STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF TRANSPORTATION )

)

Petitioner, )

)

vs. ) CASE No. 87-4590

)

REDDY ICE, a division of the ) Southland Corporation, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter was considered by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings, based upon the stipulated facts and proposed conclusions of law submitted by the parties. The parties waived an evidentiary hearing.

For Department of Transportation: Vernon L. Whittier, Jr., Esquire. For Reddy Ice: William S. Eisenberg, Esquire

ISSUE

The issue is whether a request by Reddy Ice for reimbursement of impact fees assessed by the Town of Davie when its ice manufacturing plant was displaced by the Department of Transportation for the construction of Interstate

595 should be granted under the relocation assistance program established pursuant to Section 421.55, Florida Statutes.

STIPULATED FACTS 1/

1. Reddy Ice, Inc., an ice manufacturing company, received relocation assistance and related moving costs from the Florida Department of Transportation (Department) when its plant was moved due to the construction of Interstate 595 in Broward County, Florida. When Reddy Ice relocated its business to the Town of Davie in Broward County, it was paid $108,135.57 in relocation costs by the Department.

   
   

2. The Town of Davie had an ordinance which required the payment of impact fees by a business such as Reddy Ice which uses large quantities of water. Payment of the impact fee was a prerequisite to issuance of a certificate of occupancy for the new facility. Reddy Ice was assessed and paid $71,937 as contribution charges to the Town of Davie. The payment was treated as a capital expense in the accounting records of Reddy Ice. The water and sewer service agreement Reddy Ice executed with Town of Davie Utilities Department provided for an upward adjustment of the charges if the actual water flow exceeds the estimated amount. There is no provision in the agreement for a downward

   adjustment of the impact fee in the event less water is used than was estimated. The impact fees are not reimbursed by the Town if the business moves to another location.

   
   

3. Reddy Ice filed a claim with the district office of the Department of Transportation in Fort Lauderdale to recover the impact fees. The district office denied the claim because it was not specifically provided for in the list of eligible move costs categories specified in the Florida Department of Transportation Right-of-Way Policies Manual. See the Manual, Operating Procedures, Relocation Assistance, Section 3-2. The impact fee was considered an additional expense of operating in a new location, which was ineligible for reimbursement under Section 3-3 of the Right-of-Way Manual. The claim was then forwarded to the State relocation office in Tallahassee for review and determination.

   
   

4. The State office concurred with the district determination. Because the claim for impact fees presented a relatively unique relocation issue, and federal funds are involved in the repayment of relocation costs for interstate highway construction, a national ruling was requested from the Federal Highway Administration. Ms. Barbara Reichart, Chief, Relocation Division, Federal Highway Administration, Washington, D.C., advised on May 27, 1987, that the Florida Department of Transportation and the Federal Highway Administration Division Office were correct in their determination that impact fees were ineligible for reimbursement as relocation costs under 49 CFR Section 25.305(f). Impact fees are considered by the Federal Highway Administration to be an additional operating expense incurred by a business because of operating in a new location. Reddy Ice was advised of the final determination and denial of the claim by letter dated August 25, 1987, which resulted in this administrative proceeding.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction over this matter pursuant to Section 120.57(3), Florida Statutes (1987). The State of Florida complies with the provisions of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Public Law 91- 646. See Section 421.55(1), Florida Statutes (1987). The Florida Department of Transportation administers a relocation assistance program and provides advisory services and payments to owners of businesses displaced as a result of highway construction projects. The Department of Transportation has adopted, by rule, a right-of-way policy manual which includes relocation assistance sections. See Rule 14-15.005, Florida Administrative Code.

6. Section 421.55(3), Florida Statutes (1987), provides: The state is authorized and empowered,

   in acquiring real property for use in a public project or program in which Federal or federal-aid funds are used, to make all such relocation and other payments to or for displaced persons as required under the provisions of Public

   Law 91-646 [the Federal Uniform Relocation Real Property Acquisition Policies Act of 1970], and to provide such displaced persons with relocation services.

   The federal regulations implementing Public Law 91-646 include 49 CFR Section 25.305(f) which provides:

   
   

   A displaced person is not entitled to payment for:

   (f) Any additional operating expenses of a business or farm operation incurred because of operating in a new location.

   
   

7. The Department of Transportation Right-of-Way Manual contains two sections relevant here. Section RA 3-2 states:

   
   

   1. LICENSES AND PERMITS; Any license, permit or certification required of the displacee at the replacement location is reimbursable on an actual, reasonable cost basis. However, the payment will be based on the remaining useful life of the existing license, permit or certification.

   2. OTHER MOVING RELATED EXPENSES; Other moving related expenses, not listed as ineligible under RA 3-3 of these procedures, reasonable and necessary as determined by the State Relocation Administrator, may be reimbursed.

      
      

      Section RA 3-3 provides in part:

      
      

      A. INELIGIBLE MOVING EXPENSES: The following expenses are ineligible for reimbursement as moving expenses:

      6. Any additional operating expenses of a business, farm, or nonprofit organization incurred because of operating in a new location....

      
      

8. The Federal Highway Administration has interpreted its regulation as not requiring reimbursement of impact fees which arise from doing business at a new location. That regulation, 49 CFR Section 25.305(f), is very similar to the portion of the Department of Transportation Right-of-Way Manual which describes ineligible moving expenses. The interpretation by the Federal Highway Administration of 49 CFR Section 25.305(f) appears to be controlling. In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the U.S. Supreme Court held that courts must defer to a federal agency interpretation of its governing statute that is reasonable and is not contrary to specific Congressional intent on the precise point at issue. The deference required by Chevron is not merely some sort respectful consideration that the court must accord the agency's interpretation as a step on its way to arriving at its own independent interpretation of the statute. Rather, Chevron requires outright acceptance of the agencies' interpretation provided only that it is reasonable and not against specific statutory intent. This Chevron deference is a significant shift of power from courts to federal administrative agencies. No less deference should be accorded a federal agency's construction of its own regulations than is accorded to the agency's interpretation of a statutory scheme entrusted to its administration. Chevron, 467 U.S. at 844

9. The Florida Department of Transportation, like a federal district court, should defer to the interpretation the Federal Highway Administration has given to 49 CFR Section 25.305(f) in this case, and deny reimbursement to Reddy Ice for the contribution charges assessment by the Town of Davie. The Legislature has indicated its intention to have the Florida Department of Transportation make payments to persons displaced from property for public purposes in a manner harmonious with the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. See Section 421.55(1), Florida Statutes (1987). Implicit in the Florida statutory scheme is the intention to provide reimbursement only for those items reimbursable under federal law.

   
   

10. Reddy Ice has argued that the contribution charges made by the Town of Davie are not "expenses" incurred because of operating in a new location. It characterizes the impact fees as capital expenditures under Section 263A of the Internal Revenue Code of 1986, rather than operating "expenses" under 49 CFR Section 25.305(f). It also maintains the impact fees are reimbursable as "other moving related expenses" under Section RA3-2 of the Florida Department of Transportation Right-of-Way Policy Manual. The arguments made by Reddy Ice are not persuasive. The manner in which the contribution charges should be handled for purposes of the Internal Revenue Code is irrelevant. The text of 49 CFR Section 25.305(f) and DOT Right-of-Way Policy Manual Section 3-3 are controlling. Both define "additional operating expenses of a business" as expenses for which reimbursement is not made, and the regulatory categorization of the contribution charges as additional operating expenses of a business by the Federal Highway Administration is reasonable.

RECOMMENDATION

It is recommended that the application of Reddy Ice for reimbursement of contribution charges made by the Town of Davie be denied.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 5th day of May, 1988.

WILLIAM R. DORSEY, JR.

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1050

(904) 488-9765

Filed with the Clerk of the Division OF Administrative Hearings this 5th day of May, 1988.

ENDNOTES

1/ The Stipulated Facts have been edited, in some instances for clarity.

COPIES FURNISHED:

Vernon L. Whittier, Jr., Esquire Department of Transportation Haydon Burns Building, M.S. 58 Tallahassee, Florida 32399-0458

William S. Eisenberg, Esquire 1776 North Pine Island Road Plantation, Florida 33332

Kaye N. Hendeson, Secretary Department of Transportation Haydon Burns Building, M.S. 58 Tallahassee, Florida 32399-0458

Thomas H. Bateman, III, Esquire General Counsel

Department of Transportation Haydon Burns Building, MS 58 Tallahassee, Florida 32399-0458

Docket for Case No: 87-004590

Orders for Case No: 87-004590