FIRST DISTRICT COURT OF APPEAL

STATE OF FLORIDA

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No. 1D17-5096

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KANTER REAL ESTATE, LLC,

Appellant,

v.

DEPARTMENT OF 

ENVIRONMENTAL PROTECTION,

CITY OF MIRAMAR, and BROWARD 

COUNTY, FLORIDA,

Appellees.

_____________________________

On appeal from the State of Florida Department of Environmental 

Protection. 

Noah Valenstein, Secretary.

February 5, 2019

B.L. THOMAS, C.J.

Appellant, Kanter Real Estate, LLC, challenges a Final Order 

of the Department of Environmental Protection denying a permit 

to drill an exploratory oil well, which complied with all 

environmental-protection requirements, in an “environmentally 

degraded” property located in the Florida Everglades. This Court 

has jurisdiction. Fla. R. App. P. 9.030(b)(1)(C). For the reasons 

set forth below, we reverse the Final Order and remand for entry 

of an order consistent with the Administrative Law Judge’s 
2

Recommended Order, and we direct the Department to issue the

requested oil and gas permit. 

Appellant owns in fee simple the surface rights and 

subsurface mineral rights of a 20,000-acre parcel of land located in 

Broward County. The property, which is located in Water 

Conservation Area 3 of the Florida Everglades, is encumbered by 

a flowage easement held by the South Florida Water Management 

District. The easement reserved rights of ingress and egress to the 

grantor, including access “for the exploration or drilling for, or the 

developing, producing, storing or removing of oil . . . in accordance 

with sound engineering principles.”

In 2015, Appellant applied to construct and drill an 

exploratory oil well on five acres of the property. The Department

granted Appellant an Environmental Resource 

Permit that defined and approved the design of a stormwater 

management system at the site to protect offsite lands from any 

stormwater discharges. Appellant also committed to a number of 

pollution prevention measures, including spill prevention and 

cleaning plans, a hydrogen sulfide plan, a construction pollution 

prevention plan, proposals for wildlife management, and a safety 

manual.

The Department sent Appellant three requests for 

information about issues such as the aquifer, the project site

design, and protections for the surrounding area. After 

responding, Appellant demanded that the Department process the

oil and gas permit application. The Department issued a Notice of 

Denial, stating that Appellant failed to provide information 

showing a balance of considerations in favor of issuance under

section 377.241, Florida Statutes. Section 377.241 sets forth the 

following relevant criteria for the Department to consider when 

deciding whether to issue an oil and gas permit:

(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.
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(2) The nature, type and extent of ownership of the 

applicant, including such matters as the length of time 

the applicant has owned the rights 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.

§ 377.241, Fla. Stat. (2018).

To challenge the Department’s decision, Appellant filed 

a petition for an administrative hearing, which was referred to the 

Division of Administrative Hearings. The parties stipulated that 

Appellant’s application met the minimum design standards for a 

permit and did not violate statutory setback requirements. Thus, 

the only issue for the Administrative Law Judge (ALJ) to 

determine was whether the statutory criteria of section 377.241

weighed in favor of or against issuance of an oil and gas permit.

Appellant presented evidence that the project site lies in an 

area called “the pocket,” notable for its degraded natural habitat 

and lessened environmental values. Appellant also presented the

environmental resource permit that was granted by the 

Department in acknowledgment of Appellant satisfying all 

necessary environmental precautions. Appellant also introduced

evidence that the Department had allowed other oil wells in the 

Everglades, including one approximately twenty-four miles west 

of Appellant’s project site that began operation in the late 1970s. 

Appellant’s expert testified that there was a 23% chance of

discovering oil at the project site, and that in the oil exploration 

industry, a 23% chance of discovering oil constitutes a very good 

prospect. The expert further testified that Appellant’s

well would be commercially self-supporting at $50 per barrel of 

oil if only 100,000 barrels were discovered, and opined that the 

proposed well would generate between 180,000 to 10,000,000 

barrels of oil if oil were discovered.
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The ALJ concluded that the first statutory factor, the nature 

of the lands involved, did not weigh against issuance, as the factor 

was intended to address and balance the interests 

of subsurface mineral rights owners against any competing

interests of surface owners, and that “[g]iven the unified title to 

the Well Site in Kanter, balancing of the interests of the fee simple 

owner against the interests of the mineral rights lessee is neither 

necessary nor appropriate.” The ALJ cited a series of Whereas 

clauses to illustrate the legislature’s concern over divided 

ownership interests. In addition, the ALJ found that even if the 

first factor was relevant in the absence of divided ownership 

interests, “[t]he property upon which the Well Site is to be located 

has no special characteristics that would make it susceptible to 

pollution.”

The ALJ then concluded that the second statutory factor, the 

nature of ownership, including the length of time in 

which Appellant delayed exercising oil rights, did not weigh 

against issuance in this case, as Appellant owned both surface and 

mineral rights. As to the third factor, the likelihood of discovering 

oil on a profitable basis, the ALJ found there was a strong chance

(17%) of Appellant discovering oil, meaning the third factor

weighed in favor of issuance. Balancing the three factors, the 

ALJ recommended granting Appellant’s permit request.

The Department filed twelve exceptions to 

the ALJ’s Recommended Order, stating that there was no 

competent, substantial evidence to support the likelihood of 

discovering oil in sufficient quantities to be profitable, and that 

Appellant’s delay in applying for a permit should 

have been considered.∗

 The Secretary entered a Final Order 

denying Appellant’s request for an oil and gas permit. 

As to the nature of the land, the Final Order states that 

section 377.241, Florida Statutes, requires an evaluation of the 

 ∗ Broward County also filed exceptions to the Recommended 

Order, but the county’s exceptions were untimely filed and the 

merits of the exceptions were not considered by the Department.
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lands themselves, rather than a risk analysis of possible discharge,

concluding:

The lands proposed for the Well Site are located in the 

endangered Everglades ecosystem, which is world 

renowned for its unique environmental characteristics. 

In accordance with the Everglades Forever Act, the 

Florida Legislature has dedicated the Everglades to long 

term restoration.

As to the second statutory factor, the Secretary reversed the 

ALJ’s conclusions, declaring that Appellant’s delay in seeking a 

permit was relevant to the balancing test and weighed against 

issuance. As to the third statutory factor, the Secretary accepted 

the ALJ’s determination that there was a reasonable likelihood of 

discovering oil in commercially profitable quantities. The 

Secretary then concluded that, “using the same criteria in Section 

377.241, Florida Statutes, the balance tips against issuance of an 

oil and gas permit to drill an exploratory well in the 

environmentally sensitive Everglades.” The Secretary compared 

the facts to a case in which the statutory balancing test weighed 

against issuing a permit to drill in an environmentally sensitive 

location. See Coastal Petroleum Co. v. Florida Wildlife Fed’n, Inc., 

766 So. 2d 226, 228 (Fla. 1st DCA 1999). 

The Final Order discussed the Department’s history of 

denying oil and gas permits in the Everglades, declaring:

[The Department] has not issued an oil and gas 

exploration permit since 1967 within the Everglades 

lands subject to conservation and restoration under § 

373.4592, Florida Statutes. Thus, the last oil and gas 

exploration permit within such lands was 50 years ago, 

well before Section 373.4592 known as the Everglades 

Forever Act, was enacted by the Florida Legislature in 

1991. The Florida Legislature has not amended its 

position regarding the need to preserve and restore the 

Everglades since 1991, nor has [the Department] issued 

an oil and gas exploration permit within this boundary of 

the Everglades once such lands became subject to 

restoration under the Everglades Forever Act.
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(Internal citations omitted). The Secretary stated in a footnote

that “this specific information did not form the basis of the agency's 

decision, but merely reflects that DEP has not changed its longstanding policy to deny oil and gas permits within lands subject to 

Everglades restoration.” 

Analysis

Section 120.57(1)(l), Florida Statutes, authorizes an agency to 

reject or modify an ALJ’s conclusions of law and interpretations of 

administrative rules. Barfield v. Dep’t of Health, 805 So. 2d 1008, 

1010 (Fla. 1st DCA 2001). Before the recent passing of 

Amendment Six to the Florida Constitution, this Court afforded

considerable deference to agency interpretations of statutes and 

rules, affirming such interpretations unless clearly erroneous. 

E.g., Falk v. Beard, 614 So. 2d 1086, 1089 (Fla. 1993); Addison v. 

Agency to Persons with Disabilities, 113 So. 3d 1053, 1056 (Fla. 1st 

DCA 2013). However, an appellate court may no longer defer to 

an agency’s statutory interpretation, but must instead apply a

de novo review. Amend. VI, Art. V, § 21, Fla. Const. 

For factual findings, “[a]n agency must accept the 

administrative law judge’s factual findings unless they are not 

supported by competent substantial evidence.” Stinson v. Winn, 

938 So. 2d 554, 555 (Fla. 1st DCA 2006); see also § 120.57(1)(l), Fla. 

Stat. (declaring that an agency may not reject or modify an ALJ’s 

findings of fact “unless the agency first determines from a review 

of the entire record, and states with particularity in the order, that 

the findings of fact were not based upon competent substantial 

evidence or that the proceedings on which the findings were based 

did not comply with essential requirements of law”). In fact, “[i]f 

the ALJ’s findings of fact are supported by competent, substantial 

evidence, the agency cannot reject them even to make alternate 

findings that are also supported by competent, substantial 

evidence.” Lantz v. Smith, 106 So. 3d 518, 521 (Fla. 1st DCA 2013). 

Likewise, an agency may not “reject a finding that is substantially 

one of fact simply by treating it as a legal conclusion.” Abrams v. 

Seminole Cty. Sch. Bd., 73 So. 3d 285, 294 (Fla. 5th DCA 2011).

Moreover, an agency is not permitted to consider evidence 

outside the record when reviewing exceptions to a recommended 

order. Walker v. Bd. of Prof’l Engineers, 946 So. 2d 604, 605 (Fla. 
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1st DCA 2006). In addition, an agency “may not base agency action 

that determines the substantial interests of a party on an 

unadopted rule . . . .” § 120.57(1)(e)1., Fla. Stat. (2018). This “does 

not preclude application of valid adopted rules and applicable 

provisions of law to the facts.” Id.

Section 377.241, Florida Statutes, governs the Department’s 

decisions on oil and gas permits. In Coastal Petroleum, this Court 

held that the Department “correctly determined” that section 

377.241 stated a multi-factor balancing test that “requires the 

agency to ‘weigh’ the criteria of section 377.241, balancing 

environmental interests against the right to explore for oil.” 766 

So. 2d at 228. Under that balancing test, this Court affirmed the 

Department’s denial of a permit to drill for oil off St. George Island, 

rejecting an ALJ’s recommendation to grant the permit. Id. 

Although we were required to afford deference to the 

Department’s statutory interpretation when Coastal Petroleum

was decided, whereas we now apply a de novo review, we 

nonetheless hold that the Department and this Court were correct 

that the statute states a list of factors to be weighed, as opposed to

a checklist of minimum requirements. See § 377.241, Fla. Stat. 

(2018) (declaring that the Department “shall give consideration to 

and be guided by” the listed criteria). The issue presented here is 

whether the Department correctly applied that balancing test in 

its Final order under these facts, as found by the ALJ. We hold 

that it did not.

The First Statutory Factor –

The Nature, Character, and Location of the Lands Involved

Paragraph 109 of the Recommended Order reads:

109. The property upon which the Well Site is to be 

located has no special characteristics that would make it 

susceptible to pollution. Although the Well Site is in 

WCA-3, it is located in the Pocket, an area with existing 

road access that is hydrologically isolated from both 

surface and groundwater and is environmentally 

degraded and overrun with cattails. The area is far less 

likely to impact natural resources than other 

Department-permitted wells, notably those at Raccoon 
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Point which exist in the Big Cypress National Preserve, 

in a far more ecologically intact area than here.

(Emphasis added.) Despite these findings, the Final Order 

denying Appellant’s permit application stated that the first factor 

weighs against issuance because the project site lies within the 

Everglades ecosystem, which “is world renowned for its unique 

environmental characteristics.” Appellant argues that it was 

reversible error for the Secretary to substitute its factual findings 

for the ALJ’s factual findings. 

The Department asserts it did not reject the ALJ’s factual 

findings, but rather rejected the ALJ’s legal conclusion that the 

land had no “special characteristics,” and then gave more weight 

to the nature of the land factor when re-applying the balancing 

test. Appellees admit, however, that although the Secretary

characterized Paragraph 109 as a conclusion of law, its second and 

third sentences are factual findings. Cf. Abrams, 73 So. 3d at 294 

(an agency may not “reject a finding that is substantially one of 

fact simply by treating it as a legal conclusion.”). Appellant 

correctly asserts that Paragraph 109 is made up entirely of factual 

findings and that the Secretary improperly relied upon or created 

an unadopted rule by basing its decision on a “long-standing policy 

to deny oil and gas permits within lands subject to Everglades 

restoration.” 

Appellees insist that the Secretary’s “longstanding policy” 

comment was merely meant to illustrate how rarely permits are

issued in these circumstances, and that the Secretary’s decision 

was made simply by reweighing the balancing test of section 

377.241 to conclude that the sensitive nature of the land and 

Appellant’s delay in seeking a permit outweighed the prospects of 

finding oil on a profitable basis. We disagree. 

Appellees’ argument fails to adequately explain how the 

Secretary could have accepted the ALJ’s factual findings about the 

land and still concluded that the land was of such a sensitive 

nature that the first factor weighed against Appellant. We hold, 

therefore, that the Secretary improperly relied on an unadopted 

rule which would in practice prohibit all exploratory oil drilling in 

the Everglades, without statutory authority, as we note below.
9

Every sentence in Paragraph 109 is a factual finding. See J.J. 

Taylor Cos., Inc. v. Dep’t of Bus. & Prof’l Reg., Div. of Alcoholic 

Beverages & Tobacco, 724 So. 2d 192, 193 (Fla. 1st DCA 1999) 

(declaring that to assess whether a statement is a factual finding 

or conclusion of law in order to determine what level of review to 

apply, “it is the true nature and substance of the determination or 

ruling by the ALJ that controls the Department’s ability to reject 

the ruling.”). In Goin v. Commission on Ethics, the hearing officer 

stated that “there is not sufficient evidence to persuade me that, 

as a typical consumer in such a transaction, he knew or should 

have known that it was such a good deal that he must have been 

receiving a break on the price because of his public position.” 658 

So. 2d 1131, 1137 (Fla. 1st DCA 1995). The parties disagreed over 

whether this statement was a factual finding or a conclusion of 

law. Id. This Court held that the hearing officer’s statement was 

an ultimate finding of fact, as it stated violations of a rule or 

statute. Id. at 1138.

Here, the ALJ’s ultimate finding of fact was that the land in 

question did not have any qualities that would make it vulnerable 

to pollution of the land, aquifer or surface waters, a finding the 

ALJ supported with examples and facts introduced as evidence. 

This was a factual finding, because the “true nature and 

substance” of the statement was to provide a factual basis for the 

legal conclusion that the first statutory factor did not weigh 

against issuance of a permit. Because Paragraph 109 consisted of 

factual findings supported by competent, substantial evidence, we 

agree with Appellant that the Secretary improperly rejected these

factual findings. See Stinson, 938 So. 2d at 555.

In addition to rejecting factual findings supported by 

competent, substantial evidence, the Secretary also erred in 

relying on facts from outside the record by considering language 

from the Everglades Forever Act and inferences derived therefrom.

Cf. Gen. Dev. Utils., Inc. v. Hawkins, 357 So. 2d 408, 409 (Fla. 

1978). Although the Secretary commented that the Everglades 

Forever Act demonstrates a legislative dedication to long-term 

Everglades restoration, the Everglades Forever Act does not 

prohibit exploratory-oil drilling. See generally § 373.4592, Fla. 

Stat. Moreover, language from the Everglades Forever Act was

never discussed in the proceedings until the Final Order.
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In Hawkins, an agency issued an order that applied a debt to 

equity ratio of 62% to 38%; the agency stated that this ratio, which 

did not appear in the record, was consistent with typical water 

company stocks and average ratios. 357 So. 2d at 409. The 

supreme court held that “[t]he arbitrary selection of this ratio as a 

‘fact’ comes from outside the record of the proceeding and plainly 

violates the notions of agency due process which are embodied in 

the administrative procedure act.” Id. The supreme court declared 

that “[t]he Commission is not obliged to accept either the 

company’s suggested hypothetical or its actual equity/debt ratio if 

there are valid reasons for rejecting them, but it is required to 

allow the company to know in advance and to challenge the data 

on which it chooses to rely.” Id.

Similarly, in Lawnwood Medical Center, Inc. v. Agency for 

Health Care Administration, an agency reopened the record, 

reweighed evidence, and recast findings of fact as policy questions 

to be weighed. 678 So. 2d 421, 425 (Fla. 1st DCA 1996). This Court 

declared that “[o]fficial recognition is not a device for agencies to 

circumvent the hearing officer’s findings of fact by building a new 

record on which to make new findings.” Id. This Court also noted 

the distinction between rebalancing statutory factors and 

recasting facts, stating: “Perhaps in a proper case [the agency] 

might attribute greater weight to certain of the review criteria 

than that attributed by the hearing officer. The fact is, however, 

that in this particular case [the agency] did not merely reprioritize 

the criteria; it recast the facts.” Id. at 426.

Like in Lawnwood, the Final Order here goes beyond simply 

affording more weight to one statutory factor; rather, the Secretary 

completely set aside the ALJ’s factual findings about the nature of 

the land. See § 120.57(1)(l), Fla. Stat. (“The agency may not reject 

or modify the findings of fact unless the agency first determines 

from a review of the entire record, and states with particularity in 

the order, that the findings of fact were not based upon competent 

substantial evidence or that the proceedings on which the findings 

were based did not comply with essential requirements of law.”). 

The Secretary described the lands completely differently, using 

facts from outside the record and without even suggesting that the 

ALJ’s factual findings were unsupported by competent, 
11

substantial evidence. In so doing, the Secretary improperly recast

factual findings to reach a desired outcome, contrary to law.

The Second Statutory Factor –

The Nature of Ownership, Including Delay in Exercising Rights

As to the second statutory factor, the Secretary did not 

disagree with any of the ALJ’s factual findings. Instead, the 

Secretary disagreed with the ALJ’s interpretation of section 

377.241(2), Florida Statutes, and with the ALJ’s legal conclusion 

that the second factor had little to no weight in the balancing test, 

because Appellant owned both the surface and mineral rights to 

the land. The Secretary stated that its interpretation – that the 

second factor weighs against an applicant who sits on his mineral

rights, even when there is no divided ownership – was more 

reasonable than the ALJ’s interpretation.

Applying, as we must, a de novo review to the Secretary’s 

statutory interpretation, we hold that the ALJ’s interpretation of 

section 377.241(2) was correct and that the Department’s legal 

conclusion was incorrect. The Whereas clauses cited in the 

Recommended Order demonstrate the legislature’s overriding 

concern with divided ownership interests. See Act Relating to 

Conservation of Oil, Gas and Mineral Resources and to the 

Protection of Surface Rights of Landowners, Ch. 61-299, Laws of 

Fla. (1961) (“WHEREAS, the owners of fee simple titles to the 

surface rights in granting undivided fractional oil, gas and mineral 

rights had no intention that such grants should give their grantees 

the rights to unduly interfere with the potential surface 

development and use of such lands for farms, groves and ranches, 

or the building of homes, commercial buildings or other proper and 

appropriate use as might be indicated by the character or location 

of the land”); S. Fla. Racing Ass’n v. State, Dep’t of Bus. & Prof’l 

Reg., Div. of Pari-Mutuel Wagering, 201 So. 3d 57, 64 (July 3d DCA 

2015) (rejecting an agency’s interpretation of a statute in part 

because “[T]he whereas clauses in the 1980 enactment evince a 

legislative intent to allow a struggling entity to remain in business 

during the summer, thereby increasing tax revenues and 

tourism.”). 

The very purpose of section 377.241, Florida Statutes, “was to 

institute a permit process in order to protect landowners from 
12

undue burdens from mineral leases.” Thomas G. Mosher & 

Matthew Schwartz v. Dan A. Hughes Co. & Dep’t of Envtl. Prot., 

Case Nos. 13-4254, 13-4920 (DOAH June 3, 2014) (application 

withdrawn by stipulation July 17, 2014) (internal citation 

omitted). Thus, although section 377.241(2) does not explicitly 

mention divided ownership interests, the statute must be 

“construed in light of the evil to be remedied and the remedy 

conceived by the Legislature to cure that evil.” Orlando Sports 

Stadium, Inc. v. State ex rel. Powell, 262 So. 2d 881, 885 (Fla. 

1972). Appellant’s delay could not interfere with any landowner’s 

surface rights, because Appellant is the owner of the surface 

rights. There is no rational reason to be concerned about an 

applicant sitting on his drilling rights when there is no competing 

surface interest. As the delay in exercising drilling rights served 

as the sole basis for the Secretary’s conclusion that the second 

factor weighed against issuance, and as this conclusion was based 

on a misinterpretation of section 377.241(2), Florida Statutes, we 

reverse the Secretary’s conclusion as to the second statutory factor.

The Third Statutory Factor –

The Likelihood of Discovering Oil in Profitable Quantities

The third statutory factor requires the Department to assess 

the “indicated likelihood of the presence of oil . . . in such quantities 

as to warrant the exploration and extraction . . . on a commercially 

profitable basis.” § 377.241(3), Fla. Stat. (2018). As the Secretary 

wholly accepted the ALJ’s factual findings and conclusions, there 

is no basis for reversal on the third factor.

Conclusion

We hold that the Secretary improperly rejected the ALJ’s 

factual findings on the first statutory factor, recast the facts, and 

relied on information from outside the record. It was an abuse of 

discretion to reject, modify, or substitute the ALJ’s factual 

findings, and when ““the reasons for the change are legally 

insufficient, it is entirely appropriate to remand with instructions 

to approve the hearing officer’s recommendations.’” Resnick v. 

Flagler Cty. Sch. Bd., 46 So. 3d 1110, 1113 (Fla. 5th DCA 2010) 

(quoting Dep’t of Prof’l Regulation v. Bernal, 531 So. 2d 967 (Fla. 

1988)). Moreover, we hold that the Secretary misinterpreted 

section 377.241(2), Florida Statutes, which the ALJ correctly 
13

determined is inapplicable when there is no divided ownership 

interest. Thus, there was no basis for the Secretary to conclude 

that the first or second factor weighed against issuance of 

Appellant’s oil and gas permit. Accordingly, we reverse and 

remand for entry of a final order consistent with the Recommended 

Order and direct the Department to grant Appellant’s permit

application.

REVERSED and REMANDED. 

JAY, J., and LONG, JR., ROBERT E., ASSOCIATE JUDGE, concur.

_____________________________

Not final until disposition of any timely and 

authorized motion under Fla. R. App. P. 9.330 or 

9.331.

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Douglas P. Manson, Brian Bolves, William S. Bilenky, Paria 

Shirzadi Heeter and Christine Senne of Manson Bolves Donaldson 

Varn, P.A., Tampa, for Appellant.

Robert A. Williams, General Counsel, Jeffrey Brown, Office of 

General Counsel, State of Florida Department of Environmental 

Protection, Tallahassee, for Appellee Florida Department of 

Environmental Protection. 

Daniel L. Abbott, Jamie A. Cole, Richard B. Rosengarten, and 

Adam A. Schwartzbaum of Weiss Serota Helfman Cole & Bierman, 

P.L., Fort Lauderdale, for Appellee City of Miramar. 

Andrew J. Meyers, Broward County Attorney, Michael C. Owens, 

Senior Assistant County Attorney, and Rocio Blanco Garcia, 

Assistant County Attorney, Fort Lauderdale, for Appellee 

Broward County.

Roy D. Wasson of Wasson & Associates, Chartered, Miami, and 

Mara Shlackman of Law Offices of Mara Shlackman, P.L., 
14

Fort Lauderdale, for Amicus Curiae South Florida Wildlands 

Association, Inc.