STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THOMAS P. CIMAGLIA, )

)

Petitioner, )

)

vs. ) CASE NO. 90-1521F

) DEPARTMENT OF ENVIRONMENTAL ) REGULATION, )

)

Respondent. )

)

FINAL ORDER

This matter was heard by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings, on July 11, 1990, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: B. Jordan Stuart, Esquire

Law Offices of Gaylord A. Wood, Jr.

304 Southwest 12th Street

Fort Lauderdale, Florida 33315

For Respondent: E. Gary Early, Esquire

Department of Environmental Regulation 2600 Blair Stone Road

Tallahassee, Florida 32399-2400 STATEMENT OF THE ISSUE

The issue is whether Thomas P. Cimaglia should be awarded $15,000 as a cost in attorney's fees under the Equal Access to Justice Act, Section 57.111, Florida Statutes, based upon a joint stipulation for settlement which Mr.

Cimaglia had entered into with the Department of Environmental Regulation in a prior proceeding. That prior proceeding had resulted in reimbursement to Mr. Cimaglia of funds which first had been denied when under Section 376.3071(12), Florida Statutes, he applied for clean-up costs for petroleum pollution.

PRELIMINARY STATEMENT

This application for costs and attorney's fees was filed by Mr. Cimaglia on March 2, 1990, and alleged that he was a prevailing small business party in a proceeding in which the Department of Environmental Regulation denied him reimbursement of certain clean-up expenses without substantial justification.

The Department of Environmental Regulation responded to the fees application, admitted the amount of the fees and costs claimed were reasonable, and agreed that Mr. Cimaglia was a small business party within the meaning of the statute, but denied that the Department's action lacked substantial justification, given

information available to the Department at the time of the denial. The fees sought would exceed the $15,000 statutory cap. The parties agree that if fees are due, Mr. Cimaglia should receive $15,000.

A hearing was set by the Division of Administrative Hearings, and the parties filed a prehearing statement agreeing to many facts; they still disagreed on whether the Department's denial of reimbursement funds was substantially justified within the meaning of Section 57.111(12), Florida Statutes. A transcript of the proceeding was filed and the parties filed proposed findings of fact, conclusions of law, and post-hearing memoranda. Rulings on proposed findings of fact are made in the Appendix to the Recommended Order.

FINDINGS OF FACT

1. The following findings are based on the stipulation of the parties:

   
   

   1. Thomas P. Cimaglia is the owner and operator of the Oasis Truck-N-Tel located at 5750 South State Road 7, Fort Lauderdale, Florida.

      
      

   2. On October 14, 1985, underground storage tanks at the facility were closed, i.e., they were excavated and removed. At the time the tanks were removed, diesel fuel contamination was discovered from fuel which had escaped from the tanks.

      
      

   3. The removal was observed by representatives of the Broward County Environmental Quality Control Board (County Board). At the County Board's request, monitoring wells were installed around the excavated area.

      
      

   4. The monitoring wells contained free petroleum product (diesel fuel). On or about January 21, 1986, Richard Valentine, Inc., submitted a proposal to Mr. Cimaglia for a scavenger system designed to recover the free product.

      
      

   5. On February 24, 1986, the County Board issued a "conceptual approval to construct and operate the recovery system." The system was subsequently installed.

      
      

   6. Much of the upkeep of the system was performed by Andy Greene and Mr. Cimaglia. Mr. Greene was a salaried employee of Petitioner involved in the day to day operations at the Oasis Truck-N-Tel.

      
      

   7. On July 15, 1986, Mr. Cimaglia advised the Department in Tallahassee, in writing, of his intent to file for reimbursement of cleanup costs.

      
      

   8. On September 18, 1986, Mr. Cimaglia was notified by the Department that the site would be inspected to determine eligibility for reimbursement. The inspection was performed during the week of September 22, 1986.

      
      

   9. On January 29, 1987, Mr. Cimaglia submitted to the Department a "proposal to recover diesel fuel from groundwater and clean up contaminated soil." The proposal indicated that the scavenger system had proven ineffective, for only 50 to 60 gallons of free product had been recovered.

      
      

   10. The new proposal suggested that the contamination area be excavated, the soil treated and diesel fuel on the water surface of the excavation be removed by a pump truck and soaking rags.

   11. On March 16, 1987, the County Board approved the "Remedial Action Plan."

       
       

   12. On May 19, 1987, Mr. Cimaglia was advised by the Department in writing that his facility had been found eligible for reimbursement of allowable costs of cleanup pursuant to Section 376.3071(12), Florida Statutes.

       
       

   13. Mr. Cimaglia submitted his reimbursement application to the Department before September 1, 1988. On September 17, and October 24, 1988, he submitted further information and supporting documentation as requested by the Department.

       
       

   14. On December 20, 1988, the Department issued its notice of agency action which denied reimbursement of cleanup costs.

       
       

   15. The bases for denial of reimbursement were (1)the scavenger product recovery system was not effective ($18,757.13), (2)no supporting documentation was provided for the personnel costs of Mr. Cimaglia and Mr. Green ($3,745.00) and (3)areas of clean fill and paving were not delineated ($8,661.70).

       
       

   16. On December 29, 1988, Mr. Cimaglia informed the Department by letter that the area of asphalt and paving consisted of a 75 foot by 75 foot area of 1 inch thick asphalt, underlain by 6 to 8 inches of hard rock base. On January 6, 1989, he filed a petition for a determination of his right to reimbursement of the costs the Department had denied. After the information about the paving was received, reimbursement for the repaving was approved and paid.

       
       

   17. In August 1989, the parties met in the offices of the County Board to review the County Board's files in this matter. It was determined that the County Board had specifically approved the original scavenger recovery system, which later had proven ineffective. Based upon Mr. Cimaglia's receipt of approval from that unit of local government, the Department agreed to reimburse Mr. Cimaglia for the costs of that system. It was also agreed that the Department would review further documentation, if submitted by Mr. Cimaglia, concerning the denial of reimbursement of personnel costs.

       
       

   18. On September 11, 1989, Mr. Cimaglia filed an affidavit attesting to the time that Mr. Greene spent working on the treatment system rather than his normal tasks at the facility. The affidavit was accompanied by a summary of Mr. Cimaglia records which documented the hours expended by Mr. Greene on the cleanup. The summary was submitted in lieu of the actual records, submission of which was impracticable due to their volume.

       
       

   19. On December 1, 1989, the parties entered the Joint Stipulation which settled the underlying case and determined all of the disputed costs to be reimbursable. The Final Order was entered on March 1, 1990.

       
       

2. The following facts are based on the evidence at the final hearing:

1. At the hearing, Mr. Cimaglia withdrew the request for reimbursement of the attorneys fees he paid to Richard A. Herald, in the amount of $1,280. The amount at issue still exceeds $15,000.

   
   

2. The Department's denial of rehabilitation costs focused on three items: The recovery system installed and operated in 1986, personnel costs, and paving costs.

3. The Department should have known that the initial treatment system, which ultimately did not prove to be effective, had been given conceptual approval by the County Board on February 24, 1986. While the Department believed, when reviewing the Cimaglia reimbursement application, that the County Board had only given tentative approval to the general idea, that was not true. The Department now lays the blame for its misapprehension at the feet of Mr. Cimaglia, because the Department had received no engineering drawings, installation reports or technical data regarding the treatment system, and the absence of any specific order from the County Board authorizing the treatment system.

   
   

4. At the time the first treatment system was approved by the County Board, the county was operating under a local ordinance which gave it independent authority to enforce county pollution control laws, and to direct cleanups. It is significant, however, that after 1986 the Department had contracted with the County Board to supervise petroleum contamination cleanups and to supervise and administer reimbursement. This matter was not handled by the County Board, even though Mr. Cimaglia's application was filed in 1988; it was handled by the Department directly. The Department failed to communicate effectively with the County Board when it contacted the County Board to determine whether that agency had approved the initial cleanup plan.

   
   

5. Where a system for cleanup has been specifically approved by a local government agency as an appropriate technology, the Department will pay the costs for using that system, even if it ultimately proves ineffective. It was only in August 1989, after the initial denial of the reimbursement application that a meeting was held with Mr. Cimaglia, representatives of the County Board, and the Department, during which the Department finally came to understand that the initial cleanup method had been approved by the County Board.

   
   

6. It is unreasonable for the Department to blame Mr. Cimaglia for the Department's failure to have communicated effectively with the County Board earlier. This is one of the first reimbursement applications which the Department processed. Its procedure for handling applications, and its standards for judging whether a reimbursement applications would be granted, was just developing. The Department had not promulgated rules which would have told an applicant, such as Mr. Cimaglia, precisely what sort of information should have been submitted with an application so that the Department would have known that the County Board had approved the initial treatment system. That information was readily available to the Department, and there is no satisfactory explanation in this record of why the Department did not know it, for a Department employee did telephone the County Board, and should have been told that the treatment system had been approved. This inadequate investigation of the application by the Department caused Mr. Cimaglia to incur attorneys fees in attempting to process his application, and is an appropriate item to be reimbursed under the Equal Access to Justice Act in these circumstances.

   
   

7. The Department justifies its failure to have initially approved personnel costs on the basis that the Department believed Mr. Cimaglia had provided all supporting documentation before it made its initial decision on December 20, 1988, on the reimbursement application. While the application had copies of many invoices, bills, receipts, or cancelled checks to show direct costs, the Department received no specific documentation of personnel costs until after its initial denial of personnel costs on December 20, 1988. No rule of the Department stated the manner in which these applications would be handled, and there was no way for Mr. Cimaglia to know what to send. Because he had to incur attorneys fees to make the matter more specific, those fees should

   be reimbursable under the Equal Access to Justice Act. Mr. Cimaglia could not have known to send with his application information of the type the Department ultimately accepted.

   
   

8. Paving costs should be treated similarly. Mr. Cimaglia did submit a map which showed an area from which the diesel fuel tanks had been removed and where remedial activities occurred. That area had to be repaved with asphalt. He had submitted a paver's invoice for $3,700. Information about the size of the excavated area and the thickness of the pavement had been available in the files of the County Board since that work had been performed. The fact that the Department had, at the time it was processing early applications, little experience in determining the reasonableness of paving costs is not an adequate reason to have denied the costs here. A paver's invoice had been submitted.

   The Department had no reasonable basis to reject it, and indeed ultimately accepted those costs. The Department's actions required Mr. Cimaglia to incur attorneys fees, and these fees ought to be reimbursable under the Equal Access to Justice Act.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over this matter. Section 57.111(4)(b), Florida Statutes.

   
   

10. In a proceeding to recover attorney's fees under the Florida Equal Access to Justice Act a prevailing small business party is entitled to fees "unless the actions of the [state] agency were substantially justified. See, Section 57.111(4)(a), Florida Statutes. The phrase "substantially justified" is defined to mean that the agency action "had a reasonable basis in law and fact at the time it was initiated by a state agency." Section 57.111(3)(e), Florida Statutes. The substantive statute controlling the underlying reimbursement application, Section 376.3071(12)(e) granted cleanup cost reimbursement to applicants who provided the Department with documentation that site rehabilitation had been conducted and completed. Chapter 17-773, Florida Administrative Code, provides forms and other requirements for the documentation of costs. There is no proof in the record of this case, however, that the application made by Mr. Cimaglia was rejected by the Department because it failed to include any required forms, or information called for by any form.

    The problem was more basic. The Department was just beginning to deal with reimbursement applications that had not settled on how it would handle those applications. Under Section 376.3071(12)(i), the Legislature required the Department to be liberal (though not prodigal) in handling applications for reimbursement of site rehabilitation costs. That subsection states:

    
    

    With respect to site rehabilitation initiated prior to July 1, 1986, the provisions of this subsection shall be given such liberal con- struction by the Department as will accomplish the purposes set forth in this subsection.

    With regard to the keeping of particular records or the giving of certain notice, the Department may accept as compliance action by a person which meets the intent of the requirements set forth in this subsection.

11. The Department, acting out of caution, was rather stringent in the requirements it imposed on Mr. Cimaglia. While it may have been prudent to do so, it also increased the cost to Mr. Cimaglia of compliance as the Department developed, over time, its ideas on what sort of proof Mr. Cimaglia ought to submit in order to obtain reimbursement. It was impossible for Mr. Cimaglia to know, before the agency issued its notice of intent to deny the costs at issue here, what he should bring to the Department. The Department did an inadequate job of inquiry into whether the scavenger system which had been first put in service had been approved by the County Board. It had been. There was no reasonable basis in fact for the Department to have denied the reimbursement for that system.

    
    

12. Similarly, given the liberal construction provisions of Section 376.3071(12)(i), informal proof of labor costs should have been granted earlier than they were, without requiring Mr. Cimaglia to obtain legal assistance to prosecute his reimbursement application. Those services had actually been performed, and were reimbursable, as the Department ultimately found.

    
    

13. Likewise, the paving information submitted to the Department originally was sufficient, under the liberal construction provision of the statute, to justify reimbursement for that expense. The Department's denial therefore lacked a reasonable basis in fact. It also lacked a reasonable basis in law, in that there were no rules which would have set out in detail exactly what Mr. Cimaglia should have to send to the Department to have his application approved. His only possible course of action was to do what he did here: send in what he had and see how the Department responded. This is not the way the Administrative Procedures Act is designed to work. While an agency enjoys discretion in determining when to go to rulemaking, when the fluidity of agency policy causes it to reject reimbursement applications for reasons the applicant could not have anticipated, the agency action may properly be characterized as unreasonable. To avoid the imposition of attorney's fees under the Equal Access to Justice Act, the agency must show that the proposed action had a reasonable basis in law and in fact at the time. Section 57.111(3)(e), Florida Statutes. Even if the agency's action could properly be characterized as having a reasonable basis in law, it did not have a reasonable basis in fact, and consequently Mr. Cimaglia's fees are recoverable.

ORDERED

It is therefore, ordered that the Department of Environmental Regulation pay $15,000 in fees and costs to Thomas P. Cimaglia pursuant to the Equal Access to Justice Act.

DONE and ORDERED this 18th day of March, 1991, at Tallahassee, Florida.

WILLIAM R. DORSEY, JR.

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 18th day of March, 1991.

APPENDIX TO FINAL ORDER, CASE NO. 90-1521F

Rulings on findings proposed by Mr. Cimaglia:

1. Discussed in Statement of the Issue.

2. Adopted in Findings 2-5.

3. Adopted in Finding 10.

4. Adopted in Findings 13 and 23.

5. Adopted in Finding 13.

6. Adopted in Findings 14 and 15.

7. Adopted in Findings 16-18.

8. Generally adopted as unnecessary because the parties have agreed that if entitled to fees, Mr. Cimaglia should receive $15,000.

9. Rejected for the reasons given for rejecting finding 8.

Rulings on findings proposed by the Department:

1. Generally adopted in Findings 1-19.

2. Adopted in Finding 20.

3. Adopted in Finding 21.

4. Rejected because more information was available at that time through the County Board.

5. Rejected as unnecessary.

6. Rejected as unnecessary. See, Findings 22 and 24.

7. Adopted in Finding 5.

8. Rejected as unnecessary.

9. Because what the Department believed is not determinative. The facts were otherwise. See, Finding 23.

10. Rejected for the reasons given for rejecting finding 9.

11. Rejected for the reasons given for rejecting finding 9. See also, Finding 22.

12. Rejected for the reasons given for rejecting finding 9.

13. Rejected. See, Finding 22.

14. Rejected because what the Department does to approve a plan is not at issue, the matter was handled by the County Board, under authority from the Department. The County Board operates differently.

15. Rejected. See, Finding 22.

16. Rejected. See, Finding 23, although it is true that the Department handled this matter directly.

17. Adopted in Finding 23.

18. Rejected as unnecessary.

19. Adopted in Finding 23.

20. Adopted in Finding 23.

21. Rejected as unnecessary.

22. Rejected as unnecessary.

23. Rejected as unnecessary.

24. Rejected as unnecessary.

25. Implicit in Finding 5.

26. Rejected as unnecessary. See, also Finding 25.

27. Rejected as unnecessary.

28. Rejected as unnecessary.

29. Implicit in Finding 23. That the Department contacted Broward County on one occasion does not exculpate the Department.

30. Rejected as unnecessary, although the reviewer should have gotten correct information when she called the County Board. See, Finding 23.

31. Rejected. See, Finding 23.

32. Implicit in Finding 24.

33. Adopted in Finding 24.

34. Adopted in Finding 17.

35. Rejected. See, Finding 26. It is not significant that management costs were estimated.

36 - 39. Rejected. See, Finding 26.

40. Rejected as unnecessary. Mr. Cimaglia had submitted the paving invoice.

41 - 45. Rejected. See, Finding 27.

COPIES FURNISHED:

E. Gary Early, Esquire

Department of Environmental Regulation 2600 Blair Stone Road

Tallahassee, Florida 32399-2400

B. Jordan Stuart, Esquire

Law Offices of Gaylord A. Wood, Jr.

304 Southwest 12th Street

Fort Lauderdale, Florida 33315

Carol Browner, Secretary Department of Environmental

Regulation

Twin Towers Office Building 2600 Blair Stone Road

Tallahassee, Florida 32399-2400

Daniel H. Thompson, General Counsel Department of Environmental

Regulation

Twin Towers Office Building 2600 Blair Stone Road

Tallahassee, Florida 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: 90-001521F

Orders for Case No: 90-001521F