STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PAN AMERICAN CONSTRUCTION Co., a ) FLORIDA CORPORATION and GENERAL ) CORPORATION, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 75-1878RX

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

FINAL ORDER

This matter came before this division on the Petition of the Pan American Construction Company filed under Section 120.56, Florida Statutes, challenging the validity of certain rules adopted by the Respondent, Department of Transportation. The rules challenged are in Chapter 14, Florida Administrative Code; specifically, 14-76.01 through .06. This chapter is headed PAYMENT ADJUSTMENT-BITUMINOUS MATERIAL.

APPEARANCES

For Petitioners: William L. Gray, III, Esquire

Blackwell, Walker, Gray, Powers, Flick and Hoehl

2400 First Federal Building One Southeast Third Avenue Miami, Florida 33131

For Respondent: George Waas, Esquire

Department of Transportation Haydon Burns Building Tallahassee, Florida 32304

These rules have been adopted by the Department of Transportation under the authority of Section 337.143, F.S. In pertinent part that section states:

"(1)(a) The adjustment shall be calculated separately for each month during which bituminous material is incorporated into

a project, using the following formula: Pa--Id plus 5 cents, where:

1. Pa--The adjusted unit price for bituminous material; and

(2) Id--The department's Asphalt Price Index in effect during the month in which the material is incorporated into the project.

1. The department shall determine the Asphalt Price Index by averaging quotations in effect on the first day of each month at terminals which could reasonably be expected to furnish bituminous materials to road construction projects in the state."

   
   

   Section 120.56, F.S., states in part:

   
   

   "(1) Any person substantially affected by a rule may seek an administrative determination of the invalidity of the rule on the ground:

   1. That the rule is an invalid exercise of validly delegated legislative authority.

   2. That the rule is an exercise of invalidly dele- gated legislative authority."

The Respondent, Department of Transportation does not challenge the fact that the Petitioners are substantially effected by the challenged rules and that they have adequate standing to file this Petition before this division. Petitioners claim that under Section 120.56, F.S., the rules in question are invalid exercises of validly legislative authority. Specifically, the Petitioners claim that the rules exceed and are contrary to the statutory authority of Chapter 373, F.S., which these rules allegedly implement. Section 373.143, F.S., permits adjustments to contract unit prices for bituminous material in contracts which bids were received by the Department of Transportation prior to April 1, 1974. That statute gives only one formula for reimbursement and gives a contractor the right or option to have this section applied to applicable contracts. Rule 14-76.03, F.A.C. requires a contractor to certify to the Department of Transportation the cost of materials and demonstrate the existence of irreparable economic harm in the performance of his contracts. The rule further goes on to elaborate on how the department may determine a

variety of adjustments to the contract price. Rule 14-76.03(2), F.A.C., states in part:

"The department shall not pay any amount greater than that documented by each contractor and justified by the department, and in no event shall a department pay an amount which is greater than that authorized by the formula."

The statute gives the Department of Transportation no authority to elaborate on the price adjustment formula. The statute mandates the price adjustment by use of the statutory equation.

Clearly, by rule, the department has attempted to modify the existing statute.

While the statute gives only one formula for contract price readjustments regarding bituminous material, the rules of the Department of Transportation enlarge the statutory formula by adopting additional criteria which could reduce the contract price adjustments otherwise available to applicable contractors under the statute.

The position of the Respondent, Department of Transportation, has been that the above referenced rules have been necessary to avoid giving contractors windfall profits. Such a response begs the question. The only issue in this proceeding is whether the rules have been adopted pursuant and conforming to statutory authority. Section 337.143, F.S., permits the Department of Transportation to adopt reasonable rules to implement the bituminous contract price adjustment formula, but does not give the Department any authority to modify the statutory formula. It is beyond dispute that an administrative agency may not adopt a rule which conflicts with or modifies an existing statute. State

v. Atlantic Coast Line R. Co. 47 So. 969, Louisville and N. R. Co.

v. Railroad Commissioners 58 So. 543, State ex rel. Railroad Commissioners v. Florida East Coast R. Co. 59 So. 385, Atlantic Coast Line R. Co. v. State 143 So.255, Grissom v. Van Orsdel 137 So.2d 246, De Thorn v. Beck 280 So.2d 448.

Although the Petitioners claim they are challenging the validity of Rules 14-76.01 through .06, F.A.C., it is clear their real challenge is to 14-76.03, F.A.C. As it is undisputed that this rule attempts to modify and add to the single reimbursement formula contained in Section 337.143, F.S., it is similarly beyond

dispute that Rule 14-76.03, F.A.C., is an invalid exercise of validly delegated legislative authority and is therefore invalid.

DONE and ORDERED this 28th day of June, 1976, in Tallahassee, Florida.

KENNETH G. OERTEL, Director

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

William L. Gray, III, Esquire 2400 First Federal Building One Southeast Third Avenue Miami, Florida 33131

George Waas, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32304

Docket for Case No: 75-001878RX

Orders for Case No: 75-001878RX