STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
ENVIRONMENTAL TRUST, )
)
Petitioner, )
) CASE NOS. 95-4606,
vs. ) 96-0401RU - 96-0410RU
) 96-0413RU - 96-0415RU, DEPARTMENT OF ENVIRONMENTAL ) 96-0417RU, 96-0419RU - PROTECTION, ) 96-0429RU, 96-0431RU -
) 96-0434RU, 96-0436RU,
Respondent. ) 96-1004 - 96-1007,
) 96-1009 and 96-1353 SARASOTA ENVIRONMENTAL )
INVESTORS, INC., )
)
Petitioner, )
)
vs. ) CASE NOS. 96-0411RU,
) 96-0412RU, 96-0416RU, DEPARTMENT OF ENVIRONMENTAL ) 96-0418RU, 96-0435RU, PROTECTION, ) 96-0437RU, 96-1008
) and 96-1352
Respondent. )
)
RECOMMENDED ORDER
THIS CAUSE came on for formal hearing before Suzanne F. Hood, Administrative Law Judge with the Division of Administrative Hearings, commencing on April 22, 1996, and concluding on April 25, 1996 in Tallahassee, Florida.
APPEARANCES
For Petitioner: E. Gary Early, Esquire
Christopher R. Haughee, Esquire Akerman, Senterfitt and Eidson
216 South Monroe Street, Suite 200 Tallahassee, Florida 32302-2555
For Respondent: W. Douglas Beason, Esquire
Betsy F. Hewitt, Esquire
Department of Environmental Protection 2600 Blair Stone Road
Tallahassee, Florida 32399-2400 STATEMENT OF THE ISSUE
The issue is whether the Petitioners, The Environmental Trust and Sarasota Environmental Investors, Inc., are entitled to reimbursement of their reasonable and allowable costs of site rehabilitation in accordance with the statutes, rules and written guidelines governing petroleum contamination site cleanup and
reimbursement which were in effect at the time the work was performed or the records of activities and expenses were generated.
PRELIMINARY STATEMENT
Between September 7, 1995, and February 7, 1996, Petitioner The Environmental Trust (ET) and Petitioner Sarasota Environmental Investors, Inc. (SEI) filed 46 individual petitions for administrative hearing. DEP referred the first of these cases, Case Number 95-4606, to the Division of Administrative Hearings on September 19, 1995. In this case, Petitioner ET sought an administrative hearing pursuant to Section 120.57(1), Florida Statutes, contesting DEP's denial of certain costs from applications for reimbursement of petroleum contamination site cleanup costs submitted pursuant to Section 376.3071(12), Florida Statutes.
On or about October 6, 1995, Petitioner ET requested that Case Number 95- 4606 be placed in abeyance until all anticipated related petitions for administrative hearing could be filed with DEP and referred to the Division of Administrative Hearings for consolidation before formal hearing.
On October 10, 1995, the undersigned entered an order granting abeyance and requiring Petitioner ET to file a status report in Case Number 95-4606 within forty-five days. The undersigned entered orders continuing abeyance of Case Number 95-4606 on December 4, 1995 and January 12, 1996.
On January 24, 1996, DEP referred thirty-seven related cases to the Division of Administrative Hearings: Case Numbers 96-401RU through Case Number 96-437RU. In Count I of these cases, Petitioners sought a formal hearing pursuant to Section 120.57(1), Florida Statutes, contesting DEP's denial of certain costs from applications for reimbursement of petroleum contamination site cleanup costs under Section 376.3071(12), Florida Statutes. In Count II of these cases, Petitioners alleged that DEP implemented non-rule policies in violation of Section 120.535, Florida Statutes, which resulted in the denial of certain costs from applications for reimbursement of petroleum contamination site cleanup. That same day, DEP filed a motion to consolidate these cases for purposes of final hearing.
The undersigned issued a Notice of Hearing and Order of Consolidation on February 5, 1996. This order consolidated the above referenced cases with Case Number 95-4606. It also advised the parties that the consolidated cases would be heard on February 21, 1996.
The parties filed a joint motion dated February 8, 1996 requesting that the formal hearing be rescheduled. By order dated February 12, 1996, the undersigned scheduled this matter for hearing on April 22, 1996.
On February 28, 1996, DEP referred six related cases to the Division of Administrative Hearings and requested their consolidation: Case Number 96-1004 through Case Number 96-1009. On March 14, 1996, DEP referred the final two related cases to the Division of Administrative Hearings and requested their consolidation: Case Numbers 96-1352 and 96-1353. In these cases, Petitioners ET or SEI seek the same relief as Petitioner ET in Case Number 95-4606 pursuant to Section 120.57(1), Florida Statutes. By orders dated March 8, 1996 and March 15, 1996, the undersigned consolidated these cases to proceed under Case Number 95-4606.
On April 18, 1996, Petitioner ET dismissed its petition for final hearing in Case Number 96-430RU. Accordingly, the undersigned issued an order closing the file in Case Number 96-430RU on April 19, 1996.
Petitioners ET and SEI filed a unilateral Prehearing Stipulation on April 19, 1996. DEP filed its unilateral Prehearing Statement on April 22, 1996.
At the final hearing, Petitioners presented testimony from Robert K. Beard, a Certified Public Accountant (CPA) who was tendered and accepted as an expert in the field of accounting with an emphasis on the relationship of accounting to the Florida petroleum contamination site cleanup reimbursement program; Douglas
A. Jones, Bureau Chief for DEP's Bureau of Waste Cleanup; Melike Altun, an Environmental Specialist with DEP; William Sittig, a CPA with DEP's Office of the Inspector General; Kirste Johnson, a contract reviewer with Restoration Assistance, Inc.; Charles Williams, Administrator of the Reimbursement Section of DEP's Bureau of Waste Cleanup and the designated agency representative; Neeld Wilson, President of Gator Environmental, Inc.; and Stephen R. Parrish, Vice President of American Factors Group, Inc. and designated corporate representative for ET and SEI. DEP presented testimony from John Ruddell, Director of DEP's Division of Waste Management; and Charles Williams. Petitioners presented the testimony of Robert Beard in rebuttal.
Petitioners offered Petitioners' Exhibits 1-18 and 20-57 which the undersigned received into evidence during the hearing. The undersigned also received DEP Exhibits 1-12 into evidence. The undersigned authorized Petitioners to copy and file Petitioners' Exhibits 55 and 56 post-hearing. The undersigned also authorized DEP to file a supplement to DEP's Exhibit 10 post- hearing. The undersigned left the record open for Petitioners to submit two additional exhibits post-hearing.
Upon request by Petitioners, the undersigned took official recognition of Chapter 376, Florida Statutes (1993); Chapter 17-773, Florida Administrative Code as last amended on April 22, 1993; Chapter 94-311, Laws of Florida; and House of Representatives Committee on Governmental Operations Final Bill Analysis and Economic Impact Statement for HB 1879. Upon request by DEP, the undersigned took official recognition of DEP Notice of Proposed Rule Development published in Volume 22, No. 12, p. 1911 of the Florida Administrative Weekly, March 22, 1996; the Notice issued on January 29, 1996, by James W. York in DOAH Case Nos. 96-0401RU through 96-0437RU; and the Final Order in American Factors Group Inc. and The Environmental Trust vs. Department of Environmental Protection, DOAH Case No. 96-0434RU entered on July 24, 1995.
The court reporter filed the transcript of the formal hearing with the Division of Administrative Hearings on May 30, 1996.
On June 5, 1996, Petitioners filed four post-hearing exhibits: (1) Petitioners' exhibit 55, consisting of the reimbursement application in each of the above-styled cases; (2) Petitioners' exhibit 56, consisting of the DEP stamped reimbursement application cover pages in the above-styled cases; (3) Written authorization from Petitioners' representatives for Stephen R. Parrish to testify on their behalf; and (4) Stephen R. Parrish's deposition errata sheet. Petitioners filed a supplement to Petitioners' exhibit 55 on June 7, 1996 relative to Case Number 96-1008. DEP filed a post-hearing exhibit on June 6, 1996 consisting of fourteen letters to supplement DEP's Exhibit 10.
On June 10, 1996 DEP filed a Request for Official Recognition of the Notice of Workshop published in the Florida Administrative Weekly, June 7, 1996, Volume
22, No. 23, page 3467, the subject of which is Rule 62-773, Florida Administrative Code (formerly Rule 17-773, Florida Administrative Code). Petitioners did not file a response to this request.
The parties filed their Proposed Recommended Orders on June 10, 1996.
On June 17, 1996, Petitioners filed a Motion to Strike six pages of DEP's proposed conclusions of law in DEP's Proposed Recommended Order as being in excess of page limitations set during the hearing. DEP filed a response in opposition to this motion on July 1, 1996. Said motion is hereby denied.
On July 1, 1996, DEP filed a Motion to Strike the seven page appendix to Petitioners' Proposed Recommended Order as being in excess of page limitations set during the hearing. The appendix is a matrix which purports to summarize:
reimbursement application submittal dates listed individually on the application cover sheets (Petitioners' exhibit 56); and (2) dates on which DEP took agency action on the applications and the amounts of the relevant deductions (Petitioners' exhibit 45). Petitioners' filed a response to this motion on July 5, 1996. Said motion is hereby denied.
On August 16, 1996, Petitioners filed a Motion for Official Recognition of DEP's official action as expressed in a letter dated July 18, 1996 from DEP to the Office of the Auditor General. Petitioners specifically requested the undersigned to consider certain statements in the letter as DEP's admissions concerning "the inapplicability of new rules to work that has already been performed, and the fact that new rulemaking is not warranted due to the limited life of the reimbursement program." DEP filed a response in opposition to this motion on August 28, 1996. On September 3, 1996, Petitioners filed a Motion to Strike and Reply to Department of Environmental Protection's Response in Opposition to Petitioners' Motion for Official Recognition. On September 12, 1996, DEP filed a Motion to Strike Petitioners' Motion to Strike and Reply. The motions filed on August 16, 1996, September 3, 1996, and September 12, 1996 are hereby denied.
On September 10, 1996, Petitioners filed a Notice of Failure to Publish Notice of Proposed Rulemaking. On September 19, 1996, DEP filed a Request for Official Recognition of a Notice of Proposed Rulemaking to be published in the Florida Administrative Weekly on Friday, September 27, 1996. These pleadings have not been considered because they represent an unauthorized attempt to open the record.
FINDINGS OF FACT
Reimbursement Program
The Florida Legislature created the Petroleum Contamination Site Cleanup Program to encourage responsible persons with adequate financial ability to conduct site rehabilitation and seek reimbursement in lieu of the state conducting cleanup. Section 376.3071(12), Florida Statutes (1993).
Site owners and operators or their designees become entitled to reimbursement from the Inland Protection Trust Fund (IPTF) of their allowable costs at reasonable rates after completing a program task. Section 376.3071(12)(b), Florida Statutes. The costs of site rehabilitation must be actual and reasonable. Section 376.3071(12)(d), Florida Statutes.
"Allowable" costs are those which are associated with work that is appropriate for cleanup tasks, i.e. whether the cost represents work that is technically necessary for the program task and otherwise not in violation of reimbursement limitations prescribed by statute or rule.
In order for costs to be reimbursable, an applicant must convert charges in an application into applicable units and rates. Rule 17-773.100(5), Florida Administrative Code. DEP has a predominate rate schedule to determine whether a specific allowable cost is reasonable. DEP bases its predominate rates on a study of average rates that contractors charge for a particular task. In addition, DEP reviews each application to determine whether the overall cost and the methods used to perform the work are reasonable.
DEP must also evaluate each application to determine whether a charge is an actual cost of a project. Contractors or subcontractors do not actually incur a fully reimbursable cost when they promise the site owner or its designee that they will perform work for an amount less than other professionals would charge, then allow the site owner or its designee to file a claim for reimbursement at or near the predominate rate. Such an agreement creates a back flow of funds to the site owner or its designee. This is true even though the charges are within the range of DEP's predominate rates. DEP never intended the rate schedule to create an entitlement to reimbursement regardless of the cost that contractors and subcontractors actually incur.
Requests for reimbursement must apply to costs which are "integral" to site rehabilitation. Rule 17-773.100(2), Florida Administrative Code. "Integral" costs are those which are essential to completion of site rehabilitation. Rule 17-773.200(2)(11), Florida Administrative Code.
After integral costs have been identified and incorporated on a units and rates basis in an invoice, the invoice may be marked up at two levels. These markups are subject to certain limitations:
There can be no more than two levels of markups or handling fees applied to contractor, subcontractor or vendor invoices (Rule 17-773.350(9), F.A.C.);
There can be no markups or handling fees in excess of 15 percent for each level of allowable markup applied to contractor, subcontractor or vendor invoices (Rule
17-773.350(10), F.A.C.); and
There can be no markups or handling fees applied to invoices between any two entities which have a financial, familial, or beneficial relationship with each other (Rule 17-773.350(11), F.A.C.).
In order to be reimbursable, costs must have been actually "incurred." Rule 17-773.700, Florida Administrative Code. "Incurred" means that allowable costs have been paid. Rule 17-773.200(9), Florida Administrative Code.
A contractor must pay all invoices generated by a subcontractor at 100 percent of their face value prior to submission of an application in order to qualify those invoices for reimbursement. When a contractor pays a subcontractor's invoices, the contractor paying those invoices may apply the first-tier markup.
Prior to submitting a reimbursement application, a funder or "the person responsible for contamination site rehabilitation" (PRFCSR) must pay the contractor for its invoices and markup. Then, the funder may apply the second- tier markup and submit the reimbursement application to DEP. DEP does not contest the second level of markup in these applications.
DEP rules restrict reimbursement when parties within the usual "chain" of reimbursement (PRFCSR or funder, contractor and subcontractor) have financial, beneficial or familial relationships with each other or the site owner. These terms are defined in Rules 17-773.200(1), 17-773.200(6), 17- 773.200(7), Florida Administrative Code. The application form requires disclosure of such relationships through the Program Task and Site Identification Form.
DEP's rules and written guidelines do not address or apply to activities, including financing arrangements, occurring outside of the chain of reimbursement if an applicant does not include charges for such activities in an application. Heretofore, DEP has not deducted finance costs that an applicant does not include as a line item in a reimbursement application.
DEP must perform financial audits to ensure compliance with Chapter 376, Florida Statutes, and to certify site rehabilitation costs. Rule 17- 773.300(1), Florida Administrative Code. DEP performs this audit function: (a) to establish that the PRFCSR incurred the cost; (b) to determine that adequate documentation supports the claimed costs as incurred; and (c) and to review the reasonableness and allowance of the costs. The audit staff interprets the term "incurred" to mean that the applicant paid the costs included in the reimbursement application.
DEP's audit staff usually does not inquire as to the level of a PRFCSR's financing where the application contains no line-item financing charges. However, the audit staff makes appropriate inquiries depending on the facts and events surrounding an individual application.
Pursuant to Rule 17-773.350(4)(e), Florida Administrative Code, "[i]nterest or carrying charges of any kind with the exception of those outlined in Rule 17-773.650(1), F.A.C." are not reimbursable. The exceptions to the payment of interest set forth in Rule 17-773.650(1), Florida Administrative Code, are not at issue here.
An interest rate charge on short-term borrowed capital from an unrelated third-party source is a "cost of doing business." DEP's predominate rates are fully loaded. They include a variable for all direct and indirect business overhead costs such as rent, utilities and personnel costs. DEP includes the cost of short-term borrowed capital in the direct and indirect overhead components of the fully-loaded personnel rates. Rule 17-773.700(5)(a), Florida Administrative Code.
Petitioners
PRFCSRs are entitled to make application for reimbursement of allowable markups and costs of site rehabilitation that they incur. In these consolidated cases, the site owners or operators designated either Petitioner ET or Petitioner SEI as PRFCSR. The PRFCSR is typically referred to as the "funder" in the reimbursement chain.
Petitioner ET is a trust formed in 1993 and domiciled in Bermuda. It acts as American Factors Group, Inc.'s (AFG discussed below) conduit for funds that finance activities associated with Florida's petroleum contamination site cleanup program. The named beneficiaries of the trust are those contractors and subcontractors entitled to payment of costs for activities integral to site rehabilitation and for allowable markups of such costs. The sole trustee of ET is Western Investors Fiduciary, Ltd. (WIFL).
WIFL is also the owner and a beneficiary of ET. Any profit that ET derives from funding petroleum contamination site cleanup flows through WIFL to investors who provide funds to finance site rehabilitation. American Environmental Enterprises, Inc. (AEE, discussed below) provided the investment funds for the reimbursement applications at issue here.
WIFL is a limited liability corporation created and domiciled in Bermuda. The officers of WIFL are: William R. Robins, President; John G. Engler, Vice-President; and Peter Bougner, Secretary. The directors and shareholders of WIFL are: William R. Robins, John G. Engler, Paul H. DeCoster, Alec R. Anderson and Nicholas Johnson.
Petitioner SEI is a corporation incorporated and operating under Florida law. Organized in 1994, SEI acts as AFG's conduit for funds to finance activities associated with Florida's petroleum contamination cleanup program. The officers and directors of SEI are: William R. Robins, President; John G. Engler, Executive Vice President; and Paul H. DeCoster, Secretary. William R. Robins is the sole shareholder of SEI.
ET filed the petition for administrative hearing on behalf of SEI in at least four cases: Case Numbers 96-405, 96-425, 96-433, 96-437.
Respondent
DEP is the agency charged with the duty to administer the IPTF and Chapter 376, Florida Statutes.
Financing Entities
American Factors Group, Inc. (AFG) is a privately held corporation incorporated and operating under New Jersey law. AFG is not a party to this proceeding. AFG, acts as the servicing agent for contracts associated with factoring activities and other types of financing operations.
AFG, through one of its divisions, Environmental Factors (EF), entered into factoring contracts with: (a) Gator Environmental, Inc. (Gator), general contractor; and (b) Tower Environmental, Inc. (Tower), prime subcontractor. Through these agreements, EF or its assignee bought the rights of Gator and Tower to future reimbursement payments at a percentage of the face value of the relevant invoices. The officers of AFG are: William R. Robins, President; John
G. Engler, Vice President; and Paul H. DeCoster, Secretary. Bleak House, Inc. (Texas) owns the stock of AFG.
American Environmental Enterprises, Inc. (AEE) is incorporated and operating under Nevada law. AEE is not a party to this proceeding. AEE, as the assignee under the EF contracts, is a third-party provider of capital to various entities in the reimbursement process. The officers of AEE are: William R. Robins, President; John G. Engler, Vice-President; and Paul H. DeCoster, Secretary. Bleak House, Inc., (Nevada) owns the stock of AEE.
Bleak House, Inc., (Nevada) is incorporated and operating under Nevada law. Bleak House, Inc. (Texas) is incorporated and operating under Texas law. Officers of both corporations are William R. Robins, President; John G. Engler, Vice President; and Paul H. DeCoster, Secretary. Magazine Funding, Inc. owns the stock of both Bleak House corporations.
Magazine Funding, Inc. is incorporated and operating under Nevada law. Officers of Magazine Funding, Inc. are William R. Robins, President; John G. Engler, Vice-President; and Paul H. DeCoster, Secretary. Family Food Garden, Inc. owns the stock of Magazine Funding, Inc.
Family Food Garden, Inc. is incorporated and operating under Massachusetts law. Officers of Family Food Garden, Inc., are William R. Robins, President; and Paul H. DeCoster, Secretary. Six shareholders own the stock of Family Food Garden, Inc. None of these shareholders are related by familial ties to the officers or directors of the aforementioned companies or any relative thereof.
Each of these companies -- ET, SEI, WIFL, AEE and AFG (including EF) share common officers and directors. Each of the companies maintain their own books and business records, file their own tax returns, and maintain records in accordance with the laws of the jurisdiction in which they were established. They operate pursuant to their respective bylaws or trust documents.
ET, WIFL, and SEI do not have common assets with AEE or AFG (including
EF).
ET, WIFL and SEI do not have a beneficial, financial, or familial
relationship with AEE or AFG (including EF) as Rule 17-773.200, Florida Administrative Code, defines those terms.
Despite the facial organizational and structural integrity of ET, WIFL, SEI, AEE and AFG, the officers and directors of AFG and/or AEE created ET, WIFL, and SEI, in large part, for the benefit of AFG and/or AEE as a means to invest funds in petroleum contamination site cleanup programs. The officers and directors of AFG specifically created SEI to meet the needs of AFG's Florida investors. The purpose of each funder is to maximize the profits of AFG and its investors. AFG has other investment vehicles (funders) which it uses at times depending on the needs of its investors. AFG waits until the last instance before deciding which entity it will designate as funder in any particular factoring scenario. AFG usually does not make that decision until the day AFG's designated funder issues a funder's authorization to the general contractor.
At the hearing, Mr. Stephen Parrish, a vice president of AFG, testified as the party representative for ET and SEI. ET, WIFL and SEI have no employees. EF or AFG responded to DEP's request for Petitioners to provide additional information about the financing scheme utilized here using stationary bearing EF's or AFG's letterhead. At least five of these letters written on SEI's behalf, refer to ET, an affiliate of AEE, as the funder. Nineteen of the letters written on ET's behalf refer to ET, an affiliate of AEE, as the funder.
The greater weight of the evidence indicates that AFG and/or AEE negotiated less than arms-length contractual agreements with ET, WIFL, and SEI. Petitioners admit that they are "affiliates" of AEE and AFG through contractual agreements. However, there are no written factoring contracts between Petitioners and AFG such as the ones that exist between AFG, Gator and Tower.
The only documented evidence of agreements between Petitioners and AFG are transactional based bills of sale representing the sale to AEE of Petitioners' right to receive reimbursement from IPTF. AFG created these bills of sale for bookkeeping purposes. AFG did not even go to the trouble of tailoring the form for the bills of sale for their stated purpose. For all practical purposes, Petitioners are under the management and control of AEE and AFG.
Petitioners and AFG disclosed their affiliation in meetings with DEP staff and through correspondence and other documentation, including but not limited to: (a) letter to DEP dated July 13, 1994 from AFG's counsel; (b) Addendum to Certification Affidavit signed by a certified public accountant in each application; (c) funder's authorization form; (d) letters sent to DEP between August 14, 1995 and November 19, 1996.
Factoring and the Factoring Transactions
Factoring is the purchase and sale of an asset, such as an account receivable, at a discount. An account receivable reflects the costs that a business charges after rendering a service but before the entity responsible for payment pays for that service. When a contractor completes a rehabilitation task, the contractor's invoice is an account receivable until it receives payment.
In these consolidated cases, AEE provided short-term capital to Gator and Tower at an interest rate equal to the discount percentage of the relevant invoice (account receivable). Gator and Tower did not sell their account receivables to AEE. Instead, AEE, as the assignee of EF, purchased a contractual right to receive Gator's and Tower's reimbursement payments. In exchange, AEE advanced them a discounted amount of their invoices. The discounted amount of each invoice represents a loan from AEE to Gator and Tower.
The difference between the face amount of the invoices and the discounted amount of the invoices represents interest. A discount percentage and an interest rate are equivalent. The amount of the discount represents interest on the loans or advances provided by AEE. It is an interest expense to the contractor or subcontractor. The amount that Gator and Tower actually incurred is the discounted amount of their invoices.
The Factoring Agreements
On or about April 25, 1994, EF and Tower entered into a Prime Subcontractor Factoring Agreement which set forth the terms under which EF or its assignee would finance Tower's site remediation work. At that time, the parties to the contract anticipated that EF would retain a general contractor to perform on-site remediation services with Tower acting as prime subcontractor. In the contract, Tower agreed to sell to EF its right to receive payments from the general contractor at a percentage of the underlying invoices.
Subsequent to the execution of April 1994 Prime Subcontractor Factoring Agreement, Tower experienced financial difficulties resulting in its inability to pay subcontractors for work that they performed under non-EF contracts. These financial difficulties made it impossible for Tower to meet its payroll that was due in two weeks.
Tower and its subcontractors under the non-EF contracts approached AFG and EF requesting financial assistance to resolve Tower's financial difficulties and to ensure that the subcontractors would be paid for their work. At that
time, the program tasks under these non-EF contracts were complete or substantially complete.
Given the preexisting contractual relationship between EF and Tower on other projects, AFG determined that it could use a similar financing arrangement to resolve Tower's financial problems. Such an arrangement also would protect AFG's investment in projects being conducted under the EF-Tower contracts.
On or about July 8, 1994, EF and Tower executed an addendum to the April 1994 Prime Subcontractor Factoring Agreement. This addendum applied to projects that were not covered by the original Prime Subcontractor Factoring Agreement. The addendum required Tower to sell to EF Tower's right to receive payments from the general contractor. In return, EF agreed to advance Tower a discounted amount equal to 97 percent of the face amount of Tower's invoices. Tower agreed to pay EF 100 percent of the face amount of the invoices upon receipt of payments from the general contractor. The discounted amount of each invoice represents a loan from AEE to Tower.
Late in 1993 or early in 1994, Gator began negotiating a contract with EF to provide general contracting services for on-site remediation work on unspecified Florida projects being financed by EF. Gator began serving as general contractor on some of these unspecified projects prior to the execution of a contract.
On or about July 8, 1994, EF and Gator entered into a General Contractor Factoring Agreement. In this contract, EF agreed to provide financing for projects on which Gator served as general contractor. Gator agreed to sell to EF its right to receive payments from the funder (ET or SEI) at a percentage of Gator's underlying invoices.
On or about July 13, 1994, EF and Gator entered into an Addendum to the July 8, 1994 General Contractor Factoring Agreement. This addendum applied to projects which were not covered under the original General Contractor Factoring Agreement. The addendum required Gator to sell to EF Gator's right to receive payments from the funder (ET or SEI). In return, EF agreed to advance Gator a discounted amount equal to 88 percent of the face amount of Gator's invoices. Gator agreed to pay EF 100 percent of the face amount of the invoices upon receipt of payments from the funder. The discounted amount on each invoice represents a loan from AEE to Gator.
Gator and Tower negotiated the respective factoring contracts and addenda thereto at arms-length. Pursuant to the terms of these contracts, EF assigned to AEE the rights to payments due to Tower from Gator and to Gator from ET or SEI. ET and SEI were not named parties to these contracts.
The factoring contracts and the corresponding addenda apply to the reimbursement applications at issue here. Pursuant to those agreements, the following interrelated transactions took place though not necessarily in this order.
First, Tower provided EF with a Site Certification Affidavit for a certain project. Tower also sent Gator a complete reimbursement application for the project and an invoice for Tower's services and the services of its subcontractors and vendors.
Next, EF designated either ET or SEI as the funder. The funder then sent Gator a funder's authorization form. This form acknowledged that EF was an
affiliate of the funder. It is the only documented evidence of a contract between the funder and Gator. Gator's receipt of the form constituted authorization for Gator to perform work on the project subject to reimbursement for all reimbursable costs and paid subcontractor invoices.
Within two days of receiving the funder's authorization for a project, Gator issued Tower a subcontract/purchase order. Gator notified EF and the funder of such issuance.
Upon receipt of the subcontract/purchase order, Tower sold to AEE (at a discount) Tower's right to receive full payment from Gator. A bill of sale evidenced this transaction. Tower agreed to repay AEE the face amount of Tower's invoice upon receipt of payment from Gator.
Tower executed an agreement indemnifying the funder and guaranteeing the performance of all services and the delivery of all goods. Tower agreed to a reserve trust fund deposit as security for the ultimate reimbursement payment from the IPTF.
Within four days of receiving the complete reimbursement application from Tower and within two days of receiving the funder's authorization, Gator and a certified public accountant (retained by EF) were supposed to review all supporting documentation on the project. The stated purpose of this review was to determine whether the invoices of Tower and its subcontractors were reimbursable under DEP guidelines.
As to 30 of the instant applications, Tower completed the on-site work before Gator became involved. In those cases, Gator performed a minimal due diligence review, if any, of Tower's on-site work. This included comparing Tower's technical and administrative files with the applications prepared by Tower. Without Gator's minimal review and risk assessment on these 30 applications, EF would not have included them as projects covered by the addenda to the factoring contracts.
As to 15 of the instant applications, Petitioners claim that Gator not only reviewed Tower's work product but also, issued subcontractor/purchase orders selected and scheduled subcontractors, and made on-site visits. However, there is no persuasive record evidence as to the specific activities or the level of Gator's involvement in on-site work on any one of these 15 applications.
When Gator and EF's certified public accountant completed their assessment, Gator prepared a deficiency letter and sent it to all parties. The report advised EF, the funder and Tower whether any of Tower's charges were in excess of the reimbursable amount. Tower could accept or reject any disallowance set forth in the deficiency letter.
If there was no problem with a disallowance or within five days of Tower's acceptance of a disallowance, AEE advanced Tower an amount equal to 97 percent of Tower's invoice. Tower used these funds to pay subcontractors and vendors. The discounted amount of Tower's invoice represents the actual cost that Tower incurred. Tower signed a repayment agreement in which it promised to repay AEE the face amount of Tower's invoice upon receipt of payment from Gator.
When Tower received the discounted cash advance from AEE, it had to contribute the reserve deposit (to cover any reimbursement shortfalls) to a reserve trust, domiciled in Bermuda, which was affiliated with EF. Tower was a
beneficiary of the reserve trust to the extent of its contribution less any monies it owed AEE after the IPTF reimbursed the funder.
Meanwhile, Gator sold to AEE (at a discount) Gator's right to receive full payment from the funder. A bill of sale evidenced this transaction. Gator agreed to repay AEE the face amount of Gator's invoice upon receipt of payment from the funder.
AEE advanced Gator an amount equal to 88 percent of the face amount of Gator's invoice. The discounted amount of Gator's invoice represent the amount that Gator actually incurred. Gator used these funds to pay Tower the face amount of its invoice. Tower in turn repaid AEE in full.
Gator signed a repayment agreement in which it promised to repay AEE the face amount of its invoice upon receipt of payment from the funder. For the
45 applications at issue here, the addendum to the General Contractor Factoring Agreement did not require Gator to deposit any amount in the reserve trust which was domiciled in Bermuda and affiliated with EF.
Next, Gator prepared an invoice for its services and the services of Tower and its subcontractors including a 15 percent markup and an application preparation fee. Gator's invoice could not include a charge for "management time." Then, Gator forwarded its invoice and Tower's invoice to the funder together with the complete reimbursement application.
In the meantime, ET and SEI sold AEE their right to receive reimbursement from the IPTF at a discount equal to 87 percent of their total invoice amount. A bill of sale for each transaction is the only documented evidence of an agreement between the funders and AEE. ET and SEI agreed to repay AEE for the face amount of their invoices upon receipt of payment from IPTF.
The funder prepared an invoice for the face amount of Gator's and Tower's invoices plus a 15 percent markup. Upon receipt of ET's or SEI's invoice, AEE advanced them the discounted amount as agreed. ET or SEI used the funds advanced by AEE to pay Gator the face amount of its invoice. Gator in turn repaid AEE in full.
When ET or SEI receive a reimbursement payment from the IPTF, they will remit the total payment to AEE.
The total cost for each project increased as the discount percentage and the face amount of each invoice passing up through the chain grew larger.
In regards to some applications, the relevant dates on the subcontract/purchase order, Gator invoice, and Tower invoice are the same. It is clear that the turn around time on all of the above referenced transactions, including the time between the payment of the advances by AEE to Gator and Tower and their subsequent repayment of 100 percent of the face amount of an invoice to AEE, was very short--a matter of days or weeks.
In Summary, the financing of the pending reimbursement applications involved the following interrelated transactions but not necessarily in this order:
AEE as the assignee of EF purchased the right of ET, SEI, Gator and Tower to receive
reimbursement for their services at a discount. ET, SEI, Gator and Tower agreed to repay AEE in full.
Tower prepared and submitted to Gator an invoice for services provided by Tower and its subcontractors. Tower also prepared and submitted to Gator a reimbursement application for the program task.
AEE advanced Tower the agreed upon discount amount. Tower used these funds to pay its subcontractors and vendors.
AEE advanced Gator the agreed upon discount amount. Gator used these funds to pay Tower. Tower repaid AEE in full.
Gator prepared an invoice for services provided by Gator, Tower and Tower's subcontractors including a 15 percent markup and submitted it with the reimbursement application either to ET or SEI.
AEE advanced ET or SEI the discounted amounts as agreed. ET or SEI paid Gator in the full amount of Gator's invoice plus markup. Gator repaid AEE in full.
ET or SEI prepared an invoice for its services plus the services of Gator, Tower, and Tower's subcontractors and a 15 percent markup. ET or SEI submitted the reimbursement application to DEP.
When ET or SEI receives reimbursement from the IPTF, they will remit the total payment to AEE.
The Applications
Petitioners filed the 45 applications that are the subject of this proceeding between July 18, 1994 and February 17, 1995. The financing scheme that Petitioners utilized in these applications was unique. Prior to receiving these applications, DEP never had reviewed reimbursement applications using the type of financing scheme at issue here. In fact, the instant cases present a scenario never contemplated by DEP when promulgating rules and developing written policies.
DEP has established a list by which it determines whether an applicant is charging a "reasonable rate." DEP developed that list in accordance with Petroleum Cleanup Reimbursement (PCR) Guideline Number 1.
PCR 1 establishes a "predominant rate" for costs involved in the site rehabilitation process. The predominant rate may be exceeded by up to 30 percent for personnel charges, and by up to 50 percent for non-personnel charges. Within these ranges, DEP evaluates each application and determines whether the PRFCSR is entitled to reimbursement for "allowable cost" at "reasonable rates."
The work performed by Tower was at or near DEP's "predominant" rate. In no instance were Tower's rates near the upper limits of the reasonable rate ceiling.
Tower's invoices appear to represent work that was integral to site rehabilitation which was broken down into appropriate units and rates. There is no evidence of "price fixing" between any entities engaged in site rehabilitation. There is no evidence that Tower intentionally inflated the costs of cleanup or of the scope of cleanup services to cover the cost of financing. There are no familial, beneficial or financial relationships, or any other form of affiliation between Tower and its subcontractors.
A certified public accountant (CPA) attestation accompanied the applications indicating that Petitioners incurred (paid) all relevant costs. The applications did not include charges associated with the financing arrangements as line items.
The CPA attestations referenced an addendum to the Certification Affidavit. The addendum indicated that "American Environmental Enterprises, Inc., an affiliate of the Environmental Trust, has provided financing to certain contractors and subcontractors by factoring invoices which are included within this application." The CPA provided the reference to the addendum in the CPA attestation as an "emphasis of the matter" statement rather then an "exception," or a modification of the CPA's attestation that Petitioners had incurred all costs in the application. The CPA firm performing the attestation services previously informed DEP of its intent with regard to "emphasis of the matter" reports.
Nevertheless, the difference between the face amount of an invoice and the discounted amount of that invoice clearly represents interest. This interest was not allowable as an actual and reasonable cost of site remediation because Gator and Tower agreed to accept a lesser amount for their services prior to submittal of the applications. Therefore, they did not actually incur the amount reflected in the face amount of their invoices.
DEP's predominate rates and units are fully loaded. Interest rate charges on borrowed capital from unrelated third-party sources are a "cost of doing business." DEP's fully-loaded rates include a variable for all direct and indirect business overhead costs such as rent, utilities and personnel costs. The direct and indirect overhead components of DEP's fully-loaded rates include the cost of short-term "working" capital. However, DEP never intended the predominate rate schedule to entitle an applicant to reimbursement for costs that it did not actually incur.
In the instant cases, funds that passed down through the chain from ET or SEI to Gator or from Gator to Tower flowed directly and immediately back to AEE who was affiliated with the funder. Any profit derived by the funder, ET or SEI, will flow directly to AEE and its investors. The amount that Petitioner's actually incurred before they submitted the applications was the amount that AEE advanced to Tower and/or its subcontractors for integral site work plus the actual cost of Gator's allowable services, if any, which were separate and distinct from Tower's work, plus any allowable markup(s).
Factoring Policy
At the time that Petitioners submitted the subject applications for reimbursement, there was no rule or written guideline governing financing transactions, including factoring, occurring outside of the usual chain of reimbursement. DEP normally did not inquire about such financing so long as an applicant did not pass the costs of such financial transactions to DEP in the application as a line-item cost. There was no policy disallowing reimbursement
for the face amount of the invoices when an applicant sold the right to payment,
i.e. the receivable, at a discount to a disinterested third-party in an arms- length transaction.
Commencing on August 31, 1994, DEP began to develop a policy regarding the use of factoring as a financing mechanism in the reimbursement program. DEP staff exchanged numerous documents regarding the subject of factoring. In one of those documents, Charles Williams, DEP's Reimbursement Administrator indicated that "we absolutely need to have a Big Meeting to decide what to do once and for all."
In a November 1994 telephone conversation, DEP provided AFG's counsel with an informal opinion of how DEP would handle a factored application as described by Will Robins of AFG in an earlier meeting with DEP staff. The statement was:
that the difference between the amount that a contractor accepted in payment for his services, which was a discounted amount after factoring, . . . and the face value of the invoice which was claimed and marked up in the application was determined to be a carrying charge or interest, which is specifically disallowed for reimbursement in the reimbursement rule.
American Factors Group. Inc. and the Environmental Trust v. Department of Environmental Protection, DOAH Case No. 95-0343RU, Final Order issued July 24, 1995. DEP advised AFG's counsel that it would deal with factored applications involving other entities on a case by case basis.
On December 20, 1994, John Ruddell, Director of DEP's Division of Waste Management, sought permission from DEP's Policy Coordinating Committee to promulgate a rule amendment to Chapter 62-773, Florida Administrative Code (formerly Chapter 17-773, Florida Administrative Code.) A draft rule accompanied the request. The draft rule was developed in compliance with Chapter 94-311, Section 6, Laws of Florida, which required DEP to revise its reimbursement rule.
The draft rule provided that:
nothing in this Chapter shall be construed to authorize reimbursement for the face amount of any bill or invoice representing incurred costs when the receivable has been sold at a discount. In all such cases, reimbursement shall be limited to the actual discounted amount accepted by the provider of the goods or services . . . .
The draft rule had the effect of prohibiting factoring as a mechanism for financing site rehabilitation work. It did not single out any other type of financing mechanism. DEP did not promulgate the draft rule because the problems with the program were too numerous to correct in a timely fashion by rulemaking. Instead, DEP focused on drafting proposed legislation.
In the meantime, DEP requested that Petitioners furnish additional information regarding the instant applications. Between March 1, 1995 and November 17, 1995, ET and SEI responded to DEP's requests with letters bearing AFG's or EF's letterhead. The letters state that prior to filing the applications, ET or SEI paid Gator for the face amount of Gator's invoices plus Gator's markup. Gator then paid the subcontractors for the face amount of their invoices. Prior to these payments, AEE an affiliate of ET, or SEI purchased the right to receive the amount due to Gator from ET and the right to receive the amount due to subcontractors from Gator. In each case, AEE bought the right to receive at a discount. According to the financing scheme, ET or SEI received sufficient funds from AEE to make the payments to Gator. ET or SEI, in turn, were obligated to pay AEE following their receipt of the funds claimed in the reimbursement application.
On April 21, 1995, DEP issued a memorandum to DEP application reviewers to guide them in the processing of reimbursement applications. The memorandum indicated that:
invoices from subcontractors, vendors, suppliers and/or the general contractor which were paid a factored (e.g., discounted) amount by a third party capital participant (e.g., funder) represents the actual amount incurred by that entity and subsequently by the general contractor.
The memorandum directed reviewers to deduct costs in an amount equal to the difference in the face value of an invoice or application and the amount paid for the right to receive payment under that invoice or application.
DEP did not direct the policy set forth in the April 21, 1995 memorandum towards any individual company. DEP intended the policy to apply to "any combination of a general contractor, management company, funder and responsible party" in any situation in which a third-party capital provider paid any program participants a factored (discounted) amount of their invoices." The April 21, 1995, policy did not condition DEP's position on factoring on any affiliation between any parties.
Between August 14, 1995 and January 19, 1996, DEP took action on the
45 applications that are the subject of this proceeding. As reflected in those notices, DEP denied reimbursement of costs claimed in those applications "as a result of factoring of the supporting invoices" and because "the difference between the face amount of the supporting invoices and the amount factored represents interests or carrying charges which are specifically excluded from reimbursement pursuant to Rule 62-773.350, F.A.C."
The notices properly reflect a basis of denial of costs that is consistent with DEP's policy as reflected in the December 20, 1994 draft rule and the April 21, 1995 memorandum. DEP has proven that its policy on factoring is consistent with its legislative mandate to deny reimbursement of costs which are not actual and reasonable.
Affiliation Policy
Not all out-of-chain affiliations between entities constitute a problem with regard to reimbursement. However, the instant cases presented DEP
with unique facts as to the relationship between AEE, AFG, ET, WIFL and SEI which DEP's rules and written policies do cover.
The mere existence of common corporate officers does not, in and of itself, cause AFG/AEE, ET, WIFL, and SEI to lose their integrity as separate legal entities, or make them "one and the same."
Common officers of corporations are not an element of the term "financial relationship," nor does the concept of common corporate officers appear in the definitions of beneficial relationship, familial relationship, indirect interests, material interests, or sources of income.
DEP's position at hearing that "affiliation" is a major key to it's position with regard to factoring does not appear in any of the documents in which DEP has either discussed or disseminated information regarding factoring.
There are no requirements in DEP's application forms to disclose the nature of the relationships between an applicant and an applicant's source of financing. DEP makes no standard inquiry of funders to disclose the nature of any affiliation between the funder and the provider of capital.
Nevertheless, the record supports DEP's position that it can deny reimbursement for costs when a PRFCSR has an "affiliation" with a factoring company outside of the chain of reimbursement under the facts of these cases.
It is not contested that ET, WIFL, SEI and AFG and its sister company AEE are affiliated. The greater weight of the evidence indicates that this affiliation goes beyond a mere contractual agreement. AFG, AEE, WIFL (which owns ET and is a trust beneficiary), and SEI have common officers and directors. These officers and directors created ET and SEI primarily for the benefit of AFG and AEE as conduits for investment of funds in Florida's petroleum contamination site rehabilitation program. AFG has other investment vehicles, in addition to ET and SEI, which it can designate as a funder depending on the needs of its investors. AFG usually waits until the last instance to select the funder that it will use in any particular case. AFG often selects the funder on the same day that the funder issues its authorization to the general contractor.
The greater weight of the evidence indicates that AFG and/or AEE and the Petitioners did not negotiate the contractual agreements between them at arms-length. A bill of sale evidencing the sale of Petitioners' right to receive reimbursement on each application is the only documented evidence of agreements between Petitioners and AFG or AEE. Any profit derived by ET flows back to AEE through WIFL. ET and SEI are under the management and control of AEE and AFG's officers and directors. For all practical purposes ET and SEI are "one and the same" as AEE and AFG.
The affiliation between AEE, AFG, WIFL, ET and SEI is especially troublesome here where AEE advanced the discounted amount of invoices to: (a) Tower so that it could pay its subcontractors in full; (b) Gator so that it could pay Tower in full; and (c) its affiliates, ET and SEI, so that they could pay Gator in full. Gator's and Tower's immediate repayment in the face amount of the invoices to AEE is a back flow of funds (interest) to an entity affiliated with Petitioners. All of these transactions took place before Petitioners filed the instant applications or within a few days thereafter.
They create a paper trail indicating that the parties within the "chain" at each level incurred the face amount of the next lowest level. However, the only
amount actually incurred at the time Petitioners submitted the applications was the discounted amount of the invoices.
Interest or Carrying Charges
"Incurred" means that "allowable costs have been paid." (Rule 17- 773.200(9), Florida Administrative Code) Under DEP's rules, the facial meaning of the term is that persons must receive due return for their invoiced goods and services, billed on a units and reasonable rates basis, for allowable costs of site rehabilitation.
A finance charge usually does not effect DEP's determination of charges that were "incurred" unless that charge appears as a line-item cost which is not the case here.
However, these consolidated cases presented DEP with a new scenario in which Gator and Tower immediately repaid the face amount of their invoices to AEE retaining only the discount amount of their invoices to pay the actual costs of the level below them before submitting the applications. Moreover, they included the carrying charges in the applications as having been "incurred."
Case Number 95-403RU, Pick Kwick No. 143, DEP Facility No. 528515448 is a typical example showing how the entities in the chain paid interest charges and included them in the application. In that case, Gator provided Tower with a subcontract/purchase order on July 8, 1994. Tower provided Gator with an invoice in the amount of $17,556.43 on July 8, 1994. Tower's invoice represented services performed in connection with the initial remedial action task at the Pick Kwick No. 143 facility including $269.90 for application preparation.
On or about July 8, 1994, Gator provided ET with an invoice in the amount of $20,149.41. This invoice included Gator's 15 percent markup in the amount of $2,592.98 and $269.90 for application preparation.
On August 4, 1994, AEE purchased Gator's right to receive payment from ET. AEE advanced Gator $17,696.44 or 88 percent of Gator's invoice. The interest charge on the advance was $2,452.97.
On August 4, 1994, AEE purchased Tower's right to receive payment from Gator. AEE advanced Tower $17,029.74 or 97 percent of Tower's invoice. The interest charge on the advance was $526.69.
On August 10, 1994, AEE purchased ET's right to receive payment from IPTF. AEE advanced ET $20,831.41 or 87 percent of ET's invoice. The interest charge on the advance was $2,981.93.
On August 15, 1994, ET filed the reimbursement application in the amount of $23,813.34. This amount included ET's 15 percent markup on the face amount of Gator's invoice.
Prior to filing the application, ET paid Gator, $20,149.41. Gator then paid Tower $17,556.43. Following receipt of payment from ET, Gator repaid AEE $20,149.41. Following receipt of payment from Gator, Tower repaid AEE
$17,556.43. Gator and Tower made these repayments within a matter of weeks of the time that AEE advanced funds to them.
Calculating simple interest, the annualized interest rate on the loan from AEE to Gator was approximately 144 percent. The annualized interest rate on the loan from AEE to Tower was approximately 36 percent.
These were the interest rates, as predetermined by the discount percentage in the addenda to the factoring contracts (Gator at 88 percent and Tower at 97 percent), in approximately 30 of the 45 applications. In the other
15 applications, the Gator sold its right to receive payment at a discount percentage between 87 to 89 percent of the face amount of the invoice. In those cases, Tower sold its right to receive payment at a discount percentage between
95 and 72 percent of the face amount of the invoice.
There is no evidence that Petitioners made adjustments to the costs in the applications where Gator and Tower sold their right to payments for a discount percentage at an amount other than as stated in the addenda to the factoring contracts.
Analysis of the transactions involved in each of the subject applications clearly shows that the financing scheme utilized here was not equivalent to a "plain vanilla" loan from a disinterested third-party capital provider such as a bank.
DEP properly deducted costs from Petitioners' applications that represented interest which Gator and Tower agreed to repay to Petitioners' affiliate, AEE, before Petitioners submitted the applications. The only costs that Gator and Tower actually incurred was the net amount that they received after factoring their invoices. That amount includes the difference between the face amount Gator's and Tower's invoices and the amount that AEE advanced to them. Gator and Tower did not actually incur allowable costs in the amount of the interest paid to AEE when they : (a) agreed to accept reimbursement for their services at a discount; (b) accepted the full amount of their invoices from the next highest level; and (c) passed the full amount of their respective invoices back to AEE.
DEP did not envision this type of elaborate factoring plan when it created its simple definition of "incurred" as meaning allowable costs have been paid.
It is important for participants in the program to know the "rules of the game." Applicants have to make technical and financial decisions regarding site cleanup. They have to pay all contractors and subcontractors prior to submitting an application.
In this case Petitioners' attempts to win DEP's pre-approval of their various factoring proposals were unsuccessful because DEP did not have enough information about the transactions and the relationships of the entities involved. After DEP received additional information from Petitioners, it became abundantly clear that the rules were insufficient to cover the financing scheme presented here. As early as November 4, 1993, Petitioners acknowledged that "the provisions of Rule 170773, F.A.C. do not specifically address the types of situations that arise when providing capital for cleanup activities through funding groups such as AFG."
Petitioners revealed their final plan in July of 1994 just before they began filing the applications. At that time, Petitioners knew DEP's concerns. They also knew DEP could not make a decision on an application until they filed the application with DEP.
Inconsistent Application of Statutes, Rules and Written Guidelines
DEP has authorized financial transactions by which other applicants, after incurring (paying) all costs and filing their applications, sold or pledged their right to future payment to an entity outside the usual reimbursement chain. In those cases, DEP did not deduct interest associated with such transactions. DEP's approval of such transactions came before Petitioners filed their applications in this matter.
There is no evidence that those transactions involved the factoring of invoices and an agreement to repay interest before the PRFCSR submitted the applications. Likewise, there is no evidence of an affiliation and less than arms-length negotiation between the funder and the financing company in those cases. The record contains no evidence of an inconsistent application of DEP's statutes, rules or written policies before or after Petitioners filed the instant applications.
Reservoir Capital
On March 14, 1994, DEP met with Reservoir Capital Corporation (Reservoir) to discuss a change of address notice directing reimbursement orders and checks for Clean America Financial, Inc. (Clean America) applications to a Baltimore, Maryland address. During that meeting Reservoir's counsel informed DEP that Reservoir "paid a percentage, not the full cost, for each application." DEP representative, Paul DiGuisseppe, informed Charles Williams of that conversation by memorandum dated March 15, 1994.
Mr. DiGuisseppe later spoke with a representative of Clean America (the funder) and advised him to provide a list of facilities pledged to Reservoir for which notices and payments were to be sent to the Baltimore, Maryland address.
On March 30, 1994, Clean America wrote to Charles Williams and Doug Jones, providing a list of sites pledged to Reservoir and directing DEP to send payments to the Baltimore, Maryland address. Among the sites pledged to Reservoir were Curry Station, DEP Facility No. 309103537 and Scardo Automotive, DEP Facility No. 428511319.
On June 17, 1994, DEP issued a reimbursement order to Scardo Automotive at the Baltimore, Maryland address. On July 1, 1994, DEP issued a reimbursement order to Curry Station at the Baltimore, Maryland address. These orders did not contain a denial of costs or deductions of interest based upon the disclosed fact that Reservoir had purchased the applications for an amount less than their face value. However, there is no evidence that either of the applicants sold the right to receive reimbursement before submitting the application. Additionally, there is no evidence that Reservoir was affiliated with Clean America.
On April 11, 1996, DEP revisited the Reservoir Capital factoring mechanism. In that instance, DEP reviewed a situation in which Reservoir Capital directly paid a subcontractor's invoice in an application that All American Funding (All American) filed. Reservoir had purchased the receivable of All American, and applied part of the purchase price to directly pay a subcontractor. There is no evidence of any "affiliation" between Reservoir and any other entity in the reimbursement chain.
Prior to the meeting with Reservoir, DEP intended to deny those costs since it appeared that Reservoir actually paid them rather than the applicant, All American. As a result of that meeting, DEP requested additional information from Reservoir. At the time of hearing in these cases, DEP had not made a decision in that case pending receipt of the requested information.
Governor's Bank
On March 9, 1994, Governors Bank wrote to Charles Williams requesting that DEP directly remit to Governors Bank any reimbursement due on an application filed by Clean America due to the fact that Clean America "secured its borrowings from the bank with any rights to payment which CAFC has in connection with certain reimbursement applications." On March 30, 1994, Clean America sent a letter to Charles Williams and Doug Jones requesting that the DEP honor the March 9, 1994 letter directing payment to Governor's Bank.
On November 4, 1994, Clean America advised DEP that DEP was to remit additional final reimbursements to Governors Bank. The letter advised DEP that "based upon a loan relationship Governor's Bank established with Clean America .
. ." reimbursement payments had been assigned to Governors Bank and therefore "all payments and proceeds must be remitted to Governor's Bank."
There is no record evidence that Clean America entered into a loan agreement with Governors Bank prior to submittal of the application or that the applications included claims for interest paid to the bank. There is no evidence of any affiliation between Clean America and the bank.
The financing mechanism that Petitioners used for these 45 applications is not similar to a "plain vanilla" bank loan where a lender advances funds after an applicant files an application and directs DEP to forward reimbursement payments to a bank lock box.
Barriston Environmental Investors L.P.
On March 11, 1993, Barriston Environmental Investors, L.P. (Barriston) wrote to John Ruddell, Director of the DEP's Division of Waste Management and described a mechanism of financing by which Barriston (the funder) would obtain funds, at least partially through bank debt, for the payment of subcontractors' site rehabilitation invoices.
In the Barriston proposal, the subcontractor would remit an "investment banking fee" of 5 percent of the value of the invoices back to the funder upon payment of 100 percent of the invoices. Barriston's letter acknowledged that this fee would not be reimbursable under the program. In addition, the Barriston funder would receive a commitment fee from the site owner which the Barriston funder would not include in the reimbursement claim. A reference in the letter to the payment of interest on funds advanced on the site owner's behalf does not specify the time frame in which interest would be paid, i.e. before or after the filing of an application.
The letter sought DEP's approval and assurance that the payment of
100 percent of the invoices would entitle Barriston to full reimbursement including both markups. Barriston's letter requested an informal response because it realized that DEP had no authority to take official agency action without the submission of an application.
On April 9, 1993, DEP responded to the Barriston letter. In its response, DEP stated that the arrangements appeared to be consistent with current statutes and rules and would be eligible for the full reimbursement allowed by DEP's rules. However, there is no record evidence of any official agency action on an application submitted in accordance with Barriston's proposal.
Interest Indemnification
Interest indemnification encompasses a situation in which a contractor pays interest directly back to a funder during the period of time after submittal of an application but before reimbursement by the IPTF. In June 1995, a DEP employee contacted Petitioners' certified public accountant (CPA) inquiring about the practice and seeking copies of his other clients' interest indemnification contracts.
After that conversation, the CPA discussed the matter with another DEP employee to confirm his understanding that financing issues were outside of the scope of DEP's review so long as an applicant did not include such charges in the application.
Since the June 1995 discussions, DEP has reimbursed applications which were financed through interest indemnification without adjustments for the payment of interest. However, the interest indemnification payments applied to applications after the applicants filed them with DEP to replace long-term interest that IPTF is no longer paying. The applicants were not seeking reimbursement of those payments as incurred costs.
Petitioners have not established their entitlement to reimbursement for the factored amounts of their invoices. DEP presented competent evidence to support its "factoring" and "affiliation" policies as applied here. In addition, the evidence indicates that DEP has not inconsistently applied such policies to other similarly situated reimbursement applicants. Petitioners have failed to prove that DEP's denial of costs based upon factoring is not reasonably related to the purpose of reimbursement review and otherwise unsupported by competent evidence.
The April 21, 1995 policy statement is a rule as defined in Section 120.52(16), Florida Statutes. DEP was not aware of the need for such a rule when it made the last substantive amendments to Rule 17-773, Florida Administrative Code, in 1993. Nevertheless, DEP demonstrated that the non-rule policy is a reasonable interpretation of Sections 376.3071(12)(b) and 376.3071(12)(d), Florida Statutes. DEP provided an evidentiary basis to support its factoring policy in these consolidated cases. The difference between the face amount of the invoices and their factored amount did not represent allowable costs which were actual and reasonable.
DEP deducted the amount of the relevant discount percentage (on a prorated basis) from each invoice submitted by Tower and its subcontractors. There is a discrepancy between the amount that DEP deducted from each invoice (itemized) and the total deduction based on a lump sum in 33 of the 45 cases which DEP did not explain during the hearing. Therefore, before DEP enters a Final Order, it should review the supporting documents to determine the correct deduction in each application.
"Value Added" Policy
Funders and contractors are entitled to take a markup of paid contractor and subcontractor invoices for allowable costs at reasonable rates. The invoices must represent actual and reasonable costs which are integral to site remediation.
Contractors are entitled to a first-tier 15 percent markup for supervising and/or coordinating on-site remediation, for investing capital while awaiting reimbursement by paying subcontractors invoices, and for assuming liability for the performance of the subcontractors.
Funders generally are entitled to a second-tier 15 percent markup as an incentive to provide funds to finance the work.
Markups are expressly subject to limitations set forth in Section 17- 773.350(9), (10) and (11), Florida Administrative Code. There are no other specific or implied limitations on markups in the rules or written guidelines.
Requiring each entity that receives a markup in the reimbursement chain to pay contractor, subcontractor, and vendor invoices helps ensure that each level in the reimbursement chain pays the participant at the next lowest level. In these cases, each level in the reimbursement application chain "technically" paid the next lowest level.
DEP policy in effect at the time Petitioners submitted the instant applications for reimbursement was to allow markups of paid invoices at two levels. However, prior to the submission of the instant applications, DEP was not aware of a case where a general contractor claimed a markup for work that was complete before the general contractor became involved in the project.
With regard to all of the pending reimbursement applications, Gator applied a 15 percent markup to all of Tower's invoices including the invoices of Tower's subcontractors.
With regard to a minimum of 30 of the 45 sites, Gator clearly did not supervise, manage or direct site remediation activities performed by Tower or its subcontractors. In fact, Gator did not become involved until after Tower completed these tasks.
In at least 30 of the instant cases, Tower was acting as the general contractor when all of the on-site remediation took place. However, Tower could not apply a 15 percent markup to the invoices for its own services. Gator made it possible for Petitioners to claim the markup on Tower's invoices.
As to the 15 sites at which Gator allegedly had some type of involvement with on-site remediation activities, there is no persuasive evidence regarding the specific activities or the level of Gator's involvement on any particular project.
On September 1, 1994, Restoration Assistance, an entity under contract with DEP to review reimbursement applications, issued a memorandum to its reviewers directing them to complete their review and do a "total denial" on "Gator Environmental packages." The memorandum advised the reviewers that "Bruce" was drafting canned language to use in DEP's denial statement.
On or about April 21, 1995, DEP presented its reviewers with a memorandum setting forth an initial overview of a "value added" policy for markups taken by a "management company" involved in site remediation activities. According to the memorandum, DEP would allow reimbursement of claims for actual project management work and value-added services. The memorandum further provided that DEP would allow markups to a management company which only provided cash-flow services for a majority of the program task period even if the management company performed no other service. However, DEP would deny a markup if the management company provided such services during a "one month time period." DEP intended for the April 21, 1995 memorandum to acquaint DEP reviewers with the emerging DEP policy on markups.
DEP's rules and written guidelines do not address the distinction made in the April 21, 1995 memorandum regarding the timing during which a management company could provide cash flow services and still be entitled to a markup.
On October 20, 1995, Charles Williams issued a DEP policy memorandum for reviewers to use in reviewing reimbursement applications. Through that memorandum, DEP finalized and implemented the "value added" policy. The memorandum states that:
if the 'GC' [general contractor] was involved with the management of the project during the course of the actual work by subcontractors, [DEP] rules do not preclude them from applying a markup. However, if the 'GC' came along after the work was completed by other contractors and their involvement was more of a due diligence exercise to faciltiate (sic) a funding arrangement by a third party, then the 'GC' markup would not be justified, though a markup by the actual funder listed as the PRFCSR could be allowed.
Prior to the establishment of the "value added" policy on October 20, 1995, DEP made no inquiry as to whether a contractor provided value added services in order for the contractor to be entitled to a markup. DEP applied the "value added" policy to all pending applications (including the ones at issue here) resulting in a deduction of Gator's markup in all of the subject cases.
The Department of Banking and Finance reviewed and issued a report (Comptroller's Report) on the Petroleum Contamination Site Cleanup Reimbursement Program on November 29, 1994. This report addressed the issue of markups in the reimbursement program. The Comptroller's Report recognized that DEP found the multiple markup structure to be beneficial in that it "attracts the involvement of companies whose role in cleanup projects is limited to providing funds to finance the work [and] attracts investors who provide funds which might not otherwise be available--thus facilitating cleanup of contaminated sites."
The Comptroller's Report describes a two-tier arrangement involving a "prime contractor engaged to manage the cleanup project" and a "funding entity." The report acknowledges that the prime contractor "might have only limited direct involvement in the cleanup, having engaged subcontractors for most or all of the actual work." The example in the Comptroller's report did not state what
DEP's policy would be if a subcontractor had completed all of the actual work before the contractor became involved. Even without this consideration, the report was critical of DEP's allowance of markups on either level.
The Petroleum Efficiency Task Force (PETF) issued its final report on financing contractors on August 17, 1994. This report discussed DEP's policy of allowing two markups. In this discussion, the PETF recognized that "funders must be able to rely on the skills and knowledge of contractors to minimize reimbursement shortfalls." The PETF recommended for future consideration that "the Department should provide in rulemaking that contractors who take the
first-tier 15 percent markup on subcontracted work must adequately supervise the work." When the PETF issued its report, there was no existing rule that established any level of on site supervision or any other specific criteria for applying one of the two allowable levels of markup, other than paying invoices for integral site rehabilitation work.
DEP's rules and written guidelines did not substantively change with regard to the "value added" policy from the April 22, 1993 revision of Chapter 17-773, Florida Administrative Code, to the October 20, 1995 memorandum which established a non-rule limitation on the ability of an entity to apply a markup to paid invoices.
Because the rules and written guidelines do not reflect the "value added" policy, a participant in the program would not be aware of it even if the participant requested program information.
Gator technically paid 100 percent of the face value of Tower's invoices. Without Gator's involvement, AFG and AEE would not have financed these applications. However, DEP presented persuasive evidence at the hearing to support its position that Gator was not entitled to a markup because Gator's services added no value to site remediation projects.
In the instant cases, Gator performed some type of a minimal due diligence review of Tower's site work. Gator allegedly reviewed Tower's technical and administrative files, cross-referenced technical and administrative files with the applications which Tower prepared, made visits to some job sites, and prepared a deficiency letter to determine the appropriateness of the scope of Tower's work. However, all of these functions were repetitious of the work that was performed by Tower and the certified public accountant attesting to the Certification Affidavit.
Gator limited the deficiency letters to the question of whether the scope of Tower's services were reimbursable. However, there is no evidence that Tower's deficiency letters resulted in adjustments to costs in the applications as filed by Petitioners. The deficiency letters served only to adjust the discount percentage set forth in the addenda to the factoring contracts.
Tower was a qualified engineering consulting firm that employed its own engineers and geologists. Gator's employee that reviewed the technical information in Tower's files was not a Florida professional engineer. He was not qualified as a certified public accountant to determine whether a charge was within DEP's reasonable rates. The Gator employee was a Florida professional geologist but he did not sign and seal the deficiency letter as such. There is no reference in DEP's rules or written policies to a deficiency letter.
AFG required Gator to prepare the deficiency letter within two days of the date on which EF provided Gator with the opportunity to review a
completed task. This two-day turn around time allegedly afforded efficiency of payment. Gator did not begin its review of an reimbursement application until after Gator received an invoice from Tower. The relevant subcontract/purchase order issued by Gator to Tower, the Tower invoice and the Gator invoice were often prepared on the same day.
Gator technically paid Tower's invoices with funds that AEE advanced. Tower used these funds to repay AEE. When Gator received payment from ET or SEI, it passed the funds back to AEE before ET or SEI submitted the applications to DEP or immediately thereafter. Pursuant to the addenda to the factoring contracts, Tower, not Gator, contributed to a reserve trust account which AEE will use to cover any reimbursement shortfalls. Gator indemnified AEE and guaranteed its own work but did not assume a risk of loss on Tower's work. On most if not all of the applications, Gator performed no meaningful management or supervisory functions. The greater weight of the evidence indicates that Gator's primary purpose in these consolidated cases was not to afford AFG a level of comfort as to the appropriate scope of the individual program tasks but to ensure that third-party investors maximized their profits.
The "value added" agency statement has the effect of a rule which DEP did not contemplate when it promulgated its rules and written policies. Nevertheless, DEP's decision concerning the value added policy is within the scope of its delegated legislative authority. DEP has proven that reimbursement for Gator's services was not allowable as actual and reasonable costs of site remediation. Therefore, it is not entitled to a first-tier markup.
Computer Costs
Prior to January 1, 1995, DEP determined the reimbursability of computer costs based upon a "units and rates basis" as provided by Rules 17- 773.100(5), and 17-733.700(2)(d), Florida Administrative Code. DEP evaluated computer costs "as a certain number of hours [at] a reasonable rate." Pursuant to the units and rates rule provisions, there was no rational basis for DEP to deny the computer costs contained in applications filed prior to January 1, 1995.
On January 1, 1995, DEP established a policy by which it would disallow in full any computer costs greater than $750. Under that policy, DEP would reimburse in full an applicant's computer costs with supporting invoices of $749 dollars, but disallow in full computer costs with supporting invoices of
$751. DEP's reimbursement orders involving more than $750 in computer costs after January 1, 1995 routinely stated that "there was insufficient justification to demonstrate that this computer time was integral to the task or necessary." DEP applied the computer policy to all applications filed and pending review at the time it developed the policy, regardless of when an applicant performed the work or generated the records.
DEP applied the January 1, 1995 computer policy to the application in Case No. 95-4606 which ET filed on July 18, 1994. In that case DEP denied
$1,456.25 in computer costs allowing no reimbursement for computer time.
On April 27, 1995, DEP implemented a new policy by which it evaluated computer costs based upon a calculation of allowable personnel hours per task as opposed to a units and rates basis. Under that policy DEP would evaluate the total allowable personnel hours in a task and limit computer costs to 10 percent of those hours up to a maximum of $750. Under the April 27, 1995 policy, DEP
reduced the reimbursement for computer costs to $500 if the reimbursable amount exceeded $750 after DEP made the 10 percent calculation.
DEP implemented the April 27, 1995 policy through the use of a calculation work sheet which it provided to its application reviewers. DEP applied the April 27, 1995 computer policy and work sheet to all applications pending review at the time DEP developed the policy, regardless of when the applicant performed the work or generated the records.
DEP applied the April 27, 1995, policy in all of the subject cases subsequent to Case No. 95-4606, with the following exceptions: Case Nos. 96- 0432RU, 96-1006 and 96-1009, which had no denial of computer costs; and Case No. 96-1352, in which DEP applied the 10 percent limitation, but reimbursed 896.75 dollars of the computer costs.
After implementation of the April 27, 1995 policy, DEP made no effort to adjust the denial of all computer costs in Case No. 95-4606 under the January 1, 1995 policy.
The only other category in which DEP evaluates reimbursement on a percentage of hours basis, rather than a units and rates basis, is total management costs. DEP's written guidelines and Rule 17-773.350(16), Florida Administrative Code, limit management costs to a percentage of total allowable personnel hours.
There are no rules or written guidelines that would limit computer costs based upon criteria other than a units and rates evaluation, or that would support DEP's policies as reflected in the January 1, 1995 and April 27, 1995 policy memoranda.
DEP's rules and written guidelines did not substantively change with regard to this issue from the time Petitioners filed the subject applications, to the time DEP established the January 1, 1995 and the April 27, 1995 computer policies. DEP did not issue any PCRs or other written guidelines to place applicants on fair notice of DEP's new policies with regard to computer costs.
DEP presented no persuasive evidence at the hearing to support its January 1, 1995 and April 27, 1995 policies. The only basis for the policy was DEP's representation that it developed the policies as a "reasonableness issue" in order to reduce the amount of computer costs that were appearing in reimbursement applications.
DEP did not demonstrate that it based the new policies on any calculation of the amount of computer time necessary to perform a remediation task. Once the total computer costs reached $750 dollars, DEP gave no consideration to the scope or complexity of the task. Given the difference in the amounts involved in performing site remediation services (e.g. an application totaling 7,249.75 dollars in Case No. 96-0411RU versus an application totaling 149,080.02 dollars in Case No. 96-0425RU) and the differences in program tasks (see Rule 17-773.500, Florida Administrative Code), a policy establishing a flat numerical limit on computer costs that an applicant may claim in an application is not reasonable.
DEP presented no evidence at the hearing to prove the basis for its retroactive application of the policies to work performed and applications submitted prior to the development of the policies. DEP did not attempt to
explain the basis for its failure to apply the rules and written guidelines in effect at the time the work was performed or the records generated.
Based upon the foregoing, DEP's denial of computer costs in each of these applications is not supported by the statutes, rules and written guidelines in effect at the time the work was performed or the applications were filed. Each application contains information supporting the computer costs.
The application Certification Affidavits and CPA attestations demonstrate that Petitioners incurred the computer costs which DEP should reimburse. The reimbursement for computer costs should be in full except to the extent that DEP allocates to a supporting document a prorated share of the amount of a discount on a factored invoice.
As a final note, of the computer costs denied in 16 of the 45 reimbursement notices, the sum of the allowances and deductions does not equal the overall claim. The differences ranged from a few dollars to over four hundred dollars. DEP provided no evidence to explain the discrepancy in the amount calculated by DEP in its notices.
Miscellaneous Costs
Prior to September 27, 1995, DEP reimbursed miscellaneous line-item costs when the applicant furnished support for them in the application. The miscellaneous costs policy as of May 17, 1995 even dispensed with the requirement of supporting invoices when these costs totaled less than 300 dollars.
DEP's reviewers are employees of a firm that provides DEP with application review services as an independent contractor. On September 27, 1995, after a meeting with DEP staff, the application reviewers implemented a policy to deny costs for "overhead." Under the new policy, certain items were overhead, including but not limited to: gloves, mason jars, sampling disposables, phone calls, excessive faxes, excessive copying, small hand tools, shipping documents, etc. The application reviewers had to exercise their own discretion as to which items were "overhead" until they received a guideline from DEP. The reviewers decided to approve overhead expenses of less than $50 and deny items for more than $50. The policy continued in existence at least through November 9, 1995.
DEP applied the miscellaneous/overhead policy to all of the subject applications, regardless of the date of cleanup work or application submittal.
The application reviewers applied the miscellaneous/overhead "policy" without the knowledge of DEP's Reimbursement Administrator, Charles Williams. When Mr. Williams found out about the policy, he "counselled them that they need to reverse that position." The correct policy would allow reimbursement of "miscellaneous/overhead" costs that the reviewers denied in 33 of the 45 applications. DEP made no effort to correct the denial of these costs based upon its erroneously applied policy.
DEP presented no persuasive evidence at the hearing to support its application of the miscellaneous/overhead policy in applications submitted prior to the development of the policy. DEP did not explain the basis for its failure to apply the rules and written guidelines in effect at the time the subcontractors performed the work or generated the records.
Based upon the foregoing, DEP's denial of miscellaneous/overhead costs in 33 applications in which DEP denied such costs is not supported by the applicable states, rules and written guidelines. Each application contains information supporting the miscellaneous costs. The applications' Certification Affidavits and CPA Attestations demonstrate that Petitioner's incurred the miscellaneous costs. Therefore, DEP should reimburse those miscellaneous costs. The reimbursement should be in full except to the extent that DEP allocates to a supporting document a prorated share of the amount of a discount on a factored invoice.
Airfare
From June 17, 1993, to sometime prior to January 31, 1996, DEP's policy with regard to the reimbursement of airfare was to pay airfare integral to site rehabilitation when such costs were relatively inexpensive.
By no later than January 31, 1996, DEP developed and applied a policy to deny all airfare costs regardless of whether the applicant provided justification.
On March 13, 1996, DEP decided that once again it would reimburse airfare with sufficient justification such as a comparison with car travel.
DEP considers the changes in reimbursability of airfare as "just procedures to follow," and applicable without regard to the timing of work performed. DEP denied airfare charges in Case No. 96-1353 as overhead charges.
DEP's rules and written guidelines did not substantively change with regard to airfare from June 17, 1993, when airfare was reimbursable, to the policy implemented on January 31, 1996, in which airfare was not reimbursable, to March 13, 1996, when airfare was reimbursable once again. DEP issued no PCRs or other written guidelines to place applicants on fair notice of the changes in policy with regard to airfare. DEP has not provided any evidence to support the basis for the fluctuations in its airfare policy.
DEP presented no evidence at the hearing to provide the basis for its application of the airfare policy to work performed and applications submitted prior to the development of the changes in policy. DEP did not explain the basis for its failure to apply the rules and written guidelines in effect at the time the subcontractors performed the work or generated the records.
Based upon the foregoing, DEP's denial of airfare costs in the application for Case No. 96-1353 is not supported by the applicable rules and written guidelines. The application contains information supporting the miscellaneous costs. The application's Certification Affidavit and CPA Attestation demonstrate that Petitioner ET incurred the airfare costs. Therefore, DEP should reimburse airfare costs in full except to the extent that DEP allocates to a supporting invoice the prorated amount of a discount on a factored invoice.
Inconsistent Agency Practice
The application of DEP's factoring policy did not treat Petitioners in a manner different from other funders. Heretofore, DEP was not aware of a case where program participants factored their invoices before filing an application and claimed the face amount of those invoices for reimbursement. The affiliation between Petitioners and AFG and/or AEE was also unique.
DEP issued a memorandum requiring funders to provide "clarification regarding essential cost documentation" on July 26, 1995. The purpose of this memorandum was to remind application reviewers of the need for a funder to submit an invoice documenting and supporting its line-item claim for the second- tier 15 percent markup. DEP did not intend for this memorandum to limit DEP's ability to inquire about relationships and transactions taking place outside the usual chain of reimbursement when an application on its face refers to a factoring scheme involving an "affiliation" between the factoring company and the funder.
DEP does not deduct finance charges when an applicant incurs (pays) all invoices, submits the application, then sells the receivable or agrees to pay long-term interest pending receipt of payment from the IPTF. In the instant cases, Petitioners agreed to accept reimbursement for their services at a discount before they submitted the applications then included the cost of borrowing capital in the application.
DEP does not routinely ask questions of other applicants regarding their financing. Nevertheless, under the facts of these cases, DEP would have been remiss in its duty if it had not made such inquiries.
DEP's actions in the instant cases are not inconsistent with its actions taken in other cases with other similarly situated entities because there is no evidence that other such cases exist.
Bias
On August 31, 1994, Bruce French provided Charles Williams with a memorandum in which Mr. French discussed factoring. In his memorandum, Mr. French concluded that DEP could only reimburse the "discount" amount that the factoring company actually incurred/paid the funders.
On September 1, 1994, Mr. French had a discussion with someone named "Toni" at McGuinnes Laboratories regarding the laboratories' use of AFG services for financing invoices to Tower. On September 2, 1994, Mr. French related in a memorandum to Charles Williams, his understanding that the laboratory had different price lists for different customers, generally depending on volume of analysis performed and individual payment agreements. Mr. French surmised that the laboratory's price for services "is inflated to deal with AFG's discount price to be paid by AFG." Mr. French concluded that, under those circumstances, AFG's financing arrangements may "represent collusion on behalf of all parties to the application to defraud DEP for the benefit of AFG. That is, prices are 'fixed' prior to performing of services."
On September 2, 1994, Mr. Williams responded to Mr. French's memo by indicating that the scenario presented by Mr. French "sounds interesting" and that DEP would "absolutely need to have a Big Meeting to decide what to do once and for all."
On September 12, 1994, Mr. French provided information on factoring to Bill Sittig of DEP's Office of the Inspector General and to Mr. Williams.
Mr. French included a drawing entitled "The Tangled Web They Weave or the Hidden Discount Line Items and other Fluff, August 31, 1994 Interpretation of Bruce French's Discussion." At the hearing, neither Mr. Sittig nor Mr. Williams remembered seeing the drawing. There is no competent evidence as to the identity of the person creating the drawing.
There is no persuasive competent evidence that Mr. French was biased against Petitioners or any other entity utilizing factoring as a mechanism of financing. Moreover, DEP had no direct and demonstrable bias against Petitioners.
Timeliness of Agency Action
Prior to filing the instant applications, representatives of the funders and AFG presented various financing schemes to DEP for pre-approval. In each proposal, the person speaking for AFG also spoke on behalf of the funders.
At all times relevant here, Paul DeCoster was secretary and counsel for AFG. He was also secretary of SEI and a corporate director and shareholder of WIFL.
In September of 1993, Mr. DeCoster wrote a letter to DEP describing a proposed financing scheme in which AFG would purchase the account receivables of contractors engaged in site rehabilitation. AFG's plans were in a formative stage at this time.
Mr. DeCoster wrote DEP a follow-up letter dated October 4, 1993. This letter states that:
the amount of financing required to meet [certain contractor clients'] working capital needs is so large that FEC [a funder] must find large institutional investors to accommodate them. For service of finding such investors, FEC proposes to charge a fee to the contractor client, which would be in addition to the 15 [percent] 'markup' taken by the investor providing
the financing.
The October 4, 1993 letter disclosed that contractor clients would deposit funds in a trust account as security for the performance of their work. The trust would invest its funds "in accounts receivable purchased from AFG, the parent of FEC, and any income earned by the trust on those investments would inure to the benefit of AFG."
The plan that Mr. DeCoster proposed was markedly different from the scheme utilized here. The most noticeable differences are that the subject applications did not involve a finder's fee, FEC as a funder, or the purchase of AFG's accounts receivable by a reserve trust.
In October of 1993, Will Robins met with DEP staff to discuss the manner in which the reimbursement program would apply to a proposed financing scheme. In this proposal, AFG would charge contractors an application/initiation fee and/or a commitment fee. The transactions between the entities in the instant applications did not involve an application/initiation fee and/or a commitment fee. When Mr. Robins made his presentation, DEP did not know the specific relationships between the entities involved or Mr. Robins' position as an officer, director, and or shareholder of these entities.
After that meeting, counsel for AFG sent DEP a letter dated November 4, 1993. The letter acknowledges that the existing rules did not "specifically address the types of situations that arise when providing capital for cleanup activities through funding groups such as AFG." The letter identifies ET as the proposed funder through which AFG would finance cleanups. According to the letter, ET would incur the costs but AFG would hold the right to receive the ultimate reimbursement payment from the IPTF. The letter clearly reveals DEP's concern that the proposed application/initiation fee was a "kickback" which should be deducted from the funder's markup.
In January of 1994, counsel for AFG wrote a letter to DEP describing a financing scheme which differs in some respects from the financing scheme at issue here. This letter states that AFG intended to purchase receivables of the funder and the general contractor at a discount. Under this plan, the general contractor and the funder would claim the two allowable markups. The subcontractors would pay AFG a finder's fee. The letter reveals that AFG, its affiliates, and investors would recover the cash equivalent of both levels of markups plus a fee from subcontractors for funding the high costs of risky projects. The letter states that:
since the Department's reimbursement rules do not specifically address the issue of site cleanups that are funded through private sources of capital . . . it is important that we know if there are any obvious or glaring problems with this plan that would cause reimbursement to be withheld otherwise restricted.
On July 13, 1994, counsel for AFG wrote DEP to explain some modifications in the details to the proposed plan for the purchase and sale of receivables at a discount. This letter informed DEP that AFG would have a financial affiliation with the funder (ET) which would exist outside the chain of reimbursement and which would have no effect on either the markups or the overall reimbursement amount reflected in any application. All contracts within the chain of reimbursement (between ET, SEI, Gator, Tower, and its subcontractors) would be negotiated in arms-length transactions. The letter states:
In this plan the subcontractors will perform their work on the site and will prepare their invoices in a manner consistent with any publicly or privately financed cleanup. Those invoices will be complied and forwarded to the general contractor for its review and the general contractor will add on the markup allowed by rule to the subcontractor's bills. The reimbursement application will then be forwarded to the funder who will ensure that all bills have been paid and who will be identified as the "person responsible for conducting site rehabilitation" on the reimbursement application. The funder will take the second markup allowed by rule, and will submit the reimbursement application to the Department of Environmental Protection for
processing. Reimbursement will ultimately be paid by the Department to the funder in accordance with the reimbursement application. At no step in this process will the Department relinquish any authority to review and approve either the scope and nature of the cleanup or the rates charged by the contractors and subcontractors.
Petitioners filed the first of their applications with DEP on July 18, 1994, five days after the date of the July 13, 1994 letter.
In late November, 1994, after all but 4 of the 45 applications were filed, DEP placed a telephone call to Petitioners' counsel advising him of the position DEP intended to take with regard to his client's financing arrangements. DEP did not provide any written confirmation of that call, or issue any document describing its policy, until April 21, 1995.
In each of the above described letters and/or meetings, AFG's attempt to ascertain DEP's position regarding the various proposed financing mechanisms was unsuccessful. However, AFG was aware that DEP could not take a position that represented official agency action until an applicant actually filed an application. At no time did DEP make any affirmative statement which misled Petitioners regarding the acceptability of AFG's proposals. There is no persuasive evidence to support a finding that the agency did not timely respond to the claims for reimbursement.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and parties to these proceedings pursuant to Section 120.57(1), Florida Statutes.
The record contains competent substantial evidence that ET and SEI have standing as reimbursement applicants in this proceeding.
Petitioners have the burden of going forward with the evidence and the ultimate burden of demonstrating entitlement to reimbursement by a preponderance of the evidence. Young v. Department of Community Affairs, 625 So. 2d at 831, 835 (Fla. 1993). In these consolidated cases, Petitioners have not met their ultimate burden.
Reimbursement Program
The Florida Legislature created the Petroleum Contamination Site Reimbursement Program to provide for the rehabilitation of as many petroleum contamination sites as possible, as soon as possible. Section 376.3071(12)(a), Florida Statutes. The Legislature intended that those responsible persons who possessed adequate financial ability should conduct site rehabilitation and seek reimbursement in lieu of the state conducting the cleanup. Section 376.3071(12)(c), Florida Statutes.
When owners and operators of the site or their designees perform site remediation program tasks under any of the programs created by Chapter 376, Florida Statutes, those entities become entitled to reimbursement from the Inland Protection Trust Fund (IPTF) of their allowable costs at reasonable rates. Section 376.3071(12)(b), Florida Statutes.
Section 376.3071(12)(d), Florida Statutes, requires DEP to:
Reimburse actual and reasonable costs for site rehabilitation; and
Reimburse interest on the amount of reimbursable costs for applications filed after August 14, 1992, at a rate of 1 percent per month or the prime rate, which- ever is less. Interest shall be paid from the 61st day after an application is filed with the department until the application is paid, provided the department determines the application is sufficient; otherwise, interest shall be paid commencing on the date the application is made sufficient until the application is paid. . . .
A site owner or operator may engage the services of firms to perform remediation activities on a site and may designate an entity to receive reimbursement for such work. Section 376.301(14), Florida Statutes.
Chapter 17-773, Florida Administrative Code (as revised in April of 1993), contains DEP's rules which were in effect at the time Petitioners submitted the instant applications. This chapter is currently located in Chapter 62-773, Florida Administrative Code. Chapter 17-773, Florida Administrative Code, establishes procedures and documentation required to receive reimbursement from the IPTF. Rule 17-773.100(4), Florida Administrative Code.
Rule 17-773.100(5), Florida Administrative Code, provides in pertinent part:
Review and approval of reimbursement applications shall be based upon the statutes, rules and written guidelines governing petroleum contamination site cleanup and reimbursement which were in effect at the time the work was performed or the records of activities and expenses were generated, as applicable. . . .
In order to be reimbursable, an applicant must convert charges in an application into applicable units and rates. Rule 17-773.100(5), Florida Administrative Code.
Requests for reimbursement must apply to costs which are "integral" to site rehabilitation. Rule 17-773.100(2), Florida Administrative Code. "Integral" costs are those which are essential to completion of site rehabilitation. Rule 17-773.200(2)(11), Florida Administrative Code.
After integral costs have been identified and incorporated on a units and rates basis in an invoice, the invoice may be marked up at two levels.
These markups are subject to certain limitations established by DEP rule:
There can be no more than two levels of markups or handling fees applied to
contractor, subcontractor or vendor invoices (Rule 17-773.350(9), F.A.C.);
There can be no markups or handling fees in excess of 15 percent for each level of allowable markup applied to contractor, subcontractor or vendor invoices (Rule
17-773.350(10), F.A.C.); and
There can be no markups or handling fees applied to invoices between any two entities which have a financial, familial, or beneficial relationship with each other
(Rule 17-773.350(11), F.A.C.).
In order to be reimbursable, costs must have been actually "incurred." Rule 17-773.700, Florida Administrative Code. "Incurred" means that allowable costs have been paid. Rule 17-773.200(9), Florida Administrative Code.
When the PRFCSR has no financial interest in the site, DEP considers the following costs as incurred when the program task is complete:
Reasonable rates, including profits associated with the work performed, claimed for the use of their own personnel or equip- ment with documentation pursuant to
Rule 17-773.700(7), F.A.C.; and
Allowable markups or handling fees applied to their paid contractor, subcon- tractor, or vendor invoices pursuant to Rule 17-773.350(9), (10), and (11), F.A.C.
Rule 17-773.200(9), Florida Administrative Code.
Other rules reference limitations on the ability of an entity to take a markup. Rule 17-773.600(2)(d), Florida Administrative Code, provides in pertinent part:
. . . If the person responsible for conducting site rehabilitation manufactured the [capital expense item], or a markup is otherwise prohibited under Rule 17-773.350 (9), (10) or (11), Florida Administrative Code, no markup of the equipment shall be allowed.
Rule 17- 773.700(5), Florida Administrative Code, provides in pertinent part:
Costs claimed in a reimbursement application for the employees, equipment or materials of the site owner, site operator or any entity which has a financial interest in the site or a familial or other beneficial relation- ship with the site owner or operator shall be considered to be in house and reimburse-
ment shall be limited to actual costs only. No fee, markup, commission, percentage or other consideration shall be allowed. . . .
Rule 17-773.700(7), Florida Administrative Code, provides in pertinent part as follows:
Pursuant to Rule 17-773.200(9), Florida Administrative Code, reasonable rates, including profits, may be claimed for the personnel and equipment or other allowable expenses of the person responsible for conducting site rehabilitation as well as allowable markups on paid contractor subcon- tractor and vendor invoices and shall be considered incurred for the purpose of reimbursement provided:
The person responsible for conducting site rehabilitation does not have a financial interest in the site pursuant to Rule 17-773.200(7), Florida Administrative Code, or a familial or other beneficial relationship with the site owner or operator;
The activities performed were integral to the program task claimed pursuant to Rule 17-773.500, Florida Administrative Code; and
Detailed invoices are provided by the person responsible for conducting site rehabilitation that include all subcon- tractor and vendor invoices [which]
must identify the person responsible for conducting site rehabilitation and clearly distinguish their costs from those for paid subcontractors or vendors.
There are no other provisions in the applicable rules which pertain to markups.
Rule 17-773.200(1), Florida Administrative Code, provides as follows: 'Beneficial relationship (interest)' means
a connection or association, excluding an arm's length contractual relationship, which benefits a person or company by yielding a profit, advantage or benefit, or entitlement thereto, exceeding five percent of the person's or company's annual gross income.
Rule 17-773.200(6), Florida Administrative Code, provides in pertinent part:
'Familial relationship (interest)' means a connection or association by family or relatives, in which a family member or a relative has a material interest. . . .
Rule 17-773.200(7), Florida Administrative Code, provides as follows:
'Financial relationship (interest)' means a connection or association through a material interest or sources of income which exceed five percent of annual gross income from a business entity. Banks, lending institutions, and other lenders that provide loans for site rehabilitation activities are not considered to have a financial interest in the site on that basis alone. However, as of the effective date of this rule, guarantors of loans to or co-makers of loans with persons signing as responsible party are considered
to have a financial interest if the amount of the loan exceeds five percent of the net worth of either company. As used in this definition, sources of income shall not include any income derived through arm's- length contractual transactions.
Rule 17-773.200(13), Florida Administrative Code, states as follows: 'Material interest' means a direct or
indirect interest or ownership of more than
five percent of the total assets or capital stock of any business entity.
Pursuant to Section 376.3071(l2)(m), Florida Statutes, DEP must perform financial audits "as necessary to ensure compliance with this rule and to certify site rehabilitation costs." Rule 17-773.300(1), Florida Administrative Code.
Pursuant to Rule 17-773.350(4)(e), Florida Administrative Code, "[i]nterest or carrying charges of any kind with the exception of those outlined in Rule 17-773.650(1), F.A.C." are not reimbursable. The exceptions to the payment of interest set forth in Rule 17-773.650(1), Florida Administrative Code, are not at issue here.
241 The direct and indirect overhead components of DEP's fully loaded personnel rates include the cost of short-term borrowed capital (working capital). Rule 17-773.700(5)(a), Florida Administrative Code.
Factoring and Added Value Policy
Petitioners have proved that DEP's statements on April 21, 1995 and October 20, 1995 created rules as defined in Section 120.52(16), Florida Statutes. These memoranda implement and prescribe policies of general applicability that impose restrictions not specifically required by an existing rule. They prohibit factoring as a means of financing reimbursement applications and require a contractor to provide added value services in order to take a markup on paid invoices.
DEP relied on these non-rule policies to determine the amount of reimbursement that Petitioners were entitled to in the instant cases thereby affecting their substantial rights.
Section 120.57(1)(b)15, Florida Statutes, provides as follows:
Each agency statement defined as a rule under s. 120.52 and not adopted by the rulemaking procedure provided by s. 120.54 which is relied upon by an agency to determine the substantial interests of a party shall be subject to de novo review by a hearing officer. A statement shall not enlarge, modify, or contravene the specific provision of law implemented or otherwise exceed delegated legislative authority.
The statement applied as a result of a proceeding pursuant to this subsection shall be demonstrated to be within the scope of delegated legislative authority.
Recommended and final orders pursuant to this subsection shall provide an explanation of the statement that includes the evidentiary basis which supports the state- ment applied and a general discussion of
the justification for the statement applied.
Before filing the applications, Petitioners advised DEP that they were affiliated with the factoring company. Petitioners were aware that DEP's rules did not specifically apply to situations where a factoring company funds petroleum contamination site cleanup projects. Petitioners were also aware that DEP had no authority to take an official position on Petitioners' numerous proposed financing schemes until it received an application. Petitioners' proposals repeatedly changed until approximately five days before they filed the first application.
When DEP received the applications, they contained a reference to the factoring scheme and the factoring company's affiliation with Petitioners. DEP then requested additional information which Petitioners furnished on AFG's and EF's letterhead.
At the hearing, it became apparent that WIFL owns ET. WIFL is the sole trustee and a beneficiary of ET. ET's profit flows directly back to the factoring company through WIFL. WIFL and SEI share officers and directors with the factoring company. Neither ET nor SEI have any employees.
The factoring company's officers and directors created ET and SEI for the benefit of the factoring company as a conduit for the factoring company to invest funds in the petroleum contamination cleanup program. They have other investment vehicles which they use for the same purpose waiting until the last moment to decide which funder they will use to issue a funder's authorization to the general contractor. The only documented evidence of an agreement between the factoring company and Petitioners is a bill of sale issued with each transaction.
The agreements between Petitioners and the factoring company were not negotiated at arms-length. For all practicable purposes, Petitioners and the factoring company are one and the same. Therefore, the factoring company's agreements with Gator and Tower result in a back flow of funds to an entity affiliated with the funders.
Gator and Tower agreed to sell their right to receive reimbursement payments at a discount to the factoring company before Petitioners filed the subject applications. They also agreed to immediately reimburse the factoring company upon receipt of those payments in the face amount of their respective invoices. Therefore, the difference between the face amount of an invoice and the discount amount of that invoice represents interest on borrowed capital.
There is no persuasive competent evidence to indicate that DEP applied its statutes, rules or written policies inconsistently with its treatment of other applicants. Likewise, Petitioners presented no persuasive evidence that DEP was biased against Petitioners.
When Gator became involved in the instant cases, Tower had already completed or substantially completed all of the site work. To the extent that Gator performed any site work, Petitioners failed to present evidence as to the level of Gator's involvement on any particular case.
Gator's due diligence review is not persuasive evidence of any meaningful supervisory work because the purchase order, Gator's invoice and Tower's invoice were often issued on the same day. Gator's services were duplicative of work performed by Tower and the certified public accountant.
Gator had two days in which to perform its review of each application. This review did not commence until Gator received Tower's invoice and a complete application. Under the addenda to the factoring contracts, the factoring company did not require Gator to contribute to a reserve trust as security for shortfalls in reimbursement payments.
Gator's review did not result in adjustments to applications before Petitioners filed them. Gator's primary purpose was to increase the profits of the factoring company by allowing Petitioners to include a first-tier markup on Tower's invoices.
The applicable rules and written policies do not prohibit the factoring of invoices before an applicant files an application. They do not require an applicant to disclose its relationship with its source of financing. The rules and written policies do not impose a requirement that a contractor be involved in a project for a certain period of time before the contractor may claim a markup. However, DEP did not consider the facts presented here when it promulgated its rules and written policies, i.e. an elaborate factoring scheme involving an affiliation between the factoring company and the funder and a claim for a markup by a general contractor that became involved after completion of the program task.
Faced with the facts presented in these consolidated cases, DEP had to evaluate the applications in light of its implementing statutes. In doing so, DEP was entitled to develop specific policies designed to evaluate the applications consistent with its interpretation of those statutes. Consequently, DEP developed the policies set forth in the memoranda dated April 21, 1995 and October 20, 1995.
In developing these policies, DEP implemented the dictates of Sections 376.3071(12)(b), Florida Statutes, which authorizes reimbursement of allowable costs at reasonable rates. It also implemented Section 376.3071(12)(d), Florida Statutes, which: (1) authorizes reimbursement of actual and reasonable cost for site rehabilitation; and (2) distinguishes reimbursement for actual and reasonable costs for site remediation from reimbursable cost
after an applicant submits an application to DEP. These statutes obligate DEP to examine all relevant financial transactions in determining whether an applicant has actually incurred costs which are reasonable.
The policies that DEP developed are a reasonable interpretation of the directives contained in Section 376.3071, Florida Statutes. The application of the policies in these cases is factually supported and legally correct. Petitioners' contention that DEP does not have authority to consider financial transactions which occur outside the usual chain of reimbursement is without merit. Likewise, Petitioners' claim that a contractor is entitled to a markup where it provides no value added services is unreasonable.
DEP's policies on factoring and value added services do not enlarge, modify, or exceed DEP's legislative mandate to deny reimbursement of costs which are not actual and reasonable. Section 376.3071(12)(d), Florida Statutes. Petitioners are only entitled to reimbursement of costs which are allowable at reasonable rates. Section 376.3071(12)(b), Florida Statutes.
DEP properly deducted from each factored invoice an amount equal to the amount of the discount on that invoice representing interest on borrowed capital. DEP's predominate rate schedule does not create an entitlement to reimbursement payments which otherwise are not allowable as actual and reasonable costs of site remediation.
DEP properly deducted Gator's markup because its services were not integral to site remediation. Gator did not actually perform any services which justified a markup. The preparation of an unnecessary deficiency letter and the simple payment of Tower's invoices did not create an actual and reasonable cost of site remediation.
Computer Costs, Airfare, and Other Miscellaneous Costs
DEP presented no persuasive competent evidence to support its denial of computer costs, airfare or other miscellaneous costs.
DEP did not base its changing policy relating to computer costs on a determination of the scope or the complexity of any particular tasks.
Therefore, DEP's claim that it was justified in denying these costs or a portion thereof in all but three of the subject applications based on a "reasonableness issue" is without merit.
DEP conceded at hearing that the application reviewers erroneously applied a policy relative to miscellaneous costs. After informing the reviewers of their error, DEP made no effort to correct the denial of miscellaneous costs in 33 of these 45 cases. DEP presented no persuasive evidence to explain its refusal to make these corrections.
From June of 1993 to March of 1996, DEP changed its policy relative to airfare at least two times. DEP provided no persuasive evidence to justify the fluctuations in its airfare policy. Therefore, DEP improperly denied airfare charges in Case No. 96-1353.
Based upon the foregoing, it is recommended that DEP enter a Final Order in each of these consolidated cases: (a) disallowing reimbursement of the first- tier markup; (b) disallowing reimbursement of any factored invoice in an amount
equal to the amount of the discount on that invoice; and (c) allowing reimbursement of costs associated with airfare, computers, and miscellaneous/overhead expenses.
DONE AND ENTERED this 8th day of October, 1996, in Tallahassee, Florida.
SUZANNE F. HOOD
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675 SUNCOM 278-9675
Fax Filing (904) 921-6847
Filed with the Clerk of the Division of Administrative Hearings this 8th day of October, 1996.
COPIES FURNISHED:
E. Gary Early, Esquire Christopher R. Haughee, Esquire
Akerman, Senterfitt and Eidson, P.A.
216 South Monroe Street, Suite 200 Tallahassee, Florida 32302-2555
W. Douglas Beason, Esquire Betsy F. Hewitt, Esquire Department of Environmental
Protection
2600 Blair Stone Road Tallahassee, Florida 32399-2400
Virginia B. Wetherell, Secretary Department of Environmental
Protection Douglas Building
3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
Perry Odom, Esquire Department of Environmental
Protection
3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within 15 day from the date of this recommended order. An exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
| Issue Date | Proceedings |
|---|---|
| Jan. 09, 1997 | Final Order filed. |
| Oct. 08, 1996 | Recommended Order sent out. CASE CLOSED. Hearing held 04/22 & 25/96. |
| Oct. 03, 1996 | Department of Environmental Protection's Request for Official Recognition filed. |
| Oct. 01, 1996 | (Petitioner) Notice of Related Cases filed. (for 95-4606 & 96-4663RP) |
| Sep. 19, 1996 | Department of Environmental Protection`s Request for Official Recognition; Notice of Supplemental Authority filed. |
| Sep. 13, 1996 | (Petitioners) Notice of Supplemental Authority filed. |
| Sep. 12, 1996 | Department of Environmental Protection`s Motion to Strike Petitioners` Motion to Strike and Reply filed. |
| Sep. 10, 1996 | (Petitioners) Notice of Failure to Publish Notice of Proposed Rulemaking filed. |
| Sep. 03, 1996 | Petitioner`s Motion to Strike and Reply to Department of Environmental Protection`s Response in Opposition to Petitioners` Motion for Official Recognition filed. |
| Aug. 28, 1996 | Department of Environmental Protection`s Response in Opposition to Petitioners` Motion for Official Recognition filed. |
| Aug. 16, 1996 | (Petitioners) Motion for Official Recognition filed. |
| Jul. 05, 1996 | Petitioners` Response to DEP`s Motion to Strike filed. |
| Jul. 03, 1996 | (Petitioners) Notice of Supplemental Authority filed. |
| Jul. 01, 1996 | Department of Environmental Protection`s Motion to Strike; Department of Environmental Protection`s Response to Petitioners` Motion to Strike filed. |
| Jun. 17, 1996 | (Petitioners) Motion to Strike filed. |
| Jun. 11, 1996 | (DEP) Disk (PRO, Hearing Officer has disk) filed. |
| Jun. 10, 1996 | (Petitioners) Memorandum of Law filed. |
| Jun. 10, 1996 | (Respondents) Request for Official Recognition; Department of Environmental Protection`s Proposed Conclusions of Law filed. |
| Jun. 10, 1996 | (DEP) Statement of The Issues filed. |
| Jun. 10, 1996 | Proposed Recommended Order (Petitioners) filed. |
| Jun. 10, 1996 | Proposed Final Order (Petitioners) filed. |
| Jun. 10, 1996 | Department of Environmental Protection`s Proposed Recommended Order Finding of Fact filed. |
| Jun. 07, 1996 | Letter to Hearing Officer from E. Early Re: Reimbursement application for Johnny`s Southgate Care Wash w/application attached (for case no. 96-1008) filed. |
| Jun. 06, 1996 | Department of Environmental Protection`s Notice of Filing; DEP`s Composite Exhibit Number Ten filed. |
| Jun. 05, 1996 | (Petitioner) Notice of Filing; Exhibits (1 Box, tagged) filed. |
| May 30, 1996 | (3-5 of 5 Volumes) Notice of Filing; DOAH Court Reporter Final Hearing Transcript filed. |
| May 29, 1996 | Notice of Filing; (Volumes 1-2 of 5) DOAH Court Reporter Final Hearing Transcript filed. |
| Apr. 22, 1996 | Department of Environmental Protection's Unilateral Prehearing Statement filed. |
| Apr. 22, 1996 | (Petitioners) Prehearing Stipulation; Cover Letter filed. |
| Apr. 22, 1996 | CASE STATUS: Hearing Held. |
| Apr. 19, 1996 | Order sent out. (Motion to abate proceedings denied; Motion to Compel denied; ruling on Motion for summary final Order is reserved) |
| Apr. 19, 1996 | Department of Environmental Protection`s Notice of Taking Deposition Via Telephone; Subpoena Duces Tecum filed. |
| Apr. 18, 1996 | (Petitioner) Notice of Voluntary Dismissal; Letter to W. Beason from E. Early Re: Production of Documents from Non-Parties filed. |
| Apr. 16, 1996 | Department of Environmental Protection`s Request for Production of Documents to a Non-Parties American Environmental Enterprises, Inc. and American Factors Group, Inc. filed. |
| Apr. 15, 1996 | (Respondent) Department of Environmental Protection`s Notice of Hearing; Department of Environmental Protection`s Motion to Compel Production of Documents; Department of Environmental Protection`s Notice of Filing filed. |
| Apr. 15, 1996 | Department of Environmental Protection`s Motion to Compel Production of Documents filed. |
| Apr. 15, 1996 | Department of Environmental Protection`s Notice of Hearing filed. |
| Apr. 15, 1996 | Department of Environmental Protection`s Amended Notice of Taking Deposition Duces Tecum filed. |
| Apr. 15, 1996 | Department of Environmental Protection`s Amended Notice of Taking Deposition of Sarasota Environmental Investors Inc. s` Designated Representative; Department of Environmental Protection`s Amended Notice of Taking Deposition of the Environmental Trusts` |
| Apr. 12, 1996 | (DEP) Notice of Hearing filed. |
| Apr. 12, 1996 | Subpoena Duces Tecum (6) filed. |
| Apr. 12, 1996 | Department of Environmental Protection`s Notice of Taking Telephone Depositions filed. |
| Apr. 11, 1996 | Amendment to Petitions for Administrative Hearing; Motion for Leave to File Amended Petitions for Administrative Hearing filed. |
| Apr. 10, 1996 | Department of Environmental Protection`s Motion for Summary Final Order Dismissing Count II of Petitioner`s Petition for Administrative Hearing and Motion to Abate Proceedings filed. |
| Apr. 10, 1996 | Department of Environmental Protection's Request for Oral Argument filed. |
| Apr. 09, 1996 | Department of Environmental Protection`s Notice of Service of Amended Answer to Interrogatories filed. |
| Apr. 09, 1996 | Department of Environmental Protection's Amended Answers to the Environmental Trust's First Request for Admissions; Department of Environmental Protection's Second Amended Answers to the Environmental Trust's First Request for Admissions filed. |
| Apr. 08, 1996 | (From C. Haughee) Amended Notice of Hearing filed. |
| Apr. 08, 1996 | (4) Subpoena Duces Tecum (From E. Early) filed. |
| Apr. 08, 1996 | (Petitioners) Amendment to Petitions for Administrative Hearing filed. |
| Apr. 05, 1996 | (Petitioners) Notice of Taking Depositions Duces Tecum; Notice of Hearing; Letter to D. Beason from G. Early (re: Discovery) filed. |
| Apr. 01, 1996 | Letter to Hood from G. Early (re: amending of Petition for 96-0434RU)filed. |
| Mar. 26, 1996 | (Petitioners) Amended Notice of Taking Depositions Duces Tecum filed. |
| Mar. 26, 1996 | CC: Letter to D. Beason from G. Early (re: request for Production of documents) filed. |
| Mar. 15, 1996 | Order of Consolidation sent out. (Consolidated cases are: 95-4606, 96-0401RU through 96-0419RU, 96-0434RU through 96-0437RU, 96-1004 through 96-1009, 96-1352 & 96-1353) |
| Mar. 14, 1996 | Department of Environmental Protection`s Notice of Related Cases and Motion to Consolidate (with DOAH Case No/s. 95-4606 et al. & 96-1352 &96-1353) filed. |
| Mar. 14, 1996 | Notice of Cancellation of Hearing filed. (from G. Early) |
| Mar. 13, 1996 | CC: Letter to D. Beason from G. Early (Re: Friday Motion Hearing) filed. CC: Letter to D. Beason from G. Early (Re: depositions) filed. |
| Mar. 13, 1996 | Amended Notice of Hearing; Petitioners` Amended Motion to Compel Discovery and for Sanctions (w/att`s) filed. |
| Mar. 12, 1996 | Notice of Service of Department of Environmental Protection`s First Set of Interrogatories to Petitioners Environmental Trust filed. |
| Mar. 12, 1996 | Department of Environmental Protection`s First Request for Production of Documents to Sarasota Environmental Investors, Inc.; Notice of Service of Department of Environmental Protection`s First Set of Interrogatories to Petitioners Sarasota Environment |
| Mar. 08, 1996 | Order Granting Consolidation and Amending Style sent out. (Consolidated cases are: 95-4606, 96-0401RU through 96-0419RU, 96-0434RU through 96-0437RU, 96-1004 through 96-1009) |
| Mar. 08, 1996 | Department of Environmental Protection`s Notice of Service; Department of Environmental Protection`s Response to the Environmental Trust`s First Request for Production of Documents; Department of Environmental Protection`s First Request for Production |
| Mar. 08, 1996 | Order Granting Extension of Time sent out. |
| Mar. 06, 1996 | Notice of Hearing (Motion hearing set for 3/15/96); Petitioner Motion to Compel Discovery and for Sanctions filed. |
| Feb. 29, 1996 | Department of Environmental Protection`s Motion for Extension of Time filed. |
| Feb. 28, 1996 | Department of Environmental Protection's Objection & Answers to the Environmental Trust's First Request for Admissions filed. |
| Feb. 28, 1996 | Department of Environmental Protection`s Notice of Related Cases and Motion to Consolidate (95-4606, 96-401RU through 96-437RU, 96-1004 through 96-1009) filed. |
| Feb. 12, 1996 | Order Granting Continuance and Rescheduling Hearing sent out. (hearing rescheduled for April 22-26, 1996; 10:00am; Tallahassee) |
| Feb. 08, 1996 | Joint Motion to Establish Later Hearing Date filed. |
| Feb. 07, 1996 | (E. Gary Early) Notice of Appearance filed. |
| Feb. 06, 1996 | The Environmental Trust`s Amended First Notice of Propounding Interrogatories to State of Florida, Department of Environmental Protection w/cover letter filed. |
| Feb. 05, 1996 | Order of Prehearing Instructions sent out. |
| Feb. 05, 1996 | Order of Consolidation Notice of Hearing sent out. (Hearing set for 2/21/96; 10:00am; Tallahassee; Consolidated cases are: 95-4606 and 96-401RU through 96-0437RU) |
| Jan. 29, 1996 | The Environmental Trust`s First Notice of Propounding Interrogatories to State of Florida, Department of Environmental Protection filed. |
| Jan. 12, 1996 | Order Granting Continuance and Requiring Report sent out. (Motion for Abeyance granted; parties to file status report within 30 days.) |
| Jan. 11, 1996 | Letter to Hearing Officer from E. Gary Early Re: Case Status and continue to hold case in abeyance filed. |
| Dec. 04, 1995 | Order Granting Continuance and Requiring Report sent out. (hearing date to be rescheduled at a later date; parties to file status report no later than 30 days from the date of this Order) |
| Nov. 28, 1995 | Letter to Hearing Officer from E. Gary Early Re: Continue to hold case in abeyance filed. |
| Oct. 10, 1995 | Order Granting Abeyance and Requiring Report sent out. (Parties to file status report in 45 days) |
| Oct. 06, 1995 | Letter to Hearing Officer from E. Gary Early Re: Response to Order dated 9/25/95 and request to hold case in abeyance filed. |
| Sep. 25, 1995 | Initial Order issued. |
| Sep. 19, 1995 | Request for Assignment of Hearing Officer and Notice of Preservation of Record; Agency Action Letter; Petition for Administrative Hearing filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 07, 1997 | Agency Final Order | |
| Oct. 08, 1996 | Recommended Order | No reimbursement for petroleum cleanup where invoices factored and no markup on contractor services that add no value to clean up project. |
