16-007615 Florida Power Development, Llc, A Florida Limited Liability Company vs. Department Of Agriculture And Consumer Services, Office Of Energy Status: Closed Recommended Order on Thursday, April 6, 2017.

Summary: The Department of Agriculture and Consumer Services, Office of Energy, properly deemed Petitioner's application for a Tax Credit ineligible for consideration.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA POWER DEVELOPMENT, LLC,

A FLORIDA LIMITED LIABILITY

COMPANY,

Petitioner,

vs. Case No. 16 - 7615

DEPARTMENT OF AGRICULTURE AND

CONSUMER SERVICES, OFFICE OF

ENERGY,

Respondent.

_______________________ ________/

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this

case on February 22 , 2017 , in Tallahassee , Florida, before

Administrative Law Judge R. Bruce McKibben of the Division of

Administrative Hearing s (Ð DOAH Ñ) .

APPEARANCES

For Petitioner: J. Riley Davis, Esquire

Akerman , LLP

Suite 1200

106 East College Avenue

Tallahassee, Florida 32301

Christopher George Oprison, Esquire

Akerman, LLP

Suite 1100

98 Southeast Seventh Street

Miami, Florida 33131

For Respondent: Steven Lamar Hall, Esquire

Florida Department of Agriculture

and Consumer Services

Suite 520

407 South Calhoun Street

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

Th e issue in this case is whether the Florida Renewable

Energy Production Tax Credit (ÐTax CreditÑ) a pplication filed by

Petitioner, Florida Power Development, LLC, A Florida Limited

Liability Company (ÐFlorida PowerÑ), was eligible for

consideration by Respondent, Department of Agriculture an d

Consumer Services , Office of Energy (Ð DACSÑ or the ÐDepartmentÑ

or ÐOffice of EnergyÑ ) .

PRELIMINARY STATEMENT

On August 17, 2016, the Office of Energy received Florida

PowerÓs Tax Credit application. By letter dated Septe mber 30,

2016, DACS notified Florida Power that its application was

ineligible for consideration because it had been received at

DACS after the requisite deadline. On or about October 27, 2016

( the Petition i s not dated ), Florida Power filed a Petition fo r

Formal Administrative Hearing with the Department , challenging

whether its application should have been deemed ineligible . The

Petition was forwarded to DOAH for assignment to an

Administrative Law Judge (ÐALJÑ) . Pursuant to notice, a hearing

was condu cted by the undersigned ALJ on the date set forth

above.

At the final hearing, Florida Power called the following

witnesses: Rodney Waller, customer service manager for the

United States Postal Service (ÐUSPSÑ); Kimberly Brown, plant

administrator; and Jo hn Lambert, Tateswood Energy Services

(ÐTateswoodÑ) . Florida Power Ós E xhibits 1 through 6 were

admitted into evidence. The Department called t hree witnesses:

Kelley Burk, director of the Office of Energy; April Groover

Combs, senior management analyst; and John Reeves, operations

and management consultant . The DepartmentÓs Exhibits 1

through 5 were admitted into evidence.

The parties confirmed that a transcript of the final

hearing would be ordered. By rule, the parties are allowed up

to 10 days after the transcript of the final hearing has been

filed to submit a proposed recommended order (PRO ) . The

T ranscript was filed on March 8, 2017 . March 18, 2017, falling

on a Saturday , the PROs were due on or before Monday, March 20,

2017 . Each party submitte d a PRO and each was duly considered

in the preparation of this Recommended Order. 1/

FINDINGS OF FACT

1 . Florida Power is a company which produces power by way

of burning biomass materials, primarily wood chips , at its

energy plant at 10311 Cement Plant Road, Brooksville, Florida.

Most of the energy it produces is sold to Duke Energy. The

plant had previously been a coal fired power plant, but Florida

Power spen t $196 million converting it into a renewable energy

facility utilizing biomass fuel. JP Mo rgan is the parent

company of Florida Power.

2 . The Office of Energy is the state agency responsible

for overseeing the Tax Credit program authorized under section

220.193, Florida Statutes (2016) . 2 / The Department is empowered

to review and approve ( or disapprove) all Tax Credit

applications which it receives . The Off ice of Energy is located

at 600 South Calhoun Street, Suite 251, Tallahassee, Florida

32399 - 0001 .

3 . Applications for a Tax Credit are available on the DACS

website, as are the statutes and rules governing the Tax Credit

program. The rules specify the date applications are due in

each Ðproduction yearÑ and set forth the process for filing the

applications. Applications addressing the production year at

issue in this proceeding of Janua ry 1, 2016 , through June 30,

2016 , were due at the Office of Energy no later than August 15,

20 16. Florida PowerÓs application was not received by the

Office of Energy until August 17, 2016, two days after the

deadline. As a result, the Department deemed Florida PowerÓs

application ineligible for consideration . Florida Power

believes that circumstances surrounding the filing of its

application for a Tax Credit excuse or make moot its failure to

meet the deadline.

4 . Florida Power had filed applications for Tax Credits in

prior production years. In 2015, its application was prepared

by Tateswood , a company located in Houston, Texas. Tateswood

provides management services to several power plants, including

several owned by Florida Power. The application was submitted

via overnight delivery, i.e., Fed Ex , from Houston, Texas , to the

Office of Energy in Tallahassee, Florida . A senior official

from Tateswood , Jeff Winkler, signed the application and had it

overnighted to the Department. The application was received

timely and approved by the Office of Energy. 3 / Florida Power

received a tax credit that year of approximately $1.49 million.

5 . Around July 28, 2016, Florida Power received the data

it needed from Duke Energy to file the Tax Credit application

for the 2016 production year (which was less than a full year as

the Tax Credit program was expiring) . Florida PowerÓs

accountant, Lashauna Filo, also worked for Tateswood in Houston ,

Texas . She prepared the 2016 application for Mr. WinklerÓs

signature. Mr. Winkler was traveling , but he was expected to be

in Brooksville prior to the application submission deadline.

Ms. Filo emailed the application to the Brooksville plant on

August 10, 2016, five days prior to the date it was due in

Tallahassee. Mr. Wi nkler signed the application and gave it to

Ms. Brown , plant administrator, who was given the task of

submitting the application to the Office of Energy . 4 / She noted

verbiage on the face of the application form which says it can

be submitted to the Depart ment via Ð certified mail or hand

delivery. Ñ The due date of August 15 also appeared on the face

of the application. Ms. Brown had not been involved with filing

a Tax Credit application previously. After conferring with one

of her supervisors, Dave Herma n son, she s elect ed the first

option -- certified mail Î - for submitting the application . S he

typed an envelope, filled out a Certified Receipt form, and p ut

the application into a post office box at the Brooksville ,

Florida , post office. Ms. Brown did not co nsider literally

hand - delivering the application to DACS because Tallahassee is

roughly a four - hour drive from Brooksville , and it seemed there

was enough time for the package to get to the Department. Ms.

Brown did not understand that Ðhand deliveryÑ all owed for

delivery by overnight courier. Neither Florida Power nor

Tateswood have attorneys on staff to provide guidance or

assistance in matters such as these. Instead, Ms. Brown relied

upon the advice given her by Mr. Herman son.

6 . Unfortunately, the a pplication did not sail smoothly

th r ough the USPS system. It was received by a Tampa USPS

facility at 8:00 p.m. , on August 10 , was ÐcodedÑ for

Tallahassee, and departed that facility at 9:43 p.m. , the same

evening. It arrived at the Adams Street USPS fac ility in

Tallahassee at 1:19 p.m. , on August 11. However, t he package

had been improperly ÐcodedÑ in the Tampa USPS facility to zip

code 32301 , rather than to zip code 32399. The 32399 zip code

is used for state agencies in Tallahassee. This mis - code by the

Tampa office caused the package to be erroneously sent from the

Adams Street office to the downtown Tallahassee facility , rather

than being processed for a Ðstate agencyÑ deliver y . T hereafter ,

it went to another USPS site, the Lake Jacks on facility, where

it arrived on August 12 . The package did not make it back to

the Adams Street facility where it belonged until 5:36 a.m. on

August 16 - Î one day after the submission deadline. The

application was delivered to DAC S on August 17, 2016, at

9:08 a.m. , tw o days after the deadline.

7 . Clearly, Florida PowerÓs application for a Tax Credit

was not timely received by the Office of Energy. However,

Florida Power raises several facts which m ay relate to whether

equitable tolling or equitable estoppel principle s appl y to this

situation .

8 . F lorida Power points out that verbiage on the face of

the application itself does not specifically use the words

Ð overnight express Ñ as a means of submitting the application .

Florida Power maintains, therefore, that it was misled into

believing that physical hand - delivery or certified mail were its

only options. Inasmuch as Florida Power had submitted their

prior ye arÓs application via FedEx, their claim lacks credence.

Furthermore, the rule addressing application submiss ion defines

Ðhand deliveryÑ as Ðany physical submission o f an application to

the Office [ of Energy ] from a representative of an applicant,

courier, or a private delivery service.Ñ Fla. Admin. Code R.

5 O - 2.003(3)(b)2. Florida Power was very familiar with the Tax

Credit program, but could not say why it was not familiar with

the rules governing that program.

9 . Unfortunately, c ertified mail, Florida PowerÓs delivery

option for the application at issue, does not guarantee delivery

by a date c ertain. Rather , certified mail - Î which is processed

exactly the same way as non - certified mail - Î is merely a means

for tracking a letter or package. Thus, a person who mails a

letter by way of certified mail assumes the risk that the letter

may not be delivered on or bef ore a desired date . It appears

that the risk is quite high. A USPS employee testified at final

hearing that there are 50 to 70 complaints per day in

Tallahassee concerning certified mail and several hundred

certified letters may be misdirected each week .

10 . Florida Power further argues that t he Department has

seen several applications submitted via certified mail arrive at

DACS late, i.e., after the Ðreceived byÑ deadline. Florida

Power asserts that this fact has put DACS on notice that

allowing an ap plicant to submit an application via certified

mail constitutes a flaw in the system. The Department maintains

that the use of certified mail is a valid way of tracking

applications and is feasible. During the development of the

rule governing submission s of the applications, no interested

party voiced any objection to the use of certified mail as a

delivery option. There is no evidence in the record that DACS

was previously aware of the magnitude of errors by USPS so that

it (DACS) should not include ce rtified mail as an option for

submitting applications.

11 . One must wonder, as does Florida Power, why there

needs to be tracking of the applications at al l since the

operative date is the date of receipt by DACS. But the

Department must deem it necessar y for some reason and it is the

current state of the law.

12 . Florida Power contends in its PRO that there are

numerous fallacies in the DepartmentÓs rule regulating Tax

Credit applications. This proceeding, however, is not a rule

challenge brought purs uant to section 120.56, Florida Statutes.

The validity or propriety of the rule is not in question. At

issue in the instant proceeding is whether Florida Power

complied with the duly promulgated and existing rule.

13 . DACS is one of the few state agen cies which await

delivery of its mail from the p ost o ffice , rather than sending

someone to retrieve it from USPS . DOAH is also one of those

agencies. While awaiting delivery may delay an agencyÓs receipt

of mail at times, it would not have affected Flori da Power in

this case because the package was not available for pick - up

until August 16, one day after the deadline. There is no

requirement in law or rule that any state agency opt to pick up

its mail from USPS rather than have it delivered. Florida

Pow erÓs lament that DACS could have chosen to have its mail

delivered is of no consequence.

14 . Some government agencies use the postmark on letters

or packages as evidence that the item was timely mailed out ;

think IRS and April 15, for example. H owever, t he DACS rule

requires receipt of the application by the Department ; t he rule

does not currently employ a Ðsubmitted byÑ compliance date . See

Fla. Admin. Code R. 5 O - 2.003(b).

15 . When the Tax Credit program was originally initiated,

the Department under to ok regular rule development. The first

rule promulgated by the Department was drafted in July 2012 and

was ultimately adopted in the spring of 2013. That version of

the rule stated that all applications must be ÐsubmittedÑ by a

date certain. Upon receip t of one application after the due

date, but which had been ÐsubmittedÑ by the applicant before the

deadline , the Department decided it needed to re - think that

provision . Rulemaking was recommend ed in order to amend the

language relating to timely filing of applications. During the

rule making process, which was duly noticed and advertised, DACS

received no input from interested parties co ncerning the

proposed amendment to the rule .

16 . The am ended rule requires applications to be Ðreceived

byÑ DACS on or before the deadline established by rule. This

amendment eliminated any disputes concerning when an application

was ÐsubmittedÑ by an applicant. The current, duly promulgated

rule utilizes Ðreceived byÑ rather than ÐsubmittedÑ as the

operative date.

17 . Florida Power points out that DACS has missed some of

its own statutor il y mandate d deadlines concerning the reporting

of Tax Credit information to the governorÓs office. Florida

Power does not cite to any authority which relieves an applicant

from the requirements of a rule when an agency misses its own

deadlines . So, that DACS was not timely in carrying out its own

mandated duties is irrelevant to whether Florida Power satisfied

its required actions. Nonetheless, the Department provided a

legitimate rationale for it s tardiness, though such reasons are

irrelevant to the issue in this case.

1 8 . DACS employees utilize a checklist when reviewing Tax

Credit applications. The checklist is just that, a matrix that

can be checked off as each element or requ irement of the

application is reviewed, i.e., date of receipt, signature,

application form, etc. The first question on the checklist asks

whether the application Ðwas submitted byÑ the requisite due

date. April Groover Combs, who reviewed the Florida Pow er

application using the checklist, simply interpreted the Ðwas

submitted byÑ language as Ðwas received by.Ñ Mrs. Combs had

authored the rule and was involved in its amendments, so she

understood what was required regardless of how the checklist

referred to the items . Florida Power suggests that the internal

checklist error somehow invalidates the DepartmentÓs actions; it

does not. An internal document used by employees is not meant

to provide rights to the public. It is not a rule. Thus, any

errors wi thin such a document are immaterial.

CONCLUSIONS OF LAW

1 9 . T he Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to sections 120.569 and 120.57(1), Florida

Statutes.

20 . Flor ida Power has the burden of proving that its

application for a Tax Credit sho uld have been considered by

the Department . See Balino v. DepÓt of HRS , 348 So. 2d 349,

350 (Fla. 1st DCA 1977) (Ð[T]he burden of proof, apart from

statute, is on the party assert ing the affirmative of an issue

before an administrative tribunal.Ñ) § 120.57(1)(j), Fla. Stat.

2 1 . The standard of proof is by a preponderance of the

evidence. See Fla. DepÓt of Transp. v. J.W.C. Co. , 396 So. 2d

778 (Fla. 1st DCA 1981). § 120.57(1)(j) , Fla. Stat.

2 2 . The Tax Credit program is found in s ection

220.193, Florida Statutes. Flo rida Administrative Code Rule 5 O -

2.003 sets forth the process whereby renewable energy facilities

may apply for the Tax Credit. The portions of the rule relevant

t o the instant proceedings are:

(3)(a) Applicants must complete and submit

a Florida Renewable Energy Production Tax

Credit Application, FDACS - 01919,

(Rev.01/15).

(b) Applications must be received by the

Office, located at 600 South Calhoun Street,

Suite 251, Tallahassee, Florida 32399 - 00 0 1,

either by certified mail or hand delivery.

1. Certified mail means the service

provided by the United States Postal Service

whereby the sender is provide d with a

mailing receipt and delivery record.

2. Hand delive ry means any physical

submission of an application to the Office

from a representative of an applicant,

courier, or a private delivery service.

(c) Applications must be received by the

Office no later than close of business on:

* * *

4. August 15, 201 6 for the production

period January 1, 2016 through June 30,

2016.

(d) Applications received after the due

date will be determined ineligible.

* * *

(6) The Office will evaluate the

application to verify that the applicant has

met the qualifying st atutory and rule

criteria. The Office will issue a written

certification that the applicant is eligible

for a tax credit or will issue a written

notification that the application was

determined incomplete and will include a

description of the applicationÓ s

deficiencies. If the Office determines that

an application is incomplete, the taxpayer

must submit a corrected application within

five business days from notification of the

applicationÓs deficiencies. The Office will

provide the Florida Department of Revenue a

copy of each certification issued upon

approval of an application.

2 3 . Clearly the applicant in this case, Florida Power, did

not effectuate the receipt of its application by DACS on or

before August 15, 2016. The application was therefore

app ropriately deemed ineligible for consideration.

2 4 . All that remains for consideration is Florida PowerÓs

claim that equitable tolling or equitable estoppel principles

may operate in this situation.

Equitable Estoppel

25 . Equitable estoppel is based on p rinciples of fair play

and essential justice that arise when one party lulls another

into a disadvantaged legal position. Mid - Continent Cas. Co. v.

Basdeo , 742 F. Supp. 2d 1293 (S.D. Fla. 2010); Bueno v. Workman ,

20 So. 3d 993 (Fla. 4th DCA 209). Equitab le estoppel involves,

generally, words or conducts which cause another person to

believe a certain state of things exist s and to consequently

change his or her position in an adverse way. Grove Mgt., Inc.

v. McKiness , 578 So. 2d 883 (Fla. 1st DCA 1991).

2 6 . The elements of estoppel are: (a) representation as

to a material fact that is contrary to a later - asserted

position; (b) reliance on that representation; and (c) a change

in position detrimental to the party claiming estoppel that is

caused by the re presentation and reliance thereon. State v.

Harris , 881 So. 2d 1079 (Fla. 2004); Curci Village Condo. AssÓn,

Inc. v. Maria , 14 So . 3d 1175 (Fla. 4th DCA 2009).

2 7 . There is no evidence in this case that a

Ðrepresentation as to a material factÑ was assert ed by DACS and

later changed. At no time relevant to this proceeding did DACS

tell Florida Power that it could not submit its application by

way of overnight delivery . The Ðhand deliveryÑ l anguage on the

application form Î - as interpreted in the rule Î - did not change.

Florida Power was well aware of its right to submit the

application via any means set forth in the rule , including

overnight delivery . It had availed itself of that right just

the prior year.

28 . Although the delays caused by USPS were not Florida

PowerÓs fault and were mostly out of its control, Florida Power

assumed the risk of sending its application by certified mail .

Had it chosen a different method allowed by law, the application

might have arrived timely.

Equitable Tolling

29 . Sect ion 120.569 (2)(c) addresses the filing of

ÐpetitionsÑ at a s tate agency. Such petitions are to be

dismissed if they are untimely filed. However, the statute also

states that, ÐThis paragraph does not eliminate the availability

of equitable tolling as a d efense to the untimely filing of a

petition.Ñ Although the application filed by Florida Power is

not a petition, per se, case law addressing equitable tolling

for late - filed petitions is worth considering. As noted by

Florida appellate courts, ÐThe doctr ine of equitable tolling can

be applied to extend an administrative filing deadline.Ñ See

Williams v. DepÓt of Corr. , 156 So. 3d 563 , 565 (Fla. 5th DCA

2015).

30 . Florida Power cites to Machules v. Dep artmen t of

Admin istration , 523 So. 2d 1132 (Fla. 198 0), as support for its

claim for equitable tolling in the instant case. That reliance

is misdirected. In Machules , an employee timely engaged in a

grievance process as an alternative to filing a direct appeal to

the department. The Court held that Machu les had been lulled

into inacti on regarding his appeal when the employer agency

agreed to a hearing dat e for his grievance procedure , which was

after the date for filing his appeal . This, the Court reasoned,

might have suggested to Machules that he did no t need to file

the appeal yet. (Justice Grimes dissented, saying the employer

had no duty to warn Machules that he had chosen the wrong avenue

for remedy.) In the present case, Florida Power did not timely

file its application in an alternative forum ; it did not become

lulled into not filing its application timely . R ather, Florida

Power chose an allowable method of submitting its application

without regard to the possibility of problems arising. There is

no basis for equitable tolling in this case.

Cons tructive Possession

3 1 . Florida Power also argues that DACS was somehow in

constructive possession of the application when it was delivered

to the first Tallahassee USPS office. There is no evidence in

the record to support a claim of constructive posses sion. The

Office of Energy was not in possession of the application until

August 17, 2016.

Constitutional Due Process

3 2 . Florida Power also raises the issue of violation of

its due process rights under the state and federal

constitutions. This tribunal has no authority to rule upon the

constitutionality of rules or their application. See State

DepÓt of Admin., Div. of Personnel v. State, DepÓt of Admin. ,

Div. of Admin. Hearings , 326 So. 2d 187 (Fla. 1st DCA 1976).

That Court recognized the many duties and responsibilities of

DOAH hearing officers (now ALJs), but said:

Yet it does not follow that a hearing

officer named by the Division of

Administrative Hearings to determine

disputes cognizable under the Administrative

P rocedure Act is empowered to a uthorize the

exhaustive discovery procedures that often

attend judicial inquiry into constitutional

questions formulated in Fourteenth Amendment

terms of equal protection of the laws and

due process of law. Canney v. Board of

Public Instruction of Alachua County ,

278 So. 2d 260 (Fla. 1973) ; Otto v. Harllee ,

119 Fla. 266, 161 So. 2d 402 (1935) ; State

ex rel. Watson v. Caldwell , 156 Fla. 618,

23 So. 2d 855 (1945) ; Art. II, § 3 , Fla.

Const. ; § 20.02(1), F la . S tat . ( 1973 ) .

33 . For the reasons set forth herein, Florida Power has

failed to prove, by a preponderance of evidence, that its

application for a Tax Credit is eligible for consid eration by

the Department.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be entered by the Department

of Agriculture and Consumer Services upholding its rejection of

the Tax Credit appli cation filed by Florida Power as ineligible

for consideration .

DONE AND ENT ERED this 6 th day of April , 2017 , in

Tallahassee, Leon County, Florida.

S

R. BRUCE MCKIBBEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 6 th day of April , 2017 .

ENDNOTES

1/ Actually (and ironically), Florida PowerÓs PRO was efiled at

DOAH on March 20 at 6:38 p.m., i.e., after close of business,

and was t hus deemed received on March 21 - Î one day late. Fla.

Admin. Code R. 28 - 106.104(3). The slight tardiness of the PRO

did not prejudice the Department, however, so the PRO was

accepted and considered by the undersigned.

2/ All references to Florida Statutes shall be to the 2016

version.

3/ In fact, the 2015 application submitted by Florida Power was

initially rejected becau se the person signing the application

was not an authorized signatory , and he submitted the wrong

version of the application. The Department allowed Florida

Power to submit a revised application after the submission

deadline, but that allowance was pursua nt to rule. See Fl a.

Admin. Code R. 5O - 2.003(6).

4/ Ms. Brown is not an employee of Florida Power. Although

she testified , she Ðworks for Florida Power Development . Ñ

Mr. Lambert, president of the management company (Tateswood),

said that Florida Pow er has no employees. The persons working

at the plant are actually employees of IHI, a contracted

operator of the plant. Florida Power is responsible for the

employeesÓ salaries, however.

COPIES FURNISHED:

J. Riley Davis, Esquire

Akerman , LLP

Suite 1 200

106 East College Avenue

Tallahassee, Florida 32301

(eServed)

Steven Lamar Hall, Esquire

Florida Department of Agriculture

and Consumer Services

Suite 520

407 South Calhoun Street

Tallahassee, Florida 32399

(eServed)

Christopher George Oprison, Es quire

Akerman, LLP

Suite 1100

98 Southeast Seventh Street

Miami, Florida 33131

(eServed)

Lorena Holley, General Counsel

Florida Department of Agriculture

and Consumer Services

407 South Calhoun Street, Suite 520

Tallahassee, Florida 32399 - 0800

(eServe d)

Honorable Adam Putnam

Commissioner of Agriculture

Florida Department of Agriculture

and Consumer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.