STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PIONEER OIL COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 90-4182

) DEPARTMENT OF AGRICULTURE AND ) CONSUMER SERVICES, )

)

Respondent. )

RECOMMENDED ORDER

A hearing was held in this case in Bradenton, Florida

on September 27, 1990 before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCE

For the Petitioner: Larry McGary

General Manager Pioneer Oil Company 878 12th Street East

P.O. Box 9046

Bradenton, Florida 34206

For the Respondent: Clinton H. Coulter, Jr., Esquire

Department of Agriculture and Consumer Services

515 Mayo

Tallahassee, Florida 32399-0800 STATEMENT OF THE ISSUES

The issue for consideration in this hearing was whether the Petitioner is entitled to a refund of bond or is subject to offset assessment as a result of its operations at Port Stop #4 in Duette, Florida.

PRELIMINARY STATEMENT

By letters dated June 7 and June 14, 1990, John Whitton, Chief, Bureau of Petroleum Inspection, Division of Standards, for the Florida Department of Agriculture and Consumer Services, (Department), notified Petitioner, Pioneer Oil Company, (Pioneer), that it had determined violations by it of the state's petroleum inspection laws at Port Stop #4 located in Duette, Florida. The letters also indicated that the Department intended to offset the assessments for these irregularities against the bonds previously filed by the Petitioner.

On June 25, 1990, Mr. McGary, on behalf of Pioneer, requested a hearing on both alleged violations, and by letter of June 29, 1990, the file was forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer. By Notice of Hearing dated August 8, 1990, after response by Petitioner to the Initial Order filed herein by the Division, the undersigned, to whom the case had been assigned in the interim, set it for hearing in Bradenton on September 27, 1990, at which time it was held as scheduled.

At the hearing, Petitioner presented the testimony of Larry McGary, its General Manager. Respondent presented no witnesses, relying on its cross-examination of Mr. McGary. It

also, however, introduced Respondent's Composite Exhibit A. Neither party submitted Proposed Findings of Fact.

FINDINGS OF FACT

1. At all times pertinent to the allegations contained

   herein, Pioneer Oil Company was a licensed distributor of petroleum products in Florida, and the Department was the state

   agency responsible for overseeing and regulating the sale of petroleum products in this state.

   
   

2. On May 9, 1990, the owner of Port Stop #4 in Duette, Florida, a seller of Pioneer's petroleum products at retail, requested Pioneer, as its supplier, to change over a storage tank, previously used for the storage of diesel fuel, to storage for gasoline and vice versa. Petitioner agreed but waited until the customer was nearly out of product to make the switch, and when that had happened, sent its pump truck to the facility to pump the remaining fuel out of the tankss.

   
   

3. Pioneer's employee did pump out what he believed

   was all the fuel remaining in the tanks. However, because unknown to him or to anyone else, the tanks were tilted in the ground, the pumping operations left some of each fuel in its respective tank. When the fresh fuel was then placed into these new tanks, it was contaminated by that previous stock remaining therein after the pumping.

   
   

4. On May 29, 1990, an inspector from the Department

   took samples of the diesel fuel, suppled from Petitioner, from the underground tank. When this sample was tested, it was found to be contaminated by the gasoline remaining in the tank after

   pumping. That diesel fuel did not meet state standards and was illegal.

   
   

5. Because the unleaded pump was not working that day, that product could not be sampled. Therefore, a second sample,

   this time of unleaded gasoline, was taken on May 31, 1990, and it, too, was found to be contaminated by the diesel fuel which

   remained in that tank after pump out. This fuel did not meet state standards, either, and also was illegal.

6. The diesel fuel sold at retail for $1.159 per

   gallon, and 1,359 gallons of the product had been sold. The unleaded gasoline sold at retail for $1.099 per gallon, and 4,997

   gallons of that product had been sold. The Department is authorized to assess a penalty of up to $1,000 for each illegal

   product sold, depending on the amount sold. Since more than 1,000 gallons of each product was sold, the maximum penalty was assessed in each case.

   
   

7. Mr. McGary claims that since the station where the incident took place was not owned by Pioneer, which is merely the product supplier, it was not legally obligated to pay the assessment. However, he admits that as a matter of business practice, since the products in issue were Pioneer products, since Port Stop #4 was a customer, and since it was a Pioneer employee who made the swap, it agreed to do so. Had it not made the swap, the dealer, (Port Stop #4) would have had to hire someone else to do it and Pioneer would have felt no obligation to assume the financial burden.

   
   

8. He also claims that had the unleaded gasoline pump been working on May 29, 1990, the contamination of that product

   would have been found at the same time the other was found, and there would have been only one violation. This does not necessarily follow, however.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

   
   

10. Under the provisions of Sections 525.01 and .02, Florida Statutes, the Department is required to collect from time to time, and cause to be tested, samples of gasoline and other petroleum products offered for sale in Florida. All of these products which fall below the standard set by the Department are illegal. In lieu of confiscation of these products, a bond in an amount not to exceed $1,000.00 may be posted, and if any of the product has been sold to retail customers, the Department may make an assessment equal to the retail value of the product not to exceed $1,000.00. (Section 525.06, Florida statutes)

    
    

11. In the instant case, the Petitioner was not the

    retailer who offered the contaminated product for sale. Presumably, when Petitioner sold the products to the retailer

    they met state standards. However, the products were contaminated during delivery to the retailer by Petitioner by

    being placed in storage tanks which contained sufficient contaminant to bring both products within the prohibited range. While Petitioner had no obligation to perform the tank pump out prior to dispensing the clean products from its tankers, it nonetheless did so, and when the bond was called for, placed it

    with the Department.

12. Since the value of each product exceeded $1,000.00, a bond in that amount for each was appropriate. Since the value of

    the contaminated product sold at retail exceeded $1,000.00 in each case, the assessments of that amount for each product was

    also appropriate. Petitioner's claim that had the unleaded pump been working on May 29, 1990 when the diesel sample was taken, the contamination of the unleaded product would then have been discovered and the second penalty not assessed is without merit. Clearly, the statute makes each illegal product a separate incident.

    
    

13. Though Petitioner was not obligated to post the bonds initially, it nonetheless did do. The issue of underlying liability is irrelevant, however, and since the bond assessments were appropriate in substance, Petitioner cannot now recover from the Department the amount posted and assessed.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that a Final Order be issued by the Department of Agriculture and Consumer Services affirming the imposition of bond and assessment against the bond posted by Petitioner, Pioneer Oil Company, in each of the incidents of illegal product discovered at Port Stop #4 in Duette, Florida, on May 29 and 13, 1990.

RECOMMENDED this 31 day of October, 1990, in Tallahassee, Florida.

ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 31 day of October, 1990.

COPIES FURNISHED:

Larry McGary General Manager Pioneer Oil Company

878 12th Street East

P.O. Box 9046

Bradenton, Florida 34206

Clinton H. Coulter, Jr., Esquire Department of Agriculture and

Consumer Services

515 Mayo Building

Tallahassee, Florida 32399-0800

Hon. Doyle Conner Commissioner of Agriculture The Capitol

Tallahassee, FL 32399-0810

Ben Pridgeon, Chief

Bureau of Licensing & Bond Department of Agriculture

508 Mayo Building Tallahassee, FL 32399-0800

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the final order in this case concerning their rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-004182

Orders for Case No: 90-004182