02-004052RP Beverage Hospitality, Inc. vs. Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco, Status: Closed DOAH Final Order on Monday, January 27, 2003.

Summary: Rule invalid--no specific statutory authority to include all pre-1981 revoked quota liquor licenses in double random drawing process.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BEVERAGE HOSPITALITY, INC., )

)

Petitioner, )

)

vs. ) Case No. 02 - 4052RP

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC BEVERAGES )

AND TOBACCO, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal administrative hearing was

held in this case in Tallahassee, Florida, before Diane

Cleavinger, Administrative Law Judge of the Division of

Administrative Hearings , on November 18, 2002.

APPEARANCES

For Petitioner: Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Underwood,

Purnell & Hoffman

Post Office Box 551

Tallahassee, Florida 32302 - 0551

For Respondent: Michael A. Martinez, Esquire

Dep artment of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399 - 2202

STATEMENT OF THE ISSUES

The issue in this case is whether the proposed amendments

to existing Rule 61A - 5.0105, Florida Administrative Code,

constitute a valid exercise of delegated legislative authority.

PRELIMINARY STATEMENT

Petitioner, Beverage Hospitality, Inc., filed an

application for several pre - 1981 quota liquor licenses that had

previously been revoked by Respondent, Department of Business

and Professional Regulation, Division of Alcoholic Beverages and

Tobacco (Respondent or Division). Respondent refused to accept

these applications. Petitioner then filed a Writ of Mandamus to

force Respondent to accept said applications. Thereafter,

Respondent was ordered to accept the quota license applications.

After acceptance of the applications, Respondent advised

Petitioner that pre - 1981 quota licenses would be issued pursuant

to the double random drawing proces s used for post - 1981 quota

licenses. Respondent had no rule on the issuance of pre - 1981

quota licenses and Petitioner, subsequently, successfully

challenged, as an unpromulgated rule, Respondent's policy of

placing revoked quota licenses in the double ran dom drawing

process used for post - 1981 quota licenses. Respondent, then

proposed an amendment to Rule 61A - 5.0105, Florida Administrative

Code, to include revoked pre - 1981 quota licenses in the double

random drawing process. On October 18, 2002, Petitione r filed a

Petition Challenging Proposed Agency Rule 61A - 5.0105, Florida

Administrative Code, pursuant to Section 120.54, Florida

Statutes.

The parties, by prehearing stipulation, agreed that

Petitioner had standing to bring this challenge and that,

relati ve to the merits thereof, there were no disputed issues of

material fact and the question of the validity of the proposed

rule was solely a question of law.

At the hearing, Respondent presented the testimony of four

witnesses. Petitioner did not call any witnesses. Neither

party offered exhibits into evidence.

After the hearing, Petitioner and Respondent filed Proposed

Recommended Orders on December 13, 2002.

FINDINGS OF FACT

1. The Division, on October 11, 2002, in Volume 28, No. 41

of the Florida Adm inistrative Weekly noticed a proposed

amendment to Rule 61A - 5.0105, Florida Administrative Code,

concerning the conduct of Section 561.19(2), Florida Statutes,

in double random selection drawings for revoked pre - 1981 quota

alcoholic beverage licenses. The proposed amendment states, in

the portion relevant to this challenge, as follows:

The division will follow the below listed

procedures when entry forms are accepted for

issuance of new state liquor licenses

authorized by Florida Law, when they become

av ailable by reason of an increase in the

population of a county or city, or a county

voting to permit the sale of intoxicating

beverages when such sale had previously been

prohibited, or by revocation of a license

under 565.02(1)(a) - (f) , inclusive issued by

Special Act prior to 1981 quota : 1

2. Respondent cited as specific authority for the rule its

general rulemaking powers contained in Section 561.11, Florida

Statutes. The laws implemented by the proposed amendment

included, in relevant part, Sections 561.19 and 561.20, Florida

Statutes.

3. Section 561.19, Florida Statutes, is the statutory

authority for granting or denying applications for all liquor

licenses and quota liquor licenses. Section 561.19(2)(a),

Florida Statutes, establishes the double ra ndom selection

drawing process for quota liquor licenses. Section 561.19,

Florida Statutes, states in relevant part:

(1) Upon the completion of the

investigation of an application, the

division shall approve or disapprove the

application. If approved, the license shall

be issued upon payment to the division of

the license tax hereinafter provided.

(2)(a) When beverage licenses become

available by reason of an increase in the

population of a county or by reason of a

county permitting the sale of intoxicating

beverages when such sale had been

prohibited, the division, if there are more

applicants than the number of available

licenses, shall provide a method of double

random selection by public drawing to

determine which applicants shall be

consider ed for issuance of licenses. The

double random selection drawing method shall

allow each applicant whose application is

complete and does not disclose on its face

any matter rendering the applicant

ineligible an equal opportunity of obtaining

an available license. After all

applications are filed with the director,

the director shall then determine by random

selection drawing the order in which each

applicant's name shall be matched with a

number selected by random drawing, and that

number shall determine the order in which

the applicant will be considered for a

license. (Emphasis supplied.)

4. In general, quota liquor licenses are issued in a

limited number based on the population of a county or the

increase, if any, in the population of a county. The licenses

can also be issued when a county initially changes from a county

which does not permit the sale of intoxicating liquor to one

that does permit the sale of intoxicating liquor. The quota

license is the only liquor license which is numerically lim ited;

all other types of liquor licenses are available without

numerical limitation. Because quota licenses are numerically

limited, applications for such licenses can exceed the number of

available licenses.

5. Prior to 1981, quota licenses were issued based on an

application. The evidence did not reveal the method used by the

Division or the Governor in awarding quota licenses to qualified

applicants when the applications for such exceeded the number of

available licenses. Clearly, such decisions were made since

quota licenses were issued prior to 1981. The evidence did

indicate that in 1981 the Governor did not wish to be involved

in the process of determining which applicants received quota

liquor licenses and developed legislation establishing a do uble

random drawing process. The legislation eventually became

Section 561.19(2)(a), Florida Statutes. At some point, the

number of licenses which could be issued was reduced from one

license per 2,500 residents in a county to one license per 7,500

resid ents in a county. See Section 561.20, Florida Statutes

(2002). Moreover, the Beverage Law comprised of Chapters 561,

562, 563, 564, 565, 567 and 568, Florida Statutes, establishes

that quota licenses exist as un - issued licenses at the time the

statutory criteria by county vote or population are met. See

Beverly v. Division of Beverages , 282 So. 2d 657 (Fla. 1st DCA

1973). Indeed, the Division has the duty to issue these

licenses to qualified applicants once they become available for

issuance. The effec t of revocation of a license is to revoke

the current licensee's privilege to use a certain license at a

certain location. Revocation under the Beverage Law simply

returns a license to the possession of Respondent which again

has the duty to issue the lic ense if the population of the

county supports its re - issuance. See Section 561.20(3), Florida

Statutes, and Beverly v. Division of Beverages , 282 So. 2d 657

(Fla. 1st DCA 1973).

6. In general, the double random drawing process provides

a method for not ifying the public of the availability of quota

licenses and a method for selecting applications for further

investigation and possible award of a quota license when those

licenses are available. There is currently no administrative

rule which gives Respon dent guidance on what procedure to follow

with regard to the award of pre - 1981 quota licenses that have

come back into the possession of Respondent by reason of

revocation. There is also no rule which governs the re - issuance

of post - 1981 revoked quota lic enses. Historically, Respondent

has re - issued these revoked pre - 1981 and post - 1981 quota

licenses through the double random drawing process. The

pre - 1981 revoked quota licenses issued through the double random

drawings were never issued in excess of the population limits;

however, they were issued in excess of the population increase

for the prior year, if the total population supported the number

of licenses issued. Respondent's long - standing policy was not

challenged until the recent multiple litig ation on this issue

involving Petitioner as outlined above.

7. Petitioner has applied for approximately 57 previously -

revoked quota licenses. There was no evidence whether these

licenses were initially created based on an increase in county

population.

CONCLUSIONS OF LAW

8. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. Section 120.54, Florida Statutes.

9. A hypothetical is helpful in order to analyze the issue

involved in th is proceeding. Assume that a county's population

is 75,000 and it has a special act authorizing one license for

each 7,500 persons. Assume also that the county's population

has not increased for a number of years and all ten authorized

licenses based upo n the population have been issued. Assume

next that one such issued license is revoked. The county is

authorized to have ten licenses but only nine are now issued;

thus, one license is available. The one license, irrespective

of whether it is considered "new," has become available, even

though no population increase in the county has occurred for a

number of years. The issue is whether the re - issuance of this

license should occur by application or through the double random

drawing process.

10. Con sideration of the validity of a proposed rule must

necessarily commence with an analysis of Respondent's rulemaking

authority in accordance with the legislative mandate set forth

in the twin provisions of Sections 120.52(8)(g) and 120.536(1),

Florida Statu tes. The Legislature, culminating in the 1999

amendments to Chapter 120, Florida Statutes, substantially

restricted agency rulemaking authority. Section 120.52(8),

Florida Statutes, states:

(8) "Invalid exercise of delegated

legislative authority" mea ns 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

contra venes the specific provisions of law

implemented, citation to which is required

by s. 120.54(3)(a)1. ;

(d) The rule is vague, fails to establish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(e) The rule is ar bitrary or capricious;

(f) The rule is not supported by

competent substantial evidence; or

(g) The rule imposes regulatory costs on

the regulated person, county, or city which

could be reduced by the adoption of less

costly alternatives that substa ntially

accomplish the statutory objectives.

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 interp ret

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 or 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 o f an agency shall be construed to

extend no further than implementing or

interpreting the specific powers and duties

conferred by the same statute. (Emphasis

supplied.)

11. Section 120.536(1), Florida Statutes, states:

(1) 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 or is within the agency's

class of powers and duties, nor shall an

agency have the authority t o 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 implementing o r

interpreting the specific powers and duties

conferred by the same statute.

12. Section 561.11, Florida Statutes, does provide a

general grant of rulemaking authority. Statutes prior to

passage of Chapter 120, Florida Statutes, contained more

specifi c rulemaking authority. However, upon the inception of

Chapter 120, Florida Statutes, and prior to the 1999 specificity

requirements added to Chapter 120, Florida Statutes, Section

561.11, Florida Statutes, was amended to contain less specific

rulemaking authority in order to avoid redundancy with the

rulemaking requirements of Chapter 120, Florida Statutes.

Section 561.11, Florida Statutes, provides:

(1) The division has authority to adopt

rules pursuant to ss. 120.536(1) and 120.54

to implement the p rovisions of the Beverage

Law.

(2) The division shall have full power

and authority to provide for the continuous

training and upgrading of all division

personnel in their respective positions with

the division. This training shall include

the attenda nce of division personnel at

workshops, seminars, or special schools

established by the division or other

organizations when attendance at such

educational programs shall in the opinion of

the division be deemed appropriate to the

particular position which the employee

holds.

13. The language contained in Section 561.11(1), Florida

Statutes, includes more than a general grant of rulemaking

authority. The statute specifically references the "Beverage

Law." Section 561.01, Florida Statutes, defines the B everage

Law as Chapters 561, 562, 563, 564, 565, 567, and 568, Florida

Statutes.

14. In this case, the specific law to be implemented is

Section 561.19, Florida Statutes. Section 561.19(2)(a), Florida

Statutes, is the only statute that authorizes the Div ision to

conduct double random drawings for quota licenses. It limits

the Division's authority to conduct such drawings to two

circumstances, "when licenses become available by reason of an

increase in population in the county" or by reason of a formerly

dry county permitting the sale of alcoholic beverages. There is

no authority to issue licenses which fall outside these two

categories to be issued by a double random drawing process. All

other licenses are issued by application. See Section

561.19(1), Florida Statutes.

15. Section 561.20(3), Florida Statutes, provides

The limitation upon the number of such

licenses to be issued as herein provided

does not apply to existing licenses or to

the renewal or transfer of such licenses;

but upon the revocation of any existing

license, no renewal thereof or new license

therefor shall be issued contrary to the

limitation herein prescribed.

The limitation referenced in the above - quoted section is the

limitation of licenses based on one license for every 7,500

res idents in a county contained in Section 561.20(1), Florida

Statutes. Section 561.20, Florida Statutes, does not limit

issuance or re - issuance of a license to circumstances where

there is an increase in the population of a county. A county

with a static p opulation is entitled to have a certain number of

licenses based on its population. Use of the term "no renewal

thereof or new license therefor ," refers to re - issuance of a

revoked license. Also see Beverly v. Division of Beverages , 282

So. 2d 657 (Fla. 1st DCA 1973). Thus, whether a revoked license

is labeled "new" or "old," is irrelevant to the issue in this

proceeding. A re - issued license cannot be issued in excess of

the population limitation contained in Section 561.20, Florida

Statutes. The statu te does not provide support for the proposed

rule.

16. Since a county which has commenced permitting the sale

of alcoholic beverages where such sale had previously been

prohibited would not have any previously issued licenses that

could be revoked, that c ategory of quota licenses is necessarily

inapplicable. Such a county is entitled to at least three

licenses regardless of its population. See Section 561.20(1),

Florida Statutes. However, the same argument for revoked new

wet county - issued licenses can be made unless those licenses

once revoked retain the characteristics of an initial wet county

license after revocation.

17. The other category, an increase in population of the

county, may or may not apply to a license made available because

of revocati on. The resolution depends on the reason for

issuance of the license when it was initially created since

quota licenses do not die and are subject to re - issuance as

limited by a county's population. There was no evidence in this

case which demonstrated the initial reason for the issuance of

these pre - 1981 revoked licenses at issue here or the various

bases before 1981 for the issuance of quota licenses.

18. In short, the Division has not been granted the

necessary rulemaking authority to subject to th e double random

drawing process licenses which have become available by means

other than an increase in a county's population or by a

previously dry county permitting the sale of intoxicating

liquor. The proposed rule because it covers all types of

revoke d pre - 1981 quota licenses purports to expand the

Division's authority beyond the scope of its governing statutes

and constitutes an invalid rule pursuant to Section

120.52(8)(b), Florida Statutes.

19. In State, Board of Trustees of the Internal

Improv ement Trust Fund v. Day Cruise Association, Inc. ,

794 So. 2d 696 (Fla. 1st DCA 2001), the 1999 amendments to

Sections 120.52(8)(g) and 120.536(1), Florida Statutes, were

reviewed. The court expressly noted:

[I]t is now clear, agencies have

rulemak ing authority only where the

Legislature has enacted a specific statute,

and authorized the agency to implement it,

and then only if the (proposed) rule

implements or interprets specific powers or

duties, as opposed to improvising in an area

that can be sa id to fall only generally

within some class of powers or duties the

Legislature has conferred on the agency.

* * *

[A]dministrative agencies are creatures of

statute and have only such powers as the

statutes confer . . . . The statutory

provisions governing rulemaking must be

interpreted in light of the Legislature's

stated intent to clarify significant

restrictions on agencies' exercise of

rulemaking authority, and to reject the

"class of powers and duties analysis

employed in Consolidated - Tomoka. If

reasonable doubt exists as to the "lawful

existence of a particular power that is

being exercised, the further exercise of the

power should be arrested." ( supra at 700 - 1)

20. In Southwest Florida Water Management District v. Save

the Manatee Club, Inc. , 773 So. 2d 594, 599 (Fla. 1st DCA 2000),

the court, also construing the same 1999 legislative changes,

noted:

The ordinary meaning of the term

"specific" is "limiting or limited;

specifying or specified; precise, definite,

[or] explicit." See Webs ter's New World

College Dictionary 1287 (3rd Ed. 1996).

"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.

21. The Legislature has not granted to the Division the

specific power or duty which the proposed rule seeks to

implement. Thus, the proposed rule constitutes an invalid

delegation of legislative authority pursuant to Section

120.52(8)(c), Florida Statutes. The only statute which provides

the specific power or duty for the Division to conduct a double

random selection drawing for beverage licenses is Section

561.19(2)(a), Florida Statutes. Such power is, however, limited

to two situations: an increase in population and a dry county

becoming wet. Indeed, the Division has candidly admitted in the

Prehearing Stipulation that it seeks by the proposed rule to

include Section 561.19(2), Florida Statutes, drawing licenses

"which have become available in ways not provided for in the

statute."

22. While the Division has asserted that utilizing the

Section 561.19(2)(a), Florida Statutes, double random selection

drawing is a better method for awarding previously revoked

licenses, the "necessity for, or the desirability of, an

administrative rule does not, of itself, bring into exist ence

authority to promulgate such rule." 4245 Corporation v.

Division of Beverage , 371 So. 2d 1032, 1033 (Fla. 1st DCA 1978).

23. A revoked license may or may not be a license which

falls into one of the categories contained in Section 561.19(2),

Florida Statutes. Such licenses may also be those that were

initially created for reasons outside the two categories

contained in Section 561.19(2)(a), Florida Statutes, and are not

available "by reason of any increase in the population of a

county or by a reaso n of a county permitting the sale of

intoxicating beverages when such sale had been prohibited." See

Section 561.19(2)(a), Florida Statutes. The Division has no

authority to include the latter licenses in the double random

drawing process. Respondent's efforts would be better directed

to the Legislature. Consequently, because the Division's

proposed rule includes all revoked pre - 1981 quota licenses,

Section 561.19, Florida Statutes, cannot, as a matter of law,

serve as the authority for the proposed rul e because it

enlarges, modifies, and contravenes the specific provisions of

Section 561.19, Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Facts and Conclusions of

Law, it is

ORDERED that the Petition Challenging a Proposed Agency

Ru le challenging the proposed amendment to Rule 61A - 5.0105,

Florida Administrative Code, is granted. The proposed amendment

is declared invalid.

DONE AND ORDERED this 27th day of January, 2003, in

Tallahassee, Leon County, Florida.

_________________________ __________

DIANE CLEAVINGER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed wi th the Clerk of the

Division of Administrative Hearings

this 27th day of January, 2003.

ENDNOTE

1/ On Line 7, the work "inclusive" should be underlined since

it is not in the current version of the rule and the word

" quota " should not be included since it is not contained in the

current version of the rule.

COPIES FURNISHED :

Michael A. Martinez, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399 - 2202

Harold F. X. Purnell, Esqui re

Rutledge, Ecenia, Underwood,

Purnell & Hoffman

Post Office Box 551

Tallahassee, Florida 32302 - 0551

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Flo rida 32399 - 2202

Peter Williams, Director

Division of Alcoholic Beverages and

Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Carroll Webb, Executive Director

Joint Administrative P rocedures Committee

120 Holland Building

Tallahassee, Florida 32399 - 1300

Liz Cloud, Chief

Bureau of Administrative Code

The Elliot Building

Tallahassee, FL 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

D ivision 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 mu st be filed within 30 days of rendition of the order to

be reviewed.