STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KEER-McGEE CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 82-353RP

) STATE OF FLORIDA, DEPARTMENT ) OF ENVIRONMENTAL REGULATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on April 19, 1982, in Tallahassee, Florida. The issue for determination at the hearing was whether respondent's proposed Rule 17-3.041(1)(i) and (4)(k), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority.

APPEARANCES

For Petitioner: Peter J. Nickels

Covington and Hurling

1201 Pennsylvania Avenue, Northwest Post Office Box 7566

Washington, D.C. 20044

Barbara Hoffman Ann Scott

Post Office Box 25861

Oklahoma City, Oklahoma 73125

For Respondent: Bram D. E. Canter

Gordon D. Cherr

2600 Blair Stone Road Tallahassee, Florida 32301

INTRODUCTION

By a "Petition for Administrative Determination of Proposed Rule" filed pursuant to Section 120.54(4), Florida Statutes, Kerr-McGee Corporation challenges the validity of the Department of Environmental Regulation's proposed Rule 17-3.041(1)(i) and (4)(k), Florida Administrative Code. This proposed Rule designates certain waters within the boundaries of the National Forests as "Outstanding Florida Waters" entitled to the highest protection by the Department of Environmental Regulation, and specifically lists eight water bodies within the Apalachicola National Forest, six water bodies within the Ocala National Forest, and five water bodies within the Osceola National Forest.

In support of its contentions that the proposed Rule constitutes an invalid exercise of delegated legislative authority, petitioner presented the testimony of Lloyd Bailey, a vice president in Kerr-McGee Chemical Corporation, a subsidiary of petitioner, and general manager of the agricultural products division. Petitioner's Exhibits 1 through 12 and 14 were received into evidence at the hearing. Respondent presented the testimony of William Hinkley, an Environmental Administrator with respondent's Office of Special Projects.

Respondent's Exhibits 1 through 4 were received into evidence, as were Joint Exhibits 1 through 3.

Subsequent to the hearing, the parties submitted memoranda in support of their respective legal arguments and supplements thereto. To the extent that any proposed findings of fact contained in the post-hearing memoranda submitted by the parties are not contained in this Order, they are rejected as being either not supported by competent substantial evidence adduced at the hearing or as being irrelevant and immaterial to the issues presented for decision.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing and the prehearing stipulation filed by the parties, the following relevant facts are found:

1. Kerr-McGee Chemical Corporation, a subsidiary of the petitioner, conducts phosphate mining operations. It is involved in a joint venture with Brewster Phosphate, which operates two phosphate mines south of Lakeland, Florida. In phosphate mining operations, it is possible during times of seasonal high rains or hurricanes for the water in the system to exceed the available containment areas. In such instances, water must be released outside the system and a discharge permit from the Department of Environmental Regulation is necessary.

   
   

2. In approximately 1964, petitioner received five prospecting permits to explore for mineral deposits in the Osceola National Forest. Pursuant to 30

   U.S.C. Section 211(b), the Mineral Leasing Act, petitioner filed applications for preference right leases based on commercial discoveries of phosphate on portions of the same land. Section 211(b) provides in pertinent part:

   
   

   [I]f prior to the expiration of the permit the permittee shows to the Secretary that valuable deposits of phosphate have been discovered within the area covered by his permit, the permitee shall be entitled to a lease.

   
   

   The applications for preference right leases cover areas within the drainage basins of Deep Creek, Robinson Creek and Falling Creek within the Osceola National Forest. On March 28, 1969 and December 11, 1970, the United States Geological Survey, as designee of the Secretary of the Interior, certified that petitioner had made valid discoveries of valuable mineral deposits on these lands.

   
   

3. In a proceeding filed with the United States District Court for the District of Columbia, petitioner sought an order compelling the Secretary of the Interior to issue it a preference right lease pursuant to 30 U.S.C. Section 211(b) for the purpose of mining phosphate in the Osceola National Forest. The Court took under consideration an affidavit of Russell G. Wayland, then Chief of

   the Conservation Division of the United States Geological Survey. This affidavit noted that valuable deposit determinations had been made on March 28, 1969 and December 11, 1970, but further stated that it had been determined that the criteria upon which such determinations were based are insufficient to meet the requirements of 30 U.S.C. Section 211 (1970), and the new regulations which had been promulgated in May of 1976. In an opinion filed on September 29, 1976, the United States District Court, Judge Barrington D. Parker, held that petitioner had "an acquired and vested interest" and a "statutory entitlement" to the preference right leases, and that the recently implemented regulations of May, 1976 could not void that interest. Accordingly, the Court mandated the Secretary of the Interior to immediately issue the preference right leases to Kerr-McGee Chemical Corporation. Kerr-McGee Chemical Corp. v. Thomas S. Kleppe, et al., Civil Action No. 76-0608 (D.D.C. 1976).

   
   

4. The opinion of Judge Parker was appealed to the United States Court of Appeals for the District of Columbia Circuit. That Court, in a judgment entered on March 28, 1978, reversed the United States District Court's order of September 29, 1976, holding that

   
   

   The ongoing administrative proceedings before the Secretary of the Interior were aborted by the issuance of the writ of mandamus by the District Court. Appellees should have exhausted its administrative remedies before seeking the writ or petitioning for judicial review.

   
   

5. As of the time of the administrative hearing in the instant rule challenge proceeding, the Department or Secretary of the Interior still had not yet completed its review of Kerr-McGee's preference lease applications under the new regulations. Petitioner currently has no lease to conduct phosphate mining operations in the Osceola National Forest.

   
   

6. The proposed Rule being challenged in this proceeding reclassifies certain bodies of water within three National Forests from Class III waters to Outstanding Florida Waters. The parties have stipulated that petitioner's applications for preference right leases cover only those areas within the drainage basins of Deep Creek, Robinson Creek and Falling Creek located within the Osceola National Forest. Thus, petitioner has no standing to challenge the Outstanding Florida Water (OFW) classifications of those waters within the Apalachicola or Ocala National Forests or the Ocean Pond and Middle Prong of St. Mary's River within the Osceola National Forest.

   
   

7. As to the three remaining water bodies--Deep Creek, Robinson Creek and Falling Creek located within the Osceola National Forest--it is concluded that petitioner is substantially affected by the proposed rule only if it can demonstrate that it is presently entitled to mine for phosphate in those areas, and is thus subject to compliance with the criteria and standards relating to OFW classifications. The record in this case does not adequately demonstrate that petitioner is presently entitled to conduct phosphate mining operations within the drainage basins of Deep Creek, Robinson Creek or Falling Creek in the Osceola National Forest. It has simply applied to the federal government for a permit to conduct such activities.

   
   

8. The evidence illustrates that valuable deposit determinations were made in 1969 and 1970, but that, in 1976, the criteria upon which such determinations were based were determined to be insufficient and that a new determination was

   necessary prior to the issuance of a preference right lease under 30 U.S.C. Section 211. While the United States District Court did not agree, ruling that petitioner had an entitlement to the phosphate mining leases and mandating their issuance, that decision was reversed by the Circuit Court of Appeals for the District of Columbia. Thus, the District Court's pronouncements of entitlement are of no legal force or effect. As of the hearing date, the Interior Department had not yet completed its review of petitioner's preference lease applications.

   
   

9. The facts of this case distinguish it from the holding in the case of Natural Resources Defense Council v. Berklund, 609 F. 2d 553 (D.C. Cir., 1979). In Berklund, the Court held that the Department of Interior had no discretion to reject a coal lease application by a prospecting permittee who had satisfied the commercial quantities requirement of federal law--a requirement similar to the valuable deposit determination of 30 U.S.C. Section 211(b). In the instant case, there has been no such satisfaction of requirements. Instead, there has been a specific finding that the prior determinations of valuable deposits were based upon insufficient criteria and that a new determination under the new regulations was necessary. As such, petitioner has not demonstrated that it is presently entitled to mine for phosphate in the Osceola National Forest since no valuable deposit determination has been made. Without this determination and present entitlement to the leases, petitioner's interest in the classification of the water bodies within the Osceola National Forest is speculative, at best.

   
   

10. A mere interest in a proposed rule cannot confer standing to challenge its validity. An immediate, nonspeculative and substantial effect is required to allow a person to challenge a proposed agency rule. It must be remembered that the challenged Rule does not prohibit phosphate mining in the Osceola National Forest. It simply reclassifies certain waters, thus affecting the degree of assurances required issuance of a discharge permit. Having no current property interest or present entitlement to mining leases in the Osceola National Forest, petitioner has no immediate or present interest of a substantial nature in the contents of any rules setting standards for the waters in said Forest. Petitioner has simply failed to demonstrate that if the rule were adopted, it would sustain any injury in fact. The rule may be challenged by petitioner after it takes effect if petitioner can illustrate that it is substantially affected by its contents. Petitioner failed to make such a showing in the instant proceeding, and has not demonstrated its standing to challenge proposed Rule 17-3.041(1)(i) or (4)(k), Florida Administrative Code.

FINAL ORDER

Based upon the findings of fact and conclusions of law recited above, it is ORDERED that petitioner's challenge to the validity of proposed Rule 17- 3.041(1)(i) and (4)(k), Florida Administrative Code, be DISMISSED for failure to adequately demonstrate that petitioner is substantially affected by such proposed Rule.

ORDERED and ENTERED this 27th day of July, 1982, in Tallahassee, Florida.

DIANE D. TREMOR

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 1982.

COPIES FURNISHED:

Peter J. Nickels, Esquire Covington & Hurling

Post Office Box 7566 Washington, D.C. 20044

Liz Cloud, Bureau Chief Administrative Code Section Department of State

1802 The Capitol

Tallahassee, Florida 32301

Barbara Hoffman, Esquire and Ann Scott, Esquire

Post Office Box 25861

Oklahoma City, Oklahoma 73125

Carroll Webb Executive Director

Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32301

Bram D. E. Canter, Esquire and Gordon D. Cherr, Esquire

2600 Blair Stone Road Tallahassee, Florida 32301

Victoria Tschinkel Secretary

Department of Environmental Regulation 2600 Blair Stone Road

Tallahassee, Florida 32301

Docket for Case No: 82-000353RP

Orders for Case No: 82-000353RP