21-001184RP The Florida Horsemen&Apos;S Benevolent And Protective Association, Inc., A Florida Nonprofit Corporation, And Gulfstream Park Racing Association, Inc. A Florida Corporation vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering Status: Closed DOAH Final Order on Friday, June 18, 2021.

Summary: Petitioners established that the proposed amendment to Florida Administrative Code Rule 61D-3.001 is an invalid exercise of delegated legislative authority in that it contravenes the statute it purports to implement.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

T HE F LORIDA H ORSEMEN ' S B ENEVOLENT

A ND P ROTECTIVE A SSOCIATION , I NC ., A

F LORIDA N ONPROFIT C ORPORATION , A ND

G ULFSTREAM P ARK R ACING

A SSOCIATION , I NC . A F LORIDA

C ORPORATION ,

Petitioners ,

vs. Case No. 21 - 1184RP

D EPARTM ENT OF B USINESS A ND

P ROFESSIONAL R EGULATION , D IVISION OF

P ARI - M UTUEL W AGERING ,

Respondent .

/

S UMMARY F INAL O RDER

On April 20, 2021, Respondent, Departme nt of Business and Professional

Regulation, Division of Pari - Mutuel Wagering (the ÑDivisionÒ) , filed a Motion

for Summary Final Order pursuant to section 120.57(1)(h), Florida Statutes. 1

On May 3, 2021, Petitioners, Florida HorsemenÔs Benevolent and Protec tive

Association, Inc. (ÑFHBPAÒ), and Gulfstream Park Racing Association, Inc.

(ÑGulfstream ParkÒ) (ÑPetitionersÒ) , filed a response to the DivisionÔs Motion

for Summary Final Order as well as their own Motion for Summary Final

Order. The parties have stip ulated that there are no disputed issues as to any

material fact and this case is ripe for summary decision.

A PPEARANCES

For Petitioner: Bradford J. Beilly, Esquire

Beilly & Strohsahl, P.A.

1144 Southeast Third Avenue

Fort Lauderdale, Florida 33316

1 Unless otherwise indicated, all references to Florida Statutes are to the 2020 edition.

For Respondent: Ross Marshman, Esquire

Darrell D. Garvey, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

S TATEMENT OF T HE I SSUE

The issue is whether the proposed amendment to Florida Adminis trative

Code Rule 61D - 3.001 is an invalid exercise of delegated legislative authority.

P RELIMINARY S TATEMENT

On March 10, 2021, the Division published a Notice of Proposed Rule in

the Florida Administrative Register. The stated ÑPurpose and EffectÒ of the

proposed amendment to rule 61D - 3.001, Procedures for StewardsÔ Hearings,

was Ñto update procedures for hearings before stewards with the goal of

streamlining certain enforcement actions, including equine drug positive

cases, against licensees. The rule am endment is also intended to provide

clarity to procedures related to stewardsÔ hearings.Ò The proposed

amendment constituted a substantial rewording of the text of current

rule 61D - 3.001.

On March 31, 2021, Petitioners filed at the Division of Administrat ive

Hearings (ÑDOAHÒ) a ÑRule Challenge Directed Toward Proposed Rule 61D -

3.001, F.A.C.Ò The rule challenge alleged that the proposed amendment to

rule 61D - 3.001 Ñenlarges, modifies, or contravenes the specific provisions of

the law implemented,Ò specifica lly section 120.80(4)(a), which provides:

(4) DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION. Ð

(a) Business regulation. Ð The Division of Pari -

mutuel Wagering is exempt from the hearing and

notice requirements of ss. 120.569 and 120.57(1)(a),

but only f or stewards, judges, and boards of judges

when the hearing is to be held for the purpose of

the imposition of fines or suspensions as provided

by rules of the Division of Pari - mutuel Wagering,

but not for revocations, and only upon violations of

subparagra phs 1. - 6. The Division of Pari - mutuel

Wagering shall adopt rules establishing alternative

procedures, including a hearing upon reasonable

notice, for the following violations:

1. Horse riding, harness riding, greyhound

interference, and jai alai game acti ons in violation

of chapter 550.

2. Application and usage of drugs and medication to

horses, greyhounds, and jai alai players in violation

of chapter 550.

3. Maintaining or possessing any device which

could be used for the injection or other infusion of a

prohibited drug to horses, greyhounds, and jai alai

players in violation of chapter 550.

4. Suspensions under reciprocity agreements

between the Division of Pari - mutuel Wagering and

regulatory agencies of other states.

5. Assault or other crimes of vio lence on premises

licensed for pari - mutuel wagering.

6. Prearranging the outcome of any race or game.

Petitioners contend that the proposed amendments do not provide for

actual Ñalternative proceduresÒ for the listed violations, but simply graft

DOAH di scovery and hearing processes onto the board of stewardsÔ hearings

referenced in the statute implemented, and that the proposed rules directly

modify and contravene the statute by providing that a board of stewards is

without jurisdiction to resolve Ñgenui ne issues of material factÒ as to whether

a respondent committed the violation alleged. Under the proposed

amendment, a board of stewards would be limited to resolving issues as to

the penalties to be imposed for undisputed violations. Cases involving

disp uted issues of material fact would be forwarded to DOAH for the conduct

of a hearing by an Administrative Law Judge (ÑALJÒ).

On April 20, 2021, the Division filed a Motion for Summary Final Order.

O n April 23, 2021, the Division filed an Amended Motion f or Summary Final

Order. In its amended motion, the Division argues that the statute

implemented provides no definition of Ñalternative proceduresÒ to hearings

conducted pursuant to sections 120.569 and 120.57(1) and that the

procedures set forth in the pro posed amendment to rule 61D - 3.001 should be

found as a matter of law to be harmonious with section 120.80(4)(a). The fact

that the hearings would be held before boards of stewards rather than ALJs

itself constitutes an Ñalternative procedure.Ò The fact tha t there would be

some overlap between the hearing procedures prescribed by DOAH and by

boards of stewards would not negate the ÑalternativeÒ nature of the hearings

before the latter entities.

The Division also argued that section 120.80(4)(a) is procedura l in nature.

It does not establish the jurisdiction of stewards; it addresses only procedural

matters and identifies certain types of stewardsÔ hearings that are exempt

from the requirements of section s 120.569 and 120.57(1)(a). This was as close

as the Am ended Motion for Summary Final Order came to directly

addressing PetitionersÔ argument that the proposed rule contravenes section

120.80(4)(a) by preventing boards of stewards from resolving factual issues as

to whether a violation was committed.

On May 3 , 2021, Petitioners filed their own Motion for Summary Final

Order as well as their response to the DivisionÔs Motion for Summary Final

Order. On May 7, 2021, Petitioners filed a ÑMotion for Leave to File an

Amended Rule Challenge Directed to Proposed Rule 61D - 3.001, F.A.C.Ò The

motion was granted by Order dated May 12, 2021. 2 The amended petition

added an allegation that the proposed rule amendment was arbitrary and

capricious.

On May 10, 2021, the Division filed its response to PetitionersÔ Motion for

Su mmary Final Order.

On May 24, 2021, the parties filed a Joint Stipulation of Facts.

On June 9, 2021, Petitioners filed their ÑMotion for Leave to File a Second

Amended Rule Challenge Directed to Proposed Rule 61D - 3.001, F.A.C.Ò On

June 16, 2021, the Divi sion filed its written opposition to the motion. By

Order dated June 18, 2021, the undersigned granted Petitioners Ô leave to

amend their petition a second time. This Summary Final Order is based on

PetitionersÔ ÑSecond Amended Rule Challenge Directed to Pr oposed

Rule 61D - 3.001, F.A.C.Ò (ÑSecond Amended PetitionÒ). The Second Amended

Petition adds some clarifying factual allegations but retains the main legal

allegations of the amended petition: the proposed rule enlarges, modifies, or

contravenes specific provisions of the law implemented and/or is arbitrary

and capricious.

2 In a subsequent pleading, the Division complained that the undersigned entered the Order

G ranting L eave to A mend prior to the running of the period for the Division to file a written

response in opposition. The DivisionÔs complaint is accurate. However, the undersigned

concludes that the error was harmless in that no subsequent pleading filed by the Division

ever demonstrated that it was or would be prejudiced by allowing Petitioners to amend their

petition. Unde r the authority for liberal amendment of pleadings in cases such as City of

W est Palm Beach v. Palm Beach C ounty , 253 So. 3d 623, 627 (Fla. 4th DCA 2018), Optiplan,

Inc. v. Sch ool B oard of Broward C ounty , 710 So. 2d 569, 571 - 72 (Fla. 4th DCA 1998), and Key

Biscayne Council v. Dep ar t ment of Nat ural Res ources , 579 So. 2d 293, 294 - 95 (Fla. 3d DCA

1991) , as well as the DivisionÔs later response to PetitionersÔ S econd M otion to A mend, the

undersigned finds that the Division was very unlikely to have established that Petitioners

were not entitled to amend their petition.

F INDINGS OF F ACT

1. The Division is the agency responsible for enacting administrative rules

within the scope of its delegated legislative authority as set forth in c hapter

550, Flori da Statutes, as the statutes contained therein are amended from

time to time.

2. Petitioner , FHBPA , is a Florida not - for - profit corporation whose

purposes, as set forth in its Amended and Restated Articles of Incorporation

filed with the Secretary of State on December 5, 2005, include, but are not

limited to , the following:

A. to advance, foster, and promote, generally, the

sport of thoroughbred horse racing and the

thoroughbred horse racing industry in the State of

Florida;

* * *

D. to establish standard s for racetrack conditions

and equine care, safety, health, treatment, and

well - being;

* * *

F. to foster professional integrity among horsemen

and the horse racing industry and to develop a code

of ethics governing the behavior of those persons

engaged therein;

* * *

G. to cooperate with equine and humane

organizations and public and private agencies,

regulatory authorities, racing associations, racing

commissions and other organizations located in

Florida including, for example, the Department of

Busi ness and Professional Regulation, Division of

Pari - Mutuel Wagering (the ÑDivisionÒ), and its

departments and sub - divisions. and the public, in

formulating fair and appropriate laws, rules,

regulations and conditions that affect in any

manner pari - mutuel wa gering and awards, and are

deemed to be in the best interests of horsemen,

their employees, backstretch personnel, and the

horse racing industry in general, and to ensure the

enforcement of such rules is fair and equitable;

* * *

J. to represent the inte rests of its members, before

any local, state, or federal administrative,

legislative, and judicial fora including, but not

limited to, the Division with regard to all matters

affecting horsemen and the horse racing industry.

3. Currently, the FHBPA repre sents more than 200 Florida licensed

thoroughbred horse trainers and more than 5,000 Florida licensed

thoroughbred horse owners. Pursuant to its Amended and Restated Articles

of Incorporation and applicable law, the FHBPA has associational standing to

file and prosecute this petition challenging the proposed amendment to

rule 61D - 3.001 on behalf of its members.

4. Petitioner , Gulfstream Park , is the holder of a pari - mutuel permit

issued by the Division authorizing thoroughbred horse racing at its permitted

facility in Broward County. It is directly and substantially affected by the

proposed amendment to rule 61D - 3.001.

5. Current rule 61D - 3.001(2) provides that alleged violations of

chapter 550 or chapter 61D in horseracing Ñshall be heard by a board of

stew ards. Each horseracing permitholder shall establish a board of three

stewards, at least one of whom shall be the state/division steward selected

and hired by the division.Ò Current rule 61D - 3.001(19) provides, in relevant

part:

(19) Orders.

(a) In the ev ent the stewards È determine a

statute or rule has been violated and a penalty of a

license suspension of 60 days or less, or a fine not

to exceed $1,000 is sufficient to address the

violation, the stewards or division judge shall enter

an order within 14 days after the hearing. The

order shall include a caption, time and place of the

hearing, findings of fact, statement of rules or

statutes violated, and a ruling stating the length of

any suspension and the amount of the fine imposed

for each violation.

(b) In the event the stewards È determine a

statute or rule has been violated and a penalty of a

license suspension of greater than 60 days, or a fine

of greater than $1,000 should be imposed for the

violation, the stewards or division judge shall

forward a recommendation to the division stating

their findings of fact, statement of statutes or rules

violated, and recommended penalty within 14 days

after the hearing. The recommendation shall be

served to each party at the time it is forwarded to

the division . A party shall have 14 days from the

date the recommendation is issued in which to file

a response with the division prior to the entry of a

final order.

6. Subsection (19) of the current rule plainly contemplates that the

stewards may make fact ual findi ngs sufficient to permit them to Ñdetermine a

statute or rule has been violated.Ò The language of subsection (19) has been

in place since June 26, 2011.

7. Section 120.80 is titled ÑExceptions and special requirements; agencies.Ò

The statute sets forth va rious exceptions to the requirements of chapter 120

for specific agencies in specific situations. Section 120.80(4) sets forth the

exceptions and special requirements for the Department of Business and

Professional Regulation. Section 120.80(4)(a) is the p rovision cited by the

Division as one of the statutes implemented by both the current rule and the

proposed amendment to rule 61D - 3.001. Section 120.80(4)(a) provides:

(a) Business regulation. Ð The Division of Pari -

mutuel Wagering is exempt from the hearing and

notice requirements of ss. 120.569 and 120.57(1)(a),

but only for stewards, judges, and boards of judges

when the hearing is to be held for the purpose of

the imposition of fines or suspensions as provided

by rules of the Division of Pari - mutuel Wager ing,

but not for revocations, and only upon violations of

subparagraphs 1. - 6. The Division of Pari - mutuel

Wagering shall adopt rules establishing alternative

procedures, including a hearing upon reasonable

notice, for the following violations:

1. Horse ri ding, harness riding, greyhound

interference, and jai alai game actions in violation

of chapter 550.

2. Application and usage of drugs and medication to

horses, greyhounds, and jai alai players in violation

of chapter 550.

3. Maintaining or possessing an y device which

could be used for the injection or other infusion of a

prohibited drug to horses, greyhounds, and jai alai

players in violation of chapter 550.

4. Suspensions under reciprocity agreements

between the Division of Pari - mutuel Wagering and

reg ulatory agencies of other states.

5. Assault or other crimes of violence on premises

licensed for pari - mutuel wagering.

6. Prearranging the outcome of any race or game.

8. Section 120.569 is titled ÑDecisions which affect substantial interests.Ò

Subsect ion (1) provides as follows:

(1) The provisions of this section apply in all

proceedings in which the substantial interests of a

party are determined by an agency, unless the

parties are proceeding under s. 120.573 [mediation

of disputes] or s. 120.574 [su mmary hearings].

Unless waived by all parties, s. 120.57(1) applies

whenever the proceeding involves a disputed issue of

material fact. Unless otherwise agreed, s. 120.57(2)

applies in all other cases. If a disputed issue of

material fact arises during a p roceeding under

s. 120.57(2), then, unless waived by all parties, the

proceeding under s. 120.57(2) shall be terminated

and a proceeding under s. 120.57(1) shall be

conducted. Parties shall be notified of any order,

including a final order. Unless waived, a copy of the

order shall be delivered or mailed to each party or

the partyÔs attorney of record at the address of

record. Each notice shall inform the recipient of any

administrative hearing or judicial review that is

available under this section, s. 120. 57, or s. 120.68;

shall indicate the procedure which must be followed

to obtain the hearing or judicial review; and shall

state the time limits which apply. ( e mphasis

added) .

9. Section 120.57 is titled ÑAdditional procedures for particular cases.Ò

Sectio n 120.57(1) sets forth Ñadditional procedures applicable to hearings

involving disputed issues of material factÒ and section 120.57(2) sets forth

Ñadditional procedures applicable to hearings not involving disputed issues of

material fact.Ò Subsection (1)( a) provides:

(a) Except as provided in ss. 120.80 and 120.81, an

administrative law judge assigned by the division

shall conduct all hearings under this subsection,

except for hearings before agency heads or a

member thereof. If the administrative law judg e

assigned to a hearing becomes unavailable, the

division shall assign another administrative law

judge who shall use any existing record and receive

any additional evidence or argument, if any, which

the new administrative law judge finds necessary.

10. In the absence of an exception in section 120.80 or 120.81, a case

involving a disputed issue of material fact must be heard by an ALJ or an

agency head or member thereof. Section 120.57(2) gives agencies greater

discretion in hearings not involving disput ed issues of material fact to agency

discretion:

(2) ADDITIONAL PROCEDURES APPLICABLE

TO HEARINGS NOT INVOLVING DISPUTED

ISSUES OF MATERIAL FACT. Ð In any case to

which subsection (1) does not apply:

(a) The agency shall:

1. Give reasonable notice to aff ected persons of

the action of the agency, whether proposed or

already taken, or of its decision to refuse action,

together with a summary of the factual, legal,

and policy grounds therefor.

2. Give parties or their counsel the option, at a

convenient tim e and place, to present to the

agency or hearing officer written or oral

evidence in opposition to the action of the

agency or to its refusal to act, or a written

statement challenging the grounds upon which

the agency has chosen to justify its action or

i naction.

3. If the objections of the parties are overruled,

provide a written explanation within 7 days.

(b) An agency may not base agency

action that determines the substantial

interests of a party on an unadopted

rule or a rule that is an invalid

exerc ise of delegated legislative

authority.

(c) The record shall only consist of:

1. The notice and summary of

grounds.

2. Evidence received.

3. All written statements submitted.

4. Any decision overruling objections.

5. All matters placed on the record

after an ex parte communication.

6. The official transcript.

7. Any decision, opinion, order, or

report by the presiding officer.

11. Section 120.80(4)(a) exempts the Division from the hearing and notice

requirements of sections 120.569 and 120.57(1) f or hearings before stewards

Ñwhen the hearing is to be held for the purpose of the imposition of fines or

suspensionsÒ for violations of subparagraphs 1. - 6. Section 120.80(4)(a) does

not exempt the Division from the hearing and notice requirements of secti ons

120.569 and 120.57(1)(a) for license revocations. The statute requires the

Division to adopt rules establishing Ñalterative proceduresÒ for the stewardsÔ

hearings under subparagraphs 1. - 6.

12. It is notable that section 120.80(4)(a) does not under any circumstance

exempt the D ivision from section 120.57(1)(b) - (n), which provides the

procedural due process rights of parties to administrative hearings involving

disputed issues of material fact. The narrow exemption provided by section

120.80(4)(a) allows the Division to retain jurisdiction over cases involving

disputed issues of material fact rather than refer them to DOAH or have

them heard by the agency head or a member thereof as would otherwise be

required by sections 120.569(1) and 120.57(1)(a). Stewa rds may hold formal

hearings that carry the penalty of fines or suspensions for the violations

listed in section 120.80(4)(a)1. - 6., but must respect the procedural rights

established by section 120.57(1)(b) - (n).

13. Nothing about the interplay of sections 120.57 and 120.80 suggests

that stewards lack the authority to resolve disputed issues of material fact in

the hearings subject to their jurisdiction. The LegislatureÔs exemption of the

Division from only subsection (1)(a) of section 120.57 strongly sugges ts the

opposite. The DivisionÔs current rule 61D - 3.001 clearly anticipates that

stewards will resolve disputed issues of material fact in order to determine

whether a statute or rule has been violated.

14. The text of the proposed rule amendment indicates that the Division

has revised its view of the statutory authority conferred by section

120.80(4)(a). The following are the most problematic portions of the proposed

amendment:

(1) Hearings Conducted by a Board of Stewards:

(a) All proceedings for alleged violations indicated

in subsection (1)(b) of this rule shall be heard by a

Board of Stewards unless the division indicates in

its administrative complaint that it is seeking

revocation of a licenseeÔs pari - mutuel license or the

Board of Stewards relinquis hes jurisdiction as

required by the Florida Administrative Code and/or

Florida Statutes.

(b) Allegations of the following violations shall be

heard by a Board of Stewards:

1. Horse riding and harness riding actions in

violation of Chapter 550, F.S.

2. A pplication and usage of drugs and

medication to horses in violation of Chapter 550,

F.S.

3. Maintaining or possessing any device which

could be used for the injection or other infusion

of a prohibited drug to horses in violation of

Chapter 550, F.S.

4. S uspensions under reciprocity agreements

between the Division of Pari - Mutuel Wagering

and regulatory agencies of other states involving

horse racing.

5. Assault or other crimes of violence on

premises licensed for horse racing.

6. Prearranging the outcome of any pari - mutuel

horse racing event.

* * *

(2) Procedures Applicable to Hearings by a Board of

Stewards:

* * *

(c) Conduct of Hearings Before a Board of Stewards

1. The division shall have an opportunity to

present to the Board of Stewards the

undis puted facts of the alleged violation and any

evidence of mitigation or aggravation for

purposes of deciding a penalty.

2. All parties shall have an opportunity to

present evidence and witnesses regarding

mitigation for purposes of deciding a penalty.

All witnesses shall be sworn in by a member of

the Board of Stewards and are subject to

examination, cross - examination, and

questioning by any member of the Board of

Stewards.

3. All parties shall have an opportunity to

present legal arguments to the Board o f

Stewards, including interpretation of applicable

division rules and statutes.

* * *

(4) Disputes of Material Fact: The Board of

Stewards does not have jurisdiction to hear cases

involving genuine issues of material fact. For

purposes of this rule, a material fact is a fact that is

essential to the determination of whether the

respondent committed the alleged violation. Once a

disputed issue of material fact is presented, the

Board of Stewards must relinquish jurisdiction over

the proceeding back to t he division to be governed

by Section 120.57(1), F.S., and referred to the

Division of Administrative Hearings.

15. The DivisionÔs rationale for the proposed amendment is that section

120.80(4)(a) only allows stewards to impose fines or suspensions upon

l icensees, not to make factual determinations as to the underlying violations.

The Division argues that if a matter requires anything more than a decision

over the imposition of a fine or suspension when the violation is undisputed,

then the exemption in se ction 120.80(4)(a) is no longer operative and the

hearing and notice requirements of sections 120.569 and 120.57(1)(a) apply to

force the stewards to refer the case to DOAH. The Division concludes that the

proposed amendment does not limit the stewardsÔ ju risdiction but merely

restates the limitations imposed by section 120.80(4)(a).

16. The undersigned finds that the DivisionÔs reading of the statute, while

colorable if one considers the language of section 120.80(4)(a) narrowly and in

isolation from the o ther provisions it cites, is fundamentally backward. As

noted above, the only portion of section 120.57 that the Division is ever

exempted from is subsection (1)(a). Thus, under section 120.80(4)(a), when

the stewards go forward with their hearings to impo se fines or suspensions,

they remain subject to the provisions of section 120.57(1)(b) - (n). These

provisions contain repeated specific references to the disputed issues of

material fact that the Division argues stewards lack the jurisdiction to

decide. For example:

• Section 120.57(1)(b) states that parties must be

provided the opportunity Ñto submit proposed

findings of facts and orders.Ò There would be no

need to submit proposed findings of fact in the

stewardsÔ hearings contemplated by the

Division.

• Secti on 120.57(1)(c) sets forth the limitation on

the use of hearsay in a section 120.57(1)

hearing, a provision that would not be necessary

in a proceeding with no disputed facts.

• Section 120.57(1)(d) provides, in relevant part,

ÑNotwithstanding s. 120.569(2) (g), similar fact

evidence of other violations, wrongs, or acts is

admissible when relevant to prove a material

fact in issue, such as proof of motive,

opportunity, intent, preparation, plan,

knowledge, identity, or absence of mistake or

accident, but it i s inadmissible when the

evidence is relevant solely to prove bad

character or propensity.Ò (Emphasis added.)

Again, this provision would not be necessary for

a stewardsÔ hearing as contemplated by the

Division, yet is fully applicable to the stewardsÔ

hear ings under section 120.80(4)(a).

• Section 120.57(1)(j) provides that ÑFindings of

fact shall be based upon a preponderance of the

evidence, except in penal or licensure

disciplinary proceedings or except as otherwise

provided by statute, and shall be based

exclusively on the evidence of record and on

matters officially recognized.Ò

17. The jurisdictional authority of stewards is established by section

550.1155, the full text of which is as follows:

550.1155 Authority of stewards, judges, panel of

judges, or playerÔs manager to impose penalties

against occupational licensees; disposition of funds

collected. Ð

(1) The stewards at a horse racetrack; the judges at

a dog track [ 3 ] ; or the judges, a panel of judges, or a

playerÔs manager at a jai alai fronton may impose a

civil penalty against any occupational licensee for

violation of the pari - mutuel laws or any rule

adopted by the division. The penalty may not

exceed $1,000 for each count or separate offense or

exceed 60 days of suspension for each count or

sepa rate offense.

(2) All penalties imposed and collected pursuant to

this section at each horse or dog racetrack or jai

alai fronton shall be deposited into a board of relief

fund established by the pari - mutuel permitholder.

Each association shall name a boa rd of relief

composed of three of its officers, with the general

manager of the permitholder being the ex officio

treasurer of such board. Moneys deposited into the

3 References to dog racing in this section have been eliminated by section 13, CS/SB 8A,

approved by the Governor on May 25, 2021. As of the writing of this Final Order, the bill has

not been co dified. Therefore, the statute has been quoted in its 2020 form.

board of relief fund shall be disbursed by the board

for the specific purpose of aiding occ upational

licenseholders and their immediate family

members at each pari - mutuel facility.

18. When section 550.1155 is read in conjunction with section 120.80(4)(a),

it is clear that the Legislature contemplated racetrack stewards having full

authority to hear cases and impose the limited discipline of fines and

suspensions against occupational licensees for violation of the pari - mutuel

laws or Division rules, including cases involving disputed issues of material

fact. Section 120.80(4)(a) does not extend that authority to cases seeking

license revocation, which is consistent with the provisions of section

550.1155.

19. The proposed amendment to rule 61D - 3.001 provides that stewards

may conduct only hearings not involving disputed issues of material fact. T he

board of stewardsÔ jurisdiction is expressly limited to hearings in cases with

Ñundisputed factsÒ as to the violation. Evidence may be presented only as

regards to mitigation or aggravation of the penalty for the violation. The

proposed amendment requir es the board of stewards to relinquish

jurisdiction of the case to DOAH whenever a disputed issue of material fact

arises, meaning that it strictly follows section 120.57(1)(a) in the face of the

express exemption from that provision set forth in section 1 20.80(4).

20. The authority of an agency to conduct hearings not involving disputed

issues of material fact without resort to DOAH is codified in sections

120.569(1) and 120.57. The proposed amendment purports to implement

section 120.80(4) , but in fact i gnores the exemption provided therein. In this,

the proposed rule clearly contravenes the provisions of the statute it purports

to implement.

21. The DivisionÔs reasoning, while erroneous, does not rise to the level of

being arbitrary or capricious. The la nguage of section 120.80(4)(a) , restricting

the exemption to hearings Ñheld for the purpose of the imposition of fines or

suspensions,Ò standing alone, could reasonably lead to the conclusion reached

by the Division that the stewardsÔ hearings should be li mited to instances in

which the facts of the violation are undisputed and the only question is the

level of discipline to be imposed.

22. It is when section 120.80(4)(a) is placed in the context of sections

120.569(1), 120.57(1)(a), and 550.1155 that the DivisionÔs error becomes

apparent. The Division should have made the observation that sections

120.569(1) and 120.57(1)(a) require the agency to send disputed fact hearings

to DOAH , and that section 120.80(4) provides an exemption from that

requirement. Th e Division then should have asked, ÑIf the stewards are

already precluded from hearing cases involving disputed issues of material

fact by section 120.569(1), then what does the exemption in section

120.80(4)(a) do ?Ò It being impermissible for an executive branch agency to

read a statute as mere surplusage, the exemption must mean that certain

defined disputed fact hearings may be conducted by the agency without the

need to refer the matter to DOAH. 4

4 This reading is supported by the fact that section 120.80 exempts several other entities

from section 120.57(1)(a): section 120.80(2)(b) exempts the Department of Agriculture and

Consumer S ervices from section 120.57(1)(a) for hearings held pursuant to the Florida Citrus

Code, chapter 601 , Florida Statutes ; section 120.80(7) exempts the Department of Children

and Families from section 120.57(1)(a) for certain social and economic programs; se ction

120.80(8)(a) exempts the Department of Highway Safety and Motor Vehicles from section

120.57(1)(a) for hearings regarding driver licensing pursuant to chapter 322 , Florida

Statutes, and section 120.80(8)(b) exempts the same agency from section 120.57 (1)(a) for

hearings to deny, suspend, or remove a wrecker operator from participating in the wrecker

rotation system established by section 321.051 , Florida Statutes ; section 120.80(10)(c)

exempts the Department of Economic Opportunity from section 120.57( 1)(a) for hearings

held under the Reemployment Assistance Program law, chapter 443 , Florida Statutes ;

section 120.80(12) generally exempts the Public Employees Relations Commission from

section 120.57(1)(a); and section 120.80(15) provides that the Departm ent of Health is

exempt from section 120.57(1)(a) for hearings conducted Ñ in execution of the Special

Supplemental Nutrition Program for Women, Infants, and Children; Child Care Food

Program; ChildrenÔs Medical Services Program; the Brain and Spinal Cord I njury Program;

and the exemption from disqualification reviews for certifi ed nurse assistants program.Ò The

language of these exemptions is not uniform. In most instances, the statute states that the

agency may conduct the hearings in - house Ñnotwithstandin g s. 120.57(1)(a).Ò In some

instances, the language appears to give the agency the option of sending the case to DOAH or

keeping it in - house. In none of the exemptions is there any indication that the hearing to be

conducted by the agency may not resolve d isputed issues of material fact.

23. As explained above, the DivisionÔs reasoning went in another direction.

The undersigned finds the DivisionÔs reasoning wrong but not irrational , or

completely lacking in logic, and therefore not arbitrary or capricious.

24. In light of the findings above, it is unnecessary to make extensive

findings as to P etitionersÔ other main contention, i.e., that the proposed

amendment too closely mirrors DOAH procedures to be considered an

Ñalternative procedureÒ under section 120.80(4)(a). The undersigned is

persuaded that the Division had the better argument on this point. The

statute does not define Ñalternative procedures.Ò The Ñalternative

proceduresÒ the Division adopts in its rule would still have to be consistent

with administrative due process and thus would be expected to bear at least

some passing similarity to the procedures of the Administrative Procedure

Act. How similar the alternatives may become before they cease to be

ÑalternativeÒ under the statute is a question for another day.

C ONCLUSIONS OF L AW

25. DOAH has jurisdiction of the subject matter of a nd the parties to this

proceeding. § 120.56, Fla. Stat.

26. Section 120.56(1)(a) provides that Ñany 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 rul e is an invalid exercise of

delegated legislative authority.Ò

27. Section 120.56(1)(b) provides that a petition challenging the validity of

a proposed rule must state the particular provisions alleged to be invalid and

a statement of the facts or grounds f or the alleged invalidity, and facts

sufficient to show that the petitioner would be substantially affected by the

proposed rule.

28. Section 120.56(2)(a) provides that in challenges to proposed rules,

Ñ[t]he petitioner has the burden to prove by a prepond erance of the evidence

that the petitioner would be substantially affected by the proposed rule. The

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

the proposed rule is not an invalid exercise of delegated legislative authority

as to the objections raised.Ò

29. Section 120.56(2)(c) provides that in a proceeding to determine the

invalidity of a proposed rule, Ñthe proposed rule is not presumed to be valid or

invalid.Ò

30. Section 120.56(1)(e) provides that a rule challenge procee ding is de

novo in nature and that the standard of proof is a preponderance of the

evidence. The ALJ should consider and base the decision upon all of the

available evidence, regardless of whether the evidence was placed before the

agency during its rulema king proceedings. DepÔt of Health v. Merritt , 919 So.

2d 561, 564 (Fla. 1st DCA 2006)(concluding that the Legislature has

overruled the court's holding in B oard of Medicine v. Fl orida Academy of

Cosmetic Surgery, 808 So. 2d 243 (Fla. 1st DCA 2002), that an ALJ 's role in a

proposed rule challenge is limited to a review of the record and a

determination as to whether the agency action was supported by legally

sufficient evidence).

31. To establish itself as a Ñ person substantially affected Ò in this case,

FHBP A must satisfy the elements of associational standing established in

Fl orida Home Builders Assoc iation v. Department of Labor , 412 So. 2d 351,

353 - 54 (Fla. 1982):

After reviewing the legislative history and purpose

of chapter 120, we have concluded that a trade or

professional association should be able to institute

a rule challenge under section 120.56 even though

it is acting solely as the representative of its

members. To meet the requirements of section

120.56(1), an association must demonstrate that a

substantial number of its members, although not

necessarily a majority, are "substantially affected"

by the challenged rule. Further, the subject matter

of the rule must be within the association's general

scope of interest and activity, and the relief

re quested must be of the type appropriate for a

trade association to receive on behalf of its

members.

32. When an association seeks standing to challenge an administrative

rule, its individual members are not required to participate; rather,

Ñassociational standingÒ for administrative challenges is contingent on the

organizationÔs demonstration that a substantial number of its members

would be substantially affected by the rule. NAACP, Inc. v. Fla. Bd. of

Regents, 863 So. 2d 294, 300 (Fla. 2003). There is n o requirement that the

association demonstrate Ñimmediate and actual harm.Ò Id .

33. To prove standing under the doctrine, the association must show that:

(1) a substantial number of its members, although not necessarily a majority,

are Ñsubstantially affec tedÒ by the challenged rule; (2) the subject matter of

the challenged rule is within the associationÔs general scope of interest and

activity; and (3) the relief requested is of the type appropriate for the

association to receive on behalf of its members. Fla. Home Builders , 412 So.

2d at 351; St. Johns Riverkeeper, Inc. v. St. Johns River Water Mgmt . Dist. ,

54 So. 3d 1051, 1054 (Fla. 5th DCA 2011); Rosenzweig v. DepÔt of Transp ., 979

So. 2d 1050, 1053 - 54 (Fla. 1st DCA 2008).

34. The FHBPA has standing to b ring this rule challenge proceeding. Its

purpose is to advance, foster, and promote the thoroughbred horse racing

industry in the State of Florida and to act in a representative capacity on

behalf of its members before the Division, among other entities. T he FHBPA

represents more than 200 Florida licensed trainers and more than 5,000

Florida licensed horse owners. The proposed amendment to rule 61D - 3.001

would directly affect many , if not all , of the FHBPAÔs members , and the relief

sought by the FHBPA is ap propriate for the association to receive because a

determination of the invalidity of the proposed amendment will protect the

interests of a substantial number of the FHBPAÔs members.

35. Gulfstream Park is the holder of a pari - mutuel permit issued by the

Division authorizing it to conduct thoroughbred horse racing at its permitted

facility in Broward County. Gulfstream Park would be directly and

substantially affected by the proposed amendment to rule 61D - 3.001 and

therefore has standing to pursue this rul e challenge proceeding.

36. FHBPA has proven by a preponderance of the evidence that a

substantial number of its members would be substantially affected by the

proposed amendment to rule 61D - 3.001 and Gulfstream Park has

demonstrated that it would be subst antially affected. Therefore, the burden

shifts to the Division to prove by a preponderance of the evidence that the

proposed amendment is not an invalid exercise of delegated legislative

authority as to the objections raised. The Division has failed to ca rry this

burden.

37. Section 120.52(8) states as follows:

Ñ Invalid exercise of delegated legislative authority Ò

means action which goes beyond the powers,

functions, and duties delegated by the Legislature.

A proposed or existing rule is an invalid exerci se of

delegated legislative authority if any one of the

following applies:

(a) The agency has materially failed to follow the

applicable rulemaking procedures or requirements

set forth in this chapter;

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is required

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

(c) The rule enlarges, modifies, or 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 ad equate

standards for agency decisions, or vests unbridled

discretion in the agency;

(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;

(f) The rule imposes regulatory costs on the

regulated person, county, or city which could be

reduced by the adoption of less costly alternatives

that substantially accomplish the statutory

objectives.

A grant of rulemaking authority is necessary but

not sufficient to allow an agency to adopt a rule; a

specific law to be implemented is also required. An

agency may adopt only rules that implement or

interpret the specific powers and duties granted by

the enabling statute. No agency shall have

authority to adopt a rule only because it is

reasonably related to the purpose of the enabling

legislation and is not arbitrary and capricious or is

within the agency's class of powers and duties, nor

shall an agency have the authority 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 specific powers

and duties conferred by the same statute.

38. Petitioners challenged the proposed amendment to rule 61D - 3.001

based on section 120.52(8)(c) and (e).

39. The proposed rule amendment cites sections 120.80(4)(a), 550.0251,

55 0.1155, and 550.2415 as the laws implemented. Sections 120.80(4)(a) and

550.1155 are quoted and amply discussed in the Findings of Fact above.

Section 550.0251 generally sets forth the powers and duties of the Division,

including its authority to adopt Ñre asonable rules for the control, supervision,

and direction of all applicants, permittees, and licensees and for the holding,

conducting, and operating of all racetracks, race meets, and races held in this

state.Ò £ 550.0251(3), Fla. Stat. Section 550.2415 sets forth the DivisionÔs

disciplinary authority as to impermissible medication of and prohibited

substances found in racing animals.

40. For the reasons stated in the Findings of Fact above, the proposed

amendment to rule 61D - 3.001 contravenes the provisi on of section

120.80(4)(a) that exempts Ñstewards, judges, and boards of judgesÒ from the

hearing and notice requirements of sections 120.569 and 120.57(1)(a) for

certain specified hearings. The exemption from section 120.57(1)(a), but not

from the remaind er of the formal hearing requirements of section 120.57(1),

is a clear indication that the stewards, judges, and boards of judges are

meant to conduct hearings involving disputed issues of material fact. The

proposed rule ignores the exemption from section s 120.569 and 120.57(1)(a)

and requires that disputed fact hearings be referred to DOAH. Therefore, the

proposed amendment to rule 61D - 3.001 violates section 120.52(8)(c).

41. Section 120.52(8)(e) provides: ÑA rule is arbitrary if it is not supported

by lo gic or the necessary facts; a rule is capricious if it is adopted without

thought or reason or is irrational.Ò Similarly, case law provides that an

ÑarbitraryÒ decision is one not supported by facts or logic, or despotic, and a

ÑcapriciousÒ decision is one taken irrationally, or without thought or reason.

Bd. of Clinical Lab. Pers. v. Fla. AssÔn of Blood Banks , 721 So. 2d 317, 318

(Fla. 1st DCA 1998); Bd. of Trs . of the Int. Imp. Trust Fund v. Levy , 656 So.

2d 1359, 1362 (Fla. 1st DCA 1995). In undertaking this analysis, the

undersigned is mindful that these definitions:

[A]dd color and flavor to our traditionally dry legal

vocabulary, but do not assist an objective legal

analysis. If an administrative decision is justifiable

under any analysis that a reason able person would

use to reach a decision of similar importance, it

would seem that the decision is neither arbitrary

nor capricious.

Dravo Basic Materials Co., Inc. v. DepÔt of Transp ., 602 So. 2d 632, 635 n.3

(Fla. 2d DCA 1992).

42. The proposed amendm ent to rule 61D - 3.001 is not arbitrary or

capricious. As the undersigned discussed at length above, the proposed

amendmentÔs restriction on the authority of stewards, judges, and boards of

judges to hear cases involving disputed issues of material fact is based on a

failure to read sections 120.569, 120.57, 120.80(4)(a), and 550.1155 in pari

materia . As noted above, the DivisionÔs reading of section 120.80(4)(a) is

colorable in isolation . A reading that is wrong but not unreasonable does not

rise to the lev el of Ñarbitrary or capricious.Ò

O RDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is

O RDERED that:

The proposed amendment to Florida Administrative Code R ule 61D - 3.001

is an invalid exercise of delegated legislative authority.

D ON E A ND O RDERED this 9th day of July , 2021 , in Tallahassee, Leon

County, Florida.

S

L AWRENCE P. S TEVENSON

Administrative Law Judge

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 9th day of July , 2021 .

C OPIES F URNISHED :

David Axelman, General Counsel Bradford J. Beilly, Esquire

Florida Department of Business Beilly and Strohsahl, P.A.

and Professional Regulation 1144 Southeast Third Avenue

2601 Blairstone Road Fort Lauderdale, Florida 33316

Tallahassee, Florida 32 399 - 2202

Ross Marshman, Esquire

Darrell D. Garvey, Esquire Department of Business

Department of Business and Professional Regulation

and Professional Regulation 2601 Blair s tone Road

2601 Blairstone R oad Tallahassee, Florida 32399 - 2202

Tallahassee, Florida 32399 - 2202

Julie I. Brown, Secretary

Louis Trombetta, Director Department of Business

Division of Pari - Mutuel Wagering and Pro fessional Regulation

Department of Business 2601 Blairstone R oad

and Professional Regulation Tallahassee, Florida 32399 - 2202

2601 Blairstone R oad

Tallahassee, Florida 32399 - 2202 Anya Grosenbaugh, Program

Administrator

Ken Plante, Coordinator Margaret Swain

Joint Administrative Procedures Florida Administrative Code & Register

Committee Department of State

Room 680, Pepper Building R. A. Gray Building

111 West Madison Street 500 South Bronough Street

Tallahassee, Florida 32399 - 1400 Tallahassee, Flori da 32399 - 0250

N OTICE O F R IGHT T O J UDICIAL R EVIEW

A party who is adversely affected by this Final Order is entitled to judicial

review pursuant to section 120.68, Florida Statutes. Review proceedings are

governed by the Florida Rules of Appellate Procedu re. Such proceedings are

commenced by filing the original notice of administrative appeal with the

agency clerk of the Division of Administrative Hearings within 30 days of

rendition of the order to be reviewed, and a copy of the notice, accompanied

by any filing fees prescribed by law, with the clerk of the d istrict c ourt of

a ppeal in the appellate district where the agency maintains its headquarters

or where a party resides or as otherwise provided by law.