STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ANTHONY F. KOPP, OWNER, )

LA CASA DEL SOL, )

)

Petitioner, )

)

vs. ) CASE NO. 90-7520

)

DEPARTMENT OF ENVIRONMENTAL )

REGULATION, )

)

Respondent. )

)

RECOMMENDED ORDER

On February 12, 1991, a formal administrative hearing was held in this case in Lakeland, Florida, before J. Lawrence Johnston, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Anthony F. Kopp, pro se.

Owner, La Casa Del Sol 75107 Pepperwood Drive The Vintage Club

Indian Wells, California 92210

For Respondent: Cynthia K. Christen, Esquire

Assistant General Counsel Department of Environmental

Regulation

2600 Blair Stone Road Tallahassee, Florida 32399-2400

STATEMENT OF THE ISSUES

The issues in this case essentially are whether the Respondent, the Department of Environmental Regulation (DER), should reimburse Anthony F. Kopp, Owner, La Casa Del Sol, for the difference between the cost to him of the DER's remedy for the EDB contamination of the drinking water supply at La Casa Del Sol and the remedy that is least costly to the Petitioner, together with the cost of a new irrigation system, engineering and attorney fees, and other incidental costs to the Petitioner.

PRELIMINARY STATEMENT

In 1988, unacceptable levels of ethylene dibromide (EDB) were discovered in the Petitioner's drinking water supply for La Casa Del Sol (La Casa). In October, 1988, the Petitioner filed with DER a Grant Application for EDB Clean- Up Funds. In response to the application, the DER eventually made arrangements for connection of La Casa to the Haines City water system.

A dispute arose between the Petitioner and DER as to the cost to the Petitioner of the remedy DER arranged. Culminating a series of discussions and correspondence, the DER mailed a letter to the Petitioner's attorney on September 25, 1990, stating: "The State will pay for [the cost of replacing the water supply with Haines City water for] the existing 200 units [out of 309 lots] and all interconnection costs, including landscape restoration.

Engineering and attorney fees, as well as the cost for a new irrigation system, will not be reimbursed. . . . If your client elects not to connect to this water supply, Mr. Kopp will have to obtain his own filter and maintain it in the future, or provide some other acceptable solution so safe water is supplied to the customers. The State will not participate in any future solutions for this water supply." On October 11, 1990, the DER mailed the Petitioner another letter advising the Petitioner of its "right to petition for an administrative proceeding (hearing) in accordance with Section 120.57, Florida Statutes." On or about November 9, 1990, the Petitioner filed with DER an Amended Petition for Formal Hearing.

On or about November 29, 1990, DER referred the petition to the Division of Administrative Hearings. Final hearing took place on February 12, 1991. On February 25, 1991, Richard T. Fulton, Esquire, of Baker & Hostetler in Orlando filed a Notice of Appearance and Motion for Extension of Time through February 27, 1991, for filing proposed recommended orders. Explicit rulings on the proposed findings of fact contained in the parties' proposed recommended orders may be found in the attached Appendix to Recommended Order, Case No. 90-7520.

FINDINGS OF FACT

1. The Petitioner, Anthony F. Kopp, is the owner of La Casa Del Sol (La Casa), a 40-acre development at 1255 U.S. Highway 27 North, Davenport, Florida. La Casa is divided into 309 mobile home lots, a clubhouse and five acres of common green space.

   
   

2. In January, 1987, the Petitioner received a permit for construction of a water supply system for both drinking water and irrigation needs at La Casa. The construction permit was granted with the proviso that, when La Casa's population reached 350, a second backup drinking water well, six inches in diameter at 410 feet, with a casing to 366 feet, and an auxiliary power source would have to be installed. It would cost La Casa approximately $65,000 to install the backup well and auxiliary power source.

   
   

3. La Casa did not reach a population of 350 until January, 1991. The St. Johns River Water Management District permitted the construction of the backup well, but the well never was constructed, and the construction permit now has expired. The auxiliary power source also was not installed.

   
   

4. The main water supply system for La Casa was installed during the summer of 1987. It included a well and a system of lines for carrying water to each of the 309 lots. It also included hose bibs (faucets) at each lot so that the water also could be used for irrigation at each lot. The system also supplied water for irrigation of the common green space.

   
   

5. Although all of the lots at La Casa were connected to the water supply system in the manner described, not all the lots had homes on them. During the summer of 1989, only about 175 of the lots had homes on them; by January, 1991,

   198 lots had homes on them.

6. Although not all of the lots were occupied, the entire water supply system was permitted, and no additional permits were required to provide water to the lots. However, when La Casa's population reached 350, the backup well and auxiliary power source would have to be installed under the permit conditions.

   
   

7. In about May, 1988, DER tests showed that the La Casa water supply system was contaminated with ethylene dibromide (EDB) at levels in excess of the maximum allowable for drinking water.

   
   

8. In October, 1988, the Petitioner completed and filed a Grant Application for EDB Clean-Up Funds. As part of the application, the Petitioner agreed that DER could:

   
   

   arrange for the purchase and installation of appropriate filters and inhibitors; provide a new well; or arrange for the connection of [the Petitioner's] well to an existing public

   supply system, whichever is more cost-effective as determined by the Department of Environmental Regulation.

   
   

9. DER contracted with Continental Water Systems to provide a temporary carbon filter system for La Casa's water supply system to remove the EDB and supply uncontaminated drinking water to the development, pending a permanent solution to the EDB contamination.

   
   

10. The temporary filter system was designed to provide 100 gallons per minute of water, which should have been adequate for drinking water needs at La Casa. However, water pressure problems arose due to algal growth and the use of the system for irrigation purposes in addition to the drinking water purposes for which it was designed.

    
    

11. DER is a member of the Ground Water Task Force, which met biweekly or monthly to discuss, among other things, potable wells contaminated with EDB. Other member agencies are the Department of Heath and Rehabilitative Services, the Department of Agriculture and Consumer Services, the Department of Transportation and the Department of Community Affairs. The Task Force discussed the La Casa contamination problem and agreed that the possibility of having La Casa connected to an existing water supply should be explored.

    
    

12. DER began negotiating both with Polk County and with Haines City for a water line connection. Connection with the Polk County line would have been more expensive, and Polk County was not particularly interested in extending its line. Negotiations continued with Haines City.

    
    

13. Negotiations with Haines City progressed to the point that DER was able to present for consideration by the Task Force cost figures for a permanent filter system at La Casa, with ten years of projected cost of operation and maintenance, as compared to the cost of extending the Haines City line. The Task Force agreed with DER that extending the Haines City line north to La Casa and connecting La Casa to it was the most cost-effective use of state funds to remedy the EDB problem at La Casa, particularly in view of other EDB-related drinking water supply problems in the area and anticipated future drinking water supply problems in the area.

14. The Petitioner was not invited to participate in the negotiations with Polk County and Haines City and did not participate in them. Nor was the Petitioner invited to participate in either the DER or the Task Force decision- making process, and the Petitioner did not participate in those processes, either. However, the Petitioner, through his engineering consultant, was made aware in early 1989 that DER was exploring options to have La Casa connected to an existing water supply.

    
    

15. DER paid approximately $400,000 for the Haines City water line extension and La Casa connection. This included $90,000 for Haines City impact fees to cover the 175 then existing mobile homes at La Casa (DER actually paid

    $450 per unit for 200 units), as well as the plumbing contractor fees for connecting La Casa to the extended city water line. It also includes the cost of installing a water meter at La Casa.

    
    

16. The ten-year cost to the DER to solve just the La Casa drinking water problem using an EDB filter system would have been less than the cost to the DER of extending the Haines City line and connecting La Casa to it. But the evidence is clear that, in the long run, and taking into consideration other

    EDB-related drinking water supply problems in the area, and anticipated future drinking water supply problems in the area, the most cost-effective use of state funds to remedy the problem was to extend the Haines City line and connect La Casa to it. (Even the Petitioner's expert witness agreed that the Haines City extension and connection was the most cost-effective use of state funds to remedy the area's EDB problem.)

    
    

17. DER advised the Petitioner of its agreement with Haines City in approximately May or June, 1989. By letter dated July 27, 1989, DER explained to the Petitioner the details of the agreement, specifically what DER would pay and what DER would not pay. By the fall of 1989, the Petitioner knew that work was beginning. At the time, the extension of the Haines City line and connection to La Casa was projected for completion in January, 1990, but there were delays, and the city water supply was not ready to be connected to La Casa until August, 1990. By this time, a dispute had arisen between the Petitioner and DER as to the cost to the Petitioner of connecting to the city water, and actual connection was further delayed. Finally, by letter dated October 11, 1990, DER gave the Petitioner an ultimatum: either be connected to the city water supply; or forfeit any state contribution to the cost of remedying the EDB contamination of the Petitioner's water supply. Faced with the prospect of having to open the winter peak season without any drinking water, the Petitioner agreed, under protest, to be connected to the city water supply, and initiated formal administrative proceedings to challenge DER's intended decision to limit the extent to which the DER would cover the Petitioner's costs.

    
    

18. There was evidence that the plumbing contractor hired by DER may have caused damage to the landscaping and one mobile home that has not yet been repaired. However, DER acknowledged its responsibility for the damage and intends to have the plumbing contractor repair the damage.

    
    

19. There also was evidence that the Petitioner received a bill from Haines City for the installation of a water meter at La Casa. But the evidence also was that DER may already have paid the bill. In any event, DER acknowledges its responsibility for the cost of the water meter as part of the cost of connecting La Casa to the extended city water line.

20. Although DER had the Haines City water line extended in response to the Petitioner's Grant Application for EDB Clean-Up Funds, two commercial properties south of La Casa were connected because of EDB contamination, and the line also was extended north of La Casa in preparation to address anticipated future EDB contamination problems.

    
    

21. Under the DER's response to the Petitioner's Grant Application, each additional mobile home unit over 200 connected to the city water supply will require the payment of a $450 impact fee. In addition, Haines City will charge monthly water fees of $1.80 1/ per 1000 gallons for the use of water at La Casa, with a $1,000 minimum charge per month. 2/ Based on current occupancy of

    200 lots, the Petitioner estimates water fees of $42,000 per year, figured at approximately $5,000 per month for six peak months (based on a recent peak season monthly bill) and $2,000 per month for six off-peak months. However, it is not clear whether some of that estimated usage includes irrigation.

    
    

22. If, in order to save gallonage fees, the Petitioner puts in a separate irrigation system supplied by its well, it will have to put in a separate distribution system since the current system is being used to bring city water to the lots. This would cost approximately $90,000.

    
    

23. The Petitioner has paid approximately $2,100 in engineering fees to assess the problem with the temporary filter and to propose solutions, to estimate the cost of installing a separate irrigation system, and to estimate the cost to the Petitioner of connecting to the Haines City water supply. There was no evidence as to the reasonableness of those fees.

    
    

24. The Petitioner also has paid approximately $4,500 in attorney fees to negotiate with the DER for payment of a larger portion of the Petitioner's cost of connecting to the Haines City water supply. There was no evidence as to the reasonableness of the attorney fees.

    
    

    CONCLUSIONS OF LAW

    
    

25. In pertinent part, Section 376.30(3), Fla. Stat. (1989), authorizes the Respondent, the Department of Environmental Regulation (DER), to:

    
    

    (c) Establish a program which will enable the department to:

    1. Provide for expeditious restoration or replacement of potable water systems . . . where health hazards exist due to contami- nation from pollutants . . ., subject to the following conditions:

       1. For the purposes of this subparagraph, the term "restoration" means restoration of a contaminated potable water supply to a level which meets applicable water quality standards

    . . . as adopted by rule, for the contaminant or contaminants present in the water supply

    . . . through the installation of a filtration system and provision of replacement filters as necessary or through employment of repairs or another treatment method or methods designed to remove or filter out contamination from the water supply; and the term "replacement" means

    replacement of a well or well field or connec- tion to an alternative source of safe, potable water.

    * * *

    d. Funding for activities described in this subparagraph shall not be available to fund any increase in the capacity of a potable water system . . . over the capacity which existed prior to such restoration or replace- ment, unless such increase is the result of the use of a more cost-effective alternative than other alternatives available.

    (Emphasis added.)

    
    

26. Section 376.307, Fla. Stat. (1989), provides in pertinent part:

    
    

    1. There is created in the State Treasury the Water Quality Assurance Trust Fund, to be

       administered by the Department of Environmental Regulation.

    2. The Water Quality Assurance Trust Fund may be used to carry out the provisions of ss.

       376.30 . . .; [and] for the expeditious restoration or replacement of potable water supplies as provided in s. 376.30(3)(c)1.

       * * *

       (4)

       * * *

       1. The department shall disburse moneys in the Water Quality Assurance Trust Fund for activities as authorized under subsection (2) according to the following priority order:

          * * *

          3. Restoration or replacement of contaminated private potable wells or water systems.

          * * *

       2. However, after January 1, 1989, funds used as provided in this section shall be expended for water supply systems or filters for contaminated potable water wells only as follows:

       * * *

       3. The most cost-effective remedy, as deter- mined by the department, for wells drilled prior to January 1, 1989.

       (Emphasis added.)

27. To implement these statutes, the DER promulgated F.A.C. Chapter 17-

504. F.A.C. Rule 17-504.100, entitled "Purpose of EDB Remedial Funding Procedures," provides:

The purpose of this Chapter is to set forth the eligibility criteria for the allocation of funds, and the application process to be used when applying for funds for remedial action concerning drinking water wells contaminated by state and non-state appli- cations of EDB.

(Emphasis added.) F.A.C. Rule 17-504.150, entitled "Scope of EDB Remedial Funding Procedures," provides in pertinent part:

This Chapter shall apply . . . to all . . . applying for or receiving funds for remedial action concerning drinking water wells conta- minated by state or non-state applications of EDB.

(Emphasis added.) F.A.C. Rule 17.504.300, entitled "Eligibility Criteria for EDB Remedial Action Funding", provides in pertinent part:

1. For privately owned wells, funds will be made available to the extent funded by the Water Quality Assurance Trust Fund (WQ-014, Private Water Supplies Restoration/Replacement) to those applicants that:

* * *

(b) Have signed either an individual or corporate/government liability release form (Form Nos. 17-504.900(3) or (4)), to be supplied by the Department, releasing the State, its agencies, and contributors from liability as to damage to real and personal property caused by past state or non-state application or use of EDB, or installation, maintenance, and disposal by the State or its agencies of filter systems.

(Emphasis added.)

1. The Petitioner's application in this case is governed by, and his rights and entitlements are limited by, the above-quoted statutes and rules. Apart from those statutes and rules, the Petitioner does not have a right, in this application proceeding, to be "made whole," as he claims. Claims for redress of wrongs and recovery of damages, if any, would have to be determined in another forum.

   
   

2. Under the above-quoted statutes and rules, the Petitioner is entitled to Water Quality Assurance Trust Fund money to restore or replace the Petitioner's drinking water supply. The Petitioner is not entitled to state money restore or replace the Petitioner's irrigation system.

3. Under the above-quoted statutes and rules, the Petitioner is entitled to state funds to replace its existing water supply system. At the time, the Petitioner's water supply system was permitted to serve only 350 people unless the Petitioner constructed a specified backup well and installed an auxiliary power source, at a total cost of approximately $65,000. The Petitioner never added these features to increase the legal capacity of its water supply system, and the construction permit the Petitioner had obtained from the St. Johns River Water Management District has expired. Without the backup well and auxiliary power source, the Petitioner's water supply system legally could serve only approximately 200 mobile homes. The Petitioner was entitled to replacement of that capacity, which was accomplished by DER's agreement to pay the impact fees associated with connecting 200 lots to Haines City water. The Petitioner was not entitled to payment of additional impact fees to "fund any increase in the capacity" of the Petitioner's preexisting water supply system. See Section 376.30(3)(c)d., Fla. Stat. (1989).

   
   

4. Under the above-quoted statutes and rules, the DER, not the Petitioner, is to determine the most cost-effective remedy to the EDB contamination of the Petitioner's drinking water supply system. The Petitioner does not have the right to control this determination and is not even entitled to participate in the determination (although his participation was not prohibited and may have been preferable).

   
   

5. Finally, the above-quoted statutes and rules provide that the central determination in this case is the cost-effectiveness of the various possible alternatives to the DER. The Petitioner does not have the right to force the DER to implement a remedy that is less cost-effective for the DER, on the ground that it is more cost-effective for the Petitioner. The DER has not only the Petitioner's drinking water supply with which to concern itself; under its statutory charge, the DER also has to concern itself with the other present and anticipated future drinking water supply problems in the area. In this case, the evidence was clear that the DER chose the remedy that is the most cost- effective for the DER. It is the Petitioner's choice to take advantage of the benefits of the state-funded remedy or to seek his own remedy at his own expense.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a final order dismissing the Amended Petition for Formal Hearing in this case.

RECOMMENDED this 14th day of March, 1991, in Tallahassee, Florida.

J. LAWRENCE JOHNSTON Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 1991.

ENDNOTES

1/ This gallonage fee includes a 50% surcharge for service outside the city limits.

2/ The evidence was not clear whether the minimum charge is applied to the monthly gallonage fee.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-7520

To comply with the requirements of Section 120.59(2), Fla. Stat. (1989), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1.-9. Accepted and incorporated to the extent not subordinate or unnecessary.

1. Second to last sentence, not proven (and, as mentioned in the last sentence, is an approximation.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary.

2. Third and fourth sentences, rejected as not proven. In one sense, impact fees are what the assessing agencies says they are. They usually are designed to cover the cost to the agency of providing the service. Even so, they often are designed to cover a pro rata share of the cost of providing the entire system to all those using it, not just the incremental additional "cost of improvements to service the Development." Otherwise, accepted and incorporated to the extent not subordinate or unnecessary.

3. As to (b), the evidence supports an estimated cost of $90,000; otherwise,

   1. is rejected as not proven. As to (c), the evidence supports the finding that the Petitioner has paid approximately $4,500 in attorney fees, and the reasonableness of the engineering and attorney fees was not proven; otherwise,

   2. is rejected as not proven. Proposed finding (d) was not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary.

4. Rejected in part as argument; the facts are accepted and incorporated to the extent not subordinate or unnecessary.

5. Rejected as argument and conclusion of law and not proven.

6. Accepted and incorporated.

7. As to (i) and (ii), rejected as argument and conclusion of law and not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary.

8. Rejected as argument and conclusion of law and not proven.

Respondent's Proposed Findings of Fact. 1.-7. Accepted and incorporated.

8.-9. Accepted but subordinate to facts found.

10. Rejected as conclusion of law, not finding of fact.

11.-25. Accepted and incorporated to the extent not subordinate or unnecessary.

COPIES FURNISHED:

Anthony F. Kopp

75107 Pepperwood Drive The Vintage Club

Indian Wells, California 92210

Richard T. Fulton, Esquire Baker & Hostetler

2300 Sun Bank Center

200 South Orange Avenue Post Office Box 112 Orlando, Florida 32802

Cynthia K. Christen, Esquire Assistant General Counsel Department of Environmental

Regulation

2600 Blair Stone Road Tallahassee, Florida 32399-2400

Carol Browner, Secretary Department of Environmental

Regulation

Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400

Daniel H. Thompson, Esquire General Counsel

Department of Environmental Regulation

Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT TO THE DEPARTMENT OF ENVIRONMENTAL REGULATION WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST TEN DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONSULT WITH THE DEPARTMENT OF ENVIRONMENTAL REGULATION CONCERNING ITS RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER.

Docket for Case No: 90-007520

Orders for Case No: 90-007520