STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FABIAN'S ELECTRICAL )

CONTRACTING, INC., )

)

Petitioner, )

vs. ) CASE NO. 93-1594RX

) DEPARTMENT OF MANAGEMENT SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its designated Hearing Officer, Robert T. Benton, II, held a formal hearing in the above-styled case on April 5, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Michael F. Coppins

Gwendolyn P. Adkins Cooper & Coppins, P.A.

515 North Adams Street Tallahassee, Florida 32302

For Respondent: Cindy Horne

Department of Management Services Office of the General Counsel Suite 309 Knight Building

2737 Centerview Drive

Tallahassee, Florida 32399-0950 STATEMENT OF THE ISSUES

Petitioner's challenge to determine the invalidity of Rule 60A-2.001(8), Florida Administrative Code, as an invalid exercise of delegated legislative authority as alleged in the petition filed on February 10, 1993.

PRELIMINARY STATEMENT

This case began when Fabian's Electrical Contracting, Inc. (FEC) filed a petition to determine the invalidity of an agency rule of the Department of Management Services (Department). More specifically, FEC alleged that it is substantially affected by the challenged rule, Rule 60A-2.001(8), Florida Administrative Code, as the agency has taken preliminary action in reliance upon the rule to deny Petitioner recertification as a minority business enterprise (MBE). A challenge to the agency's decision to deny MBE certification is the subject of a Section 120.57 proceeding (DOAH case no. 92-6777) with which this case was consolidated for formal hearing. Issues related to DOAH case no. 92- 6777 are addressed in a separate recommended order.

At the hearing conducted on April 5, 1993, the Petitioner presented the testimony of the following witnesses: Anthony Charles Fabian, a journeyman electrician, president of Fabian's Electrical Contracting, Inc.; Cheryl Mendenhall Thompson, an employee and shareholder of Fabian's Electrical Contracting, Inc.; Marsha Nims, a certification administrator for the Minority Business Enterprise Program; and Gerald Thompson, owner of Lewis & Thompson Electric Service, electrical contractors. The Petitioner's exhibits numbered 1 through 9 for identification were admitted into evidence.

At the outset of the hearing, the Department's motion for official recognition was granted. The materials attached to the motion have been considered in the preparation of this order. The Department presented testimony from Marsha Nims; and Hector De La O, a certification officer with the Bureau of Minority Business Assistance; and, by deposition, the testimony of Carolyn Wilson Newton, former chief of the Bureau of Minority Business Assistance; and Olugbemi Moloye, Ph. D., an anthropologist. The Department's exhibits numbered

1 through 4, 4A, 5, and 6 were also admitted into evidence.

The parties waived the requirements of Rule 28-5.402, Florida Administrative Code, and filed their proposed orders on June 17 and 21, 1993. Rulings on the proposed findings of fact are included in the appendix at the conclusion of this order.

On January 13, 1994, the Director of the Division of Administrative Hearings entered a notice of unavailability of hearing officer and order of assignment of new hearing officer that directed the parties to advise the new hearing officer as to whether they contended any additional information or argument was warranted. In response to a request from Petitioner, additional argument was afforded the parties on February 14, 1994. The transcript of that argument was filed on February 25, 1994. This final order is written based upon the existing record after having considered the additional argument of counsel.

FINDINGS OF FACT

1. Anthony Charles Fabian, a journeyman electrician, is the president of Fabian's Electrical Contracting, Inc. (FEC).

   
   

2. Mr. Fabian owns 51 percent of the stock in FEC.

   
   

3. FEC was incorporated in 1984 and since that time has been continuously engaged in the electrical contracting business.

   
   

4. In 1987, FEC applied for and received certification as a minority business enterprise (MBE). Mr. Fabian has at all times maintained he is entitled to MBE status as a Hispanic American.

   
   

5. Mr. Fabian was born in Tampa, Florida and lived in a Hispanic neighborhood there until he was six years old.

   
   

6. During the time he resided in Tampa, Mr. Fabian's neighbors, family, and friends used Spanish as their predominant language. The family culture was Cuban as was that of the area where the family resided.

7. At age six Mr. Fabian moved from Tampa to Pensacola, Florida. Mr. Fabian later moved from Pensacola to Tallahassee mid-way through his sixth grade. School mates in Pensacola and Tallahassee called him various ethnic nicknames, all related to his Hispanic ancestry. Such names included: "Julio," "Taco," "Spic," "El Cubano," and "Cuban Wheatman."

   
   

8. Other than an affection for Cuban food, Mr. Fabian currently has no cultural practices to tie him to his Hispanic heritage. Mr. Fabian does not speak Spanish. Mr. Fabian does not reside in a predominantly Hispanic community. Mr. Fabian does not practice the religious faith of his progenitors. Mr. Fabian does not instruct his child in any Cuban cultural practice. Mr. Fabian does not know of any Spanish cultural aspect that came to him from his family. Mr. Fabian has never been refused work because of his Hispanic heritage.

   
   

9. Mr. Fabian's mother has no Hispanic progenitors.

   
   

10. Mr. Fabian's father, also born in Tampa, Florida, has the following ancestors: his father (Mr. Fabian's grandfather) was born in Spain, his mother (Mr. Fabian's grandmother) was born in Key West. Mr. Fabian's grandmother, Anna Rodriguez Fabian, who Mr. Fabian spent time with in Tampa spoke Spanish and claimed Cuban heritage as both of her parents had immigrated from there to Key West. For this reason, Mr. Fabian maintains he is a Cuban from Tampa.

    
    

11. None of Mr. Fabian's grandparents was born in Mexico, South America, Central America, or the Caribbean. He has never claimed otherwise.

    
    

12. Sometime after FEC obtained certification as a MBE, the Department adopted what is now codified as Rule 60A-2.001(8), Florida Administrative Code. Such rule defines "origins" as used in Section 288.703(3)(b), Florida Statutes, to mean that a Hispanic American must substantiate his cultural and geographic derivations by at least one grandparent's birth.

    
    

13. In July, 1992, when FEC submitted its recertification affidavit, the Department notified Mr. Fabian that he had failed to establish that at least one of his grandparents was born in one of the applicable geographic locations. Accordingly, Mr. Fabian was advised his request for recertification would be denied.

    
    

14. Approximately eleven other persons have been denied minority status because they were unable to substantiate origin by the birth of a grandparent. Of those eleven, none had been previously certified. FEC is the only formerly certified MBE which has been denied recertification because of the rule.

    
    

15. However, when FEC was granted certification in 1987 it was not based upon the Department's agreement that Mr. Fabian met the statutory definition of a Hispanic American. Such certification was issued in settlement to the preliminary denial of certification since the word "origins," as used in the statute, had not as yet been defined by rule. Additionally, the recertification of FEC was based upon Department error and not an agreement that Mr. Fabian met the "origins" test.

    
    

16. Finally, in 1991, the Department cured the rule deficiencies to create parallel requirements for certification and recertification for MBE status.

    When FEC submitted its recertification affidavit under the current rule, the request was denied. Mr. Fabian has been aware of the Department's position regarding his requests for recertification from the outset; i.e. since 1987.

17. The Department promulgated the "origins" rule in response to a number of applications for MBE status from persons with distant relations or ancestors within the minority classifications. The necessity for an "origins" rule was demonstrated since the Department needed a clear standard, which staff and the public could recognize as the dividing line for who would and would not qualify as a Hispanic American, and since the purpose of the program is to provide preferences in contracting to businesses run by individuals who have been disadvantaged.

    
    

18. In deciding to use the grandparent test, the Department looked to outside sources. Since there was no legislative history resolving the "origins" issue, the Department sought guidance from dictionary definitions and statutory uses in other contexts.

    
    

19. In promulgating the rule, the Department gave notice to outside sources, including groups listed in the publication Doing Business in Florida, such as the Department of Commerce, Bureau of Commerce, small business development centers, community development corporations, local minority business certification offices, and the Minority Business Advocate's office.

    
    

20. At the public hearing conducted for the purpose of receiving input regarding the grandparent test, no one offered opposition to the "origins" definition.

    
    

21. Mr. Fabian is not a black American as defined in Section 288.703(3)(a), Florida Statutes.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

23. Section 120.56, Florida Statutes, provides, in pertinent part:

    
    

    1. Any person substantially affected by a rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority.

       
       

24. Section 120.52(8), Florida Statutes, provides:

    
    

    "Invalid exercise of delegated legislative authority" means action which goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one or more of the following apply:

    * * *

    1. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(7);

    2. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(7);

    3. The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or

    4. The rule is arbitrary or capricious.

    
    

25. As the one who attacks the rule, the Petitioner has the burden to show that the agency adopting the rule has exceeded its authority, 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 rule requirements are arbitrary or capricious. Agrico Chemical Co. v. State Department of Environmental Protection, 365 So.2d 759, 763 (Fla. 1st DCA 1978) cert. den. 376 So.2d 74 (Fla. 1979) The challenger's burden "is a stringent one indeed." Agrico, supra.

    
    

26. Where, as here, the agency's interpretation of a statute has been promulgated in rulemaking proceedings, the validity of a challenged rule must be upheld if it is reasonably related to the purpose of the legislation interpreted and it is not arbitrary and capricious. Department of Professional Regulation, Board of Medical Examiners v. Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1975).

    
    

    Moreover, the agency's interpretation of a statute need not be the sole possible interpretation or even the most desirable one; it need only be within the range of possible interpretations. Department of Health and Rehabilitative Services v. Wright, 439 So.2d 937 (Fla. 1st DCA 1983) (Ervin, C.J.,

    dissenting); Department of Administration v. Nelson, 424 So.2d 852 (Fla. 1st DCA 1982); Department of Health and Rehabilitative Services v. Framat Realty, Inc., 407 So.2d 238 (Fla. 1st DCA 1981). (Emphasis in text)

    
    

    Durrani, supra, at 517.

    
    

27. Special deference is owed to "an administrative agency's exercise of delegated discretion in respect to technical matters requiring substantial expertise." Island Harbor Beach Club, Ltd. v. Department of Natural Resources,

    495 So.2d 209 (Fla. 1st DCA 1986). In this case, the Department developed its rule to assure that all applicants for MBE status would be treated within the same clear guideline. The necessity for an "origins" rule was demonstrated since the Department needed a clear standard which staff and the public could recognize as the dividing line for who would and would not qualify as a Hispanic American. Clearly those with only a remote tie to the disadvantaged class should not receive benefits more appropriately given to those the legislature sought to assist. Unlike other disadvantaged groups, Hispanic Americans do not carry the evidence of discrimination with their appearance.

28. Section 287.0945, Florida Statutes, recognized a compelling state interest to rectify discrimination against minority business enterprises. The legislature relied on statistical data to define the minorities which were to be encouraged.

29. Rule 60A-2.001(5), Florida Administrative Code, provides, in part: "Minority" means a lawful, permanent resident

    of the State of Florida who is a :

    * * *

    (b) Hispanic American, a person of Spanish or Portuguese culture with origins

    in Mexico, South America, Central America, or the Caribbean Islands, regardless of race;

30. Rule 60A-2.001(8), Florida Administrative Code, provides: "Origins" means the minority owner's racial

    or cultural and geographic derivations, as

    substantiated by at least one grandparent's birth.

    
    

31. Thus, an applicant for MBE status who is a person of Spanish or Portuguese culture and who can establish that at least one grandparent was born in Mexico, South America, Central America, or the Caribbean Islands may qualify for certification.

    
    

32. Section 288.703, Florida Statutes, provides, in part:

    
    

    As used in this act, the following words and terms shall have the following meanings unless

    the content shall indicate another meaning or intent:

    * * *

    1. "Minority business enterprise" means any small business concern as defined in subsection (1) which is organized to engage in commercial transactions, which is domiciled in Florida, and which is at least

       51 percent owned by minority persons and whose management and daily operations are controlled by such persons. A minority business enterprise may primarily involve the practice of a profession.

    2. "Minority person" means a lawful, permanent resident of Florida who is:

       * * *

       (b) A Hispanic American, a person of Spanish or Portuguese culture with origins

       in Mexico, South America, Central America, or the Caribbean, regardless of race.

       * * *

    3. "Certified minority business enterprise" means a business which has been certified by the Department of General Services to be a minority business enterprise.

33. Section 287.0943, Florida Statutes, provides, in part:

    
    

    1. The Department of General Services shall certify minority business enterprises, as defined in s. 288.703, and shall recertify such minority business enterprises not less than once each year. * * *

       * * *

       (5) The department shall adopt rules necessary to implement this section.

       
       

34. The Department acted within its statutory authority in setting the definition for "origins." The rule is not an invalid exercise of that authority. More important, the rule assures that those who may claim minority status have a definite guideline by which their entitlement may be evaluated.

    
    

35. Finally, with regard to FEC's assertion that the rule is unconstitutional, the Division of Administrative Hearings does not have jurisdiction to dispose of constitutional issues in a Section 120.56 proceeding. Cook v. Florida Parole and Probation Commission, 415 So2d 845 (Fla. 1st DCA 1982). See Department of Revenue v. Magazine Publishers of America, Inc., 604 So2d 459 (Fla. 1992) citing Cook at 462.

    
    

36. As to FEC's argument that the rule as applied is unconstitutional, such claim is also without merit. FEC bases such argument on the conclusion that the Department does not require black Americans to show an appropriate ancestor as substantiated by at least one grandparent's birth. In the case of black Americans, the standard created by statute is set by racial consideration as opposed to cultural and geographical issues. The MBE program is to assist those who have suffered from disparate treatment, not enhance those who by remote ancestry claim minority status. The design of a minority set aside or preference program is not without technical requirements. See City of Richmond v. J.A. Croson Company, 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989). This certification process gives the Department a system for tailoring the program to assist only those who the statute intends to assist.

ORDER

Based on the foregoing, it is, hereby, ORDERED:

That the Petitioner's challenge to Rule 60A-2.001(8), Florida Administrative Code, is dismissed.

DONE AND ENTERED this 28th day of April, 1994, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 1994.

APPENDIX TO FINAL ORDER, CASE NO. 93-1594RX

Rulings on the proposed findings of fact submitted by the Petitioner: 1. Paragraphs 1 through 7, 10, 11, 13, 14, 16, 17, 19, 20, 22

through 25, 28 through 31, 33 through 41, 43, 44, 46

through 50, 60, 64, and 70 are accepted.

1. The first sentence in paragraph 8 is accepted. With regard to the second sentence it is accepted that the neighbors et al enjoyed Cuban food and cultural aspects but spoke Spanish. No proof was submitted that a language of "Cuban" was spoken by the community.

2. The last sentence of paragraph 12 is rejected as irrelevant, otherwise the paragraph is accepted.

3. Paragraph 15 is rejected as irrelevant.

4. Paragraph 18 is rejected as an incomplete statement of fact which, of itself, is insufficient to stand without further clarification; therefore rejected as not supported by the total weight of the credible evidence.

5. Paragraph 21 is rejected as irrelevant.

6. Paragraph 26 is rejected as repetitive and unnecessary.

7. With regard to paragraph 27 it is accepted that Mr. Fabian has 16 years of experience, otherwise rejected as repetitive and unnecessary.

8. The first sentence of paragraph 32 is accepted. The remainder of the paragraph is rejected as not supported by the evidence or irrelevant. Mr. Fabian does have a phone number whether that number is listed in the telephone book is not supported by the record cited.

9. Paragraph 42 is rejected as irrelevant.

10. The first two sentences of paragraph 45 are accepted. It is also accepted that Lewis & Thompson have used other minority subcontractors. Whether they "regularly" use them is irrelevant.

11. The first sentence of paragraph 51 is accepted; the remainder is rejected as comment or argument.

12. With regard to paragraph 52, it is accepted that Mr. De La O did not visit a job site; otherwise rejected as irrelevant.

13. Paragraphs 53, 54, and 55 are accepted as the applicable law of this case, not fact.

14. Paragraph 56 is rejected as contrary to the weight of the credible evidence.

15. Paragraph 57 is rejected as contrary to the weight of the credible evidence; the definition also applies to other minorities.

16. Paragraph 58 is accepted as a partial statement of fact, incomplete to stand alone without further clarification; therefore rejected as not supported by the total weight of the credible evidence.

17. Paragraph 59 is accepted as a partial statement of fact, incomplete to stand alone without further clarification; therefore rejected as not supported by the total weight of the credible evidence.

18. Paragraph 61 is accepted as a partial statement of fact, incomplete to stand alone without further clarification; therefore rejected as not supported by the total weight of the credible evidence.

19. Paragraph 62 is rejected as argument.

20. Paragraph 63 is rejected as irrelevant or argument.

21. Paragraph 65 is rejected as irrelevant or argument.

22. Paragraph 66 is rejected as argument.

23. Paragraphs 67, 68, and 69 are rejected as irrelevant or incomplete statements.

24. Paragraphs 71 through 73 are rejected as irrelevant, unnecessary or repetitive.

Rulings on the proposed findings of fact submitted by the Respondent:

1. Paragraphs 1 through 8 are accepted.

2. The first sentence of paragraph 9 is accepted; the remainder rejected as procedural comment or fact not supported by the cited record.

3. The first two sentences of paragraph 10 are accepted; the remainder rejected as argument.

4. The first and last sentences of paragraph 12 are accepted; the remainder rejected as procedural comment or fact not supported by the cited record.

5. The last sentence of paragraph 13 is accepted; the remainder rejected as recitation of testimony or procedural comment.

6. Paragraph 17 is rejected as irrelevant.

7. With regard to paragraph 18, it is accepted that Australian blacks are not coded as black; otherwise rejected as argument or procedural comment.

8. With regard to paragraphs 19 through 21, it is accepted that the origins of black Floridians, and those who the legislature sought to assist, are those whose ancestors came from Africa; otherwise rejected as recitation of testimony, incomplete statements of fact, or argument.

9. Paragraph 22 is accepted.

10. Paragraph 23 is rejected as recitation of testimony.

11. Paragraph 24 is rejected as irrelevant in an of itself.

12. Paragraph 25 is rejected as repetitive or argument.

COPIES FURNISHED:

William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307

Koger Executive Center 2737 Centerview Drive

Cindy Horne

Department of Management Services Office of the General Counsel Suite 309 Knight Building

2737 Centerview Drive

Tallahassee, Florida 32399-0950

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 ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND 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: 93-001594RX

Orders for Case No: 93-001594RX