The Issue There are three legal issues which remain for determination: (1) Whether Florida Petroleum has standing in this case; (2) Whether proposed rule 62-770.220(3)(b), requiring constructive notice to residents or business tenants of real property into which the temporary point of compliance is allowed to extend is an invalid exercise of delegated legislative authority within the meaning of Section 120.52(8)(c), Florida Statutes; and (3) Whether proposed rule 62-770.220(4), requiring additional constructive notice of the status of site rehabilitation is an invalid exercise of delegated legislative authority within the meaning of Section 120.52(8)(c), Florida Statutes.i
Findings Of Fact On December 23, 2004, the Department published a Notice of Proposed Rulemaking regarding amendments to Florida Administrative Code Chapter 62-770. In particular, proposed rule 62-770.220(3)(b) and (4), provides: Subsequent Notice of Contamination Beyond Source Property Boundaries for Establishment of a Temporary Point of Compliance (TPOC) - Prior to the Department authorizing a temporary extension of the point of compliance beyond the boundary of the source property (i.e., the location from which the contamination originates) in conjunction with Natural Attenuation Monitoring pursuant to Rule 62-770.690, F.A.C., or Active Remediation pursuant to Rule 62-770.700, F.A.C., the PRSP shall provide the following notices: * * * (b) Constructive notice to residents [if different from the real property owner(s) notified pursuant to paragraph 62- 770.220(3)(a), F.A.C.] and business tenants of any real property into which the point of compliance is allowed to extend. Such constructive notice, which shall include the same information as required in the actual notice, shall be provided by complying with the following: * * * Status Update 5-Year Notice - When utilizing a TPOC beyond the boundary of the source property to facilitate natural attenuation monitoring or active remediation, an additional notice concerning the status of the site rehabilitation shall be similarly provided every five years to [the classes of] those persons who received notice pursuant to subsection 62-770.220(3), F.A.C., unless in the intervening time, such persons have been informed that the contamination no longer affects the property into which the point of compliance was allowed to extend. * * * (The language in brackets was added pursuant to the Department's Notice of Change and "those" was deleted.) The proposed rule implements Section 376.3071, Florida Statutes. The specific authority for the proposed rule is Sections 376.303 and 376.3071, Florida Statutes. On February 2, 2005, the Environmental Regulation Commission held a public hearing on the proposed rules and approved the proposed rules with certain amendments. On February 14, 2005, Florida Petroleum filed a Petition for Determination of Invalidity of Proposed Rule (Petition) challenging the validity of proposed amendments to proposed rule 62-770.220(3)(b) and (4). The Petition was filed pursuant to Section 120.56(1) and (2), Florida Statutes, and in each instance, Florida Petroleum alleges that the proposed rule violates Section 120.52(8)(c), Florida Statutes. On March 4, 2005, the Department published a Notice of Change regarding the above-referenced Notice of Proposed Rulemaking. With respect to the pending proceeding, the Notice of Change reflects revisions to language of proposed rule 62- 770.220(4), which are not subject to challenge. See Finding of Fact 1. On May 16, 2005, without objection, official recognition was taken of the Department's Notice of Proposed Rulemaking and Notice of Change. Florida Petroleum is a Florida voluntary, non-profit trade association, which comprise, in part, approximately 194 Marketer Members who own and/or operate petroleum storage system facilities in Florida. Florida Petroleum’s purposes include providing representation on behalf of its members in legislative and regulatory matters before the Florida legislature and agencies. Florida Petroleum routinely represents its members in rule development proceeding and other regulatory matters before the Department of Environmental Protection, Department of Revenue, and Department of Agriculture and Consumer Services. Florida Petroleum’s By-Laws state that its purposes include advancing the business concerns of its members, pooling the energy and resources of its members, and communicating with elected officials at the national, state, and local levels of government. Towards those ends, Florida Petroleum has represented it members before the Florida Legislature in matters relating to the regulation of petroleum facilities under Chapter 376, Florida Statutes, and has appeared before the Department in rulemaking proceedings involving the regulation of petroleum cleanups, and the various state restoration funding assistance programs. The subject matter of the rule at issue is within the general scope of interest and activity of Florida Petroleum, in particular, its marketer members, who own or operate facilities that store petroleum products for consumption, use, or sale. Florida Petroleum submitted oral and written comments, recommendations, objections, and proposed amendments to the Department and the Environmental Regulation Commission in connection with the rules at issue in this case. A substantial number of Florida Petroleum marketer members are "persons responsible" for assessment and remediation of one or more petroleum-contaminated sites. Florida Administrative Code Chapter 62-770, governs the remediation of petroleum-contaminated sites. A substantial number of Florida Petroleum’s marketer members are "persons responsible" for assessment and remediation of sites identified by the Department as "confirmed" or "suspected" sources of contamination beyond the boundary of the facility (i.e., "off-site contamination"). In certain instances, the Department's rules allow for the use of No Further Action with Conditions procedures in cases of petroleum contamination where applicable regulatory requirements are met because the use of conditions, such as institutional and engineering controls, may be more cost- effective than active remediation. As of February 2005, the Department estimated that it had reports of approximately 23,000 petroleum-contaminated sites. In 2004, the Department received an estimated 539 Discharge Report Forms in connection with petroleum storage facilities. As of March 2005, the Department had information indicating that approximately 2,000 "off-site" properties have been affected by contamination. Assessment Reports filed with the Department indicate that a substantial number of these sites may have been affected by discharges of petroleum or petroleum products. Petroleum discharges will in all likelihood continue to occur in the future at petroleum facilities. Petroleum discharges will in all likelihood continue to affect off-site properties in the future.
Findings Of Fact Since 1984, the Department has been the state agency charged with the responsibility to establish rules and regulate underground pollutant storage facilities in Florida. In 1988, the Legislature added the administration of the newly enacted Florida Petroleum Liability and Restoration Program to the Department's duties. The program was to be established on or before January 1, 1989. The Applicant is the owner of a petroleum storage system in Jacksonville, Florida. Since 1984, it has been subject to the rules regarding underground pollutant storage facilities promulgated by the Department. On September 18, 1989, an odor indicative of possible petroleum contamination was discovered at the site during the installation of monitoring wells. A Discharge Notification Form was sent to the Department by the Applicant on October 23, 1989. The form advised that there were no leaks in the system. It was suggested that the odor may have resulted from surface spill at the site over a number of years. In response to the notification, an inspection of the site was completed by the Department on December 5, 1989. The inspection revealed the following on-site violations: Registration requirements were not being met. The forms had not been updated to include the presence of monitoring wells and overfill protection at the facility. Two underground tanks had not been properly abandoned. Inventory and reconciliation records had not been properly maintained, as required by rule since 1987. This violation was reviewed, and discussed in detail with on-site representatives of the Applicant. The monitoring wells were not installed by the time deadlines set forth in the Department's rules regarding stationary tanks. Since the wells were installed in September 1989, samples had not been taken for visual signs of petroleum contamination. The purpose of the system is to allow the owner of the storage tanks to learn if there is a leak in the tanks that can be quickly controlled to limit contamination. The day after the inspection, the Applicant applied for a determination of eligibility for participation in the restoration coverage portion of the new Florida Petroleum Liability Insurance and Liability Program. An affidavit was signed stating that all of the Department's rules regarding stationary tanks were being complied with by the Applicant. Six days after the inspection, the Department sent the Applicant written notice of the results of the inspection. The Applicant was given time frames and instructions for correcting the listed violations that could be corrected. A contamination assessment and clean up were also required in the letter. This letter did not address the issue of eligibility for the restoration funding program because that was a matter unrelated to the inspection results. On March 7, 1990, the Department determined the facility was ineligible for participation in the restoration funding provided by the Florida Petroleum Liability and Coverage Program. The following reasons were given: Failure to properly abandon underground storage tanks, pursuant to Section 17-61.050(3)(c), Florida Administrative Code. Failure to maintain inventory records, reconciliations, and significant loss/gain investigation as per Section 17-61.050(4)(c), Florida Administrative Code. Failure to install monitoring system and overfill protection by the dates set forth in Section 17-61.06(2)(c)2, Florida Administrative Code. Failure to properly monitor leak detection system, pursuant to Section 17-61.050(5)(c), Florida Administrative Code. The 10,000 gallon fuel oil tank and the 3,000 gallon waste oil tank present at the facility were abandoned in March 1990. The notice issued by the Department after its inspection in December 1989, gave the Applicant sixty days after receipt of the notice to properly abandon the tanks. The Applicant substantially complied with this requirement after the written notice was received. Although the Applicant failed to maintain the inventory records, reconciliations, and significant loss/gain investigations required by the Department rules, some of these violations had been corrected prior to the Department's inspection in December 1989. Correct inventory recordkeeping was discussed during the inspection, and the need to immediately implement the proper recordkeeping practices was emphasized in the post-inspection notice of violations. All of the recordkeeping violations were not cured until August 1990. The records kept by the Applicant during the noncompliance period from 1984 to August 1990, did not provide a substantially equivalent degree of information regarding possible leak detection or prohibited discharges as the required recordkeeping procedures. Two underground stationary storage tanks on the site have been part of the Applicant's petroleum storage system since 1970 and 1975, respectively. The monitoring wells and overfill protection for these tanks should have been in place by December 31, 1987. Neither monitoring system was installed until September 1989. The Applicant began the contract negotiations for installation in September 1988. The Applicant did not demonstrate that the facility contained an alternative procedure between December 31, 1987 and September 1989, that provided a substantially equivalent degree of protection for the lands, surface waters, or groundwaters of the state as the established requirement for monitoring wells and overfill protection. In December 1989, the Department's notice advised the Applicant that the monitoring wells should be sampled monthly for visual signs of petroleum contamination. Since April 1990, the Applicant has been completing the monthly sampling in the monitoring wells as part of its leak detection system, as required by the Department's rule regarding underground stationary tanks.
Recommendation Accordingly, it is RECOMMENDED: That the Department enter a Final Order denying Petitioner's application for restoration coverage in the Florida Petroleum Liability and Restoration Program at the Jacksonville location. DONE and ENTERED this 28 day of December, 1990, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this _28_ day of December, 1990. APPENDIX TO RECOMMENDED ORDER The proposed findings of fact submitted by Petitioner are addressed as follows: Rejected. Improper interpretation of law. As for the facts in the first sentence, they are accepted. See HO #8. Rejected. Irrelevant. See HO #9. Rejected. Contrary to fact. See HO #9 and #11. Rejected. Contract to fact. See HO #11. Rejected. Contrary to fact. See HO #12 and #13. Rejected. Contrary to fact. Improper shifting of duty ad legal responsibility. Rejected . Improper application of law. The Respondent's proposed findings of fact are addressed as follows: Accepted. Accepted. Accepted. Accepted. See HO #8. Accepted. See HO #8. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #5. Accepted. Accepted. See HO #4. Accepted. See HO #4. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #4 and #6. Accepted. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #9. Accepted. See HO #4 and #10. Accepted. Rejected. Contrary to fact. See HO #10. Accepted. Accepted. Accepted. See HO #10. Accepted. See HO #3 and #12. Accepted. Accepted. See HO #13. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #6. Accepted. Rejected. Not established by evidence. See HO #6. Accepted. Accepted. Accepted. Accepted. See HO #7. Accepted. Accepted. COPIES FURNISHED: William Chadeayne, Qualified Representative 8933 Western Way, Suite 16 Jacksonville, Florida 32256 Janet E. Bowman, Esquire Assistant General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400
The Issue The issues presented in the case are whether Respondents P & L Salvage and Marlene Ballard are liable for violations of state statutes and rules, as alleged in the amended NOV, and, if so, whether the proposed corrective action is appropriate, and whether the proposed civil penalties and costs should be paid by Respondents.
Findings Of Fact The Parties The Department is the state agency charged with the power and duty to administer and enforce the provisions of Chapters 376 and 403, Florida Statutes, and the rules promulgated in Florida Administrative Code Title 62. Respondent P & L Salvage, Inc., is a Florida corporation. P & L Salvage owned and operated an automobile salvage yard at 4535 and 4537 West 45th Street in West Palm Beach, Florida (the “property,” “facility,” or “site”). The property comprises less than two acres. Respondent Marlene Ballard is a Florida resident and the president, treasurer, secretary, and director of P & L Salvage, Inc. Historical Use of the Site Beginning in the 1960s, the site was used as an auto salvage yard, first under the name Johnny’s Junkyard and later as General Truck Parts. In 1981, the owner of the salvage yard, Marie Arant, sold the facility. The record is not clear about the exact identity of the purchaser. The Alliance report, referred to later, states that the property was purchased by “the Ballard family.” The record evidence is insufficient to prove that Marlene Ballard ever owned the salvage yard. The parties agree that the salvage yard was operated for a time as P & L Salvage, which was unincorporated. Then, in January 1990, the site was purchased by Respondent P & L Salvage, Inc., which owned the site continuously until January 2007. Marlene Ballard lived in a house on the site from the 1980s until the property was sold in 2007. A separate building at the site was used as P & L Salvage’s office. The general operation of the salvage yard was to bring junk cars and trucks to the site, remove fluids from the vehicles, remove parts for sale, and then crush the dismantled vehicles in a hydraulic crusher to prepare them for transport and sale as scrap metal. The automotive fluids removed from the junked cars were stored on the site in 55-gallon drums for later disposal. Respondents presented evidence to show that the person who had the most knowledge of and managed the day-to-day operations in the salvage yard was an employee named John Boyd. When John Boyd ceased employment at the salvage yard, Marlene Ballard’s son, Thomas Ballard, took over the management of the yard. Respondents contend that no evidence was presented that Marlene Ballard conducted or participated in any activities that resulted in contamination, or that she had authority to prevent any potential contamination that might have occurred. However, Ms. Ballard was familiar with the activities in the yard, having worked and lived on the site for many years. She did the bookkeeping and signed payroll checks. All employees answered to Ms. Ballard. She contracted for environmental assessment and remediation work, and signed the hazardous waste manifests. She was acquainted with the contamination that could and did occur at the salvage yard. Eagle Sanitation, Inc., which operated a roll-off container business, leased the site from September 2005 until January 2007. Eagle Sanitation also obtained an option to purchase the property. At first, Eagle Sanitation only leased about a quarter of the site because there were many junk autos, tires, and other salvage debris still on the site in September 2005. For several months, Thomas Ballard continued to sell auto parts and scrap from the site, and to clear the site. Eagle Sanitation did not have complete use of the site until early in 2006. Eagle Sanitation’s business consisted of delivering roll-off containers for a fee to contractors and others for the disposal of construction debris and other solid waste, and then picking up the containers and arranging for disposal at the county landfill or, in some cases, recycling of the materials. Roll-off containers at the site were usually empty, but sometimes trucks with full containers would be parked at the site overnight or over the weekend. During its lease of the site, Eagle Sanitation did not collect used oil or gasoline and did not provide roll-off containers to automotive businesses. No claim was made that Eagle Sanitation caused any contamination found at the site. Contamination at the Site In 1989, Marlene Ballard contracted with Goldcoast Engineering & Testing Company (Goldcoast) to perform a “Phase II” environmental audit. Goldcoast collected and analyzed groundwater and soil samples and produced a report. Cadmium, chromium, and lead were found in the soil samples collected by Goldcoast. Some petroleum contamination was also detected in soils. These pollutants are all associated with automotive fluids. The Goldcoast report states that groundwater samples did not indicate the presence of pollutants in concentrations above any state standard. The Goldcoast report did not address the timing of discharges of contaminating substances that occurred at the site, except that such discharges had to have occurred before the report was issued in 1989. That is before the property was purchased by P & L Salvage, Inc. During an unannounced inspection of the salvage yard by two Department employees on August 15, 1997, oil and other automotive fluids were observed on the ground at the site in the “disassembly area” and around the crusher. There were also stains on the ground that appeared to have been made by automotive fluids. No samples of the fluids were taken or analyzed at the time of the inspection. The Department inspectors told Marlene Ballard to cease discharging fluids onto the ground, but no enforcement action was initiated by the Department. Ms. Ballard was also told that she should consider removing the soil where the discharged fluids and staining were observed. In early 1998, RS Environmental was hired to excavate and remove soils from the site. This evidence was presumably presented by Respondents to indicate that they remediated the contaminated soils observed by the Department inspectors, but no details were offered about the area excavated to make this clear. In 2004, in conjunction with a proposed sale of the site, another Phase II investigation of the site was done by Professional Services Industries, Inc. (PSI), and a report was issued by PSI in May 2004. The PSI report is hearsay and, as such, cannot support a finding of fact regarding the matters stated in the report. Presumably as a result of its knowledge of the PSI report, the Department issued a certified letter to Ms. Ballard on June 24, 2005, informing her that the Department was aware of methyl tert-butyl ethylene (MTBE) contamination at the facility. MTBE is an octane enhancer added to gasoline. The Department’s June 2005 letter advised Ms. Ballard that Florida Administrative Code Chapter 62-780 required “responsible parties” to file a site assessment report (SAR) within 270 days of becoming aware of such contamination. The letter also informed Ms. Ballard of the proximity of the City of Riviera Beach’s wellfield and the threat that represented to public drinking water. The June 2005 letter was returned to the Department unsigned. In October 2005, the Department arranged to have the letter to Marlene Ballard served by the Palm Beach County Sheriff’s Office. The Department received a confirmation of service document that shows the letter was served by a deputy on October 14, 2005, but this document is hearsay and does not support a finding that Ms. Ballard had knowledge of the contents of the letter. The Department did not receive an SAR within 270 days, but no enforcement action was immediately initiated. On December 15, 2006, the Department issued a six- count NOV to P & L. Salvage, Inc. P & L Salvage requested a hearing and the matter was referred to DOAH. In January 2007, in conjunction with Eagle Sanitation’s proposed sale of its purchase option to Prime Realty Capital, LLC, Alliance Consulting & Environmental Services, Inc., (Alliance) conducted a site assessment at the site and produced an SAR in April 2007. At that time, as indicated above, P & L Salvage had ceased operations at the site and Eagle Sanitation was operating its roll-off container business there. The SAR states that in January 2007, “[a]pproximately 80 yards of black stained oily-solidified shallow sands were excavated [by Eagle Sanitation] from the central and northeastern portions of the site, where car crushing, fluid draining and battery removal were historically conducted.” The soil contained lead, iron, chromium, cadmium, and arsenic, but testing did not show the excavated soils constituted hazardous materials and, therefore, the soils were disposed at the county landfill. The area of soils where the Department inspectors in 1997 observed automotive fluids and staining appears to have been included in the soils that were excavated and removed in 2007. The Department presented no evidence to the contrary. Testing by Alliance of other soils at the site showed “no significant petroleum metals concentrations” and Alliance did not recommend the removal of other soils. The presence of an MTBE “plume” of approximately 30,000 square feet (horizontal dimension) was also described in the SAR. The plume is in the area where the crusher was located. Several groundwater samples from the site showed MTBE in concentrations above the target cleanup limit. The City of Riviera Beach operates a public water supply wellfield near the site. The closest water well is approximately 250 feet from the site. The SAR concludes that “the potential exists for the MTBE plume to be pulled downward” toward the well, and recommends that a risk assessment be performed. Alliance recommended in the SAR that the MTBE contamination be remediated with “in-situ bioremediation” with oxygen enhancement. No remediation has occurred on the site since the date of the Alliance report. The Alliance report did not address the timing of contaminating discharges that occurred at the site. To the extent that Alliance reported contamination in 2007 that was not reported in the 1989 Goldcoast report, that is not sufficient, standing alone, to meet the Department’s burden of proof to show that P & L Salvage, Inc., caused “new” contamination after 1989. Competent evidence was not presented that the Alliance report describes “new” contamination. The authors of the reports were not called as witnesses. No expert testimony was presented on whether the data in the reports can establish the timing of contaminating discharges. It is not the role of the Administrative Law Judge, nor does he have the requisite expertise, to compare the environmental assessments conducted by Goldcoast and Alliance and make judgments about whether some of the contamination reported by Alliance had to have occurred after 1989. Although the Department’s expert, Paul Wierzbicki, testified that it was his opinion that the contamination was attributable to the “operations of the P & L Salvage yard facility,” he was answering a question about “what caused the contamination” and, in context, his testimony only confirmed that the type of contamination shown in the photographs and reported in the site assessment reports was the type of contamination associated with auto salvage yards. Mr. Wiezbicki’s testimony is not evidence which can support a finding that the contamination at the site, other than the automotive fluids and stained soils observed by the Department inspectors in 1997, was caused by P & L Salvage, Inc.1 On June 12, 2007, after reviewing the Site Assessment Report, the Department issued a letter to Marlene Ballard, requesting additional data and analysis. At the hearing, the Department presented a responding letter from Alliance dated June 21, 2007. It was disputed whether the Alliance letter is evidence of Ms. Ballard’s receipt and knowledge of the Department’s June 12, letter. However, even if Ms. Ballard did not know about the Department’s letter in June 2007, she certainly became aware of the letter in the course of this proceeding. The amended NOV issued in January 2008 mentions the letter, and the letter was listed as an exhibit in the parties’ June 4, 2008 Pre-hearing Stipulation. On January 24, 2008, the Department issued an amended NOV which dropped three counts from the original NOV and added two new counts. Most significantly, the amended NOV added Marlene Ballard and Thomas Ballard as Respondents. P & L Salvage and Marlene Ballard responded to the amended NOV with petitions for hearing. Thomas Ballard did not respond. At the hearing, the Department presented testimony of employees that were involved in this enforcement action regarding the value of their time expended on various tasks associated with this case. Bridget Armstrong spent eight hours inspecting the site of the contamination, eight hours drafting the NOV and consent order, approximately 30 hours reviewing technical documents, and 15 hours corresponding with Respondents. Ms. Armstrong’s salary at the time was about $20.00 per hour. Paul Wierzbicki spent 16 hours investigating facilities in the area, reviewing the contamination assessment reports, and overseeing the enforcement activity of his subordinates. Mr. Wierzbicki was paid $33.00 per hour. Kathleen Winston spent 10 hours reviewing a site assessment report and drafting correspondence. Ms. Winston’s salary at the time was $23.56 per hour. Geetha Selvendren spent 4-to-5 hours reviewing the site assessment report. She was paid $19.00 per hour at the time. Finally, Joseph Lurix spent three hours reviewing documents. His salary at the time was $34.97 per hour.
Findings Of Fact Respondent, Lois Green, is a resident of Florida and owns the property known as the Nichols Post Office located on Highway 676 in Nichols, Polk County, Florida. There is one employee stationed at the post office and members of the public use the post office for U.S. mail purposes. On October 11, 1990, Petitioner advised Respondent that the source of water that she used to supply the post office building did not comply with the requirements of the Florida Administrative Code. Thereafter, on September 23, 1991, Petitioner issued an Administrative Complaint to Respondent, advising of Petitioner's notice of intent to assess a fine of $100.00 per day until the corrections were made or for 30 days, whichever occurred first. At the hearing, Petitioner orally amended paragraph 4 of the Administrative Complaint to change the reference "December 22, 1989" to "October 4, 1990." Following service of the Administrative Complaint on Respondent and for 30 days thereafter, the water source for the post office building was a well located behind the post office on Respondent's property. In approximately December of 1991, Respondent disconnected the well which was presently serving the post office and connected to another well located adjacent to the property which supplied a residential home. The well which provided water to the post office was originally drilled as an irrigation well. The well head was located approximately 50 ft. to the closest septic tank and restroom pipe outlets. That well had no raw sample taps or a pressure tank with an inlet or outlet. Additionally, there was no surface protection pad nor were quarterly bacteriological samples taken to measure the water quality samples. Finally, the well was not approved by Petitioner prior to placing it into use by Respondent. Sometime subsequent to 30 days after Petitioner issued the Administrative Complaint to Respondent, Respondent abandoned the well without notifying the Petitioner and connected to a residential well which also contravenes the setback requirements contained in Chapter 17, Florida Administrative Code. Specifically, that well is approximately 30 ft. from the on-site sewage disposal system (septic tank) and is in violation of Rule 17- 555.302, Florida Administrative Code, formerly Rule 17-22.615(2), Florida Administrative Code. Petitioner's agent, Mark Fallah, during times material, was employed in Petitioner's Code Enforcement Section and was charged with investigating the problems surrounding Respondent's supply of water to the Nichols Post Office. Throughout the course of employee Fallah's involvement with the investigation of this matter, there have been several proposals and counter-proposals which have been exchanged by and between Petitioner and Respondent. Petitioner's agent Fallah attempted to see if a variance could be obtained whereby Respondent could continue to use the then existing well despite the fact, however, that it was in violation of the setback requirements. Additionally, Fallah attempted to get Respondent to make certain minor changes and modifications to the existing well which were not successful. Throughout the course of the parties negotiations in an effort to resolve this matter, there has been certain concessions made by both sides; however, the well which supplies the post office is a water system which is noncompliant with applicable statutory and rule requirements. Petitioner, through its employee Fallah, checked with a local well drilling company, Dunham Well Drilling Company, to obtain an estimate for a well. That company gave an estimate of approximately $2,000.00 to $3,500.00 to install a water supply system to the post office which would comply with Petitioner's requirements.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner enter a Final Order imposing an administrative fine against Respondent in the total amount of $3,000.00 of which amount $2,500.00 shall be suspended pending Respondent's initiation of a plan to construct and install a water well system to provide the Nichols Post Office which complies with Petitioner's requirements enunciated in Chapters 403 and 381, Florida Statutes and Rule Chapter 17, Florida Administrative Code. In the event that Respondent fails to initiate a plan of correction and complete the installation of the well within sixty (60) days of the date of Petitioner's entry of its Final Order, then Petitioner shall be authorized to impose the full administrative penalty of $3,000.00 without further administrative proceedings. Respondent shall submit to Petitioner the five hundred dollar ($500.00) administrative fine within thirty (30) days from the entry of Petitioner's Final Order. DONE and ENTERED this 22 day of April, 1992, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL 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 day of April, 1992. COPIES FURNISHED: Raymond R. Deckert, Esquire Asst District Legal Counsel HRS District VI Legal Office 4000 W Dr Martin Luther King Jr Blvd Tampa, Fl 33614 Mygnon Evans, Esquire 5600 US Highway 98 N Lakeland, Fl 33809 Richard S. Power Agency Clerk Dept of Health and Rehabilitative Services 1323 Winewood Blvd Tallahassee, Fl 32399 0700 John Slye, Esquire General Counsel Dept of Health and Rehabilitative Services 1323 Winewood Blvd Tallahassee, Fl 32399 0700
Findings Of Fact On June 17, 1994, Petitioner, City of Stuart (City), filed an application with the Department of Environmental Regulation, predecessor to the Respondent, Department of Environmental Protection (Department), for a permit to maintenance dredge Krueger Creek between the East Ocean Boulevard bridge and Tenth Street. The City proposed to suction dredge 7,500 cubic yards of sediment or spoil material to be placed on nearby retention sites for dewatering. The retention sites were vacant lots in a residential neighborhood. Some 2,500 cubic yards were to remain on the dewatering sites, and the remainder to be taken elsewhere. On June 20, 1994, the Department sent a completeness letter to the City, requesting additional information. On October 4, 1994, the Department received and approved a complete sediment characterization plan. By memorandum dated January 27, 1995, Ligia Mora-Applegate, an employee of the Department, sent out interim soil cleanup goals which were to be used by waste program administrators in determining final cleanup goals. The memorandum listed chemicals and the appropriate health-based goal for each chemical. For arsenic, the cleanup goal for an aggregate residential setting was .711 mg/kg. These goals had been developed by Dr. Stephen Roberts, a toxicologist employed by the University of Florida, under contract with the Department. On February 2, 1995, the Department received additional information from the City, including sediment analysis results, responses to hydrographic questions, a description of operational methods, and revised spoil retention locations. The Department reviewed the analyses submitted by the City. By memorandum dated February 27, 1995, Paul Wierzbicki, a Waste Cleanup Supervisor of the Department, advised Bruce Jerner, the Department employee who was reviewing the City's permit application, that Based on the analyses submitted it does not appear that the sediments will meet the guidance concentration of 0.7mg/kg as the cleanup criteria for soils. An alternative management plan should be proposed for the sediments. On February 28, 1995, the Department advised the City that arsenic concentrations did not meet the Department's guidance criteria for metals at the proposed spoil disposal sites. The Department recommended alternatives for disposal of the spoil material or the performance of a site specific risk assessment for the spoil sites. By letter dated March 14, 1995, Joseph Capra, the applicant's Project Engineer, advised the Department that the City disagreed with the Department's position that the arsenic levels exceeded the state standards based on Rule 17- 775, Florida Administrative Code which allows a maximum concentration of 10mg/kg of arsenic for the cleanup of petroleum contaminated soil at a soil thermal treatment facility. Mr. Capra asked the Department to reconsider its position and consider the application complete. Staff from the Department's waste cleanup section reviewed Mr. Capra's letter and forwarded the following response to Mr. Jerner by memorandum dated March 29, 1995: The allowable maximum concentration of 10mg/kg for Arsenic referred to in the letter applies to petroleum contaminated soils and since this has not been identified as a petroleum contamination site would not necessarily be appropriate in this situation. Site specific risk assessments have always been an alternative when maximum contaminate levels are not otherwise specified. This level for Arsenic may have been used in the past for non-petroleum contaminated sites in lieu of a risk assessment since it is some- what risk based, is established in rule for specific sites, and based on the lack of any other updated risk information; however, the Department has obtained updated risk inform- ation for arsenic which is currently being incorporated into 62-770, F.A.C., the Petr- oleum Cleanup Rule first, with a 62-775 F.A.C., update to follow. The difference in the exposure to aquatic organisms through sediments and direct human exposure by disposal of the dredged material on land has been explained to Mr. Capra along with some of the alternatives, to disposal in a residential area which may allow direct exposure, which may be accept- able to the Department based on further evaluation. The goal is not to jeopardize funding for the project but to provide reasonable assurance the disposal of the dredged material will not present a potential for harm to human health or the environment based on the latest technological information. Recommend Mr. Capra continue evaluating some of the disposal alternatives discussed, assuming Arsenic is the only contaminant of concern, such as: Evaluating background conditions at the original site or an alternate site. Using the material, within acceptable levels (<0.7mg/kg As), at the original site with disposal of the remainder at a lined landfill. Using material, with acceptable levels (<3.1 mg/kg As), at an industrial site with disposal of the remainder at a lined landfill. Using the material on the original site in such a manner as to prevent human exposure as long as ground water contamination is not an issue. Disposal at a lined landfill with approval from the operator. On April 5, 1995 the interim soil cleanup goals were revised and transmitted to the waste program administrators by memorandum from Ms. Mora- Applegate. The goal for soil cleanup with arsenic in a residential setting was 0.7 mg/kg (ppm). By letter dated April 24, 1995, the Department advised Mr. Capra: The data you submitted on February 2, 1995 was reviewed by the DEP Waste Cleanup Section using the 'Updated Interim Soil Cleanup Goals' which were faxed to you on April 7, 1995. These guidance concentrations are in fact the levels which will be used to evaluate the dredged material and its ultimate destination. The Department also advised that the spoil material could be placed at a residential site if the average background arsenic levels at the spoil site met or exceeded the average of the creek sediment samples. The City declined to provide additional information concerning the application. On August 15, 1995, the Department issued a Notice of Permit Denial denying the application for the following reasons: Pursuant to Section 403.918(2), F.S., a permit may not be issued under Sections 403.91-403.929 unless the applicant provides the Department with reasonable assurance that the project is not contrary to the public interest. In determining whether or not the project is contrary to the public interest, the Department shall consider and balance the seven (7) criteria listed in Section 403.918(2)(a), F.S. This project is contrary to the public interest pursuant to Section 403.918(23)(a), F.S. because the project will: adversely affect the public health, safety, or welfare or the property of others; Specifically, the proposed disposal of dredged material with arsenic levels of greater than 0.7 mg/kg on two residential lots presents a potential for human harm based on the Departments (sic) health-based levels. The applicant has failed to demonstrate that site specific backgrounds are greater than or equal to the levels of arsenic in the dredged materials. The Department received a letter of objection on April 21, 1995 from an adjacent property owner requesting denial of the permit unless additional sediment testing is done and a suitable method of disposal is proposed. Therefore, the applicant has not provided reasonable assurance that the project to maintenance dredge is not contrary to or clearly in the public interest pursuant to Section 403.918(2), Florida Statutes. In drafting the notice of denial, Mr. Jerner relied on Ms. Mora-Applegate's memoranda dated January 27 and April 5, 1995, the memorandum from Mr. Wierzbicki dated February 27, 1995, and the memorandum from the waste cleanup section dated March 29, 1995. By memorandum dated September 29, 1995, John M. Ruddell, Director of the Division of Waste Management, sent the District Directors and Waste Program Administrators a list of the soil cleanup goals for Florida. The residential health-based cleanup goal for residential sites for arsenic was 0.7 mg/kg (ppm). In October, 1995, the Department took samples of the creek sediment. Based on the sampling by the City and by the Department, the average arsenic concentration was 1.8 ppm. On January 19, 1996, Mr. Ruddell sent the District Directors and Waste Program Administrators a memorandum concerning the use of the soil cleanup goals set out in the September 29, 1995 memorandum. Mr. Ruddell stated: The Soil Cleanup Goals are intended to be used only as 'goals' for cleanup decisions in corrective actions and should not be used by the agency as rule, standards or to deny or approve permits. The FDEP has found that most business/site owners do not normally have the money or the expertise to establish Site-specific Rehabilitation Levels (SRLs) as allowed by our cleanup Consent Order condi- tions. The soil cleanup goals are intended to be used for site screening purposes, for source removal evaluations, and as guidance during evaluation of remediation alternatives and design considerations for development of Remedial Action Plan (RAP) for a site. The soil cleanup goals can and should be used for cleanup decisions if the default assumptions fit the site-specific situation. * * * The evaluation process should take into consideration the following criteria: the site-specific background levels, the Method Detection Limits (MDLs), the soil cleanup goals, and the site contaminate levels. The site contaminant levels (criterion 4) for each Chemical of Concern (COC) would be compared to the highest value of the first three criteria. If the site contaminant levels are below the highest value, then no remediation is required for that contaminant. If the site contaminant levels are higher than the highest value, then remediation alternatives should be evaluated taking into consideration the specific nature of the site and the responsible party's ability to effectively manage the risk of a particular site contaminant level. FDEP may consider site-specific risk management alternatives that may further modify the guidance levels for the contaminant. These health-based soil goals are evaluated based on the nature and intended use of the site (e.g., residential or industrial) and usually only apply to the upper two feet of soil. If the contaminated soil can be permanently covered with more than two feet of clean soil or otherwise have the exposure pathways restricted, the site may not need further remediation if the contaminated soil is not a source of ground- water contamination. * * * The soil values may be used for other purposes (other media) if indeed the particular application fits the situation (e.g., sediments that upon dredging will be used as soil). Again, an analysis of the specific situation must be performed (i.e., ascertain land use, exposure duration, leachability concerns, background consideration, etc.). The January 29 memorandum also advised that the soil cleanup goal for arsenic on residential sites was changed to 0.8 mg/kg. This is not a significant change from the goal set out in Ms. Mora-Applegate's January 27, 1995 memorandum. The health-based soil cleanup goals for arsenic have not been adopted as rules, and the Department does not presently intend to adopt them by rule. The health-based goals for arsenic are used to define appropriate concentrations for arsenic regarding protecting public health. The levels are default numbers which an applicant may chose to accept by default. Alternatively, the applicant may elect to provide additional information in the form of a site-specific evaluation or of management strategies that would satisfy the Department. A site specific evaluation could result in a change from the default number to a greater or lesser number. Unless the applicant provides site-specific information, the Department will apply the health-based goals for arsenic.
Findings Of Fact Petitioner owns and operates a gasoline station located at 4625 U.S. 27 North, Davenport, Florida. The site was constructed in late 1986 and opened in early 1987. The underground tanks storing the gasoline are connected by pipes running underground to the pumps from which the gasoline is dispensed. A small portion of the underground supply pipe is accessible from the surface through a manhole. The excavated area exposing the pipe and what appears to be a valve are separated from the surrounding soil by a large, cylindrical corrugated pipe laid perpendicular to and above the underground supply pump. The leak in question was caused when the lower edge of the corrugated pipe cut into the underground supply pipe for the premium gasoline. The cut was caused by the cumulative effect of vehicular traffic driving over the manhole cover, placing pressure on the corrugated pipe, and eventually forcing the edge of the corrugated pipe to rupture the underground supply pipe with which it was in contact. Petitioner owns and operates a large number of gasoline stations. This incident is the first time that a corrugated pipe has cut into an underground supply pipe. The use of the corrugated pipe is not at issue in the present case. Pursuant to company policy, station employees complete a daily recap each day and forward the recap document to Petitioner. Part of the recap document is devoted to "gas inventory." The daily recap, which covers the preceding 24 hours, requires that an employee determine the amount of gasoline in each underground storage tank, adjust the figure for amounts sold and delivered, and then compare the figure to the amount determined to have been in the tank 24 hours earlier. This reconciliation is normally completed by mid- to late-morning each day. A station employee "sticks" each tank to determine how much gasoline it contains. The procedure requires that the employee insert a pole into the bottom of an underground tank. By observing the length of the pole dampened by gasoline, the employee can calculate approximately the amount of gasoline in the tank. Although stick reading results in an approximation, the results are fairly accurate, leaving at most, in the case of this 12,000-gallon tank, a margin of error of 50 gallons. "Sticking" normally takes place daily between 6:30 a.m. and 7:00 a.m. On the morning of March 6, 1988, which was a Sunday, the employee sticking the tank calculated that the premium tank held 5419 gallons. There had been no deliveries during the preceding 24 hours. During the same period, the station had sold 914 gallons of premium gasoline. However, the last sticking 24 hours earlier had disclosed 7989 gallons. A total of 1656 gallons were thus unaccounted for. The recap document requires that the station notify Respondent's "Dist. Mgr. immediately if shortage of 500 gallons or more appears." The employee failed to do so. On the morning of March 7, 1988, the employee sticking the premium tank calculated that it held 2147 gallons. During the preceding 24 hours, there had been no deliveries and 826 gallons of premium gasoline had been sold. Consequently, 2446 gallons were missing, for a total of 4102 gallons over the past two stickings. As soon as the reconciliation was completed, the employee contacted Respondent's management, which ordered that the pump be shut down during the afternoon of March 7, 1988. Comparing the sales of premium gasoline for the 24- hour period ending March 8 with those ending March 7, which are comparable because the sale of regular gasoline on those two days is almost identical, the station sold about 39% of a normal day's sales of premium gasoline. Reflecting the shutdown of the premium pumps on March 7, the employee sticking the tank on the morning of March 8, 1988, found 593 gallons. During the preceding 24 hours, there had been no deliveries and sales of 321 gallons of premium had been sold, leaving 1233 gallons unaccounted for. The total over the three stickings was 5335 gallons lost. The station had previously not experienced losses even approaching this magnitude. The daily recap for the 24-hour period ending on March 5, 1988, showed no significant loss. Although fluctuations in volume may occur shortly after deliveries due to temperature differentials, such fluctuations could not reasonably have accounted for these vast discrepancies. Theft, measurement errors, and recording errors may also account for variations in readings, but not of the magnitude and repetition involved in this case. Between the time of the reconciliation on the morning of March 6 and the system shutdown on the afternoon of March 7, the system continued operating and, thus, leaking for 28-30 hours. Given that 2446 gallons were lost during the 24-hour period ending on March 7 and 1233 gallons lost during about 9 hours on March 8, at least 100 gallons per hour were escaping from the pipe during these last 28-30 hours, for a total of between 2800 and 3000 gallons. For reasons discussed in the Conclusions of Law, the actions and omissions of the station employees following the reconciliation of inventory figures on March 6 constituted gross negligence in the maintenance of a petroleum storage system. These actions and omissions were in the scope of employment. During the relevant period of time, none of Respondent's employees performed monthly checks of the monitoring wells to determine the presence of leaks. This failure was due to ignorance and was not wilful. This failure in no way contributed to the leak or to any delay in discovering the leak. During the relevant period of time, the monitoring wells had not been properly grouted to prevent introduction of surficial contamination. However, this failure was unknown to Petitioner, which had hired a contractor to construct the wells and reasonably had relied on the contractor to grout properly the monitoring wells. The improper grouting in no way contributed to the leak or to any delay in discovering the leak. During the relevant period of time, Petitioner was not performing weekly or five-day averages of inventory records concerning gasoline. The failure to perform these reconciliations in no way contributed to the leak or to any delay in discovering the leak. Following the discovery of the leak, Petitioner notified Respondent on March 8. Petitioner requested approval to participate in the Early Detection Incentive Program by filing a Notification Application dated March 29, 1988. On July 14, 1988, Respondent completed the Pollutant Storage Tank System Inspection Report Form and Early Detection Incentive Program Compliance Verification Checklist. These documents indicate that Respondent was not monitoring monthly its monitoring wells, failed to grout properly its monitoring wells, was not performing the weekly or five-day averages of inventory (although it was taking daily inventory and reconciling opening and closing inventories), and did not immediately investigate the 1600-gallon shortage disclosed on the morning of March 6, 1988. By letter dated September 30, 1988, Respondent notified Petitioner that its site was ineligible for state-administered cleanup under the Early Detection Incentive Program. The letter cited as reasons the wilful failure to perform monthly checks of the monitoring well, the failure to immediately investigate discrepancies in inventory records while the system continued to operate after initial discovery of the 1600-gallon loss, and the improper construction of the monitoring well with respect to the improper grouting. The letter concludes that these items constitute gross negligence in the maintenance of a petroleum storage system, which precludes participation in the program.
Recommendation Based on the foregoing, it is hereby recommended that the Department of Environmental Regulation enter a Final Order denying the application of Petitioner to participate in the Early Detection Incentive Program. RECOMMENDED this 26th day of March, 1990, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of March, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-1561 Treatment Accorded Proposed Findings of Petitioner 1-4: adopted. 5-6: adopted in substance. 7-16: adopted. 17: rejected as unsupported by the greater weight of the evidence. 18-20: adopted or adopted in substance. 21: to the extent that this proposed finding suggests that Petitioner was performing the five-day or weekly averaging, rejected as unsupported by the greater weight of the evidence. However, in view of the findings and conclusions contained in the Recommended Order, rejected as unnecessary. 22-26: adopted. Treatment Accorded Proposed Findings of Respondent 1-4: rejected as conclusions of law. 5-6: adopted. 7-16: rejected as subordinate. 17: rejected as an inference unsupported by the greater weight of the evidence. 18-26: adopted. 27: rejected as irrelevant. 28-29 and 31: rejected as legal argument. 30: adopted. 32: adopted. 33: adopted except that the system was shut down at some point into the day of the second sticking showing a significant shortage. 34-38: adopted or adopted in substance. 39: rejected as speculation. 40: rejected as irrelevant. 41-42: adopted. 43: rejected as irrelevant. 44-45: rejected as subordinate. 46: adopted. 47-49: rejected as subordinate. 50: adopted. 51-53: rejected as vague with respect to reference to "Racetrac." 54: adopted. 55: rejected as cumulative. 56-57: rejected as unnecessary. COPIES FURNISHED: Dale H. Twachtmann Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Steven M. Mills Decker & Hallman Suite 1200 Marquis II Tower 285 Peachtree Center Avenue Atlanta, GA 30303 Michael P. Donaldson Assistant General Counsel Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400
Findings Of Fact Reimbursement Program The Florida Legislature created the Petroleum Contamination Site Cleanup Program to encourage responsible persons with adequate financial ability to conduct site rehabilitation and seek reimbursement in lieu of the state conducting cleanup. Section 376.3071(12), Florida Statutes (1993). Site owners and operators or their designees become entitled to reimbursement from the Inland Protection Trust Fund (IPTF) of their allowable costs at reasonable rates after completing a program task. Section 376.3071(12)(b), Florida Statutes. The costs of site rehabilitation must be actual and reasonable. Section 376.3071(12)(d), Florida Statutes. "Allowable" costs are those which are associated with work that is appropriate for cleanup tasks, i.e. whether the cost represents work that is technically necessary for the program task and otherwise not in violation of reimbursement limitations prescribed by statute or rule. In order for costs to be reimbursable, an applicant must convert charges in an application into applicable units and rates. Rule 17-773.100(5), Florida Administrative Code. DEP has a predominate rate schedule to determine whether a specific allowable cost is reasonable. DEP bases its predominate rates on a study of average rates that contractors charge for a particular task. In addition, DEP reviews each application to determine whether the overall cost and the methods used to perform the work are reasonable. DEP must also evaluate each application to determine whether a charge is an actual cost of a project. Contractors or subcontractors do not actually incur a fully reimbursable cost when they promise the site owner or its designee that they will perform work for an amount less than other professionals would charge, then allow the site owner or its designee to file a claim for reimbursement at or near the predominate rate. Such an agreement creates a back flow of funds to the site owner or its designee. This is true even though the charges are within the range of DEP's predominate rates. DEP never intended the rate schedule to create an entitlement to reimbursement regardless of the cost that contractors and subcontractors actually incur. Requests for reimbursement must apply to costs which are "integral" to site rehabilitation. Rule 17-773.100(2), Florida Administrative Code. "Integral" costs are those which are essential to completion of site rehabilitation. Rule 17-773.200(2)(11), Florida Administrative Code. After integral costs have been identified and incorporated on a units and rates basis in an invoice, the invoice may be marked up at two levels. These markups are subject to certain limitations: There can be no more than two levels of markups or handling fees applied to contractor, subcontractor or vendor invoices (Rule 17-773.350(9), F.A.C.); There can be no markups or handling fees in excess of 15 percent for each level of allowable markup applied to contractor, subcontractor or vendor invoices (Rule 17-773.350(10), F.A.C.); and There can be no markups or handling fees applied to invoices between any two entities which have a financial, familial, or beneficial relationship with each other (Rule 17-773.350(11), F.A.C.). In order to be reimbursable, costs must have been actually "incurred." Rule 17-773.700, Florida Administrative Code. "Incurred" means that allowable costs have been paid. Rule 17-773.200(9), Florida Administrative Code. A contractor must pay all invoices generated by a subcontractor at 100 percent of their face value prior to submission of an application in order to qualify those invoices for reimbursement. When a contractor pays a subcontractor's invoices, the contractor paying those invoices may apply the first-tier markup. Prior to submitting a reimbursement application, a funder or "the person responsible for contamination site rehabilitation" (PRFCSR) must pay the contractor for its invoices and markup. Then, the funder may apply the second- tier markup and submit the reimbursement application to DEP. DEP does not contest the second level of markup in these applications. DEP rules restrict reimbursement when parties within the usual "chain" of reimbursement (PRFCSR or funder, contractor and subcontractor) have financial, beneficial or familial relationships with each other or the site owner. These terms are defined in Rules 17-773.200(1), 17-773.200(6), 17- 773.200(7), Florida Administrative Code. The application form requires disclosure of such relationships through the Program Task and Site Identification Form. DEP's rules and written guidelines do not address or apply to activities, including financing arrangements, occurring outside of the chain of reimbursement if an applicant does not include charges for such activities in an application. Heretofore, DEP has not deducted finance costs that an applicant does not include as a line item in a reimbursement application. DEP must perform financial audits to ensure compliance with Chapter 376, Florida Statutes, and to certify site rehabilitation costs. Rule 17- 773.300(1), Florida Administrative Code. DEP performs this audit function: (a) to establish that the PRFCSR incurred the cost; (b) to determine that adequate documentation supports the claimed costs as incurred; and (c) and to review the reasonableness and allowance of the costs. The audit staff interprets the term "incurred" to mean that the applicant paid the costs included in the reimbursement application. DEP's audit staff usually does not inquire as to the level of a PRFCSR's financing where the application contains no line-item financing charges. However, the audit staff makes appropriate inquiries depending on the facts and events surrounding an individual application. Pursuant to Rule 17-773.350(4)(e), Florida Administrative Code, "[i]nterest or carrying charges of any kind with the exception of those outlined in Rule 17-773.650(1), F.A.C." are not reimbursable. The exceptions to the payment of interest set forth in Rule 17-773.650(1), Florida Administrative Code, are not at issue here. An interest rate charge on short-term borrowed capital from an unrelated third-party source is a "cost of doing business." DEP's predominate rates are fully loaded. They include a variable for all direct and indirect business overhead costs such as rent, utilities and personnel costs. DEP includes the cost of short-term borrowed capital in the direct and indirect overhead components of the fully-loaded personnel rates. Rule 17-773.700(5)(a), Florida Administrative Code. Petitioners PRFCSRs are entitled to make application for reimbursement of allowable markups and costs of site rehabilitation that they incur. In these consolidated cases, the site owners or operators designated either Petitioner ET or Petitioner SEI as PRFCSR. The PRFCSR is typically referred to as the "funder" in the reimbursement chain. Petitioner ET is a trust formed in 1993 and domiciled in Bermuda. It acts as American Factors Group, Inc.'s (AFG discussed below) conduit for funds that finance activities associated with Florida's petroleum contamination site cleanup program. The named beneficiaries of the trust are those contractors and subcontractors entitled to payment of costs for activities integral to site rehabilitation and for allowable markups of such costs. The sole trustee of ET is Western Investors Fiduciary, Ltd. (WIFL). WIFL is also the owner and a beneficiary of ET. Any profit that ET derives from funding petroleum contamination site cleanup flows through WIFL to investors who provide funds to finance site rehabilitation. American Environmental Enterprises, Inc. (AEE, discussed below) provided the investment funds for the reimbursement applications at issue here. WIFL is a limited liability corporation created and domiciled in Bermuda. The officers of WIFL are: William R. Robins, President; John G. Engler, Vice-President; and Peter Bougner, Secretary. The directors and shareholders of WIFL are: William R. Robins, John G. Engler, Paul H. DeCoster, Alec R. Anderson and Nicholas Johnson. Petitioner SEI is a corporation incorporated and operating under Florida law. Organized in 1994, SEI acts as AFG's conduit for funds to finance activities associated with Florida's petroleum contamination cleanup program. The officers and directors of SEI are: William R. Robins, President; John G. Engler, Executive Vice President; and Paul H. DeCoster, Secretary. William R. Robins is the sole shareholder of SEI. ET filed the petition for administrative hearing on behalf of SEI in at least four cases: Case Numbers 96-405, 96-425, 96-433, 96-437. Respondent DEP is the agency charged with the duty to administer the IPTF and Chapter 376, Florida Statutes. Financing Entities American Factors Group, Inc. (AFG) is a privately held corporation incorporated and operating under New Jersey law. AFG is not a party to this proceeding. AFG, acts as the servicing agent for contracts associated with factoring activities and other types of financing operations. AFG, through one of its divisions, Environmental Factors (EF), entered into factoring contracts with: (a) Gator Environmental, Inc. (Gator), general contractor; and (b) Tower Environmental, Inc. (Tower), prime subcontractor. Through these agreements, EF or its assignee bought the rights of Gator and Tower to future reimbursement payments at a percentage of the face value of the relevant invoices. The officers of AFG are: William R. Robins, President; John G. Engler, Vice President; and Paul H. DeCoster, Secretary. Bleak House, Inc. (Texas) owns the stock of AFG. American Environmental Enterprises, Inc. (AEE) is incorporated and operating under Nevada law. AEE is not a party to this proceeding. AEE, as the assignee under the EF contracts, is a third-party provider of capital to various entities in the reimbursement process. The officers of AEE are: William R. Robins, President; John G. Engler, Vice-President; and Paul H. DeCoster, Secretary. Bleak House, Inc., (Nevada) owns the stock of AEE. Bleak House, Inc., (Nevada) is incorporated and operating under Nevada law. Bleak House, Inc. (Texas) is incorporated and operating under Texas law. Officers of both corporations are William R. Robins, President; John G. Engler, Vice President; and Paul H. DeCoster, Secretary. Magazine Funding, Inc. owns the stock of both Bleak House corporations. Magazine Funding, Inc. is incorporated and operating under Nevada law. Officers of Magazine Funding, Inc. are William R. Robins, President; John G. Engler, Vice-President; and Paul H. DeCoster, Secretary. Family Food Garden, Inc. owns the stock of Magazine Funding, Inc. Family Food Garden, Inc. is incorporated and operating under Massachusetts law. Officers of Family Food Garden, Inc., are William R. Robins, President; and Paul H. DeCoster, Secretary. Six shareholders own the stock of Family Food Garden, Inc. None of these shareholders are related by familial ties to the officers or directors of the aforementioned companies or any relative thereof. Each of these companies -- ET, SEI, WIFL, AEE and AFG (including EF) share common officers and directors. Each of the companies maintain their own books and business records, file their own tax returns, and maintain records in accordance with the laws of the jurisdiction in which they were established. They operate pursuant to their respective bylaws or trust documents. ET, WIFL, and SEI do not have common assets with AEE or AFG (including EF). ET, WIFL and SEI do not have a beneficial, financial, or familial relationship with AEE or AFG (including EF) as Rule 17-773.200, Florida Administrative Code, defines those terms. Despite the facial organizational and structural integrity of ET, WIFL, SEI, AEE and AFG, the officers and directors of AFG and/or AEE created ET, WIFL, and SEI, in large part, for the benefit of AFG and/or AEE as a means to invest funds in petroleum contamination site cleanup programs. The officers and directors of AFG specifically created SEI to meet the needs of AFG's Florida investors. The purpose of each funder is to maximize the profits of AFG and its investors. AFG has other investment vehicles (funders) which it uses at times depending on the needs of its investors. AFG waits until the last instance before deciding which entity it will designate as funder in any particular factoring scenario. AFG usually does not make that decision until the day AFG's designated funder issues a funder's authorization to the general contractor. At the hearing, Mr. Stephen Parrish, a vice president of AFG, testified as the party representative for ET and SEI. ET, WIFL and SEI have no employees. EF or AFG responded to DEP's request for Petitioners to provide additional information about the financing scheme utilized here using stationary bearing EF's or AFG's letterhead. At least five of these letters written on SEI's behalf, refer to ET, an affiliate of AEE, as the funder. Nineteen of the letters written on ET's behalf refer to ET, an affiliate of AEE, as the funder. The greater weight of the evidence indicates that AFG and/or AEE negotiated less than arms-length contractual agreements with ET, WIFL, and SEI. Petitioners admit that they are "affiliates" of AEE and AFG through contractual agreements. However, there are no written factoring contracts between Petitioners and AFG such as the ones that exist between AFG, Gator and Tower. The only documented evidence of agreements between Petitioners and AFG are transactional based bills of sale representing the sale to AEE of Petitioners' right to receive reimbursement from IPTF. AFG created these bills of sale for bookkeeping purposes. AFG did not even go to the trouble of tailoring the form for the bills of sale for their stated purpose. For all practical purposes, Petitioners are under the management and control of AEE and AFG. Petitioners and AFG disclosed their affiliation in meetings with DEP staff and through correspondence and other documentation, including but not limited to: (a) letter to DEP dated July 13, 1994 from AFG's counsel; (b) Addendum to Certification Affidavit signed by a certified public accountant in each application; (c) funder's authorization form; (d) letters sent to DEP between August 14, 1995 and November 19, 1996. Factoring and the Factoring Transactions Factoring is the purchase and sale of an asset, such as an account receivable, at a discount. An account receivable reflects the costs that a business charges after rendering a service but before the entity responsible for payment pays for that service. When a contractor completes a rehabilitation task, the contractor's invoice is an account receivable until it receives payment. In these consolidated cases, AEE provided short-term capital to Gator and Tower at an interest rate equal to the discount percentage of the relevant invoice (account receivable). Gator and Tower did not sell their account receivables to AEE. Instead, AEE, as the assignee of EF, purchased a contractual right to receive Gator's and Tower's reimbursement payments. In exchange, AEE advanced them a discounted amount of their invoices. The discounted amount of each invoice represents a loan from AEE to Gator and Tower. The difference between the face amount of the invoices and the discounted amount of the invoices represents interest. A discount percentage and an interest rate are equivalent. The amount of the discount represents interest on the loans or advances provided by AEE. It is an interest expense to the contractor or subcontractor. The amount that Gator and Tower actually incurred is the discounted amount of their invoices. The Factoring Agreements On or about April 25, 1994, EF and Tower entered into a Prime Subcontractor Factoring Agreement which set forth the terms under which EF or its assignee would finance Tower's site remediation work. At that time, the parties to the contract anticipated that EF would retain a general contractor to perform on-site remediation services with Tower acting as prime subcontractor. In the contract, Tower agreed to sell to EF its right to receive payments from the general contractor at a percentage of the underlying invoices. Subsequent to the execution of April 1994 Prime Subcontractor Factoring Agreement, Tower experienced financial difficulties resulting in its inability to pay subcontractors for work that they performed under non-EF contracts. These financial difficulties made it impossible for Tower to meet its payroll that was due in two weeks. Tower and its subcontractors under the non-EF contracts approached AFG and EF requesting financial assistance to resolve Tower's financial difficulties and to ensure that the subcontractors would be paid for their work. At that time, the program tasks under these non-EF contracts were complete or substantially complete. Given the preexisting contractual relationship between EF and Tower on other projects, AFG determined that it could use a similar financing arrangement to resolve Tower's financial problems. Such an arrangement also would protect AFG's investment in projects being conducted under the EF-Tower contracts. On or about July 8, 1994, EF and Tower executed an addendum to the April 1994 Prime Subcontractor Factoring Agreement. This addendum applied to projects that were not covered by the original Prime Subcontractor Factoring Agreement. The addendum required Tower to sell to EF Tower's right to receive payments from the general contractor. In return, EF agreed to advance Tower a discounted amount equal to 97 percent of the face amount of Tower's invoices. Tower agreed to pay EF 100 percent of the face amount of the invoices upon receipt of payments from the general contractor. The discounted amount of each invoice represents a loan from AEE to Tower. Late in 1993 or early in 1994, Gator began negotiating a contract with EF to provide general contracting services for on-site remediation work on unspecified Florida projects being financed by EF. Gator began serving as general contractor on some of these unspecified projects prior to the execution of a contract. On or about July 8, 1994, EF and Gator entered into a General Contractor Factoring Agreement. In this contract, EF agreed to provide financing for projects on which Gator served as general contractor. Gator agreed to sell to EF its right to receive payments from the funder (ET or SEI) at a percentage of Gator's underlying invoices. On or about July 13, 1994, EF and Gator entered into an Addendum to the July 8, 1994 General Contractor Factoring Agreement. This addendum applied to projects which were not covered under the original General Contractor Factoring Agreement. The addendum required Gator to sell to EF Gator's right to receive payments from the funder (ET or SEI). In return, EF agreed to advance Gator a discounted amount equal to 88 percent of the face amount of Gator's invoices. Gator agreed to pay EF 100 percent of the face amount of the invoices upon receipt of payments from the funder. The discounted amount on each invoice represents a loan from AEE to Gator. Gator and Tower negotiated the respective factoring contracts and addenda thereto at arms-length. Pursuant to the terms of these contracts, EF assigned to AEE the rights to payments due to Tower from Gator and to Gator from ET or SEI. ET and SEI were not named parties to these contracts. The factoring contracts and the corresponding addenda apply to the reimbursement applications at issue here. Pursuant to those agreements, the following interrelated transactions took place though not necessarily in this order. First, Tower provided EF with a Site Certification Affidavit for a certain project. Tower also sent Gator a complete reimbursement application for the project and an invoice for Tower's services and the services of its subcontractors and vendors. Next, EF designated either ET or SEI as the funder. The funder then sent Gator a funder's authorization form. This form acknowledged that EF was an affiliate of the funder. It is the only documented evidence of a contract between the funder and Gator. Gator's receipt of the form constituted authorization for Gator to perform work on the project subject to reimbursement for all reimbursable costs and paid subcontractor invoices. Within two days of receiving the funder's authorization for a project, Gator issued Tower a subcontract/purchase order. Gator notified EF and the funder of such issuance. Upon receipt of the subcontract/purchase order, Tower sold to AEE (at a discount) Tower's right to receive full payment from Gator. A bill of sale evidenced this transaction. Tower agreed to repay AEE the face amount of Tower's invoice upon receipt of payment from Gator. Tower executed an agreement indemnifying the funder and guaranteeing the performance of all services and the delivery of all goods. Tower agreed to a reserve trust fund deposit as security for the ultimate reimbursement payment from the IPTF. Within four days of receiving the complete reimbursement application from Tower and within two days of receiving the funder's authorization, Gator and a certified public accountant (retained by EF) were supposed to review all supporting documentation on the project. The stated purpose of this review was to determine whether the invoices of Tower and its subcontractors were reimbursable under DEP guidelines. As to 30 of the instant applications, Tower completed the on-site work before Gator became involved. In those cases, Gator performed a minimal due diligence review, if any, of Tower's on-site work. This included comparing Tower's technical and administrative files with the applications prepared by Tower. Without Gator's minimal review and risk assessment on these 30 applications, EF would not have included them as projects covered by the addenda to the factoring contracts. As to 15 of the instant applications, Petitioners claim that Gator not only reviewed Tower's work product but also, issued subcontractor/purchase orders selected and scheduled subcontractors, and made on-site visits. However, there is no persuasive record evidence as to the specific activities or the level of Gator's involvement in on-site work on any one of these 15 applications. When Gator and EF's certified public accountant completed their assessment, Gator prepared a deficiency letter and sent it to all parties. The report advised EF, the funder and Tower whether any of Tower's charges were in excess of the reimbursable amount. Tower could accept or reject any disallowance set forth in the deficiency letter. If there was no problem with a disallowance or within five days of Tower's acceptance of a disallowance, AEE advanced Tower an amount equal to 97 percent of Tower's invoice. Tower used these funds to pay subcontractors and vendors. The discounted amount of Tower's invoice represents the actual cost that Tower incurred. Tower signed a repayment agreement in which it promised to repay AEE the face amount of Tower's invoice upon receipt of payment from Gator. When Tower received the discounted cash advance from AEE, it had to contribute the reserve deposit (to cover any reimbursement shortfalls) to a reserve trust, domiciled in Bermuda, which was affiliated with EF. Tower was a beneficiary of the reserve trust to the extent of its contribution less any monies it owed AEE after the IPTF reimbursed the funder. Meanwhile, Gator sold to AEE (at a discount) Gator's right to receive full payment from the funder. A bill of sale evidenced this transaction. Gator agreed to repay AEE the face amount of Gator's invoice upon receipt of payment from the funder. AEE advanced Gator an amount equal to 88 percent of the face amount of Gator's invoice. The discounted amount of Gator's invoice represent the amount that Gator actually incurred. Gator used these funds to pay Tower the face amount of its invoice. Tower in turn repaid AEE in full. Gator signed a repayment agreement in which it promised to repay AEE the face amount of its invoice upon receipt of payment from the funder. For the 45 applications at issue here, the addendum to the General Contractor Factoring Agreement did not require Gator to deposit any amount in the reserve trust which was domiciled in Bermuda and affiliated with EF. Next, Gator prepared an invoice for its services and the services of Tower and its subcontractors including a 15 percent markup and an application preparation fee. Gator's invoice could not include a charge for "management time." Then, Gator forwarded its invoice and Tower's invoice to the funder together with the complete reimbursement application. In the meantime, ET and SEI sold AEE their right to receive reimbursement from the IPTF at a discount equal to 87 percent of their total invoice amount. A bill of sale for each transaction is the only documented evidence of an agreement between the funders and AEE. ET and SEI agreed to repay AEE for the face amount of their invoices upon receipt of payment from IPTF. The funder prepared an invoice for the face amount of Gator's and Tower's invoices plus a 15 percent markup. Upon receipt of ET's or SEI's invoice, AEE advanced them the discounted amount as agreed. ET or SEI used the funds advanced by AEE to pay Gator the face amount of its invoice. Gator in turn repaid AEE in full. When ET or SEI receive a reimbursement payment from the IPTF, they will remit the total payment to AEE. The total cost for each project increased as the discount percentage and the face amount of each invoice passing up through the chain grew larger. In regards to some applications, the relevant dates on the subcontract/purchase order, Gator invoice, and Tower invoice are the same. It is clear that the turn around time on all of the above referenced transactions, including the time between the payment of the advances by AEE to Gator and Tower and their subsequent repayment of 100 percent of the face amount of an invoice to AEE, was very short--a matter of days or weeks. In Summary, the financing of the pending reimbursement applications involved the following interrelated transactions but not necessarily in this order: AEE as the assignee of EF purchased the right of ET, SEI, Gator and Tower to receive reimbursement for their services at a discount. ET, SEI, Gator and Tower agreed to repay AEE in full. Tower prepared and submitted to Gator an invoice for services provided by Tower and its subcontractors. Tower also prepared and submitted to Gator a reimbursement application for the program task. AEE advanced Tower the agreed upon discount amount. Tower used these funds to pay its subcontractors and vendors. AEE advanced Gator the agreed upon discount amount. Gator used these funds to pay Tower. Tower repaid AEE in full. Gator prepared an invoice for services provided by Gator, Tower and Tower's subcontractors including a 15 percent markup and submitted it with the reimbursement application either to ET or SEI. AEE advanced ET or SEI the discounted amounts as agreed. ET or SEI paid Gator in the full amount of Gator's invoice plus markup. Gator repaid AEE in full. ET or SEI prepared an invoice for its services plus the services of Gator, Tower, and Tower's subcontractors and a 15 percent markup. ET or SEI submitted the reimbursement application to DEP. When ET or SEI receives reimbursement from the IPTF, they will remit the total payment to AEE. The Applications Petitioners filed the 45 applications that are the subject of this proceeding between July 18, 1994 and February 17, 1995. The financing scheme that Petitioners utilized in these applications was unique. Prior to receiving these applications, DEP never had reviewed reimbursement applications using the type of financing scheme at issue here. In fact, the instant cases present a scenario never contemplated by DEP when promulgating rules and developing written policies. DEP has established a list by which it determines whether an applicant is charging a "reasonable rate." DEP developed that list in accordance with Petroleum Cleanup Reimbursement (PCR) Guideline Number 1. PCR 1 establishes a "predominant rate" for costs involved in the site rehabilitation process. The predominant rate may be exceeded by up to 30 percent for personnel charges, and by up to 50 percent for non-personnel charges. Within these ranges, DEP evaluates each application and determines whether the PRFCSR is entitled to reimbursement for "allowable cost" at "reasonable rates." The work performed by Tower was at or near DEP's "predominant" rate. In no instance were Tower's rates near the upper limits of the reasonable rate ceiling. Tower's invoices appear to represent work that was integral to site rehabilitation which was broken down into appropriate units and rates. There is no evidence of "price fixing" between any entities engaged in site rehabilitation. There is no evidence that Tower intentionally inflated the costs of cleanup or of the scope of cleanup services to cover the cost of financing. There are no familial, beneficial or financial relationships, or any other form of affiliation between Tower and its subcontractors. A certified public accountant (CPA) attestation accompanied the applications indicating that Petitioners incurred (paid) all relevant costs. The applications did not include charges associated with the financing arrangements as line items. The CPA attestations referenced an addendum to the Certification Affidavit. The addendum indicated that "American Environmental Enterprises, Inc., an affiliate of the Environmental Trust, has provided financing to certain contractors and subcontractors by factoring invoices which are included within this application." The CPA provided the reference to the addendum in the CPA attestation as an "emphasis of the matter" statement rather then an "exception," or a modification of the CPA's attestation that Petitioners had incurred all costs in the application. The CPA firm performing the attestation services previously informed DEP of its intent with regard to "emphasis of the matter" reports. Nevertheless, the difference between the face amount of an invoice and the discounted amount of that invoice clearly represents interest. This interest was not allowable as an actual and reasonable cost of site remediation because Gator and Tower agreed to accept a lesser amount for their services prior to submittal of the applications. Therefore, they did not actually incur the amount reflected in the face amount of their invoices. DEP's predominate rates and units are fully loaded. Interest rate charges on borrowed capital from unrelated third-party sources are a "cost of doing business." DEP's fully-loaded rates include a variable for all direct and indirect business overhead costs such as rent, utilities and personnel costs. The direct and indirect overhead components of DEP's fully-loaded rates include the cost of short-term "working" capital. However, DEP never intended the predominate rate schedule to entitle an applicant to reimbursement for costs that it did not actually incur. In the instant cases, funds that passed down through the chain from ET or SEI to Gator or from Gator to Tower flowed directly and immediately back to AEE who was affiliated with the funder. Any profit derived by the funder, ET or SEI, will flow directly to AEE and its investors. The amount that Petitioner's actually incurred before they submitted the applications was the amount that AEE advanced to Tower and/or its subcontractors for integral site work plus the actual cost of Gator's allowable services, if any, which were separate and distinct from Tower's work, plus any allowable markup(s). Factoring Policy At the time that Petitioners submitted the subject applications for reimbursement, there was no rule or written guideline governing financing transactions, including factoring, occurring outside of the usual chain of reimbursement. DEP normally did not inquire about such financing so long as an applicant did not pass the costs of such financial transactions to DEP in the application as a line-item cost. There was no policy disallowing reimbursement for the face amount of the invoices when an applicant sold the right to payment, i.e. the receivable, at a discount to a disinterested third-party in an arms- length transaction. Commencing on August 31, 1994, DEP began to develop a policy regarding the use of factoring as a financing mechanism in the reimbursement program. DEP staff exchanged numerous documents regarding the subject of factoring. In one of those documents, Charles Williams, DEP's Reimbursement Administrator indicated that "we absolutely need to have a Big Meeting to decide what to do once and for all." In a November 1994 telephone conversation, DEP provided AFG's counsel with an informal opinion of how DEP would handle a factored application as described by Will Robins of AFG in an earlier meeting with DEP staff. The statement was: that the difference between the amount that a contractor accepted in payment for his services, which was a discounted amount after factoring, . . . and the face value of the invoice which was claimed and marked up in the application was determined to be a carrying charge or interest, which is specifically disallowed for reimbursement in the reimbursement rule. American Factors Group. Inc. and the Environmental Trust v. Department of Environmental Protection, DOAH Case No. 95-0343RU, Final Order issued July 24, 1995. DEP advised AFG's counsel that it would deal with factored applications involving other entities on a case by case basis. On December 20, 1994, John Ruddell, Director of DEP's Division of Waste Management, sought permission from DEP's Policy Coordinating Committee to promulgate a rule amendment to Chapter 62-773, Florida Administrative Code (formerly Chapter 17-773, Florida Administrative Code.) A draft rule accompanied the request. The draft rule was developed in compliance with Chapter 94-311, Section 6, Laws of Florida, which required DEP to revise its reimbursement rule. The draft rule provided that: nothing in this Chapter shall be construed to authorize reimbursement for the face amount of any bill or invoice representing incurred costs when the receivable has been sold at a discount. In all such cases, reimbursement shall be limited to the actual discounted amount accepted by the provider of the goods or services . . . . The draft rule had the effect of prohibiting factoring as a mechanism for financing site rehabilitation work. It did not single out any other type of financing mechanism. DEP did not promulgate the draft rule because the problems with the program were too numerous to correct in a timely fashion by rulemaking. Instead, DEP focused on drafting proposed legislation. In the meantime, DEP requested that Petitioners furnish additional information regarding the instant applications. Between March 1, 1995 and November 17, 1995, ET and SEI responded to DEP's requests with letters bearing AFG's or EF's letterhead. The letters state that prior to filing the applications, ET or SEI paid Gator for the face amount of Gator's invoices plus Gator's markup. Gator then paid the subcontractors for the face amount of their invoices. Prior to these payments, AEE an affiliate of ET, or SEI purchased the right to receive the amount due to Gator from ET and the right to receive the amount due to subcontractors from Gator. In each case, AEE bought the right to receive at a discount. According to the financing scheme, ET or SEI received sufficient funds from AEE to make the payments to Gator. ET or SEI, in turn, were obligated to pay AEE following their receipt of the funds claimed in the reimbursement application. On April 21, 1995, DEP issued a memorandum to DEP application reviewers to guide them in the processing of reimbursement applications. The memorandum indicated that: invoices from subcontractors, vendors, suppliers and/or the general contractor which were paid a factored (e.g., discounted) amount by a third party capital participant (e.g., funder) represents the actual amount incurred by that entity and subsequently by the general contractor. The memorandum directed reviewers to deduct costs in an amount equal to the difference in the face value of an invoice or application and the amount paid for the right to receive payment under that invoice or application. DEP did not direct the policy set forth in the April 21, 1995 memorandum towards any individual company. DEP intended the policy to apply to "any combination of a general contractor, management company, funder and responsible party" in any situation in which a third-party capital provider paid any program participants a factored (discounted) amount of their invoices." The April 21, 1995, policy did not condition DEP's position on factoring on any affiliation between any parties. Between August 14, 1995 and January 19, 1996, DEP took action on the 45 applications that are the subject of this proceeding. As reflected in those notices, DEP denied reimbursement of costs claimed in those applications "as a result of factoring of the supporting invoices" and because "the difference between the face amount of the supporting invoices and the amount factored represents interests or carrying charges which are specifically excluded from reimbursement pursuant to Rule 62-773.350, F.A.C." The notices properly reflect a basis of denial of costs that is consistent with DEP's policy as reflected in the December 20, 1994 draft rule and the April 21, 1995 memorandum. DEP has proven that its policy on factoring is consistent with its legislative mandate to deny reimbursement of costs which are not actual and reasonable. Affiliation Policy Not all out-of-chain affiliations between entities constitute a problem with regard to reimbursement. However, the instant cases presented DEP with unique facts as to the relationship between AEE, AFG, ET, WIFL and SEI which DEP's rules and written policies do cover. The mere existence of common corporate officers does not, in and of itself, cause AFG/AEE, ET, WIFL, and SEI to lose their integrity as separate legal entities, or make them "one and the same." Common officers of corporations are not an element of the term "financial relationship," nor does the concept of common corporate officers appear in the definitions of beneficial relationship, familial relationship, indirect interests, material interests, or sources of income. DEP's position at hearing that "affiliation" is a major key to it's position with regard to factoring does not appear in any of the documents in which DEP has either discussed or disseminated information regarding factoring. There are no requirements in DEP's application forms to disclose the nature of the relationships between an applicant and an applicant's source of financing. DEP makes no standard inquiry of funders to disclose the nature of any affiliation between the funder and the provider of capital. Nevertheless, the record supports DEP's position that it can deny reimbursement for costs when a PRFCSR has an "affiliation" with a factoring company outside of the chain of reimbursement under the facts of these cases. It is not contested that ET, WIFL, SEI and AFG and its sister company AEE are affiliated. The greater weight of the evidence indicates that this affiliation goes beyond a mere contractual agreement. AFG, AEE, WIFL (which owns ET and is a trust beneficiary), and SEI have common officers and directors. These officers and directors created ET and SEI primarily for the benefit of AFG and AEE as conduits for investment of funds in Florida's petroleum contamination site rehabilitation program. AFG has other investment vehicles, in addition to ET and SEI, which it can designate as a funder depending on the needs of its investors. AFG usually waits until the last instance to select the funder that it will use in any particular case. AFG often selects the funder on the same day that the funder issues its authorization to the general contractor. The greater weight of the evidence indicates that AFG and/or AEE and the Petitioners did not negotiate the contractual agreements between them at arms-length. A bill of sale evidencing the sale of Petitioners' right to receive reimbursement on each application is the only documented evidence of agreements between Petitioners and AFG or AEE. Any profit derived by ET flows back to AEE through WIFL. ET and SEI are under the management and control of AEE and AFG's officers and directors. For all practical purposes ET and SEI are "one and the same" as AEE and AFG. The affiliation between AEE, AFG, WIFL, ET and SEI is especially troublesome here where AEE advanced the discounted amount of invoices to: (a) Tower so that it could pay its subcontractors in full; (b) Gator so that it could pay Tower in full; and (c) its affiliates, ET and SEI, so that they could pay Gator in full. Gator's and Tower's immediate repayment in the face amount of the invoices to AEE is a back flow of funds (interest) to an entity affiliated with Petitioners. All of these transactions took place before Petitioners filed the instant applications or within a few days thereafter. They create a paper trail indicating that the parties within the "chain" at each level incurred the face amount of the next lowest level. However, the only amount actually incurred at the time Petitioners submitted the applications was the discounted amount of the invoices. Interest or Carrying Charges "Incurred" means that "allowable costs have been paid." (Rule 17- 773.200(9), Florida Administrative Code) Under DEP's rules, the facial meaning of the term is that persons must receive due return for their invoiced goods and services, billed on a units and reasonable rates basis, for allowable costs of site rehabilitation. A finance charge usually does not effect DEP's determination of charges that were "incurred" unless that charge appears as a line-item cost which is not the case here. However, these consolidated cases presented DEP with a new scenario in which Gator and Tower immediately repaid the face amount of their invoices to AEE retaining only the discount amount of their invoices to pay the actual costs of the level below them before submitting the applications. Moreover, they included the carrying charges in the applications as having been "incurred." Case Number 95-403RU, Pick Kwick No. 143, DEP Facility No. 528515448 is a typical example showing how the entities in the chain paid interest charges and included them in the application. In that case, Gator provided Tower with a subcontract/purchase order on July 8, 1994. Tower provided Gator with an invoice in the amount of $17,556.43 on July 8, 1994. Tower's invoice represented services performed in connection with the initial remedial action task at the Pick Kwick No. 143 facility including $269.90 for application preparation. On or about July 8, 1994, Gator provided ET with an invoice in the amount of $20,149.41. This invoice included Gator's 15 percent markup in the amount of $2,592.98 and $269.90 for application preparation. On August 4, 1994, AEE purchased Gator's right to receive payment from ET. AEE advanced Gator $17,696.44 or 88 percent of Gator's invoice. The interest charge on the advance was $2,452.97. On August 4, 1994, AEE purchased Tower's right to receive payment from Gator. AEE advanced Tower $17,029.74 or 97 percent of Tower's invoice. The interest charge on the advance was $526.69. On August 10, 1994, AEE purchased ET's right to receive payment from IPTF. AEE advanced ET $20,831.41 or 87 percent of ET's invoice. The interest charge on the advance was $2,981.93. On August 15, 1994, ET filed the reimbursement application in the amount of $23,813.34. This amount included ET's 15 percent markup on the face amount of Gator's invoice. Prior to filing the application, ET paid Gator, $20,149.41. Gator then paid Tower $17,556.43. Following receipt of payment from ET, Gator repaid AEE $20,149.41. Following receipt of payment from Gator, Tower repaid AEE $17,556.43. Gator and Tower made these repayments within a matter of weeks of the time that AEE advanced funds to them. Calculating simple interest, the annualized interest rate on the loan from AEE to Gator was approximately 144 percent. The annualized interest rate on the loan from AEE to Tower was approximately 36 percent. These were the interest rates, as predetermined by the discount percentage in the addenda to the factoring contracts (Gator at 88 percent and Tower at 97 percent), in approximately 30 of the 45 applications. In the other 15 applications, the Gator sold its right to receive payment at a discount percentage between 87 to 89 percent of the face amount of the invoice. In those cases, Tower sold its right to receive payment at a discount percentage between 95 and 72 percent of the face amount of the invoice. There is no evidence that Petitioners made adjustments to the costs in the applications where Gator and Tower sold their right to payments for a discount percentage at an amount other than as stated in the addenda to the factoring contracts. Analysis of the transactions involved in each of the subject applications clearly shows that the financing scheme utilized here was not equivalent to a "plain vanilla" loan from a disinterested third-party capital provider such as a bank. DEP properly deducted costs from Petitioners' applications that represented interest which Gator and Tower agreed to repay to Petitioners' affiliate, AEE, before Petitioners submitted the applications. The only costs that Gator and Tower actually incurred was the net amount that they received after factoring their invoices. That amount includes the difference between the face amount Gator's and Tower's invoices and the amount that AEE advanced to them. Gator and Tower did not actually incur allowable costs in the amount of the interest paid to AEE when they : (a) agreed to accept reimbursement for their services at a discount; (b) accepted the full amount of their invoices from the next highest level; and (c) passed the full amount of their respective invoices back to AEE. DEP did not envision this type of elaborate factoring plan when it created its simple definition of "incurred" as meaning allowable costs have been paid. It is important for participants in the program to know the "rules of the game." Applicants have to make technical and financial decisions regarding site cleanup. They have to pay all contractors and subcontractors prior to submitting an application. In this case Petitioners' attempts to win DEP's pre-approval of their various factoring proposals were unsuccessful because DEP did not have enough information about the transactions and the relationships of the entities involved. After DEP received additional information from Petitioners, it became abundantly clear that the rules were insufficient to cover the financing scheme presented here. As early as November 4, 1993, Petitioners acknowledged that "the provisions of Rule 170773, F.A.C. do not specifically address the types of situations that arise when providing capital for cleanup activities through funding groups such as AFG." Petitioners revealed their final plan in July of 1994 just before they began filing the applications. At that time, Petitioners knew DEP's concerns. They also knew DEP could not make a decision on an application until they filed the application with DEP. Inconsistent Application of Statutes, Rules and Written Guidelines DEP has authorized financial transactions by which other applicants, after incurring (paying) all costs and filing their applications, sold or pledged their right to future payment to an entity outside the usual reimbursement chain. In those cases, DEP did not deduct interest associated with such transactions. DEP's approval of such transactions came before Petitioners filed their applications in this matter. There is no evidence that those transactions involved the factoring of invoices and an agreement to repay interest before the PRFCSR submitted the applications. Likewise, there is no evidence of an affiliation and less than arms-length negotiation between the funder and the financing company in those cases. The record contains no evidence of an inconsistent application of DEP's statutes, rules or written policies before or after Petitioners filed the instant applications. Reservoir Capital On March 14, 1994, DEP met with Reservoir Capital Corporation (Reservoir) to discuss a change of address notice directing reimbursement orders and checks for Clean America Financial, Inc. (Clean America) applications to a Baltimore, Maryland address. During that meeting Reservoir's counsel informed DEP that Reservoir "paid a percentage, not the full cost, for each application." DEP representative, Paul DiGuisseppe, informed Charles Williams of that conversation by memorandum dated March 15, 1994. Mr. DiGuisseppe later spoke with a representative of Clean America (the funder) and advised him to provide a list of facilities pledged to Reservoir for which notices and payments were to be sent to the Baltimore, Maryland address. On March 30, 1994, Clean America wrote to Charles Williams and Doug Jones, providing a list of sites pledged to Reservoir and directing DEP to send payments to the Baltimore, Maryland address. Among the sites pledged to Reservoir were Curry Station, DEP Facility No. 309103537 and Scardo Automotive, DEP Facility No. 428511319. On June 17, 1994, DEP issued a reimbursement order to Scardo Automotive at the Baltimore, Maryland address. On July 1, 1994, DEP issued a reimbursement order to Curry Station at the Baltimore, Maryland address. These orders did not contain a denial of costs or deductions of interest based upon the disclosed fact that Reservoir had purchased the applications for an amount less than their face value. However, there is no evidence that either of the applicants sold the right to receive reimbursement before submitting the application. Additionally, there is no evidence that Reservoir was affiliated with Clean America. On April 11, 1996, DEP revisited the Reservoir Capital factoring mechanism. In that instance, DEP reviewed a situation in which Reservoir Capital directly paid a subcontractor's invoice in an application that All American Funding (All American) filed. Reservoir had purchased the receivable of All American, and applied part of the purchase price to directly pay a subcontractor. There is no evidence of any "affiliation" between Reservoir and any other entity in the reimbursement chain. Prior to the meeting with Reservoir, DEP intended to deny those costs since it appeared that Reservoir actually paid them rather than the applicant, All American. As a result of that meeting, DEP requested additional information from Reservoir. At the time of hearing in these cases, DEP had not made a decision in that case pending receipt of the requested information. Governor's Bank On March 9, 1994, Governors Bank wrote to Charles Williams requesting that DEP directly remit to Governors Bank any reimbursement due on an application filed by Clean America due to the fact that Clean America "secured its borrowings from the bank with any rights to payment which CAFC has in connection with certain reimbursement applications." On March 30, 1994, Clean America sent a letter to Charles Williams and Doug Jones requesting that the DEP honor the March 9, 1994 letter directing payment to Governor's Bank. On November 4, 1994, Clean America advised DEP that DEP was to remit additional final reimbursements to Governors Bank. The letter advised DEP that "based upon a loan relationship Governor's Bank established with Clean America . . ." reimbursement payments had been assigned to Governors Bank and therefore "all payments and proceeds must be remitted to Governor's Bank." There is no record evidence that Clean America entered into a loan agreement with Governors Bank prior to submittal of the application or that the applications included claims for interest paid to the bank. There is no evidence of any affiliation between Clean America and the bank. The financing mechanism that Petitioners used for these 45 applications is not similar to a "plain vanilla" bank loan where a lender advances funds after an applicant files an application and directs DEP to forward reimbursement payments to a bank lock box. Barriston Environmental Investors L.P. On March 11, 1993, Barriston Environmental Investors, L.P. (Barriston) wrote to John Ruddell, Director of the DEP's Division of Waste Management and described a mechanism of financing by which Barriston (the funder) would obtain funds, at least partially through bank debt, for the payment of subcontractors' site rehabilitation invoices. In the Barriston proposal, the subcontractor would remit an "investment banking fee" of 5 percent of the value of the invoices back to the funder upon payment of 100 percent of the invoices. Barriston's letter acknowledged that this fee would not be reimbursable under the program. In addition, the Barriston funder would receive a commitment fee from the site owner which the Barriston funder would not include in the reimbursement claim. A reference in the letter to the payment of interest on funds advanced on the site owner's behalf does not specify the time frame in which interest would be paid, i.e. before or after the filing of an application. The letter sought DEP's approval and assurance that the payment of 100 percent of the invoices would entitle Barriston to full reimbursement including both markups. Barriston's letter requested an informal response because it realized that DEP had no authority to take official agency action without the submission of an application. On April 9, 1993, DEP responded to the Barriston letter. In its response, DEP stated that the arrangements appeared to be consistent with current statutes and rules and would be eligible for the full reimbursement allowed by DEP's rules. However, there is no record evidence of any official agency action on an application submitted in accordance with Barriston's proposal. Interest Indemnification Interest indemnification encompasses a situation in which a contractor pays interest directly back to a funder during the period of time after submittal of an application but before reimbursement by the IPTF. In June 1995, a DEP employee contacted Petitioners' certified public accountant (CPA) inquiring about the practice and seeking copies of his other clients' interest indemnification contracts. After that conversation, the CPA discussed the matter with another DEP employee to confirm his understanding that financing issues were outside of the scope of DEP's review so long as an applicant did not include such charges in the application. Since the June 1995 discussions, DEP has reimbursed applications which were financed through interest indemnification without adjustments for the payment of interest. However, the interest indemnification payments applied to applications after the applicants filed them with DEP to replace long-term interest that IPTF is no longer paying. The applicants were not seeking reimbursement of those payments as incurred costs. Petitioners have not established their entitlement to reimbursement for the factored amounts of their invoices. DEP presented competent evidence to support its "factoring" and "affiliation" policies as applied here. In addition, the evidence indicates that DEP has not inconsistently applied such policies to other similarly situated reimbursement applicants. Petitioners have failed to prove that DEP's denial of costs based upon factoring is not reasonably related to the purpose of reimbursement review and otherwise unsupported by competent evidence. The April 21, 1995 policy statement is a rule as defined in Section 120.52(16), Florida Statutes. DEP was not aware of the need for such a rule when it made the last substantive amendments to Rule 17-773, Florida Administrative Code, in 1993. Nevertheless, DEP demonstrated that the non-rule policy is a reasonable interpretation of Sections 376.3071(12)(b) and 376.3071(12)(d), Florida Statutes. DEP provided an evidentiary basis to support its factoring policy in these consolidated cases. The difference between the face amount of the invoices and their factored amount did not represent allowable costs which were actual and reasonable. DEP deducted the amount of the relevant discount percentage (on a prorated basis) from each invoice submitted by Tower and its subcontractors. There is a discrepancy between the amount that DEP deducted from each invoice (itemized) and the total deduction based on a lump sum in 33 of the 45 cases which DEP did not explain during the hearing. Therefore, before DEP enters a Final Order, it should review the supporting documents to determine the correct deduction in each application. "Value Added" Policy Funders and contractors are entitled to take a markup of paid contractor and subcontractor invoices for allowable costs at reasonable rates. The invoices must represent actual and reasonable costs which are integral to site remediation. Contractors are entitled to a first-tier 15 percent markup for supervising and/or coordinating on-site remediation, for investing capital while awaiting reimbursement by paying subcontractors invoices, and for assuming liability for the performance of the subcontractors. Funders generally are entitled to a second-tier 15 percent markup as an incentive to provide funds to finance the work. Markups are expressly subject to limitations set forth in Section 17- 773.350(9), (10) and (11), Florida Administrative Code. There are no other specific or implied limitations on markups in the rules or written guidelines. Requiring each entity that receives a markup in the reimbursement chain to pay contractor, subcontractor, and vendor invoices helps ensure that each level in the reimbursement chain pays the participant at the next lowest level. In these cases, each level in the reimbursement application chain "technically" paid the next lowest level. DEP policy in effect at the time Petitioners submitted the instant applications for reimbursement was to allow markups of paid invoices at two levels. However, prior to the submission of the instant applications, DEP was not aware of a case where a general contractor claimed a markup for work that was complete before the general contractor became involved in the project. With regard to all of the pending reimbursement applications, Gator applied a 15 percent markup to all of Tower's invoices including the invoices of Tower's subcontractors. With regard to a minimum of 30 of the 45 sites, Gator clearly did not supervise, manage or direct site remediation activities performed by Tower or its subcontractors. In fact, Gator did not become involved until after Tower completed these tasks. In at least 30 of the instant cases, Tower was acting as the general contractor when all of the on-site remediation took place. However, Tower could not apply a 15 percent markup to the invoices for its own services. Gator made it possible for Petitioners to claim the markup on Tower's invoices. As to the 15 sites at which Gator allegedly had some type of involvement with on-site remediation activities, there is no persuasive evidence regarding the specific activities or the level of Gator's involvement on any particular project. On September 1, 1994, Restoration Assistance, an entity under contract with DEP to review reimbursement applications, issued a memorandum to its reviewers directing them to complete their review and do a "total denial" on "Gator Environmental packages." The memorandum advised the reviewers that "Bruce" was drafting canned language to use in DEP's denial statement. On or about April 21, 1995, DEP presented its reviewers with a memorandum setting forth an initial overview of a "value added" policy for markups taken by a "management company" involved in site remediation activities. According to the memorandum, DEP would allow reimbursement of claims for actual project management work and value-added services. The memorandum further provided that DEP would allow markups to a management company which only provided cash-flow services for a majority of the program task period even if the management company performed no other service. However, DEP would deny a markup if the management company provided such services during a "one month time period." DEP intended for the April 21, 1995 memorandum to acquaint DEP reviewers with the emerging DEP policy on markups. DEP's rules and written guidelines do not address the distinction made in the April 21, 1995 memorandum regarding the timing during which a management company could provide cash flow services and still be entitled to a markup. On October 20, 1995, Charles Williams issued a DEP policy memorandum for reviewers to use in reviewing reimbursement applications. Through that memorandum, DEP finalized and implemented the "value added" policy. The memorandum states that: if the 'GC' [general contractor] was involved with the management of the project during the course of the actual work by subcontractors, [DEP] rules do not preclude them from applying a markup. However, if the 'GC' came along after the work was completed by other contractors and their involvement was more of a due diligence exercise to faciltiate (sic) a funding arrangement by a third party, then the 'GC' markup would not be justified, though a markup by the actual funder listed as the PRFCSR could be allowed. Prior to the establishment of the "value added" policy on October 20, 1995, DEP made no inquiry as to whether a contractor provided value added services in order for the contractor to be entitled to a markup. DEP applied the "value added" policy to all pending applications (including the ones at issue here) resulting in a deduction of Gator's markup in all of the subject cases. The Department of Banking and Finance reviewed and issued a report (Comptroller's Report) on the Petroleum Contamination Site Cleanup Reimbursement Program on November 29, 1994. This report addressed the issue of markups in the reimbursement program. The Comptroller's Report recognized that DEP found the multiple markup structure to be beneficial in that it "attracts the involvement of companies whose role in cleanup projects is limited to providing funds to finance the work [and] attracts investors who provide funds which might not otherwise be available--thus facilitating cleanup of contaminated sites." The Comptroller's Report describes a two-tier arrangement involving a "prime contractor engaged to manage the cleanup project" and a "funding entity." The report acknowledges that the prime contractor "might have only limited direct involvement in the cleanup, having engaged subcontractors for most or all of the actual work." The example in the Comptroller's report did not state what DEP's policy would be if a subcontractor had completed all of the actual work before the contractor became involved. Even without this consideration, the report was critical of DEP's allowance of markups on either level. The Petroleum Efficiency Task Force (PETF) issued its final report on financing contractors on August 17, 1994. This report discussed DEP's policy of allowing two markups. In this discussion, the PETF recognized that "funders must be able to rely on the skills and knowledge of contractors to minimize reimbursement shortfalls." The PETF recommended for future consideration that "the Department should provide in rulemaking that contractors who take the first-tier 15 percent markup on subcontracted work must adequately supervise the work." When the PETF issued its report, there was no existing rule that established any level of on site supervision or any other specific criteria for applying one of the two allowable levels of markup, other than paying invoices for integral site rehabilitation work. DEP's rules and written guidelines did not substantively change with regard to the "value added" policy from the April 22, 1993 revision of Chapter 17-773, Florida Administrative Code, to the October 20, 1995 memorandum which established a non-rule limitation on the ability of an entity to apply a markup to paid invoices. Because the rules and written guidelines do not reflect the "value added" policy, a participant in the program would not be aware of it even if the participant requested program information. Gator technically paid 100 percent of the face value of Tower's invoices. Without Gator's involvement, AFG and AEE would not have financed these applications. However, DEP presented persuasive evidence at the hearing to support its position that Gator was not entitled to a markup because Gator's services added no value to site remediation projects. In the instant cases, Gator performed some type of a minimal due diligence review of Tower's site work. Gator allegedly reviewed Tower's technical and administrative files, cross-referenced technical and administrative files with the applications which Tower prepared, made visits to some job sites, and prepared a deficiency letter to determine the appropriateness of the scope of Tower's work. However, all of these functions were repetitious of the work that was performed by Tower and the certified public accountant attesting to the Certification Affidavit. Gator limited the deficiency letters to the question of whether the scope of Tower's services were reimbursable. However, there is no evidence that Tower's deficiency letters resulted in adjustments to costs in the applications as filed by Petitioners. The deficiency letters served only to adjust the discount percentage set forth in the addenda to the factoring contracts. Tower was a qualified engineering consulting firm that employed its own engineers and geologists. Gator's employee that reviewed the technical information in Tower's files was not a Florida professional engineer. He was not qualified as a certified public accountant to determine whether a charge was within DEP's reasonable rates. The Gator employee was a Florida professional geologist but he did not sign and seal the deficiency letter as such. There is no reference in DEP's rules or written policies to a deficiency letter. AFG required Gator to prepare the deficiency letter within two days of the date on which EF provided Gator with the opportunity to review a completed task. This two-day turn around time allegedly afforded efficiency of payment. Gator did not begin its review of an reimbursement application until after Gator received an invoice from Tower. The relevant subcontract/purchase order issued by Gator to Tower, the Tower invoice and the Gator invoice were often prepared on the same day. Gator technically paid Tower's invoices with funds that AEE advanced. Tower used these funds to repay AEE. When Gator received payment from ET or SEI, it passed the funds back to AEE before ET or SEI submitted the applications to DEP or immediately thereafter. Pursuant to the addenda to the factoring contracts, Tower, not Gator, contributed to a reserve trust account which AEE will use to cover any reimbursement shortfalls. Gator indemnified AEE and guaranteed its own work but did not assume a risk of loss on Tower's work. On most if not all of the applications, Gator performed no meaningful management or supervisory functions. The greater weight of the evidence indicates that Gator's primary purpose in these consolidated cases was not to afford AFG a level of comfort as to the appropriate scope of the individual program tasks but to ensure that third-party investors maximized their profits. The "value added" agency statement has the effect of a rule which DEP did not contemplate when it promulgated its rules and written policies. Nevertheless, DEP's decision concerning the value added policy is within the scope of its delegated legislative authority. DEP has proven that reimbursement for Gator's services was not allowable as actual and reasonable costs of site remediation. Therefore, it is not entitled to a first-tier markup. Computer Costs Prior to January 1, 1995, DEP determined the reimbursability of computer costs based upon a "units and rates basis" as provided by Rules 17- 773.100(5), and 17-733.700(2)(d), Florida Administrative Code. DEP evaluated computer costs "as a certain number of hours [at] a reasonable rate." Pursuant to the units and rates rule provisions, there was no rational basis for DEP to deny the computer costs contained in applications filed prior to January 1, 1995. On January 1, 1995, DEP established a policy by which it would disallow in full any computer costs greater than $750. Under that policy, DEP would reimburse in full an applicant's computer costs with supporting invoices of $749 dollars, but disallow in full computer costs with supporting invoices of $751. DEP's reimbursement orders involving more than $750 in computer costs after January 1, 1995 routinely stated that "there was insufficient justification to demonstrate that this computer time was integral to the task or necessary." DEP applied the computer policy to all applications filed and pending review at the time it developed the policy, regardless of when an applicant performed the work or generated the records. DEP applied the January 1, 1995 computer policy to the application in Case No. 95-4606 which ET filed on July 18, 1994. In that case DEP denied $1,456.25 in computer costs allowing no reimbursement for computer time. On April 27, 1995, DEP implemented a new policy by which it evaluated computer costs based upon a calculation of allowable personnel hours per task as opposed to a units and rates basis. Under that policy DEP would evaluate the total allowable personnel hours in a task and limit computer costs to 10 percent of those hours up to a maximum of $750. Under the April 27, 1995 policy, DEP reduced the reimbursement for computer costs to $500 if the reimbursable amount exceeded $750 after DEP made the 10 percent calculation. DEP implemented the April 27, 1995 policy through the use of a calculation work sheet which it provided to its application reviewers. DEP applied the April 27, 1995 computer policy and work sheet to all applications pending review at the time DEP developed the policy, regardless of when the applicant performed the work or generated the records. DEP applied the April 27, 1995, policy in all of the subject cases subsequent to Case No. 95-4606, with the following exceptions: Case Nos. 96- 0432RU, 96-1006 and 96-1009, which had no denial of computer costs; and Case No. 96-1352, in which DEP applied the 10 percent limitation, but reimbursed 896.75 dollars of the computer costs. After implementation of the April 27, 1995 policy, DEP made no effort to adjust the denial of all computer costs in Case No. 95-4606 under the January 1, 1995 policy. The only other category in which DEP evaluates reimbursement on a percentage of hours basis, rather than a units and rates basis, is total management costs. DEP's written guidelines and Rule 17-773.350(16), Florida Administrative Code, limit management costs to a percentage of total allowable personnel hours. There are no rules or written guidelines that would limit computer costs based upon criteria other than a units and rates evaluation, or that would support DEP's policies as reflected in the January 1, 1995 and April 27, 1995 policy memoranda. DEP's rules and written guidelines did not substantively change with regard to this issue from the time Petitioners filed the subject applications, to the time DEP established the January 1, 1995 and the April 27, 1995 computer policies. DEP did not issue any PCRs or other written guidelines to place applicants on fair notice of DEP's new policies with regard to computer costs. DEP presented no persuasive evidence at the hearing to support its January 1, 1995 and April 27, 1995 policies. The only basis for the policy was DEP's representation that it developed the policies as a "reasonableness issue" in order to reduce the amount of computer costs that were appearing in reimbursement applications. DEP did not demonstrate that it based the new policies on any calculation of the amount of computer time necessary to perform a remediation task. Once the total computer costs reached $750 dollars, DEP gave no consideration to the scope or complexity of the task. Given the difference in the amounts involved in performing site remediation services (e.g. an application totaling 7,249.75 dollars in Case No. 96-0411RU versus an application totaling 149,080.02 dollars in Case No. 96-0425RU) and the differences in program tasks (see Rule 17-773.500, Florida Administrative Code), a policy establishing a flat numerical limit on computer costs that an applicant may claim in an application is not reasonable. DEP presented no evidence at the hearing to prove the basis for its retroactive application of the policies to work performed and applications submitted prior to the development of the policies. DEP did not attempt to explain the basis for its failure to apply the rules and written guidelines in effect at the time the work was performed or the records generated. Based upon the foregoing, DEP's denial of computer costs in each of these applications is not supported by the statutes, rules and written guidelines in effect at the time the work was performed or the applications were filed. Each application contains information supporting the computer costs. The application Certification Affidavits and CPA attestations demonstrate that Petitioners incurred the computer costs which DEP should reimburse. The reimbursement for computer costs should be in full except to the extent that DEP allocates to a supporting document a prorated share of the amount of a discount on a factored invoice. As a final note, of the computer costs denied in 16 of the 45 reimbursement notices, the sum of the allowances and deductions does not equal the overall claim. The differences ranged from a few dollars to over four hundred dollars. DEP provided no evidence to explain the discrepancy in the amount calculated by DEP in its notices. Miscellaneous Costs Prior to September 27, 1995, DEP reimbursed miscellaneous line-item costs when the applicant furnished support for them in the application. The miscellaneous costs policy as of May 17, 1995 even dispensed with the requirement of supporting invoices when these costs totaled less than 300 dollars. DEP's reviewers are employees of a firm that provides DEP with application review services as an independent contractor. On September 27, 1995, after a meeting with DEP staff, the application reviewers implemented a policy to deny costs for "overhead." Under the new policy, certain items were overhead, including but not limited to: gloves, mason jars, sampling disposables, phone calls, excessive faxes, excessive copying, small hand tools, shipping documents, etc. The application reviewers had to exercise their own discretion as to which items were "overhead" until they received a guideline from DEP. The reviewers decided to approve overhead expenses of less than $50 and deny items for more than $50. The policy continued in existence at least through November 9, 1995. DEP applied the miscellaneous/overhead policy to all of the subject applications, regardless of the date of cleanup work or application submittal. The application reviewers applied the miscellaneous/overhead "policy" without the knowledge of DEP's Reimbursement Administrator, Charles Williams. When Mr. Williams found out about the policy, he "counselled them that they need to reverse that position." The correct policy would allow reimbursement of "miscellaneous/overhead" costs that the reviewers denied in 33 of the 45 applications. DEP made no effort to correct the denial of these costs based upon its erroneously applied policy. DEP presented no persuasive evidence at the hearing to support its application of the miscellaneous/overhead policy in applications submitted prior to the development of the policy. DEP did not explain the basis for its failure to apply the rules and written guidelines in effect at the time the subcontractors performed the work or generated the records. Based upon the foregoing, DEP's denial of miscellaneous/overhead costs in 33 applications in which DEP denied such costs is not supported by the applicable states, rules and written guidelines. Each application contains information supporting the miscellaneous costs. The applications' Certification Affidavits and CPA Attestations demonstrate that Petitioner's incurred the miscellaneous costs. Therefore, DEP should reimburse those miscellaneous costs. The reimbursement should be in full except to the extent that DEP allocates to a supporting document a prorated share of the amount of a discount on a factored invoice. Airfare From June 17, 1993, to sometime prior to January 31, 1996, DEP's policy with regard to the reimbursement of airfare was to pay airfare integral to site rehabilitation when such costs were relatively inexpensive. By no later than January 31, 1996, DEP developed and applied a policy to deny all airfare costs regardless of whether the applicant provided justification. On March 13, 1996, DEP decided that once again it would reimburse airfare with sufficient justification such as a comparison with car travel. DEP considers the changes in reimbursability of airfare as "just procedures to follow," and applicable without regard to the timing of work performed. DEP denied airfare charges in Case No. 96-1353 as overhead charges. DEP's rules and written guidelines did not substantively change with regard to airfare from June 17, 1993, when airfare was reimbursable, to the policy implemented on January 31, 1996, in which airfare was not reimbursable, to March 13, 1996, when airfare was reimbursable once again. DEP issued no PCRs or other written guidelines to place applicants on fair notice of the changes in policy with regard to airfare. DEP has not provided any evidence to support the basis for the fluctuations in its airfare policy. DEP presented no evidence at the hearing to provide the basis for its application of the airfare policy to work performed and applications submitted prior to the development of the changes in policy. DEP did not explain the basis for its failure to apply the rules and written guidelines in effect at the time the subcontractors performed the work or generated the records. Based upon the foregoing, DEP's denial of airfare costs in the application for Case No. 96-1353 is not supported by the applicable rules and written guidelines. The application contains information supporting the miscellaneous costs. The application's Certification Affidavit and CPA Attestation demonstrate that Petitioner ET incurred the airfare costs. Therefore, DEP should reimburse airfare costs in full except to the extent that DEP allocates to a supporting invoice the prorated amount of a discount on a factored invoice. Inconsistent Agency Practice The application of DEP's factoring policy did not treat Petitioners in a manner different from other funders. Heretofore, DEP was not aware of a case where program participants factored their invoices before filing an application and claimed the face amount of those invoices for reimbursement. The affiliation between Petitioners and AFG and/or AEE was also unique. DEP issued a memorandum requiring funders to provide "clarification regarding essential cost documentation" on July 26, 1995. The purpose of this memorandum was to remind application reviewers of the need for a funder to submit an invoice documenting and supporting its line-item claim for the second- tier 15 percent markup. DEP did not intend for this memorandum to limit DEP's ability to inquire about relationships and transactions taking place outside the usual chain of reimbursement when an application on its face refers to a factoring scheme involving an "affiliation" between the factoring company and the funder. DEP does not deduct finance charges when an applicant incurs (pays) all invoices, submits the application, then sells the receivable or agrees to pay long-term interest pending receipt of payment from the IPTF. In the instant cases, Petitioners agreed to accept reimbursement for their services at a discount before they submitted the applications then included the cost of borrowing capital in the application. DEP does not routinely ask questions of other applicants regarding their financing. Nevertheless, under the facts of these cases, DEP would have been remiss in its duty if it had not made such inquiries. DEP's actions in the instant cases are not inconsistent with its actions taken in other cases with other similarly situated entities because there is no evidence that other such cases exist. Bias On August 31, 1994, Bruce French provided Charles Williams with a memorandum in which Mr. French discussed factoring. In his memorandum, Mr. French concluded that DEP could only reimburse the "discount" amount that the factoring company actually incurred/paid the funders. On September 1, 1994, Mr. French had a discussion with someone named "Toni" at McGuinnes Laboratories regarding the laboratories' use of AFG services for financing invoices to Tower. On September 2, 1994, Mr. French related in a memorandum to Charles Williams, his understanding that the laboratory had different price lists for different customers, generally depending on volume of analysis performed and individual payment agreements. Mr. French surmised that the laboratory's price for services "is inflated to deal with AFG's discount price to be paid by AFG." Mr. French concluded that, under those circumstances, AFG's financing arrangements may "represent collusion on behalf of all parties to the application to defraud DEP for the benefit of AFG. That is, prices are 'fixed' prior to performing of services." On September 2, 1994, Mr. Williams responded to Mr. French's memo by indicating that the scenario presented by Mr. French "sounds interesting" and that DEP would "absolutely need to have a Big Meeting to decide what to do once and for all." On September 12, 1994, Mr. French provided information on factoring to Bill Sittig of DEP's Office of the Inspector General and to Mr. Williams. Mr. French included a drawing entitled "The Tangled Web They Weave or the Hidden Discount Line Items and other Fluff, August 31, 1994 Interpretation of Bruce French's Discussion." At the hearing, neither Mr. Sittig nor Mr. Williams remembered seeing the drawing. There is no competent evidence as to the identity of the person creating the drawing. There is no persuasive competent evidence that Mr. French was biased against Petitioners or any other entity utilizing factoring as a mechanism of financing. Moreover, DEP had no direct and demonstrable bias against Petitioners. Timeliness of Agency Action Prior to filing the instant applications, representatives of the funders and AFG presented various financing schemes to DEP for pre-approval. In each proposal, the person speaking for AFG also spoke on behalf of the funders. At all times relevant here, Paul DeCoster was secretary and counsel for AFG. He was also secretary of SEI and a corporate director and shareholder of WIFL. In September of 1993, Mr. DeCoster wrote a letter to DEP describing a proposed financing scheme in which AFG would purchase the account receivables of contractors engaged in site rehabilitation. AFG's plans were in a formative stage at this time. Mr. DeCoster wrote DEP a follow-up letter dated October 4, 1993. This letter states that: the amount of financing required to meet [certain contractor clients'] working capital needs is so large that FEC [a funder] must find large institutional investors to accommodate them. For service of finding such investors, FEC proposes to charge a fee to the contractor client, which would be in addition to the 15 [percent] 'markup' taken by the investor providing the financing. The October 4, 1993 letter disclosed that contractor clients would deposit funds in a trust account as security for the performance of their work. The trust would invest its funds "in accounts receivable purchased from AFG, the parent of FEC, and any income earned by the trust on those investments would inure to the benefit of AFG." The plan that Mr. DeCoster proposed was markedly different from the scheme utilized here. The most noticeable differences are that the subject applications did not involve a finder's fee, FEC as a funder, or the purchase of AFG's accounts receivable by a reserve trust. In October of 1993, Will Robins met with DEP staff to discuss the manner in which the reimbursement program would apply to a proposed financing scheme. In this proposal, AFG would charge contractors an application/initiation fee and/or a commitment fee. The transactions between the entities in the instant applications did not involve an application/initiation fee and/or a commitment fee. When Mr. Robins made his presentation, DEP did not know the specific relationships between the entities involved or Mr. Robins' position as an officer, director, and or shareholder of these entities. After that meeting, counsel for AFG sent DEP a letter dated November 4, 1993. The letter acknowledges that the existing rules did not "specifically address the types of situations that arise when providing capital for cleanup activities through funding groups such as AFG." The letter identifies ET as the proposed funder through which AFG would finance cleanups. According to the letter, ET would incur the costs but AFG would hold the right to receive the ultimate reimbursement payment from the IPTF. The letter clearly reveals DEP's concern that the proposed application/initiation fee was a "kickback" which should be deducted from the funder's markup. In January of 1994, counsel for AFG wrote a letter to DEP describing a financing scheme which differs in some respects from the financing scheme at issue here. This letter states that AFG intended to purchase receivables of the funder and the general contractor at a discount. Under this plan, the general contractor and the funder would claim the two allowable markups. The subcontractors would pay AFG a finder's fee. The letter reveals that AFG, its affiliates, and investors would recover the cash equivalent of both levels of markups plus a fee from subcontractors for funding the high costs of risky projects. The letter states that: since the Department's reimbursement rules do not specifically address the issue of site cleanups that are funded through private sources of capital . . . it is important that we know if there are any obvious or glaring problems with this plan that would cause reimbursement to be withheld otherwise restricted. On July 13, 1994, counsel for AFG wrote DEP to explain some modifications in the details to the proposed plan for the purchase and sale of receivables at a discount. This letter informed DEP that AFG would have a financial affiliation with the funder (ET) which would exist outside the chain of reimbursement and which would have no effect on either the markups or the overall reimbursement amount reflected in any application. All contracts within the chain of reimbursement (between ET, SEI, Gator, Tower, and its subcontractors) would be negotiated in arms-length transactions. The letter states: In this plan the subcontractors will perform their work on the site and will prepare their invoices in a manner consistent with any publicly or privately financed cleanup. Those invoices will be complied and forwarded to the general contractor for its review and the general contractor will add on the markup allowed by rule to the subcontractor's bills. The reimbursement application will then be forwarded to the funder who will ensure that all bills have been paid and who will be identified as the "person responsible for conducting site rehabilitation" on the reimbursement application. The funder will take the second markup allowed by rule, and will submit the reimbursement application to the Department of Environmental Protection for processing. Reimbursement will ultimately be paid by the Department to the funder in accordance with the reimbursement application. At no step in this process will the Department relinquish any authority to review and approve either the scope and nature of the cleanup or the rates charged by the contractors and subcontractors. Petitioners filed the first of their applications with DEP on July 18, 1994, five days after the date of the July 13, 1994 letter. In late November, 1994, after all but 4 of the 45 applications were filed, DEP placed a telephone call to Petitioners' counsel advising him of the position DEP intended to take with regard to his client's financing arrangements. DEP did not provide any written confirmation of that call, or issue any document describing its policy, until April 21, 1995. In each of the above described letters and/or meetings, AFG's attempt to ascertain DEP's position regarding the various proposed financing mechanisms was unsuccessful. However, AFG was aware that DEP could not take a position that represented official agency action until an applicant actually filed an application. At no time did DEP make any affirmative statement which misled Petitioners regarding the acceptability of AFG's proposals. There is no persuasive evidence to support a finding that the agency did not timely respond to the claims for reimbursement.
Recommendation Based upon the foregoing, it is recommended that DEP enter a Final Order in each of these consolidated cases: (a) disallowing reimbursement of the first- tier markup; (b) disallowing reimbursement of any factored invoice in an amount equal to the amount of the discount on that invoice; and (c) allowing reimbursement of costs associated with airfare, computers, and miscellaneous/overhead expenses. DONE AND ENTERED this 8th day of October, 1996, in Tallahassee, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of October, 1996. COPIES FURNISHED: E. Gary Early, Esquire Christopher R. Haughee, Esquire Akerman, Senterfitt and Eidson, P.A. 216 South Monroe Street, Suite 200 Tallahassee, Florida 32302-2555 W. Douglas Beason, Esquire Betsy F. Hewitt, Esquire Department of Environmental Protection 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Virginia B. Wetherell, Secretary Department of Environmental Protection Douglas Building 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Perry Odom, Esquire Department of Environmental Protection 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
The Issue Whether Alachua County Environmental Protection Department discriminated against Tilak B. Shrestha based upon his race or national origin, in violation of Title VII of the Federal Civil Rights Act of 1964 and the Florida Civil Rights Act of 1992, by releasing Mr. Shrestha from his temporary assignment through Temp Force with the Alachua County Environmental Protection Department and by not hiring Mr. Shrestha for the position of Senior Environmental Specialist within the Alachua County Environmental Protection Department.
Findings Of Fact The State of Florida funds the Petroleum Cleanup Program (Petroleum Program) which is focused on removing petroleum contaminants from various sites within the State of Florida. The Department of Environmental Protection (DEP) administers the Petroleum Program, also known as the Underground Storage Cleanup Program. In 12 counties, including Alachua, Florida contracts with the county to manage the Petroleum Program. The Alachua County Environmental Protection Department (Alachua DEP) manages the Petroleum Cleanup sites in Alachua County. Mr. Chris Bird has been the director of the Petroleum Program since 1993. He has worked with Alachua County since 1986. In the 1994-1995 fiscal year, the Florida Legislature was facing a deficit; therefore, the Legislature significantly reduced the funding for the Petroleum Program. As a result, DEP froze the Petroleum Program, and dropped several active sites. The lack of funding resulted in downsizing at both the county and state levels at the beginning of 1995. At the beginning of 1995, the Alachua DEP had three funded positions in the Petroleum Program. Mr. Alex Vieira occupied the position of full-time Professional Engineer. The Alachua DEP also had funding for an administrative position and a full-time Environmental Engineer/Geologist. The Environmental Engineer/Geologist position was vacant at the beginning of 1995. The Alachua DEP originally advertised for the position. However, when the State reduced funding for the Petroleum Program, the Alachua DEP decided not to fill the position with a permanent employee and ultimately froze this permanent position. In order for the Petroleum Program to continue at a minimum level of operation, the Alachua DEP hired temporary employees through Temp Force, a temporary employment agency. Temp Force served as an independent contractor for the Alachua DEP. Temp Force provided Mr. Tilak Shrestha and Mr. Mike Shuler to the Alachua DEP Petroleum Cleanup Program. Mr. Shuler began working at the Alachua DEP through Temp Force two months prior to Mr. Shrestha's Temp Force assignment to the Petroleum Program. At the time of the assignment through Temp Force, Shrestha was not credentialed as a Ph.D. Mr. Shrestha and Mr. Shuler were employees of Temp Force, received their paychecks from Temp Force and acquired no benefits from Alachua County. Mr. Shrestha worked as a Temp Force employee for six months at Alachua DEP and was assigned to various projects at the Alachua DEP. As supervisor for the Petroleum Program, Mr. Vieira assigned projects to both Mr. Shrestha and Mr. Shuler. Mr. Shrestha described his working conditions during his assignment through Temp Force with the Alachua DEP as "good, no complaints," and "good on average." In 1995, the Florida legislature ultimately reduced funding for the Petroleum Program from $1.2 million to approximately $250,000. When the Alachua DEP received notice of these funding cuts, Mr. Bird advised Mr. Vieira that he needed to release one of the Temp Force employees from his assignment with the Alachua DEP. Mr. Vieira retained Mr. Shuler and informed Mr. Shrestha that he would no longer be working on the Petroleum Cleanup assignment through Temp Force. Mr. Shrestha's assignment through Temp Force with the Alachua DEP was terminated on August 10, 1995. During Fall 1995, the legislature substantially changed the law and administration pertaining to the Petroleum Program, both at the county and state levels. In October 1995, Ms. Pegeen Hanrahan became the Petroleum Program supervisor following Mr. Vieira's resignation. Ms. Hanrahan earned a Bachelor's degree in Environmental Engineering and Sociology and a Master's degree in Environmental Engineering. She is a registered Professional Engineer and a certified Hazardous Materials Manager. She began working for Alachua County in 1992 as an Environmental Engineer and later served for three years as Hazardous Materials Program Supervisor for Alachua County. When Ms. Hanrahan became supervisor of the Petroleum Program in Fall 1995, the Petroleum Program had essentially entered a "stand-by" mode. The Alachua DEP declined to send any additional work to its sub-contractors. Therefore, the technical duties involved in the Petroleum Program were reduced and the administrative duties became more important. During the Fall of 1995, there were no permanent employees on staff. Mr. Shuler remained as the only temporary employee in the Petroleum Program and according to Ms. Hanrahan was doing a "perfectly adequate job." Based on the new and reduced Petroleum Program budget for the 1995-1996 fiscal year, the Alachua DEP acted in October 1995 to establish the position of Senior Environmental Specialist in lieu of the Environmental Engineer/Geologist position. The position was advertised in December 1995. The main role of the Senior Environmental Specialist was to assist the Professional Engineer in the area of the administration involved in the Petroleum Program. The duties included filing reports, tracking sites, and submitting task orders and invoices to the office in Tallahassee. Due to the increasing changes in the Petroleum Program, the Alachua DEP required a Senior Environmental Specialist who understood the Petroleum Program's administrative tasks, as well as the State policies pertaining to the Petroleum Program. The Senior Environmental Specialist candidate was required to have a technical background in fields including, but not limited to, engineering, biology or geology. The Professional Engineer, not the Specialist, was assigned the technical review of the Petroleum Program. An applicant's understanding of the technical and administrative duties was necessary. In 1995, the Alachua DEP advertised the position of Senior Environmental Specialist, which included printing an advertisement in the local newspaper, per the County regulations. The Alachua DEP described the administrative tasks of Senior Environmental Specialist to include: preparing reports; making recommendations; receiving and investigating complaints; conducting performance evaluations; counseling, hiring and terminating employees. The Alachua DEP described the knowledge, skills, and abilities of the Senior Environmental Specialist to include: thorough knowledge of the technical methods and procedures involved in the administration of environmental regulations, programs, and policies; knowledge of local, state, and federal rules, regulations, and ordinances related to environmental protection; ability to create concise, clear, and succinct technical reports; and ability to research technical problems, formulate recommendations, and compile related reports. The Alachua DEP described the minimum qualifications for the position of Senior Environmental Specialist as: Bachelor's degree in environmental or natural science, civil or environmental engineering, geology, or hydrology, or related field, and two years' professional level environmental-related experience; or any equivalent combination of related training and experience. The County received 14 applications for the position as Senior Environmental Specialist from applicants, which included Mr. Shrestha and Mr. Shuler. Ms. Hanrahan was supervisor of the Petroleum Program in January 1996 and responsible for the hiring of the Senior Environmental Specialist. She received an Application Referral Document from personnel, stating that each of the applicants met the County's minimum requirements for the position of Senior Environmental Specialist. Upon receipt of the re?sume's and applications, Ms. Hanrahan initially screened the applicants for those who had petroleum-related experience. She narrowed the applicants to four individuals, who included Mr. Shrestha, Mr. Shuler, and two others. On January 22, 1996, Ms. Hanrahan conducted a telephone interview of each of the four applicants who passed the initial screening. The telephone interview was customary hiring practice within the Alachua DEP. During the telephone interview, Ms. Hanrahan asked each applicant the same series of ten questions, designed to test the applicant's level of knowledge regarding technical and administrative aspects of the position of Senior Environmental Specialist. Mr. Shrestha answered five out of a possible eleven answers correctly. This was the second highest score out of the four applicants. Shuler achieved the highest score, answering eight-and-one-half out of eleven answers correctly. Three interview questions specifically addressed administrative issues. Question six asked, "What does RBCA stand for?" Question seven stated, "This year the Florida Petroleum Cleanup Program has adopted a new mechanism for review and approval of work on petroleum contaminated sites. Can you tell me what that program is called?" Question nine stated, "Give two examples of policy decisions under RBCA." Mr. Shrestha failed to answer question six, seven or nine correctly. Mr. Shrestha's failure to correctly answer each of the administrative questions indicated to Ms. Hanrahan that he was unaware of the changes within the Petroleum Program. Another purpose of the telephone interview was to assess the applicants under pressure. Ms. Hanrahan also sought to evaluate how the applicants responded to her authority. During the telephone interview, Mr. Shrestha challenged Ms. Hanrahan regarding the relevance of the questions to the position of Senior Environmental Specialist and she noted his argumentative attitude during the interview. He conceded at the hearing that he did ask her about the relevancy of the questions. Based upon his argumentative tone, Ms. Hanrahan questioned Mr. Shrestha about his ability to accept her supervisory decisions. She decided not to hire Mr. Shrestha for the position of Senior Environmental Specialist based on his limited knowledge of the administration of the Petroleum Program, a factor essential to the position of Senior Environmental Specialist, and his inability to accept her authority as supervisor. Ms. Hanrahan was also aware of critical statements that Mr. Shrestha allegedly had made to female co-workers during his assignment through Temp Force at the Alachua DEP. Ms. Robin Hallbourg is currently employed as Senior Environmental Specialist with the Alachua DEP. Ms. Hallbourg has been with the Alachua County DEP for 15 years. Ms. Hallbourg worked with Mr. Shrestha at the Alachua DEP during Mr. Shrestha's assignment through Temp Force. Ms. Hallbourg testified that Mr. Shrestha told her that "she should be home with her child" and that she "should allow a man to have her job." After this conversation, Ms. Hallbourg discussed his statements with others in the Alachua DEP, including Ms. Hanrahan. Ms. Hanrahan recalled the discussion with her. Ms. Hanrahan hired Mr. Shuler for the position of Senior Environmental Specialist because he proved himself to be the most qualified candidate during the interview process. Ms. Hanrahan kept an interview log on which she noted Mr. Shuler's strong qualifications for the position of Senior Environmental Specialist. She noted his "excellent experience in the Petroleum Cleanup Program and his significant applicable training and experience in program administration." Ms. Hanrahan also noted that his "application and interview showed strong computer skills." Mr. Shuler's Bachelor's degree in Microbiology met the education requirements for the position of Senior Environmental Specialist. Moreover, at the time of Shuler's application, there had been a growing emphasis placed on bi-remediation, which is currently a regularly used process. Given Ms. Hanrahan's education, training,and experience as a Professional Engineer, she determined that a Bachelor's degree in Microbiology was an appropriate background for the position. In addition, Mr. Shuler had the technical knowledge of processes, performance of groundwater sampling, and drilling, as well as other relevant technical knowledge pertaining to the position of Senior Environmental Specialist. Additionally, due to his continued assignment in the Alachua DEP, he was aware of the new administrative duties required of a Senior Environmental Specialist. Ms. Hanrahan had personally observed Mr. Shuler from October 1995 until January 1996, and was extremely satisfied with his performance. As part of the usual hiring process, Ms. Hanrahan submitted her interview log, personnel action form, and applications to the personnel department to support her hiring decision. Mr. Bird approved the hiring decision in his capacity as director, and the personnel department, budget department, and Equal Employment Office then approved the decision. Since his hire, Mr. Shuler has been commended by the Alachua DEP and his supervisors. Ms. Hanrahan informed Mr. Shrestha that he had not been hired for the position during a telephone conversation on January 23, 1996. She did not base her decision to hire Mr. Shuler over Mr. Shrestha on the basis of race or national origin. Ms. Hanrahan is fully aware of Alachua County's Equal Employment Opportunity policy through her position as advisor on the Equal Opportunity Advisory Committee. There is no evidence of any discriminatory hiring decision. In fact, on the same day that Ms. Hanrahan hired Mr. Shuler for the position of Senior Environmental Specialist, she also hired Mr. Gus Olmos for the position of Environmental Engineering Supervisor. Mr. Olmos is from Panama and is Hispanic. Moreover, Dr. Prasad Kuchibhotla is a Professional Engineer with a Bachelor's, Master's and Ph.D. in Chemical Engineering. He is from India and is Asian. Alachua County hired Dr. Kuchibhotla in 1997 and is the current Petroleum Cleanup Program Manager for Alachua DEP. Dr. Kuchibhotla currently has a Senior Environmental Specialist working for him within the Petroleum Program. As was the case in December 1995, the current Specialist's primary duty is to assist him with the detailed administrative tasks involved with the Petroleum Program. On January 27, 1997, Mr. Shrestha filed a formal Charge of Discrimination. The charge was date stamped as received by the Florida Commission on Human Relations on January 30, 1997. Mr. Shrestha is currently employed with Bell South in Atlanta, Georgia. He earns $47,000 per year and receives health benefits.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order finding that Petitioner, Tilak B. Shrestha is not entitled to any relief relating to his charge of discrimination under Title VII of the Federal Civil Rights Act of 1964 and the Florida Civil Rights Act of 1992. DONE AND ENTERED this 2nd day of August, 2000, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER 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 2nd day of August, 2000. COPIES FURNISHED: Tilak B. Shrestha 3579-C Meadowglen Village Lane Doraville, Georgia 30340 Robert M. Ott, Esquire County Litigation Attorney Post Office Box 2877 Gainesville, Florida 32602 Sharon Moultry, Clerk Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149 Dana A. Baird, General Counsel Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149
The Issue The issue is whether Florida Petroleum Markers and Convenience Store Association (Florida Petroleum) is entitled to reasonable attorney’s fees and costs pursuant to Section 120.595(2), Florida Statutes, and if so, in what amount.1
Findings Of Fact Introduction Florida Petroleum is the prevailing party in the underlying rule challenge and requests an award of reasonable attorney's fees pursuant to Section 120.595(2), Florida Statutes.2 Florida Petroleum prevailed in DOAH Case No. 05-0529RP on one of two challenged proposed rule revisions to Florida Administrative Code Chapter 62-770, which governs cleanup of petroleum contamination. Proposed rule 62-770.220(3)(b) was held to be an "invalid exercise of delegated legislative authority." Proposed rule 62-770.220(4), was "not an invalid exercise of delegated legislative authority, except insofar as notice must be given every five years to persons other than 'local governments and owners of any property into which the point of compliance is allowed to extend,' as provided in Section 376.3071(5)(b)2., Florida Statutes."3 The Department argues that its actions were "substantially justified" because there was a reasonable basis in law and fact at the time its actions were taken. The proposed rules were approved by the Environmental Regulation Commission (ERC) on February 2, 2005, which is the time when the Department's "actions were taken." The Department does not argue that special circumstances exist that would make the award of fees unjust. Department Contamination Programs The Department's Division of Waste Management is comprised of the Bureau of Petroleum Storage Systems, the Bureau of Waste Cleanup, and the Bureau of Solid and Hazardous Waste. The Bureau of Petroleum Storage Systems administers the state's petroleum contamination cleanup program. This cleanup program encompasses the technical oversight, management, and administrative activities necessary to prioritize, assess, and cleanup sites contaminated by discharges of petroleum and petroleum products from petroleum storage systems. There are approximately 23,000 petroleum-contaminated sites statewide. Florida Administrative Code Chapter 62-770 establishes petroleum contamination site cleanup criteria. These criteria are established for the purposes of protecting the public health and the environment and for determining, on a site-specific basis, the rehabilitation program tasks that comprise a site rehabilitation program and the levels at which a rehabilitation program task and site rehabilitation program may be deemed complete. Fla. Admin. Code R. 62-770.160(8). The petroleum contamination cleanup program incorporates risk-based corrective action (RBCA) principles to achieve protection of human health, public safety, and the environment in a cost-effective manner. The phased RBCA process is iterative and tailors site rehabilitation tasks to site-specific conditions and risks. Fla. Admin. Code R. 62-770.160(8). The Bureau of Waste Cleanup administers the state's drycleaning solvent cleanup program. This program is for the cleanup of property that is contaminated with drycleaning solvents as a result of the operations of a drycleaning facility or wholesale supply facility. Florida Administrative Code Chapter 62-782 establishes drycleaning solvent cleanup criteria, established for the purposes of protecting the human health, public safety and the environment under actual circumstances of exposure and for determining, on a site-specific basis, the rehabilitation program tasks that comprise a site rehabilitation program and the levels at which a rehabilitation program task and site rehabilitation program may be deemed complete. Fla. Admin. Code R. 62-782.150(1). The drycleaning solvent cleanup program, like the petroleum contamination cleanup program, the brownfield site rehabilitation program, and the global RBCA contamination cleanup program mentioned below, incorporates RBCA principles to achieve protection of human health and the environment in a cost-effective manner. Fla. Admin. Code R. 62-782.150(1) and 62-785.150(1). In 2003, the Legislature adopted Section 376.30701, Florida Statutes, which authorizes the Department to adopt rule criteria for the implementation of what is referred to as "global RBCA," which extends the RBCA process to contaminated sites where legal responsibility for site rehabilitation exists pursuant to Chapter 376 or Chapter 403, Florida Statutes. Global RBCA is a cleanup program for contaminated sites that do not fall within one of the Department's other contamination cleanup programs. Department Rulemaking Efforts After the passage of Section 376.30701(2), Florida Statutes, the Department initiated rulemaking to develop Florida Administrative Code Chapter 62-780 (global RBCA). Section 376.30701(2) established July 1, 2004, as the date the Department was to adopt rule criteria to implement the global RBCA contamination cleanup program. At the same time, the Department initiated rulemaking with respect to revisions to Florida Administrative Code Chapters 62-770 (petroleum), Chapter 62-782 (drycleaning solvents), and Chapter 62-785 (brownfields). This decision was predicated on the similarities among the four waste cleanup programs and the Department's desire to ensure a consistent approach across the four programs and pursuant to one large rulemaking effort. As such, the Department sought to include the same notification provisions in each rule for consistency purposes. (T 33-34, 55). However, the Department also recognized at the time that the notice provision for RBCA for petroleum contamination cleanups, i.e., Section 376.3071(5)(b)2., was different from the notice provisions for RBCA cleanups for the drycleaning solvent (Section 376.3078(4)(b)), brownfields (Section 376.81(1)(b)), and global RBCA (Section 376.30701(2)(b)) programs. (T 69, 115, 126-129). In each of these three statutes, the Legislature expressly expanded the class of persons to whom notice is required to be given and expressly referred to a specific type of notice to be given (actual or constructive) depending on the class of persons designated to receive notice. Each of the latter statutes was enacted after, and presumably with knowledge of Section 376.3071(5)(b)2., which was materially amended in material part in 1996 to add, in part, the notice provision. See Ch. 96-277, § 5, at 1131, 1135-1136, Laws of Fla. In May 2004, the Department became aware of concerns with regard to on-going efforts to assess the groundwater contamination at the former American Beryllium plant in Tallevast, Manatee County, Florida. (The party's refer to the city as Tallavast, whereas the Transcript (T 36) and DEP Exhibit 1 refer to the city as Tallevast.) For approximately two years, the owner of the plant, Lockheed Martin, had been conducting an on-going assessment of the extent of the solvent (trichloroethylene) contamination. The Department was concerned that there were residential areas located adjacent to and in the immediate vicinity of the former industrial plant. In May 2004, it became apparent that there were problems with certain assumptions concerning the assessment of the groundwater contamination. First, there had been an erroneous assumption that the contamination plume was small and located predominantly on-site. Second, based on well surveys, there was an assumption that there were no human health exposure points in the form of contaminated off-site potable water wells. Significant concerns arose when it became apparent the contamination plume was more extensive than anticipated and had migrated off-site. These concerns were exacerbated when it became apparent that groundwater contamination was impacting off-site potable water wells. Tallevast residents raised concerns that they were being exposed to contamination and that they were never properly notified by the Department, upon the initial discovery of the groundwater contamination. Tallevast residents were also concerned about whether the Department had failed to properly notify then once it was discovered the groundwater contamination had migrated off-site. The problems experienced at Tallevast emphasized to the Department the need to explore available avenues to enhance public notification procedures as a whole.4, 5 The Department asserted as to a reasonable basis in fact for the proposed rules, that contamination affecting Tallevast residents provided an impetus for the Department in May 2004 to address notification of contamination to affected off-site property owners. The situation in Tallevast arose because well surveys failed to indicate the extent of the contamination plume and that residents were using private wells for potable water. The Department's objective was to make sure that if there was exposure potential, the potentially affected parties should be notified. The Department seems to agree that the failure to discover the contamination of the potable wells in Tallevast occurred during the assessment phase of the cleanup and that it had not yet gotten to the stage of determining the remediation strategy. (T 45-46). The Department's stated concerns regarding Tallevast are not specifically addressed by proposed rule 62-770.220(3)(b) and (4). (T 74-75, 95-96). The Department’s procedure for granting a temporary extension of the point of compliance is that the responsible party will propose such an extension in its remedial action plan. (The four cleanup programs provide for the establishment of a TPOC.) The Department will then issue its notice of intended agency action, notice of the agency action will be provided to the enumerated persons, and the persons receiving notice will have a 30-day comment period. (T 149-155). (Pursuant to proposed rule 62-770.220(3)(a), the person responsible for site rehabilitation (PRSR) "shall provide" actual notice "to the appropriate County Health Department and all record owners of any real property into which the point of compliance is allowed to extend . . . ." In this regard, as Mr. Chisolm testified, the process is "similar to a permit.") Mr. Sole testified that, in the course of rulemaking, Florida Petroleum argued to the Department that the "petroleum statute under 376.3071 is different as it addresses the temporary point of compliance. It's not as prescriptive as the other statutory provisions for Risk-Based Corrective Action and the dry-cleaning, the Brownfields, and now the Global RBCA [statutes]. And their concern was that because it's not as prescriptive, [the Department] should not be establishing these additional notice provisions, such as constructive notice . . . But their fear was or concerns . . . were that you're going to engender a lot of litigation that's unnecessary because, as soon as you say the word 'contamination,' somebody is going to want to sue me . . . . And I understood that position. But at the same time, the lessons that we learned were that failure to provide that notice, unfortunately, can cause exposure and can cause a public health concern; and [the Department] needed to balance the two." (T 63-64, 122). Mr. Chisolm testified, in part, about the development of the constructive notice provision in proposed rule 62- 770.220(3)(b) and explained that the global RBCA, brownfields, and drycleaning solvent statutes required constructive notice to residents and business tenants of impacted properties.6 Mr. Chisolm further explained: So, if you're going to give notice to the legal owners of a piece of property, many cases there are tenants there. And they may not get the word, and they may be the ones that are drinking the water. The same with business tenants. So the idea was let's give notice to the people who are going to be or potentially going to be affected by this contamination, which is, after all, under the property which they may be inhabiting and using. So that was the purpose for the rule change in this case. Let's give notice to everybody who could potentially be affected by the rule, by the contamination beyond the property boundaries . . . . The whole idea behind RBCA, Risk- Based Corrective Actions, is that, if there's no exposure, there's no risk. There's no danger to the individual, to any individual. (T 116-117).
The Issue The issue is whether Respondent, TD Del Rio, LLC, should pay for investigative costs and expenses and undertake corrective actions that are demanded by the Department of Environmental Protection (Department), as set forth in the Amended Notice of Violation and Orders for Corrective Action (Amended NOV).
Findings Of Fact Background The Department has the authority to institute an administrative action to abate or correct conditions that may create harm to the environment. In this case, it filed an Amended NOV directing the existing and prior owner of certain property to undertake cleanup and cost recovery to redress the discharge of petroleum products and disposal of hazardous waste. The property is located at 4810 South 50th Street, Tampa, Florida, measures approximately 200 by 800 feet, and is further identified as Parcel Number U-03-30-19-1Q3-000112-00001.0. The property is located in an industrial area. Mr. Dearing operated a metal recycling facility on the property during the 1990s. The facility received scrap waste and passed waste through mechanical shears that shredded the waste for sorting and recycling. The Amended NOV alleges that all contamination on the property occurred while Mr. Dearing owned the property. The charges related to his activities have been resolved in a settlement agreement prior to the final hearing in this matter. The terms of the settlement are not of record. TD Del Rio, LLC, is a limited liability company formed in April 2012. It serves as a pension fund for a self-directed Individual Retirement Account for Mr. McRae. The company acquired ownership of the subject property in September 2012 by purchasing a tax deed from Hillsborough County. Respondent agrees that there has been a "discharge," as defined under section 376.301(13), Florida Statutes, of hazardous substances and pollutants (petroleum or petroleum products) on the property prior to September 1, 2012. Such discharges have not been assessed, remediated, or abated. Respondent agrees there has been a "disposal," as defined under section 403.703(9), of hazardous waste into and upon the property prior to September 1, 2012. Respondent agrees that the property is a "facility," as defined under section 376.301(19). Respondent agrees that the property is a "hazardous waste facility," as defined under section 403.703(15). Environmental Testing Pursuant to a contract with the Department, on April 24 through 26, 2012, Ecology & Environmental, Inc. (E & E), performed a detailed inspection of the property to determine if former recycling activities conducted at the property have impacted soil and groundwater beneath the property. The inspection collected samples of soil, sediment, and groundwater. The inspection was conducted in accordance with guidance documents set forth by the United States Environmental Protection Agency regarding sampling locations, sample types, sampling procedures, use of data, data types, and field quality assurance/ quality control samples. Just before E & E issued a final report, Respondent purchased the property at a Hillsborough County tax deed sale. On November 12, 2012, E & E issued a 532-page Comprehensive Environmental Response, Compensation, and Liability Information System Site Inspection Report (Report) detailing analytical results of soil, sediment, and groundwater sampling performed at the property. See Jt. Ex. 1. E & E concluded that the activities conducted prior to April 2012 impacted the soil, sediment, and groundwater at the property. The Department has adopted Soil Cleanup Target Levels (SCTLs), which are derived based on exposure to the human body. The SCTLs account for inhalation, ingestion, and absorption of contamination into people's bodies. The presence of hazardous substances above these levels presents a threat to persons who come into contact with the substances. If a site has no polychlorinated biphenyls (PCBs) or arsenic exceeding the SCTLs, there is no requirement for the owner to complete an assessment or manage exposure at the site. The testing reveals that the following substances are present in the property's soil from both zero to two feet and two to four feet below land surface at concentrations above the Department's SCTLs: arsenic, barium, cadmium, chromium, lead, carbazole, benzo(a)antracene, benzo(a)pyrene, benzo(a)pyrene toxic equivalents, and PCBs. The commercial/industrial SCTL for PCBs is 2,600 ug/kg. This target level is based upon human exposure to PCB contaminants eight hours per day. The residential SCTL, based on 24 hours of exposure per day, is 500 ug/kg. PCBs are found across the majority of the site at concentrations ranging from 940 ug/kg to 38,000 ug/kg, over times higher than the industrial SCTL and 76 times higher than the residential SCTL for soil of 500 ug/kg. The hazardous substances located in the upper two feet of land surface present the greatest potential for exposure due to potential inhalation, ingestion, and absorption of the substances. Some potential exposure pathways include foot traffic on the property stirring up dust which people present on site could then come into skin contact with or inhale. Any work done in or around the site that is intrusive in nature could present exposure pathways. In addition to soil contamination, the following hazardous substances are present in sediment on the property: arsenic, barium, cadmium, chromium, lead, mercury, silver, volatile organic compounds, semi-volatile organic compounds, and PCBs. The following hazardous substances and petroleum products are present in groundwater on the property at concentrations exceeding the Department's Groundwater Cleanup Target Levels (GCTLs): arsenic, barium, xylenes, carbon tetrachloride, isopropylbenzene, methyl tertiary butyl ether, tetrachloroethene, and trichloroethene. For one well sample, the 2012 investigation also reported an exceedance of PCBs of 1.2 ug/kg in groundwater. The presence of tetrachloroethylene and PCBs in groundwater is a specific concern at the property. PCBs are not readily soluble in water; however, tetrachloroethylene can act as a carrier for the PCBs and mobilize this contaminant to a greater extent vertically from the source area. This is a concern for the area surrounding the property given that the Floridan aquifer, which is a source of potable water for Hillsborough County, is located approximately 300 feet below ground surface in the surrounding area. Because Respondent has not completed a Site Assessment Report (SAR), the full extent of PCBs and other contamination in soil, sediment, and groundwater, including the contaminants' potential threat to the Floridan aquifer, is not known. Respondent did not present any evidence to contradict the findings and conclusions in the Report. Moreover, Respondent has stipulated that there has been a discharge of hazardous substances and petroleum products on the property prior to its purchase of the property in September 2012. Pre-Purchase Investigation of the Property by Respondent In order to minimize liability for petroleum contamination, Mr. McRae must have undertaken "all appropriate inquiry into the previous ownership and use of" the property before he purchased it, as required by section 376.308(1)(c). Mr. McRae failed to do so. Mr. McRae is the founder, manager, and registered agent of the company and has acquired at least 20 other properties through tax deed sales. He also has bought properties contaminated with petroleum prior to the purchase of the instant property. In addition, he has owned at least 30 gas stations and has hired environmental contractors to remove petroleum tanks for previous gas stations that he bought. Mr. McRae's grandson-in- law, Matthew Moralejo, has no official title with the company, but he helps in running the business, has communicated with the Department, and bought property, including the one at issue here, at Mr. McRae's direction. Mr. McRae and Mr. Moralejo acknowledge that, before the purchase, they conducted very little research into the property, searching only for things "easily accessible or identified with the property," such as code enforcement issues or liens. They conducted visual research of the property by driving by it and looking at its condition. When the property was purchased, "the place was a wreck" and "just full of overgrowth and junk." Good commercial practice in the purchase of property upon which potentially contaminating activities have occurred entails consultation with a person with appropriate knowledge and experience. Before purchasing the property, Mr. McRae did not consult with an environmental attorney or environmental consultant regarding the potential liability associated with property used as a metal recycling site. If Mr. McRae had hired an environmental consultant to assist him in assessing the likelihood of contamination at the property, it would have been standard practice to find public records about the property, including any prior enforcement actions taken against prior owners and operators of the property, all of which were public record. A consultant likely would have recommended that Mr. McRae conduct a site assessment in accordance with Florida Administrative Code Chapter 62-780. Section 376.308(1)(c) requires that in determining whether all appropriate inquiry was undertaken by a purchaser of contaminated property, it is necessary to consider the "specialized knowledge or experience of the defendant, the relationship of the purchase price to the value of the property if uncontaminated, commonly known or reasonably ascertainable information about the property, the obviousness of the presence or likely presence of contamination at the property, and the ability to detect such contamination by appropriate inspection." Mr. McRae has no specialized knowledge of sites contaminated with hazardous substances. However, as noted above, he has extensive experience regarding the regulation, assessment, and remediation of petroleum-contaminated sites. He has bought multiple properties through tax deed sales, and he has owned at least 30 gas stations. He has hired environmental contractors to remove petroleum tanks from properties he owned. He also is familiar with the Early Detection Incentive Program instituted by the Department, under which the Department remediates petroleum- contaminated sites. The purchase price of the property in 2002 was $200,000.00, the purchase price in 2012 was $133,100.00, and the taxable value of the property in 2015 was $408,106.00. Past information about the property was reasonably ascertainable. Ownership history of the site is available from the Hillsborough County Property Appraiser's Office, Hillsborough County Clerk of the Circuit Court, and Hillsborough County Environmental Protection Commission (EPC). Information regarding regulatory actions taken at the property also was reasonably ascertainable. There were many documents in existence at the time Respondent purchased the property that showed contamination was present on the property. They included a 1995 warning letter from the EPC to previous owners of the property detailing petroleum contamination present on the property, a 1996 EPC request for a previous owner to submit a plan to address onsite soil contamination, and a field investigation conducted by the Department in April 2012, or five months before Respondent purchased the property. There is no evidence that the documents referenced above were not "reasonably ascertainable information." Although a visual inspection by a lay person would not disclose the presence of contamination at the property, Mr. McRae should have known to seek information regarding past enforcement history and site investigation performed at the property. Post-Purchase Actions After buying the property, Respondent dug up debris including tires that were approximately four feet below the soil surface. After removing debris from the contaminated soil, Respondent spread the disturbed soil. To make the property more attractive to prospective tenants, Respondent then spread up to four inches of gravel around the property. This amount of gravel did not cover the entirety of the contaminated area and did not break the exposure pathway that the contaminants presented to people on the property. According to a Department expert, two feet of clean fill over the contaminated area would have been an acceptable intermediate step to break the exposure pathway. After spreading the gravel on the property, Respondent leased the property to three tenants: a landscape business; a portalet company; and a storage container facility. The portalet company and storage container tenants both use the property as storage facilities, including loading and unloading portalets and storage containers, when needed. The contaminants present in the soil present a potential for incidental exposure to workers on the site, especially given that workers are constantly stirring up dust by loading and unloading equipment on the property. Department Communications with Respondent On February 14, 2014, the Department sent Mr. McRae a letter informing him that the Department had information indicating that contaminants may have been released or discharged at the property. The letter referenced the 2012 E & E Report, which documented metals, volatile organic compounds, semi- volatile organic compounds, and PCBs in site soils, sediments, and/or groundwater above SCTLs, Sediment Quality Assessment Guidelines, or GCTLs. The letter stated that failure to submit an SAR within 180 days of receipt of the letter, or by August 14, 2014, may subject Respondent to enforcement action to compel such compliance. Matthew Moralejo responded by email on July 17, 2014, and stated, in part, that "we have never conducted any type of business that would have led to the contamination of said property." The same day, the Department responded by email directing Mr. Moralejo to the Department's public database, OCULUS, that provides reports and correspondence regarding facilities regulated by the Department. The Department provided a link to the 2012 Report and the name of a contact person to discuss Respondent's liability as the current property owner, as well as possible cleanup programs that are available when the current owner is not the one causing the contamination. On September 29, 2015, the Department sent another letter, with attachments, to Mr. McRae. The Department stated that "[s]ome limited site assessment activities have been performed [by E & E] at the site historically; however, the work completed and the documents submitted to date do not constitute a complete [SAR] as required by Rule 62-780.600, F.A.C." The Department again requested an SAR, and, in the alternative, offered a meeting to discuss the issues associated with the letter. Again, the letter warned Mr. McRae that if an SAR was not filed within the timeframes required by the rule, he may be subjected to an enforcement action. In August 2016, Mr. Chamberlain, a Department geologist, met with Mr. McRae and Mr. Moralejo at the property. During the meeting, Mr. Chamberlain took photographs of the site and explained his concerns with the property. Specifically, he informed them that the SAR was still outstanding; and he recommended that Respondent hire an environmental consultant to assist them in the site rehabilitation process. In October 2016, Respondent hired an environmental consultant, Mr. Doherty. On November 29, 2016, the Department emailed Mr. Doherty reminding him that an SAR was due by December 13, 2016. Three days later, Mr. Doherty asked that he be given a six-month extension to file an SAR; the Department authorized only a four-month extension, or to April 3, 2017. Mr. Doherty never conducted any sampling at the property and he did not submit an SAR. Mr. McRae explained at hearing that the consultant "never did [any] work, so he didn't get paid." On May 25, 2017, the Department sent another letter to Mr. McRae stating that it had not received an SAR, and, as a final request prior to initiating enforcement action, requested that he provide a summary of all site assessments completed since September 29, 2015, complete installation of groundwater monitoring wells and conduct sampling within 90 days, and submit an SAR by October 23, 2017. Respondent did not comply with any of those requests. To date, an SAR has not been submitted and a site assessment has not been conducted. The Department then issued an NOV, as amended. Given the numerous letters and emails sent to Respondent, and various site inspections, the Department has incurred costs and expenses of at least $500.00 investigating this matter. Respondent does not dispute this amount. Respondent's Defense Respondent essentially contends it is an innocent third-party purchaser because it had nothing to do with the recycling activities conducted on the property during the 1990s. It argues that the clean-up costs requested by the Department equal or exceed the value of the property and are cost prohibitive. In its PRO, Respondent contends that if the Department reached a settlement with Mr. Dearing, whose company is responsible for the hazardous waste discharge in the 1990s, this should relieve Respondent from any responsibility. It asks that the Department use "compassion" in dealing with him.
Conclusions For Petitioner: Paul Joseph Polito, Esquire Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 For Respondent: TD McRae, pro se Matthew Moralejo, pro se TD Del Rio, LLC 4608 East Columbus Drive Tampa, Florida 33605-3210
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 sustaining the charges in Counts I, II, and III of the Amended NOV. It is further RECOMMENDED that within 30 days of the final order, Respondent TD Del Rio, LLC, shall commence a site assessment and submit an SAR in accordance with rule 62-780.600. Respondent shall assess and clean up all hazardous substance contamination and petroleum contamination at the property in accordance with chapter 62-780 and the timeframes therein. It is further RECOMMENDED that within 90 days of the effective date of the final order, Respondent shall pay $500.00 to the Department for costs and expenses. Payment shall be made by cashier's check or money order payable to the "State of Florida Department of Environmental Protection" and shall include thereon the notations "OGC Case No. 17-1090" and "Ecosystem Management and Restoration Trust Fund." The payment shall be sent to the State of Florida Department of Environmental Protection, Southwest District, 13051 North Telecom Parkway, Suite 101, Temple Terrace, Florida 33637. DONE AND ENTERED this 24th day of July, 2019, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of July, 2019. COPIES FURNISHED: Paul Joseph Polito, Esquire Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed) Lea Crandall, Agency Clerk Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed) TD McRae TD Del Rio, LLC 4608 East Columbus Drive Tampa, Florida 33605-3210 Noah Valenstein, Secretary Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed) Justin G. Wolfe, General Counsel Department of Environmental Protection Legal Department, Suite 1051-J Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed)
