STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF ENVIRONMENTAL | ) | |||
PROTECTION, | ) ) | |||
Petitioner, | ) | |||
) | ||||
vs. | ) | Case | No. | 08-1473EF |
) | ||||
Z. K. MART, INC., | ) | |||
) | ||||
Respondent. | ) | |||
) |
FINAL ORDER
The final hearing in this case was held on February 10, 2009, in Tallahassee, Florida, before Bram D. E. Canter, an Administrative Law Judge of the Division of Administrative Hearings (DOAH).
APPEARANCES
For Petitioner Department of Environmental Protection: Jason A. Wiles, Esquire
Department of Environmental Protection 3900 Commonwealth Boulevard
The Douglas Building, Mail Station 35 Tallahassee, Florida 32399-3000
For Respondent Z. K. Mart, Inc.:
Robert D. Fingar, Esquire Gramling & Fingar, LLP
1983 Centre Pointe Boulevard, Suite 200
Tallahassee, Florida 32308-7823
STATEMENT OF THE ISSUES
The issues in this case are whether Respondent violated certain rules of the Department of Environmental Protection (Department) related to petroleum contamination site cleanup criteria as alleged in the Department’s Notice of Violation, Orders for Corrective Action, and Administrative Penalty Assessment (NOV); whether Respondent is liable for the administrative fines and investigative costs assessed by the Department; whether mitigation of the administrative fine is appropriate; and whether Respondent should be required to take the corrective action described in the NOV.
PRELIMINARY STATEMENT
On February 26, 2008, the Northwest District of the Department issued a three-count NOV against Respondent. Respondent petitioned for an administrative hearing and the Department referred the case to DOAH.
The Department filed an Amended Motion for Partial Summary Final Order, asserting that there were no genuine issues of material fact as to Respondent’s liability. The motion was denied, in part because there is no authority for issuance of a partial summary final order.
Respondent moved for a stay of the proceedings to allow Respondent time to complete pending litigation with its insurer,
which was denied. However, the case was placed in abeyance for approximately 50 days.
The Department moved to strike Respondent’s defense that its insurer was a necessary party and its defense of inability to pay for further site assessment. That motion was granted.
The Department filed a motion in limine, seeking to prevent Respondent from presenting evidence regarding insurance coverage, Respondent’s litigation with its insurer, or financial inability to pay for corrective actions. The motion was denied because these matters were deemed relevant to the issue of mitigating circumstances.
At the final hearing, the Department’s Exhibits 1 and 2 were admitted into evidence. Respondent’s Exhibits 1 through 17 were admitted into evidence. Neither party called a witness.
At the request of the Department, official recognition was taken of Florida Administrative Code Chapters 62-761 and 62-770.
The one-volume Transcript of the hearing was filed with DOAH. The parties filed Proposed Final Orders that were carefully considered in the preparation of this Final Order.
FINDINGS OF FACT
The Parties
The Department is the state agency charged with the power and duty to administer and enforce the provisions of Chapters 376 and 403, Florida Statutes (2008),1 and the rules
promulgated in Florida Administrative Code Title 62, pertaining to petroleum contamination.
Respondent Z.K. Mart, Inc., is a Florida corporation, and owns and operates a retail fueling facility (DEP Facility No. 8507091) located at 5077 Normand Boulevard, Jacksonville, Florida (“the facility”).
In January 2004, soil sampling in conjunction with the removal of an underground petroleum storage tank at the facility showed petroleum contamination.
Respondent reported the contamination to the Department in a Discharge Report Form on January 29, 2004.
Respondent removed the tank that was the source of the contamination, conducted source removal activities, and submitted various reports to the Department, including a Site Assessment Report (SAR), submitted in February 2006.
In March 2006, the Department determined the SAR was incomplete and requested that Respondent submit a SAR addendum. To date, Respondent has not submitted the SAR addendum.
Respondent’s insurer, Mid-Continent Casualty Company, refused coverage for the assessment and cleanup costs associated with the reported discharge, asserting that the contamination “arose out of” the tank removal. Respondent contends that the contamination occurred before the tank removal. In
October 2004, Respondent sued Mid-Continent in the circuit court for Duval County for wrongful denial of coverage.
Respondent requested that the Department also file suit against Mid-Continent, pursuant to Section 376.309(2), Florida Statutes, for violating financial responsibility requirements. In December 2008, the Department sued Mid-Continent. The litigation is ongoing.
Respondent spent over $300,000 to remove 2,503 tons of contaminated soil and to conduct site assessment activities associated with the reported contamination.
In August, September, and October 2006, Respondent filed financial affidavits and additional materials with the Department in support of Respondent’s claim that it was unable to pay for additional assessment work.
By letter dated November 3, 2008, the Department rejected Respondent’s claim that it was financially unable to undertake the requested site assessment.
Respondent submitted a financial affidavit prepared by Abdul Khan, the vice president and secretary of Z.K. Mart, Inc., which states that the net income of Respondent was $36,479 at the end of 2005.
Financial information for later years, including 2008, was also submitted by Respondent. However, no financial analysis was included.
No evidence was submitted to establish the estimated costs of future site assessment activities.
It cannot be determined from the financial information in the record whether Respondent is currently financially able to conduct additional site assessment activities.
The Department states in the NOV that Count I constitutes a violation of Florida Administrative Code Rule 62- 770.800(5). That rule provides that it is a violation of Chapters 376 and 403, Florida Statutes, for a responsible party to fail to submit additional information or meet any time frame “herein.” The Department explained that Count I was intended to charge Respondent with failing to complete site assessment.
The only applicable time frame in Florida Administrative Code Rule 62-770.800, entitled “Time Schedules,” is in subsection (3), which requires a responsible party to submit additional information within 60 days of the Department’s request for the information. That violation, however, is more specifically charged in Count II.
Count II of the NOV charges Respondent with violating Florida Administrative Code Rule 62-770.600(11), which states that, if a SAR is incomplete, the Department shall inform the responsible party and the responsible party shall submit a SAR addendum within 60 days.
Counts I and II charge Respondent with the same offense, failing to submit requested information within 60 days of the request. As stated in the Conclusions of Law, Respondent cannot be made to pay administrative fines under a duplicate charge.
Count III of the NOV charges Respondent with liability for the Department’s investigative costs of $500 incurred in conjunction with this enforcement matter. These are nominal costs and were never disputed by Respondent.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this case under Sections 120.569, 120.57(1), and 403.121(2), Florida Statutes.
Section 376.303(1)(j), Florida Statutes, authorizes the Department to commence an administrative action to enforce the requirements of Sections 376.30 through 376.319, Florida Statutes. The charges in the NOV are based on these statutes.
If the Department has reason to believe a violation has occurred, it may institute an administrative proceeding to establish liability, to recover damages, and to order the prevention, abatement, or control of the conditions creating the violation. See § 403.121(2)(a) and (b), Fla. Stat.
The Department has the burden of proving by a preponderance of the evidence that Respondent is responsible for the violations alleged in the NOV. See § 403.121(2)(d), Fla. Stat.
A final order shall be entered by the administrative law judge on all matters, including the imposition of administrative penalties. See § 403.121(2)(d), Fla. Stat.
The Department explained that Count I of the NOV was intended to charge Respondent with failing to complete site assessment. Count I refers to Florida Administrative Code Rule 62-770.600(10), which provides that “Site assessment activities shall not be complete until such time as a [SAR] is approved.” That is merely a statement of process. Later in the NOV, the Department states that Count I constitutes a violation of Florida Administrative Code Rule 62-770.800(5). That rule provides that it is a violation of Chapters 376 and 403, Florida Statutes, for a responsible party to fail to submit additional information or meet any time frame “herein.” The only applicable time frame in Florida Administrative Code Rule 62- 770.800, entitled “Time Schedules,” is in subsection (3), which requires a responsible party to submit additional information within 60 days of the Department’s request for the information. That violation, however, is more specifically charged in Count
II. There is no time schedule established in the rule for completion of the SAR or for completion of the site assessment.
The Department did not properly charge Respondent with the failure to complete site assessment, because the law cited does not impose the duty to complete site assessment.
As presented in the NOV, Count I does not charge a different offense than Count II. Persons cannot be charged twice for the same offense.
For the reasons stated above, Respondent is not liable under Count I of the NOV.
The Department proved that Respondent is liable under Count II of the NOV, for failing to submit the SAR addendum within 60 days of the Department’s request.
Respondent argued that it should not be liable under either Count I or Count II because of its financial inability to pay for site assessment due, in part, to the refusal of Mid- Continent to cover Respondent’s assessment costs. Respondent used an analogy of car insurance, but it is widely understood that a person who is at fault in a traffic accident remains liable without regard to the existence of auto insurance coverage.
The Department may take into account a facility owner’s or operator’s financial status in the Department’s enforcement actions. However, there is no express authority in
Chapter 376 or 403, Florida Statutes, and express authority would be needed, to make liability for prohibited acts or noncompliance depend on the financial status of the owner or operator. Respondent’s financial status is not a defense to its liability under the NOV.
In this administrative enforcement action, the total amount of all penalties cannot exceed $10,000. See
§ 403.121(2)(b), Fla. Stat. Curiously, the Department sought a penalty of $10,000 under Count I, leaving no proposed penalty to assess under Count II.
The manner in which the Department distributed the penalties in its NOV does not prevent the application of the appropriate statutory penalty for Respondent’s violation under Count II of the NOV, which was proven by the evidence.
Section 403.121(4)(f), Florida Statutes, establishes a penalty of $500 for the failure to submit required reports.
Penalties “may” be assessed for each additional day during which a violation occurs. See § 403.121(6), Fla. Stat. Under the circumstances of this case, it would be fair and reasonable to assess a penalty for seven additional days of noncompliance, for a total penalty of $4,000 under Count II.
Evidence may be received in mitigation and may reduce a penalty up to 50 percent for mitigating factors, including
good faith efforts to comply prior to or after discovery of the violations by the Department. See § 403.121(10), Fla. Stat.
The Department admits that Respondent made good faith efforts to comply with the law until early 2006. Under the circumstances presented, it would be fair and reasonable to reduce the penalty for Count II by 50 percent, to $2,000.
The penalty may be further reduced upon an affirmative finding that the violation was caused by circumstances beyond the reasonable control of a respondent and could not have been prevented by due diligence. Id.
Respondent argues that the failure of its insurance company to cover the costs of site assessment and remediation is a circumstance beyond its reasonable control that justifies the further reduction of the penalty to zero. The Department strongly disagrees.
If a respondent could be excused from site assessment and cleanup by a showing that its insurer denied coverage, the potential would be created for collusion and other mischief, because it would be in the financial interest of the insurer to avoid coverage. Moreover, it is within Respondent’s control, as illustrated in this case, to sue the insurer to obtain a judgment for coverage.
The financial state of a person or company would rarely, if ever, constitute circumstances beyond the control of the person or company.
The penalties in this case should not be further reduced.
In Count III of the NOV, the Department seeks to recover $500 of investigative costs incurred in this enforcement action. These are nominal costs and were not disputed by Respondent.
Corrective Action
The Departments demands in the NOV that Respondent be required to submit the SAR addendum and to complete site assessment and remediation pursuant to the law. Those are reasonable demands that should be imposed.
DISPOSITION
Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that:
Within 60 days of this Final Order, Respondent shall submit a Site Assessment Report addendum to the Department.
Respondent shall complete site assessment and any required contamination cleanup at the facility in conformance with Florida Administrative Code Chapters 62-761 and 62-770.
Within 60 days of this Final Order, Respondent shall pay $2,000 to the Department for the administrative penalty
assessed under Count II and $500 for the Department’s investigative costs assessed under Count III. Payment shall be made by cashier’s check or money order payable to the “State of Florida Department of Environmental Protection” and shall include thereon OGC Case No. 07-2195 and the notation “Ecosystem Management and Restoration Trust Fund.” The payment shall be sent to the Department of Environmental Protection, Northeast District Office, 7825 Baymeadows Way, Suite 200-B, Jacksonville, Florida 32236-7590.
DONE AND ORDERED this 20th day of May, 2009, in Tallahassee, Leon County, Florida.
BRAM D. E. CANTER
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 20th day of May, 2009.
ENDNOTE
1/ All references to the Florida Statutes are to the 2008 codification unless otherwise indicated.
COPIES FURNISHED:
Robert D. Fingar, Esquire Gramling & Fingar, LLP
1983 Centre Pointe Boulevard, Suite 200
Tallahassee, Florida 32308-7823
Jason Alan Wiles, Esquire
Department of Environmental Protection The Douglas Building, Mail Station 35 3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
Michael W. Sole, Secretary
Department of Environmental Protection The Douglas Building, Mail Station 35 3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
Tom Beason, General Counsel
Department of Environmental Protection The Douglas Building, Mail Station 35 3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
Lea Crandall, Agency Clerk
Department of Environmental Protection The Douglas Building, Mail Station 35 3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
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 the original Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a 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.
| Issue Date | Document | Summary |
|---|---|---|
| Jul. 08, 2010 | Mandate | |
| Jun. 22, 2010 | Opinion | |
| May 20, 2009 | DOAH Final Order | Respondent is liable under Count II of the NOV for failing to submit a site assessment report addendum within 60 days, but Respondent is not liable under Count II because the count was not properly plead. |
