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 to be determined in this case is whether Sabal Trail is entitled to the proposed Environmental Resource Permit and Easement to Use Sovereign Submerged Lands to construct a natural gas pipeline.
Findings Of Fact The Parties Petitioner, WWALS, is a Georgia not-for-profit corporation registered with the Florida Department of State as a Foreign Not For Profit Corporation. Its mailing address is in Hahira, Georgia. WWALS’ mission is to advocate for conservation and stewardship of the Withlacoochee, Willacoochee, Alapaha, Little, and Upper Suwannee River watersheds in South Georgia and North Florida. WWALS stated in its petition that it has a total of 85 members, 36 of whom reside in Florida. The total number of WWALS members was not established at the final hearing. If members that joined WWALS after it filed its petition for hearing are included, WWALS has about 40 members living in Hamilton County and Suwannee County. Sabal Trail is a Delaware limited liability company that is registered to do business in the State of Florida. It is the applicant for the authorizations that are challenged by Petitioner. The Department is the state agency charged with administering the Environmental Resource Permitting program under chapter 373, Florida Statutes, and Florida Administrative Code Chapters 62-4 and 62-330. The Department is also the state agency authorized by chapter 253, Florida Statutes, and Florida Administrative Code Chapter 18-21, to review and authorize certain uses of state- owned submerged lands. General Project Description Sabal Trail proposes to construct an interstate natural gas pipeline. The primary purpose of the pipeline is to support electric power generation in Florida. The pipeline would start in the vicinity of a Transcontinental Gas Pipeline Company station in Tallapoosa County in Alabama. The portion of the pipeline in Florida would cross twelve Florida counties, entering the state in Hamilton County and terminating in Osceola County. The pipeline would include 232.75 miles of 36-inch diameter pipe for the Mainline Route, 13.1 miles of 36–inch diameter pipe for the Hunter’s Creek Line, and 21.5 miles of 24- inch pipe for the Citrus County Line. The pipe used would be made of high-strength ductile carbon steel. The project would include construction and operation of three compressor stations and three meter and regulation stations in Florida. There would also be access roads, pig launcher and receiver stations, mainline valves, and pipe storage/work areas. Most of the pipeline would be installed using a conventional “cut and cover” technique, which means a trench is excavated, sections of pipe are placed in the trench and connected, and the trench is backfilled with soil excavated from the trench. However, waterbodies along the route, including the Suwannee River and Santa Fe River, would be crossed using Horizontal Directional Drilling (“HDD”). The HDD method involves boring a pilot hole beneath the waterbody and then enlarging the hole with one or more passes of a reamer until the hole is large enough to pull a prefabricated pipe segment through the hole. The pipeline would be installed more than 40 feet beneath the Suwannee River and Santa Fe River. During HDD operations, drilling fluid or “mud” is used to lubricate the drill head, and remove cuttings from the hole. Drilling mud is a non-toxic, naturally occurring, bentonite clay, which is commonly used for drilling water wells. The pipeline will require a permanent 50-foot right-of- way. Because the construction would require digging trenches through wetlands, drilling under riverbeds, and construction of stormwater management systems for the various stations, an environmental resource permit from the Department must be obtained for the work. Because some construction is over state- owned submerged lands, authorization from the Trustees of the Internal Improvement Trust Fund is also required. Route Selection The pipeline route was selected based on environmental and cultural resource factors and co-location opportunities with existing utility rights-of-way. The proposed route was modified many times to reduce environmental impacts and respond to landowner requests. The pipeline runs parallel to two existing natural gas pipelines that cross the Santa Fe River. The closest major spring to the pipeline route would be Madison Blue Spring, 1.7 miles away. The route is closer to some smaller springs, but it would not cross near spring vents or areas of concentrated spring flow. The pipeline would cross above the Falmouth Cave system. However, the pipeline would be only four-to-six feet beneath the land surface. The cave system is more than 100 feet below ground. Sabal Trail reduced or eliminated impacts to wetlands and waterbodies along the pipeline route, but the project would result in unavoidable temporary and permanent losses of portions of wetlands along the route. The functional loss of wetland functions, as calculated under the Uniform Mitigation Assessment Method (“UMAM”), would be offset by Sabal Trail’s purchase of credits from approved wetland mitigation banks. Petitioner’s Objections The primary concern of WWALS and its members is the possibility of environmental impacts arising from the construction of the pipeline in karst terrain. Karst terrain, which is limestone undergoing dissolution and characterized by the formation in the limestone of holes, cracks, fissures, conduits, and sinkholes, is common in North Florida and throughout the State. Although fragile in particular locations, karst terrain is able to support large linear facilities in North Florida such as Interstate 10, Interstate 75, and railroads, which bear loads of many tons without collapses occurring in the underlying limestone. Sabal Trail conducted geophysical tests, evaluated the potential for sinkhole formation, developed drilling best management practices, and prepared a karst mitigation plan to address potential adverse circumstances that might arise during construction of the pipeline. The pipeline design specifications provide reasonable assurance that the formation of a sinkhole along the path of the pipeline would not cause it to break. It is in the interests of Sabal Trail to build and operate the pipeline so that breaks or disruptions of service do not occur. There are existing natural gas pipelines that were constructed under the Suwannee River and Santa Fe River. A geologist with the Florida Geological Survey testified that he was unaware of any adverse impacts that have been associated with these other pipelines. WWALS presented no evidence of adverse impacts that have been caused by similar pipelines in similar areas. Petitioner’s members are afraid the pipeline will cause adverse impacts because of its construction in karst terrain, but with the exception of four WWALS members whose properties would be crossed by the pipeline, the concerns expressed by members about how they would be affected were vague and speculative. Not all of the potential pipeline impacts described by WWALS members were vague or speculative, but the members’ injuries were vague and speculative. For example, it was not adequately explained how a sinkhole, if one were to occur along the route of the pipeline, would affect them. WWALS expressed concerns about water quality, but the use of drilling mud and grout for the HDD operations is unlikely to affect the residential water wells of any member or non- member. Nor would it affect the water quality of the rivers under which the pipeline is installed, because the amount of drilling mud and grout is so small in relation to groundwater volumes. WWALS expressed general concerns about fish and wildlife impacts, but no member identified any particular wetland impact caused by construction of the pipeline that would directly affect him or her and Petitioner presented no competent evidence to refute the UMAM assessment or the reasonableness of the proposed mitigation. No competent evidence was presented about the possibility that HDD drilling under the rivers could result in adverse impacts to fish and wildlife. Some WWALS members testified they use and enjoy the rivers and surrounding area, but the concerns about adverse impacts to their use and enjoyment were speculative, being based on the proposition that a sinkhole or other disruption of the limestone will be caused by the construction of the pipeline and it will cause a change in the rivers or land to a degree that their use and enjoyment of the rivers or land will be materially diminished. Petitioner did not establish the connection between pipeline impacts and interference with members’ use of area waters. One member testified he has an organic farm and believes it would be adversely affected by air pollution from a proposed compressor station for the pipeline, but there is a separate permit associated with the air quality impacts of the pipeline. Air quality is not a cognizable issue in this proceeding. A few members believe there could be impacts that would adversely affect their business interests, which are not interests that this proceeding was designed to protect. Although a substantial number of WWALS members have substantial interests in the use and enjoyment of the waters and environment of Hamilton County and Suwannee County, a showing of potential injury to those interests was only established in the record for four WWALS members--the four who own land that the pipeline will cross. Four members is not a substantial number when compared to the total number of WWALS members living in Hamilton County and Suwannee County, which is about forty. Public Interest For projects located in, on, or over wetlands or other surface waters, an applicant must provide reasonable assurance that the project will not be contrary to the public interest, or if such activities significantly degrade or are within an Outstanding Florida Water, are clearly in the public interest, as determined by balancing the criteria set forth in rule 62-330.302. Rule 62-330.302(1)(a) lists seven public interest factors to be considered and balanced: 1 Whether the activity will adversely affect the public health, safety, or welfare or the property of others; Whether the activity will adversely affect the conservation of fish and wildlife, including endangered or threatened species, or their habitats; Whether the activity will adversely affect navigation or the flow of water or cause harmful erosion or shoaling; Whether the activity will adversely affect the fishing or recreational values or marine productivity in the vicinity of the activity; Whether the activity will be of a temporary or permanent nature; Whether the activity will adversely affect or will enhance significant historical and archaeological resources under the provisions of s. 267.061; and The current condition and relative value of functions being performed by areas affected by the proposed activity. Petitioner presented no competent evidence to refute the evidence presented by Sabal Trail and the Department that the pipeline project would not result in adverse impacts on public health, safety, or welfare. Beyond general, undisputed evidence about the characteristics of karst geology, no competent evidence was presented by Petitioner to show that a karst-related impact could occur that would affect its members. Petitioner presented no competent evidence to refute the evidence presented by Sabal Trail and the Department that the pipeline would not cause adverse impacts to fish and wildlife. Petitioner presented no competent evidence to refute the evidence presented by Sabal Trail and the Department that the project would not cause adverse impacts to navigation or the flow of water or cause harmful erosion or shoaling. Petitioner presented no competent evidence to refute the evidence presented by Sabal Trail and the Department that the project would not cause adverse impacts to fishing or recreational values or marine productivity. It is undisputed that some of the pipeline impacts and the pipeline, itself, will be of a permanent nature. Petitioner presented no competent evidence to refute the evidence presented by Sabal Trail and the Department that the proposed pipeline would not adversely affect significant historical and archaeological resources. Petitioner presented no competent evidence to refute the evidence presented by Sabal Trail and the Department that the proposed pipeline would not adversely affect the current condition and relative value of environmental functions being performed in the area that would not be fully mitigated. Considering the seven public interest factors listed above, the proposed pipeline is not contrary to the public interest. The Suwannee River and Santa Fe River have been designated as Outstanding Florida Waters. Any activities that would affect them must be shown to be clearly in the public interest. As discussed in the Conclusions of Law, demonstrating that a project is clearly in the public interest requires greater assurance that all permitting requirements will be complied with. Sabal Trail showed clearly that it will comply with all permitting criteria. Rule 62-4.242 prohibits the degradation of water quality in an Outstanding Florida Water. Sabal Trail and the Department showed the construction and operation of the pipeline would not degrade the water quality of the Suwannee River or Santa Fe River. Rule 18-21.004(1)(a) requires that activities on sovereignty submerged lands not be contrary to the public interest. Rule 18-21.003(51) defines public interest in this context as: Demonstrable environmental, social, and economic benefits which would accrue to the public at large as a result of a proposed action, and which would clearly exceed all demonstrable environmental, social, and economic cost of the proposed action. Therefore, to obtain authorization to use sovereignty submerged lands easement, an applicant must create a net public benefit. Sabal Trail and the Department demonstrated the project creates a net public benefit because it would not have adverse environmental impacts that would not be fully mitigated and the project addresses a need determined by the Public Service Commission for additional natural gas transportation capacity into Florida, enhancement of natural gas supply diversity and reliability, and increased competition for natural gas transportation services. WWALS contends the proposed project would conflict with rule 18-21.004(2)(a), which requires that all sovereignty submerged lands be primarily managed to maintain “essentially natural conditions, propagation of fish and wildlife, and traditional recreational uses such as fishing, boating, and swimming.” However, WWALS presented no competent evidence to show that any sovereignty submerged lands would lose their essential natural conditions, that fish and wildlife propagation would be diminished, or that traditional recreational uses would be interfered with. The proposed project complies with the requirement of rule 18-21.004(2).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection issue a final order that approves issuance of Environmental Resource Permit No. 0328333-001 and grants an easement to use sovereign submerged lands to Sabal Trail Transmission, LLC, for the Sabal Trail Natural Gas Pipeline. DONE AND ENTERED this 11th day of December, 2015, in Tallahassee, Leon County, Florida. S BRAM D. E. CANTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of December, 2015. COPIES FURNISHED: Richard S. Brightman, Esquire Timothy M. Riley, Esquire H. French Brown, IV, Esquire Hopping, Green and Sams Post Office Box 6526 Tallahassee, Florida 32314 (eServed) Gus McLachlan Sabal Trail Transmission, LLC Suite 300 400 Colonial Center Parkway Lake Mary, Florida 32746 John S. Quarterman, President WWALS Watershed Coalition, Inc. Post Office Box 88 Hahira, Georgia 31632 (eServed) Jack Chisolm, Esquire Sidney C. Bigham, III, Esquire Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399 (eServed) William R. Wohlsifer, Esquire Leighanne C. Boone, Esquire William R. Wohlsifer, P.A. 1100 East Park Avenue, Suite B Tallahassee, Florida 32301 (eServed) Jonathan P. Steverson, Secretary Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399 (eServed) Craig Varn, General Counsel Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399 (eServed) Lea Crandall, Agency Clerk Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399 (eServed)
Findings Of Fact During a routine inspection on March 30, 1983, a sample diesel fuel taken from Respondent's place of business in Clearwater, Florida, was tested and was found to have a flash point of 660F. Normal flash point for diesel fuel is 1000F. A Stop Sale Notice was issued March 30, 1983, and sales from this tank were stopped. On March 31, 1983, Respondent posted a $1,000 bond in lieu of having the fuel confiscated. Before the Stop Sale Notice, 1,282 gallons of contaminated diesel fuel had been sold from this tank at a price of $1.099 per gallon.
Findings Of Fact On October 7, 1982, petitioner's employee took samples of gasoline offered for sale at respondent's Beacon Store No. 7 in Milton, Florida, including a sample of regular gasoline mixed with alcohol, known as "regularhol." The regularhol sample reached petitioner's laboratory in Tallahassee on October 11, 1982, and tests done the following day revealed that the 50 percent evaporated distillation temperature of the mix as a whole was 151 degrees Fahrenheit. Otherwise the tests revealed no problem with any of the gasolines sampled. A stop sale notice issued on October 13, 1982, and, after bond in the amount of one thousand dollars ($1,000.00) was posted, in lieu of confiscation of 3,865 gallons, the "regularhol" was released on November 8, 1982. Respondent began mixing regular gasoline with ethanol and selling it as regularhol in 1978 at the same price as regular gasoline. Until recently, Mocar made less on regularhol sales than on sales of regular gasoline. It originally offered regularhol as its way of helping to reduce the national consumption of petroleum. It has now discontinued sales of regularhol. The Phillips' terminal in Pensacola was respondent's source of the regular gasoline it mixed to make regularhol. This gasoline reached Pensacola by barge, and petitioner's employees sampled and tested each barge's cargo. The 50 percent evaporated distillation temperature of the regular gas Mocar bought from Phillips varied over a range of more than 30 degrees Fahrenheit upwards from 181 degrees Fahrenheit. Mixing ethanol with the gasoline lowered its distillation temperature, but with the single exception of the batch sampled on July 14, 1982, Mocar's regularhol had passed the testing petitioner has regularly (once every three or four months) conducted. There had also been a problem with gasohol once before.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner retain five hundred dollars ($500.00) and return five hundred dollars ($500.00) to the respondent. DONE and ENTERED this 2nd day of June, 1983, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of June, 1983. COPIES FURNISHED: Robert A. Chastain, Esquire Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 James Milton Wilson, Esquire 201 E. Government Street Pensacola, Florida 32598 Doyle Conner, Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol Tallahassee, Florida
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 Whether petitioner should take disciplinary action against respondent for the reasons alleged in the administrative complaint?
Findings Of Fact The parties stipulated that respondent Veterans Gas and Appliance Co., Inc., trading as Veterans Gas Company, now holds and has at all pertinent times has held a license issued by petitioner. Petitioner has licensed respondent as a "[d]ealer in liquefied petroleum [LP] gas, in appliances and in equipment for use of such gas and installation." Petitioner's Exhibit No. 1. Respondent has been in business for 25 years or so, at least. (T.48) On December 8, 1983, Clyde K. "Ken" Wallace, a gas serviceman in respondent's employ, was at the office of the Veterans Gas Company in Fort Walton, when a Mr. Wright telephoned, requesting that LP gas be delivered to the Ships Chandler in Destin, Mr. Wright's place of business. Mr. Wallace set out by himself for Destin in a bulk-fill truck to make the delivery. When he arrived, he found he could not enter the driveway, so he parked on the south side of U.S. Highway 98 about 15 feet from the Ships Chandler tank. He knew where the tank was because he had filled it the previous winter, the last time he had been there. Standing with two young ladies in the doorway of the Ships Chandler, Mr. Wright greeted him, saying something like, "I'm glad to see you. We're freezing." Mr. Wallace set right to work. Initially unable to remove the dome which blocked access to the underground tank, he asked Mr. Wright for a claw hammer. With the hammer he succeeded in removing the dome, and then announced he was going to turn off the service valve, which is the valve that allows gas to enter the building from the tank. Mr. Wright asked him not to turn the valve off, saying he was going to ignite the pilot light in his furnace, and disappeared into the store. Mr. Wallace took the dust cap off and, hooking up the hose to the fill valve, pumped one hundred gallons of LP gas at the rate of 25 to 30 gallons a minute, according to the meter on the truck. Before introducing LP gas into the tank, Mr. Wallace never turned off the service valve or any other valve through which LP gas flowed before passing through the regulator and into the system of pipes. In fact, he never touched the service valve, and did not know for sure whether it was on or off. Furnace apparently lit, Mr. Wright reemerged from his store after a few minutes, a check in hand to pay for the gas. Earlier on, at some point during their conversation, Mr. Wright asked Mr. Wallace whether he knew if nearby shop owners heated with gas or otherwise used gas, or something to that effect. Mr. Wallace said he did not know. The question arose because the complex had been a motel with central gas heat before it had been remodeled into shops and offices; and the conversion had taken place since the preceding winter. Mr. Wright wondered aloud whether or not his neighbors owed him money for gas. Mr. Wallace saw Mr. Wright enter one shop door, leave, enter another, leave, and so forth, presumably inquiring of the people inside whether they used gas. By the time he disengaged the hose and closed the fill valve, Mr. Wright was nowhere to be found. Mr. Wallace indicated on the invoice that it had been paid, dropped it on a desk or counter in the Ships Chandler, and left. After Mr. Wallace had driven off, an explosion occurred causing a fire and injuries to two persons. Explosion, fire and injuries occurred not in the Ships Chandler, but on the premises occupied by Way and Associates, Inc. Whoever did the remodeling cut the gas line and neglected to cap it, so that LP gas pumped into the Ships Chandler tank, ended up in a space between the dry wall and the outside wall in the building Way and Associates, Inc. occupied. Ignition of the LP gas accumulated there caused the explosion. Respondent had nothing to do either with the remodeling or with the initial installation of the gas pipes. If Mr. Wallace had followed standard industry practice, he would have turned off the service valve before pumping LP gas into the fill valve of an empty system. After pumping LP gas into the tank, he would have turned off the pump; he would have asked Mr. Wright to turn off all appliances, and, once the appliances were off, he would have turned the service valve back on to charge the system. Then he would have turned the service valve off again, in order to listen carefully. If he had done that, he would have heard LP gas moving through the regulator, even after the service valve was closed, and he would have realized that gas was leaking. Mr. Wallace, who started working for respondent in July of 1982, is qualified as a gas service man but not as a gas appliance service man. Like other new drivers respondent hires, Mr. Wallace went out with an older driver or the manager to learn the route and safety procedures for at least two weeks before going out on his own, but he was never told to check for leaks when introducing LP gas into an empty system.
Findings Of Fact Petitioner deals in fuel oil. It buys fuel oil from several wholesalers and sells it at retail, mainly to people who use fuel oil for heating purposes. Petitioner operates a low pressure pump on its premises for pumping fuel oil from a ten thousand gallon tank into five gallon cans and similar containers brought to the pump by its customers. At peak demand, the ten thousand gallon tank supplying this pump had to be refilled twice a week. In general, however, during the cold season, the tank was refilled only every other week or less often still. No fuel oil was ever pumped from the low pressure pump into any motor vehicle. Petitioner also maintained two big dispersing pumps for filling its tank trucks with fuel oil and a gasoline pump for fueling the truck engines. The trucks were equipped with pumps for emptying their fuel oil tanks, which pumped at the rate of forty gallons per minute. Petitioner advertised home delivery of fuel oil in the newspaper, and dispatched its trucks in response to the resulting telephone calls. In addition to delivering fuel oil for home heating purposes, petitioner occasionally sold larger quantities to fellow fuel oil dealers and to other commercial concerns. In February, March and April of 1974, petitioner sold particularly large quantities of fuel oil to Tampa Electric Company. During the period covered by the audit, petitioner sold from 50,000 to 70,000 gallons to other fuel oil dealers. Petitioner did not get resale certificates from its commercial customers, but Mr. Hayes, until recently petitioner's proprietor, required dealers to show him their dealer's licenses and he copied the dealers' license numbers onto the invoices. In March of 1976, Mr. Donald E. Snyder, a tax examiner in respondent's employ, began auditing petitioner's books. At this time most of petitioner's records were in Orlando in the custody of the Federal Energy Administration. Subsequently, some, but not all, of these records were returned to petitioner. In an effort to reconstruct records which were unavailable, Mr. Snyder contacted petitioner's suppliers and examined their records of sales to petitioner. On January 2, 1977, Mr. Hayes and Mr. Snyder took an inventory of petitioner's fuel oil. Mr. Snyder used this information as well as what records petitioner was able to furnish him, and concluded that petitioner had sold, during the audit period, two thousand four hundred seventy-nine (2,479) gallons of fuel oil to persons or concerns who were users of fuel oil for non-exempt purposes. Written on the invoices evidencing these sales, however, was the phrase "non-road use" or words to that effect. The limited materials with which he worked gave Mr. Snyder no indication as to the disposition of an additional two hundred fifty- eight thousand three hundred forty (258,340) gallons of fuel oil. Although Mr. Snyder approximated petitioner's sales month by month, these figures were unreliable because of certain erroneous assumptions, notably the assumption that petitioner never used additional storage facilities.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent abandon its notice of proposed assessment, as revised. DONE and ENTERED this 10th day of January, 1978, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. James P. LaRussa, Esquire Flagship Bank Building, Suite 416 315 East Madison Street Tampa, Florida 33602 Mr. Cecil L. Davis, Jr., Esquire Assistant Attorney General The Capitol Tallahassee, Florida 32304
The Issue This proceeding is for the purpose of resolving a territorial dispute regarding the extension of gas service to areas of The Villages of Sumter Lake (“The Villages”) in Sumter County, Florida, pursuant to section 366.04(3)(b), Florida Statutes, and Florida Administrative Code Rule 25-7.0472; and whether a Natural Gas System Construction, Purchase, and Sale Agreement (“Agreement”) between the City of Leesburg (“Leesburg”) and South Sumter Gas Company (“SSGC”) creates a “hybrid” public utility subject to ratemaking oversight by the Public Service Commission (“Commission”).
Findings Of Fact The Parties and Stipulated Issues PGS is a natural gas local distribution company providing sales and transportation delivery of natural gas throughout many areas of the State of Florida, including portions of Sumter County. PGS is the largest natural gas provider in Florida with approximately 390,000 customers, over 600 full-time employees, and the same number of construction contract crews. PGS’s system consists of approximately 19,000 miles of distribution mains throughout Florida. PGS operates systems in areas that are very rural and areas that are densely populated. PGS currently serves more than 45,000 customers in Sumter and Marion counties. PGS is an investor-owned “natural gas utility,” as defined in section 366.04(3)(c), and is subject to the Commission’s statutory jurisdiction to resolve territorial disputes. Leesburg is a municipality in central Florida with a population of approximately 25,000 within the city limits, and a broader metropolitan service area (“MSA”) population of about 50,000. Leesburg provides natural gas service in portions of Lake and Sumter counties. Leesburg is a “natural gas utility” as defined in section 366.04(3)(c). Leesburg has provided natural gas service to its customers since 1959, and currently serves about 14,000 residential, commercial, and industrial customers both within and outside its city limits via a current system of approximately 276 miles of distribution lines. Leesburg is subject to the Commission’s statutory jurisdiction to resolve territorial disputes. SSGC is a Florida limited liability company and an operating division of The Villages. SSGC is the entity through which The Villages has entered into a written contract with Leesburg authorizing Leesburg to supply natural gas services to, initially, the Bigham developments. The issues of cost of capital and amortization and depreciation are not applicable to this dispute. The Dispute A territorial dispute is a disagreement over which natural gas utility will serve a particular geographic area. In this case, the area in dispute is that encompassed by the Bigham developments. PGS argued that the dispute should be expanded to include areas not subject to current development, but that are within the scope of anticipated Villages expansion. The extension of this territorial dispute beyond the Bigham developments is not warranted or necessary, and would have the effect of establishing a territorial boundary in favor of one of the parties. As a result of the Agreement to be discussed herein, SSGC has constructed residential gas infrastucture within Bigham, and has conveyed that infrastructure to Leesburg. Leesburg supplies natural gas to Bigham, bills and collects for gas service, and is responsible for upkeep, maintenance, and repair of the gas system. The question for disposition in this proceeding is whether service to Bigham is being lawfully provided by Leesburg pursuant to the standards applicable to territorial disputes. Natural Gas Regulation PGS is an investor-owned public utility. It is subject to the regulatory jurisdiction of the Commission with regard to rates and service. Its profits and return on equity are likewise subject to regulation. Leesburg is a municipal natural gas utility. The Commission does not regulate, or require the reporting of municipal natural gas utility rates, conditions of service, rate-setting, or the billing, collection, or distribution of revenues. The evidence suggests that the reason for the “hands- off” approach to municipal natural gas utilities is due to the ability of municipal voters to self-regulate at the ballot box. PGS argues that customers in The Villages, as is the case with any customer outside of the Leesburg city limits, do not have any direct say in how Leesburg sets rates and terms of service.1/ That may be so, but the Legislature’s approach to the administration and operation of municipal natural gas utilities, with the exception of safety reporting and territorial disputes, is a matter of legislative policy that is not subject to the authority of the undersigned. History of The Villages The Villages is a series of planned residential areas developed under common ownership and development. Its communities are age-restricted, limited to persons age 55 and older. It has been the fastest growing MSA for medium-sized and up communities for the past five years. The Villages started in the 1970s as a mobile home community known as Orange Blossom Gardens in Lake County. That community proved to be successful, and the concept was expanded in the 1980s to include developments with golf courses and clubhouses. Residents began to customize their mobile homes to the point at which the investment in those homes rivaled the cost of site-built homes. In the 1990s, The Villages went to site-built home developments. By then, one of the two original developers had sold his interest to the other, who proceeded to bring his son into the business. They decided that their approach of building homes should be more akin to traditional development patterns in which growth emanates from a central hub. Thus, in 1994, the Spanish Springs Town Center was built, with an entertainment hub surrounded by shopping and amenities. It was a success. By 2000, The Villages had extended southward to County Road (“CR”) 466, and a second town center, Lake Sumter Landing, was constructed. The following years, to the present, saw The Villages continue its southward expansion to State Road (“SR”) 44, where the Brownwood Town Center was constructed, and then to its southernmost communities of Fenney, Bigham North, Bigham West, and Bigham East, which center on the intersection of CR 468 and CR 501. The Villages currently constructs between 200 and 260 residential houses per month. Contractors are on a computerized schedule by which all tasks involved in the construction of the home are set forth in detail. The schedule was described, aptly, as rigorous. A delay by any contractor in the completion of the performance of its task results in a cascading delay for following contractors. Gas Service in the Area Gas mains are generally “arterial” in nature, with relatively large distribution mains operating at high distribution pressure extending outward from a connection to an interstate or intrastate transmission line through a gate station. Smaller mains then “pick up” growth along the line as it develops, with lower pressure service lines completing the system. In 1994, Leesburg constructed a gas supply main from the terminus of its existing facility at the Lake County/Sumter County line along CR 470 to the Coleman Federal Prison. In August 2009, PGS was granted a non-exclusive franchise by the City of Wildwood to provide natural gas service to Wildwood. SSGC Exhibit 6, which depicts the boundaries of the City of Leesburg, the City of Wildwood, and the City of Coleman, demonstrates that most, if not all, of the area encompassed by the Bigham developments is within the Wildwood city limits. In 2015, the interstate Sabal Trail transmission pipeline was being extended south through Sumter County. The line was originally expected to run in close proximity to Interstate 75. Even at that location, Leesburg decided that it would construct a gate station connecting to the Sabal Trail pipeline to provide backfill capabilities for its existing facilities in Lake County, and for its Coleman prison customer. In 2016, the Sabal Trail pipeline was redirected to come much closer to the municipal limits of Leesburg. That decision made the Leesburg determination to locate a gate station connecting to the Sabal Trail pipeline much easier. In addition, construction of the gate station while the Sabal Trail pipeline was under construction made construction simpler and less expensive. By adding the connecting lines to the Sabal Trail pipeline while it was under construction, a “hot tap” was not required. In May 2016, PGS began extending its gas distribution facilities to serve industrial facilities south of Coleman. It started from the terminus of its existing main at the intersection of SR 44 and CR 468 -- roughly a mile and a half west of the Lake County/Sumter County line and the Leesburg city limit -- along CR 468 to the intersection with U.S. Highway 301 (“US 301”), and extending along US 301 to the town of Coleman by January 2017. The distribution line was then extended south along US 301 to Sumterville.2/ In addition, Sumter County built a line off of the PGS line to a proposed industrial customer/industrial park to the south and west of Coleman, which was assigned to PGS. It is common practice for investor-owned utilities to extend service to an anchor customer, and to size the infrastructure to allow for the addition of customers along the route. By so doing, there is an expectation that a line will be fully utilized, resulting in lower customer cost, and a return on the investment. Nonetheless, PGS has not performed an analysis of the CR 468/US 301 line to determine whether PGS would be able to depreciate those lines and recover the costs. The CR 468/US 301 PGS distribution line is an eight- inch line, which is higher capacity in both size and pressure. The entire line is ceramic-coated steel with cathodic protection, which is the most up-to-date material. PGS sized the CR 468/US 301 distribution line to handle additional capacity to serve growth along the corridor. Although PGS had no territorial or developer agreement relating to any area of The Villages when it installed its CR 468/US 301 distribution line, PGS expected growth in the area, whether it was to be from The Villages or from another developer. Although it did not have specific loads identified, the positioning of the distribution line anticipated residential and commercial development along its route. Nonetheless, none of the PGS lines were extended specifically for future Villages developments. PGS had no territorial agreement, and had no discussion with The Villages about serving any development along the mains. PGS constructed a gate station at the intersection of CR 468 and CR 501 connecting to the Sabal Palm pipeline to serve the anchor industrial facilities. The Sabal Trail gate station was not constructed in anticipation of service to The Villages. Gas Service to The Villages In 2017, The Villages decided to extend gas service to its Fenney development, located along CR 468. Prior to that decision, The Villages had not constructed homes with gas appliances at any residential location in The Villages. The Villages has extended gas to commercial facilities associated with its developments north of SR 44, which had generally been provided by PGS. The Villages’ development in Fruitland Park in Lake County included commercial facilities with gas constructed, installed, and served by Leesburg. Prior to the time in which the Fenney development was being planned, The Villages began to require joint trenching agreements with various utilities contracted to serve The Villages, including water, sewer, cable TV, irrigation, and electric lines. Pursuant to these trenching agreements, The Villages’ contractors excavate a trench to serve residential facilities prior to construction of the residences. The trenches are typically four-feet-wide by four-feet-deep. Each of the utilities install their lines in the trench at a designated depth and separation from the other utility lines in order to meet applicable safety requirements. Using a common trench allows for uniformity of installation and avoids installation mishaps that can occur when lines are installed after other lines are in the ground. The trenching agreements proved to be effective in resolving issues of competing and occasionally conflicting utility line development. The PGS CR 468 distribution line runs parallel to CR 468 along the northern boundary of the Fenney development. Therefore, PGS was selected to provide service when the decision was made to extend gas service into Fenney. PGS entered into a developer agreement with The Villages that was limited to work in Fenney. PGS was brought into the Fenney development project in August 2017, after four development units had been completed. Therefore, PGS had to bring gas service lines into residences in those units as a retrofitted element, and not as a participant to the trenching agreements under which other utilities were installed. There were occasions during installation when the PGS installation contractor, R.A.W. Construction, severed telephone and cable TV lines, broke water and sewer lines, and tore up landscaped and sodded areas. As a result, homes in the four completed Fenney development units were delayed resulting in missed closing dates. However, since PGS was not brought in until after the fact for the four completed developments, it is difficult to assign blame for circumstances that were apparently not uncommon before joint trench agreements were implemented, and which formed the rationale for the creation of joint trench agreements.3/ The Villages was not satisfied with the performance of PGS at its Fenney development. The problems described by The Villages related to construction and billing services. The Villages also complained that PGS did not have sufficient manpower to meet its exceedingly rigid and inflexible construction requirements. Mr. McDonough indicated that even in those areas in which PGS was a participant in joint trenching agreements, it was incapable of keeping up with the schedule. Much of that delay was attributed to its contractor at the time, R.A.W. Construction. After some time had passed, PGS changed contractors and went with Hamlet Construction (“Hamlet”), a contractor with which The Villages had a prior satisfactory relationship. After Hamlet was brought in, most of the construction-related issues were resolved. However, Mr. Lovo testified that billing issues with PGS were still unsatisfactory, resulting in delays in transfer of service from The Villages to the residential home buyer, and delays and mistakes in various billing functions, including rebates. In late 2017, as the Fenney development was approaching buildout, The Villages commenced construction of the Bigham developments. The three Bigham developments were adjacent to one another. The Bigham developments will collectively include 4,200 residential homes, along with commercial support facilities. By September 27, 2017, Leesburg officials were having discussions with Mr. Geoffroy, a representative of its gas purchasing cooperative, Florida Gas Utility (“FGU”), as to how it might go about obtaining rights to serve The Villages’ developments. Mr. Rogers inquired, via email, “[w]hat about encroachment into [PGS] territory north of 468, which is where they plan to build next? [PGS] has a line on 468 that is feeding the section currently under development.” Some 15 minutes later, Mr. Geoffroy described the “customer preference” plan that ultimately became a cornerstone of this case as follows: Yes, the areas that the Villages “plans” to build is currently “unserved territory”, so the PSC looks at a lot of factors, such as construction costs, proximity of existing infrastructure and other things; however, the rule goes on to state that customer preference is an over-riding factor; if all else is substantially equal. In this case, simply having the Villages say they will only put gas into the homes if Leesburg serves them, but not TECO/PGS, will do it. (emphasis added). On November 16, 2017, Leesburg was preparing for a meeting with The Villages to be held “tomorrow.” Among the topics raised by Mr. Rogers was “territorial agreement?” to which Mr. Geoffroy responded “[d]epends on which option [The Villages] choose. If they become the utility, then yes. If not, you will eventually need an agreement with [PGS].” During this period of time, PGS had no communication with either Leesburg or The Villages regarding the extension of gas service to Bigham. PGS became aware that Hamlet was installing gas lines along CR 501 and CR 468 in late December 2017. PGS had not authorized those installations. Bigham West adjoined Fenney, and PGS had lines in the Fenney development that could have established a point of connection to the Bigham developments without modification of the lines. In addition, each of the three Bigham developments front onto CR 468 and are contiguous to the CR 468 PGS distribution line. The distance from the PGS line directly into any of the Bigham developments was a matter of 10 to 100 feet. The cost to PGS to extend gas service into Bigham would have been minimal, with “a small amount of labor involved and a couple feet of pipe.” PGS met with Leesburg officials in January 2018 to determine what was being constructed and to avoid a territorial dispute. PGS was directed by Leesburg to contact The Villages for details. Thereafter, PGS met with representatives of The Villages. PGS was advised that The Villages was “unappreciative” of the business model by which The Villages built communities, and a public utility was able to serve the residential customers and collect the gas service revenues for 30 or 40 years. The Agreement The Villages was, after the completion of Fenney, unsure as to whether it would provide gas service to Bigham, or would continue its past practice of providing all electric homes. The Villages rebuffed Leesburg’s initial advances to extend gas service to The Villages’ new developments, including Bigham. Thereafter, The Villages undertook a series of discussions with Leesburg as to how gas service might be provided to additional Villages’ developments in a manner that would avoid what The Villages’ perceived to be the inequity of allowing a public utility to serve The Villages’ homes, with the public utility keeping the revenues from that service. Leesburg and The Villages continued negotiations to come to a means for extending gas service to The Villages’ developments, while allowing The Villages to collect revenues generated from monthly customer charges and monthly “per therm” charges. SSGC was formed as a natural gas construction company to engage in those discussions. SSCG was, by its own acknowledgement, “an affiliate of The Villages, and the de facto proxy for The Villages in this proceeding.” On January 3, 2018, Leesburg internally discussed how to manage the issue of contributions in aid of construction (“CIAC”). It appeared to Mr. Rogers that gas revenues would continue to be shared with The Villages after its infrastructure investment, with interest, was paid off, with Mr. Rogers questioning “is there a legal issue with them continuing to collect revenue after their capital investment is recovered? Admittedly that may not occur for 15 years.” A number of tasks to be undertaken by The Villages “justifying the continued revenue stream” were proposed, with Mr. Geoffroy stating that: While this may seem a large amount for very little infrastructure, I think it would probably be okay. Because [PGS] distribution is so close, and the Villages has used them previously, it would be relatively easy for the Villages to connect to [PGS] and disconnect from [Leesburg], at any point in the future. In order to get and retain the contract, this is what [Leesburg] has to agree to win the deal. Not sure anyone has rate jurisdiction on this anyway, other than [Leesburg]. Those discussions led to the development of the Agreement under which service to Bigham was ultimately provided. The Agreement was a formulaic approach to entice The Villages into allowing Leesburg to be the gas provider for the residents that were to come. The Agreement governs the construction, purchase, and sale of natural gas distribution facilities providing service to residential and commercial customers in The Villages’ developments. On February 12, 2018, the Leesburg City Commission adopted Resolution 10,156, which authorized the Mayor and City Clerk to execute the Agreement on the Leesburg’s behalf. The Agreement was thereupon entered into between Leesburg and SSGC, with an effective date of February 13, 2018. Then, on February 26, 2019, the Leesburg City Commission adopted Ordinance 18-07, which enacted the Villages Natural Gas Rate Structure and Method of Setting Rates established in the Agreement into the Leesburg Code of Ordinances. The Agreement has no specific term of years, but provides for a term “through the expiration or earlier termination of [Leesburg]’s franchise from the City of Wildwood.” Mr. Minner testified that “the length of the agreement is 30 years from when a final home is built, and then over that overlay is the 30-year franchise agreement from the City of Wildwood.” However, SSGC’s response to interrogatories indicates that the Agreement has a 30-year term. Though imprecise, the 30-year term is a fair measure of the term of the Agreement. For the Bigham developments, i.e., the Agreement’s original “service area,” facilities are those installed into Bigham from the regulator station at the end of Leesburg’s new CR 501 distribution line, and include distribution lines along Bigham’s roads and streets, all required service lines, pressure regulator stations, meters and regulators for each customer, and other appurtenances by which natural gas will be distributed to customers. The Agreement acknowledges that Leesburg and SSGC “anticipate that the service Area will expand as The Villages® community grows, and thus, as it may so expand, [Leesburg and SSGC] shall expand the Service Area from time to time by written Amendment to this Agreement.” SSGC is responsible for the design, engineering, and construction of the natural gas facilities within Bigham. SSGC is responsible for complying with all codes and regulations, for obtaining all permits and approvals, and arranging for labor, materials, and contracts necessary to construct the system. Leesburg is entitled to receive notice from SSGC prior to the construction of each portion of the natural gas system, and has “the right but not the obligation” to perform tests and inspections as the system is installed. The evidence indicates that Leesburg has assigned a city inspector who is on-site daily to monitor the installation of distribution and service lines. SSGC has, to date, been using Hamlet as its contractor, the same company used by PGS to complete work at Fenney. Upon completion of each section in the development, SSGC provides Leesburg with a final inspection report and a set of “as-built” drawings. SSGC then conveys ownership of the gas distribution system to Leesburg in the form of a Bill of Sale. Upon the conveyance of the system to Leesburg, Leesburg assumes responsibility for all operation, maintenance, repairs, and upkeep of the system. Leesburg is also responsible for all customer service, emergency and service calls, meter reading, billing, and collections. Upon conveyance, Leesburg operates and provides natural gas service to Bigham through the system and through Leesburg’s facilities “as an integrated part of [Leesburg’s] natural gas utility operations.” In order to “induce” SSGC to enter into the Agreement, and as the “purchase price” for the system constructed by SSGC, Leesburg will pay SSCG a percentage of the monthly customer charge and the “per therm” charge billed to Bigham customers. Leesburg will charge Bigham customers a “Villages Natural Gas Rate” (“Villages Rate”). The “per therm” charge and the monthly customer charge for each Bigham customer are to be equal to the corresponding rates charged by PGS. If PGS lowers its monthly customer charge after the effective date of the agreement, Leesburg is not obligated to lower its Villages Rate. Bigham customers, who are outside of Leesburg’s municipal boundaries and unable to vote in Leesburg municipal elections, will pay a rate for gas that exceeds that of customers inside of Leesburg’s municipal boundaries and those inside of Leesburg’s traditional service area. A preponderance of the evidence indicates that for the term of the agreement, The Villages will collect from 52 percent (per Mr. Minner at hearing) to 55 percent (per Mr. Minner in deposition) of the total gas revenues paid to Leesburg from Bigham customers. The specific breakdown of revenues is included in the Agreement itself, and its recitation here is not necessary. The mechanism by which The Villages, through SSGC, receives revenue from gas service provided by Leesburg, first to its “proxy” customer and then to its end-user customers, is unique and unprecedented. It has skewed both competitive and market forces. Nonetheless, PGS was not able to identify any statute or rule that imposed a regulatory standard applicable to municipal gas utilities that would prevent such an arrangement. The evidence establishes that, under the terms of the Agreement, Leesburg is the “natural gas utility” as that term is defined by statute and rule. The evidence establishes that SSGC is, nominally, a gas system construction contractor building gas facilities for Leesburg’s ownership and operation. The evidence does not establish that the Agreement creates a “hybrid” public utility. Extension of Service to the Bigham Developments Leesburg’s mains nearest to Bigham were at SR 44 at the Lake County/Sumter County line, a distance of approximately 3.5 miles from the nearest Bigham point of connection; and along CR 470, a distance of approximately 2.5 miles to the nearest Bigham point of connection. When the Agreement was entered, neither the Leesburg 501 line nor the Leesburg 468 line were in existence. At the time the Agreement was entered, Leesburg knew that PGS was the closest provider to the three Bigham developments. In order to serve Bigham, Leesburg constructed a distribution line from a point on CR 470 near the Coleman Prison northward along CR 501 for approximately 2.5 miles to the southern boundary between Bigham West and Bigham East. Leesburg constructed a second distribution line from the Lake County line on SR 44 eastward to its intersection with CR 468, and then southward along CR 468 to the Florida Turnpike, just short of the boundary with Bigham East, a total distance of approximately 3.5 miles. The Leesburg CR 468 line will allow Leesburg to connect with the Bigham distribution line and “loop” or “backfeed” its system to provide redundancy and greater reliability of service to Bigham and other projects in The Villages as they are developed. The new Leesburg CR 468 line runs parallel to the existing PGS CR 468 line along its entire CR 468 route, and crosses the PGS line in places. There are no Commission regulations that prohibit crossing lines, or having lines in close proximity. Nonetheless, having lines in close proximity increases the risk of, among other things, complicating emergency response issues where fire and police believe they are responding to one utility's emergency when it is the other’s emergency. Safety Although PGS was the subject of a Commission investigation and violation related to a series of 2013-2015 inspections, those violations have been resolved to the satisfaction of the Commission. Mr. Szelistowski testified that PGS has received no citations or violations from the Commission, either from a construction standpoint or an operation and maintenance standpoint, for the past three years. Mr. Moses testified that both PGS and Leesburg are able to safely provide natural gas service to customers in Sumter County. His testimony is credited. Given the differences in size, geographic range, nature, and density of areas served by the PGS and Leesburg systems, the prior violations are not so concerning as to constitute a material difference in the outcome of this case. All of the distribution and service lines proposed by Leesburg and PGS to serve and for use in the disputed territory are modern, safe, and state-of-the-art. Reliability As stated by Leesburg in its PRO, “[t]he reliability of a natural gas distribution system to serve a designated area depends on the nature, location and capacity of the utility's existing infrastructure, the ability of the utility to secure the necessary quantities of natural gas, and the ability of the natural gas utility to supply gas in a safe manner.” As set forth herein, the location of PGS’s existing infrastructure, vis-a-vis the disputed territory, weighs strongly in its favor. As to the other reliability factors identified by Leesburg, both parties are equally capable of providing reliable service to the disputed territory. Both PGS and Leesburg demonstrated that they have the managerial and operational experience to provide service in the disputed area. There was no evidence to suggest that end-user customers of either Leesburg or PGS, including PGS’s Fenney customers, are dissatisfied with their service. Regulatory Standards for Territorial Disputes Rule 25-7.0472 establishes the criteria for the resolution of territorial disputes regarding gas utilities. Rule 25-7.0472(2)(a) Rule 25-7.0472(2)(a) includes the following issues for consideration in resolving a territorial dispute regarding gas utilities: The capability of each utility to provide reliable natural gas service within the disputed area with its existing facilities and gas supply contracts. Leesburg currently obtains its natural gas supply from the Florida Gas Transmission (“FGT”) distribution system, and purchases natural gas through FGU, a not-for-profit joint action agency, or "co-op" for purchasing natural gas. FGU's membership consists of city or governmental utility systems in Florida that distribute natural gas to end-user customers, or that use natural gas to generate electricity. FGU purchases and provides gas and manages interstate pipeline capacity for its members. FGU's members contractually reserve space in interstate transmission lines. FGU aggregates its members’ contracts into a single consolidated contract between FGU and the interstate pipelines and collectively manages its members’ needs through that contract. FGU has flexibility to transfer pipeline capacity from one member to benefit another member. Leesburg currently takes its natural gas through a "lateral" pipeline from the FGT transmission line. Gas travels through one of two gate stations, one in Haines Creek, and the other near the Leesburg municipal airport, both of which are located in Leesburg’s northeast quadrant. At the gate stations, transmission pressure is reduced to lower distribution pressure, and the gas is metered as it is introduced into Leesburg’s distribution system. The FGT transmission capacity is fully subscribed by FGU. Leesburg has not fully subscribed its lateral pipeline and has sole access to its lateral line capacity. Prior to the entry of the Agreement, and Leesburg/SSGC’s extension of distribution lines along CR 501 and CR 468, Leesburg’s distribution lines extended into Sumter County only along CR 470 to the Coleman Federal Prison. One other Leesburg line extended to the county line along SR 44, and then north to serve a residential area in Lake County. Leesburg argues that it has already extended lines, and is providing service to thousands of homes in Bigham, and that those facilities should be considered in determining whether it can “provide reliable natural gas service within the disputed area with its existing facilities.” PGS did not know of Leesburg’s intent to serve Bigham until late December 2017, when it observed PGS’s Fenney contractor, Hamlet, installing lines along CR 468, lines that it had not approved. PGS met with Leesburg officials in January 2018 to determine what was being constructed and to avoid a territorial dispute. PGS was directed by Leesburg to contact The Villages for details. PGS filed its territorial dispute on February 23, 2018, 10 days from the entry of the Agreement, and three days prior to the adoption of Ordinance 18-07. Construction of the infrastructure to serve Bigham occurred after the filing of the territorial dispute. Given the speed with which The Villages builds, hundreds of homes have been built, and gas facilities to serve have been constructed, since the filing of the territorial dispute. To allow Leesburg to take credit for its facilities in the disputed territory, thus prevailing as a fait accompli, would be contrary to the process and standards for determining a territorial dispute. The territory must be gauged by the conditions in the disputed territory prior to the disputed extension of facilities to serve the area. Leesburg’s existing facilities, i.e., those existing prior to extension to the disputed territory, were sufficient to serve the needs of Leesburg’s existing service area. The existing facilities were not sufficient to serve the disputed territory without substantial extension. 2. The extent to which additional facilities are needed. Both PGS and Leesburg have sufficient interconnections with transmission pipelines. Prior to commencement of construction at Bigham, the area consisted of undeveloped rural land. As discussed herein, the “starting point” for determining the necessity of facilities is the disputed territory property before the installation of site-specific interior distribution and service lines. To find otherwise would reward a “race to serve.” PGS demonstrated that it is capable of serving the disputed territory with no additional facilities needed. Its distribution mains are located directly adjacent to the disputed territory from the Fenney development from the west, and are contiguous to each of the Bigham developments from CR 468. The PGS CR 468 line was not constructed in specific anticipation of serving Bigham, and its cost is not fairly included in PGS’s cost to provide natural gas service to the disputed area presently and in the future. PGS’s existing distribution mains are capable of providing service to Bigham literally within feet of a point of connection. PGS’s cost to reach the disputed territory from its existing facilities in Fenney was estimated at $500 to $1,000. The cost of connecting the interior Bigham service lines to PGS’s CR 468 line is, at most, $10,000. PGS’s total cost of extending gas distribution lines to serve Bigham is, at most, $11,000. The evidence demonstrated that Leesburg required substantial additional facilities to serve the disputed territory. In order to meet the needs for reliable service to Bigham established in the Agreement, Leesburg constructed a new high-pressure distribution line from the existing CR 470 line north along CR 501 to Bigham for a distance of 2.5 miles at a cost of $651,475. The CR 501 line was constructed in specific anticipation of serving Bigham and is fairly included in Leesburg’s cost to provide natural gas service to the disputed area presently and in the future. In order to meet the needs for reliable service to Bigham established in the Agreement, Leesburg constructed a new high-pressure distribution line along SR 44 and CR 468 to Bigham for a distance of 3.5 miles at a cost of $560,732. The CR 468 segment of Leesburg’s line is adjacent and parallel to PGS’s existing CR 468 pipeline. Leesburg plans to connect the CR 468 line with the CR 501 line by way of a regulator station to create a system loop. Although Leesburg’s CR 468 pipeline is, ostensibly, not the primary distribution line for Bigham, it is directly related to the CR 501 line, and provides desired redundancy and reliability for Bigham, as well as infrastructure for the further expansion of Leesburg’s gas system to The Villages. Thus, the cost of extending Leesburg’s CR 468 line is fairly included in Leesburg’s cost as an “additional facility” to provide “reliable natural gas service,” to the disputed area presently and in the future. Leesburg’s total cost of extending gas distribution lines designed as primary distribution or redundant capability to serve Bigham is a minimum of $1,212,207. In addition to the foregoing, Leesburg, in its response to interrogatories, indicated that it “anticipates spending an amount not to exceed approximately $2.2 million dollars for gas lines located on county roads 501 and 468.” Furthermore, Leesburg stated that “[a]n oral agreement exists [between Leesburg and SSGC] that the amount to be paid by Leesburg for the construction of natural gas infrastructure on county roads 468 and 501 will not exceed $2.2 million dollars. This agreement was made . . . on February 12, 2018.” That is the date on which Leesburg adopted Resolution 10,156, which authorized the Mayor and City Clerk to execute the Agreement on Leesburg’s behalf. The context of those statements suggests that the total cost of constructing the gas infrastucture to serve Bigham could be as much as $2.2 million. PGS argues that Leesburg’s cost of connecting to the Sabal Trail transmission line should be included in the cost of serving the disputed territory. Leesburg began planning and discussions to connect to Sabal Trail as early as 2015, when the construction of Sabal Trail through the area became known. Leesburg entered into a contract for the Sabal Trail connection in February 2016. The Sabal Trail connection was intended to provide Leesburg with additional redundant capacity for its system independent of service to The Villages. The cost of constructing the Sabal Trail gate station is not fairly included in Leesburg’s cost to provide natural gas service to the disputed area presently and in the future. Rule 25-7.0472(2)(b) Rule 25-7.0472(2)(b) includes the following issues for consideration in resolving a territorial dispute regarding gas utilities: The nature of the disputed area and the type of utilities seeking to serve it. The area in dispute was, prior to the commencement of construction, essentially rural, with rapidly encroaching residential/commercial development. Although the area was generally rural at the time PGS installed its CR 468/US 301 distribution line, there was a well-founded expectation that development was imminent, if not by The Villages, then by another residential developer. The disputed territory is being developed as a master-planned residential community with associated commercial development. The Bigham developments are currently proximate to the Fenney development. Other non-rural land uses in the area include the Coleman Federal Prison and the American Cement plant. As indicated, Leesburg is a municipal gas utility, and PGS is a public gas utility. The utilities seeking to serve the disputed territory are both capable, established providers with experience serving mixed residential and commercial areas. There is nothing with regard to this factor that would tip the balance in either direction. 2. The degree of urbanization of the area and its proximity to other urban areas. As it currently stands, the disputed territory is bounded to its south and east by generally undeveloped rural property, to its south by rural property along with the Coleman Prison and American Cement plant, to its west by the Fenney development and additional undeveloped rural property, and to its north by low-density residential development. The disputed territory is characterized by residential areas of varying density, interspersed with commercial support areas. The nearest of the “town centers,” which are a prominent feature of The Villages development, is Brownwood Paddock Square, which is located north of SR 44, and a few miles north of Fenney and Bigham. The town center is not in the disputed territory. The terms “urban” and “rural” are not defined in Florida Administrative Code chapter 25-7, or in chapter 366. Thus, application of the common use of the term is appropriate. “Urban” is defined as “of, relating to, characteristic of, or constituting a city.” Merriam-Webster, https://www.merriam- webster.com/dictionary/urban. “Rural” is defined as “of or relating to the country, country people or life, or agriculture.” Merriam-Webster, https://www.merriam- webster.com/dictionary/rural. The disputed territory was rural prior to the development of Bigham. The area is becoming more loosely urbanized as The Villages has moved into the area and is expected to experience further urban growth to the south and east. Fenney and Bigham are, aside from their proximity to one another, not currently proximate to other urban areas. There is nothing with regard to this factor that would tip the balance in either direction. 3. The present and reasonably foreseeable future requirements of the area for other utility services. Since the disputed territory is a completely planned development, there are requirements for basic utilities. Leesburg provides other utility services to the greater Leesburg MSA and the Villages Fruitland Park development, including electric, water, and sewer service, and has, or is planning to provide such services to other developments for The Villages in the area. Leesburg’s ability to provide other utility services to The Villages in addition to gas service is a factor in Leesburg’s favor. Rule 25-7.0472(2)(c) Rule 25-7.0472(2)(c) establishes that the cost of each utility to provide natural gas service to the disputed area presently and in the future is an issue for consideration in resolving a territorial dispute regarding gas utilities. Various costs are broken out in subparagraphs 1. through 9. of the rule, and will be addressed individually. However, it is clear, as set forth in the facts related to rule 25-7.0472(2)(a) above, that the cost of extending service into Bigham was substantially greater for Leesburg than for PGS. The individually identified costs include the following: Cost of obtaining rights-of-way and permits. There was no evidence to suggest that the cost of obtaining rights-of-way and permits for the construction of the gas infrastructure described herein varied between Leesburg and PGS. There is nothing with regard to this factor that would tip the balance in either direction. 2. Cost of capital. The parties stipulated that the issue of cost of capital is not applicable to this dispute. 3. Amortization and depreciation. The parties stipulated that the issues of amortization and depreciation are not applicable to this dispute. 4. through 6. Cost-per-home. The cost-per-home for extending service to homes in Bigham includes the costs identified in rule 25-7.0472(2)(c)4. (labor; rate per hour and estimated time to perform each task), rule 25-7.0472(2)(c)5. (mains and pipe; the cost per foot and the number of feet required to complete the job), and rule 25- 7.0472(2)(c)6. (cost of meters, gauges, house regulators, valves, cocks, fittings, etc., needed to complete the job). The cost-per-home for Leesburg and SSGC is $1,800 (see ruling on Motion to Strike). In addition, Leesburg will be installing automated meters at a cost of $72.80 per home. The preponderance of the evidence indicates that the PGS cost-per-home is $1,579, which was the cost-per-home of extending service in the comparable Fenney development. The cost-per-home is a factor -- though slight -- in PGS’s favor. 7. Cost of field compressor station structures and measuring and regulating station structures. None of the parties specifically identified or discussed the cost of field compressor station structures and measuring and regulating station structures in the Joint Pre- hearing Stipulation or their PROs. Thus, there is little to suggest that the parties perceived rule 25-7.0472(2)(c)7. to be a significant factor in the territorial dispute. As a result, there is nothing with regard to this factor that would tip the balance in either direction. 8. Cost of gas contracts for system supply. None of the parties specifically identified or discussed the cost of the respective gas contracts for system supply in the Joint Pre-hearing Stipulation or their PROs. Thus, there is little to suggest that the parties perceived rule 25-7.0472(2)(c)8. to be a significant factor in the territorial dispute. As a result, there is nothing with regard to this factor that would tip the balance in either direction. 9. Other costs that may be relevant to the circumstances of a particular case. There was considerable evidence and testimony as to the revenues that would flow to SSGC under the 30-year term of the Agreement. SSGC's revenues under the Agreement are not relevant as they are not identified as such in rule 25-7.0472, and are not directly related to the rates, which will likely not exceed PGS’s regulated rate. Rule 25-7.0472(2)(d) Rule 25-7.0472(2)(d) includes that the Commission may consider “other costs that may be relevant to the circumstances of a particular case.” This factor is facially identical to that in rule 25-7.0472(2)(c)9., but is, nonetheless, placed in its own rule section and must therefore include costs distinct from those to provide natural gas service to the disputed area presently and in the future. Cost of service to end-user customers. Due to the nature of the Agreement, Leesburg will charge a “Villages Rate” that will be equal to the fully regulated PGS rate.4/ Thus, as a general rule, the cost of service to end-user customers will be the same for PGS and Leesburg. There is nothing with regard to this factor that would tip the balance in either direction. 2. Uneconomic duplication of facilities. Neither section 366.04(3), nor rule 25-7.0472, pertaining to natural gas territorial disputes, expressly require consideration of “uneconomic duplication of facilities” as a factor in resolving territorial disputes. The Commission does consider whether a natural gas territorial agreement “will eliminate existing or potential uneconomic duplication of facilities” as provided in rule 25-7.0471. A review of Commission Orders indicates that many natural gas territorial dispute cases involve a discussion of uneconomic duplication of facilities because disputes are frequently resolved by negotiation and entry of a territorial agreement. In approving the resultant agreement, the Commission routinely considers that the disposition of the dispute by agreement avoids uneconomic duplication of facilities. See In re: Petition to Resolve Territorial Dispute with Clearwater Gas System, a Division of the City of Clearwater, by Peoples Gas System, Inc., 1995 Fla. PUC LEXIS 742, PSC Docket No. 94-0660-GU; Order No. PSC-95-0620- AS-GU (Fla. PSC May 22, 1995)(“[W]e believe that the territorial agreement is in the public interest, and its adoption will further our longstanding policy of avoiding unnecessary and uneconomic duplication of facilities. We approve the agreement and dismiss the territorial dispute.); In re: Petition by Tampa Electric Company d/b/a Peoples Gas System and Florida Division of Chesapeake Utilities Corporation for Approval of Territorial Boundary Agreement in Hillsborough, Polk, and Osceola Counties, 1999 Fla. PUC LEXIS 2051, Docket No. 990921-GU; Order No. PSC-99-2228-PAA-GU181 (Fla. PSC Nov. 10, 1999)(“Over the years, CUC and PGS have engaged in territorial disputes. As each utility expands its system, the distribution facilities become closer and closer, leading to disputes over which is entitled to the unserved areas. The purpose of this Agreement is to set forth new territorial boundaries to reduce or avoid the potential for future disputes between CUC and PGS, and to prevent the potential duplication of facilities.”); In re: Joint Petition for Approval of Territorial Agreement in DeSoto County by Florida Division of Chesapeake Utilities Corporation and Sebring Gas System, Inc., 2017 Fla. PUC LEXIS 163, Docket No. 170036-GU; Order No. PSC-17-0205-PAA-GU (Fla. PSC May 23, 2017)(“The joint petitioners stated that without the proposed agreement, the joint petitioners’ extension plans would likely result in the uneconomic duplication of facilities and, potentially, a territorial dispute . . . . [W]e find that the proposed agreement is in the public interest, that it eliminates any potential uneconomic duplication of facilities and will not cause a decrease in the reliability of gas service.”). There are Commission Orders that suggest the issue of uneconomic duplication of facilities is an appropriate field of inquiry in a territorial dispute even when it does not result in a territorial agreement. See In re: Petition to Resolve Territorial Dispute with South Florida Natural Gas Company and Atlantic Gas Corporation by West Florida Natural Gas Company, 1994 Fla. PUC LEXIS 1332, Docket No. 940329-GU; Order No. PSC-94-1310-S-GU (Fla. PSC Oct. 24, 1994)(“On March 31, 1994, West Florida filed a Petition to Resolve a Territorial Dispute with South Florida and Atlantic Gas On August 26, 1994, West Florida, South Florida, and Atlantic Gas filed a Joint Petition for Approval of Stipulation, which proposed to resolve the territorial dispute by West Florida's purchase of the Atlantic Gas facilities . . . . We believe that approval of the joint stipulation is in the public interest because its adoption will avoid unnecessary and uneconomic duplication of facilities.”). The evidence in this case firmly establishes that Leesburg’s extension of facilities to the Bigham developments, both through the CR 501 line and the CR 468 line, constituted an uneconomic duplication of PGS’s existing gas facilities. As set forth in the Findings of Fact, PGS’s existing gas line along CR 468 is capable of providing safe and reliable gas service to the Bigham developments at a cost that is negligible. To the contrary, Leesburg extended a total of roughly six miles of high-pressure distribution mains to serve the Bigham developments at a cost of at least $1,212,207, with persuasive evidence to suggest that the cost will total closer to $2,200,000. This difference in cost, even at its lower end, is far from de minimis, and constitutes a significant and entirely duplicative cost for service. Leesburg argues that if uneconomic duplication of facilities is a relevant factor, “the evidence of record demonstrates that the City will suffer significant financial impact if it is not permitted to continue to serve the Bigham Developments.” The fact that Leesburg, with advance knowledge and planning, was able to successfully race to serve Bigham, incurring its “financial impact” after the territorial dispute was filed, does not demonstrate either that PGS meets the standards to prevail in this proceeding, or that PGS should be prevented from serving development directly adjacent to its existing facilities in the disputed territory. Rule 25-7.0472(2)(e) Rule 25-7.0472(2)(e) establishes that customer preference is the “tie-breaker” if all other factors are substantially equal. The Villages is the “customer” for purposes of the selection of the provider of natural gas service to Bigham. There is no dispute that The Villages, as the proxy for the individual end-user customers, has expressed its preference to be served by Leesburg. The direct financial benefit to The Villages, and Leesburg’s willingness to enter into a revenue sharing plan -- a plan that, if proposed by PGS, would likely not be allowed by the Commission in its rate- setting capacity -- no doubt plays a role in that decision. Gas service to end-user customers living in in Bigham will be a revenue-generating venture for The Villages if served by Leesburg, and will not if served by PGS. Leesburg and SSGC have suggested that customer preference should occupy a more prominent role in the dispute since gas service, unlike electric, water, and sewer services, is an optional utility service. SSGC argued that since The Villages expressed that it would forego providing gas service to its developments if PGS is determined to be entitled to serve -- a position oddly presaged by Mr. Geoffroy in his September 27, 2017, email with Leesburg (see paragraph 35) -- and “in consideration of the business practices, size, track record of success, and economic import of The Villages,” the preference of The Villages for service from Leesburg should “be a significant factor in the resolution of this dispute.” Neither of those reasons can serve to elevate customer preference from its tie-breaker status as established by rule.
Conclusions For Petitioner: Andrew M. Brown, Esquire Ansley Watson, Esquire Macfarlane Ferguson & McMullen Suite 2000 201 North Franklin Street Tampa, Florida 33602 Frank C. Kruppenbacher, Esquire Frank Kruppenbacher, P.A. 9064 Great Heron Circle Orlando, Florida 32836 For Respondent South Sumter Gas Company: John L. Wharton, Esquire Dean Mead & Dunbar 215 South Monroe Street, Suite 815 Tallahassee, Florida 32301 Floyd Self, Esquire Berger Singerman, LLP Suite 301 313 North Monroe Street Tallahassee, Florida 32301 For Respondent City of Leesburg: Jon C. Moyle, Esquire Karen Ann Putnal, Esquire Moyle Law Firm, P.A. 118 North Gadsden Street Tallahassee, Florida 32301
The Issue There are three legal issues which remain for determination: (1) Whether Florida Petroleum has standing in this case; (2) Whether proposed rule 62-770.220(3)(b), requiring constructive notice to residents or business tenants of real property into which the temporary point of compliance is allowed to extend is an invalid exercise of delegated legislative authority within the meaning of Section 120.52(8)(c), Florida Statutes; and (3) Whether proposed rule 62-770.220(4), requiring additional constructive notice of the status of site rehabilitation is an invalid exercise of delegated legislative authority within the meaning of Section 120.52(8)(c), Florida Statutes.i
Findings Of Fact On December 23, 2004, the Department published a Notice of Proposed Rulemaking regarding amendments to Florida Administrative Code Chapter 62-770. In particular, proposed rule 62-770.220(3)(b) and (4), provides: Subsequent Notice of Contamination Beyond Source Property Boundaries for Establishment of a Temporary Point of Compliance (TPOC) - Prior to the Department authorizing a temporary extension of the point of compliance beyond the boundary of the source property (i.e., the location from which the contamination originates) in conjunction with Natural Attenuation Monitoring pursuant to Rule 62-770.690, F.A.C., or Active Remediation pursuant to Rule 62-770.700, F.A.C., the PRSP shall provide the following notices: * * * (b) Constructive notice to residents [if different from the real property owner(s) notified pursuant to paragraph 62- 770.220(3)(a), F.A.C.] and business tenants of any real property into which the point of compliance is allowed to extend. Such constructive notice, which shall include the same information as required in the actual notice, shall be provided by complying with the following: * * * Status Update 5-Year Notice - When utilizing a TPOC beyond the boundary of the source property to facilitate natural attenuation monitoring or active remediation, an additional notice concerning the status of the site rehabilitation shall be similarly provided every five years to [the classes of] those persons who received notice pursuant to subsection 62-770.220(3), F.A.C., unless in the intervening time, such persons have been informed that the contamination no longer affects the property into which the point of compliance was allowed to extend. * * * (The language in brackets was added pursuant to the Department's Notice of Change and "those" was deleted.) The proposed rule implements Section 376.3071, Florida Statutes. The specific authority for the proposed rule is Sections 376.303 and 376.3071, Florida Statutes. On February 2, 2005, the Environmental Regulation Commission held a public hearing on the proposed rules and approved the proposed rules with certain amendments. On February 14, 2005, Florida Petroleum filed a Petition for Determination of Invalidity of Proposed Rule (Petition) challenging the validity of proposed amendments to proposed rule 62-770.220(3)(b) and (4). The Petition was filed pursuant to Section 120.56(1) and (2), Florida Statutes, and in each instance, Florida Petroleum alleges that the proposed rule violates Section 120.52(8)(c), Florida Statutes. On March 4, 2005, the Department published a Notice of Change regarding the above-referenced Notice of Proposed Rulemaking. With respect to the pending proceeding, the Notice of Change reflects revisions to language of proposed rule 62- 770.220(4), which are not subject to challenge. See Finding of Fact 1. On May 16, 2005, without objection, official recognition was taken of the Department's Notice of Proposed Rulemaking and Notice of Change. Florida Petroleum is a Florida voluntary, non-profit trade association, which comprise, in part, approximately 194 Marketer Members who own and/or operate petroleum storage system facilities in Florida. Florida Petroleum’s purposes include providing representation on behalf of its members in legislative and regulatory matters before the Florida legislature and agencies. Florida Petroleum routinely represents its members in rule development proceeding and other regulatory matters before the Department of Environmental Protection, Department of Revenue, and Department of Agriculture and Consumer Services. Florida Petroleum’s By-Laws state that its purposes include advancing the business concerns of its members, pooling the energy and resources of its members, and communicating with elected officials at the national, state, and local levels of government. Towards those ends, Florida Petroleum has represented it members before the Florida Legislature in matters relating to the regulation of petroleum facilities under Chapter 376, Florida Statutes, and has appeared before the Department in rulemaking proceedings involving the regulation of petroleum cleanups, and the various state restoration funding assistance programs. The subject matter of the rule at issue is within the general scope of interest and activity of Florida Petroleum, in particular, its marketer members, who own or operate facilities that store petroleum products for consumption, use, or sale. Florida Petroleum submitted oral and written comments, recommendations, objections, and proposed amendments to the Department and the Environmental Regulation Commission in connection with the rules at issue in this case. A substantial number of Florida Petroleum marketer members are "persons responsible" for assessment and remediation of one or more petroleum-contaminated sites. Florida Administrative Code Chapter 62-770, governs the remediation of petroleum-contaminated sites. A substantial number of Florida Petroleum’s marketer members are "persons responsible" for assessment and remediation of sites identified by the Department as "confirmed" or "suspected" sources of contamination beyond the boundary of the facility (i.e., "off-site contamination"). In certain instances, the Department's rules allow for the use of No Further Action with Conditions procedures in cases of petroleum contamination where applicable regulatory requirements are met because the use of conditions, such as institutional and engineering controls, may be more cost- effective than active remediation. As of February 2005, the Department estimated that it had reports of approximately 23,000 petroleum-contaminated sites. In 2004, the Department received an estimated 539 Discharge Report Forms in connection with petroleum storage facilities. As of March 2005, the Department had information indicating that approximately 2,000 "off-site" properties have been affected by contamination. Assessment Reports filed with the Department indicate that a substantial number of these sites may have been affected by discharges of petroleum or petroleum products. Petroleum discharges will in all likelihood continue to occur in the future at petroleum facilities. Petroleum discharges will in all likelihood continue to affect off-site properties in the future.
