The Issue Whether proposed Rules 69O-175.003, 69O-170.005-007, 69O- 170.013, 69O-170.0135. 69O-170.014, 69O-170.0141, 69O-170.0142, and 69O-170.0155 are valid exercises of delegated rulemaking authority.
Findings Of Fact Section 20.05, Florida Statutes, addresses the structure and powers of the Department. Section 20.05 provides as follows, in pertinent part: 20.05 Heads of departments; powers and duties.-- (1) Each head of a department, except as otherwise provided by law, must: * * * (b) Have authority, . . ., to execute any of the powers, duties, and functions vested in the department or in any administrative unit thereof through administrative units . . . designated by the head of the department, . . . unless the head of the department is explicitly required by law to perform the same without delegation. * * * (e) Subject to the requirements of chapter 120, exercise existing authority to adopt rules pursuant and limited to the powers, duties, and functions transferred to the department. The Financial Services Commission (Commission) was created within the Department pursuant to Section 20.121, Florida Statutes. However, the Commission is not “subject to control, supervision or direction by the Department of Financial Services in any manner.” § 20.121(3), Fla. Stat. The Commission is composed of the Governor and Cabinet, who collectively serve as the agency head of the Commission. Action by the Commission can only be taken by majority vote “consisting of at least three affirmative votes.” Id. OIR is a structural unit of the Financial Services Commission. Section 20.121(3) states in relevant part, as follows: Structure.— The major structural unit of the commission is the office. Each office shall be headed by a director. The following offices are established: 1. The Office of Insurance Regulation, which shall be responsible for all activities concerning insurers and other risk-bearing entities . . . * * * * Organization.-- The commission shall establish by rule any additional organizational structure of the offices. It is the intent of the legislature to provide the commission with the flexibility to organize the offices in any manner they determine appropriate to promote both efficiency and accountability. Powers.— Commission members shall serve as the agency head for purposes of rulemaking . . . by the commission and all subunits of the commission. . . . (emphasis supplied) Clearly, under the Department’s, the Commission’s and the OIR’s organizational structures, only the Commission may promulgate rules for both itself and OIR. The Department does not have rulemaking authority over areas that have been given to the Commission. On the other hand, nothing in the statute prohibits OIR, as directed by the Commission, to perform steps, preliminary to proposing a rule, that often occur in the rule development process prior to the actual Notice of proposed rulemaking. See also § 120.54, Fla. Stat. To that end, the Commission, by non-rule policy, has delegated authority to OIR to engage in rulemaking activities on behalf of the Commission. However, this delegation is not limited to rule development activities that occur prior to the Notice of proposed Rules, but authorizes publication of the Notice prior to approval by the Commission of any proposed language or policy statement. As indicated, the Notices for the proposed Rules were published in the Florida Law Weekly in November 2004, with various changes made thereafter. The proposed Rules were published as OIR rules. Disturbingly and misleadingly, all the Notices for the proposed Rules state that the agency head approved the Rule that is the subject of the Notice on September 3, 2004 or November 2, 2004. However, none of the proposed Rules were approved by the Commission, the agency head, prior to their publication as a proposed rule in the Florida Administrative Weekly. The specific agency authority listed in the Notices for promulgating the proposed Rules was Section 624.308(1), Florida Statutes. Section 624.308(1) grants the Department of Financial Services (Department) and the Financial Services Commission (Commission) the general authority to adopt rules, pursuant to Sections 120.536(1) and 120.54 in order to implement laws that confer duties upon them. The statute does not confer the authority on the Office of Insurance Regulation (OIR) to adopt rules. See § 624.05, Fla. Stat. The statutes that confer a specific grant of rulemaking authority over the areas of the laws implemented in the proposed Rules are Sections 627.0651 and 627.331, Florida Statutes. These two statutes confer specific rulemaking authority over certain areas of insurance ratemaking only to the Commission; specific rulemaking authority is not granted to the Department or to OIR. Other than rulemaking authority, the various duties assigned in the laws implemented by proposed Rules are given to OIR.
Findings Of Fact The Parties Petitioner, Florida League of Cities, Inc. ("League"), 201 West Park Avenue, Post Office Box 1757, Tallahassee, Florida, 32302, is a wholly-owned instrumentality of its member cities, which include more than 380 incorporated municipalities in the State of Florida. The League's bylaws require it to work for the effective administration and general improvement of municipal government in Florida. It represents its membership on statewide issues affecting municipal government. The Florida Administration Commission ("Commission"), the Respondent in this proceedings, is created by Section 14.202, Florida Statutes. 1/ It is composed of the Governor and the Cabinet, and is part of the Executive Office of the Governor. The Governor is chairman of the Commission. The Commission is responsible for insuring compliance by city and county governments with the Local Government Comprehensive Planning and Land Development Regulation Act, Chapter 163, Part II, Florida Statutes, ("the Act"). Sections 163.3167(2) and 163.3184(11), Florida Statutes, grant it the authority to impose sanctions on a county or municipality if its local comprehensive plan is not in compliance with the Act or has been submitted more than 90 days after its scheduled due date. Imposition of sanctions requires the affirmative vote of the Governor and any three other members of the Commission. Section 163.3164(1), Florida Statutes. Petitioner/Intervenor, Town of Pembroke Park ("Town"), is a duly incorporated municipality in Broward County, Florida which has approximately 6,500 residents. About 80 percent of its housing units are mobile homes. The Town prepared and submitted its proposed local comprehensive plan to the Department of Community Affairs out of time; according to Rule 9J-12.006(4), Florida Administrative Code, its plan was due on October 1, 1988. The Town therefore was subject to sanctions under the Act, as implemented by the "Non- Submission Policy" adopted by the Commission on October 24, 1989. The sanctions imposed on the Town by the Commission have been stayed by an appeal from the Commission's sanctions order. Petitioner/Intervenor, Village of Virginia Gardens ("Village"), Florida, is a duly incorporated municipality in Dade County, Florida. The Village prepared and submitted its proposed local comprehensive plan to the Department of Community Affairs out of time; according to Rule 9J-12.006(1), Florida Administrative Code, its plan was due on July 1, 1988. The Village submitted its plan on February 6, 1989. It was therefore subject to sanctions under the Act, as implemented by the "Non- Submission Policy" adopted by the Administration Commission on October 24, 1989. The sanctions imposed on the Village by the Administration Commission have been stayed by an appeal from the Commission's sanctions order. Respondent/Intervenor, Department of Community Affairs ("Department"), is a Department of the State of Florida headquartered in Tallahassee, Florida. It administers the Act, and has the responsibility under Chapter 28-39, Florida Administrative Code, to make recommendations to the Commission about local comprehensive plans, including whether they have been submitted late or fail to comply with the Act. The Act and its Sanctions Counties and cities are required under Section 163.3167(1) of the Act: To plan for their future development and growth. To adopt and amend comprehensive plans, or elements or portions thereof, to guide their future development and growth. To implement adopted or amended comprehensive plans by the adoption of appropriate land development regulations or elements thereof; and To establish, support and maintain administrative instruments and procedures to carry out the provisions and purposes of the Act. Each local government is required to prepare a local comprehensive plan "of the type and in the manner set out in" the Act. Section 163.3167(2), Florida Statutes. A "complete proposed comprehensive plan" is required to be submitted to the Department by the dates specified in the Department's rules, which are found in Chapter 9J-12, Florida Administrative Code. Section 163.3167(2), Florida Statutes. Any local government that fails to meet the schedule set for submission of its local comprehensive plan by more than ninety days, is subject to imposition of the sanctions described in Section 163.3184(11)(a) by the Commission, as is a local government whose comprehensive plan fails to comply with the Act. Those sanctions include direct[ing] state agencies not to provide funds to increase the capacity of roads, bridges, or water and sewer systems within the boundaries of those local governmental entities. . .specify[ing] that the local government shall not be eligible for grants administered under the following programs: The Florida Small Cities Community Development Block Grant Program, as authorized by Sections 290.0401 - 290.049. The Florida Recreation Development Assistance Program, as authorized by Chapter 375. Revenue sharing pursuant to Sections 206.60, 210.20, and 218.61 and Part I of Chapter 212, to the extent not pledged to pay back bonds. Section 16:3.3184(11)(a), Florida Statutes. The September 26, 1989, meeting of the Commission was the first time a request for sanctions for failure to submit timely plans came before the Commission for action. Before that time the Commission had adopted no rule or policy specifying which, if any, sanctions would be imposed for non-submission, or for submission of a plan not in compliance with the Act. The Commission took up the three cases of late submissions together. They involved the Town, the Village, and Indian Creek Village (which is not a party to this proceeding). They were agenda items 3, 4, and 5 for that meeting. Staff had recommended that the Commission withhold $191,012, or 44 percent of 1989-90 revenue sharing distributions due to the Town, because its plan was submitted on March 10, 1989 -- 5.3 months late (see the additional findings made at Finding 54, below). Staff also recommended that the Commission withhold $92,344, or 60 percent of the Village's 1989-90 revenue sharing distributions, because its plan was submitted on February 6, 1989 -- 7.2 months late. Rather than impose sanctions, the Commission requested staff to recommend a policy for sanctions. After a discussion, Commissioner of Education Castor stated, "I'll make a motion, Governor, that we ask staff to come back with a policy." The motion was seconded by Treasurer Gallagher and passed unanimously. Draft policies were developed by staff. The Policies at Issue The Administration Commission adopted a policy on October 24, 1989, describing the sanctions that would be imposed for late submission of local comprehensive plans (referred to as the "Non-Submission Policy"). It adopted a second policy on the sanctions to be imposed on local governments whose local comprehensive plans have been found not to be in compliance with the Act in an administrative hearing on the compliance issue (referred to as the "Non- Compliance Policy"). These matters were Commission agenda item number 6. Both policies, when referred to jointly, are the "Sanctions Policies". (League of Cities' Exhibit number 3). These policies state: POLICY FOR NONSUBMISSION CASES. Withhold 1/365 of the annual state/local revenue sharing program distribution for each day a local government fails to submit its proposed plan. The sanction would be calculated from the first day after the due date established by DCA Rule 9J-12, Florida Administrative Code, to the date the proposed local plan is actually submitted. Procedure: Under the Administration Commission Rule (Chapter 28-39, Florida Administrative Code), DCA notifies the Administration Commission within 45 days of a local government's failure to submit its plan by the due date. Within 30 days, a meeting is held by Commission staff with Department of Community Affairs and Regional Planning Council staff, and representatives of the local government. Fifteen days later DCA provides a recommendation to the Commission regarding sanctions. The Administration Commission may act to impose sanctions described above no sooner than 90 days after the local plan is due, but the sanctions are calculated from the due date established by DCA Rule 9J-12, Florida Administrative Code. EXCEPTION FOR LOCAL GOVERNMENTS THAT DID NOT HAVE ADVANCE NOTICE OF ADMINISTRATION COMMISSION POLICY. Upon the DCA's issuance of the Notice of Intent to find the plans IN COMPLIANCE or the Administration Commission's final determination that the plan is IN COMPLIANCE if a challenge to the DCA's Notice is filed with the Division of Administrative Hearings (DOAH) ("final agency action" in either case), DOR would return 90 days' withheld revenue. Procedure: The Administration Commission would authorize the automatic return of revenue upon DCA's notification to the Secretary of the Commission and the Department of Revenue (DOR) that a plan is IN COMPLIANCE. If the plans are found NOT IN COMPLIANCE by the Administration Commission, no withheld revenue would be returned and the Administration Commission would impose sanctions as described in 2. * * * * POLICY FOR NONCOMPLIANCE CAFES. A local plan will come under the jurisdiction of the Administration Commission if it is found NOT IN COMPLIANCE after a Division of Administrative Hearings (DOAH) hearing. If the DCA issues a Notice of Intent to find the plan NOT IN COMPLIANCE and the Commission ultimately determines that the plan is NOT IN COMPLIANCE, the Commission policy would be to withhold 1/365 of the annual state/local revenue sharing distribution for every day that the plan is out of compliance beginning with the date DCA issued its Notice of Intent to find the plan NOT IN COMPLIANCE until the date the local government has amended its plan to incorporate the remedial measures specified by the Administration Commission's Final Order and the DCA issues its Notice of Intent to find the amended plan IN COMPLIANCE. If the DCA issues its Notice of Intent to find a plan IN COMPLIANCE but the Commission ultimately determines that the plan is NOT IN COMPLIANCE, the Commission would specify in its final order remedial measures which must be incorporated into the plan by a specific date, and if the remedial measures were not incorporated by the specified date, the Commission would withhold 1/365 of the annual state/local revenue sharing distribution for every day that the plan is out of compliance beginning with the date the Commission entered its final order until the date the plan is amended to incorporate the remedial measures and the DCA issues its Notice of Intent to find the plan IN COMPLIANCE. Additional sanctions would also be considered by the Commission based upon the record in each case. The additional sanctions available under Section 163.3184(11), Florida Statutes, include ineligibility for all state expenditures to increase capacity of roads, bridges, and water and sewer systems within the local government's jurisdiction. (emphasis original) The additional factors the Commission may apply to mitigate or enhance the penalty under the final paragraph of the sanctions policy await case-by-case development. At the October 24, 1989, meeting, Treasurer Gallagher moved as follows: "I think this policy recommendation is a good starting point to get that compliance, and I still think we need to review each case individually, so we can get a feel how this process operates, but I think this message in regards to how serious the Cabinet is in regards to compliance needs to be sent. Therefore I will move the policy." Secretary of State Smith seconded the motion, which carried unanimously. (League Exhibit 3 at 73, 88). The Gallagher motion not only adopted the policies, but re-affirmed the Commission's intention to engage in a case-by-case analysis of what sanctions are appropriate in each case. At the very least, the Sanction Policies will be utilized by the Staff (both the Department of Community Affairs and the Office of Planning and Budgeting, Executive Office of the Governor) as a starting point in determining what sanctions should be applied to a local government which submits an untimely comprehensive plan or a plan found to be not in compliance with the Act. Prior to the adoption of the Sanction Policies, the Commission did not: Provide notice in the manner required by Section 120.54, Florida Statutes, of its intent to adopt those policies. Provide or prepare a short and plain explanation of the purpose and effect of those policies. Prepare an economic impact statement concerning those policies. Provide prior written notice to any municipality or county of the adoption of those policies. Provide notice in the Florida Administrative Weekly of the proposed adoption of those policies. Follow any of the procedures outlined in Section 120.54, Florida Statutes. Section 163.3167(2), Florida Statutes, requires all of the League's members to submit a complete proposed comprehensive plan under the schedule adopted in Rule 9J-12.006, Florida Administrative Code. The Administration Commission could impose sanctions on any League member who submits its plan more than 90 days late or submits a plan which fails to comply with the Act. On October 24, 1989, when the "Non-Compliance Policy" was adopted, there were no cases seeking the imposition of sanctions against a local government whose timely local comprehensive plan had been found not to be in compliance with the Act, in an administrative hearing on the compliance issue. There were pending cases arising from the failure of cities such as the Town and the Village to submit timely plans. On October 24, 1989, after the adoption of the "Non-Submission Policy," the Commission applied sanctions based on the policy, without variation, to the Town, the Village, and to Indian Creek Village. These actions were agenda items number 7, 8, and 9. The policies adopted on October 24, 1989, are identified as general policies in the Commission's agenda for October 24, 1989, and in the minutes of the Commission for that meeting. No further guidelines have been established by the Commission itself, by the Department of Community Affairs or by the Office of Planning and Budgeting, Executive Office of the Governor, describing the conditions under which the Commission will deviate from the Sanctions Policies when considering an individual case. The Sanctions Policies were adopted, in part, to send a message to municipalities and counties about what would happen if they failed to submit plans or their plans are found not to be in compliance with the Act. The Department of Community Affairs has communicated the Sanctions Policies to all the municipalities and counties by a technical memorandum, which was distributed to all municipalities and-counties. (League Exhibit number 11). That memorandum states that these policies will be applied to local governments which submitted untimely plans, or plans determined not to comply with the Act. No notice or guidance is contained in these communications about the criteria the Commission might use to deviate from the policies. In December, 1989, the Department sent a letter to all municipalities and counties that were late in submitting their local comprehensive plans, advising them of the sanctions policies. Section 163.3184(11)(a)3., Florida Statutes, authorizes the Commission to order that the local government be ineligible to receive revenue sharing funds. Prior to October 24, 1989, the Administration Commission had adopted no policy or rule announcing its interpretation of when sanctions for late submission or non- compliance would begin to run. Under the "Non-Submission Policy" sanctions begin to run from the first day after the due date established by Rule 9J-12, Florida Administrative Code. No sanctions are imposed, however, if the plan is fewer than 90 days late. Under the "Non-Compliance Policy", fines begin to run from the date the Department issues a notice of intent to find the plan not in compliance with the Act. The Effect of the Policies Generally For cities, the term "state/local revenue sharing" as used in the Sanctions Policies includes: 1/2-cent sales tax 11-cent cigarette tax Gas tax imposed pursuant to Section 206.605, Florida Statutes. 2-cent cigarette tax The single occasion the Non-Submission Policy has been applied was on October 24, 1989, and the only counties or cities penalized have been the Town, the Village, and Indian Creek Village. As of the date of final hearing in this case, the "Non-Compliance Policy" had never been applied to any local government. Estimated statewide state/local municipal revenue sharing distributions to all municipalities within the state for the 1989-1990 fiscal year are $477,107,879. (A breakdown for individual municipalities is found in League Exhibits number 12, Local Government Financial Handbook at 14-29, tables a, b, c, and 105- 111). The actual amount of state/local revenue distributed statewide for the 1988-1989 fiscal year was $471,641,735, as reported by Department of Revenue to the Comptroller for publication in the Florida Comprehensive Annual Financial Report. The breakout for individual cities is found in League Exhibit number 14. For the state as a whole, municipal revenue sharing constitutes between 13 percent and 15 percent of municipal governmental revenues. For the state as a whole, 34 percent of municipal governmental expenditures are used to fund police and fire protection. Section 163.3184(11) authorizes sanctions for failure to submit a local comprehensive clan or for failure to submit a plan which complies with the Act, and permits the revenues in question to be cut off in the middle of a fiscal year, when a municipality is unable to raise ad valorem taxes. There are a limited number of other sources available to a municipality which may be used as general governmental revenue. Litigation over whether a local comprehensive plan complies with the Act can take a significant amount of time. For example, a notice of intent to find Charlotte County's local comprehensive plan not in compliance was issued by the Department on February 9, 1989. The case was heard, a Recommended Order issued, and the matter was set to go before the Administration Commission on January 24, 1990. The Hearing Officer found the plan not to be in compliance with the Act. The Department has recommended that no monetary sanctions be imposed can the county, but that the county take a number of specific actions to amend the comprehensive plan. As another example, administrative litigation over the comprehensive plan submitted by City of Cocoa took approximately 10 months from the time a notice of compliance was issued by the Department, until it was determined that the plan actually was not in compliance, and the Recommended Order came before the Administration Commission for sanctions. It is reasonable to assume that from the time that the Department issues a notice of intent to find a comprehensive plan not in compliance with the Act until the time the plan comes before the Administration Commission will be at least six months, and perhaps longer. The potential loss of revenue sharing for a period of six or more months would have a substantial effect on a municipality's budget. The potential loss of revenue for a period of six or more months is a substantial disincentive to a municipality's willingness to pursue a hearing and challenge the Department's determination when the Department issues a notice finding a local comprehensive plan not in compliance with the Act. Pembroke Park's Compliance Efforts In 1987, the Town initiated its efforts to prepare a local comprehensive plan pursuant to the Act to guide the future development of the Town. 2/ The Town is approximately 97 percent built out and contains approximately 30 acres of vacant land available for development. The Town initially contracted with the South Florida Regional Planning Council ("the Council") to develop Phase 1 of a plan for the Town. The Council forwarded the first part of a revised comprehensive plan in February, 1988, to the Department. The Town's Mayor and some members of the Pembroke Park Town Commission had questions about parts of that plan, and believed, at the time, that it would be more efficient to have an in-house person prepare the rest of the Town's plan. In March 1988, the Pembroke Park Town Commission formally decided that the Town should not use the Council to complete preparation of its local comprehensive plan. Milan Knor, a professional engineer who served as the Town's Director of Operations, was awarded a contract to prepare the remainder of the plan. Under the provisions of Rule 9J-12.006(4), Florida Administration Code, the Town's proposed comprehensive plan was due to be submitted to the Department on or about October 1, 1988. Mr. Knor did not forward a proposed comprehensive plan to the Department until December 28, 1988. The Department received this document on or about January 9, 1989. On January 17, 1989, the Department sent a letter to the Mayor of the Town acknowledging receipt of the Town's proposed comprehensive plan, and noting that the plan documentation was missing certain plan elements. This letter also stated that a complete plan was to be submitted by the Town to the Department by January 31, 1989. That same day, the Department filed a Notice of Non-submission of Proposed Comprehensive Plan with the Commission, because the Town had failed to comply with the submission schedule for its proposed comprehensive plan. On January 23, 1989, the Commission sent a letter to the Mayor of the Town acknowledging a) receipt of the Department's notice that the Town had failed to meet the schedule set for submission of its local comprehensive plan by more than 90 days, and b) that the Department had requested the Commission to impose sanctions on the Town. That letter from the Commission required the Town to submit an explanation of why it did not submit a timely plan. It also informed the Town that within 15 days of receipt of the explanation, a meeting would be held which would operate as an informal proceeding under Section 120.57(2), Florida Statutes, unless the Town's explanation showed that the plan was not late. A recommendation on sanctions would be made to the Commission within 20 days following the meeting. On or about January 27, 1989, the Town forwarded a revised plan, including the various elements requested by the Department on January 17, 1989. On or about February 8, 1989, the Department notified the Town that the plan was substantially complete, but that four additional pieces of information were needed, as well as a resolution from the Town Commission formally transmitting the plan to the Department. On March 9, 1989, the Town submitted the additional information requested to the Department along with a resolution formally transmitting the material. The Department regards March 9, 1989, as the date the Town submitted its complete plan. In June of 1989, the Department notified the Town that it had completed its review of the proposed comprehensive plan and enclosed the Department's objections, recommendations, and comments ("ORC") concerning the Town's comprehensive plan. On July 14, 1989, Beth Lines, Policy Coordinator for the Office of Planning and Budgeting and member of the Commission staff, sent a letter to the Mayor of the Town confirming July 19, 1989, as the date the meeting would be held to discuss the issues raised in the Notice of Non-Submission filed by the Department. This letter did not repeat the notice given in the letter of January 23, 1989, that this meeting would constitute a Section 120.57(2), Florida Statute, informal hearing or that the Town had to request an evidentiary hearing to consider disputed factual issues at that time, or forever waive its right to do so in the future. The Town submitted a chronology to the Department on July 27, 1989, containing the Town's explanation of why its plan was late. On August 3, 1989, Thomas Pelham, Secretary of the Department, recommended that the Commission impose sanctions on the Town for failing to submit its proposed comprehensive plan within 90 days of the scheduled due date. Secretary Pelham's recommendation considered both the written explanation the Town had submitted and comments which had been made during the July 19, 1989, meeting with Town officials, but he found no good reason for the Town's failure to submit a timely plan. Adoption of Rule 28-39.006 On August 7, 1989, Rule 28-39.006, Florida Administrative Code, became effective. The new rule set out the procedure that would be followed whenever a local government fails to meet its scheduled deadline for submission of its comprehensive plan. Before that time, no rule had been promulgated describing the procedure the Commission would follow in dealing with a local government's failure to meet the deadlines for submission of its comprehensive plan. Further Administrative Steps Against the Town In September, 1989, Patricia Woodworth, Secretary/Clerk to the Commission, submitted a proposed final order to the Commission containing a finding that the Town's proposed comprehensive plan was not timely submitted and requesting the Commission to withhold state/local revenue-sharing funds from the Town. On September 18, 1989, the Town submitted to the Department its response to the Department's objections, recommendations and comments on the Town's comprehensive plan. (See Finding 46, above). In that response, the Town expressed its desire for continued Department participation since Town's goal was to have its comprehensive plan deemed to be "in compliance" with Chapter 163, Part II, Florida Statutes, and Rule 9J-5, Florida Administrative Code. On September 19, 1989, in response to the Commission's proposed final order (see Finding 51, above), Frank Matthews, acting as counsel for the Town, submitted to the Commission staff a different proposed final order regarding the Town's failure to timely submit its proposed local government comprehensive plan. On September 26, 1989, the Commission considered, but did not adopt, Woodworth's proposed final order. Representatives of the Town appeared at that meeting and objected to the proposed order and the sanctions it recommended. The Commission heard argument on the sanctions issue from the Town's attorney, Mr. Matthews, a Town Commissioner, a representative from the Florida Audubon Society and from Secretary Pelham. The Town argued that its plan was submitted only 9 days after what it characterized as the "90-day statutory grace period" granted to local governments in Section 163.3167(2), and explained why it believed monetary sanctions were inappropriate; the representative of the Audubon Society argued that the statute gave no grace period to local governments whose plans were more than 90 days late; Secretary Pelham explained why he believed monetary sanctions were warranted. The Commission deferred action and instead directed its staff to prepare a policy for the Commission to apply in cases where local governments fail to timely submit proposed comprehensive plans. (See Finding 8, above). On September 29, 1989, Frank Matthews, acting as counsel for the Town, sent a letter to Ms. Woodworth, Secretary/Clerk to the Commission, asserting that the Town had not been provided a clear point of entry into the administrative process to contest any proposed final agency action which could adversely affect the Town's substantial interests. The letter recited the Town's understanding that any final agency action occurring in the future would be properly noticed, and that the Town would have 14 days to avail itself of administrative remedies under to Section 120.57, Florida Statutes. On that same date, Mr. Matthews sent a letter to Beth Lines, a member of the Commission staff, asking that the Town be notified of any working groups or meetings held to develop or discuss the sanctions policy, so the Town could participate. Both of these letters were never answered. On October 10, 1989, the Mayor of the Town sent a letter to Paul Bradshaw of the Department stating that the Department was not using the correct mailing address for all correspondence to the Mayor's office. Consequently, the Mayor expressed concern that certain past correspondence, such as the October 7, 1988, letter from the Department, had never reached his office. The letters were properly addressed; the letters were delivered to the Town. The mayor's implication to the contrary is rejected by the Hearing Officer. On October 18, 1989, the Town finally adopted its local comprehensive plan, including land development regulations, and hand-delivered these materials to the Department. On October 24, 1989, when the Commission adopted the sanctions policy for late submissions of comprehensive plans, it heard once again from interested parties before deciding whether to accept the recommendations of the Department and Commission staff on a sanctions policy. A representative of the League of Cities spoke, along with counsel for the Town and a representative of the Department. On October 24, 1989, approximately one hour after adopting the Non- Submission and Non-Compliance sanctions policies, the Commission considered for the second time the Department's recommendation on imposition of sanctions on the Town. The Commission applied its Non-Submission Policy, and ordered that $190,299 in state revenue sharing funds withheld, an amount equal to 160/365 of those funds. The 160 numerator represents the number of days the Commission found the Town was late in submitting its proposed comprehensive plan. The Town was provided the opportunity to recover 90/365 of the amount withheld (approximately $107,043) if and when the Department found the plan adopted by the Town (see Finding 57) to be in compliance with the Act and Rule 9J-5, Florida Administrative Code. On November 6, 1989, the Town of Pembroke Park received a copy of the executed Final Order, No. AC89-3 dated November 1, 1989. This order embodies the sanctions the Commission imposed on October 24, 1989. The Rule Challenge On November 14, 1989, The Florida League of Cities, Inc., filed a petition pursuant to Section 120.56, Florida Statutes, requesting a determination of the validity of both Rule 28-39.006(3), Florida Administrative Code, and the Sanctions Policies adopted by the Commission on October 24, 1989. This petition was filed with the Division of Administrative Hearings ("DOAH"). On November 17, 1989, the Town filed its Motion to Intervene, and requested party status in that rule challenge proceeding. Additionally, the Town moved to consolidate with the rule challenge a separate petition it filed with the Commission on November 14, 1989, for a Section 120.57(1), Florida Statutes, administrative hearing, challenging the sanctions which the Commission had imposed. On November 30, 1989, the Hearing Officer granted the Town's motion to intervene, but declined to consolidate the rule challenge with the Town's petition for a Section 120.57(1), Florida Statutes, administrative hearing. The Commission had not yet determined whether the petition for a formal hearing would be granted; as a result it had not referred the matter to DOAH. Consequently, there was then no other proceeding pending at DOAH to be consolidated with the rule challenge. Similarly, on December 1, 1989, the Village of Virginia Gardens filed its motion to intervene in the rule challenge proceeding. The motion was granted on December 5, 1989. Finally, on December 4, 1989, the Town received a copy of the Commission's proposed order denying its Petition for Formal Administrative Hearing on the sanctions which had been imposed. On December 5, 1989, the Town filed a response to that proposed order, and argued that the Commission never gave it a clear point of entry into the administrative process. The Commission disagreed, and on December 8, 1989, denied the Town's request for a formal hearing. The Commission found the Town had a clear point of entry based on its January 23, 1989, letter to the Town (see Finding 43, above), and that the Town waived its right to a formal hearing by participating in the proceedings before the Commission on September 26 and October 24, 1989, without requesting a formal hearing. On December 6, 1989, the Town was notified that its adopted local government comprehensive plan complied with the requirements of Chapter 163, Florida Statutes. As a result of the Department's finding of compliance, the state monies to be withheld from the Town pursuant to the Commission's order were reduced to $83,255 (see Finding 59, above). On December 8, 1989, the Commission entered its final order denying the Town's request for a formal hearing. Consequently, on January 4, 1990, the Town filed a Notice of Appeal with the District Court of Appeal, First District, appealing the denial of its petition for a Section 120.57(1) hearing.
The Issue The issues are whether Respondent's construction of Section 11.062, Florida Statutes (2006), is an unadopted rule, described in Subsection 120.56(4), Florida Statutes (2006); whether rulemaking is not feasible for a reason authorized in Subsection 120.54(1)(a), Florida Statutes (2006); and whether either of the petitioners is a person substantially affected by the unadopted rule. (Statutory references are to Florida Statutes (2006)).1
Findings Of Fact Petitioner, Capital Collateral Regional Counsel-Middle Region (CCRC-MR), is one of three governmental units authorized in Section 27.701 to provide collateral legal representation for certain persons convicted and sentenced to death in the state. Each governmental unit functions in a distinct multi-county region identified in the statute as either the northern, middle, or southern region. The middle region in which CCRC-MR is statutorily required to function consists of eight judicial circuits. The judicial circuits are statutorily identified as the Fifth, Sixth, Seventh, Ninth, Tenth, Twelfth, and Thirteenth Judicial Circuits. Petitioner, John W. Jennings, is the Capital Collateral Regional Counsel with statutory responsibility for administering CCRC-MR. The Supreme Court Judicial Nominating Committee recommended Mr. Jennings to the Governor, the Governor appointed Mr. Jennings, and the Florida Senate confirmed the appointment. Each appointment is for a three-year period. Mr. Jennings is currently subject to reappointment. The administration of CCRC-MR is supervised by the Commission on Capital Cases (Commission). The Commission has exclusive statutory responsibility for the oversight of each regional office pursuant to Section 27.709. The Commission consists of six members each of whom serves a term of four years. The Governor appoints two members to the Commission. The President of the Senate and the Speaker of the House each appoint two members. One of the two members appointed by the President and Speaker, respectively, must be a member of the majority party, and the other appointee must be a member of the minority party. The Office of Legislative Services is statutorily required to provide staff support to the Commission. Salaries for each regional office must be submitted annually to the Justice Administrative Commission and the offices of the President of the Senate and the Speaker of the House in accordance with Subsection 27.705. However, Section 27.702(1) provides, in relevant part: The three capital collateral regional counsels' offices shall function independently and be separate budget entities, and the regional counsels shall be the office heads for all purposes. The Justice Administrative Commission shall provide administrative support and service to the three offices to the extent requested by the regional counsels. The three regional counsels shall not be subject to control, supervision, or direction by the Justice Administrative Commission in any manner, including, but not limited to, personnel, purchasing, transactions involving real or personal property, and budgetary matters. Respondent is a state agency authorized in Section 17.002. Respondent is an executive agency described in Subsection 20.121. Section 11.062, in relevant part, prohibits an executive, judicial, or quasi-judicial department from using public funds to retain a lobbyist other than a full-time agency employee (outside lobbyist) to represent the department before the legislative or executive branches of government (prohibited lobbying). If public funds are misused for prohibited lobbying, the statute provides that Respondent "shall" deduct the amount of misused public funds from the salary of the responsible state employee and that the offending department will be barred from authorized lobbying for two years.2 It is undisputed that Petitioners have registered and paid outside lobbyists to lobby the legislative and executive branches of government on behalf of CCRC-MR from 2001 through 2005. The primary purpose of the lobbying effort has been to ensure annual budgets that are adequate for effective legal representation of persons convicted and sentenced to death in those judicial circuits that are within the functional and territorial purview of CCRC-MR. Between April 15, 2002, and June 22, 2005, Petitioners submitted approximately 28 invoices to Respondent totaling $119,000. Two invoices on April 15 and May 23, 2002, were for $10,000 each. Five invoices from August 25, 2003, through January 26, 2004, were for $2,600 each. The remaining 21 invoices ranged from $3,400 to $7,500 each. Each of the invoices were earmarked as payments for "consulting services." However, Respondent has been aware since 2001 that CCRC-MR has engaged outside lobbyists to represent CCRC-MR before the legislative and executive branches of government. Respondent approved all of the invoices. A primary dispute between the parties involves the issue of whether CCRC-MR is an agency of the executive branch of government (executive agency) or an agency of the legislative branch (legislative agency). Respondent construes Section 11.062 to mean that CCRC-MR is an executive agency and that Section 11.062 prohibits CCRC-MR from using public funds to lobby the legislative or executive branches of government. Petitioners construe Section 11.062 to mean that CCRC-MR is a legislative agency that is not prohibited from using public funds for prohibited lobbying.3 A determination of whether CCRC-MR is an executive or legislative agency is not necessary for the disposition of this rule challenge. A rule challenge conducted pursuant Section 120.56(4) does not require a determination that Respondent's statutory construction of Section 11.062 is invalid because it exceeds the scope of delegated legislative authority or for any of the other reasons described in Subsections 120.52(8)(b) through (f). The scope of this rule challenge is limited to a determination of whether the challenged statutory construction is invalid solely because Respondent has failed to promulgate the statutory construction as a rule within the meaning of Subsection 120.52(8)(a). For Petitioners' rule challenge to succeed, Subsection 120.56(4) first requires the evidence to show that the challenged statutory construction is a rule. Subsection 120.52(15) defines a rule, in relevant part, to mean: . . . each agency statement of general applicability that implements, interprets, prescribes law or policy [but] . . . does not include [the express exceptions in Subsections 120.52(15)(a)-(c)]. Subsection 120.52(15) imposes several requirements that must be satisfied in order for Respondent's construction of Section 11.062 to be defined as a rule. First, Respondent must express the challenged statutory construction as an agency statement. Second, the agency statement must satisfy the test of general applicability. Third, the statement of general applicability must, in relevant part, implement, interpret, or prescribe law or policy. Finally, the statement of general applicability that implements, interprets, or prescribes law or policy must not fall within one of the express exceptions to the definition of a rule. Respondent has expressed the challenged construction of Section 11.062 in several statements of longstanding agency policy. That policy traces its roots to the early 1990s, and Respondent has iterated its policy through various means of government communication. Most recently, Respondent stated its policy in a letter to Mr. Jennings dated September 27, 2006, approximately eight days after Petitioners filed the instant rule challenge. In relevant part, the letter states: This is in response to your letter to the Bureau of State Payrolls dated September 20, 2006, regarding your W-4 Form. Whenever state employees are under investigation for possible misuse of state funds, we routinely flag their W-4 record in our payroll system; your payroll account was flagged because of questions surrounding lobbying expenditures you authorized. Because of this action, however, our data processing system automatically generated a new W-4 form that was inadvertently sent to you twice. Please disregard both of these W-4 forms. No action of any kind has ever been taken by this office as a result of the duplicate forms you received. We apologize for any inconvenience that may have been caused. Petitioner's Exhibit(P)- 9. Respondent previously stated the challenged statutory construction in an investigative report precipitated by several complaints against the Capital Collateral Regional Counsel for the Southern Region (CCRC-SR), the last of which Respondent received on March 29, 2005. Respondent's Office of Fiscal Integrity (OFI) initiated a formal investigation of CCRC-SR and subsequently expanded the scope of the investigation to include the lobbying activities of CCRC-MR. Respondent issued a final report of the investigation on August 29, 2006. In relevant part, the report expressed the challenged statutory construction as follows: CCRC officials have argued that CCRC's are not part of the executive branch, claiming this would make them exempt from the provisions of Section 11.062. . . . A legal opinion dated January 11, 2006, by DFS counsel indicates that although CCRC's were initially created in the judicial branch, they were moved to the executive branch in 1997. The legal opinion noted that the CCRC's have been repeatedly defined by statute as executive branch agencies. . . . Examples include Section 23.21(1). , which notes that CCRC's are included as "principal administrative unit(s) within the executive branch of state government. . . . CCRC's are also defined by name in Section 186.003(6) . . . as state agencies, which are in turn defined in this section as "any official, officer, commission, board . . . or department of the executive branch of state government.[4] * * * In the case of the CCRC-Middle office, a staff attorney working for Jennings wrote an opinion saying essentially that the CCRC's were exempt from the provisions of Section 11.062 . . . because in their opinion, they are not part of the executive branch. In Jennings sworn statement, he acknowledged that he did not seek a legal opinion from anyone outside of his office. According to Jennings' sworn statement, he continues to pay . . . for lobbying services even though the contract reflects "consulting services." Jennings, on behalf of CCRC-Middle authorized payments . . . totaling $119,000. * * * It is recommended that . . . DFS legal staff initiate action against . . . Jennings to recover . . . funds that were inappropriately paid by Jennings to lobbyist[s] in violation of Sections 11.062 and 216.311. P-1 at 19 and 20. Respondent has also stated the challenged statutory construction in an Interoffice Communication dated January 11, 2006, and in a memorandum to state agencies dated March 31, 2003. Respondent issued the latter memorandum as a direct result of the lobbying expenditures of CCRC-MR but did not deliver the memorandum to CCRC-MR. Respondent argues that it has not uttered an agency statement, in relevant part, because the recommendation in the Report of Investigation has no force or effect without the authorization of the agency head.5 The argument ignores substantial evidence of other iterations of the agency statement over the years as well as the consistent interpretation by agency witnesses of the force and effect of the statement in its various iterations. The agency statement of the challenged statutory construction satisfies the test of general applicability. Respondent intends the agency statement to have the force and effect of law. Respondent applies the statement in a manner that requires compliance by all state agencies and employees with the direct and consistent effect of law. The statement creates enforcement rights in Respondent and imposes substantive standards on state agencies and employees who are not described in the express terms of Section 11.062. According to the Program Manager in charge of OFI, it is unlawful for Petitioners to expend funds for outside lobbying irrespective of whether CCRC-MR is an executive agency or legislative agency. "The issue of whether they're an executive agency is just an issue of collection." Respondent's Director of the Division of Accounting and Auditing agrees with the testimony of the Program Manager. The agency statement of general applicability interprets and implements Section 11.062. Section 11.062 does not expressly define an executive agency to include CCRC-MR.6 The agency statement defining CCRC-MR as an executive agency interprets law within the meaning of Subsection 120.52(15). The executive branch of government is constitutionally and statutorily required to organize its executive agencies into no more than 25 departments.7 The executive departments enumerated in Chapter 20 do not expressly identify CCRC-MR as an executive agency. The agency statement that CCRC-MR is an executive agency interprets law within the meaning of Subsection 120.52(15). Respondent relies on Subsection 23.21(1) to define CCRC-MR as an executive agency for the purposes of Section 11.062. Subsection 23.21(1), in relevant part, defines the term "department" to include "a principal administrative unit within the executive branch . . . and includes . . . the Capital Collateral Representative. . . ." However, the quoted definition is expressly limited to "the purposes of this part", i.e., the Paper Reduction provisions in Sections 23.20 through 23.22. Expanding the quoted definition for purposes other than Paper Reduction, including the purposes of Section 11.062, interprets law within the meaning of Subsection 120.52(15). In similar fashion, Respondent relies on Subsection 186.003(6) to define CCRC-MR as a state agency. Expanding the definition beyond the purposes of Chapter 186 to include the purposes of Section 11.062 interprets law within the meaning of Subsection 120.52(15). Respondent states in the alternative that CCRC-MR is not an agency but is a subdivision of an executive agency. The parties devoted a substantial amount of evidence in an effort to demonstrate that CCRC-MR is a unit of either a legislative or executive agency of government. As previously stated, the scope of this proceeding does not require a resolution of the dispute between the parties. The competing evidence, however, does demonstrate that the challenged agency statement interprets law within the meaning of Subsection 120.52(15). The agency statement of general applicability that interprets law and implements Section 11.062 does not fall within an express exception to the definition of a rule in Subsection 120.52(15). The iteration of the agency statement in the letter to Mr. Jennings that followed the report of investigation is not an internal management memorandum, legal memorandum, or memorandum to other state agencies within the meaning of Subsections 120.52(15)(a), (b), or (c). The iteration of the agency statement in an internal management memorandum issued as a direct result of the lobbying efforts of CCRC-MR affects the private interests of Mr. Jennings, if for no other reason, by subjecting his salary to garnishment. The challenged statutory construction is a rule within the meaning of Subsection 120.52(15). Respondent has not promulgated the rule pursuant to the rulemaking procedures prescribed in Section 120.54. A preponderance of evidence does not support a finding that rulemaking is not feasible within the meaning of Subsection 120.54(1)(a)1. Respondent argued but offered no factual evidence to support such a finding. Nor did Respondent initiate rulemaking in accordance with Subsection 120.56(4)(e). Mr. Jennings is a person substantially affected by the unpromulgated rule within the meaning of Subsection 120.56(4)(a). Subsection 11.062(1) requires Respondent to garnish the salary of Mr. Jennings if Respondent determines that Mr. Jennings violated the statutory prohibition against outside lobbying. After Respondent concluded the administrative investigation on August 29, 2006, the Director of the Division of Accounting and Auditing directed the Bureau Chief for the Division of State Payrolls to access the personal payroll account of Mr. Jennings on two occasions. Respondent subsequently exercised prosecutorial discretion not to garnish the salary of Mr. Jennings. Mr. Jennings is currently subject to reappointment to his position of employment. Mr. Jennings must disclose to the Supreme Court Judicial Nominating Committee that he is currently under investigation by OFI. The disclosure subjects Mr. Jennings to a potential loss of reappointment. CCRC-MR is a person substantially affected by the unpromulgated rule. A change in leadership would impair the institutional knowledge required to adequately represent persons in eight judicial circuits who have been convicted and sentenced to death. Placement of CCRC-MR within the executive branch of government creates a potential conflict of interest for CCRC-MR. Such a placement arguably would make the legal representative of death row inmates responsible to the executive branch of government which, in turn, must either execute the clients of the representative or commute their death sentences.
The Issue Whether Respondents failed to maintain and deposit payment instruments into their own commercial account in a federally- insured financial institution, in violation of section 560.309(3), Florida Statutes (2013).1/
Findings Of Fact The Parties Petitioner, Office of Financial Regulation, is the state agency charged with administering and enforcing chapter 560, Florida Statutes, including part III of that statute, related to money services businesses. Respondent, Moctezuma Envios, Inc. ("Moctezuma Envios"), is a Florida corporation operating as a money services business, cashing checks and acting as a money transmitter, as authorized by License No. FT30800203 issued by Petitioner. Its address of record is 19784 Southwest 177th Street, Miami, Florida 33187. Respondent Liliana Carrascal has a 100 percent controlling interest in, and is the sole officer of, Moctezuma Envios.3/ The Events Giving Rise to this Proceeding Respondents have been in the money services business, and Moctezuma Envios has been licensed to conduct this business, since 2001. Respondents were doing business with Intermex Wire Transfer LLC ("Intermex"), a money transfer services business, before the events giving rise to this proceeding. Sometime prior to January 2013, Carrascal was approached by representatives of Intermex about opening an account in the name of Moctezuma Envios at U.S. Bank.4/ Intermex representatives told Carrascal that the account could be used for depositing the checks that Moctezuma Envios cashed and also for paying Intermex for money transfers. According to Carrascal, this offer was attractive to Respondents because U.S. Bank accepted third-party checks, and opening a check-cashing account that accepts such checks is difficult. Additionally, having the account would streamline the process by which Moctezuma Envios paid Intermex to serve as its money transmitting agent, and would enable Carrascal to avoid driving across town carrying large sums of money to deposit cash into Intermex's account. Carrascal testified, credibly, that Intermex representatives told her she would be the owner of the account, that she could deposit payment instruments into and withdraw funds from the account, and that the account would be compliant with the law. On the basis of these representations, Carrascal authorized Intermex representatives to open an account in the name of Moctezuma Envios at U.S. Bank. The account number was XX3503. The persuasive evidence shows that Account No. XX3503 was established as an agent account, with Moctezuma Envios acting as a money transmitter agent for Intermex. As such, Moctezuma Envios was authorized to deposit funds and payment instruments into the account. Robert Lisy and Darryl J. Ebbert, both employees of Intermex, were signatories on Account No. XX3503, and, as such, were the owners of the account. They were authorized to deposit funds into, withdraw funds from the account, and otherwise control the account. The persuasive evidence further shows that Respondents were not signatories to Account No. XX3503.5/ Accordingly, they were not authorized to withdraw funds from the account. During the period spanning from January 2013 to late 2014, Respondents deposited payment instruments received through their check-cashing business into Account No. XX3503. The persuasive evidence shows that once Respondents deposited the payment instruments into Account No. XX3503, they lost access to and control of those funds. This is because, as noted above, only Intermex representatives were authorized signatories on the account. When Respondents deposited payment instruments into Account No. XX3503, those funds were thereafter "swept" into Account No. XX7788, which was Intermex's main operating account at U.S. Bank. This means that the funds were removed from Account No. XX3503 and deposited in Account No. XX7788. Respondents were not signatories to Account No. XX7788, so did not have access to the funds in that account. As a result of Respondents not being signatories on either Account No. XX3503 or Account No. XX7788, once they deposited payment instruments into Account No. XX3503, they lost access to and control of the funds paid under those payment instruments. The persuasive evidence establishes that Respondents deposited approximately ten percent of the payment instruments that they received from their check cashing business into Account No. XX3503 during the timeframe pertinent to this proceeding. The other payment instruments were deposited into other accounts that Respondents held at other banks. Carrascal credibly testified that when Intermex first approached her about opening an account at U.S. Bank, she was concerned because she knew that the law required payment instruments to be deposited into the business's own commercial account. Thus, she declined to open such account. When Intermex representatives approached her a second time, they told her that the account would be in the name of Moctezuma Envios and assured her that Moctezuma Envios would be in compliance with the law. She believed them, so authorized them to open Account No. XX3503. Carrascal further testified, credibly and persuasively, that as soon as she received notice that Petitioner believed that Account No. XX3503 did not comply with the law, she closed the account and ceased doing business with Intermex and U.S. Bank. The credible, persuasive evidence establishes that Respondents did not attempt to conceal any information or mislead Petitioner regarding Account No. XX3503. Carrascal credibly and persuasively testified that she had intended to fully comply with the law. She had received training in order to serve as Moctezuma Envios' compliance officer, and Moctezuma Envios has a legal compliance manual in place to help ensure that it complies with applicable laws. The evidence establishes that Moctezuma Envios has been disciplined twice for previous violations of applicable laws. Specifically, some time prior to December 2008, Moctezuma Envios failed to file currency transaction reports concerning cash received from another chapter 560 licensee and failed to timely file at least two quarterly reports, as required by statute and rule. In 2011, Moctezuma Envios failed to timely file a required quarterly report. Both violations were resolved pursuant to Stipulation and Consent Agreement between Petitioner and Moctezuma Envios, under which Moctezuma Envios paid fines and agreed to comply with the law in the future. Carrascal acknowledged that the violations had occurred, but testified, credibly, that in both instances, Respondents had not intended to violate the law, and that Respondents had cooperated with Petitioner to rectify the circumstances that had resulted in noncompliance. Petitioner has adopted rule 69V-560.1000, which codifies a penalty matrix that authorizes and enables Petitioner to impose a fine for a specific statutory or rule violation, based on the level of fine adopted in rule 69V-560.1000(150) and the number of times a licensee has violated that particular statute or rule. Rule 69V-560.1000(150) establishes a range of $1,000 to $3,500 for a Level A fine; $3,500 to $7,500 for a Level B fine; and $7,500 to $10,000 for a Level C fine. Here, Respondents are charged with having violated section 560.309(3) for the first time. Pursuant to rule 69V-560.1000(85), Respondents are subject to a Level B fine, which ranges from $3,500 to $7,500. Rule 69V-560.1000(148) sets forth the factors, which Petitioner characterizes as "aggravating" or "mitigating," that must be considered in determining the specific amount of the fine within the ranges established in rule 69V-560.1000(150). 29. Rule 69V-560.1000(148) states: In accordance with Sections 560.1141(2) and (3), F.S., the Office shall consider the following circumstances in determining an appropriate penalty within the range of penalties prescribed in this rule for each violation as based upon the citation number. The Office also shall consider these circumstances in determining a penalty that deviates from the range of penalties prescribed for each violation and citation number as a result of such circumstances: Whether the violation rate is less than 5% when compared to the overall sample size reviewed; The degree of harm to the customers or the public; The disciplinary history of the licensee; Whether the licensee detected and voluntarily instituted corrective responses or measures to avoid the recurrence of a violation prior to detection and intervention by the Office; Whether the licensee’s violation was the result of willful misconduct or recklessness; Whether at the time of the violation, the licensee had developed and implemented reasonable supervisory, operational or technical procedures, or controls to avoid the violation; Where the violation is attributable to an individual officer, director, responsible person, or authorized vendor, whether the licensee removed or otherwise disciplined the individual prior to detection and intervention by the Office; Whether the licensee attempted to conceal the violation or mislead or deceive the Office; The length of time over which the licensee engaged in the violations; Whether the licensee engaged in numerous violations or a pattern of misconduct; The number, size and character of the transactions in question; Whether the licensee provided substantial assistance to the Office in its examination or investigation of the underlying misconduct; Other relevant, case-specific circumstances. Andrew Grosmaire, Chief for Petitioner's Bureau of Enforcement, testified that Petitioner proposes to impose a $7,500 fine on Respondents, and explained the basis for that amount. Grosmaire testified that Petitioner did not have any information regarding several of the factors listed in rule 69V-560.1000, so did not "use" those factors in determining the fine to be imposed on Moctezuma Envios.6/ Specifically, Petitioner did not use the factors in subsections (a), (b), (d), (e), (f), (g), (h), (i), (j), (l), and (m) in determining the fine. Petitioner did consider subsection (c), regarding the licensee's disciplinary history, in determining the fine. As discussed above, Petitioner presented evidence showing that Moctezuma Envios had been disciplined twice for violations of provisions of chapter 560 and implementing rules, albeit not for the same violation that is the subject of this proceeding.7/ Grosmaire noted that it was "unusual" for a licensee to have two previous violations. Petitioner thus considered Moctezuma Envios' disciplinary history an aggravating factor in determining the applicable fine. Petitioner also considered subsection (k), which addresses the number, size, and character of the transactions in question. According to Grosmaire, "100 percent of the checks were deposited into this account during the period in question," so Petitioner considered this an aggravating factor in determining the appropriate fine. As noted above, pursuant to rules 69V-560.1000(85), (147), and (148), Petitioner proposes to fine Respondents $7,500. Findings of Ultimate Fact Regarding Alleged Violation Florida case law holds that the determination of whether alleged conduct violates a statute or rule is a question of ultimate fact. Gross v. Dep't of Health, 819. So. 2d 997, 2002 (Fla. 5th DCA 2002); Langston v. Jamerson, 653 So. 2d 489, 491 (Fla. 1st SCA 1995). For the reasons discussed above, the undersigned finds that the evidence clearly and convincingly establishes that Respondents did not own Account No. XX3503, into which payment instruments from Moctezuma Envios' check-cashing business were deposited. Although Respondents were able to deposit payment instruments into Account No. XX3503, they were not signatories on the account so could not withdraw funds from that account. Further, Respondents were not signatories to, and therefore did not have access to funds in, Account No. XX7788, into which Intermex swept the funds from the deposited instruments in Account No. XX3503 on a routine basis. On this basis, it is determined that Petitioner demonstrated, by clear and convincing evidence, that Moctezuma Envios and Liliana Carrascal, by virtue of being an affiliated party pursuant to section 560.103(1), violated section 560.309(3) by failing to maintain and deposit payment instruments into their own commercial account at a federally- insured financial institution. As discussed above, Petitioner proposes to fine Respondents $7,500, the maximum amount that can be imposed for a Level B fine. Petitioner reached this amount taking into account the factors set forth in rules 69V-560.1000(148)(c) and (k), which it considered to be aggravating factors that militated imposition of a higher fine within the Level B range. As discussed above, Carrascal presented evidence regarding several of the factors in rule 69V-560.1000(148) considered in determining the appropriate fine. Specifically, Carrascal testified, persuasively, that no harm to her customers or the public resulted from Respondents' violation of section 560.309(3); that Respondents' violation of the statute was inadvertent and was the result of misrepresentation by Intermex, so that the violation was not the result of Respondents' willful conduct or recklessness; that Moctezuma Envios has in place a professionally-prepared compliance manual to help Respondents avoid future violations, including the type of violation at issue in this proceeding; that once Carrascal became aware that Petitioner believed Account No. XX3503 was noncompliant with section 560.309(3), she cooperated fully with Petitioner's investigation and did not attempt to conceal, mislead, or deceive Petitioner; that as soon as Carrascal became aware of the noncompliance issues with Account No. XX3503, she closed the account and Respondents terminated all business dealings with U.S. Bank and Intermex, the latter with which Respondents had a business relationship that predated the matters giving rise to this proceeding; and that the deposits into Account No. XX3503 constituted only approximately ten percent of the total deposits Respondents made during the timeframe pertinent to this proceeding, with the other 90 percent being deposited in other accounts at other financial institutions. As discussed above, the undersigned found Respondents' evidence of mitigation regarding the factors set forth in rules 69V-560.1000(148)(b), (e), (f), (h), (k), and (l) credible and persuasive. Further, the undersigned considers relevant that in this case, Respondents affirmatively were misled into violating the law by Intermex.8/ Petitioners did not present persuasive countervailing evidence rebutting the evidence of mitigation presented by Respondents with respect to the amount of the fine. As noted above, Grosmaire testified that Petitioner considered subsections (c) and (k) as aggravating factors in determining that Respondents should be fined $7,500. Rule 69V- 560.1000(148) does not specifically address how much weight each factor should be assigned in determining the specific fine within the authorized range, and Grosmaire did not explain how the factors Petitioner "used" were weighed in arriving at the $7,500 fine. Considering the "aggravating" and "mitigating" factors on which the parties presented evidence, the undersigned determines that a $4,500 fine should be imposed on Respondents in this proceeding.9/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of Financial Regulation enter a final order finding that Respondents, Moctezuma Envios, Inc., and Liliana Carrascal, violated section 560.309(3), Florida Statutes, and imposing a fine of $4,250. DONE AND ENTERED this 22nd day of June, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of June, 2016.
The Issue At issue in this proceeding is whether petitioner's rights and benefits under the Florida Retirement System are subject to forfeiture.
Findings Of Fact Petitioner, Robert T. Lacey (Lacey), was employed as the Director of the Criminal Justice Institute, Broward Community College, Broward County, Florida, from at least January 1, 1985, until his resignation in March 1986. At all times pertinent to this case, Broward Community College (BCC) was an employer which participated in the Florida Retirement System, and petitioner, while employed by BCC, was a member of the Florida Retirement System. On February 4, 1987, a Grand Jury impaneled in Broward County, Florida, returned a fourteen (14) count true bill of indictment against Lacey. The matter was ultimately assigned Case No. 87-2056CFA, Circuit Court, Broward County, Florida. Pertinent to this case are Counts I-XII of the indictment, one count for each of the calendar months of 1985 (January through December 1985). Each count charges that Lacey did, while employed by BCC that year, commit the following acts each month: . . . unlawfully and knowingly obtain or endeavor to obtain the property of Broward Community College, to wit: United States Currency, services and/or material, of a value of one hundred dollars ($100.00) or more, with the intent to permanently or temporarily deprive Broward Community College of a right to the property or a benefit thereof, or to appropriate the property to his own use or the use of any person not entitled thereto, contrary to F.S. 812.014(1)(a)., and (1)(b)., and F.S. 812.014(2)(b). The gravamen of such charges was the assertion that while employed as director of the Criminal Justice Institute, an entity within Broward Community College, Lacy used materials, time and personnel to benefit him personally in his consulting business. On February 25, 1988, following a jury trial, the jury returned a verdict of guilty of grand theft, as alleged in Counts I-XII of the indictment, and not guilty as to Counts XIII and XIV of the indictment. Although found guilty by a verdict of the jury, the court withheld adjudication as to each count, placed Lacey on probation for a period of three years, ordered Lacey to pay $3,000 in restitution to BCC, and ordered Lacey to perform 200 hours of community service. Lacey's post trial motions for arrest of judgment, new trial, and renewed motion for judgment of acquittal were denied by the court. Following the true bill of indictment that issued February 4, 1987, Lacey was also charged by direct information filed April 21, 1987, in the Circuit Court, Broward County, Florida, Case No.87-6744CFA, with two counts of official misconduct (Counts I and III), one count of petit theft (Count II), and one count of grand theft (Count IV). Pertinent to this case, Count I of the information charged that on or about September 5, 1985, Lacey did, while a public servant, to wit: . . . an employee of Broward Community College . . . did then and there unlawfully and knowingly falsify, or cause another to falsify, an official record or official document, to-wit: a Broward Community College form entitled "STAFF AND PROGRAM DEVELOPMENT COURSE APPROVAL FORM," with the corrupt intent to obtain a benefit for himself . . . or another, to-wit: for the benefit of JACINDA LYNN FANNIN, contrary to F.S. 839.25(1)(b). Counts III and IV of the information charged Lacey with official misconduct and grand theft, respectively; however, that portion of the information which would have set forth the factual basis for Counts III and IV is not of record, and no conclusion can be drawn as to whether or not the basis for those charges related to Lacey's employment with BCC. In response to the information in Case No. 87-6744 CFA, and following the resolution of Case No. 87-2056CFA, Lacey entered a plea of nolo contendere to all counts. The Court, by order of November 28, 1988, withheld adjudication of guilt, and placed Lacey on probation for three years with regard to Counts I, III and IV and six months as to Court II. All probationary terms were to run concurrent and coterminous with those imposed in Case No.87-2056CFA. 2/
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered forfeituring the rights and benefits of petitioner, Robert T. Lacey, under the Florida Retirement System, except for the return of his accumulated contributions. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 25th day of March 1994. WILLIAM J. KENDRICK 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 25th day of March 1994.
