STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MOUNT DORA MARINA COMPANY, INC.,

Petitioner,

vs.

DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES,

Respondent.

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) Case No. 04-2416

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RECOMMENDED ORDER

A formal hearing in this case was held pursuant to notice on August 25, 2004, by Stephen F. Dean, assigned Administrative Law Judge of the Division of Administrative Hearings, in Tallahassee, Florida. Pursuant to order the representative of Petitioner participated by telephone from Mount Dora, Florida.

APPEARANCES

For Petitioner: Joseph Lewis, Secretary/Treasurer

Mount Dora Marina Company, Inc.

148 Charles Avenue

Mount Dora, Florida 32757

For Respondent: David W. Young, Senior Attorney

Office of the General Counsel Department of Agriculture

and Consumer Services

407 South Calhoun Street Mayo Building, Suite 520

Tallahassee, Florida 32399-0800

STATEMENT OF THE ISSUE

Whether the Department properly issued a warning letter for selling gasoline that failed to meet state standards regarding end point temperature contrary to Section 525.037, Florida Statutes.

PRELIMINARY STATEMENT

The Department of Agriculture and Consumer Services issued an Administrative Complaint and Warning Letter to Petitioner on June 18, 2004, alleging that the end point temperature of gasoline sold by Petitioner failed to meet state standards and advising Petitioner of its right to a formal hearing.

Petitioner requested a formal hearing and asserted as defense that it was unable to check the gasoline that it sold to determine its end point temperature, and the law made it absolutely liable for the sale of a commodity, the quality of which was not readily apparent and which Petitioner could not ascertain without testing, by which time it would have violated the law by selling the product.

The Department forwarded the matter to the Division of Administrative Hearing to conduct a formal hearing. After receipt of the case, the matter was duly set for hearing on August 25, 2004, and Petitioner was granted leave to participate by telephone. After Petitioner had made its position clear, the Department moved to relinquish jurisdiction on the basis that

the issue raised by Petitioner did not state a disputed factual issue. After hearing from the parties on the issue, the motion was denied.

At hearing, Petitioner testified and raised as an argument that it was being held strictly liable for a product which it did not make, could not test, and the quality of which was not readily determinable. The Department presented the testimony of its chief of its bureau of petroleum products who testified about the Department's procedures and services that it provides to vendors. After the hearing, a transcript was ordered and filed. Thereafter, Respondent filed a request to extend the time for filing until September 16, 2004, and a renewed motion to relinquish jurisdiction. The renewed motion to relinquish jurisdiction was denied, and the motion to extend the time of filing was granted. On September 16, 2004, Respondent filed its proposed findings in the form of a Proposed Recommended Order.

Petitioner did not file a post hearing pleading or proposed findings. Respondent's Proposed Recommended Order was read and

considered.

FINDINGS OF FACT

1. Respondent is the state agency authorized to regulate the petroleum products (fuel) offered for sale in Florida for illuminating, heating, cooking, or power purposes. It does so by randomly sampling fuels offered for sale by vendors

   throughout the state to determine if the fuel meets standards set by the state pursuant to law.

2. Petitioner operates a marina in central Florida where it offers gasoline for sale to its customers.

3. Respondent's inspectors conducted a random sampling of Petitioner's gasoline. Subsequent testing revealed that the end point temperature of the gasoline was not in conformity with the standards for premium gasoline, the only grade sold by Petitioner. On this basis Respondent issued Petitioner a warning letter. It is undisputed that the gasoline sample failed to meet standards.

4. The end point temperature of gasoline is not apparent from its color, smell, or appearance and can only be determined by testing in a laboratory equipped for that purpose.

5. Petitioner has approximately 1,000 gallons of storage for gasoline and reorders when they have approximately 500 gallons on hand. The wholesaler will not hold Petitioner harmless for product that it sells. In order to assure the quality of the gasoline it sells, Petitioner would have to test each delivery. The cost to test a sample is approximately $100. This would add approximately 20 cents to the cost of each gallon sold on a 500-gallon order, and Petitioner asserts that it now loses 10 to 15 cents per gallon on the fuel it sells as a convenience to boaters at its marina.

6. Respondent does free quality testing of gasoline for vendors as a service based upon the availability of its facilities and time. It takes at least 24 hours to test the fuel. These are unofficial, miscellaneous samples, and the results are reported to the person who provided the sample without follow up.

7. The end point temperature of gasoline is typically altered by the addition of another type of petroleum product to the fuel being sold. This can occur at any point during the chain of delivery from the manufacturer to the ultimate vendor. While the standards of the depots have improved, contamination can and does occur there. Similarly, petroleum transporters have improved their standards, but contamination does occur by inadvertently mixing products when filling tank trucks. Lastly, contamination also occurs at the vendors where there are cases of unscrupulous vendors mixing waste oil with product to get rid of the waste oil. There is no evidence of the cause of the contamination in this case.

8. The Department talked with the wholesaler of the gasoline that provided the gasoline to Petitioner, but that wholesaler was reticent to provide documentation for the fuel and to discuss the matter with representatives of the Department.

9. The operation of engines with fuels that have the wrong end point can result in serious damage to a vehicular or marine engine.

10. If Respondent finds Petitioner selling substandard fuel again, Petitioner will be liable to a fine up to $5,000. After three years, warning letters are expunged if there are no other violations, and Petitioner would receive a warning letter for another violation after three years.

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the subject matter and parties pursuant to Section 120.57, Florida Statutes.

12. Respondent cited Petitioner for the sale of substandard or contaminated motor vehicle fuel pursuant to Section 525.16, Florida Statutes, and Florida Administrative Code Rule 5F-2.001, and issued a warning letter to Petitioner. Having received a warning, Petitioner could be subjected to a fine not to exceed $5,000 if it had additional violations of Chapter 525, Florida Statutes, within three years.

13. Respondent moved to relinquish jurisdiction in this case twice asserting that there were no disputed issues of material fact. While Petitioner did not dispute the Department's testing or the findings, it did have issues

    regarding the system of regulation as implemented by the Department and the impact upon it as a fuel vendor.

14. Although Petitioner did not question the fact that testing revealed bad gasoline, it asserted that it had no way to protect itself from penalty under the scheme of regulation. If a regulatory scheme unfairly penalizes the regulated, it maybe subject to constitutional challenge, and, although an Administrative Law Judge cannot decide constitutional issues, the ALJ is obligated to permit the litigants to build a record so that an appropriate court can review the issues. In sum, this is why the Department's motions to relinquish were not granted.

15. Section 525.01, Florida Statutes, provides that Department may inspect any petroleum product (fuel) offered for sale in Florida for illuminating, heating, cooking, or power purposes. Section 525.02, Florida Statutes, provides that the Department will collect and analyze samples of fuel, and a certificate of analysis from the Department is prima facie

    evidence in any court in the state. Section 525.037, Florida Statutes, provides that it is unlawful to offer for sale or sell any fuel that fails to meet any standard the Department adopts by rule. Section 525.16, Florida Statutes, provides that the Department may enter an order imposing one or more penalties enumerated in the provision against any person who violates any

    provision of Chapter 525, Florida Statutes. The penalties include the issuance of a warning letter, as issued in this case, and fines up to $5,000 for a second offense.

16. This last section also provides that the Department shall consider the degree and extent of harm caused by the violation, the cost of rectifying the damage, the amount of money the violator benefited from the non-compliance, whether the violation was willful, and prior compliance of the violator. Any person who knowingly violates any provision of the chapter or any rule adopted by the department commits a misdemeanor of the first degree.

17. Florida Administrative Code Rule 5F-2.001, provides that all gasoline shall conform to the chemical and physical standards for gasoline as set forth in the American Society for Testing and Materials designation D 4814-03a, "Standard Specification for Automotive Spark-Ignition Engine Fuel." Further, the rule provides that, for purposes of inspection and testing, laboratory analyses shall be conducted using the methods recognized by the American Society for Testing and Materials designation D 4814-03a, "Standard Specification for Automotive Spark-Ignition Engine Fuel." The analysis in this case showed that the fuel in question failed to meet the end point temperature of said standard when tested for compliance with the rule.

18. The facts at hearing revealed that because Petitioner sells very small quantities of gasoline, it cannot get agreements from its suppliers to hold it harmless from contaminated gasoline. It conceivably could test the gasoline that it sells; however, it would have to have an alternative tank from which to vend gasoline to permit testing of product without selling the product while it was being tested. The cost of private testing would add 20 cents to the cost of each gallon of gasoline Petitioner sells. However, the law makes no distinction between small volume vendors and large volume vendors and holds vendors strictly liable for the quality of the gasoline that they sell.

19. The Department properly cited Petitioner and issued its Warning Letter. The law requires discretion by the Department in fining violators. The Department makes its excess testing capacity available to the regulated public to assist it in maintaining the quality of fuels sold within the state without penalty to the vendor. The system of regulation has improved the quality of fuels sold and diminished the number of violations recorded in the state.

RECOMMENDATION

Based upon the findings of fact and conclusions of law, it

is

RECOMMENDED:

That the Department should enter its final order confirming

the issuance of its warning letter.

DONE AND ENTERED this 12th day of November, 2004, in Tallahassee, Leon County, Florida.

S

STEPHEN F. DEAN

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 12th day of November, 2004.

COPIES FURNISHED:

David W. Young, Esquire Department of Agriculture

and Consumer Services

407 South Calhoun Street Mayo Building, Suite 520

Tallahassee, Florida 32399-0800

Joseph T. Lewis

Mount Dora Marina Company, Inc.

148 Charles Avenue

Mount Dora, Florida 32757

Eric R. Hamilton, Chief

Bureau of Petroleum Inspection Division of Standards Department of Agriculture

and Consumer Services

3125 Conner Boulevard, Building 1

Tallahassee, Florida 32399-1650

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 04-002164PL

Orders for Case No: 04-002164PL