STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CITY OF PALATKA, )

)

Petitioner, )

)

vs. ) CASE NO. 96-2724RX

)

DIVISION OF RETIREMENT )

)

Respondent. )

) TOWN OF LANTANA, )

)

Petitioner, )

)

vs. ) CASE NO. 96-2725RX

)

DIVISION OF RETIREMENT )

)

Respondent. )

) CITY OF LARGO, )

)

Petitioner, )

)

vs. ) CASE NO. 96-2871RU

)

DIVISION OF RETIREMENT )

)

Respondent. )

) CITY OF PALATKA, )

)

Petitioner, )

)

vs. ) CASE NO. 96-2874RU

)

DIVISION OF RETIREMENT )

)

Respondent. )

)

FINAL ORDER

On July 19, 1996, a formal administrative hearing was held in the above- referenced consolidated cases in Tallahassee, Florida, before Richard Hixson, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner, John F. Dickinson, Esquire City of Palatka: Richard L. Ruth, Jr. Esquire

CORBIN, DICKINSON, DUVALL and KITCHEN

Post Office Box 41566 Jacksonville, Florida 32203

For Petitioner, James W. Linn, Esquire

Town of Lantana: LEWIS, LONGMAN and WALKER, P.A.

Post Office Box 10788 Tallahassee, Florida 32302

For Petitioner, Thomas J. Jones, Esquire

City of Largo: Lawrence P. Stevenson, Esquire

HOLLAND and KNIGHT

Post Office Drawer 810 Tallahassee, Florida 32302

For Respondent: Robert B. Button, Esquire

Division of Retirement

Cedars Executive Center, Building D 2639 North Monroe Street Tallahassee, Florida 32399-1560

STATEMENT OF THE ISSUES

On April 11, 1996, the undersigned Hearing Officer entered a Final Order in City of St. Petersburg v. Division of Retirement, Case No. 95-5089RU, finding that certain non-rule policies of the DIVISION OF RETIREMENT violated the provisions of Section 120.535, Florida Statutes. In light of legislation being considered by the 1996 Legislature, certain issues asserted by the Petitioner under Section 120.56, Florida Statutes, were not resolved at the time of the entry of the Final Order in Case No. 95-5089RU. The CITY OF PALATKA, the TOWN OF LANTANA, and the CITY OF LARGO (CITIES), Petitioners in the above-referenced consolidated cases now seek a determination that the Respondent, the DIVISION OF RETIREMENT (DIVISION), may not subsequently enforce the non-rule policies which in case No. 95-5089RU were found to be in violation of Section 120.535, Florida Statutes. Petitioners further seek a determination that such non-rule polices, having been determined to be rules within the meaning of Section 120.52(16), Florida Statutes, are invalid under the provisions of Section 120.56, Florida Statutes.

The ultimate issues in these cases are: 1) whether certain agency statements made by the Respondent, DIVISION OF RETIREMENT, regarding the application of the provisions of Chapters 175 and 185, Florida Statutes, to pension plans for municipal firefighters and police officers are "rules" as defined by Section 120.52(16), Florida Statutes; and, 2) if so, whether the agency statements impermissibly enlarge, modify, or contravene the statutory provisions of Chapter 175 and 185, Florida Statutes, and therefore constitute an invalid exercise of delegated legislative authority in violation of Section 120.56, Florida Statutes.

Specifically, the issues in these cases relate to the criteria required of local law pension plans by the Legislature to qualify for the distribution of premium tax monies. Chapters 175 and 185, Florida Statutes, provide for pension plans for firefighters and police officers, and authorize two types of pension

plans. "Chapter plans" are created by state law, and "local law plans" are created either by special act of the Legislature or by municipal ordinance.

The gist of the petitions filed by the CITIES in these cases is that the DIVISION is attempting to impose, without express statutory authority, the same requirements relating to terms, conditions, and benefits on local law plans that the DIVISION requires of chapter plans. Specifically, the alleged non-rule policies of the DIVISION of which the CITIES complain are: 1) the definition of "credited service"; 2) the definition of "average final compensation"; 3) the disallowance of a Social Security offset and worker's compensation benefit offset; 4) the interpretation of "disability retirement"; and 5) the prohibition on prospectively reducing pension benefits to coincide with future available funding.

As set forth below, the requirements specified by the Legislature for local law plans to receive premium tax monies have been the subject of extensive litigation. In rejecting a challenge to the constitutionality of these statutes, the Court in City of Orlando v. State Department of Insurance, 528 So.2d 468 (Fla. 1st DCA 1988) stated:

Chapters 175 and 185 create a purely voluntary program whereby municipalities may receive state-collected taxes, imposed on property

and casualty insurance premiums, with which to fund retirement programs for local police and firefighters. In exchange for receipt of these funds, the legislature has established certain criteria under which the

funds must be operated and managed. Id. at 469.

The dispute in these cases once again focuses on ascertaining what specific criteria the Legislature has established for the operation and management of such local pension plans in order to determine whether a local law plan complies with the applicable statute for purposes of receiving state-collected tax funds.

Petitioners, CITY OF PALATKA, TOWN OF LANTANA, and CITY OF LARGO, take the position that Respondent, DIVISION OF RETIREMENT, has made non-rule policy statements, and required compliance therewith, which go beyond the specific and express criteria established by the Legislature for participation in the program. Petitioners contend that such statements are "rules" which unlawfully enlarge, modify, or contravene the provisions of Chapters 175 and 185, Florida Statutes, and therefore violate the provisions of Section 120.56, Florida Statutes, because the statements constitute invalid exercises of delegated legislative authority. Petitioners further contend that even though the DIVISION pursuant to Section 120.535(5), Florida Statutes, has, subsequent to the filing of these cases, promulgated proposed rules embodying these non-rule polices, the polices nonetheless may not be retroactively applied to deny the Petitioners their premium tax monies for calendar year 1995 to which they are otherwise entitled.

Respondent, DIVISION OF RETIREMENT, takes the position that the DIVISION has complied with the provisions of Section 120.535(5), Florida Statutes, and may apply the non-rule policy statements which are now proposed rules to require compliance from the Petitioners. The DIVISION further contends that the non- rule policy statements, which have now been promulgated as proposed rules, merely construe and apply the provisions of Chapters 175 and 185, Florida

Statutes, in the manner intended by the Florida Legislature, and therefore are not invalid under Section 120.56, Florida Statutes.

The validity of the proposed rules which were promulgated by the DIVISION on July 12, 1996, is the subject of two separate pending administrative challenges brought pursuant to Section 120.54, Florida Statutes, and filed on July 30, 1996, by the Florida League of Cities and the City of St. Petersburg in cases Nos. 96-3560RP and 96-3561.

PRELIMINARY STATEMENT

Because the above-referenced cases involve similar factual issues and identical legal issues, at the Hearing Officer's suggestion, and without objection of the parties, these cases were consolidated for all further proceedings at final hearing on July 19, 1996. The parties further agreed that there were no disputed issues of material fact in these cases, and accordingly, the cases were submitted to the Hearing Officer on Counter Motions for Summary Final Order.

Each of the CITIES in these cases has been informed by the DIVISION that premium tax monies for the 1995 calendar year would be withheld under Chapters

175 and 185, Florida Statutes, because the DIVISION determined that the CITIES' local law plans were not in compliance with certain statutory requirements.

On August 10, 1995, the DIVISION notified the CITY OF PALATKA that premium insurance excise tax funds were being withheld for calendar year 1995 unless certain changes were made to its local law pension plan. The specific provisions of the CITY OF PALATKA's local law plan which are objectionable to the DIVISION are Sections 2-86, 2-77, 2-78, and 2-78.1, and relate to credited service, disability benefits, and prospective reduction of pension benefits to coincide with available funding. The CITY OF PALATKA declined to make the changes required by the DIVISION. Accordingly, on June 4, 1996, the DIVISION, by letter constituting final agency action, informed the CITY OF PALATKA that the CITY's premium tax monies under Chapters 175 and 185, Florida Statutes, were withheld for failure to comply with the statutory requirements specified by the DIVISION in its prior letter of August 10, 1995. On June 5, 1996, in case No. 96-2724RX, the CITY OF PALATKA filed its Petition for Formal Administrative Hearing under Section 120.56, Florida Statutes. On June 15, 1996, in case No.

96-2874RU, the CITY OF PALATKA filed its Petition for Formal Administrative Hearing under Section 120.535, Florida Statutes.

On June 4, 1996, the DIVISION notified the TOWN OF LANTANA that premium insurance monies for calendar year 1995 would be withheld under Chapters 175 and 185, Florida Statutes, due to the failure of the TOWN OF LANTANA to make certain changes in the TOWN's local law plan as required by the DIVISION in letters dated November 2, 1995, January 25, 1996, and May 15, 1996. The specific provisions of the TOWN OF LANTANA's local law plan which the DIVISION finds objectionable relate to the definitions of "salary" or "annual rate of earnings." On June 5, 1996, in case No. 96-2725RX, the TOWN OF LANTANA filed its Petition for Formal Hearing under Section 120.56, Florida Statutes.

On June 4, 1996, the DIVISION notified the CITY OF LARGO (which was an Intervenor in case No. 95-5089RU) that premium insurance monies for calendar year 1995 would be withheld under Chapters 175 and 185, Florida Statutes, due to the failure of the CITY OF LARGO to comply with the DIVISION's interpretation of the definition of "salary" in the CITY's local law plan as required by the DIVISION in letters dated June 1, 1995, and November 6, 1995. On June 13, 1996,

in case No. 96-2871RU, the CITY OF LARGO filed its Petition for Formal Administrative Hearing under Section 120.535, Florida Statutes.

On June 24, 1996, a preliminary hearing was held in cases Nos. 96-2724RX and 96-2725RX, at which time it was determined that these matters would be consolidated for final hearing on July 19, 1996. As indicated above, at hearing on July 19, 1996, the parties agreed to submit these cases on Counter Motions for Summary Final Order, and the parties presented oral argument on their motions. The parties have filed Motions for Summary Final Orders, and Memoranda of Law. The CITY OF PALATKA also filed Proposed Final Orders. The findings proposed by the CITY OF PALATKA are substantially adopted and incorporated herein.

There being no factual dispute, and having heard the argument of counsel, and reviewed the motions and memoranda of law submitted by the parties, upon consideration, and for the reasons set forth below, the Motions of the Petitioner CITIES for Summary Final Order are hereby GRANTED, and the Counter Motions of the Respondent DIVISION are hereby DENIED.

FINDINGS OF FACT

Parties

1. Petitioner, the CITY OF PALATKA, is a municipality of the State of Florida which has established a local law plan and participates in the voluntary program to receive state-collected taxes levied on property and casualty insurance with which to fund retirement programs for its municipal firefighters and police officers under Chapters 175 and 185, Florida Statutes, respectively.

   
   

2. Petitioner, TOWN OF LANTANA is a municipality of the State of Florida which has established a local law plan and participates in the voluntary program to receive state-collected taxes levied on property and casualty insurance with which to fund retirement programs for its municipal firefighters and police officers under Chapters 175 and 185, Florida Statutes.

   
   

3. Petitioner, CITY OF LARGO, is a municipality of the State of Florida which has established a local law plan and participates in the voluntary program to receive state-collected taxes levied on property and casualty insurance with which to fund retirement programs for its municipal firefighters and police officers under Chapters 175 and 185, Florida Statutes.

   
   

4. Respondent, DIVISION OF RETIREMENT (DIVISION), is the agency of the State of Florida vested with the statutory authority to administer the voluntary program under which municipalities receive state-collected taxes imposed on property and casualty insurance with which to fund local plans pursuant to Chapters 175 and 185, Florida Statutes. Prior to 1993, the Florida Department of Insurance was the state agency responsible for the administration of Chapters

175 and 185, Florida Statutes.

History

1. Chapters 175 and 185, Florida Statutes, relating to pension plans for firefighters and police, authorize two types of retirement or pension plans. One type is called "chapter plans" and the other is known as "local law plans." Chapter plans are created under state law, and the provisions of Chapters 175 and 185, Florida Statutes, control the plans' terms, conditions and benefits. Local law plans are purely voluntary and are created either by special act of the Legislature, or by municipal ordinance. The special act or municipal

   ordinance contain the provisions relating to the terms, conditions, and benefits of the local law retirement plan. Both chapter plans and local law plans receive funds from the state-collected premium tax on property and casualty insurance.

   
   

2. The Petitioner CITIES have voluntarily participated on a continuing basis in the program created under Chapters 175 and 185, Florida Statutes, whereby the CITIES have received state-collected taxes imposed on property and casualty insurance premiums with which to fund its local plans for firefighters and police. The CITIES have received such premium tax monies until calendar year 1995.

   
   

3. In 1986 the Legislature significantly amended Chapters 175 and 185, Florida Statutes. See Chapters 86-41 and 86-42, Laws of Florida. Chapter 86-41 pertained to municipal firefighters; Chapter 86-42 pertained to municipal police officers. As indicated above, the constitutionality of these statutes was upheld in City of Orlando v. State Department of Insurance, supra. In Section 1 of each act, the Legislature added substantially the same legislative intent language:

   
   

   Therefore, the Legislature declares that it is a proper and legitimate state purpose to provide a uniform retirement system for the benefit of firefighters as hereinafter defined, and intends, in implementing the provisions of s. 14, Art. X of the State Constitution as they relate to municipal firefighters' pension trust fund systems and plans, that such retirement systems or plans to be managed, administered, operated, and funded in such manner as to maximize the protection of the firefighters' pension

   trust funds. This chapter hereby establishes minimum standards for the operation and funding of municipal firefighters' pension trust fund systems and plans.

   
   

4. After the enactment of Chapters 86-41 and 86-42, Laws of Florida, the Department of Insurance undertook rulemaking to implement the provisions of the acts. The City of St. Petersburg and the Florida League of Cities challenged the proposed rules under Section 120.54, Florida Statutes. The Department's proposed rules were upheld by the DOAH Hearing Officer. On appeal, the First District Court of Appeal reversed the order of the Hearing Officer, and held that the majority of the department's proposed rules were invalid because statutory provisions governing chapter pension plans, which were not made specifically and expressly applicable by the Legislature to local firefighter and police plans, did not preempt municipal power with respect to local law plans. Florida League of Cities, Inc. v. Department of Insurance, 540 So.2d 850 (Fla. 1st DCA 1989) review denied 545 So.2d 1367 (Fla. 1989), [hereinafter referred to as the "Rules Case"].

   
   

5. From 1988 to 1991, the Department of Insurance engaged in litigation with numerous municipalities regarding compliance of local law plans with the provisions of Chapters 175 and 185, Florida Statutes. The Department settled these cases and continued to distribute premium tax funds to these local law plans with the understanding that the disputed issues of statutory compliance would be better resolved through rulemaking. The Department of Insurance

   conducted staff workshops to discuss rulemaking; however, the Department did not thereafter initiate formal rulemaking under Chapter 120, Florida Statutes, with regard to any compliance requirements for local law plans under Chapters 175 and 185, Florida Statutes.

   
   

6. In 1993 the Legislature transferred statutory responsibility for the administration of Chapters 175 and 185, Florida Statutes, from the Department of Insurance to the DIVISION. The legislative transfer effected a transfer of all programs as well as personnel. Since the legislative transfer in 1993, the DIVISION has made a continuous and good faith effort to present these issues to the Legislature for clarification and resolution. Indeed, during the 1996 Session, HB 1951 and SB 2484 were introduced which specifically addressed and clarified the issues presented in these cases.

   
   

7. On October 19, 1995, the City of St. Petersburg in case No. 95-5089RU filed a Petition challenging certain non-rule policies of the DIVISION under Sections 120.535 and 120.56, Florida Statutes. On April 11, 1996, the Final Order was entered in case No. 95-5089RU, holding that the DIVISION's non-rule policies violated the provisions of Section 120.535, Florida Statutes. The Final Order did not resolve the Section 120.56, Florida Statutes, issues. On May 10, 1996, the City of St. Petersburg filed a Notice of Appeal in case No.

   95-5089RU as to the Section 120.56, Florida Statutes, issues, and that matter is now pending before the First District Court of Appeal, in case No. 96-1817.

   
   

8. As indicated above, HB 1951 and SB 2484, specifically addressing the issues raised in these cases, were introduced during the 1996 Session Florida Legislature. On April 30, 1996, HB 1951 was passed by the Florida House of Representatives, but died along with SB 2484 in the Florida Senate on May 4, 1996. The 1996 Legislature failed to enact any legislation addressing or otherwise clarifying the issues raised in these proceedings.

   
   

9. On May 31, 1996, the DIVISION noticed a rules workshop addressing these issues in the Florida Administrative Weekly. On June 12, 1996, the DIVISION disseminated proposed rules. On June 21, 1996, the DIVISION conducted the rules workshop. On July 12, 1996, the DIVISION published proposed rules and amendments, 60Z-1.004, 60Z-1.006, 60Z-1.026, 60Z-1.027, 60Z-1.028, 60Z-2.017, 60Z-2.018, and 60Z-2.019, which address the issues raised in these cases. On July 30, 1996, the City of St. Petersburg, and the Florida League of Cities, pursuant to Section 120.54, Florida Statutes, filed Petitions challenging the DIVISIONS's proposed rules. The Section 120.54 Petitions are now pending before the Division of Administrative Hearings in cases Nos. 96-3560RP and 96-3561RP.

   
   

   Stipulated Facts

   
   

   The following facts are undisputed by the parties:

   
   

10. The DIVISION takes the position that Sections 175.032 and 185.02, Florida Statutes, (Definitions), apply to local law plans, including the definitions of "aggregate years of service" and "salary."

    
    

11. It is the position of the DIVISION that firefighters disabled from duties of a fireman as defined in Section 175.032, Florida Statutes, are eligible for disability benefits.

    
    

12. It is the position of the DIVISION that local law plan benefits may not be offset by social security or workers compensation benefits.

13. It is the position of the DIVISION that a municipality with a local law pension plan is prohibited from prospectively reducing pension benefits so as to coincide with available funding.

    
    

14. The premium tax monies for calendar year 1995 are withheld from each of the Petitioner CITIES by the DIVISION.

    
    

15. Prior to 1994 the DIVISION, or its predecessor agency, the Department of Insurance, have never withheld Chapter 175 or 185 insurance tax premium moneys from the CITIES.

    
    

16. It is the position of the DIVISION that all municipal pension plans submitted for review must comply with the non-rule policies at issue in the present case in order to receive Chapter monies pursuant to Sections 175.351 and 185.35, Florida Statutes.

    
    

17. It is the position of the DIVISION that the pension plans of the Petitioner CITIES do not fulfill the requirements of Section 175.351, Florida Statutes, to qualify for release of state premium tax moneys.

    
    

18. It is the position of the DIVISION that the pension plans of the Petitioner CITIES do not fulfill the requirements of Section 185.35, Florida Statutes, to qualify for release of state premium tax moneys.

    
    

19. It is the position of the DIVISION that the term "credited years of service" as used in Section 175.351(4) and 185.35(1)(d), Florida Statutes, is to be defined in accordance with the term "aggregate number of years of service" and "aggregate number of years of service with the municipality" under Sections 175.032(1)(a) and 185(1)(b), Florida Statutes, respectively.

    
    

20. It is the position of the DIVISION that it has the authority under Chapters 175 and 185, Florida Statutes, and Chapter 60Z, Florida Administrative Code, to withhold Chapter 175 and 185 premium tax money to plans not in compliance with Sections 175.351 and 185.35, Florida Statutes.

    
    

21. It is the position of the DIVISION that it has the authority to release payment of Chapter 175 and 185 premium tax moneys to plans not in compliance with Sections 175.351 and 185.35, Florida Statutes, provided the municipality is making good faith efforts to bring the violations into compliance.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties to this proceeding pursuant to Sections 120.535 and 120.56, Florida Statutes.

    
    

23. Section 120.52(16), Florida Statutes, in pertinent part defines "rule"

    as:

    
    

    (16) ... 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 information not specifically required by statute or by an existing rule.

    
    

24. Whether an agency statement is a rule depends on the effect of the statement. State Department of Administration v. Harvey, 356 So.2d 323 (Fla. 1st DCA 1977). An agency statement is a rule if the statement "...purports in and of itself to create certain rights and adversely affect others," State Department of Administration v. Stevens, 344 So.2d 290, 296 (Fla. 1st DCA 1977), or if the statement serves "...by its own effect to create rights or require compliance or otherwise to have the direct and consistent effect of law." McDonald v. Department of Banking and Finance, 346 So.2d 569, 581 (Fla. 1st DCA 1977).

    
    

25. The DIVISION's statements at issue in this case clearly require compliance with the DIVISION's interpretation of Chapters 175 and 185, Florida Statutes, and have the direct and consistent effect of law. Specifically, the DIVISION requires that in order to receive funds, the CITY must adhere to the DIVISION's definition of "credited service" as that term is used in Sections 175.351(4) and 185.35(1)(d), Florida Statutes, to mean "aggregate years of service" or "aggregate years of service with the municipality" as set forth in the definitions sections of Chapters 175 and 185, Florida Statutes. The DIVISION requires the compliance with its definition of "salary" and also requires that the CITY desist from applying a Social Security and workers compensation offset because of the DIVISION's construction of the two (2) percent per year provision of Sections 175.351(4), and 185.35(1)(d), Florida Statutes. The DIVISION further requires compliance with its construction of disability benefits. Finally, the DIVISION prohibits a municipality from prospectively reducing pension benefits to coincide with available funding.

    
    

26. It is apparent that the non-rule statements (now proposed rules) upon which the DIVISION relies to withhold premium tax monies from the CITIES specifically determine the criteria for compliance and are not simply a reiteration of the provisions of Chapters 175 and 185, Florida Statutes. As Judge Zehmer opined in the Rules Case, Chapter 175 and Chapter 185, Florida Statutes, each provide their own specific and express statutory minimum requirements applicable to local law plans. See Sections 175.351, and 185.35, Florida Statutes. These sections provide the exact statutory criteria for compliance required by the Legislature for local law plans to receive state- collected premium tax funds. Section 175.351(4) provides in pertinent part:

    
    

    In order for municipalities and special

    fire control districts with their own pension plans for firefighters or for firefighters and other employees to participate in the distribution of the tax fund established in ss. 175.101-175.121 and 175.131-175.151,

    their pension funds must meet each of the following standards:

    1. The plan must be for the purpose of providing retirement and disability income for firefighters or their beneficiaries.

    2. The normal retirement age, if any, must not be more than age 60.

    3. If the plan provides for a stated period of service as a requirement to receive a retirement income, that period must not be

       more than 30 years.

    4. The benefit formula to determine the amount of monthly pension must be equal to at least 2 percent for each year of the fire

       fighter's credited service, multiplied by his or her average final compensation. However, if current state contributions pursuant to this chapter are not adequate to fund the additional benefits to meet the minimum requirements in this chapter, only increment increases shall be required as state moneys are adequate to provide. Such increments shall be provided as state moneys become available.

       
       

       Section 185.35(1)(d) provides in pertinent part:

       
       

       1. In order for municipalities with their own pension plans for police officers or for police officers and other employees to participate in the distribution of the tax fund established in ss. 185.07, 185.08, and 185.09, their retirement funds must meet

          each of the following standards:

          1. The plan must be for the purpose of providing retirement and disability income for police officers.

          2. The normal retirement age, if any, must not be higher than age 60.

          3. If the plan provides for a stated period of service as a requirement to receive a retirement income, that period must not be higher than 30 years.

          4. The benefit formula to determine the amount of monthly pension must be equal to at least 2 percent for each year of the

       police officer's credited service, multiplied by his or her average final compensation.

       However, if current state contributions pursuant to this chapter are not adequate to fund the additional benefits to meet the minimum requirements in this chapter, only increment increases shall be required as state moneys are adequate to provide. Such increments shall be provided as state moneys become available.

       
       

27. Under the First District Court of Appeal's decision in the Rules Case, the DIVISION's non-rule statements (now proposed rules) which extend the application of other statutory sections not made expressly and specifically applicable by the Legislature to local law plans create additional rights and impose additional requirements which have the direct and consistent effect of law. Accordingly, under the authority cited above, such agency statements are rules under the definition of Section 120.52(16), Florida Statutes.

    
    

28. Moreover, under the First District Court of Appeal's decision in the Rules Case, these statements of the DIVISION, which extend the application of

    other statutory sections of Chapters 175 and 185, Florida Statutes, to local law plans without the express and specific statutory authority of the Legislature, enlarge, modify and contravene the specific provisions of the law implemented, and constitute an "invalid exercise of delegated legislative authority" as defined in Section 120.52(8)(c), Florida Statutes. In this respect, the DIVISION contends that the definitional sections of Chapters 175 and 185, should apply to local law plans; however, while the definitional sections by their terms clearly apply within the chapters, the DIVISION cannot cite to a specific and express legislative authority to apply the definitional sections to local law plans under the Rules Case. Absent such legislative expression, the definitional section cannot be implied to apply to local law plans.

    
    

29. The DIVISION continues to take the position that these non-rule statements which interpret the criteria set forth in Chapters 175 and 185, Florida Statutes, merely implement the specific legislative intent language to provide minimum standards. As set forth above, the Legislature in enacting Chapters 86-41 and 86-42, Laws of Florida, stated, "(t)his chapter hereby establishes minimum standards for the operation and funding of municipal firefighters' pension trust fund systems and plans." See Section 175.021, Florida Statutes. (Section 185.01, Florida Statutes, contains identical legislative intent language for municipal police officers' pension plans.) The problem with the DIVISION's position in this regard is that the Legislature specifically set minimum standards for local law plans, and the First District Court of Appeal in the Rules Case already rejected the extension of the general provisions of Chapters 175 and 185, Florida Statutes, to local law plans absent express and specific legislative authority.

    
    

30. The DIVISION cites several cases for the proposition that an agency's interpretation of the statute it administers is entitled to great weight, and need only be in the range of possible interpretations. Department of Professional Regulation, Board of Medical Examiners v. Durrani, 455 So.2d 515 (Fla. 1st DCA 1984); Florida Commission on Human Relations v. Human Development Center, 413 So.2d 720 (Fla. 1st DCA 1982). See also, Department of Labor and Employment Security, Division of Workers Compensation v. Bradley, 636 So.2d 802 (Fla 1st DCA 1994). Again, Judge Zehmer in the Rules Case specifically distinguished these principles of law as being inapplicable to the construction of the Chapters 175 and 185, Florida Statutes, under these circumstances. Accordingly, the DIVISION's contention that the provisions of Chapters 175 and 185, Florida Statutes, which are applicable to chapter plans may be reasonably implied to apply to local law plans is not supported by controlling legal authority.

    
    

31. As indicated above, the Final Order in case No. 95-5089RU determined that the DIVISION's non-rule policy statements met the definition of rules and violated Section 120.535, Florida Statutes. The question also arose in that case as to the validity of these non-rule statements under Section 120.56, Florida Statutes. In this respect the First District Court of Appeal has held that "...section 120.535 provides the exclusive mechanism for challenging an agency's failure to adopt agency policy as a rule..." Christo v. State Department of Banking and Finance, 649 So.2d 318, 320 (Fla. 1st DCA 1995). The court in Christo, also stated that "...the exception to this arrangement is where the unpromulgated rule enlarges, modifies or contravenes the specific provisions of the law implemented." Id. at 319. In light of the legislation pending at that time, the Final Order in case No. 95-5089RU did not reach the issues asserted under Section 120.56, Florida Statutes. As indicated above, the 1996 Florida Legislature, however, did not enact any legislation addressing or

    otherwise clarifying these issues, and under the Christo decision it is now appropriate to exercise the authority provided under Section 120.56, Florida Statutes.

    
    

32. In summary, it is clear that the DIVISION's non-rule policies which apply the definitions of "salary" and "aggregate number of years of service" or "aggregate number of years of service with the municipality" as contained in Chapters 175 and 185, Florida Statutes, to local law plans meet the definition of rules, that such rules enlarge, modify and contravene the specific statutory authority of Chapters 175 and 185, Florida Statutes, and accordingly violate the provisions of Section 120.56, Florida Statutes.

    
    

33. It is clear that the DIVISION's policies of disallowing all Social Security and workers compensation offsets are also rules, that such rules expand, modify and contravene the specific statutory authority of Chapters 175 and 185, Florida Statutes, and accordingly violate the provisions of Section 120.56, Florida Statutes. In this respect, the DIVISION has relied upon he decision in City of Miami v. Carter, 105 So.2d 907 (Fla. 1958); however, that decision was entered prior to the 1986 amendments to the statutes, the Court there did not address the issue of legislative intent, and the decision is accordingly inapplicable to these proceedings.

    
    

34. Finally, it is clear that the DIVISION's regarding reduction of prospective benefits to coincide with available funding and the policy applying the DIVISION's construction of disability benefits are rules, that the rules enlarge, modify and contravene the specific statutory authority of Chapters 175 and 185, Florida Statutes, and accordingly violate Section 120.56, Florida Statutes.

    
    

35. Having concluded that the non-rule policies which were applied by the DIVISION on June 4, 1996, to withhold the premium tax monies of the Petitioner CITIES for calendar year 1995 are rules, and violate the provisions of Section 120.56, Florida Statutes, it is not necessary to consider the effect of the DIVISION's subsequent rulemaking actions in these proceedings.

ORDER

Based on the foregoing findings of fact and conclusions of law, it is hereby,

ORDERED:

The DIVISION's unpromulgated policies, as cited above, constitute rules, violate the provisions of Section 120.56, Florida Statutes, and are therefore invalid as a basis for agency action in these cases.

DONE and ORDERED this 6th day of August, 1996, in Tallahassee, Leon County, Florida.

Richard Hixson, 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 6th day of August, 1996.

COPIES FURNISHED:

John F. Dickinson, Esquire Richard L. Ruth, Jr. Esquire

CORBIN, DICKINSON, DUVALL and KITCHEN

Post Office Box 41566 Jacksonville, Florida 32203

James W. Linn, Esquire

LEWIS, LONGMAN and WALKER, P.A.

Post Office Box 10788 Tallahassee, Florida 32302

Thomas J. Jones, Esquire Lawrence P. Stevenson, Esquire HOLLAND and KNIGHT

Post Office Drawer 810 Tallahassee, Florida 32302

Robert B. Button, Esquire Division of Retirement

Cedars Executive Center, Building D 2639 North Monroe Street Tallahassee, Florida 32399-1560

Paul A. Rowell, General Counsel 4050 Esplanade Way

Tallahassee, Florida 32399-0950

A. J. McMullian, III, Director Division of Retirement

Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560

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: 96-002724RX

Orders for Case No: 96-002724RX