STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HANDY FOOD STORES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 89-5905

) DEPARTMENT OF ENVIRONMENTAL ) REGULATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on March 27, 1990, in Tampa, Florida.

APPEARANCES

For Petitioner: John H. Rains, III, Esquire

Russell S. Thomas, Esquire

P. O. Box 3433 Tampa, Florida 33602

For Respondent: Janet D. Bowman, Esquire

D. Gary Early, Esquire

Twin Towers Office Building 2600 Blairstone Road

Tallahassee, Florida 32399-2400 STATEMENT OF THE ISSUES

Whether petitioner's application for reimbursement from the inland protection trust fund should be approved, or whether petitioner was grossly negligent in its conduct and is accordingly not entitled to recovery.

PRELIMINARY STATEMENT

By letter dated September 14, 1989, respondent, Department of Environmental Regulation, advised petitioner, Handy Food Stores, Inc., that its application for reimbursement from the inland protection trust fund to clean up leaking gasoline tanks at petitioner's convenience store in LaBelle, Florida had been denied. As a ground, the agency contended petitioner had been grossly negligent in the maintenance of the petroleum storage system within the meaning of Subsection 376.3071(9)(b)3., Florida Statutes (1989). This notice of denial was later amended on March 21, 1990 to clarify and narrow the basis for denial. By petition filed on October 10, 1989, as later amended on March 13, 1990, petitioner requested a formal hearing pursuant to Subsection 120.57(l), Florida Statutes (1989) to contest the decision. The matter was referred by respondent to the Division of Administrative Hearings on October 30, 1989, with a request

that a hearing officer be assigned to conduct a hearing. By notice of hearing dated November 20, 1989, a final hearing was scheduled on February 27 and 28, 1990, in Tampa, Florida. At the request of the parties, the matter was rescheduled to March 27, 1990 at the same location.

At final hearing, petitioner presented the testimony of J. Andrew Bever, president, David A. Laughner, director of operations, and Howard Ray Ledbetter, an engineer and accepted as an expert in underground storage tank management and compliance with underground tank regulations. Also, it offered petitioner's exhibits 1-8. All exhibits were received in evidence. Respondent presented the testimony of John P. Svec, a professional engineer and accepted as an expert in storage tank management and regulatory compliance, Patricia J. Dugan, DER environmental administrator of the early detection incentive program, and Jeffrey G. Gould, a DER tank inspector. Also, it offered respondent's exhibits 1-8. All exhibits were received in evidence.

The transcript of hearing was filed on April 25, 1990. Proposed findings of fact and conclusions of law were filed by petitioner and respondent on May 4 and 7, 1990, respectively. A ruling on each proposed finding is made in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. Petitioner, Handy Food Stores, Inc. (HFS), is a small, family owned corporation that owns and operates a chain of thirty-four convenience stores in Florida, thirty two of which sell gasoline. At issue in this proceeding is Store No. 82 (Store 82 or the store) located on State Road 378 in LaBelle, Florida. The facility has also been identified by respondent, Department of Environmental Regulation (DER), as DER facility number 268520172. This controversy concerns an application by HFS for reimbursement of costs and expenses related to cleanup activities at Store 82 incurred after that store site became contaminated with petroleum and petroleum products. The application was preliminarily denied by DER on the ground HFS was "grossly negligent" in the maintenance of the petroleum storage system at Store 82. Because the average clean-up cost per site is $330,000, and HFS denied that it was grossly negligent in its operation and management of the system, HFS requested a formal hearing to contest the agency's proposed decision.

   
   

2. The facts in this case are not complicated, and with certain exceptions, are relatively free of dispute. Until February 1988 HFS's director of operations was Ray Collier. On February 2, 1988 Collier ordered the installation of four monitoring wells at Store 82 to determine if any leaks were occurring in two underground storage tanks located on the site. Such wells were required to be installed by DER for monitoring purposes no later than December 31, 1988. The parties have stipulated that the wells were properly installed in accordance with agency rules. When the wells were installed on February 2, the contractor's report reflected no contamination was present. Collier also contracted with Purity Well Testing, Inc. (PWT) to conduct monthly monitor system checks at the store. Such checks are required by DER to determine if any discharges of product are occurring in the storage system.

   
   

3. On February 10, 1988 Collier resigned as director of operations to accept a position in Saudi Arabia. Prior to his resignation Collier was replaced by David A. Laughner, who still remains in that position. According to

   Laughner, he and Collier spent only two weeks together prior to Collier's departure, and Collier did not advise him of the details concerning the monitoring program. Thus, he had no immediate knowledge of the existence of the monitoring wells or the tests being conducted by PWT.

   
   

4. HFS's corporate offices are located in an office building at 9330 Adams Drive, Tampa, Florida. Besides three corporate officers and the director of operations, the corporation had only three office employees who worked at the corporate headquarters. The building is owned by B & B Cash Grocery Stores, Inc. (B & B), which operates a chain of grocery stores in southwest Florida. HFS's offices are on the second floor while B & B's corporate offices are located on the first floor. Although the two corporations are legally separate entities, they have certain common directors and shareholders, and the two corporations once utilized a centralized bookkeeping and billing department which was controlled and staffed by B & B. Under that arrangement, bills sent to HFS were actually processed by B & B's accounting department which paid the invoice on behalf of HFS. In addition, the two corporations once shared the same post office box. Under that arrangement, which existed in February 1988 and continued until at least August 1988, all mail sent to HFS at the post office box was initially processed by B & B's mail room rather than being sent directly upstairs to HFS.

   
   

5. On April 24, 1988 PWT conducted its first monthly monitor well inspection at the store. That report indicated that three inches of free product was present in monitoring well three. A second monthly monitoring well inspection was conducted on May 10, 1988 reflecting the presence of two inches of free product in well number three and twelve inches in well number four. Free product was defined by a DER witness as "material (such as a petroleum product) that will be left on the water table." The presence of a free product, including a refined petroleum product, in a monitoring well is an indication that a discharge or release of the product from a storage tank has and may be continuing to occur. If free product is observed, it is the responsibility of the tank owner to determine the cause of the discharge, and if it is determined that the discharge is coming from the tank, he must empty the tank so that the system can be repaired or replaced. Also, the owner is obliged to notify DER within three working days of discovery of the discharge. The purpose behind

   these reporting and investigating requirements is to try to decrease the size of the petroleum plume and the area of contamination.

   
   

6. The results of the two tests, and the invoices for the charges, were sent by PWT to HFS's post office box. Consistent with existing procedure, B & B's mail room received the reports and invoices and forwarded both to B & B's billing department for processing and payment of the invoices. Rather than forwarding the test reports upstairs to HFS, B & B filed the reports with the invoices in B & B's billing department. The parties have stipulated that no one in the billing department knew or had reason to know of the potential significance of the monitor well inspection reports. Because the bills had been paid, PWT did not contact HFS to determine whether the reports had been received. Consequently, neither Laughner nor any other HFS corporate employee had knowledge that monitor well inspections had been conducted at Store 82 or that inspection reports had been forwarded by PWT. However, it is found that copies of such reports were either forwarded to Store 82 by someone in Tampa or by PWT because they were available for inspection by DER representatives at a store inspection that took place in late June 1988.

   
   

7. As the result of an unconfirmed telephonic report received in early February 1988 concerning possible contamination at Store 82, on June 17, 1988 a

   DER inspector, Jeffrey Gould, sent a letter to Laughner at HFS's corporate post office box advising that Gould would be conducting a stationary tanks compliance inspection at Store 82 during the week of June 27, 1988. The letter also requested that all records associated with the storage tank system be available at the facility for inspection. This inspection is commonly referred to as a "17-61 compliance inspection", meaning that the storage tanks would be checked to see if they met the requirements of Chapter 17-61, Florida Administrative Code (1987). Although the letter was addressed to Laughner, it was forwarded by an undisclosed person to a Store 82 employee, Betty Smith, whose title is area supervisor, and Laughner denies having seen the letter until several months later. 1/

   
   

8. Gould and another DER employee, Alicia Andersen, met with Betty Smith at the store on June 29, 1989. It may be inferred that Smith had copies of the PWT monitoring reports for she produced copies of the same for Gould, who then hand-copied and reviewed the two reports. Gould also made a physical inspection of the four monitoring wells on the site. He noted the presence of free product in two of the four monitoring wells. One had 7/8 of an inch of free product (gasoline) while a second well had fourteen inches of free product. Gould also detected a strong odor and observed sheen in the northeast monitoring well and a strong odor in the southeast monitoring well. These findings are memorialized in a written compliance inspection report received in evidence as respondent's exhibit 2.

   
   

9. After the inspection was completed, Gould discussed generally the results with Smith, had her sign the report and gave her a copy. Since Smith was not present at final hearing, Gould's version of their conversation is the only competent evidence of record on the subject. According to Gould, he told Smith that he "had found product and that it is a problem." Gould acknowledged that he did not go into too much detail with Smith concerning the report since she was only an employee, but he specifically recalled advising her "there was a definite problem at this facility" and that he "spent a long time" with her. Finally, after giving Smith a copy of the report, Gould told Smith to "return it to her office." However, Smith did not do so. Gould's version of the events was not credibly contradicted and it is hereby accepted.

   
   

10. On July 11, 1988 Gould, over the district manager's signature, sent Laughner by certified mail a "warning" letter and copy of the June 29 inspection report. The documents were sent to the post office box in Tampa. The return receipt was signed on July 15 by one Patty Jackson, whose relationship, if any, to HFS was not disclosed. The letter provided in pertinent part as follows:

    
    

    Free gasoline product was found in two of the compliance monitoring wells. Product thickness in one well exceeded the bailer limitation of fourteen inches. The presence of free product was also noted on monitor well records by Purity Well Testing Company for April 24, 1988 and May 10, 1988. A maximum thickness of twelve inches was measured.

    Such discharges are in violation of Chapter 376, Florida Statutes and Florida Administrative Code Rule 17-3. It is required that the discharges be stopped and the integrity of the storage system verified. Records available onsite indicate the 4000

    gallon tank failed a tightness test with a leak rate of -0.1057 gallons per hour (gph) on September 26, 1986. The tank however passed the test on October 7, 1986 at +0.027 gph. Please describe all repairs, if any, to the storage system after the initial failure. The Department requests a meeting to discuss entry into a Consent Order to resolve the violations. Please contact Jeff Gould at 813/332-2667 or write the letterhead address within ten (10) days of receipt of this letter to schedule a meeting. Your cooperation is appreciated. (Emphasis added)

    
    

11. As noted in the previous finding, the letter and report were received on July 15, 1988 but were not forwarded upstairs to Laughner or any other corporate employee. When Gould received no oral or written response - to his letter, Gould eventually telephoned Laughner on August 26, 1988. During the course of the telephone call, for the first time Laughner became aware of the existence of the contamination problem at Store 82 and the nature of the tests that had been performed that spring by PWT. It is also noted that during the telephone call, Laughner acknowledged that Gould's letter of July 11 had just been routed to his desk. The two agreed to meet at DER's Fort Myers district office on September 1, 1988 to discuss the violations.

    
    

12. On August 29, 1988, or three days after Laughner spoke with Gould, HFS filed its incentive program application for Store 82. The application, which noted that the date of discovery of a petroleum discharge at Store 82 was on June 29, 1988, was received by DER on September 6, 1988.

    
    

13. On September 1, 1988, Laughner met with DER representatives to discuss Store 82. Laughner was told that certain specific measures should be taken to insure the integrity of the storage tank system. That same day, in a letter to DER, HFS informed DER that a tank integrity test had been scheduled for Store 82 and that HFS was implementing initial remedial action (IRA) to remove any petroleum product and excessively contaminated soils and that an enviromental consultant had been contracted to conduct IRA, site contamination assessment and any necessary remedial action. Until that time, and dating back to June 29, 1988, HFS had only conducted a stick test at Store 82 to monitor the presence of petroleum product. Also, HFS personnel had not reviewed any repair records, monitoring well records, or inventory records during this same period of time.

    
    

14. On September 7, 1988, HFS conducted a tank integrity test at Store 82. The integrity test passed under the criteria set by the National Fire Protection Association, which is the acceptable standard under Chapter 17-61, Florida Administrative Code. However, DER did not consider the testing to be a timely response since it considered no more than a week to be a reasonable period of time for testing once a discharge is discovered.

    
    

15. On October 7, 1988, DER, through its inspector Gould, conducted an incentive program compliance inspection at Store 82. Although Gould observed two and one-eighth inches of free product in one well and a sheen in another well, the compliance inspection checklist noted that Store 82 was in compliance with Section 376.3071, Florida Statutes. Question 3 on the verification checklist asked if there was "evidence of gross negligence." Gould checked "yes" and made the following notations:

    See penalty worksheets (draft CO to OGC for review). Major violations failed tank test (enclosed) showed leaks Sept. 1986! - D.E.R. not notified, free product in well treated as a discharge and D.E.R. not notified of product in wells to take action.

    
    

    Gould responded in the above fashion because he concluded that nothing had been done for long periods of time to insure the integrity of the petroleum storage system at Store 82. It should be noted, however, that nothing in the checklist indicated that damages of any kind were caused by HFS's failure to take remedial action until September 1988, and DER representatives admitted they had no proof of such damages.

    
    

16. On September 14, 1989, or approximately one year later, DER issued its proposed agency action denying Store 82's eligibility for reimbursement under the incentive program. As later amended on March 16, 1990, the agency's letter recited the following reason for denying the application:

    
    

    Monitor well reports dated April 24, 1988 and May 10, 1988 listed free product in monitoring wells. No report of discharge discovery was made to the Department by Handy Foods as required by Chapter 17-61, F.A.C.

    On June 29, 1988, an inspector from the Department discovered free product in Petitioner's monitoring wells. Petitioners were sent a warning letter by the Department on July 11, 1988, requesting that Petitioner stop any discharges and verify the integrity of its storage system. Petitioner conducted such tank tightness tests on September 7, 1988, or approximately five months after the monitoring well reports indicated the discovery of free product. Failure to report, investigate and abate where there is evidence of a discharge shall be construed to be gross negligence in the maintenance of a petroleum storage system.

    
    

    In other words, DER contended that HFS was "grossly negligent" within the meaning of the law by failing to "report, investigate and abate" the discharge until almost five months after the leaks were first detected by PWT.

    
    

17. DER admits that it has no information to support a contention that, as to Store 82, HFS failed to maintain or falsified inventory or reconciliation records, intentionally damaged the petroleum storage system, failed to make monthly monitoring system checks, or failed to meet monitoring and retrofitting requirements in accordance with chapter 17-61 procedures.

    
    

18. Although the incentive and reimbursement programs under section 376.3071 were enacted by the legislature in 1986, the agency has not promulgated formal rules that define or identify "gross negligence" or the criteria for determining eligibility under the incentive reimbursement program.

    
    

19. Through the introduction of various agency records received in evidence as petitioner's composite exhibit 6, HFS sought to establish the fact

    that DER, in at least four prior cases, reached a result inconsistent with that reached in its proposed agency action regarding HFS. However, DER has processed thousands of applications of this nature, and the presence of four contrary results does not establish any binding precedent. Moreover, DER's administrator acknowledged that the agency had either erred in the cited cases or the facts were distinguishable from those presented herein.

    
    

20. The parties disagree on the meaning of the words "gross negigence" as it is used in Subsection 376.3071(12(b), Florida Statutes (1987). Both parties presented expert testimony concerning what they perceived to be a proper interpretation of the statute. According to HFS's expert, Howard Ledbetter, he construed the term to mean a willful and reckless disregard for agency regulations that were known and understood by the alleged offender. Ledbetter established that in the spring of 1988 there was no firm understanding by the industry of what was required by DER's underground storage tank rules. Finally, he recalled receiving several different interpretations of the rules from DER personnel. In contrast, a DER expert, John Svek, opined that gross negligence occurs whenever an owner/operator commits a major violation of chapter 17-61. However, Svek conceded that chapter 17-61 does not distinguish or define major or minor violations, and nothing in chapter 17-61 equates a failure to immediately investigate a discharge to gross negligence. Further, he admitted that a lack of knowledge of a discharge is a factor to consider in determining whether gross negligence is present. A second DER expert, Patricia Dugan, acknowledged that not only is there no written document setting forth guidelines for determining when gross negligence occurs but that the term "gross negligence" does not appear in chapter 17-61. However, Dugan maintained that if notices are received by a corporation but are misfiled, as was alleged to have been done here, that conduct equates to gross negligence on the part of HFS.

    
    

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties hereto pursuant to Subsection 120.57(l), Florida Statutes (1989).

    
    

22. As the petitioner in this cause, Handy Food Stores, Inc. is obliged to prove by the preponderance of evidence that it is entitled to reimbursement from the inland protection fund.

    
    

23. Section 376.3071, Florida Statutes (1989) establishes an inland protection trust fund which shall be used for, among other things, the rehabilitation and cleanup of sites contaminated as a result of a discharge from petroleum storage systems. To encourage the early detection, reporting and cleanup of contamination from leaking petroleum storage sites, subsection 376.3071(9) creates the early detection incentive program which reimburses the site owner for costs in cleaning such contaminated sites. However, subparagraph (9)(b)3. of the statute provides that reimbursement shall not lie whenever:

    
    

    3. Upon discovery by the department that the owner or operator of a petroleum storage system has been grossly negligent in the maintenance of such petroleum storage system;

    . . . the site at which such system is located shall be ineligible for participation in the incentive program and the owner shall be liable for all costs due to discharges from petroleum storage systems at that site.

    For the purposes of this paragraph, willful failure to maintain inventory and reconciliation records, willful failure to make monthly monitoring system checks where such systems are in place, and failure to meet monitoring and retrofitting requirements within the schedules established under chapter 17-61, Florida Administrative Code, or violation of similar rules adopted by the Department of Natural Resources under this chapter, shall be construed to be gross negligence in the maintenance of a petroleum storage system.

    
    

    Under respondent's theory, petitioner's failure to timely report, investigate and abate a discharge at its Store 82 constituted gross negligence in the maintenance of a petroleum storage system within the meaning of the law.

    
    

24. The term "gross negligence" is not defined in the statute. Where the critical words are not statutorily defined, well established principles of statutory construction would normally come into play, and the words' common, ordinary meaning would apply. See, e.g., Division of Alcoholic Beverages and Tobacco v. Salvation Limited, Inc., 452 So.2d 65, 67 (Fla. 1st DCA 1984). Further, where words can be readily understood by reference to commonly accepted dictionary definitions, such reference should be made. However, the term "gross negligence" is a legal concept that has been defined by the courts on numerous occasions. However, none of those decisions arose out of an administrative setting under subsection 376.3071(9)(b) and thus they are not directly on point. 2/ Through final agency action on at least two occasions, DER has construed the term "gross negligence." Under these circumstances, reference to the agency's final orders as an aid in construing the statutory term is deemed to be appropriate.

    
    

25. The parties have cited as having precedential value two agency final orders and a recommended order construing the above statute. In one, Puckett Oil Company v. Department of Environmental Regulation, 10 FALR 5525 (DER, September 1, 1988), the agency did not disturb the hearing officer's conclusion of law which defined "gross negligence" as a "grossly careless disregard of the safety and welfare of the public, or that reckless indifference of the rights of others which is equivalent to an intentional violation of them." Id. at 5567. Using that standard, the hearing officer concluded that, under the facts presented in that case, the owner/operator's conduct did not equate to gross negligence. In another final order, Nana's Petroleum, Inc. v. Department of Environmental Regulation, DOAH Case No. 89-5912, Final Order issued March 29, 1990, the agency found gross negligence to be present where an owner/operator failed to investigate the source of a leak for more than fifteen months after learning of the same, and the tanks were only a few blocks from Lake Okeechobee, a Class I drinking water supply. In the final cited case, Weeks Oil Company, Inc. v. Department of Environmental Regulation, DOAH Case No. 89-5523, Recommended Order issued May 3, 1990, the hearing officer found gross negligence present where the owner/operator learned of the presence of free product in monitoring wells in December 1988 but failed to take any remedial steps until October 1989. In both of the latter cases, the applications for reimbursement were denied. Applying the agency's accepted definition of gross negligence, as set forth in the Puckett Oil Co. case, it cannot be concluded that petitioner's conduct in the maintenance of its storage system equated to gross negligence within the meaning of the law. While petitioner's actions may have risen to the

level of simple negligence through its misfiling of documents and mail and its store manager's failure to forward the inspection report and test reports to corporate headquarters, HFS did not display a "grossly careless disregard of the safety and welfare of the public, or that reckless indifference of the rights of others which is equivalent to an intentional violation of them." Therefore, petitioner's application for participation in the petroleum contamination clean- up reimbursement program should be approved.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Handy Food Stores, Inc. for

participation in the petroleum contamination clean-up program be approved.

DONE and ORDERED this 23rd day of May, 1990, in Tallahassee, Leon County, Florida.

DON ALEXANDER

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 23rd day of May, 1990.

ENDNOTES

1/ In addition, it is noted that Gould's letter reflects that a copy of the letter was sent to Store 82.

2/ For example, the seminal case of Glaab v. Caudill, 236 So.2d 180 (Fla. 2d DCA 1970) arose out of an action under the automobile guest statute. There, the court defined "gross negligence" as "a conscious and voluntary act or omission which is likely to result in grave injury when in the face of a clear and present danger of which the alleged tort-feasor is aware." Id. at 185.

APPENDIX TO RECOMMENDED ORDER

Petitioner:

1-5. Rejected as being conclusions of law.

1. Partially adopted in finding of fact 1.

2. Partially adopted in finding of fact 2.

3. Partially adopted in finding of fact 3.

4. Partially adopted in finding of fact 2.

5. Partially adopted in finding of fact 3.

6. Partially adopted in finding of fact 5. 12-14. Partially adopted in finding of fact 4.

1. Rejected as being unnecessary.

2. Partially adopted in finding of fact 18.

3. Partially adopted in finding of fact 20.

4. Rejected as being a conclusion of law.

5. Partially adopted in finding of fact 19.

6. Partially adopted in finding of fact 15. Respondent: 1. Rejected as being unnecessary.

Note - Where a proposed finding has been partially used, the remainder has been rejected as being irrelevant, unnecessary, subordinate, cumulative or not supported by the evidence.

COPIES FURNISHED:

Dale D. Twatchtmann, Secretary Department of Environmental Regulation Twin Towers Office Building

2600 Blairstone Road

Tallahassee, FL 32399-2400

John H. Rains, III, Esquire Russell S. Thomas, Esquire

P. O. Box 3433 Tampa, FL 33602

Janet E. Bowman, Esquire

E. Gary Early, Esquire

Twin Towers Office Building 2600 Blairstone Road

Tallahassee, FL 32399-2400

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF ENVIRONMENTAL REGULATION

HANDY FOOD STORES, INC.

a Florida Corporation,

Petitioner,

DOAH File No. 89-5905

vs. OGC File No. 89-1271

STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL REGULATION.

Respondent

/

FINAL ORDER

On June 21, 1990, the Hearing Officer from the Division of Administrative Hearings served his Recommended Order on the Department of Environmental Regulation (Department) and all parties. (Exhibit A) The Department filed exceptions to the Recommended Order and Petitioner, Handy Food Stores, (HFS) filed responses to the Department's exceptions. All exceptions and responses were timely. The matter thereupon came before me as Secretary of the Department for final agency action.

BACKGROUND

This matter arose from Petitioner's request on October 10, 1989, for an administrative proceeding on the Department's denial of HFS's application for reimbursement pursuant to Section 376.3071(12)(b), Florida Statutes. That law provides a program for reimbursement of expenses incurred in the clean-up of contamination resulting from storage of petroleum or petroleum products. It applies to contaminated sites reported to the Department on or prior to December 31, 1988. Sites are not eligible for reimbursement if they are excluded from participation in the Early Detection Incentive Program for reasons set forth in Sections 376.3071(9)(b) or (d), Florida Statutes.

HFS sought reimbursement for cleanup expenses at a convenience food store owned by HFS, Store Number 82 in LaBelle, Florida. The Department initially denied eligibility because, among other things, HFS was grossly negligent in the maintenance of the storage system at the site, and therefore ineligible under Section 376.3071(9)(b)3., Florida Statutes. After an administrative hearing held on March 27, 1990, in Tampa, Florida, the Division of Administrative Hearings Hearing Officer concluded that HFS conduct should not be treated as gross negligence, and recommended that the Department determine HFS to be eligible under Section 376.3071(12)(b), Florida Statutes.

RULINGS ON EXCEPTIONS

The Department has filed three exceptions to Conclusions of Law of the hearing officer. While they are on different specific rulings of the hearing officer, they all go to the ultimate determination in this case. That is, did the actions of HFS that preceded its request for reimbursement constitute gross negligence? Although I could respond to the exceptions sequentially and separately, the considerations that they raise are interrelated. Therefore, I shall deal with them together in the discussion below.

Basic to the final determination in this case is a consideration of the appropriate definition of gross negligence in cases such as this one. The use of the term gross negligence appears in Section 376.3071(9)(b)3., Florida Statutes, as part of the provisions of the Early Detection Incentive Program. If HFS is found to have been grossly negligent in the maintenance of its petroleum storage system, it is ineligible to participate in the reimbursement program. Section 376.3071(9)(b)3., Florida Statutes provides:

Upon discovery by the department that the owner or operator of a petroleum storage system has been grossly negligent in the maintenance of such petroleum storage system; . . . the site at which such system is located shall be ineligible for participation in the incentive program .

For the purposes of this paragraph, willful failure to maintain inventory and reconciliation records, willful failure to make monthly monitoring system checks where such systems are in place, and failure to meet monitoring and retrofitting requirements within the schedules established under Chapter 17-61, Florida Administrative Code, or violation of similar rules adopted by the Department of Natural

Resources under this chapter, shall be construed to be gross negligence in the maintenance of a petroleum storage system. (Emphasis added.)

In his recommended order the hearing officer rejected the interpretation of gross negligence contained in Glaab v. Caudill, 236 So.2d 180 (Fla. 2d DCA 1970), that was proposed by the Department. The hearing officer referred to that case as "not on point," presumably because it arose from a different context. Instead, the hearing officer looked to two cases--Puckett Oil Company v. Department of Environmental Regulation, 10 F.A.L.R. 5525 (Final Order dated September 1, 1988); and Nana's Petroleum v. Department of Environmental Regulation, 12 F.A.L.R. 1758 (Final Order dated March 29, 1990) -- and stated that it was appropriate to look to Department final orders that have construed the specific statute under consideration. The hearing officer also cited the recommended order in the case of Weeks Oil Company Inc. v Department of Environmental Regulation, DOAH Case No. 89-5523. Since that time the Department has issued a final order in that case which adopts the recommended order in its entirety. F.A.L.R. (Final Order dated June 15, 1990)

While it is true that an agency's interpretation of its implementing statute in its final orders is an appropriate place to look for agency precedent, the hearing officer was incorrect in rejecting the general law of negligence developed in other areas. The legislature in using the term gross negligence must be presumed to know that the term is derived from general tort law and concerns the standard of care required in certain circumstances. This agency used an analysis of general negligence law in its final order in Racetrac Petroleum v. Department of Environmental Regulation, 12 FALR 2409 (Final Order dated May 9, 1990). Although not cited by the Hearing Officer, that decision was issued on May 9, 1990, prior to the Recommended Order in this case. Of interest also is that the hearing officer in the Weeks case based his analysis of the negligence standard on the Glaab case that this hearing officer rejected.

In its response to exceptions HFS objects to the consideration of the Racetrac decision because it was issued after the date that the parties submitted their proposed recommended orders. The fact that it was not available for citation by the parties does not deprive it of precedential value. I note that I am required to follow decisions that were made in previous final orders of the Department unless the deviation therefrom is explained. See Section

120.68 (12)(c), Florida Statutes; Florida Administrative Code Rule 17-103.160. The final order in Racetrac specifically adopted the recommendation of the hearing officer in that case on the issue of negligence. In that regard it differs from the Puckett Oil case. In Puckett Oil I expressly found that the hearing officer's granting of a Notion in Limine precluded the Department from establishing the grounds for gross negligence, and therefore I rejected as gratuitous the hearing officer's conclusions concerning gross negligence. Puckett Oil, 10-FALR at 5539. Having rejected the Puckett Oil analysis in my previous final order, it would be incongruous for me now to consider the Department to be bound by the hearing officer's analysis in that case, as HFS would have me do. Rather, I consider the conclusions that were specifically adopted in the Racetrac final order to be the most current statement of this agency's interpretation of the gross negligence standard.

In the Racetrac case, the hearing officer relied on the previously cited Glaab case. In Glaab the court established a standard for gross negligence that

distinguished between "conscious" and "careless" disregard of consequences. The court went on to define a conscious disregard of consequences as:

a voluntary act or omission in the face of conditions toward which reasonable prudence requires a particularly keen alertness or caution when such act or omission is dangerous and well calculated to result in grave injury. Glaab at 84

That standard wad followed in Courtney v. Florida Transformer, Inc., 549 So.2d 1061 (Fla. 1st DCA 1989), in applying the gross negligence standard to an action brought under Section 440.11, Florida Statutes (1985). That court listed three elements that, taken together, constitute gross negligence. These are: (1) a composite of circumstances which together constitute a clear and present danger;

(2) an awareness of such danger; and (3) a conscious, voluntary act or omission in the face thereof which is likely to result in injury.

In its response to exceptions HFS objects to application of the Glaab standard because the Department did not offer evidence at hearing as to its standard for gross negligence. In doing so, HFS misconstrues the purpose of the requirement that an agency offer evidence of its non-rule policies when they seek to apply them in an administrative hearing. An agency's application of well settled law to a statutory term does not amount to incipient agency policy. Where an agency's application of a statute is readily apparent from a literal reading of the statute, an agency may base its actions on that interpretation without going through rulemaking. St. Francis Hospital, Inc., v. Department of Health and Rehabilitative Services, 553 So.2d 1351 (Fla. 1st DCA 1989)

In this case the applicable standard for gross negligence is derived from case law precedent, not agency interpretation. The only agency interpretation that arose at hearing was a discussion by Department witnesses concerning the practice of the Department in applying the gross negligence standard to certain facts. Their testimony was that the agency's consideration of this case was consistent with prior agency practice. Such testimony is evidence of the agency's interpretation that certain fact situations constitute gross negligence. However, in this case the ultimate result rests on whether the undisputed facts constitute gross negligence as that term has been previously interpreted by the courts or by this agency in its final orders. The decisions in Glaab and Courtney are the established law on gross negligence in Florida.

Their validity and applicability do not depend on proof that they have been "accepted" by the Department.

The three elements enunciated by the Courtney court are useful to apply in making the determination of whether gross negligence exists in this instance.

The first element is whether there is a composite of circumstances that constitute a clear and present danger. Clearly the presence of free product in a monitoring well in the amounts that occurred over a three month period in this case shows that there is the clear and present danger of extensive groundwater contamination by petroleum product. The hearing officer found that in April there were three inches of free product in well number three, in May there were still three inches in well number three and twelve inches in well number four. (R.O. pp. 5-6) The June inspection by a Department inspector showed 7/8 of an inch of free product in one well and fourteen inches in another. (R.O. p. 8)

In addition, at the June inspection the inspector observed a strong odor and sheen in the northeast monitoring well and a strong odor in the southeast monitoring well. (R.O. p.8) The Department's rule governing stationary tanks

requires that the presence of a layer or odor of pollutant shall be treated as a discharge. Rule 17-61.050(5)(c), Florida Administrative Code. The legislature specifically required that immediate steps be taken to contain, remove and abate a discharge. Section 376.305, Florida Statutes. Finally, the rule requires that the owner or operator of a storage system notify the Department within three working days of a positive test from a monitoring well. Rule 17-61.050(1)(b)6., Florida Administrative Code. None of these provisions were complied with in this case.

Furthermore, the enterprise of operation of a gasoline station is one in which the risk of groundwater contamination from leaks or spills is readily apparent. The legislature has specifically found that such an enterprise is a hazardous undertaking and that spills and discharges from such facilities pose a great danger to the environment, the citizens of the state and to other interests. Section 376.30(2)(b), Florida Statutes. One who undertakes a specific enterprise that requires skill and knowledge is charged with a greater duty of care than an ordinary person. Miriam Mascheck Inc. v. Mausner, 264 So.2d 859 (Fla. 3rd DCA 1972).

More problematic in this case is the second element, whether there was an awareness of the danger. The Department has argued that HFS should be charged with constructive knowledge of the contamination from the time of the first monitoring report in April. To analyze this issue, it is important to look first at the points at which some knowledge of the potential contamination might be chargeable to HFS. HFS was sent information relating to the contamination in the monitoring wells for the first time in April, 1988. (R.O. p.6) It was sent a second report in May, 1988. (R.O. p.6) These reports were received in the post office box at which HFS ordinarily received its mail. (R.O. p.6) HFS was sent another letter alerting it to possible contamination on June 17, 1988, to the same post office box, with a copy to Betty Smith, area supervisor. (R.O. p.7) This letter notified the company that an inspection for compliance with applicable rules would be held and that all records should be available. Those records included the monitoring reports showing contamination of the monitoring wells. On June 29, DER inspected the site. Betty Smith was present during the inspection, was verbally advised that contamination was present in the wells, was given a copy of the Department's report and advised to forward it to the home office. (R.O. pp.7-8) In addition, the record reflects that Betty Smith had the April and May monitoring well reports in her possession at the time of the inspection. (R.O. p.7)

Knowledge of an agent constitutes knowledge of the principal so long as the agent received the knowledge while acting within the scope of his or her authority. Ruotal Cord. v. Ottati, 391 So.2d 308 (Fla. 4th DCA 1980) In this case there are two possible entities who had knowledge relevant to the consideration of gross negligence, B & B Cash Grocery Stores, Inc. (B & B), and Betty Smith.

The relationship between B & B and HFS during the applicable time period fits well within standard concepts of agency. The corporations received their mail at the same post office box. B & B opened, processed and distributed all of HFS's mail, and paid invoices for HFS. (R.O. pp.5-6) To be considered an agency relationship, all that is required is that one entity delegate authority to another to act on its behalf. Economic Research Analysts, Inc. v. Brennan,

232 So.2d 219 (Fla. 4th DCA 1970). Receiving and processing mail by one entity for another entity has been held to be an agency relationship. Symons Cord. v. Tartan-Lavers Delray Beach, Inc., 456 So.2d 1254 (Fla. 4th DCA 1984). Therefore, I find that an agency relationship existed between B & B and HFS for

the processing and distribution of mail, and that HFS is charged with knowledge of the monitoring well reports in April and May of 1988.

As to the second agency relationship, it is clear that under the doctrine of respondent superior, Betty Smith was an agent of HFS during the relevant period of time. Therefore HFS is also charged with, at a minimum, knowledge of the June 17, 1988, letter and the Department inspection report of June 29, 1988, through its relationship with Betty Smith. In addition, because Ms. Smith had the monitoring well reports in her possession at the time of the inspection, HFS is charged with knowledge of those reports through that relationship as well.

The final issue for determination is whether, given the knowledge imputed to HFS that petroleum products had been found in their monitoring wells since April, 1988, did the failure to take any action before August 26, 1988, constitute a conscious, voluntary act or omission which is likely to result in injury.

HFS's failure to respond was clearly likely to result in injury from the spread of groundwater contamination. Given the agency relationship between HFS and both B & B and Betty Smith, it is clear that the failure to respond after receipt of the notices letter was a conscious response to the situation. In determining that the failure to act was a conscious, voluntary omission on the part of HFS, I have considered the fact that both prior to and after the time that the first contamination was discovered, HFS made no attempt to ensure that persons within its organization who had the ability to respond were apprised of possible contamination. HFS failed to ensure that its operations manager was familiar with its monitoring responsibilities, and failed to ensure that its area managers were aware of the need to report contamination when they were aware of it. HFS also failed to ensure that B & B processed its mail properly. The amount of care required in any circumstance increases with the dangerousness of the agency involved and thus with the likelihood of injury. Marks v Delcastillo, 386 So.2d 1259 (Fla. 3rd DCA 1980), citing Carter v. J. Ray Arnold Lumber Co., 83 Fla 470, 91 So. 893 (Fla. 1922). The failure to use even slight care is gross negligence. Faircloth v. Hill, 85 So. 2d 870 (Fla. 1956) Therefore, it was incumbent on HFS, which took upon itself the operation of a gasoline storage system, to take steps to ensure that it was properly maintained. The failure of HFS to respond to the existence of groundwater contamination for a period of five months was a direct and foreseeable result of the failure of HFS to insure that the proper flow of information was maintained. HFS cannot now rely on its negligence in failing to handle the information regarding the contamination, to avoid responsibility for responding to the contamination. The information was supplied to HFS in a proper manner and the internal failure to deliver the information to the proper person within the organization is chargeable to HFS alone. HFS has pointed to no actions that it took to provide for the eventuality of a discharge being detected. During the period of time prior to the telephone call from the Department in August of 1988, HFS did not exhibit even a slight degree of care with regard to its responsibilities to contain, abate and report a discharge.

Therefore, I find that the course of conduct' of HFS in carrying out its responsibility to maintain its petroleum storage system and to respond to evidence of contamination in a timely manner constitutes gross negligence. For the reasons described above, I accept the exceptions filed by the Department and find that HFS is ineligible to receive funding under Section 376,3071 (12), Florida Statutes.

I do note, however, that this year the Florida Legislature enacted a new statute, Chapter 90-98, Laws of Florida, that may allow HFS to receive reimbursement for their site. Although this ruling precludes HFS from receiving reimbursement under Section 376.3071(12), Florida Statutes, as it existed at the time HFS applied for reimbursement, it does not preclude the Department from considering their eligibility under the new program. That determination is an entirely separate action and may be commenced by HFS at the earliest available time. At this time it would be inappropriate for the Department to consider whether HFS is eligible under the new program.

Therefore, having considered the recommendation of the hearing officer, the exceptions and the responses thereto, it is ORDERED:

1. The findings of fact and conclusions of law of the hearing officer are adopted except as modified herein.

   
   

2. The application by HFS for reimbursement pursuant to Section 376.3071(12), Florida Statutes is hereby DENIED.

Any party to this Order has the right to seek judicial review of the Order pursuant to Section 120.68, Florida Statutes, by the filing of a Notice of Appeal pursuant to Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the Department in the Office of General Counsel, 2600 Blair Stone Road, Tallahassee, Florida 32399-2400; and by filing a copy of the Notice of Appeal accompanied by the applicable y filing fees with the appropriate District Court of Appeal. The Notice of Appeal must be filed within 30 days from the date this Order is filed with the clerk of the Department.

DONE AND ORDERED this 6th day of July, 1990 in Tallahassee, Florida.

STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL REGULATION

DALE TWACHTMANN

Secretary

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

Telephone: (904) 488-9730

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by U.S. Mail this 6th day of July, 1990 to:

John H. Rains, III, Esquire Janet E. Bowman, Esquire and Russell S. Thomas, Esquire and E. Gary Early, Esquire, Annis, Mitchell, Cockey, Florida Department of

Edwards & Roehn, P.A. Environmental Regulation One Tampa City Center Building 2600 Blair Stone Road Suite 2100 Tallahassee, Florida

Tampa, Florida 33601 32399-2400

Donald R. Alexander

Division of Administrative Hearings 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL REGULATION

CAROL A. FORTHMAN

Deputy General Counsel

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

Telephone: (904)488-9730

Docket for Case No: 89-005905

Orders for Case No: 89-005905