vs. ) CASE NO. 89-4521
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on January 10, 1990, in Fort Lauderdale, Florida.
For Petitioner: Robert W. Wells, Esquire
Ignacio E. Sanchez, Esquire Kelley, Drye & Warren
For Respondent: E. Gary Early, Esquire
Whether Petitioner is entitled to participate in the Reimbursement Program established under the State Underground Petroleum Environmental Response (SUPER) Act of 1986 for the petroleum terminal owned by Gulf Products Division of BP Oil Company at Port Everglades, Florida.
Petitioner has expended funds in cleaning up petroleum contamination at the petroleum terminal owned by Gulf Products Division of BP Oil Company at Port Everglades, Florida. Petitioner is obligated for this cleanup because of the manner in which this facility was transferred, and is entitled to participate in the reimbursement program if the site meets the program qualification criteria.
Respondent has determined that the site is not eligible for participation in the reimbursement program because of the manner in which the site became contaminated and has issued an Order of Ineligibility for the Reimbursement Program. Petitioner timely contested Respondent's decision that the site does not qualify for the reimbursement program, and this proceeding followed.
At the formal hearing, Petitioner called six witnesses, to-wit, David Hyde, Morris Faircloth, Willie J. Carter, N.C. Watson, John Brady, and Paul Jakob.
Mr. Hyde is the area manager of marketing operations for Petitioner. Mr. Faircloth is the project manager for Petitioner's response action. Dr. Carter is a staff engineer for pressure vessels and tanks for Petitioner and was accepted as an expert witness in the field of aboveground storage tank design. Mr. Watson is the terminal coordinator for the Gulf Products Division of BP Oil. Mr. Brady is the terminal supervisor for the terminal facility Petitioner owns at Port Everglades and was accepted as an expert witness in the field of terminal facility operations at Port Everglades. Mr. Jakob is a principal of and chief geologist for Groundwater Specialists, Inc., a consulting firm employed by Petitioner to assist in the cleanup operation. Mr. Jakob was accepted as an expert witness in the field of environmental cleanup and response action. Petitioner also introduced 13 exhibits, which were accepted into evidence. Respondent called two witness, to-wit, John Svec and Tod Allen. Mr. Svec is a professional engineer with Respondent's Leak Detection Subsection of the Storage Tank Regulation Section and Mr. Allen is the supervisor of the Respondent's Reimbursement Section. Mr. Svec was accepted as an expert witness in the field of storage tank management. Respondent also introduced one documentary exhibit, which was accepted into evidence. In addition, the parties filed a stipulation by which they agreed to certain facts without the necessity of proof thereof.
A transcript of the proceedings has been filed. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript. Consequently, the parties waived the requirement that a recommended order be rendered within thirty days after the transcript is filed. Rule 22I-6.031, Florida Administrative Code.
Following the submission of the proposed recommended orders, this matter was, at the request of the parties, abated pending action by the 1990 regular session of the Florida Legislature on certain proposed legislation. This unusual order of abeyance was premised on the impact the anticipated passage of this legislation would have on this proceeding. On June 14, 1990, this legislation was signed into law by the Governor and was enacted as Chapter 90-98, Laws of Florida.
Thereafter, the parties filed supplemental proposed recommended orders. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.
The State Underground Petroleum Environmental Response (SUPER) Act of 1986 provides for the expeditious cleanup of sites contaminated as the result of storage of petroleum or petroleum products. The Reimbursement Program, found in Section 376.3071(12), Florida Statutes, provides for reimbursement of the allowable costs of site rehabilitation contaminated as a result of a discharge related to the storage of petroleum or petroleum products from a storage tank, or its integral piping or dispensing system. The Reimbursement Program does not provide for reimbursement of cleanup costs for discharges related to the transportation or disposal of petroleum or petroleum products.
The site at issue in this proceeding is a terminal facility used for the storage of petroleum and petroleum product located at 1500 Southeast 26th Street, Port Everglades, Florida. This facility is referred to as Gulf Facility No. 46888 and DER Facility No. 068732278 (Gulf Terminal). The subject terminal facility is one of fourteen petroleum storage terminals located at Port Everglades, Florida. Petroleum and petroleum products come to the terminal by ship and are pumped from the ship through permanent pipelines to the large aboveground storage tanks located at the facility. The petroleum and petroleum products are stored in these large tanks until it is time for the product to be distributed to the end user. The Gulf Terminal contains eighteen storage tanks whose total capacity is 650,000 barrels of petroleum or petroleum products. These tanks vary in size, with the smallest having a capacity of 10,000 barrels and the largest having a capacity of 80,000 barrels. One barrel equals 42 gallons. The primary activity of the terminals at Port Everglades is to store petroleum or petroleum products. None of the terminals at Port Everglades, including the Gulf Terminal, refines or produces petroleum or petroleum products.
Operation of this facility began in 1946. Petitioner, as the successor to the Gulf Oil Corporation, owned and operated the facility until February 1, 1985, when it sold the facility to BP Oil, Inc. As the previous owner of the facility, Petitioner performed an environmental audit which revealed petroleum hydrocarbon contamination at the site. Petitioner is responsible for the cleanup and is entitled to reimbursement of the allowable costs of the cleanup if the site is eligible to participate in the reimbursement program. Any contamination of the soil and groundwater at the site was caused by discharges of petroleum or petroleum products, water contaminated with petroleum or petroleum product or sludges which consist predominately of petroleum or petroleum product constituents.
Based on hydrogeological assessment information, Petitioner determined that response action, including ground water cleanup activities, was required at the site. Petitioner hired independent contractors to conduct the response action. In 1986, Petitioner designed a recovery system for petroleum and petroleum product and a ground water treatment system at the site. Through February, 1989, the recovery system had recovered over 12,000 gallons of petroleum or petroleum products, which constitutes the recovery of between 60%- 70% of the total amount in the ground. Through November 1989, Petitioner had expended in excess of $560,000 on its response action at the Gulf Terminal.
Petitioner advised Respondent of its response action at the site by letter dated January 6, 1988. Petitioner submitted documentation to Respondent concerning hydrogeological assessment at the site which included field and laboratory work and investigation performed for the site from 1984 to the present. Pursuant to the requirements of SUPER Act, Petitioner notified Respondent of its intention to seek reimbursement for money spent conducting response action in accordance with Chapter 17-70, Florida Administrative Code, with regard to petroleum and petroleum product contamination at the site. Petitioner's notice to Respondent was timely and was procedurally correct.
On July 13, 1989, Respondent issued its Order of Determination of Ineligibility concerning Petitioner's request for reimbursement. As stated in this order the initial basis for Respondent's denial of eligibility was:
The determination is based on the fact that the contamination was not related to the storage of petroleum or petroleum products.
Sources of contamination at this site include tanker trucks, an oil/water separator, a holding pond, and crude oil and tank-bottom sludge disposal pit. These items are not petroleum storage systems as defined in Section 376.301 F.S. therefore (sic), this site is not eligible for reimbursement under the SUPER Act. ...
Respondent clarified its Order of Ineligibility by a Notice to Amend and Clarify dated November 14, 1989, which provides, in pertinent part, as follows:
The notice of denial provides that the site is being denied due to the fact that the disclosed sources of contamination are not petroleum storage systems.
One of the criteria for being a petroleum storage system is that it be used or intended to be used for storage of petroleum or petroleum product. It is the criteria that the Department contends is not met in this case; i.e., that the discharges were not intended for storage.
Section 376.3071(4), Florida Statutes, specifically limits the use of the Environmental Protection Trust Fund to incidents of inland contamination related to storage of petroleum or petroleum product.
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The Department recently became aware that prior to 1983, contaminated water was disposed of directly from tanks at the site with no pretreatment by an oil/water separator. As with the disposal of oil and sludge to a pit, the act of intentionally disposing of contaminants to the ground is not "related to storage" as required by Chapter 376, Florida Statutes.
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Wherefore, The State of Florida Department of Environmental Regulation hereby requests that the Hearing Officer allow for the amendment of the notice of denial of eligibility to include the following basis for denial:
Contamination at the site is related to the disposal of petroleum or petroleum product, or water contaminated with petroleum or petroleum products. Disposal activities including the intentional discharge and disposal of
contaminated water and/or fuel from tanks, oil water separators and sump areas, the intentional discharge and disposal of contaminated water to a percolation pond, the intentional discharge and disposal of oil and sludge to a disposal pit, and the intentional discharge and disposal of fuel to the ground at the loading rack.
Among the causes of contamination of the Gulf Terminal are accidental overfills of tanks and leaks from an integral pipeline. Absent any other source of contamination, the discharges that occurred at the Gulf Terminal due to these causes would be eligible for the reimbursement. Respondent has determined, however, that the following additional sources of contamination render the entire response action ineligible for reimbursement:
Discharges of dissolved hydrocarbon molecules contained in water which accumulated in storage tanks;
Discharges of petroleum or petroleum products at the loading rack at the terminal; and
The discharge of crude oil and of crude oil tank bottoms.
TANK OVERFILL
During the operation of the Gulf Terminal, petroleum and petroleum products have been accidentally discharged onto the ground. In 1955, an unknown quantity of petroleum or petroleum products was accidentally discharged onto the ground in the areas of tanks 104 and 105 as a result of these tanks being over- filled. Following this massive spill, between 5,000 - 10,000 barrels of product was recovered, while an unknown quantity could not be recovered.
PIPELINE LEAK
Since 1955, approximately 15,000 additional barrels of petroleum or petroleum products were leaked from an underground pipeline that is integral to the storage system in an area between the loading rack and tank 101, extending toward the west to between tanks 110 and 102. This is the vicinity where the heaviest free floating petroleum contamination exists.
DISCHARGE OF CONTAMINATED WATER
Florida has adopted the standard code for the design of aboveground storage tanks prepared by the American Petroleum Institute (API-650). The tanks at the Gulf Terminal are in compliance with API-650.
The accumulation of water in storage tanks is a problem associated with the storage of petroleum or petroleum products in the storage tanks at the Gulf Terminal and at the other terminals at Port Everglades. Water accumulates in the storage tanks from rainfall and from condensation. The records of the US Department of Commerce, National Oceanic and Atmospheric Administration for Station 08063163 (Fort Lauderdale, Florida) accurately depict the rainfall levels at the terminal facility. The total annual rainfall levels are as
follows: 1980, 69.67 inches; 1981, 57.9 inches; 1982, 82.92 inches; 1983 75.16
inches; 1984, 59.4 inches; 1985, 63.74 inches; 1986, 64.14 inches, 1987, 58.50
inches; 1988 40.66 inches.
Because water is heavier than petroleum and petroleum products, the water accumulates at the bottom of the tanks. It is essential to the proper storage of the petroleum or petroleum products that the water be removed for at least three reasons. First, if the water is not removed, the tanks would eventually become filled with water instead of product. Second, the product contaminated by water, particularly fuel for motor vehicles and aircraft, would not meet specifications. Third, water in the tanks speeds the corrosion of the tank.
In order to remove this water that accumulates at the bottom of the storage tanks, a water draw-off mechanism located at the bottom of the tank is a design feature of API-650. When water accumulates in the bottom of the tank, the water is drained out through the water draw-off mechanism. The storage tanks located at the Gulf Terminal are equipped with such a water draw-off mechanism. Throughout the existence of the facility, accumulated water in the tanks has been controlled by discharging the water through the water draw-off mechanism.
From 1948 to 1980, water was drained out of the tanks through the water draw-off mechanism and on to the ground. Beginning in 1980, the water was taken from the tanks through the water draw-off mechanism and piped to a catch basin where an effort was made to recover petroleum product by skimming the water before the water was discharged into the ground. Since 1985, the water taken from the tanks through the water draw-off mechanism has been treated by an oil/water separator which effectively removes all petroleum product before the water is discharged. The purpose of the oil/water separator is to separate petroleum product from water so that the petroleum product can be returned to the storage tank and the water can be discharged. This process serves to prevent the discharge of petroleum product.
Up to 1988, the discharges to the ground from the oil/water separator at the Gulf Terminal accumulated in a holding pond. In 1988, the holding pond was eliminated and the water discharges from the oil/water separator were routed to a holding tank prior to treatment by an air stripper and subsequent discharge into the canal adjacent to the property.
At all times since 1983, the water drawn out of the tanks has been the subject of permits issued by Respondent which approve the use of the oil/water separator.
While it is necessary for the operation of the storage tanks that water be drawn from the tanks, it is not necessary for the operation of the storage tanks for the contaminated water to be discharged onto the ground. The purpose of discharging the water was to dispose of it. There was no intent to recover the contaminated water after it was discharged.
Any water coming out of a storage tank is contaminated with dissolved petroleum. It may have solids in it and floating residue or product on it. Between 1946 and 1980, when this water from the storage tanks was discharged to the ground, any contaminates in the water would be discharged along with it. Water has been drained from tanks numbered 101, 106, 109, 110, 111, 112 113, and
114 on a daily basis. The other tanks are drained after a rainfall. An average of one or two inches of water was drained off each time it rained. Following a
rainfall, in excess of 30 barrels of water would be drained from the smaller tanks, while approximately 300 barrels of water would be drained from the larger tanks.
The discharge of the water drawn from the storage tanks contributed to the contamination of the groundwater at the Gulf Terminal. This type contamination exists in almost all areas of the site. Petitioner was unable to distinguish the contamination to the groundwater caused by the discharge of contaminated water drawn from the storage tanks from contamination to the groundwater which resulted from other causes. Petitioner failed to establish that the contribution to this contamination to the groundwater by the discharge of the contaminated water drawn from the storage tanks was insignificant.
THE LOADING RACK
The loading rack at the Gulf Terminal is the apparatus by which the petroleum in the storage tanks is dispensed to tanker truck for distribution to consumers. The loading rack is a series of dispensers which operate much like at a service station except that it fuels tanker trucks rather than automobiles. The loading rack is connected by permanent integral piping to the storage tanks. The purpose of the loading rack is to load the transport trucks. Without the storage tanks at the terminal, there would be no need for a loading rack.
Over the years, discharges have occurred in the loading rack, usually as the result of human error. Occasional overfills in the 10-15 gallon range have occurred while a truck was being filled. This type discharge is analogous to a spill which occurs at a service station when an automobile is being fueled and the fuel splashes back or overfills the automobile's fuel tank. The supervisor of Respondent's Reimbursement Section testified that this type discharge, absent other causes, would probably be eligible for reimbursement. This testimony conflicts with the official position taken by Respondent in this proceeding that the cleanup caused by the operation of the loading rack is ineligible for reimbursement. In other incidents, small amounts of product ranging from a teacup to less than a gallon, were occasionally discharged while a truck was being drained of one type of product so that the truck could transport another type of product. The loading rack is an integral part of the storage system because without a means of moving the product out of storage and into the distribution system, the storage tanks could not provide a meaningful function. The discharges which occurred at the loading rack during the course of both loading and unloading trucks are insignificant when compared with the other sources of contamination at the site.
TANK BOTTOMS
In 1956, a storage tank was emptied for the purpose of switching product from crude oil to diesel fuel. At the time the change in product was made, approximately 1000 barrels of sludge and crude oil were disposed of in a pit adjacent to tank 101. Also disposed of was the tank bottom, a hard tar residue which formed at the bottom of the tank. Oil occasionally oozes to the surface in the vicinity of the pit adjacent to tank 101, but the area around the sludge pit has not been found to be contaminated, and the tank bottom has remained a hardened mass. Each tank on the site also had a pit alongside the tank where a tank bottom was disposed. Although it was necessary to remove the sludge and the tank bottoms to be able to properly operate the storage tanks, it was not necessary for the operation of the storage tanks to dump the sludge and the tank bottoms onto the ground or into the pits. The purpose of discharging
the crude oil sludge and the tank bottoms was to dispose of them. There was no intent to recover the crude oil sludge or the tank bottoms water after they were discharged.
CONTAMINATION PHASES
The contamination at the site exists in three phases, floating petroleum product contamination, dissolved petroleum groundwater contamination, and sludge contamination.
The contamination in the form of floating petroleum was caused by discharges of petroleum or petroleum products following the tank overfills, the pipeline leaks, and spills at the loading rack.
The dissolved groundwater contamination was caused by two primary sources. First, the dissolved groundwater contamination was caused by floating petroleum product coming into contact with groundwater. Upon such contact, molecules from the floating petroleum would dissolve into the water, causing contamination. Second, the dissolved groundwater contamination was caused by the discharge of the contaminated water that had been drawn off from the storage tanks. Petitioner was unable to distinguish the dissolved groundwater contamination that was caused by accidental discharges of product from the contamination caused by the discharge of the contaminated water. Petitioner was also unable to establish that the dissolved groundwater contamination caused by the contaminated water was insignificant.
The sludge contamination was caused by the discharge of crude oil and crude oil tank bottoms.
CLEANUP
The sludge contamination is capable of being cleaned up separately from the free floating petroleum contamination and the groundwater contamination at the site. The sludge contamination is separate and distinct from the other contamination at the site both as to the location of the contamination and as to the methods that would be employed to clean up that type of contamination.
Free floating petroleum contamination is recovered by drawing down the water level in a well by use of a pump so that a cone of depression is created. The cone of depression is a funnel shaped depression that causes the surface of the underground water table to bend down towards the well in all directions.
The free floating petroleum which flows on top of the underground water surface is then recovered by use of a second pump. The free floating petroleum is then pumped into a holding tank where the recovery of free floating petroleum is completed. The recovery of free floating petroleum contamination is usually more expensive to accomplish than groundwater cleanup because more equipment is required.
Groundwater cleanup usually takes a longer period of time to accomplish than does free floating product cleanup. The same or a similar well used to recover the free floating petroleum can also be used for the cleanup of contaminated groundwater. The contaminated groundwater is pumped from the well into an oil/water separator where the water and dissolved petroleum is separated, water is taken off the bottom, put through an air stripper, and is returned to the ground through an infiltration unit.
Respondent has previously found sites eligible for the reimbursement program even though those sites experienced discharges which alone would render a site ineligible for the reimbursement program. The basis for finding these sites eligible was that the ineligible discharges had become indistinguishable from the eligible discharges and were insignificant by comparison.
Petitioner has complied with all procedural requirements for seeking eligibility contained in Section 376.3701, Florida Statutes. Respondent has not been denied access to the Gulf Terminal. Respondent has made no determination that there has been gross negligence in the maintenance of the petroleum storage system locate at the Gulf Terminal. Petitioner has not willfully concealed the existence of a serious discharge at the Gulf Terminal. Petitioner has not falsified any inventory records maintained with respect to the Gulf Terminal. Petitioner has not caused any intentional damage to the Gulf Terminal. The Gulf Terminal is not owned by the federal government.
Petitioner's challenge to Respondent's order of ineligibility was filed in a timely manner.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1), Florida Statutes
The Petitioner in this case has the burden of demonstrating its entitlement to participate in the reimbursement program established by Section 376.3071(12), Florida Statutes. Irvine v. Duval County Planning Commission, 466 So.2d 357 (Fla. 1st DCA 1985), quashed at 495 So.2d 167 (Fla. 1986), on remand at 504 So. 2d 1265 (Fla. 1st DCA 1986); University Medical Center, Inc. v. Department of Health and Rehabilitative Services, 483 So.2d 712 (Fla. 1st DCA 1985); Florida Department of Transportation v. J.W.C., Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981).
Section 376.3071, Florida Statutes, creates the Inland Protection Trust Fund and provides, in pertinent part, as follows:
(2) INTENT AND PURPOSE. - It is the intent of the Legislature to establish the Inland Protection Trust Fund to serve as a reposi- tory for funds which will enable the depart- ment to respond without delay to incidents of inland contamination related to the storage of petroleum and petroleum products in order to protect the public health, safety, and welfare and to minimize environmental damage.
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(12) REIMBURSEMENT OF CLEANUP EXPENSES. -
Legislative findings. - The Legislature finds and declares that, in order to provide for rehabilitation of as many contamination sites as possible, as soon as possible, voluntary rehabilitation of contamination sites should be encouraged ...
Entitlement conditions. - To accomplish this purpose, ... any person conducting site rehabilitation under this subsection, either through his own personnel or through responsible response action contractors or subcontractors, shall be entitled to reimbursement from the fund at reasonable rates for allowable costs incurred on or after January 1, 1985, in connection with such site rehabilitation ...
Section 376.301, Florida Statutes (1989), provides the following definitions pertinent to this proceeding:
(3) "Discharge" includes, but is not limited to, any spilling, leaking, seeping, pouring, misapplying, emitting, emptying, or dumping of any pollutant which occurs and which affects lands and the surface and ground waters of the state not regulated by ss. 376.011-376.21.
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(11) "Petroleum storage system" means a stationary tank ... together with any onsite integral piping or dispensing system associated therewith, which is used, or intended to be used, for the storage or supply of any petroleum product ...
Section 9 of Chapter 90-98, Laws of Florida, amends the definition of "petroleum storage systems" found at Section 376.301(11), Florida Statutes, to include "oil/water separators, and other pollution control devices installed to meet the rules promulgated pursuant to this chapter."
Had this site been contaminated solely as a result of the operation of the oil/water separator that has been in effect since 1985, the site would be eligible for reimbursement because of the newly expanded definition of "petroleum storage systems" contained in Section 9 of Chapter 90-98, Laws of Florida.
Had this site been contaminated solely as a result of overfills of tanks and from leaking pipelines, the site would clearly be eligible for reimbursement.
Had this site been contaminated solely as a result of the draw-off of the water from the storage tanks and the subsequent disposal of that contaminated water prior to the installation of the oil/water separator, the site would not have been, according to the Respondent's interpretation of its rules and governing statutes, eligible for reimbursement because the disposal of the contaminated water is not "related to storage." Great deference is given to an agency's interpretation of its rules and regulations. An agency's interpretation of its own rules and regulations will not be overturned even if such interpretation is not the sole possible interpretation, the most logical interpretation, or the most desirable interpretation. An agency's interpretation of its rules and governing statutes will not be overturned unless
the interpretation is clearly erroneous. Health Quest Corporation, et al. v. Department of Health and Rehabilitative Services and Arbor Health Care Co., et al., 11 FALR 5427 (1989), ABC Liquors, Inc. v. Department of Business Regulation, 397 So.2d 696 (Fla. 1st DCA 1981); Department of Insurance v.
Southeast Volusia Hospital District, 438 So.2d 815 (Fla. 1983). Respondent's interpretation that the discharge of the water prior to the installation of the oil/water separator is an act related to disposal rather than an act related to storage is a permissible interpretation which should not be overturned.
Consequently, Respondent's determination that the site would be ineligible had all contamination come from the contaminated water should be upheld.
Respondent has likewise determined that the site would be ineligible had all the contamination come from the discharge of the crude oil and the crude oil tank bottoms because such discharges are acts related to disposal rather than acts related to storage. For the reasons given in discussing the contamination caused by the water draw-off, Respondent's determination as it relates to the crude oil and crude oil tank bottoms should be upheld.
Respondent's determination that the accidental spills and discharges which occurred while petroleum products were being pumped from the storage tanks into tanker trucks at the loading rack are not related to storage is rejected as being clearly erroneous. The definition of "storage system" contained in Section 376.301(11), Florida Statutes, includes "any integral piping or dispensing system associated" with the tank. The loading rack is such a "dispensing system", and the accidental contamination resulting from the dispensing of product in a tanker truck for subsequent transportation should be eligible for reimbursement.
Respondent has determined that the contamination resulting from accidental spills at the loading rack upon draining a tanker truck so it can take on a different type of petroleum product is not related to the storage system. This is a permissible interpretation that should not be overturned. However, contamination from this source was insignificant.
The contamination from the discharge of the crude oil and the crude oil tank bottoms is separate and distinct from the other contamination at the site. The cleanup costs of this contamination is ineligible and no part of its costs should be reimbursed.
The contamination of the groundwater was caused by a combination of eligible and ineligible causes. Petitioner, the party with the burden of proof in this proceeding, did not establish that the ineligible cause of this contamination was an insignificant contributor to the groundwater contamination, nor did it establish that the areas contaminated from ineligible causes can be separated or distinguished from areas contaminated from eligible causes. Consequently, Petitioner failed to establish its entitlement to reimbursement for the cleanup of contaminated groundwater.
Petitioner has established that the free floating petroleum contamination was from eligible causes. Petitioner has also established that, while some of the same equipment may be used in the cleanup of the free floating petroleum and in the cleanup of the contaminated groundwater, the two types of cleanups can be accomplished in two separate stages. The rationale given for Respondent's decision to disallow all reimbursement for the cleanup of the free floating petroleum is that Petitioner would have to incur most of these expenses if it were only engaged in the cleanup of the contaminated groundwater. Respondent considers the cleanup costs for the free floating contamination to be
an incremental, extra cost of the cleanup of the contaminated groundwater because the same or similar equipment may be used by Petitioner in its cleanup of the two types of contamination. While there may be significant cost savings to Petitioner because of the similarity between the procedure used to cleanup free floating petroleum and the procedure used to cleanup contaminated groundwater, this cost savings does not justify the disallowance of all reimbursement for this otherwise eligible cleanup. The exercise of administrative discretion must be reasoned and must be based on competent, substantial evidence. An exercise of discretion that is not supported by facts or logic may be rejected as being arbitrary. Agrico Chemical Company v.
Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978), cert. denied, 376 So.2d 74 (Fla. 1979); Island Harbor Beach Club, Ltd. v.
Department of Natural Resources, 495 So.2d 209 (Fla. 1st DCA 1986). Respondent's decision to disallow reimbursement for the free floating petroleum is rejected as being arbitrary. Petitioner is entitled to reimbursement of those reasonable, allowable costs that it can establish have been incurred in the cleanup of the free floating petroleum phase of the contamination.
Based on the foregoing findings of fact and conclusions of law, it is Recommended that Respondent enter a final order which determines that the subject site is eligible to participate in the reimbursement program for the cleanup of the free floating petroleum contamination, but that the subject site is ineligible to participate in the reimbursement program for the cleanup of the sludge contamination and for the cleanup of the groundwater contamination.
RECOMMENDED this 20th day of July, 1990, in Tallahassee, Leon County, Florida.
CLAUDE B. ARRINGTON
Filed with the Clerk of the Division of Administrative Hearings this 20th day of July, 1990.
The following rulings are made on the proposed findings of fact submitted by Petitioner in its Supplemental Proposed Recommended Order.
The following rulings are made on the proposed findings of fact contained in Respondent's Proposed Recommended Order and in Respondent's Supplemental Proposed Recommended Order.
E. Gray Early, Esquire Assistant General Counsel
Robert W. Wells, Esquire Ignacio E. Sanchez, Esquire KELLEY, DRYE & WARREN
Dale H. Twachtmann, Secretary Department of Environmental Regulation Twin Towers Office Building
Daniel H. Thompson, General Counsel Department of Environmental Regulation Twin Towers Office Building
