STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DENNIS COULTER; J. LARRY )

HOOPER; L. C. DAIRY, INC.; ) and WABASSO ROAD DAIRY, INC., )

)

Petitioners, )

)

vs. ) Case No. 98-3052

)

ST. JOHNS RIVER WATER )

MANAGEMENT DISTRICT, )

)

Respondent. )

)

RECOMMENDED ORDER OF DISMISSAL

This case came before Larry J. Sartin, a duly-designated Administrative Law Judge of the Division of Administrative Hearings on a Motion for Summary Recommended Order.

APPEARANCES

For Petitioners: Kenneth G. Oertel, Esquire

Oertel, Hoffman, Fernandez & Cole, P.A. Post Office Box 1110

Tallahassee, Florida 32302-1110

For Respondent: John W. Williams, Esquire

Stanley J. Niego, Esquire St. Johns River Water

Management District Post Office Box 1429

Palatka, Florida 32178-1429

and

Dykes C. Everett, Esquire Robert P. Major, Esquire Winderweedle, Haines, Ward and

Woodman, P.A.

1500 NationsBank Center

390 North Orange Avenue Orlando, Florida 32801

PRELIMINARY STATEMENT

On or about April 9, 1998, Petitioners requested relocation assistance under the "Uniform Relocation Assistance Act" and Section 421.55, Florida Statutes, from Respondent. By letter dated May 8, 1998, Respondent informed Petitioners that their request for relocation assistance was denied.

On or about June 22, 1998, Petitioners filed a Petition for Formal Administrative Hearing with Respondent challenging the denial of their request for relocation assistance. The Petition was filed by Respondent with the Division of Administrative Hearings by Notice on July 14, 1998. Respondent requested that the matter be assigned to an Administrative Law Judge for disposition. The Petition was designated Case No. 98-3052 and was assigned to the undersigned.

The matter was scheduled to be heard on November 2

through 4, 1998, by a Notice of Hearing entered August 31, 1998. An Order granting a request to limit the hearing to the issue of whether Petitioners were entitled to any benefits was entered simultaneously with the Notice of Hearing. The hearing was continued by an Order entered October 26, 1998.

On November 9, 1998, Respondent filed Respondent's Motion for Summary Recommended Order. Respondent requested oral argument on the motion. Petitioners filed a Response to the motion on December 4, 1998.

Argument was heard on the motion on December 22, 1998. On June 8, 1999, a copy of the Transcript of the motion hearing was filed by Respondent. On August 4, 1999, a Notice of Intent to Enter Recommended Order of Dismissal was entered.

FINDINGS OF FACT

1. Petitioners are Dennis Coulter; J. Larry Hooper; L.C. Dairy, Inc. (hereinafter referred to as "L.C. Dairy"); and Wabasso Road Dairy, Inc. (hereinafter referred to as "Wabasso").

2. L.C. Dairy is a closely held Florida corporation. Mr. Coulter owns 50 percent of the stock of L.C. Dairy. Mr. Coulter also serves as L.C. Dairy's President.

3. Wabasso is a closely held Florida corporation.

   
   

   Mr. Coulter and Mr. Hooper are officers and directors of Wabasso. Mr. Coulter and Mr. Hooper are, together, the majority stockholders of Wabasso.

4. Between 1988 and 1997, Petitioners operated a dairy known as Willowbrook Farms Dairy, which consisted of approximately 2,000 cattle (hereinafter referred to as the "Dairy").

5. The Dairy was operated on property owned by Willowbrook Coal Company, d/b/a Willowbrook Farms (hereinafter referred to as "Willowbrook").

6. Willowbrook is a Pennsylvania general partnership. Mr. James Sartori is the general partner of Willowbrook.

7. Willowbrook owned two adjacent parcels of property located in Brevard County, Florida. One parcel was used by Petitioners for the Dairy (hereinafter referred to as the "Dairy Parcel"). The other parcel, located to the west of the Dairy Parcel, was not directly used for grazing dairy cattle (hereinafter referred to as the "Non-Diary Parcel").

8. Respondent, St. Johns River Water Management District (hereinafter referred to as the "District"), is a public corporation with regulatory jurisdiction over the administration and enforcement of surface water management systems.

9. On August 13, 1997, the District entered into an Agreement of Purchase and Sale with Willowbrook whereby the District acquired a conservation easement over the Dairy Parcel and acquired the Non-Dairy Parcel in fee (hereinafter referred to as the "Sales Agreement"). The Sales Agreement specifically provided that all cattle on the Dairy Parcel and the Non-Dairy Parcel had to be removed prior to closing. The terms of the Diary Parcel conservation easement also provided that concentrated animal feeding operations, including dairy operations, were prohibited.

10. The total agreed purchase price for the fee interest in the Non-Dairy Parcel and the easement over the Dairy Parcel was

    $11,500,000.00.

    
    

11. While the Sales Agreement was being negotiated by the District, the District was also negotiating with the National

    Resource Conservation Service (hereinafter referred to as the "NRCS") of the United States Department of Agriculture (hereinafter referred to as the "USDA") to sell a 30-year conservation easement over the Non-Dairy Parcel to the USDA. USDA was interested in purchasing the easement as part of a federally funded program known as the Wetlands Reserve Program.

12. The USDA ultimately agreed to purchase a conservation easement over the Non-Dairy Parcel from the District for

    $4,200,000.00. This agreement was reached before closing on the Sales Agreement.

13. No agreement was made between the District and the USDA specifying that the District would provide relocation assistance to any persons displaced as a result of the USDA's purchase of a conservation easement over the Non-Dairy Parcel.

14. The Sales Agreement contained the following contingency:

    (B) This Agreement is contingent on Buyer entering into an Agreement with the United States of America for funding of a portion of the purchase price of the Conservation Easement for the Restrictions Parcel [the

    Non-Dairy Parcel] through the Wetlands Reserve Program of the Commodity Credit Corporation.

15. On March 26, 1998, the USDA wired $4,200,000.00 to the District's Land Acquisition Revenue Bonds Project Funds Account. These funds were intended to be used for USDA's purchase of the conservation easement over the Non-Dairy Parcel.

16. Closing on the Sales Agreement took place on March 30, 1998. Closing was initially held for the District's purchase of the fee interest in the Non-Dairy Parcel and the purchase of the conservation easement over the Dairy Parcel. Immediately after the completion of District's closing, a second closing was held on the purchase of the conservation easement over the Non-Dairy Parcel by the USDA. Disbursement of all purchase funds, including the $4,200,000.00 remitted by the USDA to the District and $7,300,000.00 in District funds, took place on March 31, 1998.

17. The net result of the closings on the Sales Agreement was that the District purchased a conservation easement over the Dairy Parcel and the underlying fee interest in the Non-Dairy Parcel for $7,300,000.00 and the USDA purchased a conservation easement over the Non-Dairy Parcel from the District for

    $4,200,000.00.

    
    

18. Pursuant to the terms of the Sales Agreement Petitioners were required to relocate their dairy operations. They incurred substantial costs in doing so.

19. On or about April 9, 1998, Petitioners requested relocation assistance under the "Uniform Relocation Assistance and Real Property Acquisition Policies Act" 42 U.S.C. Sections 4601 et seq. (hereinafter referred to as the "Relocation Assistance Act"), and Section 421.55, Florida Statutes, from the District. By letter dated May 8, 1998, the District informed

    Petitioners that their request for relocation assistance was denied.

20. On or about June 22, 1998, Petitioners filed a Petition for Formal Administrative Hearing with the District challenging the denial of their request for relocation assistance. The Petition was filed by the District with the Division of Administrative Hearings by Notice filed July 14, 1998.

    CONCLUSIONS OF LAW

    
    

    1. Jurisdiction.

       
       

21. The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Section 120.57, Florida Statutes (1997).

    1. The District's Motion for Summary Recommended Order.

       
       

22. The District has argued that, as a matter of law, Petitioners are not entitled to relocation assistance pursuant to the Relocation Assistance Act on two grounds:

    1. The District is under no statutory or contractual obligation that subjects the District to the Relocation Assistance Act; and

    2. Petitioners are not "displaced persons" within the meaning of the Relocation Assistance Act, which only requires relocation assistance be paid to persons who are displaced by a program or project carried out by a state agency with "federal financial assistance," as those terms are defined in the Relocation Assistance Act.

    1. The Relocation Assistance Act.

       
       

23. Relocation assistance is payable pursuant to Section 4622 of the Relocation Assistance Act:

    1. General provision

       
       

       Whenever a program or project to be undertaken by a displacing agency will result in the displacement of any person, the head of the displacing agency shall provide for the payment to the displaced person of--

       
       

       1. actual reasonable expenses in moving himself, his family, business, farm operation, or other personal property;

          
          

       2. actual direct losses of tangible property as a result of moving or discontinuing a business or farm operation, but not to exceed an amount equal to the reasonable expenses that would have been required to relocate such property, as determined by the head of the agency;

          
          

       3. actual reasonable expenses in searching for a replacement business or farm; and

          
          

       4. actual reasonable expenses necessary to reestablish a displaced arm, nonprofit organization, or small business at its new site, but not to exceed $10,000.

       
       

       1. The District's Obligation to Pay Relocation Assistance.

          
          

24. The terms of the Relocation Assistance Act only bind federal agencies and not state agencies. The Relocation Assistance Act, however, requires that any federal agency subject to its provisions refrain from providing funds for state projects where relocation assistance should be paid without first receiving "satisfactory assurances" that all displaced persons will be given relocation assistance as required by the Relocation

    Assistance Act. Norfolk Redevelopment and Housing Authority v. Chesapeake and Potomac Telephone Company of Virginia, 464 U.S. 30, 104 S. Ct. 304, 78 L. Ed. 2d 29 (1983).

25. In an effort to ensure that federal agencies obtain the necessary assurances from state agencies required by the Relocation Assistance Act, Section 4630 of the Relocation Assistance Act provides the following:

    Notwithstanding any other law, the head of a Federal agency shall not approve any grant to, or contract or agreement with, a displacing agency (other than a Federal agency), under which Federal financial assistance will be available to pay all or part of the cost of a program or project which will result in displacement of any person on or after January 2, 1971, unless he receives satisfactory assurances from such displacing agency that--

    
    

    1. fair and reasonable relocation payments and assistance shall be provided to or for displaced persons, as are required to be provided by a Federal agency under sections 4622, 4623, and 4624 of this title;

       
       

    2. relocation assistance programs offering the services described in section 4625 of this title shall be provided to such displaced persons;

       
       

    3. within a reasonable period of time prior to displacement, comparable replacement dwellings will be available to displaced persons in accordance with section 4625(c)(3) of this title.

    
    

26. The District has argued that it is not obligated to pay relocation assistance to Petitioners because the USDA failed to require it to do so pursuant to Section 4630 of the Relocation Assistance Act. The District has cited a number of cases in

    support of this argument. None of those cases, however, have been decided by the courts of this State.

27. While there is no dispute that there has been no specific agreement between the District and the USDA to provide relocation assistance in this matter, the assurances required by the Relocation Assistance Act have been provided by the Florida Legislature. The Legislature has given those assurances by its adoption of Section 421.55, Florida Statutes:

    (1) It is the intent of the Legislature to authorize the state and its departments, agencies, political subdivisions, and legislatively established port and airport authorities to comply with the provisions and requirements of the Surface Transportation and Uniform Relocation Assistance Act of 1987, Pub.

    L. No. 100-17, in those public projects or programs for which federal or federal-aid funds are available and are used.

    . . . .

    
    

    1. The state is authorized and empowered, in acquiring real property for use in any public project or program in which federal or

       federal-aid funds are used, to make all such relocation and other payments to or for displaced persons as are required under the provisions of Pub. L. No. 100-17, and to provide such displaced persons with relocation services and make available to them replacement dwellings, as required by Pub. L. No. 100-17.

       
       

    2. The state is authorized and empowered, in acquiring real property for use in any public project or program in which federal or

    federal-aid funds are used, to follow and conform with the land acquisition policies set forth in Pub. L. No. 100-17, and to pay or reimburse owners of property so acquired in the manner specified in Pub. L. No. 100-17. . . .

28. The authority of the District to provide relocation assistance to Petitioners comes from Section 421.55, Florida Statutes. Nothing in that provision requires that the District enter into any agreement with the USDA in which the District agrees to make the payments authorized by the Relocation Assistance Act.

29. Nor does the USDA, if the Relocation Assistance Act otherwise applied in this case, have to receive any more assurance from the District of its authority to provide relocation assistance. All the assurance necessary is provided by Section 421.55, Florida Statutes.

30. Based upon the foregoing, it is concluded that the District is subject to the requirements of the Relocation Assistance Act even though no specific agreement was entered into with the USDA.

    1. Application of the Relocation Assistance Act.

    
    

31. In order for Petitioners to be entitled to relocation assistance, the District must be a "displacing agency." The term "displacing agency" is defined in Section 4602(11) of the Relocation Assistance Act:

    The term "displacing agency" means any Federal Agency carrying out a program or project, and any State, State agency, or person carrying out a program or project with Federal financial assistance, which causes a person to be a displaced person. [Emphasis added].

    
    

32. The definition of a "displaced person" also requires that there be "Federal financial assistance" provided as part of

    a program or project being carried out by a state agency in order for a person to be considered a "displaced person." Section 4601(6) of the Relocation Assistance Act.

33. The term "Federal financial assistance" is defined in Section 4601(4) of the Relocation Assistance Act, in pertinent part, as follows:

    The term "Federal financial assistance" means a grant, loan, or contribution provided by the United States . . . .

    
    

34. The terms "grant," "loan," and "contribution" are not further defined in the Relocation Assistance Act or regulations implementing the act. Those terms, therefore, must be given their ordinance meaning. See Litton Industrial Automation Systems, Inc. v. Nationwide Power Corp., 106 F.2d 366 (11th Cir. 1997), reh. denied, 124 F.3d 223.

35. The terms "grant" and "contribution" imply a donation or subsidy of federal funds to a state agency; something other than an arms-length sale. The term "loan" implies the lending of federal funds to a state agency with the expectation that those funds will be repaid.

36. Applying the plain meaning of the terms "grant," "loan," and "contribution" to this case, it is clear that the District has not received "Federal financial assistance."

    Instead, the District sold an interest in real property

    
    

    (a 30-year easement) to the USDA. In exchange, the USDA paid the District $4,200,000.00 for the real property interest.

37. This conclusion is consistent with the requirements of statutes and regulations governing the Wetland Reserve Program pursuant to which the USDA purchased the 30-year easement over the Non-Dairy Parcel. The Wetland Reserve Program enabling legislation is found at 43 U.S.C. Sections 3837 et seq. (hereinafter referred to as the "Wetland Reserve Act"). Regulations implementing the Wetland Reserve Act are found at

    7 C.F.R. Section 1467. Neither the Wetland Reserve Act nor the regulations implementing it authorize any "grant," "loan," or "contribution" to any state agency. The Wetland Reserve Act and the regulations authorize and, in deed, require that the USDA acquire permanent or 30-year easements in arms-length transactions with willing sellers who are willing to restore their lands to wetland status. See Section 3837a of the Wetland Reserve Act and 7 C.F.R. Section 1467.

38. The Wetland Reserve Act specifically prohibits the acquisition of any property interest for other than fair market value:

    Compensation for easements acquired by the Secretary under this subpart shall be made in cash in such amount as is agreed to an specified in the easement agreement, but not to exceed the fair market value of the land less the fair market value of such land encumbered by the easement.

    
    

    Section 3837a(f) of the Wetland Reserve Act.

    
    

39. Regardless of whether the District was paid fair market value for the easement over the Non-Dairy Parcel it sold to the

    USDA in this case, the federal enabling legislation for the Wetlands Reserve Program specifically prohibits the payment of federal funds in excess of fair market value. Therefore, there can be no "grant," "loan," or "contribution" paid to the District in this case.

40. Based upon the foregoing, it is concluded that there has been no "grant," "loan," or "contribution" paid to the District in this case. As a consequence, Petitioners are not "displaced persons" and the District is not a "displacing agency." Therefore, Petitioners are not entitled to relocation assistance pursuant to the Relocation Assistance Act.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a final order be entered by the St. Johns River Water Management District denying Petitioners request for relocation assistance pursuant to the Relocation Assistance Act and Section 421.55, Florida Statutes.

DONE AND ENTERED this 10th day of September, 1999, in Tallahassee, Leon County, Florida.

LARRY J. SARTIN

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 10th day of September, 1999.

COPIES FURNISHED:

Kenneth G. Oertel, Esquire

Oertel, Hoffman, Fernandez & Cole, P.A. Post Office Box 1110

Tallahassee, Florida 32302-1110

John W. Williams, Esquire Stanley J. Niego, Esquire St. Johns River Water

Management District Post Office Box 1429

Palatka, Florida 32178-1429

Dykes C. Everett, Esquire Robert P. Major, Esquire Winderweedle, Haines, Ward and

Woodman, P.A.

1500 NationsBank Center

390 North Orange Avenue Orlando, Florida 32801

Henry Dean, Executive Director St. Johns Water River

Management District Highway 100, West Post Office Box 1429

Palatka, Florida 32178-1429

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 98-003052

Orders for Case No: 98-003052