STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WINGFIELD DEVELOPMENT COMPANY, )

)

Petitioner, )

)

vs. ) CASE No. 89-0008RX

) DEPARTMENT OF NATURAL RESOURCES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on March 7, 1989, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Richard S. Brightman, Esquire

Kathleen E. Moore, Esquire

P.O. Box 6526

Tallahassee, Florida 32314

For Respondent: Margaret S. Karniewicz, Esquire

Dana M. Wiehle, Esquire Douglas Building, Suite 1003 3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000 BACKGROUND

This matter began on January 6, 1989 when petitioner, Wingfield Development Company, filed a petition for administrative determination of the invalidity of Rules 16B-33.002(56) and 16B-33.004(1), Florida Administrative Code (1987).

Those rules are administered by respondent, Department of Natural Resources (DNR). After being reviewed for facial compliance with Section 120.56, Florida Statutes (1987), the petition was assigned to the undersigned hearing officer on January 10, 1989. By notice of hearing dated January 11, 1989 the matter was set for final hearing on February 6, 1989 in Tallahassee, Florida. At the request of the parties, the matter was rescheduled to March 6, 1989 at the same location.

By order dated February 20, 1989 the undersigned granted respondent's motion to strike: (a) the allegations contained in paragraphs 14c. and d. of the main body of the petition, and (b) paragraphs b. and c. of the prayer for relief. The motion was granted on the ground those matters should more appropriately be considered in a section 120.57(1) hearing. The paragraphs alleged generally that the agency had interpreted the challenged rules in an arbitrary and capricious manner and that this interpretation vested unbridled discretion in the agency.

At final hearing, petitioner presented the testimony of Gordon S. Nutt, owner and president, Kirby B. Green, III, director of DNR's Division of Beaches and Shores, and Eric J. Olsen, accepted as an expert in coastal engineering.

Also, it offered petitioner's exhibits 1-6. All exhibits were received in evidence. Respondent presented the testimony of Ralph R. Clark, a DNR engineer accepted as an expert in coastal engineering, Kirby B. Green III, and Neal A. Rogers, Jr., a DNR engineer. It also offered respondent's exhibit 1 which was received in evidence.

The transcript of hearing was filed on March 16, 1989. Proposed findings of fact and conclusions of law were originally due on March 27, 1989. At the request of the parties, this time was extended to April 3, 1989, and the same were timely filed by that date. A ruling on each proposed finding is made in the Appendix attached to this Final Order.

As clarified at hearing, the issues are whether DNR utilized an illicit rule against petitioner, or if such a rule had already been adopted and codified as a part of rules 16B-33.002(56) and 16B-33.004(1), whether those rules exceed their grant of rulemaking authority by enlarging, modifying and contravening their statutory mandate.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner, Wingfield Development Company (WDC), is a real estate development company located at 390 North Orange Avenue, Suite 1800, Orlando, Florida. In late 1982 or early 1983, WDC began developing a resort project known as Turtleback Beach Club (the project) in Indian River County. When completed, the project will consist of a 256 unit hotel, 68 villas, two swimming pools, a number of cabanas, a reverse-osmosis water plant, and other amenities which will cost approximately $50 million. All structures were designed to be constructed landward of the then existing coastal construction control line (CCCL). The date of establishment of the original CCCL is not of record.

   
   

2. From late 1982 or early 1983 until 1987, WDC expended approximately

   $1.4 million on the project. Among the expenditures were the preparation of extensive cite and design plans, the installation of off-site utilities, and the fabrication and installation of some two hundred pilings and a number of pile caps. All such work was performed landward of the then existing CCCL.

   
   

3. On March 5, 1987 respondent, Department of Natural Resources (DNR), reestablished the CCCL in Indian, River County. The new CCCL was more landward than the original CCCL. This resulted in several portions of the project, including all or parts of the villa and hotel, being seaward of the new CCCL.

   
   

4. In November 1987 WDC was advised by the Indian River County Building Department to cease construction activities because, after consultation with DNR, it has decided not to make any further inspections.

   
   

5. On April 4, 1988 DNR advised WDC by letter that, after making a site review of the project, it had determined that:

   
   

   the foundations for the hotel structure and the cabana located in the southeast portion

   of the property were `under construction' pursuant to the definition contained in Subsection 16B-33.002(56), Florida Administrative Code, at the time of the reestablishment of the coastal construction control line on March 4, 1987, ... (and that) the remaining five proposed cabana structures located on the south half of the property and shown to be seaward of the new control line, the proposed swimming pools, decks and gazebos, parking areas also shown to be seaward of the new control line and any other proposed landscaping work were not `under construction' pursuant to the definition.

   
   

   The letter added that the:

   
   

   staff shall consider the exemption status for the hotel and the one cabana under construction void if construction activity on these structures remains idle for a period of six months from the date of receipt of this exemption determination and prior to completion of the structures.

   
   

   Finally, the letter required petitioner to submit:

   
   

   a proposed `build out' schedule (that) would entail providing (the) staff with specifics of where (petitioner) expect(s) the overall project to be at ninety (90) day intervals up through completion of the structures located seaward of the coastal construction line.

   The staff feels that two years should be more than ample time with which to complete that portion of the project located seaward of the coastal construction control line. Progress must be maintained on each structure during each six month interval. Additionally, should your project fall short of any ninety day progress levels to be referenced in your

   `build out' plan, your project will lose it's (sic) exemption status and all remaining portions of the project, seaward of the control line will require a permit from the (DNR) in accordance with the provisions of Section 161.053, Florida Statutes.

   
   

   Because the letter offered a point of entry to contest the proposed agency action, WDC requested a section 120.57(1) hearing. At the same time, it continued construction on the project.

   
   

6. On November 25, 1988 DNR issued further proposed agency action in the form of a letter advising WDC that, based upon a review of WDC's exemption file, the exempt status of the project had been "lost" and that any further construction activity seaward of the CCCL would require a permit from DNR under section 161.053. The receipt of this advice prompted WDC to file a second

   request for a section 120.57(1) hearing and a petition seeking to invalidate what it perceived to be an illicit rule, or in the alternative, the two rules from which the statements were drawn.

   
   

7. WDC contends that DNR's requirement that, once a project is given an exempt status, it must remain under active construction and the owner must submit for DNR's approval a "build out" schedule, is an illicit rule since such a requirement is not contained in DNR's rules.

   
   

8. Under state law, as implemented by DNR, no construction activity may take place seaward of a CCCL without a permit from DNR. However, any projects that are under construction at the time of the establishment of the CCCL are exempt from such permitting requirements. Under the current DNR organizational structure, the Division of Beaches and Shores (Division) is charged with the responsibility of administering and enforcing the CCCL regulatory program. The Division's Bureau of Coastal Engineering and Regulation has been assigned the task of performing a site review of all projects for which local building permits have been issued at the time of the establishment of a CCCL. If a project is under construction, as defined in DNR rules, at the time of the establishment of the CCCL, the owner may continue his activities even if the structures are seaward of the CCCL. A determination as to whether a structure is under construction at the time a CCCL is reset does not take into consideration the impacts the structure will have on the beach and dune system. This is because DNR considers such a determination to be regulatory in nature, and such impacts would be irrevelant to that decision.

   
   

9. The Division construes its authority as also permitting it to require an exempt project to remain under active construction once it receives an exempt status. It does so on the notion that this insures that the exemption status was obtained in good faith, and the builder intended to go forward with the construction in a timely manner and as originally conceived. It has been DNR's experience that some property owners have engaged in a minimal construction program to circumvent the regulatory process. To prevent this, DNR has imposed a requirement that, if construction activity ceases for a period of six months or more, the exempt status will be lost. A six month time period was used because DNR realized that short, unforeseeable delays of less than six months were not uncommon. This policy has been uniformly applied, without discretion to agency personnel to do otherwise, on all projects classified as exempt. In addition, DNR has required project owners to submit to DNR staff a so-called "build out" schedule containing a construction schedule at ninety day time intervals with a time certain for completion of the project. This requirement, although infrequently used, has been uniformly imposed, when needed, upon all exempt projects, including that of WDC.

   
   

10. The agency concedes that there is no specific statutory language authorizing the above requirements. However, it takes the position that these requirements are authorized and sanctioned by chapter 161 as a whole and by rules 16B-33.002(56) and 16B-004(1), which happen to be the rules challenged by WDC. Those rules read as follows:

    
    

    16B-33.002 Definitions.

    
    

    (56) "Under construction" is the continuous physical activity of placing the foundation or continuation of construction above the foundation of any structure seaward of the established coastal construction or setback

    line. Under construction does not include application for or obtaining a building permit, a site plan approval or zoning approval from the appropriate local government agency having jurisdiction over the activity, purchasing construction materials, placing such construction materials on the site, clearing or grading the site in anticipation of construction, site surveying, continuation of site work beyond the limits of the foundation including landscape work or construction of nonhabitable major structures or rigid coastal or shore protection structures, or reactivating construction after substantially all construction activity has remained stopped for a period of six months or more.

    
    

    16B-33.004 Exemptions from Permit Requirements.

    
    

    (1) Any structures under construction prior to the establishment of a coastal construction control line in a particular county are exempt from the provisions of Section 160.053, Florida Statutes, and this Chapter, except as noted in Subsection 161.053(12), Florida Statutes.

    
    

11. Respondent acknowledges that there is nothing in rule 16B-33.004(1) that specifically authorizes it to impose the challenged requirements. However, it relies upon that part of the rule which reads "except as noted in Subsection 161.053(12), Florida Statutes" as implicitly authorizing this action. That statute removes the exempt status of a project if there are any subsequent modifications which "require, involve, ,or include any additions to, or repair or modification of the existing foundation of that structure." According to the Division director, it construes that language as authorizing it to make a determination as to whether the project owner has made any substantial changes in the nature of the project or if construction has been continuous.

    
    

12. Respondent also relies upon rule 16B-33.002(56) which defines the term "under construction" as being "the continuous physical activity of placing the foundation or contination of construction above the foundation of any structure seaward of the established coastal construction control or setback line." The Division interprets this language to mean that construction must be continuous and without a cessation of activities of more than six months. This rule language is bottomed on subsection 161.053(9) which reads in pertinent part that "the provisions of this section do not apply to ... structures existing or under construction prior to the establishment of a coastal construction control line as provided herein; provided such structures may not be materially altered except as provided in subsection (5)." Finally, the agency relies upon subsection 161.053(1)(a) which sets forth the legislative intent behind the establishment of CCCLs. Among other things, the purpose of a CCCL is to protect, the beaches and dunes from imprudent construction which can "provide inadequate protection to upland structures." In the words ,of the Division director, DNR interprets this language to mean that it has the authority to "go back and look at projects once they are declared exempt, and to make sure that they remain exempt under the statute."

13. The DNR documents which grant exemptions do not contain any reference to requirements that there be continuous construction on the project and that a build out schedule be submitted thereafter. Even so, DNR contends it is merely granting a "conditional" exemption conditioned on the project owner maintaining active and continuous construction. It posits further that, without such authority, its regulatory program would be rendered ineffective. However, the Division director conceded that, even without the imposition of these requirements, DNR still has authority to regulate all structures which are constructed seaward of the CCCL and to prohibit any material changes to an existing or partially completed structure.

    
    

14. Petitioner intends to complete its project, but contends it cannot do so at the pace required in DNR's build out schedule. Also, WDC points out that it is unable to secure permanent financing for the project since lender's are uncertain if DNR will approve the build out schedule and allow construction to go forward or instead precipitously halt the construction. There have been no construction activities on the project since November 1988.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Section 120.56, Florida Statutes (1987).

    
    

16. The parties have stipulated that petitioner has standing to bring this action.

    
    

17. In a rule proceeding, the burden is on petitioner to show by a preponderance of the evidence that the questioned statements are illicit rules, or in the alternative, that the challenged rules are an invalid exercise of delegated legislative authority. Agrico Chemical Co. v. State, Department of Environmental Regulation, 365 So.2d 759; 763 (Fla. 1st DCA 1978), cert. denied 376 So.2d 74 (Fla. 1979).

    
    

18. As clarified at hearing, petitioned contends that DNR has applied an illicit rule to its project. More specifically, WDC contends that, by imposing a requirement that WDC maintain active construction on the project, with no delays exceeding a six month period, less it lose its exempt status, DNR has utilized an illicit rule. It contends further that the imposition of a build out schedule, with a specific completion timeframe, is likewise an illicit rule. The alleged rules were applied through the agency's letters of April 4 and November 25, 1988. In the alternative, WDC has alleged )hat rules 16B- 33.002(56) and 16B-33.004(1) constitute an invalid exercise of delegated legislative authority on the ground they enlarge, modify or contravene their statutory mandate. According to petitioner, if the offending language in the two DNR letters is already codified in DNR rules, then the rules must necessarily be invalid since they go beyond the statutory mandate by imposing requirements not authorized by general law.

    
    

19. To determine if the agency's action, as reflected in the letters of April 4 and November 25, 1988, was invalid, it is first necessary to determine if the offensive language in the letters was a rule within the meaning of subsection 120.52(16). A rule is defined in that subsection as follows:

    
    

    each agency statement of general applicability that implements, interprets,

    or prescribes laws or policy or describes the organization, procedure, or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule.

    
    

    Thus, the broad inquiry is whether the agency action is an agency statement of general applicability implementing or prescribing agency policy. If it is, it must then be determined whether the statement is found in an existing, lawfully adopted rule.

    
    

20. In addition to the above statutory definition, reference to the often cited judicial principles below, but repeated here from the case of Balsam v. Department of Health and Rehabilitative Services, 452 So.2d 976 (Fla. 1st DCA 1984), are helpful. In Balsam, the court, in borrowing language from an earlier decision, provided the following instructive advice in determining whether an agency's statements constitute a rule:

    
    

    Any agency statement is a rule if it purports in and of itself to create certain rights and adversely affect others, or serves by is own effect to create rights, or to require compliance, or otherwise to have the direct and consistent effect of law. Id. at 977- 978.

    
    

21. The requirement that an exempt project have continous construction activity with periods of inactivity lasting no more than six months, and that a build out schedule be submitted, is clearly one of general applicability since it is uniformly applied statewide to all projects having an exempt status and has the direct and consistent effect of law. In itself, it creates rights and adversely affects others since it determines whether a once declared exempt project retains that status. Further, the agency requires that this policy be followed without discretion by its personnel. Accordingly, it must be concluded that the offensive language contained in the two letters constitutes a rule within the meaning of the law.

    
    

22. Having reached the above conclusion, the next task is to determine whether the statements have already been adopted as a rule. The requirement that a project remain under continuous construction, without periods of inactivity lasting more than six months, is a mirror reflection of language in rule 16B-33.002(56). That rule provides that the term "under construction," which term is used to determine if a project is classified as exempt, does not include "reactivating construction after substantially all construction activity; has remained stopped for a period of six months or more." Since the statement (requirement) in the letters closely tracks the rule, it is concluded that this statement has been adopted as a rule and is not illicit. However, the requirement that an exempt project owner submit a build out schedule and continue construction until completion of the project at a pace to be prescribed and approved by DNR personnel is another matter. Such a requirement does not appear on the face of either rules 16B-33.02(56) or 16B-33.004(1), or any other promulgated rule, and thus it constitutes an illicit rule. As to this statement, the petition is granted, and the statement is hereby declared to be unlawful as being an invalid exercise of delegated legislative authority.

23. In the alternative, petitioner has contended that rules 16B-33.002(56) and 16B-33.004(1) are an invalid exercise of delegated legislative authority on the ground they enlarge, modify and contravene their statutory mandate. If such a proposition is shown to be true, this is a proper ground for invalidating a rule. See, e.g., Department of Administration, Division of Retirement v. Albanese, 445 So.2d 639 (Fla. 1st DCA 1984). However, in applying this statutory sanction, several judicial principles come into play. First, it well established that agencies are to be accorded wide discretion in the exercise of their lawful rulemaking authority, clearly conferred or fairly implied and consistent with the agency's general statutory duties. See, e.g., Dept. of Professional Regulation, Board of Medical Examiners v. Durrani, 455 So.2d 515,

    517 (Fla. 1st DCA 1984). Further, rulemaking authority may be implied to the extent necessary to properly implement a statute governing the agency's statutory duties and responsibilities. Dept. of Professional Regulation, Board of Professional Engineers v. Fla. Society of Professional Land Surveyors, 475 So.2d 939 (Fla. 1st DCA 1985). At the same time, it is noted that an administrative construction of a statute (as formulated in a rule) by an agency responsible for its administration is entitled to great weights and should not be overturned unless clearly erroneous. See, Harbor Group, Inc. v. Department of Natural Resources, 487 So.2d 1141, 1142 (Fla. 1st DCA 1986). However, the statutory construction must be a permissible one and not "any conceivable construction of a statute ... irrespective of how strained or ingeniously reliant on implied authority it might be." State of Florida, Board of Optometry, et al v. Fla. Society of Ophthalmology, et al, 13 FLW 2764, 2767 (Fla. 1st DCA, December 19, 1988).

    
    

24. As to the contention that rule 16B-33.004(1) constitutes an invalid exercise of delegated legislative authority, this contention must fail on the ground the challenged rule contains no language pertaining to the questioned statements. While petitioner may quarrel with the agency's interpretation of the rule, and contend that, as applied to its project, such an interpretation is arbitrary and capricious, this issue is not appropriate in a section 120.56 proceeding. See, e.g., Greynolds Park Manor, Inc. v. DHRS, 491 So.2d 1157 (Fla. 1st DCA 1986). Therefore, there is no basis to invalidate the rule.

    
    

25. Remaining at issue is the validity of rule 16B-33.002(56). That rule defines the term "under construction," a definition having profound implications for all persons with exempt projects. Among other things, the rule requires that there be "continuous physical activity" on an exempt project, with periods of inactivity lasting no more than six months. The relevant question is whether such a rulemaking requirement is authorized by general law.

    
    

26. The agency's general authority for adopting rule 16B-33.002(56) is found in subsection 370.921(1), Florida Statutes (1987). That subsection authorizes DNR to "make, adopt, promulgate, amend, and repeal all rules and regulations necessary or convenient for the carrying out of the duties, obligations, powers, and responsibilities conferred on the department or any of its divisions." The specific laws which the rule implements are sections 370.02(5), 161.052 and 161.053. The first statute enumerates the powers and duties of the Division, which include a wide array of powers and duties relative to beaches and the shore line. Section 161.052 pertains, in general terms, to coastal construction and excavation regulations while section 161.053 authorizes the Division to establish CCCL on a county by county basis. Of particular note is subsection of the latter statute which provides as follows:

    
    

    (9) The provisions of this section do not apply to structures intended for shore

    protection purposes which are regulated by s.

    161.041 or to structures existing or under construction prior to the establishment of the coastal construction control line as provided herein, provided such structured may not be materially altered except as provided in subsection (5). (Emphasis added).

    
    

    The agency also finds solace in subsection 161.053(12) which provides that the CCCL permitting requirements do not apply:

    
    

    to any existing structure within the limits of the existing foundation which does not require, involve, or include any additions to, or repair or modification of, the existing foundation of that structure.

    
    

    Further, DNR relies upon the following underscored language in subsection 161.053(1)(a) to support its rulemaking authority:

    
    

    (1) The legislature finds and declares that the beaches in this state and the coastal dunes adjacent to such beaches, by their nature, are subject to frequent and severe fluctuations and represent one of the most valuable natural resources of Florida and that it is in the public interest to preserve and protect them from imprudent construction which can jeopardize the stability of the beach-dune system, accelerate erosion, provide inadequate protection to upland structures, endanger adjacent properties, or interfere with public beach access.

    (Emphasis added).

    
    

    Finally, the agency cites to section 161.131 which provides that "the provisions of ss. 161.011-161.212 shall be liberally construed by all concerned in a manner to best accommodate the beach and shore preservation purposes and programs."

    
    

27. There is no specific language in either subsections 161.053(9) or (12) which authorizes DNR by rule to continue to regulate the activities of an exempt project except for the sole purpose of insuring that no material changes in a project's character are made. The question, then is whether the authority to require continuous construction activities may be fairly implied from and is consistent with the agency's general statutory duties or, by implication, is reasonably necessary in order to implement and carry out DNR's responsibilities under the law. In answering this not so clear cut question, WDC relies principally upon the fact that the legislature has explicitly provided that, if a project is under construction prior to the establishment of a CCCL, it is exempt from all otter requirements of the section. Because that point in time was used, WDC argues that DNR may not impose continuous construction requirements after an exemption is obtained. In its proposed order, DNR responds that the words "under construction" should be broadly construed through its rulemaking powers so as to allow the agency to carry out its responsibility of protecting the beach-dune system. It argues further that the phrase connotes a meaning of being actively engaged in the process of constructing a structure and one beyond mere site preparation or surveying. DNR goes on to contend that,

    without the challenged rules, individuals could circumvent the regulatory program by engaging in minimal, insubstantial construction activities prior to the date a CCCL is set, gain an exempt status, and then wait twenty years to complete the project.

    
    

28. Initially, it is noted that subsection 161.053(1)(a), which establishes as a public policy the protection of the beach-dune system from imprudent construction cannot provide firm support for DNR's position since, by the specific terms of subsection 161.053(9), "the provisions of this section [including 161.053(1)(a)] do not apply...to structures existing or under construction prior to the establishment of the coastal construction control line." Because WDC's project was found to be "under construction" when the CCCL was reetablished, the other provisions in the section arguably do not apply. If they do, it would only be in conjunction with DNR's limited duty to insure that WDC did not make any material changes in the project's character. Next, while clearly DNRs statutory responsibilites include the protection of the beach-dune system, DNR has ample, existing tools in its regulation arsenal to fulfill this task without requiring a project remain under continuous construction. First, it now has unambiguous authority to determine whether a structure is "under construction" prior to the time a CCCL is established. Accordingly, it may stringently enforce these grand fathering provisions so that those individuals with "minimal, insubstantial" construction on a project do not initially qualify. Secondly, it has the authority to monitor existing structures and those determined to be under construction to insure they are not thereafter materially altered so as to threaten the beach-dune system. Thus, a grandfathered project owner cannot change the originally conceived design of a structure no matter how long it takes to complete the project. Finally, had the legislature intended that DNR an exempt project to remain under continuous construction, it could have easily added the words "and after" to subsection 161.053(9) so that, in order to retain an exempt status, a project would have to be under construction both "prior to and after" the establishment of a CCCL.

    
    

29. Because the authority to require continuous construction on an exempt project is not necessary in order to implement DNR's duties, and may not be reasonably inferred from the general law, it is concluded that the challenged rule is based on an erroneous, impermissible construction of the law and must be struck down as enlarging and contravening its statutory mandate.

Based on the foregoing findings of fact and conclusions of law, it is ORDERED that the petition of Wingfield Development Company is granted in

part, and the agency statement requiring petitioner to submit for DNR's approval a build out schedule and to complete the project within two years is declared to be an illict rule. It is further ORDERED that Rule 16B-33.002(56) is declared to be an invalid exercise of delegated legislative authority.

DONE AND ORDERED this 19th day of April, 1989, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 19th day of April, 1990.

APPENDIX

Petitioner:

1-2. Covered in finding of fact 1. 3-4. Covered in finding of fact 2. 5-6. Covered in finding of fact 3. 7-8. Covered in finding of fact 5.

9. Covered in finding of fact 6.

10-14. Covered in findings of fact 8-11. 15-17. Rejected as unnecessary.

Respondent:

1. Covered in finding of fact 8.

2. Covered in finding of fact 5.

3. Covered in finding of fact 6.

4-5. Covered in finding of fact 8.

6. Covered in finding of fact 10.

8-18. Not used since these merely restate statutory provisions. 19-22. Covered in findings of fact 8-11.

1. Rejected as being unnecessary.

2. Covered in finding of fact 8.

3. Rejected as being a conclusion of law.

COPIES FURNISHED:

Richard S. Brightman, Esquire

P.O. Box 6526 Tallahassee, FL 32314

Margaret S. Rarniewicz, Esquire Douglas Building, Suite 1003 3900 Commonwealth Boulevard

Tallahassee, FL 32399-3000

V. Carroll Webb, Esquire

Joint Administrative Procedures Committee Room 120, Holland Building

Tallahassee, FL 32399-1300

Liz Cloud, Chief

Bureau of Administrative Code Room 1802, The Capitol Tallahassee, FL 32399-0250

================================================================= DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

DEPARTMENT OF NATURAL NOT FINAL UNTIL TIME EXPIRES TO RESOURCES, FILE MOTION FOR REHEARING AND

DISPOSITION THEREOF IF FILED.

Appellant,

CASE NO. 89-1303

vs. DOAH CASE NO. 89-0008RX

WINGFIELD DEVELOPMENT COMPANY

Appellee.

/ Opinion filed May 28, 1991.

An Appeal from an order of the Division of Administrative Hearings Kenneth J. Plante, General Counsel, Margaret S. Karniewicz & Dana M. Wiehle, Assistant General Counsel, Tallahassee, for Appellant.

Richard S. Brightman, of Hopping, Boyd, Green & Sams, Tallahassee, for Appellee. PER CURIAM.

The Department of Natural Resources (DNR) appeals a final order which held that DNR's rule requiring Wingfield Development Company (Wingfield) to submit a "build out" schedule and to complete the project within two years is an illicit rule and that Fla. Admin. Code Rule 16B-33.002(56), is an invalid exercise of delegated legislative authority. DNR contends that the hearing officer erred in invalidating the entire definition of the term "under construction" contained in Rule 16B-33.002(56), and that he erred in determining that DNR lacks statutory authority to require continuous construction in order for a structure to be exempt from the coastal construction control line (CCCL) permit requirements.

We affirm.

In early 1983, Wingfield began to develop a resort project on land it owned in Indian River County. When completed, the project will consist of a 256-unit hotel, 68 villas, two swimming pools, cabanas, and other amenities. All of the structures were designed to be constructed landward of the then-existing coastal construction control line. The cost of the entire project was expected to be approximately $50 million. From 1983 until 1987, Wingfield spent approximately

$1.4 million on the project.

On March 5, 1987, DNR relocated the CCCL by moving the line further inland resulting in several portions of the Wingfield project being now seaward of the new CCCL. In November of 1987, the Indian River County Building Department ordered Wingfield to cease construction activities. On April 4, 1988, DNR advised Wingfield via letter that it had determined the following:

The foundations for the hotel structure and the cabana located in the southeast portion of the property were "under construction" pursuant to the definition contained in Subsection 16B-33.002(56), Florida Administrative Code, at the time of the reestablishment of the coastal construction control line on March 4, 1987, ... [and that] the remaining five proposed

cabana structures located on the south half of the property and shown to be seaward of the new control line, the proposed swimming pools, decks and gazebos, parking areas also shown to be seaward of the new control line and any other proposed landscaping work not "under construction" pursuant to the definition.

A proposed "build out" schedule [that] would entail providing [the] staff with specifics of where [petitioner] expect[s] the overall project to be at ninety (90) day intervals up through completion of the structures located seaward of the coastal construction line. The staff feels that two years should be more than ample time with which to complete that portion of the project located seaward of the coastal construction control line. Progress must be maintained on each structure during each six month interval.

Additionally, should your project fall short of any ninety day progress levels to be references in your "build out" plan, your project will lose it's (sic) exemption status and all remaining portions of the project, seaward of the control line will require a permit from the (DNR) in accordance with the provisions of Section 161.053, Florida Statutes.

Wingfield then requested a Section 120.57(1), Fla. Stat., hearing while at the same time continuing construction on the project. DNR informed Wingfield on November 25, 1988, that the project had lost its exempt status, and that any further construction activity seaward of the CCCL would require a permit from DNR. Wingfield filed a second request for hearing seeking to invalidate Fla. Admin. Code Rules 16B-33.002(56) and 16B-33.004(1) from which the statements in the letter were drawn. A formal hearing was conducted on March 6, 1989. At the final hearing, the hearing officer heard testimony from Gordon S. Nutt, owner

and president of Wingfield; Kirby B. Green, III, Director of DNR's Division of Beaches and Shore; Eric J. Olsen, an expert in coastal engineering; and Neal A. Rodgers, Jr., a DNR engineer.

The definition of "under construction" in Rule 16B-33.002(56) sets forth those preconstruction activities which DNR does not consider to be sufficient activity to exempt a structure from coastal permit requirements:

"Under construction" is the continuous physical activity of placing the foundation or continuation of construction above the foundation of any structure seaward of the established coastal construction or setback line. "Under construction" does not include application for or obtaining a building permit, a site plan approval or zoning approval from the appropriate local government agency having jurisdiction over the activity, purchasing construction materials, placing such construction materials on the site, clearing or grading the site in anticipation of construction, site surveying, continuation of site work landscape work or construction of nonhabitable major structures or rigid coastal of shore protection structures, or reactivating construction after substantially all construction activity has remained stopped for a period of six months or more.

DNR relies on this rule and interprets its language to mean that construction must be continuous and without cessation of activities for more than six months. This rule's language is premised on Section 161.053(9), Fla. Stat., which reads in pertinent part:

The provisions of this section do not apply to ....

structures existing or under construction prior to the establishment of a coastal construction control line as provided herein, provided such structures may not be materially altered except as provided in subsection (5).

(Emphasis added.)

Wingfield argued that DNR's requirements that once a project is given an exempt status it must remain under active construction, and that the owner must submit for DNR's approval a "build out" schedule, constitute an illicit rule as such requirements are not contained in DNR's rules. DNR contends that under Section 161.053, no construction activity may take place seaward of the CCCL without a permit, and that any projects which are under construction at the time a new CCCL is established are exempt from such permitting requirements. DNR further requires that an exempt project remain under active construction once it receives exempt status. It mandates the above requirement to insure the exemption status was obtained in good faith and that the builder intends to go forward with the construction in a timely manner. In order to guarantee that a developer does not engage in minimal construction efforts, DNR has imposed a requirement that if construction activity ceases for a period of six months or more, the exempt status will be lost. This policy has been uniformly applied on all projects classified as exempt. Additionally, DNR has required project

owners to submit a "build out" schedule to DNR at 90-day intervals containing a construction schedule setting forth a time certain for the completion of the project.

DNR concedes that there is no specific statutory language authorizing the above requirements. Nevertheless, it takes the position that the requirements are authorized and sanctioned by Chapter 161, Fla. Stat., and more specifically Section 161.053, and by Rule 16B-33.002(56) and Rule 16B-33.004(1). Rule 16B- 33.004(1) provides:

Any structures under construction prior to the establishment of a coastal construction control line in a particular county are exempt from the provisions of Section 161.053, Florida Statutes, and this Chapter, except as noted in Subsection 161.053(12), Florida Statutes.

DNR acknowledges that there is nothing in Rule 16B-33.004(1) that specifically authorizes it to impose the challenged requirements. It does, however, rely upon Section 161.053(12), which removes the exempt status of a project if there are any subsequent modifications which "require, involve, or include any additions to, or repair or modification of, the existing foundation of that structure," as authority for it to make a determination whether the project owner has made any substantial change in the nature of the project if the construction has been continuous.

Finally, DNR relies upon Section 161.053(1)(a) which sets forth the legislative intent behind the establishment of the CCCL. This portion of the statute states that the purpose of a CCCL is to protect the beaches and dunes from imprudent construction which can "provide inadequate protection to upland structures." DNR interprets this language to mean that it has the authority to "go back and look at projects once they are declared exempt and to make sure that they remain exempt under the statute."

A final order was entered which held that DNR's requirement to submit a "build out" schedule and to complete the project within two years constitutes an illicit rule, and further that Rule 16B-33.002(56) was an invalid exercise of delegated legislative authority. Rule 16B-33.004(1) was found to be a valid exercise of delegated legislative authority. DNR filed this appeal.

Contrary to DNR's contention, the hearing officer correctly ruled that DNR lacked the authority to compel Wingfield to comply with the limitations, requirements and provisions contained in the letter written to Wingfield on April 4, 1988, including the requirement of a "build out" schedule with progress reports at 90-day intervals up through the completion of the structures located seaward of the revised coastal construction line, and all other timing provisions in the letters that would result in the loss of its exempt status.

The letters constitute an illicit rule not adopted in the manner required by law.

"Rule" is defined in Section 120.52(16), Fla. Stat., as follows:

"Rule" means each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of an agency and includes any form which imposes any requirement or

solicits any information not specifically required by statute or by an existing rule.

In Balsam v. Department of Health and Rehabilitative Services, 452 So.2d 976, 977-978 (Fla. 1st DCA 1984), this court held that any agency statement is a rule if it purports in and of itself to create certain rights and adversely affect others, or if it serves by its own effect to create rights, or to require compliance, or otherwise to have the direct and consistent effect of law. The limitations, conditions and requirements contained in the letter of April 4, 1988, adversely affect the substantive rights of others. The letter implements, interprets or prescribes law or policy, describes procedure or practice requirements of the agency, and imposes requirements or information not specifically required by statute or by existing rule. The letter, therefore, constitutes a rule within the meaning of the law and all agency rules must be adopted according to the procedures of Section 120.54, Fla. Stat., or such rules constitute an invalid exercise of delegated legislative authority. Section 120.52(8)(a), Fla. Stat.

DNR also contends that the hearing officer erred in finding that Rule 16B- 33.002(56), which defines the term "under construction, "was an invalid exercise of delegated legislative authority. The definition establishes that only where there is a continuous physical activity of placing a foundation or continuation of construction above the foundation will the structure deemed to be under construction. It also provides that a structure for which all construction activity has remained stopped for a period of six or more months will be deemed not under construction. Rule 16B-33.004(1), provides that structures under construction prior to the establishment of a CCCL are exempt from coastal permitting by DNR.

As provided by the plain language of these two rules, in order to decide whether a structure is exempt from coastal permitting, DNR need only determine whether the structure was under construction prior to the establishment of the CCCL. Neither of these rules specifically require a determination of whether the structure remains under construction after the CCCL is established, nor do these rules require that an exempt structure lose its exemption if it does not remain under continuous construction after it is found to be exempt.

Furthermore, there is no language in Rule 16B-33.002(56) which could reasonably be interpreted to establish the requirement that an exempt structure remain under continuous construction in order to remain exempt.

An agency's interpretations of its own rules is entitled to great weight.

Agencies are to be accorded wide discretion in the exercise of their lawful rule-making authority, clearly conferred or fairly implied and consistent with

the agency's general statutory duties. Department of Professional Regulation v. Durrani, 455 So.2d 515 (Fla. 1st DCA 1984). Rule-making authority may be implied to the extent necessary to properly implement a statute governing the agency's statutory duties and responsibilities. Department of Professional Regulation v. Florida Soc'y of Professional Land Surveyors, 475 So.2d 939 (Fla. 1st DCA 1985). Moreover, the construction of a statute by an agency charged with its administration is entitled to great weight and will not be overturned unless clearly erroneous. Laborers' Int'l Union of N. Am., Local 478 v.

Burroughs, 541 So.2d 1160 (Fla. 1989). However, the statutory construction must be a permissible one and the agency cannot implement "any conceivable construction of a statute .,.. irrespective of how strained or ingeniously reliant on implied authority it might be." State, Bd. of Otometry v. Florida Soc'y of Opthalmology, 538 So.2d 878, 885 (Fla. 1st DCA 1988), review denied 542 So.2d 1333 (Fla. 1989). The deference granted an agency's interpretation is not

absolute. "When the agency's construction clearly contradicts the unambiguous language of the rule, the construction cannot stand." Woodley v. Department of Health and Rehabilitative Services, 505 So.2d 676, 678 (Fla. 1st DCA 1987).

Rule 16B-33.002(56) requires, among other things, that there be a "continuous physical activity" on an exempt project, with periods of inactivity lasting no more than six months. DNR's requirement is an invalid exercise of delegated legislative authority because it enlarge, modifies and contravenes the specific provisions of the law implemented. DNR's general authority for adopting Rule 16B-33.002(56) is found in Section 370.021(1), Fla. Stat., which authorizes DNR to "make, adopt, promulgate, amend, and repeal all rules and regulations necessary or convenient for the carrying out of the duties, obligations, powers and responsibilities conferred on the department or any of its divisions. According to DNR, the statutes which the rule implements are Sections 370.02(5), 161.052 and 161.053. Of particular importance to note is Section 161.053(9), Fla. Stat., which provides:

The provisions of this section do not apply to structures intended for shore protection purposes which are regulated by Section 161.041 or to structures existing or under construction prior to the establishment of the coastal construction control line as provided herein, provided such structures may not be materially altered except as provided in subsection (5).

(Emphasis added.) This section of the statute exempts from the effect of Section 161.053, those structures which are under construction prior to the establishment of a CCCL. The statute establishes the point in time at which DNR determines whether a structure is under construction. DNR's requirement enlarges and modifies this statutory provision by authorizing the agency to continuously determine whether exempt structures remain under continuous construction after the establishment of a CCCL. The plain language of the statute requires DNR to determine whether a structure is under construction prior to the establishment of a CCCL and does not authorize DNR to determine whether a structure remains under construction or whether construction is abandoned after that date. After it has become exempt, the statute authorizes DNR only to prevent the owner from materially changing the structure. If the legislature intended that DNR require an exempt project to remain under continuous construction, it could have easily added the words "and after" to Section 161.053(9) so that, in order to retain an exempt status, a project would have to be under construction both "prior to and after" the establishment of a CCCL.

Florida law clearly mandates that rules cannot enlarge, modify or contravene the provisions of a statute. State, Dept. of Business Regulation v. Salvation Limited, Inc., 452 So.2d 65 (Fla. 1st DCA 1984). The rule-making process cannot be used to make legal that for which there was no authority in the first place. Great American Banks, Inc. v. Division of Admin. Hearings, 412 So.2d 373 (Fla. 1st DCA 1981). If agency rules contravene the statute, they must be rejected as an invalid exercise of delegated legislative authority. E.

M. Watkins & Co., Inc., v. Board of Regents, 414 So.2d 583 (Fla. 1st DCA 1982). For the foregoing reasons, Rule 16B-33.002(56) and DNR's requirement of "continuous construction" are rules that constitute invalid exercises of delegated legislative authority and the final order appealed is affirmed.

We recognize and appreciate DNR's desire to exercise some control over exempt construction seaward of the CCCL in order to prevent property owners from performing the minimum construction to come within the exempt provision of Section 161.053(9) and then failing to complete the structure within a reasonable time. However, the proper means of attaining this authority is to secure legislation authorizing it.

AFFIRMED.

SMITH and BARFIELD, JJ., CONCUR; SCHWARTZ, Alan R., ASSOCIATE JUDGE, DISSENTS WITH OPINION.

SCHWARTZ, A.R., Associate Judge (dissenting).

In my judgment, the challenged rule represents no more than a rational explanation and elucidation of the ambiguous expression "under construction" as it is employed in section 161.053(9), Florida Statutes (1989), and does not therefore create any unauthorized addition to the provisions of the statute nor to the authority of the department. See Atlantic Coast Line R.R. v. Mack, 57 So.2d 447 (Fla. 1952).

The court's conclusion to the contrary rests upon the argument that the statutory requirement that a project be "under construction" prior to the establishment of the coastal control line precludes any restriction upon abandoning that construction afterwards. I believe, as the facts of this case show, that this view is without merit. The term "under construction" itself, which is one of process and not stasis, clearly connotes a continuum--that is, an extension over a period of time--rather than a situation as it exists at a particular point. See Webster's Third New International Dictionary 2487 (1986) ("under 9c: in process of <repair> <discussion> <construction>"). In other words, one can determine if a building is actually "under construction," even at a specific point, only by viewing, as it were, a time-lapse photograph encompassing not only that point, but also what has happened before and after during the whole history of the building. I agree with the department that when a picture of this kind shows as much as six months of total inactivity after the coastal line was drawn, or that the project has not been completed within two years, it can be said that the property was not meaningfully "under construction" even prior to the establishment of the line. 1/ In contrast, under the approach of the appellee, the hearing officer, and the majority, a contractor is able to secure its grandfathered rights to a building seaward of the control line if it merely begins construction on the day before the line is fixed, ceases the day after, and waits, presumably for decades, until it secures financing to complete the structure. But see Brennan v. Saco Const., Inc., 381 A.2d 656 (Me. 1978). But this is not what words like "under construction" mean as they have been interpreted and employed by cases, statutes, and authorities which deal with the present issue of the acquisition of vested rights to a non- conforming use. See League to Save Lake Tahoe v. Crystal Enters., 685 F.2d 1142 (9th Cir. 1982)(construction project deemed to be abandoned under Tahoe Regional Planning Agency's Land Use Ordinance where construction ceased for more than one year); Smith v. Board of Appeals, 366 Mass. 197, 316 N.E.2d 501, 504 (1974) (statutory provision .. "should be interpreted so as to afford protection from zoning changes to good faith holders of building permits taken out before the first zoning notice who proceed with some diligence to build under such

permits")(emphasis added). R. Anderson, American Law of Zoning Sections 6.28,

6.30 (3d ed. 1986); A. & D. Rathkopf, The Law of Zoning and Planning Section

51.08 (4th ed. Supp. 1989). Since the rule before us simply reflects what I believe to be the mandatory, but which is certainly at least a permissible view of the statute, I cannot agree with the court's conclusion striking it down. See General Tel. Co. of Florida v. Marks, 500 So.2d 142 (Fla. 1986).

ENDNOTE

1/ A different result would be indicated if the legislature had fixed the entitlement to building within the coastal construction line upon the mere existence of, say, "any construction" prior to that time. But it did not, and its use of the phrase "under construction" instead wholly supports the department's view of that statutory language.

MANDATE

From

DISTRICT COURT OF APPEAL OF FLORIDA FIRST DISTRICT

To the Honorable Donald R. Alexander, Hearing Officer. WHEREAS, in that certain cause filed in this Court styled:

WINGFIELD DEVELOPMENT COMPANY

v. Case No. 89-1303

Your Case No. 89-008R

DEPARTMENT OF NATURAL RESOURCES

The attached opinion was rendered on May 28, 1991.

YOU ARE HEREBY COMMANDED that further proceedings be had in accordance with said opinion, the rules of this Court and the laws of the State of Florida.

WITNESS the Honorable James D. Joanos

Chief Judge of the District Court of Appeal of Florida, First District and the Seal of said court at Tallahassee, the Capitol, on this 16th day of August, 1991.

Clerk, District Court of Appeal of Florida, First District

Docket for Case No: 89-000008RX

Orders for Case No: 89-000008RX