STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FINAL ORDER

On February 3-4, 2010, a hearing was held in this case in Tallahassee, Florida, before J. Lawrence Johnston, Administrative Law Judge, Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Gerald E. Greenberg, Esquire

Jose M. Jimenez, Esquire John R. Herin, Jr., Esquire

Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A.

150 West Flagler Street, Suite 2200 Miami, Florida 33130-1536

For Intervenor: Robert B. Shillinger, Jr., Esquire

Monroe County Attorney Office Post Office Box 1026

Key West, Florida 33041-1026

For Respondent: Matthew G. Davis, Esquire

Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100

STATEMENT OF THE ISSUES

The issues are: whether proposed amendments to Florida Administrative Code1 Rules 9K-9.003(6) and 9K-9.006(2) are invalid exercises of delegated legislative authority under Section 120.52(8)(b), (c), and (e), Florida Statutes2; and, if so, whether costs and attorney's fees should be assessed against Respondent and paid to Petitioner under Section 120.595(2), Florida Statutes.

PRELIMINARY STATEMENT

Petitioner filed its proposed rule challenge at DOAH under Section 120.56(1)-(2), Florida Statutes. The hearing on the rule challenge was scheduled and rescheduled twice, and Monroe County was granted leave to intervene in support of the rule challenge. A Pre-Hearing Stipulation was filed.

At the final hearing, Joint Exhibits 1-22 were received in evidence. Petitioner called three witnesses: Lisa Tennyson, Grants Coordinator for Monroe County; Douglas Gregory, Sea Grant Marine Agent and Monroe County Extension Office Director; and (telephonically) Curtis Skomp, a commercial real estate broker. Petitioner also had its Exhibits 1-5 admitted in evidence.

Respondent called two witnesses: Ken Reecy, Community Program Manager for the Florida Communities Trust (FCT) in the Department of Community Affairs (DCA); and Grant Gelhardt, Environmental Administrator for the FCT. Respondent offered its Exhibit 3, but

Petitioner's objection was sustained. Intervenor did not present evidence.

After the presentation of evidence, Petitioner ordered a Transcript of the hearing, which was filed on February 23, 2010, and the proposed final orders filed by March 22, 2010, have been considered.

FINDINGS OF FACT

1. The FCT has the power "to undertake, coordinate, or fund activities and projects which will . . . serve to conserve natural resources and resolve land use conflicts, including

   . . . [w]orking waterfronts." § 380.507(2)(g), Fla. Stat. The FCT also is specifically authorized to "award grants and make loans to local governments and nonprofit organizations for" that purpose. Id. at ¶ (6).

2. In 2008, the Florida Legislature enacted the Stan Mayfield Working Waterfront grant program. Codified as Section 380.5105, Florida Statutes, paragraph (2) of the statute authorizes the FCT to promulgate "rules specifically establishing an application process and a process for the evaluation, scoring and ranking of working waterfront acquisition projects. . . .

   Such rules shall establish a system of weighted criteria to give increased priority to projects:

   1. Within a municipality with a population less than 30,000;

      
      

   2. Within a municipality or area under intense growth and development pressures, as evidenced by a number of factors, including a

      determination that the municipality's growth rate exceeds the average growth rate for the state;

      
      

   3. Within the boundary of a community redevelopment agency established pursuant to s. 163.356;

      
      

   4. Adjacent to state-owned submerged lands designated as an aquatic preserve identified in s. 258.39; or

      
      

   5. That provide a demonstrable benefit to the local economy."

      
      

3. The purpose of the grant program is to preserve working waterfronts, which have been under pressure to convert to other uses. Some driving forces behind the conversion of working waterfront to other uses include: high coastal property values; high and unpredictable property taxes; increased regulation of commercial fishing to protect reduced fishery stocks; confusing and time-consuming regulatory processes for expanding or creating new working waterfronts; increased cheaper imported seafood; and rising fuel costs.

4. The Stan Mayfield Working Waterfront grant program is administered by the FCT. In 2008, the FCT adopted rules governing the program, including Rule Chapter 9K-9 on Grant Application Procedures.

5. In the first cycle of grant applications, evaluations, and awards, Monroe County applied for a grant to purchase and preserve Intervenor's property on Stock Island in Key West. Monroe County's Stock Island application was not granted.

6. The FCT announced its intention to amend the rules based on the experience of the first grant cycle under the existing rules and input from "stakeholders" (mostly local governments and private not-for-profit entities interested in applying for grants) throughout the State. Workshops were conducted, and stakeholders (including Monroe County) participated. Proposed amendments were drafted, and stakeholders were invited to comment on the draft proposed amendments. The draft proposed amendments and comments were considered by the governing board of the FCT at its meeting in May 2009. The Board made some revisions to the draft proposed amendments and initiated rulemaking.

7. Petitioner and Intervenor challenge proposed amendments to Rules 9K-9.003(6) and 9K-9.006(2). The proposed amendment to Rule 9K-9.003(6) caps awards at five million dollars or the amount appropriated by the Legislature, if less than five million dollars (sometimes referred to as "the cap"). The proposed amendment to Rule 9K-9.006(2) adds paragraph (d) and awards evaluation points based on the amount of grant money requested in an application, as follows: 8 points for a request not exceeding

   $1.5 million; 4 points for a request not exceeding $2.5 million; and 2 points for a request not exceeding $3.5 million.3 This proposed rule amendment is sometimes referred to as "the sliding scale."

8. It is common for grant programs to adopt a "cap" on awards. The FCT's proposed "cap" took into account recent and

   expected future legislative appropriations, as well as the grant amounts requested in the first grant application cycle and expected in the immediate future, with the understanding that the "cap" could be adjusted by rule amendment in the future if that became necessary. The purpose of the proposed "cap" was to ensure that at least two applicants would receive grant money in each grant cycle.

9. The proposed "sliding scale" was suggested by a representative of Dixie County at a noticed public FCT meeting. It was designed promote the use of non-State matching funds and to help local governments with less resources to compete in the grant application process. The proposed "sliding scale" was thoroughly discussed in-house by FCT staff and was discussed by the FCT governing board before it was approved unanimously.

10. The challenged proposed rules cite Sections 380.507 and 380.5105(2), Florida Statutes, as their statutory authority.

    They cite Sections 259.105 and 380.501-380.515, Florida Statutes, as the specific laws they implement.

11. Section 259.105, Florida Statutes, is the Florida Forever Act. Some of the funds in the Florida Forever Trust Fund are designated for distribution "to the Department of Community Affairs for the acquisition of land and capital project expenditures necessary to implement the Stan Mayfield Working Waterfronts Program within the Florida communities trust pursuant to s. 380.5105." § 259.105(3)(j), Fla. Stat.

12. Sections 380.501-380.515, Florida Statutes, are the Florida Communities Trust Act, which includes the Stan Mayfield Working Waterfronts grant program.

13. Petitioner and Intervenor contend that the proposed rule amendments are not authorized by statute and enlarge, modify, or contravene the law implemented because they add to the evaluation criteria in Section 380.5105(2), Florida Statutes.

    But it is clear that, besides the two proposed rule amendments under challenge in this case, the "system of weighted criteria" adopted in Rule Chapter 9K-9 includes several unchallenged criteria, in addition to the ones required by the statute to be given "increased priority." In addition, the evidence was that evaluation criteria in addition to those to be given "increased priority" are essential for the "system of weighted criteria" to function properly to differentiate and rank the most worthy grant applications. Without additional criteria, it is likely that many if not all grant applications would get the same score in the evaluation process.

14. Petitioner and Intervenor also contend that the proposed "cap" and "sliding scale" result in "increased priority" not being given to the criteria specified in Section 380.5105(2), Florida Statutes. Actually, "increased priority" still is given to the criteria listed in Section 380.5105(2), Florida Statutes. Rule 9K-9.006(1)(c) gives "increased priority" (ten points) for the criterion listed in Section 380.5105(2)(a), Florida Statutes.

    Rule 9K-9.006(2)(b) gives "increased priority" (ten points) for the criterion listed in Section 380.5105(2)(b), Florida Statutes. Rule 9K-9.006(1)(a) gives "increased priority" (ten points) for the criterion listed in Section 380.5105(2)(c), Florida Statutes. Rule 9K-9.006(1)(b) gives "increased priority" (ten points) for the criterion listed in Section 380.5105(2)(d), Florida Statutes. Rule 9K-9.006(2)(a) gives "increased priority" (ten points) for the criterion listed in Section 380.5105(2)(e), Florida Statutes.

15. Petitioner and Intervenor also contend that the challenged proposed amendments discriminate against grants to higher-priced properties. They contend that higher prices indicate higher pressure to convert, larger size, and greater benefit to the local economy from preservation. They contend that all of these indicators exist in the case of Intervenor's Stock Island property--indeed, the Stock Island property is under relatively high pressure to convert, is relatively large in size, and would stand to continue to greatly benefit the local economy if preserved. They contend that discriminating against higher- priced properties like Intervenor's Stock Island property is not authorized by statute, contravenes the statutes, and is arbitrary and capricious.

16. Actually, the challenged proposed rules do not necessarily discriminate against higher-priced properties. An applicant can use non-State matching funds to bring a more costly proposal under the "cap" of the proposed amendment to Rule 9K-

    9.003(6), and unchallenged existing Rule 9K-9.006(4)(a) provides that grant proposals with non-State matching funds score significant points--far more than would be lost under the "sliding scale" of paragraph (d) of the proposed amendment to Rule 9K-9.006(2). In addition, higher-priced projects are favored by other criteria in parts of the rule and proposed rule amendments that are not under challenge. For example, points are awarded for docking facilities, seafood houses, storage areas for traps, nets, and other gear, and boat ramps. These are more likely to be attributes of a larger, more expensive property. A proposed amendment to Rule 6K-9.006(3) significantly increased the amount of points available for docking facilities, especially existing usable docking facilities, which are more likely to exist on larger properties. A grant proposal with these kinds of amenities and attributes will "blow away in point-scoring" an application for a smaller grant for a proposal without these features.

17. In support of their contentions, Petitioner and Intervenor hypothesize two grant proposals for projects (whether in the same locale or in different parts of the state) with identical attributes except for property cost. However, the evidence was that such a scenario is unlikely. If that unlikely scenario were to occur, it is possible that the higher-cost proposal would exceed the "cap" of the proposed amendment to Rule 9K-9.003(6), and the lower-cost proposal would score more points

    as a result of the proposed addition of paragraph (d) to Rule 9K- 9.006(2). However, the former scenario would create the desired incentive to secure enough non-State matching funds to get under the "cap"; and under the latter scenario, it would make sense to favor the grant proposal requesting less State money.

18. Petitioner and Intervenor also contend that the proposed amendments fail to include a provision suggested by Monroe County to adopt a "sliding scale" for the "benefit to the local economy" and add other quantifiable criteria on a "sliding scale" (e.g., a "sliding scale" to give credit for the capacity of docking facilities and storage areas) that would give a greater competitive advantage to a large project like Monroe County's Stock Island proposal. The evidence was that these kinds of criteria would be difficult to devise and implement to achieve the desire result. For example, a large project might appear to benefit the local economy greatly but actually just consolidate several different areas of economic activity into one location. As a result, it was logical for the FCT not to adopt rules attempting to quantify and score these criteria on a "sliding scale."

19. The challenged proposed amendments are supported by logic and the necessary facts, and were adopted with thought and reason and are rational. The contention that the FCT thoughtlessly adopted a suggestion by a representative of Dixie County and ignored suggestions by Monroe County is rejected.

    CONCLUSIONS OF LAW

    
    

20. The validity of proposed rules can be challenged under Section 120.56(1)-(2), Florida Statutes. The challenger has the burden to go forward, but "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."

21. The rule challenge raises objections that the proposed amendments are invalid exercises of delegated legislative authority, as defined in the following parts of Section 120.52(8), Florida Statutes:

    1. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(3)(a)1.;

    2. 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; . . . .

    
    

    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 enabling statute.

    
    

22. The language following the lettered paragraphs of Section 120.52(8), Florida Statutes (sometimes referred to as the "flush left" language) is reiterated in Section 120.536(1), Florida Statutes. It is a "set of general standards to be used in determining the validity of a rule in all cases." Sw. Fla. Water Mgmt. Dist. v. Save the Manatee Club, Inc., 773 So. 2d 594, 597-98 (Fla. 1st DCA 2000). This standard has been held to mean that

    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 opposed 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.

    
    

    Bd. of Trustees of the Internal Improvement Trust Fund v. Day Cruise Ass'n, Inc., 794 So. 2d 696, 700 (Fla. 1st DCA 2001), clarified on reh., 798 So. 2d 847 (Fla. 1st DCA 2001). See also Sw. Fla. Water Mgmt. Dist. v. Save the Manatee Club, Inc., 773 So. 2d at 599.

23. Petitioner and Intervenor contend that the challenged proposed amendments to Rules 9K-9.003(6) and 9K-9.006(2) are not

    authorized by Sections 380.507 and 380.5105(2), Florida Statutes, and the specific laws they implement. Rather, they contend that the proposed rule amendments instead enlarge, modify, or contravene the specific laws they implement (namely, Sections

    259.105 and 380.501-380.515, Florida Statutes).

    
    

24. Petitioner and Intervenor contend that the challenged proposed amendments to Rules 9K-9.003(6) and 9K-9.006(2) enlarge, modify, or contravene Sections 259.105 and 380.501-380.515, Florida Statutes, because they add to the list of evaluation criteria in Section 380.5105(2), Florida Statutes. However, listing those criteria for "increased priority" implies that other criteria are contemplated.

25. Section 380.515, Florida Statutes, states: "The provisions of this part shall be liberally construed in a manner to accomplish its purposes." It is clear from the evidence that additional criteria are necessary for the grant program to function properly. For this reason, Section 380.5105(2), Florida Statutes, must be construed to allow evaluation criteria in besides those listed for "increased priority." To interpret the statute otherwise would lead to an absurd result, which would be contrary to the accepted rules of statutory interpretation. See Maddox v. State, 923 So. 2d 442, 445-46 (Fla. 2006).

26. Petitioner and Intervenor contend that, as a result of the proposed "cap" and "sliding scale" amendments, not enough priority is given to the criteria listed in Section 380.5105(2),

    Florida Statutes. But Petitioner and Intervenor have only challenged the proposed amendments to Rules 9K-9.003(6) and 9K- 9.006(2); they have not challenged the existing rules and other proposed rule amendments that give "increased priority" to the criteria listed in Section 380.5105(2), Florida Statutes; nor have they requested the initiation of rulemaking under Section 120.54(7), Florida Statutes, for adoption of criteria suggested by them to improve the "system of weighted criteria."

27. Section 380.5105(2), Florida Statutes, requires that "increased priority" be given to the listed criteria. It does not require quantification and scoring on a "sliding scale." A rule or proposed rule is not invalid because it is not the best possible rule. See Bd. of Trustees of Internal Improvement Trust Fund v. Levy, 656 So. 2d 1359, 1364 (Fla. 1st DCA 1995); Dravo Basic Materials Co., Inc. v. State, Dep't of Transportation, 602 So. 2d 632, 634 (Fla. 2nd DCA 1992).

28. The challenged proposed amendments to Rules 9K-9.003(6) and 9K-9.006(2) do not enlarge, modify, or contravene Sections

    259.105 and 380.501-380.515, Florida Statutes, as properly construed in accordance with Section 380.515, Florida Statutes. In addition, by creating an incentive to secure non-State matching funds, the "cap" and "sliding scale" adopted by the challenged proposed rule amendments serve to maximize state resources, consistent with the intent of the Florida Forever Act. See § 259.041(11)(a), Fla. Stat.

29. The challenged proposed amendments to Rules 9K-9.003(6) and 9K-9.006(2) are supported by logic and the necessary facts, and were adopted with thought and reason and are rational.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of Law, the challenges of Petitioner and Intervenor to the validity of the proposed amendments to Rules 9K-9.003(6) and 9K-9.006(2) are denied.

DONE AND ORDERED this 30th day of March, 2010, in Tallahassee, Leon County, Florida.

S

J. LAWRENCE JOHNSTON Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 2010.

ENDNOTES

1/ Unless otherwise indicated, all rule references are to the Florida Administrative Code.

2/ Unless otherwise indicated, all statutory references are to the 2009 Florida Statutes.

3/ The proposed rule amendment also states that the "FCT will not participate in project costs that exceed the grant award amount." That language is not challenged.

COPIES FURNISHED:

Robert B. Shillinger, Jr., Esquire Monroe County Attorney Office

Post Office Box 1026

Key West, Florida 33041-1026

Matthew G. Davis, Esquire Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100

John R. Herin, Jr., Esquire Stearns, Weaver, Miller, Weissler,

Alhadeff & Sitterson, P.A.

150 West Flagler Street, Suite 2200 Miami, Florida 33130-1536

Liz Cloud, Program Administrator Administrative Code

Department of State

R. A. Gray Building, Suite 101 Tallahassee, Florida 32399-0250

Scott Boyd, Executive Director and General Counsel

Administrative Procedures Committee Holland Building, Room 120 Tallahassee, Florida 32399-1300

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 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 party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 09-005536RP

Orders for Case No: 09-005536RP