STATE OF FLORIDA

DEPARTMENT OF ENVIRONMENTAL PROTECTION

FLORIDA WILDLIFE FEDERATION, INC.; SIERRA CLUB, FLORIDA CHAPTER; and FLORIDA AUDUBON SOCIETY, INC.,

Petitioners,

and

ROBERT A. BUTTERWORTH, ATTORNEY GENERAL,

Intervenor,

vs. OGC CASE NOS. 96-2521,

96-2862

DEPARTMENT OF ENVIRONMENTAL DOAH CASE NOS. 96-4222, PROTECTION and COASTAL 96-5038

PETROLEUM COMPANY,

Respondents.

/ ST. GEORGE ISLAND CIVIC CLUB,

Petitioner,

and

ROBERT A. BUTTERWORTH, ATTORNEY GENERAL,

Intervenor,

vs.

DEPARTMENT OF ENVIRONMENTAL PROTECTION,

Respondent.

/

FINAL ORDER

On April 8, 1998, an Administrative Law Judge with the Division of Administrative Hearings (hereafter "DOAH") submitted her Recommended Order to the Department of Environmental f' Protection (hereafter "Department"). The Recommended Order indicates that a copy thereof was furnished to counsel for the

parties. A copy of the Recommended Order is attached hereto as Exhibit A.

On April 23, 1998, Petitioners Florida Wildlife Federation, Inc.; Sierra Club, Florida Chapter; Florida Audubon Society, Inc. (hereafter "Environmental Petitioners"); and Petitioner St.

George Island Civic Club, jointly with Intervenor Robert A. Butterworth, Attorney General, (hereafter collectively "Petitioners") timely filed with the Department Joint Exceptions to the Recommended Order. Also on April 23, 1998, Respondent Coastal Petroleum Company (hereafter "Coastal") filed Exceptions to the Recommended Order. On May 4, 1998, Coastal filed its Response to the Joint Exceptions. Also on May 4, 1998, Petitioners filed a Joint Response to Coastal's Exceptions, and the Department filed a Response to Coastal's Exceptions. The matter is now before me for final agency action.

BACKGROUND

Coastal filed Application no. 1281 on March 16, 1992, to drill an exploratory oil and gas well on sovereign submerged lands leased by it nine miles south of St. George Island, Florida. On August 16, 1996, the Department notified Coastal of its intent to issue Permit no. 1281 and required Coastal to publish notice of this intent. On August 30, 1996, the Environmental Petitioners timely filed a verified petition for formal administrative hearing pursuant to section 403.412(5), Florida Statutes (1997). Petitions in opposition to the permit were also timely filed by the St. George Island Civic Club and by the St. George Island Plantation Owners' Association, Inc., but the Association's petition was later voluntarily withdrawn. The petitions were referred to DOAH, Administrative Law Judge Mary Clark, and consolidated (Case Nos. 96-4222 and 96-5038).

Coastal petitioned the First District Court of Appeal (Case No. 96-3226), asserting that it was entitled to a permit from the Department without further administrative proceedings and without a requirement that it publish notice of the Department's intent to issue the proposed permit. Over the Petitioners' objection, on October 3, 1996, the Administrative Law Judge (hereafter "ALJ") granted Coastal's request for stay of the administrative proceedings pending disposition of the appellate issues. On February 10, 1997, the District Court of Appeal denied Coastal's Petition for writ of certiorari. Coastal published notice of the Department's Intent to Issue on March 20, 1997.

No additional parties filed petitions in response to the published notice. A Petition to Intervene by Attorney General Robert A. Butterworth was granted on July 30, 1997, without objection.

Pursuant to section 377.2425, Florida Statutes (1997), the Governor and Cabinet, acting as the Administration Commission, imposed surety requirements recommended by the Department as a

condition of the permit. Coastal filed petitions with the Department and the Administration Commission protesting the surety requirements. These petitions were also referred to DOAH (Case Nos. 97-4362 and 97-4591) and consolidated with cases 96- 4222 and 96-5038.

The DOAH final hearing of these consolidated cases took place in Tallahassee from October 20, 1997, through November 6, 1997, except for a one day public hearing in Apalachicola. A total of 37 witnesses were heard, in addition to public testimony in Apalachicola, and numerous exhibits were received.

The hearing transcript was filed on January 29 and 30, 1998, and the parties' proposed recommended orders were filed on March

2 and 3, 1998. The ALJ's Recommended Order was addressed to both the Department (as to the permit application) and the Administration Commission (as to the amount of surety). Each agency is issuing a separate final order.

STANDARD OF REVIEW

A reviewing agency is authorized to reject or modify an administrative law judge's Conclusions of Law without limitation.

§ 120.57(1)(j), Fla. Stat. (1997); MacPherson v. School Bd. of Monroe County, 505 So. 2d 682, 683 (Fla. 3d DCA 1987); Siess v. Department of Health & Rehab. Servs., 468 So. 2d 478, 478 (Fla.

2d DCA 1985); Alles v. Department of Prof. Reg., 423 So. 2d 624, 626 (Fla. 5th DCA 1982).

The Findings of Fact of an administrative law judge (formerly "hearing officer"), however, may not be rejected or modified by a reviewing agency, "unless the agency first determines from a review of the entire record, and states with particularity in the order, that the findings of fact were not based upon competent substantial evidence." § 120.57(1)(j), Fla. Stat. (1997); Belleau v. Department of Envtl. Protection, 695 So. 2d 1305, 1307 (Fla. 1st DCA 1997); Martuccio v. Department of Prof. Reg., 622 So. 2d 607, 609 (Fla. 1st DCA 1993).

Petitioners have filed exceptions only to Conclusions of Law, challenging the ALJ's interpretation of section 377.241, Florida Statutes (1997). The Department reviews these exceptions de novo because it has the responsibility to interpret the statutes it administers. Public Employees Relations Comm'n v.

Dade County Police Benevolent Ass'n, 467 So. 2d 987, 989 (Fla. 1985) (upholding agency's authority to overrule hearing officer's interpretation of law); Alles, 423 So. 2d at 626 (holding that the agency need not defer to a hearing officer's interpretation of legislative intent).

GOVERNING STATUTE

This case turns on the meaning of the following statutory criteria for issuance of a permit for oil and gas exploration:

377.241. Criteria for issuance of permits.-- The division, in the exercise of its authority to issue permits as hereinafter provided, shall give consideration to and be guided by the following criteria:

1. The nature, character and location of the lands involved; whether rural, such as farms, groves, or ranches, or urban property vacant or presently developed for residential or business purposes or are in such a location or of such a nature as to make such improvements and developments a probability in the near future.

   
   

2. The nature, type and extent of ownership of the applicant, including such matters as the length of time the applicant has owned the rights claimed without having performed any of the exploratory operations so granted or authorized.

   
   

3. The proven or indicated likelihood of the presence of oil, gas or related minerals in such quantities as to warrant the exploration and extraction of such products on a commercially profitable basis.

§ 377.241, Fla. Stat. (1997) (emphasis added).

The specific examples in section 377.241(1) refer to uplands rather than to submerged sovereignty lands. However, this section should be construed in harmony with the rest of chapter

377 and with other laws affecting submerged sovereignty lands.1

Unruh v. State, 669 So. 2d 242, 245 (Fla. 1996) (courts should "construe related statutory provisions in harmony with one another"); V.C.F. v. State, 569 So. 2d 1364, 1365 (Fla. 1st DCA 1990) (courts should read all provisions in a chapter in pari materia ) .

Section 377.24 prohibits any well from being drilled without a permit, while specifying locations (including submerged lands leased after specified dates) where the legislature has removed the Department's discretion to issue permits. Because Coastal's lease was executed before 1991, the Department retains discretion to make permitting decisions with regard to sovereign submerged lands covered by Coastal's lease, guided by the criteria in section 377.241.

In addition, the Department's interpretation of statutes governing its authorization of oil and gas wells should be consistent with state policies declared in the Florida Air and Water Pollution Control Act and the Florida Constitution:

Pollution of air and waters constitutes a menace to public welfare and to aquatic life, § 403.021, Fla. Stat. (1997), and "[i]t shall be the policy of the state to conserve and protect its natural resources and scenic beauty," Art. II, § 7(a), Fla. Const. Laws should be construed "with reference to the constitution and the purpose designed to be accomplished, and in connection with other laws in pari materia, though they contain no reference to each other." American Bakeries Co. v. Haines City, 131 Fla. 790, 801, 180 So. 524, 528 (1938).

RULINGS ON PETITIONERS' EXCEPTIONS

Exception to Conclusion of Law 187

Petitioners challenge the introductory language in Conclusion of Law 187 ("[a]fter the three criteria of section

377.121 [sic] have been satisfied"), asserting that the term "satisfied" incorrectly interprets section 377.241 as a checklist of requirements to be passed or failed.2 Petitioners correctly point out that section 377.241 does not constitute a pass-fail checklist, but rather guidelines for balancing interests. The statute "should be interpreted as calling for a weighing process where each criterion is evaluated and then weighed against the other factors." (Joint Exceptions at 2.)

By its own terms as well as in the context of other sections of chapter 377, section 377.241 charges the Department with balancing the interests of the fee simple owner against the interests of the mineral rights lessee. The title of the enacting legislation describes the statute as "relating to," among other matters, "the protection of surface rights of landowners" and "providing criteria . . . to issue permits for drilling or exploring and extracting through well holes."3

Ch. 61-299, at 591. The preamble also refers to concerns of "the owners of the fee simple title" that mineral rights grantees not "unduly interfere with" the fee simple owners' use of their lands and "deems it to be in the public interest" to provide a remedy for the absence of "any system for the orderly determination" as to whether drilling or other operations should be permitted.

Ch. 61-299, at 592, Laws of Fla.

The terms "give consideration to," "be guided by," and "criteria" also indicate that section 377.241 calls for balancing interests rather than simply checking off requirements.

§ 377.241. These terms imply a greater degree of discretion than do terms such as "condition," "shall," or "must," which the legislature uses to indicate specific requirements for permits.

§ 377.2424, Fla. Stat. (1997).

A similar balancing of interests is suggested by section 377.06, which declares, in pertinent part, that it is the public policy of the state "to provide for the protection and adjustment of the correlative rights of the owners of the land wherein [oil and gas] lie and the owners and producers of oil and gas

resources," as well as "to safeguard the health, property, and public welfare of the citizens" of Florida. § 377.06, Fla. Stat. (1997).

For the above reasons, Petitioners' exception to the introductory language of Conclusion of Law 187 is granted.

Exception to Conclusion of Law 181

The first criterion to be considered by the Department is the "nature, character, and location of the lands involved."

§ 377.241, Fla. Stat. (1997). This criterion focuses on the interests of the fee simple owner. In this case, the fee simple owner is the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida (hereafter "the Trustees"). The Trustees hold title to the lands and resources of Florida "in trust for all the people." Art. X, § 11, Fla. Const.; § 253.03, Fla. Stat. (1997).

The ALJ found that Coastal's proposed oil and gas well would be drilled "in the Gulf of Mexico within waters of the State of Florida, approximately nine miles south of St. George Island in Franklin County." (Finding of Fact 8.) She found that the impact of the drilling rig on the immediate site would be minimal. (Findings of Fact 11, 32, and 34.)

The ALJ also found that "[t]he obvious threat to St. George and other sensitive barrier islands, to Apalachicola Bay (a special management area), to the world-renown[ed] beaches, and to the commercially and environmentally treasured lands along the Florida panhandle coast, would be from an oil spill." (Finding of Fact 37.) The ALJ noted that special management areas are designated because of their unique habitats, living resources, recreational use, aesthetic importance, and other ecological, educational, consumptive, intrinsic, scientific, and economic values, (Finding of Fact 125), and that "[m]ost of the area in question is within some form of special management area as defined by statute," (Finding of Fact 126). She also found that nursery and breeding habitats are sensitive to even small amounts of oil. (Finding of Fact 167.) The ALJ further found that "the chance of a damaging spill from drilling the proposed exploratory well is extremely remote," (Finding of Fact 38), that blowouts are rare, but they do happen, (Finding of Fact 92), and that a hypothetical discharge, although originating outside of any special management area, will impact natural resources within the Apalachicola Bay special management area, (Finding of Fact 168). These Findings of Fact are unchallenged. However, Petitioners challenge the ALJ's Conclusion of Law 181, which reads as follows:

1. The first criterion, on its face, has a more limited application than that proposed by the Environmental Petitioners. The legislature's intent to preclude drilling

   in coastal waters is effectuated not in section 377.241, Florida Statutes, but in section 377.242, Florida Statutes, which includes a specific exception for leases entered prior to June 7, 1991. As found above, Coastal's permit meets the first criterion.

   
   

   This Conclusion of Law discounts or overlooks the importance of the first statutory criterion of section 377.241, the "nature, character and location of the lands involved." The effect of Coastal's exclusion from the prohibitions of section 377.242 is simply to leave the Department's permitting decision subject to the criteria of section 377.241. As discussed above, these criteria are not tests to be "met," but considerations to guide the Department's discretion in determining whether to grant or deny a permit.

   
   

   Apparently the ALJ reaches her conclusion that Coastal's permit "meets" the first criterion on the basis that the chance of an oil spill is remote. (Finding of Fact 38.) However, Petitioners correctly point out that the relevant criterion is not the chance of a blowout, but the nature of the lands involved.

   
   

   The generality of the term "lands involved" suggests that the Department should look beyond the immediate footprint of the drilling rig. § 377.241(1). Moreover, as noted above, the overall purpose of the statute was to institute a permit process in order to protect landowners from undue burdens from mineral leases. Ch. 61-299, at 592, Laws of Fla. This remedial purpose should be liberally construed. Connor v. Division of Elections, 643 So. 2d 75, 77 (Fla. 1st DCA 1994) (remedial statutes "should be liberally construed so as to suppress the evil identified by the legislature, and to advance the remedy intended").

   
   

   The "evil identified" by the legislature was the lack of a permitting process, leaving landowners under a threat that mineral rights lessees might "unduly interfere with" the "proper and appropriate use as might be indicated by the character or location of the land."4 Ch. 61-299, at 592. The policies enunciated in Chapter 403 of the Florida Statutes and in Article II, Section 7(a) of the Florida Constitution, as discussed above, also suggest that the Department should consider lands and waters potentially impacted by pollution. Unruh, 669 So. 2d at 245 (construing related statutory provisions harmoniously).

   
   

   The special characteristics of the lands involved, as noted in Findings of Fact 37, 125, 126, 167, and 168, are crucial to evaluation of the first permit criterion, the landowner's interest. The public trust interest in these special lands weighs heavily against issuance of a drilling permit. The Department grants Petitioners' exception to Conclusion of Law 181.

   Exception to Conclusion of Law 182

   
   

   On the other hand, the second and third criteria to be considered by the Department both address the interest of the owner of the mineral rights. The second criterion directs the Department to consider "the nature, type and extent of ownership of the applicant, including such matters as the length of time the applicant has owned the rights claimed without having performed any of the exploratory operations so granted or authorized." § 377.241(2).

   
   

   Rather than recounting in detail the "50 + years' history" of Coastal's leases, the ALJ refers to factual narratives in court opinions such as Watson v. Holland, 20 So. 2d 388 (Fla.

   1945), and Coastal Petroleum v. Chiles, 701 So. 2d 619 (Fla. 1st DCA 1997), review denied, 707 So. 2d 1123 (Fla. 1998). (Findings of Fact 46, 49.) The original lease to Coastal's predecessor was executed in 1944. Watson, 20 So. 2d at 389. It was not a disposition of title, but "the granting of a limited right to take [minerals] from the lands or water bottoms owned by the State." Id. at 392. Between 1947 and 1968, Coastal conducted geologic and seismic studies and drilled 22 wells, finding nothing except in one inland site. Coastal, 701 So. 2d at 622.

   In a 1976 settlement agreement Coastal surrendered all but the outermost portion of its lease area. (Finding of Fact 49.) In 1992 Coastal submitted five offshore drilling applications to the Department, later reduced to one. (Finding of Fact 13.)

   
   

   The ALJ found that Coastal had not abandoned oil exploration in favor of a "greenmail" attempt to incite the State to buy its leases. (Finding of Fact 50.) "For many of the 50 years, litigation has eclipsed oil, gas and mineral exploration in the vast leases," but not all of the litigation was initiated by Coastal and none was found to be frivolous. (Id.) These Findings of Fact are likewise unchallenged. However, Petitioners challenge Conclusion of Law 182, which reads as follows:

   
   

2. Coastal's lease 224-A includes requirements for lease payments and for certain minimal drilling or exploration activity. As found above, Coastal has satisfied those requirements and there is no competent evidence that it has abandoned its drilling rights under the lease. Coastal's permit meets the second criterion.

   
   

   This interpretation oversimplifies the governing statute. Certainly abandonment of the lease would weigh heavily against issuance of the permit, but again this is not a simple pass-fail test. Facts well short of "abandonment" are also relevant. The ALJ correctly points out that "[n]othing in the text of the three criteria require[s] consideration of the applicant' s 'motive.'" (Conclusion of Law 184.) However, the fact that for many years

   the applicant held its lease without exercising its exploration rights, (Finding of Fact 50), is expressly made relevant to the second criterion. § 373.241(2), Fla. Stat. This criterion weighs somewhat against issuance of the permit. To this extent, the Department grants the Petitioners' Exception to Conclusion of Law 182.

   
   

   Exceptions to Conclusions of Law 183 and 186

   
   

   Like the second criterion, the third criterion also evaluates the applicant's interest in oil and gas rights: "The proven or indicated likelihood of the presence of oil, gas or related minerals in such quantities as to warrant the exploration and extraction of such products on a commercially profitable basis." § 377.241(3), Fla. Stat.

   
   

   The ALJ makes extensive Findings relevant to the third criterion: The target of exploration is an anticipated structure within the Jurassic Smackover and Norphlet formations, which provide commercially-viable oil production in the Jay field in northwest Florida, (Findings of Fact 9 and 59); in the experience of one witness, the standard industry expectation is a one in ten chance in a frontier well such as this "wildcat" well (a well drilled outside of a producing field), (Finding of Fact 51); the Department has rarely used this criterion to deny an application, (Finding of Fact 52); Department statistics show a success rate for wildcat wells throughout Florida of about 2-3 %, (Finding of Fact 53); Department staff determined that the siting of permit 1281 was reasonable, and this determination was supported by the evidence, (Findings of Fact 54, 66); "Coastal presented sufficient evidence of the anticipated commercial profitability of the well," (Finding of Fact 55); geologists agree that "the the Department grants the Petitioners' Exception to Conclusion of Law 182.

   
   

   Exceptions to Conclusions of Law 183 and 186

   
   

   Like the second criterion, the third criterion also evaluates the applicant's interest in oil and gas rights: "The proven or indicated likelihood of the presence of oil, gas or related minerals in such quantities as to warrant the exploration and extraction of such products on a commercially profitable basis."

   § 377.241(3), Fla. Stat.

   
   

   The ALJ makes extensive Findings relevant to the third criterion: The target of exploration is an anticipated structure within the Jurassic Smackover and Norphlet formations, which provide commercially-viable oil production in the Jay field in northwest Florida, (Findings of Fact 9 and 59); in the experience of one witness, the standard industry expectation is a one in ten chance in a frontier well such as this "wildcat" well (a well drilled outside of a producing field), (Finding of Fact 51); the Department has rarely used this criterion to deny an application, (Finding of Fact 52); Department statistics show a success rate

   for wildcat wells throughout Florida of about 2-3 %, (Finding of Fact 53); Department staff determined that the siting of permit 1281 was reasonable, and this determination was supported by the evidence, (Findings of Fact 54, 66); "Coastal presented sufficient evidence of the anticipated commercial profitability of the well," (Finding of Fact 55); geologists agree that "the only way we can determine whether oil is present is to dig a hole," (Finding of Fact 56); the contour lines interpreted by Coastal's experts "show a promising geologic structure at the site of Permit no. 1281" and contribute to their credible opinions that the site is commercially viable, (Findings of Fact 58, 76); the process of determining whether the essentials for an oil field exist requires acquisition of data from prior wells, including dry wells, (Finding of Fact 64); magnetic, seismic, and gravity testing also yields valuable data, and the more data available the more accurate the map, but prospects have been drilled without expensive and possibly subjective site-specific tests, (Findings of Fact 64, 65). Again these Findings of Fact are unchallenged. However, Petitioners challenge Conclusion of Law 183, which reads as follows:

   
   

3. The third criterion does not suggest that the prospect for finding oil must be a sure thing. Every expert testifying on this issue in this proceeding agreed that petroleum exploration is a risky business. Even in a proven productive field, dry holes are drilled. Petroleum geologists rely on data obtained from a variety of sources to select a drilling site, but only the drilling itself can determine with certainty what lies beneath that site. A wealth of credible evidence was presented by the parties on this issue. No evidence could utterly foreclose the possibility that Phillip Ware's prospect is all that he predicts. The greater weight of the evidence establishes that it is a[t] least worth a look.

   
   

   Petitioners also take exception to Conclusion of Law 186, which states in part: "Mere speculation that oil exists or does not exist does not offend the third criterion in the grant of a drilling permit." Although otherwise well-founded, these Conclusions of Law again misread the statutory criterion as a pass-fail test. Certainly, if the Department were simply checking off a list of requirements Coastal would have met this requirement. However, the Department is charged instead with balancing interests, and Petitioners correctly point out that "at least worth a look," (Conclusion of Law 183), rates fairly low on the statutory scale of "proven or indicated likelihood," § 377.241(3). (Joint Exceptions at 9.) To this extent, the Department grants Petitioners' Exceptions to Conclusions of Law

   183 and 186.

   Exception to Conclusion of Law 184

   
   

   Petitioners' final exception is to Conclusion of Law 184, which reads as follows:

   
   

4. Nothing in the text of the three criteria require consideration of the applicant's "motive." If the Environmental Petitioners are correct in their apprehension of "Greenmail" by Coastal to induce the state to buy its lease or to support a claim of inverse condemnation or "taking," the surest way to dissipate those motives is to permit the drilling.

Petitioners contend instead that "one of the harms" that section 377.241 is intended to prevent "is the issuance of oil drilling permits to persons whose motive is to use the permit as a device to force he surface owner to purchase oil and mineral rights." (Joint Exceptions at 3.) However, the Department agrees with the ALJ that nothing in the language or history of the statute suggests that the Department should consider the applicant's motive. Instead, as discussed above, the statute charges the Department with balancing the interest of the landowner against the interest of the owner of mineral rights, looking to specific, relatively objective factors. For these reasons, Petitioners' Exception to Conclusion of Law 184 is denied.

RULINGS ON COASTAL'S EXCEPTIONS

Exception to Findings of Fact 16 and 75, Conclusion of Law 178 Coastal's Exception no. 4 challenges Findings of Fact 16 and

75 and Conclusion of Law 178, which address permit conditions imposed by the Department in addition to the surety: a magnetometer and sidescan survey, a spill trajectory analysis, an inventory of oil spill equipment, and a hydrogen sulfide dispersion model.5 (Findings of Fact 73-74; Coastal's Exceptions at 6.) The ALJ found that the agency "had a sound rational basis to require each item" and that the issue is moot since Coastal has already complied with the conditions. (Finding of Fact 75.) She concluded that "[t]he conditions imposed by DEP on Coastal's permit are well within the ambit" of the agency's statutory authority. (Conclusion of Law 178.)

Coastal's Exception no. 4 is without merit. The Department is authorized to issue orders "governing all phases of" oil and gas exploration in order to minimize damage. § 377.22(2), Fla. Stat. (1977). Statutory language such as "appropriate safety e equipment," § 377.22(2)(c), prevention of "injury to neighboring

. . . property," § 377.22(2)(i), and "minimiz[ing] the impact on hydrology and biota of the area," § 377.22(2)(v), indicate the

appropriateness of the required conditions, and the record provides support for the ALJ's Conclusion that the conditions were appropriate. (Tr., Vol. 25, at 3311-15.) In addition, the issues concerning permit conditions are moot for the reasons given by the ALJ. Therefore, Coastal's Exception no. 4 (to Findings of Fact 16 and 75, Conclusion of Law 178) is denied.

Exception to Finding of Fact 172

Coastal challenges Finding of Fact 172, in which the ALJ denies both Petitioners' and Coastal's requests for costs and attorney's fees. The ALJ states that "[t]his lengthy proceeding, competently and diligently tried by all parties, yields no evidence of bad faith or improper purpose or any other basis for award of fees cognizable under Chapter 120." (Finding of Fact 172.) Review of the entire record indicates no basis to overturn this Finding. Additionally, the Petitioners have become the prevailing party in this Final Order. Coastal's Exception no. 5 (to Finding of Fact 172) is denied.

CONCLUSION

Applying the statutory criteria of section 377.241 to the facts determined by the ALJ, the Department must balance the Trustees' interest in lands they hold in public trust against the interest of the applicant. On the one hand, the "lands involved" include sensitive barrier islands, Apalachicola Bay (a special management area), world-renowned beaches, and "commercially and environmentally treasured lands along the Florida panhandle coast." (Finding of Fact 37.) On the other hand, the applicant's mineral rights were unexercised over a long period, (Findings of Fact 49, 50), and are speculative, (Findings of Fact 51, 53, 56;

Conclusions of Law 183, 186).

Weighing evidence is the province of the trier of fact, but balancing policy interests is the province of the agency. Cross v. Department of Health & Rehab. Servs., 658 So. 2d 1139, 1143 (Fla. 1st DCA 1995) ("Striking the proper balance between . . . competing policy considerations" is a decision to be made by an agency, as guided by the legislature); Florida Power Corp. v.

Department of Envtl. Reg., 638 So. 2d 545, 546 (Fla. 1st DCA), review denied, 650 So. 2d 149 (Fla. 1994) (affirming DER's determination "that the public interest in the extent of the impact on the environment . . . was a policy matter for its determination and not a question of fact to be resolved by the hearing officer"). In the present case, the balance tips against issuance of a permit to drill an exploratory well nine miles south of St. George Island.

It is therefore ORDERED:

1. The ALJ's Findings of Fact are adopted in their entirety and incorporated herein by reference.

2. The ALJ's Conclusions of Law 180, 181, 182, 183, 186, and 187 are rejected or modified as indicated above. Conclusions of Law 173-79 and 184-85 are adopted and incorporated herein by reference.6

3. The Notice of Intent to Issue Permit issued by the Department on August 16, 1996, is REVERSED.

   
   

4. Coastal's application filed with the Department requesting issuance of a permit in connection with their proposed drilling of a well for exploration of oil and gas, Permit no. 1281, is DENIED.

Any party to this proceeding has the right to seek judicial review of the Final Order pursuant to section 120.68, Florida Statutes, by the filing of a Notice of Appeal pursuant to Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the Department in the Office of General Counsel, 3900 Commonwealth Boulevard, M.S. 35, Tallahassee, Florida 32399-3000; and by filing a copy of the Notice of Appeal accompanied by the applicable filing fees with the appropriate District Court of Appeal. The Notice of Appeal must be filed within 30 days from the date this Final Order is filed with the clerk of the Department.

DONE AND ORDERED this 22nd day of May, 1998, in Tallahassee, Florida.

STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION

VIRGINIA B. WETHERELL

Secretary

Marjory Stoneman Douglas Building 3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

FILING AND ACKNOWLEDGMENT FILED, ON THIS DATE, PURSUANT To §120.52 FLORIDA STATUTES,

WITH THE DESIGNATED DEPARTMENT CLERK, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED.

5/22/98

YOLANDA WATERS DATE CLERK

ENDNOTES

1/ As noted by Petitioners, the law enacting section 377.241 contained a section expressly stating that its provisions "shall

be cumulative and supplemental to all other provisions contained in chapter 377, Florida Statutes, on the same subject" and also "cumulative and supplemental to all other provisions of law relating to submerged or sovereignty lands or relating to the powers of the trustees of the internal improvement fund." Ch. 61- 299, § 1, at 595, Laws of Fla. This provision was "repealed as being redundant" in 1977, Ch. 77-104, § 120, Reviser's Note, at 288, Laws of Fla., but its original presence corroborates the legislative intent that in pari materia principles apply to section 377.241.

2/ By implication, Petitioners also challenge the last sentence of Conclusion of Law 180, which states that Coastal "has met" its burden of establishing entitlement to the permit it seeks.

3/ Coastal argues that the purpose of the law was to protect landowners from strip-mining, versus exploration through a well hole. (Coastal's Response to Joint Exceptions, Attachment C, unnumbered page 10.) Protection against strip-mining was one of the law's purposes, but the language of the law itself, the title, and the preamble also express the legislature's intent to protect landowners against the drilling of unduly burdensome wells.

4/ Coastal attempts to exclude environmental considerations from the statute by restricting the Department from considering land uses other than those specifically enumerated in section 377.241(1) (e.g., agricultural, urban, residential). (Coastal's Response to Joint Exceptions, Attachment C, unnumbered page 12.) However, this interpretation would thwart application of the statute to submerged lands held in public trust. Cf. Smalley Transp. Co. v. Moed's Transfer Co., 373 So. 2d 55, 57 (Fla. 1st DCA 1979) (warning that the "Expressio unius" maxim should be used with caution to avoid thwarting legislative intent, for "it is not of universal application").

5/ Coastal' s challenges to the surety (Exceptions 1-3) are addressed by the Governor and Cabinet sitting as the Administration Commission and are not addressed in the Department's Final Order.

6/ Conclusions of Law 188-202 concern issues regarding the surety to be imposed and are not addressed in the Department's Final Order.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing Final Order has been sent by United States Postal Service to:

David Guest, Esquire

S. Ansley Samson, Esquire Mark McIntosh, Esquire

Post Office Box 1329 Tallahassee, Florida 32302-1329

Robert J. Angerer, Esquire Robert J. Angerer, Jr., Esquire Angerer & Angerer

P.O. Box 10468 Tallahassee, Florida 32302

Division of Administrative Hearings

1230 Apalachee Parkway The DeSoto Building

Tallahassee, Florida 32399-1550

Barbara Sanders, President St. George Island Civic Club

P.O. Box 157

Apalachicola, Florida 32320

Denis Dean, Special Counsel Monica Reimer,

Ass't Attorney General Attorney General's Office The Capitol, PL-01

Tallahassee, Florida 32399-1050

Michael Takac, Esquire Governor's Legal Office Office of the Governor The Capitol, Room 209

Tallahassee, Florida 32399-0001

Bob Bradley

Executive Office of the Governor The Capitol, Rm. 1601 Tallahassee, Florida 32399

and by hand delivery to:

Andrew J. Baumann, Esquire

Department of Environmental Protection 3900 Commonwealth Blvd., M.S. 35

Tallahassee, Florida 32399-3000

this 22nd day of May, 1998.

STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION

MAUREEN M. MALVERN

Assistant General Counsel

3900 Commonwealth Blvd., M.S. 35

Tallahassee, Florida 32399-3000 Telephone 850/488-9314

Docket for Case No: 96-004222

Orders for Case No: 96-004222