Division of Beverage, Dept. of Business Regulation v. Bonanni Ship Supply, Inc.

• Decision Date: 09 March 1978
• Docket Number: No. 51582,51582
• Citation: 356 So.2d 308
• Parties: The DIVISION OF BEVERAGE, DEPARTMENT OF BUSINESS REGULATION, an agency of the State of Florida, Appellant, v. BONANNI SHIP SUPPLY, INC., Appellee.
• Court: Florida Supreme Court

Page 308

356 So.2d 308

The DIVISION OF BEVERAGE, DEPARTMENT OF BUSINESS REGULATION, an agency of the State of Florida, Appellant, v. BONANNI SHIP SUPPLY, INC., Appellee.

No. 51582.

Supreme Court of Florida.

March 9, 1978.

Richard E. Gentry, Staff Atty., Tallahassee, for appellant.

Robert V. Williams of Gibbons, Tucker, McEwen, Smith, Cofer & Taub, Tampa, for appellee.

ENGLAND, Justice.

The circuit court for the Thirteenth Judicial Circuit entered final summary judgment in favor of appellee in a declaratory action brought against the Department of Business Regulation, in which it held Section 561.14(4), Florida Statutes (1975), to be in violation of the Commerce Clause of the United States Constitution. ¹ That provision of the statute required Bonanni Ship Supply, Inc. to obtain an exporter's license from the State of Florida in order to engage in the business of importing and exporting "in-bond" merchandise for distribution and use solely in foreign commerce. Under Article V, Section 3(b) (1) of the Florida Constitution, the Department asks us to review the trial court's declaration of invalidity. The sole issue for review is whether the state's regulation of Bonanni's import-export activity constitutes an unreasonable burden on interstate commerce under the federal constitution.

There is no controversy as to either the facts in this case or the applicable standard of law. Both parties agree that the Commerce Clause of the United States Constitution permits a state to exercise reasonable police powers necessary to protect local interests, and that in this case the sole interest of the state is to prevent a diversion of liquor from foreign commerce into the stream of state distribution. Both parties also agree that the federal government has entered the regulatory field with respect to Bonanni's business, having imposed extensive procedural requirements which govern Bonanni's activities in transferring liquor through the port of Tampa. ²

The ultimate question we are called upon to answer is whether the state's supplementary regulations, as set forth in Chapter 561 of the Florida Statutes, constitute an unreasonable burden on interstate commerce within the limitations established by the federal courts. This state's regulatory scheme with respect to Bonanni and like exporters consists of a $500 license fee, a $5,000 bond to protect against tax loss in the event merchandise is diverted into state commerce, monthly reports on the transfer of liquor into and out of the bonded warehouse in Tampa, and a semi-annual physical inspection of the bonded warehouse at which a customs employee must be present. ³

Relying on Duckworth v. Arkansas, 314 U.S. 390, 62 S.Ct. 311, 86 L.Ed. 294 (1941), and Carter v. Virginia, 321 U.S. 131, 64 S.Ct. 464, 88 L.Ed. 605 (1944), the Department argues that a reasonable state regulation of foreign commerce is permissible to achieve the state's legitimate objective of preventing diversion to in-state commerce. Bonanni contends that Duckworth and Carter are not relevant in this case because both involved state regulation in areas devoid of any federal regulatory activity, and that Epstein v. Lordi, 261 F.Supp. 921 (D.N.J.1966), aff'd, 389 U.S. 29, 88 S.Ct. 106, 19 L.Ed.2d 29 (1967), is more to the point. Epstein was a Commerce Clause case involving competing state and federal regulations.

Epstein is persuasive here, and we hold that the state's regulatory activity is not reasonably necessary to protect against diversion. On the record here, the federal regulatory scheme is more than adequate to detect any diversion from the importation, storage, and exportation of wholesale liquor passing through the State of Florida.

Obviously, the license fee and bonding requirement provide no protection for the state against diversion. Similarly, the filing of monthly reports offers nothing to the state which the federal government does not already have; indeed, Bonanni attaches to the state's form each month a copy of the report it files with the federal government for the same purpose. The one state activity that has no counterpart in the federal scheme of regulation is the semi-annual physical inventory. ⁴ Since we can discern no information regarding diversion that might emerge from the state's physical inventory which would not also be revealed by the paper and physical inventories provided by the federal government, we must conclude that the state's attempt to monitor for diversion is merely duplicative of the federal effort. Under these circumstances, the federal regulatory activity and the Commerce Clause of the United States Constitution preclude state regulation. ⁵ Section 561.14(4), which requires exporters such as Bonanni to obtain a license and to comply with the bonding, filing, and inventory requirements we have described, violates the Commerce Clause of the United States Constitution and is invalid.

Nothing in our decision today should be construed as prohibiting the state from requiring exporters to register with the state for identification purposes. ⁶ A reasonable registration requirement would not, in the words of the federal constitution, interfere with congressional power "(t)o regulate Commerce with foreign Nations, and among the several States . . . ."

The decision of the trial court is affirmed.

OVERTON, C. J., and BOYD, SUNDBERG and HATCHETT, JJ., concur.

ADKINS and KARL, JJ., dissent.

1 U.S.Const. art. I, § 8, cl. 3.

2 Bonanni's business is subject to the Tariff Act of 1930, 19 U.S.C. § 1311 et seq., the Alcoholic Beverage and Tobacco Products Provisions...