Full Opinion

FIRST DISTRICT COURT OF APPEAL STATE OF FLORIDA _____________________________ No. 1D19-820 _____________________________ MB DORAL, LLC, d/b/a Martinibar, Appellant, v. STATE OF FLORIDA, DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF ALCOHOLIC BEVERAGES AND TOBACCO, Appellee. _____________________________ On appeal from the Division of Administrative Hearings. Robert J. Telfer, Judge. April 27, 2020 ROBERTS, J. MB Doral, a limited liability company doing business as “Martinibar,” appeals a final order from the Division of Administrative Hearings (DOAH) denying its rule challenge. We agree with MB Doral that Florida Rule of Administrative Procedure 61A-4.020 is an invalid exercise of delegated legislative authority and violates section 120.52(8), Florida Statutes (2019), and reverse the order on appeal. Facts MB Doral operates an alcoholic beverage establishment, Martinibar, in Miami-Dade County. It holds a liquor license (referred to as a “quota” license) issued by the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (the Division). See § 561.20, Fla. Stat. (2019). Quota licenses are issued in relation to the population of a county, so the license is tied to the county in which the licensee conducts its business – in this case Miami-Dade County. In addition to operating Martinibar, MB Doral also caters alcoholic beverages at large open-air events throughout Florida. It does so through an exemption to the quota license. See § 561.20(2)(a)5., Fla. Stat. (2019). Vendor licensees of the Division are permitted to store their inventory in limited locations. See § 562.03, Fla. Stat. (2019). Inventory may be stored in the building or room shown in the diagram accompanying a license application or “in another building or room approved by the [D]ivision.” § 562.03, Fla. Stat. (2019). To provide guidance as to when “off-premises storage” (OPS) permits would be approved, the Division promulgated Florida Administrative Rule 61A-4.020. OPS permits are unlimited in number for licensees and require no fee. See Fla. Admin. Code R. 61A-4.020. MB Doral applied for, and was granted, an OPS permit for storage facilities in Miami-Dade County. However, when MB Doral sought OPS permits outside of Miami-Dade County to store alcoholic beverages for use in its catering business, the Division denied the permit based on the language of rule 61A-4.020, which provided in relevant part 1: 61A-4.020 Storage Permits. 1 The rule has since been amended to address other deficiencies identified by MB Doral in litigation that are not at issue in the instant appeal. 2 (1) Manufacturers, rectifiers, distributors, vendors and cooperatives or pool buying vendors who require additional storage outside of their licensed premises must obtain a permit therefor. Such permits can be obtained from the Division without fee, provided that the storage room is located in the same county as the parent place of business of the licensee or agent of such cooperatives or pool buying vendors to whom the permit was issued and provided that no such permits shall be issued to a structure which is or is a part of the residence or garage of a licensee or any employee of any licensee. Such permits authorize the storage of alcoholic beverages only in sealed containers. Applications for such permits shall be made on forms prescribed by the Division for that purpose and shall be submitted to the district supervisor of the district in which the licensed place of business for which the permit is sought is located. (Emphasis added.) MB Doral filed a petition pursuant to section 120.56(3), Florida Statutes (2018), arguing rule 61A-4.020 was an invalid exercise of delegated legislative authority. MB Doral specifically took issue with the rule’s requirement that OPS storage be in the same county as the parent place of business of the licensee. In a final order, the Administrative Law Judge (ALJ) concluded the rule was a valid exercise of delegated legislative authority because section 562.03’s pronouncement that a vendor may store alcoholic beverages “in another building or room approved by the [D]ivision” gave the Division the ability to restrict the location where alcoholic beverages are stored, as well as the ability to approve additional locations for off-premises storage. The ALJ concluded the rule’s county-based limitation was consistent with and provided clarity to section 562.03. MB Doral seeks review of the ALJ’s final order. Standard of Review Judicial review of administrative orders is authorized by section 120.68(1), Florida Statutes (2019). The ALJ’s findings of fact are reviewed for competent, substantial evidence, and its 3 conclusions of law and determinations of statutory interpretation are reviewed de novo. State, Dep’t of Elder Affairs v. Fla. Senior Living Ass’n, Inc., 45 Fla. L. Weekly D207 (Fla. 1st DCA January 29, 2020) (citing J.S. v. C.M., 135 So. 3d 312, 315 (Fla. 1st DCA 2012)). Whether an agency exceeded its rulemaking authority or enlarged the specific provisions of law implemented is reviewed de novo. S. Baptist Hosp. of Fla. v. Agency for Health Care Admin., 270 So. 3d 488, 500 (Fla. 1st DCA 2019). With the passage of article V, section 21 of the Florida Constitution, the previously afforded deference to the agency’s interpretation of the statutes it implements has been abolished; our review is de novo. Id. at 502. Analysis A substantially affected party may challenge an existing rule at any time on the basis that the rule is an invalid exercise of delegated legislative authority. § 120.56(3), Fla. Stat. (2019). An existing rule is an invalid exercise of delegated legislative authority if the “agency has exceeded its grant of rulemaking authority”; if the rule “enlarges, modifies, or contravenes the specific provisions of law implemented”; if the rule is “vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency”; or if the rule is “arbitrary or capricious.” § 120.52(8)(b)-(e), Fla. Stat. (2019). MB Doral presented argument as to why rule 61A-4.020 is an invalid exercise of delegated legislative authority under sections 120.52(8)(b)-(e). Because we agree that the rule is invalid under sections 120.52(8)(b) and (c), we need not address the remaining arguments on appeal. A rule is invalid under section 120.52(8)(b) if the agency exceeds its grant of rulemaking authority. Rulemaking authority is the “statutory language that explicitly authorizes or requires an agency to adopt, develop, establish, or otherwise create any statement coming within the definition of the term ‘rule.’” § 120.52(17), Fla. Stat. (2019). As this Court said in United Faculty of Florida v. Florida State Board of Education, The scope of an agency’s rulemaking authority is constrained by section 120.536(1) and the so-called “flush-left paragraph” in section 120.52(8), which provide 4 that an agency may only adopt rules to “implement or interpret the specific powers and duties granted by the [agency’s] enabling statute”; that an agency may not adopt rules to “implement statutory provisions setting forth general legislative intent or policy” or simply because the rule “is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious or is within the agency's class of powers and duties”; and that “[s]tatutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than implementing or interpreting the specific powers and duties conferred by the enabling statute.” Section 120.536(1) and the flush-left paragraph in section 120.52(8) require a close examination of the statutes cited by the agency as authority for the rule at issue to determine whether those statutes explicitly grant the agency authority to adopt the rule. As this court famously stated in [Southwest Florida Water Management District v. Save the Manatee Club, Inc.], the question is “whether the statute contains a specific grant of legislative authority for the rule, not whether the grant of authority is specific enough. Either the enabling statute authorizes the rule at issue or it does not.” [773 So. 2d 594, 599 (Fla. 1st DCA 2000)] (emphasis in original). 157 So. 3d 514, 516-17 (Fla. 1st DCA 2015). Rule 61A-4.020 cites section 561.11, Florida Statutes (2018), as its rulemaking authority. 2 Section 561.11(1) authorizes the Division to adopt rules to implement the “Beverage Law,” which is contained in chapters 561 through 568, Florida Statutes. See § 561.01(6), Fla. Stat. (2019) (defining the Beverage Law). This 2 The 2018 version of the rule cited section 516.11, Florida Statutes. The parties agreed this citation was a typographical error that has since been corrected by the 2019 amendment to the rule. 5 general grant of rulemaking authority is insufficient by itself to provide authority for the OPS rule. See United Faculty, 157 So. 3d at 518 n.4. (citing sections 120.52(8) and 120.536(1), Florida Statutes). At oral argument, the Division claimed the rule was authorized by the Beverage Law as a whole and that it would have been unwieldy and confusing for the Division to cite all the relevant Beverage Law provisions. We reject the Division’s laissez-faire reliance on the Beverage Law as a whole. Agency rulemaking must be based on a specific grant of authority delegated by the Legislature. See State, Bd. of Trustees v. Day Cruise Ass’n, Inc., 794 So. 2d 696, 700 (Fla. 1st DCA 2001). The Division failed to cite any statutory provision that gives it the specific authority to restrict off-premises storage to the same county as the parent place of business of the licensee. See La Galere Markets, Inc. v. State, 289 So. 3d 553, 557 (Fla. 1st DCA 2020) (recognizing the Beverage Law spans seventy-five pages of the Florida Statutes and finding the Division’s citation of a few of the statutes therein failed to support its position). MB Doral contends the rule is an invalid exercise of delegated legislative authority and violates section 120.52(8)(c) because the rule enlarges, modifies, or contravenes the specific provisions of law implemented. Rule 61A-4.020 cites sections 561.07, 565.03(2), and 562.03, Florida Statutes, for the laws implemented. Section 561.07 was repealed in 1995. Section 565.03(2) was moved by the Legislature to section 565.03(3) in 2013. Section 565.03(3) is specific to distributors who fall under a different licensing process than vendors. Section 565.03(3) contains some county-specific limitations, but provides no authority for the Division to limit the issuance of an OPS to a location in the same county as the parent place of business of the licensee. The Division principally relies upon the storage provision in section 562.03 as providing the authority for rule 61A-4.020. The Division argued the statute requires its approval; therefore, rule 61A-4.020 properly provided clarity for the terms of approval. The ALJ agreed, concluding the OPS rule was a permitted effort to implement the storage provision with more detail. We disagree. Nowhere in the language of section 562.03 did the Legislature authorize the Division to place a county or ownership prerequisite 6 upon the issuance of an OPS permit. Rule 61A-4.020 improperly enlarges, modifies, or contravenes section 562.03, the only relevant law to be implemented cited by the Division. See G.B. v. Agency for Persons with Disabilities, 143 So. 3d 454, 457 (Fla. 1st DCA 2014) (reversing an ALJ order finding a rule valid where the rule expanded and contravened the law implemented); St. Petersburg Kennel Club v. Dep’t of Bus. & Prof’l Regulation, Div. of Pari- Mutuel Wagering, 719 So. 2d 1210 (Fla. 2d DCA 1998) (holding a rule defining “poker” exceeded the Division’s rulemaking authority where the statutes implemented did not confer the authority to make rules defining poker). Here, section 562.03 authorizes the Division to approve an OPS permit application, but does not authorize the Division to make its approval contingent upon county-based limitations. As such, the rule is an invalid exercise of delegated legislative authority under section 120.52(8)(c). REVERSED. ROWE and BILBREY, JJ., concur. _____________________________ Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331. _____________________________ Louis J. Terminello and Michael Martinez of Greenspoon Marder, LLP, Tallahassee, for Appellant. Ross Marshman, Beth A. Miller, and Joseph Y. Whealdon, Department of Business and Professional Regulation, Tallahassee, for Appellee. 7