Findings Of Fact The Respondent, J. C. Penny Company, Inc., operates an automobile service center at its store in the Sunshine Mall in Clearwater, Florida. The service center has a gas station which sells gasoline products to the general public. On or about February 4, 1981, a petroleum inspector of the Petitioner, Department of Agriculture and Consumer Services, took a gasoline sample for analysis of unleaded gasoline from the Respondent's gasoline station at the Sunshine Mall. This sample was tested in the Tallahassee laboratory and was found to contain lead contents in the amount of 0.60 gram per gallon in the no- lead gasoline sample. The standard for unleaded gasoline offered for sale in Florida is 0.05 gram of lead per gallon. On the basis of this information, a stop sale notice on the tank that dispensed the gasoline was issued on February 5, 1981 (Petitioner's Exhibit 1) The station manager was informed that he had several alternatives, including confiscation of the product, with the Respondent posting a bond in the amount of $1,000 for the release of the product to be sold as regular gasoline. Having elected this alternative, a "release notice or agreement" was entered into on February 5, 1981 (Petitioner's Exhibit 1). Petitioner received a bond in the amount of $1,000 from Respondent and this amount was deposited into the Gasoline Trust Fund.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent be required to forfeit $500 of the $1,000 bond posted and the unforfeited $500 be returned to Respondent. DONE and ENTERED this 1st day of June, 1981, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 1981. COPIES FURNISHED: Robert A. Chastain, Esquire Room 513 June, 1981. Mayo Building Tallahassee, Florida 32301 Donald E. Ford J. C. Penny Company, Inc. 27 Sunshine Mall Clearwater, Florida 33516
Findings Of Fact During a routine inspection on March 30, 1983, a sample diesel fuel taken from Respondent's place of business in Clearwater, Florida, was tested and was found to have a flash point of 660F. Normal flash point for diesel fuel is 1000F. A Stop Sale Notice was issued March 30, 1983, and sales from this tank were stopped. On March 31, 1983, Respondent posted a $1,000 bond in lieu of having the fuel confiscated. Before the Stop Sale Notice, 1,282 gallons of contaminated diesel fuel had been sold from this tank at a price of $1.099 per gallon.
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
The Issue Whether petitioner should take disciplinary action against respondent for the reasons alleged in the administrative complaint? Respondent's proposed findings of fact and conclusions of law and petitioner's proposed recommended order have been considered in preparation of the following findings of fact. Proposed findings of fact have been adopted for the most part, in substance, but they have been rejected when not supported by the weight of the evidence, immaterial, cumulative or subordinate.
Findings Of Fact At all pertinent times respondent Son-Mar Propane, Inc. operated as a liquefied petroleum gas dealer under license No. 0156030178 issued by petitioner. Liquefied petroleum gas is stored under pressure. A gallon of the liquid expands to 270 gallons of vapor, at normal temperatures and pressures. Because it is so much denser, the liquid occupies the bottom of any space in which both liquid and vapor are confined. If a storage tank stands upright, and the valve is open or there is a leak at or near the valve (by far the most common place for leaks), vapor will escape. But, if the cylinder is on its side, the top-mounted valve is low enough that liquid can escape, immediately to expand as vapor to 270 times its volume as liquid. More fuel increases the risk of fire. The agent of ignition is unknown in the present case. SAINT PATRICK'S DAY 1983 Raymond Towse is not a well man; fourteen surgical operations have taken their toll; and Loretta Towse was arthritic. On March 17, 1983, Mr. and Mrs. Towse discovered that there was no propane to cook breakfast with, so they put the empty tank into their customized, 1975 Dodge Tradesman 200 van. The tank, big enough to hold 239 pounds of water, stands 49 1/4 inches tall. Curtis Howard Jones, Jr., the next door neighbor who owned the tank and had made a loan of it to the Towses, regularly helped the Towses lift the tank, which weighed 71 pounds empty, into the van. After getting something to eat at K-Mart, Mr. and Mrs. Towse drove to respondent's place of business. On their way inside, Mr. Towse asked John Dahlem to fill the cylinder tank with propane. Mr. Dahlem, who can handle these tanks single-handedly, even when they are full, retrieved the tank from the van, filled it with liquefied petroleum gas, and replaced the filled tank in the van. Only he and Mrs. Towse witnessed this replacement and she is no longer alive. Mrs. Towse went inside to look at a stereo cassette recorder they were considering purchasing, then returned to the van without it. She climbed into the front seat on the passenger's side. Later she left the front seat of the van and moved, inside the vehicle, toward the cylinder tank. She may have heard gas escaping or seen liquid leaking. She may actually have reached the tank and turned the valve perhaps, inadvertently, the wrong way. When the explosion occurred, the tank lay horizontally across the bottom of the van, leaving only the carpet underneath to tell the color of the whole before the conflagration. A moan then a sigh, as Mrs. Towse breathed her last, followed the whoosh of the exploding fire, gasping for oxygen. The windshield and the skylight popped out. The frame buckled. The Pasco County Fire Service arrived at two o'clock and put the fire out. The tank was red hot. The valve lacked a half turn being closed. Forty- nine and a half pounds of liquefied petroleum gas had escaped to be consumed by the fire. Full, the tank had weighed 171 pounds. NO RECERTIFICATION The propane cylinder tank involved was manufactured in January of 1959. Mr. Dahlem filled this tank, No. 23860, with propane at least four times in the last three and a half years. It had never been recertified, even though "NFPA requires recertification 12 years after date of manufacture" (T. 41) and periodically thereafter. Recertification contemplates at least a visual inspection for rust, dents and gouges in the cylinder, and soaping the welds and valve to determine whether there are any leaks. If the cylinder passes the test, "they mark it `E' for external, then the month and the year that they do the inspection. It's stamped right in the top of the cylinder." (T. 41) NOT SECURED VERTICALLY The Towses' neighbor, Mr. Jones, who used to help lay the tank on its side in the van, also saw it lying on its side, ready for unloading, after having been filled and driven back, on at least three occasions. The tank was too tall to be made to stand upright in the van, Mr. Jones believed. Whether the tank is too tall in fact was unclear from the evidence. Measurements of the van after the fire suggest there would not have been room enough, but the fire caused buckling of the van's roof and maybe other changes. Measurement of another Dodge van with different customizing suggest that there may have been room enough to stand the tank vertically, after all, perhaps with as much as an inch clearance. The burn patterns leave no doubt that the cylinder lay on its side during the fire. The bottom of the tank, which has a diameter of 16 to 18 inches, was almost flush with the side of the van; the likelihood that the cylinder simply fell over is very small. Mr. Dahlem testified that, although the empty tank arrived lying down, he stood the tank upright in the van, after he filled it, but his testimony that he left the tank in a vertical position has not been credited. There is no dispute that he did not say anything to the Towses about securing it on March 17, 1983. DAHLEM ACTED FOR CORPORATION John Dahlem is the brother-in-law of one of the principals of Son-Mar, Inc. He has worked there for three and a half years. He cuts the grass, pumps gas and works on trucks in addition to filling propane tanks. Before he filled propane tanks himself, Mr. Dahlem watched it being done many times over a period of a year and a half. This was evidently the extent of his training. (T. 143-144) Mr. Dahlem testified that he had been instructed to check for certification but had failed to do so on the four occasions he refilled the tank the Towses used. At one time, but not on the day of Mrs. Towse's death, he did use soapy water to check for a leak, and discussed replacing part of the tank with the Towses: I had checked that tank previous when I . . . on the shroud because he had an option then. He could either have a standard valve put in, which would have been cheaper, because he would have bought just the cap; he wouldn't have needed the shroud. (T. 138-139). Mr. Berdeaux and Mr. Johnson, respondent's principals, told Mr. Dahlem he need not secure propane tanks he filled and placed in people's conveyances. "They had to tie the tank off themselves. . . I didn't have to tie it off. No, sir." (T. 143) STANDARDS The National Fire Protection Association publishes safety standards which include the following: 6115. Containers and their appurtenances shall be determined to be leak-free before being loaded into vehicles. Containers shall be loaded into vehicles with sub stantially flat floors or equipped with suitable racks for holding containers. Containers shall be securely fastened in position to minimize the possibility of movement, tipping over or physical damage. 6116. Containers having an individual water capacity exceeding 200 pounds shall be transported with the relief valves of containers in direct communication with the vapor space. * * * B-212. All containers, including those apparently undamaged, must be periodically requalified for continued service. The first requalification for a new cylinder is required within 12 years after the date of manufacture. Subsequent requalifications are required within the periods specified under the requalification method used. B-213. DOT regulations permit three alternative methods of requalification for most commonly used LP-Gas specification containers (see DOT regulations for permissible requalification methods for specific cylinder specifications). Two use hydrostatic testing, and the third uses a carefully made and duly recorded visual examination by a competent person. In the case of the two hydrostatic test methods, only test results are recorded but a careful visual examination of each container is also required. DOT regulations cite in detail the data to be recorded for the hydrostatic test methods, the observations to be made during the recorded visual examination method, and the marking of containers to indicate the requalification date and the method used. The three methods are outlined as follows: The water jacket type hydrostatic test may be used to requalify containers for 12 years before the next requalification is due. A pressure of twice the marked service pressure is applied, using a water jacket (or the equivalent) so that the total expansion of the container during the application of the test pressure can be observed and recorded for comparison with the permanent expansion of the container after depressurization. The following disposition is made of containers tested in this manner: Containers which pass the retest, and the visual examination required with it (see B-213), are marked with the date and year of the test (Example: "6-70", indicating requalification by the water jacket test method in June 1970) and may be placed back in service. Containers which leak, or for which the permanent expansion exceeds 10 percent of the total expansion (12 percent for Specification 4-E aluminum cylinders) shall be rejected. If rejected for leakage, containers may be repaired in accordance with B-220. The simple hydrostatic test may be used to requalify containers for 7 years before the next requalification is due. A pressure of twice the marked service pressure is applied but no provision is made for measuring total and permanent expansion during the test outlined in B-213(a) above. The container is carefully observed while under the test pressure for leaks; undue swelling or bulging indicating weaknesses. The following disposition is made of containers tested in this manner: Containers which pass the test, and the visual examination required with it (see B-213) are marked with the date and year of the retest followed by an "S" (Example: "8-715", indicating requalification by the simple hydrostatic test method in August 1971), and may be placed back in service. Containers developing leaks or showing undue swelling or bulging shall be rejected. If rejected for leaks, containers may be repaired in accordance with B-220. The recorded visual examination may be used to requalify containers for 5 years before the next requalification is due provided the container has been used exclusively for LP-Gas commercially free from corroding components. Inspection is to be made by a competent person, using as a guide Compressed Gas Association "Standards for the Visual Inspection of Compressed Gas Cylinders" (CGA Pamphlet C06, 1975), and recording the inspection results as required by DOT regulations. (Note: Reference to NLPGA Safety Bulletin Recommended Procedures for Visual Inspection and Requalification of ICC Cylinders in LP-Gas Service is also recommended). The following disposition is to be made of containers inspected in this manner: Containers which pass the visual examination are marked with the date and year of the examination followed by an "E" (Example: "7-70E," indicating requalification by the recorded visual examination method in July 1970), and may be placed back in service. Containers which leak, show serious denting or gouging, or excessive corrosion shall either be scrapped or repaired in accordance with B-220. Petitioner's Exhibit No. 1, NFPA No. 58 (1979 ed.). These provisions are adopted by reference in Rule 4B-1.01, Florida Administrative Code.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner revoke respondent's license No. 0156030178. DONE and ENTERED this 29th day of June, 1984, in Tallahassee, Florida. ROBERT T. BENTON II 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 29th day of June, 1984. COPIES FURNISHED: Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Leslie King O'Neal, Esquire Markel, McDonough & O'Neal Post Office Drawer 1991 Orlando, Florida 32802 William Gunter, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32301
Findings Of Fact On March 21, 1990, the School Board of Broward County issued an invitation to bid, No. 90-597T (ITB). The ITB sought to purchase a computerized fuel system, less trade-in. The general conditions of the ITB are common to all purchasing by the School Board and are contained on a single green cover sheet; the remainder of the ITB is made up of the special conditions applicable to the specific purchase. According to page 3, paragraph 1 of those special conditions, the School Board solicited bids on a "new on-line automated fuel dispensing and accounting system, less trade-in." The bidders were required to include in their proposals "all software, hardware (except an IBM Series/1 computer, if used), installation, labor, and training to complete the following objectives:" improve the efficiency and control of the Board's existing automated fuel system; improve fuel inventory management by intergrating in-tank monitoring and leak detection into the automated fuel dispensing system. Monitoring and leak detection devices were to be completely integrated using the same communication lines and computer hardware; record the acquisition, transfer and disposal of equipment; automate the collection and transfer of data to the Board's equipment management and financial accounting systems in the same format as the Board's current data and require no additional support or action by the Board; make appropriate reports available to user departments, and schedule and notify remote sites when preventive maintenance is due for a vehicle. Specifications for the system begin at page 10 of the ITB. Section I of the Specifications is a General System Description which fills pages 10-13 of the ITB. Section II at the bottom of page 13, describes a Fuel Dispensing Procedure. Section III, on page 14 describes Operating Procedures. Section IV on pages 15 and 16 specifies Hardware; the system is to include a computer, remote terminals, and actuator cards, installation criteria are also given for power and wiring. Section V, at pages 16-22 of the ITB, specifies Software and Programming. Its subsection I describes tank level monitors and says: The system will provide for in-tank level monitoring devices which are fully incorporated into the system. The tank level system will be as follows: The fuel island terminal will monitor the tank sensoring devices and generate and send a separate transaction each time it calls the Central Control Processor. This transaction will include fuel in inches and in gallons (gaged balance), water level in inches and temperature in degrees Fahrenheit. The most current readings will be stored in the system and will be available on the fuel inventory and receipts report. The calculated balance will continue to be the "primary balance." The Central Control Processor will generate a special transaction (unique transaction code) indicating sudden loss when the gauged balance drops more than the calculated balance by 1%. A special transaction or flag will be generated when more than 1/2 inch water exists in the tank (high water). Deliveries will be captured through the fuel monitor at sites so equipped. All/any manual delivery input will be recorded and flagged, but will not change the tank files. At sites without the monitor, manual readings will still be accepted. The PFR report will show water level, temperature, sudden loss and low inventory (re- order point). The fuel island terminal will also be equipped to monitor hydro-carbon wells. When hydro-carbon is detected the Fuel Infringement Circuit (FIR) will open and the pumps will be shut down. A FIR transaction will also be generated and sent to the Central Control Processor. Hydro-carbon probes will be included for all listed monitoring wells. The School Board received bids from three bidders which were open on April 26, 1990, at 2:00 p.m.. According to the bid tabulation, Tel-Star Systems bid $59,616, Cherokee group bid $882,924 and E. J. Ward, Inc. bid $106,816. Although Tel-Star was the low bidder, board staff believed that its bid did not meet the minimum advertised specifications. Staff intended to solicit bids for hardware for automatic in-tank fuel level monitoring and hydro-carbon well monitoring (i.e., leak monitoring) capabilities, and all software necessary to perform these functions. In reviewing the literature which accompanied Tel- Star's bid, staff had found no mention of hardware to automatically monitor the level of the fuel tanks or to monitor hydro-carbon wells. The marketing director for Tel-Star told staff that the necessary hardware for in-tank fuel level monitoring or hydro-carbon well monitoring was not included in the bid because Tel-Star did not interpret the ITB to require that hardware. Board staff determined the bid should be awarded to E. J. Ward, Inc., as the lowest bidder who met all advertised specifications. To companies dealing in computerized fuel systems, a computerized fuel dispensing and accounting system is separate from a system which provides in- tank monitoring and leak detection, although these two functions can be and are commonly integrated. No single manufacturer makes a system which will provide both computerized fuel dispensing, and in-tank monitoring and leak detection. Separate systems from different manufacturers can be combined to achieve both functions. The sales manager for Tel-Star Systems, Inc., who first reviewed the ITB noted the very brief reference to tank level monitors and hydro-carbon well monitors on page 22 of the ITB. He was unsure whether the bid called for that type of hardware. He discussed the matter with the president of Tel-Star, Mr. DeVoll. It was determined that because the reference to the in-tank monitoring and leak detection (hydro-carbon monitoring) was made only in the portion of the ITB dealing with Software and Programming (Part V), the School Board only wanted an automated fuel system which was capable of being integrated with fuel tank monitors and leak detection (hydro-carbon well) monitors. Based upon the structure of the ITB, this interpretation by Tel-Star and its officers was reasonable. It is also consistent with an objective reading of the bid made by one of Tel-Star's competitors, which also received the Board's invitation to bid and contemplated submitting a bid. According to Mr. Busbee, had he submitted a bid on behalf of his firm, based on the language of School Board's ITB, he would not have included hardware for in-tank level monitoring or leak detection (hydro-carbon well) monitoring. The bid from E. J. Ward, Inc., did include hardware for in-tank monitoring and leak detection, but this was not the result of the wording of the ITB. E. J. Ward, Inc., is the manufacturer of the present fuel dispensing system which the School Board of Broward County uses. Through servicing the account, representatives of E. J. Ward knew exactly what the School Board of Broward County had on site, and what it sought to acquire through its ITB. While E. J. Ward enjoyed no undue advantage by reason of its long association with the School Board, it was able to read the ITB with the gloss of its own experience, and knowledge of what staff intended to procure through the ITB. Its response to the ITB was not solely the product of a reading of the special conditions. The School Board believes that Tel-Star should have taken steps to determine whether the ITB was intended to include fuel level monitoring and leak detection monitoring, and points to page 7 of the Special Conditions, paragraph 30 which states: Any questions by prospective bidders concerning this Invitation to Bid should be addressed to Mr. George Toman, Buyer, Purchasing Department, (305) 765-6119, who is authorized only to direct the attention of prospective bidders to various portions of the Bid so they may read and interpret such for themselves. Neither Mr. Toman nor any employee of the School Board of Broward County is authorized to interpret any portion of the bid or give information as to the requirements of the Bid in addition to that contained in the written Bid Document. Interpretations of the Bid or additional information as to its requirements, where necessary, shall be communicated to bidders only by written addendum. Section 8 of the General Conditions states: Any questions concerning conditions and specifications should be submitted in writing and received by the Department of Purchasing no later than three (3) working days prior to the Bid opening. Tel-Star and its officers made no inquiry of Mr. Toman to attempt to determine whether the Board expected bids responding to the ITB to include hardware for in-tank monitoring and leak detection. Under the wording of paragraph 30, however, it is doubtful that any such inquiry would have been enlightening. Nothing in that paragraph states that if an inquiry is made, anyone at the School Board will attempt to interpret the bid or provide additional information which all bidders will receive through a written addendum. It merely advises potential bidders should any interpretation of the ITB be made by the School Board, it will be communicated through a written addendum. Paragraph 30 does not describe a procedure which Tel-Star should have followed in order to receive a clarification of what the School Board wished to purchase through its ITB. Paragraph 8 also fails to state that requests for interpretations will be answered, or that failure to submit a written question precludes a bidder from relying on the structure and language of an ITB. The references to hardware for monitoring are found only in the specifications for software. The interpretation made by Tel-Star, that its equipment would have to be capable of integration with monitoring hardware which would be separately procured was reasonable.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the School Board of Broward County upholding the protest of Tel-Star Systems, Inc., rejecting all bids for the computerized fuel system less trade-in, Bid No. 90-597T, ordering that the bid specifications be clarified, and that a new invitation to bid be circulated. DONE and ENTERED this 13th day of September, 1990, 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 13th day of September, 1990. APPENDIX TO RECOMMENDED ORDER Rulings on the proposed findings by the School Board of Broward County: Adopted in Finding 1. Adopted in Finding 3. Implicit in Finding 4. 4.-5. Rejected as unnecessary. No party disputes that Tel-Star Systems, Inc., followed the appropriate protest procedures. Discussed in Findings 6 and 7. Rejected as recitation of testimony rather than a finding of fact. Adopted in Finding 9. Discussed in Finding 6. Generally adopted in Finding 10. Copies furnished: Norris J. DeVoll, President Tel-Star Systems, Inc. Post Office Box 791753 San Antonio, Texas 78279-1753 Edward J. Marko, Esquire Marko & Stephany Suite 201 Victoria Park Centre 1401 East Broward Boulevard Post Office Box 4369 Fort Lauderdale, Florida 33338 John K. Featherston Vice President E. J. Ward, Inc. 6410 Southwest Boulevard Suite 224 Fort Worth, Texas 76109 Virgil L. Morgan, Superintendent Broward County School Board 1320 Southwest 4th Street Fort Lauderdale, Florida 33312 Honorable Betty Castor Commissioner of Education The Capitol Tallahassee, Florida 32399-0400 Sydney H. McKenzie, General Counsel Department of Education The Capitol, PL-08 Tallahassee, Florida 32399-0400
The Issue The question presented here concerns the Petitioner, State of Florida, Department of Agriculture and Consumer Services' Stop Sale Notice placed against Respondent, Pinner Oil Company under the alleged authority of Section 525.06, Florida Statutes (1980), by the process of requiring a refundable bond in the amount of $471.34, pending the outcome of this dispute in which it is contended that the Respondent supplied gasoline for sale which failed to comply with Rule Subsection 5F-2.01(1)(j), Florida Administrative Code, dealing with the allowed lead content in gasoline.
Findings Of Fact The Petitioner, State of Florida, Department of Agriculture and Consumer Services is an agency of government which has, among other responsibilities, the requirement to establish and enforce standards related to maximum allowable lead content in unleaded gasoline offered for sale to the general public. This regulation is designed to avoid the destruction of catalytic devices found in the exhaust systems of certain cars, in which the destruction of a catalyst would bring about problems, with the exhaust system causing its replacement and more importantly, lead to adverse effects on the environment due to an increase in undesired emission from the exhaust system. The Respondent, Pinner Oil Company of Cross City, Florida, is a jobber which supplies gasoline to retail outlets who in turn sales the gasoline to members of the motoring public. The facts reveal that on October 6, 1980, an official with the Petitioner made a routine inspection of the unleaded gasoline reservoir at the B. F. Goodrich-Texaco at 210 Rogers Boulevard, Chiefland, Florida, a customer of Pinner Oil Company. This gasoline was subsequently analyzed and on October 7, 1989, a Stop Sale Notice was served based upon a determination that the unleaded gasoline found in the reservoir at that station contained more than 0.05 grams of lead per U.S. gallon. The gasoline in question was provided to the B. F. Goodrich outlet by an employee of Pinner Oil Company as a part of his duties with the Respondent. In lieu of the total confiscation of the gasoline found in the reservoir tank at the station In question, the Respondent was allowed to post a refundable bond in the amount of $471.34 which represented the price for the number of gallons sold at a retail price since the time of the prior delivery to that station. (By Stipulation entered into between the parties, it was agreed that a finding of fact would be made to the effect that the Respondent, during the course of the last two years, had not been cited for a violation of the Florida Statutes pertaining to contaminated fuels.)
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
Findings Of Fact On February 16, 1981, John Flanagan, a Graduate Chemist and Inspector for the Petitioner, Department of Agriculture and Consumer Services, (hereafter "Department") took a gasoline sample (R-247) from an unleaded pump identified as 45321" at the June Avenue Service Station, 1109 West U.S. 98, Panama City, Florida. This sample was field tested and then forwarded to the lab in Tallahassee where it was again tested on February 20, 1981 and found to be contaminated with leaded gasoline. (Testimony of Whitton, Flanagan, Petitioner's Composite Exhibit 1). As a result of the field test the Department issued a stop sale notice to Mr. Al Barry on February 16, 1981. The laboratory analysis showed that the unleaded gasoline sample exceeded the standards established by the American Society of Testing and Materials ("ASTN") for unleaded fuel which were adopted by the Department as Rule 5F-2.01, Florida Administrative Code. The sample in question contained 0.088 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. 4 The Respondent was permitted to post a $1,000 cash bond in lieu of confiscation in order to secure the release of the remaining 1,600 gallons of illegal gasoline for sale as leaded regular. The Respondent has no knowledge as to how the unleaded gasoline was contaminated. The gasoline was purchased from the Hill Petroleum Company and supplied by the Respondent to the June Avenue Service Station as unleaded gasoline.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That the Department enter a final order denying Respondent's request for the return of its 1,000 bond which was required to be posted in lieu of confiscation of approximately 1,600 gallons of contaminated unleaded gasoline. DONE and ORDERED this 21st day of September, 1981, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of September, 1981. COPIES FURNISHED: Les McLeod, Esquire Department of Agriculture and Consumer Services Room 513, Mayo Building Tallahassee, Florida 32301 William D. Dickens Dickens Oil Company 1706 Maple Avenue Panama City, Florida 32405 John Whitton, Chief Bureau of Petroleum Inspection Division of Standards Mayo Building Tallahassee, Florida 32301
The Issue The issues to be determined are whether Southeast Petro Distributors, Inc. (Petitioner or Southeast Petro), is entitled to a refund for taxes paid on its purchases of identified machinery and equipment based upon an exemption in section 212.08(5)(b), Florida Statutes; and, if so, whether Southeast Petro is entitled to statutory interest on the amount of any refund paid, pursuant to section 213.255, Florida Statutes.
Findings Of Fact Based on the testimony and documentary evidence presented, the demeanor of the witnesses, and the stipulations of the parties, the following facts are found: Southeast Petro is a fuel distributor that distributes fuel to customers in the Southeastern United States, concentrated mostly in Florida. Southeast Petro does not operate any of the locations to which it delivers fuel, but the operators of many of the locations, like Southeast Petro, are affiliate 1 Petitioner’s Exhibit 22 is for demonstrative purposes only. companies of M&R High Point Holdings, Inc. Summit Shah is the President of Southeast Petro and has been with the company for 22 years. He referred to these affiliate companies as “disregarded entities,” and testified that the companies are part of a family business, with all of the same officers and common ownership under a single federal tax return. Those other than Southeast Petro are referenced in this Recommended Order as affiliate sites. Southeast Petro also delivers fuel to locations in which it has no ownership interest. For these locations, which are referred to as dealer locations, Southeast Petro has entered into Dealer Supply Agreements. Under these agreements, Southeast Petro supplies not only the fuel to the dealers, but equipment to store and dispense the fuel, including gasoline tanks and dispensing pumps. While ownership of the fuel passes to the dealer when it is transferred to the storage tanks, the storage tanks, dispensing pumps, and related equipment remain the property of Southeast Petro. Southeast Petro is required to supply fuel to the dealer as necessary to meet customer demand. Southeast Petro purchases the underground tanks and dispensing pumps for both its affiliate sites and the dealer locations that buy its fuel. Fuel tanks generally last approximately 20 years, and have warranties for 10-20 years, while dispensing pumps last about 10 years, with most warranties lasting for four years. Both the dispensing pumps and the underground storage tanks have a depreciable life of over three years. As the pumps age, they become less efficient and the flow of the gasoline slows. This case involves the replacement of dispensing pumps and a few underground storage tanks at gas stations serviced by Southeast Petro. Most gas stations sell unleaded gasoline with three octane ratings: premium, with a 93 rating; mid-grade, with an 89 rating; and regular unleaded, with an 87 rating. Different vehicles require different fuel octane levels to maximize the performance of the vehicle. For example, a high performance sports car requires premium gas, while a typical sedan runs just fine on regular unleaded gasoline. At one time, an underground tank was required for each kind of fuel. However, within the last approximately 20 years, dispensing pumps have been manufactured with a blender mechanism that allows for the elimination of one storage tank and blends percentages of unleaded and premium fuel to create mid-grade fuel at the dispensing location. With the use of this type of dispensing pump, the need to transport and store mid-grade fuel is eliminated. Reducing the number of tanks required at each location reduces cost of insurance, as well as the cost related to supplying the tanks, and the risk of fuel leaks from the underground tanks. The Department contends that while Southeast Petro is purchasing these dispensing pumps with the blender capability, it is the customer, as opposed to Southeast Petro, that is “making” the mid-grade fuel through his or her selection of mid-grade when making the fuel purchase. However, unless the dispensing pump is equipped with the mechanism that blends the fuel, the customer cannot access mid-grade fuel. On or about May 22, 2017, Southeast Petro filed a DR-26S, Application for Refund – Sales and Use Tax form (application), with the Department, claiming that it was entitled to a refund of $146,846.47 in sales tax paid for dispensing pumps and underground storage tanks it purchased to replace the dispensing pumps and tanks at several locations. The purchases were for dispensing pumps for both affiliated entities and for dealer locations. The replacement of some underground storage tanks was also included in the claimed purchases. Dispensing pumps were purchased from Central Industries, Inc.; Guardian Fueling Technologies, LLC; and Sunoco, LLC, and underground storage tanks were purchased from Modern Welding Company of Florida, Inc. In addition to the application, Petitioner provided a power of attorney form, a spreadsheet listing job code, invoice date, invoice number, taxable amount, sales tax, sales tax percentage, and invoice totals for the purchases at issue; and several invoices for purchases of gasoline pumps, tanks, and related hardware necessary for installation. The invoices reflect the different sites to which pumps were installed. At least some portion of the address for the site was included on the invoices, such as the street address, although they did not always identify the cities where the sites were located. The refund period in the application is May 2014 through April 2017. On June 20, 2017, the Department issued a Notice of Intent to Make Tax Refund Changes. In an attachment to the Notice, the Department stated that the information provided in the request for refund was insufficient, and requested that Petitioner provide an assignment of rights to refund of sales tax form; a plant schematic of the manufacturing facility identifying the location of the equipment included in the refund request; citations to applicable Florida Statutes and administrative rules upon which Petitioner was relying for the request for exemption and refund, along with any documentation (not specified) required to support the exemption/refund request; and information related to the claimed pollution control exemption, which is no longer relevant to these proceedings. The Notice of Intent to Make Refund Changes stated, “If you do not agree with these findings, you may request an informal conference to discuss any factual, statutory, or regulatory issues related to the above refund denial. Your request for informal conference must be made, in writing, to the above referenced office within 30 days of the issuance of this Notice.” It also advised that if the taxpayer did not request an informal hearing within 30 days, a Notice of Proposed Refund Denial would be issued on or about July 20, 2017. The attachment requesting additional documents did not expressly state a deadline for the submission of the documents requested. On July 20, 2017, the Department issued a Notice of Proposed Refund Denial for the Refund Claim. The attachment to the Notice of Proposed Refund Denial stated that the request for refund was being denied because the documentation requested in the Notice of Intent to Make Tax Refund Changes had not been provided. Southeast Petro timely protested the Notice of Decision of Refund Denial pursuant to Florida Administrative Code Chapter 12-6. Southeast Petro’s Protest letter, dated August 2, 2017, included the documents previously provided to the Department. No plant schematic identifying the equipment included in the refund request was ever provided to the Department, or produced at hearing, because no plant is involved. Instead, Petitioner asserts that each gas station is a fixed site where “manufacturing, processing, compounding, or producing for sale” is taking place. On November 17, 2017, Alan Fulton, who at that time was a tax law specialist for the Department, issued a letter to counsel for Petitioner stating that the documentation to date was not sufficient to support the claim, and that the Department needed, for each transaction/refund amount requested, a properly executed assignment of rights form from each of the selling dealers to which Petitioner asserts was paid in error; the amount of tax requested for each transaction in the refund claim; a clear and concise reconciliation of the invoices/transactions for which Petitioner was seeking a refund; and proof of tax paid to the vendor that reconciles to the refund amount. Mr. Fulton also asked for production records or documents to support the claim that the machinery and equipment purchased is used in a manufacturing process to produce a new product; and a thorough description of the manufacturing process, including the specific machinery used. Mr. Fulton advised that this information, as well as any other documentation that may support the protest, needed to be provided to the Department no later than December 12, 2017. On February 28, 2018, the Department issued a Notice of Decision (NOD) of Refund Denial, in which the Department denied the refund in its entirety. In the NOD, the Department noted that it had requested additional documentation from Petitioner that it did not receive. With respect for the claim under the new or expanding business exemption, the NOD stated in part: By asserting its purchases qualify for tax exemption under s. 212.08(5)(b), F.S., Taxpayer implies its purchases are used to manufacture of process tangible personal property for sale. However, Taxpayer provides no arguments as to how its retail gasoline stations are engaged in manufacturing, processing, compounding, or producing for sale tangible personal property at fixed locations. Additionally, Taxpayer has failed to submit documentation specifically requested, such as properly executed Assignment of Rights to Refund of Sales Tax, an Application for Temporary tax Exemption Permit, form DR-1214; proof of tax paid to vendors; production records supporting Taxpayers contention that the machinery and equipment purchased is used in a manufacturing process to produce a new product; a description of the manufacturing process, including the specific machinery and equipment used; and documentation received from the Florida Department of Environmental Protection for the projects. Nonetheless, in considering Taxpayer’s assertions of tax exemption, it is reiterated, pursuant to Rule 12A-1.096(1)(d), F.A.C., promulgated to administer s. 212.08(5)(b), F.S., the phrase “manufacture, process, compound, or produce for sale” means the various industrial operations of a business where raw materials will be put through a series of steps to make an item of tangible personal property that will be sold. The gasoline was previously manufactured by a refinery from crude oil. Furthermore, it is the Taxpayer’s customers that operate the gasoline dispensing pumps at the retail stations, and not for the purpose of conducting industrial operations. As such, the Department does not find that Taxpayer is engaged in manufacturing operations at its retail gasoline stations with the dispensing pumps and underground tanks. Instead, it is the Department’s position, as indicated above, the dispensing pumps and underground storage tanks are more properly classified as storage and delivery systems utilized subsequent to the conclusion of the manufacturing process by a refinery. Therefore, these items would not qualify for the exemption from tax provided under s. 212.08(5)(b), F.S., and Rule 12S-1.096, F.A.C. (emphasis in original) On March 21, 2018, Southeast Petro filed a Petition for Reconsideration contesting the Notice of Decision of Refund Denial. With the Petition for Reconsideration, Petitioner provided, along with some other documentation, a schedule of the transactions at issue; the assignment of rights to refund from each of the selling dealers to which sales tax were paid; the corresponding invoices; the application for temporary exemption permit (DR-1214); and an explanation of how the refund amount was computed. On August 22, 2018, the Department issued its Notice of Reconsideration of Refund Denial, fully sustaining its denial of Southeast Petro’s refund claim. In its Notice of Reconsideration of Refund Denial, the Department reiterated its position stated in the NOD, and added the following statement: For both of the exemptions sought by Taxpayer, the Department acknowledges Taxpayer has submitted an Application for Temporary Tax Exemption Permit, form DR-1213, a reconciliation spreadsheet of the refund claimed, proper [sic] executed Assignment of Rights to Refund of Sales Tax, and various invoices for review and consideration. However, this information is not germane to the refund claim, because the dispensing pumps and underground storage tanks are not qualifying industrial machinery and equipment under the provisions of s. 212.051, F.S. and s. 212.08(5)(b), F.S. On October 19, 2018, Southeast Petro filed its Petition for Chapter 120 Hearing, contesting the Notice of Reconsideration. The case was referred to the Division of Administrative Hearings on November 6, 2019. Southeast Petro paid sales taxes on the purchases of underground storage tanks and dispensing pumps to the vendors supplying the equipment. Those vendors then provided to Southeast Petro Assignment of Rights to Refund of Sales Tax forms, identifying the amount of tax for which they assigned the rights to Southeast Petro. Central Industries, Inc., sold dispensing pumps to Southeast Petro, and on August 23, 2017, assigned the rights to Southeast Petro for refund of the taxes it collected. The amount assigned for transactions occurring from May 1, 2015, through April 30, 2017, is $52,592.92. Guardian Fueling Technologies, LLC, sold dispensing pumps to Southeast Petro, and on August 23, 2017, assigned the rights to Southeast Petro for refund of taxes it collected. The amount assigned for transactions occurring from May 1, 2015, to April 30, 2017, is $41,593.82. Guardian Fueling Technologies, LLC, also executed an assignment of rights for a purchase made in March 2015, where the tax paid was $36,269.31. Sunoco, LLC, sold dispensing pumps to Southeast Petro, and on September 14, 2017, assigned the rights to Southeast Petro for refund of taxes it collected. The amount assigned for transactions occurring from May 1, 2015, to April 30, 2017, is $8,953.41. Modern Welding Company of Florida, Inc., sold underground storage tanks to Southeast Petro, and on June 29, 2015, assigned the rights to Southeast Petro for refund of the taxes it collected. The amount assigned for transactions occurring from June 2012 to March 2015 was $16,646.00. It is noted that this assignment covers purchases that extend back past the refund period. When Southeast Petro originally filed its application for a refund, the requested amount was over $146,000. Over the course of the litigation, Southeast Petro withdrew its claim for refund with respect to some of its sites. The relevant information presented to substantiate the refund claim for each location for which a refund is still sought is listed below. With each transaction, the information presented is taken from the records provided, as opposed to the composite spread sheets. Fractions of a gallon have been discarded in the calculations, as they do not affect the percentages reached. Site 21 Site 21 is an affiliate site located at 5230 University Boulevard, Jacksonville, Florida. Guardian Fueling Technologies sold Southeast Petro four Gilbarco dispensing pumps. The invoice dated October 14, 2016, indicates that it was billed to “M&R Enterprises of Brevard/Southeast Petro.” The total amount invoiced was $58,747.76, and the tax paid for the purchase was $3,585.56. The invoice was paid by M&R United, Inc. The invoice includes references to ancillary features, such as a color screen and an HCR card reader for EMV, but the prices for those items are not listed separately. The dispensing pumps were installed by Petroleum Technicians, Inc., on or about December 22, 2016. In the 12 months prior to the installation of the new dispensing pumps, Site 21 sold approximately 675,257 gallons of fuel. In the 12-month period following the installation, from January 1, 2018, through December 31, 2018, Site 21 sold approximately 754,287 gallons of fuel, for an increase in sales of 11.7%. With respect to mid-grade blended fuel, in the 12 months prior to the installation, Site 21 sold 47,891 gallons, as opposed to 63,224 gallons for the identified 12-month period after installation, for an increase in sales of 32%. Site 99 Site 99 is an affiliate site located at 1600 Aurora Road, in Melbourne, Florida. Southeast Petro bought new Gilbarco dispensing pumps and related hardware for Site 99 as part of a bulk purchase from Guardian Fueling Technologies. The four dispensing pumps bought as part of the bulk purchase for Site 99, cost $56,574, with corresponding tax of $3,960.18. The invoice, dated March 24, 2015, is billed to M&R Enterprise of Brevard/Southeast Petro. The dispensing pumps were installed by Petroleum Technicians, Inc., on or about May 24, 2015. In the 12 months prior to installation, Site 99 sold approximately 656,820 gallons of fuel. In a 12-month period following the installation, from August 2015 through July 2016, Site 99 sold approximately 693,009 gallons of fuel, for an increase of 5.51%. With respect to mid-grade blended fuel, from September 2014, through May 2015, Site 99 sold 16,733 gallons. The records submitted in Petitioner’s Exhibit 33 identifies gasoline sold for the period comprising May through August 2014 on a single page. There is no legend for the types of gasoline sold on this page, and the gas code found in other records corresponding to mid- grade blended gasoline does not appear, so a total for mid-grade fuel sold during the 12-month period cannot be clearly identified. The records are not sufficient to show 12 contiguous months of production or sale of mid-grade fuel. Site 101 Site 101 is an affiliate site located at 6842 Wilson Boulevard, Jacksonville, Florida. Southeast Petro bought four new Gilbarco dispensing pumps from Central Industries. The invoice, dated January 4, 2017, is billed to Southeast Petro. The total amount invoiced is $55,813.49, and the tax paid is $3,157.84. The invoice includes charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and image/ graphics. The dispensing pumps were installed by Petroleum Technicians, Inc., on February 9, 2017. In the 12 months prior to the installation of the new dispensing pumps, Site 101 sold approximately 659,658 gallons of fuel. In the selected 12-month period following the installation, from January through December 2018, Site 101 sold approximately 836,764 gallons of fuel, for an increase of 26.85%. With respect to mid-grade blended fuel, in the 12 months prior to the installation of the new dispensing pumps, Site 101 sold 72,575 gallons, as opposed to 86,312 gallons for the period selected, for an increase of 18.93%. Site 122 Site 122 is an affiliate site located at 700 Columbia Boulevard in Titusville, Florida. Central Industries, Inc., sold Southeast Petro five new Gilbarco dispensing pumps and related hardware. The invoice, dated January 5, 2017, is billed to Southeast Petro. The total amount invoiced is $70,806, and the sales tax paid is $4,006.49. Included in the invoice are charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and image/graphics. The new dispensing pumps were installed by Petroleum Technicians, Inc., on January 19, 2017. In the 12 months prior to the installation of the new dispensing pumps, Site 122 sold approximately 1,208,313 gallons of fuel. In the selected 12-month period following the installation, from February 2017 through January 2018, Site 122 sold approximately 1,310,010 gallons of fuel, for an increase of 8.42%. With respect to mid-grade blended fuel, in the 12 months prior to installation of the new dispensing pumps, Site 122 sold 67,918 gallons, as opposed to 58,940 gallons for the identified 12-month period after installation. As sales of this grade of fuel actually went down, mid-grade fuel did not see an increase of 5%. Site 234 Site 234 is an affiliate site located at 3860 Highway A1A in Melbourne, Florida. Central Industries, Inc., sold Southeast Petro six new Gilbarco dispensing pumps and related hardware. The invoice, dated January 4, 2017, is billed to Southeast Petro. The total amount invoiced is $84,404.90 and the sales tax paid is $4,776.22. Included in the invoice are charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and the Mobil image. Petroleum Technicians, Inc., installed the new dispensing pumps on January 13, 2017. In the 12 months prior to the installation of the new dispensing pumps, Site 234 sold 582,758 gallons of fuel. In the selected 12-month period following the installation, from January through December 2018, Site 234 sold 639,150 gallons of fuel, for an increase of 9.68%. With respect to mid-grade blended fuel, in the 12 months prior to the installation of the new dispensing pumps, Site 234 sold 37,702 gallons, as opposed to 43,842 gallons for the post-installation period selected, for an increase in sales of 16.29%. Site 320 Site 320 is an affiliate site located at 4353 West Main Street in Mims, Florida. Central Industries sold Southeast Petro four new dispensing pumps and related hardware for this site. The invoice, dated January 5, 2017, is billed to Southeast Petro. The total amount invoiced is $54,329.49, and the sales tax paid is $3,073.84. Additional hardware was invoiced for this site on January 20, 2017, for $1,484.00, and sales tax paid of $84.00. The total for the combined invoices is $55,813.49, with total sales tax of $3,157.84. Included in the invoice are charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and the BP image. Petroleum Technicians, Inc., installed the new dispensing pumps on January 18, 2017. In the 12 months prior to the installation of the new dispensing pumps, Site 320 sold 1,135,378 gallons of fuel. In the selected 12-month period following the installation, from January through December 2018, Site 320 sold approximately 1,200,945 gallons of fuel, for an increase of 5.77%. With respect to mid-grade blended fuel, in the 12 months prior to the installation of the new dispensing pumps, Site 320 sold 33,106 gallons, as opposed to 36,235 gallons for the period selected, for an increase in sales of 9.45%. Site 343 Site 343 is an affiliate site located at 4090 West Midway Road in Fort Pierce, Florida. Central Industries, Inc., sold Southeast Petro six Gilbarco dispensing pumps and related hardware. The invoice, dated January 5, 2017, is billed to Southeast Petro. The total amount invoiced for the six dispensing pumps is $84,404.90, and the sales tax paid is $4,776.22. Included in the invoice are charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and image/graphics. There is a second invoice for Site 343 from Central Industries, Inc., for the purchase of a Gilbarco diesel dispensing pump. However, this pump does not have the blending capability of the other pumps purchased, and Petitioner acknowledges it would not support the criteria for a new and expanding business exemption, so it is not included. Petroleum Technicians, Inc., installed the six dispensing pumps on February 23, 2017. In the 12 months prior to the installation of the new dispensing pumps, Site 343 sold 1,107,473 gallons of fuel. In the selected 12-month period following the installation, from January through December 2018, Site 343 sold 1,289,854 gallons of fuel, for an increase of 16.47%. With respect to the mid-grade blended fuel, in the 12 months prior to installation of the new dispensing pumps, Site 343 sold 47,811 gallons, as opposed to 57,614 gallons for the post-installation period selected, for an increase of 20.5%. Site 346 Site 346 is an affiliate site located at 1595 Island Lane in Orange Park, Florida. Guardian Fueling Technologies sold Southeast Petro eight Gilbarco dispending pumps and related hardware for Site 346. The invoice, dated November 25, 2016, is billed to M&R Enterprises of Brevard/Southeast Petro. The total amount invoiced for the eight dispensing pumps is $118,047.12, and the sales tax paid is $7,722.72. The invoice includes references to ancillary features, such as a color screen and an HCR card reader for EMV, but the prices for those items are not listed separately. Petroleum Technicians, Inc., installed the eight new dispensing pumps for Site 346 on December 29, 2016. In the 12 months prior to the installation of the new dispensing pumps, Site 346 sold 1,004,375 gallons of fuel. In the selected 12-month period following the installation, from January through December 2018, Site 346 sold approximately 1,084,628 gallons of fuel, for an increase of 7.99%. With respect to the mid-grade blended fuel, in the 12 months prior to installation of the new dispensing pumps, Site 346 sold 70,508 gallons, as opposed to 84,059 gallons for the selected post-installation period selected, for an increase of 19.22%. Site 349 Site 349 is an affiliate site located at 11555 Bonita Beach Road Southeast, in Bonita Springs, Florida. Guardian Fueling Technologies sold Southeast Petro four Gilbarco dispensing pumps and related hardware for Site 349. The invoice, dated October 14, 2016, is billed to M&R Enterprise of Brevard/Southeast Petro. The total amount invoiced for the four dispensing pumps is $56,928.61, and the sales tax paid is $3,474.53. The invoice includes references to ancillary features, such as a color screen and an HCR card reader for EMV, but the prices for those items are not listed separately. Guardian Fueling Technologies also installed these pumps on November 18, 2016. In the 12 months prior to the installation of the new dispensing pumps, Site 349 sold 702,975 gallons of fuel. In the selected 12-month period following the installation, from January through December 2018, Site 349 sold approximately 815,819 gallons of fuel, for an increase of 16.05%. With respect to mid-grade blended fuel, in the 12 months prior to installation of the new dispensing pumps, Site 349 sold 66,228 gallons, as compared to 85,116 gallons for the selected post-installation period, for an increase in sales of 28.52%. Site 355 Site 355 is an affiliate site located at 2653 Boggy Creek Road in Kissimmee, Florida. Southeast Petro bought six Gilbarco dispensing pumps and related hardware from Guardian Fueling Technologies as part of a bulk purchase. The invoice, dated March 24, 2015, is billed to M&R Enterprises of Brevard/Southeast Petro. For the pumps and equipment purchased for Site 355, the cost for the pumps (pretax) was $83,738.00, and the sales tax was $5,861.66. Petroleum Technicians, Inc., removed the old pumps and installed the new dispensing pumps on April 27, 2015. For the period from September 1, 2014, through March 31, 2015, Site 355 sold 646,383 gallons of fuel. Only seven months of data is included because Southeast Petro and its affiliated companies did not own the site for a full year before the new pumps were installed, and the gas station was closed before ownership was transferred. No evidence was submitted regarding how long the station was closed prior to purchase. The evidence presented does not provide 12 contiguous months of production or sales records prior to installation of the new equipment. Site 385 Site 385 is an affiliate site located at 420 United States Highway 1, in Vero Beach, Florida. Central Industries, Inc., sold Southeast Petro five new Gilbarco dispensing pumps and related hardware. The invoice, dated October 28, 2016, is billed to Southeast Petro. The total cost of the invoice, including tax, is $69,305.34, and the sales tax paid is $4,457.57. Included in the invoice are charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and Exxon graphics. There is an additional invoice for this site dated October 27, 2016, for hanging hardware. The total of this invoice is $2,176.69, with sales tax paid of $127.00. Petroleum Technicians, Inc., installed the dispensing pumps on March 7, 2017. For the 12-month period prior to installation, Site 385 sold 599,935 gallons of fuel. For the selected 12-month period following the installation, January through December 2018, Site 385 sold 630,265 gallons, for an increase of 5.06%. With respect to the mid-grade blended fuel, for the 12 months prior to installation, Site 385 sold 39,588 gallons, as opposed to 45,098 gallons for the post-installation period selected, for an increase of 13.92%. Site 403 Site 403 is an affiliate site located at 5385 Timuquana Road in Jacksonville, Florida. Central Industries, Inc., sold Southeast Petro four Gilbarco dispensing pumps and related hardware for this location. The invoice, dated January 4, 2017, bills Southeast Petro for the purchase. The total billed is $55,813.49, with sales tax paid of $3,157. Included in the invoice are charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and image/graphics. Petroleum Technicians, Inc., installed the dispensing pumps on March 28, 2017. Southeast Petro’s affiliate owned Site 403 for only nine months prior to the installation of the dispensing pumps by Petroleum Technicians, so Southeast only submitted sales data for the nine months prior to the installation that an affiliate owned the location. Unlike Site 355, it is not clear whether the site was closed prior to the installation of the new pumps or simply changed ownership. For the nine months provided, Site 403 sold a total of 139,319 gallons of fuel. Using an average of gallons sold for that period, it is estimated that a year’s worth of sales would be approximately 185,759 gallons. For the selected post-installation period, January through December 2018, Site 403 sold 395,300 gallons of fuel. However, Petitioner did not provide 12 contiguous months of production or sales records prior to the installation of the new dispensing pumps. With respect to the mid-grade blended fuel, for the nine months the affiliated entity owned Site 403 prior to installation, it sold 11,362 gallons. Twelve contiguous months of records related to mid-grade fuel were not provided. JQ Trading JQ Trading is not an affiliate entity. It is an independent dealer location owned by Mills Chevron, LLC, located at 900 Mills Avenue in Orlando, Florida, to whom Southeast Petro sells fuel and has a dealer supply agreement. Pursuant to that dealer supply agreement, Southeast Petro supplies the pumps and related equipment in addition to delivering fuel to the site. Central Industries, Inc., sold Southeast Petro two new Gilbarco dispensing pumps and related hardware for JQ Trading. The invoice, dated January 5, 2017, is billed to Southeast Petro. The total cost of the invoice is $28,616.41, and the sales tax paid is $1,618.38. Included in the invoice are charges for ancillary items not involved in the blending process, such as speakers, hybrid card readers, and image/graphics. Petroleum Technicians, Inc., installed the dispensing pumps on January 30, 2017. Southeast Petro’s records show no gasoline sales for January 2017. For the 12 months preceding January 2017, JQ Trading sold 270,977 gallons of fuel. For the selected 12-month period following the installation, March 2017 through February 2018, JQ Trading sold 291,177 gallons, for an increase of 7.45%. Petitioner did not submit adequate documentation to determine the amount of mid-grade gasoline sold or the percentage of change. Aahan/Citrus Aahan/Citrus is an independent dealer location owned by Aahan, Inc., and located at 9548 North Citrus Springs Boulevard in Citrus Springs, Florida. Sunoco, LLC, sold Southeast Petro one dispensing pump for this location. The invoice, dated July 15, 2016, is billed to Southeast Petro. The total billed is $12,041.60, and the sales tax paid is $681.60. Southeast Petro acknowledges that it did not submit the invoice for the installation of the dispensing pump, but Mr. Clark, the owner of Petroleum Technicians, testified credibly that he installed the pump. The invoice indicates that the ship date for the dispensing pump was July 15, 2016. Mr. Clark also testified that installation can take place immediately after dispensing pumps are shipped, or as much as six months later, so relying on the ship date as the installation date is unrealistic. In the end, it does not matter, because regardless of when the dispensing pumps were installed, the increase in sales compared to the selected 12-month post- installation period is more than five percent. More specifically, the selected post-installation period is January through December 2018, and during that period, Aahan/Citrus sold 334,546 gallons of fuel. Assuming that the installation occurred within six months of the invoice, consistent with Mr. Clark’s testimony, the pre-installation comparators and the percentage increases are as follows: August 2015 - July 2016: 203,669 gallons, for a 64.26% increase; September 2015 - August 2016: 203,675 gallons, for 64.24% increase; October 2015 - September 2016: 203,960 gallons, for a 64.03% increase; November 2015 - October 2016: 195,340 gallons, for a 71.26% increase; December 2015 - November 2016: 202,772 gallons, for 64.99% increase; or January 2016 -December 2016: 202,779 gallons, for a 64.98% increase. No records were submitted from which the sales of mid-grade blended fuel can be identified or the percentage of increase, if any, can be determined. Snappy Food Mart Snappy Food Mart is an independent dealer location located at 1716 Oceanshore Boulevard in Ormond Beach, Florida. Sunoco, Inc., sold Southeast Petro three Gilbarco dispensing pumps for this location. The invoice, dated November 30, 2015, with a ship date listed as the same day, is billed to Southeast Petro. The total cost of the invoice is $35,189.73, with sales tax paid of $2,147.73. Like Aahan/Citrus, the installation invoice could not be located, although Mr. Clark testified that his company installed the pumps. As noted above, since pumps are sometimes installed up to six months after purchase, using the ship date (or the day after) as the installation date is unrealistic. The total gallons of fuel sold for the selected post-installation period of January through December 2018 is 251,355 gallons. Using the scenarios outlined below, the percentage increase for each is still over five percent. December 2014 – November 2015: 205,142 gallons,, for a 22.53% increase; January 2015 – December 2015: 200,807 gallons, for a 25.17% increase; February 2015 - January 2016: 201,664 gallons, for a 24.64% increase; March 2015 – February 2016: 198,116 gallons, for a 26.87% increase; April 2015 – March 2016: 214,614 gallons, for a 17.12% increase; or May 2015 – April 2016: 212,416 gallons, for an 18.33% increase. No records were submitted from which the sales of mid-grade blended fuel can be identified or the percentage of increase, if any, can be determined. Zack’s Zack’s is an independent dealer location owned by Zack’s Oil Enterprises, LLC, and located at 4201 Southwest 64th Avenue, in Davie, Florida. Southeast Petro purchased four dispensing pumps and related hardware for Zack’s from Sunoco, LLC, at a total cost of $45,444.32, with tax paid of $2,572.32. The invoice, dated October 6, 2014, is billed to Southeast Petro. Unlike other vendors for dispensing pumps, Sunoco issues its invoices after it ships the pumps, so, according to Summit Shah, pumps purchased from Sunoco are sometimes installed prior to the date on the invoice. In this case, the invoice from Petroleum Technicians, Inc., indicates that the dispensing pumps were installed August 24, 2015. Petitioner submitted gasoline sales records from September 2014 forward. The Dealer Supply Agreement for this location was assigned to Southeast Petro in July 2015, shortly before the installation of the new dispensing pumps. For the period beginning September 1, 2014, through August 30, 2015 (with no sales in August 2015), Zack’s sold 697,198 gallons of fuel. For the selected 12-month post-installation period, January through December 2017, Zack’s sold 743,104 gallons of fuel, for an increase of 6.58%. No records were submitted from which the sales of mid-grade blended fuel can be identified or the percentage of increase, if any, can be determined. BAM BAM is also an independent dealer location to whom Southeast Petro supplies fuel, and is located at 500 Highway A1A, in Satellite Beach, Florida. Southeast Petro purchased three dispensing pumps and related hardware for BAM from Sunoco, Inc. The invoice, dated July 1, 2013, is billed to Southeast Petro and lists a total of $35,024.52, with sales tax paid of $1,982.52. However, the assignment of rights from Sunoco, LLC, only covers sales tax paid from May 1, 2015, to April 30, 2017. Without an assignment of rights for the time period when these dispensing pumps were purchased, they cannot form the basis for a refund of the taxes paid. All of the records regarding fuel sold at each location described above were submitted for the purpose of establishing “production.” However, the records do not reflect production of any product, but rather, the volume of sales experienced at each location prior to and after the installation of the new dispensing pumps. While it is clear that overall sales at each location increased more than 5%, sometimes markedly so, the records submitted do not establish changes in production. Moreover, inasmuch as Petitioner is not contending that it “manufactures, processes, compounds or produces” premium or regular unleaded gas, sales records related to these products that Southeast Petro distributes, as opposed to manufacturing, processing, compounding, or producing, cannot establish production increases. Based upon all of the evidence presented, the more persuasive and compelling evidence is that the dispensing pumps provide a valuable improvement in the delivery of fuel to the customer, but are not a part of the production of the fuel itself. Petro also purchased two storage tanks from Modern Welding, for which they paid a total of $95,529.50 and sales tax of $5,454.50. However, unlike the dispensing pumps, storage tanks do not contribute to the “making” of a different octane-rated fuel. The evidence presented indicates that the storage tanks’ primary purpose is to store the gasoline held at each fuel location until the fuel is purchased by a customer. The tanks, like the dispensing pumps, are part of the delivery system for fuel as opposed to its production. Both tanks were installed at locations that were new businesses at the time of installation. Therefore, no prior production records for these locations were submitted.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner’s Application for Refund as a new or expanding business be denied, and its Petition for Chapter 120 Hearing be dismissed. DONE AND ENTERED this 19th day of October, 2020, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 2020. COPIES FURNISHED: Gerald J. Donnini, II, Esquire Moffa, Sutton & Donnini, P.A. Trade Center South, Suite 930 100 West Cypress Creek Road Fort Lauderdale, Florida 33309 (eServed) Mark S. Hamilton, General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 (eServed) John Mika, Esquire Office of the Attorney General Plaza Level 01 The Capitol Tallahassee, Florida 32399-1050 (eServed) Rex D. Ware, Esquire Moffa, Sutton & Donnini, P.A. Suite 330 3500 Financial Plaza Tallahassee, Florida 32312 (eServed) Paula Antonovna Savchenko, Esquire Moffa Sutton & Donni, P.A. Suite 930 100 West Cypress Creek Road Fort Lauderdale, Florida 33309 (eServed) James A. Zingale, Executive Director Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 (eServed)
