STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ENVIROCHEM ENVIRONMENTAL )

SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 93-5553RU

) STATE OF FLORIDA DEPARTMENT ) OF ENVIRONMENTAL PROTECTION, )

)

Respondent. )

)

SUMMARY FINAL ORDER

Pursuant to the request of the parties, the instant case has been decided summarily, without an evidentiary hearing being held, inasmuch as there are no disputed issues of material fact.

APPEARANCES

For Petitioner: Sidney F. Ansbacher, Esquire

William L. Finger, Esquire Suite 3100- Barnett Center

50 North Laura Street Post Office Box 4548

Jacksonville, Florida 32201-4548

For Respondent: Agusta P. Posner, Esquire

Diana L. Davis, Esquire Assistant General Counsel

Department of Environmental Protection 2600 Blair Stone Road

Tallahassee, Florida 32399-2400 STATEMENT OF THE ISSUES

1. Whether the April 26, 1993, revised edition of the Department of Environmental Protection's Guidelines for Characterizing RCRA 1/ Violations (hereinafter referred to as the "Guidelines") constitute a "rule," within the meaning of Section 120.52(16), Florida Statutes, subject to challenge pursuant to Section 120.535, Florida Statutes, by a "substantially affected" person?

   
   

2. If so, whether Petitioner is such a "substantially affected" person?

   
   

3. If so, whether the Guidelines violate the requirements of Section 120.535, Florida Statutes?

PRELIMINARY STATEMENT

On September 27, 1993, Petitioner filed a petition with the Division of Administrative Hearings (hereinafter referred to as the "Division") seeking an administrative determination that the Guidelines are a "rule," within the meaning of Section 120.52(16), Florida Statutes, that, contrary to the provisions of Section 120.535, Florida Statutes, was not adopted in accordance with the rulemaking procedures specified in Section 120.54, Florida Statutes. Petitioner further asserted in its petition that the Guidelines "exceed the statutory authority delegated to [the Department of Environmental Protection (hereinafter referred to as the "Department")]" and, "as applied to Petitioner, contain provisions that are unduly overbroad, vague, ambiguous, arbitrary and capricious, and violate the United States and Florida Constitutions, and deny Petitioner a substantial portion of the benefit of its property."

By order issued September 29, 1993, the Division Director assigned the case to a Division Hearing Officer. The Order of Assignment contained the following directive:

This matter shall be scheduled for hearing within thirty days of the date of this ORDER unless a stipulation from the parties to this proceeding requests that the final hearing be set at a later date.

On October 7, 1993, the parties jointly requested in writing that the hearing be scheduled for sometime during "the week of November 15-19, 1993." In accordance with the parties' request, the hearing was initially set for November 18, 1993. On October 29, 1993, the Department filed an unopposed motion seeking a continuance of the hearing. The motion was granted and the hearing was rescheduled for December 20, 1993.

On December 8, 1993, the parties filed their Prehearing Stipulation, which contained, among other things, a Statement of Stipulated Facts. According to the Prehearing Stipulation, the only the legal issues remaining for resolution were those relating to Petitioner's challenge to the Guidelines "as an unpromulgated rule prohibited by Section 120.535, F.S."

Also on December 8, 1993, the Department filed a Motion for Summary Final Order. In its motion, the Department asserted that there is "no genuine issue as to any material fact" inasmuch as the "parties have entered into a joint stipulation as to the facts in this matter," referring to the Statement of Stipulated Facts set forth in the parties' Prehearing Stipulation. Accompanying its Motion for Summary Final Order was a memorandum of law in which the Department advanced the following argument in support of its position that a summary final order should be issued in its favor:

[T]he Guidelines are not an agency statement that fit the definition of a rule within Section 120.52(16), F.S., because the Guidelines are not generally applicable, nor do the Guidelines impose any requirements not specifically required by statute or existing rule. In fact, the Guidelines are "internal management memoranda" addressing settlement procedures which do not "affect" private interests or have application outside the agency. Therefore the Guidelines are specifically exempted from the definition of a rule in Section 120.52(16)(a). Because the Guidelines have no independent or external effect, Envirochem was not, and could not under any set of factual circumstances be, substantially affected by the RCRA Guidelines, and in fact no actual or threatened injury has been alleged in Envirochem's petition. Therefore, Envirochem does not have and has not demonstrated standing to bring a Section

120.535, F.S. action, which is apparent on the face of the pleadings. Finally, and probably most importantly, agency discretion in making enforcement decisions is so broad that it has been called by the United States Supreme Court "absolute." Agency enforcement discretion is not a proper subject for judicial or administrative review, and a Section 120.535, F.S. proceeding to force rulemaking with respect to enforcement decisions is certainly not appropriate.

Following a prehearing conference with the parties held by telephone conference call, the Hearing Officer issued an order cancelling the December 20, 1993, hearing scheduled in the instant case and directing Petitioner to file, no later than December 27, 1993, a written response to the Department's Motion for Summary Final Order.

On December 27, 1993, Petitioner filed a Cross-Motion for Summary Final Order and Response to Respondent's Motion for Summary Final Order, as well as a supporting memorandum of law. In these pleadings, Petitioner agreed with the Department that there are "no genuine issues as to any material fact" and that therefore "a Summary Final Order may be issued as a matter of law," but, contrary to the position that the Department had taken, argued that the Guidelines did constitute a "rule," within the meaning of Section 120.52(16), Florida Statutes, because they "are an 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 that it did have standing to challenge the Guidelines pursuant Section 120.535, Florida Statutes. In advancing the latter argument, Petitioner described the "injury- in-fact" it "has suffered, and continues to suffer," as follows:

[The Department] offered to settle its dispute with Envirochem if Envirochem agreed to pay [the Department] a penalty in the amount of

$258,813.00, which was calculated using the Guidelines. [The Department] gave Envirochem a choice of paying the penalty as calculated using the Guidelines, or being sued by [the Department] and incurring significant legal expenses defending the lawsuit. These expenses are real and ongoing. Therefore, Envirochem has suffered, and continues to suffer, an injury-in-fact of sufficient immediacy to warrant standing to bring this petition.

On January 14, 1994, the Department filed a written response to Petitioner's Cross-Motion for Summary Final Order.

Oral argument on the parties' motions for summary final order was held by telephone conference call on January 24, 1994. At the close of oral argument, the Hearing Officer advised the parties that he would be deciding the case summarily and that, in making his decision, he would consider any additional written argument filed by the parties on or before February 3, 1994. The Department and Petitioner filed such additional written argument on February 2, 1994, and February 3, 1994, respectively.

STATEMENT OF STIPULATED FACTS

The following is a verbatim recital of the Statement of Stipulated Facts upon which, the parties agree, the disposition of the instant case should be based:

1. Petitioner Envirochem is a corporation organized under the laws of the State of North Carolina which operates a hazardous waste transport business.

   
   

2. Petitioner's operations included a "transfer facility" located at 8400 Roosevelt Boulevard, Jacksonville, Florida 32073.

   
   

3. Petitioner notified the Department of its operation of the transfer facility, which was assigned EPA hazardous waste notifier identification number FLD 984 27 629.

   
   

4. Operations at the transfer facility ceased in June, 1993.

   
   

5. The Department conducted an inspection of the facility on February 15, 1993, during which Department personnel observed and documented conditions and practices which the Department has alleged to be violations of hazardous waste management regulations.

   
   

6. An enforcement action against Envirochem was initiated when the Department sent a warning letter, dated April 1, 1993, advising Envirochem of "possible violations" noted during the February inspection and enclosing a copy of the inspection report. The letter invited Envirochem to contact the inspector "to arrange a meeting . . . to discuss the issues raised in this Warning Letter."

   
   

7. The basis for the Department's enforcement action is the dispute between the parties regarding whether items held by Envirochem were "RCRA samples" or hazardous waste. This dispute is currently being litigated in circuit court. The Department has never alleged that Envirochem discharged or released hazardous substances.

   
   

8. Envirochem responded to the warning letter and entered into settlement negotiations with the Department to resolve the alleged violations.

   
   

9. As part of its settlement procedures, Department personnel in the Northeast District office calculated a monetary amount to be proposed to Envirochem as the appropriate penalty. Using the RCRA Guidelines, each violation alleged to have occurred at the Envirochem transfer facility was compared with a list of possible violations and evaluated according to two criteria: "potential for harm" and "extent of deviation from requirement." Other factors, including the duration of the violation (whether or not the violation continued over a number of days) and the estimated economic benefit of noncompliance, were considered, and a settlement amount of $255,875.00 was calculated. An additional penalty in the amount of $2,938.00 for an alleged land ban violation, increased the total proposed penalty against Envirochem to

   $258,813.00.

   
   

10. The Secretary of the Department was notified of the proposed settlement amount and justification therefor by memo dated June 3, 1993.

11. By signing the penalty authorization request, the Secretary of the Department authorized the Northeast District to propose a settlement of penalties in the amount of $255,875.

    
    

12. The Department requested that Envirochem enter into a consent order to resolve the enforcement action. The proposed consent order included provisions for Envirochem to correct and redress all alleged violations within a stated time period and to comply with all applicable sections in Florida Administrative Code Chapter 17-730 and 40 Code of Federal Regulations ("C.F.R.") Parts 260-266 and 268. The draft consent order would have included payment of $255,875.00 in civil penalties.

    
    

13. Envirochem met three times with the Department district staff in an attempt to negotiate settlement of the enforcement action.

    
    

14. The Department district staff indicated they were constrained by the RCRA Guidelines in terms of how far they could vary from their original penalty calculations in settling the enforcement action through a Consent Order. The Department in negotiating sessions advised Envirochem that any counteroffer should be at least $100,000.

    
    

15. Envirochem never made any counter proposal to the Department's proposed penalty amount. Although Envirochem still desires to settle this case, Envirochem thought it would be purposeless to make a counter proposal due to the Department staff's representations during negotiations.

    
    

16. Envirochem disputed the Department's allegation that hazardous waste violations had occurred, specifically by denying that the materials stored at the transfer facility met the definition of hazardous waste. Envirochem characterized these materials as "RCRA samples."

    
    

17. Department enforcement procedures call for the involvement of the Office of General Counsel when a negotiated settlement within the penalty guidelines cannot be achieved.

    
    

18. When it became apparent that the Department and Envirochem would not be able to reach a negotiated settlement through use of the Department's proposed consent order, the Northeast District staff requested assistance of the Office of General Counsel by means of a case report.

    
    

19. The assistant general counsel assigned to the case drafted a memorandum to the Secretary of the Department requesting authorization to file a civil action, which was granted.

    
    

20. The Department filed a civil case against Envirochem in circuit court detailing the alleged violations and requesting a judicial determination of liability for hazardous waste violations and consequent imposition of the statutory maximum in civil penalties, that is, $50,000 per day for each day of continued violation.

    
    

21. The enforcement procedures (inspection, warning letter, calculation of proposed penalties using the RCRA Guidelines, settlement negotiations, proposed consent order, case report, authorization to sue memo, filing civil suit) undertaken with respect to the Envirochem case were generally consistent with the procedures followed in the implementation of the state program of hazardous waste regulation.

    STIPULATED DOCUMENTS

    
    

22. The Hearing Officer has been provided with copies of (a) the Guidelines; (b) an April 27, 1993, Interoffice Memorandum from Satish Kastury, Administrator of the Department's Hazardous Waste Regulation Section, concerning the Guidelines; (c) the Environmental Protection Agency's RCRA Civil Penalty Policy (hereinafter referred to as the "EPA Policy"); and (d) the Department's Settlement Guidelines for Civil Penalties, which were approved by the Department Secretary on April 16, 1993 (hereinafter referred to as the "Department's Settlement Policy"). The parties agree that the Hearing Officer should consider the contents of these documents in making his decision in this case.

    
    

    The Department's Settlement Policy

    
    

23. The "basic purpose of this document," as indicated in its introductory section, "is to provide guidance about when settlement may be appropriate in lieu of judicial litigation to seek penalties."

    
    

24. Section II of the Department's Settlement Policy discusses the subject of "Applicability to Program Areas" and provides in pertinent part as follows:

    
    

    This policy is designed to apply to all program areas unless otherwise preempted by an interagency agreement or other obligation of the Department. The Department currently has an interagency agreement with the EPA on implementation of the RCRA program. That program incorporates a penalty policy for hazardous waste violations, which should be used as guidance to the extent that it is different than this policy. . . .

    Most of the Department's programs have developed program specific guidelines for characterizing violations routinely found in their program areas. These program specific guidelines are attached as addenda to these Settlement Guidelines. The program specific guidelines do not attempt to provide guidelines for every possible violation that may be discovered. The program specific guidelines are intended to be used when calculating the appropriate penalties to be assessed in most cases. There may be some cases that involve unusual circumstances that have not been factored into the guidelines.

    If applying the guidelines in those cases would result in an unreasonably high or low penalty, the program specific guidelines should not be followed.

    
    

25. Section III of the Department's Settlement Policy addresses the subject of the "Applicability of Types of Violators" and provides as follows:

    
    

    These guidelines distinguish between Class A, Class B and Class C violators. Class A violators are those from whom a monetary or in-kind civil penalty should normally be

    sought, unless adjustment factors result in the complete elimination of the penalty.

    Class B violators are those from whom the Department does not plan to seek a monetary or in-kind penalty. Class C violators are those from whom a monetary or in-kind penalty would normally be sought but because of practical resource limitations penalties will not be sought. Generally, Class A violators are persons whose violations are caused by their action or failure to act. Class B violators are persons whose violations result from unforeseen acts of third parties whose violations do not result in advantage to the violator; from acts of war; or from unforeseen acts occasioned by nature. A Class B violation becomes a Class A violation once the violator, upon discovering the violation, fails to take prompt steps to notify the Department, and if appropriate, fails to take necessary remedial measures.

    The attached program specific guidelines should be referred to in determining whether a particular violator should be considered a Class C violator. In the General Guidelines section of each program specific guidelines, Class C type violators may be identified.

    These guidelines are designed to apply both to public (government) and private entities.

    
    

26. Section IV of the Department's Settlement Policy describes the "Matrix" to be used by Department personnel in "determining the appropriate amount of civil penalties the Department should seek from responsible parties in settling enforcement actions." It provides in pertinent part as follows:

    
    

    The first basis for determining the appropriate amount for a particular penalty is to use the matrix, which is attached as Exhibit I. This matrix has been adapted from the EPA civil penalty policy for RCRA, with the amounts contained in the matrix changed to reflect current legislative authority for

    the Department to seek civil penalties . . . .

    As with the EPA policy, the matrix has two factors:

    1. potential for environmental harm; and

    2. extent of deviation from a statutory or regulatory requirement.

       Subsection a. addresses the actual or potential harm to human health or the environment that may occur as a result of the violation. Note that the harm may be actual or potential- the focus should be on the activity itself and not upon whether it was discovered in time to prevent serious

       environmental consequences. There are three levels of potential harm within this axis of the matrix:

       1. MAJOR: violations that actually or are reasonably expected to result in pollution in a manner that represents a substantial threat to human health or the environment;

       2. MODERATE: violations that actually or are reasonably expected to result in pollution in a manner that represents a significant threat to human health or the environment;

       3. MINOR: violations that actually or are reasonably expected to result in minimal or no pollution. . . .

          Subsection b. addresses the degree to which the violation deviates from Department statutes and rules and thereby upsets the orderly and consistent application of the law. The three levels are classified as follows:

          1. MAJOR: the violator deviates from the requirements of the law to such an extent that there is substantial noncompliance.

          2. MODERATE: the violator deviates from the legal requirements of the law significantly

             but some of the requirements are implemented as intended.

          3. MINOR: the violator deviates somewhat from the requirements of the law but most of the requirements are met.

          
          

27. Section V of the Department's Settlement Policy addresses the subject of "Multiple and Multi-Day Penalties." It provides, in pertinent part, as follows:

    
    

    A penalty should be calculated for every violation which constitutes an independent and substantially distinguishable violation, or when the same person has violated the same requirement in substantially different locations. . . .

    Multi-day penalties are appropriate where daily advantage is being gained by the violator from an ongoing, egregious violation; or where the violator knew or should have known of the violation after the first day it occurred and either failed to take action to mitigate or eliminate the violation or took action that resulted in the violation continuing; or where economic benefit is being gained on a daily basis.

    Multi-day penalties should be computed by multiplying the appropriate daily penalty calculated or a part thereof by the number of

    days of noncompliance. Where the impact of the ongoing violation is less detrimental, a lower daily penalty should be calculated....

    An alternative to multiplying the total daily penalty by the number of days of

    noncompliance would be to use one or more of the adjustment factor amounts chosen multiplied by the number of days the adjustment factor is appropriate. . . .

    It is important in using daily penalties of this type that the amount be sufficient to discourage the violator from continuing a violation by making it more expensive to pay the daily penalty than to come into compliance. Since some programs either have or will develop guidelines for determining when multiple or multi-day penalties are appropriate, you should refer to the attached program specific guidelines for further guidance.

    
    

28. Section VI of the Department's Settlement Policy lists and explains the "Adjustment Factors" that should be considered after "the basic one day penalty" is calculated. These "Adjustment Factors" are as follows: "Good Faith Efforts to Comply/Lack of Good Faith Prior to discovery of the violation by the Department;" "Good Faith Efforts to Comply/Lack of Good Faith after the Department Informed the Responsible Party of the Violation;" "History of Non- Compliance;" "Economic Benefit of Non-Compliance;" "Ability to Pay;" and "Other Unique Factors." With respect to the latter "Adjustment Factor," the Settlement Policy provides as follows:

    
    

    This adjustment factor can be used to increase or decrease the amount of penalties derived from the penalty matrix. This adjustment factor is intended to provide the District with flexibility to make adjustments in a particular case based upon unique circumstances that do not clearly fit within the other adjustment factors. This

    adjustment factor should be used infrequently. When it is used, the unique circumstances justifying its use must be specifically explained on the penalty worksheet.

    
    

29. Section VII of the Department's Settlement Policy enumerates "In-Kind Penalties" that may considered as a means of "offsett[ing] all or some portion of the cash settlement." It provides that "In-Kind penalties should only be considered if the responsible party is a government entity . . . or if the violations committed by a non-government party would not result in cash penalties in excess of $2,500." It further provides that "In-Kind penalties should not be agreed to without obtaining appropriate approval from the Secretary."

    
    

30. Section VIII of the Department's Settlement Policy provides that "[i]n a limited number of cases, responsible parties may be given pollution prevention credits to offset all or part of a cash penalty."

31. Section IX of the Department's Settlement Policy addresses the subject of "Review by the Secretary and the Office of the General Counsel." It provides as follows:

    
    

    Florida Administrative Code Rule 17- 101.040(4)(g) requires, among other things, that consent orders can be executed only after approval by OGC [Office of the General Counsel]. 2/ It is important, therefore, that the OGC enforcement attorney review the consent order along with the penalty worksheet to determine whether the amount of penalties is statutorily authorized and consistent with these guidelines. However, if the consent order or other settlement document being used by the District tracks a model consent order or other settlement document previously prepared and approved by OGC, the penalties being sought are consistent with these Settlement Guidelines and the program specific guidelines and the penalties being sought in the consent order or other settlement document do not have to be approved by the Secretary, then no prior review by OGC of the consent order or other settlement document with penalty worksheet will be required.

    There are three situations in which approval by the Secretary and notice to the

    appropriate Division Director is required prior to settlement:

    1. The case involves a proposed penalty of more than $2,500 for a federal, state, regional or local government agency (including military). This does not mean that this settlement guidance is not applicable to government agencies, only that such settlements need to be reviewed at the highest level because of their impact on intergovernmental relations. This extra review is not intended to discourage in any way consideration of penalties for governmental entities.

    2. The case involves a proposed penalty of

       $25,000 or more.

    3. Any other case identified by the district, a Division Director, OGC, the Assistant Secretary, or the Secretary as being one of significant public interest or legal precedent.

32. Section X of the Department's Settlement Policy sets forth the following "Procedure for Implementation:

    
    

    In order for these guidelines to be implemented properly adequate recordkeeping must be followed. The penalty assessment matrix is attached. It is to be used in all cases, except in those in which another matrix applies by virtue of an interagency agreement, (for example, the RCRA matrix); and violations of the Florida Safe Drinking Water Act, which has a maximum $5,000 per day per violation.

    Also attached is the penalty computation worksheet. This worksheet should be used in all cases in which a penalty is assessed, and should be sent along with the draft Consent Order that is to be reviewed by OGC for final approval. If it is determined that the violation is a Class B (no penalty) violation, fill out only Part I on the Penalty Computation Worksheet. If it is determined that the violation is a Class A violation, fill out Part II. If the penalty being sought includes an adjustment and/or a multi-day assessment, fill out both Part II and III.

    If the penalty amount calculated as the Total Penalties for all Violations in Part II is reduced after meeting with the responsible party, a new penalty computation worksheet or Part IV of the penalty computation worksheet must be filled out. If the penalty is being reduced based upon new information concerning the facts or law relied upon to determine the number or character of the violations for

    which penalties are being sought, a new penalty computation worksheet should be filled out reflecting the changes in the violations for which penalties are being sought or the characterization of the violations. If the penalty is being reduced for other reasons, Part IV of the penalty computation worksheet must be filled out and signed and dated by the Director of District Management.

    A narrative explanation should also be prepared in all cases to be reviewed by the Secretary to explain how the settlement amount was reached, and in all cases in which the program specific guidelines are not being followed. This should be completed at the time the penalty assessment is calculated and forwarded with the penalty computation worksheet.

33. Part IV of the Penalty Computation Worksheet attached to the Department's Settlement Policy is entitled "Other Adjustments Made After Meeting with the Responsible Party" and consists of the following form:

    
    

    ADJUSTMENTS DOLLAR AMOUNT

    
    

    Relative merits of the case:

    Resource considerations: Other justification:

    
    

    
    

    Date Deputy Assistant Secretary The Guidelines

34. The Guidelines are the "program specific guidelines" for the Department's hazardous waste regulatory program.

    
    

35. They were last revised on April 26, 1993.

    
    

36. A copy of the Guidelines, as so revised, were sent to all of the Department's "Waste Program Administrators," along with the following memorandum, dated April 27, 1993, from Satish Kastury, the Administrator of the Department's Hazardous Waste Regulation Section:

    
    

    Attached is the revised Guidelines for Characterizing RCRA Violations. These revisions were developed by the Hazardous Waste Compliance/Enforcement Technical Committee, composed of representatives from each district and Tallahassee, based on suggestions submitted by RCRA and OGC staff.

    The format of the Guidelines has been improved, with citations added for each violation. Guidance for common transfer facility violations and a section of land disposal restriction violations have been added.

    These guidelines are not intended to cover every possible violation or variable that could be considered in an enforcement case. This document is not a substitute for EPA's RCRA Civil Penalty Policy. But, used in conjunction with EPA's policy, the guidelines should improve consistency in civil penalty determinations and promote uniformity among the districts in the enforcement of the RCRA program.

    I appreciate the efforts of Larry Morgan, the technical committee, and the district and Tallahassee staff in revising these

    guidelines.

37. Sections 1 and 2 of the Guidelines contain "Definitions" and "General RCRA Penalty Guidelines," respectively.

    
    

38. The remaining portions of the Guidelines identify various violations and describe how they should be characterized in terms of "Potential for Harm" and "Extent of Deviation" for purposes of calculating proposed penalties.

    
    

    The EPA's RCRA Civil Penalty Policy

    
    

39. The EPA Policy establishes a "penalty calculation system" which "consists of (1) determining a gravity-based penalty for a particular violation, from a penalty assessment matrix, (2) adding a 'multi-day' component, as appropriate, to account for a violation's duration, (3) adjusting the sum of the gravity-based and multi-day components, up or down, for case specific circumstances, and (4) adding to this amount the appropriate economic benefit gained through noncompliance."

    
    

40. "Two factors are considered in determining the gravity based penalty component:

    
    

    • potential for harm; and

    • extent of deviation from a statutory or regulatory requirement.

    
    

    These two factors constitute the seriousness of a violation under RCRA, and have been incorporated into [a] penalty matrix from which the gravity-based component will be chosen."

    
    

41. "The policy also explains how to factor into the calculation of the gravity component the presence of multiple and multi-day (continuing) violations. The policy provides that for days 2 through 180 of multi-day violations, multi-day penalties are mandatory, presumed, or discretionary, depending on the potential for harm and extent of deviation of the violations. For each day for which multi-day penalties are sought, the penalty amounts must be determined using the multi-day penalty matrix. The penalty amounts in the multi-day penalty matrix range from 5 percent to 20 percent (with a minimum of

    $100 per day) of the penalty amounts in the corresponding gravity-based matrix cells. Regions also retain discretion to impose multi-day penalties (1) of up to $25,000 per day, when appropriate under the circumstances, and (2) for days of violation after the first 180, as needed to achieve deterrence."

    
    

42. Under the EPA Policy, "[w]here a company has derived significant savings or profits by its failure to comply with RCRA requirements, the amount of economic benefit from noncompliance gained by the violator will be calculated and added to the gravity-based penalty amount."

    
    

43. The EPA Policy allows for additional adjustments to be made to gravity-based penalty amount based upon the following factors:

    
    

    good faith efforts to comply/lack of good faith (upward or downward adjustment); degree of willfulness and/or negligence (upward or downward adjustment);

    history of noncompliance (upward adjustment); ability to pay (downward adjustment); environmental projects to be undertaken by the violator (downward adjustment); and

    other unique factors, including but not limited to the risk and cost of litigation (upward or downward adjustment).

    
    

44. The following disclaimer is found in the last paragraph on page five of the EPA Policy:

    
    

    The procedures set out in this document are intended solely for the guidance of government personnel. They are not intended and cannot be relied upon to create rights, substantive or procedural, enforceable by any party in litigation with the United States.

    The Agency reserves the right to [act] at variance with this policy and to change it any time without public notice.

    
    

    CONCLUSIONS OF LAW

    
    

45. Petitioner is seeking an administrative determination that the Guidelines constitute an agency statement that violates subsection (1) of Section 120.535, Florida Statutes, which provides as follows:

    
    

    Rulemaking is not a matter of agency discretion. Each agency statement defined as a rule under s. 120.52(16) shall be adopted by the rulemaking procedure provided by s.

    120.54 as soon as feasible and practicable. Rulemaking shall be presumed feasible and practicable to the extent provided by this subsection unless one of the factors provided by this subsection is applicable.

    1. Rulemaking shall be presumed feasible unless the agency proves that:

       1. The agency has not had sufficient time to acquire the knowledge and experience

          reasonably necessary to address a statement by rulemaking; or

       2. Related matters are not sufficiently resolved to enable the agency to address a statement by rulemaking; or

       3. The agency is currently using the rulemaking procedure expeditiously and in good faith to adopt rules which address the statement.

    2. Rulemaking shall be presumed practicable to the extent necessary to provide fair

    notice to affected persons of relevant agency procedures and applicable principles, criteria, or standards for agency decisions unless the agency proves that:

    1. Detail or precision in the establishment of principles, criteria, or standards for agency decisions is not reasonable under the circumstances; or

    2. The particular questions addressed are of such a narrow scope that more specific resolution of the matter is impractical

    outside of an adjudication to determine the substantial interests of a party based on individual circumstances.

    
    

46. To prevail in this matter, Petitioner must establish, as a threshold requirement, that the Guidelines constitute a "rule," as defined in Section 120.52(16), Florida Statutes.

    
    

47. Section 120.52(16), Florida Statutes, defines the term "rule," in pertinent part, as "each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the organization, procedures, or practice requirements of an agency[,] . . . includ[ing] any form which imposes any requirement or solicits any information not specifically required by statute or an existing rule." Specifically excluded from the definition found in Section 120.52(16), Florida Statutes, are "[i]nternal management memoranda which do not affect either the private interests of any person or any plan or procedure important to the public and which have no application outside the agency issuing the memorandum."

    
    

48. Statements of "general applicability," as that term is used in Section 120.52(16), Florida Statutes, are "statements which are intended by their own effect to create rights, or to require compliance, or otherwise to have the direct and consistent effect of law." McDonald v. Department of Banking and Finance, 346 So.2d 569, 581 (Fla. 1st DCA 1977).

    
    

49. The Guidelines do not constitute such a statement of "general applicability." Rather, they are part of, what is described in Section 120.52(16), Florida Statutes, as, an "internal management memorandum."

    
    

50. Like the EPA's Policy, the Guidelines "are intended solely for the guidance of government personnel" charged with the responsibility of determining what position the agency should take in settlement negotiations with alleged RCRA violators, and the guidance they furnish is provided in such a manner that there is room for the exercise of considerable discretion on the part of agency personnel applying them to particular cases. They therefore are more akin to the general orders prescribing trooper fitness and conduct standards, "subject in application to the discretion of the enforcing officer," that were held in Department of Highway Safety and Motor Vehicles v. Police Benevolent Association, 400 So.2d 1302 (Fla. 1st DCA 1981) to be "internal management memoranda" than they are to the "virtually self-executing" bumping guidelines that were found in State Department of Administration v. Stevens 344 So.2d 290 (Fla. 1st DCA 1977) to be "rules."

    
    

51. Moreover, regardless of whether the Guidelines may be characterized as "subject in application to the discretion of [agency personnel]" or as "virtually self-executing," they do not have any direct and immediate external effect. No person or entity outside of the agency, including Petitioner, is afforded any additional rights or burdened by any further obligations as a direct and immediate consequence of the Guidelines, nor do the Guidelines otherwise have the direct and consistent effect of law. Use of the Guidelines, in conjunction with the Department's Settlement Policy and the EPA Policy, results, not in the Department's unilateral imposition of a penalty against an alleged RCRA violator, but only in the calculation of a proposed penalty that the Department offers to accept as a settlement in lieu of pursuing a civil

action against the alleged violator. The alleged violator is free to reject the Department's settlement proposal and, if it does, the proposal will remain simply that, proposed agency action, and never become final agency action inasmuch as the Department is without statutory authority to unilaterally impose penalties for RCRA penalties. 3/ While rejection of the Department's settlement proposal may lead to costly litigation and court-ordered penalties, these adverse consequences would be the product, not of the Guidelines, but of the statutory provisions that authorize the Department to seek and obtain these penalties by instituting a civil action against the alleged violator. The Guidelines themselves have no direct and immediate impact of any kind upon the substantial interests of the alleged violator or, for that matter, any other member of the public. Such being the case, they do not constitute a statement of "general applicability" and therefore do not meet the definition of a "rule" which is set forth in Section 120.52(16), Florida Statutes. See Florida League of Cities, Inc. v. Administration Commission, 586 So.2d 397, 406-07 (Fla. 1st DCA 1991); Florida Public Service Commission v. Indiantown Telephone System, Inc., 435 So.2d 892, 895 (Fla. 1st DCA 1983). Accordingly, they are not subject to challenge pursuant to Section 120.535, Florida Statutes.

Based upon the foregoing, it is hereby ORDERED:

1. Petitioner's Cross-Motion for Summary Final Order is denied.

   
   

2. The Department's Motion for Summary Final Order is granted.

   
   

3. Petitioner's petition challenging the Guidelines pursuant to Section 120.535, Florida Statutes, is dismissed.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of February, 1994.

STUART M. LERNER

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 9th day of February, 1994.

ENDNOTES

1/ As the Department of Environmental Protection notes in the Motion for Summary Final Order it has filed in this case:

"RCRA" stands for "Resource Conservation and Recovery Act," which is the federal statute governing solid and hazardous waste management. Since the State of Florida is authorized by the United States Environmental Protection Agency (EPA) to implement the

state hazardous waste management regulations in lieu of the federal regulations promulgated pursuant to RCRA, "RCRA" is commonly used as an abbreviation for the state hazardous waste regulatory program.

2/ Rule 17-101.040(4)(g), Florida Administrative Code, provides, in pertinent part, as follows:

The Secretary, as head of the Department, has delegated authority as follows:

To the Deputy Assistant Secretaries and in the absence of the Deputy Assistant Secretaries to the person designated by the Deputy Assistant Secretary in writing to act in behalf of the Deputy Assistant Secretary, authority to take the following agency actions.

Upon approval by the Office of General Counsel, to execute consent orders . . . .

3/ Given the remedy provided in Section 120.535, Florida Statutes, for a violation its rulemaking requirements -- the agency's immediate "discontinu[ance of] all reliance upon the statement or any substantially similar statement as a basis for agency action," -- it is evident that an agency statement that has not been, and will not be, used to form the basis of any final action taken by the agency is not subject to challenge pursuant to Section 120.535, Florida Statutes. See Section 120.52(2), Fla. Stat.("Agency action means the whole or part of a rule or order, or the equivalent, or the denial of a petition to adopt a rule or issue an order"); Section 120.52(11), Fla. Stat.("Order" means a final agency decision which does not have the effect of a rule and which is not excepted from the definition of a rule, whether affirmative, negative, injunctive or declaratory in form. . . . ." (Emphasis supplied.)

COPIES FURNISHED:

Sidney F. Ansbacher, Esquire William L. Finger, Esquire Suite 3100- Barnett Center

50 North Laura Street Post Office Box 4548

Jacksonville, Florida 32201-4548

Agusta P. Posner, Esquire Diana L. Davis, Esquire Assistant General Counsel

Department of Environmental Protection 2600 Blair Stone Road

Tallahassee, Florida 32399-2400

Liz Cloud, Chief

Bureau of Administrative Code Department of State

The Elliott Building Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director Administrative Procedures Committee Holland Building, Room 120 Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 93-005553RU

Orders for Case No: 93-005553RU