ANNAT, INC., a Florida ) corporation, d/b/a MUNICIPAL ) SUPPLY AND SIGN COMPANY, )
vs. ) CASE NO. 77-2157RX
Respondent. )
This cause cafe on for final hearing on Petitioner's Petition for Declaration of Rule Invalidity wherein Petitioners challenge the validity of a certain alleged rule of the Department of Offender Rehabilitation pursuant to Section 120.56, Florida Statutes.
For Petitioner: L. Ralph Smith, Jr., Esquire
For Respondent: Raymond W. Gearey, Esquire
By pretrial stipulation the panties greed that the only factual issue requiring proof relates to the allegation contained in Paragraph 7 of the petition wherein Petitioners are alleged to be directly and substantially affected by the rule adopted by the Department of Of fender Rehabilitation. By the same stipulation the parties agreed that all other factual allegations set forth in the petition are deemed admitted for the purposes of this proceeding. That pretrial stipulation dated March 5, 1978 was accepted by the Hearing Officer.
The Respondent filed a Motion to Dismiss and an Addendum to Motion to Dismiss, both of which were taken under advisement by the Hearing Officer and which are disposed of elsewhere in this order.
Having considered the testimony, evidence and memoranda filed by the parties the Hearing Officer finds the following:
Petitioners are each corporations organized and existing under the laws of the State of Florida. McCain Sales of Florida, Inc. (hereinafter referred to
; McCain) has its principal place of business in Ft. Pierce, Florida. Annat, Inc. (hereinafter referred to as Municipal) has its principal place of business in Naples, Florida.
The Department of Offender Rehabilitation is an agency as defined by Section 120.52, Florida Statutes.
Petitioners McCain and Municipal are engaged in the business of, among other things, manufacturing and marketing metal traffic control signs and related supplies and hardware. The gross sales for such equipment by McCain from July 1, 1976 to June 30, 1977, to Florida municipalities and counties amounted to $628,484.06. During the same period McCain's total gross sales amounted to approximately 1.3 million dollars. Approximately 52 percent of McCain's total gross sales during that period were directly attributable to sales of metal traffic control signs and related supplies and hardware to Florida municipalities and counties.
From February 1, 1977, to January 31, 1978, Municipal's gross sales of metal traffic control signs and related supplies and hardware to Florida municipalities and counties amounted to $167,425.87. During the same time Municipal's total gross sales were $292,277.88. Approximately 57.2 percent of principal's total gross sales during the foregoing time period were from the sale of metal traffic control signs and related supplies and hardware to Florida municipalities and counties.
The evidence presented indicates that in 1974 the Department of Offender Rehabilitation (hereinafter referred to as Department) began consideration of the establishment of a metal sign manufacturing program as a correctional work program pursuant to Section 945.06, Florida Statutes. By letter dated May 14, 1976, Mr. Louie L. Wainwright, Secretary of the Department, stated to the president of Petitioner McCain that the Department was then considering the adoption of a sign manufacturing program as one of its correctional work programs. See Petitioners' Exhibit 6. By letter dated May 24, 1977, to the president of Municipal, Mr. T. E. Bronson, then Chairman of the Prison Industry Commission created by Section 845.065, Florida Statute 1977, stated ... that it may very well be that the establishment of a sign industry is too far along to be stopped at this point." See Petitioners' Exhibit 4. The Chief of Industries Operations for the Department, Mr. William H. Kelley, testified that the Department decided to implement the metal sign manufacturing program sometime in 1976. He further testified that when the Prison Industry Commission met in June, 1977, the Department had already adopted the program and decided to proceed with it. On January 18, 1978, the Department mailed an Invitation to Bid to suppliers of metal sign shop equipment which invitation set forth more than nine pages of equipment to he used in the manufacture of metal signs. See Petitioner's Exhibit 1.
While the precise date on which the Department of Offender Rehabilitation finally decided to engage in the metal sign manufacturing program is not shown by the evidence, such a final decision had apparently not been made by May 14, 1976, judging from the representations in Mr. Wainwright's letter to the president of McCain, Petitioners' Exhibit 6. It further appears that a final decision by the Department bad been made by May 24, 1977, as evidenced by the testimony of Mr. Kelley and by Petitioners' Exhibit 4, wherein the Chairman
of the Prison;. Industry Commission stated to the president of Petitioner Municipal that the establishment of a sign industry may be too far along to be stopped. Certainly it may be inferred as a matter of fact that the Department of Offender Rehabilitation had made a decision to implement as one of its correctional work programs the metal sign manufacturing program described above when it mailed its Invitation to Bid for the acquisition of metal sign shop equipment on January 18, 1978. Thus, it is found that as a matter of fact at some time between May 14, 1976, and January 18, 1978, the Department of Offender Rehabilitation determined that it would adopt and put into effect an industrial production and marketing program pursuant to Section 945.06, Florida Statutes, involving the manufacture of metal signs and that decision was probably made in 1976.
The metal sign manufacturing program referred to herein includes the construction of a manufacturing plant for the manufacture of municipal traffic control signs and other signs and accessories, which plant will include production processes such as metal cutting, vacuum application of sheeting, beat pressure application, silk screening, and other processes, resulting in the production of such signs, and accessories, which the Department intends to sell to counties, municipalities, and other governmental entities, in addition to the State of Florida and its agencies. The evidence establishes that the Department foresees gross sales of approximately $250,000 in its first year or two of operation.
The Department did not conduct an economic impact study using professionally accepted methodology to determine the impact of the metal sign manufacturing program on private industry. The Department made a good faith effort to survey the market by sending a questionnaire to all municipalities and counties, as well as state agencies asking for a sample of their annual bid request or annual needs in the area of "... road signs, street signs, parking signs, and etc. made from steel, aluminum and/or plastic." See Petitioners' Exhibit 9. As of June 21, 1977 the Department had received replies from six state agencies or institutions and only 25 of 392 municipalities and 3 of 67 counties. See Petitioners' Exhibit 8.
It has been stipulated by the parties and is 1-C0 accepted by the Hearing Officer that in its decision to adopt a metal sign manufacturing program in the implementation of Section 945.06, Florida Statutes, the Department did not comply with the procedural requirements set forth in Section 120.54, Florida Statutes for the adoption of a rule.
CONCLUSIONS OF LAW
The Division of Administrative Hearings ha jurisdiction over this cause.
Subsection 120.54(14), defines "rule as "... each agency statement of general applicability bat implements, interprets, or prescribes law or policy
... . The same subsection further states:
The term does not include:
internal management memoranda which do not affect either the private interest of
any person or any plan or procedure important to the public and which have no application outside the agency issuing the memorandum.
Webster's New World Dictionary, 2nd College Edition (1974) defines "statement" as the thing stated. It defines "state" as "to set forth in words" or "to express or present in a non-verbal way." Here the Department has, apparently, not set forth its decision to engage in a metal sign manufacturing program in a formal written statement. Certainly no such written statement as offered into evidence. However, it is patently clear from the evidence that the Department has expressed in a non-verbal way its decision to engage in the subject program. The actions of the Department culminating in the invitation for bids clearly expresses the adoption by the Department of a metal sign manufacturing program. It is therefore concluded that the agency statement proved by the Petitioners is the decision by the Department to adopt a metal sign manufacturing program, as one of its correctional work programs under Section 945.06, Florida Statutes. For this statement to attain the status of a "rule it must be of general applicability and implement, interpret or prescribe law or policy.
In McDonald v. Dept. of Banking and Finance, 346 So.2d 569, 581 (Fla. 1st DCA 1977), the court noted that statements of general applicability are those statement which are intended among other things, "... to have the direct and consistent effect of law." The adoption by the department of a metal sign manufacturing program as one of the correctional work programs pursuant to Section 945.06, Florida Statutes, has the direct and consistent effect of law and is of general applicability as that phrase is used in Subsection 120.52(14)
, Florida Statutes.
The Legislature, in Section 945.06, Florida Statutes; has given the Department authority to adopt industrial production arid marketing programs which manufacture items practical and adaptable for prison industry and which are needed by governmental jurisdictions within the state. Inmate labor is to be used in these programs. In adopting the metal sign manufacturing program the Department has implemented the law set forth in Section 945.06, Florida Statutes.
It is noted that internal management memoranda are not included within the definition of rule unless they affect the private interest of any person or any plan or procedure important to the public and have application outside the agency issuing the memorandum. Clearly, the correctional work program involving the rehabilitation of the inmates in Florida's prison system is a plan important to the public and, when it manufactures items for sale to all counties and municipalities in competition with private industry, it affects the private interests of persons and has application outside the subject agency. Thus the agency statement in this cause, i.e. the decision to engage in a metal sign manufacturing program is not internal management memoranda which is excluded from the definition of "rule".
In P.A.M. News Corporation v. Hardin, 440 F.2d 222 (D.C. Cir. 1971) , the federal court held that the institution of a nets wire service by the Department of Agriculture, in competition with private wire services, constituted the adoption of a "rule" as defined by the Federal Administrative Procedures Act. In that case as in the one presently before us, a governmental agency had sought to institute a service, authorized by the respective legislative bodies, in direct competition with private enterprise. The
definition of "rule" in the Federal Administrative Procedure Act is "essentially identical" to the definition of "rule" in the Florida Administrative Procedure Act. McDonald v. Dept. of Banking and Finance supra, at 581.
For the foregoing reasons it is concluded that the decision of the Department to adopt a metal sign manufacturing program is a rule as defined by Chapter 120. Florida Statutes.
In order to prosecute a petition pursuant to Section 120.56, Florida Statutes, the Petitioner must show that they are substantially affected by the alleged rule. The Respondent, in its Addendum too Motion to Dismiss challenges the Petitioners' substantial interest in this cause.
The evidence establishes that the Department has adopted a correctional work program which will manufacture metal signs and market them to municipalities and counties in competition with private Industry presently engaged in such manufacture and marketing. The Petitioners in this cause are part of that private industry. As can be seen from the gross sales figures set forth in Paragraph 3 above, the addition to the metal sign manufacturing industry of a competitor marketing $250,000 worth of signs and assessories a year would have a substantial affect on the members of the industry. The affect would be real, not imaginary or illusory.
The Legislature has expressed its concern for the affect on private industry of correctional work programs in competition with that private industry when, in the creation of the Prison Industry Commission, the Legislature directed that the Commission review the operation of correctional work programs annually to determine if undue competition with private enterprise exists and to recommend adjustments necessary to prevent such undue competition. Section 945.066, Florida Statutes. Thus it appears that the Legislature has recognized that private enterprise is substantially affected by the entry into the market of a governmental competitor.
Having therefore shown their interest to be real and not imaginary or illusory and having shown themselves to be substantially affected by the alleged rile, the Petitioners have standing to pursue this action.
Having concluded for the reasons set forth above that the decision of the Department of Offender Rehabilitation to adopt a metal sign manufacturing program is a rule as defined by Chapter 120, Florida Statutes, it is necessary to determine whether the Department has complied with the rule making procedures set forth in the Administrative Procedure Act, Chapter 120, Florida Statutes, for the proper adoption of a rule. Section 120.54, Florida Statutes, sets forth in detail the procedures which rest be complied with for the adoption, amendment, or appeal of any rule, with certain exceptions not here pertinent. Failure to comply with these procedures results in a rule which is an invalid exercise of delegated legislative authority. State, Department of Administration, Division of Personnel, v Harvey, 356 So.2d 323 (Fla. 1st DCA 1978). The facts in this cause establish that the decision by the Department to adopt a metal sign manufacturing program, which decision has been found to be a rule. has not been promulgated in accordance with Section 120.54, Florida Statutes. Therefore, for that reason alone, it must be concluded that the rule is an invalid exercise of delegated legislative authority.
DONE and ORDERED this 11th day of August, 1978, in Tallahassee, Florida.
CHRIS H. BENTLEY, Director
Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
L. Ralph Smith, Jr., Esquire Post Office Box 1169 Tallahassee, Florida 32302
Raymond W. Gearey, Esquire General Counsel
Mr. Carroll Webb Executive Director
Administrative Procedure Committee Room 120 Holland Building Tallahassee, Florida 32304
Ms. Liz Cloud Department of State
Bureau Chief, Administrative Code Room 1802 Capitol Building Tallahassee, Florida 32304
