vs. ) CASE NO. 77-1759RP
Respondent. )
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on March 29, 1978, in the Collins Building, Tallahassee, Florida. Appearing for the parties were:
For Petitioners: Stephen W. Metz, Esquire
For Respondent: Kenneth H. Hart, Jr., Esquire
This proceeding was initiated by a petition filed pursuant to F.S. Section 120.54(4) seeking an administrative determination of the invalidity of respondent's proposed Rule 8C-16.03(1) on the ground that said proposed rule is an invalid exercise of delegated legislative authority. More specifically, petitioners contend that the rule is invalid because it operates beyond the scope and intent of its statutory authority; it is arbitrary, capricious and unconstitutionally vague; it is based on an invalid and faulty economic impact statement; and the agency has failed to adequately describe the purpose, facts and circumstances of the rule and has failed to cite proper statutory references.
The respondent Division of Labor has challenged the petitioners' standing to contest the proposed rule, which rule lists six factors to be considered by the respondent when making a determination of need for approval of new apprenticeship programs. It is contended by respondent that petitioners have failed to show that they are "substantially affected persons" within the meaning of F.S. Section 120.54(4) and that they have not shown any adverse effect from the proposed rule. The cases cited by respondent in support of this contention, Fla. Department of Offender Rehabilitation v. Jerry 353 So.2d 1230 (Fla. App. 1st, 1978) and Florida Home Builders Association, et al v. Division of Labor, Bureau of Apprenticeship, So.2d. (Fla. App. 1st, March 8, 1978) (Case No. 11-63), pertain respectively to standing to challenge existing rules pursuant to F.S. Section 120.56 and standing to challenge emergency rules
pursuant to F.S. Section 120.54(9). The Court thus required a showing of injury in fact to confer standing, and not the mere speculative and conjectural possibility of harm in the future. The same standard cannot be rationally applied to a petition seeking an administrative determination of the invalidity of a rule which has yet to be adopted. To do so, even though both Sections 120.54(4) and 120.56 require that a petitioner be "substantially affected," would frustrate the intent of the legislature in providing for challenges to proposed rules. Obviously, a person cannot show that he had been injured in fact from a rule which has yet to be implemented or applied to him. To require such a showing would defeat justice. In order to confer standing to challenge a proposed rule, a person need only illustrate sufficient facts that he would be subject to and substantially affected by the rule were it adopted. In short, the affectation will necessarily be prospective when a proposed rule is being challenged. As stated in 4245 Corp., Mother's Lounge v. Division of Beverage, 348 So.2d. 934 (Fla. App. 1st, 1977)
"The APA does not withhold judicial review of a new rule until an affected party at its peril violates the rule and thereby induces agency proceedings under Section 120.57 to punish for offending conduct. One who is prospectively affected by an adopted rule may challenge it administratively as 'an invalid exercise of delegated legislative authority,' obtain a ruling by a DOAH hearing officer, and promptly seek judicial review of that 'final agency action.'"
Petitioners have clearly illustrated that they would be subject to and substantially affected by the proposed rule in dispute. Florida Home Builders Association is comprised of a group of associations representing all aspects of the construction industry. Many of its affiliates sponsor apprenticeship programs which are subject to approval by the respondent. As such, petitioners are "substantially affected" by a rule of the respondent which sets forth standards for approval for registration of such programs.
In response to a recent amendment to F.S. Section 446.071, the respondent initiated rulemaking procedures in implementation thereof. Attempting to comply with Chapter 120, respondent prepared its "notice of proposed rules" to be published in the Florida Administrative Weekly. This notice contained amendments to four existing rules. The proposed rule challenged herein is an amendment to Rule 8C-16.03(1). The pertinent portions of the notice relating to this amendment are as follows:
"PURPOSE AND EFFECT:
The amendment to 8C-16.03(1) is for the purpose of establishing criteria to be used by the Bureau of Apprenticeship in approving new programs, based on determinations of need. This amendment implements Chapter
77-25, Laws of Florida, which provides that a showing of need be made before new apprenticeship programs are registered.
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SPECIFIC LEGAL AUTHORITY: Chapter 77-25,
Laws of Florida; Section 446.031(2), Florida Statutes.
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LAWS IMPLEMENTED: Chapter 77-25, Laws of Florida; Chapter 77-182, Laws of Florida; Section 446.041(3), Florida Statutes;
29 CFR 29.
ESTIMATE OF ECONOMIC IMPACT:
8C-16.03(1) is a required amendment under Chapter 77-25, Laws of Florida. The six specific criteria to be used by the Bureau in establishing whether or not a need for new programs exists are all designed to take into account the economic conditions for the lo- cale of the proposed new programs. By doing this, is is expected that duplications of programs will be eliminated and resources will be used the most efficiently."
* * *
A COPY OF THE PROPOSED RULES CAN BE OBTAINED BY WRITING TO:
* * *
Petitioner contends that this notice does not comply with the requirements of the rulemaking procedures prescribed in F.S. Section 120.54. Specifically, it is alleged that the purpose and effect of the rule is not adequately explained, the citation to legal authority is erroneous and the estimate of economic impact is both invalid and faulty. F.S. Section 120.54(1) requires that an agency, prior to the adoption, amendment or repeal of a rule, give notice setting forth
". . . a short and plain explanation of the purpose and effect of the proposed rule, a summary of the proposed rule, the specific legal authority under which its adoption is authorized, and a summary of the estimate of the economic impact of the rule on all per- sons affected by it. The notice shall contain the location where the text of the proposed rule or economic impact statement can be obtained if such text is not included in the notice.
The undersigned agrees that the stated "purpose and effect" of the proposed rule is little more than a summary of the rules content. This, by itself, should not be deemed sufficient to defeat its validity.
The statements throughout the notice that the proposed rule implements or fulfills the requirements of Chapter 77-25, Laws of Florida, are erroneous. The law implemented is Chapter 77-183, Laws of Florida, which amends F.S.
446.071. Neither Ch. 77-183 nor F.S. Section 446.071 is cited in the respondent's notice of proposed rules. Part of this defect is cured by a reference in the text of the proposed rule to F.S. Section 446.071 under "law implemented."
Of more significant and fatal import is the statement contained under that section of the notice entitled "estimate of economic impact." Such statement clearly does not comply with the requirements of F.S. Section 120.54(2). This section requires that an economic impact statement be prepared
"using professionally accepted methodology, with quantification of data to the extent practicable, giving effect to both short-term and long-term consequences." The statute goes on to require that the statement contain information on seven specific areas. The three sentence statement contained in the notice does not specifically address these seven areas nor does it contain data or logic to support the conclusions contained therein.
Respondent argues that the statement contained in the notice is simply a summary of the estimate of economic impact, that this is all that is required in the notice of intended action under F.S. Section 120.54(1), and that since the agency has not yet adopted the proposed rule, it has not yet violated rulemaking procedures. This argument defies logic and is contrary to the entire spirit and rationale for the specific and detailed procedures for the adoption of rules. True, all that is required in the notice is a summary of the estimate of the economic impact of the proposed rule on all affected persons. Logically speaking, however, one can not summarize something that does not exist. The legislature obviously intended that an economic impact statement exist prior to the notice of intended action since the last sentence of Section 120.54(1) states that
"The notice shall contain the location where the text of the proposed rule or economic impact statement can be obtained
if such text is not included in the notice."
The last statement contained in the respondent's notice states how "A copy of the proposed rules" can be obtained. It must therefore be presumed either that the text of the economic impact statement is included in the notice or that such a text does not exist. That contained in the notice is legally deficient under
F.S. 120.54(2) and respondent has not shown or contended that a more detailed statement does exist.
The preparation of an adequate economic impact statement is a material aspect of the rule adoption proceeding and is statutorily mandated. The failure of an agency to prepare such a statement when adopting an administrative rule constitutes a fatal defect to that rule's validity. This was recognized in the case of Dept. of Environmental Regulation v. Leon County, 344 So.2d. 297 (Fla. App. 1st, 1977), wherein the Court stated:
"While Section 120.54 does not specifically relate to an alleged erroneous economic impact statement to validity or invalidity of a rule, it does require the promulgation of such a statement by the agency as one of the steps in the rulemaking procedure. Thus,
the failure to give such an economic impact statement would constitute an invalid exercise of delegated legislative authority. By the same taken, the giving of a false or erroneous economic impact statement could also consti- tute an invalid exercise of delegated legi- slative authority."
The failure of the respondent to prepare or provide a proper and adequate economic impact statement renders proposed Rule 8C-16.03(1) invalid.
The above discussion is dispositive of the issue of the invalidity of respondent's proposed Rule 8C-16.03(1). However, in order to dispose of all issues raised in the petition and in light of the fact that most of the testimony adduced at the hearing related to the contents of the proposed rule, attention must now be given to the petitioner's contention that the rule is arbitrary, capricious and vague and operates beyond the scope and intent of the law it seeks to implement.
Prior to July 1, 1977, the respondent Bureau of Apprenticeship was required to approve apprenticeship sponsors, if said sponsors met certain other standards, "whenever a demand [was] made." F.S. Section 446.071. In order to assure the expansion and maintenance of quality apprentice training programs, to eliminate short-term, unstable "paper programs," and to foster and provide continuity of training and employment for apprentices, the statute was amended by Chapter 77-183, Laws of Florida. The amendment deleted the phrase "whenever a demand is made" and substituted in lieu therefor the phrase "upon a determination of need." Proposed Rule 8C-16.03(1)(b) sets forth six factors to be considered by the respondent when making such "a determination of need." Testimony adduced at the hearing from the Director of the Division of Labor and the Chief of the Bureau of Apprenticeship established that the purpose of setting forth criteria for making a need determination was to allow the respondent to exercise flexibility in approving viable programs. The testimony further established that each factor listed, standing by itself and going no further than the printed word, would not be indicative of need as related to labor economics or the assurance of quality training programs for apprentices. For example, factors one and two speak of "the number" of programs in the area and "the number" of unemployed apprentices in registered programs in the area. "The number," in and of itself, could be irrelevant without reference to the activities of the programs, the economic need for such programs and the rate of unemployment in the area. Factor number four includes for consideration "the sufficiency of training opportunities" being offered by registered programs in the area. The term "sufficiency" is somewhat vague in that it is unclear whether the term is directed to the experience of the trainers, the quality of the facilities, class size or other indicia of sufficiency.
However, petitioners have failed to demonstrate that the factors listed are not related to a determination of need or are not capable of being applied in a reasonable manner by respondent. In order to determine the rate of unemployment or the need for specific programs in specific areas, it is necessary to start out with a given number. It must be assumed that the respondent would then apply such number in a reasonable manner to determine the need or lack of need for further programs. The factors contained in the proposed rules, if reasonably applied, are valid indicators of need. Thus, the rule's contents are reasonably related to the purpose for which it was intended; to wit: to establish criteria and guidelines for the determination of need mandated by the implementing legislation -- F.S. Section 446.071, as amended.
As pointed out by Circuit Court Judge Donald O. Hartwell in an opinion upholding the constitutionality of Ch. 77-183, Laws of Florida,
"It is further to be noted that final agency action in approving or disapproving new programs is reviewable under the Administrative Procedures Act (Section 120.68(1))."
Florida Home Builders Association, et al. v. Division of Labor, Bureau of Apprenticeship, Circ. Ct. of Leon County, Case No. 77-2824 (January 16, 1978).
Through the introduction into evidence of a transcript and tape of the legislative committee meeting wherein the amendment to F.S. Section 446.071 was considered, petitioner attempted to establish the legislative intent of the amendment. Petitioners contend that these exhibits illustrate that it was the intent of the legislature that need for programs be determined solely by the number of prospective apprentices and employers desiring to participate in new programs, and not by the demand of the existing job market in the area. The three-page transcript is certainly indicative of an individual legislator's area of concern. It is not, in and of itself, conclusive of legislative intent.
Such intent can adequately be gleaned from the declaration of legislative intent set forth in F.S. Section 446.011. That intent is expressed in terms of the provision of educational opportunities for Florida's young people, the broadening of job-training opportunities and the expansion of apprenticeship programs. The respondent's interpretation of need in terms of providing quality, viable programs for apprentices is not inconsistent with the expression of legislative intent contained in F.S. Section 446.011. Witnesses for the respondent testified that the criteria listed in the rule are intended to be applied so as to eliminate short-term "paper" training programs which have a deleterious effect upon existing programs and apprentices enrolled therein and which hamper an apprentice's possibility for continuity of employement. As such, the rule does not operate beyond the scope and intent of Chapter 446, Florida Statutes.
In summary, the petitioners have failed to demonstrate that the proposed rule does violence to legislative intent or that its contents are arbitrary, capricious or unconstitutionally vague. However, the absence of a proper economic impact statement renders proposed Rule 8C-16.03(1) an invalid exercise of delegated legislative authority.
Done and entered this 28th day of April, 1978, in Tallahassee, Florida.
Stephen W. Metz, Esquire Post Office Box 1259 Tallahassee, Florida 32302
Kenneth H. Hart, Jr., Esquire Department of Commerce Division of Labor
DIANE D. TREMOR
Carroll Webb, Executive Director Administrative Procedure Committee Room 120 - Holland Building Tallahassee, Florida 32304
