n
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF TRANSPORTATION, )
)
Petitioner, )
)
v. ) PERC CASE NO. MS-87-007
) CASE NO. 87-3661RP DIVISION OF ADMINISTRATIVE )
HEARINGS, )
)
Respondent. )
)
FINAL ORDER
Robert I. Scanlan, Tallahassee, attorney for petitioner.
G. Steven Pfeiffer, Tallahassee, attorney for respondent.
This proceeding was initiated by the Department of Transportation (DOT) filing a challenge, pursuant to Section 120.54(4), Florida Statutes (Supp.
1986), to certain rules proposed by the Division of Administrative Hearings (DOAH or the Division). Because of DOAH's status as a party in this case, the Administration Commission appointed Phillip P. Quaschnick to serve as hearing officer. By stipulation of the parties, the hearing was conducted on November 18, 1987, where the following appearances were entered:
For the Department of Transportation:
Robert I. Scanlan Esquire, Deputy General Counsel Gregory G. Costas, Esquire
562 Haydon Burns Building, Mail Station 58
605 Suwannee Street
Tallahassee, Florida 32399-0455 For the Division of Administrative Hearings:
G. Steven Pfeiffer, Esquire FOWLER, WHITE, GILLEN, BOGGS,
VILLAREAL & BAKER
910 Monroe Park Tower Tallahassee, Florida 32301
After the hearing both parties filed proposed orders which included proposed findings of fact and argument in support of their respective positions. Both parties also filed responses to the proposed orders. 1/
Background
On July 31, 1987, DOAH published certain proposed amendments to its rules, Chapter 22I-6, Florida Administrative Code, in the Florida Administrative Weekly. The proposed rules included amendments to Rule 22I-6.006 entitled "Bid Protest Proceedings," and Rule 22I-6.035 entitled "Small Business Parties Attorney's Fees and Costs," and a new rule, Rule 22I-6.037, entitled "Dismissal of Administrative Complaint." On August 21, 1987, DOT filed a timely petition seeking an administrative determination of the validity of these proposed rules. Among the grounds asserted in support of DOT's contentions that the proposed rules are invalid was an allegation that the rules were not supported by an adequate economic impact statement. Prior to hearing DOT withdrew this allegation.
The rules at issue were part of a package of rule amendments designed to meet certain problems experienced by DOAH hearing officers with the rules adopted by the Division in March of 1985. As a result of the concerns expressed by the hearing officers, DOAH Director Sharyn L. Smith established a committee of hearing officers chaired by Hearing Officer Robert T. Benton, who had occupied a similar position with respect to adoption of the Division's rules in 1985. The Committee was assigned the responsibility of evaluating DOAH's existing rules an recommending changes to make the practice before DOAH more equitable and efficient.
As a result of Benton being appointed Chairman of the Rules Committee of the Administrative Law Section of the Florida Bar, meetings held to discuss DOAH's rules were conducted as meetings of the Administrative Law Section's Rules Committee. This allowed for input from numerous members of the Florida Bar who were familiar with DOAH procedures. After gathering data and considering numerous drafts, the Committee recommended specific revisions including the amendments now challenged by DOT. Division Director Smith reviewed the recommendations and approved them for publication. All revisions to the DOAH rules, except those challenged by DOT, have been filed with the Secretary of State and are now effective. 2/ As of the date of the hearing, DOAH had not made any determination whether the challenged rules would be applied to pending cases should they be adopted.
Proposed Rule 22I-6.006
Proposed Rule 22I-6.006 provides:
In a bid protest proceeding, the agency shall provide a copy of the formal protest to all other bidders at or before the time the matter is referred to the Division, together with notification of the proceeding and of the opportunity to be joined as a party of record, if warranted.
Immediately upon receipt of notice of hearing, the agency shall forward copies to all other bidders and, if possible, advise them by telephone of the time and place of hearing.
Before final hearing, the agency shall file a statement of compliance with sub-
sections (1) and (2), attaching a copy of the notification given in compliance with sub- section (1).
Currently Rule 22I-6.006 requires an agency to provide notice of a bid protest to all other bidders within 10 days from the date the matter has been referred to DOAH. Subsection (1) of the proposed rule, which is not challenged by DOT, requires notice of the protest be given to all other bidders at or before the time the bid protest is referred to DOAH for assignment of a hearing officer. The need for such notice arose when the Legislature amended 120.53(5), Florida Statutes in 1985 to require bid protests be resolved on an expedited basis.
In addition to amending subsection (1), DOAH proposes to add subsections
(2) and (3) to Rule 22I-6.006, both of which are challenged by DOT. Subsection
(2) requires that the agency in a bid protest proceeding immediately upon receipt of the notice of the hearing, forward all copies of the notice to all bidders, and if possible, advise all bidders of the time and place of the hearing by telephone. Subsection (3) requires the agency to file a statement before hearing demonstrating its compliance with subsections (1) and (2).
The purpose behind the proposed adoption of subsection (2) is to give notice of the hearing to all bidders in time to seek to intervene in a bid protest proceeding in accordance with Rule 22I-6.010. That rule provides that persons who have a substantial interest in a proceeding before DOAH and who desires to be made a party must file a motion to intervene at least five days before the date of the hearing. Because Section 120.53(5)(e) Florida Statutes, requires the DOAH hearing officer to conduct bid protest hearing within 15 days after the protest is receive by DOAH, the Rules Committee considered it necessary to expeditiously notify all bidders who do not file a protest of the date of the hearing so that the would know, as soon as possible, the deadline for filing a motion to intervene to become a part to the proceeding. It was felt that this would prevent the possibility for delay of a bid protest hearing if all entities who potentially could have their substantial interests affected by the bid protest proceeding were given notice of the hearing in time to intervene. Thus, the bidder the agency intends to award the bid and all rejected bidders, other than the protesting bidder, would receive notice of the hearing under subsection (2) as proposed.
Spillis Candella and Partners, Inc. v. The School Board of Dade County, No.
86-3002 Bid, 3/ is a case cited by DOAH as illustrative of the need for all bidders to receive notice of the bid protest hearing. There, the hearing officer determined that the protest, although not filed within the 72 hour time limit after posting of the bids as mandated by Section 120.53(5), Florida Statutes (1985), was timely because the agency never complied with the statutory notice requirements triggering the 72 hour limitation period.
When it drafted subsection (2), the Rules Committee considered whether the responsibility for providing the notice of hearing should be placed on the bid protester, the DOAH hearing officer, or the agency awarding the bid. The Rule Committee chose the agency because the bid protester was an interested party, and the DOAH hearing officer did not always have the name, address and telephone number of all bidders.
In addition to DOT, DOAH conducts bid protest hearings involving numerous state and local agencies including, the Department of Health and Rehabilitative Services, the Department of General Services, and all school boards.
DOAH has no other rule which requires a party to give notice of a hearing to persons who could be substantially effected, or which requires nonparties to receive notices of hearing.
Proposed Rule 22I-6.035
Proposed Rule 22I-6.035 concerns the resolution of petitions for costs and attorney's fees that are filed by small business parties pursuant to Section 57.111, Florida Statutes (1985), also as the "Florida Equal Access to Justice Act." The proposed rule would apply to virtually all administrative proceedings in which a small business party, as determined by the statute, prevailed against a state agency.
In addition to bid protest proceedings, DOT is routinely involved in administrative proceedings involving outdoor advertising permits, utility permits, over-dimensional truck permits, airport licensing, and driveway connection permits, all of which could involve a small business party. As of the date of the hearing in this case, one DOT attorney was assigned to 42 pending cases involving a small business party. Small business parties have prevailed against DOT in an unspecified number of cases. However, a petition for costs and fees was not filed in any of these cases.
The proposed amendments to Rule 22I-6.035 for the most part do not substantially change the rule. The changes are primarily more cosmetic in nature, such as changing the term "affiant" to "small business party." However, other changes are proposed which form the basis of DOT's challenge.
Under the present rule, a prevailing small business party is required to file a petition with an affidavit containing certain information demonstrating its entitlement to an award of costs and fees, and setting forth the claimed amount. The petition must also state whether the small business party requires an evidentiary hearing. Subsection (4) of the proposed rule provides, in part, the agency "shall either admit to the reasonableness of the fees and costs claimed or file a counter-affidavit within 20 days." Subsection (5) provides that a response shall accompany the counter-affidavits which shall state, in part, whether the agency requests an evidentiary hearing. The final section of the present rule states that if a timely request is filed a DOAH hearing officer will conduct a hearing, and that, unless ordered otherwise by the hearing officer, the hearing will take place in Tallahassee, Florida. If neither party timely requests a hearing, the hearing officer will decide the issues raised on the basis of the pleadings and supporting documents.
Proposed Rule 22I-6.035 extends the time for the small business party to request a hearing to within 10 days from the filing of the agency's response. Subsection (4) of the proposed rule retains the requirement that the agency either admits to the reasonableness of the fees and costs claimed or file a counter-affidavit. Subsection (5) retains the language stating that the agency shall file a response. The only change in the proposed rule from the current rule is that the 20 day deadline has been moved to the subsection which concerns the filing of a response from the subsection which concerns the filing of the counter-affidavit. Subsection (7) of the proposed rule, allows the hearing officer to order an evidentiary hearing sua sponte even if a timely request for hearing has not been made by either party. The subsection also makes clear that unless a party requests a hearing, the right to a hearing is deemed waived. Under both the proposed and existing rules an award of costs and
reasonable attorney's fees could be made solely upon the petition and affidavit filed by the small business party if the state agency chooses not to file a response.
Finally the proposed rule adds to the list of documents the hearing officer may consider if no hearing is conducted "the files and records of the Division of Administrative Hearings." This last provision was intended to allow the hearing officer to take notice of the files of the underlying case which precipitated the petition for an award, since DOAH considers the costs and fees petition a separate case from the underlying administrative action. However, the language in the rule is not limited to only the DOAH file in the underlying case.
Proposed Rule 22I-6.037
Proposed Rule 22I-6.037 entitled "Dismissal of Administrative Complaint" is a new rule which provides:
22I-6.037
Before a formal hearing begins, a party who as filed an administrative complaint may terminate proceedings on the administrative complaint by filing a notice of voluntary dismissal.
After a formal hearing has begun, any request for voluntary dismissal of an administrative complaint, in whole or in part, shall be made by motion which shall set
forth the reasons for the voluntary dismissal. The hearing officer shall permit the volun- tary dismissal, if at all, upon such terms
and conditions as the hearing officer deems just an proper. Unless otherwise specified in the order of dismissal, the dismissal of an administrative complaint under this paragraph is without prejudice.
Notice of voluntary dismissal of a subsequent administrative complaint based, in whole or in part, on factual allegations, earlier voluntarily dismissed, shall operate as a dismissal with prejudice as to all nonjurisdictional allegations earlier voluntarily dismissed.
Subsection (1) conforms to current practice before DOAH and is not challenged by DOT. Subsection (2) which is challenged, provides that after a hearing on the administrative complaint has begun, the hearing officer has the discretion to either deny a request for voluntary dismissal of the complaint or grant the request for voluntary dismissal with leave to refile, "upon such terms and conditions as the hearing officer deems just and proper." In drafting this rule, the Rules Committee assumed that it would be applicable only in situations were the agency sought to voluntary dismiss an administrative complaint with the intention of refiling the complaint. If the agency did not intend to refile the
complaint then it was assumed the opposing party would enter into a stipulation for dismissal pursuant to Rule 22I-6.033(2). Thus an agency that moves for voluntary dismissal of an administrative complaint at the hearing would have to declare before the hearing officer ruled on the motion, if the agency intended to refile the complaint.
Subsection (3), which is also challenged by DOT, provides that if an administrative complaint is voluntarily dismissed, at any time, any nonjurisdictional allegations contained in the complaint that weer contained in the earlier complaint that was also voluntarily dismissed, will be considered dismissed with prejudice. In other words, an agency gets "two bites of the apple" with respect to nonjurisdictional allegations.
The purpose behind the proposed rule is to ensure fairness in the conducting of an administrative complaint proceedings, which are penal in nature wherein an agency attempts to take disciplinary action against a license holder under Section 120.60, Florida Statutes (1985). Fla. Admin. Code Rule 28-6.009. DOAH hearing officers have experienced what they believed was abuse by agencies taking voluntary dismissals and refiling complaints. In particular, one agency (not DOT) would often take a voluntary dismissal of a complaint in response to the denial of its request for a continuance of the evidentiary hearing and later refile the complaint. Under subsection (3) of the proposed rule, an agency could delay the hearing in an administrative complaint case by taking a voluntary dismissal before the start of the hearing but thereafter could not use the same tactic again.
Subsection (2) treats voluntary dismissals at hearing differently because it is likely that the respondent in an administrative complaint case would have incurred significantly more expense by the time the hearing had begun. Costs are not specifically addressed in the rule because the Rules Committee could not reach a consensus on whether a DOAH hearing officer had the authority to impose costs as a condition for granting a voluntary dismissal. Rather, the broad-open ended language in the proposed rule could encompass any condition thought appropriate by the hearing officer, such as reimbursing the respondent's costs, or taking the deposition of experts who were present for hearing, thus negating the need for those experts to attend a second hearing.
Subsections (2) and (3) was intended to "make the playing field more even" because the respondent is not able to seek a voluntary dismissal of the complaint and begin the hearing again at a later date. If respondent should withdraw its request for a hearing, the agency would be entitled to take action against the respondent (such as suspension or revocation of license) based upon the allegations in the administrative complaint.
In recommending Proposed Rule 22I-6.037, the Rules Committee considered the rule on withdrawals set forth in the Model Uniform Administrative Procedure Rules for central panel agencies 4/ which provides
Any party may voluntarily withdraw a request for action or relief, appeal, or a defense raise which shall be processed in accordance with (b) or (c) below. The process is not for use in those cases where the parties have agreed between themselves to settle the matter. Settlements shall be handled in accordance with U.A.P.R. 18.1.
Before commencement of testimony at the evidentiary hearing, a party may withdraw a request for hearing or a defense raised by written request to the Clerk, with a copy to all parties, setting forth the reason for the withdrawal. Upon receipt of such request, the judge assigned to the case shall, except in those instances where the judge determines that the withdrawal should more properly be handled as a settlement under U.A.P.R. 18.1, enter an initial decision granting the withdrawal. The decision shall specify that the party requesting the withdrawal has relinquished the right to take action against the other party or parties or to defend against the action of the other party or parties and shall contain an appropriate disposition of the case.
After commencement of testimony at the evidentiary hearing, a request for withdrawal shall be made by motion pursuant to U.A.P.R.
11.1 et seq. and shall set forth the reason for the withdrawal. Upon receipt of the motion, the judge shall determine whether to permit the withdrawal and may deny withdrawal by order or issue an initial decision approving the withdrawal in accordance with
U.A.P.R. 18.2(b).
Upon entry of a decision approving a withdrawal, the Clerk shall return the matter to the agency and any motion to reopen shall be addressed to the agency head.
The Committee also considered the New Jersey Rule, 18 N.J.R. 1:1-19.5, which is substantially the same as the above quoted model rule.
DOT files administrative complaints in the following proceedings: Contractors' Certification of Qualification
Outdoor Advertising Permits Driveway Connection Permits Drainage Connection Permits
Disadvantage Enterprise Certifications
Over Weight and Over-dimensional Truck Permits Airport Licensing
Building Moving Permits
As of the date of the hearing DOT had nine cases pending involving an administrative complaint.
Since 1985, DOT has received voluntary dismissals of administrative complaint at hearing on six occasions. However, in each of these cases, DOT never sought a second hearing. On each occasion the case settled when DOT
either refiled or threatened to refile its complaint. Also since 1985, DOT has not requested a voluntary dismissal of an administrative complaint that included factual allegations which were set forth in a complaint that was previously voluntarily dismissed.
PROPOSED FINDINGS OF FACT
Both parties filed proposed findings of fact. Except as noted below, I have incorporated the substance of these proposed findings into my findings of fact.
Rejected DOT Proposed Findings of Fact
The following proposed findings are rejected because they are not facts but only recitations of testimony:
Rule 22I-6.006 - proposed finding 1 - second and third
sentence.
Rule 22I-6.037 - proposed finding 1 - second sentence.
proposed finding 2 - first and second sentence.
The following proposed findings are irrelevant to the resolution of this case:
Rule 22I-6.006 - proposed finding 4 and 5 because the
proposed rule applies to other agencies than DOT.
proposed finding 6 because whether another method of notifying all bidders is more efficient is not the standard to determine validity of the rule.
Rule 22I-6.037 - proposed finding 3, 5, and 7.
Rejected DOAH Proposed Finding of Fact
The following proposed finding of fact are rejected because these are more in the nature of legal argument or conclusions of law rather than findings of fact:
Proposed finding 5 - sentences 5 and 6.
Proposed finding 6 - second paragraph, sentences 1 and 2;
third paragraph, sentence 4 and 5; and fourth paragraph
Proposed finding 7 - second paragraph;
third paragraph; and
fourth paragraph, fifth sentence
Proposed finding 8 - fourth paragraph;
fifth paragraph; and sixth paragraph
The follow proposed findings are rejected as being irrelevant to the resolution of the issues presented in this case.
Proposed finding 1 - fourth sentence
Proposed finding 6 - second paragraph, sentence
5 and 6
Proposed finding 7 - fourth paragraph, sentence
1 through 4
The following proposed finding is rejected as not supported by the record evidence:
Proposed finding 6 - fourth paragraph, sentence 4
fifth paragraph, sentence 4 ANALYSIS
Standing
The first issue that must be addressed is DOT's standing. DOAH asserts that Dot lacks standing to challenge Proposed Rules 22I-6.035 and 22I-6.037. DOT has the burden to establish that it would be substantially affected by the proposed rules should they be adopted by DOAH. Section 120.54(5)(b), Fla. Stat. (1985); Department of Health and Rehabilitative Services v. Alice P., 367 So.2d 1045, 1052 (Fla. 1st DCA 1979). In order to resolve whether DOT has met its burden, a review of the pertinent decisions on standing is appropriate. 5/
The case cited most often on standing is the First District Court of Appeal's decision in Florida Department of Corrections v. Jerry, 353 So.2d 1230 (Fla. 1st DCA 1978), cert. denied, 359 So.2d 1215 (Fla. 1978). The court held that an inmate who had been confined for committing an assault while in prison lacked standing to challenge an existing rule concerning disciplinary confinement and forfeiture of gain-time. Because the inmate was no longer confined under the rule and had not lost any gain-time when he filed the rule challenge, the court reasoned that the inmate had not suffered an injury in fact at the time of the challenge, end therefore, was not substantially affected by the existing rule. Whether the inmate would be subject to the rule again depended on the likelihood he would commit another infraction. The court deemed this too speculative and subject to conjecture to grant standing. 353 So.2d at 1236.
In a later case, the Florida Supreme Court overruled Jerry to the extent it required associations to demonstrate a specific injury to the organization itself rather then to some of its members. Florida Home Builders' Association
v. Department of Labor and Employment Security, 412 So.2d 351 (Fla. 1982). In reaching its decision, the court warned against an overly restrictive application of the concept of standing in the rule challenge cases by noting: "Expansion of public access to activities of governmentally agencies was one of the major legislative purposes of the new Administrative Procedure Act." 412 So.2d at 352-53.
Standing to challenge proposed agency rules was addressed in Department of Health and Rehabilitative Services v. Alice P., 367 So.2d 1045 (Fla. 1st DCA 1979). There, the court held that all women of child bearing age who received medicaid benefits were not substantially affected by a proposed rule denying
medicaid payments for abortions except under limited circumstances. In denying standing to a woman who was not pregnant at the time of the rule challenge, the court specifically rejected the argument that standing to challenge a proposed rule under Section 120.54(4), Florida Statutes (1985), is less restrictive than standing to challenge an existing rule under Section 120.56, Florida Statutes (1985), by stating:
There is no difference between the immediacy and reality necessary to confer standing whether the proceeding is to challenge an existing rule or a proposed rule.
367 So.2d at 1052.
In Professional Fire Fighters of Florida v. Department of Health and Rehabilitative Services, 396 So.2d 1194 (Fla. 1st DCA 1981), the court held that a group of paramedics had standing to challenge rules establishing additional requirements for renewal of a paramedical certification. There was no showing on any of the individual paramedics had attempted to comply with the new rules or that anything in the new rules would disqualify them from retaining their certification. In rejecting the hearing officer's ruling that these individuals could not claim an injury because they had not yet applied for certification under the new rules, the court stated:
The order below would preclude a challenge by anyone who had not first complied with a rule and suffered injury, no matter how clear the rule's applicability to, or substantial its effect on, the challengers... The APA permits prospective challenges to agency rulemaking and does not require that an affected party comply with the rule at his peril in order to obtain standing to chal- lenge the rule. A party may demonstrate standing by showing that a rule has a real and immediate effect upon his case as well as by proving injury in fact.
396 So.2d at 1195-96 (citations omitted) see also 4245 Corp., Mother's Lounge Inc. v. Department of Beverage, 345 So.2d 934 (Fla. 1st DCA 1977). The court distinguished Jerry and Alice P. on the grounds that the petitioners in the case before it were immediately subject to the rule which rendered their continued employment as paramedics unlawful without compliance with the rule. The individuals were presently affected by the rule because they worked in the area to be regulated. 396 So.2d at 1196.
In Village Park Mobile Home Association v. Department of Business Regulation, 506 So.2d 426, 412 (Fla. 1st DCA 1987), the court on rehearing emphasized under the test for standing set forth in Fire Fighters that a party may show "that a rule has a real and immediate effect upon his case, as well as injury in fact." Standing was not found in Village Park for certain mobile home owners to challenge agency approval of the prospectus for a mobile home park because the prospectus only disclosed the method for raising rents and reducing services in the future. It was up to the landlord to implement the prospectus at some unspecified date in the future. 6/ Thus, no standing was found because
the alleged injury was contingent upon the future actions of a third party. 506 So.2d at 433-34; see also Boca Raton Mausoleum v. Department of Banking, 511 So.2d 1060 (Fla. 1st DCA 1987).
In this case, DOT has not alleged that it has suffered an injury in fact by Proposed Rules 22I-6.035 and 22I-6.037. That is not surprising with respect to Proposed Rule 22I-6.037 since it is a new rule that has not been implemented.
However, with respect to the proposed amendments to Rule 22I-6.035, dealing with attorney's fees and costs, most of DOT's challenges concern portions of the rule that were not substantially changed in the proposed rule. For example, DOT objects to the provisions requiring an agency to file a response or affidavit and the provisions which allow for a waiver of the right to an evidentiary hearing when one is not affirmatively requested by either party. Rule 22I-6.035 presently contains such provisions. Therefore, the injury in fact test would be applicable. However, DOT has not presented any facts indicating that a prevailing small business party has ever filed a petition seeking costs and attorney's fees from DOT under Florida Equal Access to Justice Act.
Consequently, no injury exists.
The alternative test for standing is whether the proposed rules would have a "real and immediate effect" upon DOT. With respect to Proposed Rule 22I- 6.035, DOT has not met this test merely by demonstrating that it is a party to pending cases involving small business parties. In order for DOT to be affected by Proposed Rule 22I-6.035, a small business party would first have to prevail against DOT and then file a petition for costs and attorney's fees based upon its belief that DOT was not "substantially justified" in bringing the administrative action. Whether these contingencies, which are controlled by a third party, will occur in the future is open to conjecture and speculation.
The type of immediacy envisioned by the court in the Fire Fighters case does not appear to be present with respect to Proposed Rule 22I-6.035. Therefore, DOT does not have standing to challenge this proposed rule.
On the other hand, I conclude that DOT has standing to challenge Proposed Rule 22I-6.037. DOT presently has at least nine pending cases involving administrative complaints. The proposed rule on voluntary dismissals would be immediately applicable to DOT's ability to take a voluntary dismissal on those cases without being contingent upon the acts of a third party. Such a real and immediate effect on pending cases involving DOT is sufficient to provide DOT with the requisite standing. DOT does not have to invoke the rule by seeking a voluntary dismissal in order to have standing to challenge the rule as suggested by DOAH. See Professional Fire Fighters of Florida, 396 So.2d at 1195.
Invalidity of Proposed Rules 22I-6.006 and 22I-6.037
The Florida Legislature has recently defined what constitutes an invalid exercise of Legislative authority. Section 120.52(8), Florida Statutes, as amended by Chapter 87-385, Section 2, Laws of Florida, provides:
(8) "Invalid exercise of delegated legisla- tive authority" means action which goes beyond the powers, functions, duties delegated by the Legislature. A proposed existing rule is an invalid exercise of delegated legislative authority if any one or more of the following apply:
(a ) The agency has materially failed to follow the applicable rulemaking procedure set forth in s. 120.54;
The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(7);
The rule enlarges, modifies, or con- travenes the specific provisions of law implemented, citation to which is required by s. 120.54(7);
The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or
The rule is arbitrary or capricious.
These standards are similar to those used by the courts in Florida to test the validity of agency rules. See e.g., Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978), cert. denied, 376 So.2d 74 (Fla. 1979); Humana Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985). In Agrico Chemical Co., the First District Court of Appeal stated:
[I]n a 120.54 hearing, the hearing officer must look to the legislative authority for the rule and determine whether or not the proposed rule is encompassed within that grant. The burden is upon one who attacks the proposed rule to show that the agency, if it adopts the rule, would exceed its author- ity; that the requirements of the rule are not appropriate to the ends specified in the legislative act; that the requirements contained in the rule are not reasonably related to the purpose of the enabling legislation or that the proposed rule or the requirements thereof are arbitrary or capricious.
A capricious action is one which is
taken without though or reason or irration- ally. An arbitrary decision is one not supported by facts or logic, or is despotic. Administrative discretion must be reasoned and based upon competent substantial evi- dence. Competent substantial evidence has been described as such evidence as a reason- able person would accept as adequate to support a conclusion.
The requirement that a challenger has
the burden of demonstrating agency action to be arbitrary or capricious or an abuse of administrative discretion is a stringent one.
365 So.2d at 763.
In this case DOT has the burden to demonstrate that adoption of Proposed Rules 22I-6.006 and 22I-6.037 would constitute an invalid exercise of legislative authority.
Proposed Rule 22I-6.006
DOAH is statutorily authorized "to adopt reasonable rules to carry out the provisions of this act [Chapter 120]." Section 120.65(7), Fla. Stat. (1985).
Regarding bid protests, an agency is required to forward a protest to DOAH for an evidentiary hearing in accordance with Section 120.57(1), Florida Statutes (1985), whenever there is a disputed issue a material fact. Section 120.53(5)(d)2, Fla. Stat. (1985). Section 120.57(1) sets forth certain procedures for conducting evidentiary hearings and proceedings where the substantial interests of a party are determined.
In light of these statutory provisions, DOAH proposes to amend Rule 6.006 by requiring that an agency send a copy of the notice of hearing to all bidders, other than the protesting bidder, and attempt to telephonically notify these bidders of the date, time, and place the hearing. The purpose of this requirement is to give notice of the deadline to file a motion to intervene in the protest proceeding to the successful bidder, as well as all other bidders who had not filed a timely protest. Motions to intervene must be filed within five days prior to start of an evidentiary hearing. Fla. Admin. Code Rule
6.010. DOT persuasively argues that this portion of Proposed Rule 22I-6.006 requires an agency to do a useless act because any bidder that has not flied a timely protest is precluded from gaining party status in a bid protest proceeding by filing a motion to intervene. I agree.
Section 120.53(5), Florida Statutes (1985), requires an agency to provide notice of its decision, or intended decision, concerning a bid solicitation.
The notice must contain the following statement:
"Failure to file a protest within the time prescribed in s. 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under chapter 120, Florida Statutes."
Paragraph (b) of Section 120.53(5), provides:
Any person who is affected adversely by the agency decision or intended decision shall file with the agency a notice of protest in writing within 72 hours after the posting of the bid tabulation or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after the date he filed the notice of protest. Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under chapter 120. The
formal written protest shall state with particularity the facts and law upon which the protest is based.
These statutory provisions are clear and unequivocal. An unsuccessful bidder must file a protest within the 72 hour limitations period in order to participate in further Chapter 120 proceedings. Xerox Corp. v. Florida Department of Professional Regulation, 489 So.2d 1230 (Fla. 1st DCA 1986); see also Capelletti Brothers v. Department of Transportation, 499 So.2d 555 (Fla. 1st DCA 1986)(72 hour deadline applies to protest challenging bid specifications). An adversely affected bidder cannot, and should not be allowed to, gain a back door point of entry to obtain party status in a bid protest proceeding by filing a motion to intervene when the bidder has already waived its right to participate in the proceeding.
The only substantially effected entity that would be entitled to intervene in a bid protest proceeding is the successful bidder. Therefore, there would be a valid purpose in adopting a rule that required the successful bidder to receive the notice of hearing so that it would be aware of the deadline for filing a motion to intervene. However, as to all other non-protesting bidders, there is no statutory basis for providing the notice of hearing to them in light of what appears to be a clear prohibition against allowing those bidders to obtain party status after failing to file a timely protest pursuant to Section 120.53(5)(b), Florida Statutes (1985).
DOAH argues that the need for subsection (2) of Proposed Rule 22I-6.006 is dramatized by the case of Spillis Candella and Partners, Inc. v. School Board of Dade County, No. 86-3002 Bid. There, the hearing officer determined that the agency never complied with the notice requirements triggering the 72 hour limitations period. Therefore, the protest filed in that case was determined to be timely since the 72 hour time limit had not expired.
This single case does not provide justification for requiring agencies to give notice of the evidentiary hearing to all unsuccessful bidders in all bid protest cases. No evidence was adduced indicating that the failure to provide the requisite statutory notice issue raised in the Spillis Candella case had ever occurred in any other bid protest proceeding that had come before a DOAH hearing officer. Even if this had been a recurring problem, subsection (b) of the Proposed Rule 22I-6.006 could have been more closely tailored to remedy issues similar to that raised in Spillis Candella. The rule should have limited an agency's responsibility to provide a notice of hearing to all unsuccessful bidders if the agency had not previously complied with the notice requirements of Section 120.53(5), Florida Statutes (1985). 7/
In light of the foregoing, I conclude that subsection (2) of Proposed Rule 22I-6.006 is arbitrary because it requires agencies to provide notice of a bid protest hearing to bidders who have waived their right to become parties in the proceeding. The rule also contravenes Section 120.53(5)(b), Florida Statutes (1985), which contemplates that only timely protestors may participate as parties in a bid proceeding. 8/ Subsection (3) is also invalid because it requires that an agency provide to the hearing officer proof that it has complied with subsection (2).
DOT's remaining objections to Proposed Rule 22I-6.006 are without merit.
The fact that all agencies involved in bid protests must adopt rules end procedures for the resolution of such protests, and that the Administration Commission shall also adopt model rules on the same subject, does not indicate a
legislative intent to preempt DOAH from adopting rules pertaining to the procedures for conducting bid protest hearings. Section 120.53(5)(a) and (f), Fla. Stat. (1955). In addition, Section 120.57(1)(b), Florida Statutes (1985), does not prohibit non-parties from receiving notice of an evidentiary hearing.
Proposed Rule 22I-6.037
DOT advances numerous arguments in support of its contention that subsections (2) and (3) of Proposed Rule 22I-6.037 constitute an invalid exercise of legislative authority. I am persuaded by two of these arguments that DOT's position has merit. First, with respect to subsection (2), the proposed rule provides a hearing officer with the discretion to grant a motion for voluntary dismissal "upon such terms and conditions as the hearing officer deems just and proper." This language fails to provide any guidance to a hearing officer or to the parties in an administrative complaint proceeding as to what conditions a hearing officer could impose for allowing the agency to withdraw its complaint without prejudice. Instead, the rule gives the hearing officer unlimited discretion to impose any condition the hearing officer subjectively believes is "just and proper." These words cannot be construed as words of limitation because it must always be presumed that a hearing officer will rule in a manner that he or she believes is just and proper. Thus the elimination of the "just and proper" language from the rule would not give any more discretion to a hearing officer than is presently granted by the proposed rule.
The fact that Florida Rule of Civil Procedure 1.420(2) provides that a trial court may grant a voluntary dismissal filed after submission of a case to the court "upon such terms and conditions as the court deems proper," does not provide a basis for concluding that subsection (2) of Proposed Rule 22I-6.037 is valid. The Rules of Civil Procedure were adopted pursuant to the inherent power of the courts, a power that administrative agencies do not possess.
Hillsborough County Hospital Authority v. Tampa Heart Institute, 472 So.2d 748, 753-54 (Fla. 2nd DCA 1985). Agency rules may not violate the standards set forth in Section 120.52(8), Florida Statutes, as amended by Chapter 57-325, Section 2, Laws of Florida. In this case, subsection (2) of Proposed Rule 22I-
runs afoul of paragraph (d) of Section 120.52(8), Florida Statutes, as amended, which provides that a rule is invalid if [t]he rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency." Therefore, subsection (2) of Proposed Rule 22I-6.037 is invalid.
Subsection (3) of the proposed rule is also invalid but for a different reason. Unlike subsection (2), nothing is left to the parties' imagination as to the consequences an agency will encounter if it files a notice of voluntary dismissal of an administrative complaint containing nonjurisdictional allegations that were previously the subject of a voluntary dismissal. Those nonjurisdictional factual allegations contained in both complaints will be deemed dismissed with prejudice. The issue with regard to this rule provision is whether DOAH has the statutory authority to adopt a rule that requires dismissal of an administrative complaint with prejudice under these circumstances.
Although no cases are directed on point, two district court of appeal decisions are instructive. In Great American Bank v. Division of Administrative Hearings, 412 So.2d 373 (Fla. 1st DCA 1981), the First District Court of Appeal revised a hearing officer's order imposing sanctions for a party's failure to make discovery and for a witness' failure to give responsive testimony. The
court ruled that certain portions of the model rules, which purported to give such authority to a hearing officer, were invalid because they conflicted with the discovery enforcement provisions found in the Administrative Procedure Act. Section 120.58(3), Fla. Stat. (1981). The Legislature subsequently amended Section 120.58 to specifically grant hearing officers the authority to pose sanctions to effect discovery. Ch. 84-173, Laws of Florida.
In Hillsborough County Hospital Authority v. Tampa Heart Institute, 472 So.2d 748 (Fla. 2d DCA 1985), the Second District Court of Appeal declared Model Rule 28-5.211 invalid to the extent the rule authorized a hearing officer to impose sanctions, including dismissal, to enforce procedural orders. The court rejected the argument that the same general rulemaking authority relied upon by DOAH as authority for Proposed Rule 22I-6.037, Sections 120.53 and 120.65(7), Florida Statutes (1985), authorized the model rule. Rather, any rule that provides a sanction in the form of a penalty must be based upon explicit statutory authority such as that found in Section 120.58(1)(b), Florida Statutes (1985), or Section 120.57(1)(b), Florida Statutes (Supp. 1986). 9/ 472 So.2d at 747-48.
Subsection (3) of Proposed Rule 22I-6.037 imposes the sanction of dismissal with prejudice. However, in contrast to the specific saction authority granted to hearing officers in Sections 120.58(1)(b) and 120.57(1)(b)5, no provision in Chapter 120 specifically authorizes DOAH to impose a sanction under the circumstances set forth in subsection (3) of Proposed Rule 22I-6.037.
Therefore, while I find the purpose of adopting subsection (3) of the proposed rule, to ensure failness, is laudable, this portion of the rule is invalid because DOAH does not possess the requisite legislative authority to adopt such a rule. Section 120.52(5)(b), Fla. Stat., as amended by Ch. 87-358, Section 2, Laws of Florida.
CONCLUSIONS OF LAW
DOT does not have standing to challenge Proposed Rule 22I-6.035.
DOT has standing to challenge Proposed Rules 22I-6.006 and 22I-6.037.
Subsections (2) and (3) of Proposed Rule 22I-6.006 constitute an invalid exercise of legislative authority.
Subsections (2) and (3) of Proposed Rule 22I-6.037 constitute invalid exercises of legislative authority.
ORDER
In accordance with Section 120.54(4)(c), Florida Statutes (Supp. 1986), the Division of Administrative Hearings is ORDERED to give notice in the Florida Administrative Weekly that subsections (2) and (3) of Proposed Rule 22I-6.006 and subsections (2) and (3) of Proposed Rule 22I-6.037 have been declared invalid.
It is so ordered.
ISSUED and SERVED on all parties this 15th day of January, 1988.
Phillip P. Quaschnick Hearing Officer
ENDNOTES
1/ The parties waived the requirement set forth in Section 120.54(4)(c) that the hearing be conducted within 30 days from the date the case was assigned to a hearing officer and that the final order issue 30 days from the date of hearing.
2/ Joint Exhibit 1 is an up-to-date compilation of DOAH rules, as amended, except for the proposed rules being challenged by DOT.
3/ A copy of the hearing officers recommenced order is included in the record as DOAH exhibit 10.
4/ Prepared and submitted by the State Practice and Procedures Committee for the National Conference of Administrative Law Judges.
5/ In Montgomery v. Department of Health and Rehabilitative Services, 468 So.2d 1014, 1016 n.4 (Fla. 1st DCA 1985), the First District Court of Appeal observed:
The federal law of standing is complex, inconsistent and unreliable. 4 Davis "Administrative Law Treatise" Section 24:1 (2nd Ed. 1983). The Florida Law of standing borrows much of its under pinnings from the federal law and thus arguably may be said to be subject to the same vagaries.
6/ Other statutory review procedures also protected the owners from unreasonable rent hikes or curtailment of services.
7/ It is arguable that once an agency complies with subsection (1) of Proposed Rule 6.006, by sending a copy of the protest to all other bidders, those bidders are on notice at least from the time they receive the protest that the time for filing their own protest is running even though they did not receive notice of the agency's intent to award the bid to the successful bidder as required by Section 120.53(5)(a), Florida Statutes (1985).
8/ Compare Section 120.54(4)(d), Florida Statutes (1985), which specifically provides that substantially affected persons may intervene in a proposed rule challenge proceeding.
9/ This statute allows a hearing officer to impose sanctions against a party or a party's representative for papers filed in a case that are frivolous, harassing, or cause needless delay or increased expense of litigation.
================================================================= CORRECTION COVER LETTER AND CORRECTED PAGE
=================================================================
January 20, 1988
Ms. Sharyn Smith, Director
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
Re: DOT v. DOAH
MS-87-007
DOAH Case No. 87-3661RP
Dear Ms. Smith:
Attached is an original and one copy of page nine from my Final Order issued on January 15, 1988. The first sentence of paragraph two should read as follows: Subsections (2) and (3) "were" intented to "make the playing field more even" ... .
I appologize for any inconvenience this may have caused you.
Sincerely
Phillip P. Quaschnick Hearing Officer
cc: Robert I. Scanlan, Esquire
Stephen Pheiffer, Esquire
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continuance of the evidentiary hearing and later refile the complaint. Under subsection (3) of the proposed rule, an agency could delay the hearing in an administrative complaint case by taking a voluntary dismissal before the start of the hearing but thereafter could not use the same tactic again.
Subsection (2) treats voluntary dismissals at hearing differently because it is likely that the respondent in an administrative complaint case would have incurred significantly more expense by the time the hearing had begun. Costs are not specifically addressed in the rule because the Rules Committee could not reach a consensus on whether a DOAH hearing officer had the authority to impose costs as a condition for granting a voluntary dismissal. Rather, the broad-open
ended language in the proposed rule could encompass any condition thought appropriate by the hearing officer, such as reimbursing the respondent's costs, or taking the deposition of experts who were present for hearing, thus negating the need for those experts to attend a second hearing.
Subsections (2) and (3) were intended to "make the playing field more even" because the respondent is not able to seek a voluntary dismissal of the complaint and begin the hearing again at a later date. If respondent should withdraw its request for a hearing, the agency would be entitled to take action against the respondent (such as suspension or revocation of license) based upon the allegations in the administrative complaint.
In recommending Proposed Rule 22I-6.037, the Rules Committee considered the rule on withdrawals set forth in the Model Uniform Administrative Procedure Rules for central panel agencies 4/ which provides
Any party may voluntarily withdraw a request for action or relief, appeal, or a defense raise which shall be processed in accordance with (b) or (c) below. The process is not for use in those cases where
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| Issue Date | Document | Summary |
|---|---|---|
| Jan. 15, 1988 | DOAH Final Order | DOT does not have standing to challenge sections (2)(3) of Rules 22I-6.066 and 21I-6.037 are declared invalid due to invalid exercise legislative authority. |
