STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF AGRICULTURE )

AND CONSUMER SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 90-6467

)

LEWIS OIL COMPANY, INC., )

(SUWANEE), )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for hearing before P. Michael Ruff duly designated hearing officer in Ocala, Florida.

APPEARANCES

For Petitioner: Clinton H. Coulter, Jr., Esquire

Department of Agriculture

513 Mayo Building Tallahassee, FL 32399-0800

For Respondent: Jerry Hammond (authorized by

Respondent's president) Lewis Oil Company, Inc.

P.O. Box 1282

Gainesville, FL 32602-1282 STATEMENT OF THE ISSUES

The issue to be resolved in this proceeding concerns whether a bond in the amount of $696.68 posted in lieu of confiscation of certain allegedly illegal gasoline product should be returned to the Respondent or whether an assessment against the bonded amount of $696.68 should be made by the department against the Respondent.

PRELIMINARY STATEMENT

This cause arose upon delivery to the Respondent of notification that the Petitioner (Department) found that certain gasoline sold from a "leaded regular" pump allegedly contained less than the required lead content for the product to be legally sold as "leaded regular". See Rule 5F-2.001(1)(j), Florida Administrative Code. The Department issued a Stop Sale Notice to the Respondent as to that product because of the alleged misrepresentation of the nature of the product. The Respondent at the behest of the Department, provided a bond in the amount of $696.68 in lieu of confiscation of the allegedly below standard

product, in accordance with Section 525.06, Florida Statutes. This amount was arrived by multiplying the price of $1.26.9 per gallon times the number of gallons sold which yielded the maximum assessment of $696.68.

The Respondent's position is that indeed the gasoline in the tank serving the pump in question was not of the normal required content for "leaded regular," but rather a quantity of unleaded gasoline had been placed in the tank in the process of converting the tank to storage and dispensing of "unleaded plus" type gasoline. There remained a small amount of regular leaded gasoline in the tank, hence the relatively low lead content beneath the standard for leaded regular, but above the standard for unleaded. The Respondent's position is that this is a necessary part of the process of converting a tank from leaded gasoline to unleaded and that no customer was harmed because the gasoline was sold at a substantially lower price than is leaded regular (the label represented on the pump) and indeed if the pump had been relabeled as unleaded while a certain lead content remained in the gasoline in the tank serving the pump, possible damage to cars designed to operate only on unleaded gasoline could have resulted. This would have also been a mislabelling. Accordingly, the Respondent maintains that it was attempting an honest conversion of its tank to the different type of gasoline in such a way as to avoid harm to the vehicles of the motoring public.

The cause came on for hearing as noticed at which the Petitioner adduced the testimony of Mr. Jerry Hammond, representative of the Respondent Lewis Oil Company and John C. Whitton, Jr., Chief of the Bureau of Petroleum Inspection and a chemist. The Respondent's case consisted of the Respondent's testimony in the case of the Petitioner.

FINDINGS OF FACT

1. The Petitioner is an agency of the state of Florida charged, in pertinent part, with regulating purveyors of gasoline sold at retail in the state of Florida, to ascertain if gasoline meets appropriate quality standards including the standards, embodied in the Department's rules for lead additive content. The Respondent is a corporation doing business in the state of Florida which engages in the retail sale of gasoline, including sale of such product at the Suwanee Swifty Store #265 at 1971 West Silver Springs Boulevard in Ocala, Florida.

   
   

2. An agent of the Petitioner agency performed a routine inspection on a pump connected to a storage tank operated by the Respondent on September 12, 1990. The pump add storage tank contained gasoline offered for sale and some of which had been previously sold to the general motoring public. The gasoline contained in the storage tank was a mixture of unleaded gasoline and lead- containing regular gasoline (leaded regular). The pump which pumped the gas from that tank was labeled "regular", meaning that it was labeled for a gasoline containing lead. There is no dispute that the Respondent was selling gasoline which did not meet the standard for leaded regular gasoline because it contained an insufficient amount of lead.

   
   

3. This situation arose because the Respondent had placed an order of unleaded regular gasoline from its supplier into the tank in order to begin converting that tank and pump from the sale of regular leaded gasoline to unleaded gasoline. As part of the switching process, unleaded gasoline was being added to the regular gasoline remaining in the pump or tank in order to convert the contents of the tank over to gasoline which could be legally sold as unleaded gasoline. Until the conversion process for the tank contents was

   complete the Respondent intended to and did sell the gasoline as leaded regular, because selling the gasoline at below the actual lead content of leaded regular during the conversing process would not harm customers and the price was set at below the current market price for leaded regular. If, on the other hand, the Respondent had sold the product in the tank and through that pump as unleaded gasoline, by re-labeling the pump before the actual contents of the tank served by it had been converted completely to unleaded gasoline, the labeling might have been strictly legal because the contents of the tank were below the legal standard for leaded regular authorized in Rule 5F-2.001(1)(j), Florida Administrative Code, but the selling of such gasoline which still contains some lead might harm the vehicles of the motoring public using it for vehicles designed to use only unleaded gasoline.

   
   

4. In any event, because the Department's investigation revealed that the Respondent was selling gasoline through the pump labeled for regular leaded gasoline which did not meet the lead content standard for regular leaded gasoline, the Department seized the gasoline and immediately allowed the Respondent to post a bond in the amount of $1.26.9 per gallon times the number of gallons sold, for a total bond of $696.68. The Department seeks to assess an identical amount against the Respondent in this proceeding. Upon on the posting of the bond, the product was released back to the possession of the Respondent the next day and allowed to be sold after the pump was relabeled to indicate "unleaded plus".

   
   

5. In fact, the allowing of the Respondent to resume sales of the product under the label "unleaded plus" may not be strictly legal either, because, in fact, the product when the resale of the product began still contained some lead content when resale began. In any event, however, the product being sold at the time the inspection was made was not of a quality equivalent to the appropriate standard in the above rule for "leaded regular" and therefore under the authority cited below the Department has the authority to make the assessment it seeks to impose against the bond posted by the Respondent. The assessment would be reasonable under circumstances prevailing under other similar cases in which the Department has imposed a similar amount of assessment. However, in the instant case, the Respondent established with unrefuted testimony that it was making an honest attempt to convert the gasoline in its tank and the pump to unleaded and that during the transition from the same tank of leaded regular to unleaded gasoline from that tank and pump it is normal and accepted in the industry for the product to contain some lead, albeit not enough to be truly in conformance with the above standard. Likewise it would have been inaccurate to label the pump at that point in the conversion process as "unleaded" because some residuum of lead remained in the product in the tank. The point is that the manner in which the Respondent sold the gasoline, by continuing to label it as regular, instead of unleaded, was less harmfully misleading to the public because the use of such gasoline in cars requiring leaded regular would not be harmful to the mechanical components of those vehicles. Because the pump at the time of the sales in question was labeled regular (meaning leaded regular) cars requiring unleaded gasoline would not have been filled at that pump with such drivers being aware of the necessity to only fill their car at pumps labeled "unleaded", etc. Thus the harm which can be posed to mechanical components of cars requiring unleaded gas by the fueling of the car with leaded gasoline was least likely to occur by the conversion method followed by the Respondent involving keeping the old regular leaded label until the gasoline in the tank was entirely converted over to a content and quality which equated to the legal standard for unleaded gasoline. Because of this, although it is undisputed that

   Respondent was selling gasoline from the pump in question which did not meet the legal standard for leaded regular, the Department should exercise its discretion in favor of returning the amount of the bond posted to the Respondent.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of these proceedings. Section 120.57(1), Florida Statutes.

   
   

7. Section 525.06, Florida Statutes provides:

   
   

   "All oils . . . that shall fall below the standard fixed by the Department of Agriculture and Consumer Services, are declared illegal and shall be subject to confiscation and sale by order of the department. Instead of confiscation, a refundable bond in cash or by certified check in the amount of the value of the product subject to confiscation may be accepted by the Department, pending legal disposition.

   The amount of this bond should be limited to

   $1,000. If any of the product has been sold to retail customers, the Department is authorized to make an assessment equal to the retail value of the product sold, not to exceed $1,000."

   
   

8. In the instant case, as delineated in the above findings of fact, it has been established that the Respondent sold gasoline which did not contain a sufficient amount of lead to equate with the legal standard for leaded regular gasoline embodied in Rule 5F-2.001(1)(j), Florida Administrative Code. That gasoline was sold from a pump which, nevertheless, was labeled regular (meaning leaded regular). Thus, technically, the gasoline sold from the pump was misrepresented and was not regular gasoline because it did not contain sufficient lead. On the other hand, the gasoline in the pump could not have been legally labeled unleaded because it contained lead. The explanation the Respondent adduced in testimony, concerning the reason that the product remained labeled as it was while the conversion to "unleaded" in that tank was being carried out, is a reasonable one and (demonstrates that the public interest in purchasing quality motor fuels was thus best observed.

   
   

9. The Respondent showed that the safety of the mechanical components of gasoline customers vehicles was best protected by continuing to label the product as regular, because "unleaded customers" would therefore not pump gas into their vehicles from that tank and therefore would not be receiving gasoline containing lead when their vehicles were not designed for it. On the other hand customers who normally buy regular leaded gasoline for their vehicles would continue to buy from that pump, which product posed no harm to their vehicles merely because it had less than the legal requirement of lead content.

   
   

10. In view of this circumstance, it is clear that, while the Respondent violated Section 525.06, Florida Statutes by selling mislabeled gasoline and while the above statute clearly authorizes the Department to either confiscate the subject product or demand a bond in lieu of confiscation, and to make an assessment equal to the retail value of the product sold, the statute does not

make those actions mandatory on the Department. The statute speaks in terms of the above-defined illegal product being "subject" to confiscation and sale or to the bonding process and to the Department's being "authorized" to make an assessment. The statute does not require the Department to either confiscate, require the bond or require an assessment. Thus the Department has discretion in this regard and although it has been established that the Department made an assessment in a manner authorized by the statute, the Department also has discretion not to impose the assessment if the circumstances warrant.

Accordingly, because of the mitigatory circumstances delineated in the above findings of fact and conclusions of law it is therefore

RECOMMENDATION

That a final order be entered by the Department of Agriculture and Consumer Services granting the request of the Respondent for refund of the bond posted and that the Department elect to rescind its assessment-in the amount of

$696.68.

DONE and ENTERED this 25th day of April, 1991, in Tallahassee, Florida.

COPIES FURNISHED:

R. Bruce Sheets, Manager Lewis Oil Company, Inc. Post Office Box 1282 Gainesville, FL 32602

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

Consumer Affairs

515 Mayo Building Tallahassee, FL 32399-0800

Honorable Bob Crawford, Commissioner of Agriculture Department of Agriculture

and Consumer Services The Capitol, PL-10

Tallahassee, FL 32399-0810

P. MICHAEL RUFF 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 April, 1991.

Richard Tritschler, General Counsel Department of Agriculture and

Consumer Services

515 Mayo Bldg. 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 WRITTEN EXCEPTIONS. YOU SHOULD CONTACT TEE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING, AGENCY 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: 90-006467

Orders for Case No: 90-006467