STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RAYMOND MACKAY and IRENE MACKAY, )

)

Petitioners, )

)

v. ) CASE NO. 84-2897

) DEPARTMENT OF ENVIRONMENTAL REGULATION, )

)

Respondent, )

and )

)

FLORIDA AUDUBON SOCIETY, )

)

Intervenor. )

)

RECOMMENDED ORDER

On March 25, 1985, this case was heard in Key West, Florida, by R. L. Caleen, Jr., Hearing Officer with the Division of Administrative Hearings. The parties were represented by counsel.

APPEARANCES

For Petitioners: David Paul Horan, Esquire

608 Whitehead Street

Key West, Florida 33040

For Respondent: Douglas H. MacLaughlin, Esquire

130 North Monroe Street Tallahassee, Florida 32301

For Intervenor: Charles Lee, Qualified Representative

Vice President

Florida Audubon Society 1101 Audubon Way

Maitland, Florida 32751 ISSUES

1. Whether petitioners' application for a permit to place fill in waters of the state, in an area known as the Key West Salt Ponds, should be granted or denied on grounds that the filling activity would result in violations of water quality standards contained in Chapters 17-3 and 17-4, Florida Administrative Code, and Chapter 403, Florida Statutes;

   
   

2. Whether, assuming the propriety of the permit denial and its validity as an exercise of the state's police power under Chapter 403, Florida Statutes, Petitioners are entitled to relief on a claim that the denial constitutes a "taking" in violation of the United States and Florida Constitutions;

BACKGROUND

On August 2, 1984, Raymond and Irene Mackay (Petitioners) filed with Respondent, Department of Environmental Regulation ("DER"), its request for an APA proceeding 1/ to contest DER's July 21, 1984 notice of "Intent to Deny" their application to place fill in waters covering their oceanfront property in Key West, Florida.

In their request for hearing, Petitioners allege that, contrary to DER's assertions in its "Intent to Deny," the proposed filling activity would not degrade water quality of the navigable waters of the state; that while the filling would change the character of the existing environment, such change would not adversely impact the public interest; and that unless they are allowed to fill their privately owned property "so that a reasonable use can be made thereof, . . . they should be compensated as set forth in the Fifth Amendment in the United States Constitution." (See, Request for Formal Proceedings, P.5)

On August 10, 1984, DER granted the request for hearing and forwarded this case to the Division of Administrative Hearings for assignment of a hearing officer. Hearing was thereafter set for February 7, 1985; on DER's unopposed motion, reset for March 8, 1985; then subsequently reset for March 25, 1985.

On January 14, 1985, DER moved to strike, for lack of subject matter jurisdiction, that portion of Petitioners' request alleging that the permit denial constitutes an unconstitutional "taking" of private property. DER argued that the "taking" issue could be decided only by a circuit or appellate court, not by DER or a hearing officer in APA proceedings. Citing Key Haven Associated Enterprises, Inc. v. Board of Trustees of Internal Improvement Trust Fund, 427 So.2d 153 (Fla. 1982), Petitioners responded that it was proper to raise the "taking" issue in APA proceedings; and that the hearing officer may "recommend to [DER] that the intended denial is improper or . . . may find a basis for allowing a less extensive development of the Petitioners' privately owned land" (See, Petitioners' Response R, p.3). By order dated February 22, 1985, DER's motion to strike was denied. The order was predicated on Key Haven's holding that the "taking" issue (arising out of the denial of an environmental permit), can be raised by an applicant either in direct review by an appellate court, if the record is adequate, or before a circuit court. Id. at 160. If applicants are foreclosed from presenting evidence in support of a "taking" claim during APA proceedings the record could rarely, if ever, be adequate for an appellate court to decide issue. 2/ Direct review of agency action would no longer be a viable judicial remedy for an unconstitutional "taking."

Prior to hearing, Florida Audubon Society ("Intervenor") filed an unopposed petition to intervene, which was granted on February 22, 1985. Subsequently, Charles Lee was found qualified to represent Intervenor in these proceedings.

At final hearing, Petitioners testified on their own behalf and presented the testimony of James A. Flanner. DER presented the testimony of Richard W. Cantrell and Arthur Mosley. Joint exhibt no. 1 and Respondent's exhibit no. 1 and 2 were received in evidence. 3/

The transcript of hearing was filed on April 25, 1985. 4/ The parties filed proposed findings of fact and conclusions of law, with responses, by May 20, 1985. On May 28, 1985, DER moved to strike Petitioners' proposed findings on grounds of untimeliness. Although Petitioners' post-hearing filings were beyond the deadline agreed to at hearing, any prejudice to DER is cured by its subsequent response, so the motion is denied.

The proposed findings of fact have been considered and a ruling on each has been made directly or indirectly in this Recommended Order, except where rejected as subordinate, cumulative, irrelevant, or unnecessary.

Although in their request for hearing Petitioners assert entitlement to the permit on grounds that the proposed fill would not degrade water quality, at hearing and in their post-filings, they concede that the denial of their fill- application "was proper and taken in accordance with the requirements of a constitutionally valid Statute or set of Statutes." (TR.12) 5/ Petitioners have maintained throughout, however, that the permit denial, otherwise proper, constitutes an unconstitutional "taking" which precludes them from making any economically reasonable use of their property. Although conceding that only the judiciary can decide this issue, they assert that administrative findings relevant to the issue will facilitate a decision by the appellate or trial court. (See, Petitioners' Proposed Findings of Fact, p.3)

This case, then, presents an anomaly. Petitioners concede the validity of DER's denial and recommend that DER enter a final order denying their own fill application. (See, Petitioners' Proposed Findings, p. 8) The only bona fide issue at hearing was whether the denial precludes them from all economically reasonable use of their property--an issue which, in the parties' view, only the courts can decide. According to Petitioners, the record of the proceedings and findings of the hearing officer ". . . unless modified by the agency," will be the basis for an inverse condemnation action (claiming an unconstitutional "taking" of private property) they will file in the Circuit Court of the Sixteenth Judicial Circuit in Monroe County, Florida. (See, Petitioners' Post- Hearing Memorandum on Permit Denial Being Both Proper and Confiscatory, p. 3)

For the reasons explained in the conclusions of law below, no findings will be made which are relevant only to the "taking" issue. Findings will be made which go to the basis for DER's denial of Petitioners' application to fill.

Although such findings pertain to a matter not seriously at issue, they are submitted for the purpose of articulating the basis for the permit denial and facilitating entry of final agency order under Section 120.59, Florida Statutes. For these reasons, the following findings are entered:

FINDINGS OF FACT I.

Description of Proposed Fill Project

1. DER proposes to deny three alternative proposals to fill all or part of Petitioners' real property located in Key West, Florida. The property is rectangular, approximately three acres in size, with 300 feet bordering Roosevelt Boulevard (High-Way A1A) to the south and approximately 300 feet bordering Key West International Airport to the north. The easterly property line is 489.4 feet and the westerly line is 434.63 feet. The Straits of Florida (Atlantic Ocean) are immediately on the other side of Roosevelt Boulevard to the south. The property has a strip of approximately 90 feet of upland and transitional wetland adjacent to Roosevelt Boulevard, with the rest of the property being covered by a salt pond of approximately 40 acres in size (Jnt. Ex. 1).

   
   

2. Petitioners initially submitted a permit application in July, 1983, to fill the entire property for construction of multifamily housing units. On May

   4, 1984, after discussion with a DER permitting official, Petitioners submitted a second application containing two alternative, less extensive development proposals. The first alternative involves the placement of fill over a 300' x 230' area (approximately 9722 cubic yards) extending 230 feet from the property along Roosevelt Boulevard out into the water. This alternative would entail construction of 24 family housing units, consisting of six basic structures, each four-stories high. The second alternative involves subdividing the property into six separate lots connected by a central fill road with cul-de- sac. Each lot, approximately .4 acres in size, would contain a single family house on pilings and an associated fill pad for parking. The fill pads would be connected to a approximately 300' x 30' entrance road constructed on fill material. Presumably, this second alternative would contain the same amount of total fill as required in the first.

   
   

3. As it presently exists, the salt pond (a part of which applicant would fill) serves several significant and beneficial environmental functions. In regard to water quality, the pond stores, filters, and purifies large quantities of storm water which drain from the airport and South Roosevelt Boulevard. The filling of any portion of this pond would diminish this capacity. (Jnt. Ex. 1)

   
   

4. Because of their relatively isolated nature, the organic detrital material that is produced from the leaf litter of fringing mangroves is broken down into a very fine and readily usable form by bacteria. As a result, when there is an occasional exchange between the salt pond and tidal waters, the exported organics are in a very desirable form for higher trophic levels in the food web such as small fish, crustaceans, filter feeders, and various larval forms of marine life. (Jnt. Ex. 1)

   
   

5. The salt pond proper provides valuable habitat for fish and wildlife, most notable of which are avifauna. The pond has apparently become established as a healthy, self-sustaining ecosystem providing permanent and temporary food, shelter and refuge for many faunal species which play significant and necessary ecological roles both in the salt ponds and other tidal and brackish water systems. (Jnt. Ex. 1)

   
   

6. Through the placement of fill and the displacement of present salt pond habitat, water quality and the biological resources in the immediate and surrounding areas would be expected to undergo degradation. (Jnt. Ex. 1)

   
   

7. Through the encroachment of development in this area, which presently lacks residential development, biological integrity standards would be expected to fall below acceptable levels. The proposed fill areas would reduce wind- driven circulation in the pond so as to stress levels of oxygen, salinity, temperature and turbidity. Runoff from the proposed fill would introduce nutrients and elevate turbidity during storm events. Finally, elevated turbidity levels could be expected during the actual filling process and the various species of fish and wildlife now located over the project site would be temporarily disturbed by construction activities and permanently displaced in the long term through the loss of habitat. (Jnt. Ex. 1)

   
   

8. There is a 40' zoning setback and another 50' easement owned by the City of Key West, which together form a 90' strip on the property adjacent to Roosevelt Boulevard. This 90-foot strip is largely upland and some transitional wetland.

9. There is no zoning impediment to any of the development alternatives proposed by Petitioners. The property is currently zoned R2H (multifamily residential) by the City of Key West.

   
   

   II.

   
   

   DER's Action on the Application

   
   

10. After DER received and reviewed Petitioners initial application on July 22, 1983, a completeness summary was sent on August 17, 1983, requesting additional information. DER received the additional information on March 23, 1984, after which it notified Petitioners that additional information was needed. Petitioners met with DER officials on April 20, 1984, and submitted additional information on May 4, 1984, including the two alternative proposals. DER issued the "Intent to Deny" all three of the proposed projects on July 19, 1984 (Jnt. Ex. 1).

    
    

11. On May 16, 1984, a DER Environmental Specialist visited the site of the proposed projects and conducted a biological and water quality assessment. This assessment was later submitted, in report form, as the Permit Application Appraisal, dated June 7, 1984. This appraisal, uncontested by Petitioners, indicates that each of the three fill proposals would take place in waters of the state and result in water quality violations under Rules 17-3.051(1), 17- 3.061(2)(c), (j) and (r); 17-3.121(7), (13) and (28); Chapter 17-4, Florida Administrative Code; and Chapter 403, Florida Statutes. Water quality problems associated with the project were identified as diminished storm water treatment, reduced beneficial deterital material, stress on oxygen levels, salinity, temperature, and turbidity, and an introduction of nutrients. (Jnt. Ex. 1)

    
    

12. Although a DER dredge and fill permitting official testified that any filling of the salt pond would be detrimental to the birds and animals which feed there on a daily basis, and that, in his view, a "substantial amount" of filling would not be allowed by DER, there are development projects (other than the three presented by Petitioners) which, in his view, may qualify for a permit under DER rules. DER has, in the past, issued permits authorizing the construction of above-ground residences over wetland properties. Under DER's permitting standards, one or more single-family residences could be built on the property if the structures were built on stilts, did not violate water quality standards, had acceptable drainage, and did not result in adverse storm water discharges. In evaluating such an application, any mitigation an applicant could provide, such as enhancing flushing in the salt ponds by the installation of a culvert to open water, would be balanced against any adverse impacts expected from the filling activity. The three alternative filling proposals submitted by Petitioners (including drawings and designs) do not, however as yet, fall within or satisfy these general perimeters of permitting acceptability.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Fla. Stat. (1983).

    
    

14. An applicant has the burden of demonstrating compliance with permitting standards. See, Florida Department of Transportation v. J. W. C. Co., Inc., 396 So.2d 778; Rule 17 1.59, Fla. Admin. Code. DER may issue a fill permit only after it is assured that the proposed activity will not cause

    pollution in violation of Chapter 403, Florida Statutes and standards contained in DER rules. See, Section 403.087, Fla. Stat. (1983); Rule 17-4.03, Fla.

    Admin. Code.

    
    

15. In the instant case, Petitioners have not shown compliance with DER permitting standards. Instead, they concede the propriety of DER's (free-form) denial of their application and offer nothing to refute evidence that granting the permit (authorizing any of the three alternate fill proposals) would result in violations of water quality standards contained in DER Rules 17-3.05(1); 17- 3.061(2)(c), (j) and (r); 17-3.121(7), (13) and (28), as well as Chapter 17-4, Florida Administrative Code, and Chapter 403, Florida Statutes. Their application, consisting of three alternate fill proposals, must therefore be denied.

    
    

16. At hearing and in post-hearing submittals, Petitioners essentially abandoned their initial claim--that their application met permitting standards-- and asserted, instead, that the denial, wholly proper under Chapter 403, Florida Statutes, resulted in an unconstitutional "taking" of their property.

    
    

17. Citing Key Haven, Petitioners state that DER "is implementing a statute [Chapter 403, F.S.] which by its terms properly allows a total taking of private property. 6/: They then reason:

    
    

    Therefore, if [they] are willing to accept all actions by [DER] as correct both to constitutionality of the Statute implemented, and as to the propriety of the agency proceedings, then suit can be filed in the Circuit Court on the basis that denial was proper but resulted in an unconstitutional taking of [their] private property. 6/

    
    

    In Key Haven, the Florida Supreme Court held that an unsuccessful applicant for an environmental permit, after exhausting executive branch appeals, could either file suit for inverse condemnation a circuit court, or have its "taking" claim decided by the district court of appeal on direct review, providing the record is adequate. Id. at 159. The applicant can raise the "taking" issue in either forum, but not both. In the instant case, Petitioners have announced their intent (both at hearing and in post-hearing memorandum) to file an inverse condemnation action against DER (based on denial of their permit) in the Circuit Court of the Sixteenth Judicial Circuit in Monroe County, Florida 7/

    
    

18. Thus, there is no reason for DER to make factual findings on the "taking" issue for later use by the circuit court since that court, unlike the district court, is capable of deciding all facts relevant to the issue before it. DER argues that the statutory "taking" remedy found in Section 403.90, Florida Statutes, limits the circuit court to "reviewing" agency action in the same manner as district courts--thus requiring development of an administrative record on the issue. This suggestion is rejected as unsupported by the language of the statute. There is no indication that the legislature, by enacting Section 403.90, intended to divest the circuit court of its inherent power to determine all facts relevant to the issue before it.

    
    

19. There is another reason why, under these circumstances, DER should refrain from fact-finding on the "taking" issue: such action would most likely complicate an already perplexing array of procedural problems. 8/ Questions arise such as whether DER's findings would be binding on the parties and the

    circuit court. 9/ If the agency substitutes its own findings for those of the hearing officer based on a claim of special insight and expertise, what effect would be given such findings? See, McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977).

    
    

20. Finally, any DER findings on the "taking" issue would be incomplete, thus inadequate for later use by the circuit court. Graham v. Estuary Properties, Inc., 399 So.2d 1374, 1380 81 (Fla. 1981), cert. den., 454 U.S. 1083 (1981), identified six criteria to be used in deciding when a "taking" has occurred, i.e. "when the valid exercise of the police power stops and an impermissible encroachment on private property rights begins." Id. In the instant case, however, evidence was presented going only to one of the criteria-

-whether the permit denial precludes all economically reasonable use of the property. Thus, under Estuary Properties, the circuit court would presumably be required to conduct further fact finding before deciding the "taking" issue.

10/ In short, under the peculiar circumstances of this case, fact finding by a hearing officer, and ultimately DER, on the "taking" issue would be of doubtful benefit and would tend to complicate, not simplify, hamper, not aid, the parties' efforts to obtain a judicial adjudication of the "taking" issue.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That Petitioners' application to fill (containing three alternative proposals) be denied for failure to prove compliance with applicable permitting standards contained in Chapter 403, Florida Statutes, and Chapters 17-3 and 17- 4, Florida Administrative Code.

DONE and ORDERED this 26th day of July, 1985, in Tallahassee, Florida.

R. L. CALEEN, JR. 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 26th day of July, 1985.

ENDNOTES

1/ Referring to a formal proceeding under Section 120.57(1) of Florida's Administrative Procedure Act, Chapter 120, Florida Statutes.

2/ This is because the criteria and evidence relevant to a "taking" claim are different from those which apply to an APA licensing dispute.

3/ Joint exhibit no. 1 and Respondents' exhibits will be referred to as Jnt. Ex. and R- , respectively.

4/ Pages in the transcript will be referred to as TR. .

5/ See, Petitioners' Proposed Findings, pp.2, 8 ("The Petitioners. . . announced during the administrative hearing that they had no grounds for contesting the propriety of the action of the Respondent, DER; * * * The Petitioners have conceded (sic) that the Respondent's denial of filling activities on the subject property was proper.")

6/ See, Petitioners' Proposed Findings, p.7.

7/ See, TR.193; Petitioners' Post-Hearing Memorandum p. 3.

8/ See, "Procedural Issues in Raising a Constitutional Taking Claim: Trends in Florida Law," 12 FLA. S.T U.S. REV. 825 (1985).

9/ Although both parties now agree that DER should make findings on the "taking" issue for later circuit court use, neither has agreed to be bound or limited by such findings. Interestingly, Petitioners state that the findings of fact of the hearing officer, unless modified by DER, will be the basis of their later circuit court action. See, Petitioners' Post-Hearing Memorandum, p. 3.

10/ Other difficulties, stemming from APA processes, come to mind. For example, one of the "taking" criteria identified in Estuary Properties is whether the agency's denial confers a public benefit or prevents a public harm. Is the agency's ultimate finding under this criteria a finding of fact or a conclusion of law? The answer decides the agency's power to reject or modify the submittal of a hearing officer. DER's Order of Remand in Snow v. DER, D0AH Case No. 84-2836, suggests that, at least in its view, such a finding on public benefit or harm would be a conclusion of law which the agency would be free to reject at will.

COPIES FURNISHED:

Douglas H. MacLaughlin, Esquire Twin Towers Office Bldg.

2600 Blairstone Road

Tallahassee, Florida 32301

David Paul Horan, Esquire 608 Whitehead Street

Key West, Florida 33040

Charles Lee

Senior Vice President Florida Audubon Society 1101 Audubon Way

Maitland, Florida 32751

Docket for Case No: 84-002897

Orders for Case No: 84-002897