Phibro Resources Corp. v. State, Dept. of Environmental Regulation

• Citation: 579 So.2d 118
• Decision Date: 23 January 1991
• Docket Number: No. 90-50,90-50
• Parties: PHIBRO RESOURCES CORP. and Salomon, Inc., Appellant, v. STATE, DEPARTMENT OF ENVIRONMENTAL REGULATION; Conserv, Inc.; and Mobil Mining and Minerals Co., Appellees. 579 So.2d 118, 16 Fla. L. Week. D1294, 16 Fla. L. Week. 302
• Court: Court of Appeal of Florida (US)

Page 118

579 So.2d 118

PHIBRO RESOURCES CORP. and Salomon, Inc., Appellant, v. STATE, DEPARTMENT OF ENVIRONMENTAL REGULATION; Conserv Inc.; and Mobil Mining and Minerals Co. Appellees.

No. 90-50.

579 So.2d 118, 16 Fla. L. Week. D1294, 16 Fla. L. Week. 302

District Court of Appeal of Florida First District.

Jan. 23, 1991.

On Motion for Rehearing and Rehearing En Banc May 8, 1991.

Alan C. Sundberg and Jacob D. Varn, of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tallahassee, for appellant.

David K. Thulman, Asst. General Counsel, Tallahassee, for Department of Environmental Regulation.

Roy C. Young, of Young, Van Assenderp, Varnadoe & Benton, P.A., William H. Green and James S. Alves, of Hopping, Boyd, Green & Sams, Tallahassee, for Conserv and Mobil, appellees.

ERVIN, Judge.

Appellants, Phibro Resources Corp. and its corporate parent, Salomon, Inc., appeal a final administrative order entered by the Department of Environmental Regulation (DER or department), dismissing their petitions for formal administrative hearing. In their petitions, appellants had challenged two consent orders entered by the department with Conserv, Inc., the current owner and operator of a phosphate fertilizer manufacturing facility located in Polk County, Florida, and with Mobil Mining and Minerals Company (Mobil), a former owner of the facility. The consent orders represented an attempt to remedy the pollution of groundwater beneath the site of the facility. In its order of dismissal, the department ruled that Phibro, a former owner and operator of the facility, which was not given the opportunity to participate in either of the two consent orders, lacked the requisite standing as a substantially interested party to be allowed a section 120.57 ¹ hearing regarding any effect the orders may have had on Phibro's interests. As an additional reason for dismissal, the department stated that Salomon's petition was untimely, because it was not filed within the required twenty-one days from Salomon's receipt of notice of the consent orders. We reverse and remand with directions to accord both Phibro and its corporate parent Salomon a section 120.57 hearing.

The facts alleged in Phibro's petition are as follows: Mobil operated the facility in question until 1968, when it ceased operations. In 1974, Phibro acquired the facility and continued to operate it until 1982, at which time it transferred ownership and operation to its subsidiary Conserv. Subsequently in 1983, Phibro sold Conserv to another owner. In July 1985, DER issued warning notices to Conserv, Phibro, and Mobil, reciting that pollutants exceeding levels permissible in class II groundwaters had been detected at the property boundary of the Conserv facility site. Phibro was specifically warned that former owners like itself could be held responsible for their operations if they had contributed to the present state of contamination. ²

In 1989, following notice to Phibro and Salomon that DER intended to enter into consent orders with Conserv and Mobil only, Phibro and Salomon petitioned for a formal administrative hearing. Among other measures, the remedial acts in the proposed orders involved construction of a containment system, which would consist of a number of wells surrounding a portion of the facility, designed to act as a hydraulic barrier to prevent the further migration of contaminated groundwater. Phibro and Salomon alleged that this would not restore the groundwater to its former condition, but in fact would allow continued migration of pollutants in such waters and would lead to additional contamination, thereby increasing the liability which DER had asserted against Phibro. The consent orders with Conserv and Mobil specifically recited that the facility had been discharging pollutants into the groundwater on or before 1982, during a period of time which coincided with Phibro's ownership and operation of the facility. The consent orders also reserved all the department's "rights against all past and present owners and operators of the lands" north of the facility. Moreover, the order with Conserv concluded that if it were determined that Conserv had not complied with its obligations under the order, the department reserved the right to enforce the terms of the order "or to take whatever other actions it deems appropriate."

In its final order dismissing the petitions of Phibro and Salomon, the department, relying upon Agrico Chem. Co. v. Department of Envtl. Reg., 406 So.2d 478 (Fla. 2d DCA 1981), review denied sub nom. Freeport Sulphur Co. v. Agrico Chem. Co., 415 So.2d 1359 (Fla.1982), and review denied sub nom. Sulphur Terminals Co. v. Agrico Chem. Co., 415 So.2d 1361 (Fla.1982), stated that Phibro had failed to show a substantial interest sufficient to warrant the initiation of a section 120.57 proceeding in that it had neither demonstrated injury in fact of sufficient immediacy to warrant a hearing, nor had it shown that its affected interest was of the type or nature that chapter 403 was designed to protect. The department stated that the petition merely alleged speculative injury to an entity which might at sometime in the future be held liable for such violation, if the settlement executed between the department and the two other alleged violators failed to resolve the violation fully.

In so concluding, DER observed that Phibro had alleged that its potential liability was dependent upon three contingencies: first, that the terms of the consent orders would be insufficient to remedy the contamination; second, that if the consent orders failed, the department would then take enforcement action against Phibro; and third, that Phibro would ultimately be found liable. The department was of the view that all three of the contingencies depended in whole or in part upon the volitional acts of others, primarily the discretion of the department to decide whether or not to prosecute Phibro. The department observed that if Phibro's fears became true and the department thereafter decided to pursue an enforcement action against it, Phibro could then raise all of its available defenses, including the defense that the contamination had increased due to the inherent flaws in the remediation plan as outlined in the consent orders. The department thereupon decided that because it was clear that certain volitional acts of the agency must first occur before any injury to Phibro could exist, dismissal of the petition for lack of standing was appropriate.

We disagree with both the department's reasoning and its conclusions. In so deciding we do not disavow the holdings of those judicial decisions relied upon by the department in its order, ³ or those decisions the department cited in its brief. ⁴ Unlike the instant case, however, all of the cases cited by appellee involved circumstances in which the person allegedly affected by administrative action sought initial access into the administrative proceeding. None involved a situation, such as here, in which the person seeking an administrative hearing had previously achieved both access and party status to the proceeding.

Our conclusion in this regard requires that we examine carefully the pertinent provisions of the 1974 Administrative Procedure Act (APA), furnishing adjudicatory proceedings to parties or persons whose substantial interests are affected or may be affected by an agency's actions. Section 120.57 provides that "[t]he provisions of this section apply in all proceedings [formal or informal] in which the substantial interests of a party are determined by an agency[.]" (Emphasis added.) As pointed out by a knowledgeable commentator, in order for one to apply the appropriate access standard to administrative proceedings recognized under section 120.57, it is necessary to make "a separate examination of the provision's three essential elements: 'substantial interests,' 'party,' and 'are determined by an agency.' " Dore, Access to Florida Administrative Proceedings, 13 Fla.St.U.L.Rev. 965, 1062 (1986).

Turning to the first element, substantial interests, Professor Dore explains, "[T]he adjective 'substantial' suggests important or significant and the noun 'interests' signifies something less than legally recognized and protected rights, privileges, or immunities." Id. at 1062. The latter, more restrictive language had existed under the 1961 APA in the following language: "Any party's legal rights, duties, privileges or immunities shall be determined only upon public hearing by an agency unless ... waived by the affected party...." Sec. 120.22, Fla.Stat. (1973). Professor Levinson, one of the principal architects of the 1974 APA, additionally comments that the adoption of the language "substantial interests" in lieu of the earlier statutory language was intended to supersede judicial decisions, such as Bay Nat'l Bank & Trust Co. v. Dickinson, 229 So.2d 302 (Fla. 1st DCA 1969). Levinson, The Florida Administrative Procedure Act: 1974 Revision and 1975 Amendments, 29 U.Miami L.Rev. 617, 628 (1975). In Bay Nat'l, this court had interpreted the predecessor act to mean that its provisions had no applicability to agency action "rendered in the performance of a quasi-executive or quasi-legislative function in which legal rights, duties, privileges, or immunities are not the subject of adjudication." Bay Nat'l, 229 So.2d at 306. Thus, in order for one now to gain access to the procedures furnished under section 120.57 of the 1974 APA, such person need not necessarily show that his or her legal rights or duties were litigated or determined in formal or informal proceedings.

Turning next to the second and third of the three essential elements of section 120.57, "party" and "determined by an agency," Professor Dore explains that one's access to an adjudicatory proceeding does not require demonstration of any impact on that particular person's personal interests, rather it is the determination of the...