00-004234RX Mitchell Brothers, Inc. vs. Department Of Transportation Status: Closed DOAH Final Order on Friday, December 29, 2000.

Summary: Petitioner challenged Rule 14-22.012, Florida Administrative Code, dealing with Qualification to Bid, as invalid exercise of delegated legislative authority. The rule was held to be valid.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MITCHELL BROTHERS, INC., )

)

Petitioner, )

)

vs. ) Case No. 00-4234RX

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, this cause was heard by William R.

Pfeiffer, the assigned Administrative Law Judge of the Division

of Administrative Hearings, on November 14, 2000, in

Tallahassee, Florida.

APPEARANCES

For Petitioner: F. Alan Cummings, Esquire

Patricia A. Snyder, Esquire

Cummings & Snyder, P.A.

1004 DeSoto Park Drive

Post Office Box 589

Tallahassee, Florida 32302-0589

For Respondent: Robert C. Downie, II, Esquire

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

Robert N. Clarke, Jr., Esquire

Stephen C. Emmanuel, Esquire

Ausley & McMullen, P.A.

Post Office Box 391

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

The issue in this case is whether the challenged portions

of Rule 14-22.012, Florida Administrative Code, constitute an

invalid exercise of delegated legislative authority as defined

by Section 120.52(8), Florida Statutes.

PRELIMINARY STATEMENT

On May 18, 2000, the State of Florida, Department of

Transportation ("Department"), issued a Notice of Intent to Deny

Application for Qualification to Petitioner, Mitchell Brothers,

Inc. ("MBI"). The Department based its written denial of MBI's

Application on an alleged demonstration of a "pattern of

exorbitant and false, deceptive, or fraudulent statements,

certifications, or materials in claims for payment, which

constitute violations of Rule 14-22.012(1)(a)3, Florida

Administrative Code ." On May 30, 2000, MBI timely initiated an

administrative proceeding pursuant to Section 120.57, Florida

Statutes. The case was designated DOAH Case No. 00-2431, and

assigned to Administrative Law Judge William R. Pfeiffer. A

Notice of Hearing was issued, setting the final hearing for

October 26, 2000.

On October 13, 2000, MBI timely filed a Petition Seeking

Administrative Determination that Florida Administrative Code

Section 4-22.012 is Invalid. The petition was designated DOAH

Case No. 00-4234RX.

On October 26, 2000, MBI filed a notice withdrawing its

Section 120.57 petition, but expressing its intent to continue

to pursue Case No. 00-4234RX. A Notice of Hearing was issued

setting the final hearing in Case No. 00-4234RX for November 14

through 16, 2000, in Tallahassee, Florida.

At the final hearing, MBI presented the testimony of two

witnesses and offered four exhibits. Petitioner's Exhibits 1,

2, and 4 were admitted into evidence. Petitioner's Exhibit 3

was not admitted into evidence. The Department presented no

testimony of witnesses, but offered nine exhibits, all of which

were admitted into evidence.

FINDINGS OF FACT

The Parties

The Respondent

1. The Department is the state agency charged with the

responsibility of building and maintaining the state’s

transportation system. Each year the Department lets out

hundreds of road and bridge construction projects totaling over

one billion dollars. The projects range from sidewalk

improvements to major bridge construction.

2. Accordingly, there is a wide range of expertise and

qualifications necessary for the different kinds of projects let

by the Department in Florida. Section 337.14(1), Florida

Statutes, requires any person desiring to bid on any Department

construction contract in excess of $250,000 to first be

certified by the Department as qualified to perform the work to

be let.

3. Pursuant to Section 337.164, Florida Statutes, the

Department qualifies contractors to preserve the integrity of

the public contracting process, to ensure an open and

competitive environment for the benefit of the taxpayers, and to

ensure a quality project in terms of public works.

4. Pursuant to Section 337.14, Florida Statutes, persons

seeking to bid on contracts in excess of $250,000 must first

file an application for a Certificate of Qualification with the

Department. The statute specifically authorizes the Department

to enact rules addressing the qualification of persons to bid on

contracts in excess of $250,000, including requirements with

respect to competency, responsibility, equipment, past record,

experience, financial resources, and organizational personnel of

the applicant.

5. Gregory Xanders is the State Construction Engineer.

His duties include setting policy and reviewing contractor

responsibility and qualifications under Chapter 337, Florida

Statutes, and Chapter 14-22, Florida Administrative Code.

6. In conjunction with reviewing a contractor’s

qualifications, the State Construction Engineer’s Office

receives input from other personnel, including contract managers

in the field, the Department General Counsel’s Office, the

Department Inspector General’s Office, and other cities and

counties who may work with the contractor. The State

Construction Engineer’s Office also reviews any intended

decision to deny, suspend, or revoke a contractor’s Certificate

of Qualification with the Assistant Secretary of the Department.

7. When the State Construction Engineer’s Office makes a

preliminary determination that a contractor’s Certificate of

Qualification should be suspended, revoked, or denied, the

contractor is notified and informed of its rights to an

administrative hearing to contest the intended decision under

Section 120.569, Florida Statutes.

The Petitioner

8. MBI is a company which engages in road building and

asphalt paving. Since the early 1980s MBI has been qualified to

bid on and awarded several Department projects. Approximately

80 percent of MBI's workload involves Department projects.

9. Pursuant to Department rules, MBI annually submits an

application to renew or obtain an updated Certificate of

Qualification in order to continue bidding and performing

Department projects. In 1997, MBI was denied qualification to

bid on Department projects for approximately ten months.

However, MBI was subsequently qualified by the Department during

calendar year 1999.

10. On or about March 31, 2000, MBI filed an Application

for Qualification with the Department. By letter dated May 18,

2000, the Department gave MBI notice of its intent to deny MBI’s

Application for Qualification, and stated that any subsequent

application would not be considered for a period of two years.

The Department’s letter advised MBI that the denial of the

application constituted "a determination of non-responsibility

to bid on any other construction or maintenance contract" for

the same period. Specifically, the letter provided:

Please be advised that pursuant to Chapter

337, Florida Statutes, and Rule Chapter 14-

22, Florida Administrative Code, it is the

intent of the Department of Transportation

(hereinafter Department) to deny Mitchell

Brothers, Inc.’s (hereinafter Mitchell

Brothers) Application for Qualification dated

March 31, 2000. This denial shall preclude

consideration of any subsequently submitted

Application for Qualification for a period of

two (2) years. Additionally, this denial

shall constitute a determination of non-

responsibility to bid on any other

construction or maintenance contract and

shall prohibit Mitchell Brothers from acting

as a material supplier, contractor, or

consultant on any Department contract during

the period Mitchell Brothers is not qualified

by the Department.

11. The Department’s Notice of Intent denied MBI’s

Application based upon a determination that MBI had demonstrated

"a pattern of exorbitant and false, deceptive or fraudulent

statements, certifications, or materials in claims for payment,"

and "a lack of management expertise and continuity."

12. By Petition for Formal Hearing dated May 30, 2000, MBI

challenged the Department’s Notice of Intent to Deny MBI’s

Application for Qualification. MBI’s Petition for Formal

Hearing was referred to the Division of Administrative Hearings

and assigned DOAH Case No. 00-2431.

13. On September 18, 2000, the Department served on MBI a

Modified Notice of Intent to Deny MBI’s application. The

Modified Notice gave additional grounds for the Department’s

decision to deny MBI’s Application for Qualification. Among the

additional grounds for denying MBI’s Application were the

following: MBI submitted false, deceptive, fraudulent,

erroneous or unreasonable statements, certifications, or

materials in its claims for payment to the Department, the City

of Tallahassee, the Leon County School Board, and other owners;

MBI submitted claims or statements for services not performed or

expenses not incurred; MBI failed to avoid, diminish or

otherwise mitigate the effects of construction delays; and MBI

failed to reasonably cooperate with the Department’s efforts to

investigate the accuracy of MBI’s delay claims and statements.

14. On October 13, 2000, MBI filed it’s Petition Seeking

Administrative Determination that Rule 14-22.012, Florida

Administrative Code, is an invalid exercise of delegated

legislative authority (DOAH Case No. 00-4234RX). Specifically,

in paragraph 11 of its Petition, MBI alleges that the Rule

enlarges, modifies, or contravenes specific provisions of the

law implemented, and that the Rule is vague, fails to establish

adequate standards for agency decisions, or vests unbridled

discretion in the agency. MBI later alleged that the Department

had also exceeded its grant of rulemaking authority.

15. A three-week final hearing was scheduled to commence

in DOAH Case No. 00-2431 on October 26, 2000. Shortly prior to

hearing, Petitioner filed a Motion to consolidate DOAH Case Nos.

99-2431 and 00-4234RX. The Department opposed the motion based

on their counsel's inability to be adequately prepared for the

00-4234RX rule challenge proceeding. In lieu, the parties

agreed to temporarily break from the 00-2431 hearing during the

second week and commence the rule challenge. However, on the

morning of October 26, 2000, MBI filed a Notice of its

Withdrawal of its Petition for Formal Hearing in DOAH Case No.

00-2431. Consequently, DOAH Case No. 00-4234RX was scheduled

for hearing on November 14, 2000.

16. Based on MBI’s Notice of Withdrawal of its Petition,

an Order Closing File was entered in DOAH Case No. 00-2431 on

November 1, 2000.

17. On November 2, 2000, the Department entered a Clerk’s

Order of Dismissal of MBI’s Petition challenging the denial of

its Application for Qualification.

"Good Cause" Defined in

Section 337.16(2), Florida Statutes

18. Section 337.16(2), Florida Statutes, provides:

(2) For reasons other than delinquency in

progress, the department, for good cause, may

determine any contractor not having a

certificate of qualification nonresponsible

for a specified period of time or may deny,

suspend, or revoke any certificate of

qualification. Good cause includes, but is

not limited to, circumstances in which a

contractor or the contractor’s official

representative:

(a) Makes or submits to the department

false, deceptive, or fraudulent statements or

materials in any bid proposal to the

department, any application for a certificate

of qualification, any certification of

payment pursuant to s. 337.11(10), or any

administrative or judicial proceeding;

(b) Becomes insolvent or is the subject of a

bankruptcy petition;

(c) Fails to comply with contract

requirements, in terms of payment or

performance record, or to timely furnish

contract documents as required by the

contract or by any state or federal statute

or regulation;

(d) Wrongfully employs or otherwise provides

compensation to any employee or officer of

the department, or willfully offers an

employee or officer of the department any

pecuniary or other benefit with the intent to

influence the employee or officer’s official

action or judgment;

(e) Is an affiliate of a contractor who has

been determined nonresponsible or whose

certificate of qualification has been

suspended or revoked and the affiliate is

dependent upon such contractor for personnel,

equipment, bonding capacity, or finances;

(f) Fails to register, pursuant to chapter

320, motor vehicles that he or she operates

in this state.

19. Section 337.16(2), Florida Statutes, authorizes the

Department to deny, suspend, or revoke an Application for

Qualification based upon a determination of "good cause." "Good

cause" is defined by six examples specified in Section

337.16(2), Florida Statutes, but the statute further provides

that "good cause includes, but is not limited to" the six

circumstances specified in the statute.

"Good Cause" Defined in the

Rule 14-22.012, Florida Administrative Code

20. Rule 14-22.012, Florida Administrative Code, is

entitled: "Suspension, Revocation, or Denial of Qualification."

Subsection (1) of this Rule provides in pertinent part:

(1) The Department will, for good cause, as

that term is defined in Section 337.16(2),

Florida Statutes, suspend, revoke, or deny

any contractor’s qualification to bid. A

suspension, revocation, or denial for good

cause pursuant to this rule shall prohibit

the contractor from bidding on any Department

construction contract for which

prequalification is required by Section

337.14, Florida Statutes, and shall

constitute a determination of non-

responsibility to bid on any other

construction or maintenance contract and from

acting as a material supplier, subcontractor,

or consultant on any Department contract or

project during the period of suspension,

revocation, or denial. As provided in

Section 337.16(2), Florida Statutes, such

good cause shall include, but shall not be

limited to, the provisions of paragraphs (a)

through (e) below. When a specific period of

revocation, denial, or suspension is not

specified by this rule, the period shall be

based on the criteria of Rule 14-22.0141(4),

F.A.C., as well as Department contractor

certification activities.

(a) The contractor’s Certificate of

Qualification shall be denied or revoked for

at least one year when it is determined by

the Department that any of the following has

occurred:

1. One of the circumstances specified under

Section 337.16(2)(a), (b) or (d), Florida

Statutes, has occurred.

2. Affiliated contractors submitted more

than one proposal for the same work. In this

event the Certificate of Qualification of all

of the affiliated bidders will be revoked or

denied. All bids of affiliated bidders will

be rejected.

3. The contractor made or submitted to the

Department false, deceptive, or fraudulent

statements, certifications, or materials in

any claim for payment or any information

required by any Department contract.

4. The contractor defaulted on any

Department contract or the contract surety

took over any Department contract from the

contractor.

21. Rule 14-22.012(1), Florida Administrative Code,

authorizes the Department to deny, suspend, or revoke a

contractor’s qualification to bid based on a determination of

"good cause" as that term is defined in Section 337.16(2),

Florida Statutes. The term is defined by examples contained in

Section 337.16(2), Florida Statutes, and in the Rule, but it is

not exhaustive.

22. In addition to the list of examples of "good cause"

specified in Section 337.16(2), Florida Statutes, and Rule 14-

22.012(1), Florida Administrative Code, the Department

consistently considers other criteria contained in Chapter 337,

Florida Statutes, which relate to the qualifications of a

contractor. Section 337.14, Florida Statutes, requires the

Department to consider a contractor’s equipment, past record,

experience, financial resources and organizational personnel.

Other factors considered are contained in Rule 14-22.003,

Florida Administrative Code, which addresses the rating of the

applicant, work performance record, quality of work performed,

history of payment, timeliness of completing projects,

cooperative attitude, contract litigation, claims, defaults,

integrity, and responsibility. Both Chapter 337, Florida

Statutes, and Chapter 14-22, Florida Administrative Code,

provide the industry with sufficient guidance as to the criteria

for "good cause."

Responsibility

23. A contractor bidding on projects of less than $250,000

is presumed to be responsible unless one of the circumstances

specified in Rule 14-22.0141, Florida Administrative Code,

occurs, in which case the contractor may be deemed "non-

responsible."

24. In addition to being "qualified," a contractor seeking

to bid on projects over $250,000 must also be deemed to be

"responsible." By statute, a contractor must be "responsible"

as a prerequisite to being "qualified." Section 337.14(3),

Florida Statutes, provides:

(3) Upon the receipt of an application for

certification, the department shall examine

it, verify its statements when necessary, and

determine whether the applicant is competent,

is responsible, and possesses the necessary

financial resources to perform the desired

work.

25. The Department must consider the responsibility of the

contractor during the review of its Application for

Qualification. If a contractor’s qualification has been denied,

suspended, or revoked for "good cause," then the contractor is

deemed to be non-responsible and not allowed to bid on any

project. Under Section 337.16(2), Florida Statutes, the

Department may determine the time period in which a contractor

is deemed to be non-responsible.

Period of Disqualification

26. As to the period of disqualification, Section

337.16(2), Florida Statutes, and Rule 14-22.012, Florida

Administrative Code, provide a framework of guidelines and, in

some instances, detailed timeframes relating to specific

circumstances. For example, Section 337.165(2)(b)1, Florida

Statutes, specifically requires the Department to deny or revoke

a contractor's certification for a period of 36 months when the

Department determines that the contractor has been convicted of

a contract crime. This statute provides a frame of reference

for the Department in establishing the period of

disqualification. Within the framework provided by Chapter 337,

Florida Statutes, and Chapter 14-22, Florida Administrative

Code , the Department considers a period of disqualification

ranging from 0 to 36 months.

27. Rule 14-22.012, Florida Administrative Code, states

that when a Certificate of Qualification is denied or revoked

for any of the specified reasons in Rule 14-22.012(1)(a),

Florida Administrative Code, the denial or revocation is "for at

least one year." This revocation period only provides a lower

limit. Rule 14-22.012(1), Florida Administrative Code, further

provides: "When a specific period of revocation, denial, or

suspension is not specified by this rule, the period shall be

based on the criteria of Rule 14-22.0141(4), Florida

Administrative Code , as well as Department contractor

certification activities."

28. Rule 14-22.0141(4), Florida Administrative Code ,

provides that a contractor will be "ineligible to bid on

Department contracts for a period of time based on the

seriousness of the deficiency." Rule 14022.0141(4), Florida

Administrative Code , provides examples of factors affecting the

seriousness of the deficiency. Under the Rule, the examples of

factors affecting the seriousness of the deficiency include

impacts on project schedule, cost, quality of work, unsafe

conditions allowed to exist, complaints from the public, delay

or interference with the bidding process, and the potential for

repetition.

29. It is not possible to codify in a rule the precise

time period of disqualification for every single instance.

Because the facts and circumstances supporting a determination

of "good cause" vary, it is impracticable to compile an

exhaustive list for each instance.

CONCLUSIONS OF LAW

30. The Division of Administrative Hearings has

jurisdiction over the parties to, and the subject matter of,

this proceeding pursuant to Section 120.56, Florida Statutes.

Standing

31. Section 120.56(1), Florida Statutes, provides that

"[a] ny person substantially affected by a rule may seek an

administrative determination of the invalidity of the rule on

the ground that the rule is an invalid exercise of delegated

legislative authority." Pursuant to Section 120.56(3)(a), "[a}

substantially affected person may seek an administrative

determination of the invalidity of an existing rule at any time

during the existence of the rule."

32. MBI is substantially affected by the Rule and has

standing to bring this rule challenge. Moreover, the challenge

is not mooted by withdrawal of MBI's 120.57 petition. See

Greynolds Park Manor, Inc. v. Dept. of Health and Rehab. Serv. ,

491 So. 2d 1157 (Fla. 1st DCA 1986); Hasper v. Department of

Administration , 459 So. 2d 398 (Fla. 1st DCA 1984).

33. The Department removed MBI from the bid list by

denying MBI's March 31, 2000, application for a period of two

years. In the Department's initial notice of disqualification

dated May 18, 2000, as well as its amended notice dated

September 18, 2000, the Department cited the challenged rule,

Rule 14-22.012, Florida Administrative Code , as authority for

its action.

34. The Department's action under Rule 14-22.012

disqualifies MBI from bidding on Department projects, both in

excess of or less than $250,000, as well as on a substantial

number of other projects, including local governmental projects,

where Department prequalification has been adopted as a

prerequisite to bidding. By the Department's action under Rule

14-22.012, MBI is unable to bid on projects that consist of the

majority of its past workload. MBI has targeted government

contracts for its financial livelihood and, therefore, has been

substantially affected by the action taken by the Department

under its challenged rule.

35. As the Department has been MBI's primary source of

business for over 20 years, the adverse financial impact to MBI

from this action has been substantial.

36. Under these facts and the authority of Greynolds and

Hasper , supra , MBI has been substantially affected by Rule 14-

22.012, Florida Administrative Code , and is entitled to a

declaration of the Rule's validity or invalidity regardless of

MBI's decision to withdraw its Section 120.57 petition, and

whether or not further relief is available to MBI if it is

successful in invalidating the challenged rule.

Burden of Proof

37. The burden of proof, absent a statutory directive to

the contrary, is on the party asserting the affirmative of the

issue in a Chapter 120, Florida Statutes, proceeding. See

Florida Dep’t of Transp. v. J.W.C. Co., Inc. , 396 So. 2d 778,

788 (Fla. 1st DCA 1981); see also Department of Banking and

Finance v. Osborne Stern and Co. , 670 So. 2d 932, 934 (Fla.

1996)("The general rule is that a party asserting the

affirmative of the issue has the burden of presenting evidence

as to that issue.").

38. Because MBI is asserting that existing Rule 14-22.012,

Florida Administrative Code, constitutes an invalid exercise of

delegated legislative authority, it has the burden of proving

the invalidity of the challenged rule. See St. Johns River

Water Management Dist. v. Consolidated-Tomoka Land Co. , 717 So.

2d 72, 76-77 (Fla. 1st DCA 1998).

Rule Validity

39. Section 120.56(1)(a), Florida Statutes (2000),

provides that "[a] ny person substantially affected by a rule or

a proposed rule may seek an administrative determination of the

invalidity of the Rule on the ground that the Rule is an invalid

exercise of delegated legislative authority." The phrase

"invalid exercise of legislative authority" is defined in

Section 120.52(8) as "an action which goes beyond the powers,

functions, and duties delegated by the Legislature." The

statute enumerates seven circumstances in which a proposed or

existing rule constitutes an invalid exercise of delegated

legislative authority:

(1) The agency has materially failed to

follow the applicable rulemaking procedures

or requirements;

(2) The agency has exceeded its grant of

rulemaking authority;

(3) The rule enlarges, modifies, or

contravenes the specific provision of law

implemented;

(4) The rule is vague, fails to establish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(5) The rule is arbitrary or capricious;

(6) The rule is not supported by competent

substantial evidence;

(7) The rule imposes regulatory costs on

the regulated person, county or city which

could be reduced by the adoption of less

costly alternatives that substantially

accomplish the statutory objectives.

40. Following the seven enumerated grounds for challenging

a rule, Section 120.52(8), Florida Statutes, provides a set of

standards to be used in determining the validity of a rule in

all cases:

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, interpret

or make specific the particular 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, 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 an agency shall be construed to

extend no further than the particular powers

and duties conferred by the same statute.

41. The Petitioner alleges that Rule 14-22.012, Florida

Administrative Code, is an invalid exercise of legislative

authority because (1) the agency has exceeded its grant of

rulemaking authority; (2) the rule enlarges, modifies or

contravenes the specific provisions of law implemented; and (3)

the rule is vague, fails to establish adequate standards for

agency decisions, or vests unbridled discretion in the agency.

The Department has not exceeded its Rulemaking Authority

42. The Legislature has provided the Department with

general statutory authority to enact Rule 14-22.012, Florida

Administrative Code . Specifically, Section 334.044(2), Florida

Statutes, provides:

334.044 Department; powers and duties.— The

department shall have the following general

powers and duties:

* * * *

(2) To adopt rules pursuant to ss.

120.536(1) and 120.54 to implement the

provisions of law conferring duties upon it.

43. In addition, Section 337.14, Florida Statutes,

requires the Department to promulgate rules in order to review

Applications for Qualifications. It provides in pertinent part:

The rules of the department shall address the

qualification of persons to bid on

construction contracts in excess of $250,000

and shall include requirements with respect

to the equipment, past record, experience,

financial resources, and organization

personnel of the applicant necessary to

perform the specific class of work for which

the person seeks certification.

44. Pursuant to Section 120.52(8), Florida Statutes, a

grant of rulemaking authority is necessary but not sufficient to

allow an agency to adopt a rule. In addition, a specific law to

be implemented is also required. In promulgating Rule 14-

22.012, Florida Administrative Code, the Department has clearly

adopted a rule which implements the provisions of Sections

337.14 and 337.16(2), Florida Statutes. These statutes clearly

impose upon the Department the duty of reviewing Applications

for Qualifications and of denying, suspending, or revoking

Certificates of Qualification for good cause. Since the

Legislature has specifically imposed these duties upon the

Department, the Rule does not exceed the Department’s statutory

authority.

Rule 14-22.012 Does Not Invalidly Enlarge, Modify Or Contravene

Section 337.16(2), Florida Statutes .

45. In its Petition, MBI alleges that Rule 14-22.012,

Florida Administrative Code, enlarges, modifies, or contravenes

the grounds for suspending, revoking, or denying an Application

for Qualification set forth in Section 337.16(2), Florida

Statutes. Specifically, MBI alleges that the Florida

Legislature restricted the circumstances in which the Department

could deny, suspend, or revoke a Certificate of Qualification to

the listed examples set forth in Section 337.16(2), Florida

Statutes.

46. The plain wording of Section 337.16(2), Florida

Statutes, does not support MBI’s claim. Section 337.16(2)

provides in pertinent part:

(2) For reasons other than

delinquency in progress, the department, for

good cause, may determine any contractor not

having a certificate of qualification non-

responsible for a specified period of time or

may deny, suspend or revoke any certificate

of qualification. Good cause includes, but

is not limited to, circumstances in which a

contractor or the contractor’s official

representative. . . .

Under MBI’s interpretation of Section 337.16(2), Florida

Statutes, the statutory provision "includes, but is not limited

to," is ignored and rendered meaningless. The provision does

have meaning.

47. The Legislature has used the term "includes, but is

not limited to" or words of similar effect in several hundred

statutes. The Legislature has used this term when it was not

practical or feasible for the Legislature to list all of the

precise circumstances in which an official or agency was

justified in taking certain action.

48. Clearly, the Legislature intended the provision

"includes, but is not limited to" to be given meaning, or it

would not have used that phrase in these statutes. This phrase

should be given its common, normal, plain, and ordinary meaning.

State v. Cormier , 375 So. 2d 852, 854 (Fla. 1979). In addition,

the Florida Supreme Court has recognized and supported the

principle that rules may clarify and flesh out the details of an

enabling statute. Agencies utilize their expertise by creating

rules to effectuate the Legislature's stated policy. "The

Legislature itself is hardly suited to anticipate the endless

variety of situations that may occur or to rigidly prescribe the

conditions or solutions to the often fact-specific situations

that arise." Avata Development Corporation v. State , 713 So. 2d

199, 204 (Fla. 1998).

49. By the express terms of Section 120.52(8), Florida

Statutes, the Department may adopt rules to implement or

interpret the specific powers and duties granted by the enabling

statute. As the First District Court of Appeals recently

determined in Southwest Florida Water Management District v.

Save the Manatee , 25 Fla. L. Weekly 02737a (2000), "the use of

the word 'interpret' suggests that a rule will be more detailed

than the applicable enabling statute. . . . 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."

50. MBI’s contention that "good cause" must be strictly

limited to the examples set forth in Section 337.16(2), Florida

Statutes, notwithstanding the language "includes, but not

limited to," ignores the principles above.

51. In addition to being inconsistent with the plain

meaning of the statute, MBI’s interpretation of Section

337.16(2), Florida Statutes, flies in the face of several well

established rules of statutory construction. First, a statute

must be construed so as to give effect to all of its parts.

State v. Gale Distributors, Inc. , 349 So. 2d 150 (Fla. 1977).

These words should be given their plain and ordinary meaning.

Cormier , (supra) .

52. Second, MBI’s construction of Section 337.16(2),

Florida Statutes, ignores the rule of statutory construction of

ejusdem generis , which means "of the same kind or class."

Black’s Law Dictionary (7th Edition). Under the doctrine of

ejusdem generis , where a general word or phrase follows a list

or class of items, the general word or phrase is construed as

including within it items of the same general nature or class as

those specifically enumerated. Brown v. Saint City Church of

God , 717 So. 2d 557 (Fla. 3d DCA 1998). Under the doctrine of

ejusdem generis , a statute containing a general phrase followed

by a list or class of items should not be construed as limiting

its scope to the items specifically mentioned in the statute.

If a statute were construed in this fashion, it would render the

general phrase "entirely inoperative, and thereby violate

another statutory rule of construction, namely, that every part

of a statute should, if possible, be sustained and given

appropriate effect." Children’s Bootery v. Sutker , 91 Fla. 60,

107 So. 345, 347 (1926); see also Halifax Area Council v. City

of Daytona Beach , 385 So. 2d 184, 187 (Fla. 5th DCA 1980).

53. The doctrine of ejusdem generis applies to Section

337.16(2), Florida Statutes. See Soverino v. State , 356 So. 2d

269, 273 (Fla. 1978)( ejusdem generis applied by the Florida

Supreme Court to the phase "includes, but shall not be limited

to"); Section 337.16(2), Florida Statutes, plainly authorizes

the Department to consider as "good cause" other circumstances

which are of a similar nature or character as those expressly

listed in the statute.

54. Third, a statute must be construed in a reasonable

manner and so as to avoid absurd results. State v. Webb , 398

So. 2d 820 (Fla. 1981). It requires little effort to identify

examples of misconduct which are not listed in Section

337.16(2), Florida Statutes, as examples of good cause. If a

contractor commits serious and relevant misconduct, the

Department cannot be held powerless to consider it when

reviewing the contractor’s Application for Qualification. Under

MBI’s construction, the Department would be precluded from

considering not only physical assaults on its employees, but

literally countless other types of potential misconduct by a

contractor, including the submission of fraudulent statements to

other owners.

55. Moreover, many statutes authorize state agencies to

take action based upon a finding or determination of "good

cause." See , e.g. , Section 465.013, Florida Statutes ("The

board may refuse to certify to the department or may revoke the

registration of any intern for good cause, including grounds

enumerated in this chapter for revocation of pharmacists’

licenses."); Section 487.041(3), Florida Statutes ("The

department, for reasons of adulteration, misbranding, or other

good cause, may refuse or revoke the registration of any

pesticide, after notice to the applicant or registrant giving

the reason for the decision.") To adopt an exceedingly narrow

construction of Section 337.16(2), Florida Statutes, would be an

incorrect precedent and may potentially jeopardize the ability

of other state agencies to rely upon and enforce state statutes

authorizing them to take certain action based upon a finding or

determination of good cause.

56. Based on the plain meaning of the statute, and the

applicable rules of statutory construction discussed above, it is

clear that the Department is not limited to the specific examples

of good cause set forth in Section 337.16(2), Florida Statutes.

Rather, the Legislature has given the Department the discretion to

consider as "good cause" other factors of a similar nature or

class as the examples given by the Legislature in Section

337.16(2), Florida Statutes.

57. The examples of "good cause" set forth in Rule 14-

22.012, Florida Administrative Code, are of the same class and

nature as the examples set forth by the Legislature in Section

337.16(2), Florida Statutes.

58. Rule 14-22.012, Florida Administrative Code, does not

impermissibly enlarge, modify or contravene the provisions of

Section 337.16(2), Florida Statutes.

Rule 14-22.012, Florida Administrative Code, Is Not Vague, Does

Not Fail To Establish Adequate Standards For Agency Decisions .

And Does Not Vest Unbridled Discretion.

59. MBI’s Petition also alleges that Rule 14-22.012,

Florida Administrative Code, is vague, fails to establish

adequate standards for agency discretion, and vests unbridled

discretion in the agency. Rule 14-22.012, Florida

Administrative Code, does not give the Department the discretion

to deny, suspend, or revoke Certificates of Qualification.

Rather, it is Sections 337.14 and 337.16(2), Florida Statutes,

that grant the Department the authority to take such actions.

An administrative rule cannot be invalidated simply because the

governing statutes, not the challenged rule, confer discretion

upon an agency. Florida Public Service Commission v. Florida

Waterworks , 731 So. 2d 836 (Fla. 1st DCA 1999).

60. Section 337.164, Florida Statutes, is entitled

"Legislative intent with respect to integrity of public

contracting process." In Section 337.164, Florida Statutes, the

Legislature expressly states that the preservation of the

integrity of the public contracting process is vital to the

development of a balanced and efficient transportation system

and a matter of great interest to the State. In addition,

Section 337.164(4), Florida Statutes, provides that "it is the

intent of the Legislature to provide sufficiently broad

authority to the department to ensure the integrity of its

public contracting process."

61. MBI asserts that Section 337.16(2), Florida Statutes,

is a penal statute that must be strictly construed and relies

upon White Construction Co. v. Dep’t of Transportation , 281 So.

2d 194 (Fla. 1973). The statutory provisions at issue in White

have been eliminated since that decision was rendered in 1973.

Further, the Legislature has since established that the

opportunity to bid on Department contracts is a privilege, not a

right. Specifically, Section 337.164(2), Florida Statutes,

provides: "The opportunity to bid on department contracts or to

supply goods or services to the department is a privilege, not a

right." In addition, Section 337.167(1), Florida Statutes,

provides:

(1) A certificate to bid on a department

contract, or to supply services to the

department, is intended to assist the

department in determining in advance the

performance capabilities of entities seeking

to supply goods and services to the

department and is not a "license" as defined

in s. 120.52. The denial or revocation of a

certificate is not subject to the provisions

of s. 120.60 or s. 120.68(3). The provisions

of ss. 120.569 and 120.57 are applicable to

the denial or revocation of such certificate.

62. Based on Sections 337.164(2) and 337.167(1), Florida

Statutes, it is clear that Section 337.16(2), Florida Statutes,

is not a penal statute. Holding a Certificate of Qualification

merely gives a contractor the privilege of bidding on Department

contracts in excess of $250,000. Denial of a Certificate of

Qualification does not deprive a contractor of the ability to

engage in business or to work for other owners as would the

denial of a professional or business license.

63. "[T]he test for vagueness is more lenient where an

administrative rule, rather than a penal statute is being

examined." City of St. Petersburg v. Pinellas County , 414 So.

2d 293, 294 (Fla. 2d DCA 1982); see also Florida East Coast

Industries v. State, Dep’t of Community Affairs , 677 So. 2d 357,

362 (Fla. 1st DCA 1996)("[T]he fundamental concern of the

vagueness doctrine is not threatened here because the

consequences of being found out of compliance with the

challenged rules is not penal.")

64. In addition, Section 120.54(1)(a)2., Florida Statutes,

provides that rulemaking is not practicable and therefore not

required when an agency establishes that either of the following

is true:

(a) Detail or precision in the

establishment of principles, criteria, or

standards for agency decisions is not

reasonable under the circumstances; or

(b) The particular questions

addressed are of such a narrow scope that

more specific resolution of the matter is

impractical outside of an adjudication to

determine the substantial interests of a

party based on individual circumstances.

65. The sufficiency of a rule’s standards and guidelines

depends upon the subject matter dealt with and the degree of

difficulty involved in articulating finite standards. Cole

Vision Corp. v. Department of Business & Professional

Regulation , 688 So. 2d 404, 410 (Fla. 1st DCA 1997). In this

case, it is not practical or feasible for either the Legislature

or the Department to list every circumstance that may constitute

"good cause" for suspending, denying, or revoking an Application

for Qualification. Any attempt at an exhaustive list would be

incomplete. See Florida East Coast Industries v. Dep’t of

Community Affairs , 677 So. 2d 357 (Fla. 1st DCA 1996); City of

St. Petersburg v. Pinellas County , 414 So. 2d 293 (Fla. 2d DCA

1982).

66. Similarly, it is not feasible to establish by rule

with precision or exactness the period of time for which a

contractor’s Application for Qualification will be suspended or

denied in all cases. The factors to be considered will vary

depending upon the circumstances and severity of the

contractor’s actions.

67. In paragraph 14 of its Petition, MBI also seeks an

administrative determination that Rule 14-22.012(1)(a), Florida

Administrative Code, is invalid because it states that a

contractor’s Certificate of Qualification shall be denied or

revoked "for at least one year when it is determined by the

Department that any of the following has occurred. . . ." It is

alleged that this provision improperly gives the Department

"unbridled discretion to set a period of suspension or

revocation for any period of time over one year."

68. As indicated, the governing statutes specifically

confer discretion to the Department. In particular, Section

377.16(2), Florida Statutes, requires the Department to

"specify" a period of time. It provides:

[T]he Department, for good cause, may

determine any contractor not having a

Certificate of Qualification non-responsible

for a specified period of time or may deny,

suspend, or revoke any Certificate of

Qualification.

69. MBI argues the Rule improperly gives the Department

the discretion to establish a period of suspension or revocation

for any period of time over one year. However, it is the

statute, and not the rule, that provides this discretion. "An

administrative rule cannot be invalidated simply because the

governing statute, not the challenged rule, confers discretion

upon an agency." Florida Public Service Commission v. Florida

Waterworks , 731 So. 2d 836 (Fla. 1st DCA 1999). See also

Cortez v. State Board of Regents , 655 So. 2d 132 (Fla. 1st DCA

1995)(governing statutes, not the challenged rule, confer the

discretion).

70. Notwithstanding the fact that the governing statute

confers discretion, the Department has established criteria and

standards for the implementation of its grant of legislative

authority and application of rules.

71. Rule 14-22.012(1), Florida Administrative Code,

provides several specific periods of suspension, revocation, or

denial. ( See , for example, 90 days for a first occurrence of

submitting a false, deceptive, or fraudulent certification of

current capacity (Rule 14-22.012(b)(1)); not exceeding one year

for a second occurrence of submitting a false, deceptive, or

fraudulent certification of current capacity (Rule 14-

22.012(b)(2)); four months based on a determination that the

contractor failed to notify the Department of being declared in

default or suspended by any public official (Rule 14-22.012(a));

and four months when it is determined the contractor failed to

register motor vehicles (Rule 14-22.012(e)(2)).

72. Included in this list of periods of suspension,

revocation, or denial is Subsection (1)(a) which states, "[T]he

contractor’s Certificate of Qualification shall be denied or

revoked for at least one year when it is determined by the

Department that any one of the following has occurred. . . ."

This period is not specific in that it only provides a lower

limit.

73. The sentence immediately preceding subsection (1)(a)

states that when a specific period of suspension, revocation,

denial is not specified by this rule, the period shall be based

on the criteria of Rule 14-22.0141(4), Florida Administrative

Code . Since the period of disqualification for the acts listed

in subsection (1)(a) is general and not specific (denial or

revocation for at least one year), the Rule specifies that the

criteria contained in Rule 14-22.0141(4) shall be considered in

determining the period of disqualification.

74. As indicated in Rule 14-22.012(1), Florida

Administrative Code, the criteria of Rule 14-22.0141(4), Florida

Administrative Code, are applied to determine the specific

period of suspension, revocation, or denial when the denial or

revocation is "at least one year." Rule 14-22.0141(4), Florida

Administrative Code, establishes the standards and guidelines.

Rule 14-22.0141(4), Florida Administrative Code, establishes

that the contractor will be "ineligible to bid on Department

contracts for a period of time based on the seriousness of the

deficiency." The Rule then provides "examples of factors

affecting the seriousness of the deficiency." These examples

include: (1) impacts on project schedule, cost or quality of

work; (2) unsafe conditions allowed to exist; (3) complaints

from the public; (4) delay or interference with the bidding

process; and (5) the potential for repetition. (Rule 14-

22.0141(4)(a)1-5, Florida Administrative Code). Rule 14-

22.012(1), Florida Administrative Code, expressly provides

examples of the criteria to be applied.

75. Rule 14-22.012(1), Florida Administrative Code, does

not give the Department unbridled discretion. The Rule

establishes criteria and guidelines well within the statutory

scheme.

76. Section 337.16, Florida Statutes, along with the other

sections of Chapter 337 discussed above, and Rules 14-22.012(2)

and 14-22.0141, Florida Administrative Code, guide the

Department in determining the appropriate period of suspension,

revocation, or denial. The time period for a particular set of

facts and circumstances present narrow questions that are

addressed and must be on a case-by-case basis. Environmental

Trust v. State, Dep’t of Environmental Protection , 714 So. 2d

493, 498 (Fla. 1st DCA 1998). An applicant who believes the

time period is inappropriate for any reason can challenge the

agency action pursuant to Sections 120.569 and 120.57, Florida

Statutes.

77. It is also important to note that some authority,

discretion, or judgment is necessarily required to be exercised

in carrying out a duty imposed by a statute. Performing such

function does not invalidate a rule. See Ameriaquatic, Inc. v.

State Department of Natural Resources , 651 So. 2d 114 (Fla. 1st

DCA 1995). This is especially true when a determination of

"good cause" can depend on numerous factors. More detailed or

specific legislation would not be practical. Id. The criteria

for determining the period of suspension, revocation, or denial

track the implementing statute and are consistent with its broad

legislative intent. Id. To set any more definitive standards

and guidelines, given the requirement to determine "good cause,"

would not be practical. See Cole Vision Corporation v.

Department of Business and Professional Regulation Board of

Optometry , 688 So. 2d 404 (Fla. 1st DCA 1997). The Department

"cannot be expected to adopt rules in ‘excruciating detail’ so

as to recognize every potential circumstance that might arise."

Consolidated – Tomoka Land Company vs. St. John’s Water

Management District , DOAH Case No. 97-0870 RP (DOAH 1997)

( quoting Cole Vision at p. 410), reversed on other grounds , 717

So. 2d 72 (Fla. 1st DCA 1998).

ORDERED

Based upon the foregoing Findings of Fact, Conclusions of

Law, and the preponderant evidence of record, it is

ORDERED that Petitioner has not established that Rule 14-

22.012 is an invalid exercise of delegated legislative

authority. Accordingly, the Petition filed herein is hereby

dismissed.

DONE AND ORDERED this 29th day of December, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

WILLIAM R. PFEIFFER

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 29th day of December, 2000.

COPIES FURNISHED :

F. Alan Cummings, Esquire

Patricia A. Snyder, Esquire

Cummings & Snyder, P.A.

1004 DeSoto Park Drive

Post Office Box 589

Tallahassee, Florida 32302-0589

Robert C. Downie, II, Esquire

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

Robert N. Clarke, Jr., Esquire

Stephen C. Emmanuel, Esquire

Ausley & McMullen, P.A.

Post Office Box 391

Tallahassee, Florida 32302

Pamela Leslie, General Counsel

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

James C. Myers

Clerk of Agency Proceedings

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

Carroll Webb

Joint Administrative Procedures Commission

Holland Building

600 S Calhoun Street, Room 120

Tallahassee, Florida 32301-2009

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 Administrative 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.