STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RACETRAC PETROLEUM, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 89-1561

) DEPARTMENT OF ENVIRONMENTAL ) REGULATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled case was heard on January 10, and February 19, 1990, in Orlando, Florida, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Steven M. Mills

Decker & Hallman

Suite 1200 Marquis II Tower

285 Peachtree Center Avenue Atlanta, Georgia 30303

For Respondent: Michael P. Donaldson

Assistant General Counsel Twin Towers Office Building 2600 Blair Stone Road

Tallahassee, Florida 32399-2400 STATEMENT OF THE ISSUES

The issue in the case is whether Petitioner is entitled to participation in the Early Detection Incentive Program in which the State of Florida pays for the cleanup of a site that has been contaminated by the discharge of petroleum product.

PRELIMINARY STATEMENT

By letter dated September 30, 1988, Respondent informed Petitioner that its site was ineligible for state-administered cleanup.

By Petition for Formal Proceedings filed October 27, 1988, Respondent requested a formal hearing.

At the hearing, Petitioner called two witnesses and offered into evidence nine exhibits. Respondent called three witnesses and offered into evidence two exhibits. All exhibits were admitted into evidence.

The transcript was filed on March 12, 1990. Each party filed a proposed recommended order. Treatment of the proposed findings is detailed in the appendix.

FINDINGS OF FACT

1. Petitioner owns and operates a gasoline station located at 4625 U.S. 27 North, Davenport, Florida. The site was constructed in late 1986 and opened in early 1987.

   
   

2. The underground tanks storing the gasoline are connected by pipes running underground to the pumps from which the gasoline is dispensed. A small portion of the underground supply pipe is accessible from the surface through a manhole. The excavated area exposing the pipe and what appears to be a valve are separated from the surrounding soil by a large, cylindrical corrugated pipe laid perpendicular to and above the underground supply pump.

   
   

3. The leak in question was caused when the lower edge of the corrugated pipe cut into the underground supply pipe for the premium gasoline. The cut was caused by the cumulative effect of vehicular traffic driving over the manhole cover, placing pressure on the corrugated pipe, and eventually forcing the edge of the corrugated pipe to rupture the underground supply pipe with which it was in contact.

   
   

4. Petitioner owns and operates a large number of gasoline stations. This incident is the first time that a corrugated pipe has cut into an underground supply pipe. The use of the corrugated pipe is not at issue in the present case.

   
   

5. Pursuant to company policy, station employees complete a daily recap each day and forward the recap document to Petitioner. Part of the recap document is devoted to "gas inventory." The daily recap, which covers the preceding 24 hours, requires that an employee determine the amount of gasoline in each underground storage tank, adjust the figure for amounts sold and delivered, and then compare the figure to the amount determined to have been in the tank 24 hours earlier. This reconciliation is normally completed by mid- to late-morning each day.

   
   

6. A station employee "sticks" each tank to determine how much gasoline it contains. The procedure requires that the employee insert a pole into the bottom of an underground tank. By observing the length of the pole dampened by gasoline, the employee can calculate approximately the amount of gasoline in the tank. Although stick reading results in an approximation, the results are fairly accurate, leaving at most, in the case of this 12,000-gallon tank, a margin of error of 50 gallons. "Sticking" normally takes place daily between 6:30 a.m. and 7:00 a.m.

   
   

7. On the morning of March 6, 1988, which was a Sunday, the employee sticking the tank calculated that the premium tank held 5419 gallons. There had been no deliveries during the preceding 24 hours. During the same period, the station had sold 914 gallons of premium gasoline. However, the last sticking 24 hours earlier had disclosed 7989 gallons. A total of 1656 gallons were thus unaccounted for.

   
   

8. The recap document requires that the station notify Respondent's "Dist. Mgr. immediately if shortage of 500 gallons or more appears." The employee failed to do so.

9. On the morning of March 7, 1988, the employee sticking the premium tank calculated that it held 2147 gallons. During the preceding 24 hours, there had been no deliveries and 826 gallons of premium gasoline had been sold. Consequently, 2446 gallons were missing, for a total of 4102 gallons over the past two stickings.

   
   

10. As soon as the reconciliation was completed, the employee contacted Respondent's management, which ordered that the pump be shut down during the afternoon of March 7, 1988. Comparing the sales of premium gasoline for the 24- hour period ending March 8 with those ending March 7, which are comparable because the sale of regular gasoline on those two days is almost identical, the station sold about 39% of a normal day's sales of premium gasoline.

    
    

11. Reflecting the shutdown of the premium pumps on March 7, the employee sticking the tank on the morning of March 8, 1988, found 593 gallons. During the preceding 24 hours, there had been no deliveries and sales of 321 gallons of premium had been sold, leaving 1233 gallons unaccounted for. The total over the three stickings was 5335 gallons lost.

    
    

12. The station had previously not experienced losses even approaching this magnitude. The daily recap for the 24-hour period ending on March 5, 1988, showed no significant loss.

    
    

13. Although fluctuations in volume may occur shortly after deliveries due to temperature differentials, such fluctuations could not reasonably have accounted for these vast discrepancies. Theft, measurement errors, and recording errors may also account for variations in readings, but not of the magnitude and repetition involved in this case.

    
    

14. Between the time of the reconciliation on the morning of March 6 and the system shutdown on the afternoon of March 7, the system continued operating and, thus, leaking for 28-30 hours. Given that 2446 gallons were lost during the 24-hour period ending on March 7 and 1233 gallons lost during about 9 hours on March 8, at least 100 gallons per hour were escaping from the pipe during these last 28-30 hours, for a total of between 2800 and 3000 gallons.

    
    

15. For reasons discussed in the Conclusions of Law, the actions and omissions of the station employees following the reconciliation of inventory figures on March 6 constituted gross negligence in the maintenance of a petroleum storage system. These actions and omissions were in the scope of employment.

    
    

16. During the relevant period of time, none of Respondent's employees performed monthly checks of the monitoring wells to determine the presence of leaks. This failure was due to ignorance and was not wilful. This failure in no way contributed to the leak or to any delay in discovering the leak.

    
    

17. During the relevant period of time, the monitoring wells had not been properly grouted to prevent introduction of surficial contamination. However, this failure was unknown to Petitioner, which had hired a contractor to construct the wells and reasonably had relied on the contractor to grout properly the monitoring wells.

    
    

    The improper grouting in no way contributed to the leak or to any delay in discovering the leak.

18. During the relevant period of time, Petitioner was not performing weekly or five-day averages of inventory records concerning gasoline. The failure to perform these reconciliations in no way contributed to the leak or to any delay in discovering the leak.

    
    

19. Following the discovery of the leak, Petitioner notified Respondent on March 8. Petitioner requested approval to participate in the Early Detection Incentive Program by filing a Notification Application dated March 29, 1988.

    
    

20. On July 14, 1988, Respondent completed the Pollutant Storage Tank System Inspection Report Form and Early Detection Incentive Program Compliance Verification Checklist. These documents indicate that Respondent was not monitoring monthly its monitoring wells, failed to grout properly its monitoring wells, was not performing the weekly or five-day averages of inventory (although it was taking daily inventory and reconciling opening and closing inventories), and did not immediately investigate the 1600-gallon shortage disclosed on the morning of March 6, 1988.

    
    

21. By letter dated September 30, 1988, Respondent notified Petitioner that its site was ineligible for state-administered cleanup under the Early Detection Incentive Program. The letter cited as reasons the wilful failure to perform monthly checks of the monitoring well, the failure to immediately investigate discrepancies in inventory records while the system continued to operate after initial discovery of the 1600-gallon loss, and the improper construction of the monitoring well with respect to the improper grouting. The letter concludes that these items constitute gross negligence in the maintenance of a petroleum storage system, which precludes participation in the program.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code.)

    
    

23. Section 376.3071(9) sets forth the requirements for participation in the Early Detection Incentive ("EDI") Program. In relevant part, Section 376.3071(9)(b) requires the state to pay certain cleanup costs unless:

    
    

    the owner or operator of a petroleum storage system has been grossly negligent in the maintenance of such petroleum storage system . . .

    
    

    Section 376.3071(9)(b)3.

    
    

24. Section 376.3071(9)(b) 3. states further:

    
    

    For the purposes of this paragraph, willful failure to maintain inventory and reconciliation records, willful failure to make monthly monitoring system checks were such systems are in place, and failure to meet monitoring and retrofitting requirements within [certain] schedules . . . shall be

    construed to be gross negligence in the maintenance of a petroleum storage system.

    
    

25. Rule 17-61.050(4)(c)1.b. requires monthly testing of monitoring wells. Rule 17-61.050(4)(c)2.b. requires the averaging of losses or gains from each day's inventory over a five-day period or one-week period. In cases of "significant loss or gain," Rule 17-61.050(4)(c)3. outlines an investigatory procedure that culminates in the testing of the storage system if measurement and arithmetic errors are not found. Rule 17-61.050(5)(a)6. requires that monitoring wells be sealed into the bore hole at the surface with an impervious barrier to prevent contamination of the well by surface pollutants.

    
    

26. The underground storage tank and underground supply pipe satisfy the definition of a "petroleum storage system," as set forth in Section 376.301(11). Petitioner's eligibility for the EDI program depends upon whether it has been grossly negligent in the maintenance of its petroleum storage system.

    
    

27. Petitioner's failure to test monthly the monitoring well and perform five-day or weekly averaging of inventory records were not wilful and were not responsible for the leak or the failure to detect the leak earlier. The improper grouting is likewise irrelevant.

    
    

28. However, nothing in Section 376.3071(9)(b)3. suggests that the three cited omissions are exhaustive. It is therefore necessary to determine whether Petitioner was otherwise grossly negligent in the maintenance of its petroleum storage system.

    
    

29. Gross negligence is "the absence of exercise of `slight care.'" See, e.g., Faircloth v. Hill, 85 So. 2d 870, 872 (Fla. 1956); Cadore v. Karp, 91 So. 2d 806, 808 (Fla. 1957). The Faircloth decision, which notes the "impracticability" of dividing negligence into degrees, adds: "[Gross negligence] is the omission or commission of an act with a conscious indifference to consequences so far as other persons are concerned." 85 So. 2d at 872.

    
    

30. The court in Glaab v. Caudill, 236 So. 2d 180 (Fla. 2d DCA 1970), noted that gross negligence lies between simple negligence and wilful and wanton conduct. The court stated that gross negligence is the "act or omission which a reasonable, prudent man `would know would probably and most likely' result in an injury to another." [Citation omitted.] The act or omission must reflect a

    
    

    "conscious disregard of consequences," as distinguished from a "careless" disregard therefor (as in simple negligence) or from the more extreme "wilful or wanton" disregard thereof (as in culpable or criminal negligence).

    
    

    Id. at 183-84. The court explained further:

    
    

    We equate "conscious disregard of consequences" with a voluntary act or omission in the face of conditions toward which reasonable prudence requires a particularly keen alertness or caution when such act or omission is

    dangerous and well-calculated to result in grave injury. [Citation omitted.]

    
    

    Id. at 184.

    
    

31. In the present case, there is no evidence to suggest that Petitioner was grossly negligent in failing to discover the leak prior to sticking the tank on the morning of March 6, followed by the reconciliation several hours later. The question is whether the actions and omissions of Petitioner's employees, after discovery of the loss of the first 1656 gallons, constituted gross negligence under the circumstances.

    
    

32. The 1656-gallon shortage detected on March 6 represented almost 14% of the tank's capacity and almost twice the amount of gasoline sold during the preceding 24 hours. Station employees should have immediately rechecked for errors in measurement or arithmetic. The size of the shortage precluded possibilities of petty theft, temperature fluctuations, or other typical causes. The daily recap document itself sets a shortage of 500 gallons as the threshold for immediate notification of management.

    
    

33. The failure to recheck promptly the data and calculations was exacerbated by the failure to restick the premium tank a few hours later. This simple task would have quickly confirmed that the system was leaking. Slight care demanded that the station employee depart from his daily routine long enough to make the small effort to restick the tank. A resticking at, say, 2:00 p.m., would have revealed the loss of nearly 700 gallons more since morning.

    
    

34. The failure of the station employees to take these simple measures on March 6 to investigate the source of the sizeable inventory discrepancy resulted in another 3679 gallons of gasoline unnecessarily escaping into the ground.

    
    

35. The actions and omissions of the station employees constituted a conscious disregard of the consequences of the discharge of thousands of gallons of gasoline into the ground. In the face of conditions requiring a particularly keen alertness or caution, the failure to recheck the data and calculations and restick the tank a few hours later constituted gross negligence in the maintenance of a petroleum storage system.

    
    

36. The gross negligence of the station employees is imputed to their employer. See, e.g., Stinson v. Prevatt, 84 Fla. 416, 94 So. 656 (1922). Consequently, Petitioner is not entitled to participate in the Early Detection Incentive Program due to its gross negligence in maintaining the petroleum storage system.

RECOMMENDATION

Based on the foregoing, it is hereby recommended that the Department of Environmental Regulation enter a Final Order denying the application of Petitioner to participate in the Early Detection Incentive Program.

RECOMMENDED this 26th day of March, 1990, in Tallahassee, Florida.

ROBERT E. MEALE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 26th day of March, 1990.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-1561

Treatment Accorded Proposed Findings of Petitioner 1-4: adopted.

5-6: adopted in substance. 7-16: adopted.

17: rejected as unsupported by the greater weight of the evidence. 18-20: adopted or adopted in substance.

21: to the extent that this proposed finding suggests that Petitioner was performing the five-day or weekly averaging, rejected as unsupported by the greater weight of the evidence. However, in view of the findings and conclusions contained in the Recommended Order, rejected as unnecessary.

22-26: adopted.

Treatment Accorded Proposed Findings of Respondent 1-4: rejected as conclusions of law.

5-6: adopted.

7-16: rejected as subordinate.

17: rejected as an inference unsupported by the greater weight of the evidence. 18-26: adopted.

27: rejected as irrelevant.

28-29 and 31: rejected as legal argument. 30: adopted.

32: adopted.

33: adopted except that the system was shut down at some point into the day of the second sticking showing a significant shortage.

34-38: adopted or adopted in substance. 39: rejected as speculation.

40: rejected as irrelevant. 41-42: adopted.

43: rejected as irrelevant.

44-45: rejected as subordinate. 46: adopted.

47-49: rejected as subordinate. 50: adopted.

51-53: rejected as vague with respect to reference to "Racetrac." 54: adopted.

55: rejected as cumulative.

56-57: rejected as unnecessary.

COPIES FURNISHED:

Dale H. Twachtmann Secretary

Department of Environmental Regulation Twin Towers Office Building

2600 Blair Stone Road Tallahassee, FL 32399-2400

Daniel H. Thompson General Counsel

Department of Environmental Regulation 2600 Blair Stone Road

Tallahassee, FL 32399-2400

Steven M. Mills Decker & Hallman

Suite 1200 Marquis II Tower

285 Peachtree Center Avenue Atlanta, GA 30303

Michael P. Donaldson Assistant General Counsel Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400

Docket for Case No: 89-001561

Orders for Case No: 89-001561