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 Petitioner is the owner of the site known as Union 76 #702 or as Taylor's 76, Inc., located at 9700 East Indigo Street, Perrine, Dade County, Florida. The prior owner of that site was Lawrence Oil Company. There appears to be a commonality of principals between Petitioner TYU, Inc., and its predecessor in title, Lawrence Oil Company. In 1986 the Legislature created the Early Detection Incentive Program (hereinafter "EDI") to encourage early detection, reporting, and cleanup of contamination from leaking petroleum storage systems. Essentially, the Legislature created a 30-month grace period ending on December 31, 1988, for owners of sites with contamination from petroleum storage systems to apply for reimbursement for cleanup expenses due to the contamination, without retribution from the State. The statute also provided several bases for which an applicant would be deemed ineligible. Prior to the December 31, 1988, deadline Petitioner checked the various sites owned by it, including the site which is the subject of this proceeding, to determine whether contamination was present. The subject site had been a service station, selling gasoline for 30 to 35 years. From 1986 forward, however, gasoline was no longer being dispensed at the site although the underground gasoline tanks were still present. It is unknown whether the tanks were emptied at the time that they were taken out of service. Automobile repairs were still performed at the site. By 1989, the site was also occupied by a lawn maintenance company and a pool company. In 1988 and 1989 a 55-gallon drum of used oil was located on the site. The lawn company employees used that oil to lubricate their chain saws. The remainder of the used oil and the solvents from the small parts washer were picked up from that site for recycling. In November or December of 1988, Harry Barkett, president of Lawrence Oil Company, personally visited the site. He sampled the monitoring wells. Because he smelled gasoline in the monitoring wells, he retained Seyfried & Associates, Inc., an environmental consultant, to prepare a report to be submitted to the Department. That report is dated December 15, 1988. Petitioner's application for participation in the EDI program, together with the report of Seyfried & Associates, Inc., was submitted to the Department prior to the December 31, 1988, deadline. At the time, Metropolitan Dade County's Department of Environmental Resources Management (hereinafter "DERM") was performing EDI inspections for the Department pursuant to a contract. On March 22, 1989, a DERM employee who performed only industrial waste inspections went to the subject site. He specifically was not there to inspect the petroleum storage systems, and he did not do so. That employee went into the service bays where the routine auto repair and maintenance services were performed. He noticed the floor drains going from the service bays to the oil/water separator. He then inspected the oil/water separator. He noted that a hole had been cut at the top of the effluent pipe, which breached the system and which might allow oil to flow into either a drain field or a septic tank system. He did not check further to ascertain which. He took three samples from inside the oil/water separator, one for oil and grease, one for phenols, and one for metals, specifically cadmium, chromium, and lead. Not surprisingly, the laboratory analysis of those samples indicated the presence of phenols, oil, and grease. The only sampling done by that employee was of the contents of the oil/water separator. No investigation was made of, and no samples were taken from, the soil or groundwater anywhere on the site. Such sampling was not part of that employee's authority or responsibility. On October 11, 1989, Dade County DERM sent a different employee to perform the EDI inspection at the subject site. To determine the presence of contamination from petroleum or petroleum products, that employee dipped an acrylic bailer into each of the monitoring wells and then "sniffed the bailer" to ascertain if the odor of gasoline could be detected. He did not dip the bailer lower than the top foot of water since he did not wish to bring the bailer up through a column of water before sniffing. Dade County DERM employees no longer "sniff the bailer" due to the health risk involved in such a procedure. In 1989, however, it was the common practice for DERM employees to "sniff the bailer," albeit cautiously. That employee failed to detect the odor of gasoline and did not see any petroleum contamination in the monitoring wells. He issued a report to that effect. He took no samples from the soil or groundwater to determine if there were contamination from petroleum or petroleum products at the site. Based upon the second report indicating the absence of gasoline odor and based upon the first report indicating the presence of oil, grease, and phenols inside the oil/water separator, Dade County DERM recommended to the Department that Petitioner's application for participation in the EDI program be denied. Based upon that recommendation, the Department sent Petitioner a letter dated May 23, 1990, denying Petitioner's application for participation in the EDI program. That letter stated as the two reasons for denial the following: Contamination is not the result of a discharge from a petroleum storage facility as defined in Section 376.301(11), Florida Statutes. Waste oil contamination found on the ground and groundwater was the result of poor maintenance practices by site owner/ operator. Participation in the Early Detection Incentive Program is restricted to contamination from such storage facilities pursuant to 376.3071(9), Florida Statutes. Contamination is a mixture of waste oil, grease and phenolic compounds. Participation in the Early Detection Incentive Program is limited to petroleum or petroleum products as defined in Section 37.301 [sic] (9) and (10), Florida Statutes. That letter further advised Petitioner of its right to request a hearing regarding that determination and advised Petitioner that its failure to timely request an administrative hearing would render that correspondence to be a final Order of Determination of Ineligibility. When Petitioner received that correspondence, one of its employees interpreted the letter to mean that the Department had determined that the site did not have contamination from petroleum or a petroleum product. Viewing that as good news, that employee merely put the letter in a file. No request for an administrative hearing was made by Petitioner, and the correspondence became a final Order of Determination of Ineligibility by its own terms. In 1990 the Legislature determined that all sites which had been declared ineligible by the Department would be re-determined for eligibility. The Legislature established March 31, 1991, as the new deadline by which owners or operators could request the Department to reevaluate eligibility for sites for which a timely EDI application had been filed but which had been deemed ineligible by the Department. The new legislation set forth several circumstances under which the Department would not redetermine the eligibility of a previously denied site. One of those exceptions related to the reason for which a site had initially been denied. Petitioner had remained convinced that the subject site was contaminated by petroleum or petroleum products prior to the original deadline for filing EDI applications. Petitioner was aware of the new legislation and new deadline by which sites determined ineligible could have their eligibility redetermined. Petitioner therefore retained Kiefer-Block Environmental Services, Inc., to do a site analysis to verify Petitioner's belief that the site had a petroleum contamination. That company issued a report indicating that was the case. Petitioner timely filed its application for redetermination before the March 31, 1991, deadline and submitted to the Department the information obtained from Kiefer-Block, the second environmental consultant to verify the presence of petroleum contamination. In reviewing applications for redetermination, the Department established a procedure whereby it simply looked at its original letter denying eligibility to ascertain the reason for denial. If that reason matched one of the exclusions under the new legislation, the Department advised the applicant that it was not eligible to have its site redetermined. The Department did not review the Department's files relating to a site and did no additional inspection. In 1991 the Legislature again amended the statute, this time carving out an exception to those sites excluded from redetermination of eligibility by directing that sites excluded due to an absence of contamination be redetermined for eligibility if contamination had in fact existed. That amendment went into effect July 1, 1991. Accordingly, that amendment was part of the law in effect when the Department made its decision as to whether it would redetermine Petitioner's eligibility. By letter dated September 3, 1991, the Department advised Petitioner that it was not eligible to participate in the redetermination process. That letter specifically provided as follows: This Order is to inform you that this site is not eligible to participate in the eligibility redetermination process pursuant to Section 376.3071(9)(b), F.S., because the original reasons for ineligibility were: Contamination is not the result of a discharge from a petroleum storage facility as defined in Section 376.301(11), Florida Statutes [definition in Section 376.301(15), F.S., current revision]. Waste oil contamination found on the ground and groundwater was the result of poor maintenance practices by site owner/ operator. Participation in the Early Detection Incentive Program is restricted to contamination from such storage facilities pursuant to 376.3071(9), F.S. Contamination is a mixture of waste oil, grease and phenolic compounds. Participation in the Early Detection Incentive Program is limited to petroleum or petroleum products as defined in Section 376.301(9) and (10), Florida Statutes [definitions in Section 376.301(13) and (14), F.S., current revision]. Section 376.3071(9)(b)3.c., F.S., states that redetermination of eligibility is not available to facilities that were denied eligibility due to contamination from substances that were not petroleum or a petroleum product, or contamination that was not from a petroleum storage system. Petitioner timely filed its request for an administrative hearing regarding that letter, contesting the Department's refusal to redetermine Petitioner's eligibility to participate in the EDI program.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: (1) granting Petitioner's application for redetermination of eligibility and (2) finding Petitioner ineligible to participate in the Early Detection Incentive Program. DONE and ENTERED this 26th day of August, 1992, at Tallahassee, Florida. LINDA M. RIGOT 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 26th day of August, 1992. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 92-0678 Petitioner's three unnumbered paragraphs contained in its post-hearing submittal have been rejected as not constituting findings of fact but rather as constituting conclusions of law or argument. Respondent's proposed findings of fact numbered 1-3, 5-18, and 20 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed finding of fact numbered 4 has been rejected as being unnecessary to the issues involved herein. Respondent's proposed finding of fact numbered 19 has been rejected as not being supported by the weight of the competent evidence in this cause. COPIES FURNISHED: C. Vittorino Special Projects Manager TYU, Inc. 1601 McCloskey Boulevard Tampa, Florida 33605-6710 Brigette A. Ffolkes, Esquire Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Carol Browner, Secretary Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400
The Issue Whether Petitioner's site, Hughes Supply, Inc. located at 2920 Ford Street, Fort Myers, Lee County, Florida is eligible for restoration under Section 376.3072, Florida Statutes.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: Hughes is a Florida Corporation in good standing and authorized to do business in the State of Florida. The Department's facility no. 36-8519331 (the Facility), owned and operated by Hughes and the subject matter of this proceeding, is located at 2920 Ford Street, Ft. Myers, Lee County, Florida, and is a "Facility" as defined in Section 376.301(5), Florida Statutes. The Facility consisted of (a) two underground storage tanks (USTs), one 4000 gallons UST (gasoline tank) and one 8000 gallons UST (diesel tank), and (b) four monitoring well, and is a "petroleum storage system" as defined in Section 376.301(15), Florida Statutes. At all times material to this proceeding, Hughes held, and was the name insured of, an effective third party pollution liability insurance policy (No. FPL 7622685 - Renewal No. FPL 7621566) applicable to the Facility that was issued in accordance with, and qualified under, Section 376.3072, Florida Statutes. Hughes paid annual premiums exceeding $20,000.00 for the above insurance. In accordance with Sections 376.3072, Florida Statutes, and Chapter 17- 769, Florida Administrative Code; the Department issued to Hughes a Notice of Eligibility pertaining to the Facility and the third party pollution liability insurance referred to in Finding of Fact 4 above. Lee County, Florida has a local program approved by the Department pursuant to Section 376.3073, Florida Statutes, to provide for the administration of the Department's responsibilities under certain sections of Chapter 376, Florida Statutes. Diesel fuel was placed into the diesel tank at the Facility on August 12, 1991, and no diesel fuel has been placed in the diesel tank at the Facility since that date. On Thursday, August 29, 1991, a contractor bidding on the removal of the tanks detected free product in one of the monitoring wells at the Facility and told Larry Carman, the Warehouse Manager for Hughes. Mr. Carman told Phillip Ross, the Branch Manager for Hughes, who in turn informed Gene Kendall, the Operations Coordinator for Hughes. All of this occurred on August 29, 1991. On Friday, August 30, 1991, an employee of IT Corporation, acting upon the request of Gene Kendall, sampled the four monitoring wells at the Facility and found six inches of free product in the northwest monitoring well. On Tuesday, September 3, 1991, Fred Kendall discussed the discharge with Bill W. Johnson, Supervisor, Lee County Storage Tank Local Program. During this discussion, Johnson learned that the diesel tank had not been emptied. Johnson advised Kendall that the diesel tank had to be emptied of its product and placed out of service. On Tuesday, September 3, 1991 Mr. Kendall completed the Discharge Reporting Form (DRF) pertaining to the discharge and mailed the DRF to Johnson on September 4, 1991. The DRF indicated August 30, 1992, the day that IT Corporation confirmed the discharge, as the day of discovery of the discharge. The discharge was diesel fuel as indicated by the DRF and a "petroleum product" as defined in Section 376.3-1(14), Florida Statutes. The discharge reported in the DRF constitutes a "discharge" as defined in Section 376.301(4), Florida Statutes, which constitutes an "incident" as defined in Section 376.3072(2)(c), Florida Statutes, and as described in Rule 17-769.600, Florida Administrative Code. On Wednesday, September 4, 1991, Mr. Kendall also mailed a letter to Johnson stating Hughes' intent to seek restoration coverage for the Facility, pursuant to Policy No. FPL 762285, Renewal No. FPL 7621566. On September 13, 1991 when Hooper, Inspector for the Lee County Storage Tank Local Program, inspected the Facility the diesel tank contained a total of 39 5/8 inches of diesel and water, of which 4 3/4 inches was water. On September 16, 1991 when Hooper again inspected the Facility, the diesel tank contained a total of 36 1/2 inches of diesel and water, of which 4 1/2 inches was water. On this date, Hooper advised Hughes that the diesel tank had to be emptied of its product. The inspection report issued on September 16, 1991 by Hooper advised Hughes that the Facility was not in compliance with Chapter 17-761, Florida Administrative Code. On September 17, 1991, Hughes had the diesel tank emptied of all its product. Although Hughes was in the process of emptying the diesel tank by giving diesel away, at no time between August 30, 1991 and September 16, 1991 was the diesel tank completely empty of its product. Between August 30, 1991 and September 16, 1991 Hughes did not test the diesel tank to determine if the diesel tank was leaking and, if so, to pinpoint the source of the leak. There was no evidence that either the Department or Lee County Storage Tank Local Program personnel ever informed Hughes before September 16, 1991 that there was a time frame within which the diesel tank had to be emptied of all of its product, and placed out of service in order for Hughes to be in compliance and eligible for reimbursement for restoration under the FPLIRP. Likewise, Hughes did not request any information from the Department or the Lee County Local Program personnel concerning any time frames within which the diesel tank had to be tested for leaks or emptied of its contents to prevent any further discharge in order to be eligible for reimbursement for restoration under the FPLIRP. Between August 29, 1991 and September 17, 1991 Hughes bailed the monitoring wells at the Facility on a daily basis, removed the free product from the monitoring wells, and placed the free product in a sealed 55-gallon drum. When the discharge was discovered, Hughes made the decision to close the Facility by tank removal, and at this point did not intend to repair or replace the Facility. As a result of an inspection of the Facility by the Lee County Local Program personnel in May, 1991, Hughes was made aware that the Facility was not in compliance with Chapter 17-761, Florida Administrative Code, since the gasoline tank had not been used in over three years, and there had been no closure of the gasoline tank. This noncompliance with Chapter 17-761, Florida Administrative Code, concerning the gasoline tank was also a portion of the noncompliance report filed by Hooper on September 16, 1991. The gasoline tank comes within the definition of "unmaintained" as defined by Rule 17-761.200(2), Florida Administrative Code. Both the diesel tank and the gasoline tank were removed on October 28, 1991 by a Florida licensed storage tank system removal contractor, and the Facility permanently closed by IT Corporation on October 29, 1991. In December, 1991, Hughes filed a tank closure assessment report pertaining to the removal of the diesel and gasoline tanks from, and closure of, the Facility. The tank closure assessment report was prepared by IT Corporation upon a request made by Hughes to IT Corporation on September 3, 1991 for a tank closure assessment proposal which was submitted by IT Corporation to Hughes on September 4, 1991. In April or May, 1992, Hughes filed with Lee County a contamination assessment report prepared by IT Corporation pertaining to the removal of the USTs from and closure of the Facility. Subsequent to discovery of the discharge. Hughes has expended approximately $60,000.00 as of June 10, 1992, on the Facility in connection with the USTs. Site rehabilitation costs for the Facility have been estimated in a range of $220,000.00 to $245,000.00 as of June 10, 1992. In the early part of 1991 water was present in the diesel tank, and approximately six months before discovering the discharge in August, 1991, Hughes had the water pumped out of the diesel tank. Hughes gave no explanation for the presence of water in the diesel tank. Neither the Department nor the Lee County Local Program personnel were notified of this unexplained presence of water in the diesel tank.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that the Department enter a Final Order denying Hughes application for restoration coverage under the Florida Petroleum Liability Insurance and Restoration Program. DONE and RECOMMENDED this 24th day of September, 1992, at Tallahassee, Florida. WILLIAM R. CAVE, 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 24th day of September, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-8334 The following constitutes my specific rulings, pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner The following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parenthesis is the Finding(s) of Fact which so adopts the Proposed Finding(s) of Fact:(1); 2-3(2); 4-5(3); 6- 8(4); 9(5); 10(6); 11(8,9); 12(10,11); 14(15,22); 15(10); 16(19); 18(10); 19(13); 20-21(7); 22-23(24); 24(21); 25(17); 26-29(20); 30(15); 31(16); 32(22); 33(23); 35(23); 36(7); 37(23); 38(24); 39(25); 40(26); 41(27); 42-43(27); and 44(15,22). Proposed Findings of Fact 13, 17 and 34 are neither material nor relevant to the conclusion reached in the Recommended Order. Rulings on Proposed Findings of Fact Submitted by the Respondent 1. The following Proposed Findings of Fact are adopted in substance as modified in the Recommended Order. The number in parenthesis is the Finding(s) of Fact which so adopts the Proposed Finding(s) of Fact:1-2(2); 3(3); 4-6(5); 7(6); 8(22); 9(7); 10(8); 11(9); 12(10); 13-16(11); 17(12); 18(13): 19(18); 20(17); 21-22(14); 23-24(15); 25-26(28); 27(16); and 28(23). COPIES FURNISHED: Scott E. Wilt, Esquire Maguire, Voorhis and Wells 2 South Orange Plaza Orlando, Florida 32801 Brigette A. Ffolkes, Esquire Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Carol Browner, Secretary Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400
The Issue Whether Petitioner, Hendry Energy Services, LLC (“Hendry Energy”), is entitled to issuance of an operating permit recertification of the Red Cattle Co. #27-4 well, and an Oil and Gas Drilling Permit, Permit No. OG 0904AH.
Findings Of Fact Parties Hendry Energy is a Florida Limited Liability Company organized under the laws of the State of Florida. At all relevant times, Hendry Energy could lawfully conduct business in the State of Florida. The Department is the state agency with the authority under chapter 377, part I, Florida Statutes, to issue permits for the drilling for, exploring for, or production of oil, gas or other petroleum products which are to be extracted from below the surface of the land. Background Regarding the Mid-Felda Oil Field The Mid-Felda Field is an established oil field in Hendry County, Florida, discovered in 1977. The Mid-Felda Field generally exists within Sections 22, 23, 26, 27, 34, and 35 of Township 45 South, Range 28 East. The Mid-Felda Field includes three historically producing wells: RCC 27-4 (Permit No. 904), Red Cattle #27-1 (Permit No. 983), and Turner #26-3 (Permit No. 949). The RCC 27-4 was originally drilled and completed in 1977; the Turner #26-3 (“Turner 26-3”) was drilled and completed in 1979; and the Red Cattle #27-1 (“RC 27-1”) was drilled and completed in 1979. All three wells were vertical completions, meaning that the wellbore is vertical or nearly vertical from the surface- hole to the bottom-hole location. All three wells are located in routine drilling units. Routine drilling units are based on the U.S. Government Surveyed Township and Range system. The RCC 27-4 routine unit consists of the southeast quarter section of Section 27, Township 45 South, Range 28 East. The Turner 26-3 routine unit consists of the southwest quarter section of Section 26, Township 45 South, Range 28 East. The RCC 27-1 routine unit consists of the northeast quarter section of Section 27, Township 45 South, Range 28 East. RCC 27-4 is located approximately in the center of the southeast quarter section of Section 27. The true vertical depth of RCC 27-4 is approximately 11,686 feet. Turner 26-3 is located approximately in the center of the southwest quarter section of Section 26. The true vertical depth of Turner 26-3 is approximately 11,518 feet. Between 1978 and 2000, wells in the Mid-Felda Field produced nearly 1,500,000 barrels of oil. The RCC 27-4 and Turner 26-3 produced approximately 700,000 barrels each. The RCC 27-1 and Turner 26-3 have been plugged and abandoned. The RCC 27-4 has been temporarily abandoned with a plug installed. Facts Regarding Geophysical and Geological Data Supporting the Proposed New Bottom-Hole Location In 2013, Hendry Energy began engaging in production curve analysis of the existing wells in the Mid-Felda Field, conducted subsurface geological mapping of the Mid-Felda Field, and performed a 3D seismic survey of the Mid-Felda Field. Mr. Whitaker, a petroleum engineer, analyzed the historic production of the Mid-Felda Field, specifically production from the RCC 27-4 and the Turner 26-3 wells. This analysis was to determine whether there is additional recoverable oil that can be exploited from the Mid-Felda Field. Mr. Whitaker charted the field performance data as a graph of the production rate over time and the cumulative production versus the water to oil ratio. Using this analysis, he was able to determine that economically recoverable oil reserves likely remain in the Mid-Felda Field. Petroleum geologist Barry Falkner analyzed the subsurface geological data and developed reservoir maps for the Lower Sunniland C reservoir in the Mid-Felda Field. These maps depict the Top of Porosity, Average Permeability, and the Net Oil Pay Isopach, collectively describing the reservoir quality. Mr. Falkner also developed structural cross sections of the underground structure, on a north-south and east-west direction in the Mid-Felda Field. A 3D seismic study was conducted and analyzed by Charles Morrison, a petroleum geophysicist. The subsurface geological and geophysical seismic data revealed a structural high point at approximately 11,340 feet to 11,400 feet below ground level located on the section line between the southwest quarter of Section 26 (i.e., the routine drilling unit for the Turner 26-3 well, which was a producer) and the southeast quarter of Section 27 (i.e., the routine drilling unit for the RCC 27-4 well, which was a producer). RCC 27-4 and Turner 26-3 were drilled to depths of 11,686 feet and 11,518 feet respectively. These completion depths are both below the identified structural high point. As oil is produced, the water level in and around the well rises resulting in more water being produced and an increasing water-to-oil ratio. This phenomenon occurred in both RCC 27-4 and Turner 26-3 with the result that these wells are no longer economically productive. Accordingly, these two wells cannot extract oil reserves that may be present in the structure above their completion depths. A high point in the reservoir structure indicates a location where the presence of oil is likely. The geological and geophysical data indicate that the identified high point and point of thickness in the Sunniland C structure is a “closed contour,” which also indicates a trap of oil in the reservoir. The oil located at the top of a reservoir structure and above the completion depths of adjacent wells is also known as “attic oil.” Furthermore, a review of the subsurface geological data revealed a point of thickness in the reservoir structure as depicted on the map of the seismic data presented with net pay isopach for the Sunniland C structure. With the combined analysis of the field performance, the geophysical seismic interpretations, and the geological data, Hendry Energy identified the location of an optimal point in the subsurface structure from which Hendry Energy believes it can produce the most oil economically. This optimal point is located on the section line between the south halves of Section 26 and Section 27, between the existing RCC 27-4 and Turner 26-3 wells. Proposal to Reenter and Redrill Existing RCC 27-4 and Establish New Nonroutine Unit Based on the optimal extraction point identified through Hendry Energy’s geophysical and geological analysis of the Mid-Felda Field, Hendry Energy proposed to establish a new, nonroutine unit (consisting of the eastern half of the southeast quarter of Section 27 and the western half of the southwest quarter of Section 26), reenter the existing RCC 27-4 well, and drill a new horizontal well to the identified target bottom-hole location. Mr. Hancer, director of Hendry Petroleum, the parent company to Hendry Energy, testified that “[a]s a result of the studies that [Hendry Energy] conducted, the 3D seismic survey and the subsurface mapping and the production curve analysis, we discovered a structure that straddles the section lines between Sections 27 and 26, and we requested the establishment of a new drilling unit in order to be able to drill to that optimal bottom-hole location. And this application [Joint Exhibit 2] is a request for approval of that well.” The optimal target bottom-hole location cannot be reached by a routine, or statutory, drilling unit because of the setback requirements from section lines applicable to the bottom-hole location in routine units. See Fla. Admin. Code R. 62C-26.004(4)(a). However, establishing a nonroutine unit would allow Hendry Energy to access the target bottom-hole location. The proposed nonroutine unit is necessary to produce the “attic oil” that may exist at the proposed bottom-hole location. The identified optimal bottom-hole location is located approximately at the center of the proposed nonroutine unit, as required by section 377.25(3). Facts Regarding the Need to Horizontally Complete a New Bore to Access the Remaining Reserves from the Subsurface Structure To recover the remaining attic oil, Hendry Energy must hit a bottom-hole location at the top of the identified structure. A horizontal entry and a lateral completion of the well are required to economically drain the remaining attic oil reserves identified at this location in the Mid-Felda Field. The surface-hole location of the existing RCC 27-4 well is the optimal surface entry point to achieve a horizontal and lateral completion in the target bottom-hole location. Mr. Whitaker testified that “27-4 offers several different advantages, and we looked at this real closely, because, again, we’re all into – part of the exploitation effort is efficiency and that means capital efficiency and recovery efficiency. . . . And when you look at the geometry of where the wells sit and with the desired completion method, with the entry angle and then the lateral, 27-4 became the optimal point.” Facts Regarding the Drilling Application On April 12, 2016, Hendry Energy submitted an application for a permit to establish a new, nonroutine unit and drill a new horizontal well in the Mid-Felda Field in Hendry County, Florida (File No. 0904AH; PA No. 304674). By stipulation, except for the issue of preventing waste, the parties agree that Hendry Energy’s Oil and Gas Drilling Permit Application satisfies the criteria of chapter 377 and chapters 62C-26 through 62C-30, with regards to drilling a new oil well. Facts Regarding the Establishment of a Nonroutine Unit and the Prevention of Waste Rule 62C-26.004(6) provides: “The Department may grant drilling permits within shorter distances to adjacent drilling unit boundaries or on different drilling units than those prescribed in this rule whenever the Department determines that such steps are necessary to protect correlative rights or to prevent waste.” The terms “waste” and “physical waste” are statutorily defined as: The inefficient, excessive, or improper use or dissipation of reservoir energy; and the locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner that results, or tends to result, in reducing the quantity of oil or gas ultimately to be stored or recovered from any pool in this state. The inefficient storing of oil; and the locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner that causes, or tends to cause, unnecessary or excessive surface loss or destruction of oil or gas. The producing of oil or gas in a manner that causes unnecessary water channeling or coning. The operation of any oil well or wells with an inefficient gas-oil ratio. The drowning with water of any stratum or part thereof capable of producing oil or gas. The underground waste, however caused and whether or not defined. The creation of unnecessary fire hazards. The escape into the open air, from a well producing both oil and gas, of gas in excess of the amount that is necessary in the efficient drilling or operation of the well. The use of gas for the manufacture of carbon black. Permitting gas produced from a gas well to escape into the air. The abuse of the correlative rights and opportunities of each owner of oil and gas in a common reservoir due to nonuniform, disproportionate, and unratable withdrawals, causing undue drainage between tracts of land. § 377.19(31), Fla. Stat. The paragraphs of the definition specifically at issue were paragraphs (b), (f), and (k). Hendry Energy performed extensive geophysical and geological due diligence in the Mid-Felda Field to identify and assess the likelihood of finding producible quantities of oil in the field. As a result, Hendry Energy identified an optimal location in the subsurface structure of the Mid-Felda Field for exploiting oil reserves remaining in the field. This optimal target straddles the Section 26 and 27, Township 45 South, Range 28 East, section lines. Hendry Energy’s oil and gas drilling application proposes the establishment of a nonroutine drilling unit, consisting of 160 acres straddling Section 26 and 27. This proposed drilling unit consists of portions of two existing routine drilling units and wells, the RCC 27-4 and the Turner 26-3. Both wells previously produced oil in economic quantities until they were no longer economically viable. Hendry Energy’s application locates the nonroutine unit and the proposed bottom-hole at the optimal location for extracting any remaining oil. This is verified by the geophysical and geological analysis conducted. This target bottom-hole cannot be accessed from a routine drilling unit. As stated by Michael Whitaker, Hendry Energy’s expert in petroleum engineering, “[T]he statutory units as they exist today, even if we wanted to reactivate them, just physically don’t permit us to reach the target.” The drilling permit application proposes using existing surface infrastructure of the RCC 27-4 well. Using the existing surface-hole location and surface infrastructure of the RCC 27-4 well is the most efficient manner of draining the remaining reserves. The existing RCC 27-4 surface-hole is in the optimal location and provides the proper geometry for a lateral completion in the target bottom-hole. Not allowing the target bottom-hole location or attempting to drain the target point from another surface location would reduce the quantity of oil ultimately recovered and leave underground waste. Specifically, failure to authorize the permit for the well as proposed by Hendry Energy will prevent recovering the oil and thus leaving the oil underground without benefit to Hendry Energy or the mineral owners and other stakeholders. Mr. Hancer testified that a horizontal completion of the well allows the operator to more efficiently reach and drain oil from the underground structure. This increases the ultimate recovery and minimizes underground waste. Increased recovery equates to increased royalty payments. The remaining reserves are contained in an area that lies across the section lines of Section 26 and 27. The proposed nonroutine unit also lies across the section lines of Section 26 and 27. This proposed unit allows for a proportionate production of oil and therefore protects correlative rights. The proposed horizontal completion penetrates the structure in a way that encompasses portions of both Section 26 and 27, and therefore implicates the mineral owners in both sections. The proposed well will be draining the minerals of both parties, and thus paying royalties to both parties, creating a fair and equitable arrangement. Over 90 percent of the mineral rights in the proposed unit have been leased to Hendry Energy, evidencing the mineral owners’ desire to drain the reserves in the nonroutine unit. The greater weight of evidence supports that the nonroutine unit is necessary to prevent waste.
The Issue At issue in this proceeding is whether Respondent, a tool company, should be required to repay funds that the Department of Labor and Employment Security, Division of Workforce and Employment Opportunity (the "Department") alleges were erroneously paid under a North American Free Trade Agreement- Transitional Adjustment Assistance ("NAFTA" or "NAFTA-TAA") job training program for equipment that Respondent provided to two NAFTA-TAA trainees.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, the following findings of fact are made: The Department administers NAFTA-TAA, a job training program established under the provisions of the North American Free Trade Agreement and funded by the federal government. The program provides vocational training for employees adversely affected by trade agreements made by the United States with Canada and Latin America. Once a business is certified as "NAFTA eligible" based upon diminished employment opportunities attributable to international trade, the affected employees are referred to the Department for evaluation by a local NAFTA coordinator. In consultation with the Department's local NAFTA coordinator, a participant chooses from training programs taught at various public and private educational institutions and vocational training facilities. The student is provided a training allowance that includes the cost of tuition, books and fees. The Department arranges to pay training costs directly, and to pay vendors for the required books, tools and supplies. In this case, the Department alleges that two students participating in the NAFTA program purchased tools from Respondent that were not required for their training as automotive technicians. The Department alleges that, by providing tools not required for training and obtaining reimbursement therefor from the Department, Respondent acted in violation of the "rules and practices" of the NAFTA program. The Department offered no evidence that it has promulgated rules related to its administration of the NAFTA- TAA program, and offered no evidence of a Florida statute or of federal statutes, rules or policies governing the Department's administration of the program. The Department produced no documentation to indicate that it has developed official written policies regarding its administration of the NAFTA-TAA program. Henry Broomfield, the Department's statewide TAA coordinator, testified as to the actual operation of the program. Mr. Broomfield stated that the program pays for tuition, books and supplies for up to 104 weeks. He testified that the participating schools are required to present a list of the books, tools and supplies that the student will need during training, and that reimbursement is limited to the items on that list. Mr. Broomfield testified that the list is limited to items required for training, and does not include tools that students may need in the field after they complete their training. The student and the Department's local TAA coordinator are provided with copies of the list. Charles Thackrah, an instructor at P-Tech, testified as to the development of the approved book, tool and supply list at his institution. The list was developed over time by Mr. Thackrah and his fellow instructors, and includes the minimum basic hand tools required to complete the objectives of the program. The list was not developed specifically for the NAFTA program, but is the minimum tool list for all students enrolled in the automotive service technology course. Mr. Thackrah stated that P-Tech does not require the purchase of tools outside the list. Mr. Broomfield testified that when a student needs particular items on the list, the student must contact the local TAA coordinator, who authorizes the purchase from a third party vendor. When the student receives the tools, the third party vendor sends the bill to the local TAA coordinator, who then forwards the invoice to the state office for final approval. Mr. Broomfield testified that a request for an unlisted tool must be made in writing by the student's instructor. The student brings the written request to the local TAA coordinator, who forwards it to Mr. Broomfield's office for final approval. The instructor must verify that the requested tool is necessary for training. The evidence established that, aside from one incident in which a student obtained approval for a special pair of welding shoes, neither of the students in question followed the approval procedure for unlisted tools set forth by Mr. Broomfield. On February 13, 1998, Howard Spangler of Largo was enrolled in the NAFTA-TAA program by the Department's local coordinator for the Clearwater area, Margaret Brewer. Mr. Spangler was enrolled for training as an automotive technician. Also on that date, Mr. Spangler received a letter approving his request for training. The letter stated that his training would be provided by P-Tech "at a cost not to exceed $4,400.00." The letter stated that this amount "includes tuition, books, supplies and fees." Also on February 13, 1998, Ms. Brewer provided Mr. Spangler with an "Applicant Acknowledgement Form" stating that $2,400 would be allotted for "books, equipment, supplies and/or tools. This is the total amount allowed for the entire length of your training, be it a one-week, or a two-year course." The form stated that "books, special equipment, tools and uniforms will be limited to those items required by the school for every student." The form also stated that when the amount allotted for training materials has been exhausted, any additional costs must be borne by the student. Mr. Spangler signed the form, acknowledging that its contents had been "fully discussed" with him. The evidence established that Mr. Spangler obtained from Respondent tools that were not on the approved list at a total price of $4,336.92, and that the Department paid Respondent for those purchases. Mr. Spangler testified that he was aware of the limits set forth in the letter and acknowledgement form, and of the approved list of tools, but also testified that Ms. Brewer told him that he could purchase items not on the list with his instructor's approval. He stated that Ms. Brewer never told him that her approval was required for purchases of tools not on the list. Mr. Spangler testified that he approached Ms. Brewer about a pair of special shoes for his welding course. Although the welding shoes were on the approved list, Mr. Spangler wanted Ms. Brewer's approval for his purchase because he paid more for them than the price shown on the list. Mr. Spangler testified that during this conversation he also asked Ms. Brewer about purchasing tools not on the list, and that Ms. Brewer told him that he needed only his instructor's signature to obtain tools he would need in the field. Mr. Spangler understood the $4,400 limit on tuition, books, supplies and fees. Notwithstanding the limit, he purchased over $4,000 in tools alone from Respondent. He stated that he relied on Ms. Brewer's advice in making these purchases. Mr. Spangler testified that it would be difficult to hold a job in the field with only the tools included on the approved list, and that Ms. Brewer clearly imparted the understanding to him that he would be allowed to purchase whatever he needed for the field, if his instructor approved. Ms. Brewer testified that she always told the students that the state would not pay for tools outside of those on the list. She told the student that if he needed something special that the instructor believed was necessary to complete the course, then the student would have to bring her a letter from the instructor. She would then send the letter to Mr. Broomfield in Tallahassee for approval. Ms. Brewer recalled Mr. Spangler approaching her about approval for the welding shoes, but did not recall telling him that he could get approval for items outside the approved list. She testified that she would not have approved purchases of items not on the list without writing a letter of explanation to Mr. Broomfield and obtaining his final approval. The facts that Mr. Spangler approached Ms. Brewer for approval of the welding shoes, and that Ms. Brewer submitted this request to Tallahassee for final approval, tend to support Ms. Brewer's testimony as to what transpired between her and Mr. Spangler regarding the necessity of Department approval for items not on the approved list. Ms. Brewer testified that, as far as she knew, she had no independent authority to approve purchases outside the list. She stated that it was her understanding that the NAFTA program dealt strictly with the tools needed to complete the coursework, not with tools that students might need in the field after completing the courses. Ms. Brewer had no direct contact with the vendors, but relied on the students to convey the information regarding the NAFTA program to the vendors and to their instructors. Mr. Thackrah was Mr. Spangler's instructor, and testified that he did not tell Mr. Spangler that the NAFTA program would pay for tools that he would need in the field after completing his coursework. Mr. Thackrah stated that he did not have the responsibility to track the various programs that provided funding to his students, and that he did not know what the NAFTA program would provide. Mr. Thackrah testified that he was provided no written guidelines as what the NAFTA program would or would not pay for. He stated that anything he knew about the NAFTA program was conveyed to him by his students, who told him that NAFTA would cover anything they would need in the field. Mr. Thackrah recalled helping the students put together lists of tools they would need in the field. He assumed that NAFTA would pay for these tools, based on his students' explanation of the program. Mr. Thackrah testified that he might have passed along this understanding of the NAFTA program information to Keith Williams, Respondent's employee in charge of the P-Tech account. Mr. Thackrah did not believe he told Mr. Williams that the students were allowed to buy anything they wanted, but that Mr. Williams may have heard that from the students. Mr. Williams testified that he had an informal meeting with instructors at P-Tech, and that they told him that the NAFTA students were entitled to any tools that they would need in the field to perform an automotive technician's job. The instructors gave him no dollar limit on those purchases, and told him that the students needed only the instructors' approval to purchase the tools. Mr. Williams testified that these students must have "thought it was Christmas." Mr. Williams recalled that Mr. Thackrah was "probably" the person who gave him the information about NAFTA reimbursements. Mr. Williams testified that he took the P- Tech instructors at their word, because he had been dealing with them over the course of five years and never had a problem with reimbursements. On September 1, 1998, Robert Dennison of Pinellas Park was enrolled in the NAFTA-TAA program by the Department's local coordinator for the St. Petersburg area, Sylvia Wells- Moore. Mr. Dennison was enrolled for training as an automotive technician. Also on that date, Mr. Dennison received a letter approving his request for training. The letter stated that his training would be provided by P-Tech "at a cost not to exceed $3,950." The letter stated that this amount "includes tuition, books, supplies and fees." Also on September 1, 1998, Ms. Wells-Moore provided Mr. Dennison with an "Applicant Acknowledgement Form" stating that $450 would be allotted for "books, equipment, supplies and/or tools. This is the total amount allowed for the entire length of your training, be it a one-week, or a two year course." The form stated that "books, special equipment, tools and uniforms will be limited to those items required by the school for every student." The form also stated that when the amount allotted for training materials has been exhausted, any additional costs must be borne by the student. Mr. Dennison signed the form, acknowledging that its contents had been "fully discussed" with him. The evidence established that Mr. Dennison obtained from Respondent tools that were not on the approved list at a total price of $8,046.79, and that the Department paid Respondent for those purchases. Mr. Dennison testified that he looked at the list of approved tools and concluded that no one could do a mechanic's job with those tools. He asked Ms. Wells-Moore if other tools would be provided, and she said they would. Mr. Dennison did not recall whether Ms. Wells-Moore told him that he would need her approval for purchases outside the list. He testified that, as he understood the NAFTA program, he believed all the tools he purchased were authorized. Ms. Wells-Moore testified that her practice was to tell students that all their tools and supplies had to come from the approved list. She stated that students were required to come to the Department and obtain a voucher before making any purchases. The student would then take the voucher to the merchant and obtain the approved tools. The merchant is then responsible for sending the invoice to the Department of Labor for reimbursement. Documents entered into evidence at the hearing indicate that Ms. Wells-Moore provided written instructions to Jason Hoch, a salesman working for Respondent on the P-Tech account. These instructions were consistent with her description of the vouchering process. She sent these instructions by facsimile transmission on October 2, 1998, prior to the purchase of any of the unlisted tools by either Mr. Spangler or Mr. Dennison. Ms. Wells-Moore testified that she never told Mr. Dennison that he could purchase items that he would need in the field after completing his coursework. She stated that she was not authorized to approve such purchases. Ms. Wells-Moore testified that if a student approached her about a tool not on the list, her first step would be to contact the instructor to ask whether the student really needed the tool to complete the coursework. She recalled such a conversation with one of Mr. Dennison's instructors, and the instructor telling her that the unlisted tools in question were not required for the course. Richard Knight was Mr. Dennison's instructor at P- Tech. Mr. Knight provided Mr. Dennison with a copy of the approved list and told him that these were the minimum tools. Mr. Knight testified that he had no direct knowledge of the NAFTA program and was unaware of any authority he had to approve the purchase of tools not on the list. He never told Mr. Dennison that NAFTA would provide tools for use in the field. Mr. Knight stated that he never "approved" any tool purchases, but he did recall signing a list of tools that Mr. Dennison brought to him. He understood that his signature was to verify that these were tools that the student would find useful in the field. Mr. Knight never received any written guidelines from the Department as to allowable purchases under the NAFTA program. He recalled a former student in the NAFTA program who said that NAFTA would pay the students for anything they needed in the field. Mr. Knight testified that both Mr. Dennison and Mr. Spangler appeared to assume that NAFTA would pay for tools they would need in the field. Mr. Knight also conceded that he may have relayed the students' understanding to the Respondent's salespeople. Mr. Broomfield testified that he became aware of problems when a representative of Respondent called to complain that some of its invoices were not being paid. Mr. Broomfield could find no record of the invoices at issue. He investigated and discovered that Respondent was bypassing the local TAA coordinators and sending its invoices directly to Tallahassee, some to the wrong division within the Department. Mr. Broomfield testified that this explained why so many unauthorized purchases were reimbursed by the Department. When an invoice arrives at the Tallahassee office, it is assumed that the local TAA coordinator has investigated and approved the purchase. Under ordinary circumstances, the Tallahassee office does not conduct an item-by-item review; it merely processes the invoices and writes the checks. In summary, the evidence established that Mr. Spangler and Mr. Dennison purchased tools not on the approved P-Tech list valued at a total of $12,383.71. The evidence established that these students were provided written notice of the firm limits on the allotted costs for their training. The evidence established that Ms. Wells-Moore gave Respondent written notice of the proper procedure for processing its invoices, prior to any of the unauthorized purchases. The evidence established that Respondent bypassed this procedure, and was reimbursed for purchases that had not been approved at the local level. The evidence established that the Department was remiss in its administration of the NAFTA program. It has promulgated no written rules or policies setting forth the reimbursement limits of the NAFTA program. It provided no written guidelines to either the schools or the vendors regarding allowable purchases. Ms. Brewer frankly stated that she relied on the students to inform their schools and vendors as to the purchasing limits. Whether Messrs. Spangler and Dennison honestly believed their purchases were allowed, or whether they were manipulating the system, they might not have obtained the unauthorized items had the Department directly informed P-Tech of its reimbursement practices. The evidence supports the finding that Respondent at the least was aware that the NAFTA program appeared to be unusually liberal, and that Respondent should have made further inquiry. Mr. Williams likened the program to "Christmas" for its participants. He testified that the instructors explained that the students were entitled to tools they would need in the field. However, the instructors credibly testified that, if they told Mr. Williams such a thing, they were merely relaying what the students told them. At best, Respondent was content to rely on the information provided by the students rather than contacting the Department to seek confirmation. The fact that Respondent bypassed the local TAA coordinators, and offered no explanation for this breach of the billing procedure, supports an inference that Respondent's failure to inquire was not entirely innocent. The evidence established that Respondent knew or should have known that the purchases in question were not covered by the NAFTA program, absent prior approval from the local TAA coordinators and the central office in Tallahassee. The Department's failure to establish a system of informing schools and vendors of the program's requirements was sufficiently obviated in this case by Ms. Wells-Moore's contacts with Respondent's representative. Ms. Wells-Moore directly placed Respondent on notice of the Department's reimbursement practices, prior to the purchases by Messrs. Spangler and Dennison. At the hearing, Respondent asserted a claim that the Department still owes Respondent $14,119.59 for tools provided to Messrs. Spangler and Dennison. Given the findings of fact above, it is unnecessary to address this claim.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Department enter a final order providing that Respondent is indebted to the Department for NAFTA-TAA program overpayments in the amount of $12,383.71, and that Respondent shall repay the aforesaid amount within six months following entry of the final order. DONE AND ENTERED this 2nd day of February, 2001, in Tallahassee, Leon County, Florida. ___________________________________ LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of February, 2001. COPIES FURNISHED: Jacqueline Corbett, Credit Manager Nestor Sales Company, Inc. 7337 Bryan Dairy Road Largo, Florida 34647 Sonja P. Mathews, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Mary B. Hooks, Secretary Department of Labor and Employment Security The Hartman Building, Suite 303 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Sherri Wilkes-Cape, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189
Findings Of Fact Certain hospital equipment ("Equipment") was sold in 1973 and 1974 by Hospital Contract Consultants ("Vendor") to F & E Community Developers and Jackson Realty Builders (hereinafter referred to as "Purchasers") who simultaneously leased the Equipment to Petitioner. These companies are located in Indiana. At the time of purchase, Florida sales tax ("Tax") was paid by the Purchasers and on or about March 18, 1974, the tax was remitted to the State of Florida by the Vendor. However, the Tax was paid in the name of Medical Facilities Equipment Company, a subsidiary of Vendor. In 1976, the Department of Revenue audited Petitioner and on or about April 26, 1976 assessed a tax on purchases and rental of the Equipment. On or about April 26, 1976, petitioner agreed to pay the amount of the assessment on the purchases and rentals which included the Equipment, in monthly installments of approximately Ten Thousand and no/100 Dollars ($10,000.00) each and subsequently paid such amount of assessment with the last monthly installment paid on or about November 26, 1976. On or about December, 1976, the Department of Revenue, State of Florida, checked its records and could not find the Vendor registered to file and pay sales tax with the State of Florida. Petitioner then looked to the State of Indiana for a tax refund. On or about January 4, 1977, Petitioner filed for a refund of sales tax from the State of Florida in the amount of Thirty Five Thousand One Hundred Four and 02/100 Dollars ($35,104.02). This amount was the sales tax paid to and remitted by various vendors for certain other equipment purchased in 1973 and 1974 and simultaneously leased. The amount of this refund request was granted and paid. Relying upon the facts expressed in paragraph 4 heretofore, Petitioner on or about June 2, 1977 filed with the Department of Revenue of the State of Indiana for the refund of the Tax. On or about June 7, 1979, the Department of Revenue of Indiana determined that the Vendor was registered in the State of Florida as Medical Facilities Equipment Company and therefore Petitioner should obtain the refund of the Tax form the State of Florida. So advised, Petitioner then filed the request for amended refund, which is the subject of this lawsuit, on July 16, 1979 in the amount of Seventeen Thousand Two Hundred Sixteen and 28/100 Dollars ($17,216.28). This request for refund was denied by Respondent, Office of the Comptroller, on the basis of the three year statute of non-claim set forth in section 215.26, Florida Statutes. Purchasers have assigned all rights, title and interest in sales and use tax refunds to Petitioner. During the audit of Petitioner in 1976 the lease arrangement on the equipment apparently came to light and Petitioner was advised sales tax was due on the rentals paid for the equipment. This resulted in an assessment against Petitioner of some $80,000 which was paid at the rate of $10,000 per month, with the last installment in November, 1976. The auditor advised Petitioner that a refund of sales tax on the purchase of this equipment was payable and he checked the Department's records for those companies registered as dealers in Florida. These records disclosed that sales taxes on the sale of some of this rental equipment had been remitted by the sellers of the equipment but Hospital Contract Consultants was not registered. Petitioner was advised to claim a refund of this sales tax from Indiana, the State of domicile of Hospital Contract Consultants. By letter on March 18, 1974, Amedco Inc., the parent company of wholly owned Hospital Contract Consultants, Inc. had advised the Florida Department of Revenue that Medical Facilities Equipment Company, another subsidiary, would report under ID No. 78-23-20785-79 which had previously been assigned to Hospital Contract Consultants Inc. which had erroneously applied for this registration. (Exhibit 2) Not stated in that letter but contained in Indiana Department of Revenue letter of April 18, 1979 was the information that the name of Hospital Contract Consultants had been changed to Medical Facilities Equipment Company. The request for the refund of some $17,000 submitted to Indiana in 1976 was finally denied in 1979 after research by the Indiana Department of Revenue showed the sales tax had been paid to Florida and not to Indiana.
The Issue The issue presented is whether, pursuant to Section 376.3072, Florida Statutes, Petitioner, Asher G. Sullivan, Jr., d/b/a St. Augustine Trust, is eligible for restoration coverage pursuant to the Florida Petroleum Liability Restoration and Insurance Program (FPLRIP), Section 376.3072, Florida Statutes.
Findings Of Fact Asher G. Sullivan, Jr., owns and is the trustee of the Asher G. Sullivan, Jr. St. Augustine Trust (Trust). The Trust owns a Florida Department of Environmental Protection Facility known as Café Erotica Restaurant, 2620 S.R. 207, Elkton, Florida 32033, FDEP Facility No. 558515938. See Endnote 1. The Trust purchased the property in or around 1995. Neither Mr. Sullivan nor the Trust ever operated a petroleum facility or a gas station on the property. However, the property, when purchased by the Trust, had underground petroleum storage tanks. (The parties stipulated that all of the parties have standing.) Intervenors, Assad O. Knio and Selma Knio, formerly owned the property, and currently hold the mortgage on the property. The Department is charged with the statutory responsibility pursuant to Section 376.3072, to determine whether facilities are eligible to participate in FPLRIP. Insurance and Eligibility A Certificate of Insurance was issued by Commerce & Industry Insurance Company to Asher G. Sullivan, Jr. St. Augustine Trust, certifying "that it has issued liability insurance covering the following underground storage tank(s): CHEVRON-207 2630 SR 207 ELKTON FL 32033 7 Tanks."1 The effective date of the Certificate of Insurance, Policy No. FPL8079861, was September 3, 1997, and the period of coverage was from September 3, 1997, to September 3, 1998. The limits of liability are $1 million for each loss and $1 million for all losses, exclusive of legal defense costs. (Mr. Sullivan believed that a similar certificate of insurance and policy covered the facility's tanks on the property between September 1996 and September 1997 which was renewed thereafter.) The Certificate of Insurance was issued for taking corrective action and compensating third parties for bodily injury and property damage caused by sudden accidental releases and non-sudden accidental releases, in accordance with and subject to the limits of liability exclusions, conditions and other terms of the policy arising from operating the underground storage tank(s) identified above. Subparagraphs 2.d. and e. of the Certificate of Insurance provide: Cancellation or any other termination of the insurance by the 'Insurer', except for non-payment of premium and misrepresentation by the insured, will be effective only upon written notice and only after the expiration of 60 days after a copy of such written notice is received by the insured. Cancellation for non-payment of premium or misrepresentation by the insured will be effective only upon written notice and only after expiration of a minimum of 10 days after a copy of such written notice is received by the insured. The insurance covers claims otherwise covered by the policy that are reported to the 'Insurer' within six months of the effective date of cancellation or non-renewal of the policy except where the new or renewed policy has the same retroactive date or a retroactive date earlier than that of the prior policy, and which arise out of any covered occurrence that commenced after the policy retroactive date if applicable and prior to such policy renewal or termination date. Claims reported under such extended reporting period are subject to the terms, conditions, limits, including limits of liability and exclusions of the policy. The authorized agent of the insurer certified, at the bottom of page two of the Certificate, "that the wording of this instrument is identical to the wording in 40 CFR 280.97(b)(2) and that the 'Insurer' is licensed to transact the business of insurance in one or more states." See 40 C.F.R. Section 280.97(b)(2)2.d. and e. See Finding of Fact 50. Petitioner's Exhibit 1 was issued by Commerce & Industry Insurance Company, and is entitled "Florida Storage Tank Third-Party Liability and Corrective Action Policy (Policy)." It is more than a fair inference that this is the Policy referred to in the Certificate of Insurance. This Policy states that it is a Claims-Made-and-Reported policy for third party liability coverage. It is a Release- Reported Policy for corrective action coverage. This policy is site-specific: only scheduled tanks are covered. This insurance is excess over any restoration (corrective action) funding for storage tanks whose owners qualify for and are eligible for reimbursement from the Florida Inland Protection Trust Fund as part of the Restoration Insurance Program of the Florida Petroleum Liability and Restoration and Insurance Program. The Policy provides conditions for cancellation and non-renewal and, in part, states: "B.1. The NAMED INSURED may cancel this policy by mailing or delivering to the Company advance written notice of cancellation. 2. If this policy has been in effect for more than ninety (90) days the Company may cancel this policy or the coverage afforded by this policy with respect to a particular Storage Tank System only for one or more of the following reasons: a. Nonpayment of premium " (Emphasis in original.) Condition B.3. provides: "If the Company cancels this policy for [nonpayment of premium], the Company will mail or deliver to the Named Insured first listed in the Declarations, written notice of cancellation, accompanied by the reasons for cancellation at least" ten days before the effective date of cancellation. (Emphasis in original.) Conditions B.4.a. and b. of the Policy provide: Non-Renewal: If the Company decides not to renew this policy the Company will mail or deliver to the Named Insured written notice of nonrenewal, accompanied by the reason for nonrenewal, accompanied by the reason for nonrenewal, at least forty-five (45) days prior to the expiration of this policy. Any notice of nonrenewal will be mailed or delivered to the Named Insured's last mailing address known to the Company. If notice is mailed, proof of mailing will be sufficient proof of notice. (Emphasis in original.) On or about September 12, 1997, the Department issued2 a "Notice of Eligibility" (Notice) to Asher G. Sullivan, Jr. St. Augustine Trust, for a term of eligibility effective September 3, 1997, and an expiration date of September 3, 1998.3 This Notice related to Petroleum Liability and Restoration Insurance Program Coverage. The Notice also stated: The following operator/operator [Asher G. Sullivan Jr. St. Augustine Trust] has demonstrated financial responsibility for third party liability for contamination related to the storage of regulated petroleum products and is therefore eligible for Restoration Coverage under the Petroleum Restoration Insurance Program, Section 376.3072, Florida Statutes, for the facilities listed on the attached sheet(s), contingent upon continued compliance with Chapter 376, F.S., and Chapter 62-761, F.A.C. and/or 62-762, F.A.C. (Consistent with the Certificate of Insurance mentioned above, the facility name is Chevron-207.) FPLRIP provides third-party liability and excess coverage to owners and/or operators who have registered storage tank systems, such as underground storage tanks (USTs). There are several ways to demonstrate financial responsibility, including, but not limited to, obtaining insurance, as here. See Fla. Admin. Code R. 62-761.400(3). As an owner of USTs, Petitioner was required to demonstrate financial responsibility in the amount of $1 million per occurrence and $1 million on an annual aggregate amount. 40 C.F.R. Section 280.93(a)(1) and (b)(1); Fla. Admin. Code R. 62-761.400(3)(b). Participation in FPLRIP was voluntary to the extent that not every owner or operator of a UST, such as Petitioner, was required to participate in this state program, notwithstanding the state and federal requirements that financial responsibility be demonstrated by virtue of ownership or operation of a UST. See, e.g., Sections 376.301(18) and 376.309; Fla. Admin. Code R. 62-761.400(3); 40 C.F.R. Section 280.93. However, if insurance, such as the insurance policy obtained in this case, was chosen as the financial responsibility mechanism, participation in FPLRIP was required because federal law required first dollar coverage for financial responsibility. 40 C.F.R. Section 280.93(a)(1) and (b)(1). Stated otherwise, here, the Policy had a $150,000 deductible, and FPLRIP provides the first $150,000 worth of coverage, subject to a deductible. Section 376.3072(2)(d)2.d. See also Fla. Admin. Code R. 62-761.400(3)(a)3. ("Financial responsibility requirements for petroleum storage systems containing petroleum products may be supplemented by participation in the [FPLRIP] to the extent provided in Section 376.3072, F.S.") Because Petitioner chose insurance as the financial responsibility mechanism, the Department relied on the Certificate of Insurance to determine the financial responsibility of Petitioner of the Chevron-207 facility. Once this Certificate of Insurance was issued, the Department issued a Notice of Eligibility to the Petitioner, so the facility could be eligible to participate in FPLRIP. See Endnotes 3 and 5. The Department determined that Petitioner demonstrated financial responsibility under FPLRIP for a term of one year, here from September 3, 1997, through September 3, 1998. This meant that, under the Department's interpretation of FPLRIP by Lewis J. Cornman, Environmental Manager for the Department,4 a discharge would be covered under FPLRIP only if it occurred and was discovered during the insurance policy period (here September 3, 1997 through September 3, 1998) set forth in the Notice of Eligibility. See (T: 67-70, 75-77, and 83.) A penalty or deductible amount may be imposed if the discharge is not reported to the Department in a timely fashion, i.e., within 24 hours after discovery of the discharge (suspected release). Section 376.3072(2)(d)2.f.(I). (Thus, the filing of an untimely report would not affect coverage or eligibility under FPLRIP.) (T: 68-69.) Mr. Fagin, an expert witness testifying on behalf of Intervenors, opined that FPLRIP "is a discovery and reporting period program," which means that Petitioner is not eligible under FPLRIP because the date of discovery and report of the discharge was subsequent to the end of the insurance policy period, September 3, 1998, unless the Policy period is extended. Mr. Fagin focused on Section 376.3072(2)(b)4., which states in part: "Upon report of a discharge, the department shall issue an order stating that the site is eligible for restoration coverage unless the insured . . . cannot demonstrate that he or she has obtained and maintained the financial responsibility for third-party claims and excess coverage as required by subparagraph 2."5 Mr. Fagin reads this subsection to require that "upon report of a discharge," a facility owner, such as Petitioner, must maintain financial responsibility (here maintain a policy of insurance) on the date the discharge was discovered, here September 15, 1998, and reported, here September 17, 1998. (T: 106, 108, and 113.) For Mr. Fagin, the crux of the issue is whether Petitioner's insurance policy was effective on September 15, 1998, and September 17, 1998. The answer to this question, for Mr. Fagin, is whether the 10 or 60-day provisions set forth in Subparagraph 2.d. of the Certificate of Insurance, see Finding of Fact 6, apply to extend the Policy past September 3, 1998, and through September 15 and 17, 1998. For Mr. Fagin, it does not matter if the discharge was discovered prior to September 3, 1998, because of his and Mr. Cornman's interpretation of Subsection 376.3072(2)(b)4. See Finding of Fact 39. Mr. Fagin opines that the 10-day provision applies here, extending the Policy expiration date (or the effective date of cancellation or non-renewal) at least until September 21, 1998, 10 days after the September 11, 1998 letter, see Finding of Fact 25. (T: 91-92.) See also Endnote 9. Mr. Fagin believes the Department's (Mr. Cornman) interpretation, see Finding of Fact 15, is reasonable even if, according to Mr. Fagin, it may lead to a potentially absurd result whereby there may be insurance coverage under the terms of the Policy (but no coverage under FPLRIP) when a discharge is reported within the six-month extended reporting period (after the expiration of the Policy) and if the discharge occurred during the term of the Policy, here prior to September 3, 1998. See Findings of Fact 40-44, finding that the discharge occurred at Petitioner's facility prior to September 3, 1998. The Policy is Not Renewed by Petitioner or Terminated by the Insurer By letter dated August 2, 1998, Ben Harrison, Account Manager for FPLIPA,6 wrote Mr. Sullivan a letter addressed to Asher G. Sullivan, Jr. St. Augustine Trust, referencing Policy FPL8079861, the subject of the Notice of Eligibility and Certificate of Insurance, and stated: In May, 1998 we mailed renewal application to be used in renewing reference policy. We requested that application be returned to us by July 3, 1998. To date, we have not received the required paperwork that would allow us to quote this account. Please forward application and affidavit and any tight test information that you have concerning underground tanks. We cannot quote this account without the required paperwork. Policy cannot be renewed if paperwork is not received. Mr. Sullivan received the August 2, 1998, letter prior to September 3, 1998. Mr. Sullivan had the opportunity to renew the Policy before September 3, 1998. (T: 23, 30.) Mr. Sullivan did not respond to the August 2, 1998, letter "[b]ecause [according to Mr. Sullivan] the tanks were due to be pulled out before September the 3rd." (T: 29-30.) Mr. Sullivan thought, in reference to the August 2, 1998, letter, that if he did not "sign and renew the application, there would not be any insurance after September 3rd." In other words, Mr. Sullivan did not make any attempt prior to September 3, 1998, to renew the Policy, including providing any information to the insurance company or its agent, Mr. Harrison. (T: 30.) Mr. Sullivan did not mail or deliver or otherwise give any notice of cancellation of the Policy to the insurance company, or its agent. (T: 41-42.) Mr. Sullivan maintains that he had insurance coverage for the discharge in question "[b]ecause there was a six-month tail-end coverage, and also [he] was supposed to be notified by the insurance company within 10 days of the cancellation of insurance." (T: 40.) (But, Mr. Sullivan defers to his legal counsel regarding coverage issues.) (T: 45.) Mr. Sullivan stated that he did not receive a letter from the insurance company or FPLRIP until the September 11, 1998, letter that the insurance would be cancelled. (T: 40.) He interpreted this letter to mean that the Policy would not be renewed. (T: 20.) On September 11, 1998, Mr. Harrison advised Mr. Sullivan, by letter, that the Policy expired on September 3, 1998, and stated: If policy holder has not been approved by the Department of Environmental Protection under another EPA approved financial responsibility mechanish [sic], policy holder no longer has access to the State Restoration Fund for new discharges. Excess coverage over the State Fund has also expired. We have had no response from the renewal application that we mailed out nor from my letter of Aug [sic] 2, 1998 stating that we could not quote the account nor bound without the application and affidavit. If you have any questions on how to reinstate the policy please call us at 1- 800-475-4055. (Emphasis in original.) Mr. Harrison testified by deposition. In 1989, he began working for the Florida Petroleum Liability Insurance Program Administrators in Cocoa, Florida. His duties included issuing quotes, mailing out renewal paperwork applications, and upon receipt, converting "the indications into policies once the money and appropriate paperwork comes in." FPLIPA began with the issuance of third-party liability insurance. When the State of Florida began reducing the amount that they would provide for cleanup, FPLIPA provided, through AIG, the excess coverage that was required. According to Mr. Harrison, the Policy at issue in this case, was terminated because the Petitioner did not renew it. Mr. Harrison refers to his September 11, 1998, letter, as a "letter informing [Mr. Sullivan] that his coverage had lapsed" or expired. Mr. Harrison did not intend that either his August 2, or September 11, 1998, letters be considered as notice(s) of termination or cancellation of the Policy. Mr. Harrison was the account manager on all of the files related to Mr. Sullivan. Mr. Harrison stated that if the Policy was to be terminated, he would have had to notify Petitioner in writing and if the Policy was not going to be renewed by the insurance company, he would have had to notify Petitioner in writing 60 days prior to the renewal date. Mr. Harrison advised that termination letters are furnished by FPLIPA for an insurance company, here referring to AIG.7 Discovery and Reporting of the Discharge Several petroleum USTs were located at the facility and on the property owned by the Trust. After a one to two-week delay, on or about September 15, 1998, the storage tanks were removed from the property by a contractor who Mr. Sullivan believes was named Pipeline Industries (Pipeline).8 The removal operation was performed over the course of several days. During the course of removal, Pipeline informed him that there was a discharge of petroleum found on the property. The tanks on the property were removed intact on September 15, 1998. At that time, it was certified that the tanks were empty, and were removed without holes in them. (It appears that the Department reported the tanks as empty in February 1996.) (T: 128, 146.) Pipeline filed a Discharge Report Form with the Department on September 17, 1998. This Form recites that a discharge was confirmed on the property on September 15, 1998. Within less than a week, upon learning of the discharge, Mr. Sullivan's right-hand-man, J.C. Brunel, advised Commerce & Industry Insurance Company that the storage tanks had been removed and that there was a discharge. Thereafter, and on some unknown date, the insurance company advised Mr. Sullivan that no coverage would be provided. Mr. Sullivan was made aware of the existence of the storage tanks before the Trust bought the property. He believes that the last time that the site was used as a gasoline station was probably in 1992. Mr. Sullivan was not aware of any other spills or discharges that might have occurred on the property other than what was reported by Pipeline in September 1998. Mr. Sullivan has no personal knowledge when the discharge occurred. He was on the property on and off at the time when Pipeline removed the storage tanks, but probably not on-site when the tanks were actually removed. Pipeline could have caused the discharge, but it is uncertain. Mr. Sullivan relied upon his hired experts (ECT) to determine when the petroleum discharge occurred, the extent of the discharge, and the cost of the clean-up. The Discharge As noted above, the Discharge Report Form indicates confirmation of a discharge on September 15, 1998. The Department contends that the discharge occurred on September 15, 1998, after the insurance policy expired on September 3, 1998. Mr. Cornman determined that the site was ineligible because the site was not properly enrolled in FPLRIP because Petitioner did not maintain financial responsibility when the discharge occurred after the time period of coverage, i.e., after the Policy expired on September 3, 1998. This position was based on the Notice of Eligibility which states the coverage existed from September 3, 1997 through September 3, 1998. See also Findings of Fact 10 and 15. Petitioner contends, in part, that the discharge occurred during the policy period, i.e., prior to September 3, 1998, and was timely reported during the extended reporting period. In the alternative, Petitioner contends that the Policy was never properly terminated or cancelled by the insurance company or its agent (by not providing appropriate notice of termination or cancellation) and, as a result, the Policy was still effective on September 15, 1998, and September 17, 1998, the dates when the discharge was discovered and the report submitted to the Department, respectively. Thus, Petitioner contends that Petitioner is eligible under FPLRIP, having maintained insurance coverage through and including the report of discharge. See Finding of Fact 18. The only scientific evidence presented in this case as to when the petroleum discharge occurred on the property was elicited from Dr. William Case Zegel. Dr. Zegel has a chemical engineering undergraduate degree; and a doctor of science degree in chemical engineering. Dr. Zegel has been associated with Water and Air Research, Incorporated, in Gainesville, Florida, since 1979. He is president of the company and principal engineer. He is a licensed professional engineer in the State of Florida. Dr. Zegel has substantial experience in determining how chemicals are released into the environment. Dr. Zegel is familiar with the property at issue in this proceeding. He was on-site for a day. He spent approximately 100 hours analyzing the site conditions and the petroleum discharge related to the property owned by Petitioner. Further, he reviewed data collected by "ECT," in particular, two sets of data taken about 600 days apart. From this data, he could determine how things changed on the property. He also performed what is called "reverse modeling" to determine when a discharge may have occurred on the property. While stating that the modeling, and the estimates derived therefrom, are not precise as to a particular day or month, Dr. Zegel stated that one estimate indicated that the discharge occurred before March 12, 1999, and a second wave of modeling indicated that the discharge occurred in November 1998. (T: 124, 140.) After identifying specific details of the available data, and his analysis, Dr. Zegel's opined that the discharge occurred prior to September 15, 1998, and that the release into the environment occurred before that date. He also opined that the discharge on the property occurred perhaps as early as 1996. It is not probable that the discharge would have occurred after September 15, 1998. It seems odd that no discharge was detected prior to September 15, 1998, given the status of the tanks. Nevertheless, Dr. Zegel's testimony is credible and persuasive. The weight of the evidence, including no expert opinion to the contrary, supports the finding that the discharge reported to the Department on September 17, 1998, occurred prior to September 3, 1998, although the specific date of the discharge is unknown. Petitioner's Application for Coverage under FPLRIP Mr. Sullivan, on behalf of the Trust, applied, with the Department, for restoration coverage for the discharge under FPLRIP. On October 21, 2002, the Department issued a letter to Mr. Sullivan on behalf of the Trust, denying FPLRIP eligibility, stating that the facility was ineligible because the facility was not "properly enrolled in FRLRIP after September 3, 1998." Stated otherwise, the Department determined that the site was ineligible because the site was not properly enrolled in FPLRIP and Petitioner did not maintain financial responsibility because the discharge occurred after coverage expired on September 3, 1998. The Department relied on the dates in the Notice of Eligibility generated by FPLIPA as agent for the Department in determining the denial of Petitioner's request. As of the October 21, 2002, letter, and when Mr. Cornman testified, the only information provided the Department regarding the date of discharge was the discharge confirmation date (September 15, 1998) reported by Petitioner on September 17, 1998. The Environmental Protection Agency's (EPA) Regulations and Interpretations In 1988, the EPA promulgated financial responsibility requirements applicable to owners and operators of USTs containing petroleum, which included amendments to 40 C.F.R. Part 280, Subpart H. See 53 Fed. Reg. 433322, 1988 WL 258482 (Oct. 26, 1988) for the EPA's explanation of the regulations. See also 52 Fed. Reg. 12786, 1987 WL 131023 (April 17, 1987.) In 1989, the EPA amended several provisions of 40 C.F.R. Part 280, Subpart H and, material here, 40 C.F.R. Sections 280.97(b)(1) and (b)(2), pertaining to financial responsibility requirements for UST's containing petroleum. The 1989 amendments refined required language of endorsements to existing insurance policies and certificates of insurance for insurance and risk retention group coverage. See 54 Fed. Reg. 47077-02, 1989 WL 287711 (Nov. 9, 1989) for the EPA's explanation of the amendments. Currently, 40 C.F.R. Section 280.97 deals with "[i]nsurance and risk retention group coverage." Subsection 280.97(a), provides: "An owner or operator may satisfy the requirements of [Section] 290.93 [sic] by obtaining liability insurance that conforms to the requirements of this section from a qualified insurer or risk retention group. Such insurance may be in the form of a separate insurance policy or an endorsement to an existing insurance policy." Subsection 280.97(b) provides in part: "Each insurance policy must be amended by an endorsement, worded as specified in paragraph (b)(1), or evidenced by a certificate of insurance worded as specified in paragraph (b)(2) of this section . . . ." Pertinent here, Subsections 280.97(b)(2)2.d. and e. provide: Cancellation or any other termination of the insurance by the ["Insurer" or "Group"] will be effective only upon written notice and only after the expiration of 60 days after a copy of such written notice is received by the insured. Cancellation for non-payment of premium or misrepresentation by the insured will be effective only upon written notice and only after expiration of a minimum of 10 days after a copy of such written notice is received by the insured. [Insert for claims-made policies: The insurance covers claims otherwise covered by the policy that are reported to the ["Insurer" or "Group"] within six months of the effective date of cancellation or non- renewal of the policy except where the new or renewed policy has the same retroactive date or a retroactive date earlier than that of the prior policy, and which arise out of any covered occurrence that commenced prior to such policy retroactive date, if applicable, and prior to such policy renewal or termination date. Claims reported under such extended reporting period are subject to the terms, conditions, limits, including limits of liability, and exclusions of the policy.] * * * The issues confronting the EPA in 1989, and which prompted the revisions set forth above, pertained to, in part, the EPA's efforts to make clear that the mandatory language in the certificate of insurance (Subsection 280.97(b)(2)2.e.) "requires that a claims-made insurance contract cover claims for any occurrence that commenced during the term of the policy and that is discovered and reported to the insurer within six months of the effective date of the cancellation or other termination of the policy." 54 Fed. Reg. at 47079. "This provision was meant to address concerns that a claims-made policy might leave a gap in coverage if, for example, a claim is reported after the expiration of a policy for a release that began prior to the policy expiration date." Id. The issue for the EPA was whether insurers should be required to provide an extended reporting period and the EPA stated its intention "that insurers provide extended reporting period coverage only where the termination or non-renewal of the policy results in the owner or operator having no coverage for releases that occurred during the time period of the previous policy and which are reported within six months after the termination or non-renewal of that policy. For discussion purposes, EPA has labeled this predicament as a 'gap' in coverage." Id. The EPA identified "only two situations where the termination of a policy results in a 'gap' in coverage, and thus only two situations where the insured whose policy is terminated must obtain extended reporting period coverage. The first situation occurs when the insured renews his existing policy or purchases a new policy and the renewed policy contains a retroactive date subsequent to the retroactive date of the insured's previous insurance policy. The second situation occurs where the policy is terminated or is not otherwise renewed and the insured elects a financial assurance mechanism other than insurance (such as a guarantee, surety bond, etc.) as a replacement. EPA is today promulgating revised language to clarify EPA's intended interpretation of paragraph 2.e. of the Endorsement contained in [Subsection 280.97(b)(1)] and of paragraph 2.e. of the Certification contained in [Subsection] 280.97(b)(2)." Additionally, the EPA defines "termination," as used in Subsections 280.97(b)(1) and (2), to mean "only those changes that could result in a gap in coverage as where the insured has not obtained substitute coverage or has obtained substitute coverage with a different retroactive date than the retroactive date of the original policy." 40 C.F.R. Section 280.92; 54 Fed. Reg. at 47080. Relevant here, the EPA amended Subsections 280.97(b)(1)d., 280.97(b)(2)d., and 280.105(a)(2) [now 280.109(a)(2)] to allow an insurer to terminate an insurance contract for non-payment of premium or misrepresentation by the insured after a 10 day notice period. EPA does not intend for this shortening of the coverage period from 60 to 10 days to apply to termination for any reason other than non-payment of premium or misrepresentation. The Agency is aware that some state insurance laws mandate a longer period following cancellation. In order to accommodate these state-specific situations, the amended language of [Section] 280.97(b)(1) Endorsement paragraph d and [Section] 280.105(a)(2) [now 280.109(a)(2)] specifies that the mandatory coverage period following termination for non-payment of premium or misrepresentation shall be a 'minimum of 10 days.' The insurer is still bound to provide the owner or operator with written notice of cancellation with the 10 day period beginning upon receipt of notice by the owner or operator. 54 Fed. Reg. at 47080. See also Endnote 9. Conversely, the EPA expressly did not amend the requirement for a six-month extended reporting period following cancellation for non-payment of premium or misrepresentation. As noted in the previous section, the [EPA] believes that such a reporting period must be mandatory for all claims-made insurance contracts used to demonstrate financial assurance, regardless for the reason for termination. The six-month extended reporting period is essential to avoiding gaps in coverage that could threaten human health and environment, especially in cases where the owner or operator may have as few as 10 days upon receipt of notice of cancellation to obtain substitute coverage. The distinction between the two provisions, extended reporting period and the effective date of cancellation, is that even if a policy is cancelled for non- payment of premium, the extended reporting period merely extends the time during which an insured may report occurrences covered by the policy for which he or she has already paid. Thus the extended reporting provision does not provide the insured with a benefit for which he or she has not paid. In contrast, any delay in the effective date of a policy cancellation or termination due to regulatory requirements provides insureds who failed to pay their premium coverage for which they have not paid. Id. at 47080-47081.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection enter a final order that Petitioner is not eligible for restoration coverage under FPLRIP. DONE AND ENTERED this 12th day of November, 2003, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS 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 12th day of November, 2003.
Findings Of Fact The Application On June 28, 1985, Petitioner, Frank Edward B1anco (Blanco), filed an application with Respondent, Department of Banking and Finance (Department), for registration as an associated person with Rothschild Equity Management Group, Inc. Pertinent to this proceeding, the application provided: Have you ever: been the subject of a major complaint or legal proceeding? E. been the subject of any order, judgment, decree or other sanction of a foreign court, foreign exchange, or foreign governmental or regulatory agency? * * * While associated in any capacity in the securities, commodities, investment advisory, real estate, banking or insurance industry or any other business have you ever: * * * C. had any temporary or permanent injunction or administrative order entered against you or any broker, dealer, investment advisor, municipal securities dealer, bank or commodities firm with which you were associated in any capacity at the time such injunction was entered? Blanco answered "yes" to each of the foregoing questions, and in response to his obligation to provide "complete details" advised that he had been named in a cease and desist order by the State of Missouri while associated with Precious Metals International, Inc., (PMI), and a cease and desist order by the State of Florida, Department of Banking and Finance, arising from his association with First Petroleum Corporation of America (First Petroleum). On August 12, 1985, Blanco filed an amendment to his application, and in so doing advised the Department that he had agreed to enter into "what is the equivalent of a Consent Decree" in the case of the Commodity Futures Trading Commission and the State of Florida, Department of Banking and Finance v. Precious Metals International, Inc., Executive Control Corporation, and Frank Blanco, et al, then pending in the United States District Court, Southern District of Florida. By Order of October 5, 1985, the Department denied Blanco's application for registration as an associated person predicated, inter alia, or Blanco's failure to disclose an injunction entered against him in the case of Federal Trade Commission v. First Petroleum, Blanco, et al, United States District Court, Southern District of Florida, Case No. 82-2744- CIV, and his unworthiness to transact business as an associated person. Blanco filed a timely request for a formal hearing. The Background Mr. Blanco was employed from September 198 to November 1982 by First Petroleum as a salesman and, ultimately, Executive Vice President (sales manager and recruiter). From December 1983 to December 1984 he was the president and sales manager of Precious Metals International, Inc. (PHI), and from December 1984 to January 1985 the "Director of Consulting" for Executive Control Corporation (the "administrative branch" for PMI). By complaint for injunctive and other relief filed in the United States District Court, Southern District of Florida, Case No. 82-2744-CIV, the Federal Trade Commission sued First Petroleum, Blanco, and others (Defendants) for violations of Section 5(a) of the Federal Trade Commission Act (FTC Act), 15 U.S.C. 45(a), regarding unfair or deceptive acts or practices. Specifically, the complaint alleged that Defendants misrepresented certain material facts in their solicitation of the sale of filing, evaluation and advisory services to consumers in connection with the Federal Simultaneous Oil and Gas Leasing System (SIMOL System). On April 6, 1983, the court entered a "Stipulated Final Order and Judgment."1 In its order, the court found: Defendants First Petroleum Corporation of America,... Frank E. Blanco,... ("defendants") may have misrepresented their past success in obtaining oil and gas mineral rights in the Federal Simultaneous Oil and Gas Leasing System (SIMOL System), the level of competition for such rights, and the value of rights obtained through the program; Defendants may have deceptively failed to disclose in oral sales presentations and written sales materials the true number parcels of land for which they obtained oil and gas leasing rights for their customers and the true number of attempts to obtain such rights. The Court enjoined the defendants from misrepresenting, orally or in writing, the past or likely future success of defendants' customers in obtaining oil or gas lease rights through the SIMOL System or any program which makes such rights available to the public; misrepresenting, orally or in writing, the number of competing applications for lease rights that are filed, or are likely to be filed; representing orally or in writing, that parcels defendants select for their clients contain oil or gas; or making any false or deceptive claims concerning past or likely future earnings of defendants' customers. The court also ordered that the defendants, jointly or severally, contribute to an escrow account established by the Federal Trade Commission the sum of $125,000 as redress for customers who may have been injured by the alleged deceptive practices. Blanco paid $25,000 into the escrow account. By complaint for injunctive and other relief filed in the United States District Court, Southern District of Florida, Case No. 85-6705-CIV, the Commodity Futures Trading Commission (CFTC) and the State of Florida, Department of Banking and 1 Finance, sued Precious Metals International, Inc. (PMI), Executive Control Corporation (ECC), Blanco, and others (Defendants) for the use of unfair, misleading, false and deceptive sales practices in the sale of "physical deferred payment" contracts for precious metals, and the unlawful operation of a "boiler room" within the State of Florida. On September 27, 1985, the court entered a final judgment and permanent injunction with the Defendants' consent, but without any adjudication on the merits and without the Defendants admitting or denying the allegations of the complaint. In its final judgment, the court found that the defendants, "without admitting or denying" had violated Section 4(a) of the Commodity Exchange Act, in that they had solicited orders in connection with contracts for the purchase and sale of commodities for future delivery without such transactions having been conducted on or subject to the rules of a board of trade designated by the CFTC as a "contract market", without such contracts having been executed or consummated through a member of such "contract market", and without such contracts having been evidenced by a record in writing showing the date, the parties, their addresses, the property, its price and terms of delivery. The court also found that the defendants, "without admitting or denying" had violated Section 4(b) of the Commodity Exchange Act, in that they had cheated, defrauded, and willfully deceived, or had attempted to cheat, defraud or deceive, customers in connection with contracts for the purchase and sale of commodities for future delivery. Finally, the court found that the defendants, "without admitting or denying" had also violated Section 517.301 and 517.312, Florida Statutes, by operating a boiler room selling commodities future contracts or "investments" as defined in Section 517.021(11), Florida Statutes, and by making various oral and written untrue and misleading representations which defendants knew or should have known were untrue and misleading.2 The court enjoined the defendants, including Blanco, from the future commission of the aforesaid offenses; appointed a receiver for PMI and ECC to take control of their assets, wind-up their business operations, remove the individual defendants from control and management of PHI and ECC, and to satisfy the claims of customers; and ordered Blanco to disgorge $28,000, payable $10,000 within 30 days of the entry of judgment and $1,500 per month for one year. Blanco has made the payments required by the court's order. On March 25, 1985, In the matter of Precious Metals International, Inc., Frank Blanco and Merrill Porte, 2 (Respondents), file No. CD-85-7, the State of Missouri, Secretary of State, Division of Securities, entered an order to cease and desist against Respondents. In its order, the Commissioner of Securities found that Respondents had violated section 409.201, 409.301, 409.101 and 409.408 of the Missouri Statutes by engaging in broker-dealer and agent activities within the state without being properly registered; by selling unregistered securities in a fraudulent manner; and by failing to file a statement of exemption with the Commissioner. Respondents were ordered to cease and desist from the offer or sale of unregistered or exempt securities in violation of section 409.301, Missouri Statutes. BLANCO'S RESPONSE Blanco asserts that his failure to disclose the final order entered in Federal Trade Commission v. First Petroleum, Blanco, et al, on his application to the Department was inadvertent. Blanco claims he "inadvertently thought" it was part of the cease and desist order entered by the State of Florida, Department of Banking and Finance, against First Petroleum. Blanco's assertion is inherently improbable. The cease and desist order entered by the Department was, as Blanco knew, reversed on appeal. Blanco paid $25,000 under the final order entered in the Federal Trade Commission case. These matters were hardly subject to confusion. An evaluation of Blanco's proof in this case is glaring in its absence of substance. With respect to the injunctions rendered against him in the Federal Trade Commission v. First Petroleum, Blanco, et al, and the Commodity Futures Trading Commission v. PMI, B1anco, et al, cases, Blanco offered no evidence concerning the validity of the charges, the propriety of the injunctions, or any exculpatory or mitigative proof. Regarding the Missouri case, Blanco averred that it arose because of misrepresentations made by PMI salesman Merrill Ponte (Ponte).3 At the time in question, however, Blanco was the president and sales manager of PMI, and responsible for assuring that sales personnel did not make misrepresentations. Blanco offered no proof that he was unaware of Ponte's activities, or that Ponte's activities were unauthorized.4
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
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint issued against him and, if so, what disciplinary action should be taken against him.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Respondent is now, and has been at all times material to the instant matter, registered as a septic tank contractor with the Department. In July 2002, Respondent entered into a contract with Pro Gold Investments Corp. (Pro Gold), whose president and sole owner is Emerico Kemeny Fuller. The contract provided that Respondent would install a "new septic system" for Pro Gold at 453 Blue Road in Coral Gables, Florida (Blue Road Property) for $4,600.00, a job that should have taken only a "few days" to complete. Pro Gold gave Respondent a "job deposit" of $2,300.00. In July 2003, Pro Gold, by Warranty Deed, conveyed title to the Blue Road Property to Maurits de Blank's company, Mortgage Lending Company LLC (MLC), and it also executed a Bill of Sale, Absolute and Assignments of Contracts, which read as follows: PRO GOLD INVESTMENTS CORP, as Seller, in consideration of Ten Dollars ($10.00) and other valuable consideration paid to it by MORTGAGE LENDING COMPANY, LLC, as Buyer, the receipt of which is acknowledged hereby sells, assigns, grants, transfers, and conveys to Buyer all of Seller's right, title, and interest in the following described goods, contracts and personal property: SEE ATTACHED EXHIBIT "A- PROPERTY" AND EXHIBIT "B- CONTRACTS ASSIGNED" Seller covenants and agrees that it is the lawful owner of goods, contracts, rights or interests transferred hereby; that they are free from all encumbrances, except for outstanding amounts due, if any, to those parties set forth on Exhibit "B," and that it has the right to sell, transfer and assign the goods, properties and rights set forth in the attached Exhibit "A," and the right to transfer and assign the contracts, rights or interests shown on Exhibit "B," and will warrant and defend same against the lawful claims and demands or all persons. The "attached Exhibit 'A- Property'" read, in pertinent part, as follows: (Regarding transfer of 453 Blue Road, Coral Gables, Florida, "the Real Property") (Mortgage currently in favor of Mortgage Lending Company, LLC "the Mortgage") All property rights of any kind whatsoever, whether in property that is real, fixed, personal, mixed or otherwise and whether in property that is tangible or intangible, including, without limitation, all property rights in all property of any kind whatsoever that is owned or hereafter acquired by the Company and that is associated with, appurtenant to or used in the operation of the Real Property or is located on, at or upon the Real Property and is associated with or used in connection with or in operation of any business activity conducted on, at or upon the Real Property, and including, without limitation, the following: * * * All right, title, and interest in those certain contracts and agreements [set] forth in the attached Exhibit "B," which are hereby transferred and assigned to Mortgage Lending Company LLC. Among the "contracts and agreements [set] forth in the attached Exhibit 'B,'" was the aforementioned July 2002, contract wherein Respondent agreed to install a "new septic system" for Pro Gold on the Blue Road Property (Septic System Contract). This contract was still executory. Respondent had not done any work on the site in the year that had passed since the contract had been signed. In the beginning of August 2003, Mr. de Blank met with Respondent and advised him that MLC was the new owner of the Blue Road Property and that MLC had also received an assignment of the Septic System Contract from Pro Gold. In response to this advisement, Respondent stated "he did not do assignments." Following this meeting, Mr. de Blank sent Respondent documentation supporting the assertions he had made regarding MLC's ownership of the Blue Road Property and its having been assigned the Septic System Contract. Mr. de Blank then attempted, unsuccessfully, to make contact with Respondent by telephone. He "left messages," but his telephone calls were not returned. These efforts to telephonically communicate with Respondent having failed, Mr. de Blank "decided that it may make some sense to start a letter writing program." As part of that "program," on September 8, 2003, Mr. de Blank sent Respondent the following letter: Re: 453 Blue Road, Coral Gables As background, and in chronological order: Pro Gold Investments purchased the above cited property and obtained a construction loan from our firm. One of the conditions was that all construction contracts would be assignable to our firm in the event of default. Pro Gold Investments entered into contract with your firm to install a new septic tank and drainfield at 453 Blue Road. Pro Gold Investments defaults and forfeits title in lieu of foreclosure. The deed was recorded on August 4, 2003, at Bk/Pg: 21484/4283. Not recorded but attached for your reference is an assignment of contracts to include the contract Pro Gold Investments entered into with your firm. See further attachment. The original can be inspected in my office. At this point, I request you proceed with the work as soon as practical and under identical conditions as originally agreed with Pro Gold Investments. Please call me at . . . to confirm a start date. Mr. de Blank did not receive any response to his letter. He finally was able, however, to reach Respondent on the telephone. During this telephone conversation, Mr. de Blank made arrangements to meet Respondent at the Blue Road Property to discuss Respondent's doing the work Respondent had agreed to do in the Septic System Contract. This meeting between Mr. de Blank and Respondent took place on September 11, 2003. During the meeting, Mr. de Blank went over with Respondent "what the job [was] going to be." Although Respondent indicated that he was "going to put in th[e] septic tank" per the Septic System Contract, Mr. de Blank had his doubts that Respondent would be true to his word. Following the meeting, Mr. de Blank sent Respondent the following letter: Re: 453 Blue Road, Coral Gables We met today to discuss the above referenced job. My understanding is: You will start the job no later than the first week of October and will complete the job no later th[a]n the last week of October. I will obtain a copy of the approved permit. You indicated you will not need a survey.[1] Should you change you[r] mind, you can always refer to a survey I keep on site. You will have your insurance agent mail to my address a certificate of insurance. Though not discussed: I would like a partial release of payments made to date for the job. See further the attachment. Assuming you concur, then please send a signed and notarized copy to Maurits de Blank, Mortgage Lending Company, Post Office Box 430336, Miami, Florida 33143. Note that I prefer for various legal reasons that you use the release form as provided. Once the job has been started, I would like a list of firms supplying materials to the job. Notwithstanding that he had promised Mr. de Blank that he would "start the job no later than the first week of October," by the middle of October Respondent had yet to even "pull a septic tank construction permit from the City of Coral Gables" (that was needed before any on-site work could begin).2 In an attempt to find out from Respondent what was the cause of the delay, Mr. de Blank started a "calling campaign," but Respondent neither answered the telephone when Mr. de Blank called nor returned Mr. de Blank's calls. On October 19, 2003, Mr. de Blank sent the following letter to Respondent (by certified United States Mail, return receipt requested): Re: 453 Blue Road, Coral Gables I need a firm commitment when you will start and finish septic tank at above address. If you cannot perform the work, then I will need a refund of the deposit given to your firm. Please call to discuss. The end of the month was fast approaching, and Respondent had neither contacted Mr. de Blank nor begun the Septic System Contract on-site work. After paying a visit to Coral Gables City Hall and learning that Respondent had still not even "pull[ed] a septic tank construction permit from the City of Coral Gables," Mr. De Blank found another septic tank contractor, Westland Septic Tank Corp., to do the installation work for MLC that Respondent was contractually obligated to perform. MLC paid Westland $4,400.00 to do the work. Westland completed the job some time prior to November 4, 2003. The work passed all of the necessary inspections. Upon learning that MLC had contracted with Westland, Respondent sent Mr. de Blank a letter complaining that Mr. de Blank had not given Respondent an adequate opportunity to meet his obligations under the Septic System Contract. In the letter, Respondent offered to return only $500.00 of the $2,300 down payment he had received from Pro Gold. Mr. de Blank subsequently informed Respondent that this was not satisfactory and that he wanted the "full deposit back." He added that if he did not get it, he would "go to court." Not having received any portion of the "deposit back," Mr. de Blank, acting on behalf of MLC, in mid-November 2003, filed suit against Respondent in Miami-Dade County Court. On May 14, 2004, a Final Judgment was entered in Miami-Dade County Court Case No. 0313813 in favor of MLC and against Respondent "in the amount of $1,675.00 plus court costs in the amount of $121.00." As of the date of the final hearing in this case, Respondent had not made any payments to MLC. In view of the foregoing, it is found that Respondent abandoned for 30 consecutive days, without any apparent good cause, a project in which he was under contractual obligation to complete; and his failure to go forward with the project, combined with his failure to return any of the deposit he had received, caused monetary harm to a party to whom he was contractually obligated.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby: RECOMMENDED that the Department issue a final order finding Respondent guilty of the misconduct alleged in the Administrative Complaint and disciplining him therefor by fining him $500.00 and suspending his registration for 90 days. DONE AND ENTERED this 4th day of February, 2005, in Tallahassee, Leon County, Florida. S STUART M. LERNER 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 4th day of February, 2005.
