STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GBS GROVES, INC., AND CITRUS GROWERS ASSOCIATES, INC.,

Petitioners,

vs.

DEPARTMENT OF CITRUS,

Respondent.

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) Case No. 02-2936RP

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FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly-designated Administrative Law Judge,

Jeff B. Clark, held a formal administrative hearing in this case on October 15, 2002, in Lakeland, Florida.

APPEARANCES

For Petitioners: James T. Griffiths

Qualified Representative

GBS Groves, Inc., and Citrus Growers Associates, Inc.

2930 Winter Lake Road Lakeland, Florida 33803

For Respondent: Kenneth O. Keck, Esquire

Florida Department of Citrus Post Office Box 148

Lakeland, Florida 33802-0148 STATEMENT OF THE ISSUE

Whether Respondent's, Department of Citrus, proposed changes to Rules 20-71.005, 20-71.006, and 20-72.009, Florida

Administrative Code, are invalid exercises of delegated legislative authority.

PRELIMINARY STATEMENT

By letter dated July 19, 2002, directed to Chief Judge Sharyn Smith, Division of Administrative Hearings, Petitioners, GBS Groves, Inc., a Florida corporation which owns citrus groves in Polk County, Florida, and Citrus Growers Associates, Inc., a Florida corporation which represents the interests of Florida citrus growers, challenged three proposed rule changes advanced by Respondent, Department of Citrus, as invalid exercises of delegated legislative authority. The referenced letter further states: "[T]hese rule changes provide that any shipment of bulk citrus products between any two registered processing facilities may be completed without the bulk product being certified as to inspection for grade prior to shipment. This is in direct contravention of Chapter 601.49."

On July 25, 2002, the case was scheduled for final hearing in Lakeland, Florida, on August 19, 2002. On August 5, 2002, Respondent, with the consent of Petitioners, moved for a continuance of the final hearing until after the September 18, 2002, meeting of the Florida Citrus Commission; the motion was granted.

On August 15, 2002, James T. Griffiths, Ph.D., was found to be qualified to appear as a Qualified Representative for Petitioners.

On September 30, 2002, the final hearing was rescheduled for October 15, 2002.

The final hearing took place as rescheduled. Prior to the presentation of evidence, Petitioners moved for a continuance of the final hearing based on the fact that Cynthia Douglas, an employee of the United States Department of Agriculture (USDA), had failed to appear as a trial witness notwithstanding being subpoenaed. Dr. Griffiths reported that he had been contacted by the USDA's Office of General Counsel who advised that

Ms. Douglas would not appear because it was believed that her appearance was not in the best interest of the Federal government, apparently asserting some sort of "executive privilege." At the close of the testimony Petitioners were given the opportunity to depose Ms. Douglas and submit her deposition as trial testimony. Petitioners elected not to pursue taking her deposition.

Petitioners offered one witness, James T. Griffiths, Ph.D., and offered one exhibit, which was received in evidence and marked Petitioners' Exhibit 1. Respondent presented three witnesses: Andy Laurent, Shannon Shepp, and Lisa Young Rath.

Respondent offered two exhibits, which were received in evidence and marked Respondent's Exhibits 1 and 2.

The Transcript of the final hearing was filed with the Clerk of the Division of Administrative Hearings on October 30, 2002. By agreement, the parties had ten working days to file proposed orders. Both parties filed proposed orders which were

thoughtfully considered.

FINDINGS OF FACT

Based on the evidence and the testimony of witnesses presented and the entire record in this proceeding, the following findings of fact are made:

1. In Florida, all citrus processing plant operations are under continuous inspection by USDA inspectors as a result of a Cooperative Agreement, which has an effective date of July 1, 1968, between the Consumer and Marketing Services (now known as Agricultural Marketing Services), the USDA, and the Florida Department of Agriculture (now known as Department of Agriculture and Consumer Services).

2. By its terms, the Cooperative Agreement contemplates that the State of Florida agency (Respondent herein) may develop standards for processed citrus products under authority granted by Florida state law. As such, Respondent establishes policy and the USDA implements the policy established by Respondent.

3. Since 1949, Chapter 601, Florida Statutes (the "Florida Citrus Code"), has vested Respondent with general and specific legislative authority to inspect, grade, develop minimum quality and maturity standards, and to do myriad other things to ensure the quality of processed citrus products. In addition, the Florida citrus industry has implemented internal quality control testing and standards in an effort to instill consumer confidence in Florida citrus products.

4. Not unlike many other segments of commerce, the Florida citrus industry has evolved from small, local operators to large multi-state conglomerates. Innovation and consolidation has resulted in new products, production techniques, and citrus processing methodology. Where bulk concentrate was stored in 55-gallon drums in the 1950s, it is now stored in 100,000-gallon tanks, and can be transported in huge container trailers towed by semi-tractors.

5. As the Florida citrus industry has changed, so too has governmental and internal testing for product wholesomeness, maturity, grade, and safety.

6. Upon delivery to a citrus processing plant, all citrus fruit is tested for wholesomeness and maturity before it is processed. This initial inspection is accomplished by the arbitrary selection of approximately 38-45 pounds of citrus from throughout a 500-box load. If the citrus passes this initial

   testing, it proceeds to be processed. Processed citrus product is later tested for grade and, finally, undergoes microbial, pathogen, and safety testing by the Food and Drug Administration. In addition, processors undertake private testing to assure particular quality assurance.

7. In 2001, the Florida Legislature repealed Subsection 601.48(1), Florida Statutes, and, as a result, deleted the statutory requirement for inspections of grade standards in registered citrus processing plants. The repeal of Subsection 601.48(1), Florida Statutes, eliminated legislative direction for a grade inspection; however, there remained other inspection requirements.

8. Section 601.49, Florida Statutes, provides that it is unlawful for any person to sell or transport canned or concentrated products unless the same has been inspected and accompanied by a certificate of inspection or manifest indicating that an inspection has taken place.

9. Subsection 601.48(3), Florida Statutes, exempts intrastate shipment of processed citrus products between licensed citrus fruit dealers who operate processing plants from grade labeling requirements.

10. In 2000, Respondent, by Rule 20-71.005, Florida Administrative Code, established manifest requirements and statements for in-state transport of processed citrus products

    between registered facilities owned by the same processor. This was the precursor to the proposed rule changes, which are the subject of this rule challenge.

11. Proposed Rule 20-71.005, Florida Administrative Code, allows the intrastate transport of bulk processed citrus products between registered facilities, eliminating the requirement that both facilities be owned by the same individual or entity and establishes informational requirements for the shipping manifest.

12. One of the informational requirements for the shipping manifest established in the proposed rule is a certified statement that "the processed citrus products are being transported in bulk as processor grade." "Processor grade" is a new designation.

13. Proposed Rule 20-71.006, Florida Administrative Code, establishes manifest requirements for transport of processed citrus products with the exception of bulk processed citrus product shipments specified in Rule 20-71.009, Florida Administrative Code.

14. Proposed Rule 20-71.009, Florida Administrative Code, authorizes an inspector to issue a certificate of processor grade, which reflects that the bulk processed citrus product has been inspected for wholesomeness and maturity and ensures that

    the bulk processed citrus product will be inspected and/or re- graded before final shipment.

15. The proposed rules reflect changes that are taking place in citrus processing methodology; the rule changes ensure that inspection as required by Section 601.49, Florida Statutes, takes place.

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction of the parties and subject matter of this cause, pursuant to Sections 120.52 and 120.56, Florida Statutes.

17. Petitioners, a citrus grove owner and an association representing the interests of the owners of 75,000 acres of citrus groves, could be substantially affected by the proposed rules. Petitioners' standing has not been challenged.

18. Under Subsection 120.56(2)(c), Florida Statutes, proposed rules are not presumed valid or invalid. Once challenged, the burden shifts to the agency to prove that the proposed rule "is not an invalid exercise of delegated legislative authority as to the objections raised," (see Subsection 120.56(2)(a), Florida Statutes) but first, the challengers must present evidence necessary to establish a factual basis for their objections. Board of Clinical

    Laboratory Personnel v. Florida Association of Blood Banks, 721 So. 2d 317 (Fla. 1st DCA 1998); St. Johns River Water Management

    District v. Consolidated Tomoka Land Co., 717 So. 2d 72 (Fla. 1st DCA 1998).

19. Petitioners allege that the proposed rules constitute an invalid exercise of delegated legislative authority, pursuant to Subsection 120.52(8)(c), Florida Statutes, because the proposed rules would enlarge, modify, or contravene the specific provisions of law they purport to implement. More specifically, Petitioner maintains that the proposed rules are invalid because they violate Section 6o1.49, Florida Statutes.

20. Subsection 120.536(1), Florida Statutes, reads as

    
    

    follows:

    
    

    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.

    
    

21. Subsection 601.02(4), Florida Statutes, advises that one of the stated purposes of Chapter 601, Florida Statutes, is

    "[T]o provide means whereby producers, packers, canners, and concentrators of citrus fruit and the canned and concentrated products thereof may secure prompt and efficient inspection and classification of grades of citrus fruit and the canned and concentrated products thereof at reasonable costs, it being hereby recognized that the standardization of the citrus fruit industry of Florida by the proper grading and classification of citrus fruit and the canned and concentrated products thereof by prompt and efficient inspection under competent authority is beneficial . . ."

22. Subsection 601.10(1), Florida Statutes, reads as follows:

    The Department of Citrus shall have and shall exercise such general and specific powers as are delegated to it by this chapter and other statutes of the state, which powers shall include, but shall not be confined to, the following:

    
    

    1. To adopt and, from time to time, alter, rescind, modify, or amend all proper and necessary rules, regulations, and orders for the exercise of its powers and the performance of its duties under this chapter and other statutes of the state, which rules and regulations shall have the force and effect of law when not inconsistent therewith.

       
       

23. Subsection 601.10(7), Florida Statutes, vests Respondent with the authority "[T]o adopt, promulgate, alter, rescind, modify, amend, and enforce rules and regulations and

    establish minimum maturity and quality standards for citrus fruits."

24. Section 601.49, Florida Statutes, provides Respondent's specific authority for implementing the proposed rules, and reads as follows:

    It is unlawful for any person, except as provided in s. 601.50, to sell or offer for sale, to transport, receive, or deliver for transportation, or market any canned or concentrated products of citrus fruits unless the same has been inspected and is accompanied by a certificate of inspection issued by a duly authorized inspector of the Department of Agriculture, provided, however, that the Department of Citrus shall by regulation provide that in lieu of the accompaniment of such shipment by a certificate of inspection, the fact of such inspection may be shown by appropriate means on the manifest or bill of lading covering such shipment.

    
    

25. The proposed rules do not enlarge, modify, or contravene the specific provisions of the law implemented. With the legislative repeal of Subsection 601.48(1), Florida Statutes, and the elimination of the requirement of citrus product grading in a registered processing plant, Respondent has authority to authorize the transport of concentrated citrus products intrastate accompanied by a manifest certifying that the citrus products are being shipped "in bulk as processor grade." As such, Respondent is implementing the inspection

    requirement of Section 601.49, Florida Statutes, for which it has specific statutory authority.

26. The proposed rules reflect changes in the methodology of processing citrus fruit and implement to inspection requirements of Section 601.49, Florida Statutes, as such, the proposed rule changes are not arbitrary or capricious, and they are supported by competent substantial evidence. Panama City Beach Community Redevelopment Agency v. State, 2002 W.L. 31317951 (Fla. 2002) (competent, substantial evidence); Bd. of County Commissioners of Brevard v. Snyder, 627 So. 2d 469, 474 (Fla. 1993) (competent, substantial evidence); Degroot v. Sheffield, 95 So. 2d 912 (Fla. 1957) (competent, substantial evidence); Dravo Basic Materials Co., Inc., v. Dept. of Transp., 602 So. 2d 632, 634 (Fla. 2nd DCA 1992) (arbitrary and capricious); Agrico Chem. Co. v. Dept. of Environmental Reg.,

    365 So. 2d 759, 763 (Fla. 1st DCA 1978) (arbitrary and capricious).

27. While "processor grade" currently lacks specific definition, it satisfies the inspection requirement of Section 601.49, Florida Statutes, and reflects a status for processed concentrate which has been inspected for wholesomeness and maturity and is being transported between licensed processing plants within the state.

ORDER

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

ORDERED that the proposed changes to Rules 20-71.005, 20-71.006, and 20-72.009, Florida Administrative Code,

constitute valid exercises of delegated legislative authority.

DONE AND ORDERED this 4th day of December, 2002, in Tallahassee, Leon County, Florida.

JEFF B. CLARK

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 4th day of December, 2002.

COPIES FURNISHED:

James T. Griffiths Qualified Representative GBS Groves, Inc., and Citrus

Growers Associates, Inc.

2930 Winter Lake Road Lakeland, Florida 33803

Kenneth O. Keck, Esquire Florida Department of Citrus Post Office Box 148 Lakeland, Florida 33802-0148

Mia McKown, General Counsel Department of Citrus

Post Office Box 148

1115 East Memorial Boulevard Lakeland, Florida 33802-0148

Bob Crawford, Executive Director Department of Citrus

Post Office Box 148 Lakeland, Florida 32802

Carroll Webb, Executive Director

Joint Administrative Services Procedures Committee

120 Holland Building Tallahassee, Florida 32399-1300

Liz Cloud, Chief

Bureau of Administrative Code The Elliott Building, Room 201 Tallahassee, Florida 32399-0250

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 02-002936RP

Orders for Case No: 02-002936RP