Florida/Georgia Personal Injury & Workers Compensation

...permit. This amount was based upon the estimated cleanup costs and damages to the state's natural resources that would result from a spill. Coastal elected to join the fund as a means of providing security and paid the $4000 annual fee specified by section 377.2425(1)(b), Florida Statutes....

...Puckett Oil, 577 So.2d 988, 991 (Fla. 1st DCA 1991), the appellants correctly argue that the final order must be reversed because the department acted without authority and contrary to legislative intent when it required security in excess of the annual fund fee. Section 377.2425, entitled "Manner of providing security for geophysical exploration, drilling and production," requires an applicant seeking a permit for geophysical operations "to provide surety that these operations will be conducted in a safe and environmentally compatible manner." The statute then provides two methods to comply with this requirement. Under 377.2425(1)(a) an applicant may provide a deposit of cash or other securities, a surety bond, or an irrevocable letter of credit. Alternatively, under 377.2425(1)(b): An applicant for a drilling, production, or injection well permit, or a permittee who intends to continue participating in longterm production activities of such wells, has the option to provide surety to the department by paying an annual fee to the Petroleum Exploration and Production Bond Trust Fund....

...For an applicant or permittee choosing this option the following shall apply: 1. For the first year, or part of a year, of drilling production, or injection well permit, or change of operator, the fee is $4000 per permitted well. (Emphasis added.) Nothing in section 377.2425 suggests that the department can require additional security when an applicant has paid into the fund....

...urity. But these statutory and contractual provisions, which indicate that Coastal will be responsible for damages caused by its drilling operations, do not suggest that the department has authority to require security greater than that specified in section 377.2425(1)(b)....

...In Coastal Petroleum Co. v. State Department of Environmental Protection, 649 So.2d 930 (Fla. 1st DCA 1995), we held that the Department of Environmental Protection lacked authority to require security in addition to Coastal's payment of an annual fee pursuant to section 377.2425, Florida Statutes, as a condition precedent to granting Coastal's application for a permit to drill an oil and gas exploration well upon the leased lands....

...able from other possible reasonable sources. Similarly, the trustees here have failed to demonstrate that imposing the bond at issue is the only means available to protect the state lands, particularly in light of the existing surety requirements of section 377.2425, Florida Statutes, and Coastal's agreement in the lease contract to assume "responsibility for all damages caused by [its] operations." Accordingly, we must conclude that the $1.9 billion bond requirement would substantially *574 impair the obligation of the lease contract in violation of article I, section 10....