COLUMNS

           DEP Update

    F. Perry Odom, General Counsel

A. Selected Appellate Cases

Wetherell v. National Pollution Funds Center, Case No. 4:96cv517-MMP (N.D. Fla.)

     The National Pollution Funds Center (NPFC) refused to adjudicate numerous natural resource damage claims submitted by the Department of Environmental Protection (DEP) against the Oil Spill Liability Trust Fund. Its refusal was based on a Comptroller General Opinion declaring that the state has no recourse against the Fund for such claims except by means of congressional appropriation. DEP sued for a declaratory judgment and injunctive relief, asserting that the clear language of OPA includes natural resource damage claims within claims which can be presented to the Fund after denial by the discharging party (which claims do not require special appropriation). Plaintiffs filed a motion for summary judgment. Defendants obtained an extension of time in order to seek an opinion on the same issue from the Office of Legal Counsel of the Department of Justice. The September 25, 1998 Department of Justice opinion agreed with DEP's position, and the parties stipulated to a settlement whereby the NPFC would adjudicate DEP's natural resource damage claims without need for congressional appropriation.

Levy v. Board of Trustees, Case No. 97-02106, slip op. (Fla. 2d DCA May 20, 1998).

     Levy petitioned under section 120.542 (new waiver/variance statute) for a waiver of or variance from the provision in rule 18-20.004(5)(a)1 prohibiting docks longer than 500 feet in aquatic preserves. The rule itself had been previously affirmed in Board of Trustees v. Levy, 656 So. 2d 1359 (Fla. 1st DCA 1995), which was decided before the variance/waiver statute was enacted.

     DEP issued a final order on behalf of the Board of Trustees dismissing the petition on the grounds that the variance and waiver statute applies only to regulatory matters such as permits and licenses, not to proprietary authorizations by the Board of Trustees. Levy appealed. The Second District Court of Appeal affirmed per curiam on May 20, 1998.

B. Selected Final Orders

Florida Wildlife Federation v. Department of Environmental Protection; and Coastal Petroleum Company v. Administration Commission and Department of Environmental Protection, Case Nos. 96-4222, 96-5038, 97-4362, 97-4591 (Fla. DOAH).

     Coastal Petroleum Company ("Coastal") applied for a permit to drill an exploratory oil and gas well in the Gulf of Mexico, approximately nine miles offshore of St. George Island. DEP notified Coastal of its intention to issue the permit, and directed Coastal to publish the notice of intent to issue the permit. Instead, Coastal appealed DEP's notice and publication requirements to the First District Court of Appeal, arguing that it wrongfully provided a point of entry to interested persons to challenge the agency's intent to issue the permit.

     The Florida Wildlife Federation, Sierra Club and Florida Audubon Society, along with the St. George Island Civics Club, filed petitions challenging the intent to issue Coastal's drilling permit. These petitions were referred to DOAH for formal administrative hearings, but the Administrative Law Judge stayed them pending Coastal's appeal.

     On March 3, 1997, the District Court denied Coastal's petition for writ of certiorari and subsequently denied Coastal's Motion For Clarification.

     During the 1997 legislative session, and the pendency of the administrative challenges to Coastal's permit, Chapter 97-49, Laws of Florida, was adopted, requiring additional surety, when warranted, for oil and gas exploration and production activities occurring in coastal waters. The new law requires this surety to be set by the Governor and Cabinet sitting as the Administration Commission upon recommendation by DEP. The surety must be based on projected cleanup costs and natural resource damages for a "maximum oil spill" where "adverse hydrographic and atmospheric conditions would tend to transport oil into environmentally sensitive areas."

     The new surety law explicitly applies to pending permit applications. Accordingly, the Department prepared a recommended surety amount. During the September 9, 1997, Cabinet meeting, the Administration Commission adopted the Department's recommendation and set the surety amount at $4.242 billion. Coastal immediately filed a petition against the Administration Commission and the Department, challenging the imposition of any new surety as well as the amount of surety actually imposed. These petitions were consolidated with the ongoing petitions challenging the Department's intent to issue Coastal's permit.

     The Attorney General intervened in these consolidated proceedings on behalf of the environmental petitioners, and the consolidated matters were set for final hearing on October 20, 1997.

     A Recommended Order was filed by the Administrative Law Judge on April 8, 1998, concluding that the Department's Notice of Intent to Issue was proper, and that Coastal was entitled to a drilling permit. However, the ALJ reduced the amount of the surety condition of Coastal's permit to $225 million. The proceedings were then referred back to the Department for a final order regarding issuance of the permit and to the Administration Commission for a final order regarding the surety amount.

     The Administration Commission reversed the ALJ's conclusions of law regarding the interpretation of "maximum oil spill" as used in the statute. Reasoning that the ALJ had improperly used a form of probability analysis in rejecting scenarios accurately representing a "maximum oil spill," the Commission remanded the matter to DOAH for further testimony and evidence to calculate a new surety amount conforming to the Commission's interpretation of the statute.

     The Department issued a Final Order reversing the ALJ's legal conclusions interpreting the permitting criteria in Section 377.241, Florida Statutes, and denying Coastal's permit. The Department concluded that the ALJ had misapplied the criteria set forth in that statute. The criteria, when properly applied to balance the interests in protecting the environment against the interests of the applicant, Coastal, weighed against issuance in this particular case.

     Coastal has appealed the DEP's Final Order to the First District Court of Appeal, where the matter remains pending. The surety issues, remanded by the Administration Commission, remain pending before DOAH.

A. Selected Final Orders

Kencik v. Department of Environmental Protection, OGC Case No. 97-0815, DOAH Case No. 97-2481.

     The Administrative Law Judge filed a Recommended Order supporting the DEP's position and stating that even if the DEP permitted certain similar structures along the same stretch of beach, the DEP is not estopped from denying a similar permit to this applicant. Without receiving a permit, the applicant built an enhanced deck structure on his beachside townhouse because others had similar decks in the region. He then filed for an after-the-fact permit for the enhanced deck. The enhanced deck was denied because of its potential to generate wind- and water-borne missiles in a storm. The RO supports the DEP position that each project is reviewed on a case-by-case basis and that estoppel would not apply to these facts, because the applicant did not rely on any statement to his detriment.

McGinnis v. Department of Environmental Protection, OGC Case No.: 97-0609, DOAH Case No. 97-1894.

     The Department received an application for an Environmental Resource Permit and a state water quality certification under Section 404 of the Clean Water Act for a project on October 2, 1995. The applicants, Mel and Pamela McGinnis applied for a permit from the Department to impact approximately 1.61 acres of wetlands to construct a single family residence, driveway, swimming pool, boat channel and boat basin. The property consisted of approximately 5.5 acres and contained about 0.9 acres of upland adjacent to the road. The applicants had initially requested and were denied an exemption from the requirement to obtain an ERP. The exemption request was based upon the allegation that the property was originally upland prior to the construction of mosquito control ditches on the property in the 1960s. On May 1, 1996, the Department issued a notice of intent to deny the permit application. As an alternative to obtaining a section 120.57 hearing, the Petitioners originally requested a special master proceedings under section 70.51 of the Florida Statutes.

     During the special master proceeding Petitioners modified their proposal as a result of lengthy discussions during the mediation process. The current modified proposal was attached to the special master report as an exhibit or appendix. During the proceedings, the special master excluded the public, including Manasota-88, from attending. The special master report made findings suggesting that the Department approve the petitioners' exemption request or approve the permit and that by denying this the Department would be "taking" the property. The Department rejected the recommendation made by the special master on several grounds, including that the proceedings were conducted in violation of state statutes because the public was excluded, the report was untimely, and the report incorrectly concluded that the petitioners and the Department had reached a mutually acceptable solution.

     The Department timely received the petition for an administrative hearing on March 31, 1997, after the conclusion of the special master proceeding. Manasota-88 moved to intervene as a respondent on May 14, 1997. The ALJ admitted the special master report because it was attached to the Order and because it provided the Petitioners' most recent proposal. However, the ALJ refused to consider it for any other purpose, because it was otherwise irrelevant. In addition, the ALJ found that the mosquito ditch exemption was not applicable on the property and that the petitioners had failed to provide reasonable assurances that the project would meet several criteria for the issuance of the ERP permit. He therefore recommended denial of the permit. In addition, the ALJ dismissed Manasota-88 from the case for failure to prove standing at the hearing.

     The Department issued a final order on June 1, 1998, which rejected the ALJ's dismissal of Manasota-88 for failure to prove standing and the finding that the project failed to meet one of the ERP criteria, the cumulative impacts requirement of section 373.414(8) of the Florida Statutes. The final order stated that cumulative impacts were directed only to "similar projects" and since there were no findings of fact regarding "similar projects" the Department rejected the ALJ's finding on the failure to meet the criterion for cumulative impacts. Otherwise, the final order adopted the language in the recommended order and denied the permit. The period for filing an appeal in this matter has lapsed without an appeal by any party.

     In a related proceeding, still pending, Manasota-88 filed a complaint in January 1997 against the DEP, Raymond McLarney (the special master), and Mel McGinnis, seeking declaratory and injunctive relief concerning whether the dispute resolution under section 70.51 should be declared null and void and whether portions of section 70.51 are unconstitutional. Manasota-88 and Thomas Reese v. DEP, Case No. 96-8670 (13th Judicial Circuit). The parties later agreed to wait until the outcome of the administrative hearing to decide on how to proceed. At a status conference held in April, Manasota-88 suggested that the case may be dismissed, pending a favorable final order without an appeal. Other than the withdrawal of counsel for Raymond McLarney there has been no activity since that time.

B. Everglades Update

     Since Summer 1997 the following things have occurred with respect to the Everglades and the Everglades Construction Project:

(A) Stormwater Treatment Area 6 (STA-6) was permitted and came on line at the end of 1997. While it is too early to definitively state for sure, particularly since there have now been prolonged dry conditions, STA-6 appears to be operating better than expected in removing phosphorus from the waters it receives and processes.

(B) Construction of the remaining STAs is proceeding on schedule in accordance with the Everglades Forever Act (EFA),. § 373.4592(4)(a) 1-6, Fla. Stat. (1997), with STA-1W being the next Stormwater Treatment Area scheduled to come on line.

(C) STA-6 required only a state permit under the EFA. However, the remaining STAs will require both a state EFA and a federal NPDES stormwater permit. It has proven quite a challenge to develop a hybrid or dual permit satisfying both EFA and NPDES requirements, but the process is just about complete for STA-1W after many rounds of working meetings and many, many revisions and rewrites.

(D) In 1995, the Miccosukee Tribe filed suit in the U.S. District Court for the Southern District of Florida against the U.S. Environmental Protection Agency (US EPA) asserting the EFA modified or altered existing state water quality standards. The US EPA had determined, at least preliminarily, that it had not. In 1997, following appeal of the District Court's order granting US EPA's motion to dismiss, the U.S. 11th Circuit Court of Appeals remanded the case to District Court with instructions to make a factual determination on whether, in fact, the EFA did or did not modify state water quality standards. Miccosukee Tribe of Indians of Florida v. U.S. Environmental Protection Agency, 105 F. 3d 599 (11th Cir. 1997). Following remand, the Secretary in her official capacity moved for and was granted intervention as of right on the side of the US EPA. Sugar interests also intervened. On September 11, 1998, Judge Edward Davis ruled that the EFA constitutes a change in state water quality standards and violates the state's anti-degradation policy by allowing pollution to flow into the Everglades until 2006. The court remanded the case to the EPA for appropriate action.

(E) The first of the EFA's major permitting actions was to the South Florida Water Management District (SFWMD) for what is called the Non-ECP (i.e., non-Everglades Construction Project) permit under section 373.4592(9)(k) & (l). Specifically, thereunder SFWMD was required "to apply for a permit ... to operate and maintain discharge structures within the control of the district which discharge[d] into, within, or from the Everglades Protection Area and [we]re not included in the Everglades Protection Area." § 373.4592(9)(k), Fla. Stat. (1997).

In December 1995, SFWMD submitted its permit application to DEP. DEP issued its initial "Notice of Intent to Issue Permit" in May 1996, and the Miccosukee Tribe of Indians (Tribe) thereafter filed a timely administrative challenge. In early September 1997, just prior to the commencement of a three-week admin- istrative hearing, DEP issued its "Second Revised Draft Permit" in the matter. As for the Tribe's litigation position, although it sought denial of the non-ECP permit in its petition, at hearing the Tribe sought to litigate, among other things, whether 10ppb of phosphorus should be established as the numeric equivalent to the narrative nutrient criterion of "no imbalance of flora and fauna" for the waters of the Everglades Protection Area (EPA). See id. § 373.4592(2)(h) (definition of Everglades Protection Area).

     In February 1998, ALJ Susan Kirkland entered a recommended order that DEP issue SFWMD its non-ECP permit. The recommended order found that the District's schedules, strategies, and monitoring program established and identified under paragraph (k) of section 373.4592(9) provided the Department with substantial reasonable assurance under paragraph (l) of that same section that the permit would "provide compliance with water quality standards to the maximum extent practicable and otherwise comply with the provisions of" sections 373.413 and 373.416. On April 21, 1998, DEP entered its final order adopting the ALJ's recommended order. The Miccosukees have filed an appeal from that final order to the Third DCA, and no decision in that appeal is expected until early 1999.

(F) The Miccosukees promulgated water quality standards for their reservation and "use" lands in the Everglades and filed them for approval with the US EPA in January of this year. There are some difficulties with certain aspects of the Miccosukee's water quality standards, and the US EPA has not yet acted to approve or disapprove those standards. The Department expects to hear something from the US EPA in this regard within the next several months.

Op. Att'y Gen. Fla. 98-30 (1998).

     In the spring of 1998 an issue arose as to whether an application for a wetland resource permit issued in the panhandle of Florida could be complete if the permit fee had not been submitted. There was a concern that some permits may have defaulted because the 90 day time clock had not been started because the fee had not been submitted. In order to get an independent review of the issue, the Department asked the Attorney General for an opinion. The Attorney General opined that, under section 373.4145, the applicable rules in the geographical territory of the Northwest Florida Water Management District are chapters 62-312 and 62-4, and that under rules 62-312.060(2), 62-312.060(16), and 62-4.050(4) an application is not complete and may not be considered until the fee is paid. Accordingly, there can be no default if the permit fee is not paid.

Water Quality Certification

     Under the Clean Water Act, the Governor is authorized to establish state procedures for certifying, denying certification, or waiving certification that a project requiring a federal permit complies with state water quality standards. The existing procedures needed clarification concerning projects covered by siting acts, consent decrees, final agency orders, interagency agreements, and delegations to water management districts and local governments. By letter dated January 15, 1998, the Governor designated the Department of Environmental Protection as the agency responsible for establishing the details for such certifications, and further authorized the Secretary of the Department to delegate concurrent authority for such certifications to the water management districts and local pollution control programs. By letter dated February 2, 1998, the Secretary of the Department established the categories of permits, siting act certifications, consent decrees, orders, and agreements which constitute certification, established activities for which certification is waived, and delegated concurrent authority for such certifications to the water management districts. Copies of these letters are available from the Department.

Reorganization Approved

     On June 24, 1998, the Department issued an order under section 373.1962 approving the reorganization of the West Coast Regional Water Supply Authority. The reorganization is hoped to finally resolve the "water wars" in Hillsborough, Pinellas, and Pasco counties, significantly reduce the environmental effects of improper or excessive withdrawals of water from concentrated areas, and provide adequate and dependable water supplies at a uniform wholesale rate.

Revisions to the DEP/WMD Operating Agreements

     By August 1998, the governing boards of the water management districts (except NWFWMD) and the DEP are expected to have completed revisions to the operating agreements to further streamline and clarify the agreements. Changes were made to the provisions relating to which agency reviews permit applications for borrow pits, aquaculture, marinas, piers, seawalls, single family residences, and seaports.

DEP/WMD/U.S. Army Corps Operating Agreement

     The parties have agreed to the terms of an operating agreement and are in the process of circulating it for final approval and execution. The purpose of the agreement is to coordinate the permitting, compliance, and enforcement programs of the parties concerning the regulation of activities that affect wetlands and other surface waters. The agreement continues the practice of joint applications forms and provides for procedures relating to providing the Corps with copies of applications; procedures relating to water quality certification, denial, and waiver; procedures relating to determinations of coastal zone consistency concurrence; procedures for coordinating review of mitigation banking permit applications; and procedures for sharing enforcement information.

A. Selected Final Orders

     The Environmental Trust & Sarasota Environmental Investors, Inc. v. Department of Environmental Protection, Department of Environmental Protection v. The Environmental Trust, Sarasota Environmental Investors, Inc., Sirrom Resource funding, L.P., Southeast Solutions, Inc., Environmental Corp. of America, Inc., Sirrom Environmental Funding, LLC, & Reservoir Capital Corp., Case Nos. 96-4341, 97-0255, 97-0770, 97-3909 (consolidated).

     The legislature created the Inland Protection Trust Fund ("IPTF") to pay for the cost of cleaning up petroleum contaminated property when such costs were "integral to" site rehabilitation. The Department also had a rule which prohibited reimbursement of interest. The Department received reimbursement applications requesting payment for services which added no value to, and therefore were not integral to, site rehabilitation (for example, paying for reviewing a completed application after all the work was completed on behalf of a funder). Some applications also requested full payment for "factored" invoices. The Department determined paying the face amount of these invoices was the functional equivalent of interest, which is specifically prohibited by rule. The Department was challenged when it denied payment of these costs. Petitioners alleged that the denials were based upon statements that were unadopted rules, which the Department then attempted to formally adopt. An ALJ upheld the denials, yet indicated that the Department had to adopt the statements. A second ALJ invalidated the Department's attempt to adopt the statements because all reimbursable work had already been completed and the Department could not retroactively apply the statements as a rule.

     First, Judge Padavano, writing for the DCA panel, stated that "[s]tatutes establishing economic grants or entitlements are strictly construed in favor of the government and against the grantee" and that ET failed to show a legal basis for their claim. "Proof of entitlement to government benefits cannot rest on a claim that the benefits are not specifically prohibited by law" (emphasis in original).

     Second, the statements upon which the Department relied to deny those costs, challenged as unadopted rules in violation of §120.54(1), Florida Statutes (§ 120.535, at the time of the challenge), were found by the court not to be unpromulgated rules. The DCA stated that "[a]n agency statement explaining how an existing rule of general applicability will be applied in a particular set of facts is not itself a rule. If that were true, the agency would be forced to adopt a rule for every possible variation on a theme, and private entities could continuously attack the government for its failure to have a rule that precisely addresses the facts at issue."

     Third, the court reversed the administrative law judge and upheld the retroactive application of the statements proposed for adoption as a rule because they "merely clarif[y] another existing rule and [do]not establish new requirements."

     Lastly, the court held that the prospective application of the rule is proper because if an agency followed proper rulemaking procedures and the rule was valid at the time it was proposed, the fact that the program has ended does not render the rule invalid. The $51,861.33 award of attorneys' fees and costs, based on the administrative law judge's contrary ruling, was reversed. Motions for rehearing, certification to the Supreme Court, and for rehearing en banc were filed by two of the parties.

A. Exceptions to the Uniform Rules of Procedure

     On June 10, 1998, the Department adopted rules as exceptions to the Uniform Rules of Procedure. The new procedural rules appear in chapter 62-110 and took effect on July 1. In general, the new rules incorporate or slightly amend the Department's previous procedural rules (which had appeared in chapter 62-103, now to be repealed) and address issues omitted from the Uniform Rules or differ from them because of a statutory mandate. A summary of the new rules follows, section by section:

     Rule 62-110.103 allows the Department to supplement the notice provisions of Uniform Rule 28-103; specifies that testimony before the Environmental Regulation Commission must be under oath; requires that hearings before the Commission be governed by Robert's Rules of Order; and specifies the method of offering amendments at such hearings, the manner of recording Commission hearings, and the procedure for obtaining transcripts of such hearings.

     Rule 62-110.104 supplements the variance and waiver provisions of chapter 28-104 to provide procedures for various kinds of variances and waivers authorized by statutes other than chapter 120 and subject to different standards than those applicable under section 120.542 and the Uniform Rules.

      Rule 62-110.105 supplements the provisions of chapter 28-105 on declaratory statements, to address the specific requirements for a petition asking the Department for a formal delineation of the landward extent of wetlands and other surface waters.

     Rule 62-110.106 sets forth exceptions to chapter 28-106 on decisions determining substantial interests. These exceptions clarify the permissible manner of service and the time when service shall be deemed complete; provide that the time for filing a petition commences with receipt of agency action," as defined in rule 62-110.106(2); provide special deadlines for filing a petition for an administrative hearing on permit applications for hazardous waste facilities or for other kinds of permits under chapter 403, as well as for challenging a written notice of violation under section 403.121(2)(c); authorize the Department to enlarge the time for filing any document; and provide special requirements for various kinds of notices of agency action under state statutes or federal mandates or approvals.

     Rule 62-110.107 contains several exceptions to chapter 28-107, requiring requested additional information (needed to complete permit applications) to be provided within ninety days; providing for emergency orders either directing or authorizing immediate action to protect the public health, safety, or welfare; allowing general permits for minor activities to be issued within thirty days of application; authorizing the disciplining of water well contractors in accordance with section 373.414 and 373.4145 and for hazardous waste permits; requiring that the deadlines of section 120.60(1) be reset if a substantial revision is made to an application that is complete and under review; and tolling the deadlines under section 120.60 when a soils assessment is requested by an applicant for certain wetland resource permits.

B. Peteroleum Storage Systems

     Amendments to the Petroleum Storage Systems Rule (chapter 62-761 of the Florida Administrative Code) were adopted by the Environmental Regulation Commission on May 1, 1998. These amendments merge the requirements applicable to both aboveground and underground petroleum storage systems regulated under chapter 376 of the Florida Statutes into a single rule chapter. Additionally, the amendments update reference standards contained in the rules, conform the rules to legislative requirements, and make the rules pertaining to underground storage tanks consistent with federal requirements. The amendments to chapter 62-761 and the repeal of chapter 62-762 became effective on July 13, 1998.

C. Brownfields

     New rule chapter 62-785 (the Brownfields Cleanup Criteria Rule) was adopted by the Environmental Regulation Commission on April 30, 1998. This chapter establishes the cleanup criteria and program tasks applicable to site rehabilitation at a designated Brownfield site. The rule chapter is established, in accordance with the requirements of section 376.81, Florida Statutes, for the purposes of protecting public health and the environment under actual circumstances of exposure. Risk-based corrective action principles are incorporated to the maximum extent feasible to achieve protection of human health and safety and the environment in a cost effective manner. The chapter provides both default cleanup target levels for both groundwater and soil, and a process for the derivation of site-specific alternative cleanup target levels that are protective of human health and safety and the environment. The rule became effective on July 6, 1998.

D. Upcoming rulemaking for the next year:

     Drycleaning Cleanup Criteria Rules. Under chapter 98-189 of the Laws of Florida, for the rehabilitation of sites contaminated by drycleaning solvents, the Department is directed to establish cleanup criteria that are protective of human health and safety and the environment, and that incorporate risk-based corrective action principles to the maximum extent feasible to achieve protection of human health and safety and the environment in a cost-effective manner. The Department anticipates holding a workshop in August or September on this rulemaking.

     Rule Chapter 62-771, Petroleum Cleanup Priority Ranking Rule. The Department is proposing amendments to the priority ranking rule to address certain statutory exceptions to state-funded cleanup of petroleum-contaminated sites in priority order. The proposed amendments also address conditions under which the priority score of a site may be changed.