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
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearings the following facts are found: At all times pertinent to this proceedings Petitioner was a producer of agricultural products in the State of Florida as defined in Section 604.15(5), Florida Statutes (1985). At all times pertinent to this proceedings Respondent Pent was a licensed dealer in agricultural products as defined by Section 604.15(1), Florida Statutes (1985), issued license no. 3531 by the Department, and bonded by Respondent Transamerica Insurance Company (Transamerica) in the sum of $4,750.00 - Bond No. 51 823 994. At all times pertinent to this proceedings Respondent Transamerica was authorized to do business in the State of Florida. The complaint filed by Petitioner was timely filed in accordance with Section 604.21(1); Florida Statutes (1985). On January 11, 1985 Respondent Pent purchased 1900 photinia fraserii plants to be delivered at a later date for a total price of $8,977.50 with a down payment of $2,185.31 leaving a balance of $6,792.19. Sixteen hundred (1600) and three hundred (300) photinia fraserii plants were delivered on March 21 and 28, 1986, respectively. On July 7; 1985 Respondent made a partial payment to Petitioner of $1,292.19 of which Petitioner credited Respondent Pent with $981.94 against the purchase of the plants and $310.25 was applied to past due service charges, leaving a balance of $5,610.25 owing for plants which was reduced to $5,310.25 by a partial payment of $500.00 on August 9, 1985. No further payments have been made by Respondent Pent. Respondent has not denied receiving the plants nor did he complain about their quality or condition upon delivery. Respondent Pent owes a balance of $5,310.25 to Petitioner.
Recommendation Based on the Findings of Fact and Conclusions of Law recited herein, it is RECOMMENDED that Respondent Pent be ordered to pay to the Petitioner the sum of $5,310.25. It is further RECOMMENDED that if Respondent Pent fails to timely pay the Petitioner as ordered, then Respondent Transamerica be ordered to pay the Department as required by Section 604.21, Florida Statutes (1985) and that the Department reimburse the Petitioner in accordance with Section 604.21, Florida Statutes (1985). Respectfully submitted and entered this 23rd day of May, 1986, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 23rd day of May, 1986. COPIES FURNISHED: Doyle Conner, Commissioner Department of Agriculture and Consumer Services The Capitol Tallahassee, Florida 32301 Robert Chastain, General Counsel Department of Agriculture and Consumer Services Mayo Building Room 513 Tallahassee, Florida 32301 Ron Weaver, Esquire Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 Mr. Joe W. Kight Chief Bureau of License and Bond Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 Transamerica Insurance Company 1150 S. Olive Street Los Angeles, CA 90015 Mr. Paul Pent Paul Pent Landscape Company 1660 Emerson Street Jacksonville, Florida 32207 William D. Reese Greenbriar Nurseries, Inc. 2025 N.E. 70th Street Ocala, Florida 32670
Findings Of Fact Puckett reported a discharge of used oil at its site when it filed an early detective incentive program notification application with DER. Puckett, thus, advised DER that it would clean up its site and apply for reimbursement of the costs of that cleanup in accordance with Section 376.3071(12), Florida Statutes (Supp. 1986). When it received Puckett's application, DER conducted an investigation of the site and determined that a discharge of used automotive crankcase oil had occurred there. DER was advised by Puckett that the discharge had occurred when used automotive crankcase oil was drained into a service bay floor drain. Puckett and the site operator placed the used oil in the drain in the belief that a storage tank was connected to the floor drain to receive and safely store the used oil. Unknown to Puckett, however, the storage tanks previously connected to that floor drain had been removed by a former site owner or operator. The Recommended Order entered by the Hearing Officer contains findings to the effect that Puckett was unaware that storage tanks did not any longer connect with the floor drain in question, in part, at least, because it is the custom and practice in the service station business that used oil collecting persons or entities collect from such storage tanks after the service station hours of operation. Therefore, it was customary for the operator of a service station not to be aware of when used oil was removed from storage tanks. Upon learning that used oil had been spilled at the site due to the lack of a storage tank, where formerly one had been in place, the subject application was filed. DER conducted its site investigation and after it was concluded, on April 16, 1987, issued an order denying reimbursement eligibility to Puckett. DER took this position because it opined that used oil is not "petroleum" or a "petroleum product", as those terms and substances are defined in Subsections 376.301(9)(10), Florida Statutes (Supp. 1986). Puckett then filed a timely petition for administrative hearing as a result of that denial of eligibility. The cause was duly transmitted to the undersigned Hearing Officer for conduct of a Section 120.57, Florida Statutes, formal proceeding. In the discovery phase of that proceeding, requests for admissions were served by Puckett upon DER, in response to which DER admitted that the sole basis for denial of reimbursement eligibility was the fact that the substance discharged was used oil, which, DER contended was not "petroleum" or a "petroleum product". DER, thus, took the position that the used oil in question was beyond the scope of reimbursement eligibility allowed by the "Super Act," the statutory provisions cited above. The cause was duly scheduled for hearing for September 9-10, 1987. Shortly prior to the hearing, on August 31, 1987, DER filed a motion for continuance seeking an opportunity thereby to have time to explore the question of whether Puckett was "grossly negligent" in the maintenance of its facility, which is a ground for disqualification from Super Act reimbursement eligibility. This was an issue which had not theretofore been raised in the proceeding. See Section 376.3071(9)(b)3., Florida Statutes (Supp. 1986). That motion for continuance was denied, as found and discussed in the Recommended Order in the underlying proceeding. The cause then came on for hearing as scheduled on September 9-10, 1987. A motion in limine filed by Puckett was granted at the hearing so as to preclude DER from raising any issue concerning "gross negligence" at hearing. The basis for the ruling was that DER had known of the circumstances surrounding the discharge for nearly one year, but that during the discovery process, DER assured Puckett that its position was that gross negligence would not be an issue in the proceedings and that the sole basis for its denial of the reimbursement application was that the substance discharged, being used oil, was not, in its view, "petroleum" or a "petroleum product". Following the hearing, the Hearing Officer issued the Recommended Order in question finding that used crankcase oil was, indeed, "petroleum", as well as being a "petroleum product", for the purposes of the definitions in the above- cited statutory provisions. It was thus recommended that Puckett be determined to be eligible to apply to DER for reimbursement of the cleanup costs involved. Puckett, 10 FALR at 5540. Certain findings and conclusions made in the Recommended Order are germane to the question of whether DER's actions with respect to the initial and final denial of Super Act eligibility had a reasonable basis in law and fact at the time the agency action was initiated and finally taken in the Final Order. Those findings include the findings in the Recommended Order that used crankcase oil consists of "petroleum", as that term is defined by Section 376.301(9), Florida Statutes (Supp. 1986), with particular emphasis on those findings and conclusions in the Recommended Order, incorporated by reference herein, concerning crankcase oil coming within the definition of "other hydrocarbons" for the reasons delineated in the Recommended Order. Further, DER's own expert witness admitted, and it was found by the Hearing Officer, that the predominant use of used oil is as a fuel, just as is gasoline, diesel, kerosene and certain other grades of fuel oil, which are specifically included in the statutory definition of "petroleum product". See page 20 of the Recommended Order and the transcript of the proceeding below, pages 362-363. It was also established without question that used oil is a "liquid," a "commodity" and a liquid fuel commodity for the reasons delineated in the Recommended Order. It was established further by the record in the proceeding on the merits, and found in the Recommended Order that used oil has no meaningful similarity to the substances specifically, statutorily excluded from the definition of "petroleum product", and that DER has had a policy encouraging the collection and recycling of used oil as a fuel. This was well-known and accepted by DER's own experts before the "policy makers" at DER, who engendered the subject initial agency action, took the position that used oil did not constitute petroleum or a petroleum product. Used oil has not been otherwise regulated as a hazardous waste. DER's interpretation of the statutory definition of "petroleum product" to the effect that the product, as it was initially produced, must be sold or used as a fuel in order to meet that definition, in fact, imposes an additional inconsistent criteria for determining what types of substances are included within the meaning of the term, which criteria is not enunciated in the statute, either expressly or implicitly. DER's restrictive interpretation of the statute further disregards the language of the Super Act. Sections 376.3071(12)(a) and 376.315, Florida Statutes (Supp. 1986), which requires it to give "such liberal construction to the statute as will accomplish the purposes set forth in this subsection", in other words, to promote the cleanup of as many contamination sites as possible. Further, it was established by the record in the proceeding on the merits and concluded in the Recommended Order that the restrictive interpretation of the statute adopted by DER was inconsistent with existing agency policy which encourages used oil collection and recycling and that the interpretation "is clearly not one expressed or reasonably implied on the face of the statute" and "would frustrate the clear, legislative impetus of the Super Act" and is "illogical". More significantly, DER's policy makers responsible for the initial agency action and decision that used oil is not "petroleum" or a "petroleum product" did not take counsel with certain key expert personnel in DER's own used oil section concerning whether used oil is "petroleum" or a "petroleum product" prior to the initial denial of eligibility and the proceeding and hearing before the Hearing Officer. In fact, the policy makers were apparently unaware of facts critical to the subject determination and to the fact that DER's proposed (and, indeed, final) action was inconsistent with agency policy concerning treatment and definition of used oil, which DER's "in- house" experts had been aware of all along. These findings and conclusions in the Recommended Order demonstrate clearly and in detail why DER's initial agency action and position through the conclusion of the hearing, concerning rejection of Puckett's reimbursement eligibility, did not have a reasonable basis in law and fact. Those findings and conclusions appearing at pages 18-36 of the Recommended Order, which has been stipulated into the record of the instant proceeding, are incorporated by reference and adopted in the findings of fact and conclusions of law in this Final Order. Despite the findings and conclusions in the Recommended Order, DER, in its Final Order, ultimately denied reimbursement eligibility. Puckett at page 5505. DER found in its Final Order that Super Act coverage is limited to "incidents related to storage", as opposed to incidents where a contaminant is discarded. DER also found that because Puckett did not have a "petroleum storage system" at the site, the discharge was not "related to storage", despite the facility operator's proven and found intention and belief, when he dumped the product in the floor drain, that he was "storing" the used oil in question. DER acknowledged the Hearing Officer's granting of Puckett's motion in limine, which precluded denial of reimbursement eligibility on "gross negligence" grounds, but stated that it was not denying eligibility on this ground at page 18 of its Final Order. Although DER acknowledged in its Final Order that its denial of eligibility did not depend on a finding of gross negligence, this acknowledgment, which appears to re- state its position, taken in the discovery phase, that gross negligence would not be raised as an issue by DER, and is an apparent acknowledgment of the ruling on the motion in limine, is somewhat belied by the following language from the Final Order: Although my decision to deny eligibility for reimbursement to Puckett does not depend on a finding of gross negligence on the part of Puckett, any site owner who fails to ascertain whether an oil drain fitting on site is actually connected to an operational used oil system now has clear notice that it allows used oil discharges to that drain fitting only at its own peril. It is not appropriate that state funds be expended to remediate contamination caused by reckless disregard for elementary waste disposal regulations. In the future, the department will continue to deny eligibility to any site where contamination has resulted from used oil discharges to land in the complete absence of a used oil storage system. (emphasis supplied) See pages 18 and 19 of the Final Order. Puckett then appealed that denial of reimbursement eligibility. The District Court of Appeals reversed DER, finding as follows: DER's assertion that Puckett's eligibility for cleanup reimbursement of the used oil discharge was dependent on whether storage was involved and whether the used oil would be reused or recycled was never made until the final agency order was entered. These issues were not raised by the pleadings, were not litigated at the hearing, were not considered by the Hearing Officer, and were not considered by the Hearing Officer's Recommended Order. In addition, the pleadings reflect that DER was asked in a written request for admission to admit the following: 'The Department's only basis for denial of Super Act eligibility for Puckett is that the reported discharge was used oil.' DER admitted that statement. This was the only issue created by the pleadings, and it was the only issue tried and determined by the Hearing Officer. DER cannot raise and decide for the first time in the final agency order issues not previously raised or considered. See Puckett, 549 So.2d at 722 (emphasis in original). The Court then remanded the proceeding to DER for entry of an order determining Puckett to be eligible to apply for reimbursement. Puckett also petitioned the appellate court for appellate attorney's fees pursuant to Section 120.57(1)(b)5., Florida Statutes, arguing that the Final Order was a "gross abuse" of agency discretion, a standard for granting of appellate attorney's fees under that statutory provision. The Court denied that motion on the basis that gross abuse of agency discretion had not been demonstrated. Although reliance on issues improperly raised for the first time in the Final Order may not have been a "gross abuse" of agency discretion supportive of an award of appellate costs and fees pursuant to the above- referenced statutory provision, it is found that DER has not justified as reasonable its rejection of eligibility on additional non-litigated or properly raised grounds in the Final Order. Therefore, DER's reliance on the new issues in the Final Order to deny reimbursement eligibility was not "substantially justified". After issuance of the Court's mandate, Puckett filed a petition for costs and fees pursuant to Section 57.111, Florida Statutes, initiating the instant proceeding. DER filed an untimely response conceding that Puckett was a "prevailing small business party" and the other criteria for award of fees and costs provided for in Section 57.111, Florida Statutes, with the exception that it did not concede that its denial of reimbursement eligibility in the related proceeding was not "substantially justified". DER did not dispute that the reasonable amount of costs and fees incurred by Puckett exceeded $15,000.00 nor did it assert that any special circumstances exist which would make an award of costs and fees unjust nor that it was a nominal party only. Since Puckett's petition was not timely responded to and since its Motion for Summary Final Order thereon was not answered by DER, the Hearing Officer issued a Summary Final Order awarding $15,000.00 in costs and fees to Puckett. DER appealed and the First District Court of Appeals reversed the award and remanded the proceedings to the Hearing Officer to consider DER's position on the issue of award of fees and costs, based generally upon the Court's view that DER's non- timely response to the petition for fees and costs should be excused, as more particularly delineated in the Court's opinion in Department of Environmental Regulation v. Puckett Oil Company, Inc., 16 FLW D.926 (Fla. 1st DCA April 3, 1991). The cause involving fees and costs, thus, became at issue before the Hearing Officer once again. In the prehearing filings, the parties limited the issues to that concerning whether DER's action on the reimbursement eligibility question was "substantially justified". On July 30, 1991, a hearing was held on this matter, during which the parties presented their arguments and stipulated that the record in this proceeding would be the record on appeal, including the Hearing Officer's Recommended Order in the reimbursement eligibility case.
The Issue Whether or not the agency may, pursuant to Section 525.06, F.S. enter an assessment for sale of substandard product due to a violation of the petroleum inspection laws and also set off that amount against Respondent's bond.
Findings Of Fact Frank Hampton, d/b/a Hampton's Gulf Station, has operated at 2610 North Myrtle Avenue, Jacksonville, for many years and has had no prior complaints against it by the Petitioner. Respondent is in the business of selling kerosene, among other petroleum products. The facts in this case are largely undisputed. On November 28, 1990, Bill Ford, an inspector employed with the Department of Agriculture and Consumer Services, visited the Respondent's premises to conduct an inspection of the petroleum products being offered for sale to the public. Ford drew a sample of "1-K" kerosene being offered for sale, sealed it, and forwarded it to the agency laboratory in Tallahassee where John Anderson, under the supervision of Nancy Fischer, an agency chemist, tested it to determine whether the sample met agency standards. The testing revealed that the sampled kerosene contained .21% by weight of sulfur. This in excess of the percentage by weight permitted by Rule 5F- 2.001(2) F.A.C. for this product, but it would qualify as "2-K" kerosene. A "Stop Sale Notice" was issued, and on the date of that notice (November 30, 1990) the tank from which the test sample had been drawn contained 3887 gallons of product. It was determined from Respondent's records that 4392 gallons had been sold to the public since the last delivery of 5500 gallons on November 16, 1990. The product was sold at $1.58 per gallon. The calculated retail value of the product sold was determined to be in excess of $1,000.00, and the agency permitted the seller to post a bond for $1,000.00 (the maximum legal penalty/bond) on December 3, 1990. The assessment is reasonable and conforms to the amount of assessments imposed in similar cases. On this occasion, Respondent had purchased the kerosene in question from a supplier which is not its usual wholesale supplier. This was the first time Respondent had ever ordered from this supplier and it is possible there was some miscommunication in the order, but Respondent intended to order pure "1-K" kerosene. Respondent only purchased from this supplier due to the desperate need in the community for kerosene during the unusually cold weather that occurred during the fall of 1990. Respondent ordered "1-K" kerosene and believed that "1-K" had been delivered to it by the new wholesale supplier up until the agency inspector sampled Respondent's tank. After posting bond, Respondent originally intended to send the unused portion of "2-K" kerosene back to its supplier, but instead was granted permission by the agency to relabel the remaining product so that the label would correctly reflect that the product was "2-K." Respondent accordingly charged only the lesser rate appropriate to "2-K" kerosene for sale of the remaining 3887 gallons.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Cnsumer Services enter a final order approving the $1,000.00 maximum penalty and offsetting the bond against it. DONE and ENTERED this 20th day of June, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 20th day of June, 1991. COPIES FURNISHED TO: FRANK HAMPTON HAMPTON VILLA APARTMENTS 3190 WEST EDGEWOOD AVENUE JACKSONVILLE, FL 32209 CLINTON COULTER, JR. ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES (LEGAL) MAYO BUILDING, ROOM 510 TALLAHASSEE, FL 32399-0800 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE 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
Findings Of Fact Puckett Oil Company, at times pertinent hereto, operated a full-service gasoline and auto service station at 7251 Pensacola Boulevard, Pensacola, Florida. The station at that site performed a complete range of automotive repairs, including lubrication and oil changes. These services are typical of such full-service service stations. On or about June 27, 1986, the operator of that station which was owned by Puckett, Mr. Winters, discovered a discharge of used oil at the site. The discharge occurred because the operator believed that used oil had been drained into an underground storage tank on a routine basis at the facility, as the oil was changed in customer vehicles. In fact, it developed that, unbeknownst to Mr. Winters, the tank had been removed by the prior land owner. This resulted in repetitive contamination of soil and groundwater at the facility, since the oil poured into the floor drain at the station, after being removed from the crank cases of customer vehicles, was in reality draining into the ground, instead of into a storage tank. After becoming aware of this problem, Puckett filed an Early Detection Incentive (EDI) Program Notification Application, reporting the discharge of used oil to the Department, pursuant to Section 376.3071, Florida Statutes (Supp. 1986). That EDI notification application form lists used oil as a "product." Puckett notified the Department of its intent to proceed with voluntary cleanup at the Puckett site pursuant to Section 376.3071(11) and (12), Florida Statutes (Supp. 1986), and to seek reimbursement for the cost of that contamination cleanup pursuant to Section 376.3071(12), Florida Statutes (Supp. 1986). The Department, in view of the request, conducted a site inspection on December 19, 1986. The Department's inspection personnel prepared an EDI Program Compliance Notification Checklist on the Puckett site. This report noted the circumstances of the discharge, to the effect that the used oil tank had been removed while used oil was still being disposed of through the drain at the service station. Thereafter, by its Order of April 16, 1987, the Department advised Puckett that its site was not eligible for "Super Act" reimbursement. The denial of eligibility was based on the DER's position that used oil was not "petroleum" or a "petroleum product" for purposes of Section 376.301(9) or (10), Florida Statutes (Supp. 1986). On May 8, 1987, Puckett filed a Petition for Formal Proceedings, alleging, among other things, that used oil is "petroleum" or "petroleum product" within the meaning of the "Super Act" and that the Department is estopped from denying "Super Act" reimbursement eligibility for voluntarily reported discharges of used oil. Inasmuch as the DER conducted inspections of the site in question, recording its findings, the Department was aware of the circumstances of the discharge; that the used oil tank had been removed and that oil had continued thereafter to be placed in the drain facility, thus contaminating the soil where the used oil disposal tank had formerly been placed. The Department did not raise the eligibility exception involving gross negligence in the Order of April 16, 1987, however, nor by any other vehicle until the filing of its Motion for Continuance with the Hearing Officer on August 31, 1987. Additionally, in response to a Request for Admissions served by Puckett, the Department admitted that the sole basis for denial of the reimbursement eligibility for the Puckett site was the fact that the substance discharged was "used oil," which the Department contends is not petroleum or petroleum product and thus is not a proper subject for reimbursement of related clean up and decontamination expenses. Uncontroverted evidence establishes that in August 1984, eleven oil changes at the Puckett site generated 3.5 quarts or about 9 1/2 gallons of used oil. Using this figure as an average, until the time the discharge was discovered 22 months later, the Puckett site generated approximately 210 gallons of used oil. Mr. Winters testified that he believed he had a 500 or 1,000 gallon used oil tank. Puckett's used oil was disposed of by inserting the drain bucket on the floor drain. The floor drain is a receptacle with an adapter on it for the oil drain bucket. Although the floor drain system appeared to be a working system, the underground used oil storage tank at the Puckett site had been removed, unbeknownst to Mr. Winters. It was apparently removed by Exxon Corporation, the previous site operator. It was Exxon's practice to remove fuel tanks from non-operational stations, such as the Puckett site was at the time it was sold to Puckett. It was not their normal practice, however, to remove used oil storage tanks. Mr. Winters, in his sixteen years of operating service stations, has never experienced a floor drain with such an adapter that was not connected to an underground storage tank. Further, he had previously leased a service station that had been purchased from Exxon after being closed for seven years and the used oil tank was still in place at the time he took possession of the station. He asked the person responsible for closing the Exxon station (the Puckett site) where the used oil tank was located. That person responded by pointing to an area of landscape shrubbery where a galvanized pipe could be seen protruding from the ground. A used oil collection company attempted to pump the contents of the tank using that pipe. Three large holly bushes were growing undisturbed over the area where Mr. Winters had been told the tank was located. It thus appeared to Mr. Winters that the tank could not have been removed. There was no evidence that Mr. Winters attempted to conceal the discharge of the oil or that he continued to dispose of the used oil in the floor drain after discovering that the tank had been removed. If the floor drain had not become stopped up, Mr. Winters likely never would have begun looking for the presence of the tank. A used oil collection company never was able to pump any used oil from the pipe supposedly connected to the tank. It was Mr. Winters' belief that used oil collection companies normally came to service stations after closing hours to pump the used oil storage tanks, so they can avoid paying for the used oil. It was for this reason, he believed, that he rarely had seen a used oil collection company trying to pump oil from such a storage tank. He was thus not concerned when the company reported that it could pump no used oil from the tank because he believed that another used oil collector had previously drained it. The used oil discharged at the Puckett site consists of used engine crank case oil with an estimated two percent of used transmission oil. Used oil at the Puckett site is not mixed with solvents or other hazardous wastes. Puckett does not accept neighborhood collections of used oil. An assessment of the contamination at the Puckett site was conducted by Delta Environmental Consultants. Delta had an analysis of soil samples prepared by Pioneer Laboratories and an analysis of ground water samples by Savannah Laboratories. Dr. Litt, the Petitioner Puckett's expert witness, opined, based on the contamination assessment, that the contamination was due to used oil or "used oil fuel" instead of "hazardous waste fuel" or hazardous waste. Dr. Litt relied on the testimony of Mr. Winters to the effect that solvents or other hazardous wastes were not mixed with the used oil at the Puckett site in the service station's operations. Based on the soil and ground water analyses supplied him, Dr. Litt found an absence of halogenated solvents which would commonly be mixed with used oil, thus corroborating Mr. Winters' testimony that the used oil at the Puckett facility was not known to have been mixed with any hazardous wastes. The soil analysis indicates a level of organic halogens of 1,090 parts per million. This level might raise a presumption, under relevant EPA regulations, that the oil had been mixed somewhat with hazardous wastes, but Dr. Litt established that indeed no mixing had occurred based upon Mr. Winters' testimony, as well as the fact that the testing method used is accurate to only a plus or minus 700 parts per million in a total range of 1,000 to 2,000 parts per million. Indeed, some halogen levels may be attributed to natural soil conditions. Thus, the finding of 1,090 parts per million organic halogens could be as much as 700 parts per million in error, and some of this quantity can be due to natural backgrounds. Additionally, the level of individual chlorinated solvents sampled indicated no mixing of used oil with typical hazardous wastes. International Petroleum Corporation International Petroleum Corporation (International) has operated an oil storage plant and used oil reclamation facility at 105 South Alexander Street, Plant City, Florida, since May 1980. That site contains approximately 10 acres. There are two on-site tank farms containing 17 above-ground stationary tanks and two underground tanks. One underground tank holds 10,000 gallons and is used to store diesel fuel. The other tank holds 5,000 gallons and stores virgin gasoline. The above-ground tanks range in size from 8,000 to 212,000 gallons and are used to store oil, both used oil and new oil. All the tanks have been registered with the DER in accordance with its rules and are a part of the DER's "stationary tank system." The plant site also contains an office building and a testing laboratory which provides an array of testing services. The lab contains an atomic absorption unit, kinematic viscosity baths, API gravity hydrometers, distillation equipment and a gas chromatography. International uses this equipment, operated by a trained chemist, to test incoming loads of oil for such things as viscosity, flash point, API gravity, heavy metals, halides, etc. Since 1980, International has received, processed and sold more than 5,000,000 gallons of oil from this facility. The oil processed through the facility includes virgin kerosene, diesel, jet fuel and oils of various grades ranging from ASTM grade numbers 1-4 (the distillates) and ASTM grade numbers 5, 6 and "bunker C" (the residuals). The residual oils are those oils left after the lighter distillates are removed through the vacuum distillation process. The amount of residual oils processed since 1980 is relatively low, less than fifteen percent of the total amount of oils processed at International's facility. Out of 7,000,000 gallons processed in an average year, the plant may receive two or three carloads of grade numbers 5, 6 or bunker C. From 1980 to 1985, approximately 7,000,000 to 12,000,000 gallons of virgin oils were processed at the facility. In each of those years, from 4,000,000 to 7,000,000 gallons of used oil were also processed. Over that five- year period approximately 20,000,000 gallons of used oil were processed and sold through the International facility. International blends virgin oils received at the plant with used oils to meet particular specifications of a customer. It uses its own trucks to collect oil from service stations, automobile dealerships and other industrial accounts. Oil is then delivered to the plant and tested for basic constituents before being placed in an appropriate storage tank. International tests all incoming used oil to see if it meets the criteria for so-called "on spec" used oil or "off spec" used oil. These specifications were established by the EPA in 1985 and adopted by the DER. Used oil meeting these criteria may be burned as fuel in industrial and non-industrial boilers without limitations. The criteria are as follows: Constituent/Property Allowable Level Arsenic 5 ppm maximum Cadmium 2 ppm maximum Chromium 10 ppm maximum Lead 100 ppm maximum Total Halogens 4,000 ppm maximum Flashpoint 100 degrees Fahrenheit minimum International has followed a practice of rejecting incoming used oil which fails to meet the criteria of 1,000 parts per million or less of total halogens, which is the rebuttable threshold presumption of "hazardous waste" oil. International makes an effort to ensure that used oil it receives and processes is thus "on spec." It regularly sends samples to independent laboratories to cross-check its own laboratory testing results. It is selective in its sources of used oil and typically obtains used oil from large companies such as the Mack truck shops, car dealerships and other large volume producers of used oil. These are sources unlikely to be contaminated with any hazardous materials. The "on-spec" used oil accepted by International is placed in separate storage tanks, segregated according to water content and API gravity, viscosity and lead content. It is then blended with virgin oils to meet the specification of various customers. Heat is sometimes supplied in order to drive off water. The used oil undergoes no further treatment or alteration, being merely tested and blended to meet the customer's requirements. Often blending is unnecessary. When a truckload is received, tested and found to meet specifications, it is sometimes directly delivered to a customer. International sometimes obtains used oil without payment from its suppliers and has often purchased it from the generators of used oil. It always sells it to its customers, however. It has a definitely defined industrial market as a fuel commodity and is recognized as having value when sold for such purposes. It may sell for as little as 30 cents per gallon and has sold for much more than that, depending on the market conditions prevailing at the time of sale. It is used both as a burner fuel for industrial and non-industrial boilers, as well as a key constituent in the phosphate beneficiation process. International sells approximately 40 percent of its used oil production to asphalt plants where it is used to fire burners and to rock drying mills, also as a burner fuel. It sells approximately 60 percent of its production of used oil to the phosphate companies for the beneficiation process. In that process, oil is used with other reagents and fatty acids to "float" phosphate out of the rock or ore in which it is contained, allowing it to be skimmed and separated. Although the oil is not burned as a fuel in this process, its use by the phosphate plants substitutes for virgin oils of ATM grade numbers 4 and 5 (heating oil) or in some cases kerosene or number 2 diesel. In 1985, International produced 4,295,101 gallons of used oil which were burned as a fuel by its customers and in 1986 produced 2,221,652 gallons of used oil which were burned as a fuel. The used oil which it sells for the beneficiation process meets DER and EPA standards for "on spec" used oil fuel, except for the lead content, which fact is immaterial to its use for the beneficiation of phosphate. The used oil sold for phosphate purposes does meet pertinent regulatory standards for "off spec" used oil, in any event, so that it could be burned as industrial furnace fuel under EPA and DER rules. The sale of used oil for final use as a burner fuel is very common. Many oil recyclers pick up used oil and take it directly to asphalt plants for burning as fuel without any blending or other treatment. International's sale of 60 percent of its used oil for phosphate processing is unique in the used oil industry, but is attributable to its close proximity to the central Florida phosphate plants. Most oil recycling facilities sell a larger percentage of their product for burner fuel than does International. The used oil which International sells as burner fuel is comparable to heating oil, ASTM grade numbers 2 or 4 and has a similar viscosity, specific gravity and flash point. It can be poured and handled without preheating. Residual oil, however, such as grade numbers 5 and 6 (bunker C) are very viscous and require preheating in industrial boilers or burner furnaces before it can be burned as fuel. The used oil sold by International Petroleum is more similar to ASTM grades 2 and 4 (the distillates) than it is to grades 5 and 6 (the residuals). Petroleum hydrocarbon contamination of the soil and groundwater at the International site was discovered in December 1983 by DER personnel. International retained a consultant to assess the site and determine the nature and extent of any contamination. It has already expended more than $50,000 in an effort to investigate and clean up petroleum contamination at its site. DER conducted a soil and groundwater site investigation in 1985, which showed that hydrocarbons were in the soil and that volatile organics were also present in the groundwater at the site. International has provided all background information requested by DER on site conditions existing prior to cleanup. This was for purposes of showing its entitlement to reimbursement eligibility. The contamination at the site consisted mostly of small leaks, drips and spills associated with loading and unloading railway tank cars, as well as stationary tanks, over at least a five year period. The storage tanks include integral piping systems, and some leakage occurred at hose or pipe connections. The petroleum products placed in the various tanks in the tank farm vary, so that the contamination existing at the site cannot be differentiated or attributed separately to used oils or virgin oils, to distillates (ASTM grades 1-4) or the heavier residuals. All are made up of hydrocarbons and their breakdown products in the ground are essentially indistinguishable. The record does not establish that any major or significant oil spills have occurred at the plant site and does not show that the operators have been particularly negligent or have failed to conform to industry standards. International has already taken remedial action by building high retaining walls and by removing contaminated dirt where repeated drippages occurred near the railroad tracks. Employees have received training to avoid leaks from hoses and pipes and have been instructed to clean up even small spills immediately. Valve equipment has also been upgraded. As a result of these efforts, subsequent testing of the monitoring wells at the site has shown that the groundwater condition has markedly improved and it may be possible that the cleanup action already taken will be sufficient to accord with regulatory standards for groundwater. Used Oil as "Petroleum" or "Petroleum Product" Used oil is derived from crude oil and consists primarily of engine lubricating oil which is a form of hydrocarbon and a special fraction of the original crude oil. The lubricating oil consists of vacuum distilled base oil and atmospheric distillate portions of crude oil produced at a refinery and further refined by processes involving wax removal and solvent extraction. The remaining portion of lubricating oil consists of additives added to the base oil to improve certain physical properties such as rust inhibition and to improve viscosity. Many of these additives, in turn, are substantially comprised of base oil themselves. Used oil also typically contains gasoline which condenses in the crank case, water, gasoline additives, lead sulfates, carbonates or oxides and other partial combustion products of gasoline motor fuel. Lead contained in used engine oil is produced by engines running on tetraethyl lead gasoline. This lead accumulates in the form of lead sulfate, lead carbonate or lead oxide, rather than tetraethyl lead in its original form. The sulfates, carbonates and oxides are insoluble and are not likely to be leached out by groundwater, in contrast to tetraethyl lead. Use of the oil does not change its basic chemical structure. The oil may be contaminated by various impurities resulting from partial combustion of gasoline, from rust, from condensed water and so forth, but these are essentially mechanical mixtures, rather than alterations of the chemical structure of the oil itself. Aside from water, when oil is pumped from the ground at the well, two substances are produced at the well head: crude petroleum oil and natural gas, including casing head gas. Used oil is similar in nature to the petroleum products specifically listed in Section 376.301(10), Florida Statutes (Supp. 1986). The predominant use of used oil is as a fuel, similar to diesel, kerosene and gasoline. A fuel is a material burned as a source of heat, rather than for disposal purposes. It can be either for propulsion purposes or for stationary equipment such as industrial boilers, asphalt plants and the like. Kerosene and diesel fuel are similar in terms of viscosity and BTU value to ASTM grade number 2 fuel oil. Used oil is thicker and more viscous than ASTM grades 2, 3 or 4, but not so viscous as grades 5 or 6. Neither does it have as high a BTU content as grade number 5 fuel oil. ASTM grade number 5 residual oil must be preheated before burning as a fuel. Viscosity is too high for the material to atomize properly at normal temperature. In fact, used oil can be used as a blending agent to blend down or reduce viscosity of grade number 5 oil and reduce the temperature to which number 5 oil must be preheated before burning. With some variance from one sample to another, used oil typically is similar in viscosity and BTU value to ASTM grade number 3 or 4 fuel oil. Gasoline, kerosene, diesel and used oil are all hydrocarbons which burn readily. These materials are mixtures of hydrocarbons, with additives which do not materially affect the properties of the hydrocarbon fuel, or its use as a fuel. Gasoline, in fact, is not classified by ASTM grade. Parenthetically, it thus appears that the Legislature did not intend to limit the scope of "petroleum product" by such considerations as only viscosity and BTU value. "Petroleum products" are commonly used as fuels and are typically stored at service stations or storage tank facilities which can pose a danger of causing inland soil or water contamination, if improperly discharged. Gasoline, kerosene, diesel and used oil are commonly stored in tanks at facilities throughout the state. Used oil does not have any meaningful similarity to the substances specifically excluded from the definition of petroleum or petroleum product by Section 376.301(10), Florida Statutes (Supp. 1986). Used oil, for instance, bears little similarity to liquefied petroleum gas or to petrochemical feed stocks, which latter products are used to supply the raw materials for chemical plants manufacturing petrochemicals of many types. Used oil only is similar to these substances to the extent that it is within the broad family of hydrocarbons derived from crude oil or gases, derived in turn from petroleum wells. Likewise, the ASTM Grades 5 and 6 residual oils are based on the residuum or the heave viscous material left after the distillation process is applied to crude oil. This residuum is the material left that is too heavy to further distill. On the other hand, crank case lubricating oils and transmission oils, which are typically involved in the category "used oil" or "used oil fuel," are derived by the process of vacuum distillation such that they are distillation products, as opposed to residual products. "Bunker C" oils, and marine bunkering oils generally, are residual fuel products and, together with asphalt oil, are not used as fuel, at least not at inland locations. These materials likewise are typically not stored at inland service stations or bulk storage or reclamation facilities and locations. Both the Federal Environmental Protection Agency (EPA) and the Florida DER, in their regulatory scheme concerning used oil, encourage its collection and recycling. Used oil is typically recycled as a fuel and as a lubricant, by being separated from its contaminants by a re-refining process. Indeed, the oil constituent of used oil is not altered by use as lubricating or transmission oil, but rather is rendered in a "used oil" state by being subjected to various contaminants. It is not presently economically viable, given low virgin oil prices, to recycle used oil for lubricating oil. Thus, the two alternatives for disposition of used oil are to deposit it in landfills, a practice now generally prohibited by the DER and other regulatory authorities, or to use it as a fuel. Indeed, the use of used oil as a fuel is about the only practical way to dispose of it safely and legally in view of former uses, such as road oiling for dust control and weed abatement, now being prohibited in potable water aquifer areas. Section 403.75(2), Florida Statutes (1985). Thus, it is not only common and general practice to burn used oil as a boiler fuel and as a fuel in various industrial and utility plants, at the present time-that is almost the only manner in which it can be legally and safely disposed of. The Department itself has a policy encouraging the collection and recycling of used oil, as lubricating oil, fuel or as a feed stock in the manufacturing of other petroleum products. (See IP Exhibits 17, 18 and Joint Exhibit 5 in evidence.) Under EPA regulations which have been adopted by DER, used oil is not regulated as a hazardous waste. Under these regulations, the EPA has adopted a "rebuttable presumption of mixing" in order to distinguish between used oils which have been contaminated through mere use and used oils which have been mixed with hazardous wastes and therefore must be regulated as hazardous wastes or "hazardous waste fuel." Certain hazardous, halogenated constituents, such as chlorinated solvents, are the hazardous wastes typically found mixed with used oil. The "presumption of mixing" provides that any used oil containing greater than 1,000 parts per million of total halogens (such as chlorine, fluorine, bromine, iodine and similar substances) is presumed to have been mixed with a hazardous waste and will be regulated as "hazardous waste fuel" under 40 CFR Part 266, Subpart D, rather than as "used oil fuel" under 40 CFR Part 266, Subpart E. Hazardous waste fuel is essentially a hazardous waste with a BTU value of at least 5,000 BTUs per gallon. Hazardous waste fuel burning is tightly regulated by the EPA and DER. The presumption of mixing can be rebutted through a demonstration that the used oil in question has not been mixed with any hazardous waste. If mixing of used oil with hazardous wastes is known to have occurred, however, the oil is regulated as a hazardous waste when it is burned for energy recovery. Once it has been determined that a particular used oil is a used oil fuel and not a hazardous waste, the used oil falls into one of two categories: "Specification used oil fuel" or "off-specification used oil fuel." Specification used oil contains essentially the same toxic constituents as virgin oil fuels. Off-specification used oil fuel contains elevated levels of toxic components. Most used oil is off-specification, particularly if it is made up of mixtures of several types of used oil. If oil comes from a service station which was used in an engine burning leaded gasoline it would likely result in the used oil from that engine being off-specification due to the toxic lead compounds which would be present in the oil. If the oil was used in an engine which burned unleaded fuel, it is likely that it would be within specification limits for "on-specification used oil." Neither type of used oil is regulated as hazardous waste when burned as fuel, however. For purposes of determining whether an oil fuel is off-specification on on-specification, the EPA has developed a list [at 40 CFR Section 266.40(e): of contaminants, with the allowable levels for each contaminant, below which oil will be determined to be "on specification." Those contaminants are arsenic (5 ppm), cadmium (2 ppm), chromium (10 ppm), lead (100 ppm), with total halogens not exceeding 4,000 ppm in order for used oil to be within specification for nonindustrial burning. Specification used oils may be burned as fuel in nonindustrial boilers, including schools, hospitals, and apartment buildings. Off-specification used oil fuel may be burned in industrial furnaces, industrial boilers, utility boilers and some space heaters meeting certain federal safety requirements. Moreover, EPA regulations allow the blending of off-specification and specification used oil so that the resultant used oil, when burned, meets the specifications for nonindustrial burning. The Department's policy makers who were responsible for the initial decision that used oil is not petroleum or a petroleum product did not consult with certain key personnel in the Department's own used oil section concerning whether oil should be considered as a petroleum or petroleum product. In fact, Mr. Gentry, who is involved in policy making regarding the subject matter of the "Super Act," was not aware that the Department has a program to encourage the burning of used oil as a fuel nor the fact that used oil is extensively burned as a fuel in Florida.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the applications of Puckett Oil 4 Company and International Petroleum Corporation for eligibility for reimbursement pursuant to Section 376.3071(12), Florida Statutes (Supp. 1986), be granted. DONE and ENTERED this 7th of June, 1988, in Tallahassee, Florida. P. MICHAEL RUFF 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 7th day of June, 1988. APPENDIX TO RECOMMENDED ORDER CASE NOS. 87-2161 & 87-2465 Petitioners' Proposed Findings of Fact: 1-23. Accepted. 24. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 25-38. Accepted. 39-40. Rejected as subordinate to the Hearing Officer's findings and as not directly material. 41-45. Accepted. 46-48. Rejected as not material and relevant. 49-54. Accepted. 55. Rejected as subordinate to Hearing Officer's findings on this subject matter. 56-58. Accepted. 59. Rejected as subordinate to Hearing Officer's findings on this subject matter. 60-63. Accepted. 64. Rejected as subordinate to the Hearing Officer's findings on this subject and as unnecessary to the resolution of material issues. 65-70. Accepted. 71. Rejected as irrelevant. 72-77. Rejected as subordinate to the Hearing Officer's findings on this subject. Accepted, but not directly relevant and material. Accepted. Respondent's Proposed Findings of Fact: 1-5. Accepted. 6. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 7-8. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as immaterial, in part, because the Hearing Officer, in determining whether the material at the subject sites meets the statutory definitions at issue is not, by the "pleading" confronted with the issue of whether any and all types of "used oil" meet these definitions, rather merely those types comprising the contamination at Petitioner's facility. The Hearing Officer cannot, in this proceeding, issue declaratory statements or advisory opinions. Accepted. Accepted, except for the next to last sentence. 11-12. Accepted. Accepted as to its historic accuracy, but not as a resolution of the essential issue presented. Rejected as immaterial in the absence of a Motion to Compel further, more detailed answers. Accepted as to its historical accuracy, but, for reasons similar to the ruling next above, not as probative of the appropriate, timely raising of the issue of gross negligence. 16-24. Accepted. 25-26. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Accepted. Accepted as to its historical import. 29-38. Accepted. 39. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant evidence of record. 40-43. Accepted. 44-45. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as not constituting a finding of fact, but, rather, a conclusion of law and statement of policy. Rejected as contrary to the preponderant evidence, as subordinate to the Hearing Officer's findings and as largely immaterial. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter; as being partially immaterial and as a discussion of policy and not a pertinent finding of fact. 51-53. Rejected as constituting legal argument and not a finding of fact. 54-55. Rejected as constituting legal argument. 56. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. 57-58. Rejected as - subordinate to the Hearing Officer's findings on this subject matter. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 61-63. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence and as constituting, in part, legal argument instead of fact finding. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter, as contrary to the preponderant weight of the evidence and, standing alone, of scant materiality in proving whether used oil is a "petroleum product" or a "fuel commodity." Rejected as contrary to the preponderant weight of the evidence. 78-80. Accepted in part, but not as to its material import and subordinate to the Hearing Officer's findings on this subject matter. 81-84. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant credible evidence. 85. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant credible evidence and as largely immaterial. 86-87. Rejected as immaterial to the ultimate factual and legal issues. 88-89. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant credible evidence. Accepted. 92-93. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 94-95. Rejected as subordinate to the Hearing Officer's findings on this subject matter and not in itself material. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as not comporting with the preponderant weight of the evidence and as immaterial. Rejected as immaterial and irrelevant. Rejected as subordinate to the Hearing Officer's findings and as not directly material and relevant. Rejected as not in accordance with the preponderant weight of the evidence. Rejected as subordinate to the Hearing Officer's 4 findings on this subject matter. 102-103. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as to its purported material import. 104. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as to its purported material import and further as not being in accord with the preponderant weight of the evidence. 105-106. Rejected as constituting legal argument and discussion. 107-109. Rejected as constituting legal argument and discussion and as contrary to the preponderant weight of the evidence. 110-111. Rejected as constituting legal argument and discussion. 112-113. Rejected as constituting legal argument and discussion and as contrary to the preponderant weight of the evidence. Rejected as constituting legal argument and discussion. Accepted but subordinate to the Hearing Officer's findings and not, in itself, material to the legal issue sub judice. Rejected as contrary to the preponderant weight of credible evidence. Rejected as not in itself material and as contrary to the preponderant weight of the credible evidence. Rejected as not in itself material and as contrary to the preponderant weight of the credible evidence and as constituting legal argument and discussion. 119-120. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as to its purported material import and further as not being in accord with the preponderant weight of the evidence. COPIES FURNISHED: Robert D. Fingar, Esquire HUEY, GUILDAY, KUERSTEINER & TUCKER Regulation Suite 510 First Florida Bank Building Post Office Box 1794 Tallahassee, Florida 32302 Dale Twachtmann, Secretary Department of Environmental Blair 2600 Stone Road Tallahassee, Florida 32399. L. Caleen, Jr., Esquire OERTEL & HOFFMAN 2400 Blair Stone Road Tallahassee, Florida 32301 E. Gary Early, Esquire Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400
The Issue Whether or not the agency may, pursuant to Section 525.06 F.S., assess $390.04 for sale of substandard product due to a violation of the petroleum inspection laws and also set off that amount against Petitioner's bond.
Findings Of Fact Coleman Oil Co., Inc. d/b/a Shell Oil Co. at I-75 and SR 26 Gainesville, Florida, is in the business of selling kerosene, among other petroleum products. On November 15, 1990, Randy Herring, an inspector employed with the Department of Agriculture and Consumer Services and who works under the direction of John Whitton, Chief of its Bureau of Petroleum, visited the seller to conduct an inspection of the petroleum products being offered for sale to the public. Mr. Herring drew a sample of "1-K" kerosene being offered for sale, sealed it, and forwarded it to the agency laboratory in Tallahassee where Nancy Fisher, an agency chemist, tested it to determine whether it met agency standards. The testing revealed that the sampled kerosene contained .22% by weight of sulfur. This is in excess of the percentage by weight permitted by Rule 5F- 2.001(2) F.A.C. for this product. A "Stop Sale Notice" was issued, and on the date of that notice (November 20, 1990) the inspector's comparison of the seller's delivery sheets and the kerosene physically remaining in his tanks resulted in the determination that 196 gallons of kerosene had been sold to the public. Based on a posted price of $1.99 per gallon, the retail value of the product sold was determined, and the agency accordingly assessed a $390.04 penalty. The agency also permitted the seller to post a bond for the $390.04 on November 21, 1990. The assessment is reasonable and conforms to the amount of assessments imposed in similar cases.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving the $390.04 assessment and offsetting the bond against it. DONE and ENTERED this 25th day of April, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 25th day of April, 1991. COPIES FURNISHED TO: CLINTON H. COULTER, JR., ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 510 MAYO BUILDING TALLAHASSEE, FL 32399-0800 MR. RANDAL W. COLEMAN COLEMAN OIL COMPANY POST OFFICE BOX 248 GAINESVILLE, FL 32602 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE 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
The Issue The issue presented for decision herein is whether or not Petitioner's Antiknock (octane) Index number of its petroleum product was below the Index number displayed on its dispensing pumps.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received, and the entire record compile herein, I make the following relevant factual finding. Rafael Ruiz is the owner/operator of Coral Way Mobil, an automobile gasoline station, situated at 3201 Coral Way in Coral Gables, Florida. Ruiz has operated that station in excess of ten (10) years. On or about May 13, 1987, Respondent, Department of Agriculture and Consumer Services, received a customer complaint alleging that the fuel obtained from Petitioner's station made her automobile engine ping. Respondent dispatched one of its petroleum inspectors to Petitioner's station at 3201 Coral Way on May 14, and obtained a sample of Respondent's unleaded gasoline. Inspector Bill Munoz obtained the sample and an analysis of the sample revealed that the produce had an octane rating of 86.9 octane, whereas the octane rating posted on the dispenser indicated that the octane rating of the product was 89 octane. On that date, May 14, 1987, Respondent issued a "stop sale notice" for all of the unleaded product which was determined to be 213 gallons. Petitioner was advised by Inspector Munoz that the unleaded produce should be held until he received further instructions from the Respondent respecting any proposed penalty. On May 15, 1987, Petitioner was advised by John Whittier, Chief, Bureau of Petroleum Inspection, Florida Department of Agriculture and Consumer Services, that the Antiknock Index number of the sampled product was 2.1 percent below the octane rating displayed on the dispenser and that an administrative fine would be levied in the amount of $200 based on the number of gallons multiplied times by the price at which the product was being sold, i.e., 213 gallons times 93.9 cents per gallon. Petitioner did not dispute Respondent's analysis of the product sample, but instead reported that he had been advised that three of the five tanks at his station were leaking and that this is the first incident that he was aware of wherein the product tested below the octane rating displayed on the dispenser.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED: That the Respondent, Department of Agriculture and Consumer Services, enter a Final Order imposing an administrative fine in the amount of $200 payable by Petitioner to Respondent within thirty (30) days after entry of the Respondent's Final Order entered herein. RECOMMENDED this 7th day of October, 1987, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL 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 7th day of October, 1987. COPIES FURNISHED: Rafael E. Ruiz c/o Coral Way Mobil 3201 Coral Way Miami, Florida 33145 Clinton H. Coulter, Jr., Esquire Senior Attorney Office of General Counsel Department of Agriculture and Consumer Services Room 514, Mayo Building Tallahassee, Florida 32399-0800 Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-0810 Robert Chastain, Esquire General Counsel Department of Agriculture, and Consumer Services Room 513, Mayo Building Tallahassee, Florida 2399-0800
Findings Of Fact On November 5, 1987, a customer at Cowarts 66 service station complained of suspected water in the premium unleaded gasoline the customer had purchased at Cowarts 66 service station. Pursuant to the complaint, William Ford, an inspector for the Department, examined the premium unleaded gasoline storage facility at Cowarts 66 service station. The inspector obtained a sample of gasoline from the premium unleaded gasoline tank. The sample was examined by a Department of Agriculture chemist. There was no water found in the sample. However, the sample showed an end point of 455 degrees Fahrenheit which exceeded the maximum end point of 437 degrees Fahrenheit allowed by the Department under its rules governing petroleum products. Rule 5F-2.001(c)(4), F.A.C. The high end point was caused by the gasoline stored in the tank being mixed with or contaminated by another petroleum product with a high end point such as diesel fuel, thereby raising the end point of the premium unleaded. The contamination was caused by Clay Oil when their delivery driver accidentally mixed two fuels together and delivered the contaminated fuel to Cowarts 66. On November 6, 1987, the inspector issued a stop sale notice. The Department then has the right to confiscate the contaminated gasoline. However, the Department may elect to allow the station to post a bond in lieu of confiscation. In this case, the Department allowed Cowarts 66 to post a $1,000.00 bond in return for replacing the contaminated gasoline with gasoline meeting the Department's standards. The bond was posted the same day as the stop sale notice. The gasoline was likewise replaced either the same day or the morning after by Clay Oil. Cowarts 66 was later reimbursed by Clay Oil for the $1,000.00 cash bond. William Ford testified that he had been an inspector for Petitioner in the Jacksonville area for 16 years and had been familiar with Clay Oil Corporation and its operation for the past 10 or 15 years. He knew the corporation to be a reputable company. Prior to the instant case, he had never had any dealings with Clay Oil Corporation regarding dispensing of contaminated fuel. He had never had an occasion to require Clay Oil Corporation to post a bond. Ford, also, testified that the violation was clearly inadvertent and not representative of the normal business practices of Clay Oil Corporation. Furthermore, Ford testified that Clay Oil Corporation had been totally cooperative with the Department and had made immediate efforts to correct the violation regarding the contaminated fuel. Clay Oil Corporation's representative, Peter T. Eyrick, testified that upon being advised that contaminated fuel had been delivered to Cowarts' service station, he immediately instigated measures to replace the contaminated fuel with fuel that met Department standards. Furthermore, he testified that he had no knowledge that contaminated fuel had been delivered or that illegal sales had occurred until being informed by Cowarts' owner and the Department's inspector. The evidence clearly establishes that this violation was inadvertant and isolated. The violation is not representative of the normal business practice of Respondent. The evidence, also, clearly demonstrated that Respondent had no intent to sell adulterated fuel.
Recommendation Based upon the foregoing findings of fact and Conclusions of Law, it is RECOMMENDED that the Department refund to Clay Oil Corporation $750.00 of the $1,000.00 bond. DONE and ORDERED this 11th day of May, 1988, in Tallahassee, Florida. DIANE CLEAVINGER 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 11th day of May, 1988. APPENDIX CASE NO. 88-0181 Petitioner, Clay Oil Corporation, did not number its paragraphs in its recommended order. I, therefore, have numbered the paragraphs in its recommended order sequentially and utilize those numbers in this appendix. Petitioner's proposed findings of fact contained in paragraphs 1, 2, 3, 4 and 5, have been adopted, in substance, in so far as material. Respondent's proposed findings of fact contained in paragraphs 1, 2 and 3, have been adopted, in substance, in so far as material. Respondent's proposed findings of fact contained in paragraph 4 has been adopted, in substance, in so far as material, except for the finding regarding the number of gallons sold. The number of gallons sold was not shown by the evidence. Respondent's proposed findings of fact contained in paragraph 5 was not shown by the evidence. COPIES FURNISHED: Peter T. Eyrick Clay Oil Corporation Post Office Box 8 Doctors Inlet, Florida 32030 Harry Lewis Michael, Esquire Florida Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32399-0800 Paul S. Boone, Esquire 1221 King Street Jacksonville, Florida 32204 Honorable Doyle Connor Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-0810 Ben Pridgeon, Chief Bureau of Licensing & Bond Department of Agriculture Lab Complex Tallahassee, Florida 32399-1650
The Issue The issues in these consolidated cases are: (1) whether Petitioner, Department of Health, properly denied Respondent Discovery Experimental and Development, Inc.'s, application for a drug manufacturer's permit or, if the permit is deemed issued, whether the permit remains valid, and, if so, whether the Department may revoke such permit; (2) whether Respondents committed the offenses alleged in the Administrative Complaints and, if so, what administrative fine should be imposed; whether the Department of Health properly denied Respondent Discovery Experimental and Development, Inc.'s, application for an over-the-counter permit or any other approval; and whether the Department of Health properly denied Respondent Discovery Experimental and Development, Inc.'s, request to register its Silvicidal ES (extra strength) as a drug.
Findings Of Fact The Department of Health ("Department"), through its Bureau of Pharmacy Services ("Bureau"), is the state agency responsible for administering and enforcing the Florida Drug and Cosmetic Act, Chapter 499, Florida Statutes, which includes the regulation of the manufacture, promotion, and distribution of prescription drugs. James T. Kimball ("Mr. Kimball"), a former Respondent in this case and who is now incarcerated at the federal facility FCI Yazoo City, formerly resided at 6036 Country Club Road, Wesley Chapel, Pasco County, Florida 33544. At all times relevant to this proceeding, Respondent Discovery Experimental and Development, Inc. ("DEDI"), an alter ego of Mr. Kimball, was a Florida corporation, whose principal place of business was 29949 State Road 54 West, Wesley Chapel, Florida. The April 14, 1992, financial statement of Mr. and Mrs. James T. Kimball indicated that Mr. and Mrs. Kimball jointly owned 90 percent of the stock of DEDI and valued that interest at $1,000,000. Respondent Discovery Experimental and Development of Mexico, N.A. ("Discovery-Mexico"), existed in name only and was really a front for DEDI as noted elsewhere in these findings. At all times relevant to this proceeding, Respondent Discovery Distributing, Inc. (“DDI”), an alter ego of Mr. Kimball, was a Florida corporation whose principal place of business was 29949 State Road 54 West, Wesley Chapel, Florida. At all times relevant to this proceeding, Respondent ASTAK, Inc. (“ASTAK, Inc.”), an alter ego of Mr. Kimball, was a Florida corporation whose principal place of business was 29949 State Road 54 West, Westley Chapel, Florida. Respondent B & B Freight Forwarding, Inc. ("B & B"), an alter ego of Mr. Kimball, was a Florida corporation whose principal place of business was 29949 State Road 54 West, Wesley Chapel, Florida, from 1991 through July 1994. Subsequently, B & B moved to other locations. At all times relevant to this proceeding, Respondent Josephine Kimball (“Mrs. Kimball”), wife of Mr. Kimball, resided and continues to reside at 6036 Country Club Road, Wesley Chapel, Pasco County, Florida 33544. Respondent Discovery Tour Wholesaler, Inc. ("TOURS"), is a Florida corporation whose principal place of business is 29949 State Road 54 West, Wesley Chapel, Pasco County, Florida. Mrs. Kimball is the president and majority owner of TOURS as well as its only full-time employee. TOURS owns the property located at 29949 State Road 54 West, in Wesley Chapel, Florida. This property includes a building with over 10,000 square feet and six acres of land, with 440 feet abutting State Road 54. TOURS acquired this real estate from Mr. and Mrs. Kimball in 1987 or 1988 at no cost to TOURS. The Kimballs acquired this real estate from an individual who holds a mortgage that TOURS pays at $3,350 per month. TOURS pays the mortgage on the property located at 29949 State Road 54 West, Wesley Chapel, Florida, from the rent it receives from DEDI and ASTAK, Inc., and at the times noted below, from DDI and B & B. Respondents DEDI, ASTAK, Inc., DDI and B & B paid the rent to Tours from their income. According to the April 14, 1992, financial statement of Mr. and Mrs. Kimball, Mrs. Kimball owned 83 percent of the stock of Tours jointly with her husband and valued the stock at a minimum of $383,460 and valued the real property at $800,000 less the mortgage. Respondent Toni Ann Kimball ("Ms. Kimball") is the daughter of Mr. and Mrs. Kimball and resides at 3122 49th Avenue, North, St. Petersburg, Florida 33714-3018. At one time, Ms. Kimball was a part-time employee of B & B. At all times relevant to this proceeding, Respondent GLOBAL Health Information/Medical Research Institute ("GLOBAL"), was a Florida corporation whose principal place of business was 15310 Amberly Drive, Suite 250, Tampa Palms in Tampa, Florida. GLOBAL was set up as a nonprofit organization at Mr. Kimball's direction, and Mr. Kimball was responsible for the executive direction of GLOBAL. GLOBAL produced literature that was used as a means of getting out information about various products manufactured and/or distributed by one or more of Respondent corporations. At all times relevant to this proceeding, Mr. Kimball operated corporate Respondents DEDI, ASTAK, Inc., DDI, B & B, and GLOBAL as his alter ego. Mr. Kimball utilized each of the corporate Respondents that served as his alter ego as he saw fit. Respondents DEDI, DDI, ASTAK, Inc., and B & B were used interchangeably and often assets were transferred from one to another. The Department first interacted with Mr. Kimball in the fall of 1990 when he contacted the Department to request information regarding the types of permits he would need to research using sulfa Dimethyl ether. Mr. Kimball also indicated that he was interested in researching generic drugs. As a result of this conversation, a local Department agent was sent to visit DEDI's facility at 29949 State Road 54 West, Wesley Chapel, Florida ("business establishment" or "Wesley Chapel business establishment"), to determine how he was using the ether. Following the visit, the agent reported to the Bureau's drug agent supervisor, now program manager, Gregg Jones, R.Ph. ("Agent Jones"), that Mr. Kimball was interested in producing a generic or improved version of an already approved drug called Eldepryl. Eldepryl is and at all times relevant to the proceeding was, an approved prescription drug, approved by the Food and Drug Administration ("FDA"), and marketed in tablet form for the treatment of Parkinson's Disease. Eldepryl has as its active ingredient, Selegiline. In the fall of 1990, Eldepryl was the only form of Selegiline that was approved by the FDA. In or about November 1990, Agent Jones inspected DEDI's space in the business establishment. During that inspection, Mr. Kimball indicated to Agent Jones, as he had the Department agent who had previously visited the business establishment, that he wanted to produce a generic and highly improved form of the product, Eldepryl. According to Mr. Kimball, he wanted to make the product available as an over- the-counter product, without a prescription, for the condition of life extension or life enhancement. In response, Agent Jones notified Mr. Kimball, DEDI's and DDI's principal, that since the FDA had approved the Selegiline-based drug Eldepryl as a prescription drug, DDI's Selegiline-based product was also a prescription drug and, as such, required FDA new drug approval in order for DEDI or DDI to produce and/or market that product. Agent Jones further advised Mr. Kimball that he would need to be licensed by the State of Florida. During the November 1990 inspection, Agent Jones provided DEDI and/or DDI, through Mr. Kimball, with a copy of the Florida Drug and Cosmetic Act, Chapter 499, Florida Statutes, and the rules adopted under the Act. The Department, through the Bureau as configured under its predecessor, the Florida Department of Health and Rehabilitative Services ("HRS"), began its investigation of DEDI and DDI, and their principal, Mr. Kimball, in 1990. Agents of the Bureau learned that in December 1990, Wes Sargenson, a reporter with WFLA Channel 8 TV, a television station serving the Tampa, Florida, viewing area, had interviewed Mr. Kimball on the air. The subject of the television interview was the promotion by DDI of a drug which was not approved by the FDA. During the publicly televised interview, DDI, through Mr. Kimball, voiced the intention to make and sell a new drug, not approved by the FDA, he called Kimbellac Vitamin C Plus ("Kimbellac"). The active ingredient in the product was Selegiline. DDI, through Mr. Kimball, further expressed the intention to sell Kimbellac, an unapproved drug, in spite of FDA opposition, which he acknowledged during the interview. A promotional letter by DDI and a label on the bottle of Kimbellac shown during the interview claims that Kimbellac can treat or mitigate diseases in humans that are not amenable to self-treatment, but rather require the intervention of and prescription from a physician. The DDI promotional letter states in part the following: The side effects of Kimbellac are negligible at most . . . Kimbellac is in essence the same as Eldepryl, also known as Deprenyl and in purer form . . . It is proven that this product enhances sex drive in older people. It has been proven and again was in the edited F.D.A. report the antidepressant qualities. Tests have proven Kimbellac will help some people that have contracted Alzheimer's disease. Despite these claims, the FDA had not approved Kimbellac as safe and effective for such medicinal purposes. Mrs. Kimball, at her husband's request, recorded a telephone message that was written by Mr. Kimball. The recorded message explained how persons could place orders for Kimbellac. However, it is not clear that Mrs. Kimball knew that the product being promoted in the recording was an unapproved drug. When Mr. Kimball had the television interview and directed his wife to make the promotional recording, neither the FDA nor HRS had approved Kimbellac. This fact was acknowledged in a letter from DDI to customers which stated, "[T]he receipt of this letter and your returned unprocessed check, means that the F.D.A. and the Florida Health and Rehabilitative Services (H.R.S.) has refused to allow you to purchase Kimbellac by refusing to allow us the right to sell it to you." As a result of the actions of DDI, through Mr. Kimball, to promote and sell Kimbellac, in March 1991, the Department, through its predecessor, HRS, filed an Administrative Complaint, seeking to impose a fine of $55,000 against DDI and Mr. Kimball. The Administrative Complaint charged DDI and Mr. Kimball with manufacturing, advertising or otherwise promoting and distributing a new unapproved drug containing selegiline. On September 26, 1991, HRS resolved the matter by Consent Final Order. Mr. Kimball and DDI did not admit to any of the violations, but they agreed to certain "acceptable corrective actions." The Stipulation for Settlement, adopted and incorporated into the Consent Final Order, provides in pertinent part the following: Discovery [DDI] is located at 29949 State Route [sic] 54 West, Wesley Chapel, FL 33543. Jay Kimball [Mr. Kimball] is president of Discovery [DDI]. * * * HRS, Discovery [DDI], and Jay Kimball [Mr. Kimball] agree that the following actions shall constitute acceptable corrective actions in response to concerns expressed by HRS: HRS agrees not to file proceedings against Discovery [DDI] under Chapter 499, Florida Statutes, or otherwise seek remedy for any purported violations of Florida law as alleged in the March 7, 1991 Administrative Complaint. Discovery [DDI] and Jay Kimball [Mr. Kimball] agree not to distribute the new drug Selegiline HCL, alone or in combination with other substances, within the state of Florida without permits required pursuant to Chapter 499, Florida Statutes. Discovery [DDI]and Jay Kimball [Mr. Kimball] agree not to manufacture the new drug Selegiline HCL [unless and until a permit to manufacture a legend drug has been obtained.] Discovery [DDI] and Jay Kimball [Mr. Kimball] agree to allow inspection by HRS of any establishment owned or maintained by Discovery [DDI] and/or Jay Kimball [Mr. Kimball] in which drugs are manufactured or held. Discovery [DDI] and Jay Kimball [Mr. Kimball] agree not to advertise and offer for sale a drug advertised to have an effect on[:] High Blood Pressure Mental Disease Sexual Impotence Extension of life expectancy Depression or on any other of the diseases and conditions listed in ss. 499.0054, F.S. Discovery [DDI] and Jay Kimball [Mr. Kimball] acknowledge that they are aware of the provisions of [S]ections 499.005(4), 499.005(5), 499.005(6), 499,005(11), 499.054(3), 499.0054(6), 499.011, and 499.023, Florida Statutes. Notwithstanding the Stipulation for Settlement and the Consent Final Order referenced in paragraphs 27 and 28, in the spring of 1991, Respondent DEDI, through Mr. Kimball, had developed Kimbellac (Deprenyl) in liquid form, and called this new unapproved drug Liquid Deprenyl Citrate. The Liquid Deprenyl Citrate (“DEDI-brand liquid deprenyl citrate”) is composed of selegiline, the active drug ingredient, in addition to citra-gel, the inactive component. Selegiline is also referred to as deprenyl. Soon after the Consent Final Order referenced in paragraphs 27, 28, and 29 was issued, it came to the Department's attention that a newsletter, Inside Health, was being placed in various establishments in the Tampa area. The 1991 Spring edition and the 1991 Fall edition of Inside Health were published by DDI and paid for by Respondents DDI and ASTAK, Inc. DDI used the Inside Health newsletter to market the benefits of deprenyl to consumers and to recommend dosages. For example, the Fall 1991 edition of Inside Health, included an article titled "Discovery's Recommended Dosages for Deprenyl." The article provided two charts regarding the dosages for deprenyl, one for humans and the other for animals. The chart listing the dosages of deprenyl for humans provided the following: People with Alzheimer's Disease-10mg twice daily during the day, early AM & Early afternoon People with Parkinson's Disease - consult with a physician familiar with Parkinson's Disease If you are using Deprenyl to improve quality of life, as a sex stimulant, to prolong life, or a preventative for Parkinson's or Alzheimer's disease use the chart above for proper dosage Attached to Inside Health was a form entitled, "How to Order Deprenyl." The order form, developed by DEDI, directs customers to purchase the DEDI-brand liquid deprenyl citrate from its alter ego, Discovery-Mexico, at $75.00 for a one-half ounce bottle, plus $18.00 for shipping and handling. To place an order, the form directs customers to call either B & B at the business establishment in Wesley Chapel, Florida, or to contact the B & B in San Diego, California, near Tijuana, Mexico. The order form indicates that to expedite orders, mail should be sent to Discovery-Mexico, c/o B & B, Post Office Box 7178, Wesley Chapel, Florida. The order form advises readers to call "Inside Health" at (813) 973-7704 to obtain the name of the nearest health food or nutrition center that could provide them with information on acquiring the DEDI-brand liquid deprenyl citrate. The telephone number listed in Inside Health was a number at the Wesley Chapel business establishment. One or more employees of Respondents DEDI, ASTAK, Inc., and/or B & B, packaged Inside Health, along with "How to Order Deprenyl" forms, and shipped them for said Respondents to stores that had agreed to promote the sale of DEDI-brand liquid deprenyl citrate. Respondents DEDI and B & B, through promotional material, brochures, labels, and labeling, promoted and advertised DEDI-brand liquid deprenyl citrate as a new drug intended for the cure, mitigation, treatment, therapy, or prevention of disease in humans. Specifically, Respondents DEDI and B & B promoted this new, unapproved drug through brochures, bearing the DEDI logo, entitled Facts About Liquid Deprenyl and Updated Facts About Liquid Deprenyl Citrate. These brochures state that the DEDI-brand liquid deprenyl citrate has been proven effective for increasing life span and for the following conditions: depression, senile dementia, abolishing ulcer formation, sex drive dysfunction, Parkinson's disease, Alzheimer's disease, multiple sclerosis, ALS (Lou Gehrig's disease), and high blood pressure. A copy of one of these brochures was mailed out with each purchase of DEDI-brand liquid deprenyl citrate. Contrary to the representations in the brochures, Facts about Liquid Deprenyl and Updated Facts About Liquid Deprenyl Citrate, the diseases on which the DEDI-brand liquid deprenyl citrate is claimed to be effective are serious diseases that require physician oversight to properly treat them. Moreover, the DEDI-brand liquid deprenyl citrate has serious side effects, and its interactions with other drugs and foods make it unsafe if it is not prescribed under the direction and supervision of a physician. Clearly, based on the representations and claims in Facts About Liquid Deprenyl and Updated Facts About Liquid Deprenyl Citrate, Respondents DEDI and ASTAK, Inc., and B & B intended to sell the DEDI-brand liquid Deprenyl Citrate in such a manner as to make it an unapproved prescription drug. Carol Vigue was employed as the secretary for DEDI from September 1991 through May 1993. While a secretary for DEDI, Ms. Vigue formatted the Facts About Liquid Deprenyl on a computer-publishing program at the business establishment in Wesley Chapel, Florida. During her employment with DEDI, there were several different versions of the brochure published, all of which were produced commercially and mailed to individuals as directed by Mr. Kimball. On five occasions between August 1991 and October 1993, the Department made undercover purchases of DEDI- brand liquid deprenyl citrate. In each instance, the Department requested and received DEDI-brand liquid deprenyl citrate by using instructions on the "How to Order Deprenyl" form developed by DEDI. The Department found these instructions at health food establishments in Florida, attached to the DDI newsletter, Inside Health. Pursuant to these instructions, the Department sent each of its deprenyl purchase requests to the business establishment in Wesley Chapel, Florida, or to Post Office Box 7178, Wesley Chapel, a post office box purchased by B & B. Two of the canceled money orders that the Department submitted to Respondent B & B to purchase DEDI-brand liquid deprenyl citrate had the endorsement of James T. Kimball and the money for these purchases was deposited in bank accounts controlled by Mr. Kimball. The Department received the DEDI-brand liquid deprenyl citrate that it had ordered in a location in Florida. Of the five orders received by the Department, the first of the undercover purchases was sent via United Parcel Service ("UPS") account #263-0X8, an account paid for by B & B. The DEDI-brand liquid deprenyl citrate received by the Department through these undercover purchases had a return address in the San Diego, California, vicinity at business locations leased by Respondent B & B. The DEDI-brand liquid deprenyl citrate received by the Department through these undercover purchases also came with brochures and directions for use as a drug. The purpose of this drug, as stated in the labels and labeling, is to affect the structure and function of the human body or to treat or mitigate diseases such as ". . . depression; learning, cognitive and motor functions; sense of well being; senile dementia; increasing energy; pain reduction; abolishing ulcer formation; hormone release; inhibiting toxic free radicals; sex drive dysfunction; revival of dying brain cells; Parkinson's disease; Alzheimer's disease; increasing life span; multiple sclerosis; ALS (Lou Gehrig's Disease); blepharospasms; high blood pressure; stroke induced paralysis; and mental dysfunction." The Department sent the DEDI-brand liquid deprenyl citrate obtained through each of its undercover purchases to the Crime Laboratory of the Florida Department of Law Enforcement (“FDLE”), and, in each instance, the DEDI-brand liquid deprenyl citrate tested as containing the active drug ingredient, selegiline. On November 29, 1991, about a year after Mr. Kimball met with Agent Jones, DEDI applied to the FDA for approval of the DEDI-brand liquid deprenyl citrate as a new drug to treat Alzheimer’s disease. On April 3, 1997, the FDA issued a Final Order denying this application. The Final Order, published in the Federal Register, Vol. 62, No. 64, pages 15903-15914, Docket No. 94N-0171, detailed the reasons for the denial. According to the Final Order, the FDA refused to approve DEDI-brand liquid deprenyl citrate because it found that DEDI’s application lacked essential information to support approval. Specifically, the FDA found that DEDI provided insufficient information for the FDA to determine that DEDI’s liquid deprenyl citrate was safe for use or that it would have the effect it purported to have under the conditions of use stated in DEDI’s proposed labeling. Additionally, the FDA found that DEDI did not submit any supporting information on the safety or efficacy of its new drug but instead relied only on data about other selegiline-based drugs. Finally, the FDA found that DEDI’s drug manufacturing facilities at the Wesley Chapel business establishment did not comply with the FDA's current good manufacturing practice standards. The FDA and the Department issued warning notices to DEDI regarding deprenyl. The FDA and the Department warned DEDI through these notices that DEDI could not, directly or indirectly through a company in a foreign country, introduce deprenyl in interstate commerce in the United States and Florida. DEDI received these notices prior to submission of its application to the FDA and after the FDA issued a Final Order denying approval of the DEDI-brand liquid deprenyl citrate, as well as times in between. Almost 11 months after DEDI applied to the FDA for approval of the DEDI-brand liquid deprenyl citrate as a new drug to treat Alzheimer's disease, DEDI submitted to the Department an application for a permit as a drug manufacturer. The application was received by the Department on October 9, 1992, but was neither approved nor denied by the Department within the 90-day period required by Section 120.60(2), Florida Statutes (1991). Accordingly, DEDI's application was approved as a matter of law, on or about January 20, 1993, which was 90 days after the receipt of DEDI's completed application by the Department.10 Pursuant to Section 499.01(3)(b), Florida Statutes (1993), DEDI manufacturer's permit that was issued by operation of law on January 20, 1993, "automatically expire[ed] 2 years after the last day of the anniversary month in which the permit was originally issued," unless DEDI initiated action to renew the permit. Therefore, DEDI's manufacturing permit was effective from January 20, 1993, until January 31, 1995. Although DEDI had a manufacturer's permit, the permit authorized DEDI to conduct only those activities authorized by Chapter 499, Florida Statutes. Such authorized activities did not include DEDI's selling or otherwise distributing unapproved drugs. Prior to the expiration of the DEDI's manufacturer's permit, and after the Department's May 1993 inspection of the Wesley Chapel business establishment, discussed below, the Department filed an Administrative Complaint in which it sought to revoke DEDI's manufacturer's permit. Between 1991, before DEDI had a manufacturer's permit, and 1999, after such permit expired, persons working for DEDI at the Wesley Chapel establishment manufactured the freebase or active ingredient of DEDI-brand liquid deprenyl citrate. Other employees of Respondent DEDI at the Wesley Chapel business establishment manufactured the inactive ingredients for DEDI- brand liquid deprenyl citrate. From August 1991 through May 12, 1993, Mr. Kimball, DEDI, and B & B implemented a scheme to enhance the distribution of the DEDI-brand liquid deprenyl citrate. A memorandum developed by DEDI entitled, "Big Profits In Deprenyl" ("Big Profits"), and mailed on occasion from the Wesley Chapel business establishment, explained how businesses could make commissions by displaying advertisements on how to order deprenyl. When a customer paid for an order of DEDI-brand liquid deprenyl citrate, his order form referenced the store number from which the customer got the order form. B & B then paid commissions to the store based on the number of DEDI-brand liquid deprenyl citrate purchases. With regard to commissions, "Big Profits" indicated that participating stores would receive a profit of 25 percent for each bottle of DEDI-brand liquid deprenyl citrate ordered, using that particular store number. The cost of each bottle of DEDI-brand liquid deprenyl citrate was listed at $75.00 per 300 mg bottle, plus $18.00 for freight and handling. With regard to the cost, the form states, "This compares to Chinoin’s Deprenyl (Eldepryl) that sells for $120.00 to $200.00, for sixty 5mg pills available by prescription only." "Big Profits" also stated that Discovery-Mexico would issue commission checks based on the amount of collected sales for the previous month. Finally, "Big Profits" advised that the checks may be issued by banks outside the United States in United States dollars and would be designated as consulting fees. The principal of DEDI and B & B directed the development of "Big Profits." For example, while a secretary for DEDI, Carol Vigue, typed "Big Profits" in accordance with instructions from DEDI's principal, Mr. Kimball. Consistent with those directives, "Big Profits" was on Discovery-Mexico's letterhead and listed the address as APDO Post No. 5049, Tijuana, B.C., Mexico. According to "Big Profits," in order to expedite calls or mail, individuals were advised to call 813- 973-7354 or 813-973-7437 for message forwarding. For expedited mail, customers were advised to mail orders to Discovery-Mexico, c/o B & B, Post Office Box 7178, Wesley Chapel, Florida 33543. From at least 1991 until 1993, B & B employees were directed to mail "Big Profits" to health food stores that wanted to earn commissions for promoting the sale of DEDI-brand liquid deprenyl citrate. DEDI and B & B operated consistent with "Big Profits" in that when a person ordered the DEDI-brand liquid deprenyl citrate, the order always included a store number. B & B logged the sale with credit to that particular store and then paid a monthly commission to the store based on monthly sales of DEDI- brand liquid deprenyl citrate attributed to that store. B & B maintained a database of all the stores and how many sales of DEDI-deprenyl were attributed to each store. Once a month B & B totaled all the sales of the DEDI-brand liquid deprenyl citrate for each of the stores to which it had assigned a store number pursuant to "Big Profits." The money from the sale of the DEDI-brand liquid deprenyl citrate was usually deposited in the B & B Barnett Bank checking account in Florida. The money from the sales was then wired from the B & B Barnett Bank account to the California Commerce Bank so that B & B employees in California could write checks to pay the commissions to each store. The commission checks were typically written in San Diego, California, on the B & B account at the California Commerce Bank. These checks for commissions were sometimes written by Respondent Ms. Kimball, who was a signatory on the B & B bank account at the California Commerce Bank in the San Diego, California, vicinity. Louis T. Smith was an employee of B & B from 1991 until May or June of 1993, when he was employed by ASTAK, Inc. As an employee of B & B and ASTAK, Inc., Mr. Smith was familiar with the inner workings of the DEDI-brand liquid deprenyl citrate sales and distribution enterprise of Respondents DEDI, B & B, and ASTAK, Inc. When Mr. Smith worked for B & B, both B & B and DEDI initially sold DEDI-brand liquid deprenyl citrate by requesting that customers place orders by mail to B & B's Wesley Chapel Post Office Box 7178 in Wesley Chapel, Florida. These instructions were consistent with the ordering directions in "How to Order Deprenyl." Orders for the DEDI-brand liquid deprenyl citrate were sent to Wesley Chapel, Florida. Many of these orders were addressed to Discovery of Mexico, c/o B & B Freight Forwarding, Inc., at Post Office Box 7178, in Wesley Chapel, Florida. Even though not shown on B & B's registration as a Florida corporation, DEDI, through its principal, Mr. Kimball, directed B & B and ensured that customers received their orders of DEDI-brand liquid deprenyl citrate. As an employee of B & B, Mr. Smith helped log in customer names and addresses and the quantity of deprenyl that they ordered into a computer database system. Also, while employed by B & B, Mr. Smith, on a daily basis, between Monday and Friday, sent by facsimile the information on customers who had ordered DEDI-brand liquid deprenyl citrate to Ms. Kimball in San Diego. Respondent Ms. Kimball then filled those orders as well as any orders received via the automated telephone system in California and/or Mexico. From the spring of 1992 until about May 12, 1993, Mr. Smith was responsible for maintaining the checking accounts of B & B. Mr. Smith’s responsibilities included depositing funds from the sale of the DEDI-brand liquid deprenyl citrate, an unapproved prescription drug, into the B & B checking account at a Barnett Bank in Florida. The funds received from purchasers of the DEDI-brand liquid deprenyl citrate and deposited into B & B’s checking account was in the form of money orders, personal checks, and cashier's checks. From time to time, B & B obtained cashiers checks made payable to the principal of DEDI and B & B, or to Discovery- Mexico from its Barnett Bank account in Florida. This made it possible for either Discovery-Mexico or the principal of DEDI and B & B to cash the checks. The checks were in round figures, in amounts from three thousand to eight thousand dollars. In some instances, the day after a cashier's check was generated from the sale of DEDI-brand liquid deprenyl citrate, the principal of DEDI and B & B confirmed that the bank had enough money to cover the check, and would then take the check to the bank and cash it. B & B developed a record of DEDI-brand liquid deprenyl citrate customers, referred to as "Client Quick History Reports" ("Client Reports") for Client No. 1001 through Client No. 2764. Each Client Report recorded the name and address of the DEDI- brand liquid deprenyl citrate customer, a code to track the number of sales, the price of the product, the amount that was collected for each sale, plus shipping information, and how the customer ordered the deprenyl. Information concerning the filling and shipping of customers ordering the DEDI-brand liquid deprenyl citrate was recorded in a UPS shipping book. This UPS shipping book was maintained in San Diego, California, initially by Julio Garcia, subsequently by Respondent Ms. Kimball, and later by Gaylord Hughes, when they were employees of B & B. The UPS account number for the shipments of DEDI-brand liquid deprenyl citrate was 263-0X8. As noted in paragraph 41, this was the same UPS account on the envelopes containing DEDI- brand liquid deprenyl citrate which the Department purchased undercover. DEDI's principal, Mr. Kimball, and B & B took orders for DEDI-brand liquid deprenyl citrate and handled the money received through these orders. The bank accounts were established and authorized in a manner that allowed DEDI's principal, Mr. Kimball, to possess and control the income from the sale of deprenyl, either in the form of deposits to bank accounts which he controlled or in cash or its equivalent. At or near the time Mr. Kimball and DDI agreed to the Stipulation of Settlement incorporated in the Department’s 1991 Consent Final Order referenced in paragraphs 27, 28, and 29, Respondents DDI, ASTAK, Inc., DEDI, B & B, and Discovery-Mexico implemented an elaborate scheme to conceal from drug regulatory agencies, the FDA and the Department, their responsibility for the manufacture, promotion, distribution, and sale of deprenyl. Under this scheme DEDI, ASTAK, Inc., B & B, and Mr. Kimball made it appear that the DEDI-brand liquid deprenyl citrate was being manufactured and distributed by a foreign company, Discovery-Mexico. However, Discovery-Mexico is another alter ego of DEDI and Mr. Kimball and was a front for them to sell the DEDI-brand liquid deprenyl citrate, undetected by Florida and federal drug regulators. There is no indication that Discovery-Mexico was capable of manufacturing or properly formulating deprenyl without the direct participation of DEDI and its agents. Instead, the Mexican company, Cyto-Pharma, which fronted as Discovery-Mexico, merely mixed the active ingredient, selegiline, called deprenyl freebase, with the inactive ingredient, citra gel. Under instructions from DEDI, Cyto- Pharma then bottled the formulated DEDI-brand liquid deprenyl citrate, but had nothing to do with manufacturing the active ingredient. The principals of Respondent DEDI are identified as owners of Discovery-Mexico in a fictitious name disclosure filed by Respondent Ms. Kimball with the Recorder and County Clerk for San Diego County, California. Respondent Ms. Kimball applied for the mailbox for Discovery-Mexico at Pak Mail in San Ysidro, California. On or about October 1, 1991, Respondent DEDI opened a Florida bank account in the name of DEDI doing business as Discovery-Mexico. Mr. Kimball noted on the Request for Tax Identification Number ("Request") for the Discovery-Mexico account that he was the president of the company. Mr. Kimball also signed the Request as president of Discovery-Mexico. On the bank account, Discovery-Mexico's address was listed as 29949 State Road 54 West in Wesley Chapel, Florida. In a separate document related to the account, Mr. Kimball authorized that the facsimile signature of R.R. Riot be honored for payment of all checks, drafts, and money orders on the account for "Discovery Experimental and Development, Inc. d/b/a Discovery Experimental and Development Mexico, N.A." Mr. Kimball signed this authorization as secretary of DEDI d/b/a Discovery-Mexico. Mr. and Mrs. Kimball declared on their April 14, 1992, financial statement that the value of the 100 percent ownership interest in Discovery-Mexico of DEDI's principal, Mr. Kimball, was $2,000,000. DEDI, through Mr. Kimball, had signature stamps, including one with the name R.R. Riot on it. These signature stamps were in DEDI’s control and were used by Mr. Kimball, as DEDI’s principal, when he transacted business related to the manufacture and sale of deprenyl in the name of Discovery- Mexico. On one occasion, Mr. Kimball admitted to Mr. Smith that Riot did not exist. In connection with the consulting services that Mrs. Kimball through TOURS, provided to Respondent DEDI, she placed an order for two "R.R. Riot" signature stamps, one of which was on the premises of the Wesley Chapel establishment in May 1993. In December 1991, on a visit to B & B in California, Mr. Smith and Mr. Kimball both went daily to Cyto-Pharma in Tijuana, Mexico, the Discovery-Mexico front for DEDI. The purpose of these visits was to retrieve overnight orders of DEDI-brand liquid deprenyl citrate that were on an automated voice system. Julio Garcia originally installed the automated voice mail system on a personal computer for Respondent B & B. The prerecorded messages on the voice mail system were the voices of DEDI's principal, Mr. Kimball, and Respondent Ms. Kimball. These recorded messages all related to placing orders for the DEDI-brand liquid deprenyl citrate. In 1991, while Mr. Smith was in Mexico and California, the information regarding persons to whom Mr. Kimball and Mr. Smith were to send filled orders of DEDI-brand liquid deprenyl citrate came via facsimile from Respondent Ms. Kimball in Florida. Respondents B & B and DEDI also received faxed orders daily at the Wesley Chapel business establishment from Respondent Ms. Kimball when she moved to San Diego, California. In December 1991, when Mr. Kimball and Mr. Smith returned to San Diego from Mexico, they packaged orders for DEDI-brand liquid deprenyl citrate that they had retrieved from the computer system in Mexico. They would take bottles of deprenyl from a large box and place them in Jiffy packs, a brown padded envelope, together with a dropper and a plastic package, and then seal the Jiffy pack. Using customer information obtained from the computer at B & B in Otay Mesa and San Diego, California, the customer information (i.e. name and address) would be placed on the front of the Jiffy pack. The packaged DEDI-brand liquid deprenyl citrate was in the same form that the Department received when it placed undercover orders for the DEDI-brand liquid deprenyl citrate. Mr. Kimball, as the principal of DEDI and Discovery- Mexico, had a falling out with its Mexican front, Cyta-Pharma. Soon thereafter, in the spring of 1992, the computer and automated voice mail system for placing orders for DEDI-brand liquid deprenyl citrate were moved to Respondent Ms. Kimball's apartment in San Diego, California. While continuing to use the name Discovery-Mexico, Respondent DEDI moved the process of mixing the active and inactive ingredients of DEDI-brand liquid deprenyl citrate, called "formulation," from Cyta-Pharma, its front company in Mexico, to the Wesley Chapel business establishment. On May 12, 1993, agents of a multi-agency federal task force executed search warrants regarding the manufacture and sale of the DEDI-brand liquid deprenyl citrate at the Wesley Chapel business establishment. The Department participated in the task force search and also conducted an inspection that day. Areas searched and/or inspected included the Wesley Chapel business establishment, the residence of Mr. and Mrs. Kimball at 6036 Country Club Road, Wesley Chapel, Florida, and the Wesley Chapel, Florida, residence of Mr. Bob Brown, a friend of Mr. Kimball and a business tenant of the Wesley Chapel business establishment. During the inspection and execution of search warrants, the Department agents wore blue shirts with huge letters across the back that read, "HRS Drug Agent," and displayed their identification badges on their front pockets. During the May 12, 1993, inspection and search, the Department found two 50-kilogram drums of ephedrine, the basic starting chemical for the manufacture of deprenyl, at the residence of Mr. and Mrs. Kimball. The ephedrine was labeled "Caution Federal Law prohibits dispensing without a prescription." The two drums of ephedrine, as labeled and in the form found by the Department on May 12, 1993, at the Kimball residence, is a drug, not a herbal or dietary supplement. The two drums contained enough ephedrine to make between 18 and 20 million dollars worth of finished DEDI-brand liquid deprenyl citrate at the price being charged by Respondents DEDI and B & B. At the Brown residence, a Department agent found a DEDI refrigerator containing more ephedrine, the chemical building block for DEDI-brand liquid deprenyl citrate, as well as deprenyl free base (selegiline) and unlabeled one-half ounce bottles of formulated DEDI-brand liquid deprenyl citrate. Some of the unlabeled bottles were control samples of various drugs or products that DEDI had manufactured. Respondent DDI purchased ephedrine from BASF, a manufacturer of chemicals, prior to the May 12, 1993, search and inspection. DDI again purchased ephedrine after the Department had seized the ephedrine from the Kimball residence even though DDI never obtained a manufacturer’s or any other permit pursuant Chapter 499, Florida Statutes. The only manufacturer's permit issued and in effect at this time was the one issued to DEDI as noted in paragraphs 47 and 48. During the May 1993 search and inspection of the Wesley Chapel business establishment, the Department found other items related to the production, promotion, and distribution of deprenyl. These included Discovery-Mexico letterhead, a brochure advertising DEDI-brand liquid deprenyl citrate, checks and money orders (not yet cashed) from customers for orders of DEDI-brand liquid deprenyl citrate, glass jugs of selegiline, deprenyl labels and labeling, and rubber stamps for Discovery- Mexico and for R.R. Riot. During the May 12, 1993, inspection of the business establishment, the Department issued stop-sale orders for items that were not seized by federal agents at the scene. The Department also seized ephedrine from the residence of Mr. and Mrs. Kimball, pursuant to Sections 499.06 through 499.064, Florida Statutes. The Department sent a bottle of what it believed to be DEDI-brand liquid deprenyl citrate to the FDA for testing, and the FDA confirmed that the contents contained the DEDI-brand liquid deprenyl citrate. On August 10, 1993, after the May 12, 1993, search and inspection, the Department initiated an injunctive enforcement case in the Circuit Court of Pasco County, Florida. After an evidentiary hearing, the Department obtained a temporary injunction against Mr. Kimball and DEDI, which was issued on or about February 17, 1994. More than four years later, on motion by the defendants to vacate the temporary injunction, the court issued a corrected order dated November 24, 1998, dissolving the temporary injunction as vague. After the May 12, 1993, inspection by the Department and before the issuance of the February 17, 1994, temporary injunction, Respondents DEDI and B & B changed the method of selling DEDI-brand liquid deprenyl citrate by accepting orders only if payments were made in cash. This eliminated much of the audit trail of the sale of DEDI-brand liquid deprenyl citrate. Respondent DEDI did not comply with the temporary injunction, entered February 17, 1994, and did not seek to dissolve the temporary injunction until approximately four years after it was issued. Nevertheless, the temporary injunction did not deter DEDI's and B & B's sales of DEDI-brand liquid deprenyl citrate, which had returned to the pre-May 12, 1993, level by late 1993. An inventory of DEDI dated year end 1991 corresponds with DDI possessing ephedrine and having the capacity to manufacture deprenyl in large, valuable quantities from 1991 through May 1993 by stating the following: "We currently hold over 200 kilos of starting chemicals for deprenyl. These starting chemicals would produce a wholesale value of completed deprenyl in excess of $20 million." The inventory for that date indicates that DEDI had operating locations not only in Wesley Chapel, Pasco County, Florida, but also in San Diego, California, and Tijuana, Mexico, with a completed product in stock valued at $430,500. After the May 12, 1993, search and inspection, but before the July 13, 1994, inspection discussed below, DEDI and B & B sent its employee, Gaylord Hughes a/k/a Hugo Lord West, to fill DEDI-brand liquid deprenyl citrate orders. He traveled with the shipping labels to send the filled orders to the customers, and was usually gone from Wesley Chapel for three to four days. At the same time, DEDI sent by Airborne Express the formulated one-half ounce bottles of DEDI-deprenyl from the Wesley Chapel business establishment. The Department conducted another inspection of the Wesley Chapel business establishment on July 13, 1994, to check the status of the May 1993 drugs and items under stop-sale order, and to check for compliance with the temporary injunction. This inspection was initiated during a visit to the business establishment in response to a request of Pasco County officials, after a small fire and explosion had spread smoke in the business establishment from a DEDI laboratory on the premises. The Pasco County officials wanted to determine the status of the business establishment after the chemical reaction that had caused the fire. When the Department inspected the business establishment on July 13, 1994, Department agents found shredded orders for DEDI-brand liquid deprenyl citrate, which B & B had filled. They also found labeling, promotional literature, and business records regarding the manufacture, promotion and sale of DEDI-brand liquid deprenyl citrate by Respondents DEDI and B & B. One of the filled orders was to a husband and wife, Mr. and Mrs. Freis, who resided in Florida at that time, and another filled order was sent to Mr. Joseph Marino who resided in South Carolina. Federal Express confirmed delivery of the orders for the DEDI-brand liquid deprenyl citrate to B & B at the Wesley Chapel business establishment. Subsequent to the Department's July 13, 1994, inspection, Respondents DEDI and B & B sold DEDI-brand liquid deprenyl citrate such that purchasers in Florida, as well as in other jurisdictions, received this unapproved drug. After July 13, 1994, DEDI and B & B moved the location where cash orders for DEDI-brand liquid deprenyl citrate were received and the location from which orders for deprenyl DEDI- brand liquid deprenyl citrate were filled. B & B paid the rent for each of these locations. These locations included 8875 Hidden River Parkway, Suite 300, Tampa, Florida; 7676 Hazard Center, 5th Floor, San Diego, California; and 5025 Central Avenue, Box 619, Phoenix, Arizona. On August 9, 1995, the FDA issued an import alert regarding DEDI-brand liquid deprenyl citrate, as an unapproved new drug being promoted in the United States. This alert was relied on by the Department in its investigation of DEDI-brand liquid deprenyl citrate as further indication that the FDA considered this product to be an unapproved drug. In June 1996, Gaylord Hughes moved to Phoenix, Arizona, to be with his girlfriend who had relocated to that area. In Phoenix, Mr. Hughes continued to operate B & B and DEDI-brand liquid deprenyl citrate sales operations like B & B had operated from Wesley Chapel before May 1993, from the Wesley Chapel business establishment from May 1993 to the Department's July 13, 1994, inspection, and from the Hidden River Parkway location from mid-1994 through 1996. Mr. Kimball paid the fee for B & B’s mailbox in Phoenix, Arizona. After Mr. Hughes moved to Phoenix and B & B was set up there, once a week, DEDI received, at the Wesley Chapel business establishment location, a package containing a large quantity of cash from B & B's sales of DEDI-brand liquid deprenyl citrate. The currency was neatly wrapped in the manner and style of Mr. Hughes. Federal search warrants were executed in Phoenix, Arizona, on May 7 and 8, 1998, at Mr. Hughes' residence in Phoenix, Arizona, and the B & B mailbox at Mail Boxes Etc., on Central Avenue, in Phoenix, Arizona. Two months later, the Phoenix B & B was closed and the mailbox rental was cancelled. From August 1991 through September 2000, Mr. Kimball along and with Respondents DEDI, DDI, B & B, and ASTAK, Inc., have manufactured, held for sale and sold or otherwise distributed the selegiline based drug, DEDI-brand liquid deprenyl citrate, from and into Florida, without first obtaining from the FDA the requisite new drug approval. From September 17, 1991, until just prior to the May 12, 1993, search and inspection, B & B received more than $600,000 gross income from the sale of DEDI-brand liquid deprenyl citrate. This is based on sales of 8,424 bottles of DEDI-brand liquid deprenyl citrate, of which 1,407 bottles were sold in Florida. The 8,424 bottles of DEDI brand liquid deprenyl citrate, an unapproved drug, were sold to 1,634 persons. The Department's fair estimate of the income to DEDI, B & B, and ASTAK, Inc., from their sale of DEDI-brand liquid deprenyl citrate is an average of $28,000 per month, totaling more than $2,600,000.11 Client reports maintained by B & B and DEDI indicate that clients purchased Vitamin C as well as DEDI-brand liquid deprenyl citrate. However, according to these records, there are seven times as many client reports for customers who purchased DEDI-brand liquid deprenyl citrate as for those who purchased DEDI Vitamin C. The average income of $53,585 for the three-month period of February 1993 through April 1993 was for the sale of DEDI-deprenyl as compared to an average of $200 per month for DEDI Vitamin C. Prior to the multi-agency task-force's execution of search warrants regarding the DEDI-deprenyl brand liquid citrate manufacture and sales operations, DEDI and B & B sold between 500 and 600 bottles of DEDI-deprenyl brand liquid citrate a month. Pursuant to agreements, DEDI and other corporate Respondents paid TOURS consulting and administrative fees for providing specified services, equipment, and furniture. The administrative services provided by TOURS included the following: maintaining the books; making bank deposits; handling accounts payable; monitoring payroll records; keeping bank ledgers updated, making and monitoring a purchasing system, making purchases; and working with accountants; and filing incorporation and annual corporate renewal papers. The aforementioned Respondents paid TOURS for use of TOURS' office equipment, such as the postage meter and telephones. TOURS also purchased office supplies and other needed materials and equipment for Respondents. The costs of these supplies, materials, and equipment were then billed by TOURS to Respondents as charge-backs. The fees paid by these Respondents came from the sale of unapproved drugs such as DEDI-brand liquid deprenyl citrate. Pursuant to a lease agreement, TOURS charged DEDI $3,000 per month rent while DEDI was a tenant at the Wesley Chapel business establishment from late 1990 through the first of 2000. Likewise, TOURS charged rent to B & B from early 1990s to 1995 or 1996; DDI from 1990 to May 1993; and ASTAK, Inc., from early 1990 to late 1999 or early 2000. For the period of September 17, 1991, through September 23, 1994, TOURS generated income from the rent paid by the corporate Respondents who occupied space in the Wesley Chapel business establishment, as follows: rent, $75,792; consulting and administrative fees, $112,834; and charge-backs or miscellaneous, $34,856. The total collected by TOURS for this time period was $223,482 or over $6,200 per month. From 1993 through 2000, Mr. Kimball transferred most of his assets, as well as all the assets of DEDI and ASTAK, Inc., to TOURS. Mr. Kimball transferred his interest in his personal residence in Wesley Chapel, Florida, to his wife, Mrs. Kimball. Most recently, DEDI transferred its rights to its line of products and customer lists to TOURS. TOURS, in turn, transferred its rights to DEDI's products and customer lists to Strictly Supplements, Inc.,12 a company recently formed by Mrs. Kimball, who serves as the company's marketing director. DEDI, through its "pharmaceutical division," and ASTAK, Inc., sold in commerce for human use several colloidal silver drugs that had not been approved by the FDA. Initially, DEDI and ASTAK, Inc., sold colloidal silver drugs as if they were FDA-sanctioned by being “grand- fathered” or exempt from the FDA new drug approval process. To qualify for an exemption from this regulation, the DEDI colloidal silver drug would have had to exist prior to 1938 or the present manufacturer of the drug must have been the pre-1938 manufacturer. Here, none of DEDI’s colloidal silver drugs met the criteria to qualify for an exemption or grandfather status under the FDA’s new drug approval process. At times relevant to this proceeding, DEDI and ASTAK, Inc., filled orders for AG-Cidal and shipped AG-Cidal to a company in California which sold to customers drug products whose active ingredient is the heavy metal, silver, in colloidal suspension. DEDI and ASTAK, Inc., labeled DEDI-AG-Cidal, some of which the Department stop-saled in July 13, 1994, at the Wesley Chapel business establishment, as a drug in that the label claims it to be an antibiotic, anti-viral, anti-bacterial and anti-infective. DEDI and ASTAK, Inc., also misbranded AG-Cidal by putting a National Drug Code number ("NDC#") on the label of the product. Such information on the label is false and misleading to the consumers in that an NDC# makes the product appear to be an FDA approved drug, or an FDA drug authorized in commerce, when neither DEDI nor ASTAK, Inc., has ever obtained FDA drug approval for their AG-Cidal. DEDI and ASTAK, Inc., also labeled their DEDI- Silvicidal as a drug in that the label claims it to be an anti- infective. The Department had issued a stop-sale of some of these products on May 12, 1993, while conducting an inspection of the business establishment. Although DEDI registered this product, it was never approved as a drug with FDA. Notwithstanding its failure to obtain the necessary approvals, DEDI sought to distribute these products through an out-of-state company. DEDI applied to the Department to register, as a drug, DEDI-Silvicidal ES (extra strength), 300 ppm, Mild Silver Protein. In response, the Department timely gave notice to DEDI of its intent to deny the application by letter dated May 29, 1998. The FDA has not approved DEDI-Silvicidal ES as a drug that the FDA authorizes in commerce and such approval is required by Section 499.023, Florida Statutes, before such drugs can be marketed in commerce in Florida. Although DEDI never obtained the necessary approvals, DEDI manufactured Silvicidal ES at the Wesley Chapel business establishment as an anti-viral and anti-infective and distributed the unapproved drug. DEDI gave to others Experimental Colloidal Silver for use on persons with serious illnesses, thus making this product a drug. The Experimental Colloidal Silver was used on persons having Lyme disease, HIV, staphylococcus infections, and other serious illnesses. The DEDI-Silvicidal ES is a DEDI colloidal silver drug that has been advertised by NaturaLife, Arvada, Colorado, as an “incredible antibiotic” priced at $69. According to advertising and/or labeling, the product can be used to prevent both contact and airborne transmitted diseases when office, hospital, school and daycare environments cannot be avoided and is proven to be exceedingly effective in bacterial, viral and fungal infections from a common virus or bacteria to more serious infections such as E. coli and Streptococcus. DEDI and ASTAK, Inc., sold each of the above-listed, colloidal silver drugs for human use as antibiotic, anti-viral, anti-bacterial and anti-fungal. DEDI made claims that the products were effective to treat diseases such as Lyme disease and the common cold, even though the FDA never authorized these drugs in commerce with such claims. DEDI and ASTAK, Inc., further misled the consuming public as to the safety and effectiveness of these unapproved drugs by claiming on the labels that their colloidal silver drugs were "non-toxic" and had no side effects. In fact, there are serious side effects that can occur from the human consumption of drugs containing colloidal silver. DEDI, through its principal, established GLOBAL to publish a pamphlet, entitled "Silver Solutions" espousing the FDA unapproved colloidal silver drugs manufactured by DEDI and sold by DEDI and ASTAK, Inc. The FDA has never authorized a New Drug Application for any of the Respondents for any of the colloidal silver products listed above, nor otherwise authorized any such drugs in commerce by other means. The FDA has adopted a final rule regarding drugs containing colloidal silver ingredients, which states in pertinent part that: (b) Any OTC drug product containing colloidal silver ingredients or silver salt that is labeled, represented, or promoted for the treatment and/or prevention of any disease is regarded as a new drug within the meaning of section 201(p) of the Federal Food, Drug, and Cosmetic Act (the act) for which an approved application or abbreviated application under section 505 of the act and part 314 of this chapter is required for marketing. In the absence of an approved new drug application or abbreviated new drug application, such product is also misbranded under section 502 of the act. * * * After September 16, 1999, any such OTC drug product containing colloidal silver or silver salts initially introduced or initially delivered for introduction into interstate commerce that is not in compliance with this section is subject to regulatory action. See Federal Register, August 17, 1999, Volume 64, No. 158, and 21 C.F.R. Section 310.548. The DEDI colloidal silver drugs discussed in the above paragraphs are misbranded drugs since none have new drug approval by the FDA. Also, in absence of such approval, the products may not be introduced in commerce. Because Section 499.023, Florida Statutes, requires such approval, the Department is without authority to grant DEDI's request to register DEDI's Silvicidal ES as a drug. After the Department filed its first Administrative Complaint in these consolidated cases, Respondents as named and noted below conducted themselves as follows in paragraphs 127 through 134. In July 13, 1994, upon execution of a federal search warrant, Respondents DEDI and ASTAK, Inc., were found to have a hidden compartment, having dimensions about two or three feet by two or three feet, under a stairwell at the Wesley Chapel business establishment. In the compartment, which was obscured by a cabinet, there were five boxes of 100 one-half ounce bottles of DEDI-brand liquid deprenyl citrate. In 1998, the Unites States Customs returned to DEDI the Selegiline freebase that had been seized in May 1993 from the Wesley Chapel business establishment. Soon thereafter, at Mr. Kimball’s direction, DEDI's consultants and/or employees of DEDI purified or reprocessed the Selegiline as DEDI deprenyl freebase.13 On May 7 and 8, 1998, an agent with the Department accompanied federal agents who were executing a federal search warrant of Box 619 at Mail Boxes Etc., located at 5025 Central Avenue, Phoenix, Arizona. The Department's agent observed orders for DEDI-brand liquid deprenyl citrate along with the correct amount of cash enclosed ($75.00 per bottle, plus $18.00 for shipping and handling per order) at the mailbox in Phoenix, Arizona, that was rented by B & B. In June 1996, B & B, through Mr. Kimball, executed a rental agreement with Mail Boxes Etc. to rent Mail Box 619 at that location, and paid rent for that box. Subsequently, Mr. Hughes, as an agent for B & B paid the fees required for renewal of the mailbox. In or about October 2000, while this proceeding was pending, Mr. Kimball, the principal officer of DEDI, DDI, B & B, ASTAK, Inc., and GLOBAL was indicted by a federal grand jury and convicted of fraud and conspiracy to commit fraud against the FDA and the Department. See United States of America v. James T. Kimball, USDC-Middle District of Florida, Case No. 99-256-CR- T-26E, upheld on appeal 291 F.3d 726 (11th Cir. 2002). At a hearing on September 20, 1999, regarding the government's motion to revoke Mr. Kimball's release bond in United States v. Kimball, supra, DEDI's and ASTAK, Inc.’s, principal, Mr. Kimball, admitted to the presiding federal magistrate judge that for the preceding two and one-half years he has sold selegiline, the active drug ingredient in the DEDI- brand liquid deprenyl citrate, to compounding pharmacies in Oregon. The principal of DEDI's and ASTAK, Inc., Mr. Kimball, knew and intended that the selegiline DEDI and ASTAK, Inc., sold and shipped to these pharmacies would be formulated and labeled in finished dosage form as Discovery-brand liquid deprenyl citrate. This version of the unapproved prescription drug, DEDI-deprenyl, was not compounded pursuant to a patient-specific prescription but was manufactured for sale through their agents in Oregon.14 On September 13, 1999, a shipment of 940 bottles labeled deprenyl, and bearing the DEDI logo was seized under a federal warrant in Oregon, by Oregon law enforcement officers and the FDA officials. But for the seizure of the unapproved drug, it would have been shipped to IAS, a company in England with which the DEDI and ASTAK, Inc., through its principal, had a business relationship. DEDI and ASTK, Inc., knew and intended that the DEDI-brand liquid deprenyl citrate would be shipped to IAS in England, where persons from the United States, including Florida, could purchase it. By letter dated August 16, 1999, the FDA warned Respondents DEDI and ASTAK, Inc., that their manufacturing, labeling, and selling of DEDI-brand liquid deprenyl citrate was unlawful since this product is an unapproved new drug not authorized by the FDA in commerce. The aforementioned Respondents were also advised that the unapproved drug was being labeled in a false and misleading manner. By Final Judgment rendered March 3, 2000, Respondents, DEDI, DDI, B & B, ASTAK, Inc., and Mr. Kimball were permanently enjoined, either directly or indirectly, from manufacturing, advertising or selling liquid deprenyl, any compound or article containing selegiline or any other drug, unless and until they demonstrate at an evidentiary hearing that they have complied with the Florida Drug and Cosmetic Act. See Department of Health and Rehabilitative Services v. Discovery Experimental and Development, Inc., et al., Case Nos. 93-3991 and 93-4287, Sixth Judicial Circuit in and for Pasco County, Florida (rendered March 3, 2000); appealed dismissed on August 30, 2000, in Discovery Experimental and Development, Inc., v. State, Department of Health, 769 So. 2d 376 (Fla. 2d DCA 2000). Respondents DEDI, ASTAK, Inc., B & B, and Discovery- Mexico are a danger to public health, safety and welfare. They have persisted in manufacturing for sale, holding for sale, promoting and selling or otherwise distributing the unapproved prescription drug deprenyl in disregard of the Department's 1991 Consent Final Order. Moreover, these Respondents have never obtained the required FDA approval and the Department licenses or permits that would authorize such activities. Nonetheless, from August 1991, these Respondents have distributed the unapproved prescription drug deprenyl in, from and into Florida by direct sales to the purchaser without a prescription from the purchaser's prescribing health care practitioner and without the deprenyl being dispensed by a licensed pharmacist. By marketing and selling the unapproved drug, DEDI- brand liquid deprenyl citrate, over-the-counter and without the intervention of a prescribing medical practitioner or a pharmacist, Respondents posed a danger to the public. The Department, through its Bureau, incurred the costs of investigating Respondents from 1990 to the presentation of evidence in this proceeding. The Department employed in this investigation and enforcement action numerous drug agents, drug agent supervisors, and clerical staff. One of the Department’s drug agents, Chief Investigator Agent Deborah Orr, worked on this case on an almost full-time basis since being employed by the Department in or about 1992. The Department incurred costs associated with the expenses of court reporters, appearance of witnesses, travel costs, expert witness costs, office supplies, and materials, as well as the salaries of the investigative staff assigned to work on this case. Conservatively, the Department spent approximately one-half million dollars, or more specifically, $486,621.40, in this investigation and enforcement action. After giving careful consideration and evaluation to the many intense hours of testimony, the undersigned concludes that the Department’s witnesses are credible experts in the field of pharmacy and drug regulation laws and procedures of the State of Florida. The Findings of Fact in the Final Judgment in Department of Health and Rehabilitative Services v. Discovery Experimental and Development, Inc., et al., Case Nos. 93-3991 and 93-4287, Sixth Judicial Circuit Court, Pasco County, Florida (March 2, 2000) against Respondents, DEDI, ASTAK, Inc., DDI and B & B are adopted by reference herein. These findings are adopted under the doctrines of res judicata, collateral estoppel, and estoppel by judgment as to these same Respondents, except for Mr. Kimball, who has been dismissed from the instant case, and are noted as additional support for the Findings of Fact in this Recommended Order.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health issue a final order which finds that: Respondents Discovery Distributing, Inc.; Discovery Experimental and Development, Inc.; ASTAK, Inc.; and B & B Freight Forwarding, Inc., committed the offenses alleged in the Administrative Complaint, as it relates to the DEDI-brand liquid deprenyl cittrate. Respondents Discovery Distributing, Inc. and Discovery Experimental and Development, Inc., shall jointly and severally pay to the Florida Department of Health an administrative fine of two million, eighty-seven thousand dollars ($2,087,000.00), for violations of Chapter 499, Florida Statutes (1997), as they relate to the DEDI-brand liquid deprenyl citrate. Respondents Discovery Experimental and Development, Inc., and ASTAK, Inc., committed the offenses related to the DEDI drugs containing colloidal silver as alleged in the Administrative Complaint. Respondents Discovery Experimental and Development, Inc., and ASTAK, Inc., shall jointly and severally pay to the Florida Department of Health an administrative fine of one million five hundred and three thousand dollars ($1,503,000) for violations of Chapter 499, Florida Statutes (1997), as those violations relate to the DEDI drugs containing colloidal silver. The pending application for Discovery Experimental and Development, Inc., to register as a drug, its Silvicidal ES be and hereby is denied. The Administrative Complaint against Respondents Global Health Information/Medical Research Institute, Inc.; Discovery Tours Wholesalers, Inc.; Josephine Kimball; and Toni Ann Kimball be dismissed. DONE AND ENTERED this 18th day of April, 2003, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD 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 18th day of April, 2003.
