The Issue The issue to be determined in this case is whether CJC Properties, Ltd. (CJC), is eligible for state restoration funding assistance under the Petroleum Contamination Participation Program or the Florida Petroleum Liability and Restoration Insurance Program for one or more discharges of gasoline at DEP Facility No. 378943938 (“the facility”).
Findings Of Fact The Facility CJC is a Florida Limited Partnership. It is the current owner of property located at 5691 U.S. Highway 27 North, in Tallahassee. Prior to CJC’s acquisition of the property, the property was owned by Carolyn J. Chapman, John W. Chapman, Jane Chapman Latina, and Carolyn Chapman Landrum (“the Chapmans”). The property was leased to various entities and operated as a gas station. The tanks and dispensers remained in service until November, 1995. The last operator of the facility was Lake Jackson 76, Inc. There were five underground petroleum storage tanks at the facility. Before 1991, one of the tanks at the facility was used for regular, leaded, gasoline. When leaded gasoline was phased out, the tank was used for unleaded gasoline. Site Assessments and Sampling Data On November 30, 1995, the Chapmans employed Petroleum Contractors, Inc., to remove the five storage tanks. During the tank removal, Environmental and Geotechnical Specialists, Inc. (“EGS”) performed an assessment to determine whether the facility was contaminated with petroleum or petroleum products. The Underground Storage Tank Removal Report prepared by EGS noted that all five tanks appeared to be intact. Soils in the tank pit wall and bottom were not discolored. No significant contamination was observed directly below the tanks. Soil from the tank pit was stockpiled on the site. EGS observed no significant signs of contamination of this soil. The soil stockpile was also screened with a Flame Ionization Detector Organic Vapor Analyzer (OVA). No organic vapors were detected. An OVA detects any organic vapor, but is used as a screening tool to find petroleum vapors. Department rules require that an OVA reading be performed both unfiltered and filtered. The filtered reading screens out everything but methane and is “subtracted” from the unfiltered reading to determine the presence of petroleum vapors. Twenty-four soil samples were taken from various depths at nine locations in the tank pit. These samples were tested using an OVA. Nine of the soil samples, taken from four locations, had corrected OVA readings indicative of petroleum contamination. EGS concluded that “soil contamination detected in the tank pit is likely the result of a leak in the piping” between the dispensers and the tanks. Soil samples were also taken from three borings in the vicinity of the dispenser island and OVA-tested. In boring D-2, organic vapors were detected from the surface to a depth of approximately seven feet. The OVA readings from D-2 declined with depth. EGS reported that “some contamination was detected beneath a dispenser; however, it does not ‘appear’ to significantly extend below six (6) feet.” EGS did not report both filtered and unfiltered OVA readings for the soil samples taken from the dispenser area, as it had done for soil samples taken from the tank pit and the stockpile. For the dispenser area soil samples, EGS reported a single OVA reading for each sample, without indicating whether the reading was “corrected” after filtering. For this reason, the Department contends that these data are unreliable. CJC points out that EGS stated in the text of its report that the soil samples were filtered. CJC also argues that, because the filtered OVA readings for soil samples taken from the tank pit area were not different from their unfiltered readings, the OVA readings for the soil samples from the dispenser area would not have changed after filtering. The preponderance of the evidence is that the contamination in the dispenser area was petroleum. Based on EGS’ findings during the tank removal in November 1995, Petroleum Contractors, Inc., filed a Discharge Reporting Form on December 1, 1995, stating that there had been a discharge of unleaded gasoline at the facility. In January 1996, the Chapmans applied to participate in FPLRIP based on the discharge reported on December 1, 1995. By order dated January 26, 1996, the Department determined that the reported discharge was eligible for state-funded remediation assistance under FPLRIP. In 1997, another consultant, Levine Fricke Recon (LFR) conducted a site assessment at the facility and submitted its Interim Site Assessment Report to the Department. As part of its own soil sampling at the site, LFR collected a “direct push” soil boring in the dispenser island area, near the place where EGS had reported organic vapors. The boring data showed no petroleum vapors until the interval 16-to-20 feet below ground surface. LFR also collected and analyzed groundwater samples from the site. It reported that a sample taken from beneath the former diesel dispenser contained lead. Because lead occurs naturally in soils, its presence in a water sample does not confirm that a discharge of leaded gasoline occurred. In 1998, LFR conducted a second assessment of the facility site. It installed and sampled four shallow monitoring wells, designated MW-1S through MW-4S, and three deep monitoring wells, designated MW-2D through MW-4D. Groundwater samples from MW-3S and MW-3D were analyzed for lead, ethylene dibromide (EDB), and 1,2-Dichloroethane. All three substances are usually detected in a groundwater sample contaminated with leaded gasoline. On August 28, 1998, LFR submitted its Interim Site Assessment II to the Department, which shows lead and EDB were found in a sample taken from MW-3S, but not 1,2-Dichloroethane. LFR did not conclude or express a suspicion in either of its two assessment reports that leaded gasoline had been discharged at the facility. The deadline for submitting a Discharge Reporting Form or written report of contamination was December 31, 1998. A site assessment report received by the Department before January 1, 1999, which contained evidence of a petroleum discharge, was accepted by the Department as a “report of contamination.” The petroleum discharge information received by the Department before January 1, 1999, consisted of the Underground Storage Tank Removal Report, the FPLRIP claim, the Interim Site Assessment Report, and the Interim Site Assessment Report II. Post Deadline Site Assessment Data After the statutory deadline, LFR submitted its Interim Site Assessment III. This report includes January 1999 groundwater sampling data from four monitoring wells which show the presence of low levels of EDB. When EDB is found in a groundwater sample, it is a common practice to re-sample the well from which the sample was taken. Of the wells that showed the presence of EDB, only MW- 10D was re-sampled, after January 1, 1999. There was no EDB present in the groundwater when MS-10D was re-sampled. In June 2000, as part of the remediation of the contamination at the facility, an area of contaminated soil was removed to a depth of 14 feet. The area of soil removed included the former dispenser area. In January 2003, the Department notified CJC that the $300,000 FPLRIP funding cap would soon be reached. In March 2003, CJC signed a Funding Cap Transition Agreement, acknowledging that “At no time will the DEP be obligated to pay for cleanup of this discharge any amount that exceeds the funding cap.” CJC further acknowledged that it “is responsible for completing the remediation of the discharge in accordance with Chapter 62-770, F.A.C.” In 2005, CJC re-sampled one of the monitoring wells for lead and EDB. Neither substance was present. The site is not currently being actively remediated. Periodic groundwater sampling indicates that concentrations of contaminants are dropping. No further active remediation has been proposed. The cost to complete remediation is a matter of speculation. The record evidence is insufficient to make a finding about future remediation costs. Eligibility Determinations On September 2, 2003, CJC submitted a PCPP Affidavit to the Department, seeking state funding under PCPP. On October 30, 2003, the Department denied CJC eligibility for PCPP funding on the basis that the contamination was covered under FPLRIP and, therefore, was excluded from funding under PCPP. The Department has never granted PCPP eligibility for the cleanup of a discharge previously being funded under FPLRIP. Apparently, in 2005, CJC hired Glenn R. MacGraw, an expert in the assessment of petroleum-contaminated sites, to review the EGS and LFR assessments. In a letter to CJC’s attorney dated August 19, 2005, MacGraw expressed the opinion that “at least 2 discharges have occurred on this site, one in the former tank area, and one in the former dispenser area.” MacGraw’s opinion that there had been a discharge of leaded gasoline was based on the detection of EDB and lead in the groundwater. He also thought the presence of methyl tetra-butyl ether (MTBE) in groundwater samples taken from the tank pit area showed a tank leak of unleaded gasoline. CJC requested FPLRIP funding for the other alleged discharges at the facility. On March 23, 2006, the Department issued a letter formally stating its disagreement that there were other reported discharges and denying eligibility for FPLRIP funding. On March 30, 2006, the Department issued an Amended Order of Ineligibility under PCPP. The amended order added a second ground for denial, that the reported discharge was not shown to have occurred before January 1, 1995. Whether There Was A Second Discharge Eligible for Funding CJC argues that the presence of lead and EDB in the groundwater sample taken from MW-3S shows that there was a discharge of leaded gasoline at the facility. However, LFR reported that the well screen for MW-3S had probably been damaged during installation, because a significant amount of filter sand was observed in the purge water. The Department contends, therefore, that the source of the lead detected in the groundwater sample from MW-3S could have been (naturally) in the soil that entered the well. The Department also discounts the detection of EDB in the groundwater sample because EDB is an ingredient of some pesticides and can show up in groundwater when pesticide has been applied to the overlying land. Furthermore, EDB was not detected in the groundwater sample taken from MW-3D, a deeper well located near MW-3S. MacGraw does not think the EDB came from a pesticide application, because the EDB contamination at the site occurs in an elongated “plume,” in the former dispenser area, whereas one would expect to see EDB distributed evenly over the site if the source was a pesticide application. MacGraw mapped the plume of EDB by using data obtained after the discharge reporting deadline. Michael J. Bland, a Department employee and expert in geology and petroleum site assessment, believes the data from the facility are insufficient to confirm the presence of EDB or its distribution. LFR reported in its Interim Site Assessment that no significant soil contamination was found near the dispenser island. Groundwater samples from MW-3D, a deep monitoring well near MW-S3, showed no EDB, lead, or 1,2-dichlorothane. Bland opined that, if the detection of EDB in the shallow well was reliable, EDB would have been detected in the deep well, too, because EDB is a “sinker.” EDB is persistent in groundwater, so when it is not detected when a well is re-sampled, reasonable doubt arises about the detection in the first sample. Of all the wells sampled in 1999 that showed EDB, only MW-10D was re-sampled in 2003. When the well was re-sampled, there was no EDB. CJC contends that EDB was not found in the re-sampling of MW-10D because of the soil removal in 2000, but the Department contends that the soil removal would not have affected the presence of EDB in MW-10D, because the well is significantly down-gradient of the area of soil removal. It was undisputed that the presence of 1,2- dichoroethane in MW-S3 was not reliably determined. There is insufficient evidence in the record to establish that the contamination reported in the dispenser area is the source of contamination which persists at the facility. The reported contamination only affected the top six feet of soil. The soil removal to a depth of 14 feet in that area in 2000 should have fully remediated the reported contamination. The data upon which CJC relies in claiming eligibility under FPLRIP or PCPP for a second discharge are, at best, incomplete and ambiguous. CJC failed to prove by a preponderance of the evidence that a discharge of leaded gasoline occurred. CJC also failed to prove that the reported contamination in the dispenser is associated with a discharge that still exists to be remediated with state assistance.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Department of Environmental Protection enter a final order determining that CJC is ineligible to participate in the Petroleum Cleanup Participation Program for the discharge reported to the Department on December 1, 1995, and that CJC has not demonstrated eligibility to participate in the Petroleum Cleanup Participation Program or the Florida Petroleum Liability and Restoration Program for any other discharges. DONE AND ENTERED this 9th day of July, 2008, in Tallahassee, Leon County, Florida. BRAM D. E. CANTER 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 9th day of July, 2008.
The Issue The issues in these cases include the following: Did Petitioner file completed applications to entitle it to an oil and gas drilling permit? Is the Department's policy of requiring information in support of an offshore oil and gas well drilling permit not specifically set out in existing rules constitute an unadopted rule? If the Department applied an unadopted rule to Petitioner in these cases, does the unadopted rule meet the requirements of Section 120.57(1)(e), Florida Statutes? Is Petitioner entitled to the oil and gas drilling permits it sought by default?
Findings Of Fact The Parties. Petitioner, Coastal Petroleum Company (hereinafter referred to as "Coastal"), is a Florida corporation. Phillip Ware is the current president of Coastal. Respondent, the Florida Department of Environmental Protection (hereinafter referred to as the "Department"), is an agency of the State of Florida. The Department is charged with the responsibility of implementing Florida laws and rules regulating the issuance of oil and gas drilling permits. Intervenors are the Florida Wildlife Federation, Inc., Sierra Club, Florida Chapter, and the Florida Audubon Society, Inc. (hereinafter referred to as the "Environmental Intervenors"), and the Department of Legal Affairs (hereinafter referred to as "Legal Affairs"). The Environmental Intervenors and Legal Affairs filed verified petitions to intervene in this proceeding pursuant to Section 403.412(5), Florida Statutes. Coastal's Offshore Drilling Rights. On or about December 27, 1944, Coastal's predecessor entered into two leases, Drilling Lease Nos. 224-A and 224-B (hereinafter referred to as the "Original Leases"), with the predecessor to the Florida Board of Trustees of the Internal Improvement Fund. The Original Leases gave Coastal the exclusive right to explore for and produce oil and gas on submerged lands of the State of Florida throughout an area extending for a distance of 10.36 statute miles off most of the west coast of Florida. The area extends from approximately Apalachicola, Florida, in the north, to Naples, Florida, in the south. On or about February 27, 1947, the Original Leases were modified to redefine the area covered by the Leases due to claims of the federal government of parts of the area originally covered by the Original Leases (hereinafter referred to as the "Modified Leases"). In 1990 the Legislature enacted Chapter 90-72, Laws of Florida (1990), expressing the current policy of the State concerning offshore drilling. Pursuant to Chapter 90-72 the Legislature prohibited all offshore leasing and drilling. Recognizing Coastal's rights pursuant to the Modified Leases, an exception for drilling in areas governed by the Modified Leases was included in Chapter 90-72. Coastal is currently the only person entitled to explore for, and produce oil and gas on State submerged lands. Coastal's working interests under the Modified Leases were, as a result of litigation between the State and Coastal, subsequently reduced to the width of the area covered by the Modified Leases to between 7 miles and 10.36 miles from the coast. The litigation began during the late 1960's and ended with a settlement in 1976. Following the execution of the Original Leases and continuing through 1968, Coastal was involved with obtaining permits for, and drilling, approximately 9 wells in the area covered by the Original and/or Modified Leases. No permits were obtained by Coastal to drill in the area covered by the Modified Leases after 1968 due to the ongoing litigation between Coastal and the State. After the settlement of the dispute in 1976, Coastal was involved in litigation with Mobil Oil until the 1980's. Due to that litigation, Coastal did not pursue any other drilling operations under the Modified Leases until the 1980's. Because of the significant changes in the state of offshore drilling technology since Coastal had last applied for a permit to drill offshore in Florida, it took Coastal until the early 1990's to file a new application to drill offshore. Permit 1281. In March 1992 Coastal filed five separate applications with the Department seeking permits to drill exploratory oil and gas wells at five separate locations in the Gulf of Mexico within the area of the Modified Leases. Two applications were for proposed sites offshore from northwest Florida and three were for proposed sites offshore from southwest Florida. The applications were designated permit application numbers 1277 through 1281 by the Department. The applications filed by Coastal included a completed one-page Department form (Form 3), a location plat for the proposed drilling sites, and a filing fee. Coastal subsequently withdrew four of the applications. Only permit application 1281 remained. Pursuant to permit application 1281, Coastal sought approval to drill offshore from Franklin County, Florida, near St. George Island. In August 1996 the Department, after protracted negotiations with Coastal, issued notice of its intent to issue Permit 1281. The protracted negotiations involved, among other things, a request of the Department for additional information concerning the proposed location and drilling plans of Coastal. The additional information requested by the Department was essentially the same as the information requested by the Department in these cases. While Coastal provided the information concerning permit application 1281, it did so under protest. The Department's proposed decision to issue Permit 1281 was challenged. Following an administrative hearing, a Recommended Order was entered recommending that the permit be issued. The Department rejected the recommendation by Final Order issued May 22, 1998. That Final Order has been appealed by Coastal. Coastal's Applications for Permits 1296 through 1307. On or about February 25, 1997, Coastal simultaneously filed twelve separate applications (hereinafter referred to as the "Twelve Applications") with the Department seeking permits to drill exploratory oil and gas wells at twelve separate locations in the Gulf of Mexico within the area of the Modified Leases. Coastal Exhibits 49 through 60. The Twelve Applications were designated permit application numbers 1296 through 1307 by the Department. All of the proposed drilling sites are located between 8 and 9 miles offshore in water depths ranging between 50 to 75 feet. The general location of the twelve proposed drilling sites is as follows: Permit applications 1296 and 1297: offshore from St. George Island and Franklin County; Permit application 1298: offshore from the St. Marks River, Wakulla County; Permit application 1299: offshore from the mouth of the Steinhatchee River, Taylor County; Permit applications 1300 and 1301: offshore from Anclote Island, Pasco County; Permit application 1302: offshore from Longboat Key, Sarasota County; Permit applications 1303, 1304, and 1305: offshore from Gasparilla Island, Charlotte County; Permit application 1306: offshore from Sanibel Island, Lee County; and Permit application 1307: offshore from Naples, Collier County. The locations of the proposed exploratory wells are depicted on Coastal Exhibit 27, which is incorporated into this Recommended Order by reference. The Twelve Applications filed by Coastal consisted of the following: A completed Application For Permit to Drill, Form 3, for each well; A check payable to the Petroleum Exploration Bond Trust Fund as performance security for the twelve proposed wells; A navigation chart published by the U.S. Department of Commerce, National Oceanic and Atmospheric Administration, with the location (latitude and longitude) of each proposed drilling site and the area of Coastal's lease designated on the chart. The scale of the chart provided by Coastal is 1:20,000. A surveyor's report of the coordinates of each proposed drilling site was also included; and A single check in the amount of $24,000.00 in payment of the $2,000.00 application fee for each permit application. Form 3 requires that an applicant provide information concerning the name, phone number, and address of the applicant, the well name and its location, ground elevation, acres assigned to the well, the "field/area" of the well, the county and specific location of the well, proposed depth of the well, and the applicant's mineral interests in the drilling unit. Coastal provided all of this information. Form 3 also requires that the applicant answer a series of questions concerning whether the proposed location of the well will be located within: a municipality; tidal waters within 3 miles of a municipality; an improved beach; submerged land located in any bay or estuary; one mile seaward of the Florida coastline or the boundary of any state, or a local or federal park, or aquatic or wildlife preserve; on the surface of a freshwater body; within one mile inland from the shoreline of the Gulf of Mexico, the Atlantic Ocean or any bay or estuary; or within one mile of any freshwater body. Coastal answered all of the foregoing questions "no" on the Twelve Applications. Coastal did not provide a copy of its Organization Report (Department "Form 1") because it had already provided one to the Department. As provided in the Department's rules, Coastal informed the Department that its Organization Report was on file with the Department. Coastal did not initially provide casing and cementing plans or a contingency plan for hydrogen sulfide with the Twelve Applications. Ultimately, casing and cementing plans were provided by Coastal. Finally, Coastal requested that the Department conduct a preliminary site inspection, pursuant to the requirement of Rule 62C-26.003(4), Florida Administrative Code. The Department's Notice of Incompleteness. By letter dated March 26, 1997, the Department informed Coastal that the Twelve Applications were incomplete. The Department requested that Coastal provide additional information which it listed under eleven general categories: Location Plat; Environmental and Site Assessments; Zero Discharge; Accidental Pollutant Discharges; Drilling Platform; Hurricane Plan; Geologic Data; Transportation; Test Oil and Gas Plan; Drilling Plan; and H2S Contingency Plan. Coastal's Response to the Department's Notice of Incompleteness and Request for Additional Information. By letter dated September 22, 1997, Mr. Ware, on behalf of Coastal, responded to the Department's March 26, 1997, notice of incompleteness and request for additional information. In general, Coastal provided some of the requested information but indicated that it did not believe the Department had the authority to request most of the information. Therefore, Coastal informed the Department that most of the requested information was not being provided. Despite the fact that Coastal did not provide most of the requested information, Mr. Ware stated the following in the first paragraph of the September 22, 1997, letter: In fact, no statutory or regulatory authority was cited for any request. If Coastal is mistaken on any such request, please inform us of the specific authority allowing the department to require such information and Coastal will respond. [Emphasis added]. The Department's Answer to Coastal's Request for Specific Authority. Coastal's request for citations of specific authority and Coastal's representation that it would provide the information if such authority were given, was reasonably interpreted by the Department as an expression of Coastal's willingness to continue to discuss whether the Twelve Applications were in fact complete. As a consequence, the Department proceeded to respond to Coastal's request rather than proceeding to treat the Twelve Applications as complete and review them on their merits. After extensive research, the Department responded to Coastal's request for authority by letter dated December 16, 1997. The Department provided Coastal with citations to statutes and rules which the Department believed supported the additional information it had requested in its March 26, 1997, letter. See Coastal Exhibit 76. The Department also pointed out inconsistencies in the information Coastal had provided in support of the Twelve Applications. In particular, the Department asked why Coastal's H2S contingency plan referred to a drilling rig different than the one that Coastal had indicated it intended to use. The Department also asked Coastal how it planned to drill twelve wells within the time allowed after a permit is issued with only the one drilling platform that Coastal had indicated it planned to use for all twelve wells. Coastal's First Notice of Completeness. By letter dated December 26, 1997, Coastal informed the Department that it was not convinced that the authorities cited by the Department in its December 16, 1997, letter required that it provide the additional information sought by the Department. Mr. Ware, therefore, informed the Department in the December 26, 1997, letter of the following: As a result of the Department's insistence that Coastal provide such information, Coastal is left with no alternative but to file a petition for administrative hearing concerning whether the materials submitted by Coastal were sufficient to complete the applications so that they should have been processed by the Department. Twelve separate Petitions for Formal Administrative Hearing were filed by Coastal with the December 26, 1997, letter. Pursuant to the petitions, Coastal challenged the Department's request for additional information and sought approval of the Twelve Applications by default. Coastal's December 26, 1997, letter and the petitions filed simultaneously with the letter were the first indication from Coastal that it considered the Twelve Applications complete. On January 22, 1998, the Department entered an Order Dismissing Petitions, dismissing the twelve petitions filed by Coastal. The petitions were dismissed without prejudice to the filing of amended petitions alleging how the Department's December 16, 1997, letter constituted "agency action." No amended petitions were filed by Coastal. The Department also concluded in the Order Dismissing Petitions that Coastal's December 26, 1997, letter constituted Coastal's first notice that it considered the Twelve Applications complete and directed that staff grant or deny the Twelve Applications within 90 days from Coastal's notice. In support of the Department's conclusion that the Twelve Applications should not be considered as complete until Coastal filed its December 26, 1997, letter, the Department noted in its order that Coastal, in response to the Department's December 16, 1997, letter, had requested specific authority for the Department's request and had represented that it would provide the additional information sought by the Department if it were satisfied with authority cited by the Department. I. The Department's Denial of Coastal's Applications. On March 24, 1998, the Department entered a "Final Order" denying the Twelve Applications. It is this Final Order that is the subject of these proceedings. The Department's decision to deny the Twelve Applications was explained as follows: The applications as submitted do not provide the Department with assurance that the issuance of the permits would be in compliance with the standards and criteria of Chapter 377, Part I, F.S., and Rules 62C-25 through 62C-30, F.A.C. The Department cannot determine based on the information submitted, that the proposed drilling activities do not threaten public safety and the state's natural resources. Information critical to making such a determination remains absent. . . . The Department's Final Order denying the Twelve Applications was entered within 90 days after Coastal notified the Department that it did not intend to provide any additional information to support the Twelve Applications and that it considered the applications complete. The Department's decision to deny the Twelve Applications was based solely on the Department's conclusion that it had not been provided sufficient information to review the merits of the Twelve Applications. The Department's Specific Authority Over Oil and Gas Drilling Permits. Part I, Chapter 377, Florida Statutes (hereinafter referred to as the "Act"), establishes the law in Florida governing oil and gas resources of the State. Section 377.06, Florida Statutes, sets out the general public policy of the State concerning oil and gas: It is hereby declared to be the public policy of the state to conserve and control the natural resources of oil and gas in said state, and the products made therefrom; to prevent waste of said natural resources; to provide for the protection and adjustment of the correlative rights of the owners of the land wherein said natural resources lie and the owners and producers of oil and gas resources and the products made therefrom, and of others interested therein; to safeguard the health, property, and public welfare of the citizens of said state and other interested persons and for all purposes indicated by the provisions herein. . . . The Department is designated as one of the agencies of the State authorized to carry out the powers, duties, and authority of the Act. Section 377.07, Florida Statutes. The Department's authority includes the authority to adopt rules and enter orders it deems necessary to implement and enforce the provisions of the Act. Section 377.22, Florida Statutes. In particular, the Department has been given broad authority to regulate the drilling for oil and gas in Florida in Sections 377.22(2)(a) through (x), Florida Statutes. Pursuant to this broad authority, the Department has promulgated Chapters 62C-25 through 62C-30, Florida Administrative Code. Rule 62C-25.006, Florida Administrative Code, sets out the general rule concerning the exploration for oil and gas in Florida: Each person who conducts geophysical surveys (unless exempted by Rule 62C-26.007), drills an oil or gas related well (62C-26.003), or operates an oil or gas related well . . . (62C-26.008) shall first obtain a permit from the Department. Each of these activities requires a separate permit. [Emphasis added]. Ordinarily a single permit will be issued for drilling a well and either transporting test oil or injecting test fluids for a period of 90 days after testing is commenced. . . . In these cases, Coastal is seeking a permit to drill an oil or gas-related well and must, therefore, comply with Rule 62C-26.003, Florida Administrative Code, titled "Drilling Applications" (hereinafter referred to as the "Drilling Application Rule"). The Drilling Application Rule establishes certain specific requirements concerning specific information which, by the clear terms of the rule, must be provided by all applicants for oil and gas drilling permits in Florida. Applicants for drilling applications are required to be provide the following: All Applications to Drill (Form 3) shall include an Organization Report (Form 1; 62C- 25.008), performance security (62C-25.008, 62C- 26.002), location plat (62C-26.003(7)), site construction plans (62C-26.003(9)), casing and cementing program (62C-26.003(5)), contingency plan if appropriate (62C-27.001(7)), and application fee (62C-26.003(8)). In addition to these items, an application to drill a nonroutine well shall include a lease map or document and a letter of justification, both as described in 62C-26.004(6)(d). Any of these items already on file with the Department may be included by reference. The application to drill shall be considered incomplete until the applicant requests a preliminary inspection be made by the Department. . . . A proposed casing and cementing program must be included with the application to drill. This program shall at a minimum include setting depths, specified minimum yield strength, grade of pipe, class of cement to be used, cement additives, cement quantity, intended interval to be cemented, hole size, displacement method, special tools to be used, and calculated percent excess cement to be used. . . . . Each application shall be accompanied by a location plat surveyed and prepared by a registered land surveyor licensed under Chapter 472, FS. All such plats shall meet the minimum technical standards for land surveys as specified in Chapter 61G-17-6, FAC, and must: Be drawn to a scale sufficient to show the required detail, preferably 1 inch = 1,000 feet. Show and provide a legal description of all mineral acreage within the drilling unit which is not under lease to the applicant. Show the exact well location (both surface and bottom if different) and unit acreage within the drilling unit and indicate distances to adjacent wells, drilling unit boundaries, quarter-section corners, rivers and other prominent features. With prior notice and explanation to the Department, other established lines, reference points, or methods may be used when section corners are unavailable and an inordinate amount of preliminary surveying would have to be done to establish section corners or other standard reference points. In any case, a standard survey or equivalent with plat shall be made prior to obtaining an operating permit. Show ground elevation, with tolerances, at the drill site. State whether the proposed drilling unit is routine on nonroutine and specify the applicable subsection of s. 62C-26.004 under which the well is located. Each application to drill shall be accompanied by a $2,000 processing and regulatory fee . . . for costs incurred by the Department through well completion or plugging. . . . . . . . The applicant shall describe the provisions made for locating and constructing roads, pads, utility lines and other facilities needed for drilling operations and shall make every effort to minimize related impacts. Applications for permits in wetlands, submerged lands, and other sensitive areas shall be reviewed in accordance with 62C-30.005, FAC. Coastal provided all of the specific information applicable to the Twelve Applications required by the Drilling Application Rule. Much of the information required by the Drilling Application Rule, however, pertains to drilling operations on land and not drilling operations on submerged, offshore lands. The Department's Offshore Drilling Policy. Although Coastal provided all of the specific information required by the Drilling Application Rule, the Department required that a significant amount of additional supporting information be provided in support of the Twelve Applications. The additional information is generally described in Section E of this Recommended Order and is more specifically described, infra. Through the incompleteness letters issued by the Department in these cases, the Department expressed a statement of general applicability which "implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency . . . ." Section 120.52(15), Florida Statutes. The Department's statement of general applicability is, in effect, that all applicants for offshore oil and gas wells must provide the information described in the Department's letters of incompleteness to Coastal; information not specifically listed in the Drilling Application Rule. This state of general applicability will hereinafter be referred to as the "Offshore Drilling Policy." The Offshore Drilling Policy is of recent origin. It was not applied during the 1940's, 1950's, and 1960's. The policy was only recently developed because only a few offshore drilling permits have been applied for until recently and the technology applied in offshore drilling has changed significantly in the past fifty years. Between the 1960's and 1992, when Coastal filed five applications for permits, only one offshore drilling permit was issued by the Department. That permit was issued in the late 1970's or early 1980's to Getty Oil Company (hereinafter referred to as "Getty") for a test well approximately three miles offshore from Santa Rosa County, Florida. The Offshore Drilling Policy was not applied by the Department to Getty, although most of the information required in these cases was eventually provided by Getty. Getty provided the information not because of Department policy, however, but in an effort to settle a challenge to the Department's proposed decision to issue the permit. Although much of the Department's knowledge concerning offshore drilling was developed as a result of the Getty permit, the Department did not receive another permit application for offshore drilling for ten to twelve years or more. Since 1992, however, the Department has required the same additional information it requested Coastal to provide in these cases for seventeen different proposed well locations located from offshore sites off the northwest coast of Florida near St. George Island and extending to the southwest coast of Florida near Naples. The Offshore Drilling Policy has been adopted by the Department because existing rules were adopted primarily to govern drilling operations on land and not offshore. As a consequence, those rules inadequately address offshore wells. The Department, however, is charged with broad authority under Chapter 377, Florida Statutes, to govern oil and gas drilling operations on and offshore. That authority includes the broad authority to carry out the public policy of the State expressed in Section 377.06, Florida Statutes, to "conserve and control the natural resources of oil and gas . . . ; to prevent waste of said natural resources; . . . to safeguard the health, property and public welfare of the citizens . . . ." When the intent of existing rules is considered in the context of offshore drilling, it is apparent that Drilling Application Rule does not adequately address all the reasonable concerns with offshore drilling. The Department has developed the Offshore Drilling Policy to the point where it has become more than a mere interpretation and application of existing law to offshore drilling applications. The Offshore Drilling Policy has become a uniform statement of policy describing a significant amount of particular information which the Department will require for any application for an offshore drilling permit. The Offshore Drilling Policy has passed the point in its development that it can be considered the Department's reaction to a particular set of circumstances. The Scope of the Department's Application of the Offshore Drilling Policy. The Offshore Drilling Policy has been applied to the last seventeen applications for offshore wells filed with the Department. The first five applications were filed in March 1992. Although four of those applications were withdrawn, the Department developed the Offshore Drilling Policy and applied it to permit application 1281 prior to August 1996 when the Department issued its notice of intent to issue Permit 1281. Although the evidence failed to prove exactly when the Department decided to apply the Offshore Drilling Policy to permit application 1281, the policy had been applied before the Twelve Applications were filed in February 1997. The Offshore Drilling Policy was applied uniformly to the Twelve Applications from the date they were filed through the date of the hearing in these cases. The Offshore Drilling Policy was also sufficiently formulated for the Department to publish notice of its intent to adopt the Offshore Drilling Policy as a rule. That notice was published on November 24, 1998. Therefore, the Offshore Drilling Policy was sufficiently formulated to be proposed for adoption as a rule prior to the commencement of this de novo proceeding. It is apparent that the Department intends to apply the Offshore Drilling Policy to all applications for oil and gas wells proposed for location offshore in the waters of the State. At present, only Coastal has the right to drill in the sovereign submerged lands of the State and Section 377.242(1)(a)5, Florida Statutes, currently prohibits granting drilling permits within the boundaries of the Florida's territorial seas to any person other than Coastal. The evidence failed to prove, however, that Coastal cannot assign its right to drill to other persons, which it has done in the past. Even though Coastal may currently be the only applicant for oil and gas well drilling permits, the Department is at liberty to modify the Offshore Drilling Policy at any time to require different or additional information, without prior notice to Coastal. Coastal has the right to some certainty as to what information the Department may require for approval of an offshore drilling permit. Section 120.57(1)(e), Florida Statutes; De Novo Review of the Offshore Drilling Policy. Section 120.57(1)(e), Florida Statutes, requires a de novo review of any unadopted rule which formed the basis of any agency action. The Department's denial of the Twelve Applications in these cases was based solely on its application of the Offshore Drilling Policy. The Offshore Drilling Policy has not been adopted as a rule, although the Department has instituted rule- making procedures. Therefore, if the Offshore Drilling Policy constitutes a rule, the Offshore Drilling Policy must meet the requirements of Section 120.57(1)(e), Florida Statutes. Each category of information required by the Department pursuant to the Offshore Drilling Policy must be examined in determining whether some of the requirements of Section 120.57(1)(e), Florida Statutes, have been met. The other requirements of Section 120.57(1)(e), Florida Statutes, can be considered generally without an examination of each category of information required by the Department. Location Plat Information. The Department requested that Coastal provide the following information concerning the location of the proposed wells: For each proposed location, submit a plat on an original nautical chart showing each drilling site relative to the shore. This map should include at least the following surface and bottom hole locations including satellite navigation coordinates so the site can be re-occupied by a preliminary inspection team, boundaries of the working interest area, location of nearby reefs or sensitive aquatic wildlife areas, wildlife migration routes, proposed routing of supply ships, discharge barges, pipelines, helicopter routes, and commonly used shipping lanes. Also submit a diagram showing the orientation of the rig and the location of its major components. Coastal provided only standard nautical charts with a surveyed site location and the lease boundaries noted. The charts did not contain any of the information requested by the Department. Nor did the charts note whether the plotted points were surface or bottom hole locations. The Department relied upon the following authority in requesting the Location Plat information: Section 377.22(2)(h), Florida Statutes, and Rule 62C-26.003(7), Florida Administrative Code, quoted, supra. Section 377.22(2)(h), Florida Statutes, provides the following: (2) The department shall adopt such rules and regulations, and shall issue such orders, governing all phases of the exploration, drilling, and production of oil, gas, or other petroleum products in the state . . . as may be necessary for the proper administration and enforcement of this chapter. Rules, regulations, and orders promulgated in accordance with this section shall be for, but shall not be limited to, the following purposes: . . . . (h) To require the making of reports showing the location of all oil and gas wells; the making and filing of logs; the taking and filing of directional surveys; the filing of electrical, sonic, radioactive, and mechanical logs of oil and gas wells; if taken, the saving of cutting and cores, the cuts of which shall be given to the Bureau of Geology; and the making of reports with respect to drilling and production records. . . . The Department's purpose in requiring the information concerning the Location Plat was to allow it to place the proposed drilling site into context with the surrounding environmental and other features of the area. Without the requested information, the Department could not ensure that sensitive resources and significant features would not be damaged by the proposed drilling operations. Rule 62C-26.003(7), Florida Administrative Code, does not directly authorize the Department to request the Location Plat information. That rule was drafted with onshore drilling operations in mind. Requiring the Location Plat information in these cases is not a mere application of that rule. Rule 62C-26.003(7), Florida Administrative Code, however, does support the conclusion that the requested information is needed for offshore, as well as onshore drilling. More importantly, it demonstrates the broad authority of the Department under the Act to require assurances from an applicant for offshore drilling that the proposed drilling will not be detrimental to the environment. The information provided by Coastal concerning archaeological sites, underground sea cables, and sensitive environmental features on the bottom was not sufficient for the Department to fulfill its responsibilities under the Act. The Act in general and the specific cites provided by the Department in support of its request for Location Plat information give the Department sufficient authority to request the information. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting Location Plat information was not arbitrary or capricious. Environmental and Site Assessment. The Department requested that Coastal provide the following information concerning environmental features of the proposed well sites: Submit a professional ecological/biological survey and report for each proposed drill site. Wildlife habitats including living coral reefs, artificial reefs, patch reefs, benthic infauna, sea grasses, and associated communities shall be identified and located if present. Photodocumentation consisting of television and color still photography shall be included with each report. . . . The Department's request included an outline format for the photodocumentation survey report. Coastal provided no information in response to the Department's request for Environmental and Site Assessment information. Instead, Coastal suggested that the Department obtain the information it requested through the preliminary site inspection required by the Department's rules. The Department relied upon the following authority in requesting the Environmental and Site Assessment information: Sections 377.21(2), 377.22(2)(i), 377.241(1), and 377.371(1), Florida Statutes, and Rule 62C-26.003(10), Florida Administrative Code. While Section 377.21(2), Florida Statutes, gives the Department little authority concerning the protection of the environment, the other statutory provisions cited by the Department do. Section 377.22(2)(i), Florida Statutes, authorizes the Department to take into consideration the impact of drilling operations on surrounding leases or property. Section 377.241(1), Florida Statutes, requires the Department to take into consideration the nature, character, and location of lands on which drilling will occur and those involved with the drilling. Finally, and most significantly, Section 377.371(1), Florida Statutes, requires that drilling not cause pollution to land or water, "damage aquatic or marine life, wildlife, birds, or public or private property " Rule 62C-26.003(10), Florida Administrative Code, provides, in part, that "[a]pplications for permits in . . . submerged lands, and other sensitive areas shall be reviewed in accordance with 62C-30.005," a rule governing applications for drilling in the Big Cypress Watershed. Rule 62C-30.005(2)(b), Florida Administrative Code, sets out the requirements for drilling sites. Among other things, Rule 62C-30.005(2)(b)2, Florida Administrative Code, requires that topographical and engineering surveys of the drill site, along with aerial photography, must be prepared. While this rule does not specifically authorize the Environmental and Site Assessment information the Department has requested, the statutory authority that supports the rule does. Aerial photography is normally required as an aid to the Department in identifying the proposed site and the surrounding area. Obviously, aerial photography would be of little assistance for a submerged site. Therefore, in order for the Department to carry out its responsibility to protect the environment, including sensitive environmental features such as "live bottom areas" as defined in Rule 62C-25.002(49), Florida Administrative Code, the Department requested photodocumentation of the proposed sites. The Department's request that Coastal provide it with an environmental assessment of the proposed drilling sites was also made to give the Department the necessary information for it to ensure that the environmental impacts of the proposed wells would not be detrimental. Such information also relates to the ability of an applicant to ensure that it has adopted adequate plans to deal with possible oil spills and other accidents. By fully considering the environmental features of an area, the applicant will be better able to draft and adopt contingency plans. Unlike onshore drilling, an offshore well entails a relatively large drilling rig with large feet that rest on the bottom to support the drilling platform above the surface of the water. Those feet, if placed on live bottom, can cause significant damage to marine biota which live in crevices, cracks, and permeable portions of some rocks that may be found on the bottom. The preliminary site inspection conducted by the Department is not an adequate substitute for the information requested by the Department. That inspection is only intended to verify the assurances which the applicant is first required to give. After all, it is the applicant that is seeking permission to drill. As a consequence, the applicant should first determine what impact its proposed drilling will have and, if satisfied on its findings, provide assurances to the Department to support its application. The Act in general and the specific cites provided by the Department in support of its request for Environmental and Site Assessment information give the Department sufficient authority to request the information. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting Environmental and Site Assessment information was not arbitrary or capricious. Zero Discharge. The Department requested that Coastal provide the following information concerning a "zero discharge" plan for the proposed wells: Submit a plan which ensures zero discharge operation for each proposed well. The plan must include an environmental monitoring plan which provides for filed sampling around the drill site such that pre-drilling, drilling, and post- drilling sediments may be compared. Coastal, in response, only stated that it intended to use a zero discharge drilling rig at all the proposed sites. A copy of a brochure generally describing the rig was provided. No description of systems for containing discharges was provided. Nor did Coastal provide monitoring and sampling plans. The Department relied upon the following authority in requesting a zero discharge plan: Sections 377.21(2), 377.22(2), 377.22(2)(c) and (i), 377.241(1), 377.243, 377.371, and 377.371(1), Florida Statutes, and Rule 62C-26.003(10), Florida Administrative Code. A zero discharge plan is the written plan that an applicant is supposed to follow in the event of the discharge of any pollutant into the surrounding environment of a well site. The plan must cover not only discharges from the well shaft, but also from all equipment used, located, or traveling to the site. The purpose of the plan is to prevent spills and, where an accidental spill occurs, to minimize the impact of the spill. While the use of a zero discharge rig may be a significant part of a zero discharge plan, its use alone is not sufficient. The use of zero discharge rig does not provide assurances concerning the operation of other vessels and equipment which may be used at a site. Nor does its use provide assurances as to what will be done to ensure that the rig works properly or what will be done if it does not. Section 377.22, Florida Statutes, provides authority for the Department to ensure that all precautions are taken to prevent pollutants entering the area of a drilling site or any area associated with the well. Section 377.22(2)(a), Florida Statutes, authorizes the Department to require that drilling operations are done in such a manner as to prevent pollution of the waters, including salt water, and property of the State. Section 377.22(2)(c), Florida Statutes, authorizes the Department to require safety equipment to minimize the possibility of an escape of oil and other petroleum products. Finally, Section 377.22(2)(i), Florida Statutes, authorizes the Department to prevent drilling operations that will cause injury to neighboring property. Section 377.243(2), Florida Statutes, also provides the Department with the authority to require assurances concerning an applicant's efforts to protect against discharges into the environment of oil and other pollutants: (2) As a condition precedent to the issuance or renewal of a permit, the division shall require satisfactory evidence that the applicant has implemented or is in the process of implementing, programs for control of pollution related to oil, petroleum products or their byproducts, and other pollutants and the abatement thereof when a discharge occurs. Finally, Section 377.371(1), Florida Statutes, prohibits persons drilling for oil and gas from polluting land or water and from damaging marine or aquatic life. A spill of oil or gas and other pollutants can have a devastating impact on the environment regardless of whether the spill occurs on land or at sea. Such damage could result in loss of tourism in Florida and severe economic damage. The oil industry has progressed significantly in its ability to prevent spills and, where spills occur, to minimize the impacts of the spill on the environment. In order to minimize the chance of spills and the impacts which could occur from a spill, however, an applicant must take the steps necessary to plan ahead of time and provide the Department with the assurances that the applicant has done so. The Act in general and the specific cites provided by the Department in support of its request for zero discharge information give the Department sufficient authority to request the information. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting zero discharge information was not arbitrary or capricious. Accidental Pollutant Discharges. The Department requested that Coastal provide a spill contingency plan for each of the proposed well sites. The requested plan was to include Coastal's plans for dealing with escaped pollutants, modeling of how projected spills might react, plans for deployment of cleanup equipment, inventories of equipment available for dealing with spills, designation of the individuals responsible for cleanup, and general clean-up plans. In response to the request for the spill contingency information the Department insisted it needed, Coastal stated the following: With respect to Coastal's implementation of a program for control of pollution related to oil, petroleum products and their byproducts, and other pollutants, see the letter of Dr. Tom Herbert, and his curriculum vita, as well as the ISO 14,000 Program on file in Permit #1296. With respect to Coastal's implementation of a program for the abatement of pollution discharges related to oil, petroleum products and their byproducts and other pollutants, see attached letter of Shaw Thompson, and his resume on file in Permit #1296. Coastal did not provide the Department with a specific, written oil-spill contingency plan. Dr. Herbert was involved with ensuring compliance of the Getty well off of Santa Rosa County with environmental protection requirements. Dr. Herbert had not, however, reviewed information concerning the Twelve Applications other than the nautical charts showing the location of the wells. In a letter from Dr. Herbert submitted by Coastal to the Department, Dr. Herbert represented the following concerning Coastal's proposed operations: Coastal Petroleum has used the Getty operations as a "template" for designing operations for the permit number 1281 well and for all subsequent drilling permits pending (numbers 1296 through 1307). We have been retained to assist with the development of plans and procedures and to insure that the operations are carried out in an environmentally safe and conscientious manner. . . . . Coastal Petroleum Company has adopted the ISO 14000 standard as the method for implementing long-term environmental compliance for drilling and production operations off Florida's coast. As the issuance date for the 1281 permit draws near we will begin implementing the ISO 14000- program beginning with training provided by the University of Florida TREEO Center. The implementation of the environmental program will extend from Coastal's own employees to others who may be service companies or contractors. Dr. Herbert's representations to the Department in his letter and at hearing do not constitute an actual oil-spill contingency plan for any of the specific proposed well sites. At best, his representations constitute a commitment to deal with the manner in which Coastal will comply with environmental requirements in the future. It does not constitute a commitment to actually draft and implement an oil-spill contingency plan. Dr. Herbert and Coastal also failed to explain how the Getty site, which was located in 11 to 12 feet of water, is sufficiently similar to the proposed sites of the Twelve Applications, which are all located in much deeper waters. Nor did Coastal explain how it would deal with the fact that the Getty site was not in the open waters of the Gulf of Mexico. More importantly, no specific oil-spill contingency plan was provided for the twelve proposed sites. Mr. Thompson is an expert in oil-spill containment and cleanup. Coastal provided a letter from Mr. Thompson providing assurances that he would be working with Coastal during any drilling of the twelve proposed wells. At hearing, Mr. Thompson had little knowledge of the proposed sites. More importantly, Mr. Thompson did not provide a specific oil-spill contingency plan for the twelve proposed sites. The ISO 14000 Guide provided by Dr. Herbert consists of a book containing a generic template suggested by the author for use by any business concerned with environmental impacts. The Guide is not specific to the oil and gas industry. More importantly, it is not specific to Coastal nor any of the proposed well locations. Finally, the Guide would be of little assistance in dealing with an actual emergency. The Guide is not a specific oil-spill contingency plan. The Department relied upon the following authority in requesting the oil-spill contingency plan: Sections 377.22, 377.22(2)(c), 377.243, and 377.371, Florida Statutes. The same statutory authority that supports the request for a zero discharge plan, supports the oil-spill contingency plan requested by the Department. Especially Section 377.243(2), Florida Statutes, quoted, supra. While Section 377.243(2), Florida Statutes, allows an applicant to implement or be in the process of implementing an abatement program, merely indicating the intent to implement a program is insufficient. The Department must ensure that an applicant has taken sufficient steps to prevent the pollution of land or water, as well as damage to aquatic or marine life, wildlife, and birds. The environmental damage from a spill or a well blow-out can be significant. One of the worst oil well blow-outs occurred at an exploratory well. Site specific information must be considered by the applicant in its planning and such information must be provided to the Department for it to make its statutorily required evaluation. The Act in general and the specific citation provided by the Department in support of its request for an accidental pollutant discharge plan give the Department sufficient authority to request the plan. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting the accidental pollutant discharge plan was not arbitrary or capricious. Drilling Platforms. The Department requested that Coastal provide information concerning the drilling platform(s) Coastal intended to use at each proposed site. In particular, the Department requested information concerning rig impacts, rig designation, scheduling, commitment from rig owners, zero discharge, auxiliary power equipment, and safety plans concerning karst hazards, including a shallow seismic program to rule out the existence of sinkholes or bottom caverns. In response to the request for the drilling platform information the Department sought, Coastal provided only a brochure for the Nobel Drilling Company's rig, the Paul Wolff. Coastal also indicated that the rig would face north. The Department relied upon the following authority in requesting the drilling platform information: Sections 377.22(2)(c), (d), and (i), Florida Statutes; and Rules 62C- 26.003(10), 62C-27.001(4), (5), (6) (cited as 62C-26001(5) and 62C-26001(6) by error in the Department's December 16, 1997, letter), and 62C-28.004(8), Florida Administrative Code. Section 377.22, Florida Statutes, provides authority for the Department to ensure that all precautions are taken to prevent pollutants entering the area of a drilling site and to protect surrounding property. Section 377.22(2)(a), Florida Statutes, authorizes the Department to require that drilling operations are done in such a manner as to prevent pollution of the waters, including salt water, and property of the State. Section 377.22(2)(c), Florida Statutes, authorizes the Department to require safety equipment to minimize the possibility of an escape of oil and other petroleum products. Section 377.22(2)(d), Florida Statutes, authorizes the Department to ensure that drilling is performed in a manner that will prevent the escape of oil from one stratum to another. Finally, Section 377.22(2)(i), Florida Statutes, authorizes the Department to prevent drilling operations that will cause injury to neighboring property. The rig Coastal proposed to use sits on three large feet, each with a diameter of over 93 feet. Each foot sits 235 feet from the other two. The entire rig is extremely heavy and, therefore, each foot has a great deal of weight placed on it. The Department requested information concerning rig impacts in order to avoid adverse impacts on the sea bottom. The Department requested information on rig designation, scheduling and owner commitment because of the Department's concern that a single rig could not drill all twelve wells within the limited one-year period of time a permit is valid for. Coastal had also provided some inconsistent information in its hydrogen sulfide plan concerning what rig would be used. Without knowing what rig would be used at each location, the Department could not fully evaluate the possible impacts of the rig on the environment. The seismic survey and the sink hole and karst formation safety plans were requested because of concerns that a rig could collapse if it were placed on such a formation. A karst formation is a geologic formation caused by increased porosity and permeability of underground limestone formations. As limestone is eaten away, the potential for a sinkhole or cavern collapse increases. Sinkholes and karst formations are not uncommon in the area of Coastal's proposed wells. If a rig collapsed on a karst formation, it is possible that a blow out or other oil spill could occur. The potential for such a catastrophe is greater in this instance because the rig that Coastal is proposing to use is a tripod design which could tip over if one foot were placed in a sinkhole or karst formation that collapses. A shallow seismic survey would provide information concerning possible karst formations at the sites where Coastal plans to drill its test wells. The Act in general and the specific cites provided by the Department in support of its request for rig impact information give the Department sufficient authority to request the information. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting rig impact information was not arbitrary or capricious. Hurricane Response Plan. The Department requested that Coastal provide a hurricane preparation and response plan for each site. Coastal provided none of the requested information. The Department relied upon the following authority in requesting the hurricane response plan: Section 377.22(2)(c), Florida Statutes, and Rules 62C-27.001(5) and 62C-27.006(1), Florida Administrative Code. Section 377.22(2)(c), Florida Statutes, authorizes the Department to require safety equipment to minimize the possibility of an escape of oil and other petroleum products in the event of a natural disaster. Although not cited by the Department, Section 377.371, Florida Statutes, gives the Department broad authority to ensure that oil and gas wells do not pollute. The entire area where Coastal proposed to drill is subject to hurricanes for a significant part of every year. Such storms can have a devastating impact on any structure, including an oil rig, which is in its path. Requiring that an applicant for drilling permits anywhere in the coastal waters of Florida plan ahead of time to respond to an approaching hurricane is abundantly reasonable. The Act in general and the specific citation provided by the Department in support of its request for a hurricane preparation and response plan give the Department sufficient authority to request the plan. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting a hurricane preparation and response plan was not arbitrary or capricious. Geologic Data. The Department requested that Coastal provide the following information concerning the geology of each location of its proposed well sites: Submit material in the form of studies, data, cross sections, or maps which support or explain your decision for locating each well as proposed. All interpreted geologic data must be certified by a geologist licensed in Florida. Coastal provided none of the requested information. For applications 1296 and 1297, Coastal referred the Department to its application for Permit 1281. The Department relied upon the following authority in requesting the geologic information: Section 377.075(4)(g), 377.21(2), and 377.241(3), Florida Statutes, and Rule 62C- 26.004(6)(d), Florida Administrative Code. Section 377.075(4)(g), Florida Statutes, requires that the Department maintain maps identifying information concerning oil and gas activities in Florida. This provision does not, however, authorize the Department to request the geologic information it requested from Coastal. Section 377.21(2), Florida Statutes, gives the Department the authority and the duty to make inquiries to determine whether "waste" exists or is imminent. "Waste" is defined in Section 377.10(10), Florida Statutes. Based upon the definition of "waste," Section 377.21(2), Florida Statutes, gives the Department the authority to request the information it requested concerning the geology of Coastal's proposed locations. Finally, Section 377.241(3), Florida Statutes, requires that the Department take into consideration the "proven or indicated likelihood of the presence of oil, gas or related minerals in such quantities as to warrant the exploration and extraction of such products . . ." before issuing any permit. This provision alone is sufficient for the Department to request the geologic information it requested from Coastal. Oil and gas wells are not drilled without first considering the geology of an area and the likelihood that oil or gas may be found. The determination of a likely successful well is made by a consideration of relevant geologic information such as that requested by the Department. Without such information, the Department would not be able to reasonably carry out its duty under Section 377.231(3), Florida Statutes. Coastal did not dispute the reasonableness of the requested information in determining whether a well should be placed at a proposed location. Instead, Coastal suggested that the Department has all the information it needs to make the determination and, therefore, Coastal shouldn't be required to provide any further information. The information available to the Department, however, is too general in nature. It does not deal with specific locations such as those proposed by Coastal. More importantly, it is Coastal that is seeking permission to drill. Coastal should, therefore, have already gathered and considered the geologic information requested by the Department in deciding where to place its exploratory wells. There have been relatively few wells drilled in Florida offshore waters. None have been productive. One offshore well located near Franklin County was drilled in 1968 and was dry. The only producing offshore well was located off the southern tip of the Florida Keys. Given these facts, the Department was reasonable in seeking assurances from Coastal concerning the possibility that its proposed wells were reasonably placed. Finally, the information Coastal referred to with regard to Permit 1281 was submitted during the formal administrative hearing on that case and was not as part of Coastal's permit application. That information, therefore, was not available to the Department to review. Nor was it provided during the formal hearing on these cases. The Act in general and the specific cites provided by the Department in support of its request for geologic information give the Department sufficient authority to request the information. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting geologic information was not arbitrary or capricious. Transportation. The Department requested that Coastal provide the following information concerning transportation to and from the proposed wells of the drilling rig(s), a description of onshore facilities and the traffic to the rig(s), and a description of, and route to be taken by, transport vessels and helicopters. In response to the Department's request for the transportation information demanded by the Department, Coastal merely stated that no helicopters would be used at any of the proposed sites except in case of an emergency. The Department relied upon the following authority in requesting information concerning transportation: Section 377.22(2)(s), Florida Statutes, and Rules 62C-26.006(1) and 62C- 26.003(10), Florida Administrative Code. Section 377.22(2)(s), Florida Statutes, allows the Department to require "certificates of clearance or tenders in connection with the transportation or delivery of oil or gas, or any product." Section 377.371, Florida Statutes, authorizes the Department to ensure that a drilling operation is not harmful to the environment. This provision alone gives the Department sufficient authority to request information from Coastal concerning how it intends to deal with transportation issues concerning the proposed wells. Pursuant to the Department's statutory authority, the Department has adopted Chapter 62C-30, Florida Administrative Code, which, among other things, provides rules governing transportation issues for wells located in Big Cypress. Although those rules do not specifically deal with offshore wells, they do support the conclusion that assurances concerning transportation issues surrounding any well can be required by the Department. Accidents, and the resulting damage to the environment, often occur during the transportation of oil and other equipment and supplies used for a rig. The Department needs to be provided with assurances that every effort is made by an applicant to avoid such damage. If provided sufficient information, the Department may be able to require that an applicant use a different route between a rig and an onshore facility in order to avoid a sensitive reef and thereby reduce the potential adverse impacts of an accident to the reef. A different route may also be required due to safety concerns. In addition to the legitimate concerns of the Department about accidental spills of oil, gas, and cuttings, the Department is concerned about the transportation of other noxious or hazardous materials used in drilling operations. Mixed saltwater and oil byproducts of drilling also must be transported away from a well site. Spills of these materials can have adverse impacts on the environment and, therefore, steps must be taken to reduce those impacts. The Act in general and the specific citations provided by the Department in support of its request for transportation information give the Department sufficient authority to request the information. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting transportation information was not arbitrary or capricious. Test Oil and Gas Plan. The Department requested that Coastal provide the following information concerning plans to test for oil and gas at each of the proposed wells: Submit a plan for safely producing, transporting, and storing test oil and gas. What mode of transportation is anticipated? Tankers? Barges? Pipelines? Where will produced test oil/gas be taken? Where will landfall occur? Include a statement from each appropriate local government assuring that all proposed facilities for oil and gas transportation and storage, both onshore and offshore, will be in compliance with local comprehensive plans. Indicate any leasehold interest or other property interests which will need to be secured to transport test oil or gas. Will test gas be vented, flared, or stored? Discuss why. Coastal provided no test oil and gas plan or other information in response to this request. The Department relied upon the following authority in requesting the test oil and gas plan: Sections 377.06, 377.22(2)(c) and (s), Florida Statutes, and Rules 62C-25.006(1) and 62C-28.001, Florida Administrative Code. For all the reasons previously discussed concerning the Department's authority to regulate oil and gas wells, the Department's statutory authority is broad enough to require the test oil and gas plan it requested from Coastal. The testing of fluids, their transport, and their storage all can have adverse impacts on the environment. The Act in general and the specific citations provided by the Department in support of its request for a test oil and gas plan give the Department sufficient authority to request the plan. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting a test oil and gas plan was not arbitrary or capricious. Drilling Plan. The Department requested that Coastal provide information concerning drilling plans for the proposed wells, including a blow-out prevention plan. In response, Coastal provided all of the requested information, including a casing plan, cementing plan, and drilling plan, but refused to provide a blow-out prevention plan. The Paul Wolff brochure provided to the Department included a list of blow-out preventers that are standard equipment on the rig, but there was no information concerning how a blow-out would be dealt with. The Department relied upon the following authority in requesting the blowout prevention plan: Sections 377.22(2)(a), (c), (d), (e) and (l), Florida Statutes, and Rules 62C-26.003(5), 62C-26.007, and 62C-27.005, Florida Administrative Code. Section 377.22(2)(l), Florida Statutes, authorizes the Department to adopt rules to prevent blow-outs. That authority, coupled with other provisions of the Act giving the Department the authority to protect the environment from oil and gas well drilling operations, is sufficient authority for the Department to require the requested blow-out prevention plan. A blow-out can cause the release of oil and gas into the environment with serious consequences to the environment. Preventing a blow-out is, therefore, of paramount importance. Proper prevention of blow-outs depends upon the geology of each drilling site. Different sites may require different equipment or different measures to prevent a blow-out. Consequently, a separate plan for each site is reasonable and necessary. The Act in general and the specific citations provided by the Department in support of its request for a blow-out prevention plan give the Department sufficient authority to request the plan. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting a blow-out prevention plan was not arbitrary or capricious. H2S Contingency Plan. The Department requested that Coastal provide a hydrogen sulfide (H2S) contingency plan, including a site specific air dispersion model for each site predicting the transport of any hydrogen sulfide accidentally released into the air. Coastal provided a single hydrogen sulfide contingency plan. No air dispersion modeling was provided. The Department relied upon the following authority in requesting individual plans and modeling: Sections 377.22 and 377.243(2), Florida Statutes, and Rule 62C-27.001(7), Florida Administrative Code. Hydrogen sulfide is a toxic gas which can be released during drilling operations. The gas is colorless. It is also denser than air. If not handled properly, a release can be fatal to anyone coming into contact with the gas. For an offshore well, a release of hydrogen sulfide can injure workers on the rig and boaters or fishermen in the area. Contact with hydrogen sulfide at a concentration of 100 parts per million can kill a person's sense of smell in 3 to 15 minutes. At a concentration of 300 parts per million, it can be fatal, and at 500 parts per million breathing will cease in only a matter of a few seconds. Because hydrogen sulfide is heavier than air, it will remain just above the surface of the water, where people are normally located on the Gulf. Individuals on the Gulf cannot escape to higher ground to avoid the gas like they may be able to do on land. While modeling cannot provide certainty as to how a cloud of hydrogen sulfide might act, it can at least give information concerning the prevailing wind direction of each site, which may be beneficial in being prepared to deal with an accident. Without such information it is difficult to determine whether plans to deal with an accident are adequate. Section 377.243(2), Florida Statutes, provides adequate authority for the Department to require that Coastal provide modeling for each proposed site. The Act in general and the specific citations provided by the Department in support of its request for hydrogen sulfide modeling give the Department sufficient authority to request the modeling. The Department's request did not enlarge, modify, or contravene its grant of authority. The Department's exercise of its authority in requesting modeling was not arbitrary or capricious. Section 120.57(1)(e)2.c., Florida Statutes. None of the required information is vague, establishes inadequate standards, or vests unbridled discretion in the Department. All of the information requested by the Department was understood by Coastal. Coastal knew what the Department was requested because it had already provided the requested information in support of its 1281 permit application. Section 120.57(1)(e)2.e., Florida Statutes. Coastal received adequate notice of the Department's Offshore Drilling Policy. Coastal had been requested to provide the information in support of its 1281 permit application. It was given written notice of the Offshore Drilling Policy in these twelve cases through the March 26, 1997, notice of incompleteness and the December 16, 1997, explanation of authority for the requested information. AA. Section 120.57(1)(e)2.g., Florida Statutes. While there are costs which Coastal would be required to pay in order to provide the information required by the Department, those costs are not excessive; not when the rationale for requesting the information is considered. Coastal did not consider the costs associated with providing the information sought by the Department to be too excessive for it to refuse to provide the information in seeking Permit 1281. On the contrary, Coastal incurred those costs. Although there was testimony that the costs of providing the information for Permit 1281 was in excess of a million dollars, the weight of the evidence failed to support the testimony. The evidence proved that the costs of providing all of the information requested by the Department would be well below a million dollars for each well. As to considering less costly alternatives, Coastal never gave the Department an opportunity to do so. Coastal simply refused to provide the requested information, to propose less-costly alternatives, or to discuss the matter further with the Department. Nor were any, less costly, methods of obtaining the information necessary for the Department to carry out its responsibilities under the Act proved at hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection enter a Final Order denying permit applications 1296 through 1307 for failure to file complete applications. DONE AND ENTERED this 26th day of March, 1999, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 26th day of March, 1999. COPIES FURNISHED: Robert J. Angerer, Esquire Robert J. Angerer, Jr., Esquire Angerer and Angerer Post Office Box 10468 Tallahassee, Florida 32302 Andrew Baumann, Assistant General Counsel John W. Costigan, Deputy General Counsel Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Monica K. Reimer, Assistant Attorney General Department of Legal Affairs The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 S. Ansley Samson, Esquire David G. Guest, Esquire Earthjustice Legal Defense Fund Post Office Box 1329 Tallahassee, Florida 32302 Kathy Carter, Agency Clerk Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 F. Perry Odom, General Counsel Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 David B. Struhs, Secretary Department of Environmental Protection 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
The Issue Whether or not the agency may, pursuant to Section 525.06 F.S., assess $390.04 for sale of substandard product due to a violation of the petroleum inspection laws and also set off that amount against Petitioner's bond.
Findings Of Fact Coleman Oil Co., Inc. d/b/a Shell Oil Co. at I-75 and SR 26 Gainesville, Florida, is in the business of selling kerosene, among other petroleum products. On November 15, 1990, Randy Herring, an inspector employed with the Department of Agriculture and Consumer Services and who works under the direction of John Whitton, Chief of its Bureau of Petroleum, visited the seller to conduct an inspection of the petroleum products being offered for sale to the public. Mr. Herring drew a sample of "1-K" kerosene being offered for sale, sealed it, and forwarded it to the agency laboratory in Tallahassee where Nancy Fisher, an agency chemist, tested it to determine whether it met agency standards. The testing revealed that the sampled kerosene contained .22% by weight of sulfur. This is in excess of the percentage by weight permitted by Rule 5F- 2.001(2) F.A.C. for this product. A "Stop Sale Notice" was issued, and on the date of that notice (November 20, 1990) the inspector's comparison of the seller's delivery sheets and the kerosene physically remaining in his tanks resulted in the determination that 196 gallons of kerosene had been sold to the public. Based on a posted price of $1.99 per gallon, the retail value of the product sold was determined, and the agency accordingly assessed a $390.04 penalty. The agency also permitted the seller to post a bond for the $390.04 on November 21, 1990. The assessment is reasonable and conforms to the amount of assessments imposed in similar cases.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving the $390.04 assessment and offsetting the bond against it. DONE and ENTERED this 25th day of April, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 25th day of April, 1991. COPIES FURNISHED TO: CLINTON H. COULTER, JR., ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 510 MAYO BUILDING TALLAHASSEE, FL 32399-0800 MR. RANDAL W. COLEMAN COLEMAN OIL COMPANY POST OFFICE BOX 248 GAINESVILLE, FL 32602 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE THE CAPITOL, PL-10 TALLAHASSEE, FL 32399-0810 RICHARD TRITSCHLER, GENERAL COUNSEL DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 515 MAYO BUILDING TALLAHASSEE, FL 32399-0800
The Issue The issue in this case is whether the Petitioner is eligible for reimbursement for allowable costs pursuant to Section 376.3071(12), Florida Statutes, related to the cleanup of certain contamination at the Petitioner's ground transportation facility.
Findings Of Fact Based on the evidence received at the hearing, I make the following findings of fact: Facts stipulated to by the parties The subject facility is a bus, limousine and van storage, dispatch, and service area for a ground transportation company serving Miami International Airport which contains a parking lot, fuel storage tanks, an administration building, and a maintenance shop. The Department of Environmental Regulation is the agency charged with responsibility for administering the provisions of Section 376.3071, Florida Statutes. Red Top Sedan, Inc., through its agents, notified the Department of possible ground and ground water contamination on or about September 10, 1986. The Department received said notification and on September 19, 1986, advised Red Top that the notice was adequate and requested further information. Following various correspondence and requests for information, the Department determined that it had sufficient information and, on February 1, 1988, issued its Notice of Intent regarding the eligibility of the subject sites for participation in the program. One area, adjacent to and surrounding the diesel fuel pumps, was found to be eligible. Another area, east and west of the maintenance shop (Exhibit "2" to the Notice) was found to be ineligible. Red Top filed a Petition for Administrative Determination which was received by the Department on February 23, 1988. The Petition was subsequently referred to the Division of Administrative Hearings and a Hearing Officer assigned. Facts Established at Hearing General Information About The Facility The subject facility also contains a parking area for approximately 95 buses, 40 to 45 vans, two dozen mini-buses, and 15 or 16 limousines and Lincoln towncars. There is also employee parking on the site. To the east of the Red Top office building there is a fuel island used for fueling Red Top's vehicles. The tanks associated with that fuel island have discharged diesel fuel. That petroleum contamination site is entirely separate from the one involved in this proceeding and has been found to be eligible for reimbursement. When the subject facility was constructed, Red Top employed an engineering company. It also employed a company named Service Station Aid. Service Station Aid is in the business of servicing tanks and other equipment used in connection with the handling of oil, gasoline, diesel fuel, and other similar products. Among other things, Service Station Aid installed underground waste oil tanks and tanks to hold automatic transmission fluid and new motor oil in the area of the maintenance facility. A drainage system servicing the asphalt parking areas and driveways surrounding the various buildings was also installed on the subject site. That system contained various grease traps which conformed to accepted practice at the time of their construction. Facts Regarding The East Side of the Maintenance Building Two underground waste oil tanks are on the east side of the maintenance building. The two waste oil tanks have been in operation since 1976, when the facility was built. Each of these two tanks has a capacity of 560 gallons. Employees of Red Top regularly pour used motor oil into the two waste oil tanks on the east side of the maintenance facility. The used oil is periodically removed by an EPA approved company. That company removes the waste oil to a fuel recycling facility in the Port Everglades area where it is made into recycled fuel. It is possible, even probable, that used oil has been spilled from time to time both while being poured into the waste oil tanks and while being removed from the waste oil tanks. However, there is no persuasive competent substantial evidence that any such spillage was a significant contribution to the contamination at the site. .1/ It is possible that one or both of the waste oil tanks has leaked. However, there is no persuasive competent substantial evidence that any such leakage was a significant contribution to the contamination at the site. In this regard it is noted that Red Top has not tested either of the waste oil tanks to determine whether they are leaking. Approximately 70 feet to the east of the maintenance building there are three storm drains. The storm drains are attached by way of a catch basin to soakage pits. Soakage pits are specifically designed to allow materials entering the soakage pit to be discharged directly to the earth. Storm drains are designed to catch stormwater runoff rather than large amounts of pollutants. The area to the east of the maintenance facility is paved with asphalt. That paved area is sloped so that any discharge of pollutants in that area of the site will flow to the storm drains. On numerous occasions waste oil has been observed in the storm drains. Instances of direct discharges of waste oil onto the ground or into the storm drains have been observed. Oil stains around the storm drains and observations by Dade County inspectors indicate that such direct discharges have been regular, if not frequent. Other sources of contamination at the Red Top facility include leaking drums of oil, oil leaking from stored or discarded equipment, oil discharged to the ground, disposal of contaminated waters from the maintenance building, and engine washing water discharged on the site. In the ground to the east of the maintenance building there is a large plume of dissolved oil and grease. This plume includes a plume of free product in the vicinity of the southernmost of the two waste oil tanks. Extending beyond the identified plume there are additional areas contaminated by constituents of waste oil. The primary cause of the contamination on the east side of the maintenance building is the direct discharge of contaminants. Discharge from the two waste oil tanks constitutes, at most, only a very minor cause of the overall contamination. .2/ Facts Regarding the West Side of the Maintenance Building On the west side of the maintenance building there are two underground tanks that are used to hold new motor oil and new transmission fluid. Motor oil and transmission fluid are lubricants used to lubricate engines and transmissions. They are not fuels. Pollutants which were discharged onto the floor of the maintenance building during maintenance work have been washed directly into the storm drains on the northwest side of the maintenance facility. There are two small areas of contamination on the west side of the maintenance facility. One such area is around a storm drain at the northwest side of the maintenance facility. The other is around the two tanks that contain new motor oil and transmission fluid. The contamination in the area of the storm drain includes lead, cadmium, and chromium. Motor oil and transmission fluid do not contain lead, nor do they contain levels of cadmium or chromium in amounts sufficient to be detected in groundwater. There is also an area of free product near the storm drain. There is no storage tank adjacent to the storm drain on the northwest side of the maintenance facility that could account for the lead, cadmium, and chromium contamination or that could account for the area of free product. The contamination at the storm drain on the west side of the maintenance facility resulted from direct discharges of contaminants to the storm drain and catch basin and was not a result of a discharge from a storage tank. The contamination in the area of the two tanks used for new motor oil and transmission fluid also contains lead, cadmium, and chromium. The metals contamination at this area is a result of discharge to the storm drain, and is not the result of discharge of new motor oil or transmission fluid from the two tanks. The groundwater in the area around these two tanks is also contaminated by dissolved oil and grease. The dissolved oil and grease plume is consistent in terms of substance and concentration with the dissolved waste oil to the east of the building. Within that plume of dissolved oil and grease there is also a small plume of free product. There is no waste oil tank on the west side of the maintenance facility that could account for waste oil contamination at that location. The dissolved oil and grease plume on the west side of the maintenance facility is most likely the result of waste oil discharge to the catch basin. The tanks containing new motor oil and transmission fluid may have contributed to the small free product plume in that area as a result of overfilling, but any such contribution was only a minor part of the overall contamination. In reviewing an application for eligibility for reimbursement, the Department looks at the relative importance of eligible and ineligible portions of a contaminated site. In cases where a potentially eligible source is minor in comparison to an overall otherwise ineligible contamination site, the Department's policy is to treat the entire site as ineligible. This policy is based on the fact that as a practical matter it is not possible to clean up one part of a contaminated site without affecting any adjacent contaminated areas. For the same reason, if the majority of a contaminated site is eligible, but it contains minor ineligible sources, the Department's policy is to treat the entire site as eligible.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Regulation issue a final order in this case concluding that the contamination area at issue in this proceeding is not eligible for reimbursement under Section 376.3071(12), Florida Statutes. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 15th day of June 1989. MICHAEL M. PARRISH 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 15th day of June 1989.
The Issue The issues in this case are whether Respondent, L.B. King, Jr., violated certain rules relating to petroleum contamination site cleanup criteria promulgated by Petitioner, Department of Environmental Protection (Department), whether he should be required to pay an administrative fine and investigative costs and expenses incurred by the Department, and whether he should take corrective action, as described in the Department's Notice of Violation, Orders for Corrective Action, and Administrative Penalty Assessment (Notice of Violation) issued on June 15, 2007.
Findings Of Fact Based upon the record presented by the parties, and those allegations in the Notice of Violation which are undisputed, the following findings of fact are determined: Respondent is the owner and operator of non-residential property (doing business as King Oil and Tire) located at 16776 Southeast U.S. Highway 19 (at Main Street and Ward Street) in Cross City, Florida. He has owned the property since June 30, 1982. Since July 1978, eight regulated petroleum storage tanks were situated on the property. See Fla. Admin. Code R. 62- 761.200(20), (45), (53), and (65). The Department has assigned facility identification number 15/8839661 to the site. During the intervening time period since Respondent assumed ownership, six of the tanks and their associated piping have been closed or removed, including tank 4 in August 1997 and tanks 5 and 6 in March 2004. Tank 4 was a 1,000 gallon diesel underground storage tank system (UST) originally installed in July 1982, tank 5 was a kerosene UST installed in July 1978, while tank 6 was a waste oil UST installed in July 1978. Only tanks 7 and 8 still remain in service. After tank 4 and the associated piping were closed in August 1997, Respondent conducted a closure assessment in the area of tank 4 and performed soil and groundwater analytical sampling in the area of its former piping run. He then filed a Tank Closure Assessment Report (TCAR) with the Department on August 19, 2003. The TCAR revealed groundwater contaminants above the Department's Cleanup Target Levels (CTLs) for Methylnapthalene in two respects and for Naphthalene. See Fla. Admin. Code R. 62-777.170(1)(a), Table I. Because of the presence of contamination on the site, on September 3, 2003, the Department sent Respondent a letter requesting that he submit a Discharge Report Form (DRF) and initiate a site assessment, as required by Florida Administrative Code Rule 62-770.600, and that he file a completed site assessment report by July 10, 2004.3 Subsection (1) of that rule requires that "[w]ithin 30 days of discovery of contamination, the responsible party shall initiate a site assessment." On September 29, 2003, the Department received the requested DRF. During a tank closure inspection of tanks 5 and 6 performed on March 4, 2004, the Levy County Health Department, acting on behalf of the Department, discovered stained soils in the fill area of tank 6. On May 18, 2004, the Department received a TCAR dated May 7, 2004, for the closure of tanks 5 and 6. The TCAR documented the results of laboratory analytical tests on groundwater samples, which revealed groundwater contaminants above the Department's CTLs for Methylnapthalene in two respects. On May 24, 2004, the Department received from Respondent a copy of a DRF (dated March 9, 2004, as amended on April 9, 2004) for the contamination related to tanks 5 and 6. The DRF was the last report filed by Respondent concerning tanks 5 and 6. On the same date, the Department sent Respondent a letter requesting that he initiate site assessment activities for the discharge related to tanks 5 and 6, as required by Florida Administrative Code Rule 62-770.600(1). On July 14, 2004, the Department sent Respondent another letter requesting (a) completion of a site assessment and (b) the submission of a Site Assessment Report (SAR) for the discharge from tank 4 (SAR-97), which complied with the requirements of Florida Administrative Code Rule 62-770.600(8). (The SAR-97 was originally due on July 10, 2004, but had not yet been filed.) In order to be deemed complete, a SAR must contain all of the information detailed in subsection (8). Also, the letter requested that a SAR for the 2004 discharge (SAR-04) be completed no later than August 1, 2004, as required by Florida Administrative Code Rule 62-770.600(7). That subsection requires in relevant part that "[w]ithin 270 days of discovery of contamination, the responsible party shall submit to the Department or to the FDEP local program for review two copies of a [SAR] " On July 15, 2004, or the day after the above letter was mailed, the Department received a copy of the SAR-97 from Respondent. The report was then referred to the Department's Petroleum Cleanup Section for its review. By letter dated August 27, 2004, the Department advised Respondent that SAR-97 was under review. The letter also changed the due date for the SAR-04 from August 1, 2004, to November 9, 2004. On September 15, 2004, the Department received correspondence from Respondent requesting an extension of time in which to submit his SAR-04. On December 10, 2004, the Department approved the request and authorized Respondent to file a SAR-04 no later than March 1, 2005. On April 12, 2005, Respondent filed with the Department a Site Assessment Report Addendum (SARA) for the 1997 discharge (SARA-97). The report was dated March 1, 2005. On May 25, 2005, the Department sent Respondent a letter requesting that he file two copies of a supplement to the SARA-97 no later than July 5, 2005, to address certain deficiencies noted in that report, as required by Florida Administrative Code Rule 62-770-600(11). That subsection provides that "[i]f the [SAR] is incomplete in any respect, or is insufficient to satisfy the objectives of subsection 62- 770.600(3), F.A.C., the Department or the FDEP local program shall inform the responsible party pursuant to paragraph 62- 770.600(9)(b), F.A.C., and the responsible party shall submit to the Department or to the FDEP local program for review two copies of a [SARA] that addresses the deficiencies within 60 days after receipt of the notice." The same letter also requested that a disposal manifest be provided for the tank and piping closures. On July 11, 2005, the Department received a second SARA-97 from Respondent's consultant. On July 14, 2005, it also received the disposal manifest documentation for the closure of tank 4 and its piping. These were the last reports filed by Respondent. On October 4, 2005, the Department sent Respondent a letter requesting that he provide two copies of a third SARA for the 1997 discharge to address deficiencies noted by the Department in the second SARA. The letter indicated that the third SARA was to be filed no later than November 23, 2005. The Department also requested that he provide a completed financial affidavit to justify Respondent's claim that he was financially unable to complete the remaining required cleanup corrective actions at his property. On November 29, 2005, Respondent requested an extension of time to complete the third SARA-97. (The reason for the requested extension was that Respondent's insurance carrier would not give authorization for the work.) On January 12, 2006, the Department advised Respondent by letter that his request had been denied and that he must submit either the third SARA or a financial affidavit, as previously requested, no later than February 15, 2006. In its response, the Department indicated that it did not "consider generic delays by contractors or insurance carriers as good cause for an extension." To date, neither filing has been made. By failing to file the requested third SARA for the 1997 discharge, Respondent has contravened the requirements of Florida Administrative Code Rules 62-770.600(11) and 62- 770.800(3), which require that within 60 days after notice, a responsible party submit a SARA to address deficiencies noted in a SAR. Respondent's conduct also implicates Florida Administrative Code Rule 62-770.800(5), which makes it a violation of two Florida Statutes for a responsible party to not submit requested information within the time frame specified. Since March 1, 2005, which was the due date on which a report was to be filed, Respondent has failed to submit an approved SAR for the 2004 discharge, as required by Florida Administrative Code Rule 62-770.600(7), which in turn contravenes Florida Administrative Code Rule 62-770.800(3) and (5). To date, Respondent has failed to complete site assessment activities for both the 1997 and 2004 discharges, as required by Florida Administrative Code Rule 62-770.600(10). That provision states that "[s]ite assessment activities shall not be deemed complete until such time as a [SAR] is approved." To date, Respondent has failed to timely and completely assess and remediate the contamination at his property, as required by Florida Administrative Code Rule Chapter 62-770. That chapter contains the criteria which apply to the cleanup of a site contaminated with petroleum products. During the course of its investigation of this matter, the Department has incurred expenses "in the amount of not less than $500.00." As mitigating evidence, Respondent offered into evidence Respondent's Exhibits 2-15, the majority of which pertain to his insurance policy and the pending litigation with his carrier, Mid-Continent Casualty Company (MCC), or the priority score funding process, which is the process by which contaminated properties are scored or rated for purposes of determining eligibility to receive state cleanup funds when the responsible party is financially unable to do so. Although evidence regarding the insurance policy and pending litigation was deemed to be immaterial to the issues of establishing Respondent's liability for the violations and responsibility for undertaking the corrective actions necessary to satisfy the violations, the undersigned ruled that it could be used by Respondent as mitigating evidence, if relevant, for the purpose of seeking to reduce the administrative penalty. Respondent's Exhibits 8, 9, and 11 indicate that after he reported the 2003 discharge to MCC, in 2003 the carrier denied coverage for that discharge (on the ground "any 'confirmed release' must commence after the retroactive date of the policy (4/3/98)"). However, MCC initially accepted coverage for the 2004 discharge and authorized Respondent's environmental consultants to conduct a site assessment. The documents further show that in December 2005, or before the 2004 site assessment had been completed and a SAR prepared, MCC reversed its position and denied coverage for the 2004 discharge on the ground there was no "Confirmed Release," as defined by the policy. Respondent then filed his lawsuit seeking a determination that the carrier was responsible for cleanup costs. Respondent asserts that he has expended more than $50,000.00 in pursuing the lawsuit, which is much more than the administrative penalty being assessed by the Department. Respondent points out that prior to the time MCC reversed its position as to coverage for the 2004 discharge in December 2005, he had filed a DFR, TCAR, disposal manifest, SAR- 97, and two SARAs for the 1997 discharge, and a TCAR and DFR for the 2004 discharge, all of which indicate a good faith effort on his part to comply with the assessment requirements. As noted above, the final reports prepared by Respondent's consultant were a second SARA-97 and a disposal manifest for the 1997 discharge, which were filed with the Department in July 2005, and a TCAR and DRF for the 2004 discharge filed in May 2004. Respondent's Exhibit 10A recites language in Coverage B of the insurance policy, which provides in part that MCC "will pay Clean-up Costs by an Insured for environmental damage that an Insured is legally obligated to pay . . . ." Respondent argues that if he acknowledges by affidavit or other proof that he does not have the ability to pay for cleanup costs, he fears that under the above language, MCC would not be "legally obligated to pay." This is because Section 376.3071(7)(c), Florida Statutes, provides that when a responsible party does not have the ability to pay for all of the cleanup costs, the Department "may" enter into an agreement with the responsible party to undertake all or part of the site rehabilitation after "taking into consideration the party's net worth and the economic impact on the party." Respondent contends that if he files an affidavit under this statute, MCC would then be relieved of any responsibility under the policy, and his rights in the lawsuit would be jeopardized. Respondent further points out that several other provisions in the insurance policy prohibit him from completing the assessment until the litigation is concluded. For example, one provision (Section II.B) provides that "No Clean-up Costs, charges, and expenses shall be incurred without the Company's consent," while another (Section II.C) provides that "An Insured shall not admit or assume any liabilities or settle any Claim(s) without the Company's consent." Respondent asserts that these provisions prevent his consultant from conducting any further work on the site without MCC's consent, and if he does so, he will lose the right to reimbursement under the policy. Finally, Exhibits 3 through 6 show that Respondent's property has been assigned a site ranking score of ten points, and that the Department is currently funding sites that are eligible for state restoration funding only if they have scores of 37 points and higher. Thus, Respondent argues that a delay in remediation of the site is not unreasonable. Except for the two discharges at issue in this case, there is no evidence that Respondent has a history of non- compliance or that he gained any direct economic benefit by virtue of the discharges. Although no reports have been filed since July 2005, through counsel, Respondent has kept the Department abreast of his efforts to establish liability on the part of MCC so that the site assessments can resume.
Findings Of Fact The parties stipulated to findings of fact set forth in paragraphs 1.- 8.,below. Stipulated Facts Respondent has documented contamination from the abandoned petroleum storage system. The abandoned petroleum storage system has been properly closed. Petitioner submitted an application to Respondent on Respondent's forms 17-769.900(3) and (4), F.A.C., which was postmarked on or before June 30, 1992. The site is not eligible for cleanup pursuant to Section 376.3071(9) and (12), Florida Statutes, the Early Detection Incentive Program, or the Florida Petroleum Liability and Restoration Insurance Program pursuant to Section 376.3072, Florida Statutes. This site is not owned or operated by the federal government. This site did not have leaking tanks that stored pollutants that are not petroleum products as defined in Section 376.301, Florida Statutes. Respondent was not denied access to this site. Petroleum contamination was not discovered after the application deadline of June 30, 1992. Additional Facts Petitioner, a Florida corporation with its principal place of business in Leon County, Florida, is in the business of owning and leasing property. Petitioner is the fee simple owner of property located at 2022 Wahnish Way in Tallahassee, Florida. The property located on Wahnish Way was leased to James T. "Pete" Thomas by Petitioner's predecessor in title. Thomas operated a gasoline station and automobile repair garage on the property. The lease with Thomas was continued by Petitioner without change upon Petitioner's assumption of the legal title to the property in 1985. Prior to Petitioner's assumption of title to the property, Thomas had installed four petroleum storage systems in a four tank pit on the property in the early 1970's. Each tank and its integral piping is a petroleum storage system, as defined by Section 376.301(15), Florida Statutes (1991). In the early 1980's, Thomas and his wholesale gasoline distributor determined that one of the four underground tanks was losing petroleum product. In 1982, Thomas ceased using the southernmost tank in the pit for the storage of petroleum products for subsequent consumption, use or sale. The distributor ceased placing gasoline in the southernmost tank. Later, in compliance with subsequent statutory enactments, Thomas registered all of the tanks, including the abandoned southernmost tank with Respondent by the statutory deadline of December 31, 1984. Although Thomas signed the registration documents as an agent of Petitioner, he was not such an authorized agent and the registration occurred without the knowledge or approval of Petitioner. As a result, Petitioner cannot be viewed as having filed the registration. Petitioner, unaware that Thomas had experienced any product loss problems or that the tanks on the property had been registered by Thomas with Respondent, became aware of both matters following receipt of a letter from government officials of Leon County, Florida, on November 20, 1990. As set forth in that letter, Petitioner was apprised that the tanks were not in compliance with State of Florida standards and would have to be closed or retrofitted to bring the tanks into compliance. Following receipt of the letter, Petitioner informed Thomas that selling of gasoline at the site was to be discontinued immediately. Closure of the tanks, performed in early 1991 by contractors retained by Petitioner, consisted of excavation and removal of the petroleum storage systems from the property. All four tanks were in the tank pit side by side, from the northernmost end of the pit to the southern end of the pit fronting on Osceola Street in Tallahassee, Florida. When the removal was completed, a Closure Assessment form was prepared by one of the contractors, Jim Stidham and Associates, in accordance with requirements of Florida law. During that process, excessive contamination from petroleum product of the soils in the extreme south end of the tank pit was discovered. Excessive contamination, defined as anything more than 500 parts per million, was located beneath the southernmost pump on the southern end of the pump island and in the southern end of the pit. Both soil sample seven in the southernmost end of the pit and soil sample 11 under the southernmost pump document these unacceptable high levels of contamination. A 20 foot soil boring as near as possible to the southernmost tank on the site revealed the unacceptable levels of contamination extended to that depth. As supported by the testimony of James A. Stidham, Petitioner's expert in the assessment of contamination caused by underground petroleum storage tanks, the location of contamination in the pit area establishes that the tank causing the contamination was the southernmost tank. In view of the location of the contamination in the pit area, the tank discovered to have a hole in it at the time of removal was the southernmost tank. The excessive contamination located at the shallow depth of two feet under the southernmost pump resulted from the improper disconnection of piping attached to the pump and is not attributable to the leak in the tank. Each tank was connected by piping on the eastern end of each tank to the corresponding pump. The southernmost pump was not used after 1982 and was missing integral parts by the time the tanks were closed. In the course of exploring options for clean up of the property, Petitioner filed for assistance from Respondent in the form of participation in the ATRP. Unaware of the true date of the cessation of use of the southernmost tank, Petitioner gave the date of last use for all tanks in the pit by stating that the "tanks were taken out of service between December 15, 1990 and January 15, 1991." Petitioner provided this response to Respondent's July 30, 1991 request for further information on August 6, 1991. Although Respondent made an initial determination to deny Petitioner's application in the middle of August, 1991, that action was not communicated to Petitioner. Instead, Petitioner's application was held by Respondent, pending possible amendment to Section 376.305(7), Florida Statutes (1991), the law controlling admission to the ATRP. Respondent held Petitioner's application for a total of 19 months before issuance of a formal decision to deny the application on February 26, 1993. Such delay by Respondent is unreasonable. Respondent's denial of Petitioner's application was based upon the eligibility requirement restricting ATRP participants to those situations where the petroleum storage system has not stored petroleum products for consumption, use or sale after March 1, 1990, and the belief of Respondent's personnel that all storage systems on Petitioner's property had stored products beyond that date. Specifically, Respondent eventually gave notice that it intended to deny Petitioner's application for participation in the ATRP for the following reason: Eligibility in the Abandoned Tank Restoration Program is restricted to those petroleum storage systems that have not stored petroleum products for consumption, use or sale after March 1, 1990, pursuant to Section 17-769.800(3)(a), Florida Administrative Code. Respondent utilized provisions of Subsection 376.305(7)(f), Florida Statutes (1991), to permit entry of some applicants into the ATRP, demonstrating that Respondent did not consider the March 1, 1990 deadline contained in provisions of Subsection 376.305(7)(b), Florida Statutes (1991), to be absolute. As attested at the final hearing by Respondent's employee, Respondent considered "variables" when determining whether to enforce the March 1, 1990, deadline. Those variables comprise the criteria listed in Subsection 376.305(7)(f), Florida Statutes (1991). By use of those variables, Respondent effectively applied provisions of Subsection 376.305(7)(f), Florida Statutes (1991), to some program applicants other than Petitioner and permitted their participation while choosing to refrain from final agency action under that same criteria with regard to Petitioner's application pending subsequent legislative enactment. Petitioner's southernmost tank is an abandoned petroleum storage system that was not required to be registered with Respondent when it was in service; the system came into the possession of Petitioner following its abandonment; was never returned to service; and is not otherwise eligible for cleanup pursuant to Subsection 376.3071(9), Florida Statutes, or Section 376.3072, Florida Statutes.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a final order be entered granting Petitioner's application for participation in the ATRP with regard to contamination resulting from Petitioner's southernmost petroleum storage system. DONE AND ENTERED this 1st day of February, 1994, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of February, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2658 The following constitutes my rulings, pursuant to Section 120.59, Florida Statutes, upon proposed findings of fact submitted by the parties: Petitioner's Proposed Findings. 1.-23. Adopted, though not verbatim. Respondent's Proposed Findings. 1.-2. Rejected, not supported by weight of the evidence. 3.-4. Rejected, subordinate to HO findings on this point. 5.-11. Accepted. Rejected, relevance. A mischaracterization of the evidence in that the testimony establishes that an existing lease agreement was continued. Accepted to the extent that the evidence establishes that there were four tanks in the pit. Rejected, credibility, weight of the evidence as to the accuracy of the registration form in the face of conflicting evidence. 16.-18. Rejected, weight of the evidence. 19.-20. Accepted. 21.-22. Rejected, subordinate. Accepted. Rejected, relevance. 25.-26. Accepted. 27.-29. Rejected, subordinate. Rejected, relevance. Rejected, argumentative. Accepted. Rejected, legal conclusion, argumentative. COPIES FURNISHED: Melissa Fletcher Allaman Attorney at Law Post Office Drawer 1170 Tallahassee, Florida 32302 Jefferson M. Braswell Lisa M. Duchene W. Douglas Beason Assistant General Counsels Department of Environmental Protection 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Kenneth Plante General Counsel Department of Environmental Protection 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Virginia B. Wetherell Secretary Department of Environmental Protection Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400
Findings Of Fact Since 1984, the Department has been the state agency charged with the responsibility to establish rules and regulate underground pollutant storage facilities in Florida. In 1988, the Legislature added the administration of the newly enacted Florida Petroleum Liability and Restoration Program to the Department's duties. The program was to be established on or before January 1, 1989. The Applicant is the owner of a petroleum storage system in Jacksonville, Florida. Since 1984, it has been subject to the rules regarding underground pollutant storage facilities promulgated by the Department. On September 18, 1989, an odor indicative of possible petroleum contamination was discovered at the site during the installation of monitoring wells. A Discharge Notification Form was sent to the Department by the Applicant on October 23, 1989. The form advised that there were no leaks in the system. It was suggested that the odor may have resulted from surface spill at the site over a number of years. In response to the notification, an inspection of the site was completed by the Department on December 5, 1989. The inspection revealed the following on-site violations: Registration requirements were not being met. The forms had not been updated to include the presence of monitoring wells and overfill protection at the facility. Two underground tanks had not been properly abandoned. Inventory and reconciliation records had not been properly maintained, as required by rule since 1987. This violation was reviewed, and discussed in detail with on-site representatives of the Applicant. The monitoring wells were not installed by the time deadlines set forth in the Department's rules regarding stationary tanks. Since the wells were installed in September 1989, samples had not been taken for visual signs of petroleum contamination. The purpose of the system is to allow the owner of the storage tanks to learn if there is a leak in the tanks that can be quickly controlled to limit contamination. The day after the inspection, the Applicant applied for a determination of eligibility for participation in the restoration coverage portion of the new Florida Petroleum Liability Insurance and Liability Program. An affidavit was signed stating that all of the Department's rules regarding stationary tanks were being complied with by the Applicant. Six days after the inspection, the Department sent the Applicant written notice of the results of the inspection. The Applicant was given time frames and instructions for correcting the listed violations that could be corrected. A contamination assessment and clean up were also required in the letter. This letter did not address the issue of eligibility for the restoration funding program because that was a matter unrelated to the inspection results. On March 7, 1990, the Department determined the facility was ineligible for participation in the restoration funding provided by the Florida Petroleum Liability and Coverage Program. The following reasons were given: Failure to properly abandon underground storage tanks, pursuant to Section 17-61.050(3)(c), Florida Administrative Code. Failure to maintain inventory records, reconciliations, and significant loss/gain investigation as per Section 17-61.050(4)(c), Florida Administrative Code. Failure to install monitoring system and overfill protection by the dates set forth in Section 17-61.06(2)(c)2, Florida Administrative Code. Failure to properly monitor leak detection system, pursuant to Section 17-61.050(5)(c), Florida Administrative Code. The 10,000 gallon fuel oil tank and the 3,000 gallon waste oil tank present at the facility were abandoned in March 1990. The notice issued by the Department after its inspection in December 1989, gave the Applicant sixty days after receipt of the notice to properly abandon the tanks. The Applicant substantially complied with this requirement after the written notice was received. Although the Applicant failed to maintain the inventory records, reconciliations, and significant loss/gain investigations required by the Department rules, some of these violations had been corrected prior to the Department's inspection in December 1989. Correct inventory recordkeeping was discussed during the inspection, and the need to immediately implement the proper recordkeeping practices was emphasized in the post-inspection notice of violations. All of the recordkeeping violations were not cured until August 1990. The records kept by the Applicant during the noncompliance period from 1984 to August 1990, did not provide a substantially equivalent degree of information regarding possible leak detection or prohibited discharges as the required recordkeeping procedures. Two underground stationary storage tanks on the site have been part of the Applicant's petroleum storage system since 1970 and 1975, respectively. The monitoring wells and overfill protection for these tanks should have been in place by December 31, 1987. Neither monitoring system was installed until September 1989. The Applicant began the contract negotiations for installation in September 1988. The Applicant did not demonstrate that the facility contained an alternative procedure between December 31, 1987 and September 1989, that provided a substantially equivalent degree of protection for the lands, surface waters, or groundwaters of the state as the established requirement for monitoring wells and overfill protection. In December 1989, the Department's notice advised the Applicant that the monitoring wells should be sampled monthly for visual signs of petroleum contamination. Since April 1990, the Applicant has been completing the monthly sampling in the monitoring wells as part of its leak detection system, as required by the Department's rule regarding underground stationary tanks.
Recommendation Accordingly, it is RECOMMENDED: That the Department enter a Final Order denying Petitioner's application for restoration coverage in the Florida Petroleum Liability and Restoration Program at the Jacksonville location. DONE and ENTERED this 28 day of December, 1990, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY 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 _28_ day of December, 1990. APPENDIX TO RECOMMENDED ORDER The proposed findings of fact submitted by Petitioner are addressed as follows: Rejected. Improper interpretation of law. As for the facts in the first sentence, they are accepted. See HO #8. Rejected. Irrelevant. See HO #9. Rejected. Contrary to fact. See HO #9 and #11. Rejected. Contract to fact. See HO #11. Rejected. Contrary to fact. See HO #12 and #13. Rejected. Contrary to fact. Improper shifting of duty ad legal responsibility. Rejected . Improper application of law. The Respondent's proposed findings of fact are addressed as follows: Accepted. Accepted. Accepted. Accepted. See HO #8. Accepted. See HO #8. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #5. Accepted. Accepted. See HO #4. Accepted. See HO #4. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #4 and #6. Accepted. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #9. Accepted. See HO #4 and #10. Accepted. Rejected. Contrary to fact. See HO #10. Accepted. Accepted. Accepted. See HO #10. Accepted. See HO #3 and #12. Accepted. Accepted. See HO #13. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #6. Accepted. Rejected. Not established by evidence. See HO #6. Accepted. Accepted. Accepted. Accepted. See HO #7. Accepted. Accepted. COPIES FURNISHED: William Chadeayne, Qualified Representative 8933 Western Way, Suite 16 Jacksonville, Florida 32256 Janet E. Bowman, Esquire Assistant General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400
The Issue The issue in this case is whether Petitioner's site, Circle K General, Inc., Store #2375, located at U.S. #1 and Pennekamp Park, is eligible for restoration pursuant to the Florida Petroleum Liability and Restoration Program (FPLIRP) set forth in Section 376.3072, Florida Statutes.
Findings Of Fact Petitioner, Circle K General, Inc., Store #2375 owns and operates a petroleum storage site located at U.S. #1 and John Pennekamp Park, Key Largo, Florida. The DER Facility ID Number for the site is 448624728. Circle K operates at the site three 10,000 gallon fiberglass tanks which contain gasoline. The tanks currently operated at the site were installed in 1987. Four monitoring wells for the site were installed at the same time as the Circle K tanks were installed in 1987. Monthly monitoring well reports were completed each month beginning on December 12, 1987, and ending on July 30, 1989, by Professional Services Industries on behalf of Circle K. Steve Belin is the individual at Circle K responsible for reviewing or supervising the review of the monitoring well reports for Store #2375. The November 26, 1988, monthly monitoring well report indicated the presence of petroleum odor in all four of the monitoring wells at the site. After receipt of the November 26, 1988, monthly monitoring report, neither Steve Belin nor any employee of Circle K filed a Discharge Notification Form with the Department. After receipt of the November 26, 1988, monthly monitoring report, neither Steve Belin nor any employee of Circle K undertook steps to investigate the source or cause of the petroleum odor. The monthly monitoring report dated March 20, 1989, indicates the presence of a petroleum odor in one of the four monitoring wells. After receipt of the March 20, 1989, monitoring well report, neither Steve Belin nor any employee of Circle K filed a Discharge Notification Form with the Department. After receipt of the March 20, 1989, monthly monitoring report, neither Steve Belin nor any employee of Circle K undertook steps to investigate the source or cause of the petroleum odor. The July 30, 1989, monthly monitoring well report indicates the presence of petroleum product in all four monitoring wells. The July 30, 1989, monthly monitoring well report was not received by Steve Belin until September, 1989. On July 31 and August 1, 1989, Combustion Engineering installed a set of four new compliance monitoring wells. Circle K contracted for the installation of new monitoring wells because the four existing monitoring wells were only 15 feet deep and were dry. By letter dated August 17, 1989, Combustion Engineering notified Steve Belin that a petroleum odor was detected in the soils retrieved while drilling one of the new monitoring wells and that a petroleum odor was also detected in one of the old monitoring wells. On August 21, 1989, Steve Belin filed a Discharge Notification Form with the Department for Circle K Store #2375. After the discharge notification was filed on August 21, 1989, none of the tanks were taken out of service. After the filing of the August 21, 1989 Discharge Notification Form, Circle K inspected the inventory records for the site beginning in October, 1988, through September, 1989, and detected no significant loss of petroleum product. On October 6, 1989, an inspection of Circle K Store #2375 was conducted by Leslie Rueth of the South District Office of the Department of Environmental Regulation. At the time of the October 6, 1989, DER inspection, free product was noted in two of the four new monitoring wells, and all of the wells contained a petroleum odor. On October 19, 1989, the South District Office of Department of Environmental Regulation notified Steve Belin of the October 6, 1989, inspection results and requested (1) that a tank and line tightness test be performed to determine if there was a leak in the petroleum storage system and (2), if free product was present, that an initial remedial action (IRA) be implemented as defined in F.A.C. Rule 17-70.006. An Initial Remedial Action consists of the removal of free product through the bailing or pumping of free product off the water table and may include the removal of excessively contaminated soil. On October 30, 1989, Steve Belin submitted tank tightness test results for the three 10,000 gallon tanks located at Circle K Store #2375. All three tanks passed the tank and line tests. By letter of October 17, 1989, Steve Belin requested ATEC Associates, Inc. to have all of the monitoring wells of Store #2375 bailed of free product once a week for one month. The free product present at Store #2375 resulted from old tanks and piping installed by Circle K's predecessor, U Under Florida Administrative Code Rule 17 presence of a layer or odor, or the positive report of a laboratory that the monitoring well sample contains pollutant, shall be treated as a discharge. A properly installed monitoring well should have at least one foot of water in the well in order to be able to take a water sample from the well. If a foot or less of water is present in a monitoring well, a vapor monitoring device should be used to test the wells. From December, 1987, until July, 1989, the Circle K monitoring wells were usually dry. Under Florida Administrative Code Rule 17 wells must be constructed such that the bottom of the casing is at least five feet below the water level at the time of drilling but no deeper than 25 feet. The monitoring wells constructed at Circle K Store #2375 did not meet the construction specifications set forth in Chapter 17-61, Florida Administrative Code. Florida Administrative Code Rule 17-61.050(b)(6) requires discharges to be reported to the Department within three working days of discovery. DER was not notified of a discharge subsequent to either the November 26, 1988, or the March 20, 1989, monitoring well reports, nor did Circle K contain the leak.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Environmental Regulation enter a Final Order denying the Petitioner's application for site restoration pursuant to the Florida Petroleum Liability and Insurance Program (FPLIRP). DONE and ENTERED this 27th day of August, 1990, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-2065 To comply with the requirements of Section 120.59(2), Florida Statutes (1989), the following rulings are made on the Respondent's proposed findings of fact (the Petitioner not having filed any): 1.-27. Accepted and incorporated. Cumulative. Accepted; subordinate to facts found. 30.-33. Accepted but subordinate and unnecessary. 34.-38. Accepted and incorporated. 39. Cumulative. 40.-41. Accepted and incorporated. 42. Accepted but subordinate to facts found and unnecessary. 43.-44. Accepted but subordinate and unnecessary. Conclusion of law. Accepted but unnecessary. 47.-48. Accepted but subordinate and unnecessary. 49. Cumulative and unnecessary. COPIES FURNISHED: Steve Belin The Circle K Corporation Regional Environmental Director 500 South Faulkenburg Road Tampa, FL 33619 Janet E. Bowman, Esquire Assistant General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400
The Issue The issue to be determined is whether the applicant, Kanter Real Estate, LLC (Kanter), is entitled to issuance of an Oil and Gas Drilling Permit, No. OG 1366 (the Permit).
Findings Of Fact The Parties Kanter is a foreign limited liability company registered to do business in the State of Florida. Kanter owns 20,000 acres of property in western Broward County, on which it seeks authorization for the drilling of a vertical exploratory well. The exploratory well is to be located on a five-acre site that is subject to an ERP (the Well Site). The Department is the state agency with the power and duty to regulate activities related to the management and storage of surface waters pursuant to chapter 373, Florida Statutes, and to regulate oil and gas resources, including the permitting of activities related to the exploration for and extraction of such resources, pursuant to chapter 377, Florida Statutes. Miramar is a Florida municipal corporation located in Broward County, Florida. Broward County is a political subdivision of the State of Florida with jurisdiction extending to the Kanter property and the Well Site. The Application On July 2, 2015, Kanter submitted its Application for Permit to Drill (Application) to the Department. The proposed Well Site is on land to which Kanter owns the surface rights and subsurface mineral rights. The Application contemplates the drilling of an exploratory well to a depth of approximately 11,800 feet. The Application is not for a production well. The well is to be drilled, and ancillary activities are to be performed on a fill pad of approximately five acres, surrounded by a three-foot high perimeter berm on three sides and the L67-A levee on the fourth. The pad is the subject of an ERP which, as set forth in the Preliminary Statement, is not being challenged. The pad is designed to contain the 100-year, three-day storm. The engineering design incorporates a graded area, berm, and containment with a water control structure and a gated culvert to manipulate the water if necessary. The entire pad is to be covered by a 20 mil PVC liner, is sloped to the center, and includes a steel and concrete sump for the collection of any incidental spills. The pad was designed to contain the full volume of all liquids, including drilling fluid, fuel, and lubricating oil, that are in tanks and containers on the facility. The Application includes technical reports, seismic data, and information regarding the geology and existing producing oil wells of the Upper Sunniland Formation, which Kanter filed for the purpose of demonstrating an indicated likelihood of the presence of oil at the proposed site. The third Request for Additional Information (RAI) did not request additional information regarding the indicated likelihood of the presence of oil at the proposed site. After it submitted its response to the third RAI, Kanter notified the Department of its belief that additional requests were not authorized by law. As a result, the Department completed the processing of the Application without additional RAI’s. On November 16, 2016, the Department entered its Notice of Denial of the Oil and Gas Drilling Permit. The sole basis for denial was that Kanter failed to provide information showing a balance of considerations in favor of issuance pursuant to section 377.241.1/ There was no assertion that the Application failed to meet any standard established by applicable Department rules, Florida Administrative Code Chapters 62C-25 through 62C-30. In particular, the parties included the following stipulations of fact in the Joint Prehearing Stipulation which are, for purposes of this proceeding, deemed as established: The structure intended for the drilling or production of Kanter’s exploratory oil well is not located in any of the following: a municipality; in tidal waters within 3 miles of a municipality; on an improved beach; on any submerged land within a bay, estuary, or offshore waters; within one mile seaward of the coastline of the state; within one mile seaward of the boundary of a local, state or federal park or an aquatic or wildlife preserve; on the surface of a freshwater lake, river or stream; within one mile inland from the shoreline of the Gulf of Mexico, the Atlantic Ocean or any bay or estuary; or within one mile of any freshwater lake, river or stream. The location of Kanter’s proposed oil well is not: within the corporate limits of any municipality; in the tidal waters of the state, abutting or immediately adjacent to the corporate limits of a municipality or within 3 miles of such corporate limits extending from the line of mean high tide into such waters; on any improved beach, located outside of an incorporated town or municipality, or at a location in the tidal waters of the state abutting or immediately adjacent to an improved beach, or within 3 miles of an improved beach extending from the line of mean high tide into such tidal waters; south of 26°00'00? north latitude off Florida’s west coast and south of 27°00'00? north latitude off Florida’s east coast, within the boundaries of Florida’s territorial seas as defined in 43 U.S.C. 1301; north of 26°00'00? north latitude off Florida’s west coast to the western boundary of the state bordering Alabama as set forth in s. 1, Art. II of the State Constitution; or north of 27°00'00? north latitude off Florida’s east coast to the northern boundary of the state bordering Georgia as set forth in s. 1, Art. II of the State Constitution, within the boundaries of Florida’s territorial seas as defined in 43 U.S.C. 1301. 19. The proposed oil well site does not contain Florida panther habitat and is located outside of the primary and secondary habitat zones for the Florida panther. 21. There are no recorded archaeological sites or other historic resources recorded within the area of the proposed oil well site. Kanter submitted a payment of $8,972.00 for its oil and gas permit application on June 30, 2016 pursuant to Rule 62C- 26.002(5)(c), F.A.C. Kanter’s application includes sufficient information and commitments for performance bonds and securities. DEP and Intervenors do not claim that the application lacks the information required in rule 62C-26.002, F.A.C. Kanter’s application includes an organization report that satisfies the requirements of rule 62C-26.003(3), F.A.C. Kanter’s engineering aspects of the site plan for the proposed project site, are appropriate. Kanter’s survey submitted to DEP in support of its application includes a suitable location plat which meets the minimum technical standards for land surveys. Kanter’s application includes an appropriate description of the planned well completion. DEP and Intervenors do not claim that the drilling application lacks the information required by rule 62C-26.003, F.A.C. Kanter’s Application proposes using existing levees to provide access to the proposed Kanter well site. Kanter did not propose to construct additional roads for access. Kanter’s proposed well site is located 332 feet from the L67-A levee, which serves as a roadway for trucks used to perform operations and maintenance on the levees and canals in the area. Kanter’s application does not lack any information required by DEP with respect to the location of roads, pads, or other facilities; nor does it lack any information regarding the minimization of impacts with respect to the location of roads. DEP and Intervenors do not contend that the permit should be denied based upon the proposed “spacing” of the well, or drilling unit, as that term is used in rule 62C-26.004, F.A.C. Kanter’s application includes appropriate plans for the construction of mud tanks, reserve pits, and dikes. Kanter agrees to a reasonable permit condition requiring that if water is to be transported on-site, that it will add additional tanks for the purpose of meeting water needs that would arise during the drilling process. Kanter’s design of the integrated casing, cementing, drilling mud, and blowout prevention programs is based upon sound engineering principles, and takes into account all relevant geologic and engineering data and information. Kanter’s proposed casing plan includes an additional casing string proposed in its response to DEP’s Third Request for Additional Information. This casing plan meets or exceeds the requirements of 62C-27.005, F.A.C. Kanter’s proposed casing and cementing program, as modified, meets or exceeds all applicable statutory and rule criteria.[2/] Kanter’s response and documents provided in response to DEP’s 3rd RAI satisfactorily resolved DEP’s concern regarding the risk of passage of water between different confining layers and aquifers resulting from the physical act of drilling through the layers of water and the intervening soil or earth. Kanter’s application includes a sufficient lost circulation plan. Kanter’s application is not deficient with respect to specific construction requirements which are intended to prevent subsurface discharges. Kanter’s drilling fluids plan is appropriate and is not deficient. Kanter’s blowout prevention equipment and procedures are appropriate and are not deficient. Kanter’s plans for blowout prevention are not insufficient. Kanter’s proposed oil pad is above the 100 year flood elevation and under normally expected circumstances would not be inundated by water if constructed as proposed in Kanter’s application. Kanter’s application includes a Hydrogen Sulfide Safety Plan that includes standards which are consistent with the onshore oil and gas industry standards set forth in the American Petroleum Institutes’ Recommended Practice. DEP and Intervenors do not claim any insufficiencies with respect to Kanter’s Hydrogen Sulfide Gas Contingency Plan, the sufficiency of secondary containment, its construction plans for a protective berm around the drilling site and storage tank areas of sufficient height and impermeability to prevent the escape of pad fluid, its pollution prevention plan, its safety manual, or its spill prevention and cleanup plan. DEP and Intervenors do not contend that the permitting of the well would violate section 377.242(1), F.S., regarding permits for the drilling for, exploring for, or production of oil, gas, or other petroleum products which are to be extracted from below the surface of the land only through the well hole(s). DEP and Intervenors do not contend that Kanter’s application violates the applicable rule criteria for oil and gas permitting set forth in Chapters 62C-25 through 62C-30, Florida Administrative Code. In addition to the foregoing, Kanter is not seeking or requesting authorization to perform “fracking,” and has agreed to a permit condition that would prohibit fracking. As a result of the foregoing, the parties have agreed that the Application meets or exceeds all criteria for an exploratory oil well permit under chapters 62C-25 through 62C-30. The Property Kanter owns two parcels of land totaling 20,000 acres in the area of the proposed Well Site: a northern parcel consisting of approximately 11,000 acres and a southern parcel consisting of approximately 9,000 acres. Kanter assembled its holdings through a series of acquisitions by deeds from 1975 to 1996. The Well Site is to be located within the southern parcel. On August 7, 1944, Kanter’s predecessor in title, Dallas Investment Co., acquired by tax deed all interests in a parcel within the 9,000-acre southern parcel described as “All Section 23 Township 51 South, Range 38 East, 640 Acres,” including, without reservation, the oil, gas, minerals, and phosphate. The evidence of title submitted as part of the Application indicates that a “Kanter” entity first became possessed of rights in Section 23 in 1975. By virtue of a series of transactions extending into 1996, Kanter currently holds fee title to all surface rights, and title to all mineral rights, including rights to oil, gas, and other mineral interests, within Section 23 Township 51 South, Range 38 East. The Well Site specified in the Application is within Section 23, Township 51 South, Range 38 East. Kanter’s property is encumbered by a Flowage Easement that was granted to the Central and Southern Flood Control District in 1950, and is presently held by the South Florida Water Management District (SFWMD). The Flowage Easement guarantees Kanter access to the entire easement property “for the exploration or drilling for, or the developing, producing, storing or removing of oil, gas or other . . . in accordance with sound engineering principles.” Kanter has the legal property right to locate and drill the well, and the exploratory well is consistent with Kanter’s ownership interest. The Well Site is located in a 160-acre (quarter section) portion of the 640-acre tract described above, and is within a “routine drilling unit,” which is the block of land surrounding and assigned to a well. Fla. Admin. Code R. 62C-25.002(20) and 62C-25.002(40). The Kanter property, including the Well Site, is in the historic Everglades. Before efforts to drain portions of the Everglades for development and agricultural uses, water flowed naturally in a southerly direction through land dominated by sawgrass and scattered tree islands. The tree islands were generally shaped by the direction of the water flow. Beginning as early as the late 1800s, dramatically increasing after the hurricane of 1947, and extending well into the 1960s, canals, levees, dikes, and channels were constructed to drain, impound, or reroute the historic flows. Those efforts have led to the vast system of water control structures and features that presently exist in south Florida. The Well Site, and the Kanter property as a whole, is located in Water Conservation Area (WCA)-3. WCA-3 is located in western Broward County and northwestern Miami-Dade County. It was constructed as part of the Central and Southern Florida Flood Control project authorized by Congress in 1948, and was created primarily for flood control and water supply. In the early 1960s, two levees, L67-A and L67-C, were constructed on a line running in a northeast to southwest direction. When constructed, the levees separated WCA-3 into WCA-3A to the west and WCA-3B to the southeast. The Well Site is in WCA-3A.3/ The area between L67-A and L67-C, along with a levee along the Miami Canal, is known as the “Pocket.” There is no water control in the Pocket. Although there is a structure at the south end of the Pocket, it is in disrepair, is rarely -- if ever -- operated, and may, in fact, be inoperable. The Well Site is located within the Pocket, on the southern side of L67-A. L67-A and L67-C, and their associated internal and external canals, have dramatically disrupted sheet flow, altered hydrology, and degraded the natural habitat in the Pocket. Water inputs and outputs are entirely driven by rainfall into the Pocket, and evaporation and transpiration from the Pocket. From a hydrologic perspective, the Pocket is entirely isolated from WCA-3A and WCA-3B. The Pocket is impacted by invasive species, which have overrun the native species endemic to the area and transformed the area into a monoculture of cattails. Vegetation that grows in the Pocket dies in the Pocket. Therefore, there is a layer of decomposing vegetative muck, ooze, and sediment from knee deep to waist deep in the Pocket, which is atypical of a functioning Everglades system. L67-A and L67-C, and their associated internal and external canals, impede wildlife movement, interfering with or preventing life functions of many native wildlife species. The proposed Well Site, and the surrounding Kanter property, is in a rural area where future residential or business development is highly unlikely. The property is removed from urban and industrial areas and is not known to have been used for agriculture. The Department has previously permitted oil wells within the greater Everglades, in areas of a more pristine environmental nature, character, and location than the Pocket. The Raccoon Point wellfield is located 24 miles west of the Proposed Project Site within the Big Cypress National Preserve. It is within a more natural system and has not undergone significant hydrologic changes such as the construction of canals, levees, ditches, and dikes and, therefore, continues to experience a normal hydrologic flow. Mr. Gottfried testified that at Raccoon Point, “you can see the vegetation is maintaining itself because the fact that we don’t have levees, ditches canals, dikes, impacting the area. So you have a diversity of plant life. You have tree islands still. You have the normal flow going down.” The greater weight of evidence shows that the Kanter Well Site is far less ecologically sensitive than property at Raccoon Point on which the Department has previously permitted both exploration and production wells. The Biscayne Aquifer The Biscayne Aquifer exists in almost all of Miami- Dade County, most of Broward County and a portion of the southern end of Palm Beach County. It is thickest along the coast, and thinnest and shallowest on the west side of those counties. The western limit of the Biscayne Aquifer lies beneath the Well Site. The Biscayne Aquifer is a sole-source aquifer and primary drinking water source for southeast Florida. A network of drainage canals, including the L-30, L-31, L-33, and Miami Canals, lie to the east of WCA-3B, and east of the Well Site. Those canals penetrate into the substratum and form a hydrologic buffer for wellfields east of the Well Site, including that operated by Miramar, and isolate the portions of the Biscayne Aquifer near public wellfields from potential impacts originating from areas to their west. The canals provide a “much more hydraulically available source” of water for public wellfields than water from western zones of the Biscayne Aquifer, and in that way create a buffer between areas on either side of the canals. The Pocket is not a significant recharge zone for the Biscayne Aquifer. There is a confining unit comprised of organic soils, muck, and Lake Flint Marl separating the Pocket and the Well Site from the Fort Thompson formation of the Biscayne Aquifer. There is a layer of at least five feet of confining muck under the L67-A levee in the area of the Well Site, a layer that is thicker in the Pocket. The Well Site is not within any 30-day or 120-day protection zones in place for local water supply wells. The fact that the proposed well will penetrate the Biscayne Aquifer does not create a significant risk of contamination of the Biscayne Aquifer. The drilling itself is no different than that done for municipal disposal wells that penetrate through the aquifer much closer to areas of water production than is the Well Site. The extensive casing and cementing program to be undertaken by Kanter provides greater protection for the well, and thus for the aquifer, than is required by the Department’s rules. A question as to the “possibility” that oil could get into the groundwater was answered truthfully in the affirmative “in the definition of possible.” However, given the nature of the aquifer at the Well Site, the hydrological separation of the Well Site and well from the Biscayne Aquifer, both due to the on-site confining layer and to the intervening canals, the degree of casing and cementing, and the full containment provided by the pad, the testimony of Mr. Howard that “it would be very difficult to put even a fairly small amount of risk to the likelihood that oil leaking at that site might possibly actually end up in a well at Miramar” is accepted. The Sunniland Formation The Sunniland Formation is a geologic formation which exists in a region of South Florida known as the South Florida Basin. It is characterized by alternating series of hydrocarbon-containing source rock, dolomite, and limestone of varying porosity and permeability and evaporite anhydrite or mudstone seal deposits. It has Upper Sunniland and Lower Sunniland strata, and generally exists at a depth of up to 12,000 feet below land surface (bls) in the area of the Well Site. Underlying the Sunniland Formation is a formation generally referred to as the “basement.” The basement exists at a depth of 17,000-18,000 feet bls. Oil is produced from organic rich carbonate units within the Lower Cretaceous Sunniland Formation, also known as the Dark Shale Unit of the Sunniland Formation. The oil produced in the Sunniland Formation is generally a product of prehistoric deposits of algae. Over millennia, and under the right conditions of time and pressure, organic material is converted to hydrocarbon oil. The preponderance of the evidence demonstrates that active generating source rock capable of producing hydrocarbons exists in the Sunniland Formation beneath the Kanter property. The preponderance of the evidence also indicates that the oil generated in the Sunniland Formation is at a sufficient depth that it is preserved from microbial degradation, which generally occurs in shallower reservoirs. The Upper Sunniland Formation was formed in the Cretaceous geological period, between 106 and 100 million years ago. Over that period, sea levels rose and fell dramatically, allowing colonies of rudists (a now extinct reef-building clam) and oysters to repeatedly form and die off. Over time, the colonies formed bioherms, which are reef-like buildups of shell elevated off of the base of the sea floor. Over millennia, the bioherms were exposed to conditions, including wave action and exposure to air and rainwater, that enhanced the porosity of the component rudist and oyster shell. Those “patch reefs” were subsequently buried by other materials that formed an impermeable layer over the porous rudist and oyster mounds, and allowed those mounds to become “traps” for oil migrating up from lower layers. A trap is a geological feature that consists of a porous layer overlain by an impervious layer of rock that forms a seal. A trap was described, simplistically, as an upside down bowl. Oil, being lighter than water, floats. As oil is generated in source rock, it migrates up through subterranean water until it encounters a trapping formation with the ability to create a reservoir, and with an impervious layer above the porous layer to seal the trap and prevent further migration, thus allowing the “bowl” to fill. The reservoir is the layer or structure with sufficient porosity and permeability to allow oil to accumulate with its pores. The thickness of the layer determines the volume of oil that the reservoir is capable of retaining. Although rudist mounds are generally considered to be more favorable as traps due to typically higher porosity, oyster mound traps are correlated to producing wells in the Sunniland Formation and are primary producers in the Felda field and the Seminole field. The Lower Sunniland Formation is a fractured carbonate stratum, described by Mr. Aldrich as a rubble zone. It is not a traditional structural trap. Rather, it consists of fractured and crumbling rock thought to be created by basement shear zones or deep-seated fault zones. It has the same source rock as the Upper Sunniland. There is little information on traps in the Lower Sunniland, though there are two fields that produce from that formation. A “play” is a group of prospects or potential prospects that have the same source rock, the same reservoir rock, the same trap style, and the same seal rock to hold in the hydrocarbons. The producing oil fields in the Sunniland Formation, including Raccoon Point, Sunniland, Felda, West Felda, and Lake Trafford are part of a common play known as the Sunniland Trend. The Sunniland Trend is an area of limestone of greater porosity within the Sunniland Formation, and provides a reasonable extrapolation of areas that may be conducive to oil traps. The Sunniland Trend extends generally from Manatee County on the west coast of Florida southeasterly into Broward County and the northwestern portion of Miami-Dade County on the east coast of Florida. The trend corresponds to the ancient Cretaceous shoreline where rudist and oyster bioherms formed as described above. In 2003, the “Mitchell-Tapping” report, named after the husband and wife team, identified two separate trends within the Sunniland Trend, the rudist-dominant West Felda Trend, and the more oyster-based Felda Trend. Both are oil-producing strata. The Felda Trend is more applicable to the Kanter property. Throughout the Sunniland Trend, hydrocarbon reservoirs exist within brown dolomite deposits and rudist and oyster mounds. Dolomite is a porous limestone, and is the reservoir rock found at the productive Raccoon Point oil wellfield. The evidence indicates that a brown dolomite layer of approximately 20 feet underlies the Well Site, and extends in all directions from the Well Site. A preponderance of the evidence indicates that the Kanter property, including the Well Site, is within the Sunniland Trend and its Felda Trend subset.4/ Oil produced from wells in the Sunniland Trend is typically thick, and is not under pressure. The oil does not rise through a bore hole to the surface, but must be pumped. The Raccoon Point Field, which is the closest productive and producing wellfield to the proposed Well Site, is located approximately 24 miles to the west of the Well Site, within the Sunniland Trend. Raccoon Point contains numerous well sites, of which four or five are currently producing, and has produced in the range of 20 million barrels of oil since it began operation in the late 1970s. Cumulative production of oil from proven fields in the South Florida Basin, including fields in the Sunniland Formation, is estimated to be in excess of 160 million barrels. Estimates from the U.S. Geological Service (USGS) indicate that 25 new fields capable of producing five million barrels of oil each are expected to be found within the Lower Cretaceous Shoal Reef Oil Assessment Unit, which extends into the Kanter property. Estimates of the potential reserves reach as high as an additional 200 million barrels of oil. The Dollar Bay Formation Another formation that has potential for oil production is the Lower Cretaceous Dollar Bay Formation, also in the South Florida Basin. The Dollar Bay Formation exists beneath the Kanter property at a shallower depth than the Sunniland Formation, generally at a depth of 10,000 feet in the vicinity of the Well Site. Most of the Dollar Bay prospects are on the east side of the South Florida Basin. Most of the wells in the South Florida Basin are on the west side. Thus, there has not been much in the way of exploration in the Dollar Bay Formation, so there is a lack of data on traps. Dollar Bay has been identified as a known oil-bearing play by the USGS. It is a self-source play, so the source comes from the Dollar Bay Formation itself. Dollar Bay exists both as potential and mature rock. It has known areas of very high total organic content (TOC) source rock; logged reservoir in the formation; and seal rock. There have been three oil finds in the Dollar Bay formation, with at least one commercial production well. Kanter will have to drill through the Dollar Bay Formation to get to the Upper Sunniland formation, thus allowing for the collection of information as to the production potential of the prospect. Although Dollar Bay is not generally the main “target” of the Permit, its potential is not zero. Thus, consideration of the Dollar Bay Formation as a factor in the calculation of risk/success that goes into the decision to drill an exploratory well is appropriate. Initial Exploratory Activities In 1989, Shell Western E&P, Inc. (Shell), conducted extensive seismic exploration in south Florida. Among the areas subject to seismic mapping were two lines -- one line of 36,000 feet mapped along the L67-A levee, directly alongside the Well Site, and the other of approximately 10 miles in length along the Miami Canal levee. The lines intersect on the Kanter property just north of the Well Site. The proposed exploration well is proposed to extend less than 12,000 feet deep. The seismic mapping performed by Shell was capable of producing useful data to that depth. The seismic methodology utilized by Shell produced data with a high degree of vertical and spatial resolution. Given its quality, the Shell data is very reliable. Shell did not use the seismic data generated in the 1980s, and ultimately abandoned activity in the area in favor of larger prospects, leaving the smaller fields typical of south Florida for smaller independent oil companies. The Shell seismic data was purchased by Seismic Exchange, a data brokerage company. In 2014, Kanter purchased the seismic data from Seismic Exchange for the lines that ran through its property. With the purchase, Kanter received the original field tapes, the support data, including surveyors’ notes and observer sheets which describe how the data was acquired, and the recorded data. As a result of advances in computer analysis since the data was collected, the seismic data can be more easily and accurately evaluated. It is not unusual for companies to make decisions on whether to proceed with exploration wells with two lines of seismic data. Mr. Lakin reviewed the data, and concluded that it showed a very promising area in the vicinity of the L67-A levee that was, in his opinion, sufficient to continue with permitting an exploratory oil well. Mr. Lakin described the seismic information in support of the Application as “excellent data,” an assessment that is well-supported and accepted. Mr. Pollister reviewed the two lines of seismic data and opined that the information supports a conclusion that the site is a “great prospect” for producing oil in such quantities as to warrant the exploration and extraction of such products on a commercially profitable basis. Seismic Data Analysis The seismic lines purchased by Kanter consist of line 970, which runs southwest to northeast along the L67-A levee, and a portion of line 998, which runs from northwest to southeast along the Miami Canal levee. The lines intersect at the intersection of the two levees. The data depicts, among others, the seismic reflection from the strata of the Sunniland Trend, and the seismic reflection from the basement. The depiction of the Sunniland Trend shows a discernable rise in the level of the strata, underlain by a corresponding rise in the basement strata. This rise is known as an anticline. An anticline is a location along a geologic strata at which there is an upheaval that tends to form one of the simplest oil traps that one can find using seismic data. In the South Florida Basin, anticlines are typically associated with mounded bioherms. A “closed structure” is an anticline, or structural high, with a syncline, or dip, in every direction. A closed structure, though preferable, is not required in order for there to be an effective trap. Most of the Sunniland oil fields do not have complete closure. They are, instead, stratigraphic traps, in which the formation continues to dip up and does not “roll over.” Where the rock type changes from nonporous to porous and back to nonporous, oil can become trapped in the porous portion of the interval even without “closure.” Thus, even if the “bowl” is tilted, it can still act as a trap. Complete closure is not necessary in much of the Sunniland Trend given the presence of an effective anhydrite layer to form an effective seal.5/ The seismic data of the Kanter property depicts an anticline in the Sunniland Formation that is centered beneath the Well Site at a depth in the range of 12,000 feet bls. Coming off of the anticline is a discernable syncline, or dip in the underlying rock. Applying the analogies used by various witnesses, the anticline would represent the top of the inverted bowl, and the syncline would represent the lip of the bowl. The evidence of the syncline appears in both seismic lines. The Shell seismic data also shows an anhydrite layer above the Sunniland Formation anticline. The same anticline exists at the basement level at a depth of 17,000 to 18,000 feet bls. The existence of the Sunniland formation anticline supported by the basement anticline, along with a thinning of the interval between those formations at the center point, provides support for the data reliably depicting the existence of a valid anticline. A basement-supported anticline is a key indicator of an oil trap, and is a feature commonly relied upon by geophysicists as being indicative of a structure that is favorable for oil production. The seismic data shows approximately 65 feet of total relief from the bottom to the top of the anticline structure, with 50 feet being closed on the back side. The 50 feet of closed anticline appears to extend over approximately 900 acres. There is evidence of other anticlines as one moves northeast along line 970. However, that data is not as strong as that for the structure beneath the Well Site. Though it would constitute a “lead,” that more incomplete data would generally not itself support a current recommendation to drill and, in any event, those other areas are not the subject of the permit at issue. The anticline beneath the well site is a “prospect,” which is an area with geological characteristics that are reasonably predicted to be commercially profitable. In the opinion of Mr. Lakin, the prospect at the location of the proposed Well Site has “everything that I would want to have to recommend drilling the well,” without a need for additional seismic data. His opinion is supported by a preponderance of the evidence, and is credited. Confirmation of the geology and thickness of the reservoir is the purpose of the exploratory well, with the expectation that well logs will provide such confirmation. Risk Analysis Beginning in the 1970s, the oil and gas industry began to develop a business technique for assessing the risk, i.e., the chance of failure, to apply to decisions being made on drilling exploration wells. Since the seminal work by Bob McGill, a systematic science has developed. In 1992, a manual was published with works from several authors. The 1992 manual included a methodology developed by Rose & Associates for assessing risk on prospects. The original author, Pete Rose,6/ is one of the foremost authorities on exploration risk. The Rose assessment method is a very strong mathematical methodology to fairly evaluate a prospect. The Rose method takes aspects that could contribute to finding an oil prospect, evaluates each element, and places it in its perspective. The Rose prospect analysis has been refined over the years, and is generally accepted as an industry standard. The 1992 manual also included a methodology for assessing both plays and prospects developed by David White. The following year, Mr. White published a separate manual on play and prospect analysis. The play and prospect analysis is similar to the Rose method in that both apply mathematical formulas to factors shown to be indicative of the presence of oil. Play and prospect analysis has been applied by much of the oil and gas industry, is used by the USGS in combining play and prospect analysis, and is being incorporated by Rose & Associates in its classes. The evidence is convincing that the White play and prospect analysis taught by Mr. Aldrich is a reasonable and accepted methodology capable of assessing the risk inherent in exploratory drilling. Risk analysis for plays and prospects consists of four primary factors: the trap; the reservoir; the source; and preservation and recovery. Each of the four factors has three separate characteristics. Numeric scores are assigned to each of the factors based on seismic data; published maps and materials; well data, subsurface data, and evidence from other plays and prospects; and other available information. Chance of success is calculated based on the quantity and quality of the data supporting the various factors to determine the likelihood that the prospect will produce flowable hydrocarbons. The analysis and scoring performed by Mr. Aldrich is found to be a reasonable and factually supported assessment of the risk associated with each of the prospects that exist beneath the proposed Well Site and that are the subject of the Application.7/ However, Mr. Aldrich included in his calculation an assessment of the Lower Sunniland Formation. The proposed well is to terminate at a depth of 11,800 feet bls, which is within the Upper Sunniland, but above the Lower Sunniland. Thus, although the Lower Sunniland would share the same source rock, the exploration well will not provide confirmation of the presence of oil. Therefore, it is more appropriate to perform the mathematical calculation to determine the likelihood of success without consideration of the Lower Sunniland prospect. To summarize Mr. Aldrich’s calculation, he assigned a four-percent chance of success at the Well Site for the Dollar Bay prospect. The assignment of the numeric scores for the Dollar Bay factors was reasonable and supported by the evidence. Mr. Aldrich assigned a 20-percent chance of success at the Well Site for the Upper Sunniland play. The assignment of the numeric scores for the Upper Sunniland factors was reasonable and supported by the evidence. In order to calculate the overall chance of success for the proposed Kanter exploratory well, the assessment method requires consideration of the “flip side” of the calculated chances of success, i.e., the chance of failure for each of the prospects. A four-percent chance of success for Dollar Bay means there is a 96-percent (0.96) chance of failure, i.e., that a commercial zone will not be discovered; and with a 20-percent chance of success for the Upper Sunniland, there is an 80-percent (0.80) chance of failure. Multiplying those factors, i.e., .96 x .80, results in a product of .77, or 77 percent, which is the chance that the well will be completely dry in all three zones. Thus, under the industry-accepted means of risk assessment, the 77-percent chance of failure means that there is a 23-percent chance of success, i.e., that at least one zone will be productive. A 23-percent chance that an exploratory well will be productive, though lower than the figure calculated by Mr. Aldrich,8/ is, in the field of oil exploration and production, a very high chance of success, well above the seven-percent average for prospecting wells previously permitted by the Department (as testified to by Mr. Linero) and exceeding the 10- to 15-percent chance of success that most large oil companies are looking for in order to proceed with an exploratory well drilling project (as testified to by Mr. Preston). Thus, the data for the Kanter Well Site demonstrates that there is a strong indication of a likelihood of the presence of oil at the Well Site. Commercial Profitability Commercial profitability takes into account all of the costs involved in a project, including transportation and development costs. Mr. Aldrich testified that the Kanter project would be commercially self-supporting if it produced 100,000 barrels at $50.00 per barrel. His testimony was unrebutted, and is accepted. The evidence in this case supports a finding that reserves could range from an optimistic estimate of 3 to 10 million barrels, to a very (perhaps unreasonably) conservative estimate of 200 barrels per acre over 900 acres, or 180,000 barrels. In either event, the preponderance of the evidence adduced at the hearing establishes an indicated likelihood of the presence of oil in such quantities as to warrant its exploration and extraction on a commercially profitable basis.9/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection enter a final order: Approving the Application for Oil and Gas Drilling Permit No. OG 1366 with the conditions agreed upon and stipulated to by Petitioner, including a condition requiring that if water is to be transported on-site, it will add additional tanks for the purpose of meeting water needs that would arise during the drilling process, and a condition prohibiting fracking; and Approving the application for Environmental Resource Permit No. 06-0336409-001. DONE AND ENTERED this 10th day of October, 2017, 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 10th day of October, 2017.
The Issue The issues in this case concern the question of whether implementation of the consent agreement threatens the substantial interests of Petitioners in the surface waters and ground water resources at and around Seaboard's used oil facility located off Route 314A in Oklawaha, Marion County, Florida. Petitioner, State of Florida, Department of Environmental Regulation, gave public notice of its intent to implement a consent agreement with Respondent. The other Petitioners opposed the agreement asserting that the waters of the State were threatened by the agreement and requested a final hearing.
Findings Of Fact On March 7, 1988, Seaboard's used oil facility located off Route 314A in Oklawaha, Marion County, Florida, on Little Lake Bryant was inspected by a DER representative. At the time of the inspection pools of used oil were observed on the ground. Four 4,000 gallon above-ground tanks were being used to store used oil. Additionally, several old tank-truck bodies were used to store petroleum produces. These tanks did not have an impervious containment area to prevent used oil from spilling directly onto the ground and to prevent free runoff of precipitation. An underground tank (made from a septic tank) was being used to temporarily store water contaminated with used oil, which was gravity drained from the bottom of the used oil transport trucks. No impervious containment existed around the opening of the underground tank to prevent any spillage during transfer from directly reaching the ground. The underground tank was plugged and has no connection to a drain field. This tank is located in a flood plain. A 2,000 gallon above-ground tank and a 3,000 gallon above-ground tank were used to store water contaminated with used oil from the pumped underground tank. DER, in response to the March 7, 1988 inspection and subsequent site visits, negotiated a consent agreement with Seaboard. The consent agreement was executed on March 30, 1989 by Seaboard and filed with DER's Clerk on April 12, 1989. A copy of the consent agreement may be found as DER's Exhibit 1 admitted into evidence. The consent agreement specifies corrective actions to be taken by Seaboard, subject to DER approval, in order to address the problems identified at Seaboard's used oil facility. Paragraph 10 of the consent agreement addresses protection against spills directly reaching the ground. Impervious containment is required by the agreement for all above-ground used oil storage tanks but not the old truck bodies. Impervious containment is required for product transfer areas where transport trucks, pumps and hoses would operate, but not in the vicinity of the old truck bodies. A concrete containment dike surrounding the above-ground tanks is required to control drainage of rain, snow, sleet, fog, etc., but not around the truck bodies. (DER's Exhibit 1). The concrete pads already poured by Respondent are not impervious and the sides of these containment areas are not high enough to contain a major tank failure. Paragraph 11 of the consent agreement addresses operation of the underground tank in order to prevent leaks. Seaboard is required to provide protection against spillage during product transfer between transport trucks and the underground tank and provide for cleanup of spilled material. Nothing addresses the problems of the tank lying in a flood plain. (DER's Exhibit 1). Paragraph 12 of the consent agreement requires Seaboard to implement "Preliminary Contamination Assessment Actions". These actions provide the framework for determining if the problems identified at Seaboard's used oil facility have resulted in contamination of the soil, surface waters and ground water. The actions required are subject to prior DER approval. The actions represent standard conduct in these and similar types of cases. (DER's Exhibit 1). If the surveys and tests required by the agreement indicate soil, sediment, surface water or ground water contamination, DER can pursue any or all of the following: (1) institute an administrative proceeding requiring further assessment and cleanup; (2) institute a civil action in circuit court; or (3) perform the necessary corrective actions at the facility and recover the costs of such actions from Respondent, Seaboard. (DER's Exhibit 1). Notice was given of DER's proposed consent agreement with Seaboard by publication in the Ocala Star Banner of August 10, 1989. The Petitioners live around Little Lake Bryant, Oklawaha, Florida, where Seaboard's used oil facility is located. The Petitioners timely filed the petitions leading to the present hearing. The Petitioners are Helen V. Pierce, Mr. and Mrs. Marvin Pierce, Mr. and Mrs. Maurice Warner, Mr. and Mrs. Robert J. Painter, Sr., Mr. and Mrs. William E. Hartman, Mr. and Mrs. Bruce Hallman, Mr. Robert J. Painter, Jr., Mr. and Mrs. Elmer Weinheimer, Mr. and Mrs. Henry Allan Gwin, Mr. and Mrs. Edwin Jones, and Mr. and Mrs. Daryl N. Driscoll. Mr. and Mrs. Elmer Weinheimer and Mr. and Mrs. Marvin Pierce, Petitioners in this case, did not attend the hearing. The other Petitioners attended the hearing. Introduction of waste oil into the waters of Little Lake Bryant would endanger the waters of the lake around which all of the Petitioners live. They use this lake for recreational purposes.
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 the DER enter a Final Order approving a consent agreement incorporating the following four recommendations: installation of impervious areas with high enough walls to retard a spill under all tanks; removal of the underground tank from the flood plain; installation of monitoring wells in sufficient quantity in new and old areas; and frequent inspection. DONE AND ORDERED this 24th day of January, 1990, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 1990. COPIES FURNISHED: Mr. Dale H. Twachtmann Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson, Esq. General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Otis Ted Holly Route 4, Box 851 Silver Springs, FL 32688 Francine M. Ffolkes, Esq. Assistant General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Elbert Gray Route 1, Box 1293A Oklawaha, FL 32679 =================================================================
