The Issue The issue here presented concerns the alleged violation of Rule Subsection 5F-2.01(1)(j) , Florida Administrative Code, related to allowable amounts of lead per gallon in gasoline which is dispensed under the distinctive name "Unleaded Gasoline." This alleged violation of the Rule potentially subjects the Respondent to the penalty set forth in Section 525.06, Florida Statutes (1980). The particular facts of this allegation are that on September 15, 1981, a sample of gasoline from the pump at the Respondent's station marked "Unleaded Premium Gasoline" was extracted and a test conducted revealing .31 grams per gallon of lead content and a further test was conducted on September 25, 1981, at the same station and pump revealing .23 grams of lead per gallon, in violation of the maximum allowable .05 grams per gallon. FINDINGS OF FACT 1/ This case was presented for hearing based upon the request for a formal Subsection 120.57(1), Florida Statutes, hearing, made by the Respondent, Emmett C. Wever. The matters to be considered are as set forth in the Issues provision of this Recommended Order. The hearing was conducted on December 14, 1981, in keeping with the Respondent's request. The Petitioner, State of Florida, Department of Agriculture and Consumer Services, is an agency of State Government which has the obligation of gasoline and oil inspection pursuant to the provisions of Chapter 525, Florida Statutes. The Respondent is the proprietor of a station which dispenses gasoline, at 1204 Ocean Shore Boulevard, Ormond Beach, Florida. On September 15, 1981, an employee of the Petitioner made a check of the unleaded premium gasoline pump from which the Respondent had been selling that product. The sample extracted was analyzed on September 22, 1981, and this analysis revealed a lead content in the sample of .31 grams of lead per gallon. The results of that report were made known to the Petitioner's employee on September 25, 1981, and a further check of the aforementioned gasoline pump was made on that same date. Subsequent testing of that sample revealed .23 grams of lead per gallon. In the face of these revelations of lead content in the gasoline, a Stop Sale Notice was given to the station owner. The effect of the Stop Sale Notice would allow the confiscation of gasoline remaining in the unleaded premium tank at the Respondent's station or in lieu of the posting of a bond, not to exceed $1,000.00. The Respondent elected to post a bond of $953.30 which was equal to the 657 gallons which had been dispensed from the subject gas pump during the questioned period. The Respondent was allowed to sell the remaining 1,046 gallons in the tank, which was associated with the gasoline pump, as regular gasoline. Excessive lead, when introduced into those automobiles which are required to use unleaded gasoline, can damage the catalytic converter, and it is estimated that this damage would occur after burning approximately five (5) tanks of contaminated unleaded gasoline. In addition, lead in the fuel tends to foul the engine. There was no showing in the course of the hearing that the Respondent had knowledge of the lead content discovered on September 15 and 25, 1981, which amounts were in excess of the standards set forth in Rule Subsection 5F- 2.01(1)(j), Florida Administrative Code, calling for no more than .05 grams of lead per gallon in gasoline sold as unleaded fuel.
The Issue Whether the Department of Revenue's denial of Petitioner's application for a Florida fuel license should be upheld.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: On or about July 22, 2002, Armando B. Yzaguirre submitted to the Department a completed Florida Fuel Tax Application, Form DR-156, seeking licensure as a private carrier and wholesaler on behalf of My Oil (the "2002 Application"). The application listed Maria Yzaguirre as the president and chairman of the board of My Oil, and listed Armando B. Yzaguirre as the vice-president and chief executive officer of My Oil. This was the second Florida Fuel Tax Application filed by My Oil. On or about June 22, 2001, Maria Yzaguirre submitted to the Department a completed Florida Fuel Tax Application, Form DR-156, seeking licensure as a private carrier and wholesaler on behalf of My Oil (the "2001 Application"). The application listed Mrs. Yzaguirre as the president and sole stockholder of My Oil. The Department's rejection of the 2001 Application was at issue in DOAH Case No. 02-0469. The rejection was based on the fact that Armando Yzaguirre, a convicted felon whose civil rights had not been restored and who was the father of Armando B. Yzaguirre and the husband of Maria Yzaguirre, appeared to be in a position to exert control over the business of My Oil. Shortly before the 2001 Application was filed, Armando Yzaguirre had filed a Florida Fuel Tax Application for Yzaguirre Oil Company Inc. ("Yzaguirre Oil"). The application listed Armando Yzaguirre as the president and sole stockholder of Yzaguirre Oil. The coincidence of the applications, and the fact that they listed many of the same assets, led the Department to suspect that My Oil would operate as a "front" for Yzaguirre Oil, which was presumptively ineligible for licensure because it was owned and operated by a convicted felon. The relevant facts found in the Recommended Order for DOAH Case No. 02-0469 are as follows: In his review of the Yzaguirre Oil and My Oil applications, [Aaron Hood, the Department's revenue specialist] discovered that the companies claimed many of the same assets. Each company listed the same two tanker trucks to be used in transporting fuel. Each company listed 211 New Market Road, East, in Immolakee as its principal business address. Each company claimed exactly $1 million in accounts receivable. The timing of the filings and the common assets led Mr. Hood to suspect that the later My Oil application was submitted under Maria Yzaguirre's name to evade the possible disqualification of the Yzaguirre Oil application because of Mr. Yzaguirre's felony convictions. In short, Mr. Hood suspected that My Oil was a "front" corporation over which Mr. Yzaguirre would exercise control. The common assets also led Mr. Hood to suspect the truthfulness and accuracy of the financial affidavits filed by Maria Yzaguirre on behalf of My Oil. While it investigated the criminal history of Mr. Yzaguirre, the Department also investigated the extent of Mr. Yzaguirre's possible control over My Oil's business activities. Armando B. Yzaguirre is the 25-year- old son of Armando Yzaguirre and the stepson of Maria Yzaguirre. Testimony at the hearing established that Armando B. Yzaguirre completed both license applications and was the driving force behind the creation of both Yzaguirre Oil and My Oil. The elder Armando Yzaguirre's chief business is farming. His tomato and melon operation earns over $1 million per year. To save money on transporting the large amounts of fuel needed for his farming operations, Mr. Yzaguirre purchased two sizable tanker trucks in 2001, a new Peterbilt with a capacity of 9,200 gallons, and a 1998 Ford with a 2,500 gallon capacity. If these trucks were used only for Mr. Yzaguirre's farm, they would sit idle much of the time. This idle capacity gave Armando B. Yzaguirre the idea of going into the fuel transport business, using his father's tankers to deliver fuel to other farms and businesses in the area. Yzaguirre Oil was incorporated to operate as a fuel transport business. The business would be operated entirely by Armando B. Yzaguirre, who was the only member of the family licensed to drive the large tanker truck. The trucks were owned by and licensed to Yzaguirre Oil. Armando B. Yzaguirre was going through a divorce at the time Yzaguirre Oil was established. He was concerned that his wife would have a claim to half of any business he owned, and wished to ensure that ownership of Yzaguirre Oil would remain in his family. Thus, Armando B. Yzaguirre placed all ownership of Yzaguirre Oil in the name of his father, though his father would have no connection with the operation of the company's business. Subsequent to incorporating Yzaguirre Oil, Armando B. Yzaguirre discussed his prospective business with his stepmother, Maria Yzaguirre. Mrs. Yzaguirre was pleased that young Armando was establishing a business for himself. They discussed the future of the six younger Yzaguirre children and ideas for businesses that could be established to eventually be taken over by the children. Ultimately, the younger Armando and Maria Yzaguirre settled on the idea of a convenience store and filling station that could be established on part of a city block in Immolakee that the senior Mr. Yzaguirre already owned. This would be the type of business that the children could learn and work at while they were still in school, then take over after their graduation. This was the genesis of My Oil. Mrs. Yzaguirre contacted a lawyer to draft articles of incorporation and later transferred $100,000 from her personal money market account into a My Oil bank account to provide start-up money. The younger Armando Yzaguirre filled out the fuel license application, using his earlier application for Yzaguirre Oil as a model. As with the earlier application, the younger Armando Yzaguirre kept his name off the corporate documents and the fuel license application to avoid any claim by his soon- to-be ex-wife to the company's assets. He anticipated that My Oil would lease the two tanker trucks from Yzaguirre Oil, and thus listed them on the application as assets of My Oil. At the hearing, Mr. Yzaguirre conceded that he made mistakes on both applications. As noted above, he listed $1 million in accounts receivable for each of the companies. These were actually accounts receivable for his father’s farming operation, and should not have been included as assets for either Yzaguirre Oil or My Oil. * * * The Department pointed to several alleged discrepancies in the My Oil application as grounds for its suspicion that the company was a "front" for Yzaguirre Oil. First, the My Oil application, filed June 20, 2001, lists a corporate asset of $100,000 in cash on deposit at an unnamed bank, when in fact the cash was not deposited in a My Oil account at Florida Community Bank until September 10, 2001. Second, the My Oil application lists the two tanker trucks as corporate assets as of the date of application, when in fact the trucks were titled in the name of Yzaguirre Oil and the anticipated lease arrangement had yet to be consummated. Third, the My Oil application claimed the property at 211 New Market Road, East, as a corporate asset as of the date of application, when in fact the property was titled in the name of the elder Mr. Yzaguirre. Fourth, the My Oil application listed $1 million in accounts receivable as a corporate asset. As noted above, Armando B. Yzaguirre admitted at the hearing that these receivables were from his father's farming operation and should not have been listed on the application as assets of My Oil. Armando B. Yzaguirre plausibly explained that My Oil anticipated leasing the trucks, but that there was no reason to spend the money to finalize that arrangement until the fuel license was obtained and My Oil could actually commence operations. Similarly, Mrs. Yzaguirre clearly had on hand the $100,000 in cash claimed as a My Oil asset, and the timing of her actual transfer of that money into a My Oil account would not alone constitute cause for suspicion, given that My Oil had yet to commence operations when the application was filed. Armando B. Yzaguirre also convincingly explained that leasing the tanker trucks from his father's company would not give Yzaguirre Oil effective control over My Oil's business. The younger Mr. Yzaguirre contemplated that the lease agreement would be an arms-length arrangement between the two companies. If the companies could not arrive at a mutually satisfactory lease agreement, or if the lease agreement should later fall through, My Oil could lease trucks from another company and continue doing business. However, no witness for My Oil offered a satisfactory explanation as to how the elder Mr. Yzaguirre's ownership of the real property would not give him some degree of control over My Oil's business. At the time of the hearing, title to the property at 211 New Market Road, East, was in the name of Armando Yzaguirre. A warranty deed for at least a portion of the property, executed by the prior owners on July 16, 1998, was in the name of Armando Yzaguirre. The Yzaguirres did not explain whether My Oil would purchase or lease the property from the elder Mr. Yzaguirre. The structure of the arrangement is critical to the issue of the elder Mr. Yzaguirre's control over My Oil. Substitutes for the tanker trucks could be obtained in short order with little or no disruption of My Oil's business. However, the physical location of the convenience store and filling station could not be changed so readily, and the elder Mr. Yzaguirre's position as owner of that property could give him great leverage over the operation of the business. The Department also raised the issue of the undisclosed participation of Armando B. Yzaguirre in the business affairs of My Oil. The testimony of Maria Yzaguirre and of her stepson strongly indicated that the younger Mr. Yzaguirre would have substantial control over the business activities of My Oil. However, because Armando B. Yzaguirre's identity was not disclosed on My Oil's application, the Department had no opportunity to conduct a review of his background and character to determine whether he met the standard set by Section 206.026, Florida Statutes. In summary, there was no direct evidence that the Yzaguirres deliberately attempted to deceive the Department or that My Oil was established as a front to obtain licensure for the presumptively ineligible Yzaguirre Oil. The evidence did establish that Armando Yzaguirre has been convicted of at least one felony, and that his ownership of the real property on which My Oil would conduct business could provide him with control of My Oil's business activities. The evidence further established that Armando B. Yzaguirre will have control over My Oil's business, and that the Department should have had the opportunity to conduct a background review to determine his fitness under Section 206.026, Florida Statutes. The relevant conclusions of law set forth in the Recommended Order for DOAH Case No. 02-0469 are as follows: Section 206.026, Florida Statutes, provides in relevant part: (1) No corporation . . . shall hold a terminal supplier, importer, exporter, blender, carrier, terminal operator, or wholesaler license in this state if any one of the persons or entities specified in paragraph (a) has been determined by the department not to be of good moral character or has been convicted of any offense specified in paragraph (b): 1. The licenseholder. The sole proprietor of the licenseholder. A corporate officer or director of the licenseholder. A general or limited partner of the licenseholder. A trustee of the licenseholder. A member of an unincorporated association licenseholder. A joint venturer of the licenseholder. The owner of any equity interest in the licenseholder, whether as a common shareholder, general or limited partner, voting trustee, or trust beneficiary. An owner of any interest in the license or licenseholder, including any immediate family member of the owner, or holder of any debt, mortgage, contract, or concession from the licenseholder, who by virtue thereof is able to control the business of the licenseholder. 1. A felony in this state. Any felony in any other state which would be a felony if committed in this state under the laws of Florida. Any felony under the laws of the United States. (2)(a) If the applicant for a license as specified under subsection (1) or a licenseholder as specified in paragraph (1)(a) has received a full pardon or a restoration of civil rights with respect to the conviction specified in paragraph (1)(b), then the conviction shall not constitute an absolute bar to the issuance or renewal of a license or ground for the revocation or suspension of a license. . . . In December 1990, Armando Yzaguirre entered a no contest plea to a second-degree felony charge of possession of more than five but not more than 50 pounds of marijuana in a Texas court. At the time of Mr. Yzaguirre's Texas conviction, Florida law listed cannabis as a Schedule I substance. Section 893.03(1)(c)4, Florida Statutes (1990). Absent licensure or other authorization, bringing cannabis into the state was a third-degree felony in 1990. Section 893.13(1)(d)2, Florida Statutes (1990). Possession of more than 20 grams of cannabis was a third-degree felony in 1990. Section 893.13(1)(f) and (g), Florida Statutes (1990). There can be little question that Mr. Yzaguirre's felony in Texas would have constituted at least one felony under Florida law, and thus that Mr. Yzaguirre has been convicted of an offense specified in Section 206.026(1)(b), Florida Statutes. Mr. Yzaguirre has not received a full pardon or restoration of civil rights, thus mooting any potential application of Section 206.026(2)(a), Florida Statutes, to this case. Mr. Yzaguirre's ownership of the real property that would hold My Oil's principal place of business would give him the ability to control the business of the licenseholder. This conclusion might have been different had My Oil presented evidence of the business relationship under which it would operate the facility on Mr. Yzaguirre's property. The extent of Armando B. Yzaguirre's involvement in My Oil was not disclosed to the Department. Testimony at the hearing established that the younger Mr. Yzaguirre would be the principal operator of My Oil for the foreseeable future. Due diligence under Section 206.026, Florida Statutes, requires the Department to conduct a background investigation of Armando B. Yzaguirre prior to the issuance of a fuel license to My Oil. In conclusion, My Oil has failed to demonstrate its entitlement to a Florida fuel license on the merits of the application it filed on June 20, 2001. The Recommended Order in DOAH Case No. 02-0469 recommended that My Oil's 2001 Application be denied, but without prejudice to My Oil's ability to file a subsequent application curing the defects of its 2001 Application. In the 2002 Application, My Oil sought to cure those defects. First, the 2002 Application listed Armando B. Yzaguirre as a principal of My Oil, providing the Department an opportunity to conduct an investigation of his background and character. The Department's background check revealed no criminal convictions or other disqualifying factors related to Armando B. Yzaguirre. The Department's background check also revealed no criminal convictions or other disqualifying factors related to Maria Yzaguirre. The 2002 Application included an executed lease agreement, dated July 19, 2002, by which Armando Yzaguirre granted to My Oil a five-year lease on the premises at 211 New Market Road, East, in Immokalee. The lease specifies that My Oil will pay rent of $1,000 per month, and that the premises are to be used for the purpose of "a convenience store and retail gasoline sales to the general public, storage, and uses related to such use . . . and for no other purpose or purposes." The lease expressly states: "Landlord shall have no control over the use of the premises by the Tenant during the period of the lease." The 2002 Application continued to list the two tanker trucks as assets of My Oil, though they remain titled to Yzaguirre Oil. Armando B. Yzaguirre testified that My Oil does have a written lease with Yzaguirre Oil for the use of the tanker trucks. Armando Yzaguirre confirmed the existence of a lease on the trucks. However, the lease was not included in the 2002 Application and was not produced at the hearing. After receiving the 2002 Application, the Department contacted Armando B. Yzaguirre to request a current balance sheet for My Oil. The balance sheet submitted by Mr. Yzaguirre purported to show the assets and liabilities of My Oil as of July 22, 2002. The balance sheet indicated a negative total equity of $5,904.43. It indicated a "credit card" debt of $101,000 to Yzaguirre Farms, and other accounts payable of $36,852.79 to Yzaguirre Farms. At the hearing, the Department produced a canceled check from Armando Yzaguirre to My Oil in the amount of $101,000, with the notation, "My Oil Operating & Payroll." Armando Yzaguirre testified at the hearing that he has taken steps to have his civil rights restored, but that the process is not yet complete and his rights have not been restored. On August 22, 2002, the Department issued its Notice of Intent to Deny the 2002 Application, which stated, in relevant part: Your organization does not qualify for this license as there is a felony conviction of an owner of interest in the license and/or an immediate family member of the owner, as outlined in Chapter 206.026(1)(a)(9)&(b), Florida Statutes. The Department based its denial on several factors. First, the family relationship between My Oil's principals and Armando Yzaguirre itself raised the potential for Armando Yzaguirre to control My Oil. In particular, the Department noted the fact that Armando B. Yzaguirre resides in a mobile home owned by his father, and located a few hundred feet away from Armando Yzaguirre's main residence on the family property. Second, the balance sheet submitted by My Oil indicated a negative equity with large debts owed to Yzaguirre Farms, controlled by Armando Yzaguirre. Third, the Department concluded that the lease on the premises at 211 New Market Road, East, would not prevent Armando Yzaguirre from exerting control over My Oil, by breaking the lease, raising the rent, selling the property, or ejecting My Oil from the premises. Fourth, no proof was offered that My Oil had leased or purchased the tanker trucks from Yzaguirre Oil, meaning that My Oil's means of transporting fuel would be directly controlled by Armando Yzaguirre. Fifth, the $101,000 constituting the startup money for My Oil appears to have come directly from the bank account of Armando Yzaguirre. Sixth, My Oil was administratively dissolved by the Department of State on October 4, 2002, for failure to file an annual report. Finally, the Department stated that, regardless of the arms-length nature of any business dealings between My Oil and Armando Yzaguirre, My Oil would not be granted a license until Armando Yzaguirre's civil rights have been restored. The close family relationship coupled with the fact that Armando Yzaguirre is the source of My Oil's startup funds, its tanker trucks, and its business location, militate against granting My Oil a license so long as Armando Yzaguirre's civil rights have not been restored. In response, My Oil insisted that its 2002 Application cured every specific deficiency noted in the 2001 Application. First, it listed Armando B. Yzaguirre as a principal so that his background and criminal history could be investigated, and the Department's investigation revealed no disqualifying offenses. Armando B. Yzaguirre testified that the July 22, 2002, balance sheet submitted at the Department's request was not an accurate My Oil balance sheet. He stated that in setting up the computer program for My Oil's accounting, he attempted to shortcut the software's lengthy setup process for new businesses by simply copying an existing Yzaguirre Farms spreadsheet, then substituting the name "My Oil" for "Yzaguirre Farms." However, he quickly discovered that his "shortcut" would require him to delete manually every balance sheet entry for Yzaguirre Farms and re-enter the correct entries for My Oil. He abandoned this effort and began a My Oil spreadsheet from scratch, but he never deleted the partially converted Yzaguirre Farms spreadsheet from his computer. Mr. Yzaguirre testified the Department's phone call to request a current balance sheet came to him on his cellular phone while he was working on his father's farm. He relayed the message to his secretary, who printed a My Oil balance sheet and faxed it to the Department. Mr. Yzaguirre stated that, until the Department rejected the 2002 Application, he did not realize that his secretary had faxed a balance sheet generated by his aborted conversion of the Yzaguirre Farms spreadsheet, rather than the actual balance sheet for My Oil. A copy of what Armando B. Yzaguirre claimed was the actual My Oil balance sheet as of July 31, 2002, was introduced at the hearing. This balance sheet indicates an opening equity of $101,000, with $92,078.02 in retained earnings and operating and payroll accounts totaling $8,921.98. The July 31, 2002, balance sheet is accepted as the actual balance sheet for My Oil. While this balance sheet refutes the Department's conclusion that My Oil is starting business with a negative balance sheet indicating over $136,000 in debts to Yzaguirre Farms, it does not refute the evidence that the entire source of My Oil's cash accounts is $101,000, provided in the form of a check from an account in the name of Armando Yzaguirre. Armando B. Yzaguirre testified that the money came from a joint money market account in the name of Armando and Maria Yzaguirre, and that Maria was the source of the funds. This testimony is inconsistent with the fact that the check in question was signed by Armando Yzaguirre, and that his name alone appeared on the account name printed on the check. The elder Mr. Yzaguirre testified that he signed the check, but also testified that the account is in his name and that of his wife, and that they both consider the $101,000 to be her investment in My Oil. Neither of the Yzaguirres offered an explanation as to why Maria Yzaguirre's name did not appear on a check they claimed was drawn on a joint account. The Department's concerns about Armando Yzaguirre, a convicted felon, being the source of My Oil's startup funding were reasonable. My Oil failed to offer evidence sufficient to allay those concerns. Despite My Oil's claims to the contrary, the $101,000 check was plainly signed by Armando Yzaguirre and drawn from an account in his name. My Oil failed to explain the terms under which it accepted this startup funding from Armando Yzaguirre. The Department's explanation of its rejection of the lease submitted by My Oil for the premises at 211 New Market Road, East, was not reasonable. The lease document is a standard, arms-length agreement between My Oil and Armando Yzaguirre. The Department offered no evidence to support its assertions that Armando Yzaguirre would break the terms of the lease, that My Oil would not exercise its legal rights should Mr. Yzaguirre violate the lease's provisions, or that the lease should be considered invalid because a contract between relatives is inherently suspect. The other concerns raised by the Department-- that Mr. Yzaguirre might raise the rent, sell the property, or evict My Oil-- are answered by the terms of the lease itself and raise no issues beyond those that would arise in any lessor/lessee relationship. As to the lease on the tanker trucks, both Armando B. and Armando Yzaguirre testified that My Oil did have a lease on the trucks, to take effect if and when My Oil receives a fuel tax license from the Department. Their testimony is credited as to the existence of the lease, though they offered no testimony specifying the terms of the lease. The fact that My Oil was administratively dissolved for failure to file an annual report should have played no part in the Department's rejection of My Oil's application. Such dissolution is an administrative matter easily cured by the filing of the report. At most, the Department should have required My Oil to provide proof of reinstatement prior to issuance of any fuel tax license. In summary, several of the particular concerns on which the Department based its decision were overstated. However, the Department's overarching concern that Armando Yzaguirre was in a position to control the business of My Oil was reasonable. Armando Yzaguirre was clearly the source of the $101,000 in startup money for My Oil, and no evidence was offered to explain the terms under which this money was provided to My Oil. The lease arrangements for the premises and the tanker trucks may be unobjectionable in themselves, but when coupled with the fact that My Oil is heavily indebted to Armando Yzaguirre, they raise entirely reasonable suspicions regarding My Oil's independence from Mr. Yzaguirre's control. The Department's position that My Oil cannot be granted a license until Armando Yzaguirre's civil rights have been restored is supported by the evidence. Armando Yzaguirre is the source of My Oil's funds, its place of doing business, and its means of transporting fuel. My Oil failed to demonstrate that these facts do not give Armando Yzaguirre the ability to control its business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying the application of My Oil Company, Inc., for a Florida fuel license, without prejudice to the ability of My Oil Company, Inc., to file a new application upon the restoration of Armando Yzaguirre's civil rights. DONE AND ENTERED this 28th day of May, 2003, in Tallahassee, Leon County, Florida. LAWRENCE P. STEVENSON 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 28th day of May, 2003. COPIES FURNISHED: J. Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Post Office Box 6668 Tallahassee, Florida 32314-6668 Robert F. Langford, Jr., Esquire Office of the Attorney General The Capitol-Tax Section Plaza Level 01 Tallahassee, Florida 32399-1050 E. Raymond Shope, II, Esquire 1404 Goodlette Road, North Naples, Florida 34102 R. Lynn Lovejoy, Esquire Office of the Attorney General The Capitol-Tax Section Tallahassee, Florida 32399-1050 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact On September 16, 1981, an inspector employed by the Petitioner, Department of Agriculture and Consumer Services took gasoline samples from leaded and unleaded pumps identified as "Way 44547513" and "Way 445475A" respectively, at the Cigar City Auto/Truck Plaza, in Tampa, Florida. The samples were tested and found to contain suspicious substances. Specifically, the unleaded gasoline was found to be contaminated with leaded gasoline. As a result of test results, the Department issued a stop sale notice to Robert Lawson, Manager of Cigar City, on September 18, 1981. The test analysis showed that the unleaded gasoline sample exceeded the standards established by the American Society of Testing and Materials (ASTM) for unleaded fuel which were adopted by the Department as Rule 5F-2.01, Florida Administrative Code. The sample in question contained 1.41 gram of lead per gallon and, therefore, violated Rule 5F-2.01(1)(j), Florida Administrative Code, which states that unleaded gasoline may not contain more than 0.05 gram of lead per gallon. The Respondent was permitted to post a $1,000 cash bond in lieu of confiscation in order to secure the release of 4,230 gallons of illegal gasoline for sale as leaded regular. The contamination was caused by a delivery man for a gasoline supplier who unintentionally placed-leaded gasoline into an unleaded tank. When the Respondent became aware of the problem, immediate steps were taken which included color coding the tanks so that the problem would not reoccur. This is the first incident concerning the sale of illegal gasoline in which the Respondent has been involved. No complaints were filed by any consumers concerning the gasoline sold by the Respondent.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That the Department enter a final order returning $750 of the Respondent's cash bond which was required to be posted. DONE and ORDERED this 8th day of January, 1982, in Tallahassee, Florida. SHARYN L. SMITH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 1982. COPIES FURNISHED: Robert A. Chastain, Esquire General Counsel Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 Gerald Taylor, Esquire 3224 Bay to Bay Boulevard Tampa, Florida 33609
The Issue The issue in this case is whether or not Petitioner is entitled to a refund of the bond it posted in lieu of confiscation of allegedly mislabelled gasoline products.
Findings Of Fact Petitioner, AGI Service Corporation, owns and operates a Citgo service station located at 1599 West Flagler Street in Miami, Florida. The service station sells regular unleaded, unleaded plus and unleaded premium gasoline to the public. On February 18, 1991, James Carpinelli, the Respondent's inspector, visited the station to conduct an inspection and obtain samples of the gasoline Petitioner was offering for sale to the consuming public from its tanks and related gasoline pumps. Mr. Carpinelli took samples of all three types of gasoline offered for sale by Petitioner. The samples were forwarded to the Respondent's laboratory and were tested to determine whether they met Departmental standards for each type of gasoline. The Petitioner's "premium unleaded" pump indicated the octane or Anti Knock Index of the gasoline was 93. The "regular unleaded" pump indicated that the octane level was 87. The laboratory analysis of the samples revealed that the octane level of the gasoline taken from the "premium unleaded" pump was 87.4. The octane level of the gasoline taken from the "regular unleaded" pump was 93.0. Upon discovering the discrepancy in the octane levels, the Respondent seized the gasoline and immediately allowed the Petitioner to post a bond in the amount of $1,000. Upon the posting of the bond, the product was released back to the possession of the Petitioner and was allowed to be sold after the pumps were relabelled. Petitioner acquired ownership of the service station four days prior to the time of the inspection. At the time they opened the station, the new owners labelled the pumps based upon the information provided to them by the prior owners. The new owners had limited experience in the petroleum business and followed the guidance of the prior owners regarding labelling the pumps. It is clear that the pumps were inadvertently mislabelled based upon the information provided by the prior owners. The new owners sold "premium unleaded" at the price of "regular unleaded" and visa versa. Because more "premium unleaded" was sold at the price for regular, Petitioner lost money as a result of the mislabelling. The Department seeks to assess the full amount of the bond against the Petitioner in this proceeding. Respondent calculated the number of gallons of mislabelled gasoline that was sold based upon a delivery date of February 13, 1991. Those calculations indicate that 2,498 gallons were sold at a price of $1.259 per gallon. However, Respondent's calculations appear to begin at a time prior to Petitioner's ownership of the station. No evidence was presented as to how many gallons were sold while Petitioner owned the station. In addition, it is not clear when the mislabeling was done. Thus, no clear evidence was presented as to how many mislabeled gallons were sold by Petitioner.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Department of Agriculture and Consumer Services enter a Final Order granting the request of the Respondent for a refund of the bond posted and that the Department rescind its assessment in this case. DONE and ENTERED this 4th day of October, 1991, at Tallahassee, Florida. J. STEPHEN MENTON 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 4th day of October, 1991. COPIES FURNISHED: LOUIS PASCALI AND DONATO PASCALI QUALIFIED REPRESENTATIVES AGI SERVICE CORPORATION 1599 WEST FLAGLER STREET MIAMI, FL 33147 JAMES R. KELLY, ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES ROOM 514, MAYO BUILDING TALLAHASSEE, FL 32399-0800 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES THE CAPITOL, PL-10 TALLAHASSEE, FL 32399-0810 RICHARD TRITSCHLER, GENERAL COUNSEL DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 515 MAYO BUILDING TALLAHASSEE, FL 32399-0800 BRENDA HYATT, CHIEF BUREAU OF LICENSING & BOND DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 508 MAYO BUILDING TALLAHASSEE, FL 32399-0800
Findings Of Fact The Petitioner is licensed as a dealer of special fuel pursuant to Florida Statutes 206 and has been assigned license Number 1627. The pertinent sections of Florida Statutes which are applicable to this case are ss206.86(1), (6), (8), 206.87, 206.89, 206.93, 206.94 and Ch. 212. The pertinent rules of the Department of Revenue applicable to special fuels sales involved herein is 12A-2.03. The deposition of Albert Colozoff and all answers to interrogatories and responses to requests for admissions are admissible as evidence and are to be made a part of the record in this cause. The Petitioner sold special fuels to Zamora Truck and Car Services, Roberts Equipment Company and Florida Petroleum, Inc. Petitioner was assessed by the Respondent for tax on 1,979,201 gallons of special fuel sold by it and paid tax and interest as set forth in the letter attached hereto as Exhibit A. That no penalty paid on any of the tax paid pursuant to that letter. That Petitioner did not remit taxes that were due during the month the sales of special fuel were reported on any of the sale to Zamora, Roberts or Florida Petroleum or the remaining 1,417,263 gallons sold. Zamora and Roberts represented to Belcher that they were purchasing all special fuel from Belcher for exempt agricultural use. Due to past dealings and delivery of the special fuel to a farm, Belcher believed and relied upon the facts represented to it by Zamora and Roberts. However, Belcher did not obtain written documentation of this agricultural use from Zamora or Roberts and did not furnish the Department with any such written documentation. Belcher did not obtain resale certificates or exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum. Nor did the report forms filed by Belcher contain resale certificates, exemption certificates or dealer license numbers from Zamora, Roberts or Florida Petroleum. An employee of the Department advised Belcher that Zamora and Roberts were under investigation for fraudulent failure to report taxes. Belcher paid sales tax on sales of special fuel in the amount of $18,589.53 on the sale of 538,030 gallons of special fuel. Zamora is not a licensed dealer of special fuels. Florida Petroleum is not a licensed dealer of special fuel. Roberts is not a licensed dealer of special fuel. Belcher did not fraudulently file incorrect monthly special fuels reports. The Department of Revenue audited Belcher and computed tax, penalty and interest due as set forth in the documents attached hereto as Exhibit B. The Department of Revenue advised Belcher of its duties regarding reporting requirements in the letters from L. N. Thomas attached as Exhibit C.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is, RECOMMENDED: That Respondent's assessment be upheld with respect to Petitioner's tax deficiency, penalty and interest as set forth in the assessments with adjustments to be made for payments paid by Petitioner under the "sales tax" theory. DONE and ORDERED this 30th day of April, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Mail: 530 Carlton Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: James R. McCachren, Jr., Esquire Ervin, Varn, Jacobs, Odom & Kitchen Post Office Box 1170 Tallahassee, Florida 32302 William D. Townsend, Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301
Findings Of Fact Respondent, Big "S" Oil Company, operates a gasoline station at 4002 North Pace Boulevard, Pensacola, Florida. The station sells gasoline products to the general public. On or about December 9, 1981, a petroleum inspector of Petitioner, Department of Agriculture and Consumer Services, took a gasoline sample for analysis of regular gasoline from the Respondent's storage tanks during the course of a routine inspection. This sample was tested in Petitioner's mobile laboratory and was found to have an elevated End Point of 494 degrees Fahrenheit 1/ Department regulations provide that the End Point for leaded gasoline offered for sale in Florida shall not exceed 446 degrees Fahrenheit. A second test conducted in a private laboratory confirmed the initial testing results. On the basis of this information, a stop sale notice on the tank that dispensed the gasoline was issued on December 9, 1981. (Petitioner's Exhibit 2). Petitioner determined that prior to the issuance of the notice, approximately 1,900 gallons of contaminated gasoline had been sold to the public. A bond of $1,000 was paid by Respondent to Petitioner in lieu of confiscation of the remaining leaded or regular gasoline in the storage tanks (Petitioner's Exhibit 1). The hearing was requested to contest the forfeiture of the bond.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent be required to forfeit the $1,000 bond posted with Petitioner. DONE and ENTERED this 24th day of February, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675
Findings Of Fact Frank Gish operates Gish's Exxon service station, which is located at 400 Ridgewood Avenue, Holly Hill, Florida. Gish's Exxon service station purchases all of its gasoline from the Respondent, Widmaier Oil Company. On or about February 17, 1982, one of the Department's employees performed a routine inspection at Gish's Exxon service station. Samples were taken from each of the station's gasoline pumps and forwarded to a mobile laboratory. One of the samples taken was from the pump labeled "Exxon Unleaded." An examination of this sample was performed on the same date. The lead content of the sample was found to be .09 grams per gallon. After this analysis was performed, the remainder of the sample was forwarded to the Department's laboratory in Tallahassee for more detailed examination. Personnel at the Department's laboratory in Tallahassee performed a precise X-ray examination of the sample. American Society for Testing Materials standards were applied in conducting the examination. The lead content of the sample was found to be .098 grams per gallon. The Department's rules require that gasoline sold as unleaded gasoline may not contain more than .05 grams of lead per gallon Rule 5F-2.01(1)(j), Florida Administrative Code. The Department's testing techniques have a "reproducibility factor" or error factor of up to .034 grams per gallon. Thus, the Department does not take action based upon tests that it runs unless the tests reveal a lead content of more than .084 grams per gallon. The samples taken from Gish's Exxon service station exceeded this amount, and a "Stop Sale" order was issued. Widmaier Oil Company posted a bond in the amount of one thousand dollars ($1,000) with the Department, so that the gasoline could be sold as "leaded gasoline." Widmaier Oil Company has agreed to accept responsibility for the selling of any illegal product as might be determined in this proceeding. No evidence was offered at the hearing from which it could be determined how the unleaded gasoline being sold at Gish's Exxon service station came to have an excessive lead content. Respondent contended that the gasoline may have been contaminated by the Petitioner's agents wrongly placing samples of gasoline that had been taken from a leaded pump into the unleaded tank. This contention is not supported by any evidence, and it appears that the samples taken by the Respondent's agents were not sufficient in volume to have raised the lead content in the unleaded tank to a level that would have violated the Department's standards.
Findings Of Fact Since 1984, the Department has been the state agency charged with the responsibility to establish rules and regulate underground pollutant storage facilities in Florida. In 1988, the Legislature added the administration of the newly enacted Florida Petroleum Liability and Restoration Program to the Department's duties. The program was to be established on or before January 1, 1989. The Applicant is the owner of a petroleum storage system in Jacksonville, Florida. Since 1984, it has been subject to the rules regarding underground pollutant storage facilities promulgated by the Department. On September 18, 1989, an odor indicative of possible petroleum contamination was discovered at the site during the installation of monitoring wells. A Discharge Notification Form was sent to the Department by the Applicant on October 23, 1989. The form advised that there were no leaks in the system. It was suggested that the odor may have resulted from surface spill at the site over a number of years. In response to the notification, an inspection of the site was completed by the Department on December 5, 1989. The inspection revealed the following on-site violations: Registration requirements were not being met. The forms had not been updated to include the presence of monitoring wells and overfill protection at the facility. Two underground tanks had not been properly abandoned. Inventory and reconciliation records had not been properly maintained, as required by rule since 1987. This violation was reviewed, and discussed in detail with on-site representatives of the Applicant. The monitoring wells were not installed by the time deadlines set forth in the Department's rules regarding stationary tanks. Since the wells were installed in September 1989, samples had not been taken for visual signs of petroleum contamination. The purpose of the system is to allow the owner of the storage tanks to learn if there is a leak in the tanks that can be quickly controlled to limit contamination. The day after the inspection, the Applicant applied for a determination of eligibility for participation in the restoration coverage portion of the new Florida Petroleum Liability Insurance and Liability Program. An affidavit was signed stating that all of the Department's rules regarding stationary tanks were being complied with by the Applicant. Six days after the inspection, the Department sent the Applicant written notice of the results of the inspection. The Applicant was given time frames and instructions for correcting the listed violations that could be corrected. A contamination assessment and clean up were also required in the letter. This letter did not address the issue of eligibility for the restoration funding program because that was a matter unrelated to the inspection results. On March 7, 1990, the Department determined the facility was ineligible for participation in the restoration funding provided by the Florida Petroleum Liability and Coverage Program. The following reasons were given: Failure to properly abandon underground storage tanks, pursuant to Section 17-61.050(3)(c), Florida Administrative Code. Failure to maintain inventory records, reconciliations, and significant loss/gain investigation as per Section 17-61.050(4)(c), Florida Administrative Code. Failure to install monitoring system and overfill protection by the dates set forth in Section 17-61.06(2)(c)2, Florida Administrative Code. Failure to properly monitor leak detection system, pursuant to Section 17-61.050(5)(c), Florida Administrative Code. The 10,000 gallon fuel oil tank and the 3,000 gallon waste oil tank present at the facility were abandoned in March 1990. The notice issued by the Department after its inspection in December 1989, gave the Applicant sixty days after receipt of the notice to properly abandon the tanks. The Applicant substantially complied with this requirement after the written notice was received. Although the Applicant failed to maintain the inventory records, reconciliations, and significant loss/gain investigations required by the Department rules, some of these violations had been corrected prior to the Department's inspection in December 1989. Correct inventory recordkeeping was discussed during the inspection, and the need to immediately implement the proper recordkeeping practices was emphasized in the post-inspection notice of violations. All of the recordkeeping violations were not cured until August 1990. The records kept by the Applicant during the noncompliance period from 1984 to August 1990, did not provide a substantially equivalent degree of information regarding possible leak detection or prohibited discharges as the required recordkeeping procedures. Two underground stationary storage tanks on the site have been part of the Applicant's petroleum storage system since 1970 and 1975, respectively. The monitoring wells and overfill protection for these tanks should have been in place by December 31, 1987. Neither monitoring system was installed until September 1989. The Applicant began the contract negotiations for installation in September 1988. The Applicant did not demonstrate that the facility contained an alternative procedure between December 31, 1987 and September 1989, that provided a substantially equivalent degree of protection for the lands, surface waters, or groundwaters of the state as the established requirement for monitoring wells and overfill protection. In December 1989, the Department's notice advised the Applicant that the monitoring wells should be sampled monthly for visual signs of petroleum contamination. Since April 1990, the Applicant has been completing the monthly sampling in the monitoring wells as part of its leak detection system, as required by the Department's rule regarding underground stationary tanks.
Recommendation Accordingly, it is RECOMMENDED: That the Department enter a Final Order denying Petitioner's application for restoration coverage in the Florida Petroleum Liability and Restoration Program at the Jacksonville location. DONE and ENTERED this 28 day of December, 1990, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY 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 _28_ day of December, 1990. APPENDIX TO RECOMMENDED ORDER The proposed findings of fact submitted by Petitioner are addressed as follows: Rejected. Improper interpretation of law. As for the facts in the first sentence, they are accepted. See HO #8. Rejected. Irrelevant. See HO #9. Rejected. Contrary to fact. See HO #9 and #11. Rejected. Contract to fact. See HO #11. Rejected. Contrary to fact. See HO #12 and #13. Rejected. Contrary to fact. Improper shifting of duty ad legal responsibility. Rejected . Improper application of law. The Respondent's proposed findings of fact are addressed as follows: Accepted. Accepted. Accepted. Accepted. See HO #8. Accepted. See HO #8. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #5. Accepted. Accepted. See HO #4. Accepted. See HO #4. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #4 and #6. Accepted. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #9. Accepted. See HO #4 and #10. Accepted. Rejected. Contrary to fact. See HO #10. Accepted. Accepted. Accepted. See HO #10. Accepted. See HO #3 and #12. Accepted. Accepted. See HO #13. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #6. Accepted. Rejected. Not established by evidence. See HO #6. Accepted. Accepted. Accepted. Accepted. See HO #7. Accepted. Accepted. COPIES FURNISHED: William Chadeayne, Qualified Representative 8933 Western Way, Suite 16 Jacksonville, Florida 32256 Janet E. Bowman, Esquire Assistant General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400
Findings Of Fact On July 14, 1982, Jimmy Haywood Nixon, an employee of petitioner, took samples of gasoline offered for sale at respondent's Beacon Store No. 7 in Milton, Florida, including a sample of regular gasoline mixed with alcohol, known as "regularhol." Pat Flanagan, a chemist employed by petitioner, performed various tests on the sample of regularhol, including ASTM method 86, and determined that the 50 percent evaporated distillation temperature of the mix as a whole was 150 F. His testimony to this effect was uncontroverted. When he learned the test results, Mr. Nixon locked the regularhol pump at respondent's store in Milton, only unlocking the pump to release the mixture when a thousand dollar bond was posted on July 16, 1982. Respondent began mixing regular gasoline with ethanol and selling it as regularhol in 1978 at the same price as regular gasoline. Until recently, Mocar made less on regularhol sales than on sales of regular gasoline. It originally offered regularhol as its way of helping to reduce the national consumption of petroleum. The Phillips' terminal in Pensacola was respondent's source of the regular gasoline it mixed to make regularhol. This gasoline reached Pensacola by barge, and petitioner's employees sampled and tested each barge's cargo. The 50 percent evaporated distillation temperature of the regular gas Mocar bought from Phillips varied over a range of more than 30 degrees Fahrenheit upwards from 180 F. Mixing ethanol with the gasoline lowered its distillation temperature, but until the batch sampled on July 14, 1982, Mocar's regularhol had passed the testing petitioner has regularly conducted.
Recommendation Respondent has not been shown to be more blameworthy than any of the fuel owners involved in the cases cited above, each of whom regained part of the bond that had been posted. It is, accordingly, RECOMMENDED: That petitioner retain four hundred dollars ($400.00) and return six hundred dollars ($600.00) to the respondent. DONE and ENTERED this 19th day of December, 1982, in Tallahassee, Florida. ROBERT T. BENTON Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of December, 1982. COPIES FURNISHED: Robert A. Chastain, Esquire Department of Agriculture and Consumer Services Room 513 Mayo Building Tallahassee, Florida 32301 James Milton Wilson, Esquire 201 East Government Street Pensacola, Florida 32598 The Honorable Doyle Conner Commissioner of Agriculture The Capitol, Plaza Level Tallahassee, Florida 32301
