. 07-0603RX

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JM AUTO, INC., d/b/a JM LEXUS, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Petitioner, FINAL ORDER

vs.

DEPARTMENT OF HIGHWAY

SAFETY AND MOTOR VEHICLES,

Respondent,

and

WINTER PARK IMPORTS, INC.,

d/b/a LEXUS OF ORLANDO,

FLORIDA AUTOMOBILE DEALERS

ASSOCIATION, AND SOUTH

FLORIDA AUTO-TRUCK DEALERS

ASSOCIATION, INC.,

Intervenors.

On March 8, 2007, a hearing was held in Tallahassee,

Florida, pursuant to the authority granted in Sections 120.56,

120.569 and 120.57(1), Florida Statutes. The case was considered

by Lisa Shearer Nelson, Administrative Law Judge.

APPEARANCES

For Petitioner: Dean Bunch, Esquire

Andrew Bertron, Esquire

Sutherland Asbill & Brennan LLP

3600 Maclay Boulevard South, Suite 202

Tallahassee, Florida 32312-1267

David S. Kurtzer-Ellenbogen, Esquire

Williams & Connolly LLP

725 12th Street Northwest

Washington, DC 20005

For Respondent: Michael Alderman, Esquire

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Room A432

2900 Apalachee Parkway

Tallahassee, Florida 32399

For Intervenor Winter Park Imports, Inc.,

d/b/a Lexus of Orlando:

John W. Forehand, Esquire

Walter E. Forehand, Esquire

Lewis, Longman & Walker, P.A.

125 South Gadsden Street

Tallahassee, Florida 32301

Ladd H. Fassett, Esquire

Fassett, Anthony & Taylor, P.A.

1325 West Colonel Drive

Orlando, Florida 32804

For Intervenor Florida Automobile Dealers Association:

Alex Kurkin, Esquire

Marc E. Brandes, Esquire

Pathman Lewis, LLP

One Biscayne Tower, Suite 2400

Miami, Florida 33131

For Intervenor South Florida Auto-Truck Dealers Association:

A. Edward Quinton, III

Adams, Quinton & Paretti, P.A.

80 Southwest 8 Street, Suite 2150

Miami, Florida 33130

STATEMENT OF THE ISSUE

Whether Florida Administrative Code Rule 15C-7.005 is a

invalid exercise of legislatively delegated authority in

violation of Section 120.52(8), Florida Statutes.

PRELIMINARY STATEMENT

On February 2, 2007, a Petition to Determine Invalidity of

Florida Administrative Code Rule 15C-7.005 was filed on behalf of

Petitioner, JM Auto, Inc., d/b/a JM Lexus (JM Lexus). The case

was assigned to the undersigned on February 6, 2007, and a Notice

of Hearing was issued setting the final hearing for March 8,

2007, in Tallahassee, Florida. The case proceeded to hearing as

scheduled.

On February 12, 2007, Petitioners filed a request for

approval of David Kurtzer-Ellenbogan, an attorney licensed in

another jurisdiction, as a qualified representative. Winter Park

Imports, Inc., d/b/a Lexus of Orlando (Lexus of Orlando), and the

Florida Automobile Dealers Association (FADA), filed petitions to

intervene on the side of the Department of Highway Safety and

Motor Vehicles (DHSMV or the Department). Petitioner did not

object to intervention but did object to the expansion of issues

from those alleged in its petition, and filed a Motion in Limine

to limit the evidence accordingly.

On February 19, 2007, an Order was issued granting the

approval of Mr. Kurtzer-Ellenbogan as a qualified representative;

granting the petitions for intervention filed by Lexus of Orlando

and FADA; and granting Petitioner's Motion in Limine. The South

Florida Auto-Truck Dealers Association, Inc. (SFADA) also filed a

Petition to Intervene that was granted by Order dated

February 23, 2007.

On February 28, 2007, Lexus of Orlando filed a Motion to

Take Judicial or Administrative Notice of a variety of materials.

At the commencement of the hearing, the undersigned indicated

that official recognition would be taken of the items numbered

one through seven in the request only.

No witnesses were presented by any party at hearing.

Exhibits numbered 1, and 10 through 15 were admitted for Lexus of

Orlando; and SFADA's Exhibits numbered 1 and 2 were admitted.

The parties were given until ten days from the filing of the

transcript to file their proposed final orders. All submissions

were timely filed and have been considered in the preparation of

this Final Order.

FINDINGS OF FACT

1. The Department is an agency of the State of Florida.

The Department adopted Florida Administrative Code Rule 15C-

17.005, which became effective March 3, 1996. The Rule has not

been amended since its initial adoption.

2. JM Lexus and Lexus of Orlando are both licensed

franchised motor vehicle dealers in the State of Florida.

3. Lexus of Orlando has filed a complaint in the Ninth

Circuit Court, Orange County, Florida, alleging, that JM Lexus

violated Rule 15C-7.005 in connection with the alleged sale for

resale of new Lexus vehicles to non-Lexus dealerships.

4. FADA and SFADA are trade associations whose members are

licensed motor vehicle dealers in the State of Florida and are

substantially affected by the rule.

5. Florida Administrative Code Rule 15C-7.005 provides the

following:

15C-7.005 Unauthorized Additional Motor

Vehicle Dealerships - Unauthorized

Supplemental Dealership Locations.

(1) An additional motor vehicle dealership,

as contemplated by Sections 320.27(5) and

320.642, Florida Statutes, shall be deemed to

be established when motor vehicles are

regularly and repeatedly sold at a specific

location in the State of Florida for retail

purposes if the motor vehicle dealer

transacting such sales:

(a) Is not located in this state, or

(b) Is not a licensed motor vehicle

franchised for the specific line-make, or

(c) Is a licensed motor vehicle dealer

franchised for such line-make, but such sales

are transacted at a location other than that

permitted by the license issued to the dealer

by the Department. Such sales are not

subject to this rule, however, when a motor

vehicle dealer occasionally and temporarily

(not to exceed seven days) sells motor

vehicles from a location other than the motor

vehicle dealer's licensed location provided

such sales occur within the motor vehicle

dealer's area of sales responsibility (except

a motor vehicle dealer who may be deemed a

licensee under this rule).

(2) For the purpose of this rule, a sale for

retail purposes is the first sale of the

motor vehicle to a retail customer for

private use, or the first sale of the motor

vehicle for commercial use, such as leasing,

if such commercial motor vehicle is not

resold for a period of at least ninety days.

Furthermore, this rule shall apply regardless

of whether the titles issued, either in this

or another state, pursuant to such sales are

designated as "new" or "used."

(3) An additional motor vehicle dealership

established in this fashion is unlawful and

in violation of Section 230.642, Florida

Statutes. A licensed motor vehicle dealer of

the same line-make, as the vehicle being sold

in violation of this rule, may notify the

Department of such violation. The notice

shall include motor vehicle identification

numbers or other data sufficient to identify

the identity of the selling dealer and

initial retail purchaser of the motor

vehicles involved.

(a) Within 30 days from receipt of a request

from the Department containing motor vehicle

identification numbers or other data

sufficient to identify the motor vehicles

involved, the licensee shall provide to the

Department, to the extent such information is

maintained by the licensee, copies of

documents showing the dealer to whom each

vehicle was originally delivered, any inter-

dealer transfer and the initial retail

purchaser as reported to the licensee. Upon

a showing of good cause, the Department may

grant the licensee additional time to provide

the information requested under this

paragraph. Examples of good cause include,

but are not limited to, request for

information on more than 100 vehicles,

information on vehicle sales which accrued

more than 2 years prior to the date of the

request, and information which is no longer

maintained in the licensee's current

electronic data base.

(b) Within forty days of receipt of notice

from the motor vehicle dealer, the Department

shall make a determination of probable cause

and if it determines that there is probable

cause that a violation of this rule has

occurred, the Department shall mail, by

certified mail, return receipt requested, to

the line-maker motor vehicle dealership or

dealerships involved a letter containing

substantially the following statement:

Pursuant to Rule 15C-7.005, F.A.C., the

undersigned has received a notice that

you have allegedly supplied a

substantial number of vehicles on a

regular and repeated basis, which were

sold at a location in the State of

Florida, at which you are not franchised

or licensed to sell motor vehicles. If

these allegations are true, your conduct

may violate Florida law including, but

not limited to, the above-mentioned

rule, Sections 320.61 and 320.642,

Florida Statutes. It may also cause you

to be deemed a licensee, importer and/or

distributor pursuant to Florida law and

subject you to disciplinary action by

the Florida Department of Highway Safety

and Motor Vehicles, including fines

and/or suspension of your Florida Dealer

license, if applicable. The Division of

Motor Vehicles is putting you on notice,

if you are conducting such activity,

that you cease and desist such activity

immediately. If you fail to do so, this

agency will take appropriate action.

(c) If the dealer supplying vehicles in

violation of subsections (1) and (4) is not

located in the State of Florida, the

Department shall notify such dealer in

writing that they may be operating as a

distributor of motor vehicles without proper

authorization in violation of Section 320.61,

Florida Statutes, and may be violating

Section 320.642, Florida Statutes.

(4) A motor vehicle dealer, whether located

in Florida or not, which supplies a

substantial number of vehicles on a regular

and repeated basis which are sold in the

manner set forth in subsection (1), shall be

deemed to have established a supplemental

location in violation of Section 320.27(5),

Florida Statutes, and Rule 15C-7.005, F.A.C.

Furthermore, a motor vehicle dealer which

supplies vehicles in this manner shall be

deemed to have conducted business within the

State of Florida and acted as a "licensee,"

"importer" and "distributor" as contemplated

by Section 320.60, Florida Statutes, and thus

such activity shall constitute a violation of

Sections 320.61 and 320.642, Florida

Statutes. Furthermore, this paragraph

neither imposes any liability on a licensee

nor creates a cause of action by any person

against the licensee, except a motor vehicle

dealer who may be deemed to have acted as a

licensee under this paragraph.

(5) Furthermore, no provision of this entire

rule creates a private cause of action by any

person against a licensee, other than a

dealer who is deemed a licensee pursuant to

the provisions of subsection (4) of this

rule, for civil damages; provided, however,

if a licensee fails to comply with the

requirements of paragraph (3)(a) of this

rule, the Department may bring an action for

injunctive relief to require a licensee to

provide the information required. No other

action can be brought against the licensee

pursuant to this entire rule other than a

dealer who is deemed to be a licensee

pursuant to the provisions of subsection (4)

of this rule.

(6) Any franchised motor vehicle dealer who

can demonstrate that a violation of, or

failure to comply with, the provisions of

subsection (4) of this rule by a motor

vehicle dealer, or a motor vehicle dealer

which pursuant to subsection (4) shall be

deemed to have conducted business and acted

as a licensee, importer, and distributor, has

adversely affected or caused pecuniary loss

to that franchised motor vehicle dealer,

shall be entitled to pursue all remedies

against such dealers, including, but not

limited to the remedies, procedures, and

rights of recovery available under Sections

320.695 and 320.697, Florida Statutes.

6. Rule 15C-7.005 identifies as specific authority Section

320.011, Florida Statutes. Section 320.011 states:

The department shall administer and enforce

the provisions of this chapter and has

authority to adopt rules pursuant to ss.

120.536(1) and 120.54 to implement them.

7. The Rule lists as "Law Implemented" Sections 320.27 and

Sections 320.60-.70, Florida Statutes.

8. Sections 320.60 through 320.70, Florida Statutes, are

commonly referred to as the Motor Dealers Act.

9. Section 320.27(1)(c), Florida Statutes, provides the

following definitions for a motor vehicle dealer and a franchised

motor vehicle dealer:

(c) "Motor vehicle dealer" means any person

engaged in the business of buying, selling,

or dealing in motor vehicles or offering or

displaying motor vehicles for sale at

wholesale or retail, or who may service and

repair motor vehicles pursuant to an

agreement as defined in s. 320.60 (1). Any

person who buys, sells, or deals in three or

more motor vehicles in any 12-month period or

who offers or displays for sale three or more

motor vehicles in any 12-month period shall

be prima facie presumed to be engaged in such

business. The terms "selling" and "sale"

include lease-purchase transactions. . . The

transfer of a motor vehicle by a dealer not

meeting these qualifications shall be titled

as a used vehicle. The classifications of

motor vehicle dealers are defined as follows:

1. "Franchised motor vehicle dealer" means

any person who engages in the business of

repairing, servicing, buying, selling, or

dealing in motor vehicles pursuant to an

agreement as defined in s. 320.60(1).

10. Subsection 320.27(2), Florida Statutes, requires motor

vehicle dealers to be licensed. Subsection (5) of this same

provision requires that "any person licensed hereunder shall

obtain a supplemental license for each permanent additional

place or places of business not contiguous to the premises for

which the original license is issued."

11. Section 320.27(9) authorizes the Department to

discipline motor vehicle dealers for a variety of enumerated

offenses. Among those enumerated offenses is the willful

failure to comply with any administrative rule adopted by the

department or the provisions of Section 320.131(8), Florida

Statutes. § 320.27(9)(a)16., Fla. Stat.

12. Section 320.60, Florida Statutes, provides definitions

for terms used in Sections 320.61 through 320.70, Florida

Statutes. Pertinent to this case are the following:

(1) "Agreement" or "franchise agreement"

means a contract, franchise, new motor

vehicle franchise, sales and service

agreement, or dealer agreement or any other

terminology used to describe the contractual

relationship between a manufacturer, factory

branch, distributor, or importer, and a motor

vehicle dealer, pursuant to which the motor

vehicle dealer is authorized to transact

business pertaining to motor vehicles of a

particular line-make.

* * *

(5) "Distributor" means a person, resident

or nonresident, who, in whole or in part,

sells or distributes motor vehicles to motor

vehicle dealers or who maintains distributor

representatives.

* * *

(7) "Importer" means any person who imports

vehicles from a foreign country into the

United States or into this state for the

purpose of sale or lease.

(8) "Licensee" means any person licensed or

required to be licensed under s. 320.61.

* * *

(10) "Motor vehicle" means any new

automobile, motorcycle, or truck, including

all trucks, regardless of weight . . . the

equitable or legal title to which has never

been transferred by a manufacturer,

distributor, importer, or dealer to an

ultimate purchaser;

(11)(a) "Motor vehicle dealer" means any

person, firm, company, corporation, or other

entity, who,

1. Is licensed pursuant to s. 320.27 as a

"franchised motor vehicle dealer" and, for

commission, money, or other things of value,

repairs or services motor vehicles or used

motor vehicles pursuant to an agreement as

defined in subsection (1), or

2. Who sells, exchanges, buys, leases or

rents, or offers, or attempts to negotiate a

sale or exchange of any interest in, motor

vehicles, or

3. Who is engaged wholly or in part in the

business of selling motor vehicles, whether

or not such motor vehicles are owned by such

person, firm, company, or corporation.

* * *

(14) "Line-make vehicles" are those motor

vehicles which are offered for sale, lease,

or distribution under a common name,

trademark, service mark, or brand name of the

manufacturer of same.

13. Section 320.61, Florida Statutes, requires all

manufacturers, factory branches, distributors or importers to be

licensed.

14. Section 320.63, Florida Statutes, describes the

application process for obtaining licensure for manufacturers,

factory branches, distributors or importers. The section

authorizes the Department to require certain enumerated

information as well as "any other pertinent matter commensurate

with the safeguarding of the public interest which the

department, by rule, prescribes." § 320.63(7), Fla. Stat.

15. Section 320.64, Florida Statutes, provides in pertinent

part:

320.64 Denial, suspension, or revocation of

license; grounds.--A license of a licensee

under s. 320.61 may be denied, suspended, or

revoked within the entire state or at any

specific location or locations within the

state at which the applicant or licensee

engages or proposes to engage in business,

upon proof that the section was violated with

sufficient frequency to establish a pattern

of wrongdoing, and a licensee or applicant

shall be liable for claims and remedies

provided in ss. 320.695 and 320.697 for any

violation of any of the following provisions.

A licensee is prohibited from committing the

following acts:

* * *

(3) The applicant or licensee willfully has

failed to comply with significant provisions

of ss. 320.60-320.70 or with any lawful rule

or regulation adopted or promulgated by the

department.

* * *

A motor vehicle dealer who can demonstrate

that a violation of, or failure to comply

with, any of the preceding provisions by an

applicant or licensee will or can adversely

and pecuniarily affect the complaining

dealer, shall be entitled to pursue all of

the remedies, procedures, and rights of

recovery available under ss. 320.695 and

320.697.

16. Section 320.642, Florida Statutes, provides the process

for a licensee to establish additional motor vehicle dealerships

or to relocate existing dealerships to a location where the same

line-make vehicle is presently represented by a franchised motor

vehicle dealer or dealers. Section 320.642, does not, by its

terms, authorize rulemaking.

17. Section 320.69, Florida Statutes, states in its

entirety that "the department has the authority to adopt rules

pursuant to ss. 120.536(1) and 120.54 to implement the provisions

of this law."

18. Section 320.695, Florida Statutes, which contains no

additional grant of rulemaking authority, provides:

In addition to the remedies provided in this

chapter, and notwithstanding the existence of

any adequate remedy at law, the department,

or any motor vehicle dealer in the name of

the department and state and for the use and

benefit of the motor vehicle dealer, is

authorized to make application to any circuit

court of the state for the grant, upon a

hearing and for cause shown, of a temporary

or permanent injunction, or both, restraining

any person from acting as a licensee under

the terms of ss. 320.60-320.70 without being

properly licensed hereunder, or from

violating or continuing to violate any of the

provisions of ss. 320.60-320.70, or from

failing or refusing to comply with the

requirements of this law or any rule or

regulation adopted hereunder. Such

injunction shall be issued without bond.

A single act in violation of the provisions

of ss. 320.60-320.70 shall be sufficient to

authorize the issuance of an injunction.

However, this statutory remedy shall not be

applicable to any motor vehicle dealer after

final determination by the department under

s. 320.641(3).

19. Section 320.697, Florida Statutes, which also contains

no additional grant of rulemaking authority, provides:

Civil damages . --Any person who has suffered

pecuniary loss or who has been otherwise

adversely affected because of a violation by

a licensee of ss. 320.60-320.70,

notwithstanding the existence of any other

remedies under ss. 320.60-320.70, has a cause

of action against the licensee for damages

and may recover damages therefor in any court

of competent jurisdiction in an amount equal

to 3 times the pecuniary loss, together with

costs and a reasonable attorney's fee to be

assessed by the court. Upon a prima facie

showing by the person bringing the action

that such a violation by the licensee has

occurred, the burden of proof shall then be

upon the licensee to prove that such

violation or unfair practice did not occur.

CONCLUSIONS OF LAW

20. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to this

action in accordance with Sections 120.56, 120.569 and 120.57(1),

Florida Statutes.

21. Petitioner and all Intervenors have standing to

participate in this case, and the parties have stipulated that

this is so. Section 120.56, Florida Statutes, allows a person

who is substantially affected by a rule or agency statement to

initiate a challenge. To establish standing under the

"substantially affected" test, a party must demonstrate that

1) the rule will result in a real and immediate injury in fact,

and 2) the alleged interest is within the zone of interest to be

protected or regulated. Jacoby v. Florida Board of Medicine , 917

So. 2d 358 (Fla. 1st DCA 2005); see also Florida Board of

Medicine v. Florida Academy of Cosmetic Surgery , 808 So. 2d 243,

250 (Fla. 1st DCA 2002), superseded on other grounds , Department

of Health v. Merritt , 919 So. 2d 561 (Fla. 1st DCA 2006).

Both Petitioner and Lexus of Orlando are licensees regulated by

the Department and subject to the rule in question.

22. Intervenors FADA and SFADA likewise have standing to

participate. See NAACP, Inc. v. Board of Regents , 863 So. 2d

294, 300 (Fla. 2003); Florida Homebuilders Association v.

Department of Labor and Employment Security , 412 So. 2d 351, 353-

54 (Fla. 1982)(association may meet standing requirements if a

substantial number of members, although not necessarily a

majority, are substantially affected by the rule).

23. As the Petitioner, JM Lexus "has the burden of proving

by a preponderance of the evidence that the existing rule is an

invalid exercise of delegated legislative authority as to the

objections raised." § 120.56(3)(a), Fla. Stat. The standard of

review is de novo . § 120.56(1)(e), Fla. Stat.

24. Petitioner challenges the proposed rule in accordance

with the definition of "invalid exercise of delegated legislative

authority" in Section 120.52(8)(b), Florida Statutes (2006),

which states:

(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:

(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 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 directives.

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. An agency may

adopt only rules that implement or interpret

the specific powers and duties granted by the

enabling statute. No agency shall have

authority to adopt a rule only because it is

reasonably related to the purpose of the

enabling legislation and is not arbitrary and

capricious and is within the agency's class

of powers and duties, nor shall an agency

have the authority to implement statutory

provisions setting forth general legislative

intent or policy. Statutory language

granting rulemaking authority or generally

describing the powers and functions of any

agency shall be construed to extend no

further than implementing or interpreting the

specific powers and duties conferred by the

same statute.

25. Specifically, Petitioner asserts that the rule violates

the requirements of subsections (b) and (c).

Whether the Department Has Exceeded Its Authority

26. The crux of Petitioner's argument with respect to

Section 120.52(8)(b), Florida Statutes, is that a general grant

of rulemaking authority, such as Section 320.011, Florida

Statutes, is not enough without the specific law being

implemented also directing the adoption of rules. Respondent and

the Intervenors, on the other hand, insist that as long as Rule

15C-7.005 is supported by a general grant of authority and

implements specific powers and duties granted to the Department,

it is within the parameters provided in Section 120.536, Florida

Statutes.

27. In order to determine the merits of Petitioner's

argument, it is necessary to examine the appellate cases

interpreting Sections 120.52(8) and 120.536 since the 1999

amendments to those sections. The First District first

considered the 1999 amendments to the rulemaking provisions of

Chapter 120 when it decided Southwest Florida Water Management

District v. Save the Manatee Club, Inc. , 773 So. 2d 594 (Fla. 1st

DCA 2000). In Save the Manatee , the court affirmed a decision

invalidating portions of Florida Administrative Code Rule 40D-

4.051, because the exemptions from permitting requirements

created within the rule had no specific statutory authority. The

Court recounted the 1996 amendments, its judicial interpretation

of those amendments as articulated in St. Johns River Water

Management District v. Consolidated-Tomoka Land Co. , 717 So. 2d

72 (Fla. 1st DCA 1998), and the Legislature's reaction to the

Consolidated-Tomoka decision. In discussing the legislative

amendments to the rulemaking process, the court stated:

One significant feature of the new statute is

that it contains an additional statement of

the factors that are not sufficient to

justify the adoption of an administrative

rule. Section 120.52(8) now provides that an

agency shall not have the authority to adopt

a rule merely because the rule "is within the

agency's class of powers and duties." By

including this language in the 1999 version

of the statute, the Legislature has rejected

the standard we adopted in Consolidated-

Tomoka . An administrative rule must

certainly fall within the class of powers and

duties delegated to the agency, but that

alone will not make the rule a valid exercise

of legislative power.

* * *

In the absence of a special statutory

definition, we may assume that the word

"specific" was used according to its ordinary

dictionary definition. . . .The ordinary

meaning of the term "specific" is "limiting

or limited; specifying or specified; precise,

definite, [or] explicit.". . . "Specific is

used as an adjective in the 1999 version of

section 120.52(8) to modify the phrase

"powers and duties." In the context of the

entire sentence, it is clear that the

authority to adopt an administrative rule

must be based on an explicit power or duty

identified in the enabling statute.

Otherwise, the rule is not a valid exercise

of delegated legislative authority.

773 So. 2d at 599 (emphasis in original).

28. Ultimately, the First District determined that the

question to be answered is "whether the statute contains a

specific grant of authority for the rule, not whether the grant

is specific enough. Either the enabling statute authorizes the

rule at issue or it does not." Id. With this test in mind, the

First District concluded that the rule at issue was invalid

because it did not implement or interpret any specific power or

duty granted by the applicable enabling statute. Section

373.414(9), Florida Statutes, upon which the District relied for

its statutory authority, authorized rules to "establish

exemptions and general permits, if such exemptions and general

permits do not allow significant adverse impacts to occur

individually or cumulatively." The rule, however, allowed

exemptions from the permitting requirements based entirely on

prior approval. Thus, the court held that there was no specific

authority for the rule.

29. The First District again considered the requirements of

Sections 120.52(8) and 120.536, Florida Statutes, in Board of

Trustees of the Internal Improvement Trust Fund v. Day Cruise

Association, Inc. , 794 So. 2d 696 (Fla. 1st DCA 2001). In Day

Cruise , the Trustees of Internal Improvement Trust Fund had

noticed a rule for adoption that would prohibit "cruises to

nowhere." The proposed rule cited to Section 253.03(7), Florida

Statutes, as its rulemaking authority, and Sections 253.001, .03,

.04, and .77, Florida Statutes (1999), along with Article X,

Section 11, Florida Constitution, as the law to be implemented.

Like the Court in Save the Manatee , the First District discussed

the amendments to Sections 120.52(8) and 120.536 and the case law

interpreting those amendments. It stated:

It is now clear, agencies have rulemaking

authority only where the Legislature has

enacted a specific statute, and authorized

the agency to implement, and then only if the

(proposed) rule implements or interprets

specific powers or duties, as opposed to

improvising in an area that can be said to

fall only generally within some class or

powers or duties the Legislature has

conferred on the agency.

794 So. 2d at 700. The court further noted that provisions

governing rulemaking "must be interpreted in light of the

Legislature's stated intent to clarify significant restrictions

on agencies' exercise of rulemaking authority." Id. The court

examined Section 253.03(7)(a) and (b), Florida Statutes, upon

which the agency had relied for its statutory authority. The

court stated:

Subparagraph (7)(a) describes the Trustees'

duties in very general terms and confers

equally general rulemaking authority:

The Board of Trustees of the

Internal Improvement Trust Fund is

hereby authorized and directed to

administer all state-owned lands

and shall be responsible for the

creation of an overall and

comprehensive plan of development

concerning the acquisition,

management, and disposition of

state-owned lands so as to ensure

maximum benefit and use. The Board

of Trustees of the Internal

Improvement Trust Fund has the

authority to adopt rules pursuant

to ss. 120.536(1) and 120.54 to

implement the provisions of this

act.

§ 253.(7)(a), Fla. Stat. (1999).

Subparagraph (7)(a) confers no rulemaking

authority specific to submerged lands.

Unlike subparagraph (7)(b), subparagraph

(7)(a) makes no mention of submerged lands

whatsoever.

As comprehensive as its grant of rulemaking

authority is, subparagraph (7)(a) should not

be read as setting at naught the restrictions

on rulemaking authority set out in

subparagraph (7)(b), which applies

specifically to submerged lands. . . .

While subparagraph (7)(b) does confer

rulemaking authority with respect to

submerged lands, it does not authorize

adopting the proposed rule, because it

qualifies the grant of rulemaking authority

in ways that are incompatible with the

adoption of the proposed rule.

Id. at 701.

30. The Florida Supreme Court noted the 1999 amendments to

Section 120.536(1), Florida Statutes, when it considered a

challenge to the "disconnect authority rule" adopted by the

Florida Public Service Commission. The specific authority for

the rule stated that "the commission may regulate, by reasonable

rules, the terms of telecommunications service contracts between

telecommunications companies and their patrons." § 364.19, Fla.

Stat. The Supreme Court, citing Save the Manatee , held that the

"disconnect authority rule is directly and specifically related

to the authority granted the commission over telecommunications

contracts pursuant to section 364.19." Osheyack v. Garcia , 814

So. 2d 440 (Fla. 2001).

31. In Hennessey v. Department of Business and Professional

Regulation , 818 So. 2d 697 (Fla. 1st DCA 2002), several horse

trainers challenged the "absolute insurer rule" which makes race-

animal trainers the absolute insurers of the condition of the

animals entered into races at Florida pari-mutuel facilities.

The authorizing statutes for the rule were Sections 550.0251(3)

and 550.2415(2) and (13), Florida Statutes. Section 550.0251(3)

required the Division of Pari-Mutuel Wagering to adopt reasonable

rules for the control, supervision, and direction of all

licensees, and for the holding, conducting and operating of all

races. Subsections 550.2415(2) and (13) provided as follows:

(2) Administrative action may be taken by

the division against an occupational licensee

responsible pursuant to rule of the division

for the condition of the animal that has been

impermissibly medication or drugged in

violation of this section.

* * *

(13) The division shall adopt rules to

implement this section. The rules may

include a classification system for

prohibited substances and a corresponding

penalty schedule for violations.

(Emphasis added). The First District reiterated the holding in

Save the Manatee and held that a plain reading of the

authorizing statutes demonstrates that the Legislature granted

the department the specific authority to hold a trainer

responsible for the condition of the horses he or she trains and

races, should drugs be found in their system.

32. In Department of Children and Family Services v. I.B. ,

891 So. 2d 1168 (Fla. 1st DCA 2005), the petitioners attacked a

rule providing that adoptive applicants did not have the right

to appeal the Department's decision on the selection of an

adoptive home for a particular child. The court affirmed the

administrative law judge's conclusion that there were no

statutes, collectively or individually, that provide to the

Department the necessary specific legislative authority to

exempt the selection of adoptive homes from Chapter 120, Florida

Statutes. Moreover, the court specifically stated that after

adoption of a rule, the Department may not rely on statutory

provisions not cited in the proposed rule as statutory

authority. Id. at 1172.

33. As late as this year, the First District considered the

reach of specific authority in Hanger Prosthetics and Orthotics,

Inc. v. Department of Health , 948 So. 2d 980 (Fla. 1st DCA

2007). The Board of Orthotists proposed a rule that defined the

term "direct supervision." Section 468.802, Florida Statutes,

directed the Board to implement the provisions of the

Orthotists, Prosthetics and Pedorthics Act, including rules

relating to standards of practice. The court found that a

licensed professional's "direct supervision" qualifies as a

standard of practice, and thus the Board acted within its grant

of rulemaking authority.

34. Finally, in Smith v. Department of Corrections , 920 So.

2d 638 (Fla. 1st DCA 2005), the court considered a rule of the

Department of Corrections which allowed the Department to charge

inmates for copying services and found it to be invalid for lack

of a specific grant of authority. The following portions of the

First District's decision are pertinent to our inquiry here:

"[A]n administrative rule must certainly fall

within the class of powers and duties

delegated to the agency, but that alone will

not make the rule a valid exercise of

legislative power." [Save the Manatee ] at

599. "The question is whether the statute

contains a specific grant of authority for

the rule, not whether the grant of authority

is specific enough ." Id. (emphasis in

original). "Either the enabling statute

authorizes the rule at issue or it does not."

Id. In addition, under the standard set

forth in section 120.52(8), the Department's

arguments as to the wisdom of the challenged

portions of the rule in light of past

experience . . . cannot save the challenged

portions of the rule in the absence of

specific statutory authority for those

provisions.

* * *

Finally, even though not initially cited

in the rule as statutory authority for the

rule, an analysis as to whether section

944.09, Florida Statutes, provides authority

for the rule appears to be necessary given

the Department's explicit reliance on this

provision below and the Department's

subsequent amendment of the rule to include a

citation to this statute as statutory

authority for the rule. Section 944.09

merely sets forth the general rulemaking

authority of the Department with regard to,

among other things, "[t]he rights of

inmates," "[t]he operation and management of

the correctional institution or facility and

its personnel and functions," "[v]isiting

hours and privileges," and "the determination

of restitution, including the amount to how

it should be paid. . . ." Once again, there

is no specific grant of authority in this

statute for the assessment by the Department

of monetary costs for any particular service

provided to inmates by the Department. In

fact, the supreme court has recognized that

"section 944.09 is merely the general

statutory authority for the Department to

promulgate rules," and that the Department

has "long looked" to other statutory

provisions for the specific authority to

promulgate rules. See Hall v. State , 752 So.

2d 575, 579 (Fla. 2000). Consequently, the

language in section 944.09, relied upon by

the Department . . . does not contain a

specific grant of legislative authority for

those provisions under the standard set forth

in section 120.52(8) as interpreted in Save

the Manatee.

Id. at 641, 642-43.

35. None of the cases discussed above hold that a general

grant of authority such as that found in Section 320.011, Florida

Statutes, provides the specific grant of authority required in

Sections 120.52(8)(b) and 120.536(1), Florida Statutes. To do so

would nullify the directive of the last sentence of the "flush

left" portion of both sections, which states, "[s]tatutory

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 same statute. " It is a

fundamental rule of statutory construction that statutory

language cannot be construed so as to render it meaningless. Day

Cruise Association , 794 So. 2d at 701. The question which must

be addressed is what the Legislature intended by the phrase "by

the same statute."

36. The undersigned concludes that "by the same statute"

was intended to refer to the specific statutory section cited as

authority for a rule. Therefore, while the subject matter of

Rule 15C-7.005 is within the class of powers and duties conferred

upon the Department by Chapter 320, Florida Statutes, that is, by

definition, not enough.

37. This conclusion is also supported by the fact that,

where the Legislature has intended for the Department to engage

in rulemaking, it has provided specific authority for it to do

so. See , for example , §§ 320.02(1), (2)(b), (14)(a); 320.025(1);

320.03(1)&(7); 320.0657(5); 320.08053(3); 320.084(4)(c);

320.0841(2); 320.0848(10); 320.131(8); 320.08053(3); and

320.27(3), Fla. Stat.

38. In their reply to the Petition, Intervenors asserted:

"Specific" authority is not required for each

and every rule. Rather, such "additional

authority" may be required only with respect

to subjects where an agency makes rules in

order to define areas which do not readily

submit to legislation, such as what

constitutes a wetland, or how water quality

is to be measured. In sum, a statutory

provision which generally grants authority

for an agency to adopt rules enforcing the

statutes the agency is charged with enforcing

satisfies the requirements of the post-1996

rulemaking statutes. A specific statute

authorizing each and every rule is

unnecessary.

39. Intervenors' position is unsupported in current law,

and contradicts the express rulemaking requirements of Section

120.54(3)(a)1., Florida Statutes:

1. Prior to the adoption, amendment, or

repeal of any rule other than an emergency

rule, an agency, upon approval of the agency

head, shall give notice of its intended

action, setting forth a short, plain

explanation of the purpose and effect of the

proposed action; the full text of the

proposed rule or amendment and a summary

thereof; a reference to the specific

rulemaking authority pursuant to which the

rule is adopted ; and a reference to the

section or subsection of the Florida Statutes

or the Laws of Florida being implemented,

interpreted, or made specific.

Section 120.54(3)(a)1. clearly anticipates reference to specific,

as opposed to general, rulemaking authority for all rules adopted

through the normal rulemaking procedures.

40. Under these circumstances, Rule 15C-7.001 is invalid

because the Department has exceeded its rulemaking authority in

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

Whether Rule 15C-7.005 Enlarges, Modifies, or Contravenes

The Law Implemented

41. Petitioner also asserts that Rule 15C-7.005 is an

invalid exercise of legislatively delegated authority because it

enlarges, modifies, or contravenes the specific provisions of law

implemented, in violation of Section 120.52(8)(c), Florida

Statutes. In support of this contention, Petitioner asserts that

the rule is invalid because it purports to implement a series of

statutory provisions as opposed to a single section; that it

enlarges and modifies terms defined by statutes; and modifies the

statutory scheme balancing agency enforcement and private

actions.

42. Petitioner's claim of invalidity because the rule

implements more than one statute is without merit. As long as

specific authority exists, there is no prohibition cited by any

party to the Department addressing a series of inter-related

provisions in a single rule.

43. Petitioner's claim that the Rule enlarges the

provisions of the implementing statutes focuses on the term

"importer" and the phrase "permanent additional place or places

of business not contiguous to the premises." The term "importer"

is defined statutorily as "any person who imports vehicles from a

foreign country into the United States or into this state for the

purpose of sale or lease." § 320.60(7), Fla. Stat. Petitioner's

argument focuses on a comparison of the statutory definition

compared to sections (1) and (4) of Rule 15C-7.005:

(1) An additional motor vehicle dealership,

as contemplated by Sections 320.27(5) and

320.642, Florida Statutes, shall be deemed to

be established when motor vehicles are

regularly and repeatedly sold at a specific

location in the State of Florida for retail

purposes if the motor vehicle dealer

transacting such sales:

(a) Is not located in this state, or

(b) Is not a licensed motor vehicle

franchised for the specific line-make, or

(c) Is a licensed motor vehicle dealer

franchised for such line-make, but such sales

are transacted at a location other than that

permitted by the license issued to the dealer

by the Department. Such sales are not

subject to this rule, however, when a motor

vehicle dealer occasionally and temporarily

(not to exceed seven days) sells motor

vehicles from a location other than the motor

vehicle dealer's licensed location provided

such sales occur within the motor vehicle

dealer's area of sales responsibility (except

a motor vehicle dealer who may be deemed a

licensee under this rule.

* * *

(4) A motor vehicle dealer, whether located

in Florida or not, which supplies a

substantial number of vehicles on a regular

and repeated basis which are sold in the

manner set forth in subsection (1), shall be

deemed to have established a supplemental

location in violation of Section 320.27(5),

Florida Statutes, and Rule 15C-7.005, F.A.C.

Furthermore, a motor vehicle dealer which

supplies vehicles in this manner shall be

deemed to have conducted business within the

State of Florida and acted as a "licensee,"

"importer" and "distributor" as contemplated

by Section 320.60, Florida Statutes, and thus

such activity shall constitute a violation of

Sections 320.61 and 320.642, Florida

Statutes. . . .

44. Under the express terms of the rule, a Florida

Chevrolet dealership in Tallahassee that supplies Chevrolet motor

vehicles to a Nissan dealership in Jacksonville that sells the

Chevrolets at the Jacksonville location would be deemed to be an

"importer" under the rule, despite the fact that the Chevrolet

dealer at no time brought vehicles from a foreign country into

the United States or from another state into Florida for the

purpose of sale or lease. Clearly, Rule 17C-7.005(4) expands the

definition of "importer" from that provided by Section 320.60(7),

and violates Section 120.52(8)(c), Florida Statutes.

45. The Department and Intervenors assert a different

reading of the rule, stating, "Whether the 'supplier' is a

Florida licensed franchised motor vehicle dealer or is out-of-

state, by regularly supplying motor vehicles to another for

resale, the supplier is functioning as a distributor (in the case

of in-state dealers) or an importer (in the case of out-of-state

dealers) and so is in violation of section 320.61, which requires

distributors and importers to be licensed." This interpretation,

however, is inconsistent with the express language of Rule 15C-

7.005(4), which states "shall be deemed to have conducted

business in the State of Florida and acted as a 'licensee,'

'importer,' and distributor."

46. Similarly, Section 320.27(5) requires that a

supplemental license is required only for "each permanent

additional place or places of business not contiguous to the

premises for which the original license is issued." By contrast,

Rule 15C-7.005 simply requires motor vehicles to be "regularly

and repeatedly sold at a specific location in the State of

Florida" under certain specified circumstances. It requires

neither that the location be permanent nor that it not be

contiguous to the premises for which the original license is

issued. For this reason Rule 17C-7.005(1) enlarges the specific

provisions of law implemented, in violation of Section

120.52(8)(c), Florida Statutes.

Whether Rule 15C-7.005 Impermissibly Creates a Private

Right of Action

47. Finally, Petitioners assert that Rule 15C-7.005

impermissibly creates a private right of action for its

violation. Petitioner asserts several theories for invalidating

Rule 15C-7.005 on this basis, but only one requires discussion.

There is no question that Chapter 320, Florida Statutes, creates

several instances in which competitors have a private right of

action against entities that violate various licensure

requirements. See , e.g. , §§ 320.64, 320.695 and 320.697, Fla.

Stat. However, there is simply no statutory authority for the

Department to create any private right of action or to create

enforcement authority for itself by rule. Smith v. Department of

Corrections , 920 So. 2d 638 (Fla. 1st DCA 2005); Board of

Trustees of the Internal Improvement Trust Fund v. Day Cruise

Association, Inc. , 794 So. 2d 696 (Fla. 1st DCA 2001); St.

Petersburg Kennel Club v. Department of Business and Professional

Regulation , 719 So. 2d 1210 (Fla. 2d DCA 1998). To the extent

that it does so, Rule 17C-7.005(4), (5) & (6) exceed the

Department's statutory authority in violation of Section

120.52(8)(b), Florida Statutes.

CONCLUSION

Based upon the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED:

Florida Administrative Code Rule 15C-7.001 is an invalid

exercise of delegated legislative authority.

DONE AND ORDERED this 20th day of April, 2007, in

Tallahassee, Leon County, Florida.

S

LISA SHEARER NELSON

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 20th day of April, 2007.

COPIES FURNISHED:

Michael J. Alderman, Esquire

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Room A-432

2900 Apalachee Parkway

Tallahassee, Florida 32399-0635

J. Andrew Bertron, Jr., Esquire

Sutherland Asbill & Brennan, LLP

3600 Maclay Boulevard South, Suite 202

Tallahassee, Florida 32312

John W. Forehand, Esquire

Lewis, Longman & Walker, P.A.

125 South Gadsden Street, Suite 300

Tallahassee, Florida 32301-1525

Alex Kurkin, Esquire

Pathman Lewis, LLP

One Biscayne Tower, Suite 2400

Two South Biscayne Boulevard

Miami, Florida 33131

A. Edward Quinton, III, Esquire

Adams, Quinton & Paretti P.A.

Brickell Bayview Center

80 Southwest 8th Street, Suite 2150

Miami, Florida 33130

David S. Kurtzer-Ellenbogen, Esquire

WILLIAMS & CONNELLY LLP

725 Twelfth Street, North West

Washington, DC 20005

Ladd H. Fassett, Esquire

Fassett, Anthony & Taylor, P.A.

Post Office Box 3387

Orlando, Florida 32802-3387

Scott Boyd, Acting Executive Director

and General Counsel

Joint Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

Liz Cloud, Chief

Bureau of Administrative Code

The Elliott Building, Room 201

Tallahassee, Florida 32399-0250

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.