Findings Of Fact Respondent, Gloria Ann Ellwood, is currently licensed and eligible for licensure in the State of Florida as a general lines agent. Ellwood purchased in January 1985 from Pasqualey "Pat" Caliguiri what they both believed to be were shares in two franchises to operate a nonstandard automobile insurance business, Cash Register Auto Insurance of Escambia County and Cash Register Auto Insurance of Okaloosa County. Ellwood paid Caliguiri $10,000 as a down payment and financed $35,000 for 500 of 1,000 shares in the Escambia County agency and approximately $25,000 for 500 of 1,000 shares in the Okaloosa County agency. Ellwood paid Caliguiri approximately one-half the amount financed before the events occurred which are the basis for this case. These two franchises Caliguiri had purchased in 1983, along with another franchise, for nonstandard auto insurance sales offices from Lloyd Register for $5,000 apiece, as evidenced by 500 shares of 1,000 shares common stock in each of the three corporations. Through this purchase, Caliguiri received a reduction in the amount of commission paid on the franchise and the ability to realize a profit from his efforts in building the business. He executed a consulting agreement with Register and had to sign an employment contract with the various corporations. Register provided accounting and similar services, and Caliguiri had to repay to Register all capital expenditures made on the agencies. Register was present at the closing of the sale between Caliguiri and Ellwood. Register was silent at the closing between Ellwood and Caliguiri regarding Ellwood's rights. He was aware of the transfer of Caliguiri's stock to Ellwood for valuable consideration. After the transfer, Ellwood executed a consulting agreement with Register and signed an employment contract with the two corporations which she had purchased. Ellwood was entitled to $500 per week salary from `the corporation. In the case of both Caliguiri and Ellwood, when receipts from the business were low, Register suggested that they take some lesser sum as a salary payment than what they were entitled to under their employment contract. Register demanded payment of all moneys due to Register, although he did extend the time for payment for Caliguiri at one point when business was particularly bad. Both Caliguiri and Ellwood thought that they owned the stores which they had purchased. Ellwood served as general manager, president and director of Cash Register Auto Insurance of Escambia County at all times material to the complaint. Cash Register of Escambia was a Florida corporation engaged in the operation of a nonstandard insurance agency at all times material to the complaint. During 1985 and 1986, Ellwood paid for rent, improvements to property, telephone service, and similar business expenses from her personal account when there insufficient funds in the operating account to cover these expenditures. The total of these loans to the corporation was $14,930.37. Ellwood was charged by Register for the annual state corporate filings with the State of Florida. The Escambia agency had two checking accounts; one for payroll and the other for bills and refunds. The latter account was called the operating account into which deposits and premiums were deposited. Checks for insurance companies, insureds, beneficiaries and all business expenses, except salary, were written on this account. Ellwood wrote or caused to be written all checks for the agency from both accounts. Starting in January 1987 and continuing to June 1988, Ellwood wrote a series of 14 checks on the operating account to fictitious payees which were designated as refund checks to insureds; however, the payees had never paid a deposit to the company. Between January 1987 and July 1988, Ellwood endorsed and cashed these checks keeping $1,897.44. Ellwood described these checks as repayment of the money which she had advanced to the business. Ellwood explained that she wrote these checks to fictitious payees to prevent questions from Register's accountant and from fear Register would want commissions from non-franchise agencies which she owned. During all times material to this complaint, Register provided accounting services as part of his consulting agreement. Register or his accountant was aware that checks had not been drawn on the operating account for payment of rent, advertising, and telephone services and he knew the agency was still in business at the same locale. Register or his accountant was aware of the checks for refunds which ran from $21.89 to $398.99, no two of which were for the same amount. These checks do not appear on their face to be refunds for special high risk automobile insurance although they are annotated as such. Register suggested and was aware that Ellwood and Caliguiri took less salary than they were entitled to take under their employment contracts. Although money received from a client or company for a client or beneficiary is held in a fiduciary capacity, the operating account is not an escrow account and agents are not required to maintain deposits in an escrow account pending transfer of the premiums to an insurer. No evidence was received that Ellwood impaired these accounts by issuing these checks to fictitious clients and cashing them. Ellwood did not question her ownership of the business until late summer 1988 when Register advised Brian Fisher, a potential buyer, that Fisher would not have the rights of ownership if he purchased Ellwood's shares of stock because she held only common stock and control of the corporation was vested in those persons holding preferred stock all of which was owned by Register and his wife.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that the charges be dismissed against the Respondent DONE AND ORDERED this 7th day of March, 1990, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 7th day of March, 1990. APPENDIX A TO RECOMMENDED ORDER 89-4903 The following is a list of the proposed findings which were adopted and those which were rejected and why. Petitioner's Proposed Findings: Paragraph 1 Adopted. Paragraph 2 Adopted. Paragraph 3 Adopted, but reworded & renumbered. Paragraph 4 Adopted, but reworded & renumbered. Paragraph 5 Rejected as contrary to the facts. Paragraph 6 Rejected as contrary to the facts. Paragraph 7 Respondent admitted she used the money for another agency; however, that does not establish that taking the money was fraudulent. Paragraph 8 Rejected as contrary to the facts. Respondent's Proposed Findings: Paragraph 1 Adopted. Paragraph 2 Adopted. Paragraph 3 Adopted, but reworded & renumbered. Paragraph 4 Adopted, but reworded & renumbered. Paragraph 5 Adopted, but reworded & renumbered. Paragraph 6 Adopted, but reworded & renumbered. Paragraph 7 Adopted, but reworded & renumbered. Paragraph 8 Rejected as contrary to the facts. Paragraph 9 Adopted. COPIES FURNISHED: Mr. Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell, Esq. General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Roy Schmidt, Esq. Office of the Treasurer Department of Insurance and Treasurer 412 Larson Building Tallahassee, FL 32399-0300 Fletcher Fleming, Esq. Shell, Fleming, Davis & Merige Seventh Floor, Seville Tower P.O. Box 1831 Pensacola, FL 32595
The Issue Whether the Florida Department of Environmental Protection‘s (Department) notice of intent to issue an environmental resource/mitigation bank permit, and notice of intent to grant a variance waiving the financial responsibility requirements for the construction and implementation activities of the mitigation bank to Respondent, CRP/HLV Highlands Ranch, LLC (Highlands Ranch) should be approved, and under what conditions.
Findings Of Fact The Parties Petitioner is a Florida not-for-profit corporation in good-standing, originally incorporated in 1946, with its corporate offices currently located at 2545 Blairstone Pines Drive, Tallahassee, Florida. Petitioner‘s corporate purposes include, among others, ?the cause of natural resource conservation and environmental protection, to perpetuate and conserve the fish, wildlife, mineral, soil, water, clean air and natural resources of Florida.? The Department is an agency of the State of Florida having concurrent jurisdiction with the state‘s water management districts for permitting mitigation banks pursuant to chapter 373, Part IV, Florida Statutes. Highlands Ranch is a Delaware limited-liability corporation registered with the State to do business in Florida, with its corporate offices located at 9803 Old St. Augustine Road, Suite 1, Jacksonville, Florida. Highlands Ranch was the applicant for the SJRWMD Permit, and is the applicant for the DEP Permit and Variance that are at issue in this proceeding. The Property The property designated to become the HRMB (the Property) comprises approximately 1,575 acres, which includes 551.99 acres of wetlands, 990.90 acres of uplands, and 32.60 acres of miscellaneous holdings, including easements and a hunt camp. The Property is bounded by the Jennings State Forest on the eastern boundary, the conservation lands of Camp Blanding Joint Training Center on the southern boundary, and a titanium mine on the western boundary. The upland communities consist of mesic and xeric pine plantations. The wetland communities consist of 260.30 acres of hydric pine flatwoods, 80.26 acres of bay and bottomland, and 211.43 acres of floodplain. The wetland areas of the HRMB are generally associated with two creeks that traverse the property, Boggy Branch on the northern portion of the property, and Tiger Branch, which is a series of streams and branches in the southeastern and eastern portion of the property. Boggy Branch and Tiger Branch feed into the north fork of Flat Creek, some of which encroaches onto the eastern side of the property. In addition to Boggy Branch and Tiger Branch and their tributaries, there are isolated wetlands scattered throughout the HRMB property. Most of the uplands, and much of the wetlands have been altered from their native plant communities by historic and on- going silvicultural activities. The uplands currently consist largely of pine plantation planted in slash pine of various ages and densities, with one small area planted in longleaf pine. The property has an elevation gradient of approximately 90 feet, which extends generally from the higher xeric pine flatwoods, sloping down to the creek systems. A gradient of 90 feet over an area as small as the HRMB is a significant elevation change in Florida. Mitigation Banks A mitigation bank is ?a project permitted under 373.4136 undertaken to provide for the withdrawal of mitigation credits to offset adverse impacts authorized? by an Environmental Resource Permit (ERP) issued under Part IV, chapter 373, Florida Statutes. § 373.403(19), Fla. Stat. A mitigation bank permit is a type of ERP. The Department and the water management districts are legislatively authorized to require permits to establish and use mitigation banks. § 373.4136(1), Fla. Stat. Mitigation banks act as repositories for wetland mitigation credits that can be used to offset adverse impacts to wetlands that occur as the result of off-site ERP projects. Mitigation banks are intended to ?emphasize the restoration and enhancement of degraded ecosystems and the preservation of uplands and wetlands as intact ecosystems rather than alteration of landscapes to create wetlands. This is best accomplished through restoration of ecological communities that were historically present.? They are designed to ?enhance the certainty of mitigation and provide ecological value due to the improved likelihood of environmental success associated with their proper construction, maintenance, and management,? often within larger, contiguous, and intact ecosystems. § 373.4135(1), Fla. Stat. A mitigation credit is a "standard unit of measure which represents the increase in ecological value resulting from restoration, enhancement, preservation, or creation activities." Fla. Admin. Code R. 62-345.200(8). Ecological value is defined as the value of functions performed by uplands, wetlands, and other surface waters to the abundance, diversity, and habitats of fish, wildlife, and listed species. Included are functions such as providing cover and refuge; breeding, nesting, denning, and nursery areas; corridors for wildlife movement; food chain support; natural water storage, natural flow attenuation, and water quality improvement which enhances fish, wildlife, and listed species utilization. Fla. Admin. Code R. 62-345.200(3). When an ERP permit requires wetland mitigation to offset adverse impacts to wetlands, the permittee may purchase wetland credits from a mitigation bank and apply them to meet the mitigation requirements. When the permittee has completed the agreement with the mitigation bank and paid for the credits, those mitigation credits are debited from the mitigation bank's ledger. Every mitigation bank has a ledger that reflects how many credits have been released for use, and how many have been sold for use as mitigation. Uniform Mitigation Assessment Method Rule A mitigation bank is to be awarded mitigation credits ?based upon the degree of improvement in ecological value expected to result from the establishment and operation of the mitigation bank as determined using a functional assessment methodology.? § 373.4136(4), Fla. Stat. Section 373.414(18), Florida Statutes, provides, in pertinent part, that: The department and each water management district responsible for implementation of the environmental resource permitting program shall develop a uniform mitigation assessment method for wetlands and other surface waters. The department shall adopt the uniform mitigation assessment method by rule no later than July 31, 2002. The rule shall provide an exclusive and consistent process for determining the amount of mitigation required to offset impacts to wetlands and other surface waters, and, once effective, shall supersede all rules, ordinances, and variance procedures from ordinances that determine the amount of mitigation needed to offset such impacts. Once the department adopts the uniform mitigation assessment method by rule, the uniform mitigation assessment method shall be binding on the department, the water management districts, local governments, and any other governmental agencies and shall be the sole means to determine the amount of mitigation needed to offset adverse impacts to wetlands and other surface waters and to award and deduct mitigation bank credits . . . . It shall be recognized that any such method shall require the application of reasonable scientific judgment. The uniform mitigation assessment method must determine the value of functions provided by wetlands and other surface waters considering the current conditions of these areas, utilization by fish and wildlife, location, uniqueness, and hydrologic connection, and, when applied to mitigation banks, the factors listed in s. 373.4136(4). The uniform mitigation assessment method shall also account for the expected time lag associated with offsetting impacts and the degree of risk associated with the proposed mitigation. The uniform mitigation assessment method shall account for different ecological communities in different areas of the state . . . . In 2004, the Department adopted the Uniform Mitigation Assessment Method (UMAM) rule, Florida Administrative Code Chapter 62-345. In general terms, the UMAM is designed to assess impacts and wetland functions associated with projects that impact wetlands, along with necessary mitigation required to offset those impacts. As it pertains to this proceeding, the UMAM establishes the standards for evaluating mitigation banks and calculating the credits that may be awarded to a mitigation bank, and provides a standardized wetland assessment methodology that may be applied across community types. Permitting of a mitigation bank first involves a qualitative characterization of the property, known as a Part I evaluation. The Part I evaluation is conducted by dividing the subject parcel of property into assessment areas for wetlands and uplands. An assessment area is ?all or part of a . . . mitigation site, that is sufficiently homogeneous in character . . . or mitigation benefits to be assessed as a single unit.? Fla. Admin. Code R. 62-345.200(1). Each mitigation assessment area must be described with sufficient detail to provide a frame of reference for the type of community being evaluated and to identify the functions that will be evaluated. When an assessment area is an upland proposed as mitigation, functions must be related to the benefits provided by that upland to fish and wildlife of associated wetlands or other surface waters. Information for each assessment area must be sufficient to identify the functions beneficial to fish and wildlife and their habitat that are characteristic of the assessment area‘s native community type . . . Fla. Admin. Code R. 62-345.400. After the assessment areas have been established, a Part II assessment is performed using the scoring criteria established in the UMAM "to determine the degree to which the assessment area provides the functions identified in Part I and the amount of function lost or gained by the project.? Under the Part II evaluation, each mitigation assessment area is evaluated under its current condition --or for areas subject to preservation mitigation, without mitigation -- and its ?with mitigation? condition. The difference in those conditions represents the improvement of ecological value referred to as the ?delta? or the ?lift.? Fla. Admin. Code R. 62-345.500. The ?delta? for an enhancement or restoration area is subject to modification by applying any applicable time lag factor and risk factor to arrive at the numeric relative functional gain (RFG). The RFG is multiplied by the number of acres of the assessment area to determine the number of mitigation bank credits to be awarded. Fla. Admin. Code R. 62- 345.600. Time Lag Factor Section 373.414(18) provides, in pertinent part, that ?[t]he uniform mitigation assessment method shall also account for the expected time lag associated with offsetting impacts . . . .? Florida Administrative Code Rule 62-345.600(1) establishes the UMAM criteria for applying the time lag factor and provides, in pertinent part, that: Time lag shall be incorporated into the gain in ecological value of the proposed mitigation as follows: The time lag associated with mitigation means the period of time between when the functions are lost at an impact site and when the site has achieved the outcome that was scored in Part II. In general, the time lag varies by the type and timing of mitigation in relation to the impacts. Wetland creation generally has a greater time lag to establish certain wetland functions than most enhancement activities. Forested systems typically require more time to establish characteristic structure and function than most herbaceous systems. Factors to consider when assigning time lag include biological, physical, and chemical processes associated with nutrient cycling, hydric soil development, and community development and succession. There is no time lag if the mitigation fully offsets the anticipated impacts prior to or at the time of impact. * * * For the purposes of this rule, the time lag, in years, is related to a factor (T- factor) as established in Table 1 below, to reflect the additional mitigation needed to account for the deferred replacement of wetland or surface water functions. The ?Year? column in Table 1 represents the number of years between the time the wetland impacts are anticipated to occur and the time when the mitigation is anticipated to fully offset the impacts, based on reasonable scientific judgment of the proposed mitigation activities and the site specific conditions. TABLE 1. Year T-factor <or=1 1 2 1.03 3 1.07 4 1.10 5 1.14 6-10 1.25 11-15 1.46 16-20 1.68 21-25 1.92 26-30 2.18 31-35 2.45 36-40 2.73 41-45 3.03 46-50 3.34 51-55 3.65 >55 3.91 The time lag factor is a discounting process which adjusts the future value of the mitigation to a present value at the time credits are released, and is intended to account for the difference between the time that the impacts that the mitigation is to offset have occurred and the time that the final success upon which the credits are based is achieved. The application of the time lag factor is required when mitigation credits are released prior to the mitigation bank achieving the scored final "with-mitigation" condition. Risk Factor Section 373.414(18) provides, in pertinent part, that ?[t]he uniform mitigation assessment method shall also account for the . . . degree of risk associated with the proposed mitigation.? Florida Administrative Code Rule 62-345.600(2) establishes the criteria for applying the time lag factor and provides, in pertinent part, that: (2) Mitigation risk shall be evaluated to account for the degree of uncertainty that the proposed conditions will be achieved, resulting in a reduction in the ecological value of the mitigation assessment area. In general, mitigation projects which require longer periods of time to replace lost functions or to recover from potential perturbations will be considered to have higher risk that those which require shorter periods of time. The assessment area shall be scored on a scale from 1 (for no or de minimus risk) to 3 (high risk), on quarter- point (0.25) increments. A score of one would most often be applied to mitigation conducted in an ecologically viable landscape and deemed successful or clearly trending towards success prior to impacts, whereas a score of three would indicate an extremely low likelihood of success based on the ecological factors below. A single risk score shall be assigned, considering the applicability and relative significance of the factors below, based upon consideration of the likelihood and the potential severity of reduction in ecological value due to these factors. As with the time lag factor, the risk factor is a discounting process which is designed to account for the possibility that there may be occurrences that interfere with the ability of the mitigation bank to replace the ecological functions and values lost when wetland impacts are permitted prior to the final success or evidence that the mitigation bank is clearly trending towards success. DEP/SJRWMD Operating Agreement Sections 373.4135 and 373.4136 establish that the mitigation banking program was created to be jointly administered by the Department and the water management districts. In order to facilitate that joint administration, and to ?further streamline environmental permitting, while protecting the environment,? the Department and the SJRWMD have entered into a written Operating Agreement to ?divide[] responsibility between the DISTRICT and the DEPARTMENT for the exercise of their authority regarding permits . . . under Part IV, Chapter 373, F.S.? By that Operating Agreement, the Department expressly delegated its ?duties and responsibilities? under chapter 373 and Title 62, F.A.C. to the SJRWMD. The Operating Agreement has been adopted by rule by the Department, in rules 62-113.100(3)(x) and 62-300.200(2)(b), and by the SJRWMD in rule 40C-4.091(1)(b). The Department and the SJRWMD are clearly in privity with one another for projects that are subject to the written Operating Agreement. HRMB Permitting History On January 5, 2009, Highlands Ranch submitted an application to the SJRWMD for approval of the HRMB to be located on a 1,575.5-acre parcel of property in Clay County, Florida, specifically in Sections 9, 10, 15, and 16, Township 5 South, Range 23 East (the Property). The application was appropriately submitted to the SJRWMD pursuant to the terms of the Operating Agreement. The Mitigation Service Area (MSA) for the proposed HRMB incorporated portions of Baker, Clay, St. Johns, Putnam, and Duval Counties. The land area and MSA that was the subject of the SJRWMD Permit is identical to the Property encompassed by the proposed DEP Permit at issue in this proceeding. As established in the proceeding that resulted in the issuance of the SJRWMD permit: Highlands Ranch is proposing to place a conservation easement over the mitigation bank property and to conduct enhancement activities in those areas of the property needing improvement as a result of current land uses. Generally, it proposes to cease all pine production practices and cutting of cypress and hardwood trees after the permit is issued. It has also proposed to improve hydrologic conditions on the property by removing a trail road, installing four low water crossings, and removing pine bedding and furrows within all areas planted with pine on the property. Finally, supplemental plantings of appropriate canopy species will be conducted. The project will be implemented in three phases . . . . CRP/HLV Highlands Ranch, LLC v. SJRWMD, Case No. 10-0016, ¶20, (Fla. DOAH May 26, 2010; SJRWMD July 16, 2010). The general project description and phases were substantially identical to the phased proposal in the instant DEP Permit. When Highlands Ranch made its 2009 application to the SJRWMD, the District performed a review of the application, conducted multiple site inspections, met with the applicant's consultants, submitted requests for additional information, and reviewed other appropriate resources. On November 19, 2009, the SJRWMD issued its notice of intent to approve the application, and to approve 204.91 mitigation credits for the HRMB. The credits were calculated by the SJRWMD by applying the UMAM rule. Highlands Ranch filed a petition to challenge the number of credits with the SJRWMD, and requested a formal administrative hearing before the Division of Administrative Hearings. By the time of the final hearing, Highlands Ranch had modified its request to 425 credits, and the SJRWMD had modified its proposed agency action to reduce the number of credits to 193.56. A primary issue of contention in the SJRWMD permit hearing was whether the UMAM preservation adjustment factor (PAF) should be separately applied in areas proposed for enhancement activities in conjunction with preservation afforded by the conservation easement, or whether preservation should be considered as a subsumed element of the enhancement. The PAF is a process that assigns a value to the preservation of the property, and is scored on a scale from zero (no preservation value) to one (optimal preservation value) on one-tenth increments. Fla. Admin. Code R. 62-345.500(3)(a). Thus, preservation at anything less than optimal preservation will result in a downward adjustment of the RFG upon which credits for the acres in an assessment area are ultimately calculated. Under the ?two-step? process, after the functional gain associated with the preservation of the wetland assessment areas is determined, the second step of scoring the functional gain that would be achieved from the enhancement activities, which includes consideration of time lag and risk associated therewith, is performed. The preservation and enhancement scores are considered as separate forms of mitigation, and are each applied as multiples of the delta to arrive at the RFG. In contrast to the SJRWMD approach, Highlands Ranch used a "one-step approach," which scored any area that would be both preserved and enhanced/restored only as ?with mitigation? under UMAM and did not conduct a separate analysis for preservation or apply a separate preservation factor multiple. Neither the ?two-step? PAF nor the ?one-step? PAF is specifically described in the UMAM rule, and both are allowable interpretations of the rule. After the formal hearing, the administrative law judge entered a recommended order in which he determined that the SJRWMD‘s application of the UMAM standards, including its application of the ?two-step approach? was appropriate and correct, thus warranting an award of 193.56 mitigation credits for the HRMB. Neither Highlands Ranch nor the SJRWMD filed exceptions to the recommended order. On July 14, 2010, the SJRWMD entered its final order, which adopted the recommended order ?in its entirety as the final order of this agency.? The final order was not appealed. The SJRWMD permit, Permit Number 4-019-116094-2, was thereafter issued on August 4, 2010, and is currently valid. Development of the June 15, 2011 DEP Guidance Memo During the 2011 legislative session, a bill was proposed to amend the statutes governing mitigation banks. The legislation failed to pass. After the conclusion of the 2011 legislative session on May 7, 2011,1/ more than nine months after the issuance of the SJRWMD permit, counsel for Highlands Ranch contacted Mr. Littlejohn, who had been hired in March, 2011 as the Department‘s Deputy Secretary for Regulatory Programs, to express Highlands Ranch‘s ?frustration with . . . what they considered not an objective review at the [SJRWMD].? Mr. Littlejohn understood that Highlands Ranch believed the SJRWMD review of the application that led to the issuance of the SJRWMD Permit ?was not impartial.? After the telephone conversation, Mr. Littlejohn instructed Department staff to work with counsel for Highlands Ranch to develop guidance to interpret the UMAM rule. Counsel for Highlands Ranch prepared and provided drafts of a guidance document for the Department. There was no evidence of any private individual, other than counsel for Highlands Ranch, being given an opportunity to provide input or otherwise participate in the development of the guidance document. On June 15, 2011, the Department released its final ?Guidance Memo on Interpreting and Applying the Uniform Mitigation Assessment Method? (Guidance Memo). The Guidance Memo was designed to establish ?nuanced interpretations of the UMAM rule? in order to ?provide a uniform method throughout the state.? The Guidance Memo consisted of eight numbered paragraphs. According to Mr. Littlejohn, ?some of these paragraphs are completely unaltered from the [failed 2011] legislation, but I believe that most of them probably had some minor alteration in the subsequent review by the Office of General Counsel and during our own review internally, but . . . some form of Paragraphs 2 through 8 existed in . . . that legislation.? It was the intent of the Department that the Guidance Memo would reflect the current Department interpretation and direction to others in the application of the UMAM. The Guidance Memo was provided to the program administrators for each of the Department‘s six district offices, to the ERP program administrators for each of the water management districts, and to Broward County, which administered the only delegated local ERP program, with the intent that it be uniformly applied by each of them. The Guidance Memo is, and was intended to be, a Department-issued statement of general applicability that implements, interprets, or prescribes law or policy. The practical effect of the Guidance Memo was to reject the ?two-step? preservation adjustment factor (PAF) as applied by the SJRWMD, and establish the ?one-step? PAF as the only interpretation and application allowed by the UMAM rule. The development of the Guidance Memo would have made an appropriate subject for rulemaking, at which all affected stakeholders could have participated. Instead, the Department chose to limit participation to Highlands Ranch, offering no opportunity for other views, either in favor of or in opposition to the terms of the Guidance Memo. Notably, despite the legislature‘s encouragement, if not requirement, of cooperation between the Department and the water management districts in the development and implementation of the UMAM, the Guidance Memo, which was designed to override the method by which UMAM standards were applied by at least two of the water management districts, was developed without water management district knowledge or participation. SJRWMD Application for Modification On September 14, 2011, Highlands Ranch submitted an application for a modification of the SJRWMD permit to the SJRWMD. The application requested that the SJRWMD reconsider the permitted mitigation bank plan in light of the DEP Guidance Memo and, based thereon, modify the number of mitigation credits awarded. No other changes were made to the mitigation bank as permitted. Based on the application of the Guidance Memo alone, Highlands Ranch calculated that 425 mitigation credits was the appropriate number for the development and implementation activities presented in the original SJRWMD permit application. Highlands Ranch withdrew the application for a modification of the SJRWMD permit prior to November 2011. DEP Application for Modification On November 2, 2011, Highlands Ranch submitted an application to the Department for a modification of the SJRWMD Permit (the DEP modification application). In addition to a request that the Guidance Memo be applied, the modification made changes to the plan permitted by the SJRWMD, including supplemental planting of seedling longleaf pine, modification to the prescribed burn schedules, and modification of the monitoring plans and ?success criteria? for demonstrating ecological progress. The application proposed that 426.05 credits be awarded for the HRMB as modified. The DEP modification application was assigned for permit review to Constance Bersok who was, at the time, the Environmental Administrator for the Wetlands Mitigation Program. Ms. Bersok had been involved in the process of applying the UMAM since shortly after the 2000 legislative session, when she ?was in charge of the Department's part of [the UMAM rule] development and coordination? along with the water management districts and other affected entities. Ms. Bersok was identified as the primary Department contact for ?questions and other feedback? regarding the UMAM rule in the June 15, 2011 Guidance Memo. Ms. Bersok is knowledgeable and experienced regarding the interpretation and application of the UMAM rule. Thus, she was the appropriate staff person for primary oversight of the application. Special Cases Agreement The Department determined that it would process the modification application despite the assignment of such projects to the SJRWMD under the Operating Agreement. In order to assume control over the permitting of the HRMB, the Department entered into a ?Written Agreement Pursuant to the Special Cases Section of the Operating Agreement? with the SJRWMD (Special Cases Agreement). Section II, Part D. of the Operating Agreement provides that: By written agreement between the DISTRICT and the DEPARTMENT, responsibilities may deviate from the responsibilities outlined in II. A., B., or C. above. Instances where this may occur include: An extensive regulatory history by either the DISTRICT or the DEPARTMENT with a particular project that would make a deviation result in more efficient or effective permitting; Simplification of the regulation of a project that crosses water management district boundaries; The incorrect agency has begun processing an application or petition and transfer of the application or petition would be inefficient; or Circumstances in which a deviation would result in the application being more efficiently or effectively processed. The specific provisions of paragraphs 1-3 being inapplicable, the Department assumed control over the modification application by relying on the generic ?catch-all? reason set forth in paragraph 4. The basis for the Department‘s determination that it could ?more efficiently or effectively process[]? the application -- despite the fact that the HRMB Property was literally in the SJRWMD‘s back yard, that the SJRWMD had a recent permitting history regarding the Property, and that the SJRWMD had extensive existing knowledge of the condition of the Property -- is not apparent and was not explained. The Special Cases Agreement became effective on December 13, 2011, upon Mr. Littlejohn‘s signature. DEP Permit Application On November 22, 2011, Highlands Ranch submitted a second package to Ms. Bersok, which converted the HRMB application from one for a modification of the SJRWMD permit, to one for a new permit to be issued by the Department. The permit application made certain changes to the terms and conditions for the development of the mitigation bank established in the SJRWMD Permit, but otherwise encompassed the same boundary and service area of the SJRWMD Permit. Highlands Ranch proposed 426.05 mitigation credits as the appropriate number of credits for the activities in the DEP permit application. There has been no other instance in which the Department accepted, processed, or issued a second mitigation bank permit when there was an existing and valid permit issued by a water management district for the same property. Thus, this application is unique in that regard. The Special Cases Agreement provided that it was designed to allow the Department to process the ?[a]pplication for a modification of the Highlands Ranch Mitigation Bank wherein the applicant seeks to revise the mitigation plan.? Despite its apparent limitation to a modification of the SJRWMD permit, the Special Cases Agreement cites to the application number of the DEP Permit that is the subject of this proceeding, and became effective after the submission of the new permit application. There is no evidence of the SJRWMD having objected to the Department‘s continued processing of the application. Thus, although irregular, the Special Cases Agreement was broad enough in its scope to encompass the conversion of the application for modification to a separate permit application. In addition to the foregoing, the scope of the Special Cases Agreement is a matter between the Department and the SJRWMD. There is no question that both agencies have legislatively conferred authority with regard to permitting mitigation banks. The decision between those agencies as to which would have responsibility going forward with the HRMB is not one that affects the substantial interests of Petitioner. Creation of the New ?Performance-driven? Approach On or about February 10, 2012, Ms. Bersok was advised by Mr. Littlejohn that the Department was going to implement a new and previously untried ?performance-driven? approach to permitting the HRMB. Mr. Littlejohn testified that this performance-driven approach is an interpretation of existing mitigation banking rules, and was to provide greater certainty in environmental performance, mitigation success, and provide for a more consistent, predictable, and repeatable permitting process.2/ The more practical effect of the ?performance-driven? approach, as stated by Mr. Littlejohn, is that ?there may be some increase in credits upon not applying a risk or a time lag factor. Those are both discount factors which attach to the raw scoring. So there may be an increase in credits.? Mr. Littlejohn testified that under his ?performance- driven? approach, the current condition of the Property and the final ?success criteria? were the only relevant factors, not how the applicant chose to meet those criteria. Consistent with that approach, Ms. Bersok was instructed that there was no need to issue a request for additional information as to the details by which the performance goals would be met, as was the normal procedure for environmental resource permits, including mitigation bank permits.3/ Under the performance-driven approach as applied to the HRMB, mitigation credits are subject to interim release and available for use upon the satisfaction of ?success criteria? set forth in the permit. Pursuant to the credit release schedule set forth in the DEP Permit, credits may be released upon recording the conservation easement(s), posting the required financial responsibility instrument and providing site security, and thereafter upon meeting one of five ?interim release? milestones. The interim credit releases authorize the release of mitigation credits for use to offset wetland impacts well before the time when the site has achieved the outcome that was scored in the Part II assessment. Although Highlands Ranch will have performed the bulk of the active construction and implementation activities before being entitled to an interim release, the ecological benefit of the interim ?success criteria? does not represent the achievement of the structure and function that will be necessary for final success, nor does it guarantee that that final structure and function will ultimately be achieved. Complete Application Though instructed not to request additional information, Ms. Bersok sent an e-mail to the agent for Highlands Ranch that contained a recitation of what she would have sent the applicant in a request for additional information. On February 14, 2012, Highlands Ranch submitted supplemental information in support of the permit application to Ms. Bersok. The supplemental information contained some, though not all, of the information requested by Ms. Bersok. The submittals of November 1, 2011; November 22, 2011; and February 14, 2012, along with the application check, constitute the application to DEP. There were no written submittals designed to supplement, alter, or amend the proposed activities to enhance or preserve the Property after February 14, 2012. Thus, those documents constituted the complete application. The application contained Highlands Ranch‘s description of historic and existing vegetative communities. There was no suggestion that the description provided by Highlands Ranch was not accurate. The goal of the HRMB as reflected in the DEP application was to convert a silviculture operation to the appropriate native target communities. Mitigation activities proposed in the complete application included restoring or enhancing longleaf pine/xeric oak sandhill, mesic flatwoods, hydric or wet flatwoods, baygall/bay swamp, floodplain swamp/stream or lake swamp and bottomland forest/wetland forest mixed communities, generally through reversal of the existing silvicultural impacts and implementing hydrologic enhancement activities. Each phase of the HRMB would be subject to a conservation easement granted to the Department and the SJRWMD for preservation of the Property in its existing or enhanced condition. The complete application provided that enhancement and restoration would be accomplished through canopy thinning in existing upland and wetland pine plantation areas; control of nuisance and invasive exotic vegetative species; vegetative enhancement, including replanting thinned pine areas with appropriate species where necessary, and supplemental planting of historic native trees and ground cover; prescribed fire; and hydrologic enhancements. Ongoing management of the HRMB site would primarily involve monitoring; prescribed fire; and control of nuisance and invasive exotic vegetative species. Draft Permits As information regarding the application was submitted by Highlands Ranch, Ms. Bersok undertook to calculate the number of mitigation credits warranted by the complete application. She performed several calculations between December 8, 2011 and February 22, 2012. On February 22, 2012, Ms. Bersok performed her final written analysis of the application using the information contained in the November 22, 2011, submittal, including the mitigation activities and target levels and methodologies described by Highlands Ranch, and the information contained in the February 14, 2012, submittal. Thus, her assessment and review was based upon the complete application. In addition to the information regarding site conditions from the permitting file, Ms. Bersok had ?a couple of meetings? to discuss the application, made a site visit, and reviewed additional aerial images obtained on-line. Although her site visit was not comprehensive, Ms. Bersok felt that she had adequate information regarding the current condition for each of the different types of assessment areas that were on the site. Since her review was based in large measure on information and site descriptions regarding the current conditions provided by Highlands Ranch, her belief as to the sufficiency of the information regarding the assessment areas upon which she based her review is warranted and accepted. The November 22, 2011, submittal included the following mitigation activities that differed from the conditions of the SJRWMD permit: All areas subjected to prescribed burning would be burned on a 2-8 year rotation. Two burns necessary to reach final success criteria. Communities defined by both FLUFCS classification and FNAI classification. Basal area targets of less than 60 square feet per acre in U1 and 80 square feet per acre in U2 (perpetual management only). A total of 426.05 credits proposed. No credit withholding by phase. Completion of Construction and Implementation tasks results in 20% of credit release. Target levels and methodologies to determine percent cover and composition of canopy, shrub, and groundcover. The February 14, 2012, submittal included the following description of mitigation activities that differed from the conditions of the SJRWMD permit: The expected fire frequency for the hydric pine restoration areas to be a 1-3 year cycle, with actual burn frequency to be in the professional judgment of the burn manager and team ecologists. Further description of the low water crossings and structures. Since Ms. Bersok utilized the November 22, 2011, submittal, along with the information provided by Highlands Ranch on February 14, 2012, her review and analysis necessarily included the above-listed mitigation activities and target conditions. Ms. Bersok made assumptions designed to produce high quality outcomes that, at the time of her review, had not yet been incorporated as conditions to any proposed permit. Her assumptions/recommendations included the following: In those locations without sufficient pyrogenic groundcover, mechanical means of shrub reduction to carry a fire, and planting or seeding of the native ground cover to achieve and sustain the target community type. Planting of longleaf pine in the xeric (U1) and mesic (U2) communities, and similar mitigation in the hydric pine restoration (W1 and W2) assessment areas. Ms. Bersok‘s assumptions were ultimately incorporated in the DEP draft permit. Ms. Bersok‘s analysis included the ?one-step? approach to application of the preservation factor, wherein preservation was included as an element of enhancement in restoration or enhancement assessment areas, rather than as a separate factor, consistent with the approach outlined in the June 15, 2011 Guidance Memo. Thus, for the assessment areas that were not exclusively bay or floodplain preservation, the ?P-Factor? score was listed as ?n/a.? Ms. Bersok utilized the ?performance-driven? approach as instructed by Mr. Littlejohn. Therefore, her February 22, 2012, assessment assigned a score of 1.00 for both time lag and risk. As a result of her calculations, Ms. Bersok arrived at a total of 280.33 mitigation credits for the HRMB. Ms. Bersok‘s February 22, 2012, score of 280.33 credits incorporated all of the material changes to the SJRWMD permit that were proposed by Highlands Ranch in its complete application, and the material specific conditions that were ultimately included in the DEP proposed permit. The only changes to the SJRWMD permit that were not explicitly part of Ms. Bersok‘s calculation, either as a proposal by the applicant or as an assumption, were: two consecutive burns within a period of 1-3 years in the xeric, mesic, and hydric pine restoration areas to demonstrate final success. monitoring and recording of shrub height to meet success criteria. control of oak species ?to obtain the abundance appropriate to the sandhill community condition.? Those relatively minor changes are not significant in light of the overall information presented in the complete application and Ms. Bersok‘s accepted assumptions, and do not materially affect the final target conditions for the mitigation. Several days prior to May 8, 2012, Ms. Bersok met with Mr. Rach and Mark Thomasson to discuss progress on the application and draft permits. At that time, she reviewed a UMAM assessment that assigned 333 mitigation credits to the HRMB. She was instructed ?to look for some more credits, that [333 credits] wasn't enough.? Ms. Bersok advised Mr. Rach and Mr. Thomasson that 333 mitigation credits was more than could be ecologically supported.4/ On May 8, 2012, Mr. Rach presented Ms. Bersok with a draft pilot permit that called for the award of 424 mitigation credits for the HRMB. Mr. Rach was unable to identify who in the Department calculated the UMAM credits, but that ?the credits which were the result of the UMAM were one of the last things filled in in the permit. So I'm not sure at that point in time who it was.? On May 9, 2012, Ms. Bersok prepared a ?status memo? in which she expressed her opinion that she could not ecologically support the award of 424 mitigation credits for the HRMB, and expressed her ?objection to the intended agency action and refusal to recommend this permit for issuance.? On May 11, 2012, Ms. Bersok was removed from further involvement in the review of the HRMB permit application. Issuance of the DEP Permit and Variance Over the course of the next three months, the Department and Highlands Ranch had several meetings in which they developed the performance standards and ?success criteria? that would be applied to allow for the release of mitigation credits. The meetings included additional site visits. There was no evidence that the additional site visits revealed conditions of the site that were inconsistent with those set forth in the complete application. During the course of the hearing, it was suggested that ?additional activities [were] proposed? during the period when the permit application was being processed. There were, in this case, no requests for additional information, no written submittals memorializing any such additional activities, and no evidence of any alteration or amendment of the complete application. Those ?additional activities? were not specified or described during the final hearing. To the extent that the Department or Highlands Ranch purports to rely on unspecified ?additional activities? that are not contained in the application or the permitting file, or otherwise presented as evidence to support issuance of the permit, they may not be considered as part of the record of this proceeding. On August 17, 2012, the Department issued its Notice of Intent to Issue Environmental Resource/Mitigation Bank Permit and Variance (Notice) and draft permit that awarded 424.81 mitigation credits for the HRMB. The number of credits awarded by the Department ?was a collaborative effort with the Applicant over the course of several meetings,? with Mr. Thomasson ultimately signing off and agreeing to the final scores. The Notice provided that the UMAM assessment of the HRMB Property showed ?a potential of 424.81 total freshwater credits: 207.31 Hydric Flatwoods/Wet Prairie credits and 217.50 Freshwater Forested wetlands credits.? Thus, the credits awarded to the HRMB may be purchased and applied at impact sites in the MSA to offset 207.31 units of functional loss associated with hydric flatwoods and wet prairies, and 217.50 units of functional loss associated with freshwater forested wetlands. The 426.05 credits proposed by Highlands Ranch in the November 22, 2011 application were derived by calculating 291.99 credits for restoration of the upland pine assessment areas, 73.78 credits for restoration of the hydric pine assessment areas (thus 365.77 credits for restoration of overall pine assessment areas), 15.40 total credits for enhancement and restoration of floodplain, bottomland, and bay assessment areas, and 37.65 credits for preservation of floodplain and bay assessment areas. The 425.81 credits awarded by the Department were derived by calculating 317.64 credits for restoration of the upland pine assessment areas, 52.06 credits for restoration of the hydric pine assessment areas (thus 369.70 credits for restoration of overall pine assessment areas), 15.35 total credits for enhancement and restoration of floodplain, bottomland, and bay assessment areas, and 39.75 credits for preservation of floodplain and bay assessment areas. The number of credits awarded by the Department is roughly identical to the number requested by Highlands Ranch in the 2010 SJRWMD proceeding (425 credits), the number requested by Highlands Ranch in the November 1, 2012, application for modification of the SJRWMD permit (426.05 credits), the number requested by Highlands Ranch in the November 22, 2011 DEP permit application (426.05 credits), and the number preliminarily calculated by the Department and provided to Ms. Bersok on May 8, 2012 (424 credits). Credit Release Schedule Section 373.4136(5) provides that: SCHEDULE FOR CREDIT RELEASE.— After awarding mitigation credits to a mitigation bank, the department or the water management district shall set forth a schedule for the release of those credits in the mitigation bank permit. A mitigation credit that has been released may be sold or used to offset adverse impacts from an activity regulated under this part. The department or the water management district shall allow a portion of the mitigation credits awarded to a mitigation bank to be released for sale or use prior to meeting all of the performance criteria specified in the mitigation bank permit. The department or the water management district shall allow release of all of a mitigation bank‘s awarded mitigation credits only after the bank meets the mitigation success criteria specified in the permit. The number of credits and schedule for release shall be determined by the department or water management district based upon the performance criteria for the mitigation bank and the success criteria for each mitigation activity. The release schedule for a specific mitigation bank or phase thereof shall be related to the actions required to implement the bank, such as site protection, site preparation, earthwork, removal of wastes, planting, removal or control of nuisance and exotic species, installation of structures, and annual monitoring and management requirements for success. In determining the specific release schedule for a bank, the department or water management district shall consider, at a minimum, the following factors: Whether the mitigation consists solely of preservation or includes other types of mitigation. The length of time anticipated to be required before a determination of success can be achieved. The ecological value to be gained from each action required to implement the bank. The financial expenditure required for each action to implement the bank. Notwithstanding the provisions of this subsection, no credit shall be released for freshwater wetland creation until the success criteria included in the mitigation bank permit are met. Florida Administrative Code Rule 62-342.470(3) allows for the release of credits prior to final success criteria having been met, and provides that: Some Mitigation Credits may be released for use prior to meeting all of the performance criteria specified in the Mitigation Bank Permit. The release of all mitigation credits awarded will only occur after the bank meets all of the success criteria specified in the permit. The number of credits and schedule for release shall be determined based upon the performance criteria for the Mitigation Bank, the success criteria for each mitigation activity, and a consideration of the factors listed in subsection 373.4136(5), F.S. However, no credits shall be released until the requirements of Rules 62-342.650 and 62.342.700, F.A.C., are met. Additionally, no credits awarded for freshwater creation shall be released until the success criteria included in the Mitigation Bank Permit are met. Prior to achieving the final success criteria, Highlands Ranch will be eligible for interim credit releases when the ?success criteria? for each phase as set forth in the permit are met. The mitigation credits are scheduled for release as follows: Conservation Easement/Financial Assurance/Security Phase 1 - 23.45 credits Phase 2 - 21.78 credits Phase 3 - 18.49 credits Interim Criteria I Phase 1 - 39.09 credits Phase 2 - 36.29 credits Phase 3 - 30.82 credits Interim Criteria II-A Phase 1 - 9.38 credits Phase 2 - 8.71 credits Phase 3 - 7.40 credits Interim Criteria II-B Phase 1 - 3.13 credits Phase 2 - 2.90 credits Phase 3 - 2.47 credits Interim Criteria III Phase 1 - 32.83 credits Phase 2 - 30.49 credits Phase 3 - 25.89 credits Interim Criteria IV Phase 1 - 28.14 credits Phase 2 - 26.13 credits Phase 3 - 22.19 credits Final Success Criteria by Phase Phase 1 - 12.51 credits Phase 2 - 11.61 credits Phase 3 - 9.86 credits Final Bank Success Criteria - 21.25 credits The tasks related to Phase 1 are targeted to commence upon permit issuance, with active management activities -- i.e., recording the conservation easement, providing title insurance, executing financial assurance mechanisms, and providing security; and enhancement activities, e.g., tree thinning, crushing bedding rows, planting, and activities relating to trail roads and culverts -- to be completed within one year. The evidence indicates that some of the management activities, including tree thinning and crushing bedding rows were completed prior to the submission of the application for the DEP Permit. The tasks related to Phase 2 and Phase 3 are targeted to commence upon ?phase implementation,? with active management and enhancement activities within one year of the implementation of each phase. The application provides that the implementation date for Phase 2 and Phase 3 ?will be based upon market demand for mitigation within the mitigation service area.? Thus, the phases could be implemented immediately, or not at all, at the sole discretion of Highlands Ranch. The HRMB mitigation milestones that allow for interim releases of mitigation credits prior to the final success of the target communities and measures for which the bank was scored under the Part II assessment do not materially differ from standards for interim releases applicable to all mitigation banks pursuant to section 373.4136(5) and Florida Administrative Code Rule 62-342.480(3). In addition to the foregoing, though not dispositive of the issue, is the fact that the ?success criteria? in the HRMB permit are, in many cases, vague and non-quantifiable. Thus, in the absence of specific standards and comparators, the HRMB success criteria may allow for the release of credits to offset present wetland impacts without any specific or measurable ecological benefit. Application of the Time Lag Factor The Department calculated the credits for the HRMB using a time lag score of 1.00 for all assessment areas. Thus, in keeping with the UMAM, the Department necessarily made the decision that at the time of the interim releases, ?the mitigation fully offsets the anticipated impacts prior to or at the time of impact.? Meeting the ?success criteria? for an interim release of credits does not mean that the mitigation bank has met the success measures for which the bank was scored under the Part II assessment. Rather, meeting the ?success criteria? serves only to recognize that the project is meeting interim goals that show general progress towards the target goals if continued and successful into the future. In this case, there is a time difference between the achievement of the ecological benefits of the final target community, and the interim release of mitigation credits and their use to offset impacts at sites requiring mitigation. There is little practical ecological difference between releasing credits before final target communities are achieved based on ?success criteria? that are the result of implementing described activities, and releasing credits based on the physical implementation of those described activities. The effect in both cases is that mitigation credits are to be released during the ?time between when the functions are lost at an impact site and when the site has achieved the outcome that was scored in Part II.? There was testimony offered at the final hearing that the Department‘s time lag and risk scores of 1.00 were appropriate because the credit release schedule represents functional ecological improvement that must be achieved before credits are released. For the reasons set forth above, the undersigned finds that the functional ecological improvement represented by the ?success criteria? is not materially dissimilar from the means by which the ecological value of interim release milestones has been calculated for previously permitted and implemented mitigation banks. Thus, testimony that the success criteria as proposed in the DEP Permit warrants time lag and risk scores of 1.00 is not credited. Contrary to the evidence referenced in the preceding paragraph, Mr. Hull testified convincingly that there is a sizable percentage of credits released prior to the mitigation bank reaching the success proposed for many of the restoration assessment areas without time lag or risk. An example of time lag that should be applicable to the HRMB is the fact that final success for all assessment areas includes, among other criteria, the requirement that all plants, except those targeted for control or eradication, be reproducing naturally. In the case of longleaf pine, which is to be planted throughout the Property, the period before the achievement of that outcome is approximately 30 years. Furthermore, Ms. Bersok testified credibly that when starting with a community that has few ecological functions, the time necessary to ultimately achieve a high community structure score can take much longer than 15 to 20 years. That period before final success should have been reflected as time lag in the UMAM assessment, but was not. In accordance with the schedule proposed by Highlands Ranch, a significant number of the total credits awarded for the three phases may be released within one year of permit issuance. In that regard, the ?CE/Financial Assurance/Security? interim release allows for a three-phase total of 63.72 credits to be released for that interim step, estimated to occur within 30 days of permit issuance or phase implementation, while Interim Criteria I allows for a three-phase total of 106.20 credits to be released for that interim step, estimated to occur within one year of permit issuance or phase implementation. Thus, 169.92 of 425.81 credits, or 40 percent of the total, are potentially eligible for release within a short period, and years before any reasonable expectation of final target community success. It is that circumstance that squarely meets the standards for the application of the time lag factor. Based on the testimony and evidence adduced at the final hearing, the calculation of credits for the HRMB without accounting for the time lag before final success produces an unreasonable result, regardless of the application of the "performance-driven" approach that was created for the HRMB by the Department.5/ Thus, the decision to assign a time lag score of 1.00 to each of the restoration assessment areas is contrary to the facts of this case, and the plain language of the UMAM rule and its requirements. Application of the Risk Factor The Department calculated the credits for the HRMB using a risk score of 1.00 for all assessment areas. Thus, pursuant to the UMAM, the Department made the decision that the mitigation projects require no significant ?periods of time to replace lost functions or to recover from potential perturbations,? and that the mitigation activities are being ?conducted in an ecologically viable landscape and deemed successful or clearly trending towards success prior to impacts.? As set forth in preceding paragraphs, there is a sizable period of time between the interim release of credits - and their availability to replace lost functions at permitted impact sites -- and the time at which the mitigation has been established and monitored to the point at which it is ?clearly trending towards success.? Thus, a risk score of 1.00, meaning that there is essentially no risk, is not warranted. The risk in this case is that associated with the fact that the ?mitigation projects . . . require longer periods of time to replace lost functions or to recover from potential perturbations.? Although there were concerns expressed that the proposed activities might have heightened risk inherent in the mitigation methods, the testimony on that issue was vague and non-specific, and is not accepted. Based on the testimony and evidence adduced at the final hearing, the failure to account for the risk associated with the extended period of time expected before final restoration and enhancement success is not warranted, regardless of the application of the "performance-driven" approach. Thus, the decision to assign a risk score of 1.00 to each of the restoration assessment areas is contrary to the facts of this case, and the plain language of the UMAM rule and its requirements. Application of the Preservation Adjustment Factor The DEP Permit applied the preservation factor as a ?one-step? process as described above. Under that method, the PAF was not separately applied in any restoration or enhancement assessment area. That method was applied by Ms. Bersok in her February 22, 2013, UMAM scoring of the HRMB complete application. A PAF of 0.70 was applied to both of the preservation assessment areas. That score was also applied by Ms. Bersok in her February 22, 2013, UMAM scoring of the HRMB complete application. The ?one-step? application of the PAF was an allowable method under the UMAM rule. Petitioner failed to prove that the score of 0.70 for the preservation assessment areas was not warranted. Variance from Construction and Implementation Financial Responsibility Requirement Section 373.4136 provides that, in order to obtain a mitigation bank permit, an applicant must meet the financial responsibility requirements established by rule. § 373.4136(10), Fla. Stat. As it relates to financial responsibility for the construction and implementation of a mitigation bank, Florida Administrative Code Rule 62-342.700(4) provides, in pertinent part, that: Financial Responsibility for Construction and Implementation. No financial responsibility shall be required where the construction and implementation of the Mitigation Bank, or a phase thereof, is completed and successful prior to the withdrawal of any credits. * * * . . . When the bank (or appropriate phase) has been completely constructed, implemented, and is trending toward success in compliance with the permit, the respective amount of financial responsibility shall be released. The financial responsibility mechanism shall become effective prior to the release of any mitigation credits. Section 120.542(2) provides that: (2) Variances and waivers shall be granted when the person subject to the rule demonstrates that the purpose of the underlying statute will be or has been achieved by other means by the person and when application of a rule would create a substantial hardship or would violate principles of fairness. For purposes of this section, ?substantial hardship? means a demonstrated economic, technological, legal, or other type of hardship to the person requesting the variance or waiver. For purposes of this section, ?principles of fairness? are violated when the literal application of a rule affects a particular person in a manner significantly different from the way it affects other similarly situated persons who are subject to the rule. On July 16, 2012, Highlands Ranch filed a petition with the Department for a variance from the financial responsibility requirements of rule 62-342.700 for the construction and implementation activities of Highlands Ranch Mitigation Bank.6/ In its ?Petition for Variance from Rule Subsections 62-342.700(1)(a), (2), (3) and (4), F.A.C.?, Highlands Ranch requested that the variance be granted on the basis that the application of the rule would create a substantial hardship. Highlands Ranch did not assert that the application of the financial responsibility rule would violate principles of fairness. As indicated previously, the proposed permit authorizes a release of credits when Highlands Ranch records the conservation easement, provides title insurance, executes financial assurance mechanisms, and provides security. Thus, the proposed HRMB permit authorizes the release of mitigation credits prior to any construction being commenced, much less completed. Although certain interim criteria must be met in order for additional mitigation credits to be released, those interim steps do not constitute success of the target conditions scored under the Part II Assessment or, without more, demonstrate that the mitigation is ?trending toward success? in meeting those final target conditions. Financial assurance is required for construction and implementation activities at all mitigation banks, and may not be released until the mitigation ?is trending toward success in compliance with the permit.? Highlands Ranch asserts that the unique ?performance-driven? approach that has been applied to the HRMB warrants a deviation from the requirement that it financially guarantee the work. To the contrary, the financial responsibility required by rule provides assurance that the active construction and implementation is performed and, as would be the case with the ?performance-driven? approach, may be released only when the expected outcomes are trending towards success. Without question, any time a permitee is required to provide financial responsibility, it will have a financial effect on the permittee. However, the standard for a variance requires that the financial effect constitute a hardship to the person requesting the variance. In this case, Highlands Ranch failed to demonstrate that meeting the financial responsibility requirements applicable to all mitigation bank permittees would constitute an economic, technological, legal, or other type of hardship as applied to it. Highlands Ranch did not request a variance on the basis that the application of the financial-responsibility rule would violate principles of fairness. Nonetheless, the Department determined that ?principals of fairness? warranted its grant of the variance. For the reasons set forth herein, including the fact that the financial-responsibility instruments required of all permittees may be released only when the mitigation ?is trending toward success in compliance with the permit,? the undersigned finds that the financial-responsibility rule does not affect Highlands Ranch in a manner significantly different from the way it affects other similarly situated persons who are subject to the rule. Highlands Ranch failed to demonstrate that the application of Florida Administrative Code Rule 62-342.700(4) would create a substantial hardship or would violate principles of fairness as applied to Highlands Ranch and the HRMB. Highlands Ranch‘s Motion for Attorney‘s Fees and Costs Based on the evidence adduced in this proceeding, the undersigned finds that Petitioner did not participate in this proceeding for an improper purpose. In that regard, Petitioner is found to have prevailed on certain issues that substantially changed the outcome of the proposed agency action which is the subject of this proceeding regarding both the DEP Permit and the Variance. Furthermore, despite the evidence provided as to the source of payment for certain of Petitioner‘s costs and attorney‘s fees, there was insufficient evidence to support a finding that Petitioner brought this action ?primarily to harass or to cause unnecessary delay or for frivolous purpose or to needlessly increase the cost of litigation, licensing, or securing the approval of an activity.? § 120.595(1)(e)1., Fla. Stat. Ultimate Findings of Fact Based on the totality of the facts adduced at the final hearing, having weighed the evidence introduced by each of the parties, and having gauged the demeanor and credibility of the witnesses, the undersigned accepts the testimony of Ms. Bersok as constituting the most credible and reliable application of reasonable scientific judgment, resulting in an accurate calculation of the allowable credits (except as modified below) that may be awarded under the standards established by the UMAM rule. The competent and substantial evidence available to Ms. Bersok, including the complete application submitted by Highlands Ranch, and her assumptions that were ultimately incorporated in the DEP proposed permit, are found to have been sufficient to allow her to formulate reasoned opinions and conclusions regarding the number of mitigation credits that could be ecologically justified in this case. Therefore, the undersigned finds that the application of the UMAM standards to the HRMB property and the restoration, enhancement, and preservation activities to take place thereon, warrants an award of a maximum of 280.33 mitigation credits. Based on the testimony and evidence adduced at the final hearing, and as set forth herein, the undersigned finds that the facts of this case, including the ?performance-driven? approach that was developed for and applied to the HRMB application, do not warrant a determination that there is no time difference between the time wetland impacts being mitigated by released mitigation credits are anticipated to occur and the time when the mitigation is anticipated to fully offset the impacts. Based thereon, the application of a time lag score of 1.00 in the UMAM assessment was in error. Thus, the 280.33 mitigation credits that reflect the maximum allowable number should be revised by applying an appropriate time lag modifier to the ?delta? for each restoration and enhancement assessment area as calculated by Ms. Bersok, with the RFG and final credits calculated based thereon. Based on the testimony and evidence adduced at the final hearing, and as set forth herein, the undersigned finds that the facts of this case do not warrant a determination that there is no uncertainty that there may be a reduction in the ecological value of the mitigation assessment area. That finding is based on the length of time expected before final success, rather than any inherent vulnerability of the target communities. Based thereon, the application of a risk score of 1.00 in the UMAM assessment was error. Thus, the 280.33 mitigation credits that reflect the maximum allowable number should be revised by applying an appropriate risk modifier to the ?delta? for each restoration and enhancement assessment area as calculated by Ms. Bersok, with the RFG and final credits calculated based thereon. For the reasons set forth herein, Highlands Ranch failed to demonstrate that it was entitled to a variance from the financial responsibility requirements of Florida Administrative Code Rule 62-342.700.
Recommendation Based on the findings of fact and conclusions of law, it is RECOMMENDED that the Department of Environmental Protection enter a final order consistent with the findings of fact and conclusions of law set forth herein. DONE AND ENTERED this 11th day of April, 2013, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of April, 2013.
The Issue Whether Petitioner is entitled to a refund for sales taxes paid by Petitioner to Respondent on valet parking transactions for the period May 1, 1997 through April 30, 2002.
Findings Of Fact The Department is the agency of the State of Florida charged with implementing the state tax statutes. The Sheraton operates a full service hotel, the Sheraton Bal Harbour, located at 9701 Collins Avenue, Bal Harbour, Florida. The Sheraton is licensed as a hotel under the provisions of Chapter 509, Florida Statutes (2004). The Sheraton’s principal business is providing lodging, food, and other services to the guests of its hotel. The Sheraton provides valet parking to its hotel guests and visitors. Upon arrival at the Sheraton, a guest or visitor arriving by motor vehicle provides his or her vehicle and the vehicle keys to the parking attendant. The parking staff provides the guest or visitor with a valet parking ticket. The parking attendant collects the valet parking fee upon departure or charges it to the guest room. The Sheraton’s parking is located in a building on the Sheraton’s grounds that is secure. No hotel guests, visitors, or members of the general public are allowed in the parking building. No guest or visitor to the Sheraton can park his or her vehicle on the Sheraton’s grounds without using the valet parking. There are no self-parking spaces on the Sheraton’s grounds. No member of the valet parking staff and no member of the hotel staff is authorized to use a guest’s or visitor’s vehicle for any activity other than to park and return the vehicle to the guest or visitor at his or her request. There is no time when the vehicle would not be delivered to the guest or visitor upon request. The Sheraton’s guest or visitor may request his or her automobile at any time and it is delivered.1 The Sheraton’s guest may go in and out and request the vehicle several times a day or night without a separate charge. (This may not apply to a visitor to the Sheraton.) There are not very many public overnight parking spots near the Sheraton. The Bal Harbour Shops2 are located across the street from the Sheraton. The Bal Harbour Shops has its own paid self- parking and valet parking services available. The Sheraton, on a regular basis, utilizes the Bal Harbour Shops’ parking spaces for its valet parking when there is overflow from the parking available on its premises. The Sheraton pays a per space charge to the Bal Harbour Shops for these parking spaces, and sales tax is included in this charge. The Sheraton’s fee for valet parking services is a flat fee and does not identify a separate charge for valet services, for a parking space, or for sales tax. The Sheraton advises its guests and visitors that it is not responsible for damages to the vehicle parked by the valet parking except through its staff’s negligence. The Sheraton does pay on a regular basis for fixing cars that are damaged while in its possession. The Sheraton’s valet parking ticket and signs posted at its entrance contain terms and conditions for the valet parking, which include the following: Vehicle is accepted for parking only. We (Sheraton) assume no liability for fire, theft, vandalism, flood, or damage in any case except through our own negligence. We are not bailees and are not responsible for loss or damage of any article left in vehicle including but not limited to radar detectors, cellular phones, money, etc. The owner of the vehicle acknowledges that he is in constructive possession and control thereof at all times. [3] No notification was made by the Sheraton to its guests or visitors regarding any sales tax on valet parking during the period at issue in this proceeding. Through internal accounting records, the Sheraton allocated a portion of the parking fees collected to sales tax and remitted that amount to the Department. Sales tax was not stated on any invoice nor did the Sheraton’s valet parking signs posted at the hotel’s entrance mention sales tax. During the period from May 1, 1997 through April 30, 2002, the valet parking charges ranged from $12.00 to $18.00 per day for overnight valet parking. On a monthly basis, during the refund period from May 1, 1997 through April 30, 2002, the Sheraton paid to the Department sales taxes on valet parking in the total amount of $329,497.20. On or about July 9, 2002,4 the Sheraton applied to the Department for a refund in the amount of $329,497.20 for the sales taxes it paid during the refund period. On June 11, 2003, the Department denied the refund request. On August 4, 2003, the Sheraton filed a protest with the Department. On April 27, 2004, the Department issued a Notice of Decision sustaining the denial of the refund. The Sheraton thereafter timely filed the Petition for Administrative Hearing which initiated this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order denying the subject application for a refund. DONE AND ENTERED this 4th day of October, 2004, in Tallahassee, Leon County, Florida. S CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 2004.
Findings Of Fact Pursuant to its authority to regulate water and sewer rates, charges and rate structures embodied in Chapters 367, Florida Statutes, and 25-30, Florida Administrative Code, the Public Service Commission entered Orders numbered 16971 and 17058, which adopted specific guidelines and conditions for utilities to implement certain income tax impact charges for contributions-in-aid- of-construction ("CIAC gross-up charges"). (See Orders numbered 20409, p.3; 16971, p.2-4; and 17058). One of these conditions requires that utilities submit appropriate tariff sheets (rates and charges sheets) for the Commission's approval prior to implementation of the CIAC gross-up charge. CIAC is the payment or contribution of cash or property to a utility from a customer or entity seeking service from that utility in order to secure the provision of such services or to reserve it for a future time. The Internal Revenue Code of 1986 changed the treatment of CIAC from being non-taxable to being taxable as income. A CIAC gross-up charge is a method by which a utility can recover that tax expense, represented by the income tax assessed against collected CIAC, through approved rates and charges to customers. The amount of CIAC tax impact funds collected by a utility is not itself treated as CIAC for rate-making purposes. The Respondent, St. Johns North Utility Corp., collected gross-up charges which were not authorized by its filed and approved tariff schedules (rate schedules), and without securing the requisite approval from the Commission. (See Orders numbered 20409 and 20762). The Commission was made aware of the charging of unauthorized CIAC gross-up charges by the Utility Respondent when a developer, Fruit Cove Limited, communicated with the Commission concerning its doubts about utility service being available for one of its subdivisions, when required, from the Respondent. Fruit Cove Limited had paid CIAC gross-up charges to St. Johns. On June 3, 1988, the Commission, through its staff, contacted Mr. Joseph E. Warren, the General Manager for the Respondent, and explained the Commission's requirements regarding the requisite pre-approval of the charging of CIAC gross-up charges. Mr. Warren agreed to file a written request for authorization to implement such charges. No request was filed, despite repeated admonitions and solicitations by the Commission and its staff and a lengthy opportunity to comply. Finally, Order No. 20409 was issued by the Commission on December 5, 1988, requiring the Utility to file a written request for authorization to implement CIAC gross-up charges within thirty (30) days of that Order. A written request was not timely filed, however. The Utility finally filed its written request for approval of these charges on September 5, 1989. The accompanying tariff sheets representing such charges were ultimately filed in response to Orders numbered 16971 and 20409, and Show Cause Order No. 20762. They became effective on September 15, 1989. The Commission, through its staff, also made repeated inquiries to the Utility regarding certain service availability charges and practices, initially by letter of July 29, 1988. The Utility was allowed until August 19, 1988 to make the requested responses. The letter was addressed to Mr. Joseph Warren at the Utility's mailing address of record. The Utility, however, did not provide written responses to the comments and questions by the Commission, despite repeated assurances that it would do so. Order No. 20409, issued on December 5, 1988, required the Utility to provide the full written responses to the July 29, 1988 letter within thirty (30) days of the date of that Order. The responses were not timely made. Order No. 20762 was issued on February 17, 1989, requiring the Utility to show cause in writing on or before March 13, 1989 why it should not be fined up to $5,000.00 per day, in accordance with the Commission's penalty authority, for failure to comply with the provisions of Order No. 20409, regarding the necessity for written responses to the Commission's specified questions and the submission of a written request to implement the CIAC gross-up charges referenced above. The first item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to seek approval, including submission of proposed rate tariff sheets for authorization to implement the CIAC tax impact charge referenced above. That item was responded to on September 5, 1989, more than eight months after the deadline set by Order No. 20409. The second item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to provide the names and addresses of financial institutions in which gross-up charge funds were being retained. That item was responded to as requested. The third item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to provide a listing of all gross-up monies received from each contributor. No response was ever provided by the Respondent. The significance of the information requested by the Commission is that it would provide identity of the individuals who were entitled to a refund of the unauthorized CIAC gross-up charges collected by the Utility, as provided in Order No. 20762. The fourth item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to provide a copy of all current developer agreements. That item was responded to within the deadline set by Order No. 20409. The fifth item in the Commission's July 29, 1988 letter to the Utility had requested the Utility to file revised tariff sheets indicating the actual legal description of the Utility's certificated service territory. No response was ever provided. Order No. 20762 was ultimately issued on February 17, 1989 imposing a $5,000.00 fine on the Utility for serving outside of its authorized service area. Order No. 20409 requested the Utility to indicate to the Commission whether, with regard to the developer agreement between the Respondent and Fruit Cove Limited, the charges listed in the various paragraphs of that agreement would, upon completion of the real estate development involved, be adjusted to reflect actual utility service costs incurred. No response to that request was ever provided by the Utility. Additionally, in that Order, the Commission requested information concerning a so- called "step tank", which was referenced in paragraphs 12C and 13D of the developer agreement with Fruit Cove Limited. That request, in Order No. 20409, was never responded to. A certain fee was charged for installation of the step tank by the Utility to Fruit Cove Limited, and no response was given to the Commission's inquiry as to why that fee was omitted from the Utility's approved tariff on file with the Commission. The significance of the requested information was that the omission of the step tank installation fee from the Utility's tariff of rates and charges could cause the developer agreement to constitute a "special service availability agreement", which can only be approved in advance by the Commission. It is not a matter, approval of which has been delegated by the Commission to its staff members. The Order referenced last above also requested an explanation for why a meter installation fee, referred to in that same developer agreement, does not include a "curb stop" or a meter box. This information is significant because it is necessary in order for the Commission to determine whether the charge involved is reasonable. A cost breakdown for the meter installation, including the various hardware components and other charges, was necessary and was not provided by the Utility. Additional information concerning the area of service availability, required to be provided to the commission by Order No. 20409, included the requirement that approval be obtained from the Commission for the CIAC gross-up charge in the developer agreement with Fruit Cove Limited. As stated above, that approval was not requested in writing, as required by the Order, for more than eight months after the deadline set by that Order. By Order No. 20762, St. Johns was fined $5,000.00 for three separate violations of the statutes and rules, and the Orders enumerating them, for a total of $15,000.00. The Utility was fined for serving outside of its authorized service territory, for collecting unauthorized CIAC gross- up charges, and for failing to file its developer agreements with the Commission as required by law. The developer agreements were only submitted after repeated efforts by the Commission's staff which culminated in Order No. 20409 and which were either unresponded to or not properly responded to by the Utility. Additionally, by Order No. 21559, issued on July 17, 1989, St. Johns was fined $5,000.00 for failure to file an application for an extension of its territory as required by Order No. 20409. In the meantime, by Order No. 22342, issued on December 26, 1989, the Commission approved a transfer of the Utility's assets from St. Johns to Jacksonville Suburban Utilities Corporation ("Jacksonville Suburban"). That Order did not authorize transfer of the liabilities of the Respondent to Jacksonville Suburban. The Order specifies that St. Johns, and not Jacksonville Suburban, will remain liable for the previously imposed refund obligations and fines. Only in the event that there remained sales proceeds in excess of the certain debt of St. Johns owed to its institutional lender would funds from the Jacksonville Suburban sale be applied toward payment of the refund and fines found to be due and owing by the above-cited Orders, by way of escrow or otherwise. Any excess proceeds, absent Order No. 22342, were to be paid to St. Johns. Order No. 22342 does not make Jacksonville Suburban liable for the refund and fines at issue. It is speculative whether there will be any sales proceeds available from the sale, after payment of the debt, to be applied toward the refund and fines. The sales price was made dependent upon establishment of the Utility's "rate base" amount, to be established in that transfer proceeding at a point in time after entry of Order No. 22342. That Order, however, specifically preserves the liability of St. Johns for the refund and fines and does not provide for the extinguishment of such liability in the event that the sales proceeds prove to be insufficient to pay them.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that St. Johns be assessed a penalty of $5,000.00 for knowingly and willfully failing to comply with Order No. 20409. DONE AND ENTERED this 13th day of June, 1990, in Tallahassee, Leon County, Florida. Hearings Hearings 1990. P. MICHAEL RUFF Hearing Officer Division of Administrative The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative this 14th day of June, APPENDIX TO RECOMMENDED ORDER Petitioner's Proposed Findings of Fact 1.-24. Accepted. Respondent's Proposed Findings of Fact. (Respondent filed no proposed Findings of Fact) Copies furnished to: David Schwartz, Esq. Florida Public Service Commission Legal Division 101 E. Gaines Street Tallahassee, FL 32399-0850 Joseph E. Warren, Esq. 1930 San Marco Boulevard Suite 200 Jacksonville, FL 32207 Mr. Steve Tribble Director of Records and Recording Florida Public Service Commission 101 E. Gaines Street Tallahassee, FL 32399-0850 Mr. David Swafford Executive Director Florida Public Service Commission 101 E. Gaines Street, Room 116 Tallahassee, FL 32399-0850 Susan Clark, Esq. General Counsel Florida Public Service Commission 101 E. Gaines Street, Room 212 Tallahassee, FL 32399-0850
The Issue The issues are whether Florida Power and Light may backbill James Kiselak for electricity diverted from a residential electric meter, and for costs of investigation, and whether it may decline to transfer the account for the residence at which the electricity was diverted to the name of Pat Kintz until the backbill and the costs of investigation are paid.
Findings Of Fact Mr. James Kiselak has, for a number of years, been the customer of record for electric service provided by Florida Power and Light Company to a residence located at 3987 NW 163rd Street in Opa Locka, Florida. Mr. Kiselak had been accused in 1985 of current diversion by removing the meter and inverting it. After an investigation, Mr. Kiselak paid a back bill for current diversion. As part of the resolution of the first current diversion matter, the old meter, #5C75910, was removed and replaced with meter #5C98980 on January 27, 1986. The meter was brand new at the time it was installed. This is not a situation where a new resident has become the customer of record at a home and "inherited" a meter which had been tampered with by a prior resident. In August of 1989 Florida Power and Light Company received a tip that the customer at the Kiselak residence was removing the meter from the socket. A meterman was sent to investigate on September 17, 1989, who found only a hole in the acrylic canopy over the meter. The meter was reinspected by Mr. Chase Vessels on March 18, 1990. He found a wire placed through the hole in the acrylic canopy which stopped the meter disc from turning and registering the use of electricity. At that time he saw that electricity was being consumed because a wall unit air conditioner was operating, a freezer located outside the home was operating, and the outside lights were on. That meter was removed and taken under lock and key where it was tested by Emory Curry on April 4, 1990. Mr. Curry found that the wire through the hole in the canopy had stopped the disc from turning, and that there were drag marks on the top of the disc. When the obstructing wire was removed, tests showed that the meter registered current usage appropriately. The meter has been kept in a locked meter box, and FPL has maintained a log of all persons who have had access to the meter in that box since that time. From the time the meter was tested by Mr. Curry on April 4, 1990, no other person has had access to the meter, the meter was locked again at the close of the hearing on November 4, 1991, in the meter box. The wire was maintained in a separate envelope and locked in the meter box as well. An investigator for Florida Power and Light Company, Joe Brenner, observed the residence at 3987 NW 163rd Street on January 23, 24, and 25, 1991, February 4, 5, 6, 7, and 8, 1991, and February 11, 12, 13, and 14, 1991. In the yard in front of the home a Mazda truck was parked, as well as a Mazda RX7, 2- door automobile, which had no license tag. On January 23, Mr. Brenner saw a gentleman come out, go to the mailbox, remove mail, go through it in a manner consistent with receiving mail at his place of residence and re-enter the home. A credit report obtained by Florida Power and Light Company from Equifax Credit Information Services in North Miami Beach, Florida, shows that Mr. Kiselak has resided in the house from August 6, 1973, through the date of that report on October 30, 1991, and that he receives bills from his various creditors at that address. Mr. Brenner met this man at the informal hearing which was conducted by the Public Service Commission, who identified himself as James Kiselak. Mr. Kiselak drove to the informal hearing in the Mazda RX7, which then had a license plate. The records of the Dade County Auto Tag Agency which were admitted during the hearing show that the car was registered to James Kiselak at the address of 3987 NW 163rd Street in Opa Locka, Florida. After the testing of the meter in April of 1990, a current diversion investigator for Florida Power and Light Company, Diann Thomas, met with Patricia Kintz at the residence where the current diversion occurred; she was accompanied by Roger Sweeney, who also works for Florida Power and Light. At that time Ms. Kintz maintained that she was the owner of the house and its resident, that she was solely responsible for the payment of the electric bills and that she lived in the home alone. Based upon the records of Florida Power and Light which have shown Mr. Kiselak as the customer at the residence since before 1986, his presence at the home on January 23, 1991, his receipt of mail there, the credit report showing that the residence is his billing address for his creditors, and the presence of the Mazda automobile at the residence during the period from January 23 to February 14, 1991, I find that Mr. Kiselak has been residing at the home continuously, and has received the benefit of the current diversion based on meter tampering. For a substantial period of time, at least since October 11, 1988, Ms. Kintz has also occupied the house and received the benefit of the current diverted, although there is no proof that she is (a) responsible for causing the diversion or (b) subject to a cause of action by Florida Power and Light Company for the value of the current diverted. Ms. Diann Thomas has calculated a backbill for the current diverted at the Kiselak residence in a manner consonant with Rule 25-6.104, Florida Administrative Code, which permits a utility to bill the customer "on a reasonable estimate of the energy used" when there has been meter tampering. The type of tampering involved would be manipulable from day-to-day or month-to-month. The bill during the month of April 1989 was for 2,079 kwh of electricity. Usage registered that month was high compared to other months and it is reasonable for the utility to regard this as an unmanipulated month, and to use that consumption as the basis for projecting the proper amount to be billed. For the entire year of 1989, on average for residential customers of Florida Power and Light Company, April bills represented 6.81 percent of all billings for the calendar year. Therefore, the projected electric utilization for the entire year would be 30,529 kwh. Stated another way, the average percentage of use calculation would also show an average use of 69 kwh per day. After the diversion was detected and the new (i.e. third) meter was set on the residence, the use recorded for August and September of 1990 were 2,885 kwh and 3,333 kwh, which are consistent with the average percentage of use calculation based on the April 1989 actual usage. The projected usage for the bill delivered in March 1986 (the first full billing period after the meter had been placed on January 27, 1986), through April of 1990, after the diversion was discovered, is calculated in FPL exhibit 10. The actual bills paid for the Kiselak residence were deducted from the projected amounts in FPL exhibit 18. Based upon these calculations FPL is due $6,871.65 for the diverted electricity; a franchise charge, which would have been added to each monthly bill based upon kilowatt hours used of $284.69, is due, as is a city/county utility tax of $591.80, and a current diversion investigation charge of $375.53. The current diversion investigation charge is reasonable and is broken out on page 4 of FPL exhibit 10. The total due to FPL is therefore $8,087.67. The second issued raised is whether Florida Power and Light Company has properly declined to transfer service at the residence to the name of Ms. Kintz, without payment of the total amount due from Mr. Kiselak. The preponderance of the evidence shows that Mr. Kiselak has used the address as a mailing address for his credit cards, he has been observed frequenting the residence. Ms. Kintz has been also residing there since at least October 10, 1988, when her most current Florida drivers license was issued and she used the residence as her address on that license. Both Kiselak and Kintz continue to occupy the residence. While only Mr. Kiselak is indebted to Florida Power and Light, its tariffs, which have been approved by the Commission, do address this situation. According to tariff sheet 6.010, on service agreements, section 1.5: [Florida Power and Light] may refuse or discontinue service for failure to settle, in full, all prior indebtedness incurred by any customer for the same class of service at any one or more locations of such customer. [Florida Power and Light] may also refuse service for prior indebtedness by a previous customer provided that the current applicant or customer occupied the premises at the time the prior indebtedness occurred and the previous customer continues to occupy the premises. Both Ms. Kintz and Mr. Kiselak benefited from the service during the period current had been diverted, for while the account had been in Mr. Kiselak's name, Ms. Kintz resided there too. Florida Power and Light may refuse to provide service to Ms. Kintz at 3987 NW 163rd Street pursuant to the tariff sheet. The provisions of the tariff sheet are reasonable. It is specifically meant to cover situations such as this, though the more common situation would be one in which two college roommates occupy an apartment or residence, while the electric service is in the name of only one of them. After running up a substantial electric bill which they are unable to pay, the roommate not named on the FPL account may apply to have the service transferred to his (or her) name, and thereby attempt to avoid payment of the current bill, and avoid an interruption of service. Section 1.5 of tariff sheet 6.010 (FPL exhibit 13) is designed to prohibit such situations. It prohibits the transfer of the account into the name of Ms. Kintz here.
Recommendation It is RECOMMENDED that a final order be issued by the Florida Public Service Commission finding that Mr. Kiselak is indebted to Florida Power and Light in the amount of $8,087.67, and that if this amount is not paid to Florida Power and Light within 10 days from the date of the Commission's final order, Florida Power and Light be authorized to cease providing electric service to that address. It is also recommended that Florida Power and Light not be required to transfer the account from the name of Mr. Kiselak to Ms. Kintz unless Mr. Kiselak first pays the full amount due, because Ms. Kintz occupied the premises at the time the current diversion occurred and still continues to occupy those premises. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 12th day of November 1991. WILLIAM R. DORSEY, JR. 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 12th day of November 1991. COPIES FURNISHED: K. Crandal McDougall, Esquire Florida Power and Light Company Legal Department Post Office Box 029100 Miami, Florida 33102-9100 Mr. James Kiselak 3987 Northwest 163rd Street Miami, Florida 33054 Ms. Pat Kintz 3987 Northwest 163rd Street Miami, Florida 33054 Kay Flynn, Chief PSC/Bureau of Records 101 East Gaines Street Tallahassee, Florida 32399-0870 Susan Clark, Esquire Public Service Commission 101 East Gaines Street Room 212 Tallahassee, Florida 32399-0850 Steve Tribble, Director of Records and Recording Public Service Commission 101 East Gaines Street Tallahassee, Florida 32399-0850 David Swafford, Executive Director Public Service Commission Room 116 101 East Gaines Street Tallahassee, Florida 32399-0850 Rob Vandiver, General Counsel Public Service Commission Room 212 101 East Gaines Street Tallahassee, Florida 32399-0850
The Issue The issues presented concern the request by Petitioner for a refund of $700 paid to the Florida Public Service Commission as a filing fee related to an application for a rate increase of its passenger fares.
Findings Of Fact The facts presented are based upon a stipulation offered by the parties. Those facts were accepted for purposes of this Recommended Order by the interlocutory Order of November 21, 1983. In keeping with that action and pursuant to the parties' stipulation of facts, the following facts are found: (See Stipulation of Facts and all exhibits attached to this Recommended Order.)
