Agrico Chemical Co. v. State Dept. of Environmental Regulation

• Decision Date: 01 December 1978
• Docket Number: FF-340 and GG-448,Nos. FF-95,s. FF-95
• Citation: 12 ERC 1503,365 So.2d 759
• Parties: AGRICO CHEMICAL COMPANY et al., Petitioners, v. STATE of Florida DEPARTMENT OF ENVIRONMENTAL REGULATION and Sarasota County, Florida, Respondents. AGRICO CHEMICAL COMPANY, Borden, Inc., Brewster Phosphates, Farmland Industries, Inc., Gardinier, Inc., International Minerals & Chemical Corporation, Mobil Chemical Company, Occidental Chemical Company, Swift Agricultural Chemicals, USS Agri-Chemicals (a Division of United States Steel Corporation), and W. R. Grace & Co., Appellants, v. STATE of Florida DEPARTMENT OF ENVIRONMENTAL REGULATION, and State of Florida Environmental Regulation Commission, Appellees, and Sarasota County, Florida, Intervenor/Appellee. AGRICO CHEMICAL COMPANY, Borden, Inc., Brewster Phosphates, Farmland Industries, Inc., Gardinier, Inc., International Minerals & Chemical Corporation, Mobil Chemical Company, Occidental Chemical Company, Swift Agricultural Chemicals Corporation, USS Agri-Chemicals (a Division of United States Steel Corporation), and W. R. Grace & Co., Petitioners, v. Reubin O'D. ASKEW, Governor, Bruce A. Smathers, Secretary of State, Robert L. Shevin, Attorney General, Gerald A. Lewis, Comptroller, Bill Gunter, Treasurer and Insurance Commissioner, Ralph D. Turlington, Commissioner of Education, and Doyle Conner, Commissioner of Agriculture, as the Governor and Cabinet of the State of Florida, and State of Florida Department of Environmental Regulation, Respondents.
• Court: Florida District Court of Appeals

Page 759

365 So.2d 759

12 ERC 1503

AGRICO CHEMICAL COMPANY et al., Petitioners, v. STATE of Florida DEPARTMENT OF ENVIRONMENTAL REGULATION and Sarasota County, Florida, Respondents.

AGRICO CHEMICAL COMPANY, Borden, Inc., Brewster Phosphates, Farmland Industries, Inc., Gardinier, Inc., International Minerals & Chemical Corporation, Mobil Chemical Company, Occidental Chemical Company, Swift Agricultural Chemicals, USS Agri-Chemicals (a Division of United States Steel Corporation), and W. R. Grace & Co., Appellants, v. STATE of Florida DEPARTMENT OF ENVIRONMENTAL REGULATION, and State of Florida Environmental Regulation Commission, Appellees, and Sarasota County, Florida, Intervenor/Appellee AGRICO CHEMICAL COMPANY, Borden, Inc., Brewster Phosphates, Farmland Industries, Inc., Gardinier, Inc., International Minerals & Chemical Corporation, Mobil Chemical Company, Occidental Chemical Company, Swift Agricultural Chemicals Corporation, USS Agri-Chemicals (a Division of United States Steel Corporation), and W. R. Grace & Co., Petitioners, v. Reubin O'D. ASKEW, Governor, Bruce A. Smathers, Secretary of State, Robert L. Shevin, Attorney General, Gerald A. Lewis, Comptroller, Bill Gunter, Treasurer and Insurance Commissioner, Ralph D. Turlington, Commissioner of Education, and Doyle Conner, Commissioner of Agriculture, as the Governor and Cabinet of the State of Florida, and State of Florida Department of Environmental Regulation, Respondents.

Nos. FF-95, FF-340 and GG-448.

District Court of Appeal of Florida, First District.

Dec. 1, 1978.

Dissenting Opinion On Denial of Rehearing Jan. 16, 1979.

Robert L. Rhodes, Jr., Chesterfield Smith, Lakeland, and W. Daniel Stephens of Holland & Knight, Tampa, for petitioners.

Robert L. Shevin, Atty. Gen., J. Kendrick Tucker, Asst. Atty. Gen., R. L. Caleen, Jr., Tallahassee, Richard L. Smith of Nelson, Hesse, Cyril & Weber, Sarasota, for respondents.

BOYER, Judge.

The central issue in each of the three cases which have been consolidated for consideration by this court relates to the validity (or invalidity) of proposed rules of the Department of Environmental Regulation (Department) which concern effluent standards for phosphate mining and processing operations. The petitioners-appellants are all engaged in the phosphate industry in Florida and will be referred to as the Industry. Since the issues presented by the three cases are closely related and the cases have all been consolidated, we will address only those procedural issues raised by the parties, making no attempt to resolve any apparent problem regarding what constitutes final agency action when both F.S. 120.54(4) and F.S. 403.804 are involved. Nor do we find it necessary, for the same reasons, to address here the issues discussed in Carrollwood State Bank v. Lewis, 362 So.2d 110 (Fla. 1st DCA 1978), and cases therein referred to.

In November, 1976, the Department published a notice in the Florida Administrative Weekly of its intent to adopt a proposed rule entitled "Effluent Guidelines and Standards for Mineral Mining and Processing Subpart R Phosphate Rock Subcategory." Adoption was scheduled to take place at a public hearing before the State of Florida Environmental Regulation Commission (Commission) which is the environmental standard-setting body of the Department, on December 1, 1976. The Industry filed a timely "Petition for Administrative Determination of A Proposed Rule" with the Division of Administrative Hearings pursuant to F.S. 120.54(4). Notwithstanding the pendency of that petition, which was duly assigned to a hearing officer, the Commission held its scheduled public hearing On December 27, 1976, Sarasota County (Sarasota) was permitted to intervene.

on December 1 and 2, 1976, and "approved" the proposed rule over the Industry's objection. The Industry objected to the proceedings before the Commission on the ground that the action was prohibited by F.S. 120.54(4)(c).

On December 29 and 30, 1976, and January 4, 1977, a hearing was held before the hearing officer who rendered a final order on January 31, 1977, implicitly upholding the validity of the proposed rule. That order, declared to be "final agency action" by F.S. 120.54(4)(d) resulted in the filing of a petition for review in this court, which was assigned Case No. FF-95. In the challenged order, the hearing officer found, inter alia, that the subject rule is more stringent than current federal guidelines under the jurisdiction of the Environmental Protection Agency.

The final order, further recited:

"* * * Under a claim that a proposed rule is arbitrary, unreasonable or factually unsound, the Petitioners must demonstrate that the rule is so totally unfounded as to be completely beyond reason. Under the evidence submitted in this case, this burden has not been met."

That holding is the nucleus of the Industry's first point.

In Conner v. Cone, 235 So.2d 492 (Fla.1970) the Supreme Court of Florida had occasion to consider a statute regulating dairy products and their substitutes. The Court there said:

"* * * We recognized in the Setzer case, supra, (Setzer v. Mayo, 150 Fla. 734, 9 So.2d 280 (1942)) that the Legislature had the power to prescribe a standard for dairy products in the interest of public health and the general welfare and that filled milk was generally considered to be injurious to health. We also recognized, however, that the Legislature's power in this regard was not absolute. Any prohibition under the police power must have some relation to the protection of the health, morals, safety or welfare of the public, and if no relation can be shown which is reasonable, then such prohibition must be taken as arbitrary and capricious, the effect of which is to deprive one of property without due process, or to deprive one of equal protection under law." (Emphasis added: 235 So.2d at page 494)

Given a proposed rule within the general area of regulation delegated by the legislature to an agency, the test of arbitrariness is the same for the proposed rule as it would be for a statute having the same effect. Fla. Citrus Comm'n v. Owens, 239 So.2d 840, 848 (Fla. 4th DCA 1969), cert. denied, 242 So.2d 873 (Fla.1971).

Rulemaking by an agency is quasi-legislative action and must be considered with deference to that function. In Florida Beverage Corporation v. Wynne, 306 So.2d 200 (Fla. 1st DCA 1975), this Court said:

"Where the empowering provision of a statute states simply that an agency may 'make such rules and regulations as may be necessary to carry out the provisions of this Act', the validity of regulations promulgated thereunder will be sustained so long as they are reasonably related to the purposes of the enabling legislation, and are not arbitrary or capricious."

Similarly, the United States Supreme Court in Thompson v. Consolidated Gas Corp., 300 U.S. 55, 57 S.Ct. 364, 81 L.Ed. 510 (1937), in reviewing administrative regulations relating to the production of gas by landowners, found that the test for validity was whether the regulations are found to have a reasonable relationship either to the prevention of waste or the protection of correlative rights, or whether they are arbitrary.

F.S. 120.54(4), is the statute under which a hearing officer initially determines the validity or invalidity of a proposed agency rule. It provides that any substantially affected person may seek an administrative determination of invalidity on the ground that the proposed rule is "an invalid exercise of delegated legislative authority." The challenge under F.S. 120.54(4) is a two-step process: The challenge is first heard before an administrative hearing officer Thus, in a 120.54 hearing, the hearing officer must look to the legislative authority for the rule and determine whether or not the proposed rule is encompassed within that grant. The burden is upon one who attacks the proposed rule to show that the agency, if it adopts the rule, would exceed its authority; that the requirements of the rule are not appropriate to the ends specified in the legislative act; that the requirements contained in the rule are not reasonably related to the purpose of the enabling legislation or that the proposed rule or the requirements thereof are arbitrary or capricious.

whose order "shall be final agency action." That final agency action is subject to judicial review. Both the hearing officer (acting in a detached quasi-judicial capacity) and this Court should determine from the evidence presented whether or not there is competent, substantial evidence to support the validity of the rule.

A capricious action is one which is taken without thought or reason or irrationally. An arbitrary decision is one not supported by facts or logic, or despotic. Administrative discretion must be reasoned and based upon competent substantial evidence. Competent substantial evidence has been described as such evidence as a reasonable person would accept as adequate to support a conclusion.

The requirement that a challenger has the burden of demonstrating agency action to be arbitrary or capricious or an abuse of administrative discretion is a stringent one indeed. However, the degree of such required proof is by a preponderance of the evidence which is substantially different from that imposed by the hearing officer, viz: "So totally unfounded so as to be completely beyond reason."

We conclude, therefore, that in considering the evidence adduced before him and in rendering the order of January 31, 1977, the hearing officer applied a more onerous burden on the Industry than that required by law. In view of the conflicting evidence, the multiplicity of issues and the complexity of the facts, it would be presumptuous on our part to attempt to determine from the voluminous record before us whether the application of a different burden of proof, viz, by a preponderance of the evidence, would have resulted in different conclusions by the hearing officer. We accordingly...