STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF AGRICULTURE ) AND CONSUMER SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 86-3534

)

MORRIS PETROLEUM, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held pursuant to notice in the above-styled cause in Monticello, Florida, on November 12, 1986, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. This case arose on a stop sale order issued by the Florida Department of Agriculture and Consumer Services to Hicks' Gulf Service Stations because of contaminated fuels. It developed that Morris Petroleum, Inc., paid the $767.27 bond in lieu of the Department confiscating the remaining 1,754 gallons of contaminated fuel. Subsequently, Morris Petroleum Company, Inc., requested a formal hearing.

APPEARANCES

For Petitioner: William C. Harris, Esquire

Senior Attorney Department of Agriculture

and Consumer Services Room 514, Mayo Building Tallahassee, Florida 32301

For Respondent: John M. Morris, Jr.

Morris Petroleum, Inc. Post Office Box 495 Monticello, Florida 32344

ISSUES

Whether the assessment of $767.27 as a bond was proper.

FINDINGS OF FACT

1. On May 21, 1986, the samples of fuel were taken at Hicks' Gulf Station,

   U.S. 19 South and Hicks' Gulf Station, U.S. 19 North in Perry, Florida. Using ASTM D86, it was determined that the samples of Good Gulf regular leaded gasoline taken at the Hicks' Service Stations contained contaminants that caused their evaporative end points to exceed 437/0F, the acceptable maximum set by Florida Statute and Rule 5F-2.01, Florida Administrative Code. These results were confirmed at the main laboratory in Tallahassee on June 5, 1986.

2. Stop sales notices were issued on May 21, 1986. On May 23, 1986, a bond of $767.27 was posted by Morris Petroleum, Inc., in lieu of the Department confiscating 1,754 gallons of the contaminated fuel. Delivery and sales records allowed the Department to determine that 791 gallons of contaminated fuel had been sold to the public at the two stations at 97 per gallon since the last delivery from the wholesaler.

   
   

3. Nancy Fischer, chemist for the Department of Agriculture and Consumer Services, testified regarding the Department policy. The Department tests motor fuels at terminals and wholesalers. However, the Department does not levy fines against wholesalers and terminals. In cases where fuels being held by terminals and wholesalers are found to be contaminated, the Department issues a stop sale order. When establishing the amount of bond to be paid by a retailer for contaminated fuel, the Department uniformly bases the bond on the retail value of the substandard product sold to retail customers at the retail price.

   
   

4. The Respondent, Morris Petroleum, Inc., is a wholesale distributor of motor fuels. Morris Petroleum sold the motor fuels in question in this case for

   81.5 per gallon to Hicks' Service Stations in Perry, Florida. It is common practice for wholesalers to pay the bonds levied against retailers in order to maintain the business of the retailers.

   
   

   CONCLUSIONS OF LAW

   
   

5. This hearing is held pursuant to Section 120.57(1), Florida Statutes. The Department of Agriculture and Consumer Services regulates motor fuels pursuant to Chapter 525, Florida Statutes.

   
   

6. Section 525.06, supra, provides that gasoline falling below standard and declared illegal is subject to confiscation by order of the Department. Said Section provides alternatively that the Department may accept a bond equal to the amount of the value of the product subject to confiscation or an assessment equal to the retail value of any substandard product sold to retail customers; however, not exceeding a maximum bond of $1,000.

   
   

7. The wholesale price of the fuel sold was 81.5 cents per gallon. Morris states that the nature of the business dictates that wholesalers make good on the contaminated gas and that the wholesaler has no control over the retail price. Morris argues that the wholesaler is therefore obligated to pay a fine based upon the value of the gasoline which the wholesaler has no control over and which is 15 to 20 percent higher than the wholesale price of the motor fuel.

   
   

8. While Morris's argument is not without merit and is equitable, the Statutes do not permit the Department's unbridled discretion in establishing the amount of bonds. Section 525.06, supra, clearly provides that the Department may accept a bond equal to the amount of the value of the product subject to confiscation in lieu of confiscation and that the assessment will be equal to the retail value of any substandard product sold to retail customers.

   
   

9. In the instant case the records revealed, and the parties agree, that 791 gallons of contaminated motor fuel were sold at a retail price of 97 cents per gallon. Based upon these facts, the bond was $767.27. Evidence was received that the Department has adopted no rules amplifying on the statutory language and that the Department uniformly applies the Statute as written assessing bonds in an amount equal to the retail value of any substandard product sold to retail customers. The Department does not fine wholesalers or

   terminals when contaminated fuels are discovered but issues a stop sale order preventing the introduction of such fuels into retail commerce.

   
   

10. Having considered the facts and the law, it is clear that the Department has appropriately arrived at the amount of the bond assessed in this case.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department be affirmed and the bond of $767.27 be

retained.

DONE and ORDERED this 1st day of December 1986 in Tallahassee, Florida.

STEPHEN F. DEAN

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this 1st day of December 1986.

COPIES FURNISHED:

William C. Harris, Esquire Senior Attorney

Department of Agriculture and Consumer Services

Room 514, Mayo Building Tallahassee, Florida 32301

John M. Morris, Jr. Morris Petroleum, Inc. Post Office Box 495 Monticello, Florida 32344

Honorable Doyle Conner Commissioner of Agriculture The Capitol

Tallahassee, Florida 32301

Robert Chastain, Esquire General Counsel Department of Agriculture

and Consumer Services Mayo Building, Room 513 Tallahassee, Florida 32301

Docket for Case No: 86-003534

Orders for Case No: 86-003534