Three items that outline the CCO case for "JUST COMPENSATION" that I've been sending out to news media people. Feel free to send these items yourself to anyone who might have an interest. I know that most of you have seen these before, but I'm just putting them here all together for the record (The Oil & Gas J. Story requires a subscription to link to the original story):
Reference #1 Oil & Gas Journal. February 8, 1999
ogj.pennnet.com
Oil&Gas Journal
Volume 97, Issue 6 (Feb 08, 1999)
In This Issue
Apalachicola embayment may be continent's last virgin oil basin
Jamil Azad
Azad Exploration Ltd.
Calgary
History has shown that the largest fields in a given basin are usually discovered early in its exploration.
Today in the developed areas of the U.S. and Canada each successful exploratory well yields on the average less than 100,000 bbl of oil. Only one exploratory well in seven is successful.
The odds of discovering a large oil field were much greater in the early days of exploration. For example:
„h The first well in Pakistan's Sind Province hit giant Sui gas field.
„h The first wildcat in northeastern India's Assam area turned up Digboi oil field, and the second found Nahorkatiya oil field.
„h The first two wildcats in Burma (Myanmar) produced Chauk and Yenanyaung fields.
There was a time when it seemed that virtually no wildcat off Southeast Australia, in Ecuador's Oriente basin, or in Alberta's Rainbow Lake area could miss a major discovery.
The lesson is clear: Find a virgin petroliferous basin and be among the first to drill it.
One virgin petroliferous basin remains in North America. The basin is sprinkled with giant structures, all of them undrilled, and their presence is firmly established.
Apalachicola embayment
The Apalachicola embayment since its inception in Jurassic times has been affected by a gradual subsidence and a tilt towards the southwest and deeper part of the basin (Fig. 1 [91,594 bytes]). Otherwise it is free of salt tectonics, folding, and significant faulting.
Fig. 2 [79,730 bytes], showing the configuration of basement in the Apalachicola embayment, has been amended from Dobson and Buffler.1 Fig. 2 incorporates the results of a seismic survey that were not available to Dobson and Buffler. Also shown on Fig. 2 is Coastal Petroleum Co.'s State of Florida Drilling Lease 224-A, which as will be seen is critical to this play.
The Jurassic is a major petroliferous system in the Gulf of Mexico/Gulf Coast basin, where it hosts more than 150 onshore oilfields and must have contributed greatly to the reserves that have migrated upwards and sideways that are now being produced from Upper Tertiary sediments in the central parts of the basin. The Destin Dome is a salt pillow that has gas in the Norphlet but no Smackover reefs.
Fig. 3 [60,200 bytes] shows the area of Smackover-Norphlet sediments to their pinchout. Note the coincidence between the basement culminations (Fig. 2) and the updip pinchout of the Smackover-Norphlet. Also note that the enduring tilt offers a favorable paleoslope for migrating hydrocarbons and that none of the Apalachicola embayment's large reefs has yet been drilled.
The 420 million bbl Jay (Smackover) oil field in Santa Rosa County, Fla., is similar to these Apalachicola reefs (Fig. 1), but Jay lies outside the Apalachicola embayment proper.
Fig. 4 [63,391 bytes] is a schematic cross-section run between Destin and the Apalachicola embayment highs. The Louann salt pinches out to the west.
The westerly part of the basement surface has low relief and is blanketed by a sheet of basement-derived clastics (Norphlet), which is generally porous and offers a conduit for the Smackover generated hydrocarbons to migrate updip. As the Smackover transgressed on a ramp it developed a number of large reefs.
The eastern part of the section shows the strong relief that results from the erosion of remnants of the Apalachicola orogen. There, the large Smackover reefs that cap the highs are in an ideal position to collect the petroleum that is sourced in the local sediments, organically rich Smackover micrites that surround them, and the petroleum that has migrated over long distances from the deeper part of the basin as well.
The maturation index suggests that petroleum of approximately 50¢X gravity can be generated and preserved under these circumstances.
Reefs on seismic
Fig. 5 [149,043 bytes] shows the seismic expression of two very large Smackover reefs developed on the Apalachicola ramp. A 1984 study2 suggested that these buildups are coral-dominated patch reefs and bioclastic piles. The reefs are approximately 3 miles across and lie at a depth of 16,000-18,000 ft. As indicated above, these traps are well placed to catch locally sourced petroleum as well as petroleum that migrates up the ramp.
Fig. 6 [150,379 bytes] shows the basinal Smackover turning into a reef at contact with a basement high. This true giant is 5 miles across and perfectly placed to collect migrating Smackover petroleum.
The prospects that explorationists would no doubt select first are reefs such as those shown by the two small red crosses on Figs. 2 and 3 because of their optimum location. If any reefs are likely to collect their full load of petroleum, these two should be the best candidates. Fig. 7 [174,659 bytes] shows the more easterly of those two reefs.
A seismic cross-line (not shown) demonstrates four-way closure. Fig. 8 [128,292 bytes] is the westerly buildup. It, too, has a seismic cross line that demonstrates four-way closure. Prominent Norphlet clastics prograde from the right, and a beautiful reef talus drops to the left of the buildup. The framework should be coral-stromatoporoid.
This reef covers roughly 4,500 acres and is about 1,300 ft high. Applying the parameters of the Jay oilfield model (average porosity 15%, salt water 8%), the possible oil in place is 6 billion bbl. The other reef has a potential of 3 billion bbl of oil in place.
It is impossible to tell at this point how many of these very large reefs grew in the Jurassic petroliferous system of the Apalachicola embayment because of the limited amount of seismic available. However, the author has identified 10 very large reefs from the available seismic.
The reefs of the ramp should prove to be alignments of patch reefs, and no one knows how many platform margin and basin margin reefs will be found. A conservative guess would be at least three dozen.
These large reefs are in 35-60 ft of water and at depths of 12,500-18,000 ft. Costs are around $8 million/well. Upside are possible tens of billions of barrels of produced oil, but the catch is that only one opportunity exists to test this entire play.
State Drilling Lease 224-A
The entire offshore area of the Apalachicola embayment is contained within leasing moratoriums.
Leasing in federal waters has been prohibited by executive order of the President of the United States, and it is unknown how long this will remain in effect.
Leasing in Florida state waters has been prohibited by Florida law since 1990. The only exceptions to this moratorium are the existing leases owned and operated by Coastal Petroleum, which are shown in yellow on Fig. 2. These moratoria make Coastal Petroleum's lease a unique drilling island into the Apalachicola embayment Smackover reef play.
These leases date to the 1940s. They granted Coastal Petroleum the exclusive right to explore for and to produce oil, gas, and other minerals on millions of acres of Florida offshore areas. Coastal Petroleum drilled a number of wells, but the only one to test the Jurassic was the last well drilled. That well is located in the Apalachicola embayment. It did not test a Smackover reef, but it did find Smackover and Norphlet present near to the reefs.
Coastal Petroleum filed an application to drill the first test of the Smackover reefs on the reef shown in Fig. 8 in March 1992. The State of Florida and several environmental groups have fought the issuance of this permit, but after two appellate victories and a three week trial a recommended order of an administrative law judge in Florida found that the permit should be issued. Undaunted, the state again denied the permit. Coastal Petroleum expects the final appeal to result in the issuance of its permit to drill in the spring of 1999.
When the drill bit probes these large Smackover reefs we may indeed watch one of this continent's greatest exploration plays unfold.
Jay oil field was the largest discovery of oil east of the Mississippi River. It lifted Florida to the eighth largest U.S. oil producing state.
This Apalachicola Smackover reef play might result in scores of even larger oil fields. Florida would then be doing its part to assure that long term energy supplies exist for this continent.
References
1. Dobson, Laura M., and Buffler, Richard T., Seismic stratigraphy and geological history of Jurassic rocks, AAPG Bull., Vol. 81, No. 1, January 1997.
2. Crevello, Paul D., and Harris, Paul M., Depositional models for Jurassic reefal buildups, Third GCS-SEPM Conference, 1984.
The Author
Jamil Azad worked on various international petroleum exploration assignments for Burmah Oil Co. until 1971, when he took up consulting in geoscience in Calgary. He obtained a degree of geologist from Ecole Polytechique Federale in Lausanne, Switzerland.
Copyright 1999 Oil & Gas Journal. All Rights Reserved.
Reference #2 Detroit Free Press. May 9, 1998
freep.com
Sellout on dunes? In fact it looks like best of a bad deal
When Michigan taxpayers were stuck with paying more than $90 million to preserve the Nordhouse Dunes, environmentalists and others said John Engler pulled a fast one
May 9, 1998
BY DAWSON BELL
Free Press Lansing Staff
The story of the Nordhouse Dunes has an easy plot line. It goes like this:
Site of publicly owned natural wonder is under attack by greedy oil developers. Developers, rebuffed by state officials, file suit. Anti-environmental governor abandons stewardship of the Lake Michigan coastline resource, negotiates secret deal to pay off developers -- who happen to be big political contributors. Environmental ruin follows.
It's easy. It appears to be widely believed.
It also is wrong.
The real story of the Nordhouse Dunes is not easy. It can't be told in a paragraph.
The single point of reference for both is Nov. 9, 1995.
That was the day the Michigan Legislature approved the payment of more than $90 million to settle claims to property (oil and mineral reserves) beneath the Nordhouse Dunes that had been taken by the state in 1987.
And it ended a court battle that began when state environmental regulators banned drilling at Nordhouse, a battle the state lost in every particular and at every turn for eight years. It represented a savings to taxpayers of at least $25 million.
It also, according to Michigan's most ardent enviro-activists, made Gov. John Engler an eco-criminal.
In their view, Engler's negotiation of the settlement was a betrayal of Michigan's heritage of environmental protection, a partisan sellout. Increasingly of late, they have recruited mainstream media and Engler's political opponents to the cause.
An investigative series on Southfield's WXYZ-TV (Channel 7) this year termed Nordhouse a "back-room deal" in which "the taxpayers got fleeced."
Under this theory, Engler cut a secret, sweetheart deal with his political cronies and rammed it through an unsuspecting, supine Legislature.
Democratic candidate for governor Geoffrey Fieger, interviewed by WXYZ, called Nordhouse an act of "monumental political corruption."
When he formally announced his candidacy last month, Fieger piled on.
"The governor has allowed millions of dollars to be stolen from the people," he said, on a phony lawsuit "about mineral and land rights in the Sleeping Bear Dunes, one of our ...economic and ecological gems."
Setting aside Fieger's confused geography (the Sleeping Bear Dunes are 55 miles north of Nordhouse), none of those conclusions is based on the evidence.
For instance:
The key decisions that led to the lawsuit were made in the 1980s by the administration of Gov. James Blanchard. They were made despite staff warnings that a blanket denial of drilling was illegal and unnecessary -- "a colossal boner," said one official.
The court rulings that unequivocally found the state had violated the Michigan Constitution and seized private property without compensation, and set its staggering value, were made almost exclusively by judges with past ties to the Democratic Party.
By 1995, Attorney General Frank Kelley, a Democrat, and his environmental assistants had decided the case was lost, and prolonging the fight could only make matters worse. He told lawmakers as much.
Far from being in the dark, the Legislature understood the deal it was being asked to endorse, and the political connections of those who would benefit from it. "Everybody knows the facts on this," House Democratic Leader Curtis Hertel, D-Detroit, said at the time.
But to really understand Nordhouse, you have to start long before the fall of 1995.
In the beginning
On the shoreline north of Ludington lies a piece of original Michigan, a breathtaking stretch of sand dune that rises from the lake and merges with pine and hardwood forest.
Lying hard by Ludington State Park, the dunes have long been recognized as special. And in 1987, Congress created the 3,450-acre Nordhouse Dunes Wilderness Area, the only official wilderness in the Lower Peninsula.
The dunes also lie atop potential oil reserves. That was known when the federal government bought the land and when it became a wilderness area.
On both occasions, the government explicitly acknowledged that mineral owners were entitled to access to the property.
In the early 1980s, Miller Bros., a west Michigan oil and gas development firm, leased the rights and conducted seismic testing that showed the presence of oil. The firm sought permission from the state to drill.
The Department of Natural Resources conducted a two-year environmental review and held hearings marked by overwhelming opposition.
By early 1987, the state was in a terrific political bind.
Environmentalists and much of the public regarded Nordhouse as the Holy Land and oil drilling as the work of greedy polluters. They wanted a blanket ban. The mineral owners were clear that they were entitled to their property rights.
The problem, said Jon Roethele, a retired DNR employee who supervised the environmental review, was that science couldn't support a blanket ban.
Some of the area -- especially the open dunes -- was uniquely valuable and fragile.
But other large sections, with inland second-growth timber laced by two-track roads, were not. And that, not the sand dunes, was where Miller Bros. proposed to drill.
Roethele said in a recent interview that a final report prepared for then-DNR Director Gordon Guyer suggested limited drilling could be accommodated.
The report went to Guyer and other top officials from the DNR and attorney general in a meeting April 22, 1987.
It was rejected.
Roethele said he spent that evening rewriting the conclusions to reflect the department's position -- no drilling anywhere in the Nordhouse Dunes Wilderness Area or a buffer zone around it.
"I said, 'Don't be foolish. This is a taking. They are going to file a lawsuit,' " Roethele recalled.
"It was the biggest, colossal boner the government could make."
On to court
Jack Bails, a former deputy DNR director to whom Roethele reported and upon whom Guyer relied in making his decision, said in a recent interview that he doesn't remember Roethele's warning.
But five months later, Miller Bros. notified the state it would sue if the ban wasn't lifted. It was not, and the lawsuit was assigned to Ingham County Judge Peter Houk, a former Democratic county prosecutor.
In rulings over the next three years, Houk found that the state confiscated the mineral rights through inverse condemnation (i.e. regulation). Relying on testimony from experts in a seven-week trial, he set damages at close to $90 million. In 1994, the state Court of Appeals -- a panel of three judges, two of whom had been Democrats -- unanimously affirmed most of Houk's findings. The Michigan Supreme Court declined the state's request to hear an appeal.
A year later, the state was before Houk again, arguing that the damage award was "manifestly unjust, wildly excessive." Houk rejected that claim, and ruled that Miller Bros. alone was entitled to $84.5 million. Other mineral-rights owners were owed $36.2 million.
The taxpayers of Michigan were on the hook for a minimum of $120 million, with interest piling up at more than $20,000 a day.
In September 1995, Engler, who had been watching the court battle for more than four years, began direct talks with C. John Miller, a longtime acquaintance he knew as a generous contributor to the state Republican Party.
For Engler, the politics were terrible. If he agreed to anything, it would be viewed (as it widely has been) as a sellout to rich Republicans. And there was little certainty he could save the state money anyway.
Mike Miller, John Miller's son and partner in the oil business, said: "We were always willing to listen. But you've got to remember, we were entering the fourth quarter ahead by 50 points."
Engler and John Miller agreed to settle the Miller Bros. claim for $60 million (with a $25,000-a-day penalty after Oct. 3). Engler took the deal to Kelley.
The alternative to settlement was a trek back through the courts.
"We were looking at a 3- to 5-year process," said Michael Leffler, chief of Kelley's environmental division. "The calculation of what the damages would be by then were pretty frightening.
"The overwhelming consensus was that we were not going to improve our position by continuing."
Kelley endorsed settling.
The proposal was presented to the Legislature on Sept. 25.
In the following weeks, House lawmakers engaged in long and furious debate. Twice they rejected the proposal by narrow margins.
Ultimately, the Legislature expanded the offer to more than $90 million to buy out the owners of the mineral rights as well. On Nov. 9, the House approved the settlement. It passed easily in the Senate.
Colorful, but . . .
Since then, environmental activists repeatedly have charged that the settlement was a payoff. Their theory: Engler and the GOP conspired to settle a winnable lawsuit in exchange for campaign contributions.
That contention is based largely on $200,000 the Millers and another well-heeled plaintiff, Grand Rapids businessman Peter Cook, gave the state GOP between 1992 and 1995.
WXYZ described the settlement as "a back-room deal between rich oil moguls and Gov. John Engler" in which the developers were "pumping a river of cash into the campaigns of Michigan lawmakers and walking away with millions."
The problem with that theory is that the deal was endorsed openly by Democrats who knew of the Millers' GOP contributions.
During the 1995 debate, opponents of the settlement delivered to each House member a full accounting of the Miller-Cook GOP contributions.
WXYZ did uncover about $8,000 that Rep. Michael Goschka, R-Brant, received from oil-connected contributors a year after the settlement. Goschka voted no on the deal twice, calling it too expensive, then yes on Nov. 9.
The day before, Goschka said, he had talked to John Miller's brother Jack about the history of the lawsuit and changed his mind.
Five other lawmakers, four of them Democrats, switched from no to yes votes Nov. 9.
In the end, 10 Republicans voted no. Thirteen Democrats, none of whom got oil money, voted yes.
Rep. Jack Horton, R-Lowell, voted for the settlement three times. In 1996, Cook gave $250 to a candidate who ran against Horton.
Underground contention
The other prong in the conspiracy theory of the settlement involves a report by state experts about the value of the oil and gas reserves.
The report, which pegged the value at a fraction of what was paid, was withheld from legislators, according to this theory. Had they known, they might have rejected the deal.
In 1997, the Sierra Club devoted much of its summer newsletter to a story darkly headlined "Did Gov. Engler withhold information that might have saved taxpayers $80 million?"
Was the report a critical component of the governor's "secret deal"?
The short answer is: No.
The analysis referred to was neither new in September 1995, nor relevant to the Legislature.
The DNR and the attorney general hired Gustavson Associates of Boulder, Colo., after having been routed in the earlier trial before Judge Houk.
In 1991, experts for Miller Bros. had presented a sophisticated theoretical model of the value of the Nordhouse oil. The original state expert relied on a hypothetical method that he testified had never been used. Houk rejected it conclusively, and accepted the Miller valuation.
When geologist and engineer John Gustavson later reviewed the case, he established a value that was substantially lower -- at least 10 times.
Gustavson's work was completed by the spring of 1995. He testified before Houk in April.
"We tried 15 different ways to put new value evidence in," state attorney Leffler said. "And the court wouldn't let us do it."
A final version of Gustavson's report was delivered to the attorney general Sept. 23 -- two days before Engler submitted his proposal to the Legislature.
The environmentalists believe that Gustavson's estimates suggest the case could have been won on appeal. But, in 1995, the appeals court already had adopted Houk's ruling on value.
The question wasn't who was right, but whether a court would listen.
"We can't appeal a case based on evidence the court won't admit," Leffler said recently. "However persuasive it is, it didn't matter."
Nor was it critical to the Legislature in the fall of 1995. Virtually no one involved, Engler included, defended the size of the proposed payment.
"Most of us thought that the settlement was outrageous and that the Millers were excessively greedy," said Rep. Bill Bobier, R-Hesperia, whose district includes the Nordhouse area. "But to say that we didn't know what we were doing is complete horseshit.
"Our experts got their butts whipped in court in the first place. And when we got better experts it was too late. It was like asking the court for a fourth strike."
For the environmentalists, however, when the question is protection of a natural resource, you're never out.
From the beginning, the allegations of political payoffs and suppressed documents were weapons in a wider war.
Opponents of the Nordhouse settlement still believe the courts were wrong to find that the drilling ban was unconstitutional, and think it is scandalous that the taxpayers of Michigan had to pay for it.
Worse yet, they view the case as a dark cloud hanging over environmental protection generally.
As Channel 7 reporter Shellee Smith put it: "People who watched that settlement are now lining up to sue the state."
Smith cited a pair of lawsuits. One -- involving a blocked development in Oakland County -- was filed seven years before Nordhouse was settled. The other -- filed by the owners of a peat mining operation in the Thumb -- is based on an agreement the state signed to permit mining in 1958.
Each poses serious questions about the state's authority to protect natural resources. But those questions were posed long before Nordhouse.
There is no line at the courthouse door. State officials said the number of lawsuits alleging an unconstitutional confiscation of private property filed since 1995 has been at roughly the same, very low, level it's been for years.
Nor is it clear that Michigan's environmental regulators have retired from the field.
In fact, significant new regulations -- most of them in response to prolific drilling of Antrim gas wells -- have been enacted for development of gas and oil wells in the 1990s. More are pending in the Legislature.
Assistant Attorney General Peter Manning said there is a relatively simple reason why most regulations are legally defensible. They've been around for a while. A property owner has a harder time proving loss from regulation if the rule was in place when the property was obtained.
But there's another reason why the lawsuits are not epidemic -- they can cost a small fortune.
Robert Bunting, attorney for the developers in the Oakland County case, said: "There are probably not 100 people in the state that have enough money to litigate a claim. You're fighting an opponent who has unlimited resources and doesn't care how long it takes."
With the Nordhouse Dunes, it took eight years to exhaust the government. The environmentalists believe the state should have appealed again to the state Supreme Court.
But the environmentalists "simply don't know what they're talking about," state attorney Leffler said.
"It's real easy for people who weren't party to it and don't have to pay for it to go back and nitpick the record. But they're wrong."
Ultimate values
"There are few enough places in the state where you can stand on the crest of a knife-edge dune, follow the skittery tracks of small unknown creatures through the sand ...or watch the water ripple out like silk to some seamless joining with a liquid blue sky."
Those words, appearing in the Free Press, described the Nordhouse Dunes in 1984.
They ring true now. Nordhouse is a special place. Perhaps so special that no incursion is justified. So special it should, for the public good, be protected at all cost.
But if the value of such a place is so great, should the public not pay for it?
These are close questions, argued persuasively and passionately from both sides all over the country.
Sometimes they are decided one way in court, and another in the court of public opinion. They are almost never simple stories.
Dawson Bell can be reached at 1-313-222-6609, or by E-mail at dbell@det-freepress.com
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Reference #3 Appeal Court Ruling. October 6, 1999
coastalcarib.com
IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA COASTAL PETROLEUM COMPANY,
Appellant,
V.
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED.
FLORIDA WILDLIFE
FEDERATION, INC.; SIERRA
CLUB, FLORIDA CHAPTER;
FLORIDA AUDUBON SOCIETY,
INC.; ROBERT A.
BUTTERWORTH, ATTORNEY
GENERAL; ST. GEORGE ISLAND
CIVIC CLUB; and DEPARTMENT
OF ENVIRONMENTAL
PROTECTION,
Appellees.
CASE NO. 98-1998
____________________________/
Opinion filed October 6, 1999.
An appeal from an order of the Division of Administrative Hearin9s.
John K. Aurell of Ausley & McMullen, Tallahassee, Susan W. Fox of
Macfarlane, Ferguson & McMullen, Tampa, and Robert J. Angerer and
Robert J. Angerer, Jr. of Angerer & Angerer, Tallahassee, for
Appellant.
David G. Guest, and S. Ansley Samson, Earthjustice Legal Defense Fund, Tallahassee, for Appellees Florida Wildlife Federation, Inc., Sierra Club, Florida Chapter, and Florida Audubon Society, Inc.;
Barbara Sanders, Apalachicola, for appellee St. George Island Civic Club;
Maureen M. Malvern, Senior Assistant General Counsel, and Andrew
J. Baumann, Senior Assistant General Counsel, Office of General Counsel, and Jonathan A. Glogau, Assistant Attorney General, for appellee Department of Environmental Protection;
and Monica K. Reimer, Assistant Attorney General, Tallahassee, for appellee Robert A. Butterworth, Attorney General.
BARFIELD, C. J.
In what may be one of the final chapters in the continuing saga of the appellant's quest to extract oil from beneath the Gulf of Mexico, it challenges an order of the Florida Department of Environmental Protection (DEP) denying its application for a drilling permit, ostensibly because oil extraction is potentially too dangerous to the environment. The appellant contends that the order must be reversed because DEP's interpretation of the applicable statute will result in an unconstitutional taking of its property. We affirm the order.
The decision in this case turns on the interpretation of section 377.241, Florida Statutes (1997):
Criteria for issuance of permits. The division, in the
exercise of its authority to issue permits as hereinafter provided, shall give consideration to and be guided by the following criteria:
(1) The nature, character and location of the lands involved, whether rural, such as farms, groves, or ranches, or urban property vacant or presently developed for residential or business purposes or are in such a location or of such a nature as to make such improvements and developments a probability in the near future.
(2) The nature, type and extent of ownership of the applicant, including such matters as the length of time the applicant has owned the rl9hts claimed without having performed any of the exploratory operations so granted or authorized.
(3) The proven or indicated likelihood of the presence of oil, gas or related minerals in such quantities as to warrant the exploration and extraction of such products on a commercially profitable basis.
The appellant asserts that in the past, DEP has issued permits when each criterion of section 377.241 "has been met," but that when DEP announced its intention to issue a drilling permit in this case, a
group of environmental organizations challenged the decision, arguing that DEP was wrongly interpreting the statute, which requires the agency to "weigh" the criteria of section 377.241, balancing environmental interests against the right to explore for oil. Following an evidentiary hearing and the issuance of an order in which the hearing officer recommended granting the permit with a multi-million dollar surety, DEP reconsidered its past practice and agreed with the environmental petitioners that "meeting" each criterion was not legally sufficient. It then "balanced" the criteria and determined that issuance of a drilling permit was too dangerous to the coastal environment.
The appellant contends that DEP cannot "change its mind" about how to interpret the law without notice and rulemaking procedures, especially when the result is an unconstitutional taking of its property. We find that the appellant had adequate opportunity to be heard on the issue of the proper interpretation of section
377.241. DEP correctly determined that its previous practice was not consistent with the proper interpretation of the permitting statute and adequately explained its determination. Section 120.68(12), Fla. Stat. (1997). Cf. Dept. of Administration V Albanese, 445 So.2d 639 (Fla. 1st DCA 1984) (Agency possesses only such authority as is specifically delegated to it by statute and cannot promulgate rules that go beyond that grant of authority or are contrary to the intent of the legislature)
With respect to the constitutional challenge to DEP's interpretation of the statute, the issues of contract impairment
and taking go hand-in-hand. There is no dispute that the appellant has a viable contract with the State of Florida to explore for and extract oil from submerged sovereignty lands. DEP's interpretation and application of the permitting statute, based on its determination that there is a compelling public purpose in not allowing the appellant to drill off shore, effectively prevents the appellant from exercising its rights under the contract. DEP's action would be unconstitutional only if just compensation is not paid for what is taken. Fla. Const. Art. X, ¡± 6. This is a matter to be resolved in the circuit court.
AFFIRMED.
BOOTH and WOLF, JJ., CONCUR. |
