STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WHITE CONSTRUCTION CO., INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-2658RU

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

) CLARK CONSTRUCTION CO., INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-2659RU

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Hearing Officer of the Division of Administrative Hearings, on June 21, 1996, in Tallahassee, Florida.

APPEARANCES

For Petitioners: Mary M. Piccard, Esquire

Cummings, Lawrence & Vezina, P.A. Post Office Box 589

Tallahassee, Florida 32302-0589

For Respondent: Paul Sexton, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58 605 Suwannee Street

Tallahassee, Florida 32399-0458 STATEMENT OF THE ISSUES

The issue to be resolved in this proceeding concerns whether certain statements contained in written notices of delinquency issued to the Petitioners by the Respondent constituted agency statements of general applicability and in conformance with the definition of a rule, constitute violations of Section 120.535, Florida Statutes, because the statements are not adopted as rules in conformance with Section 120.54, Florida Statutes.

PRELIMINARY STATEMENT

The Petitioners challenge an alleged agency statement of general applicability which they maintain has not been promulgated in accordance with Section 120.54, Florida Statutes, and, therefore, is in violation of Section 120.535, Florida Statutes. Specifically, the Petitioners allege that certain notices of delinquency issued by the Department to the Petitioner contractors constitute unpromulgated rules. Those statements are as follows:

* * *

Pursuant to Florida Statute 337.16 and in accordance with this determination, we intend to suspend your Certificate of Qualification and those of your affiliates. This suspension will become conclusive final agency action unless you request an Administrative Hearing within ten (10) days from receipt of this notice. Should your Certificate of Qualifi- cation be suspended or revoked, you shall

also be disapproved as a subcontractor on any Department project during the period of suspension or revocation.

Your request for a hearing shall be in writing and shall be filed with the Clerk of Agency proceedings, Mail Station 58, Haydon Burns Building, 605 Suwannee Street, Tallahassee, Florida 32399-0459 within ten (10) days from receipt of this notice. A copy of the request for hearing shall also be provided to the State Construction Engineer, Mail Station 31, Haydon Burns Building, 605 Suwannee Street, Tallahassee, Florida 32399-0450. The request for hearing shall include:

1. The name and address of the party making the request;

2. A statement that the party is requesting a formal or informal proceeding; and

3. All specific facts and circumstances which the Contractor believes legally excuses the unsatisfactory progress on the project.

* * *

Failure to timely request an Administrative Hearing within the specified time will result in the contract being declared delinquent.

The challenges to this statement as an unpromulgated rule were consolidated because they involve the same subject matter and the same issues of fact and law. The Department's motions to dismiss and alternative motions for more definite statement were denied, and its motion for expedited discovery was granted. Prior to hearing, the parties entered into a joint stipulation of facts so that no testimony was necessary or presented at hearing. Instead, the parties presented argument on the application of Section 120.535, Florida Statutes, to the facts of this case. Thereafter, Proposed Final Orders were submitted by the parties on July 9, 1996 by agreement. Those Proposed Final

Orders have been considered in the rendition of this Final Order, and the proposed findings of fact are ruled upon herein and in the Appendix attached hereto and incorporated by reference herein.

FINDINGS OF FACT

1. On December 28, 1995, the Department issued a written notice of intent to suspend the Petitioner, White Construction Co., Inc.'s (White) Certificate of Qualification, pursuant to Section 337.16, Florida Statutes. On April 15, 1995, the Department issued a written notice of intent to suspend the Petitioner, Clark Construction Co., Inc.'s (Clark) Certificate of Qualification, pursuant to that statute. The notices asserted that the allowed time under the Department's contracts with White and Clark had expired and that the contract work had not been completed in the case of each contract with those entities. The notices further stated the Department's intent to suspend the Certificates of Qualification and those of their affiliates, as well as the procedures to be followed and the applicable time limits. Both companies filed timely requests for formal hearings, pursuant to Section 120.57(1), Florida Statutes, and those cases are pending at the present time. Additionally, White and Clark challenged the written notices of intent to suspend as being statements which constitute rules which have not been promulgated in accordance with Section 120.54, Florida Statutes, in alleged violation of Section 120.535, Florida Statutes.

   
   

2. In taking action, such as suspension or revocation of a contractor's Certificate of Qualification, pursuant to Section 337.16(1), Florida Statutes, the Department's general practice is to issue a written notice which states its reasons for asserting that unsatisfactory progress is being made on a construction project in accordance with the contract terms or for asserting that the allowed contract time has expired. It also informs the contractor of the Department's intent to deny, suspend, or revoke his or her Certificate of Qualification and informs the contractor of his or her right to a hearing, as well as the procedure which must be followed and applicable time limits.

   
   

3. The challenged statements contained in the notices of intent issued to Clark and White are consistent with the Department's general practice of implementing Section 337.16(1)(b), Florida Statutes, by informing a delinquent contractor in writing of the Department's intent to deny, suspend or revoke his or her Certificate of Qualification, informing the contractor of his or her right to a hearing, the procedure which must be followed and the applicable time limits. The challenged statements contained in the notices issued to Clark and White are representative of the language generally included in Department notices of intent to deny, suspend or revoke a Certificate of Qualification.

   The challenged statements provide as follows:

   
   

   * * *

   Pursuant to Florida Statute 337.16 and in accordance with this determination, we intend to suspend your Certificate of Qualification and those of your affiliates. This suspension will become conclusive final agency action unless you request an Administrative Hearing within ten (10) days from receipt of this notice. Should your Certificate of Qualifi- cation be suspended or revoked, you shall

   also be disapproved as a subcontractor on any Department project during the period of suspension or revocation.

   Your request for a hearing shall be in writing and shall be filed with the Clerk of Agency proceedings, Mail Station 58, Haydon Burns Building, 605 Suwannee Street, Tallahassee, Florida 32399-0459 within ten (10) days from receipt of this notice. A copy of the request for hearing shall also be provided to the State Construction Engineer, Mail Station 31, Haydon Burns Building, 605 Suwannee Street, Tallahassee, Florida 32399-0450. The request for hearing shall include:

   1. The name and address of the party making the request;

   2. A statement that the party is requesting a formal or informal proceeding; and

   3. All specific facts and circumstances which the Contractor believes legally excuses the unsatisfactory progress on the project.

      * * *

      Failure to timely request an Administrative Hearing within the specified time will result in the contract being declared delinquent.

      
      

4. The Department presented no evidence that rule making is not feasible or is not practicable.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Sections 120.57(1) and 120.535, Florida Statutes.

   
   

6. Section 120.535(1), Florida Statutes, provides, in relevant part, as follows:

   
   

   Rulemaking is not a matter of agency discretion. Each agency statement defined as a rule under s. 120.52(16) shall be adopted by the rulemaking procedure provided by s. 120.54 as soon as feasible and practicable. Rulemaking shall be presumed feasible and practicable to the extent provided by this subsection unless one of the factors provided by this subsection is applicable.

   
   

7. Since the Department presented no evidence to overcome the statutory presumption that rulemaking is feasible and practicable, the only issues to be resolved concern whether the Department violated Section 120.535(1), Florida Statutes, for making the challenged statements without first adopting them as rules, pursuant to Section 120.54, Florida Statutes. In order to answer this question, it is first necessary to determine if the challenged statements are "rules" under Section 120.52(16), Florida Statutes. That provision defines a rule as:

   
   

   . . . each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the

   organization, procedure, or practice require- ments of an agency and includes any form which imposes any requirement or solicits any infor- mation not specifically required by statute or by an existing rule. The term also includes the amendment or repeal of a rule.

   
   

8. This definition generally describes two types of agency statements:

   (1) statements of general applicability that implement, interpret, or prescribe law or policy; and (2) statements of general applicability that describe the organization, procedure, or practice requirements of an agency.

   
   

9. However, not every agency statement that implements, interprets or prescribes law or policy is a "rule" under Section 120.52(16), Florida Statutes. An agency statement is a "rule" only:

   
   

   if it 'purports in and of itself to create certain rights and adversely affect others,' [cite omitted], or serves 'by [its] own effect to create rights, or to require compliance,

   or otherwise to have the direct and consistent effect of law.' [cite omitted]

   
   

   See Balsam v. Department of Health and Rehabilitative Services, 452 So.2d 976, 977-978 (Fla. 1st DCA 1984).

   
   

10. The Petitioners assert that the challenged statements in the Department's notices are rules that must be adopted pursuant to Section 120.535, Florida Statutes. The Department asserts that portions of the statements do not meet the definition of a "rule" under Section 120.52(16), Florida Statutes, and that the remaining statements are simply recitations of the requirements of Section 337.16(1), Florida Statutes, or the Model Rules of Procedure and that, therefore, the Department need not adopt any rule in order for the statements to comport with the requirements of Section 120.535, Florida Statutes.

    
    

11. The first sentence in the challenged statements does not meet the definition of a rule. This sentence appears at the beginning of the third paragraph of each notice, after a recitation of specific facts and a determination that the contractor is delinquent under its contracts with the Department. That sentence is not a "statement of general applicability," because it is a statement of Department intent to suspend the individual contractor named in the notice and the certificates of its affiliates and because it incorporate the specific determination that the named contractor is delinquent:

    
    

    Pursuant to Florida Statute 337.16 and in accordance with this determination, we intend to suspend your Certificate of Qualification and those of your affiliates.

    
    

12. As the statement is directed to the contractor named in the notice and incorporates a determination that the specific facts applicable to the individual contract show the contractor to be delinquent, it is not a statement of general applicability. Further, under the Balsam analysis, the statement does not purport to create rights, adversely affect others, or serve by its own effect to create rights, require compliance, or to have the direct and consistent effect of law.

13. The remaining portions of the challenged statements are merely recitations of the requirements of Section 337.16, Florida Statutes, and the Model Rules of Procedure. Section 120.535, Florida Statutes, does not require that an agency codify the existing language of Florida Statutes in the Florida Administrative Code as a condition of implementing statutory provisions. Similarly, once an agency has adopted rules setting forth its policies and procedures that are applicable to a category of agency action, the agency is not required to adopt a separate rule to apply those policies and procedures to each circumstance that falls within the overall scope of existing rules.

    
    

14. Nothing in the language or the legislative history of Section 120.535, Florida Statutes, suggests that such repetition was intended. If such repetition was to occur, it would simply fill the code with redundant provisions that would likely serve to confuse, rather than clarify agency policy and procedures. Notably, the definition of a "rule" under Section 120.52(16), Florida Statutes, includes "any form which imposes any requirement or solicits any information [not specifically required by statute or by an existing rule]." [Emphasis supplied]. The Legislature intended only to require agencies to use rulemaking to codify policies and procedures that are not already codified in existing statutes or rules.

    
    

15. The purpose behind Section 120.535, Florida Statutes, was to insure that members of the public are aware of established policies and procedures of state agencies and have notice of them and further that they thus participate in the development of agency policy through the rulemaking process. However, to the extent that such policies and procedures are set forth in statute or in existing rules, the public is already on notice by the very terms of those statutes and rules. Rulemaking to simply codify statutorily enunciated policies and procedures would not provide a basis for useful public input or a rule challenge, as agency action affecting substantial interests.

    
    

16. The Department's rulemaking effort in adopting Rule 14-6.001, Florida Administrative Code, presumably provided the public with an opportunity to participate in the Department's decision to rely on the Model Rules of Procedure to govern Department proceedings which affect substantial interests and to propose different procedures for specific proceedings, such as delinquency proceedings. Similarly, any Department repeal of rules addressing procedures for delinquency proceedings provided a forum for public comment on the application of the Model Rules to delinquency matters at that time.

    
    

17. The Department's notices issued to White and Clark were issued pursuant to Section 337.16, Florida Statutes, which provides, in pertinent part:

    
    

    1. A contractor shall not be qualified to bid when an investigation by the department discloses that such contractor is delinquent on a previously awarded contract, and in such case the contractor's certificate of qualifi- cation shall be suspended or revoked. Any contractor whose certificate of qualification is suspended or revoked for delinquency shall also be disapproved as a subcontractor during the period of suspension or revocation, except when a prime contractor's bid has used prices

       of a subcontractor who becomes disqualified after the bid and before the request for author- ization to sublet is presented.

       1. A contractor is delinquent when unsatisfactory progress is being made on a construction project or when the allowed contract time has expired and the contract work is not complete. Unsatisfactory progress shall be determined in accordance with the contract provisions.

       2. The department shall inform the contractor in writing of its intent to deny, suspend, or revoke his or her certificate of qualification

          to bid on work let by the department for delin- quency and inform the contractor of his or her right to a hearing, the procedure which must be followed, and the applicable time limits. If a hearing is requested within 10 days after the receipt of the notice of intent, the hearing shall be held within 30 days after receipt by the hearing officer of the request for the hearing. The recommended order shall be issued

          within 15 days after the hearing. The contractor's application for a certificate of qualification shall be denied or the contractor's current certificate of qualification shall be suspended

          for the number of days that it is administratively determined that the contractor was delinquent

          even if the delinquency is cured during the pendency of the hearing proceedings.

          * * *

    2. For reasons other than delinquency in progress, the department, for good cause, may determine any contractor not having a certificate of qualification nonresponsible for a specified period of time or may deny, suspend, or revoke any certificate of qualification. Good cause includes, but is not limited to, circumstances

    in which a contractor or the contractor's official representative:

    * * *

    (e) If an affiliate of a contractor who has been determined nonresponsible or whose certi- ficate of qualification has been suspended or revoked and the affiliate is dependent upon such contractor for personnel, equipment, bonding capacity, or finances.

    
    

    The statements within the challenged portion of the Department's notices that state that the contractor will be suspended as a subcontractor, that the contractor's affiliates will be suspended and which address applicable time limits are simply recitations of the policies and procedures prescribed by Section 337.16, Florida Statutes, and need not be adopted by rule under Section 120.535(1), Florida Statutes.

18. The Department has adopted Rule 14-6.001, Florida Administrative Code, which specifies that the Model Rules of Procedure apply to all Department proceedings that affect substantial interests:

    
    

    Decisions affecting substantial interests will be governed by Chapter 120, Florida Statutes, and Chapter 28-5, Florida Admin- istrative Code, the model rules of procedure. The rules regarding the indexing, management, and availability of final orders are issued

    pursuant to Section 120.533, Florida Statutes, and Chapter 1S-1, Florida Administrative Code. In addition, this rule chapter implements the Department's uniform indexing of final orders, which are outlined within this rule chapter.

    The purpose of the indexing is to provide

    public access to and availability of final orders.

    
    

19. A proceeding to suspend a contractor's Certificate of Qualification is a proceeding that affects that contractor's substantial interests. Therefore, pursuant to Department rules, such proceedings are governed by the provisions of Chapter 28-5, Florida Administrative Code. Rule 28-5.201, Florida Administrative Code, provides, in part:

    
    

    1. Initiation of formal proceedings shall be made by petition to the Agency responsible for rendering final Agency action. The term petition as used herein includes any applica-

       tion or other document which expresses a request for formal proceedings. Each petition should

       be printed, typewritten or otherwise duplicated in legible form on white paper of standard letter size. Unless printed, the impression shall be on one side of the paper only and lines shall be double-spaced and indented.

       
       

    2. All petitions filed under these rules should contain:

       1. The name and address of each Agency affected and each Agency's file or identification number, if known;

       2. The name and address of the petitioner or petitioners, and an explanation of how his/ her substantial interests will be affected by the Agency determination;

       3. A statement of when and how petitioner received notice of the Agency decision of intent to render a decision;

       4. A statement of all disputed issues of material fact. If there are none, the petition must so indicate;

       5. A concise statement of the ultimate

          facts alleged, as well as the rules and statutes which entitle the petitioner to relief;

       6. A demand for relief to which the petitioner deems himself entitled; and

       7. Other information which the petitioner contends is material.

    
    

    Those statements within the challenged portion of the Department's notices that address procedural requirements for requesting a hearing are simply recitations of the policies and procedures prescribed by Rule 28-5.201, Florida Administrative Code, and need not be adopted by a separate rule under Section 120.535(1), Florida Statutes. The statements do not create new rights, adversely affect others, or serve by their own effect to create rights to require compliance not already required by statute or the model rules, nor do they have the direct and consistent effect of law in their own right.

    
    

20. Rule 28-5.111, Florida Administrative Code, provides, in part: Unless otherwise provided by law or agency rule:

    1. Persons requesting a hearing on an Agency decision which does or may determine their substantial interest shall file a petition with the Agency within twenty-one (21) days

       of receipt of written notice of the decision, or within twenty-one (21) days of receipt of written notice of intent to render such decision; whenever possible, an Agency shall issue a written notice of intent to render a decision prior to the decision and allow persons who may be substantially affected thereby twenty-one (21) days from receipt in which to request a hearing. The notice shall state the time limit for requesting a hearing

       and shall reference the Agency's procedural rules.

       
       

    2. Any person who receives written notice of an Agency decision or who receives written notice of intent to render a decision and who fails to request a hearing within twenty-one

    (21) days, shall have waived his right subse- quently to request a hearing on such matters.

    
    

    Section 337.16(1), Florida Statutes, prescribes a 10-day time limit to file a petition challenging a notice of intent to suspend for delinquency. The statements within the challenged portion of the Department's notices that provide that the failure to file a request for hearing within 10 days will result in suspension of the contractor's certificate are simply recitations of the policies and procedures already prescribed and codified by Section 337.16(1), Florida Statutes, and Rule 28-5.111, Florida Administrative Code; and no purpose, public notice or otherwise, would be served by adopting them once again by separate rule, pursuant to Section 120.535(1), Florida Statutes.

    
    

21. Notably, Section 337.16, Florida Statutes, does not require the Department to adopt separate rules to implement its provisions. The Legislature intended that the Department exercise its discretion to decide whether the statute and model rules would suffice to implement the policy expressed in Section 337.16, Florida Statutes, or whether additional rules would be needed.

    The Department has decided to rely upon the express provisions of Section 337.16(1), Florida Statutes, and the model rules to set forth its policy on the implementation of Section 337.16, Florida Statutes. Section 120.535, Florida Statutes, does not require it to do otherwise.

    
    

22. Section 120.535(8), Florida Statutes, provides:

    
    

    When a hearing officer determines that all or part of an agency statement violates subsection (1), the agency shall immediately discontinue all reliance upon the statement or any substantially similar statement as a basis for agency action.

    
    

    Because the Department has not violated Section 120.535(1), Florida Statutes, in making the challenged statements in the notice issued to White and Clark, Section 120.535(8), Florida Statutes, does not place any limitation on the Department's ability to rely on the challenged statements as a basis for agency action.

    
    

23. The legal impact of a final order issued in the above-styled case on White's and Clark's pending 120.57(1), Florida Statutes, proceedings is a matter for determination in those proceedings and need not be addressed herein. However, as the Petitioners have already filed timely requests for formal hearings in response to the Department's notices of delinquency, it would appear that the Department would not be relying on the statements in the notices here under challenge for any further proceedings regarding the suspension of the certificates in question. In any event, the Department would only be precluded from relying on the specific portion of the challenged statements determined to be a "rule" that was not adopted in accordance with Section 120.54, Florida Statutes. Section 120.535(8), Florida Statutes, does not limit the Department's ability to rely on any other statements in the notices not found to be in violation of Section 120.535(1), Florida Statutes, had any portion been found to violate that section.

    
    

24. Accordingly, in light of the foregoing, it is concluded that Section 120.535, Florida Statutes, has not been violated by the issuance of the subject statements or notices.

Having considered the foregoing Findings of Fact and Conclusions of Law, it

is

ORDERED that the petitions to challenge purported agency noncompliance with

rulemaking requirements of Sections 120.54 and 120.535, Florida Statutes, be and the same are hereby dismissed.

DONE AND ORDERED this 30th day of August, 1996, in Tallahassee, Florida.

P. MICHAEL RUFF, 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 30th day of August, 1996.

APPENDIX TO FINAL ORDER

Petitioners' Proposed Findings of Fact 1-3. Accepted.

1. Rejected, as not in accordance with the preponderant weight of the evidence and, in part, constituting a conclusion of law.

2. Accepted, but not materially dispositive of the issues presented for adjudication.

Respondent's Proposed Findings of Fact 1-7. Accepted.

COPIES FURNISHED:

Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589

Tallahassee, Florida 32302-0589

Paul Sexton, Esquire Department of Transportation Haydon Burns Building, MS 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

Ben G. Watts, Secretary Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0458

Thornton J. Williams, Esquire Department of Transportation

562 Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32399-0458

Carroll Webb, Executive Director Administrative Procedures Committee Holland Building, Room 120 Tallahassee, Florida 32399-1300

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: 96-002658RU

Orders for Case No: 96-002658RU