The Issue Whether Betmar Utilities, Inc.'s application for an expansion of territory under its water and wastewater certificates in Pasco County should be approved by the Public Service Commission.
Findings Of Fact Betmar Utilities, Inc. is a private utility company who owns and holds Florida Public Service Commission Certificates Number 137W and No. 98S. These certificates grant Betmar the right to operate a water and wastewater system in a specified territory within an unincorporated area of Pasco County. Betmar seeks an extension of its certified territory into the areas immediately to the north and south in an unincorporated area of the county. There is, or will be in the near future, a need for water and wastewater services in the proposed amended territory. An Application for Amendment of Territory was filed with the Commission to allow Betmar to service the area on November 13, 1989. When Betmar noticed the City of its pending application, an objection was filed to the proposed expansion. The objection specifically relates to the property on the south side of Geiger Road, which extends 330 feet south of the roadway, and adjoins the City's boundaries. Although the City does not currently provide services to this locale, it does own water and sewer lines on the northern side of Geiger Road in the Silver Oaks area. Other water and sewer lines in the City's system extend below the south side of Geiger Road at the far eastern portion of the area for which Betmar is seeking the extension of territory. In an interlocal agreement between the City and the County dated February 9, 1988, these governmental entities established designated service areas for water and wastewater services in this particular area of the county. The purpose of the agreement was to promote the economic delivery of services to citizens in the area, and to provide for the necessary long-range planning inherent in the provision of these services. Prior to the agreement, the County was authorized to provide the services to the areas for which an extension is sought by Betmar. The service area boundaries delineated in the agreement were to be periodically reviewed in conjunction with the review of each party's respective comprehensive plans. Pursuant to this agreement, the City and County determined that the City's Service Area Boundry would include the area south of Geiger Road that abuts Betmar's current service area. The City and the County each relied upon this interlocal agreement in the creation of their respective comprehensive plans. However, no additional action has been taken by the City to service the area. The City is not actually operating within the disputed area for a number of reasons. First of all, the City has adopted an ordinance which requires annexation of contiguous property as a condition of receiving its water and sewer services. The disputed portion of the proposed amended territory is not within the city limits and has not been annexed. Secondly, the City is not prepared to build utility lines to service the disputed proposed amended territory until the new bypass road along Geiger Road is built, and the proper right-of-way is obtained. At that time, the City would like to extend the Silver Oaks line under Geiger Road to the south, and the line along the eastern side of the disputed portion of territory to the west. These anticipated expansions correlate with the City's Service Area Boundry in the interlocal agreement which remains unchanged between the City and the County. A proposed service date was not provided by the City at the formal hearing. The City seeks to control land use and development of property along the Geiger Road corridor though its ability to provide or withhold utility services. Betmar also has water and sewer lines abutting or located on all properties described in its application for extension, including the area in controversy. These lines are currently active due to Betmar's water and sewer system which is in the center of the area targeted for expansion. Both Betmar and the City have the technical and financial ability to provide water and wastewater services in the proposed amended territory. Betmar has a tariff approved by the Commission which allows it to charge 110% of the cost of the extension of service from its existing lines to any property seeking service. Owners of property abutting Geiger Road have contacted Betmar about the possibility of providing service. A formal request for service has been made by Jake Developers for service in that area. Betmar's sewage collection facilities abutting the Geiger Road property are gravity lines. The City's sewage collection facilities in close proximity to the area are force mains. Betmar does not charge impact fees for connection into its system. The City charges a water impact fee of $350.00 and a sewer impact fee of $1,278.00 for connection into its system. Betmar anticipates a reduction in water and sewer rates if the extension is approved. Betmar presented no evidence about plans for further financial investment which would enable the utility to provide service in the area for which the extension has been requested because Betmar believes further investment is unnecessary. Betmar has an agreement with the County that states the County will provide bulk wastewater treatment to Betmar for the purpose of offering centralized wastewater services from the County's Southeast Subregional Wastewater Treatment Plant for a twenty-five year term. The County has placed a possible qualification on the term of years in the agreement by inserting the following clause: ... its first responsibility is to the customers inside its own service limits and that it reserves the right to act in the best interest of those customers in all circumstances. The agreement between the County and Betmar has not been approved by the Commission.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: The Commission should deny Betmar's application for an amendment to its certified territory in Pasco County as the applicant has failed to provide that it will be allowed the continued use of the County's Southeast Subregional Wastewater Treatment Plant for the twenty-five year term set forth in the agreement presented at hearing. DONE and ENTERED this 16th day of July, 1991, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of July 1991. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact are addressed as follows: 1. Accepted. See HO #2. 2. Accepted. See HO #1. 3. Accepted. See HO #3. 4. Accepted. See HO #11. 5. Accepted. See HO #4. 6. Accepted. See HO #9. 7. Accepted. See HO #11. 8. Accepted. See HO #13. 9. Accepted. See HO #14. 10. Accepted. See HO #9. 11. Accepted. See HO #9. 12. Accepted. See HO #11. 13. Accepted. Rejected. Improper legal conclusion. Accepted. See HO #5. Accepted. See HO #8. Accepted. See HO #14. Accepted. See HO #14. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #15. Accepted. See HO #15. Accepted. See HO #16. Rejected. Improper legal conclusion. See HO #17. Accepted. See Preliminary Statement. Respondent's proposed findings of fact are addressed as follows: Accepted. See Preliminary Statement. Accepted. See Preliminary Statement. Accepted that an interlocal agreement between City and county existed. See HO #5. The rest of the paragraph is rejected as legal argument. Intervenor's proposed findings of fact are addressed as follows: 1. Accepted. See HO #2. 2. Accepted. See HO #12. 3. Accepted. See HO #12. 4. Accepted. See HO #3. 5. Accepted. See HO #11. 6. Accepted. See HO #4. 7. Accepted. See HO #12. 8. Accepted. See HO #9. 9. Accepted. See HO #9. 10. Accepted. See HO #9. 11. Accepted. See HO #5. COPIES FURNISHED: Scott L. Knox, Esquire 28870 U.S. Highway 19 North Suite 230 Clearwater, Florida 34621 Thomas P. McAlvanah, Esquire 37818 Highway 54 West Zephyrhills, Florida 34248 Robert J. Pierson, Esquire Florida Public Service Commission 101 East Gaines Street Tallahassee, Florida 32399-0863 David Swafford, Executive Director Florida Public Service Commission 106 Fletcher Building 101 East Gaines Street Tallahassee, Florida 32399-0850 Steve Tribble, Director Records and Recording Florida Public Service Commission 101 East Gaines Street Tallahassee, Florida 32399 Susan Clark, General Counsel Florida Public Service Commission 212 Fletcher Building 101 East Gaines Street Tallahassee, Florida
Findings Of Fact Ed Smith is the President of Riverside Village Mobile Home Park, Inc., which in turn is the owner of the mobile home park in question in this case. The mobile home park is located in Ruskin, Hillsborough County, Florida. Petitioner was served with an Administrative Complaint alleging that the chlorine residual in the park water supply distribution system was inadequate and that this constituted a violation of Chapter 513 and Section 386.041(1)(f), Florida Statutes, as well as Rule 10D-26.67(1), Florida Administrative Code. Specifically, the Administrative Complaint alleges violations occurring between July 16, 1986 and July 29, 1986, and seeks the imposition of a civil penalty in the amount of $500 per day which "shall be calculated when this complaint is received by the (Petitioner), and will run until the violation has been corrected." Petitioner requested a hearing to contest these allegations, and his request was filed with Respondent's Clerk on October 8, 1986. It was not established by competent substantial evidence when Petitioner "received" the Administrative Complaint which is the subject of this action. The only evidence of any violation occurring between July 16 and July 29, 1986 was the testimony of Harry Messick who signed an Official Notice and Notice of Intended Action which were both dated July 16, 1986, and which alleged that "chlorine reading found at time of inspection (was) between 0.1 ppm and (a) trace." However, Messick did not perform any test to either produce or confirm this result. He testified that someone else performed the field test, but there was no testimony from anyone else who may have actually conducted a test on Petitioner's water supply system on July 16, 1986. Therefore, it has not been established by competent substantial evidence that Petitioner's water supply system on July 16, 1986, was in violation of the requirement that .2 mg/1 of free chlorine residual be maintained. Testimony from Respondent's other witnesses, Norman Vik and Neil R. Schobert, indicates Vik was not even at Petitioner's mobile home park between July 16 and 29, 1986, and the only test conducted by Schobert found that Petitioner's water supply system was in compliance on July 24, 1986. Design modifications in Petitioner's water supply distribution system were approved by the Hillsborough County Health Department on July 9, 1986.
Recommendation Based on the foregoing, it is recommended that Respondent enter a Final Order DISMISSING the Administrative Complaint filed against Petitioner. DONE AND ENTERED this 19th day of February 1987 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of February 1987. APPENDIX (DOAH Case No. 86-4094) Rulings on Respondent's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 2-3. Rejected in Findings of Fact 4, 5. COPIES FURNISHED: James A. Sheehan, Esquire Florida Federal Building One Fourth Street North Suite 800 St. Petersburg, Florida 33701 Carol M. Dittmar, Esquire 4000 West Buffalo Avenue Suite 520 Tampa, Florida 33614 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301 John Miller, Esquire General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301 =================================================================
Findings Of Fact The applicant, East County Water Control District, Lehigh Acres, Florida (ECWCD), was created in 1958 pursuant to statute, legislative act, and judicial decree as a drainage district for resources management and control. ECWCD has similar boundaries to those of the Lehigh Acres development near Fort Myers, Florida, which consists of some 65,000 acres, 1,200 of which are located in Hendry County, and the remainder in Lee County, Florida. The works sought to be constructed are set forth in Unit III of the ECWCD's Plan of Reclamation that was approved by the Circuit Court of Lee County on September 25, 1972. The Plan of Reclamation is intended to provide a system of water control for separate Unit No. 3, an area of almost 70 square miles in Lehigh Acres, to prevent flooding in that area and thus permit maximum beneficial use of land for development and other purposes. The Plan of Reclamation indicates that an auxiliary benefit would accrue in that the peak discharge into the lower Orange River would be lowered by a planned outfall canal system that will extend and adjoin existing canals with water control structures (Testimony of Gardner, Ward, Exhibit 11.) In 1973, the ECWCD filed application with various state agencies to implement its Plan of Reclamation. In 1974, one of the agencies requested that a report be prepared on the effect of implementation of the plan on water resources. This was secured in May, 1975, and applications were refiled thereafter. On June 8, 1975, the ECWCD filed Application No. 20986 with the FCD requesting a surface water management permit to construct the works covered under its Plan of Reclamation and an additional water control structure (Testimony of Gardner, Ward, Composite Exhibit 1.) The ECWCD consists of approximately 102 square miles located in the northeast portion of Lee County, south of the Caloosahatchee River, some 17 miles east of Fort Myers. The principal community located therein is Lehigh Acres with a current population of about 13,000. This developed area represents about 34 percent of the ECWCD. Unit No. 3 covers approximately 69 percent of the total distract land area. The primary receiving water body for the land area of the ECWCD is the Caloosahatchee River on the north boundary which in turn is one of the two major outlets of Lake Okeechobee for water control. The ECWCD contributes approximately 53 square miles of runoff into the Caloosahatchee River drainage basin. The remainder of 49 square miles of the ECWCD contributes runoff to the Orange River which enters the Caloosahatchee River approximately 8 miles downstream of the Franklin Lock and Dam. The ECWCD presently has some 175 miles of primary and secondary canals, several controllable culverts and one major water control structure, No. 1, on Hickey's Creek Canal. Internal stormwater routing is accomplished via swales and shallow waterways. The existing water management plan removes excess storm runoff from 49 square miles via Sailfish and Able Canals (which are located within the district boundaries) to the Orange River. There are two other drainage basins, one being the Hickey's Creek Basin of 20 square miles drained by the Hickey's Creek Canal which in turn is fed by several smaller canals, and the second being the portion of Bedman's Creek Basin within the ECWCD of 14 square miles. The developed portion of the ECWCD is serviced by sewage collection and central treatment facilities. To date, there has been no shortage of domestic water in the ECWCD, which comes from underground sources. The three major canals serve as outfall canals as well as major interior collector canals. Severe flooding has occurred within the Orange River and the Hickey's Creek basin in the past, but has not been experienced in the past several years due to drought conditions (Exhibit 5.) Under the present water control plan, the Able-Sailfish Canal basin discharges to the Orange River while the Hickey's Creek Canal basin discharges to the Caloosahatchee River. Under the proposed plan, both basins would discharge all runoff to the Orange River below 178 cubic feet per second which has been determined to be a safe limit for discharges into the Orange River to prevent flooding due to ECWCD discharges. Any runoff in excess of 178 cfs will go to the Caloosahatchee River (Exhibit 5.) The proposed water control project consists of the following principal elements: A diversion waterway approximately 1 mile long will be constructed from Able Canal to Hickey's Creek Canal, with a portion of the latter canal to be enlarged. Existing Structure No. 1 will be enlarged and automated to accommodate additional flow to be diverted from Able Canal to Hickey's Creek Canal. Structure No. 2 to be located at the junction of Able and Sailfish Canal, equipped with automatic gates, will be constructed to maintain low flows into the Orange River and to divert the excess into the Caloosahatchee River via Hickey's Creek Canal. An outfall canal from the junction of Hickey's Creek and Hickey's Creek Canal to the Caloosahatchee River, approximately 3,000 feet in length, will be built to carry excess waters from the diversion to alleviate flooding in the lower regions in Hickey's Creek. Structure No. 3, a low level overflow type dam, will be constructed to require continuation of low volume discharges down Hickey's Creek with higher discharges (above 360 cubic feet per second) passing to the Caloosahatchee River via the Outfall Canal (Exhibit 5.) The sandstone aquifer which underlies the water table aquifer in the ECWCD area will not be significantly affected by the proposed project. They are separate aquifers and do not show the same response to water level changes. During a heavy rainstorm, the water table aquifer rises to the surface. The source of recharge for the sandstone aquifer has not been definitely ascertained, but even if it is determined that recharge occurs in the ECWCD land area, it would not be detrimentally affected because the proposed works are designed to ensure that present water levels remain the same (Testimony of Winter.) Concern over the possible loss of cypress trees and increased number of fires if the area known as Greenbriar Swamp is drained are premature because proposed horizontal canals bordering that area are not included in the project under consideration (Testimony of Long.) The Orange River and Hickey's Creek Basins have experienced floods in the past. Various land owners who reside near the Orange River in the Buckingham area, which is adjacent to but not within the ECWCD, have experienced flooding of the Orange River in past years that has caused damage to their property and who consequently are in favor of the proposed project (Testimony of Pizzagalli, Hudson, Skates.) Other land owners are of an opposite view due to possible lowering of the water table in the Orange River and the Hickey's Creek areas (Testimony of Cantrell , Hartwell, Brown, Henry, Exhibit 7.) Although testimony and documentary evidence was received at the hearing concerning the effect of the proposed works upon water quality, specific findings in this regard are not deemed necessary in view of the FCD staff recommendation that any granting of a surface water management permit be conditioned upon the ECWCD's pending application before the Department of Environmental Regulation for a Chapter 403 and 253 permit and water quality certification (Exhibit 5.)
Recommendation That applicant be granted a permit for construction of the facilities proposed in its Application No. 20986, subject to the conditions set forth in the Staff Report of the Central and Southern Florida Flood Control District. Done and entered this 3rd day of May, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: John Wheeler, Esquire P.O. Box V West Palm Beach, Florida 33402 Thomas G. Pelham, Esquire P.O. Box 1109 a 2302 Tallahassee, Florida 32302 Richard D. DeBoest, Esquire P.O. Box 1480 Fort Myers, Florida 33902 Charles A. Ball, Jr., Esquire Route 1, Box 486 Ft. Myers, Florida Madison F. Pacetti, Esquire 324 Royal Palm Way Palm Beach, Florida
The Issue Whether Petitioner was wrongfully denied general permits to construct an extension to a public water supply distribution system and to construct a waste water treatment system at a camp being constructed by Petitioner.
Findings Of Fact On December 11, 1991, the Department of Environmental Regulation (DER), Ft. Myers office, received applications from the Orange Blossom Baptist Association, Petitioner, submitted by its project engineer, for general permits to install an extension to provide water to, and construct a waste water treatment facility for, a camp being built by Petitioner. These applications were reviewed by the Respondent, and on January 2, 1992, James Oni telephoned Petitioner's engineer to tell him the applications were incomplete and additional information was required. Some of this additional information was submitted by Petitioner on January 7, 1992, but the word "vertical" was left out of the application to indicate what the 18 inch separation of the water and sewer lines represented; no pump out was provided for the lift station; the flotation formula as submitted contained a typographical error where an "s" was substituted for a "5", leaving the calculation of storage capacity of the system indeterminable; the lift station was only 4.5 feet deep and should normally be 10 feet; the configuration of the sump to insure solids would settle to the bottom was not provided, nor was the amount of concrete to be used to obtain this configuration shown; and the type of equipment to be used was not clearly shown. In summary, when submitted the application was not technically correct, and it remained technically incorrect after the additional information was submitted by the applicant. General permits are required to be processed by DER within 30 days of their receipt, and if not denied within that 30 day period they must be approved regardless of their compliance with the statutes and regulations.
Recommendation It is recommended that a Final Order be entered denying Orange Blossom Baptist Association general permits to install a waste water treatment facility and to construct an extension to a public water supply distribution system in Highlands County, Florida. ORDERED this 6th day of May, 1992, in Tallahassee, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of May, 1992. COPIES FURNISHED: William N. Clark, P.E. 233 E. Park Avenue Lake Wales, FL 33853 Francine M. Ffolkes, Esquire Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Carol Browner Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400
The Issue The narrow issue is whether the City of Daytona Beach's (City's) Petition for Administrative Hearing (Petition) challenging certain special conditions in its water use permit was timely.
Findings Of Fact Based on the evidence presented by the parties, the following findings of fact are made: Permit Number 2-127-0320 (Permit) was issued by the District on December 14, 1992, and was scheduled to expire on December 14, 1999, seven years later. The Permit authorized the City to withdraw 5,849 million gallons per year of groundwater from the Floridan aquifer for household, water utility, and essential uses. On August 28, 1998, the City filed an application to renew the Permit. In May 2004, the District approved the application, with certain modifications. To place this phase of the controversy in proper perspective, a review of the District's application review process is helpful. After an application for a consumptive water use permit is filed by an applicant, the District's Division of Water Use Regulation (Division) undertakes a preliminary review. If further information is needed to resolve the Division's concerns, the applicant is requested to submit additional information. A determination is then made as to whether the additional information provided by the applicant is deemed to be "sufficient" so as to render the application complete; if not, the Division staff (staff) often collects additional information on its own initiative to resolve any outstanding concerns. Once an application is deemed complete through responses from an applicant, or after additional information is obtained by the staff, the staff prepares and issues a document known as a Technical Staff Report (TSR), which represents the staff recommendation and the District's notice of intent to grant or deny the application. In some cases, however, a draft TSR, which contains the staff's preliminary recommendation, may be issued before the final TSR is prepared. After the TSR is prepared, the Division notifies the District's Division of Permit Data Services (Data Services) that a package of documents (known as the noticing package) consisting of the TSR, Written Notice of Intended Decision, and Notice of Rights should be sent to the applicant and other interested parties. This noticing package is generated through an automated system maintained by Data Services and offers substantially affected persons a point of entry to contest the proposed agency action. More than one TSR can be issued by the District while an application is pending. However, only one noticing package (which includes a point of entry) is sent to the applicant and interested persons. After a point of entry is offered, the TSR is placed on the agenda of the District's Governing Board, which may approve, approve with modification, or deny the application. In the rare case when the Governing Board reaches a decision which "substantially differs from the notice of District decision," a new point of entry is offered. After a TSR is issued, and a point of entry offered, but before the Governing Board considers the matter, an applicant may still submit new information to the staff in an effort to resolve any outstanding issues raised in the TSR. Indeed, in some cases, a "revised" TSR may be prepared, which reflects any changes brought about by the submission of new information, but a new point of entry is not offered (unless the changes in the revised TSR are substantial). When a revised TSR is prepared, it typically contains strike-throughs and underlines to reflect any changes made. In this case, a number of contentious issues arose between the City and the staff during the review process, particularly involving impacts to wetlands. Consequently, between December 1998 and September 2000, at least four requests for additional information were made by the staff. However, this information never fully resolved the issues to the staff's satisfaction. On July 11, 2003, the staff issued a draft TSR containing its preliminary conclusions, including one regarding the wetland impacts issue. Because the TSR was a "draft," it was not accompanied by a Written Notice of Intended Decision or Notice of Rights. At the request of the City, on October 3, 2003, a "primarily technical" meeting was held in Daytona Beach for the purpose of allowing the staff to give a presentation concerning its findings in the draft TSR. Several City staffers attended the meeting. No attorneys for either party were present. Mr. Dennis R. Colby, then the City's Manager of Water and Wastewater Utilities, and the person who signed the City's application, recalled that at the meeting Mr. Dwight T. Jenkins, Division Director and an attendee at the meeting, advised him that the City would "have its day in court" after the Governing Board voted on the permit application. Mr. Colby, who is not an attorney, says he understood this to mean that the City could request a hearing after the Governing Board voted on the City's application. He did not confirm this understanding with any other person, including anyone at the District or in the City Attorney's Office, nor did he raise the issue again. Another City staffer, Stan R. Lemke, City Public Works Director, attended the same meeting and recalled a slightly different version of events in which Mr. Jenkins allegedly said words to the effect that "if [the City] got to the Governing Board and [the City] didn't like the outcome," that it could then file a petition for a hearing. Mr. Jenkins "very clearly" recalled that he did not offer any procedural advice at that meeting and that all of his comments were directed to technical issues. Another District employee, James Hollingshead, who also attended the meeting, could not recall Mr. Jenkins giving any procedural advice of the type described by Mr. Colby or Mr. Lemke. The testimony of Mr. Jenkins is accepted as being the most credible on this issue because Mr. Jenkins is also an attorney and he "fully underst[ood] the ramifications that are associated with advising somebody regarding their legal rights." On January 26, 2004, the Division finalized its TSR on the City's application and alerted Data Services that a noticing package should be sent to the City and other interested persons. On January 29, 2004, Data Services issued a computer-generated package consisting of the TSR, Notice of Intended District Decision, and Notice of Rights. The TSR recommended approval of Permit Application 8834 subject, however, to twenty-four special conditions, of which nine are opposed by the City. The Notice of Rights specifically advised the City that it was required to file a petition for administrative hearing, or a request for an extension of time to file a petition under Florida Administrative Code Rule 28-106.111(3), by February 26, 2004. The noticing package also indicated that the Governing Board would take final action on the application at a meeting to be held on February 10, 2004. Although the City has in-house counsel, and later hired outside counsel to represent it in this action, on its application filed with the District, the City listed Mr. Colby as its designated representative. (The City never advised the District that notices and other papers should be sent to anyone other than Mr. Colby.) Consistent with its practice of sending all noticing packages to the designated representative on an application, Data Services sent the noticing package to Mr. Colby by certified mail. The receipt (green card) indicates that the Notice of Rights (and other documents) was received by the City on January 30, 2004, as acknowledged by the signature of another City employee, Francis X. Bell, who is authorized by the City to sign the return receipt green cards. It is fair to infer from the evidence that Mr. Colby did not alert the City Attorney about the deadline provided in the Notice of Rights or seek legal advice on what steps the City should take. In fact, the evidence shows that it was not until at least March or more likely April 2004 that an attorney for the City became involved in this matter.1 On February 1, 2004, the District published a notice in The News Journal, a newspaper of general circulation in Volusia County, advising that a notice of intent regarding the City's application had been issued and that all petitions for administrative hearings must be filed within 21 days after publication of the notice, or within 26 days of the District depositing the Notice of Intent in the mail for those persons who receive actual notice. At the City's request, on February 3, 2004, City representatives again met with staff to discuss the pending case. Because the City was aware that the Governing Board intended to take final action on the City's application at its February 10 meeting, on February 4, 2004, Mr. Lemke sent a letter to Mr. Jenkins requesting that the District defer consideration of the application until a later date. More specifically, the letter stated in relevant part that I understand we are on the February 10, 2004 Agenda for discussion of our consumptive use permit. We believe additional discussion is warranted prior to proceeding. Please accept this as a formal request for an extension. * * * Our consultant recently hired a biologist to assist in the review of the wetlands information. His analysis resulted in a report on the wetland condition dated January 28, 2004. A copy of this report is enclosed for your review. It is our opinion following your review of the information presented our respective staffs should meet one more time to resolve our technical differences. Following this meeting, I believe we will be prepared to go before the Board for issuance of our consumptive use permit. We would like to request we be placed on the April Agenda to allow adequate time for comments. The letter did not request a hearing, request an extension of time to file a request for a hearing, or otherwise directly or indirectly respond to the Notice of Rights previously received by the City on January 30, 2004. Although the City suggests otherwise, a fair construction of the letter is that Mr. Lemke was simply asking that the City's application be placed on the April 2004 agenda, so that the staff could review the biologist's report prepared a few days earlier. In accordance with Mr. Lemke's request, Mr. Jenkins asked that the item be removed from the February 10, 2004, agenda and that it be rescheduled to the April 2004 meeting. On February 5, 2004, Mr. Witt, a hydrogeologist employed by the City since August 2003 as an outside consultant, also sent a letter to Mr. Jenkins labeled as a "Time Extension Request" in which, among other things, he requested on behalf of the City that the [District] postpone by two (2) months (i.e., time extension) their submittal of the staff report and permit for the governing board for approval. It is the City's desire to avoid having to file for an administrative hearing in order to have an impartial review. At hearing, Mr. Witt explained that he had been authorized by Mr. Lemke to send the letter. Also, while the letter did not specifically say so, Mr. Witt stated that it was intended to serve as a request for an extension of time to file a request for a hearing, and not simply to request a postponement of a decision by the Governing Board. Before drafting his letter, Mr. Witt did not consult with an attorney or read the Notice of Rights, the District's procedural rules, or the Uniform Rules of Procedure. According to Mr. Colby, Mr. Witt was authorized to "evaluate documents, report back to the [C]ity, and have communications with St. Johns, ask questions from St. Johns, [and] look at documents." It seems unlikely, however, that the City had authorized Mr. Witt, a hydrogeologist, to protect its legal rights, and it never advised the District that Mr. Witt was authorized to seek that type of relief. In any event, because Mr. Witt was in the process of preparing a report on wetlands impacts (which was completed on February 27, 2004), a fair construction of the letter is that Mr. Witt was merely seconding Mr. Lemke's request that the Governing Board take up the City's application at a later date so that the staff could consider the newly-prepared consultants' reports prior to a final decision being made. Mr. Jenkins did not treat either letter as a formal request for an extension of time to file a request for a hearing under Florida Administrative Code Rule 28-106.111(3) and therefore did not forward them to the District's Office of the General Counsel. Instead, he treated them as requests to defer consideration of the application by the Governing Board until a later date. This action was consistent with the language in the two letters. It also comports with testimony by Mr. Colby and Mr. Lemke that they were under the impression, albeit incorrect, that it was not necessary to file a request for a hearing until after the Governing Board voted on the City's application. Finally, although it would seem logical to do so if the two letters were intended to be requests for an extension of time to file a petition, neither Mr. Lemke or Mr. Witt made any follow- up inquiry to determine if their "requests" for an extension of time had been granted, and if so, the new date for filing a petition. On March 3, 2004, Mr. Lemke sent a letter to a District hydrologist, James Hollingshead, in which he indicated that the City agreed with all twenty-four conditions in the Permit except conditions 2, 3, 6, 10, 12-14, 19, and 24. As to those conditions, Mr. Lemke proposed suggested changes. The letter did not request a hearing, but did indicate that the City looked "forward to a meeting with the District staff prior to the April Board meeting." The letter also included Mr. Witt's report completed a few days earlier. After receiving Mr. Witt's report (and the earlier report by the City's biologist), the staff undertook another review of the application in light of the new information in the reports. On March 25, 2004, Mr. Hollingshead telephoned Mr. Lemke and advised that the staff had conducted an additional field investigation and that its analysis would not be completed for two more weeks. As a consequence, the staff was requesting that the TSR dated January 26, 2004, be taken up at the Governing Board's May 2004 meeting, and not in April, as originally planned. On April 14, 2004, Mr. Hollingshead e-mailed Mr. Lemke and advised him that the staff had completed its review of Mr. Witt's report and that except for certain "date changes" in the permit conditions, it did not intend to change its recommended agency action. At the request of the City, on April 20, 2004, another meeting was held with the staff. Mr. James Thurrott, who is the City's Assistant Manager for Water and Streets, attended the meeting and says he recalled Mr. Jenkins advising that the City could either mediate the dispute or have "an administrative hearing once the governing board took an action." Mr. Witt, who also attended that meeting, recalled that Mr. Jenkins described the point of entry process and that the Governing Board "preferred it be done before the [B]oard meeting, but it could be done after the [B]oard meeting." (Mr. Witt's recollection of this conversation was somewhat confusing, for he first indicated that the meeting occurred in October 2003 and then later stated it was February 2004. More than likely, however, Mr. Witt was referring to the meeting held on April 20, 2004, since Mr. Witt recalled that the City's outside counsel was also present at the meeting.) Again, Mr. Jenkins denied giving procedural, as opposed to technical, advice to the City and says he referred any legal questions to the City's outside counsel, who by then was participating in the case and attended this meeting. This version of the events is accepted as being more credible, particularly since counsel for the City was present. On April 26, 2004, the Division prepared another TSR incorporating certain changes to the conditions suggested by the City. Due to inadvertence and miscommunication, Data Services generated a second noticing package on April 29, 2004, containing not only the new TSR, but also another Notice of Intended Decision (Second Notice) and Notice of Rights. While no changes were made to conditions 2, 3, 6, 10, and 19, certain changes (presumably suggested by the City) were made to the other disputed conditions. These changes, however, were not so substantial as to warrant the issuance of another point of entry (even though one was erroneously sent by Data Services). The second package was sent by certified mail to Mr. Colby and was received by the City on April 30, 2004. The return receipt indicates that Francis X. Bell again signed the green card on behalf of the City. At the City's request, on May 3, 2004, the City and staff held another meeting to discuss the proposed permit conditions and wetlands mitigation projects. On May 5, 2004, Mr. Lemke sent a letter to Mr. Jenkins in which he indicated that, based on discussions at the May 3 meeting, the City was offering additional suggestions regarding conditions 3, 6, and 14. He also discussed several points of agreement that were reached at the meeting on other issues. On May 6, 2004, the Division issued a Revised TSR which incorporated the changes previously made in the April 26, 2004, TSR. (The Revised TSR contains strike-throughs and underlines reflecting the changes made in the April 26, 2004, TSR. Whether further changes were made as a result of Mr. Lemke's letter of May 3 is not of record.) Because the changes were not substantial, a new point of entry was not offered the City. On May 11, 2004, the Governing Board approved the issuance of the Permit, as recommended in the Revised TSR. On May 21, 2004, the City filed its Petition requesting a formal hearing and asking that the District modify the Permit issued on May 11, 2004, "as proposed in [its letters dated] March 3, 2004, and May 5, 2004." Thus, the City was challenging special conditions 2, 3, 6, 10, 12-14, 19, and 24. The Petition indicated that it was being filed in response to the point of entry received by the City on April 30, 2004. Not surprisingly, it made no reference to the first point of entry received by the City on January 30, 2004. After the Petition was referred to DOAH, the District filed its Renewed Motion.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the St. Johns River Water Management District enter a final order dismissing the City of Daytona Beach's Petition as being untimely. DONE AND RECOMMENDED this 29th day of September, 2004, in Tallahassee, Leon County, Florida. S DONALD R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 2004.
The Issue The parties have raised myriad issues hare. Petitioner has alleged being capriciously and arbitrarily denied its permit because similar treatment plants have been licensed nearby. The parties disagree over whether local Lake County Pollution Control Board rules are applicable to Petitioner's plant. If the rules are applicable, they disagree over their interpretation. The parties further disagree over whether Petitioner has pending an application for a waste water treatment plant operating permit. It is this last issue which is discussed below because it is dispositive of the case.
Findings Of Fact Petitioner operates a waste water treatment plant in Lake County, Florida which serves four motels at the intersection of U.S. Highway 27 and SR 19 immediately to the south of Interchange 27 on the Florida Turnpike. On October 27, 1972, DER issued a construction permit to Petitioner to construct the plant at a design capacity of 250,000 gallons per day (gpd). The treated effluent was proposed to be discharged via a spray irrigation system to the ground water on Petitioner's site. The plant has never operated at capacity. Its normal volume has ranged from between a low of 40,000 gpd to a peak of 140,000 gpd. Petitioner's plant is situated on a 12.5 acre site over a clay hard pan. The hard pan which is immediately below the ground surface prevents adequate percolation of the plant's effluent down to the underlying ground water. During periods of heavy rain the effluent from the plant has breached a retaining dike and flowed directly into a marsh area known as the Little Everglades to the north. Petitioner has submitted four permit applications to the Department. The first, submitted in September of 1972 was for the construction permit already mentioned. The next applications dated October 22, 1973, was for an operation permit. The application indicated that there would be no discharge to surface waters but there would be a discharge to ground waters. The application also indicated that the availability of space for the expansion of the plant was limited to the site at that time. Petitioner later purchased additional land not reflected in this application. The operation permit was never granted by the Respondent. As stated by Mr. Potter, President of Lake County Utilities, Inc., "In the fall of 1973, I made an application as engineer for the utility company to the Florida DPC [Department of Pollution Control] and to Lake County for an operation permit. That permit was denied by the Department on the ground that we had not satisfied Lake County as to the total containment of our effluent." Subsequently on August 30, 1976, Petitioner submitted a construction permit application to DER for permission to add a 1.32 acre oxidation-polishing pond, to regrade and regrass the existing spray irrigation field, to construct a 0.40 acre denitrification pond and to add a nutrient uptake. No increase in the design capacity was proposed. On that application Petitioner indicated that there would be a discharge to the surface waters of the state. In answer to that part of the application which asked for proposed drainage path of the effluent Petitioner stated, "From treatment plant to 'on-site' ponds to 'on-site' grassy pond and marsh would overflow to ajacent Florida DOT [Department of Transportation] borrow pit: thence via developed drainage waste to the 'Little Everglades' swamp: then, via developed canal and ditches and through natural ponds and marshes to 'Little Lake Harris' and ultimately the Atlantic Ocean." This permit was denied by DER because the Lake County Pollution Control Board did not approve the plan. Finally on September 29, 1978, Petitioner applied for another construction permit. Thee construction would include: Construction of storm water control structures and culverts: Regrading of water and sewer plant sites; Construction of percolation pond "A" and enclosing dikes; and Construction of percolation pond "B" and enclosing dikes. This application was made in response to advice from DER that Petitioner's plant should be in a no discharge condition in order to comply with Lake County Pollution Control rules. On November 2, 1979, the Department issued a Letter of Intent to deny the last permit application because the application was deemed to be incomplete and because the further data which DER requested was not provided. In response to DER's intent to deny the construction permit Petitioner on November 20, 1979, filed its Petition for an Administrative Hearing. Petitioner does not now intend to construct the proposed facilities for which it requested the construction permit in September of 1978. The following colloquy is from the final hearing. Mr. Stephens Have you-- Can you describe briefly the nature of the changes proposed in your 1978 construction permit application? Mr. Potter 1978 construction permit application on nominally the five acre parcel to create a diked pond or lake. Mr. Stephens Uh-huh. Mr. Potter Solely that. The part on the nominally two and a half acre parcel, give or take, was to create a deep percolation pond in which I proposed digging through the clay to the sand and shell below. Mr. Stephens Uh-huh. Mr. Potter So that waters that entered that pond, A, because of its depth, would denitrify and release nitrogen contents to the atmosphere; and, the water would, because of its hydraulic head in relation to the soil below, would push its way into the soils below. Mr. Stephens Uh-huh. Mr. Potter But in the event I could not dispose of the water through that form of percolation, it would overflow into the five acre diked area. And thereby I hoped to satisfy Lake County and the D.E.R. and solve this lingering festering problem. Mr. Stephens Uh-huh. You are the Petitioner in this case. Is it your desire or intention to complete those. . .that construction? Mr. Potter Now that I have been made aware of the law, the law of Chapter four oh three, the rules of Florida D.E.R. and become clear as to the ordinances adopted by the County Commission and the Lake Pollution Board of Lake County as to Class 3-B waters, I have no intention of squandering my money, and, in effect, the money of my customers, in such a wasteful pursuit. Mr. Stephens So you're saying here under oath you don't intend to perform that work even if granted a permit? Mr. Potter Not shy of a court order. As the result of Mr. Potter's testimony on behalf of the Petitioner at the final hearing, it is found that Petitioner has withdrawn its September 1978 application for a construction permit. There is not now pending before the Department of Environmental Regulation a valid permit application for the Petitioner to operate its waste water treatment plan. On May 9, 1980 Lake County Utilities, Inc. served Petitioner's Fourth Interrogatories to Respondent which asked by Interrogatory 10: Please state when and by whom the Department of Environmental Regulation has caused field studies to be made and samples to be taken out of the waters of Lake County (and specifically the geographical vicinity of U.S. 27 - S.R. 19 - Fla. Turnpike) periodically and in a logical geographic manner so as to determine the levels of water quality of the waters as such studies and sampling is within the powers and duty of the Department as mandated by the Florida Legislature in Chapter 403 of the Laws of Florida. (emphasis in original) The Department responded: 10. The Department conducts sampling in the waters of Lake County in conjunction with individual permit applications and not on a systematic basis throughout the County. Respondent objects to this interrogatory as being irrelevant to this proceeding in that the subject permit was not denied on the basis of anticipated water quality violations, but rather, as a result of the pollution control ordinances of Lake County, Florida, which prohibit any discharge to surface waters from the subject facility, and which the Department is required to enforce pursuant to Section 403.182(6), Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it Is RECOMMENDED: That the State of Florida, Department of Environmental Regulation enter a Final Order dismissing the Amended Petition for Administrative Hearing without prejudice, however, to the filing of a new application by Petitioner for a waste water treatment plant operating permit. DONE and RECOMMENDED this 12th day of May, 1981, in Tallahassee, Florida. MICHAEL P. DODSON 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 12th day of May, 1981.
Findings Of Fact Pal-Mar is a water management district operating pursuant to Chapter 298, Florida Statutes, in Martin and Palm Beach Counties, Florida. Pal-Mar has proposed to construct a drainage system serving approximately 22,500 acres of land of which approximately 18,000 acres are located in Martin County. There are five (5) proposed phases of construction required to complete the drainage system. Four (4) of these phases, I, II, IV and V, are considered by Pal-Mar to constitute a closed system as defined in Section 373.403(6), Florida Statutes. There is no connection between phase III and the rest of the system. During mid 1976, Pal-Mar filed an application with SFWMD for a surface water management permit for Pal-Mar's water management plan for phase III. It was stated therein that Pal-Mar considered phases I, II, IV and V to be a closed system and exempt from the permitting requirement of Part IV, Chapter 373, Florida Statutes. At its regular monthly meeting of October 7, 1976, the governing board of SFWMD considered the status of phases I, II, IV and V of the Pal-Mar plan. A motion to declare phases I, II, IV and V not a closed system failed. No other motion was made concerning the system. At its annual landowners meeting of June 16, 1977, the president of Pal-Mar's Board of Supervisors indicated that Pal-Mar had received a "tentative declaration" that phases I, II, IV and V constitute a closed system. On September 2, 1977, Martin County initiated the instant proceeding. Phases I, II and V of the propose drainage system are separated from phase IV by State Road 711. The section of State Road 711 in Martin County is maintained by Martin County and Martin County owns a 200 foot easement for the State road. The southern portion of State Road 711 within the drainage system runs through Palm Beach County. The Jupiter Grade Road passes through the center of the proposed drainage system's reservoir in an east/west direction. Litigation is presently pending between Pal-Mar and Martin County as to the ownership of the Jupiter Grade Road. Pal-Mar has acquired no easements or other legal use of the Jupiter Grade Road from Martin County nor has Pal-Mar obtained from Martin County any form of easement or license to cross State Road 711 for purposes of implementing the drainage system. As part of its plan, Pal-Mar intends to acquire from either Martin County or Palm Beach County such control of or access to State Roads 711 and its appurtenant easement as is necessary to implement the drainage system plan. As to the Jupiter Grade, Pal-Mar intends to either provide a two part reservoir with containment levees to protect the Jupiter Grade, to seek requisite ownership or control of the Jupiter Grade from Martin County or to voluntarily relocate the Jupiter Grade as part of its proposed project. Finally, the project will require a joint levee east of phase IV, 500 feet north of State Road 706. Pal-Mar intends as part of its plan to obtain necessary easements for construction of the joint levee. The proposed system requires no water for filling, replenishing and maintaining its water level and indeed requires no water at all.
Recommendation For the foregoing reasons, it is recommended that South Florida Water Management District enter its declaratory statement declaring that the Pal-Mar Water Management District plan is a closed system as that term is defined in Section 373.403(6), Florida Statutes. DONE and ENTERED this 8th day of March, 1978, in Tallahassee, Florida. MICHAEL R. N. McDONNELL Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 1978.
The Issue Whether, and to what extent, petitioner should be authorized to increase the water and sewer rates it charges its customers.
Findings Of Fact I. The Utility and its Application The Utility, a wholly owned subsidiary of Gulfstream Land and Development Corporation, owns and operates water and sewer systems serving residents of "Jacaranda Community," a development located within the city limits of Plantation, Florida. The Utility's water treatment plant uses a lime- softening process; its sewage treatment plant uses a contact stabilization mode. During the test year ending September 30, 1980, the Utility supplied water service to an average of 3,162 residential, 662 general service, and 14 private fire-line customers; during the same period it supplied sewer service to an average of 3,162 residential and 276 general service customers. By its February 5, 1981, application, the Utility alleged that it was authorized a rate of return of 9.87 percent, yet during the test year it earned only a 7.20 percent rate of return on its water rate base, and a 6.58 percent return on its sewer rate base. It proposed new rates which would generate $1,271,841 in water operating revenues and $1,381,401 in sewer operating revenues--constituting a rate of return of not less than 12.42 percent. (Testimony of Fabelo; Petitioner's application dated January 30, 1981, R-4.) II. The Elements of Rate-Making In setting utility rates, the Commission must determine: (1) rate base; 2/ (2) the cost of providing the service, including debt interest, working capital, maintenance, depreciation, tax, and operating expenses; (3) a fair return on the rate base; and (4) the quality of service provided. If the Utility is providing service of acceptable quality, it is entitled to rates which will produce revenues sufficient to cover its reasonable costs of operation and allow it an opportunity to earn a fair return on its rate base. There are three major issues in this case: two involve the determination of rate base and the other involves whether several Utility expenditures should be expensed or capitalized. These issues are addressed below with the the appropriate rate-making element. Rate Base The two issues involving rate base are: (1) what portion of the Utility's sewer treatment plant is used and useful in the public service; and what method should be used to calculate working capital allowance. Used and Useful Plant A public utility is entitled to a return only on Utility property which is "used and useful in the public service." 3/ At hearing, the Utility contended that 100 percent of its sewage treatment plant was used and useful; the Commission contended that the correct figure was 76 percent. 4/ The Utility's contention is accepted as more credible because it is based on a professional engineering analysis of actual wastewater flows through the sewage treatment plant during the test year and eight months thereafter. In contrast, the Commission's contention is based on application of a formula which relates total rated capacity of a plant to the number of Equivalent Residential Connections 5/ ("ERCs") it is capable of serving. Here, actual must prevail over theoretical fact. The Utility's sewage treatment plant has a rated capacity of 2.5 million gallons per day ("MGD"). During the test year, average daily flows, calculated monthly, fluctuated between 63.6 percent and 75.2 percent of the rated capacity; the average three-day peak flow, calculated monthly, ranged from 73.2 percent to 86.4 percent of capacity; and one-day peak flows ranged from 74.4 percent to 87.2 percent of capacity. During the eight months following the test year, sewage flow steadily increased. The greatest flow was during February, a relatively dry month; average daily flow was 2.20 MGD, 88 percent of rated capacity; the average three-day peak flow was 98.8 percent of capacity; and the peak flow day was 100.4 percent of capacity. If, on that peak flow day, the plant had only 76 percent of its present capacity, sewage would have overflowed the plant. The parties agree 6/ that a margin of reserve or allowance for growth of approximately 24 percent should be used in calculating the Utility's used and useful plant; they also agree that the Utility's future growth in ERCs is expected to range from 700 to 800 ERCs a year. The Commission argues that the 24 percent growth allowance should be added to average ERCs during the test year, and not to actual February, 1981, flows. This argument is unpersuasive. The test year period is a tool for predicting conditions which will exist during the period in which the new rates will be effective; rates are set prospectively, for the future--not the past. Thus, rates must take into account known changes and conditions occurring subsequent to the test year in order to accurately reflect conditions expected for the future. Here, the Utility's actual sewage flows indicate that 100 percent of its existing plant is used and useful and necessary to satisfy the immediate and anticipated future needs of its customers. In an attempt to rebut or overcome the effect of the sewage plant's actual flow conditions, the Commission contends that the sewage system is experiencing ground water infiltration of sufficient magnitude to cast doubt on the use of total flow figures. However, the infiltration does not exceed the amount which is ordinarily planned for in constructing sewage treatment plants. Infiltration which will continue to take place--despite the Utility's best efforts to ameliorate it--cannot be separated from the wastewater stream. Since the plant must be capable of handling the combined flow, including infiltration, total flow figures must be considered. The Commission also contends that the system is not 100 percent used and useful because it can serve more connections. This contention is inconsistent with the acknowledged requirement that a sewage treatment plant must be capable of accepting increased sewage flows reasonably anticipated in the near future. That is the purpose of including an allowance for growth in the used and useful calculation. Lastly, the Commission contends that the Utility's failure to consult with Department of Environmental Regulation officials about future plant expansion is inconsistent with its 100 percent used and useful claim. But the Utility, recognizing its present limits and future needs, has actively pursued an interlocal agreement which will allow it to pump approximately 700,000 GPD to Broward County's regional sewage facility. The agreement is in its final stages and approval is eminent. (Testimony of Ring, Farina, Walden; P-1, p-2, R-1.) Cash Working Capital Allowance Cash working capital is the amount of investors' supplied cash needed to operate a utility during the interval between rendition of service and receipt of payment from the customers. By including it in rate base, a utility is allowed to earn a return on this portion of its investment. A utility's working capital requirements may be calculated by using: a standardized formula; (2) the utility's balance sheet; or (3) a lead-lag study. Until June, 1981, the Commission routinely used the formula approach; working capital was calculated by multiplying 12.5 percent (equivalent to one- eighth of a year) times the utility's annual adjusted operations and maintenance expenses. This method is also facilitated by Commission Rule 25- 10.176(2)(a)2.g., Florida Administrative Code which requires that water and sewer rate adjustment applications include a schedule showing: g. Allowance for working capital (1/8 of annual operations and maintenance expenses for the test year.) Id. In this case--consistent with the Commission's rule and custom--the Utility seeks a working capital allowance derived by using the standard Commission formula. However, the Commission seeks to use, instead, the balance sheet approach--an approach which it contends is more precise than the standard formula and results in a closer correlation between the Utility's rate base and its capital structure. The Commission's contention is accepted as persuasive. Under the balance sheet method, working capital allowance is the difference between a utility's current assets and current liabilities. Thus, the working capital component of rate base is derived, by simple adjustments, from a utility's balance sheet; it originates in the balance sheet's capital structure, just as do the other components of rate base. In comparison, the formula approach originates from a utility's income statement, i.e., one-eighth of its annual operating and maintenance expenses. The one-eighth factor equates to a 45-day lag--a period of time assumed to cover the lapse between the rendering of service and payment by the customer. But this assumption, while generally useful, may not accurately depict the working capital requirement of a given utility. In this case, the balance sheet approach is a more precise method for determining the Utility's working capital requirements. The Utility poses two objections to calculating working capital allowance by the balance sheet method: (1) it deviates from the Commission's prior practice in water and sewer rate cases, and (2) it may result in a negative allowance when a utility has insufficient cash to pay its current bills; thus a utility in greatest need of working capital would receive the least allowance. As to the objection that the balance sheet method represents a departure from past practice, the Commission has flexibility to expand, refine, and alter its policy through individual case decisions provided its action is explained and justified by record evidence. 7/ The Commission has not, by rule, limited that flexibility. Rule 25-10.176(2)(a)2.g. only requires applicants for rate adjustments to show their working capital requirements by applying the formula method; it does not preclude the Commission or utilities from using an alternative method more suitable to the facts of a given case. For example, it is generally recognized that, if a lead-lag study is conducted, it will prevail over the formula method. The Utility's second objection (that a cash-poor utility receives a lesser working capital allowance), is based on a hypothetical case and has no application to the facts here; the Utility has sufficient current assets and the balance sheet method results in a positive working capital allowance. This finding in favor of the balance sheet method is based on the evidence presented; its effect is thus necessarily limited to this case. Should the Commission--in future cases--advocate the balance sheet method, as opposed to the formula method, it must again explain and justify its position, insofar as possible, by conventional proof. 8/ Unless its policy is adopted by rule, an agency must repeatedly establish and defend it. 9/ The other components of the Utility's rate base, as adjusted, are not in dispute. Water and sewer rate base are therefore $3,369,160 and $4,099,887, respectively, and are depicted below: RATE BASE Test Year Ending September 30, 1900 Water Sewer Utility Plant in Service $5,919,833 $9,210,212 Utility Plant Held for Future Use (145,384) (644,429) Construction Work in Progress 265,300 -0- Accumulated Depreciation (616,835) (954,300) Contributions in Aid of Construction--Net (2,293,690) (3,579,118) Working Capital Allowance 39,936 59,522 Materials and Supplies -0- -0- TOTAL $3,369,160 $4,099,887 (Testimony of Davis, Asmus; P-6, R-2, R-3.) Net Operating Income The Commission opposes several operation, maintenance, and depreciation expenses which the Utility proposes to include in the test year statement of operations. The Hardy Gross Analysis The Hardy Cross Analysis is a computer analysis of the entire water distribution system. It indicates loss of pressure, balances water flows, and determines residual pressure at the end points of the system. It is a useful and necessary informational tool in designing additions to water distribution systems: it allows the designer to properly size new pipes added to the system. Growth, such as that experienced by the Utility, requires that such an analysis be updated at least once a year. The parties do not dispute the value of such an analysis, its cost, or the necessity for its actual updating. They dispute only who should bear the cost: the existing rate-payers or the developers which require and benefit from the continued expansion of the water system. It is concluded that the recurring cost of updating the Hardy Cross Analysis should be borne by developers, and, indirectly, the future customers who are the primary beneficiaries of the annual updating; without the growth associated with new developments, the annual updating of the Hardy Gross Analysis would be unnecessary. It would be unfair to require existing customers to pay for services--through higher rates--which they do not require and from which they receive no significant benefit. (Testimony of Farina, Walden.) Review of City of Plantation Utility Standards In 1969, the City of Plantation, where the Utility's water and sewer systems are located, enacted an ordinance containing detailed technical standards governing the construction of water and sewer systems. Historical experience has indicated that the standards incorporated in the ordinance require annual review, and periodic revision; the Utility's participation in that process is reasonably necessary to its continued efficient operation. A necessary expense of $1,000 should be allowed and charged as an operation expense to each system--water and sewer. (Testimony of Farina.) Diesel Fuel On June 16, 1980--during the last quarter of the test year--the Utility installed two auxiliary power units which utilize diesel fuel. Since the two power units were not in service during the entire test year, the Utility seeks to annualize the cost of the diesel fuel consumed during the 3 1/2-month period and include it as a recurring operating expense. 10/ The Commission opposes annualizing the fuel costs on the ground that sufficient documentation was not presented by the Utility to justify the actual consumption of fuel by the power units and establish that such consumption represented normal operation of the Utility, i.e., that it is reasonably expected that such annual consumption will repeatedly occur in the future. The Commission's contention is accepted as persuasive. The Utility has the burden of supporting its claimed expenses with adequate documentation. 11/ Here, no evidence was presented to establish the actual periods of operation of the auxiliary generators or the conditions under which they were used; nor were rated consumption of fuel figures supplied. The alternate treatment suggested by the Commission--amortize initial diesel fuel fill-up cost over three years, placing one-third of it in expense and adding the other two-thirds to materials and supplies 12/ --is a reasonable method of treating the fuel expenditures. (Testimony of Davis, Walden, Asmus; R-2, R-3.) Amortization of Legal Expense Relating to Proposed CIAC Rules The Utility contends that the Commission is contemplating further CIAC 13/ rule making thus necessitating the expenditure of recurring legal expenses in the total amount of $778. However, although the Commission is now considering the adoption of CIAC rules, recurring revisions in the future are not reasonably expected. In the last ten years, the Commission has had one rule docket pertaining to CIAC rule making. Amortization of this expense is therefore unjustified. (Testimony of Davis.) Adjustment for Increased Chemical Costs Because of escalating costs of chemicals, the Utility proposes to adjust the water and sewer chemicals account by applying June, 1981, prices to the quantity of chemicals consumed during the test year. The Commission opposes the proposed adjustment, contending that the Utility's new lime-feeding equipment will result in lower lime costs. The Utility's adjustments 14/ are accepted as credible; since a new Zeolite treatment plant will soon be coming on-line, it is reasonably expected that lime requirements, associated with the water-softening process, will--if anything--increase. (Testimony of Farina, Davis, Asmus; R-6.) Maintenance Expenses: Amortization of Post Test-Year Gearbox Repairs The Utility proposes to include in sewer maintenance expense amortization of the cost of a gearbox repair incurred subsequent to the test year. The Commission proposes to amortize--for three to five years--all major repairs incurred during the test year. The Utility has not amortized such extraordinary repairs during each of the last five years; it contends that such historical amortization is necessary to arrive at a representative figure for extraordinary repair on an on-going basis, that the Commission cannot begin--for the first time--to amortize such repairs during the test year. The Utility proposes to simply adjust sewer maintenance expense by $3,386--an admittedly rough estimate. The Utility's accountant admits: It would be a lot more exact to go back five years and apply it [amortization of extraordinary repairs] down the line. . .but that's very time-consuming. (Tr. 192.) It is undisputed that the Utility--to properly account for extraordinary maintenance repairs--should amortize such expenses through the expected life of the repairs. The Utility has not done so to repairs incurred during the last five years. The substitution of an "estimate" of expected future repair costs for a preferable and more exact accounting method is unacceptable and should be rejected. (Testimony of Davis, Asmus.) Depreciation Expense The finding, infra, paragraph A(1) that the Utility's sewer plant is 100 percent used and useful necessarily requires an adjustment to the Commission's proposed depreciation expense. The adjustment increases depreciation, for sewer operations, by $11,897. (Testimony of Asmus; R-6.) The net operating income which a utility should be allowed the opportunity to earn is reached by multiplying rate base by a fair rate of return. 15/ Operating expense and taxes (income and gross receipts tax) are then added to net operating income to calculate gross revenue requirements. In this case, the Utility's net operating income should be $414,743 from water operations and $504,696 from sewer operations. Before gross revenue requirements can be determined, operating expense and taxes should be recalculated consistent with the above findings; such recalculation should be conducted by the Commission, verified by the Utility, and included as part of the Commission's final order entered in this proceeding. Rate Structure, Allocation, and Rate Design The Utility's present rates are structured in accordance with what is commonly referred to as the base facility rate design. The purpose of this design is to require customers to pay their pro rata share of the Utility's cost of providing the service. It is objectively determined and results in an equitable and consistent distribution of the costs involved. Both parties agree that the new rates should also be structured in accordance with the base facility rate design. However, the new rates should eliminate the present 25 percent rate differential between commercial and residential rates--a differential that has not been justified and which the Utility no longer seeks to impose. Motorola, Inc., a large industrial customer of the Utility, requested more favorable rate treatment because of the large volume of water it consumes. However, insufficient cost of service information was submitted to justify a "volume discount." A cost of service study is necessary to accurately allocate costs of service among customer classes. (Testimony of Fabulo, Asmus; R-4.) Quality of Service Several customers complained that the Utility's water had offensive color and taste. Eight complaints were filed with the Broward County Health Department during 1980. However, the preponderance of evidence establishes that the Utility's water and sewer systems are in compliance with local and state standards. Neither system is under any citation or enforcement action instituted by a regulatory agency. The quality of the water and sewer service provided is, therefore, determined to be satisfactory. (Testimony of Farina, Walden; P-11)
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Utility be authorized to file rate tariffs consistent with the provisions of this Recommended Order. DONE AND RECOMMENDED this 21st day of August, 1981, in Tallahassee, Florida. R. L. CALEEN, JR. 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 21st day of August, 1981.
The Issue The issue is whether WRP, Inc.'s application for an Individual Water Use Permit to construct five 24-inch diameter wells in Walton County, Florida, and to withdraw an average of 4.84 million gallons per day for twenty years, should be issued, as proposed by the agency on June 5, 1998.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: The Parties Respondent, Northwest Florida Water Management District (District), is an independent special district of the State of Florida created pursuant to Section 373.069, Florida Statutes. The District is charged with regulating consumptive uses of water in a sixteen-county area in Northwest Florida, including all of Walton and Okaloosa Counties. Respondent, WRP, Inc. (WRP), is a not-for-profit Florida corporation with its headquarters in Walton County, Florida. It is jointly owned by Destin Water Users, Inc. (DWU) and South Walton Utility Company, Inc. (SWUC). Both DWU and SWUC are not- for-profit Florida corporations that own and operate water supply systems (with thirteen operating wells) in and around the southern portions of Okaloosa and Walton Counties. Established in 1995, WRP was originally organized as a partnership made up of DWU, SWUC, and Petitioner, Florida Community Services Corporation of Walton County, d/b/a Regional Utilities of Walton County (RU). This partnership was established for the purpose of cooperating in the development of an alternate water supply for the utilities' service areas. Thereafter, the partnership was dissolved, which led to the establishment of WRP. RU is no longer a part of this organization. Petitioner, City of DeFuniak Springs, is a municipal corporation in Walton County, Florida. The city owns and operates its own public water supply system. At the present time, it serves approximately 15,200 persons who reside both inside and outside the corporate limits of the city. Petitioner, City of Freeport, is a municipal corporation in Walton County, Florida, and owns and operates its own public water supply utility. RU is a not-for-profit Florida corporation which, pursuant to a lease, operates a public water supply system in the coastal area of Walton County under a permit issued by the District. It presently serves around 500 customers representing a population of 17,000. A portion of its water supply is also obtained from the City of Freeport. Petitioner, Walton County (County), is a political subdivision of the State of Florida pursuant to Article 8, Section 1 of the Florida Constitution. The County owns the land and facilities used by RU for its public water supply system. However, under a lease agreement between those parties, RU operates the system. In addition, the County also owns a small well recently constructed near the Rock Hill area. Historical Background of the Area's Water Supply The District's overall responsibility in the consumptive use program is to provide for all citizens the sustainability of the water resources of Northwest Florida. It also seeks to allocate the resource in a manner that is reasonable and beneficial, that is in the public interest, and that will not interfere with the use associated with other existing legal users. This is often referred to as the three prong test. Ground water is measured by the location of its potentiometric surface in relation to sea level. The potentiometric surface is the level to which water will rise in a tightly cased well. In portions of coastal Okaloosa and Walton Counties, the potentiometric surface of the Floridan Aquifer is below sea level. At one coastal location the surface is at 110 feet below sea level as compared to elevations of more than 200 feet above sea level in the northern portions of those counties. When the potentiometric surface is below sea level it is called a cone of depression. As shown on District Exhibit 1, the cone of depression in the coastal area of Okaloosa and Walton Counties has grown from 1974 to 1995. The decline of these water levels in the coastal areas is further supported by the hydrographs found on the District's Exhibit 2 entitled Floridan Aquifer System Water Level Trends. These hydrographs document the reduction in the potentiometric surface over time. Of particular significance are the hydrographs of the "Okaloosa School Board" well which show the potentiometric surface to be 60 feet above sea level in the late 1930's when it was constructed and to be approximately 110 feet below sea level in 1996. As early as 1982, the District recognized a threat to the continued existence of a long-term sustainable water supply for the coastal regions of Walton and Okaloosa Counties. Significantly, the pumping of water from the Floridan Aquifer in this coastal region has caused a degradation to the aquifer and the water resources. As a result, the District began taking affirmative steps to protect the water resources in the coastal area of Walton and Okaloosa Counties. In 1982, the District undertook a regional water supply development plan entitled 1982 Regional Water Supply Development Plan (the 1982 Plan). The 1982 Plan assessed the sustainability of water resources in the coastal region of Okaloosa and Walton Counties, estimated the Floridan Aquifer's water supply capabilities in relation to expected long-term water demand, and addressed the need to find an alternative long-term water supply for these coastal regions. The 1982 Plan also discussed strategies for alternate water resource development including inland well fields, desalinization, conservation measures, and use of surface water from the Choctawhatchee River. In 1988, the District developed an addendum to the 1982 Plan, known as the 1988 Plan, which addressed similar issues. In particular, the 1988 Plan further emphasized the need for the coastal water utilities of DWU, SWUC, and RU to use inland well fields and/or desalinization as potential alternatives for the long-term water supply needs of the area. The 1988 Plan eliminated surface water from the Choctawhatchee River as a potential alternate source for the long-term water supply needs of the area because it was not technically, economically, and environmentally feasible. The thrust of these two studies is to encourage movement of withdrawals away from coastal areas. In 1989, the District implemented Rule 40A-2.801, Florida Administrative Code, which authorizes the declaration of areas of the District as "water resource caution areas." In that same year the District adopted Rule 40A-2.802(1), Florida Administrative Code, which designates the coastal area of Walton and Okaloosa Counties as a water resource caution area. This designation means that the water resources of the coastal area are limited and will not be sufficient to meet the water needs of the area within a period of twenty years. In addition, the rule prohibits non-potable uses of the Floridan Aquifer as against the public interest. Since 1989, the District has worked with DWU, SWUC, and other coastal water supply utilities to expedite the development of alternate water sources and implement water conservation measures. In Okaloosa County, the District has placed limitations on the diameters of wells and the amount of water that can be withdrawn from coastal wells. To promote conservation of water, the District has imposed stricter requirements for the reuse of wastewater; promoted the adoption by coastal utilities of inverted rate structures; required that utilities implement retrofit programs to replace old water fixtures with more efficient water-saving devices; required that utilities account for losses due to system leakage; required that utilities provide for education programs and public service announcements on the need to conserve water; and encouraged utilities to seek adoption of water efficiency landscape and irrigation ordinance by the appropriate local governments. The measures taken by the District are intended to address the harmful impacts to the Floridan Aquifer caused by increasing coastal water withdrawals. Because the District has determined that the water resources are limited, the District has mandated that alternative water supplies must be identified and developed in order to provide for a sustainable and long-term source of potable water in the coastal areas of Okaloosa and Walton Counties. There is no evidence to refute the District's concerns regarding the impact of continued coastal withdrawal and the need to find an alternative source of potable water to meet the region's long term demands. Based on the evidence, it is clear that coastal withdrawals of ground water cannot continue and that an alternate source of water must be found to meet the long-term water demands of the coastal areas of Walton and Okaloosa Counties. The Application In July 1996, WRP submitted a Consumptive Use Permit Application (CUPA) for the withdrawal of water from an inland wellfield in Walton County. The CUPA requested a maximum withdrawal of 7.2 million gallons of water per day (mgd) from two production wells with additional wells to be constructed on an as needed basis. The original application placed the wells along Highway 20 in the vicinity of the City of Freeport, or some twenty miles north of its present wellfields. This location concerned the District because of its proximity to the Choctawhatchee Bay and the saltwater/freshwater interface. In response to the District's concerns, WRP relocated the proposed wellfield farther north and inland to a 4,900 acre site approximately five miles north of the City of Freeport, known as the Rock Hill site. Under the proposed permit, WRP may withdraw an average of 4.84 mgd from the Floridan Aquifer from five 24-inch diameter wells. All withdrawals of water are authorized solely for public supply use. The proposed permit also authorizes a combined monthly withdrawal limit of 150,040,000 gallons. The permit is issued for a twenty-year period and has an expiration date of June 26, 2018. The proposed permit contains numerous conditions to issuance. They are primarily intended to implement water conservation and efficiency measures as well as monitor and mitigate any impacts to the Floridan Aquifer and existing legal users caused by the permitted water withdrawals. Compliance with Permitting Standards The District's overall responsibility in the consumptive use program is to provide for the sustainability of the water resources of Northwest Florida. In allocating water resources, the District seeks to do so in a manner that is reasonable and beneficial, that is in the public interest, and that will not interfere with the use associated with other existing legal users. WRP's compliance with these broad standards will be discussed in detail below. Reasonable and Beneficial Use of the Water In determining whether a water use is reasonable and beneficial, the District must consider the criteria set forth in Rule 62-40.410(2)(a)-(r), Florida Administrative Code. Quantity of Water Requested [62-40.410(2)(a)] In its original application, WRP requested withdrawals of 7.2 mgd. Because of the District's concern that the amount of withdrawals and projected annual rate of growth were too great, the permitted amount has been revised downward to 4.84 mgd. This quantity is not excessive, and the actual pumping under the permit will be less than the amount modeled for evaluation of impacts. Demonstrated Need [62-40.410.(2)(b)] The current water source for both DWU and SWUC is coastal Walton and Okaloosa Counties. That source is insufficient for future needs, and the demand placed on that resource should be reduced. As noted above, the need for coastal areas to develop an alternative wellfield was recognized by the District as early as 1982. This finding was reconfirmed in a District study completed in 1988. The record supports a finding that WRP has shown a demonstrated need for the alternative site. Suitability and Value of Use [62-40.410(2)(c) and (d)] WRP is requesting a withdrawal of water for public supply. This type of use within the Rock Hill area is a suitable use of that resource. Also, the Rock Hill area has long been identified as a good location for an inland wellfield. The suitability of the use to the source of water is demonstrated by the high quality of the raw water which can be easily treated for potable drinking water. The purpose is for domestic consumption, which is the highest use. The proposed wellfield is the closest available inland groundwater source with minimal impact. In terms of value, WRP is proposing to withdraw water from the Floridan Aquifer to provide the public with drinking water. The provision of a long-term, reliable source of water is a high value. It also helps to sustain the resource in coastal Okaloosa and Walton Counties by reducing future demands on the source. The Extent and Amount of Harm Caused [62-40.410(2)(e)] The evidence establishes that neither the resource nor the existing legal users will be harmed by the proposed activity. Harm would occur, for example, when a domestic user would be permanently denied water as a result of a proposed pumping activity. Although this condition should not occur, the permit contains conditions to mitigate this event. WRP conducted a test well program and extensive groundwater modeling at its proposed wellfield to establish the drawdown curve that would exist in the Floridan Aquifer. The extent and amount of harm caused is not significant, and WRP has demonstrated that there will be no significant environmental impact or impact to other users. There will not be any drawdown impacts in the surficial aquifer, nor should there be any discernible impact on the Floridan Aquifer. Drawdowns as a result of WRP pumping in the potentiometric surface in the Freeport area are expected to be two feet in the year 2005, and around five feet in the year 2018. These are not considered significant drawdowns for a public supply well. Under the proposed permit, WRP will be required to mitigate any impacts attributable to its withdrawal that interfere with domestic users in the vicinity of the wellfield. Any problems encountered in domestic wells in the area can be remedied by adding a length of pipe, or lowering the pumps in the wells. The water resource will not be significantly impacted by saltwater intrusion as a result of the proposed use. The greatest part of the advance of the saltwater wedge is due to the City of Freeport's own pumping; WRP's contribution to the advance is minimal. This is because the City of Freeport is closer to the coast. Any impacts on wells within the City of Freeport from chlorides will be the result of their own pumping, and not that of WRP's proposed pumping. Mitigation of Harm [62-40.410(2)(f)] The District does not anticipate that any harm to other legal users will occur. Even assuming arguendo that some harm might occur, there are two conditions in the permit that can be invoked to ensure that the issues are addressed. Standard Condition 11 entitles the District to curtail permitted withdrawal rates if such withdrawal causes significant adverse impacts on existing legal uses of water, or adjacent use, while Special Condition 17 requires that WRP mitigate any impacts to existing legal users if such interference should occur. The District envisions the latter condition to be implemented through a telephone hotline and arrangements with a water well contractor to remedy any adverse impact. To the extent that any harm to area domestic wells may occur, WRP has agreed to correct any individual adverse impacts by either lowering the pump, deepening the well, replacing the well, or whatever may be necessary. This is consistent with Special Condition 17, which requires that WRP mitigate impacts attributable to its withdrawal which interfere with users of water in the vicinity of their wellfield. Finally, the proposed permit has a system of checks and balances by which the District can look at actual water uses over time and adjust them while still providing for coastal reductions. Impacts on Other Lands [62-40.410(2)(g)] Although WRP purchased approximately five thousand acres on which to site its wellfield, not all of the property is necessary to run the wellfield. The parcel was purchased so that any adverse effects from the pumping would not affect landowners, and the majority of the drawdown would be confined to the purchased property. The test well program conducted at the remote wellfield, and the modeling conducted by WRP Witness Maimone, establish that the greatest impacts will be on lands owned and controlled by WRP. Method and Efficiency of Use [62-40.410(2)(h)] The method and efficiency of use by WRP is demonstrated by its utilization of water conservation measures to ensure that efficiency is maximized throughout the system. The use of ground water from the inland wellfield is an efficient method of providing potable water for public supply. Water Conservation Measures [62-40.410(2)(i)] The District has mandated that certain conservation steps be taken to protect the resource in the Okaloosa and Walton County area. This is consistent with the District's efforts to require implementation of conservation measures by coastal water supply utilities. Reuse of treated wastewater has been encouraged, and it is used to irrigate golf courses and private landscapes. Also, the District is requiring DWU and SWUP to account for and correct water losses, and to undertake retrofit programs among homeowners and commercial establishments to install water-saving devices and other types of efficiency measures. Except on rare occasions, all DWU treated effluent is used for irrigation. Indeed, DWU is currently achieving a 100 percent reuse rate. Reuse water currently supplied to customers of DWU is not available for aquifer storage. As part of a general conservation effort, DWU has replaced almost 6,000 water meters in the last five years. The City of Destin, which is within DWU's service area, has distributed low-usage shower heads, and it has implemented a low volume toilet ordinance which requires these types of fixtures in all new construction. Currently, DWU has a 12 percent water loss and is attempting to meet the District's recommended goal of 10 percent. SWUC has various programs in place to conserve potable water. The conservation methods include an inverted block structure, reuse, and public education. Currently, SWUC provides reuse irrigation water to golf courses and a subdivision. The evidence supports a finding that the water use proposed by WRP will not be wasteful. Conditions 3 through 12 in the permit require WRP to implement a comprehensive series of water conservation and efficiency measures. Without the new wellfield, it would be impossible to conserve a sufficient amount of water to be able to provide for the future needs of the citizens to be served by WRP. The District will require WRP to comply with a comprehensive water conservation and efficiency program. The conservation and efficiency program includes implementation of a retrofit program, reduction of unaccounted for losses to less than ten percent, five-year audits, landscape ordinances, and irrigation ordinances. Feasibility of Other Sources [62-40.410(2)(j)] The District has identified no available surface water body from which WRP could meet its anticipated demands. In 1988, the Choctawhatchee River was determined not to be a feasible source. Additionally, the Sand and Gravel Aquifer is not suitable for a large, public supply utility to access. In 1982, Eglin Air Force Base (Eglin) was projected to be a location for regional wellfields. The 1988 Plan, however, removed Eglin as a possible solution for long-term water supply problems due to Eglin's decision not to allow wells on the reservation. SWUC, DWU, and WRP all produced water masterplans in order to identify options available to address the additional water supply needs in the area. Upon its formation, WRP undertook an investigation to determine whether additional water supplies could be provided best by a remote wellfield or by a reverse osmosis (RO) plant. The study was undertaken because the the available water supply clearly would be insufficient and other options should be considered. After being formed, WRP immediately purchased options from the Champion Paper Company for six well sites along Highway 20. At considerable expense, WRP investigated the RO alternative as a water supply source along with other alternative sources such as reclaimed water, stormwater, brackish water, and saltwater. WRP constructed a RO test well to evaluate that option. The test well extended into the Lower Floridan Aquifer since that aquifer was considered as a possible source of brackish water from which potable water could be produced. The District provided a $30,000 grant toward the RO evaluation, and it also provided technical assistance and guidance to ensure that WRP obtained the type of data that the District desired. Assumptions made in evaluating the cost of the RO option were designed to predict the lowest possible construction and operating costs. Also, a number of problems were identified with the RO process. These included long-term water quality, contamination, and disposal of the waste (reject water) produced. These concerns are addressed separately below. The potential for long-term change in water quality is the most important factor in evaluating the feasibility of the RO option. WRP's test well showed chlorides at 1,800 parts per million; 200 feet below that, the test well was half seawater; and at another 200 feet below, the test well was full of seawater. These results indicated that saltwater upconing was a severe concern. The data strongly indicated that water quality would not remain constant for very long in the RO well. An analysis made by WRP estimated that saltwater upconing would occur in less than a year and probably within a matter of months. The analysis considered only vertical movement for upconing within the RO test well, and it did not consider the effects of horizontal movement. These assumptions produce the most reliable result possible. The possibility of lateral movement is an additional risk to the water quality in the RO test well. Together with the potential for upconing shown in the study conducted by WRP, a great amount of uncertainty existed in the raw water source in terms of long-term stability and water quality. If seawater occurred within the aquifer at some close proximity to the RO test well, then ultimately the whole system could convert from brackish water to a seawater system. This would change the entire economics of the treatment process and plant design, and it would diminish WRP's ability to obtain a concentrate disposal permit. Without some certainty as to the quality of water over time, RO is not a viable alternative. The data summarized in WRP's report demonstrates that copper values in excess of 2.9 micrograms per liter (mcg/l) were present in the water withdrawn from the well. Samples taken directly from the Lower Floridan Aquifer using the Packard Stem Test indicated that the copper came from the aquifer formation. The established water quality standard for copper in Class II waters is 2.9 mcg/l. As noted above, this standard would be violated. The concentrate or reject water from the RO process utilizing the subject source would be expected to contain five times the copper concentration of the raw water. In addition to this concern, gross alpha, Radium 226, and Radium 228 were also present in grab samples and constituted another potential problem. These types of contamination render the RO option unfeasible because of problems with disposal of the concentrate or reject water. A RO option necessarily includes a brine disposal element. The disposal would be in the form of a reject stream that would be continuously discharged from the RO facility while in operation. The concentrate from the RO process is classified as an industrial waste. In Florida, the method for disposal for the reject water includes deep well injection and surface water disposal. However, the deep well injection of reject concentrate is not feasible for the RO well because the Lower Floridan Aquifer has no internal confinement between the zone of withdrawal and a proposed zone of injection. Moreover, there is no zone in Northwest Florida sufficient to be used for this type of injection in these volumes. The only other remaining option would be surface water discharge which requires a National Pollutant Discharge Elimination System permit. Any surface water discharge with respect to RO would be to Class II waters, which would be far more difficult to permit than a Class III water, where such discharges have normally occurred. In addition, because of the high level of copper in the reject concentrate, it would be extremely difficult to receive a mixing zone for copper at the extended concentrations. Since 1982, the District has recommended that an inland wellfield be developed in the area north of the City of Freeport. An inland wellfield is a more reliable source of water with a greater amount of certainty, can be permitted within a reasonable period of time, and is less expensive. WRP's proposal for a remote, inland well in the Rock Hill area is consistent with these goals. Present and Projected Demand for Water [62-40.410(2)(k)] The District relied upon two studies to reach the conclusion that the average growth rate for water would be three percent per year in WRP's service area. This contrasts with WRP's projection that a five percent growth rate would be more accurate. Due to the high degree of uncertainty in the area of growth and water demand, the District has provided a mechanism to deal with underestimated growth which includes periodic review of the withdrawal amounts by the District and corresponding adjustments, if necessary. It is clear that the supply of water is adequate to provide water for WRP as well as other users in the area. Long-Term Yield Available from the Source of Water and Water Quality Degradation [62-40.410(2)(l) and (m)] Sufficient water resources exist in the Rock Hill area to meet projected water demands through the year 2018. No impact to the surficial aquifer is expected, while only minimal impact to nearby surface water is projected to occur. The movement of the saltwater wedge is not a factor. For some fifteen years, the District has taken steps to monitor and reduce coastal well withdrawals. More recently, it directed its staff to notify all existing non-potable users of the Floridan Aquifer that at the time of permit renewal, they may be required to find alternate sources. Starting two years ago, a number of these permits came up for renewal. In some cases, the applicants were given approximately two years to eliminate the Floridan Aquifer withdrawals, find an alternate source, and plug their wells. The potential for water quality degradation is evaluated through computer modeling. A modeling plan is a document that describes the approach that a modeler is going to use to build a model. It specifies the various components of the model, battery conditions, modeling techniques, model domain, and the modeler's conceptualization of the stratigraphy. WRP's model demonstrates a lack of degradation of the water resources. The modeling of the saltwater wedge indicates that the wells in the Freeport area will not be threatened. There will be negligible impacts to base stream and river flow and no impact to surface wetlands. Based on the present and projected demand for the source of water, no significant impact to the environment or to existing users will occur. To the extent water quality degradation might occur, it will cause a minimal amount of change in the position of the diffused chlorides in the coastal zone. The predicted impacts to water quality take into consideration the coastal reductions which will limit pumping of the coastal wells and switch withdrawals to the alternate inland source. Proposed Flood Damage [62-40.410(2)(n)] There is no indication that WRP's proposed withdrawal activity will cause any flood damage. The proposed use will not cause or contribute to flood damage due to its negligible affect on surface waters. Significant Inducement of Saltwater Intrusion [62-40.410(2)(o)] WRP's coastal saltwater intrusion model used worst case conditions when estimating the movement of the saltwater wedge. Indeed, the saltwater intrusion was computed so conservatively that the existing coastal wells were modeled pumping saltwater instead of the actual freshwater that they currently pump. The movement of the saltwater wedge is not projected to be dramatic over the next 50 years. The location of the saltwater wedge in the year 2050 would still be 600 feet below sea level. The wedge does not approach, nor would it threaten, the City of Freeport's wells. In fact, any potential risk of saltwater contamination in Freeport's wells is due to that City's current pumping rates. The Amount of Water Which Can be Withdrawn [62-40.410(2)(p)] The amount of water withdrawn by WRP will have no significant impact on the resource. This finding is supported by a WRP groundwater modeling study. The impacts of the wellfield on the potentiometric surface do not go below sea level. There will be no drawdown impact in the surficial aquifer or any discernable impact on the Floridan Aquifer. Adverse Effect on Public Health [62-40.410(2)(q)] No potential adverse effects on public health have been identified in the instant case, and there is no indication that WRP's withdrawals would affect public health. The resource is a high-quality use and would provide the public with a high-quality source of water for drinking purposes. Significant Effects on Natural Systems [62-40.410(2)(r)] The evidence established that there will be no impacts to surface wetlands and very minimal impacts to base stream flow. Base flow is the constant flow from groundwater into surrounding waters. Any reduction in the flow of groundwater to the Choctawhatchee River as a result of WRP pumping is negligible. Slight impacts were observed in the base flow of streams close to the proposed wellfield site. Impacts on the surface water are also minimal. Riparian wetlands would be unaffected by the water level decline that was simulated as a result of WRP pumping. Finally, any impacts associated with the construction of the transmission pipeline from the inland wellfield are temporary in nature and extend only through the period of construction. Consistent with the Public Interest The evidence demonstrates that the use of the water by WRP, as well as the water use reduction allocation, is consistent with the public interest. WRP is proposing to withdraw water from the Floridan Aquifer in the Rock Hill area to provide citizens with drinking water. The purpose of domestic consumption is the highest and best use of a water resource. The public interest is served through the proposed reduction in coastal groundwater withdrawals contained in the WRP permit. Reduction in the withdrawals from the coastal areas has been a long-term goal of the District in order to protect water resources in the area. WRP's proposed use is also consistent with the public interest in that the use will not affect natural systems in the area. Similarly, the use proposed by WRP is consistent with regional water supply planning needs. Finally, the proposed use is consistent with the comprehensive planning goals of Walton County as expressed in its Evaluation and Appraisal Report (EAR). The EAR commends WRP's efforts to fully analyze the alternative sources and its selection of the Rock Hill area on which to site a remote wellfield. Non-Interference with Existing Legal Users WRP purchased 5,000 acres on which to site its wellfield so that pumping from the well sites would not adversely affect adjacent landowners, and the majority of the drawdown would basically be confined to the property. Pertinent District rules only require that an applicant consider existing legal uses of water. However, WRP considered all existing legal uses of water and their future increases until the year 2018, and these existing and potential impacts were considered in its groundwater model. Even with the anticipated pumpage in the year 2018, the potentiometric surface at the WRP wellfield site location will not be drawn below sea level. The water level drawdowns associated with the withdrawal do not constitute a harm, they can be remedied, and the permit has been conditioned to provide for those remedies. For example, Standard Condition 11 and Specific Condition 17 provide protection to domestic wells users in the area. They should specifically address the legitimate concerns of public witnesses who testified at hearing. The Local Sources First Statutory Provision Section 373.223(3), Florida Statutes, (Supp. 1998), also known as the local sources first statutory provision, enumerates a number of factors which the District must consider when evaluating whether a proposed use of water is consistent with the public interest. However, the law provided that water use permit applications pending with the District as of April 1, 1998, were exempted. The legislation was not enacted until October 1, 1998, and the notice of proposed agency action on the instant permit was issued in June 1998. Therefore, the District took the position that the legislation does not apply to the WRP permit. In an abundance of caution, however, the District reviewed the application as if the local sources first exception applied, and then again as if the exception did not apply. Under either scenario, the District concluded that the application met the criteria enumerated by the law. Assuming arguendo that the new law applies, WRP has met all criteria necessary for the issuance of a permit. The proposed wellfield site is the best suitable site to move water withdrawals inland away from the coastal area, and other locations closer to the coast would have resulted in interference and impacts; there are no other impoundments in the vicinity of the proposed wellfield site that are technically and economically feasible for the proposed use; there are no economically and technically feasible alternatives to the proposed source; there are no potential environmental impacts from the wellfields; there are no adequate existing sources of water available on the peninsula; the District has had numerous interactions with area local governments; and the District did not allow WRP's investment in 4,900 acres of land to influence its decision. Standing The only alleged basis for standing which went to fact finding at hearing was an allegation in paragraph (5)(a) of the Petition that "[t]he withdrawal of up to 4.8 million gallons per day of groundwater by WRP will adversely impact the quantity and quality of groundwater available for withdrawal by Petitioners." As to RU, which currently serves 500 customers representing a population of 17,000, it has no wells in the vicinity of WRP's proposed wellfield; its wellfields are located along the coastal area of Highway 30-A from Santa Rosa Beach to the east of Inlet Beach, on the Bay County line, or some twenty- five to thirty miles south of the proposed wellfield. It also purchases 500,000 gallons of water per day from the City of Freeport to meet its customers' demand. Because of RU's own continued pumping, at least four of its coastal wells are "going bad" due to saltwater intrusion and upconing. This condition will continue to occur even if WRP's application is not granted. Although it has a permit application for new inland wellfields pending with the District, at the time of hearing the application was incomplete and is therefore irrelevant to a standing determination. There was no direct evidence that RU's coastal wellfields will be adversely affected by WRP's proposed operation. Indeed, the projected decline in water levels in that area will be less than one foot and will have a de minimus impact. As to Walton County, it owns the land on which RU's coastal wells are located as well as the production facilities. Under a lease agreement between those parties, RU operates the system. The County also had one small exempt well in the vicinity of WRP's proposed wellfields which was installed after this case was filed, but shortly before the hearing began. There was no evidence as to the depth of the well, the source of water, or the well's pumping capacity. Likewise, there was no evidence that the well has actually been used. In addition, there was no evidence that the County relies on groundwater from the Floridan Aquifer to supply potable water to its citizens or customers, or that WRP's proposed withdrawal will adversely impact the quantity or quality of groundwater available for withdrawal by the County. As to the City of DeFuniak Springs, it operates its own public water supply system serving approximately 17,200 persons. It has four water supply wells located approximately nine miles north of WRP's proposed wellfields, and upstream from WRP's site. WRP's model predicts that the City's wellfields will be impacted, albeit very slightly, by WRP's pumping over the lifetime of the proposed permit. To this limited extent, the proposed activity affects its substantial interests. Finally, the City of Freeport owns and operates its own public water supply utility. It has existing wells which are permitted by the District and which lie five miles directly south of WRP's proposed wellfield. Like the City of DeFuniak Springs, the City of Freeport will also experience drawdown impacts, although not considered significant, over the lifetime of the proposed permit. To this extent, the permit will impact the City of Freeport. This is true in spite of the City's admission that its principal concern in this case is WRP's intention to sell water to customers outside Walton County.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED that the Northwest Florida Water Management District enter a Final Order granting Consumptive Water Use Permit No. I05349 to WRP, Inc., as proposed in its Notice of Proposed Agency Action issued on June 5, 1998. DONE AND ENTERED this 22nd day of April, 1999, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us COPIES FURNISHED: Filed with the Clerk of the Division of Administrative Hearings this 22nd day of April, 1999. Douglas E. Barr, Executive Director Northwest Florida Water Management District Route 1, Box 3100 Havana, Florida 32333-9700 Douglas P. Manson, Esquire Jack R. Pepper, Jr., Esquire 712 South Oregon Avenue Tampa, Florida 33606-2543 George Ralph Miller, Esquire Post Office Box 687 DeFuniak Springs, Florida 32433-0687 Clayton J. M. Adkinson, Esquire Post Office Box 1207 DeFuniak Springs, Florida 32435-1207 Douglas L. Stowell, Esquire Stephen L. Spector, Esquire Post Office Box 11059 Tallahassee, Florida 32302-3059 Kenneth G. Oertel, Esquire Segundo J. Fernandez, Esquire Post Office Box 1110 Tallahassee, Florida 32302-1110 Paul R. Bradshaw, Esquire 1345 Dupont Road Havana, Florida 32333
The Issue The issue in this case is whether Seacoast Utility Authority's challenge to the South Florida Water Management District's proposed issuance of a water use permit to PGA National Golf Club and Sports Center, Ltd. in a critical water supply area should be upheld. As discussed below, the parties have stipulated that, in deciding to issue the permit, the South Florida Water Management District has not evaluated or considered whether the use of reclaimed water was either economically, environmentally or technically infeasible.
Findings Of Fact Based upon the evidence adduced at the hearing and the entire record in this proceeding, the following findings of fact are made: Seacoast is a publicly owned water and sewer utility which operates a wastewater treatment facility in Palm Beach County, Florida. Seacoast's service area is bounded on the south by Riviera Beach and on the north by the Town of Jupiter. Seacoast operates four treatment plants: two water plants and two wastewater plants. Seacoast's regional wastewater facility currently generates approximately six (6) million gallons per day ("MGD") of reclaimed water and is permitted by the Florida Department of Environmental Protection ("DEP") as an eight (8) MGD wastewater treatment plant. As discussed in more detail in the Conclusions of Law below, the Florida Legislature and DEP have sought to encourage the reuse of reclaimed water. This policy is one of the many sometimes competing goals that are supposed to be taken into account in the water use permitting process. Until a few years ago, the treated effluent from one of Seacoast's wastewater plants was directly discharged to nearby surfacewater. During the last four years, Seacoast installed a pumping station and five miles worth of transmission lines to deliver all of its treated effluent to its regional wastewater facility. Seacoast claims that these efforts were prompted by its interpretation of changing regulations and a perceived regulatory preference for reuse of water.1 Although Seacoast claims that there has been a change in regulatory emphasis in favor of reuse of reclaimed water, Seacoast is not under a mandate from any court or agency to sell or utilize any specific amount of reclaimed water. It does appear that a deep injection well used by Seacoast for disposal of wastewater is not or was not operating as designed. Seacoast was apparently obligated to construct reclaimed water facilities at its wastewater treatment plant as part of its permit from DEP for the injection well. There was no requirement that the reclaimed water be sold or otherwise utilized. The intended primary disposal for Seacoast's reclaimed water is reuse.2 Seacoast's wastewater treatment plant provides irrigation quality reclaimed water. Seacoast tries to sell the reclaimed water for irrigation use in an effort to recoup the costs incurred in constructing the facilities necessary to reclaim the water. Backup disposal is achieved through injection down a 3300 feet deep injection well into the boulder zone. Once the reclaimed water is injected down the well, it is unavailable for reuse. The evidence suggests that there are other possible utilizations available for Seacoast's reclaimed water including sale to another utility and/or backup recharge to preserve wetlands during periods of high pumpage. For example, Seacoast is apparently in the process of applying for the necessary permits to utilize a portion of its reclaimed water to prevent harm to wetlands adjacent to its Hood Road Well Field by constructing an hydraulic barrier. At all times pertinent to this proceeding, only approximately 1.2 MGD of the reclaimed water generated by Seacoast was being reused. The remaining approximately 5 MGD was disposed of through the injection well. PGA owns and operates three (3) golf courses in Palm Beach County within Seacoast's service area. PGA's golf courses are located within an area that has been designated by the District as a Critical Water Supply Problem Area. Critical Water Supply Problems Areas are geographical regions where the available water supply due to the potential for saltwater intrusion, wetland impacts, or impacts to existing legal uses, is predicted not to meet water demands that are projected during the next 20 years. See, Chapter 40E-23, Florida Administrative Code. The use of reclaimed water is not mandated in such areas. However, the District's Rules seek to insure the optimal utilization of alternative sources of water in such areas to minimize the potential harm to water resources. It is not clear from the evidence presented in this case when PGA first obtained the Permit from the District for golf course irrigation. The Permit allows PGA to use the groundwater table as the source of water for its irrigation. Before its expiration, PGA timely sought renewal of the Permit. On April 12, 1994, the District staff recommended renewal of PGA's Permit. The staff recommendation would allow PGA to continue using the groundwater table as the source of its water. The recommendation did not contain a requirement for PGA to use any reclaimed water as part of its golf course irrigation system. Seacoast became aware of PGA's application to renew its Permit through a routine review of all water use permit applications made to the District by "potential reclaimed water users in [its] service area." Seacoast filed a Petition for Formal Administrative Hearing challenging the District staff's recommendation to renew PGA's Permit. In its Petition, Seacoast alleged that its substantial interests would be affected by the renewal of the Permit because Seacoast's ability to achieve the State of Florida's goals of conservation and environmental protection depends upon PGA, and other similar country clubs, being required to consume reclaimed water. Seacoast contends that the staff recommendation immediately eliminates a major potential consumer of Seacoast's reclaimed water which purportedly impairs Seacoast's ability to meet state objectives for reuse of reclaimed water and results in the undesirable continued disposal of reclaimed water via deep well injection. In connection with its challenge to the proposed renewal of PGA's Permit, Seacoast has stipulated that PGA's proposed withdrawals from the groundwater table would not cause harm to the water resources of the District. Seacoast also admits that it has never evaluated whether it would be environmentally injured by PGA's withdrawals from the groundwater table and/or whether the proposed use by PGA is wasteful. The District does not currently have any goals for the utilization of reclaimed water on a regional basis. Instead, the District oversight of the utilization of reclaimed water is done on a permit by permit basis. As a general policy, the District will not accept a water use permit application in an area of critical water shortage unless a reuse feasibility determination is included. The District's rules do not currently contain any guidelines as to how the determination of feasibility is to be made, nor are there any criteria for reviewing an applicant's determination of feasibility. As discussed below, the District does not even consider the applicant's reuse feasibility determination unless the proposed withdrawal is projected to result in harm to the resources of the District. Even when harm to a resource is projected, the District accepts an applicant's feasibility determination regarding the use of reclaimed water without question or analysis. For the other consumptive use criteria set forth in Rule 40E-2.301, the District independently evaluates the applicant's conclusions to confirm that they are reasonable. In other words, the District treats reclaimed water as an alternative source of water in the event that an applicant's proposed water use is projected to cause harm to the water resources of the District. If no harm is expected to occur to water resources as a result of a proposed use, the District does not review the applicant's determination of whether or not to use reclaimed water. If harm is projected, the applicant is required to look at alternatives like water conservation or utilization of water sources other than those proposed (such as reclaimed water). The applicant is free to select any alternative that mitigates the harm. Thus, even in a Critical Water Supply Area, an applicant can mitigate concerns about harm to the resource without utilizing reclaimed water. In sum, under the District's current procedures, the use of reclaimed water is never required. It is simply one alternative an applicant can utilize to offset or mitigate projected harm to water resources (such as saltwater intrusion, contamination, wetland drawdowns or existing legal use impacts) from a proposed withdrawal. Even when the District staff concludes that an applicant's proposed use will result in harm to water resources, the staff does not critically review the applicant's determination of whether the use of reclaimed water is economically, environmentally, or technically infeasible. With respect to PGA's Permit, the District staff concluded that no harm to the resource was predicted as a result of PGA's proposed use. Thus, PGA's determination not to use reclaimed water was not evaluated or even considered. The District explains that its implementation of the permitting program is based upon its interpretation that its primary responsibility is to prevent harm to water resources. The District points out that there are a number of factors to be considered in utilizing reclaimed water. These factors include, but are not limited to, the cost of the reclaimed water, the cost of retrofitting an irrigation system, the long-term availability of the reclaimed supply and the availability of a back-up supply.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the South Florida Water Management District enter a Final Order dismissing the Petition filed by Seacoast challenging the renewal of Permit Number 50-00617-W to PGA for golf course irrigation. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 6th day of February 1995. J. STEPHEN MENTON 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 6th day of February 1995.
