STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARR EXXON SERVICE CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-3256F

) DEPARTMENT OF ENVIRONMENTAL ) REGULATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, final hearing in the above-styled case was held in Cocoa, Florida, on November 27, 1989, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: David T. Young

Young, Murray and Townsend

P.O. Box 560563

Rockledge, Florida 32956-0563

For Respondent: E. Gary Early

Assistant General Counsel Department of Environmental

Regulation

Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400

STATEMENT OF THE ISSUE

The issue in this case is whether, under Section 57.111, Florida Statutes, Respondent is liable for attorneys' fees and costs incurred by Petitioner in an earlier proceeding. The purpose of the earlier proceeding was to determine the eligibility of Petitioner's site for state-administered cleanup of discharge from a petroleum storage system under the Early Detection Incentive program described in Section 376.3071(9), Florida Statutes.

PRELIMINARY STATEMENT

By letter dated July 22, 1987, Respondent informed Petitioner that its site was not eligible for state-administered cleanup under the Early Detection Incentive program set forth in Section 376.3071(9), Florida Statutes. The letter explains that the source of contamination was used oil, which did not meet the statutory definitions of "petroleum" or "petroleum product."

By Petition for Hearing dated August 26, 1987, Petitioner requested a formal administrative hearing. On July 28, 1989, Petitioner and Respondent filed a Joint Stipulation and Motion to Dismiss. An Order Closing File was entered on the same date.

In the meantime, Petitioner prematurely filed a Petition for Small Business Party's Attorney's Fees and Costs. After the earlier case was closed, the request for fees and costs was assigned the case number set forth above.

On August 7, 1989, Respondent filed a Motion for Summary Final Order denying costs on the grounds that Petitioner had not timely filed an affidavit for costs, as required by Rule 22I-6.035(3), Florida Administrative Code. At the beginning of the final hearing, Petitioner moved, ore tenus, for leave to file an Amended Supplemental Affidavit of Attorney's Fees and Costs.

Respondent's motion was denied, and Petitioner's motion was granted. Without withdrawing its objection to the adverse rulings, Respondent subsequently agreed to the reasonableness of the fees and costs set forth in the amended affidavit filed at the hearing.

At the hearing, Petitioner called three witnesses and offered into evidence two exhibits. Respondent called one witness and offered into evidence five exhibits. All exhibits were admitted. In addition, the Hearing Officer advised the parties that he would take official notice of the contents of DOAH Case No. 87-4448, which was the earlier proceeding that had been settled.

The transcript was filed on December 27, 1989. Each party filed a proposed final order. Treatment of the proposed findings is detailed in the appendix.

FINDINGS OF FACT

1. Petitioner informed Respondent of a pollutant discharge at Petitioner's gasoline station by filing a Discharge Notification Form on March 9, 1987. The form states that the discovery was made on March 5, 1987, as a result of a manual test of one or more monitoring wells. The form is marked "unknown" in response to questions concerning the estimated gallons lost, the part of storage system leaking, the type of tank, the cause of leak, and the type of pollutant discharged, although next to the last response are the typewritten words: "appears to be motor oil."

   
   

2. A cover letter from Petitioner dated March 5, 1987, accompanied the Discharge Notification Form. The letter restates that the source of pollution is unknown, but adds that "there is a possibility that [the pollution] is the result of a septic tank, drain field discharge." The letter discloses that Blackhawk Environmental Services, Inc. ("Blackhawk") and NEPCCO/IT are investigating "to determine the extent of the contamination as well as the source." The letter provides the name and telephone number of the Blackhawk employee for further information.

   
   

3. A separate cover letter from the Blackhawk employee to Respondent states that the notification was being submitted for consideration for Site Rehabilitation Reimbursement Costs. The letter also states that the site has been the subject of groundwater contamination from an "unknown source."

   
   

4. Following the notification, Orlando Laboratories, Inc. submitted to Blackhawk a written analysis of the groundwater at the site. The report, which is dated March 19, 1987, contains quantitative data without any interpretation and was submitted without interpretation to Respondent on March 20, 1987.

5. Petitioner applied to participate in the Early Detection Incentive ("EDI") Program by filing an EDI Program Notification Application dated March 23, 1987, together with a cover letter of the same date. The application supplied no more information than did the notification form. In response to the question as to the type of product discharged, Petitioner circled the choice, "used oil," but added the word, "possibility." Although the application may not have been immediately filed, Respondent received it prior to July, 1987.

   
   

6. As part of a site inspection, an employee of Respondent prepared an Early Detection Incentive Program Compliance Verification Checklist, which was dated April 28, 1987. The checklist notes that Blackhawk "is looking into problem [and] will forward results from lab when available." The checklist also states:

   
   

   Odor found in E[ast] & W[est] M[onitoring] W[ells]. No other contamination found on site. Site has old waste oil tank on site that could possibly be contaminating drainfield next to tank. Also old abandoned tank (since 1967) on site. Asked owner to investigate tank's conditions. If not needed, he will remove & adjust registration accordingly. Floordrain in shop area dumps into on-site septic tank which could also contribute.

   
   

7. The repeated mention of motor oil is due to at least two factors. First, a Blackhawk employee had mentioned to Belvin Marr, who owns and operates Petitioner, that the contaminant "looked like" motor oil. Second, Mr. Marr knew that he had, for many years, discarded used motor oil down a floordrain leading into a septic tank with an onsite drainfield.

   
   

8. By letter dated July 22, 1989, Respondent informed Petitioner that its site was ineligible for state-administered cleanup under for the EDI program described in Section 376.3071(9), Florida Statutes. The letter states that the decision was "based upon information given in this [Notification Application] and a compliance verification evaluation of your reported site."

   
   

9. The July 22 letter explains that the site is ineligible because, according to the application and district inspection:

   
   

   the source of contamination at Marr's Exxon has been attributed to used oil. Petroleum, as defined by Section 376.301(9), Florida Statutes (F.S.), included [sic] only crude oil and other hydrocarbons in the form in which they are originally produced at the well. Petroleum product, as defined by Section 376.301(10), F.S., means fuel in its refined state which is similar in nature to fuels such as diesel fuel, kerosene, or gasoline. Used oil cannot be considered "petroleum" or "petroleum products" because it has become unsuitable for its original purpose due to the presence of impurities or loss of original properties. Therefore, your

   site, which is contaminated by unrefined used oil, is not eligible for participation in Early Detection Incentive (EDI) Program.

   
   

10. The July 22 letter advises Petitioner that he could obtain administrative and judicial review of the decision by filing a petition within

    21 days of the date of receipt of the letter. The letter thus provided Petitioner with a clear point of entry.

    
    

11. By letter dated July 30, 1987, Petitioner requested a 30-day extension to allow for retesting. Additional testing took place in early August, 1987. However, there is no indication that the resulting data, which again omit textual interpretation, were submitted to Respondent until the filing of the more definite statement described in the following paragraph.

    
    

12. The next communication between Petitioner and Respondent took place when Petitioner requested a formal hearing by filing a Petition for Hearing dated August 26, 1987. By Order for More Definite Statement entered September 14, 1987, Respondent ordered Petitioner to file a more definite statement. By Response to Order for More Definite Statement dated September 28, 1987, Petitioner filed a more definite statement. The additional test data were attached to the more definite statement, although they are not in the DOAH case file.

    
    

13. The Response offers the following chronology with all dates being approximate dates.

    
    

    March 5, 1987: Respondent notified of groundwater contamination from unknown source.

    March 20, 1987: analysis of contamination conducted by Orlando Laboratories, Inc. and forwarded to Respondent.

    March 23, 1987: Petitioner applied for participation in Early Detection Incentive ("EDI") program, and the application is attached to the More Definite Statement.

    April 27, 1987: Compliance Verification checklist issued.

    July 22, 1987: Respondent denied Petitioner's application.

    July 30, 1987: Petitioner requested 30-day extension to conduct further testing, the results of which are attached to the More Definite Statement.

    August 26, 1987: Petitioner requested formal administrative hearing.

    
    

14. Following receipt of the more definite statement, Respondent forwarded the pleadings to the Division of Administrative Hearings for assignment of a Hearing Officer to conduct a hearing. The pleadings were received on October 9, 1987, and the file was assigned DOAH Case No. 87-4448.

    
    

15. In a Motion for Continuance filed on January 14, 1988, Respondent asserted that the case involves the issue whether "used oil," which was what had been discharged at Petitioner's facility, is a "petroleum product." The motion refers to a pending case, Puckett Oil v. Department of Environmental Regulation,

    and states that this case, which had been heard in September, 1987, involves the same question. By Motion for Continuance filed on May 13, 1988, Respondent requested a continuance on the same grounds as previously cited and represented that Petitioner had no objection.

    
    

16. An internal memorandum of Respondent dated March 17, 1988, acknowledges that Petitioner requested a review of the available data based on an "inaccurate assessment by his contractor." Reviewing the data, some of which had been provided after July 22, 1987, the memorandum notes that the majority of the contamination is from gasoline, but the involvement of the drainfield as the source of contamination "is the reason eligibility was denied."

    
    

17. After the issuance of the final order in Puckett Oil v. Department of Environmental Regulation, 10 FALR 5525 (September 1, 1988), Respondent, filing a Motion to Set Hearing Date, disclosed that "[Respondent's] review of the Final Order indicates that Petitioner's site remains ineligible for SUPER Act funding."

    
    

18. However, on July 28, 1989, the parties filed a fully executed Joint Stipulation and Motion to Dismiss. An Order Closing File, which was entered the same date, returned the matter to Respondent for final disposition consistent with the stipulation.

    
    

19. The Joint Stipulation and Motion to Dismiss states:

    
    

    1. On July, 22, 1987, [Respondent] denied eligibility for the [EDI] Program, Section 376.3071(9), Florida Statutes, to [Petitioner's) site . . .. The basis for the denial was that the site was contaminated with used oil.

    2. Subsequent to [Respondent's] denial, Petitioner conducted a series of ground water tests to more accurately determine the nature and extent of contamination at the site. The results of that testing indicate that the site was contaminated with significant amounts of gasoline constituents and minor amounts of used oil constituents emanating possibly from a septic tank drainfield and a used oil storage facility. The gasoline constituents exist at levels many times that of the other constituents.

    3. Based upon the overwhelming contribution to the overall contamination presented by the gasoline constituents, [Respondent] agrees that the presence of minor amounts of contaminants from something other than a tank should not preclude [Petitioner's] site from being eligible for the EDI Program.

    4. [Respondent reserves the right not to pay for the cost of cleanup of contamination not related to discharge from a tank.]

       WHEREFORE Petitioner . . . and Respondent request that the hearing officer adopt this stipulation . . . and retain jurisdiction for an award of attorney's fees and costs (Fla.

       Stat. Sect. 57.111 (1986 Supp.) and Fla. Admin. Code Rule 22I-6.035). . ..

       
       

20. The parties stipulated that Petitioner was a small business party. The parties also stipulated to reasonable attorneys' fees of $6625 and costs of

    $4690. Following the final hearing, Petitioner filed supplemental affidavits showing, in connection with the prosecution of the subject case and not the earlier proceeding, additional attorneys' fees of $1875 and costs of $490.85.

    
    

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Sections 57.111(4) and 120.57(1), Florida Statutes. (All references to "Sections" are to Florida Statutes.)

    
    

22. In general:

    
    

    an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to chapter

    120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.

    
    

    Section 57.111(4)(a).

    
    

23. In the case of a settlement, a party prevails if the settlement is "favorable . . . on the majority of the issues which such party raised during the course of the proceeding." Section 57.111(3)(c)2.

24. A proceeding is "initiated by a state agency" if the agency: was required by law or rule to advise a small

    business party of a clear point of entry after some recognizable event in the investigatory or other free-form proceeding of the agency.

    
    

    Section 57.111(3)(b)3.

    
    

25. A proceeding is "substantially justified" if "it had a reasonable basis in law and fact at the time it was initiated by a state agency." Section 57.111(3)(e).

    
    

26. Petitioner clearly satisfies all of the prerequisites for fees and costs except whether the proceeding was substantially justified. The resolution of this issue requires an assessment of the reasonableness of Respondent's refusal to find Petitioner eligible to participate in the EDI program. Specifically, the issue is whether Respondent's determination of ineligibility had a reasonable basis in law and fact when Respondent "initiated" the earlier proceeding by advising Petitioner of its clear point of entry on July 22, 1987.

    
    

27. As disclosed by the joint stipulation and other documents, the earlier proceeding involved only the Early Detection Incentive program described in Section 376.3071(9). The earlier proceeding did not involve other SUPER Act

    programs, such as where parties cleaning up sites may seek state reimbursement under Section 376.3071(12) or where the state cleaning up high-priority sites may seek reimbursement from responsible persons under Section 376.3071(4) and (7).

    
    

28. Section 376.3071(9) states that the purpose of the EDI program is to "encourage early detection, reporting, and cleanup of contamination from leaking petroleum storage systems." A "petroleum storage system" is a stationary tank, together with onsite integral piping and dispensing system, that is used or intended to be used for the storage or supply of any "petroleum product." Section 376.301(11). A "petroleum product" means "any liquid fuel commodity made from petroleum, including various fuel oils, but excluding certain specified, generally high-viscosity oils. Section 376.301(10). ("Petroleum," which is relevant to coverage questions under Section 376.301(1) and (4), has no bearing on a claim under Section 376.3071(9), which is limited, pursuant to the definition of "petroleum storage systems," to "petroleum products.")

    
    

29. To participate in the EDI program, a person must initially report the site during the covered period and file a "complete written report . . . within a reasonable time." Section 376.3071(9). Presumably, the report must disclose that the site meets the relevant statutory criteria.

    
    

30. In rejecting Petitioner's application, Respondent had a reasonable basis to treat the site as contaminated by used motor oil rather than gasoline. The notification form and application suggested that the contamination was from used oil, not gasoline. The first cover letter indirectly suggests oil by linking the contamination to drainfield discharge from a septic tank. The second cover letter states that the contamination appears to consist of motor oil. The checklist cites as possible sources of contamination an old waste oil tank, an old abandoned tank, and the floordrain in the shop. Neither the checklist nor the documentation provided by Petitioner prior to July 22, 1987, expressly suggested that the discharge involved gasoline.

    
    

31. Petitioner argues that the data accompanying the application should have made it obvious to Respondent that the source of contamination was gasoline. It is unclear why, if the original data were so clear in this regard, Petitioner's experts thought that the contaminant looked like used motor oil.

    If their thinking on this matter changed prior to July 22, 1987, they did not bother to so inform Respondent. Additionally, Petitioner stipulated that a subsequent series of groundwater tests more accurately determined not only the extent, but the nature of the contamination. Most important, one of the few pieces of information that Petitioner supplied on the notification form or application was the repeated suggestion that the contaminant might be oil.

    Given these facts, Respondent had a reasonable basis, as of July 22, 1987, to treat the contaminant as oil rather than gasoline.

    
    

32. Reasonably assuming that the contaminant was oil, Respondent could reasonably reject the application on the basis of the facts and law in existence on July 22, 1987. The Puckett Oil decision clearly identifies used motor oil as a "liquid fuel commodity" within the meaning of "petroleum product". In hindsight, Respondent's position to the contrary has been proven wrong.

    However, the present issue is not the correctness, but the reasonableness of Respondent's rejection of used oil as a "fuel" prior to the decision in the Puckett Oil case. It is necessary to consider the Puckett Oil final and recommended orders, which describe the means by which a common lubricant is, by application of custom and technology, transformed to a fuel or potential fuel after it has been drained from a motor vehicle. On balance, Respondent's

    refusal to treat used motor oil as a fuel was not without a reasonable basis in law and fact.

    
    

33. There is an independent basis for Respondent to have refused to accept Petitioner's application. The notification form, application, and other information supplied by Petitioner provided Respondent without even an alleged basis on which to grant the EDI program application. By law, participation is limited to leaks from "petroleum storage systems." Both the notification form and application provide numerous options by which the applicant can describe the storage system that is leading to the contamination. Petitioner never did so. Repeatedly, these questions on the forms are ignored or marked "unknown."

    
    

34. The legislation in question did not authorize participation in the EDI program simply upon a report of a contaminant. Even if the mere existence of a discharge at a gasoline service station might arguably permit an inference of leakage from a petroleum storage system, any such inference was negated in this case by two facts. First, the documentation repeatedly suggested oil as the contaminant. Second there was evidence of contamination through a floordrain, which does not involve a storage system. In Puckett Oil Company v. Department of Environmental Regulation, 549 So. 2d 720 (Fla 1st DCA 1989), the applicant had been pumping its used oil down a drain that it mistakenly believed led to an underground storage tank, which had in fact been removed previously. The Puckett Oil decision stands for the proposition that used oil may qualify as a liquid fuel commodity made from petroleum. However, the court refused to address the question whether the storage criterion was satisfied. Respondent had failed to raise this issue, and, accordingly, this issue had not been addressed in the recommended order. There is evidence that Respondent would not have failed to raise this important issue in the prior proceeding with Petitioner. The memorandum of March 17, 1988, identifies the drainfield as the reason why eligibility had been denied, and the joint stipulation of July 28, 1989, finds, based on new data, only "minor amounts of contaminants from something other than a tank."

ORDER

Based on the foregoing, it is hereby ordered that Petitioner's request for attorneys' fees and costs is denied.

ORDERED this 20th day of February, 1990, in Tallahassee, Florida.

ROBERT E. MEALE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of February, 1990.

APPENDIX TO FINAL ORDER, CASE NO. 89-3256F

Treatment Accorded Proposed Findings of Petitioner

1: adopted in substance, except that the notification form reported that the type of pollutant discharged was "unknown--appears to be motor oil." Also last sentence rejected as unsupported by the greater weight of the evidence.

2: adopted in substance as part of the checklist report. 3: adopted.

4: adopted, except that the test results were submitted no earlier than the date on which the more definite statement was filed.

5: adopted in substance. 6: rejected as irrelevant.

7: rejected as unsupported by the contents of the stipulation.

8: rejected as unsupported by the greater weight of the evidence. 9-14: adopted or adopted in substance.

15-23: rejected as recitation of testimony, legal argument, and not findings of fact.

Treatment Accorded Proposed Findings of Respondent 1-6: adopted or adopted in substance.

7: rejected as subordinate and recitation of testimony. 8-9: adopted or adopted in substance.

10: rejected as unsupported by the greater weight of the evidence and legal argument. Petitioner did not challenge Respondent's position regarding used oil. Petitioner challenged Respondent's decision not to allow Petitioner to participate in the EDI program.

11: adopted.

12: rejected as unsupported by the greater weight of the evidence. 13: adopted in substance.

14-15: adopted.

16-17: adopted in substance. 18-20: adopted.

COPIES FURNISHED:

Dale H. Twachtmann Secretary

Department of Environmental Regulation Twin Towers Office Building

2600 Blair Stone Road Tallahassee, FL 32399-2400

Daniel H. Thompson General Counsel

Department of Environmental Regulation 2600 Blair Stone Road

Tallahassee, FL 32399-2400

David T. Young

Young, Murray and Townsend

P.O. Box 560563 Rockledge, FL 32956-0563

E. Gary Early

Assistant General Counsel

Department of Environmental Regulation Twin Towers Office Building

2600 Blair Stone Road Tallahassee, FL 32399-2400

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 89-003256F

Orders for Case No: 89-003256F