CHARLOTTE COUNTY v. SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT

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E. Issuance of New Permits Upon Achievement of Minimum Level

476. Some Petitioners claim the SWUCA Rules are vague because they do not delineate how permit applicants will be alerted when the five year averages have been met for each of the three designated areas so that permit applications for new withdrawals will be considered. Although the Rules do not specifically address how or when the District would notify potential permittees that new applications would be processed, District regulatory personnel testified during the hearing that upon final adoption of the SWUCA Rules, aquifer levels of each designated area would be evaluated for the five immediately preceding years to determine whether the minimal levels had been met. Thereafter, the District would make the determinations on an annual basis after receiving the September USGS potentiometric surface maps. The procedure thus described is reasonable and consistent with the language of the rules.

477. A superficial review of the minimum level provisions in the SWUCA Rules indicates that the issuance of new permits would be a relatively simple matter after the five-year averages in each of the designated areas have achieved the specified levels. A closer examination, however, reveals certain problems. The proposed addition to Section 4.3 of the BOR provides that new amounts of groundwater will

478. The District intends to follow its current practice of applying computer modeling to assess the impact of a proposed new withdrawal. In the SWUCA, the District would use its regional model to assess cumulative impacts. The District's witnesses explained that to project whether the minimum levels would be violated, a proposed new withdrawal would be modeled cumulatively with existing permitted quantities rather than actual use quantities. Thus, even when the minimum levels have been achieved according to the five-year averages, new permits will not automatically be granted. Current permitted quantities in the SWUCA total approximately 1.35 to 1.5 billion gallons per day. The permitted quantities are not expected to be reduced to less than 1 billion gallons per day, even if the rules' proposed efficiency and conservation measures are implemented fully over the next 10 years. Accordingly, it does not appear there is any feasible or practicable way that additional groundwater withdrawals in the SWUCA will be permitted in the foreseeable future.⁸⁰

479. Furthermore, if no new permits are granted for several years, it is reasonable to expect there will be pent-up demand resulting in multiple applications being filed as soon as the District announces that new withdrawal applications will be considered. The proposed rules do not describe a process for reviewing, prioritizing, and/or permitting multiple applications for new quantities of UFAS groundwater within the SWUCA. In this regard, the rules are vague and vest unbridled discretion in the District.

F. Implementation of Minimum Level Provisions

480. Recent projections indicate that competition for groundwater in the SWUCA will rise significantly over the next fifty years. The SWUCA Management Plan projects that, if left unchecked, total groundwater use in the SWUCA would increase to approximately 1.3 billion gallons per day by the year 2020.⁸¹ As noted above, the highest water use on record in the SWUCA to date was during 1989 when estimated groundwater pumpage was 832 MGD. The consequences of 1989 pumping highlighted the need for regulation to limit withdrawals to protect the resource.

481. While strong arguments can be made that the public interest requires the District to balance conflicting demands in a manner that affords greater protection to the resource than provided by the selected minimum level, the District has chosen a strategy that seeks to minimize economic impacts. As discussed above, the minimum level would reduce, but not halt, saltwater intrusion and would help stabilize lake levels. The District has been granted broad authority to balance various interests and make the difficult choices. However, the District's mechanism for achieving its selected goals must conform to the statutory framework. In certain key respects, the District's proposals conflict with that framework.

482. Significantly, the District's proposed implementation of the SWUCA Rules would not require existing permitted uses (or their renewals) and certain other classes of permits to meet or comply with the minimum aquifer level.

483. Proposed Rule 40D-8.628(1) provides in part that "[p]ermitted withdrawals from the upper Floridan aquifer will not be considered to be in violation of [the minimum] level." In other words, any permit in existence at the time the SWUCA Rules are formally adopted will not have to meet the minimum aquifer level set forth in the rules. Furthermore, even when a permit is up for renewal, the minimum level would not be applied. Originally published in the rule amendments of February 10, 1995, the language (regarding permitted withdrawals) in proposed rule 40D-8.628(1) resulted from a settlement agreement with several parties that had initially challenged the proposed SWUCA Rules.

484. According to the District, the statutory directive to establish minimum flows and levels did not anticipate a regulatory scenario where existing use exceeded an aquifer's safe yield.⁸² Thus, the District asserts that the statute provides no guidance for implementing a minimum level in a situation where existing permitted quantities exceed what is determined to be the appropriate minimum level of the resource.

485. The District contends that it must be accorded the discretion to determine an appropriate minimum implementation strategy based upon the condition of the resource, the hydrogeology of the affected area, the amount of withdrawals from the resource, and the nature of the uses involved. For example, in the SWUCA, the District claims that only recently has it developed a sufficient understanding of the resource to attempt to establish an appropriate minimum level. In the meantime, however, an economy developed that is dependent upon the ready availability of groundwater.

486. Even though the District is now aware that permitted quantities in the SWUCA greatly exceed safe yield, the District has chosen not to impose any reductions on existing permitted quantities. Moreover, the District has also decided that it will not apply the minimum level in determining whether to renew the existing quantities when current permits expire.

487. The District notes that saltwater intrusion and lake level declines developed in the SWUCA over a long period of time and that drastic steps to effectuate an immediate cure could have catastrophic economic consequences. The District believes the long-term health of the resources can be protected without a major disruption of the local economy.

488. While the scope of the District's delegated authority is broad, the existing statutory structure does not allow it to make a blanket determination that the renewal of an existing permit is automatically entitled to priority consideration over other applications for new uses. That policy choice impermissibly modifies and/or contravenes the existing statutory scheme.

489. Obtaining a permit does not grant a water user a perpetual right of access to a limited public resource. While the District contends that the proposed SWUCA Rules' treatment of existing permitted uses is acceptable because the District retains the ability to determine whether the use is reasonable and beneficial, the proposed rules restrict the opportunity to shift water allocations to those that are more in the public interest. Moreover, the favored treatment of renewals combined with the rules' reallocation provisions (discussed in Section V below) enable private uses to sell for profit the right to use a public resource even though the original right to use the resource was obtained without cost and other potential users are being denied the right to access the resource.

490. Implementation of the SWUCA Rules' proposed minimum level provisions would effectively allow the allocation of limited groundwater resources without specific deliberation on the uses of the resource that are most in the public interest as required in Chapter 373.

1. Allocating Water in Accordance with the Public Interest

491. According to the District, the proposed SWUCA regulatory program reflects its conclusions that the existing mix of permitted uses in the SWUCA best meets the public interest, and that the public interest further directs that existing uses should not be restricted upon renewal any further than required by the increased efficiency standards. According to the District, a restructuring of the current mix of uses would occur through the private market via application of the proposed reallocation provisions discussed below. The District also claims that potential new users in the SWUCA could obtain access to the UFAS through the reallocation provisions or could obtain water from sources other than the UFAS.

492. Noting that the SWUCA minimum level provisions would apply to new quantities sought by existing permittees, the District asserts that the goal of the SWUCA Rules is to avoid the issuance of permits for new quantities, not necessarily to preclude new uses. Again, the District believes that the rules' adverse economic impacts could be minimized by allowing the existing uses to continue while limiting additional withdrawals. Concerned about establishing a minimum level that was already exceeded at the time of adoption, the District was also aware that it would be confronted with numerous applications for permit renewals. The District says that its proposals avoid a situation where the renewal of a permit depends on the random timing of when the permit is up for renewal vis-a-vis other permits. However, alternate solutions could be developed by adjusting permit durations and combining applicants by user groups and/or areas to address such issues without exceeding current statutory authority.

493. Chapter 373 does not provide direction on the extent to which economic factors are to be considered in the permitting process. In many instances, existing users have made significant investments premised on the availability of water from the UFAS. For example, agricultural permittees often have substantially invested in land, machinery, irrigation systems, and crops specifically designed to accommodate and rely upon utilization of groundwater from the UFAS. Similarly, public water supply utilities have made significant capital investments in wellfields and water distribution systems. The District says substantial investments often cannot be recovered during the term of a six-to-ten-year permit. Many short-term permits have been issued by the District with the expectation that they would be renewed provided the user has complied with District rules and permit conditions.⁸³

494. The District is also concerned because some existing users will be required to make additional capital investments to meet the increased efficiency standards contained in the proposed rules. The District is hesitant to impose such a burden on permittees unless they are afforded an opportunity to recapture their investments.

495. While the District claims that the economic impact of the proposed rules on potential new uses will not be as great as impacts on existing users if their permits are not renewed, there is no reasonable basis to make that assumption in all cases. Moreover, Chapter 373 does not provide that economic impact is the sole factor to consider when deciding the right to access and use a public resource.

496. In its permitting process, the District has not attempted to apply the public interest portion of the three-prong test by classifying or prioritizing one type of water use higher than another, nor does it appear that any other water management district has addressed this difficult issue.

497. The District claims that any use of water that meets the appropriate level of efficiency is deemed to be equally "in the public interest" as any other use. In effect, however, the proposed SWUCA rules conclusively establish that it is in the public interest to continue the allocation of quantities associated with existing uses -- including renewals -- over any proposed new use, subject only to increased efficiency standards and the rules' reallocation process. As a result, the District has effectively limited its statutory responsibility to allocate water to higher uses.

498. After considering all of the evidence, it is concluded that for the foreseeable future, the proposed SWUCA rules would effectively preclude most new uses within the area, except those obtained through the purchase of water rights under the proposed rules' reallocation program. While the District claims that potential alternative water sources within and/or without the SWUCA are available for new users, the quantity limitations and costs associated with their development and use will, in many cases, render alternatives sources largely unavailable.

2. Applications For Competing Uses

499. The District is understandably concerned about how to apply the public interest test to distinguish among different types of uses. Although the current statutory framework includes a mechanism for allocating limited water resources among several applicants, i.e., the competing applications provision of Section 373.233, F.S., the District has never applied the mechanism. In fact, it appears that none of the water management districts in the state have ever implemented this provision in their water use permitting programs.

500. There are numerous practical difficulties in administering Section 373.233, F.S., and neither the statute nor the District's rules delineate a structure or provide any guidance for its application. (The competing applications provision contained in the District's existing rules is merely a reiteration of the statutory language). For the competing applications process to work, the quantity of water available for allocation would first have to be determined. Then geographic and timing parameters would have to be established to delineate the uses that would be considered "competing" for an identified quantity. Finally, standards would have to be developed for determining the "equivalent" nature of two or more applications before the statutory preference for renewal applicants could be applied. All of the issues must be resolved within the context of Section 120.60, F.S., which limits the time within which the District must act on permit applications.

501. A competing applications process necessarily involves many case-specific issues that are difficult to address and/or define by rule. Without question, it would be extremely difficult to adopt a rule that would cover every conceivable mix of water uses and sources. The District can certainly utilize the process while it is developing the information and experience to make it work more effectively and in more situations. See, Section 120.535(a) and (b), F.S. However, some type of structure and general parameters for implementing a competing applications process could, however, be developed by rule. Indeed, some guidance regarding the application of a competing applications process is essential at the outset. Without a preliminary framework setting forth the scope and procedures, the applications process cannot be considered a viable tool for determining water uses that are most "in the public interest."

502. Arguments can be made that a competing applications process is time consuming, expensive and cumbersome. The difficulties in determining how a competing applications process should work are increased by the lack of any prioritization or hierarchy of uses in statute, the State Water Policy and the District's rules. Nonetheless, the process is the only specific mechanism provided in Chapter 373 to resolve allocation disputes, and it manifests a specific legislative directive that the renewal of an existing permit is only entitled to priority over a proposed new use if the competing applications are otherwise equally qualified. See, Section 373.233(2), F.S.

503. Existing users have expressed great concern regarding the competing application process, and the District also questions the uncertainty, expense and controversy that could arise upon implementation of such a process. Some testimony suggested that one purpose of the SWUCA Rules was to minimize the likelihood that the competing applications process would ever be invoked. While the District can pursue a regulatory approach that seeks to equitably allocate a limited public resource between multiple potential users without the use of the competing applications process, any such strategy must be consistent with the statutory framework of Chapter 373, which is premised upon the issuance of specific duration permits. The SWUCA Rules deviate from the statutory scheme by granting favored treatment to certain classes of permits, including the renewal of existing uses.

3. Comprehensive SWUCA Strategy

504. The District argues that the treatment of renewal and similar classes of permits should not be viewed in isolation and must be considered within the context of the entire SWUCA strategy. The District reiterates that the intent of the SWUCA Rules is to allow existing uses to decrease permitted quantities over time and to impose limitations on new withdrawals from the groundwater basin.

505. To support its position, the District points out that several provisions in the proposed rules would impact existing permit holders by imposing various conservation measures, such as lower per-capita usage requirements for public supply users and new conservation and efficiency standards for agriculture and recreational users, which would be phased in over a ten-year period. The renewal process would include a mandatory permit-by-permit review of individual conservation plans, and the District would apply the increased efficiency standards to reduce renewed permitted quantities for every user group.⁸⁴

506. The District denies that the SWUCA Rules would give existing permittees a perpetual permit for their uses and quantities. Instead, the District asserts that renewal applicants would still have to meet the BOR provisions, but that a renewal application would not be denied simply because the minimum level had not been met. The District claims that even if the SWUCA Rules are adopted, it could, if necessary, reduce the permitted quantity for any permit in the SWUCA that comes up for renewal. The District also says the SWUCA Rules would not prevent it from applying the minimum level requirements in conjunction with other applicable considerations in its permit review criteria. It is not clear, however, what alternate methods of applying the minimum level, if any, could be reconciled with the proposed rule language.

507. Some District witnesses claimed that the availability of the statutory competing applications process alleviates any concern that renewal applicants will be allowed to continue using a public resource while potential new users are denied access to the same source. The SWUCA Rules do not reference the competing applications process, but the District contends that a new use applicant can always compete with a renewal applicant for any renewal quantity. In view of the problems noted above, however, the District's contention that new use applicants are not necessarily precluded from obtaining a permit, because the "competing applications process is always available to potential new applicants for water withdrawals in the SWUCA," is not persuasive. Absent some clarification and explanation regarding how the competing applications process would work, it cannot reasonably be considered an alternative method by which proposed new users could access the UFAS in the SWUCA. Until the District establishes a specific procedure for implementing the competing applications process, a potential new user would never know when or if its proposed withdrawal would be considered in competition with the renewal of an existing permit.

508. The District also claims that a potential new water user in the SWUCA could obtain a "reallocation permit" after negotiating a sale of user with an existing user and/or could obtain water from alternative sources such as the intermediate aquifer. As discussed below, there are serious problems with the District's reallocation proposal, and the intermediate aquifer is -- at best -- a sporadic and limited option in the SWUCA. The rules' reallocation provisions are of marginal value to potential new users and, in fact, give existing permit holders a favored status that is not recognized in Chapter 373.

509. In sum, the District has concluded that the problems in the SWUCA developed over a long period and do not need an "immediate fix." The District claims that the SWUCA Rules, taken together, represent a reasoned approach and a reasonable amount of time to rehabilitate the area's water resources. The more persuasive evidence supports the District's conclusions that the problems facing the SWUCA are regional in scope and need to be addressed through a long-term regional strategy. In fact, a piecemeal approach that simply addresses permit applications as they are presented for approval or renewal is unlikely to be effective and is, arguably, one of the reasons for the area's current problems. Yet, the District's long-term rehabilitative design must comply and be consistent with the regulatory framework of Chapter 373.

4. Ambiguities in Proposed Rules

510. The District's strategy to treat renewals and certain other classes of permits differently for purposes of complying with the SWUCA minimum aquifer level has necessitated some strained and confusing attempts to craft effective rule language. One of the Conditions for Issuance in the existing rules, Rule 40D-2.301(1)(d), F.A.C., provides that a water use should not cause water levels or rates of flow to deviate from the ranges established in Chapter 40D-8. The SWUCA Rules attempt to fashion an exception to this condition for existing or renewal permits.

511. Prior to the amendments published on November 3, 1995, proposed Rule 40D-2.301(2) utilized "presumptions" to explain how the District would apply the Conditions For Issuance in Rule 40D-2.301(1), to renewal or reallocation permits in the SWUCA. This provision caused considerable confusion in part because the "presumptions" in the proposal were intended to be applied in a different manner than other "presumptions" in the District's rules. The November 3 Modifications sought to clarify the confusion by providing that the District had "determined" that renewed or reallocated withdrawals would meet the Conditions For of Issuance if they satisfied the BOR criteria. The District argues that without the "determination," it would have to deny the renewal of any existing use in the SWUCA solely because it was located in a basin where water use contributes to nonattainment of an established minimum aquifer level.

512. Under proposed Rule 40D-2.301(2), as revised, renewal permits for existing quantities in the SWUCA, permit modifications, Reallocation Permits, and Groundwater Withdrawal Credit Permits would have to meet all BOR criteria with the exception of the minimum level requirements. The District states that it would continue to follow its existing permit evaluation procedures, including its "limited cumulative analysis," but would not apply the regional cumulative analysis to these four permit categories.

513. Proposed Rule 40D-2.381(3)(q) would authorize the District to modify a permit in the SWUCA if the District determines that "significant water quantity or quality changes, impacts to existing legal uses, or adverse environmental impacts are occurring . . . ." However, the special treatment accorded renewal and reallocation permits could inadvertently limit the District's ability to apply the application because proposed Rule 40D-2.301(2) provides that those types of permits are "determined" to meet the Conditions for Issuance, provided they satisfy the BOR criteria. Because no BOR criterion specifically addresses the Condition for Issuance relating to changes in water quality or quantity (i.e., Rule 40D-2.301(1)(b)), the District has arguably handcuffed its ability to modify a permit adversely affecting water quantity or quality.

514. Similar problems arise with respect to the District's proposal to repeal existing standard permit conditions regarding compliance with minimum groundwater levels, Rule 40D-2.381(3)(i) and BOR Section 6.1.9. Existing permits in the SWUCA contain a standard permit condition that states: "the permittee shall cease or reduce withdrawal as directed by the District if water levels in aquifers fall below the minimum levels established by the Governing Board." The repeal of the standard conditions would not be limited to the SWUCA and would apply to all permits in the District. The District claims that the repeal is necessary so that renewal and reallocation permits in the SWUCA would not automatically violate standard permit conditions when the minimum level is exceeded. By repealing the existing standard permit condition throughout its entire jurisdiction, the District will be limiting its ability to enforce minimum levels district-wide. The District argues that the repeal is not particularly significant at this time because there are no other minimum levels adopted by rule. As discussed in the Conclusions of Law, the District's decision to repeal these provisions is not necessarily contrary to Chapter 373. However, it does remove a potentially important tool for implementing and enforcing minimum flows and levels and is indicative, of the problems injected into the District's rules by the special treatment accorded to renewal and reallocation permits.

515. The SWUCA Rules include the following proposed amendment to BOR Section 4.3: "Permitted withdrawals from the Floridan Aquifer will not be considered to be in violation of [the minimum level] because of seasonal or localized lowering of the Floridan aquifer potentiometric surface." The reference to "localized lowering" was intended to address concerns that under the original methodology for calculating the minimum level (published December 2, 1994), the renewal of an existing quantity might be subject to denial because a seasonal or local fluctuation lowered the potentiometric surface below the adopted level. With the amended methodology for calculating the minimum level published on April 14, 1995, this provision became obsolete, but it has not been withdrawn. Its continued presence in the rules is a source of ambiguity and possible confusion.

5. Effect of Minimum Level on Actual Water Use

516. There is evidence suggesting that some permits in the SWUCA include "water-banked" quantities. Water banking occurs when a water use permit is issued for quantities beyond the amount needed. For example, some permits have been issued for the irrigation of unimproved pastureland, with the idea that the permitted quantities would be available for agricultural needs in time of drought. The amount of water banked and/or never used by permittees in the SWUCA is not clear. To the extent that water banking has resulted in the issuance of permits for quantities that do not represent a reasonable-beneficial use, it is inconsistent with Chapter 373. Nonetheless, it does not appear the SWUCA Rules would totally eliminate water-banked quantities. Even upon renewal, such quantities, may not be completely eliminated. At the same time, potential new users would be denied access to the resource. This result conflicts with the requirements of Chapter 373.

517. Prior to 1989, the District applied efficiency standards when determining the quantity that would be permitted, but the standards were not expressly set forth in a rule. When the ETB, NTB and HR WUCA Rules went into effect in 1990, existing permits in the designated areas were modified to require higher efficiency standards. The only portion of the SWUCA not affected by the increased efficiency standards in the rules is the "non-WUCA SWUCA" area of DeSoto and Hardee Counties. The proposed SWUCA Rules would impose new efficiency standards upon the two remaining counties.

518. Separate efficiency standards have been proposed in the SWUCA rules to address the specific features, conditions and variation of the different types of use. For example, agricultural efficiency standards are based upon the percentage of the total quantity of water used that actually benefits the crop, after accounting for losses due to evaporation, irrigation system runoff, deep well infiltration, etc.⁸⁵

519. The District estimates that the increased efficiency requirements of the SWUCA rules would result in significant reductions in permitted quantities over a ten-year period.

520. Based on 1993 permitted quantities of 1.333 billion gallons per day, the District estimates that the proposed efficiency requirements would reduce total permitted quantities in the SWUCA to 1.054 billion gallons per day over ten years -- a decrease of nearly twenty-one percent. In 1995, however, permitted quantities in the SWUCA increased to approximately 1.5 billion gallons. It is unlikely that the new efficiencies would reduce total permitted groundwater quantities below 1.1 billion gallons per day. The new efficiencies together with other strategies embodied in the SWUCA Rules -- including the reallocation provisions in combination with restrictions on the permitting of new uses -- may actually create incentives for existing permittees to use more of their permitted amounts. In effect, the ratio between actual and permitted use could go up.

521. Based upon historic patterns the District still expects that actual use quantities will be significantly less than estimated permitted quantities after the efficiencies are in place. The evidence was insufficient to demonstrate that the District's conclusion was arbitrary or unreasonable.

6. Impact of Rules on Small Businesses

522. The District contends that the treatment of renewal permits in the proposed SWUCA Rules reflects a concern to minimize the impacts on small business in accordance with these provisions of Chapter 120 while also implementing and furthering the policies of Chapter 373.

523. As part of the rule development process, the District prepared an Economic Impact Statement ("EIS") to assess the costs and benefits of implementing the SWUCA Rules on persons who would be affected by them. See also, Section 120.54(2)(b), F.S.⁸⁶ During preparation of the EIS, the District analyzed the impact that the proposed rules would have on small businesses. See also, Section 120.54(2)(a), (c)4, F.S. Of the 5,800 permits issued in the SWUCA, the District points out, 88 percent were issued to agricultural entities whose permits account for 60 percent of the total permitted quantities. The District further estimates that at least 75 percent of the agricultural permittees qualify as small businesses under Chapter 120. The District contends that the SWUCA Rules' treatment of renewal permits would minimize the rules' impact on small businesses in accordance with the provisions of Section 120.54(2)(a), F.S., while implementing and furthering the policies of Chapter 373.

524. Under Chapter 373, the "right" to the use of water exists only for the duration of a permit. Accordingly, that period is an important focus for the District's analysis under Chapter 120. While a matter of legitimate concern, impacts that may occur to small businesses after expiration of a permit cannot serve as a basis for expanding statutory water rights under Chapter 373.

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