vs. ) DOAH CASE NO. 87-0014
) DER FILE NO. DC46-121977 STATE OF FLORIDA DEPARTMENT )
Respondents. )
Notice was provided and on July 29, 1987, a formal Section 120.57(1), Florida Statutes, hearing was held in this case. The location of the hearing was Tallahassee, Florida, in the offices of the Division of Administrative Hearings. The hearing officer was Charles C. Adams. This recommended order is being entered following a review of the transcript of proceedings and examination of exhibits.
Proposed recommended orders have been received from the various parties which form the basis for certain fact findings in this recommended order.
Conversely, other proposed facts are rejected for reasons explained in the appendix to the recommended order.
For Petitioner: W. Douglas Hall, Esquire
Carlton, Fields, Ward, Emmanuel, Smith, Cutler & Kent, P.A.
For Respondent W. Dexter Douglass, Esquire Board: Douglass, Cooper and Coppins
In this case the question is raised on the subject of whether Rule 17- 4.210(1)(a), Florida Administrative Code, must be complied with before necessary environmental permits may be issued by the State of Florida, Department of Environmental Regulation (DER) associated with the construction of an expansion to an existing sewage treatment operation. If the answer is in the affirmative, the related question of compliance in this instance is posed. This concerns an application made in the name of Greg Wood, President, Niceville, Valparaiso, Okaloosa County Regional Sewer Board (Board) and Albert Swihart, successor to Greg Wood as president of that Board. There is also raised the issue of whether the applicant has complied with the provisions of Rule 17-4.210(1)(d), Florida Administrative Code, a prerequisite to the issuance of the subject environmental permitting. Challenges to compliance with these DER rules have been made by the City of Valparaiso, a Florida municipal corporation (Petitioner), which prompted the hearing in this cause.
On June 27, 1986, Greg Wood, as president of the Niceville, Valparaiso, Okaloosa County Regional Sewer Board submitted an application to DER to allow additional construction and expanded operation of an existing domestic wastewater treatment and disposal system. A copy of that permit application may be found as Joint Exhibit 2 admitted into evidence. This project contemplates the expansion of the existing sewage treatment system from a capacity of 2.0
m.g.d. to 2.35 m.g.d.
At page 20 of the application, it is stated that the application was one in which Greg Wood was the applicant in his capacity as president of the Board. Under Part VI of the application form, at page 20, the following representations were made by Wood:
The undersigned applicant is fully aware that the statements made in this application for a construction permit are true, correct and complete to the best of his knowledge and belief. The undersigned agrees to retain the design engineer, or another professional engineer registered in Florida, to conduct
on-site observation of construction, to prepare a certification of completion of construction, and to review record drawings for adequacy as referenced in F.A.C. Rule 17- 6.140(2)(b). Further, the undersigned agrees to provide an appropriate operation and maintenance manual for the facilities pursuant to F.A.C. Rule 17-6.150(2) and to retain a professional engineer registered in Florida to examine (or to prepare if desired) the manual.
In addition, at Part VI on page 20, there is contained the statement of Glenn D. Stephens of Polyengineering, Inc., an engineer reported to be registered in Florida. His statement concerning design capabilities said:
This is to certify that the engineering features of this pollution control project
have been designed by me or by individual(s) under my direct supervision and found to be in conformity with sound engineering principles, applicable to the treatment and disposal of pollutants characterized in the permit application. There is reasonable assurance, in my professional judgement (sic), that the pollution control facilities, when properly maintained and operated, will discharge an effluent that complies with the limitations specified in this application.
On October 27, 1986, DER issued its intent to grant a permit for the proposed project. A copy of that notice of intent may be found as Joint Exhibit
3 admitted into evidence. In this statement of intent, DER noted that the applicant for the permit was Greg Wood.
On November 12, 1986, Valparaiso filed a petition for formal administrative hearing challenging the grant of the subject permit. Initially, the petition left open the possibility of challenge to the grant of the permit along the lines of environmental concerns. Subsequently, those matters were withdrawn from consideration. That left for adjudication the questions set forth in the statement of issues related in this recommended order.
In this connection, the history of the Board, applicant, may be traced back to an agreement entered into on February 28, 1974, between the City of Niceville, Florida; the City of Valparaiso, Florida; and the Board of County Commissioners of Okaloosa County, Florida. A copy of that agreement may be found as Joint Exhibit 5 admitted into evidence. By this agreement it is stated that the signatories to that agreement desire to establish a central sewage disposal facility. It sets forth that the parties to the agreement will file a joint application to the Environmental Protection Agency to gain a grant of funds to construct the facility, with the City of Niceville being the lead applicant. Once the regional sewer board was established, the City of Niceville would terminate its responsibility as lead applicant. The agreement calls for each of the parties to the agreement to provide a pro-rata share of the capital outlay for the facility, including engineering, land and right-of-way acquisition and construction costs. Per the agreement, percentage contribution in the way of capital outlay is to be apportioned along the lines of the capacity made available to each of the parties related to the total capacity of the facility.
Within paragraph 6 of the 1974 agreement, it is stated:
That all capital improvements and major alterations to the facility shall first be borne by the party for which same was necessary if such be the case, and if such improvements or major alterations are necessitated for the overall benefit of all parties herein then such costs shall be borne in accordance to the percentage that each party's apportioned capacity bears to the full capacity of the facility.
Further, at paragraph 9 within the agreement, it is stated:
That each of the parties herein is irrevocably bound by this agreement and should any party withdraw from same it shall pay all additional costs and expenses occasioned by any other party due to the withdrawal of said party.
At paragraph 10 of the 1974 agreement, the following language is found:
That it is recognized and agreed by the parties herein that a regional sewer board shall be necessary and desirable to control and operate the facility once same is constructed and to this end it is further expressly agreed:
. . . .
The board shall have no authority to indebt any party to this agreement
The board shall have the power and authority to do all things necessary and reasonable incident to the businesslike operation and maintenance of the facility herein including but not limited to the hiring of necessary personel (sic), setting salaries, purchasing materials, letting contracts for engineering and construction services for necessary additions and alterations to the facility, and setting reasonable charges to the parties herein for use of the facility in accordance with paragraph five herein. The board shall have such additional powers and or limitations as may be set forth in joint resolutions of the parties herein from time to time.
. . . .
On March 26, 1980, the parties entered into a supplemental agreement concerning the regional sewer facility. A copy of that supplemental agreement may be found as Joint Exhibit 6 admitted into evidence. In paragraph 1(a) of the supplement, it is indicated that the supplemental agreement was perceived as being a reaffirmation of the provisions of the original agreement of February 28, 1974. At paragraph 3, the supplemental agreement calls for a preliminary organizational meeting to be held by the Board members on April 14, 1980. At that meeting it was contemplated that the Board would appoint a president, secretary and treasurer and would commence the study and evaluation necessary to establish basic operating procedures of the Board, to adopt bylaws and identify the form of legal entity to be pursued. At paragraph 4 in that document it is stated that the Board would not be officially involved in the construction of the regional sewer system. This is perceived to mean the original facility, not additions to the facility. That paragraph states that the Board's official involvement would come at the place where the operation and maintenance of the facility was taken over following acceptance of the project by the City of Niceville, lead applicant, and approval by DER and EPA.
The supplemental agreement calls for the monetary contribution of the parties to the agreement to be set upon a pro-rata basis related to use of the facility. The exact amount of contribution for operation and maintenance was to
be established by the Board. The supplemental agreement envisions the fact that the Board would enter into utility purchase contracts with each of the parties to the agreement. It calls for the treatment of the sewage at the main treatment plant in Niceville, Florida, and for the disposal of treated sewage in the spray irrigation field adjacent to the main treatment plant. At paragraph
8 of the supplemental agreement it is stated that the treatment capacity for the City of Valparaiso was 500,000 gallons per day, City of Niceville was 1,100,000 gallons per day and Okaloosa County was 400,000 gallons per day. This corresponds to 25 percent, 55 percent and 20 percent pro-rata shares of capacity for each of those entities respectively. The utility purchase contract contemplated in the supplemental agreement was to set forth the ownership and maintenance responsibilities of the parties. In this circumstance the Board was to be responsible for the maintenance of the main treatment plant, the holding pond, spray irrigation field and the master flow meter. Force mains, pump stations and sewage connection pipes in the respective jurisdictions of the three signatories to the agreement and supplement were to be maintained by those several governmental bodies.
The supplemental agreement, at paragraph 9, indicates that the utility contract was to establish fees charged to the several governmental bodies for the operation and maintenance expenses of the system in accordance with the original agreement of February 28, 1974.
Paragraph 10 to the supplemental agreement calls for the Board to Establish a separate fund known as the "equipment replacement fund" with each party to the agreement having the responsibility to provide a pro-rata share on the basis of usage, together with the establishment of provisions for emergency expenditures and that other funding action would be taken if found to be appropriate and agreeable to the parties.
As contemplated by the February 28, 1974, agreement and the supplement to that agreement dating from March 26, 1980, the Board was formed and took over the maintenance and operation of the sewage treatment facility. The bylaws of that Board were established on March 2, 1981. A copy of those bylaws may be found as Joint Exhibit 7 admitted into evidence. The bylaws are identified as being in furtherance of the initial agreement and the supplement to that agreement. Each of the governmental bodies is made a member of the Board, pursuant to the bylaws. Corporate affairs are managed through the Board of Directors. The Directors are six in number, with two serving on the Board from each of the three governmental bodies. Actions of the Board of Directors are carried forth at meetings in which a quorum is present and the majority vote controls. Day to day activities of the corporation are managed by a plant superintendent/manager appointed by the Directors. With the exception of the limitations placed upon the activities of the Board announced in the original agreement and the supplement to that agreement, the Directors of the Board control the business and affairs of the corporation.
Within Article VI, paragraph 3(c), there is a commitment that the Board will establish and provide the proper maintenance of a fund for repairs and alterations to buildings and to the plant.
At Article VI, paragraph 3(d), there is the authority to set aside funds for reserve related to any proper purpose of the Board, dealing with contingencies which are anticipated or Unanticipated, and for repair and maintenance and operation of the Board.
By the terms of the bylaws of the Board, the office of president is created, and this individual serves as chairman of the Board. Among the duties of the president would be to assure that orders and resolutions of the board are carried out.
Under the bylaws, at Article IX, contracts of the Board are limited by those provisions set out in the agreement of February 28, 1974, at Paragraphs 10(f) and (g) as discussed before. The Board may authorize officers to contract for it.
Petitioner sued the City of Niceville, Florida, the Board of County Commissioners of Okaloosa County, and the Sewer Board seeking to have the court declare what the rights of the parties were under the terms of the February 28, 1974, agreement and March 26, 1980, supplement to that agreement, specifically related to the question of the right to expand the central sewage facility. This action was in the Circuit Court in and for Okaloosa County, Florida, Civil Action No. 84-2251. A copy of the final judgment entered in that case may be found in Joint Exhibit 4 admitted into evidence. The issues as found in that case were described in the final judgment as:
Who owns the regional sewer system?
How is the sewer system operated?
How are decisions made as to alterations proposed to be made to the system?
What are the rights of the 3 owners as to proposed alterations?
What are the responsibilities of the 3 owners as to proposed alterations?
What is the status of the agreement between the Sewer Board and Polyengineering and what are the obligations of the 3 owners as to that agreement?
The court ultimately decided these issues by its orders to the following effect, as entered on December 9, 1985:
The Cities of Niceville, Valparaiso and the County of Okaloosa each own 1/3 of the Regional Sewer System, but their ownership
interests in the real estate conveyed by the City of Niceville (Plaintiff's Exhibit #8), are as set forth in that deed. Their apportioned capacities in the system are as follows:
Niceville - 55 percent
Valparaiso - 25 percent Okaloosa County - 20 percent
The system is operated by the Board of Directors of the Sewer Board pursuant to its Charter and By-Laws and subject to the provisions of the trilateral agreement of February 28, 1974, as supplemented by the agreement of March 26, 1980.
The Board of Directors of the Sewer Board
have the authority to determine whether and to what extent expansions to the system should be made, after receiving a proper request from one or more of its members. If they abuse that discretion or fail to follow correct procedures, their actions are subject to review by the Courts.
4 & 5. The owners have a right to request alterations to be made to the system to meet their growing needs provided they agree to pay their pro-rata share of the costs of such alterations. If the Sewer Board decides to proceed on such a request, notice must be given to the other owners of this decision and they must be afforded a reasonable period of time within which to elect to join in the expansion with their own additional request and they must likewise agree to pay their
pro-rata share of the costs of such alterations, pro-rata shares being determined by the respective percentages of the alterations.
The Sewer Board and Polyengineering, Inc. are both hereby enjoined from proceeding any further under the terms of the Contract for Professional Engineering Services (Plaintiff's Exhibit #6) until the Sewer Board has received a written agreement from
one or more members agreeing to pay the costs for such contractual services.
This Court expressly reserves
jurisdiction of this cause and of the parties hereto for the purpose of entering such further orders as may be necessary.
By order of June 2, 1987, entered in the present case, the applicant was allowed to offer amendments in its attempt to meet the requirement of Rules 17-4.210(1)(a) and (d), Florida Administrative Code. In furtherance of that opportunity, the Board, in a meeting of June 22, 1987, determined to give notice of intent related to an authorized agent and to provide a guarantee of compliance with design criteria, action which was perceived as addressing the requirements of Rules 17-4.210(1)(a) and (d), Florida Administrative Code. A copy of the minutes of that meeting and the format of the notice of intent and guarantee may be found as Joint Exhibit 1 admitted into evidence.
Subsequently, the notice of intent of authorized agent, per Rule 17- 4.210(1)(a), Florida Administrative Code, was submitted in support of the application A copy of that notice may be found as DER Exhibit B admitted into evidence. This form names the Board as applicant and states that the president of the Board, in this instance Albert Swihart, may file the permit application with DER. It also states that the notice is intended to reaf firm the authority of Greg Wood, former president of the Board, to make application for the environmental permit. The notice goes on to describe that the Board is filing the notice in accordance with the agreement of February 28, 1974, which
established the Board as the agent of the owners and upon the belief that the Board was the sole responsible entity for operation and maintenance, upgrade and expansion of the facility. This notice dates from June 23, 1987.
The guarantee mentioned above also originates from June 23, 1987. A copy of this document may be found as DER Exhibit A admitted into evidence. In this statement, the Board is named as the applicant, the authorized agent is said to be Albert Swihart, president of the Board, and the Board states that it is guaranteeing that it will meet the design criteria as accepted by DER concerning applicable provisions of law related to quantities and types of materials to be discharged from the plant. The Board states that it is providing the written guarantee in accordance with the agreement of February 28, 1974, which establishes that the Board is the agent of the owners and which again is said to recognize that the Board is responsible for the operation and maintenance, upgrade and expansion of the facility.
Wayne Gibson, an assistant to the City Manager of Niceville, Florida, who is serving as the project coordinator for the proposed expansion, testified in the course of the final hearing. He identified the fact that the present operating permit issued by DER for the unexpanded facility is in the name of the Board. The choice to attempt expansion was upon vote of the majority of the Board members of the Board of Directors of the Sewer Board. His impression is that the Board, as applicant, was acting as agent for the governmental entities which he perceived to be the owners.
Gregory S. Wood, former president of the Board who submitted the application initially, gave testimony at hearing. He is the administrative assistant to the mayor and city commission of the City of Valparaiso. He continues to be a member of the Board and serves presently as the secretary/treasure. He established that the Petitioner had never filed a notice of intent or written guarantee in its own right or specifically spoken to whether the Board can act as agent for the City of Valparaiso in these matters. When submitting the application, he did so as president of the Board and not as a member of the Petitioner's staff.
Robert Kriegel, who is the northwest district manager for DER and responsible for administration of permitting and regulatory activities for DER in that part of the state, testified at hearing. In his capacity, he is involved with the question of compliance with the provisions of Rules 17- 4.210(1)(a) and (d), Florida Administrative Code. This includes the policy determination of whether an applicant need comply with Rule 17-4.210(1)(a), Florida Administrative Code. Mr. Kriegel is convinced that this provision of the rule reads to the effect that a notice of intent is required by the owners of their authorized agents. In his view, a notice of intent is needed in a circumstance in which an agent files the application in lieu of the owner. As Kriegel describes it, an application by some third party is what is contemplated as needing the owner to verify that the third party is acting for the owner. In the instance in which the owner himself is making application or in which the which the chief executive officer is acting for a corporate applicant, the notice of intent is not necessary. In Kriegel's opinion, in looking at the matter of the application, when Wood filed for the Board, he filed as an owner. On the other hand, according to Kriegel, if the president is seen as being an agent for the Board, the actions of the Board in arranging for the amended submission of information as found in DER Exhibit B sufficiently identifies the fact that the president, then Swihart, had the permission to act as agent.
On the topic of compliance with Rule 17-4.210(1)(d), Florida Administrative Code, Kriegel believes that the information as mentioned in the application at page 20 sufficiently complies with the requirement of provision of guarantees about the design criteria as evidenced by the comments and signature of Greg Wood as president of the Board and of Glenn Stephens as engineer with the firm Polyengineering, Inc.
By contrast to the point of view of the Department, Petitioner believes that the official version of Rule 17- 4.210(1)(a), Florida Administrative Code, a copy of which has been obtained from the Department of State and may be found as Petitioner's Exhibit 2 admitted into evidence, requires that either the owner or the authorized agent of the owner must file a written notice of intent in submitting an application. Indeed, the language found in that exhibit and the language found in the Florida Administrative Code available to the hearing officer reads as follows: ". . . a notice of intent by the owners(s) or his (their) authorized agent."
As identified by the witness Kriegel, the grant of the permit does not carry with it the absolute right to proceed to construct the addition to the facility. It merely signifies that DER is sufficiently satisfied and that it has decided to grant the permit in question.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action in accordance with Section 120.57(1), Florida Statutes.
There is raised for consideration the matter of Rule 17-4.210(1)(a), Florida Administrative Code, in particular whether this applicant, the Board, need comply with that rule and whether it has complied if required to do so. Further, there is raised the question of whether the Board has sufficiently complied with the requirements of Rule 17-4.210(1)(d), Florida Administrative Code, related to an owner's written guarantee. The language of those two rules provisions is as follows:
In addition to requirements of Part I of this chapter, a Department Construction Permit shall be obtained in accordance with the following:
A notice of intent by the owner(s) or his (their) authorized agent.
. . . .
(d) Owners' written guarantee to meet the design criteria as accepted by the Department and to abide by Chapter 403, F.S., and the rules and regulations of the Department as to the quantities and types of materials to be discharged from the plant. The owner may be required to post an appropriate bond to guarantee compliance with such conditions in instances where the owner's financial resources are inadequate or proposed control facilities are experimental in nature.
When Gregory Wood submitted the application as president of the Board, that submission was facially acceptable from the point of view of compliance
with Rules 17-4.210(1)(a) and (d), Florida Administrative Code. However, at the point in time where Petitioner, a substantially affected party, made a timely challenge to the DER agency decision to grant the subject permit, the focus of the inquiry changed. It then became necessary to examine the question of whether compliance with the two rule provisions could be found when taking into account extrinsic evidence beyond the matters set forth in the application documents. The question of compliance with those rule provisions does not allow for or call for a decision of who owns the existing sewage treatment facility.
It becomes an examination of whether sufficient indicia exist on the status of the applicant to convince DER that the rules are applicable or have been complied with.
Paragraph 10(g) to the February 28, 1974, agreement contains language which for purposes of compliance with the DER rules in question identifies the fact that the Board may seek to construct additions and to alter the existing facility. Likewise, the order of the court in paragraph 3 to that order, in the decision of December 9, 1985, identified that the Board has the authority to determine whether and to what extent expansion should be made, upon request of the signatories to the agreement leading to the creation of the sewage treatment facility. While paragraph 4 & 5 identifies the specific steps which the court feels are necessary in the notice to signatories to the agreement who have not requested an alternation and the need to have the requesting party agree to pay pro-rata share of the cost of such alterations, the court, by its action, does not bar the DER from processing the application made by the Board in the person of its president. Nor does the injunction against the Board and Polyengineering, Inc., found in paragraph 6 to the court order barring pursuit of the contract for professional engineering services until such time as the Board receives written agreement from one or more of the signatories to the agreement for creation of the Board to pay costs for the contractual services prohibit DER in its regulatory function of permit review and issuance. The practical effect of the court's order deters construction of the expansion to the sewage treatment facility. It does not prohibit the grant of an environmental permit which may only be used in the event that the Board honors the terms of the court's order.
The Board, in its own right, may state its intent to pursue the application independent of the signatories to the agreement for establishment of the sewage treatment facility, including Petitioner. There is apparent authority for this conduct in accordance with the original agreement of February 28, 1974. Even though the rule as written provides that the owner must notice its intent to proceed with the application, in lieu of noticing its intention to proceed with the application through an authorized agent, the Board has sufficient controlling interest in the sewage treatment facility to proceed as an owner within the meaning of Rule 17-4.210(1),(a), Florida Administrative Code, and to give its written guarantee as contemplated by Rule 17-4.210(1)(d), Florida Administrative Code.
DER moved to dismiss the action and Petitioner moved for summary recommended order. Those motions were denied by order of June 2, 1987, which is attached as Exhibit A to this recommended order. DER also moved for summary recommended order at a later date or in the alternative to have relinquishment of the jurisdiction in this case to DER for informal hearing. This motion was denied by order of July 13, 1987, which is attached as Exhibit B to this recommended order.
Upon consideration of the facts found and the conclusions of law reached, it is,
That a final order be entered which grants the permit for construction of the expansion to the existing sewage treatment facility, to include a caveat that the permit may not be used in contravention to the court order described herein.
DONE AND ENTERED this 3rd day of September, 1987, at Tallahassee, Florida.
CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1987.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0014
The facts contained in the proposed recommended orders not spoken to through facts related in the recommended order are distinguished, for the following reasons:
Paragraphs 5, 7 and 8 are subordinate to facts found in the recommended order.
W. Douglas Hall, Esquire Carlton, Fields, Ward, Emmanuel,
Smith, Cutler & Kent, P.A.
Karen A. Brodeen, Esquire Assistant General Counsel Department of Environmental
W. Dexter Douglass, Esquire Douglass, Cooper & Coppins
