05-001882RP Bowling Centers Association Of Florida, Inc.; Shore Lanes, Inc.; Sanford Finklestein; And Sarah Lynch vs. Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco Status: Closed DOAH Final Order on Wednesday, December 7, 2005.

Summary: Respondent corrected deficiencies found in a prior rule challenge. The proposed rules are not an invalid exercise of delegated legislative authority. The challenge is denied.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BOWLING CENTERS ASSOCIATION OF )

FLORIDA, INC.; SHORE LANES, )

INC.; AND SANFORD FINKLESTEIN, )

)

Petitioners, )

)

vs. ) Case No. 05 - 1882RP

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC BEVERAGES )

A ND TOBACCO, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, an administrative hearing was held in

this case before Daniel M. Kilbride, Administrative Law Judge of

the Division of Administrative Hearings, on August 30, 2005, in

Tallahassee, Florida.

APPEARANCES

For Petitioner: Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Purnell & Hoffman

Post Office Box 551

Tallahassee, Florida 32302 - 0551

For Respondent: Renee Alsobrook, Esquire

John Lockwood, Qualified Representative

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

STATEMENT OF THE ISSUES

Whethe r the proposed Rules 61A - 7.006, 61A - 7.007, 61A - 7.008,

and 61A - 7.009, constitute a valid exercise of delegated

legislative authority, as such term is defined in Subsection

120.52(8), Florida Statutes (2004).

PRELIMINARY STATEMENT

This matter was initiated on May 20, 2005, when Petitioners

filed a Petition Challenging the Validity of Proposed Rules

Noticed for Adoption ("Petition"). The Petition alleges that

Respondent, Department of Business and Professional Regulation,

Division of Alcoholic Beverages and Tobacco's (Division),

proposed Rules 61A - 7.006, 61A - 7.007, 61A - 7.008, and 61A - 7.009

constitute an invalid exercise of delegated legislative

authority as defined in Subsection 120.52(8), Florida Statutes

(2004).

A Notice of Hearing was issued on May 25, 2 005, scheduling

a formal hearing for June 16, 2005. On June 6, 2005, the

hearing was placed in abeyance for a period of 30 days. A final

Notice of Hearing was issued on July 18, 2005, scheduling a

formal hearing for August 30, 2005. On August 18, 2005, John

Lockwood was deemed a qualified representative of Respondent.

The parties filed a Pre - Hearing Stipulation on August 26, 2005.

At hearing, the parties agreed to the voluntary dismissal

of Sarah Lynch as a Petitioner. Respondent went forward with

the evidence and presented the testimony of Marie Carpenter,

Debbie Pender, Michael Martinez, and Richard Law, certified

public accountant. Petitioners presented the testimony of

Brenda Olsen and Sanford Finkelstein as rebuttal witnesses.

Petitioner's Exhib its numbered 1 through 8 were admitted into

evidence, which consisted of: 1) a copy of the Final Order of

Administrative Law Judge (ALJ) Barbara J. Staros in Bowling

Centers Association of Florida, Inc. v. Department of Business

and Professional Regulatio n, Division of Alcoholic Beverages and

Tobacco , Case No. 03 - 4776RP (DOAH March 26, 2004); 2) a copy of

Article X, Section 20 of the Florida Constitution; 3) a copy of

Chapter 386, Part II, Florida Statutes (2005); 4) a copy of

Section 561.695, Florida Stat utes (2005); 5) a copy of proposed

Rules 61A - 7.006, 61A - 7.007, 61A - 7.008, and 61A - 7.009; 6) a copy

of the Division's Form ABT - 6039 and instruction sheet; 7) a copy

of the Division's publication entitled "Frequently Asked

Questions"; and 8) a copy of Marie Carpenter's deposition taken

on January 26, 2004. Respondent's Exhibits numbered 1 through 3

were admitted into evidence, which consist of: 1) a copy of the

notice of rule development, notice of rulemaking, and the

proposed rules as submitted to the Flor ida Administrative

Weekly; 2) a copy of a Transcript from the rulemaking workshop

held on July 29, 2005; 3) a copy of the Transcript of the rule

development workshop held on May 13, 2005, with attachments.

The Division filed a Motion to Take Official Reco gnition

and orally supplemented with Sections 561.1105, 561.20, 565.02,

and 565.045, Florida Statutes (2005), in addition to Florida

Administrative Code Rules 61A - 3.0141 and 61A - 3.054. Official

recognition was taken without objection.

A Transcript consis ting of one volume was filed on

September 9, 2005. The parties requested until October 10,

2005, in which to submit proposed final orders. The request was

granted, and each party timely filed their proposals.

FINDINGS OF FACT

Based on the evidence, the following findings of fact are

determined:

1. The State of Florida, Department of Business and

Professional Regulation (Respondent), is the state agency

responsible for adopting the proposed rules which are the

subject matter of this proceeding.

2. Th e Division is vested with general regulatory

authority over the alcoholic beverage industry within the state.

3. The Division issues both general and special alcoholic

beverage licenses. The general licenses which permit

consumption of alcoholic beverag es on the premises of a business

are: 1 - COP licenses which permit consumption of beer and

certain wine and distilled spirit products; 2 - COP licenses which

permit consumption of beer, wine, and certain distilled spirit

products; and 4 - COP licenses which pe rmit the consumption of

beer, wine, and all distilled spirits.

4. Quota licenses are issued based on the population of

the county and are limited in number. In addition, a quota

license allows consumption on the premises of beer, wine, and

distilled spi rits.

Standing and/or Identification of the Parties

5. The parties stipulated in the Joint Pre - Hearing

Stipulation to the standing of Bowling Centers Association of

Florida, Inc. (BCAF), Shore Lanes, Inc., and Sanford

Finklestein. The parties agreed at hearing that Sarah Lynch

would be voluntarily dismissed as a Petitioner.

6. BCAF is a non - profit Florida corporation with its

principle place of business in Orlando, Florida. It is composed

of owners of bowling centers throughout the State of Florida.

Its purpose is representing the interests of its member bowling

centers. This purpose includes matters of rule adoptions that

would affect or concern bowling centers.

7. All members of BCAF are bowling centers that may hold

either a special bowling lic ense (SBX) or a general alcoholic

beverage license.

8. Shore Lanes, Inc., is the owner/operator of a bowling

center located in Merritt Island, Florida. Shore Lanes, Inc.,

currently holds an SBX license, but is eligible to hold a

general alcoholic bevera ge license.

9. Sanford Finklestein is the general manager and part -

owner of Shore Lanes, Inc., as well as the current president of

BCAF. Finklestein is substantially affected because

establishments holding general alcoholic beverage licenses are

classif ied as enclosed indoor workplaces.

Florida Clean Indoor Air Act

10. Article X, Section 20 of the Florida Constitution,

"the Florida Clear Indoor Act," was adopted by the electorate in

May 2002, as "a Florida health initiative to protect people from

the health hazards of second - hand tobacco smoke." It contains a

far - reaching prohibition against smoking in enclosed indoor

workplaces. A very limited exception from this general

prohibition was provided for "stand - alone bars," as such term

was defined in s ubsection (c)(8) of the amendment.

(8) "Stand - alone bar" means any place of

business devoted during any time of

operation predominately or totally to

serving alcoholic beverages, intoxicating

beverages, or intoxicating liquors, or any

combination thereo f, for consumption on the

licensed premises; in which the serving of

food, if any, is merely incidental to the

consumption of any such beverage; and that

is not located within, and does not share

any common entryway or common indoor area

with, any other en closed indoor workplace

including any business for which the sale of

food or any other product or service is more

than an incidental source of gross revenue.

The amendment further provided in subsection (d) for legislative

implementation of this amendment in a manner which could be

more, but not less, restrictive than the provisions of the

amendment.

11. On June 23, 2003, the Governor of Florida signed House

Bill 63 - A into law to implement Article X, Section 20 of the

Florida Constitution. It was denomina ted as Chapter 2003 - 398,

Laws of Florida, and this statute substantially revises

Chapter 386, Florida Statutes (2002), which is commonly referred

to as the Florida Clean Indoor Air Act.

12. Section 386.2125, Florida Statutes (2003), requires

the Departmen t of Health and Respondent, in consultation with

the state fire marshal, to adopt rules pursuant to Subsection

120.536(1) and Section 120.54, Florida Statutes (2003), to

implement the provisions of Chapter 386, Part II, Florida

Statutes (2003), within each agency's specific areas of

regulatory authority.

13. The Legislature, in implementing Article X, Section 20

of the Florida Constitution, enacted Section 386.204, Florida

Statutes (2003), which prohibits smoking in enclosed indoor

workplaces, except as pr ovided in Section 386.2045, Florida

Statutes (2003). Section 386.2045, Florida Statutes (2003),

provides that smoking may be permitted in a:

(4) Stand - Alone Bar -- A business that meets

the definition of a stand - alone bar as

defined in s. 386.203(11) and o therwise

complies with all applicable provisions of

the Beverage Law and this part.

14. A stand - alone bar is defined in Subsection

386.203(11), Florida Statutes (2003), as follows:

(11) "Stand - alone bar" means any licensed

premises devoted during any time of

operation predominantly or totally to

serving alcoholic beverages, intoxicating

beverages, or intoxicating liquors, or any

combination thereof, for consumption on the

licensed premises; in which the serving of

food, if any, is merely incidental to the

consumption of any such beverage; and the

licensed premises is not located within, and

does not share any common entryway or common

indoor area with, any other enclosed indoor

workplace, including any business for which

the sale of food or any other pr oduct or

service is more than an incidental source of

gross revenue. A place of business

constitutes a stand - alone bar in which the

service of food is merely incidental in

accordance with this subsection if the

licensed premises derive no more than 10

per cent of its gross revenue from the sale

of food consumed on the licensed premises.

Prior Litigation

15. The Division previously was involved in rule challenge

proceedings concerning the stand - alone bar exemption. Bowling

Centers Association of Florida, Inc. v. Department of Business

and Professional Regulation, Division of Alcoholic Beverages and

Tobacco , Case No. 03 - 4776RP (DOAH March 26, 2004). In that

case, ALJ Staros concluded that the Division exceeded its grant

of rulemaking authority in three of the four rules proposed at

the prior hearing. ALJ Staros found three of the proposed rules

to be arbitrary by failing to take into consideration a

licensee's predominate business and, also, by permitting the use

of gross revenue from sources other than t he sale of food and

alcoholic beverages to render the provision "predominately or

totally devoted" to serving alcoholic beverages.

16. The text of the invalidated proposed rules as

published in their final form in the Florida Administrative Code

Weekly on October 10, 2003, is as follows:

61A - 7.007 Formula for Compliance With

Required Percentage of Gross Food Sales

Revenues

In order to determine compliance, the

division shall use the formula of gross food

sales revenue, including but not limited to

non - alcoholic beverages, divided by gross

total sales revenue, in any consecutive six -

month period. The results of the formula

will represent the percentage of food sales

revenues as defined herein as in s. 561.695,

Florida Statutes.

Specific Authority 386.2 125, 561.695(9), FS.

Law Implemented 386.203(11), 561.695(6), FS.

History - New

61A - 7.008 For Percentage of Gross Alcohol

Sales Revenue Formula.

In order to determine compliance, the

division shall use the formula of gross

alcohol sales revenue divided by gross total

sales revenue, in any consecutive six - month

period.

Specific Authority 386.2125, 561.695(9), FS.

Law Implemented 386.203(11), 561.695(6), FS.

History - New

61A - 7.009 Method Used to Determine Whether

an Establishment is Predominantly Dedic ated

to the Serving of Alcoholic Beverages.

In order to determine whether an

establishment, other than one holding a

specialty license designated in Rule

61A - 7.003, F.A.C., is predominantly

dedicated to the serving of alcoholic

beverages, the division sha ll compare the

percentage of gross food sales revenue with

the percentage of gross alcohol sales

revenue. If the percentage of gross alcohol

sales revenue is greater than that of the

gross food sales revenue, an establishment

is deemed predominantly dedic ated to the

serving of alcoholic beverages.

Specific Authority 386.2125, 561.695(9) FS.

Law Implemented 386.203(11), 561.695(6), FS.

History - New

29 Fla. Admin. W. 4021 - 4022 (October 10, 2003).

The Proposed Rules

17. The revised proposed Rules 61A - 7. 006, 61A - 7.007,

61A - 7.008, and 61A - 7.009 were drafted in response to legislation

that implemented Article X, Section 20 of the Florida

Constitution.

18. The basis for the proposed rules is information

derived from telephone calls, committee hearings, legi slative

staff interaction, town hall meetings, rule workshops, rule

hearings, senators, and representatives.

19. The text of the proposed rules as published in their

final form in the Florida Administrative Weekly on March 11,

2005, is a follows:

61A - 7.00 6 Records Required to Maintain the

Designation

(1) Stand - alone bars holding an "ss" or

"ssf" designation shall maintain records to

substantiate reports, affidavits and

designation qualifications. Records of all

purchases of food, all gross retail sales of

alcohol for consumption on the licensed

premises, all gross retail sales of alcohol

for consumption off the licensed premises,

all gross retail sales of food sold for

consumption on the premises, all gross

retail sales of food sold for consumption

off the premises, and gross revenue from all

other sales shall be separately documented.

(2) Stand - alone bars holding an "ss" or

"ssf" designation shall maintain complete

and accurate records of all sales and

purchases. Records shall include, but are

not li mited to, purchase invoices, sales

tickets, inventory records, receiving

records, cash register journal tapes, on

premises food sales records, computer

records generated from automatic dispensing

devices, Department of Revenue Sales Tax

Returns, and any ot her record documenting

sales. Sales records shall be sequentially

organized by month and year and include a

monthly statement summarizing the total

sales revenue, food revenue and percentage

of food revenue for each month.

Specific Authority 386.2125, 56 1.695(9), FS.

Law Implemented 386.203(11), 561.695(6), FS.

History - New

61A - 7.007 Formula for Compliance With

Required Percentage of Gross Food Sales

Revenues.

In order to determine compliance, the

division shall use the formula of gross food

sales reve nue from the sale of food the

licensee sells for consumption on premises,

including but not limited to non - alcoholic

beverages, divided by gross total sales

revenue, in any consecutive two month

period. The results of the formula will

represent the percen tage of food sales

revenues as defined herein and in Section

561.695, Florida Statutes.

Specific Authority 386.2125, 561.695(9), FS.

Law Implemented 386.203(11), 561.695(6), FS.

History - New

61A - 7.008 For Percentage of Gross Alcohol

Sales for Consumpti on on the Licensed

Premises Revenue Formula

In order to determine compliance, the

division shall use the formula of gross

alcohol sales revenue from the sale of

alcohol the licensee sells for consumption

on premises, divided by gross total sales

revenue, in any consecutive two - month

period.

Specific Authority 386.2125, 561.695(9), FS.

Law Implemented 386.203(11), 561.695(6), FS.

History - New

61A - 7.009 Method Used to Determine Whether

an Establishment is Predominately Dedicated

to the Serving of Alcohol ic Beverages.

In order to determine whether an

establishment, other than one holding a

specialty license designated in rule

61A - 7.003, F.A.C., is predominately

dedicated to the serving of alcoholic

beverages for consumption on the licensed

premises, the d ivision shall compare the

percentage of gross alcohol revenue from the

sale of alcohol the licensee sells for

consumption on the premises with the

following categories of revenue:

(1) For stand - alone bars holding the "ss"

designation:

(a) the percentage of gross alcohol sales

revenue from the sale of alcohol the

licensee sells for consumption off the

premises where the purchaser is required to

enter,

(b) the percentage of gross alcohol sales

revenue from the sale of alcohol the

licensee sells for consu mption off the

premises where the purchaser is not required

to enter the premises, and

(c) the percentage of gross revenue from

any source not included in the alcohol

categories above.

If the percentage of gross alcohol sales

revenue from the sale of alcohol the

licensee sells for consumption on premises

is greater than that of the gross sales

revenue from each individual category of

gross sales in 61A - 7.009(1)(a) - (c), an

establishment is deemed predominately

dedicated to the serving of alcoholic

bever ages.

(2) For stand - alone bars holding the "ssf"

designation:

(a) the percentage of gross food sales

revenue from the sale of food the licensee

sells for consumption on premises,

(b) the percentage of gross food sales

revenue from the sale of food t he licensee

sales for consumption off premises,

(c) the percentage of gross alcohol sales

revenue from the sale of alcohol the

licensee sells for consumption off the

premises, and

(d) the percentage of gross revenue from

any source not included in the food and

alcohol categories above.

If the percentage of gross alcohol sales

revenue from the sale of alcohol the

licensee sells for consumption on premises

is greater than that of the gross sales

revenue from each individual category of

gross sales in 61 A - 7.009(2)(a) - (d), an

establishment is deemed predominately

dedicated to the serving of alcoholic

beverages.

Specific Authority 386.2125, 561.695(9), FS.

Law Implemented 386.203(11), 561.695(6), FS.

History - New

31 Fla. Admin. W. 964 - 965 (March 11, 2005 ).

Applicable Statutes

20. The provision within the Florida Statutes that

outlines the "12 - month affidavit" reads as follows:

(5) After the initial designation, to

continue to qualify as a stand - alone bar the

licensee must provide to the division

ann ually, on or before the licensee's annual

renewal date, an affidavit that certifies,

with respect to the preceding 12 - month

period, the following:

(a) No more than 10 percent of the gross

revenue of the business is from the sale of

food consumed on th e licensed premises as

defined in s. 386.203(11).

(b) Other than customary bar snacks as

defined by rule of the division, the

licensed vendor does not provide or serve

food to a person on the licensed premises

without requiring the person to pay a

sep arately stated charge for food that

reasonably approximates the retail value of

the food.

(c) The licensed vendor conspicuously

posts signs at each entrance to the

establishment stating that smoking is

permitted in the establishment.

The division s hall establish by rule the

format of the affidavit required by this

subsection.

§ 561.695(5), Fla. Stat. (2005).

21. The provision within the Florida Statutes that

outlines the "36 - month certified public accountant evaluation"

reads as follows:

(6) E very third year after the initial

designation, on or before the licensee's

annual license renewal, the licensed vendor

must additionally provide to the division an

agreed upon procedures report in a format

established by rule of the department from a

Flori da certified public accountant that

attests to the licensee's compliance with

the percentage requirement of s. 386.203(11)

for the preceding 36 - month period. Such

report shall be admissible in any proceeding

pursuant to s. 120.57. This subsection does

no t apply to a stand - alone bar if the only

food provided by the business, or in any

other way present or brought onto the

premises for consumption by patrons, is

limited to nonperishable snack food items

commercially prepackaged off the premises of

the stand - alone bar and served without

additions or preparation; except that a

stand - alone bar may pop popcorn for

consumption on its premises, provided that

the equipment used to pop the popcorn is not

used to prepare any other food for patrons.

§ 561.695(6), Fla . Stat. (2005).

22. The provision within the Florida Statutes that

authorizes the Division to promulgate rules regarding the

enforcement and administration of Section 561.695, Florida

Statutes (2005), and Chapter 386, Part II, Florida Statutes

(2005), re ads as follows:

(9) The division shall adopt rules

governing the designation process, criteria

for qualification, required recordkeeping,

auditing, and all other rules necessary for

the effective enforcement and administration

of this section and part I I of chapter 386.

The division is authorized to adopt

emergency rules pursuant to s. 120.54(4) to

implement the provisions of this section.

§ 561.695(9), Fla. Stat. (2005).

23. The provision within the Florida Statutes that defines

an "invalid exercise of delegated legislative authority" reads,

in pertinent part, as follows:

(8) "Invalid exercise of delegated

legislative authority" means action which

goes beyond the powers, functions, and

duties delegated by the Legislature. A

proposed or existing r ule is an invalid

exercise of delegated legislative authority

if any one of the following applies:

* * *

(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.;

* * *

(e) The rule is arbitrary or capricious.

A rule is arbitrary if it is not supported

by logic or the necessary facts; a rule is

capricious if it is adopted without thought

or reason or is irrational; . . . .

§ 120.52(8), Fla. Stat. (2005).

Objections of Petitioner

24. Petitioners challenge the proposed rules in the

present case as constituting an invalid exercise of delegated

legislative authority. Petitioners argue that Subsection

386.203(11), Florida Statutes (2005), limits a stand - alon e bar

to selling only alcoholic beverages and food for consumption on

the premises. Petitioners assert that proposed Rule 61A - 7.006

constitutes an invalid exercise of delegated legislative

authority by authorizing the receipt of gross revenues from and

th e consideration of records regarding sales by a stand - alone

bar received from other than the sale of food or alcoholic

beverages for consumption on the premises.

25. Petitioners also assert that proposed Rules 61A - 7.007

and 61A - 7.008 are invalid exercises of delegated legislative

authority for the reason that the two - month period for

determining compliance with the stand - alone bar requirement of

Subsection 386.203(11), Florida Statutes (2005), is contrary to

such statute's directive that compliance must be maintained "at

any time"; would permit a stand - alone bar to violate on repeated

occasions during the audit period, the "incidentals sales"

requirement that no more than 10 percent of gross revenues be

from the sale of food for consumption on the premises; and is

contrary to the prior Final Order in DOAH Case No. 03 - 4776RP,

which found that a substantially identical proposed rule, in

which the audit period was six months, constituted an invalid

exercise of delegated legislative authority.

26. Petitioners f urther assert that proposed Rule

61A - 7.009 is an invalid exercise of delegated legislative

authority in that it violates the statutory requirements of

Subsection 386.203(11), Florida Statutes (2005), that a stand -

alone bar sell only alcoholic beverages and food for consumption

on the premises; permits a stand - alone bar to derive

approximately 25 percent or less of its gross revenue from the

sale of alcoholic beverages for consumption on the premises and

be deemed by the Division to be "predominantly devoted " to the

sale of alcoholic beverages for consumption on the premises, and

is only a non - substantive, cosmetic change from the previous

proposed Rule 61A - 7.009 held invalid in DOAH Case No. 03 - 4776RP.

27. Based on the testimony of Brenda Olsen, assistant C EO

for the American Lung Association of Florida and director of

Governmental Affairs, during the 2003 legislative session in

which House Bill 63 - A was passed, the Florida House of

Representatives and Senate had conflicting views of the

legislation at first . The House version contemplated

eliminating the stand - alone bar exemption while the Senate

version would allow 25 percent food sales.

28. Tampa Lanes is a bowling alley in the Tampa area that

has purchased a quota liquor license in order to operate as a

stand - alone bar, and is a 50 - lane bowling center that consists

of around 175 game machines, which is one of the larger machine

set - ups in the bowling industry.

The Division's Position

29. The Division's proposed two - month auditing period is

analogous to the method in which the Division currently audits

SRX licensed premises.

30. There are statutory restrictions on what may be sold

in some establishments licensed to sell alcoholic beverages, but

no statutory limits exist specifically for stand - alone bars .

31. Richard Law has been a CPA in Florida since 1977 and

has been qualified as an expert in accountancy in state

administrative hearings, federal administrative hearings,

federal district court, and the circuit court. Law was

recognized as an expert. Based on his testimony, the typical

audit period is a year. A yearly audit is a true and accurate

representation of a business's practice. A daily audit would be

susceptible to skewed results. For example, a tour bus may stop

alongside a bar resulting i n that particular days' food sales

being abnormally high. Those particular days' sales would not

be representative of the true nature of the bar's business

practices.

32. Michael Martinez, special counsel to the Department of

Business and Professional Re gulation, was involved with the

legislative process in drafting legislation that implemented

Article X, Section 20 of the Florida Constitution. In addition

to the input received from the Legislature, there was input from

public workshops, public hearings, and numerous telephone calls

from concerned business owners.

CONCLUSIONS OF LAW

Jurisdiction

33. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to Section 120.56, Florida Sta tutes (2005).

34. Petitioners consist of an association, a company, and

an individual whose substantial interests will be affected by

the proposed rules, and they have standing to bring this rule

challenge.

Burden of Proof

35. Initially, Petitioners "sh all state with particularity

the objections to the proposed rule and the reasons that the

proposed rule is an invalid exercise of delegated legislative

authority." § 120.56(2)(a), Fla. Stat (2005). Then, the

Division "has the burden to prove by a prepond erance of the

evidence that the proposed rule is not an invalid exercise of

delegated legislative authority as to the objections raised."

Id. ; see also Southwest Florida Water Management District v.

Charlotte County , 774 So. 2d 903, 908 (Fla. 2nd DCA

2001 )("Nothing in section 120.56(2) requires the agency to carry

the burden of presenting evidence to disprove an objection

alleged in a petition challenging a proposed rule. Instead a

party challenging a proposed rule has the burden of establishing

a factual basis for the objections to the rule, and then the

agency has the ultimate burden of persuasion to show that the

proposed rule is a valid exercise of delegated legislative

authority."), citing St. Johns River Water Management District

v. Consolidated - Tomo ka Land Co. , 717 So. 2d 72, 76 (Fla. 1st DCA

1998). The court in Consolidated - Tomoka Land Co. , declined to

require the agency to go forward with evidence to disprove every

objection made in the petition. Consolidated - Tomoka Land Co. ,

717 So. 2d at 76. I nstead, the court adopted a practical

approach that requires the party challenging the proposed rule

to establish a factual basis for the objections put forth in the

petition. Id. at 77.

36. A rule may not be declared invalid on any other ground

without impermissibly extending the authority of the

Administrative Law Judge. See Schiffman v. Department of

Professional Regulation, Board of Pharmacy , 581 So. 2d 1375,

1379 (Fla. 1st DCA 1991)("An administrative agency has only the

authority that the legislatu re has conferred it by statute.")

Thus, a proposed rule may not be invalidated simply because the

ALJ believes it is not the wisest or best choice. See Bd. of

Trustees of Internal Improvement Fund v. Levy , 656 So. 2d 1359,

1364 (Fla. 1st DCA 1995)("The i ssue before the hearing officer

in this [rule challenge] case was not whether the Trustees made

the best choice . . . or whether their choice is one that the

appellee finds desirable . . . ."); Dravo Basic Materials Co.,

Inc. v. Department of Transportatio n , 602 So. 2d 632, 634 (Fla.

2nd DCA 1992)("It is not our task, however, to write the best

rule for DOT. That was not the task of the hearing officer.").

Statutory Construction

37. Legislative intent is the polestar that guides a

court's statutory cons truction analysis. Reynolds v. State , 842

So. 2d 46, 49 (Fla. 2002). In determining the Legislature's

intent in using a particular word in a statute, the courts may

examine other uses of the word in similar contexts. Hankey v.

Yarian , 755 So. 2d 93, 96 (Fla. 2000).

38. Statutory phrases are not to be read in isolation, but

rather within the context of the entire section. Jones v. ETS

of New Orleans, Inc. , 793 So. 2d 912, 915 (Fla. 2001). The

legislative use of different terms in different sections is

strong evidence that different meanings were intended.

Department of Professional Regulation, Board of Medical

Examiners v. Durrani , 455 So. 2d 515, 518 (Fla. 1st DCA 1984).

39. When the Legislature enacts a statute, it is presumed

to know existing statu tes and the case law construing them.

Williams v. Christian , 335 So. 2d 358, 360 (Fla. 1st DCA 1976).

40. The statutory construction principle in pari materia

requires two statutes relating to the same thing or subject to

be construed together "so as to harmonize both statutes and give

effect to the Legislature's intent." Maggio v. Florida

Department of Labor and Employment , 899 So. 2d 1074, 1078 (Fla.

2005.

Agency Interpretation

41. It is widely recognized that "[a]gencies are to be

accorded wide disc retion in the exercise of their lawful

rulemaking - authority, clearly conferred or fairly implied and

consistent with the agency's general statutory duties."

Department of Natural Resources v. Wingfield Development

Company , 581 So. 2d 193, 197 (Fla. 1st DC A 1991).

42. The Division is to be "accord[ed] great deference to

administrative interpretations of statutes which the . . .

agency is required to enforce." Department of Environmental

Regulation v. Goldring , 477 So. 2d 532, 534 (Fla. 1985).

43. "[T]he agency's interpretation of a statute need not

be the sole possible interpretation or even the most desirable

one; it need only be within the range of possible

interpretations." Department of Professional Regulation, Board

of Medicine Examiners v. Durrani , 455 So. 2d 515, 517 (Fla. 1st

DCA 1984). See Board of Podiatric Medicine v. Florida Medical

Association , 779 So. 2d 658, 660 (Fla. 1st DCA 2001) (upholding

agency's definition "[i]n light of the broad discretion and

deference which is accorded an agency in the interpretation of a

statute which it administers, and because such an interpretation

should be upheld when it is within the range of permissible

interpretations[.]").

44. The ALJ has the discretion to declare the proposed

rule wholly or partly inva lid. § 120.56(2)(b), Fla. Stat.

(2005).

Statutory Exemptions

45. Statutory exceptions to general statutory provisions

are to be strictly construed against one attempting to take

advantage of the exception. See Heburn v. Department of

Children and Famil ies , 772 So. 2d 561 (Fla. 1st DCA 2000). In

Heburn , the appellant had been disqualified from a "position of

trust" because of two offenses involving possession of marijuana

on school property and armed robbery. Heburn , 772 So. 2d at

562. Appellant sough t relief under a statutory provision that

would allow an exemption if it was proven by clear and

convincing evidence that a disqualification was not required.

Id. The Department of Children and Families issued a final

order denying Appellant the exemptio n. Id. The District Court

of Appeal, upholding the denial, found that "[a]n exemption from

a statute, enacted to protect the public welfare, is strictly

construed against the person claiming the exemption, and the

Department was not required to grant Heb urn any benefits under

the exemption." Id. at 563, citing State v. Nourse , 340 So. 2d

966, 969 (Fla. 3d DCA 1976).

46. In Nourse , 340 So. 2d at 968 - 969, the appellee sought

an exception to a broad prohibition against possession of under -

sized crawfish. The appellee attempted to take advantage of an

exception that related to the right to bait traps ten days

before crawfish season. Id. at 969. The court ruled against

the appellee finding that an exception to a general prohibition

is strictly construed ag ainst an individual seeking to take

advantage of the exception. Id.

47. Petitioners have failed to establish how this widely -

accepted rule of statutory construction alters the Division's

discretion in promulgating rules. Furthermore, Petitioners have

c ited no legal authority that has applied this rule to a

scenario in which neither party is seeking an exemption.

Invalid Exercise of Delegated Legislative Authority

48. The ultimate question in a proposed rule challenge is

whether the rule is "an invalid exercise of delegated

legislative authority." § 120.56(1), Fla. Stat. (2005).

Subsection 120.52(8), Florida Statutes (2005), defines the term

as an "action which goes beyond the powers, functions, and

duties delegated by the Legislature."

49. In 1999, the Legislature revised the closing paragraph

of Subsection 120.52(8), Florida Statutes, after the decision in

Consolidated - Tomoka Land Co. , which held that "[a] rule is a

valid exercise of delegated legislative authority if it

regulates a matter directly within the class of powers and

duties identified in the statute to be implemented."

Consolidated - Tomoka Land Co. , 717 So. 2d at 80. The language of

Subsection 120.52(8), Florida Statutes, was amended to read:

A grant of rulemaking authority is

necessar y 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

au thority 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 of an agency shall be construed to

extend no further than implementing or

interpreting the sp ecific powers and duties

conferred by the same statute. (Emphasis

supplied.)

§ 120.52(8), Fla. Stat. (2005). See Board of Trustees of the

Internal Improvement Trust Fund v. Day Cruise Association, Inc. ,

794 So. 2d 696 (Fla. 1st DCA 2001); See also South west Florida

Water Management District v. Save the Manatee Club, Inc. ,

773 So. 2d 594 (Fla. 1st DCA 2000).

50. The test for invalid delegation of legislative

authority is whether a rule gives effect to a "specific law to

be implemented" and whether the ru le implements or interprets

"specific powers and duties." Day Cruise , 794 So. 2d at 704.

51. The court in Day Cruise discussed the importance of

the 1999 Administrative Procedure Act (the "Act") amendments as

follows:

Under the 1996 and 1999 amendments t o the

APA, it is now clear, agencies have

rulemaking 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 o pposed to improvising in an area

that can be said to fall only generally

within some class of powers or duties the

Legislature has conferred on the agency.

Day Cruise , 794 So. 2d at 700. See generally Save the Manatee

Club, Inc. , 773 So. 2d at 598 - 599 (i nterpreting Subsection

120.52(8), Florida Statutes (1999), as removing an agency of the

authority to adopt a rule merely because it is with the agency's

class of powers and duties).

Applicability of Res Judicata

52. It is well settled that the doctrine of res judicata

may be implied in administrative proceedings. See Thomson v.

Department of Environmental Regulation , 511 So. 2d 989 (Fla.

1987); Wager v. City of Green Cove Springs , 261 So. 2d 827 (Fla.

1972); Metropolitan Dade Co. Board of County Commiss ioners v.

Rockmatt Corporation , 231 So. 2d 41 (Fla. 3d DCA 1970).

53. However, the principles upon which res judicata

applies do not always fit neatly within the scope of

administrative proceedings. Thomson , 511 So. 2d at 991. The

doctrine of res judic ata is to be applied with "great caution"

in proceedings before administrative bodies. Id. , citing Coral

Reef Nurseries, Inc. v. Babcock Co. , 410 So. 648 (Fla. 3d DCA

1982).

54. Furthermore, the doctrine is inapplicable where there

has been a change in c ircumstances or facts relating to the

subject matter. Metropolitan Dade Co. Board of County

Commissioners v. Rockmatt Corp. , 231 So. 2d at 44.

55. There is a significant difference between the prior

rules and the proposed rules. For example, the prior r ules only

required the alcohol sales to be greater than the food sales in

order to be deemed predominately dedicated to the serving of

alcoholic beverages. The difference results in a substantial

change in circumstances that renders the doctrine of res

ju dicata inapplicable to the present proceeding.

Merits

56. Sections 386.2125 and 561.695 and Subsection

386.203(11), Florida Statutes (2005), give the Division

sufficient specific rulemaking authority regarding the

designation process, criteria for qualif ication, required

record - keeping, auditing, and all other rules necessary for the

effective enforcement of Chapter 561 and Part II of Chapter 386,

Florida Statutes (2005).

57. Petitioners raised the objection that the Division has

arbitrarily interpreted the statutory language of Subsection

386.203(11), Florida Statutes (2005). Specifically, Petitioners

allege that the statute only allows for the sale of alcoholic

beverages and food in a stand - alone bar. Not only do

Petitioners mistake the language of th e statute as an express

limitation on what a stand - alone bar may sell, but Petitioners

failed to support this objection with factual evidence presented

at hearing. Petitioners cited no law and presented no testimony

to establish that the Legislature inten ded to limit what could

be sold in a stand - alone bar.

58. Proposed Rule 61A - 7.006 requires a licensee to

maintain records in a separate manner that will allow

computation by the use of proposed Rule 61A - 7.009. This is a

reasonable and consistent interpre tation of the statutory

language and does not modify, enlarge, or contravene the

implementing statute.

59. Petitioners raised the objection that the Division has

arbitrarily interpreted the phrase "during any time of

operation." Specifically, Petitioners allege that the

Legislature clearly intended this phrase to mean a daily basis.

However, Petitioners fail to note that Section 561.695, Florida

Statutes (2005), requires the licensee to submit a "12 - month

affidavit" and a "36 - month certified public accou ntant

evaluation." See § 561.695, Fla. Stat. (2005). Neither the

affidavit, nor the evaluation, contemplates a daily review of

sales. See Id. Interpreting the statute in a manner that would

require daily compliance contravenes the language of the

speci fic statutes and, thus, the legislative intent. See

§ 561.695(5), Fla. Stat. (2005)(requiring the licensee to

certify that the stand - alone bar criteria was met for the

preceding 12 - month period); § 561.695(6), Fla. Stat.

(2005)(requiring the licensee to s ubmit a report from a Florida

CPA that attests to the licensee's compliance with the

ten - percent requirement for the preceding 36 - month period).

Petitioners' objection is lacking a factual basis as none of the

statutes pertaining to this exemption contain s the language

"daily." Petitioners put forth neither statutory cites, nor

evidence that would support such an interpretation. Further, a

daily review of sales by the Division would be practically

impossible to achieve.

60. Proposed Rules 61A - 7.007 and 61A - 7.008 properly

implement Subsection 386.203(11), Florida Statutes (2005), by

utilizing a two - month averaging period that will obtain a

reasonable representation of the business in question. These

rules would be used as an enforcement tool to verify th e

business's compliance with the "12 - month affidavit" and

"36 - month certified public account evaluation" requirements of

Section 561.695, Florida Statutes (2005). Neither provision

requires the audit period to be examined on a daily basis. See

§ 561.695( 5) and (6), Fla. Stat. (2005). If the Legislature had

contemplated the stand - alone bar exception to be met on a daily

basis, they would have so stated in the "12 - month affidavit" or

the "36 - month certified public accountant evaluation"

requirements of the statute. "Daily" was not used in the

definition of a stand - alone bar or in any other provision of the

statute related thereto.

61. Petitioners presented no evidence that would support

its contention that the Legislature intended the phrase "during

any t ime of operation" to mean on a daily basis. Martinez

testified that the phrase "during any time of operation" could

be interpreted to mean "every single sale." Both

interpretations lead to an absurd result which is to be

disfavored when discerning legisl ative intent. State v. Webb ,

398 So. 2d 820 (Fla. 1981). The Division stresses that proposed

Rules 61A - 7.007 and 61A - 7.008 are enforcement tools that will

ensure the provisions of Section 561.695, Florida Statutes

(2005), are being met. These rules in n o way serve as a method

of obtaining qualification as a stand - alone bar.

62. Petitioners raise a final objection pertaining to the

Division's authority to create categories in order to determine

whether the premises are dedicated predominately or totally to

the serving of alcoholic beverages. Petitioners argue that the

Legislature placed an express limitation on what a stand - alone

bar may sell. If the Legislature had envisioned such a

limitation on what a stand - alone bar may sell, then the final

sentence in the "stand - alone bar" exemption would have required

the ten percent requirement to be compared to alcoholic beverage

sales, rather than total gross revenue. See § 386.203(11),

Fla. Stat. (2005)("A place of business constitutes a stand - alone

bar in whi ch the service of food is merely incidental in

accordance with this subsection if the licensed premises derives

no more than ten percent of its gross revenue from the sale of

food consumed on the licensed premises"). (Emphasis supplied.)

At hearing, Petit ioners failed to present any factual evidence

or point to the express limitation in the statute that would

support such a contention.

63. Proposed Rule 61A - 7.009 takes into consideration a

licensee's predominate business by requiring the sale of alcohol

f or consumption on the premises to be the highest grossing

category of revenue. The implementing statute does not prohibit

the licensee from selling items other than alcoholic beverages

and food. Petitioners failed to offer testimony to establish

otherwis e. The Division's interpretation is consistent with the

dictionary definition and within the range of reasonable

interpretations. Therefore, it follows that the interpretation

is not an invalid exercise of delegated legislative authority.

64. Petitioner 's evidence presented at trial falls short

of that required to shift the burden to the Division.

Petitioners' opening statement and subsequent witnesses fail to

support the objections raised in the petition. Petitioners'

opening statement cannot be consi dered as factual basis for

objections put forth in the petition. The purpose of the

attorney's opening statement is to outline what is expected to

be established by the evidence. See Occhicone v. State , 570

So. 2d 902, 904 (Fla. 1990) ("Opening remarks a re not evidence,

and the purpose of opening argument is to outline what an

attorney expects to be established by the evidence."), citing

Whitted v. State , 362 So. 2d 668 (Fla. 1978).

65. Subsection 386.203(11), Florida Statutes (2005), does

not require a licensee to meet the ten percent threshold on a

daily basis. Such an interpretation is neither reasonable, nor

supported by the evidence presented at trial. Proposed Rules

61A - 7.007 and 61A - 7.008 are rules setting forth the requirements

to obtain a desig nation as a stand - alone bar. These rules will

be used for enforcement purposes to ensure that the

establishment is meeting the requirements imposed by Section

561.695, Florida Statutes (2005).

66. Subsection 386.203(11), Florida Statutes (2005), does

n ot prohibit the licensee from selling items other than

alcoholic beverages and food. Such interpretation would require

words to be read into the statute and impermissibly modify the

legislative intent. Petitioners are correct in pointing out

that the Leg islature made an express limitation on what a

"retail tobacco shop" could sell; however, there is no such

express limitation for the "stand - alone bar" statute.

67. The Division's proposed Rule 61A - 7.009 takes into

consideration a licensee's predominate bu siness by requiring the

sale of alcohol for consumption on the premises (the service of

alcoholic beverages) to be the highest grossing category of

revenue. This is a reasonable interpretation that does not

modify, contravene, or expand the specific provi sions of the

implementing law. Furthermore, this categorical scheme cures

the deficiency found by ALJ Staros in the prior rule challenge.

See Bowling Centers Association of Florida, Inc. v. Florida

Department of Business and Professional Regulation, Divi sion of

Alcoholic Beverages and Tobacco , Case No. 03 - 4776RP (DOAH

March 26, 2004).

68. Petitioners have failed to meet the burden of

establishing a factual basis for the objections to the rule.

While the Petition raised objections, the testimony and evid ence

presented at trial did not establish a factual basis for the

objections raised.

69. Additionally, there was no evidence presented by

Petitioners to show that either the rules were not supported by

logic or that they were adopted without thought or re ason. To

the contrary, the Division has shown that numerous workshops,

hearings, and thousands of telephone calls from concerned

citizens were taken into account when drafting the proposed

rules.

70. In conclusion, the Division has shown by a

preponderan ce of the evidence that the proposed rules challenged

by Petitioners are not invalid exercises of the authority

delegated to the Division by the Legislature. The proposed

rules do not enlarge, modify, or contravene the specific statute

to be implemented. The rules are consistent with the statute,

they lawfully implement the specific statute, and they serve a

reasonable interpretation of the specific powers and duties

outlined within the applicable statutes. The designation as a

stand - alone bar requires, for renewal of the annual license, the

submission of an affidavit that for the proceeding year the

business met the criteria for the designation. The two - month

audit set forth in the proposed rule is used for other license

types with percent of sales rest rictions. The two - month audit

accomplishes the intent of the legislation without imposing

arbitrary requirements on a business. The proposed rule does

not contravene the requirements for the designation "any time,"

it merely gives notice as to the Divisi on's enforcement

procedures as required and authorized by the specific authority

granted in Subsection 561.569(9), Florida Statutes (2005). The

rule provides that the business be, if not totally,

predominately devoted to serving alcoholic beverages.

Pred ominate, or to be, or have a greater quantity than other

sales is required by the proposed rule. Sales of other than

alcoholic beverages are not prohibited by statute.

ORDER

Based on the foregoing Findings of Facts and Conclusions of

Law, it is

ORDERED that proposed Rules 61A - 7.006, 61A - 7.007,

61A - 7.008, and 61A - 7.009 are not an invalid exercises of

delegated legislative authority and the Petition is denied.

DONE AND ORDERED this 7th day of December, 2005, in

Tallahassee, Leon County, Florida.

S

DANIEL M. KILBRIDE

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.stat e.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7th day of December, 2005.

COPIES FURNISHED :

Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Purnell & Hoffman

Post Office Box 551

Tallahassee, Florida 32302 - 0551

Renee Also brook, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

John Lockwood, Qualified Representative

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee , Florida 32399 - 2202

Leon Biegalsi, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Scott Boyd, Executive Director

and General Counsel

Joint Administrative Procedures Commi ttee

120 Holland Building

Tallahassee, Florida 32399 - 1300

Liz Cloud, Program Administrator

Bureau of Administrative Code

Department of State

R.A. Gray Building, Suite 101

Tallahassee, FL 32399 - 0250

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is ad versely 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 agency 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 p arty resides. The notice of

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

be reviewed.