97-003834RX South Florida Cargo Carriers Association, Inc. vs. Pilotage Rate Review Board Status: Closed DOAH Final Order on Tuesday, February 24, 1998.

Summary: Board's rule which in effect exempts itself from portion of s.120.57(1) invalid as contrary to the law and also, therefore, as arbitrary and capricious.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTH FLORIDA CARGO CARRIERS )

ASSOCIATION, INC., )

)

Petitioner, )

)

vs. ) Case No. 97-3834RX

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

PILOTAGE RATE REVIEW BOARD, )

)

Respondent, )

)

and )

)

FLORIDA STATE PILOTS )

ASSOCIATION, INC., )

)

Intervenor. )

_________________________________)

FINAL ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot,

the assigned Administrative Law Judge of the Division of

Administrative Hearings, on December 9-11, 1997, in Tallahassee,

Florida.

APPEARANCES

For Petitioner: William L. Hyde, Esquire

Gunster, Yoakley, Valdes-Fauli &

Stewart, P.A

215 South Monroe Street, Suite 830

Tallahassee, Florida 32301

For Respondent: John J. Rimes, III, Esquire

Office of the Attorney General

Department of Legal Affairs

The Capitol, Suite Plaza 01

Tallahassee, Florida 32399-1050

For Intervenor: David M. Caldevilla, Esquire

Post Office Box 2350

Tampa, Florida 33601-2350

STATEMENT OF THE ISSUE

The issue presented is whether Rule 61E13-2.012, Florida

Administrative Code, is an invalid exercise of delegated

legislative authority.

PRELIMINARY STATEMENT

On August 18, 1997, Petitioner South Florida Cargo Carriers

Association, Inc., filed a Petition Seeking an Administrative

Determination of the Invalidity of an Existing Rule. On

September 9, 1997, this cause was consolidated with DOAH Case No.

97-3656, styled South Florida Cargo Carriers, Petitioner vs.

Department of Business and Professional Regulation, Pilotage Rate

Review Board, and Port Everglades Pilots' Association,

Respondents.

On October 20, 1997, the Florida State Pilots Association,

Inc., filed a Petition to Intervene in support of the Rule. That

Petition was granted by Order entered November 20, 1997.

A Recommended Order in DOAH Case No. 97-3656 has been

entered immediately following entry of this Final Order.

Petitioner's request for official recognition of Rule 61E13-

2.012, Florida Administrative Code, and of the Florida House of

Representatives Committee on Streamlining Governmental

Regulations Final Bill Analysis & Economic Impact Statement for

CS/SBs 2290 and 2288 was granted by Order entered on December 8,

1997. The parties also stipulated to certain factual information

in the Prehearing Stipulation filed in the consolidated cases.

No other evidence was offered by the parties to this proceeding.

All parties filed post hearing proposed orders. Those

documents have been considered in the entry of this Final Order.

FINDINGS OF FACT

l. Petitioner South Florida Cargo Carriers Association,

Inc., is a Florida not-for-profit corporation with its principal

office in Miami, Florida. Petitioner's purpose is to promote,

advance, and secure laws, rules and regulations concerning

vessels utilizing the navigable waters of the State of Florida,

in particular the Port of Miami and Port Everglades, in order

that the waters, harbors, and ports of the State and the

environment, life, and property of all persons be protected to

the fullest extent possible consistent with sound financial

principles. Petitioner consists of the following companies:

members of the Florida-Caribbean Cruise Association; Maersk,

Inc.; Seaboard Marine; Kirk; SeaLand; Zim; Cari Freight; Thompson

Shipping, and Burmuth.

2. Intervenor Florida State Pilots Association, Inc., is a

Florida not-for-profit corporation. It is a voluntary

organization whose membership is comprised of all individual

pilot associations serving the various ports of the State of

Florida, as well as approximately 100 pilots licensed by the

State of Florida. Among other things, Intervenor advances and

defends the interests of its membership on the state level.

3. The Port Everglades Pilots' Association (hereinafter

"PEPA") is an association composed of present and retired harbor

pilots that is treated as a partnership for tax purposes and

which performs the pilotage services at Port Everglades. PEPA

and its affiliates Port Everglades Pilots, Inc., and PEP, Inc.,

are located in Fort Lauderdale. The purpose of PEPA is to

provide pilotage services in Port Everglades in a safe and

efficient manner and in compliance with the provisions of Chapter

310, Florida Statutes, the rules promulgated thereunder, and any

other provisions of law governing the provision of pilotage

services. As such, PEPA is entitled to charge pilotage rates as

provided in Section 310.151, Florida Statutes, and, as further

provided therein, to seek rate changes by filing a petition with

the Department of Business and Professional Regulation, Pilotage

Rate Review Board.

4. A number of Petitioner's members are affected by the

rates of pilotage set for Port Everglades, inasmuch as they are

required by Chapter 310, Florida Statutes, to utilize and

compensate the pilots whose rates are established by the Board,

and they are utilizing and compensating pilots in accordance with

the rates currently established for Port Everglades.

5. In January 1997 PEPA submitted to the Board an

application for an increase in the pilotage rates for Port

Everglades. In February 1997 Petitioner submitted its own

application for a decrease in the rates of pilotage for Port

Everglades.

6. On May 20, 1997, the Board held a public hearing on both

applications. At the conclusion thereof, the Board preliminarily

determined to grant PEPA's application for a rate increase in its

entirety and to deny Petitioner's application for a rate

decrease. The Board's preliminary determination was reduced to

writing on July 3, 1997.

7. On July 28, 1997, Petitioner filed with the Board a

Petition for Formal Administrative Hearing challenging the

Board's decision to grant PEPA's application and to deny

Petitioner's application. The Board thereafter transmitted that

Petition to the Division of Administrative Hearings.

8. The Board's transmittal letter filed August 7, 1997,

cautioned the Division not to carry out its full statutory

functions because:

it is the Board's position , as expressed in rule

61E13-2.012(3), F.A.C., that the resolution of any

disputed issue of fact by an [Administrative Law

Judge] cannot result in a recommendation from that

ALJ as to wh at the rate should be. The ALJ's

recommendation should only extend to resolving the

disputed issues of material fact. Subsequently, and

based upon the resolved issues of fact, the Pilotage

Rate Review Board will set the appropriate rates.

9. On August 18, 1997, Petitioner filed its Petition

Seeking an Administrative Determination of the Invalidity of an

Existing Rule, challenging Rule 61E13-2.012(3), Florida

Administrative Code, pursuant to Section 120.56(3), Florida

Statutes.

10. Petitioner has standing to file and maintain this rule

challenge proceeding.

11. Intervenor has standing to intervene in this rule

challenge proceeding.

12. Rule 61E13-2.012(3), Florida Administrative Code, was

adopted before October 1, 1996. It was included on a list

submitted by the Pilotage Rate Review Board in accordance with

Section 120.536(2), Florida Statutes. It was subsequently

amended by the Board, effective October 14, 1997, so as to delete

all portions of the Rule except for Subsection (3) which is now

the entire Rule.

CONCLUSIONS OF LAW

13. Rule 61E13-2.012, Florida Administrative Code,

effective October 14, 1997, provides as follows:

Determination of Disputed Issues of Material

Fact; Formal or Informal Hearings. Since the

determination of the actual rate of pilotage

to be imposed at any port is a quasi-legislative

act, the resolution of any disputed issue of

material fact by a hearing officer [administrative

law judge since October 1, 1996] assigned by the

Division of Ad ministrative Hearings shall not

result in a recommendation from the hearing

officer as to the appropriate rate to be imposed

at any port area in question. The hearing

officer's recommendation shall only extend to

resolving disputed issues of material fact which

result from a party's disputing the underlying

facts upon which the Board has suggested intended

rates for the port area in question. (See Rule

61E13-2.010, F.A.C.). Specific authority

310.151(1)(c) FS. Law Implemented 310 .151, 120.57

FS. History--New 8-8-95, Amended 10-14-97.

14. Section 310.151(1)(c), Florida Statutes, the Board's

cited authority for the Rule, authorizes the Board "to adopt such

rules as are consistent with law".

15. Subsection (4) of Section 310.151, Florida Statutes,

provides that the Board shall afford an administrative proceeding

to any person substantially affected by a Board decision as to a

change in rates. Subsection (4) specifies in two places that

there shall be a "hearing in accordance with the Administrative

Procedure Act." Subsection (4) further provides that:

If the board concludes that the petitioner has

raised a disputed issue of material fact, the

board shall designate a hearing, which shall be

conducted by formal proceeding before an

administrative law judge assigned by the Division

of Administrative Hearings pursuant to ss. 120.569

and 120.57(1), unless waived by all parties.

No further description of the hearing the Board is required to

afford is contained in Section 310.151, Florida Statutes.

16. Section 120.536, Florida Statutes, provides, in part,

as follows:

(2) By October 1, 1997, each agency shall provide

to the Administrative Procedures Committee [of

the Legislature] a listing of each rule, or

portion thereof, adopted by that agency before

October l, 1996, which exceeds the rulemaking

authority permitted by this section. . . .

(3) . . . A rule adopted before October 1, 1996,

and included on a list submitted by an agency in

ac cordance with subsection (2) may not be

challenged before July 1, 1999, on the grounds that

it exceeds the rulemaking authority or law

implemented as described by this section.

17. The Board reported Rule 61E13-2.012, Florida

Administrative Code, to the Administrative Procedures Committee,

thereby admitting that it has no authority for the existence of

its Rule and shielding it from attack until July 1, 1999, only on

the grounds that the Rule exceeds the Board's rulemaking

authority. Although it is questionable whether a Rule amended

subsequent to October 1, 1996, is entitled to be shielded from

attack on the ground that it exceeds rulemaking authority,

Petitioner has not challenged the Rule on that basis.

18. Section 120.57(1) governs proceedings before the

Division of Administrative Hearings. Subsection (1)(i) provides,

in part, as follows:

The presiding office shall complete and submit

to the agency and all parties a recommended order

consisting of findings of fact, conclusions of law,

and recommended disposition or penalty, if

applicable, and any other information required by

law to be contained in the final order. All

proceedings conducted pursuant to this subsection

shall be de novo .

Subsection (1)(j) provides, in part, as follows:

The agency may adopt the recommended order as the

final order of the agency. The agency in its final

order may reject or modify the conclusions of law

and interpretation of administrative rules over

which it has substantive juri sdiction.

19. Chapter 120 is not a law over which the Pilotage Rate

Review Board has substantive jurisdiction, and the Board's

interpretation of its provisions is entitled to no deference. It

is the Legislature which can determine what entities and

activities are subject to Chapter 120, not the Board.

20. It is axiomatic that Chapter 120, Florida Statutes,

applies to all agency proceedings. Exemptions therefrom appear

in Sections 120.80 and 120.81, Florida Statutes. There is no

provision within those Sections which exempts the Department of

Business and Professional Regulation or any of its boards or,

specifically, its Pilotage Rate Review Board from the provisions

of Section 120.57(1)(i).

21. The only exemption from the requirements of Chapter 120

as to the content of recommended orders and the extent of an

administrative proceeding pursuant to Sections 120.569 and 120.57

appears in Section 120.80(3)(b), which specifically provides that

in certain cases involving the Department of Banking and Finance,

administrative law judges shall submit a written report

consisting only of findings of fact and rulings on evidentiary

matters rather than a recommended order. The Legislature has

given the Pilotage Rate Review Board no such exemption.

22. Accordingly, a recommended order in a case involving

the Pilotage Rate Review Board must comply with the requirements

of Section 120.57(1)(i). The effect of the Rule under challenge

in this proceeding is that the Board has given itself an

exemption from part of Section 120.57(1), something which the

Legislature chose not to do.

23. Section 120.52(8), Florida Statutes, provides, in part,

as follows:

'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:

* * *

(c) The rule enlarges, modifies, or contravenes

the specif ic provisions of law implemented,

citation to which is required by s. 120.54(3)(a)l.;

* * *

(e) The rule is arbitrary and capricious. . . .

24. Petitioner correctly argues that the Board's Rule is

invalid because, by limiting the role of an administrative law

judge in entering a recommended order, the Board's Rule

specifically contravenes both provisions of law it purports to

implement, i.e. , Section 120.57 and Section 310.151, Florida

Statutes. Petitioner further correctly argues that by

contravening both Sections 120.57 and 310.151, the Rule is

arbitrary and capricious.

25. Rule 6E13-2.012, Florida Administrative Code, expressly

conflicts with the authority vested in an administrative law

judge pursuant to Section 120.57(1), Florida Statutes, to issue a

recommended order, containing findings of fact and conclusions of

law, and to make a recommended disposition. The Rule also

expressly conflicts with Section 310.151(4) which requires the

administrative hearing to conform to Chapter 120 and with Section

310.151(1)(c) which requires the Board to promulgate only rules

that are consistent with law. Further, nothing in Sections

120.57 or 310.151 authorizes the Board to promulgate rules for

conducting administrative proceedings.

26. In its proposed final order, the Board argues that

Petitioner has no standing to maintain this proceeding. Since

the Board stipulated in the prehearing stipulation filed in this

cause that Petitioner does have standing, the Board's argument is

without merit.

27. In its proposed final order, the Board also argues that

the Rule is valid because it is reasonably related to legislative

intent. Chapter 120, Florida Statutes, was substantially

amended, effective October 1, 1996. In two distinct places, the

Legislature added the following language:

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, nor shall an agency

have the authority to impleme nt statutory

provisions setting forth general legislative

intent or policy.

Sections 120.52(8) and 120.536(1), Florida Statutes. Further,

the Final Bill Analysis for amended Chapter 120 specifically sets

forth the Legislature's intent to overrule case law relied upon

by the Board which permits agencies to promulgate rules that are

reasonably related to the purpose of the enabling legislation.

See , for example, page 23.

28. The Board also argues that rate-setting is quasi-

legislative and that, therefore, courts cannot set rates. In

support of that argument, the Board cites case law involving

constitutional agencies, legislative agencies, and independent

commissions and cases decided prior to Florida's Administrative

Procedure Act. The Division of Administrative Hearings is not a

court; it is an agency within the executive branch of government,

just like the Department of Business and Professional Regulation.

The Board is merely one of the many boards housed within that

Department.

29. It is true, as argued by the Board, that the

Legislature may delegate the authority to set rates to an

administrative agency, and it has done so with the Board.

However, it has also directed that when there are disputed facts

involved with rate setting, the Board shall refer the matter to

the Division of Administrative Hearings, and the Division shall

exercise the power and responsibility given to it in Sections

120.569 and 120.57(1) to enter a recommended order containing

findings of fact, conclusions of law, and a recommended

disposition. The Board's characterization of its function as

quasi-legislative does not authorize the Board to ignore

legislative directives.

Based upon the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED THAT Petitioner's Petition Seeking an Administrative

Determination of the Invalidity of an Existing Rule be and the

same is hereby granted, and Rule 61E13-2.012 be and the same is

hereby determined to be an invalid exercise of delegated

legislative authority.

DONE AN D ORDERED this 24th day of February, 1998, in

Tallahassee, Leon County, Florida.

___________________________________

LINDA M. RIGOT

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 24th day of February, 1998.

COPIES FURNISHED:

John J. Rimes, III, Esquire

Office of the Attorney General

Department of Legal Affairs

The Capitol, Suite Plaza 01

Tallahassee, Florida 32399-1050

William L. Hyde, Esquire

Gunster, Yoakley, Valdes-Fauli & Stewart, P.A

215 South Monroe Street, Suite 830

Tallahassee, Florida 32301

Margaret D. Mathews, Esquire

Akerman, Senterfitt & Eidson, P.A.

First Union Bank Building

100 South Ashley Drive, Suite 1500

Tampa, Florida 33602-5311

E. Gary Early, Esquire

Akerman, Senterfitt & Eidson, P.A.

216 South Monroe Street, Suite 200

Tallahassee, Florida 32301

David M. Caldevilla, Esquire

Post Office Box 2350

Tampa, Florida 33601-2350

Carol Webb, Executive Director

Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399-1300

Susan Foster, Executive Director

Pilotage Rate Review Board

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399-0773

Lynda Goodgame, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399-0792

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 one copy of

a notice of appeal with the Clerk of the Division of Admini-

strative Hearings and a second 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.