03-000595RP Louis Dreyfus Citrus, Inc.; Tampa Juice Service, Inc.; Pasco Beverage Company; And Juice Source, L.L.C. vs. Department Of Citrus Status: Closed DOAH Final Order on Tuesday, May 20, 2003.

Summary: Proposed rules found invalid where underlying statute has been held unconstitutional.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LOUIS DREYFUS CITRUS, INC.; )

TAMPA JUICE SERVICE, INC.; )

PASCO BEVERAGE COMPANY; and )

JUICE SOURCE, L.L.C., )

)

Petitioners, )

)

and )

)

COUNTRY PURE FOODS, INC., )

)

Intervenor, )

)

vs. ) Case No. 03 - 0595RP

)

DEPARTMENT OF CITRUS, )

)

Respondent. )

)

FINAL ORDER

By Order dated March 10, 2003, Lawrence P. Stevenson, a

duly - designated Administrative Law Judge of the Division of

Administrative Hearings, granted the parties' joint stipulation

that no form al hearing was necessary in this case. In lieu of a

hearing, the parties stipulated that the record in this case

would consist of the record in DOAH Case No. 02 - 4607RP,

supplemented by two filings by Petitioners and memoranda of law

by all parties.

APPE ARANCES

For Petitioners and Intervenor:

Kristen C. Gunter, Esquire

Macfarlane Ferguson & McMullen

1501 South Florida Avenue

Lakeland, Florida 33803

For Resp ondent: Ken Keck, Esquire

Department of Citrus

Post Office Box 148

Lakeland, Florida 33802 - 0148

Hank Campbell, Esquire

Post Office Box 3

Lakeland, Florida 33801 - 0003

Eric J. Taylor, Esquire

Attorney General's Office

Tax Section

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

STATEMENT OF THE ISSUE

The issue prese nted for decision is whether Proposed Rules

20 - 15.001, 20 - 15.002, and 20 - 15.003 constitute an invalid

exercise of delegated legislative authority pursuant to Section

120.52(8)(a) - (e), Florida Statutes.

PRELIMINARY STATEMENT

The Department of Citrus (the "Department") published

Proposed Rules 20 - 15.001, 20 - 15.002, and 20 - 15.003, Florida

Administrative Code (the "Proposed Rules"), in the November 15,

2002, edition of the Florida Administrative Weekly (vol. 28,

no. 46, pp. 4996 - 4998). The Proposed Rules wer e challenged in

Peace River Citrus Products, Inc., et al., vs. Department of

Citrus , DOAH Case No. 02 - 4607RP (" Peace River "). That case was

consolidated with DOAH Case No. 02 - 3648RE, a challenge to

Emergency Rules 20ER02 - 01, 20ER02 - 02, and 20ER02 - 03, whic h were

identical to the Proposed Rules. On January 24, 2003, a Final

Order was entered holding that the Emergency Rules constituted

an invalid exercise of delegated legislative authority, and that

the Proposed Rules did not constitute an invalid exercise of

delegated legislative authority. That Final Order is currently

on appeal at the Second District Court of Appeal.

On February 19, 2003, the Department amended the Proposed

Rules. These amendments were published in the March 7, 2003,

edition of the Flor ida Administrative Weekly (vol. 29, no. 10,

p. 1036).

On February 24, 2003, Petitioners in the instant case filed

a Petition for Administrative Determination of the Invalidity of

Proposed Rules 20 - 15.001, 20 - 15.002, and 20 - 15.003, Florida

Administrative Co de (the "Petition"). None of Petitioners was a

party to DOAH Case No. 02 - 4607RP. The Petition seeks a

clarification of the Final Order, or a new decision based upon

new grounds and additional exhibits not considered in the

earlier case.

On March 5, 200 3, the parties to the instant case filed a

stipulation for hearing. The parties stipulated that the

hearing record in this case would include the record from Peace

River , supplemented by orders from Tampa Juice Service, Inc., et

al. v. Department of Citru s , Case No. GCG - 00 - 3718

(Consolidated), in the Tenth Judicial Circuit Court, in and for

Polk County. The parties further stipulated that no hearing

would be necessary in the instant case, and submitted a proposed

schedule for the filing of memoranda of la w. By Order dated

March 10, 2003, the undersigned approved the parties'

stipulation.

On March 21, 2003, Country Pure Foods, Inc., filed a

Petition to Intervene in the instant case. The Department filed

no objection to the Petition to Intervene, which was granted by

Order dated May 9, 2003.

The parties timely filed their memoranda of law, which have

been given full consideration in the deliberations leading to

this Final Order.

FINDINGS OF FACT

Based on the stipulated facts, and the entire record in

this proceeding, the following findings of fact are made:

1. The Florida Citrus Commission was established in 1935

to organize and promote the growing and sale of various citrus

products, fresh and processed, in the State of Florida. The

purpose of the Citrus Commission is today reflected in Section

601.02, Florida Statutes.

2. The powers of the Florida Citrus Commission ("the

Commission") and the Department, are set forth in full in

Section 601.10, Florida Statutes. The powers of the Department

include the power to tax and raise other revenue to achieve the

purposes of the Department. In particular, Section 601.10(1)

and (2), Florida Statutes, state:

The Department of Citrus shall have and

shall exercise such general and specific

powers as are delegated to it by this

chapter and other statutes of the state,

which powers shall include, but shall not be

confined to, the following:

(1) To adopt and, from time to time,

alter, rescind, modify, or amend all proper

and necessary rules, regulations, and orders

f or the exercise of its powers and the

performance of its duties under this chapter

and other statutes of the state, which rules

and regulations shall have the force and

effect of law when not inconsistent

therewith.

(2) To act as the general supervisor y

authority over the administration and

enforcement of this chapter and to exercise

such other powers and perform such other

duties as may be imposed upon it by other

laws of the state.

3. The Department is authorized to set standards by

Section 601.11, F lorida Statutes, as follows:

The Department of Citrus shall have full and

plenary power to, and may, establish state

grades and minimum maturity and quality

standards not inconsistent with existing

laws for citrus fruits and food products

thereof contai ning 20 percent or more citrus

or citrus juice, whether canned or

concentrated, or otherwise processed,

including standards for frozen concentrate

for manufacturing purposes, and for

containers therefor, and shall prescribe

rules or regulations governing t he marking,

branding, labeling, tagging, or stamping of

citrus fruit, or products thereof whether

canned or concentrated, or otherwise

processed, and upon containers therefor for

the purpose of showing the name and address

of the person marketing such citr us fruit or

products thereof whether canned or

concentrated or otherwise processed; the

grade, quality, variety, type, or size of

citrus fruit, the grade, quality, variety,

type, and amount of the products thereof

whether canned or concentrated or otherwis e

processed, and the quality, type, size,

dimensions, and shape of containers

therefor, and to regulate or prohibit the

use of containers which have been previously

used for the sale, transportation, or

shipment of citrus fruit or the products

thereof whet her canned or concentrated or

otherwise processed, or any other commodity;

provided, however, that the use of

secondhand containers for sale and delivery

of citrus fruit for retail consumption

within the state shall not be prohibited;

provided, however, th at no standard,

regulation, rule, or order under this

section which is repugnant to any

requirement made mandatory under federal law

or regulations shall apply to citrus fruit,

or the products thereof, whether canned or

concentrated or otherwise processed, or to

containers therefor, which are being shipped

from this state in interstate commerce. All

citrus fruit and the products thereof

whether canned or concentrated or otherwise

processed sold, or offered for sale, or

offered for shipment within or withou t the

state shall be graded and marked as required

by this section and the regulations, rules,

and orders adopted and made under authority

of this section, which regulations, rules,

and orders shall, when not inconsistent with

state or federal law, have th e force and

effect of law.

4. The Department is authorized to conduct citrus research

by Section 601.13, Florida Statutes.

5. To help pay for these duties of the Department, the

Legislature first enacted the "box tax" in 1949. The box tax is

now codifi ed as Section 601.15(3), Florida Statutes.

6. Section 601.15(3)(a), Florida Statutes, provides in

relevant part:

There is hereby levied and imposed upon each

standard - packed box of citrus fruit grown

and placed into the primary channel of trade

in this st ate an excise tax at annual rates

for each citrus season as determined from

the tables in this paragraph and based upon

the previous season's actual statewide

production as reported in the United States

Department of Agriculture Citrus Crop

Production Fore cast as of June 1.

Section 601.15(3)(a), Florida Statutes, goes on to set forth

specific rates for fresh grapefruit, processed grapefruit, fresh

oranges, processed oranges, and fresh or processed tangerines

and citrus hybrids.

7. Section 601.15(1), Flori da Statutes, sets forth the

Department's authority to administer the box tax, as follows:

The administration of this section shall be

vested in the Department of Citrus, which

shall prescribe suitable and reasonable

rules and regulations for the enforcemen t

hereof, and the Department of Citrus shall

administer the taxes levied and imposed

hereby. All funds collected under this

section and the interest accrued on such

funds are consideration for a social

contract between the state and the citrus

growers of the state whereby the state must

hold such funds in trust and inviolate and

use them only for the purposes prescribed in

this chapter. The Department of Citrus

shall have power to cause its duly

authorized agent or representative to enter

upon the premise s of any handler of citrus

fruits and to examine or cause to be

examined any books, papers, records, or

memoranda bearing on the amount of taxes

payable and to secure other information

directly or indirectly concerned in the

enforcement hereof. Any person who is

required to pay the taxes levied and imposed

and who by any practice or evasion makes it

difficult to enforce the provisions hereof

by inspection, or any person who, after

demand by the Department of Citrus or any

agent or representative designated by it for

that purpose, refuses to allow full

inspection of the premises or any part

thereof or any books, records, documents, or

other instruments in any manner relating to

the liability of the taxpayer for the tax

imposed or hinders or in anywise delays or

prevents such inspection, is guilty of a

misdemeanor of the second degree, punishable

as provided in s. 775.082 or s. 775.083.

8. The box tax was challenged in 1936 under various

provisions of the Florida Constitution as well as the Export

Clause, Ar ticle 1, s. 9, cl. 5, of the United States

Constitution. The Florida Supreme Court issued an opinion in

1937 upholding the validity of the box tax. C.V. Floyd Fruit

Company v. Florida Citrus Commission , 128 Fla. 565, 175 So. 248

(1937).

9. In 1970, the Legislature enacted the "equalization

tax," codified as Section 601.155, Florida Statutes. The

statute mirrored Section 601.15, Florida Statutes, but added

certain processors who were mixing foreign citrus products with

Florida products. The purpose of the equalization tax was to

have all Florida processors of citrus products help pay for the

costs of the Department, rather than have the burden fall

entirely on the Florida growers subject to the box tax.

10. Section 601.155, Florida Statutes, provides, in

relevant part:

(1) The first person who exercises in

this state the privilege of processing,

reprocessing, blending, or mixing processed

orange products or processed grapefruit

products or the privilege of packaging or

repackaging processed orange pr oducts or

processed grapefruit products into retail or

institutional size containers or, except as

provided in subsection (9) or except if a

tax is levied and collected on the exercise

of one of the foregoing privileges, the

first person having title to or possession

of any processed orange product or any

processed grapefruit product who exercises

the privilege in this state of storing such

product or removing any portion of such

product from the original container in which

it arrived in this state for purp oses other

than official inspection or direct

consumption by the consumer and not for

resale shall be assessed and shall pay an

excise tax upon the exercise of such

privilege at the rate described in

subsection (2).

(2) Upon the exercise of any privil ege

described in subsection (1), the excise tax

levied by this section shall be at the same

rate per box of oranges or grapefruit

utilized in the initial production of the

processed citrus products so handled as that

imposed, at the time of exercise of the

taxable privilege, by s. 601.15 per box of

oranges.

11. In order to administer the tax, the Legislature

provided the following relevant provisions in Section 601.155,

Florida Statutes:

(6) Every person liable for the excise

tax imposed by this sectio n shall keep a

complete and accurate record of the receipt,

storage, handling, exercise of any taxable

privilege under this section, and shipment

of all products subject to the tax imposed

by this section. Such record shall be

preserved for a period of 1 year and shall

be offered for inspection upon oral or

written request by the Department of Citrus

or its duly authorized agent.

(7) Every person liable for the excise

tax imposed by this section shall, at such

times and in such manner as the Department

of Citrus may by rule require, file with the

Department of Citrus a return, certified as

true and correct, on forms to be prescribed

and furnished by the Department of Citrus,

stating, in addition to other information

reasonably required by the Department of

Citrus, the number of units of processed

orange or grapefruit products subject to

this section upon which any taxable

privilege under this section was exercised

during the period of time covered by the

return. Full payment of excise taxes due

for the period reported shall accompany each

return.

(8) All taxes levied and imposed by this

section shall be due and payable within 61

days after the first of the taxable

privileges is exercised in this state.

Periodic payment of the excise taxes imposed

by this section by the person first

exercising the taxable privileges and liable

for such payment shall be permitted only in

accordance with Department of Citrus rules,

and the payment thereof shall be guaranteed

by the posting of an appropriate certificate

of deposit, approved surety bond, or cash

deposit in an amount and manner as

prescribed by the Department of Citrus.

* * *

(11) This section shall be liberally

construed to effectuate the purposes set

forth and as additional and supplemental

power s vested in the Department of Citrus

under the police power of this state.

12. In March 2000, certain citrus businesses challenged

Section 601.155(5), Florida Statutes, as being unconstitutional.

At the time of the suit, Section 601.155(5), Florida Stat utes,

read as follows:

All products subject to the taxable

privileges under this section, which

products are produced in whole or in part

from citrus fruit grown within the United

States, are exempt from the tax imposed by

this section to the extent that t he products

are derived from oranges or grapefruit grown

within the United States. In the case of

products made in part from citrus fruit

grown within the United States, it shall be

the burden of the persons liable for the

excise tax to show the Departmen t of Citrus,

through competent evidence, proof of that

part which is not subject to a taxable

privilege.

13. The citrus businesses claimed the exemption in

Section 601.155(5) rendered the tax unconstitutionally

discriminatory, in that processors who imp orted juice from

foreign countries to be blended with Florida juice were subject

to the equalization tax, whereas processors who imported juice

from places such as California, Arizona and Texas enjoyed an

exemption from the tax. The case, Tampa Juice Serv ice, Inc., et

al. v. Department of Citrus , Case No. GCG - 00 - 3718 (Consolidated)

(" Tampa Juice "), was brought in the Tenth Judicial Circuit

Court, in and for Polk County. Judge Dennis P. Maloney of that

court continues to preside over that case.

14. In a p artial final declaratory judgment effective

March 15, 2002, Judge Maloney found Section 601.155, Florida

Statutes, unconstitutional because it violated the Commerce

Clause of the United States Constitution due to its

discriminatory effect in favor of non - F lorida United States

juice. In an order dated April 15, 2002, Judge Maloney severed

the exemption in Section 601.155(5), Florida Statutes, from the

remainder of the statute.

15. The court's decision necessitated the formulation of a

remedy for the injur ed plaintiffs. While the parties were

briefing the issue before the court, the Florida Legislature met

and passed Chapter 2002 - 26, Laws of Florida, which amended

Section 601.155(5), Florida Statutes, to read as follows:

Products made in whole or in part f rom

citrus fruit on which an equivalent tax is

levied pursuant to s. 601.15 are exempt from

the tax imposed by this section. In the

case of products made in part from citrus

fruit exempt from the tax imposed by this

section, it shall be the burden of the

persons liable for the excise tax to show

the Department of Citrus, through competent

evidence, proof of that part which is not

subject to a taxable privilege.

Chapter 2002 - 26, Laws of Florida, was given an effective date of

July 1, 2002.

16. By order dated August 8, 2002, Judge Maloney set forth

his decision as to the remedy for the plaintiffs injured by the

discriminatory effect of Section 601.155(5), Florida Statutes.

Judge Maloney expressly relied on the rationale set forth in

Division of Alcoholi c Beverages and Tobacco v. McKesson

Corporation , 574 So. 2d 114 (Fla. 1991)(" McKesson II").

17. In its initial McKesson decision, Division of

Alcoholic Beverages and Tobacco v. McKesson Corporation , 524

So. 2d 1000 (Fla. 1988), the Florida Supreme Court a ffirmed a

summary judgment ruling that Florida's alcoholic beverage tax

scheme, which gave tax preferences and exemptions to certain

alcoholic beverages made from Florida crops, unconstitutionally

discriminated against interstate commerce. The Florida Sup reme

Court also affirmed that portion of the summary judgment giving

the ruling prospective effect, thus denying the plaintiff a

refund of taxes paid pursuant to the unconstitutional scheme.

18. The decision was appealed to the United States Supreme

Cou rt. In McKesson Corporation v. Division of Alcoholic

Beverages and Tobacco , 496 U.S. 18 (1990), the United States

Supreme Court reversed the Florida Supreme Court's decision as

to the prospective effect of its decision. The United States

Supreme Court he ld that:

The question before us is whether

prospective relief, by itself, exhausts the

requirements of federal law. The answer is

no: If a State places a taxpayer under

duress promptly to pay a tax when due and

relegates him to a postpayment refund actio n

in which he can challenge the tax's

legality, the Due Process Clause of the

Fourteenth Amendment obligates the State to

provide meaningful backward - looking relief

to rectify any unconstitutional deprivation.

496 U.S. at 31 (footnotes omitted).

19. The United States Supreme Court set forth the

following options by which the state could meet its obligation

to provide "meaningful backward - looking relief":

[T]he State may cure the invalidity of the

Liquor Tax by refunding to petitioner the

difference betwe en the tax it paid and the

tax it would have been assessed were it

extended the same rate reductions that its

competitors actually received. . . .

Alternatively, to the extent consistent with

other constitutional restrictions, the State

may assess and col lect back taxes from

petitioner's competitors who benefited from

the rate reductions during the contested tax

period, calibrating the retroactive

assessment to create in hindsight a

nondiscriminatory scheme. . . . Finally, a

combination of a partial refun d to

petitioner and a partial retroactive

assessment of tax increases on favored

competitors, so long as the resultant tax

actually assessed during the contested tax

period reflects a scheme that does not

discriminate against interstate commerce,

would ren der Petitioner's resultant

deprivation lawful and therefore satisfy the

Due Process Clause's requirement of a fully

adequate postdeprivation procedure.

496 U.S. at 40 - 41 (citations and footnotes omitted). The United

States Supreme Court expressly provide d that the state has the

option of choosing the form of relief it will grant.

20. In keeping with the United States Supreme Court

opinion, the Florida Supreme Court granted the Division of

Alcoholic Beverages and Tobacco (the "Division") leave to advise

t he Court as to the form of relief the state wished to provide.

The Division proposed to retroactively assess and collect taxes

from those of McKesson's competitors who had benefited from the

discriminatory tax scheme. McKesson contended that a refund of

the taxes it had paid was the only clear and certain remedy,

because retroactive taxation of its competitors would violate

their due process rights. McKesson II, 574 So. 2d at 116.

21. The Florida Supreme Court remanded the case to the

trial court for further proceedings on McKesson's refund claim,

with the following instructions:

While McKesson may not necessarily be

entitled to a refund, it is entitled to a

"clear and certain remedy," as outlined in

the Supreme Court's opinion. Because

nonparties, su ch as amici, will be directly

affected by the retroactive tax scheme

proposed by the state, all affected by the

proposed emergency rule must be given notice

and an opportunity to intervene in this

action. Therefore, on remand, the trial

court not only mus t determine whether the

state's proposal meets "the minimum federal

requirements" outlined in the Supreme

Court's opinion, it also must determine

whether the proposal comports with federal

and state protections afforded those against

whom the proposed tax will be assessed.

We emphasize that the state has the option

of choosing the manner in which it will

reformulate the alcoholic beverage tax

during the contested period so that the

resultant tax actually assessed during that

period reflects a scheme which does not

discriminate against interstate commerce.

Therefore, if the trial court should rule

that the state's proposal to retroactively

assess and collect taxes from McKesson's

competitors does not meet constitutional

muster and such ruling is upheld on appeal,

the state may offer an alternative remedy

for the trial court's review. However, any

such proposal likewise must satisfy the

standards set forth by the Supreme Court as

well as be consistent with other

constitutional restrictions.

574 So. 2d at 1 16.

22. In the Tampa Juice case, Judge Maloney assessed the

options prescribed by the series of McKesson cases and concluded

that the only fair remedy was to assess and collect back

assessments from those who benefited from the unconstitutional

equalizati on tax exemption. His August 8, 2002, order directed

the Department to "take appropriate steps, consistent with

existing law, to assess and collect the Equalization tax from

those entities which [benefited] from the unconstitutional

exemption."

23. On September 18, 2002, the Department promulgated the

Emergency Rules that were at issue in DOAH Case No. 02 - 3648RE.

The Emergency Rules were filed with the Department of State on

September 24, 2002, and took effect on that date. Those

emergency rules were held invalid in Peace River , and are not at

issue in the instant case.

24. In the November 15, 2002 issue of the Florida

Administrative Weekly (vol. 28, no. 46, pp. 4996 - 4998), the

Department published the Proposed Rules that were at issue in

DOAH Case No . 02 - 4607RP. In the March 7, 2003, issue of the

Florida Administrative Weekly (vol. 29, no. 10, p. 1036), the

Department published amendments to the Proposed Rule. The

Proposed Rules, as amended, read as follows:

EQUALIZATION TAX ON NON - FLORIDA

UNITED ST ATES JUICE

20 - 15.001 Intent.

(1) The Court in Tampa Juice Service, et

al v. Florida Department of Citrus in

Consolidated Case Number GCG - 003718 (Circuit

Court in and for Polk County, Florida)

severed the exemption contained in Section

601.155(5), Flo rida Statutes, that provided

an exemption for persons who exercised one

of the enumerated Equalization Tax

privileges on non - Florida, United States

juice. The Court had previously determined

that the stricken provisions operated in a

manner that violated the Commerce Clause of

the United States Constitution. On

August 8, 2002, the Court ordered that the

Florida Department of Citrus "take

appropriate steps, consistent with existing

law, to assess and collect the Equalization

tax from those entities which [benefited]

from the unconstitutional exemption."

(2) It is the Florida Department of

Citrus' intent by promulgating the following

remedial rule to implement a non -

discriminatory tax scheme, which does not

impose a significant tax burden that is so

har sh and oppressive as to transgress

constitutional limitations. These rules

shall be applicable to those previously

favored persons who received favorable tax

treatment under the statutory sections cited

above.

Specific Authority 601.02, 601.10, 601.15,

6 01.155 FS. Law Implemented 601.02, 601.10,

601.15, 601.155 FS. History -- New .

20 - 15.002 Definitions.

(1) "Previously favored persons" shall be

defined as any person who exercised an

enumerated Equalization Tax privilege as

defined by Sectio n 601.155, Florida

Statutes, but who was exempt from payment of

the Equalization Tax due to the exemption

for non - Florida, United States juice set

forth in the statutory provision, which was

ultimately determined to be unconstitutional

and severed from Sec tion 601.155(5), Florida

Statutes.

(2) The "tax period" during which the

severed provisions of Section 601.155(5),

Florida Statutes, were in effect shall be

defined as commencing on October 6, 1997,

and ending on March 14, 2002.

(3) "Tax liability" shall be defined as

the total amount of taxes due to the Florida

Department of Citrus during the "tax

period," at the following rates per box for

each respective fiscal year:

Fiscal Year Processed Rate

Orange Grapefruit

1997 - 1998 .175 .30

199 8 - 1999 .17 .30

1999 - 2000 .18 .325

2000 - 2001 .175 .30

2001 - 2002 .165 .18

Specific Authority 601.02, 601.10, 601.15,

601.155 FS. Law Implemented 601.02, 601.10,

601.15, 601.155 FS. History -- New .

20 - 15.003 Collection.

(1) The Florida Department of Citrus

shall calculate the tax liability for each

person or entity that exercised an

enumerated Equalization Tax privilege

outlined in section 601.155, Florida

Statutes, upon non - Florida, United States

juice based upon ins pection records

maintained by Florida Department of

Agriculture and Consumer Services and the

United States Department of Agriculture.

(2) Subsequent to adoption of this rule,

the Florida Department of Citrus will

provide to the previously favored pe rsons by

certified mail a Notice of Tax Liability

which shall contain a demand for payment

consistent with the above - referenced

itemized statement. The Department will

deem late payment of Equalization Taxes owed

by previously favored persons to constitut e

good cause, and shall waive the 5 percent

penalty authorized by Section 601.155(10),

F.S., as compliance with either of the

following is established by Department

[sic]:

(a) Lump sum payment of the tax liability

remitted with the filing of Department of

Citrus Form 4R (incorporated by reference in

Rule 20 - 100.004, F.A.C.) for the relevant

years and then - applicable tax rate(s) per

subsection 20 - 15.002(3), F.A.C., within 61

days of receiving Notice of Tax Liability;

or

(b) Equal installment payments remitted

with the filing of Department of Citrus Form

4R (incorporated by reference in Rule 20 -

100.004, F.A.C.) for the relevant years and

then - applicable tax rate(s) per subsection

subsection [sic] 20 - 15.002(3), F.A.C., over

a 60 - month period, the first payment being

due within 61 days of receiving Notice of

Tax Liability pursuant to subsection 20 -

15.003(2), F.A.C.; or

(c) The Good Cause provisions of

601.155(10), F.S., shall not apply to

persons who do not comply with paragraph 20 -

15.003(2)(a), F.A.C ., or paragraph 20 -

15.003(2)(b), F.A.C.

(d) Failure to pay the taxes or penalties

due under 601.155, F.S. and Chapter 20 - 15,

F.A.C., shall constitute grounds for

revocation or suspension of a previously

favored person's citrus fruit dealer's

license pu rsuant to 601.56(4), F.S.,

601.64(6), F.S., 601.64(7), F.S., and/or

601.67(1), F.S.

(3) The Florida Department of Citrus will

not oppose the timely intervention of

persons who previously enjoyed the subject

exemption that wish to present a claim to

the Court in the Tampa Juice Service, Inc.,

et al v. Florida Department of Citrus.

However, the Florida Department of Citrus

does not waive any argument regarding the

validity of the calculation of the tax

liability or that imposition of this tax is

constitu tional.

Specific Authority 601.02, 601.10, 601.15,

601.155 FS. Law Implemented 601.02, 601.10,

601.15, 601.155 FS. History -- New .

25. The Final Order in Peace River held that the Proposed

Rules were not an invalid exercise of delegated legislat ive

authority, for reasons discussed in the Conclusions of Law

below.

26. Judge Maloney has yet to rule on the backward - looking

remedy proposed by the Department. On March 26, 2003, Judge

Maloney entered an order extending until May 1, 2003, the time

fo r interested parties to file motions to intervene with regard

to the Department's proposed backward - looking relief. The order

noted that the parties have stipulated to the suspension of the

back tax as to plaintiffs and objecting non - parties until

further order of the court.

27. On February 19, 2003, Judge Maloney entered an "Order

Granting Plaintiffs' Motion for Partial Summary Judgment --

Import - Export." The sole issue before Judge Maloney was

"whether Section 601.155, Florida Statutes, (the 'Equalizati on

Tax'), as it existed in 1997 , violates Article I, Section 10,

clause 2 of the Constitution of the United States (the 'Import -

Export Clause')." (Emphasis in original) After setting forth

the standard for analysis of whether a taxing scheme violates

the Import - Export Clause under Michelin Tire Corp. v. Wages , 423

U.S. 276, 96 S. Ct. 535, 46 L.Ed.2d 495 (1976), Judge Maloney

ruled as follows:

It is precisely [the exemption for United

States products found in 601.155(5), Florida

Statutes] that causes the 1997 Equalization

Tax to contravene the Import - Export Clause.

Specifically, the court finds that because

the statute exempts "citrus fruit grown

within the United States," but does not

exempt citrus fruit grown in foreign

countries, the exemption causes the tax to

"fall on imports as such simply because of

their place of origin." Michelin , 423 U.S.

at 286. Additionally, because the tax falls

on foreign - grown citrus as such simply

because of its origin but does not fall on

domestic - grown citrus, the Equa lization Tax,

with the exemption, creates a "special

tariff or particular preference for certain

domestic goods." Id. (i.e. California,

Arizona, and Texas citrus products).

* * *

In conclusion, because the court finds the

exemption contained with in the 1997

Equalization Tax violates both the first and

third elements of the Michelin test, 1 the

court finds the 1997 Equalization Tax

violates Article I, Section 10, clause 2 of

the Constitution of the United States (the

"Import - Export Clause").

28 . On March 31, 2003, Judge Maloney entered an "Order

Granting Plaintiffs' Motion for Partial Summary Judgment." In

this order, Judge Maloney found that the box tax itself,

Section 601.15, Florida Statutes, violates the First Amendment

to the United State s Constitution.

29. Petitioners and Intervenor in the instant case are

licensed citrus fruit dealers regulated by Chapter 601, Florida

Statutes. As such, they are subject to the rules of the

Department. Petitioners and Intervenor buy, sell, and

manufa cture citrus juices. They shipped products made with non -

Florida U.S. juice during the tax period without paying

equalization taxes. Petitioners and Intervenor have been

notified by the Department that they are liable to pay back

taxes pursuant to the Pr oposed Rules, as well as the invalid

Emergency Rules.

CONCLUSIONS OF LAW

30. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to these

proceedings pursuant to Section 120.56, Florida Statutes.

31. Section 120.56(1)(a), Florida Statutes, provides:

"Any 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 au thority." Section 120.56(2)(a), Florida

Statutes, provides that in challenges to proposed rules,

"Petitioner has the burden of going forward. The agency then

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

the proposed rule is not an inva lid exercise of delegated

legislative authority as to the objections raised."

32. Petitioners and the Intervenor are licensed citrus

fruit dealers regulated by Chapter 601, Florida Statutes.

During the tax period, they imported, stored and blended non -

Fl orida United States citrus juices. Petitioners have

demonstrated that they would be substantially affected by the

Proposed Rules and accordingly have standing to bring this rule

challenge. Petitioners have alleged a real and sufficiently

immediate injury in fact, in that the Proposed Rules would

subject them to payment of taxes for the period in question and

to penalties for non - payment. Petitioners' alleged injury is

within the zone of interest that is regulated by the statutes

purportedly implemented b y the Proposed Rules. See Lanoue v.

Florida Department of Law Enforcement , 751 So. 2d 94 (Fla. 1st

DCA 1999), and cases cited therein regarding the "substantially

affected" test to establish standing in a rule challenge

proceeding.

33. Section 120.52(8), Florida Statutes (2002), provides:

"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

legi slative 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, citati on to which is

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

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required

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

(d) The rule is vague, fails to establish

adequate standards f or agency decisions, or

vests unbridled discretion in the agency;

(e) The rule is arbitrary 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 c ity which

could be reduced by the adoption of less

costly alternatives that substantially

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

impleme nted 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

e nabling 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 g ranting rulemaking authority or

generally describing the powers and

functions of an agency shall be construed to

extend no further than implementing or

interpreting the specific powers and duties

conferred by the same statute.

34. The statutory pr ovisions cited by the Department as

specific authority for the proposed rules are Sections 601.02,

601.10, 601.15, and 601.155, Florida Statutes. Section 601.02,

Florida Statutes, sets forth the purposes of Chapter 601,

Florida Statutes, and provides:

( 1) In the exercise of the police power

to protect health and welfare and to

stabilize and protect the citrus industry of

the state.

(2) Because the planting, growing,

cultivating, spraying, pruning, and

fertilizing of citrus groves and the

harvesting , hauling, processing, packing,

canning, and concentrating of the citrus

crop produced thereon is the major

agricultural enterprise of Florida and,

together with the sale and distribution of

said crop, affects the health, morals, and

general economy of a v ast number of citizens

of the state who are either directly or

indirectly dependent thereon for a

livelihood, and said business is therefore

of vast public interest.

(3) Because it is wise, necessary, and

expedient to protect and enhance the quality

a nd reputation of Florida citrus fruit and

the canned and concentrated products thereof

in domestic and foreign markets.

(4) To provide means whereby producers,

packers, canners, and concentrators of

citrus fruit and the canned and concentrated

product s thereof may secure prompt and

efficient inspection and classification of

grades of citrus fruit and the canned and

concentrated products thereof at reasonable

costs, it being hereby recognized that the

standardization of the citrus fruit industry

of Flor ida by the proper grading and

classification of citrus fruit and the

canned and concentrated products thereof by

prompt and efficient inspection under

competent authority is beneficial alike to

producer, packer, shipper, canner,

concentrator, carrier, rece iver, and

consumer in that it furnishes them prima

facie evidence of the quality and condition

of such products and informs the carrier and

receiver of the quality of the products

carried and received by them and assures the

ultimate consumer of the qualit y of the

products purchased.

(5) To enable citrus producers

collectively to pay assessments to fund

marketing and research programs for the

direct benefit of the citrus industry of

this state. It is the intent of the

Legislature that all funds collec ted under

this chapter and the interest accrued on

such funds are consideration for a social

contract between the state and the citrus

growers of the state whereby the state must

hold such funds in trust and inviolate and

use them only for the purposes pre scribed in

this chapter.

(6) To stabilize the Florida citrus

industry and to protect the public against

fraud, deception, and financial loss through

unscrupulous practices and haphazard methods

in connection with the processing and

marketing of citrus fruit and the canned or

concentrated products thereof.

(7) Because said act is designed to

promote the general welfare of the Florida

citrus industry, which in turn will promote

the general welfare and social and political

economy of the state.

In the event any word, phrase, clause,

sentence, paragraph, or section of this

chapter is declared unconstitutional by any

court of competent jurisdiction, then such

declaration of such unconstitutionality

shall not affect the remainder of this

chapter, and t he unconstitutional portion

shall be considered severable, it being the

intent of the Legislature that the remainder

of this chapter shall continue in full force

and effect.

35. Section 601.10, Florida Statutes, is quoted, supra , in

paragraph 2.

36. Section 601.15, Florida Statutes, provides as follows,

in relevant part to the provisions of the Proposed Rules:

(1) The administration of this section

shall be vested in the Department of Citrus,

which shall prescribe suitable and

reasonable rules and regulations for the

enforcement hereof, and the Department of

Citrus shall administer the taxes levied and

imposed hereby. All funds collected under

this section and the interest accrued on

such funds are consideration for a social

contract between the st ate and the citrus

growers of the state whereby the state must

hold such funds in trust and inviolate and

use them only for the purposes prescribed in

this chapter. The Department of Citrus

shall have power to cause its duly

authorized agent or representa tive to enter

upon the premises of any handler of citrus

fruits and to examine or cause to be

examined any books, papers, records, or

memoranda bearing on the amount of taxes

payable and to secure other information

directly or indirectly concerned in the

e nforcement hereof. Any person who is

required to pay the taxes levied and imposed

and who by any practice or evasion makes it

difficult to enforce the provisions hereof

by inspection, or any person who, after

demand by the Department of Citrus or any

agen t or representative designated by it for

that purpose, refuses to allow full

inspection of the premises or any part

thereof or any books, records, documents, or

other instruments in any manner relating to

the liability of the taxpayer for the tax

imposed o r hinders or in anywise delays or

prevents such inspection, is guilty of a

misdemeanor of the second degree, punishable

as provided in s. 775.082 or s. 775.083.

(2) The Department of Citrus shall plan

and conduct campaigns for commodity

advertising, pu blicity, and sales promotion,

and may conduct campaigns to encourage

noncommodity advertising, to increase the

consumption of citrus fruits and may

contract for any such advertising,

publicity, and sales promotion service. . .

.

* * *

(4) Every han dler shall keep a complete

and accurate record of all citrus fruit

handled by her or him. Such record shall be

in such form and contain such other

information as the Department of Citrus

shall by rule or regulation prescribe. Such

records shall be preser ved by such handlers

for a period of 1 year and shall be offered

for inspection at any time upon oral or

written demand by the Department of Citrus

or its duly authorized agents or

representatives.

(5) Every handler shall, at such times

and in such man ner as the Department of

Citrus may by rule require, file with the

Department of Citrus a return certified as

true and correct, on forms furnished by the

Department of Citrus, stating, in addition

to other information, the number of

standard - packed boxes o f each kind of citrus

fruit handled by such handler in the primary

channel of trade during the period of time

covered by the return. Full payment of all

excise taxes due for the period reported

shall accompany each handler's return.

* * *

(9)(a) Any handler who fails to file a

return or to pay any tax within the time

required shall thereby forfeit to the

Department of Citrus a penalty of 5 percent

of the amount of tax determined to be due;

but the Department of Citrus, if satisfied

that the dela y was excusable, may remit all

or any part of such penalty. Such penalty

shall be paid to the Department of Citrus

and disposed of as provided with respect to

moneys derived from the taxes levied and

imposed by subsection (3).

(b) The Department of Ci trus may collect

any taxes levied and assessed by this

chapter in any or all of the following

methods:

1. By the voluntary payment by the person

liable therefor.

2. By a suit at law.

3. By a suit in equity to enjoin and

restrain any handler, ci trus fruit dealer,

or other person owing such taxes from

operating her or his business or engaging in

business as a citrus fruit dealer until the

delinquent taxes are paid. Such action may

include an accounting to determine the

amount of taxes plus delinq uencies due. In

any such proceeding, it is not necessary to

allege or prove that an adequate remedy at

law does not exist.

(10) The powers and duties of the

Department of Citrus include the following:

(a) To adopt and from time to time alter,

resc ind, modify, and amend all proper and

necessary rules, regulations, and orders for

the exercise of its powers and the

performance of its duties under this

chapter. . . .

37. Section 601.155, Florida Statutes, at the time of the

suit in Tampa Juice Serv ice , provided as follows, in relevant

part:

(1) The first person who exercises in

this state the privilege of processing,

reprocessing, blending, or mixing processed

orange products or processed grapefruit

products or the privilege of packaging or

repac kaging processed orange products or

processed grapefruit products into retail or

institutional size containers or, except as

provided in subsection (9) or except if a

tax is levied and collected on the exercise

of one of the foregoing privileges, the

first person having title to or possession

of any processed orange product or any

processed grapefruit product who exercises

the privilege in this state of storing such

product or removing any portion of such

product from the original container in which

it arri ved in this state for purposes other

than official inspection or direct

consumption by the consumer and not for

resale shall be assessed and shall pay an

excise tax upon the exercise of such

privilege at the rate described in

subsection (2).

(2) Upon t he exercise of any privilege

described in subsection (1), the excise tax

levied by this section shall be at the same

rate per box of oranges or grapefruit

utilized in the initial production of the

processed citrus products so handled as that

imposed, at th e time of exercise of the

taxable privilege, by s. 601.15 per box of

oranges.

(3) For the purposes of this section, the

number of boxes of oranges or grapefruit

utilized in the initial production of

processed citrus products subject to the

taxable priv ilege shall be:

(a) The actual number of boxes so

utilized, if known and verified in

accordance with Department of Citrus rules;

or

(b) An equivalent number established by

Department of Citrus rule which, on the

basis of existing data, reasonably equates

to the quantity of citrus contained in the

product, when the actual number of boxes so

utilized is not known or properly verified.

(4) For purposes of this section:

(a) "Processed orange products" means

products for human consumption consis ting of

20 percent or more single strength

equivalent orange juice; orange sections,

segments, or edible components; or whole

peeled fruit.

(b) "Processed grapefruit products" means

products for human consumption consisting of

20 percent or more singl e strength

equivalent grapefruit juice; grapefruit

sections, segments, or edible components;

or whole peeled fruit.

(c) "Original container" includes any

vessel, tanker or tank car or other

transport vehicle.

(d) "Retail or institutional container "

means a container having a capacity of 10

gallons or less.

(5) All products subject to the taxable

privileges under this section, which

products are produced in whole or in part

from citrus fruit grown within the United

States, are exempt from the ta x imposed by

this section to the extent that the products

are derived from oranges or grapefruit grown

within the United States. In the case of

products made in part from citrus fruit

grown within the United States, it shall be

the burden of the persons l iable for the

excise tax to show the Department of Citrus,

through competent evidence, proof of that

part which is not subject to a taxable

privilege.

Products made in whole or in part from

citrus fruit on which an equivalent tax is

levied pursuant to s . 601.15 are exempt from

the tax imposed by this section. In the

case of products made in part from citrus

fruit exempt from the tax imposed by this

section, it shall be the burden of the

persons liable for the excise tax to show

the Department of Citrus, through competent

evidence, proof of that part which is not

subject to a taxable privilege.

(6) Every person liable for the excise

tax imposed by this section shall keep a

complete and accurate record of the receipt,

storage, handling, exercise of any taxable

privilege under this section, and shipment

of all products subject to the tax imposed

by this section. Such record shall be

preserved for a period of 1 year and shall

be offered for inspection upon oral or

written request by the Department of Cit rus

or its duly authorized agent.

(7) Every person liable for the excise

tax imposed by this section shall, at such

times and in such manner as the Department

of Citrus may by rule require, file with the

Department of Citrus a return, certified as

true and correct, on forms to be prescribed

and furnished by the Department of Citrus,

stating, in addition to other information

reasonably required by the Department of

Citrus, the number of units of processed

orange or grapefruit products subject to

this sec tion upon which any taxable

privilege under this section was exercised

during the period of time covered by the

return. Full payment of excise taxes due

for the period reported shall accompany each

return.

(8) All taxes levied and imposed by this

sect ion shall be due and payable within 61

days after the first of the taxable

privileges is exercised in this state.

Periodic payment of the excise taxes imposed

by this section by the person first

exercising the taxable privileges and liable

for such paymen t shall be permitted only in

accordance with Department of Citrus rules,

and the payment thereof shall be guaranteed

by the posting of an appropriate certificate

of deposit, approved surety bond, or cash

deposit in an amount and manner as

prescribed by the Department of Citrus.

(9) When any processed orange or

grapefruit product is stored or removed from

its original container as provided in

subsection (1), the equalizing excise tax is

levied on such storage or removal, and such

product is subsequently shipped out of the

state in a vessel, tanker or tank car, or

container having a capacity greater than 10

gallons, the person who is liable for the

tax shall be entitled to a tax refund, if

such tax has been paid, or to a tax credit,

provided she or he can provide satisfactory

proof that such product has been shipped out

of the state and that no privilege taxable

under subsection (1) other than storage or

removal from the original container was

exercised prior to such shipment out of the

state.

(10) All excise taxes levied and

collected under the provisions of this

section, including penalties, shall be paid

into the State Treasury to be made a part of

the Florida Citrus Advertising Trust Fund in

the same manner, for the same purposes, and

in the same pro portions as set forth in s.

601.15(7). Any person failing to file a

return or pay any assessment within the time

required shall thereby forfeit to the

Department of Citrus a penalty of 5 percent

of the amount of assessment then due; but

the Department of Citrus, on good cause

shown, may waive all or any part of such

penalty.

(11) This section shall be liberally

construed to effectuate the purposes set

forth and as additional and supplemental

powers vested in the Department of Citrus

under the police p ower of this state.

38. Chapter 2002 - 26, Laws of Florida, amended Section

601.155(5), Florida Statutes, to read as follows:

Products made in whole or in part from

citrus fruit on which an equivalent tax is

levied pursuant to s. 601.15 are exempt from

th e tax imposed by this section. In the

case of products made in part from citrus

fruit exempt from the tax imposed by this

section, it shall be the burden of the

persons liable for the excise tax to show

the Department of Citrus, through competent

evidence , proof of that part which is not

subject to a taxable privilege.

39. The Final Order in Peace River , holding that the

Proposed Rules were not an invalid exercise of delegated

legislative authority, was premised on the facts that Judge

Maloney had found Section 601.155, Florida Statutes (2001),

unconstitutional as violative of the Commerce Clause of the

United States Constitution, and that Judge Maloney had severed

the unconstitutional portion, Section 601.155(5), from the

remainder of the statute. That severance, and Judge Maloney's

order that the Department devise a meaningful backward - looking

remedy for the unconstitutional discrimination caused by the

operation of Section 601.155(5), Florida Statutes, led the

undersigned to conclude that the exemptio n, and only the

exemption, had been held void ab initio and that Petitioners who

had enjoyed the exemption were now subject to taxation as if the

exemption had never existed.

40. Petitioners in Peace River , as well as Petitioners in

the instant case, u rged that this conclusion was flawed because

the analysis in a rule challenge proceeding is confined to a

determination of whether the Legislature has affirmatively

granted the agency authority for the rules proposed.

Petitioners noted that Section 120.54 (1)(f), Florida Statutes,

prohibits an agency from adopting retroactive rules "unless the

power is expressly authorized by law." Because the

Legislature's amendment of Section 601.155(5), Florida Statutes,

in Chapter 2002 - 26, Laws of Florida, was silent a s to

retroactive application, Petitioners contend that the Department

has no statutory authority to collect the Equalization Tax

retroactively, regardless of the implications of Judge Maloney's

orders.

41. The Final Order in Peace River rejected Petit ioners'

argument, because the requirements of the Administrative

Procedure Act cannot operate to preempt the constitutional

authority of an Article V court to declare a tax exemption

unconstitutional and void ab initio , and to order a state agency

to provi de appropriate relief to affected parties. The

legislative silence in Chapter 2002 - 26, Laws of Florida, as to

retroactive application could not define or limit the court's

constitutional jurisdiction. Petitioners in the instant case

have offered no convi ncing reasons for the undersigned to recede

from the analysis in Peace River.

42. However, the analysis cannot end at this point.

Petitioners have submitted two orders entered by Judge Maloney

after the Final Order in Peace River . Judge Maloney's order of

February 19, 2003, found Section 601.155, Florida Statutes, "as

it existed in 1997," 2 violates the Import - Export Clause of the

United States Constitution. This order makes clear that the

constitutional deficiency lies in the exemption already found

unc onstitutional in Judge Maloney's prior order of March 15,

2002. However, the parties have presented no order subsequent

to February 19, 2003, that severs Section 601.155(5), Florida

Statutes, from the remainder of the equalization tax. Thus, the

plain wo rding of the February 19, 2003, order leads to the

conclusion that Judge Maloney has invalidated the entirety of

Section 601.155, Florida Statutes.

43. Petitioners point out that the Import - Export Clause,

unlike the Commerce Clause, states an absolute ba n on

legislative enactments contravening its terms. Department of

Revenue of the State of Washington v. Association of Washington

Stevedoring Companies , 435 U.S. 734, 751 (1978). Thus, it must

be concluded that Judge Maloney's order has the effect of

hol ding the equalization tax void ab initio .

44. While Section 601.155, Florida Statutes, is not the

only statute cited as authority for the Proposed Rules, it is

obviously their basis. Without the substance of the

equalization tax, Sections 601.02, 601. 10, and 601.15, Florida

Statutes, cannot be read to authorize the retroactive collection

of equalization taxes contemplated by the Proposed Rules.

45. Further, in an order dated March 31, 2003, Judge

Maloney found that the box tax, Section 601.15, Flori da

Statutes, violates plaintiffs' rights guaranteed by the First

Amendment to the United States Constitution. Thus, the entire

taxing scheme by which the Department and the Commission finance

the performance of their duties has been held unconstitutional

by Judge Maloney.

46. Section 120.52(8), Florida Statutes, provides: "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." As to the Proposed Rules, the

"specific law to be implemented" has itself been held

unconstitutional and invalid. There is no longer a specific law

to be implemented. The Proposed Rules are therefore an invalid

exercise of delegated legislative authority.

47. Section 120.52(8)(e), Florida Statutes, provides that

a proposed rule is an invalid exercise of delegated legislative

authority if it is "arbitrary or capricious." An "arbitrary"

decision is one not supported by facts or logic, or despotic.

A "capricious" decision is one tak en irrationally, or without

thought or reason. Board of Clinical Laboratory Personnel v.

Florida Association of Blood Banks , 721 So. 2d 317, 318 (Fla.

1st DCA 1998); Board of Trustees of the Internal Improvement

Trust Fund v. Levy , 656 So. 2d 1359, 1362 ( Fla. 1st DCA 1995).

In undertaking this analysis, the undersigned is mindful that

these definitions:

add color and flavor to our traditionally

dry legal vocabulary, but do not assist an

objective legal analysis. If an

administrative decision is justifiab le under

any analysis that a reasonable person would

use to reach a decision of similar

importance, it would seem that the decision

is neither arbitrary nor capricious.

Dravo Basic Materials Company, Inc. v. Department of

Transportation , 602 So. 2d 632, 6 34 n.3 (Fla. 2d DCA 1992).

48. Under any of the standards provided by the cited

cases, the Proposed Rules are arbitrary and capricious for the

simple reason that the underlying equalization tax has been held

void ab initio by a court of competent jurisdi ction. There is

no longer any statute that even arguably authorizes the

Department to collect the equalization tax on a retroactive or

any other basis.

ORDER

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is

ORDERED that Propo sed Rules 20 - 15.001, 20 - 15.002, and 20 -

15.003, Florida Administrative Code, constitute an invalid

exercise of delegated legislative authority.

DONE AND ORDERED this 20th day of May, 2003, in

Tallahassee, Leon County, Florida.

_ _________________________________

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Park way

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk o f the

Division of Administrative Hearings

this 20th day of May, 2003.

ENDNOTES

1/ The first element of the Michelin test, as restated by Judge

Maloney, is that "the Federal government must speak with one

voice." A tax is violative of the first element if it:

a) falls on imports as such simply because of their place of

origin, or b) creates special tariffs or particular preferences

for certain domestic goods, or c) can be applied selectively to

encourage or disc ourage any importation in a manner inconsistent

with federal regulations. Michelin , 423 U.S. at 287. The third

element of the Michelin test is "maintaining harmony between the

states." A tax is violative of the third element if it: a)

does not fall upo n a taxpayer with a reasonable nexus to the

state, or b) is not properly apportioned, or c) discriminates,

or d) does not reasonably relate to services provided by the

state.

2/ Save for a technical amendment to Section 601.155(2),

Florida Statutes, enac ted in Chapter 2000 - 154, section 79, the

Equalization Tax was unchanged from 1997 until the 2002

amendment quoted above.

COPIES FURNISHED :

Kristen C. Gunter, Esquire

Macfarlane Ferguson & McMullen

1501 South Florida Avenue

Lakeland, Florida 33803

Eric J. Taylor, Esquire

Attorney General's Office

Tax Section

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

Ken Keck, Esquire

Department of Citrus

Post Office Box 148

Lakeland, Florida 33802 - 0148

Hank Campbell, Esquire

Post Office Box 3

Lakel and, Florida 33801 - 0003

Mia McKown, General Counsel

Department of Citrus

Post Office Box 148

Lakeland, Florida 32399 - 2100

Carroll Webb, Executive Director

Joint Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399 - 1300

Liz Cloud, Chief

Bureau of Administrative Code

The Elliott Building, Room 201

Tallahassee, Florida 32399 - 0250

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to Section 1 20.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing the original notice of appeal with the Clerk of the

Division of Administrative Hearings and a copy, accompanied by

filing fees prescribed by law, with the District Court of

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

the Appellate District where the party resides. The notice of

appeal must be filed within 30 days of rendition of the order to

be reviewed.