The Issue The issues in this case are whether Respondent, L.B. King, Jr., violated certain rules relating to petroleum contamination site cleanup criteria promulgated by Petitioner, Department of Environmental Protection (Department), whether he should be required to pay an administrative fine and investigative costs and expenses incurred by the Department, and whether he should take corrective action, as described in the Department's Notice of Violation, Orders for Corrective Action, and Administrative Penalty Assessment (Notice of Violation) issued on June 15, 2007.
Findings Of Fact Based upon the record presented by the parties, and those allegations in the Notice of Violation which are undisputed, the following findings of fact are determined: Respondent is the owner and operator of non-residential property (doing business as King Oil and Tire) located at 16776 Southeast U.S. Highway 19 (at Main Street and Ward Street) in Cross City, Florida. He has owned the property since June 30, 1982. Since July 1978, eight regulated petroleum storage tanks were situated on the property. See Fla. Admin. Code R. 62- 761.200(20), (45), (53), and (65). The Department has assigned facility identification number 15/8839661 to the site. During the intervening time period since Respondent assumed ownership, six of the tanks and their associated piping have been closed or removed, including tank 4 in August 1997 and tanks 5 and 6 in March 2004. Tank 4 was a 1,000 gallon diesel underground storage tank system (UST) originally installed in July 1982, tank 5 was a kerosene UST installed in July 1978, while tank 6 was a waste oil UST installed in July 1978. Only tanks 7 and 8 still remain in service. After tank 4 and the associated piping were closed in August 1997, Respondent conducted a closure assessment in the area of tank 4 and performed soil and groundwater analytical sampling in the area of its former piping run. He then filed a Tank Closure Assessment Report (TCAR) with the Department on August 19, 2003. The TCAR revealed groundwater contaminants above the Department's Cleanup Target Levels (CTLs) for Methylnapthalene in two respects and for Naphthalene. See Fla. Admin. Code R. 62-777.170(1)(a), Table I. Because of the presence of contamination on the site, on September 3, 2003, the Department sent Respondent a letter requesting that he submit a Discharge Report Form (DRF) and initiate a site assessment, as required by Florida Administrative Code Rule 62-770.600, and that he file a completed site assessment report by July 10, 2004.3 Subsection (1) of that rule requires that "[w]ithin 30 days of discovery of contamination, the responsible party shall initiate a site assessment." On September 29, 2003, the Department received the requested DRF. During a tank closure inspection of tanks 5 and 6 performed on March 4, 2004, the Levy County Health Department, acting on behalf of the Department, discovered stained soils in the fill area of tank 6. On May 18, 2004, the Department received a TCAR dated May 7, 2004, for the closure of tanks 5 and 6. The TCAR documented the results of laboratory analytical tests on groundwater samples, which revealed groundwater contaminants above the Department's CTLs for Methylnapthalene in two respects. On May 24, 2004, the Department received from Respondent a copy of a DRF (dated March 9, 2004, as amended on April 9, 2004) for the contamination related to tanks 5 and 6. The DRF was the last report filed by Respondent concerning tanks 5 and 6. On the same date, the Department sent Respondent a letter requesting that he initiate site assessment activities for the discharge related to tanks 5 and 6, as required by Florida Administrative Code Rule 62-770.600(1). On July 14, 2004, the Department sent Respondent another letter requesting (a) completion of a site assessment and (b) the submission of a Site Assessment Report (SAR) for the discharge from tank 4 (SAR-97), which complied with the requirements of Florida Administrative Code Rule 62-770.600(8). (The SAR-97 was originally due on July 10, 2004, but had not yet been filed.) In order to be deemed complete, a SAR must contain all of the information detailed in subsection (8). Also, the letter requested that a SAR for the 2004 discharge (SAR-04) be completed no later than August 1, 2004, as required by Florida Administrative Code Rule 62-770.600(7). That subsection requires in relevant part that "[w]ithin 270 days of discovery of contamination, the responsible party shall submit to the Department or to the FDEP local program for review two copies of a [SAR] " On July 15, 2004, or the day after the above letter was mailed, the Department received a copy of the SAR-97 from Respondent. The report was then referred to the Department's Petroleum Cleanup Section for its review. By letter dated August 27, 2004, the Department advised Respondent that SAR-97 was under review. The letter also changed the due date for the SAR-04 from August 1, 2004, to November 9, 2004. On September 15, 2004, the Department received correspondence from Respondent requesting an extension of time in which to submit his SAR-04. On December 10, 2004, the Department approved the request and authorized Respondent to file a SAR-04 no later than March 1, 2005. On April 12, 2005, Respondent filed with the Department a Site Assessment Report Addendum (SARA) for the 1997 discharge (SARA-97). The report was dated March 1, 2005. On May 25, 2005, the Department sent Respondent a letter requesting that he file two copies of a supplement to the SARA-97 no later than July 5, 2005, to address certain deficiencies noted in that report, as required by Florida Administrative Code Rule 62-770-600(11). That subsection provides that "[i]f the [SAR] is incomplete in any respect, or is insufficient to satisfy the objectives of subsection 62- 770.600(3), F.A.C., the Department or the FDEP local program shall inform the responsible party pursuant to paragraph 62- 770.600(9)(b), F.A.C., and the responsible party shall submit to the Department or to the FDEP local program for review two copies of a [SARA] that addresses the deficiencies within 60 days after receipt of the notice." The same letter also requested that a disposal manifest be provided for the tank and piping closures. On July 11, 2005, the Department received a second SARA-97 from Respondent's consultant. On July 14, 2005, it also received the disposal manifest documentation for the closure of tank 4 and its piping. These were the last reports filed by Respondent. On October 4, 2005, the Department sent Respondent a letter requesting that he provide two copies of a third SARA for the 1997 discharge to address deficiencies noted by the Department in the second SARA. The letter indicated that the third SARA was to be filed no later than November 23, 2005. The Department also requested that he provide a completed financial affidavit to justify Respondent's claim that he was financially unable to complete the remaining required cleanup corrective actions at his property. On November 29, 2005, Respondent requested an extension of time to complete the third SARA-97. (The reason for the requested extension was that Respondent's insurance carrier would not give authorization for the work.) On January 12, 2006, the Department advised Respondent by letter that his request had been denied and that he must submit either the third SARA or a financial affidavit, as previously requested, no later than February 15, 2006. In its response, the Department indicated that it did not "consider generic delays by contractors or insurance carriers as good cause for an extension." To date, neither filing has been made. By failing to file the requested third SARA for the 1997 discharge, Respondent has contravened the requirements of Florida Administrative Code Rules 62-770.600(11) and 62- 770.800(3), which require that within 60 days after notice, a responsible party submit a SARA to address deficiencies noted in a SAR. Respondent's conduct also implicates Florida Administrative Code Rule 62-770.800(5), which makes it a violation of two Florida Statutes for a responsible party to not submit requested information within the time frame specified. Since March 1, 2005, which was the due date on which a report was to be filed, Respondent has failed to submit an approved SAR for the 2004 discharge, as required by Florida Administrative Code Rule 62-770.600(7), which in turn contravenes Florida Administrative Code Rule 62-770.800(3) and (5). To date, Respondent has failed to complete site assessment activities for both the 1997 and 2004 discharges, as required by Florida Administrative Code Rule 62-770.600(10). That provision states that "[s]ite assessment activities shall not be deemed complete until such time as a [SAR] is approved." To date, Respondent has failed to timely and completely assess and remediate the contamination at his property, as required by Florida Administrative Code Rule Chapter 62-770. That chapter contains the criteria which apply to the cleanup of a site contaminated with petroleum products. During the course of its investigation of this matter, the Department has incurred expenses "in the amount of not less than $500.00." As mitigating evidence, Respondent offered into evidence Respondent's Exhibits 2-15, the majority of which pertain to his insurance policy and the pending litigation with his carrier, Mid-Continent Casualty Company (MCC), or the priority score funding process, which is the process by which contaminated properties are scored or rated for purposes of determining eligibility to receive state cleanup funds when the responsible party is financially unable to do so. Although evidence regarding the insurance policy and pending litigation was deemed to be immaterial to the issues of establishing Respondent's liability for the violations and responsibility for undertaking the corrective actions necessary to satisfy the violations, the undersigned ruled that it could be used by Respondent as mitigating evidence, if relevant, for the purpose of seeking to reduce the administrative penalty. Respondent's Exhibits 8, 9, and 11 indicate that after he reported the 2003 discharge to MCC, in 2003 the carrier denied coverage for that discharge (on the ground "any 'confirmed release' must commence after the retroactive date of the policy (4/3/98)"). However, MCC initially accepted coverage for the 2004 discharge and authorized Respondent's environmental consultants to conduct a site assessment. The documents further show that in December 2005, or before the 2004 site assessment had been completed and a SAR prepared, MCC reversed its position and denied coverage for the 2004 discharge on the ground there was no "Confirmed Release," as defined by the policy. Respondent then filed his lawsuit seeking a determination that the carrier was responsible for cleanup costs. Respondent asserts that he has expended more than $50,000.00 in pursuing the lawsuit, which is much more than the administrative penalty being assessed by the Department. Respondent points out that prior to the time MCC reversed its position as to coverage for the 2004 discharge in December 2005, he had filed a DFR, TCAR, disposal manifest, SAR- 97, and two SARAs for the 1997 discharge, and a TCAR and DFR for the 2004 discharge, all of which indicate a good faith effort on his part to comply with the assessment requirements. As noted above, the final reports prepared by Respondent's consultant were a second SARA-97 and a disposal manifest for the 1997 discharge, which were filed with the Department in July 2005, and a TCAR and DRF for the 2004 discharge filed in May 2004. Respondent's Exhibit 10A recites language in Coverage B of the insurance policy, which provides in part that MCC "will pay Clean-up Costs by an Insured for environmental damage that an Insured is legally obligated to pay . . . ." Respondent argues that if he acknowledges by affidavit or other proof that he does not have the ability to pay for cleanup costs, he fears that under the above language, MCC would not be "legally obligated to pay." This is because Section 376.3071(7)(c), Florida Statutes, provides that when a responsible party does not have the ability to pay for all of the cleanup costs, the Department "may" enter into an agreement with the responsible party to undertake all or part of the site rehabilitation after "taking into consideration the party's net worth and the economic impact on the party." Respondent contends that if he files an affidavit under this statute, MCC would then be relieved of any responsibility under the policy, and his rights in the lawsuit would be jeopardized. Respondent further points out that several other provisions in the insurance policy prohibit him from completing the assessment until the litigation is concluded. For example, one provision (Section II.B) provides that "No Clean-up Costs, charges, and expenses shall be incurred without the Company's consent," while another (Section II.C) provides that "An Insured shall not admit or assume any liabilities or settle any Claim(s) without the Company's consent." Respondent asserts that these provisions prevent his consultant from conducting any further work on the site without MCC's consent, and if he does so, he will lose the right to reimbursement under the policy. Finally, Exhibits 3 through 6 show that Respondent's property has been assigned a site ranking score of ten points, and that the Department is currently funding sites that are eligible for state restoration funding only if they have scores of 37 points and higher. Thus, Respondent argues that a delay in remediation of the site is not unreasonable. Except for the two discharges at issue in this case, there is no evidence that Respondent has a history of non- compliance or that he gained any direct economic benefit by virtue of the discharges. Although no reports have been filed since July 2005, through counsel, Respondent has kept the Department abreast of his efforts to establish liability on the part of MCC so that the site assessments can resume.
Findings Of Fact The parties stipulated to findings of fact set forth in paragraphs 1.- 8.,below. Stipulated Facts Respondent has documented contamination from the abandoned petroleum storage system. The abandoned petroleum storage system has been properly closed. Petitioner submitted an application to Respondent on Respondent's forms 17-769.900(3) and (4), F.A.C., which was postmarked on or before June 30, 1992. The site is not eligible for cleanup pursuant to Section 376.3071(9) and (12), Florida Statutes, the Early Detection Incentive Program, or the Florida Petroleum Liability and Restoration Insurance Program pursuant to Section 376.3072, Florida Statutes. This site is not owned or operated by the federal government. This site did not have leaking tanks that stored pollutants that are not petroleum products as defined in Section 376.301, Florida Statutes. Respondent was not denied access to this site. Petroleum contamination was not discovered after the application deadline of June 30, 1992. Additional Facts Petitioner, a Florida corporation with its principal place of business in Leon County, Florida, is in the business of owning and leasing property. Petitioner is the fee simple owner of property located at 2022 Wahnish Way in Tallahassee, Florida. The property located on Wahnish Way was leased to James T. "Pete" Thomas by Petitioner's predecessor in title. Thomas operated a gasoline station and automobile repair garage on the property. The lease with Thomas was continued by Petitioner without change upon Petitioner's assumption of the legal title to the property in 1985. Prior to Petitioner's assumption of title to the property, Thomas had installed four petroleum storage systems in a four tank pit on the property in the early 1970's. Each tank and its integral piping is a petroleum storage system, as defined by Section 376.301(15), Florida Statutes (1991). In the early 1980's, Thomas and his wholesale gasoline distributor determined that one of the four underground tanks was losing petroleum product. In 1982, Thomas ceased using the southernmost tank in the pit for the storage of petroleum products for subsequent consumption, use or sale. The distributor ceased placing gasoline in the southernmost tank. Later, in compliance with subsequent statutory enactments, Thomas registered all of the tanks, including the abandoned southernmost tank with Respondent by the statutory deadline of December 31, 1984. Although Thomas signed the registration documents as an agent of Petitioner, he was not such an authorized agent and the registration occurred without the knowledge or approval of Petitioner. As a result, Petitioner cannot be viewed as having filed the registration. Petitioner, unaware that Thomas had experienced any product loss problems or that the tanks on the property had been registered by Thomas with Respondent, became aware of both matters following receipt of a letter from government officials of Leon County, Florida, on November 20, 1990. As set forth in that letter, Petitioner was apprised that the tanks were not in compliance with State of Florida standards and would have to be closed or retrofitted to bring the tanks into compliance. Following receipt of the letter, Petitioner informed Thomas that selling of gasoline at the site was to be discontinued immediately. Closure of the tanks, performed in early 1991 by contractors retained by Petitioner, consisted of excavation and removal of the petroleum storage systems from the property. All four tanks were in the tank pit side by side, from the northernmost end of the pit to the southern end of the pit fronting on Osceola Street in Tallahassee, Florida. When the removal was completed, a Closure Assessment form was prepared by one of the contractors, Jim Stidham and Associates, in accordance with requirements of Florida law. During that process, excessive contamination from petroleum product of the soils in the extreme south end of the tank pit was discovered. Excessive contamination, defined as anything more than 500 parts per million, was located beneath the southernmost pump on the southern end of the pump island and in the southern end of the pit. Both soil sample seven in the southernmost end of the pit and soil sample 11 under the southernmost pump document these unacceptable high levels of contamination. A 20 foot soil boring as near as possible to the southernmost tank on the site revealed the unacceptable levels of contamination extended to that depth. As supported by the testimony of James A. Stidham, Petitioner's expert in the assessment of contamination caused by underground petroleum storage tanks, the location of contamination in the pit area establishes that the tank causing the contamination was the southernmost tank. In view of the location of the contamination in the pit area, the tank discovered to have a hole in it at the time of removal was the southernmost tank. The excessive contamination located at the shallow depth of two feet under the southernmost pump resulted from the improper disconnection of piping attached to the pump and is not attributable to the leak in the tank. Each tank was connected by piping on the eastern end of each tank to the corresponding pump. The southernmost pump was not used after 1982 and was missing integral parts by the time the tanks were closed. In the course of exploring options for clean up of the property, Petitioner filed for assistance from Respondent in the form of participation in the ATRP. Unaware of the true date of the cessation of use of the southernmost tank, Petitioner gave the date of last use for all tanks in the pit by stating that the "tanks were taken out of service between December 15, 1990 and January 15, 1991." Petitioner provided this response to Respondent's July 30, 1991 request for further information on August 6, 1991. Although Respondent made an initial determination to deny Petitioner's application in the middle of August, 1991, that action was not communicated to Petitioner. Instead, Petitioner's application was held by Respondent, pending possible amendment to Section 376.305(7), Florida Statutes (1991), the law controlling admission to the ATRP. Respondent held Petitioner's application for a total of 19 months before issuance of a formal decision to deny the application on February 26, 1993. Such delay by Respondent is unreasonable. Respondent's denial of Petitioner's application was based upon the eligibility requirement restricting ATRP participants to those situations where the petroleum storage system has not stored petroleum products for consumption, use or sale after March 1, 1990, and the belief of Respondent's personnel that all storage systems on Petitioner's property had stored products beyond that date. Specifically, Respondent eventually gave notice that it intended to deny Petitioner's application for participation in the ATRP for the following reason: Eligibility in the Abandoned Tank Restoration Program is restricted to those petroleum storage systems that have not stored petroleum products for consumption, use or sale after March 1, 1990, pursuant to Section 17-769.800(3)(a), Florida Administrative Code. Respondent utilized provisions of Subsection 376.305(7)(f), Florida Statutes (1991), to permit entry of some applicants into the ATRP, demonstrating that Respondent did not consider the March 1, 1990 deadline contained in provisions of Subsection 376.305(7)(b), Florida Statutes (1991), to be absolute. As attested at the final hearing by Respondent's employee, Respondent considered "variables" when determining whether to enforce the March 1, 1990, deadline. Those variables comprise the criteria listed in Subsection 376.305(7)(f), Florida Statutes (1991). By use of those variables, Respondent effectively applied provisions of Subsection 376.305(7)(f), Florida Statutes (1991), to some program applicants other than Petitioner and permitted their participation while choosing to refrain from final agency action under that same criteria with regard to Petitioner's application pending subsequent legislative enactment. Petitioner's southernmost tank is an abandoned petroleum storage system that was not required to be registered with Respondent when it was in service; the system came into the possession of Petitioner following its abandonment; was never returned to service; and is not otherwise eligible for cleanup pursuant to Subsection 376.3071(9), Florida Statutes, or Section 376.3072, Florida Statutes.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a final order be entered granting Petitioner's application for participation in the ATRP with regard to contamination resulting from Petitioner's southernmost petroleum storage system. DONE AND ENTERED this 1st day of February, 1994, in Tallahassee, Leon County, Florida. DON W. DAVIS 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 1st day of February, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2658 The following constitutes my rulings, pursuant to Section 120.59, Florida Statutes, upon proposed findings of fact submitted by the parties: Petitioner's Proposed Findings. 1.-23. Adopted, though not verbatim. Respondent's Proposed Findings. 1.-2. Rejected, not supported by weight of the evidence. 3.-4. Rejected, subordinate to HO findings on this point. 5.-11. Accepted. Rejected, relevance. A mischaracterization of the evidence in that the testimony establishes that an existing lease agreement was continued. Accepted to the extent that the evidence establishes that there were four tanks in the pit. Rejected, credibility, weight of the evidence as to the accuracy of the registration form in the face of conflicting evidence. 16.-18. Rejected, weight of the evidence. 19.-20. Accepted. 21.-22. Rejected, subordinate. Accepted. Rejected, relevance. 25.-26. Accepted. 27.-29. Rejected, subordinate. Rejected, relevance. Rejected, argumentative. Accepted. Rejected, legal conclusion, argumentative. COPIES FURNISHED: Melissa Fletcher Allaman Attorney at Law Post Office Drawer 1170 Tallahassee, Florida 32302 Jefferson M. Braswell Lisa M. Duchene W. Douglas Beason Assistant General Counsels Department of Environmental Protection 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Kenneth Plante General Counsel Department of Environmental Protection 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Virginia B. Wetherell Secretary Department of Environmental Protection Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400
The Issue Whether Petitioner's site, Hughes Supply, Inc. located at 2920 Ford Street, Fort Myers, Lee County, Florida is eligible for restoration under Section 376.3072, Florida Statutes.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: Hughes is a Florida Corporation in good standing and authorized to do business in the State of Florida. The Department's facility no. 36-8519331 (the Facility), owned and operated by Hughes and the subject matter of this proceeding, is located at 2920 Ford Street, Ft. Myers, Lee County, Florida, and is a "Facility" as defined in Section 376.301(5), Florida Statutes. The Facility consisted of (a) two underground storage tanks (USTs), one 4000 gallons UST (gasoline tank) and one 8000 gallons UST (diesel tank), and (b) four monitoring well, and is a "petroleum storage system" as defined in Section 376.301(15), Florida Statutes. At all times material to this proceeding, Hughes held, and was the name insured of, an effective third party pollution liability insurance policy (No. FPL 7622685 - Renewal No. FPL 7621566) applicable to the Facility that was issued in accordance with, and qualified under, Section 376.3072, Florida Statutes. Hughes paid annual premiums exceeding $20,000.00 for the above insurance. In accordance with Sections 376.3072, Florida Statutes, and Chapter 17- 769, Florida Administrative Code; the Department issued to Hughes a Notice of Eligibility pertaining to the Facility and the third party pollution liability insurance referred to in Finding of Fact 4 above. Lee County, Florida has a local program approved by the Department pursuant to Section 376.3073, Florida Statutes, to provide for the administration of the Department's responsibilities under certain sections of Chapter 376, Florida Statutes. Diesel fuel was placed into the diesel tank at the Facility on August 12, 1991, and no diesel fuel has been placed in the diesel tank at the Facility since that date. On Thursday, August 29, 1991, a contractor bidding on the removal of the tanks detected free product in one of the monitoring wells at the Facility and told Larry Carman, the Warehouse Manager for Hughes. Mr. Carman told Phillip Ross, the Branch Manager for Hughes, who in turn informed Gene Kendall, the Operations Coordinator for Hughes. All of this occurred on August 29, 1991. On Friday, August 30, 1991, an employee of IT Corporation, acting upon the request of Gene Kendall, sampled the four monitoring wells at the Facility and found six inches of free product in the northwest monitoring well. On Tuesday, September 3, 1991, Fred Kendall discussed the discharge with Bill W. Johnson, Supervisor, Lee County Storage Tank Local Program. During this discussion, Johnson learned that the diesel tank had not been emptied. Johnson advised Kendall that the diesel tank had to be emptied of its product and placed out of service. On Tuesday, September 3, 1991 Mr. Kendall completed the Discharge Reporting Form (DRF) pertaining to the discharge and mailed the DRF to Johnson on September 4, 1991. The DRF indicated August 30, 1992, the day that IT Corporation confirmed the discharge, as the day of discovery of the discharge. The discharge was diesel fuel as indicated by the DRF and a "petroleum product" as defined in Section 376.3-1(14), Florida Statutes. The discharge reported in the DRF constitutes a "discharge" as defined in Section 376.301(4), Florida Statutes, which constitutes an "incident" as defined in Section 376.3072(2)(c), Florida Statutes, and as described in Rule 17-769.600, Florida Administrative Code. On Wednesday, September 4, 1991, Mr. Kendall also mailed a letter to Johnson stating Hughes' intent to seek restoration coverage for the Facility, pursuant to Policy No. FPL 762285, Renewal No. FPL 7621566. On September 13, 1991 when Hooper, Inspector for the Lee County Storage Tank Local Program, inspected the Facility the diesel tank contained a total of 39 5/8 inches of diesel and water, of which 4 3/4 inches was water. On September 16, 1991 when Hooper again inspected the Facility, the diesel tank contained a total of 36 1/2 inches of diesel and water, of which 4 1/2 inches was water. On this date, Hooper advised Hughes that the diesel tank had to be emptied of its product. The inspection report issued on September 16, 1991 by Hooper advised Hughes that the Facility was not in compliance with Chapter 17-761, Florida Administrative Code. On September 17, 1991, Hughes had the diesel tank emptied of all its product. Although Hughes was in the process of emptying the diesel tank by giving diesel away, at no time between August 30, 1991 and September 16, 1991 was the diesel tank completely empty of its product. Between August 30, 1991 and September 16, 1991 Hughes did not test the diesel tank to determine if the diesel tank was leaking and, if so, to pinpoint the source of the leak. There was no evidence that either the Department or Lee County Storage Tank Local Program personnel ever informed Hughes before September 16, 1991 that there was a time frame within which the diesel tank had to be emptied of all of its product, and placed out of service in order for Hughes to be in compliance and eligible for reimbursement for restoration under the FPLIRP. Likewise, Hughes did not request any information from the Department or the Lee County Local Program personnel concerning any time frames within which the diesel tank had to be tested for leaks or emptied of its contents to prevent any further discharge in order to be eligible for reimbursement for restoration under the FPLIRP. Between August 29, 1991 and September 17, 1991 Hughes bailed the monitoring wells at the Facility on a daily basis, removed the free product from the monitoring wells, and placed the free product in a sealed 55-gallon drum. When the discharge was discovered, Hughes made the decision to close the Facility by tank removal, and at this point did not intend to repair or replace the Facility. As a result of an inspection of the Facility by the Lee County Local Program personnel in May, 1991, Hughes was made aware that the Facility was not in compliance with Chapter 17-761, Florida Administrative Code, since the gasoline tank had not been used in over three years, and there had been no closure of the gasoline tank. This noncompliance with Chapter 17-761, Florida Administrative Code, concerning the gasoline tank was also a portion of the noncompliance report filed by Hooper on September 16, 1991. The gasoline tank comes within the definition of "unmaintained" as defined by Rule 17-761.200(2), Florida Administrative Code. Both the diesel tank and the gasoline tank were removed on October 28, 1991 by a Florida licensed storage tank system removal contractor, and the Facility permanently closed by IT Corporation on October 29, 1991. In December, 1991, Hughes filed a tank closure assessment report pertaining to the removal of the diesel and gasoline tanks from, and closure of, the Facility. The tank closure assessment report was prepared by IT Corporation upon a request made by Hughes to IT Corporation on September 3, 1991 for a tank closure assessment proposal which was submitted by IT Corporation to Hughes on September 4, 1991. In April or May, 1992, Hughes filed with Lee County a contamination assessment report prepared by IT Corporation pertaining to the removal of the USTs from and closure of the Facility. Subsequent to discovery of the discharge. Hughes has expended approximately $60,000.00 as of June 10, 1992, on the Facility in connection with the USTs. Site rehabilitation costs for the Facility have been estimated in a range of $220,000.00 to $245,000.00 as of June 10, 1992. In the early part of 1991 water was present in the diesel tank, and approximately six months before discovering the discharge in August, 1991, Hughes had the water pumped out of the diesel tank. Hughes gave no explanation for the presence of water in the diesel tank. Neither the Department nor the Lee County Local Program personnel were notified of this unexplained presence of water in the diesel tank.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that the Department enter a Final Order denying Hughes application for restoration coverage under the Florida Petroleum Liability Insurance and Restoration Program. DONE and RECOMMENDED this 24th day of September, 1992, at Tallahassee, Florida. WILLIAM R. CAVE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-8334 The following constitutes my specific rulings, pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner The following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parenthesis is the Finding(s) of Fact which so adopts the Proposed Finding(s) of Fact:(1); 2-3(2); 4-5(3); 6- 8(4); 9(5); 10(6); 11(8,9); 12(10,11); 14(15,22); 15(10); 16(19); 18(10); 19(13); 20-21(7); 22-23(24); 24(21); 25(17); 26-29(20); 30(15); 31(16); 32(22); 33(23); 35(23); 36(7); 37(23); 38(24); 39(25); 40(26); 41(27); 42-43(27); and 44(15,22). Proposed Findings of Fact 13, 17 and 34 are neither material nor relevant to the conclusion reached in the Recommended Order. Rulings on Proposed Findings of Fact Submitted by the Respondent 1. The following Proposed Findings of Fact are adopted in substance as modified in the Recommended Order. The number in parenthesis is the Finding(s) of Fact which so adopts the Proposed Finding(s) of Fact:1-2(2); 3(3); 4-6(5); 7(6); 8(22); 9(7); 10(8); 11(9); 12(10); 13-16(11); 17(12); 18(13): 19(18); 20(17); 21-22(14); 23-24(15); 25-26(28); 27(16); and 28(23). COPIES FURNISHED: Scott E. Wilt, Esquire Maguire, Voorhis and Wells 2 South Orange Plaza Orlando, Florida 32801 Brigette A. Ffolkes, Esquire Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Carol Browner, Secretary Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400
The Issue The issue is whether to approve an application by Respondent, Dan R. Hughes Company, L.P. (applicant or Hughes), for an oil well drilling permit authorizing the drilling of an exploratory oil well in Collier County, Florida.
Findings Of Fact The Parties Mosher resides on a three-acre lot at 4695 26th Avenue Southeast, Naples, Florida. His residence is around 2,500 feet west of the proposed wellsite, but Mosher says that the eastern edge of his lot "might be 2,000 feet" from the drilling site. He has not, however, measured the actual distance to confirm this assertion. Preserve is a Florida non-profit corporation whose purpose is to educate the public on issues affecting the preservation and protection of the environment, particularly the environment of south and southwest Florida. It was formed in response to Hughes' intention to drill for oil in the area. The corporation is not a membership organization; rather, it has around 25 non-member, active volunteers, six member directors, and an unknown number of donors. Excluding Mosher, the other member directors live between three and ten miles away from the proposed wellsite. The record does not show where the 25 volunteers reside. The corporate representative testified that four directors, including Mosher, regularly use the Florida Panther National Wildlife Refuge (Refuge) to observe wildlife and habitat. However, the public access point to the Refuge appears to be at least several miles from the wellsite. Based upon an email survey, he stated that a "substantial number [around 36] of donors and volunteers utilize the panther refuge," but he was unaware of when, or how often, this occurred. About every six weeks, meetings are conducted at Mosher's home, which are attended by some, but not all, of the directors and volunteers. Schwartz's primary residence is in Lake Worth (Palm Beach County) where he serves as the unpaid executive director of the South Florida Wildlands Association.3 He sometimes provides paid tours in the Everglades and Big Cypress Swamp and has led "numerous" free hikes into panther habitat to look for signs of panthers. These hikes are limited to the hiking trails in the southeast corner of the Refuge, which is the only area that can be accessed by the public. He represented himself as an advocate for the protection of wildlife habitat in the greater Everglades, with a particular interest in the Florida panther. Hughes is a Texas limited partnership engaged in the business of oil and gas exploration, which is registered to do business in the State of Florida. Hughes has applied for a permit to drill an exploratory well for oil in Collier County. If the well is commercially viable, Hughes must apply for an operating permit at a later time. The Department has jurisdiction to issue permits for the drilling and exploring for, or production of, oil under part I, chapter 377. Pursuant to that authority, the Department reviewed the oil and gas well drilling permit application. The Application and Project After the application was deemed complete by the Department, it was distributed for comment to a number of local, state, and federal agencies. While some commented on the application, no agency had any unresolved concerns at the end of the application process. Hughes met all rule requirements for performance bonds or securities, and it provided all information required by rule. The proposed site is located on the southeast corner of an active farm field in the Big Cypress Swamp watershed, just north of a speedway now used as a test track. Surface holes for oil wells are commonly located on farm land, and farm fields are compatible with oil wells. Based upon a mineral lease between Hughes and the owner of the land, Collier Land Holdings, Ltd., Hughes has the right to locate and drill the well at the proposed surface hole location. The Refuge was established by Congress in 1989 to protect the Florida panther and its habitat and is located approximately 20 miles east of Naples. Around 98 percent of the Refuge is closed to any public activity. The project is consistent with the comprehensive conservation plan for the Refuge prepared by the United States Fish and Wildlife Service (USFWS), in that the plan recommends "slant drilling" off of the Refuge. Although Mosher and Preserve argue that the drill hole should be moved further east into wetlands, and Schwartz contends that it should be moved further west away from the Refuge, the proposed location of the drilling pad and project site is reasonable with respect to the nature, appearance, and location of the proposed drilling site. Likewise, the location is reasonable with respect to the type, nature, and extent of Hughes' ownership. The proposed activity can best be characterized as a "resource play," where an operator drills toward a known resource. This is distinguished from a wildcat operation, where the operator is drilling in an unproven area. Hughes proposes to target the rubble zone (i.e., the lower zone) within the lower Sunniland formation, a geologic formation thousands of feet below the ground surface that runs through southwest Florida. Hughes will first drill a vertical pilot hole and then drill horizontally from the hole bottom in a southeast direction toward a formerly drilled oil well known as the Tribal Well. In order to increase the probability of locating commercially available petroleum, Hughes plans to proceed from west to east in order to arrive at a perpendicular direction of existing limestone fractures as the drilling approaches the Tribal Well. When that well was drilled vertically into the rubble zone in the 1970s, oil rose to the ground surface. Thus, the indicated presence of oil is sufficient to warrant and justify the exploration for oil at this location. The proposed depth of the pilot hole is 13,900 feet measured depth (MD/13,900 feet true vertical depth (TVD)), which will allow assessment of the upper Sunniland, lower Sunniland, and Pumpkin Bay Formations. If the evaluation determines that the well will likely be commercially productive, Hughes will complete a 4,100-foot horizontal leg in the lower Sunniland rubble zone with a landing depth at 12,500 feet MD/12,064 TVD and a total depth of 16,600 feet MD/12,064 feet TVD. The footprint for the drilling pad will be 225 feet by 295 feet, or 2.6 acres, with a two-foot earthen berm around the perimeter of the operating area to contain all water on the site. A secondary containment area within the perimeter of the site will be covered by high-density polyethylene to contain and collect any accidental spills. A drilling rig, generators, and other drilling equipment will be on the pad during drilling operations. A maximum of 20 persons will be at the site, and then only for one day of operations. At all other times, Hughes anticipates there will be a five-person drill crew plus support personnel on site. After drilling, Hughes will remove its equipment. Once the access road is built and the equipment put in place, the drilling activities will take place 24 hours per day, seven days per week, and will be completed in approximately 60 to 70 days. The on-site diesel generators will run simultaneously 24 hours per day while drilling is taking place. The pad will be illuminated at night with lights on the drilling derrick and throughout the pad. Construction of the drilling pad will require trucking around 12,000 to 14,000 cubic yards of fill to the drilling location. Additional traffic for bringing in fill, piping, and related equipment will occur, but the exact amount of traffic is unknown. The South Florida Water Management District (SFWMD) previously approved an environmental resource permit (ERP) to allow the construction and operation of a surface water management system on Camp Keais. The United States Army Corps of Engineers (USACE) also permitted the same system under the Clean Water Act. The latter permit requires mitigation for wetlands and Florida panther habitat compensation. Based on the proposed wellsite, the SFWMD modified the ERP to allow a culvert and access to the proposed wellsite. In addition to the oil drilling permit application, Hughes has applied for two water well drilling permits from the SFWMD, and an injection well drilling permit. Petitioners and Intervenor's Objections The challengers have raised a number of objections that they assert require denial of the application. Conflicting testimony was presented on these issues, which has been resolved in Respondents' favor as being the more credible and persuasive testimony. Mosher and Preserve Mosher and Preserve raise two broad objections. First, they contend that hydrogen sulfide gas (H2S) is likely to be encountered in the drilling of the proposed well. They further contend that the H2S contingency plan submitted by Hughes is not sufficient to evacuate the public in the event of an incident where H2S is uncontrollably released under pressure. Second, they contend that the Committee did not review the application under the process contemplated by section 377.42(2). Except for these two objections, they agree that no other issues remain. See TR., Vol. I, p. 33. Within the petroleum industry, drilling operators create H2S plans when there is reason to believe that the operator may encounter H2S while drilling. This practice is codified in Florida Administrative Code Rule 62C-27.001(7), which requires a contingency plan only when H2S is "likely" to be encountered while drilling. The plan must "meet generally accepted industry standards and practices," and it must contain measures "for notifying authorities and evacuating civilians in the event of an accident." Id. See also rule 62C-26.003(3), which requires a contingency plan "if appropriate." The plan is prepared for two main users: the personnel working at the drilling site; and local emergency management officials, who must plan and train for the implementation of emergency activities. The parties agree that the "generally accepted industry standards and practices" for the oil and natural gas industry are found in the operating standards and recommended practices adopted by The American Petroleum Institute (API), a trade association for the oil and natural gas industry. Recommended Practice 49 (API 49) is the generally accepted industry standard for oil and gas drilling operations likely to encounter H2S and was relied upon by all parties throughout the hearing. The standard includes guidance on personnel protection measures, personnel training, personnel protection equipment, and community contingency planning. API 49 recommends the use of a community warning and protection plan when atmospheric H2S exposures beyond the well site could exceed potentially harmful exposure levels and could affect the general public. Mosher/Preserve's expert opined that H2S might be encountered at levels as high as 21 percent (210,000 parts per million (ppm)) in southwest Florida, and that "it's quite likely" H2S would be encountered at the proposed wellsite. At the same time, however, he agreed with the assessment of Respondents' experts that the likelihood of encountering H2S at this site was merely "possible," "sporadic," and "unlikely," and that there was "zero" potential of a severe H2S release under high pressure. Florida has two major oil producing areas: the Sunniland Trend in southwest Florida and the Smackover formation near Jay, Florida, in the northwest part of the state. Unlike the Smackover formation which has higher temperatures and pressures and a high concentration of H2S, the Sunniland Trend has normal temperatures and pressures and a sporadic presence of H2S. Less than two percent of wells in southwest Florida have been reported to contain H2S, and those reports relate to production wells where bacteria (biological contamination) was likely introduced into the formation during production. Of over 300 oil wells drilled in southwest Florida, only six were reported to have encountered H2S. Notably, the Tribal Well, located 1.5 miles to the southeast of the proposed site, encountered relatively low pressure during drilling and had no H2S, and another well located 12 miles to the north likewise had no high pressure or H2S. It is unlikely that Hughes will encounter high pressure or H2S if it drills at the proposed site. Even though it is unlikely that high pressure or H2S will be encountered during the drilling of this proposed well, Hughes still submitted an H2S contingency plan as part of the drilling application. The Department determined the plan provided an effective design to detect, evaluate, and control any hazardous release of H2S. In response to public concerns, in January 2014 Hughes revised its plan to provide more protections. The revised plan exceeds the guidance provided in API 49. The revised plan clarifies and adds multiple protections, including implementing the plan at a vertical depth of 9,000 feet, which is 2,700 feet before the zone that Mosher claims could contain H2S; clarifying that an H2S alarm notification at 15 ppm would result in an instant well shut-in (i.e., closure of the well) to prevent the escape of H2S; instituting a reverse 911 call system to allow local officials to notify the public by telephone of any incident; creating an air dispersion model to understand the likelihood of public exposure; and adding H2S scavengers to the drilling mud. Adding H2S scavengers in the mud is a protective measure. Specifically, the zinc oxide scavengers will react with H2S to create benign zinc sulfide and water. Even if H2S is present in the formation, the H2S scavengers will neutralize the H2S before it could reach the surface. The H2S scavengers will effectively eliminate the likelihood of H2S escaping from the well during drilling operations. The drilling plan requires the Trinity C formation (which Hughes estimated will begin at a depth of around 11,850 feet) to be cemented off and sealed once drilled. This formation will not be encountered in the first 15 or 20 days of drilling. Once encountered, the formation will be exposed for only four to six days. Even if H2S were encountered during this short exposed duration, all of the protections included in the revised plan would be in place, including overbalanced drilling mud, H2S scavengers, blowout preventers, H2S monitors, and alarms. When wells are drilled, there are numerous personnel monitoring the drilling fluid, or mud, which is designed not only to carry cuttings to the surface, but more importantly to act as a barrier to keep fluids or gasses in the geologic formation. The mud is weighted with additives to combat reservoir pressures. Drill operators want the same amount of mud pumped into the hole as the amount flowing back up. If more fluid is flowing back up, then the mud is not heavy enough to hold back the fluids or gasses encountered. If this imbalance occurs, the well is shut- in immediately and the mud weight is adjusted. A shut-in can be accomplished in just a few seconds. Anything in a shut-in well will stay in the well. Hughes' normal drilling plan is to slightly overbalance the mud weight. This ensures that nothing unintentionally escapes from the reservoir. Mosher and Preserve contend that if H2S is encountered, dangerous concentrations of H2S would leave the wellsite. In response to this type of concern, as part of the revised plan, Hughes conducted an air dispersion model using the methodology provided by API 49. The API 49 model is a Gaussian model with default values reflecting the worst-case exposures. The peer- reviewed and conservative model calculated by Dr. Walker looked at H2S concentrations of 10, 15, and 100 ppm. At the extreme case, a 100-ppm release at the well would be reduced below 10 ppm within about 20 feet from the well and further reduced to one ppm within 60 feet from the well. Although H2S is unlikely to escape the well, 100 ppm was selected as a precautionary level because this level is an immediate danger to human life and health. Reaching 100 ppm is highly unlikely because at an instantaneous reading of 15 ppm, the well is immediately shut-in. The air dispersion model results demonstrate that atmospheric H2S exposures beyond the wellsite could not exceed potentially harmful exposure levels nor could exposures affect the general public. Thus, even though the plan includes a community warning and protection provision, it is not required under API 49. In an abundance of caution, however, the plan provides for a public notification zone of 2,000 feet in case of an H2S release. This zone is two orders of magnitude beyond the 20- foot, 10 ppm distance dispersion of H2S based on the modeled worse case release and exceeds any required notification zones in other states. The notification boundary is conservative, as compared with industry standards. While Mosher's expert recommended more stringent standards than API 49, he knew of no contingency plan for an oil drilling permit in the United States that included his recommended standards. Mosher's expert testified that based on his review of literature, the lowest observable adverse effect from H2S was at concentrations of 2.1 ppm. Based on a worst case scenario release of 100 ppm of H2S, the gas would disperse to a concentration of 2.1 ppm in less than 40 feet from the well. The property boundary abutting the neighborhood to the west is over 800 feet from the well. API 49 expressly provides that wellsite personnel should be provided protection devices if concentrations of H2S exceed 10 ppm for an eight-hour time-weighted average. The revised plan requires wellsite personnel to don a self-contained breathing apparatus if the monitors encounter an instantaneous reading of 10 ppm H2S. Instantaneous readings are more protective of human health than the time-weighted averages proposed by Mosher's expert. Using an instantaneous trigger is another area where the revised plan exceeds the recommendation of API 49. The greater weight of evidence demonstrates that the H2S contingency plan meets or exceeds guidance of API 49. The revised plan requires hands-on training for public officials and fire/rescue staff before reaching the depth of 9,000 feet. The revised plan further requires hands-on training and drills related to the procedures for use, and location of, all self- contained breathing apparatus and evacuation procedures. The plan is a complete and accurate contingency plan that will assist operators and local emergency management in the unlikely event of an H2S escape. It exceeds the degree of caution typically employed in industry standards. Mosher and Preserve contend that the plan fails to include specific instructions and training for nearby residents in the event of an emergency. However, emergency plans are designed for use by operators at the facility and the local emergency management officials rather than nearby residents. Thus, the Department did not require the applicant to provide specific instructions for those residents. Mosher and Preserve also contend that the plan fails to adequately describe the evacuation routes in the event of an emergency. However, evacuation routes and the potential closure of roads are normally in the domain of local governments, as the operator and Department have no control over this action. Mosher and Preserve contend that the plan does not include complete and accurate information for all property owners in the area. This is understandable since some property owners either failed to respond to inquiries by Hughes when it assembled the information for the plan or were reluctant to provide any personal information. Recognizing this problem, the Department reviewed the website of the Collier County property appraiser to complete the information. To the extent information on certain parcels may not be complete, Hughes can update that aspect of the plan on an on-going basis before operations begin. If a permit is issued, the Department will continue to coordinate with Collier County and other local emergency management officials for the purpose of planning to implement the contingency plan. Based on the foregoing, the evidence establishes that the probability of a dangerous release of H2S beyond the wellsite is highly remote and speculative in nature. The revised contingency plan is consistent with industry standards and satisfies the requirements of the rule. Schwartz Like Mosher and Preserve, Schwartz agreed that except for the concerns expressed in his amended pleading, no other issues remain. Schwartz first contends that Hughes did not demonstrate sufficient efforts to select a proposed location for drilling to minimize impacts as required by rule 62C-30.005. Subparagraph (2)(b)1. requires that drilling sites be located "to minimize impacts on the vegetation and wildlife, including rare and endangered species, and the surface water resources." In particular, Schwartz is concerned about the potential impact on the Florida panther, an endangered species. Hughes selected the proposed site primarily because of its proximity to the Tribal Well, which had a significant show of oil. In order to increase the chances for commercial production, the horizontal segment of the well needs to be perpendicular to the natural fractures in the limestone. In this location, Hughes must drill horizontally from west to east in the direction of the Tribal Well. Hughes was unable to locate the well on the automotive test track directly south of the agricultural field and west of the Tribal Well because of objections by Harley-Davidson, then the owner of the track. A second proposed location just east of the test track was considered but Harley-Davidson would not grant access from the track to the upland sites on the adjacent location. A third option was to construct a lengthy access road from the north to one of the upland sites just east of the test track. However, this alternative would have resulted in significant impacts to wetlands and native vegetation. The proposed site offers the least amount of environmental impact. It is 1.5 miles from the Tribal Well. It has no federal or jurisdictional wetlands on the site, and groundwater modeling submitted with an application for a water use permit demonstrated that the proposed use of water will not adversely affect surrounding wetlands. The proposed access road and drilling pad will not impact any cypress-mixed forest swamps, hardwood hammocks, mangrove forests, archeological sites, or native ceremonial grounds. Nor will they adversely affect known red-cockaded woodpecker colonies, rookeries, alligator holes, research sites, or pine uplands. The evidence establishes that Hughes chose a site that minimized environmental impacts. Schwartz also contends that the wellsite activities will directly decrease the recovery chances of the Florida panther. According to Schwartz, this decrease will occur because the activities involve creating an access road, truck traffic, noise, lights, and vibrations. He also asserts that the proposed wellsite will result in a small amount of direct habitat loss when the cattle field is converted to a drilling pad. The USFWS has developed a panther scientific habitat assessment methodology. It relies upon peer-reviewed studies that found that panthers will select land cover types while avoiding others. The methodology ranks the value of land cover types from zero to ten based on the potential for panther selection. Applying the USFWS' scoring to the proposed wellsite, an improved pasture area has a value of 5.2, which means the land cover is neither actively selected nor avoided by panthers. The areas to the south and east of the proposed wellsite are forested wetlands and forested uplands, which have substantially higher values that range from 9.2 to 9.5. If converted to an open water reservoir under the Camp Keais ERP, the site value would be zero, the land cover type most avoided by panthers. The underlying USACE permit specifically required panther habitat compensation. Hughes' expert established that the proposed site minimizes impacts on wildlife by avoiding habitat selected by panthers such as wetlands, forested uplands, saw palmetto thickets, fresh water marshes, prairies, and native habitats. Based on a dozen visits to the site for the purpose of conducting vegetation mapping and wildlife surveys, the expert concluded there are no panthers currently known to be living, breeding, or denning on the site. A home range for a panther is the area providing shelter, water, food, and the chance for breeding. The typical home range for a male panther is 209 square miles, and female home ranges average around 113 square miles. The evidence establishes the proposed drilling activity will not interfere with the panthers' use of the site. Approval of the permit will not remove or push any panthers out of their home range. Hughes' expert opined that the four male panthers, which historically traversed the area within a mile of the proposed wellsite, would only likely move through the area every 15 or 20 months or longer. The temporary nature of the drilling activities means the panthers may not even be near the location during that time. If a panther is near the location and frightened by any activities, it will avoid the area, but will eventually return. Based on the large home range of the panther, the temporary activities will not increase the likelihood of intraspecies aggression or decrease panther survivability. The more persuasive evidence is that panthers are adaptable. They are habituated to the drilling operations in southwest Florida based on over a hundred thousand telemetry data points taken near 93 oil wells in the primary zone. Panthers are not threatened by the presence of humans. In fact, they live and den in and around residential communities and active agricultural operations. Panthers need prey, water, and shelter. The drilling activities will not adversely affect prey availability or impact water resources. The proposed wellsite's location within a disturbed agricultural field will not impact the panther's ability to shelter. During the permit review process, the Department requested input from the USFWS, the Florida Fish and Wildlife Conservation Commission (FFWCC), and other interested parties regarding the proposed drilling permit. No formal comments were offered by the USFWS, and its biologist for conservation planning indicated informally that the surface impacts from an oil well are "very minor." Likewise, the FFWCC offered no formal comments on the application. The evidence supports a finding that the proposed permit activities will not affect the panther's use of, or travel to and from, the Refuge. The activities will not affect the panthers' availability of prey or increase panther competition for food or home range territory. The drilling will not adversely affect the panther's breeding, survivability, or the recovery of the species. The only other threatened or endangered species found in the vicinity of the proposed site was an eastern indigo snake, which was located two and one-half miles away and would not travel to the proposed wellsite, as its home range is up to a maximum of 450 acres. Schwartz further contends that section 377.242 requires that the permit be denied because the proposed wellsite is within one mile from the seaward (western) boundary of the Refuge. The Refuge is located entirely inland and does not have a seaward boundary, as contemplated by section 377.242(1)(a)3. Therefore, no drilling will be located within one mile of the seaward boundary of any state, local, or federal park, aquatic preserve, or wildlife preserve. This is consistent with the Department's routine and long-standing interpretation of the statute. Big Cypress Swamp Advisory Committee Petitioners and Intervenor initially contended that the permit should be denied because a meeting of the Committee was never convened pursuant to section 377.42. The Committee, however, met on March 11 and 31, 2014. Although a majority of the Committee voted to recommend that the Department deny the permit on various grounds, the recommendation of the Committee is not binding on the Department, and after consideration, was rejected. In their Proposed Recommended Orders, the opponents now contend that the permit should be denied because the Committee did not meet before the Department issued its proposed agency action. For the reasons stated in the Conclusions of Law, this contention is rejected.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order issuing Permit No. 1353H, without further modifications. DONE AND ENTERED this 3rd day of June, 2014, 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 3rd day of June, 2014.
The Issue As stated by the Administrative Law Judge in his Recommended Order, the issue presented is: "whether the Petitioner waived its right to a hearing by failing to request a hearing within the period of time described in the Notice to Show Cause."
Findings Of Fact After review of the record in its entirety, it is determined that the Administrative Law Judge's Findings of Fact found in paragraphs 1 through 9 of the Recommended Order are supported by the record and are accepted and incorporated as if fully set forth herein.
Conclusions This proceeding was initiated by a request for a formal administrative hearing filed by Petitioner, SHELL OIL COMPANY (hereinafter SHELL), challenging the Violation and Notice to Show Cause issued by the Respondent, DEPARTMENT OF TRANSPORTATION (hereinafter DEPARTMENT), regarding SHELL'S driveway connection to State Road 7 in Dade County, Florida. This matter was referred to the Division of Administrative Hearings (DOAH) for a formal hearing on October 21, 1997. On October 27, 1997, DOAH issued its Initial Order assigning the case to Michael M. Parrish, a duly appointed Administrative Law Judge, and setting forth the responsibilities of the parties. The hearing was scheduled for January 29, 1998, in Miami, Florida. An Order Granting a Motion for Continuance was issued on December 19, 1997, rescheduling the hearing for March 19, 1998. On March 5, 1998, the hearing was again continued. The hearing was held on May 14, 1998, by telephone. Appearances on behalf of the parties were as follows: For Petitioner: John Lukacs, Esquire Lukacs & Lukacs, P.A. 1825 Coral Way, Suite 102 Miami, Florida 33145 For Respondent: Paul Sexton, Esquire Chief Administrative Law Counsel Brian F. McGrail, Esquire Assistant General Counsel Department of Transportation 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0458 Stipulated Facts were filed prior to hearing with three exhibits attached. The deposition of Ingrid Birenbaum, the DEPARTMENT'S District Six Permits Engineer at the time the Notice to Show Cause was issued, was filed with DOAH together with exhibits introduced at the deposition. A transcript was prepared and filed subsequent to the hearing. By agreement of the parties, no witnesses were presented and the Stipulated Facts with the three exhibits attached and the deposition of Ingrid Birenbaum constituted the record in this case for the purpose of disposing of the limited issue of timeliness. On June 22, 1998, the DEPARTMENT filed its Proposed Recommended Order and SHELL filed its Findings of Fact, Conclusions of Law and Recommended Order. On July 21, 1998, the Administrative Law Judge issued his Recommended Order. Exceptions to the Recommended Order were filed by SHELL on August 5, 1998, and the DEPARTMENT filed its response to the exceptions on August 17, 1998. Thereafter, SHELL filed a reply to the DEPARTMENT'S response to the exceptions, the DEPARTMENT filed a motion to strike the reply as unauthorized, and SHELL filed a response to the motion to strike.
Appeal For This Case THIS ORDER CONSTITUTES FINAL AGENCY ACTION AND MAY BE APPEALED BY ANY PARTY PURSUANT TO SECTION 120.68, FLORIDA STATUTES, AND RULES 9.110 AND 9.190, FLORIDA RULES OF APPELLATE PROCEDURE, BY FILING A NOTICE OF APPEAL CONFORMING TO THE REQUIREMENTS OF RULE 9.110(d), FLORIDA RULED OF APPELLATE PROCEDURE, BOTH WITH THE APPROPRIATE DISTRICT COURT OF APPEAL, ACCOMPANIED BY THE APPROPRIATE FILING FEE, AND WITH THE DEPARTMENT'S CLERK OF AGENCY PROCEEDINGS, HAYDON BURNS BUILDING, 605 SUWANNEE STREET, M.S. 58, TALLAHASSEE, FLORIDA 32399- 0458, WITHIN THIRTY (30) DAYS OF RENDITION OF THIS ORDER.
Findings Of Fact The parties stipulated at hearing to the factual findings set forth in paragraphs 1-5 below. Stipulated Facts The Petitioner has four underground tanks. Two tanks are located at Petitioner's facility in Port Everglades and two tanks are located at Petitioner's facility at Miami International Airport. All four tanks are registered as "stationary tanks" with Respondent. The Petitioner filed a request for reimbursement with the Respondent pursuant to section 376.3071(12)(b), Florida Statutes. The Respondent's denial with regard to the facility at each site was based on "...the fact that this facility is not a petroleum storage system as defined in section 376.301(11), Florida Statutes." Subsequent to the Respondent's denial of the Petitioner's application, the Respondent conducted an additional inspection of the Port Everglades site. The Petitioner timely filed a petition for a formal administrative hearing in response to Respondent's denial. Other Facts Petitioner, Everglades Pipeline Company, is a single, unified pipeline facility. The sole purpose of the system is to transport petroleum product along a route from a receiving pumping station at Port Everglades via a 35 mile pipeline to various terminals and ending at a terminal at the Miami International Airport. The pipeline facility transports 400 to 3000 barrels of petroleum product per hour. The petroleum product transported by Petitioner usually consists of jet A turbine fuel, JP-4 military fuel and railroad diesel fuel. Various pipe lines, not owned or operated by Petitioner, transport petroleum product from major petroleum companies to the Petitioner's receiving station at Port Everglades where the product enters the Petitioner's pipe line facility. The process of placing the petroleum product in the care of Petitioner is known as a "custody transfer." While the product is in Petitioner's custody for purpose of transport to its destination, ownership of the product does not change. At all times, the product remains the property of the company acquiring the Petitioner's transportation service. After transfer to the Petitioner's custody and during the transportation process, tests are constantly performed on the product for the purpose of maintaining quality control. During the testing process, an amount of the petroleum product is withdrawn from the pipeline through a one fourth inch pipe. Samples for testing purposes are then taken from the quantity of the product so removed. The excess of that quantity is channeled to two underground tanks at the Everglades station and temporarily held there for later injection back into the pipeline for delivery, with the same batch of product from which it was drawn, to the recipient at the other end of the pipeline journey. In the Miami station, the same process of withdrawal of a quantity of the product occurs, with two underground tanks there fulfilling the same holding function as that performed by the tanks at the Port Everglades facility. While each of the four tanks have been registered as required by section 376.301(11), Florida Statutes, such registration is not deemed dispositive of whether the tanks are petroleum storage systems since registrations are accepted at face value by the Respondent and no independent verification of registration is made. The two tanks at the Everglades facility have a 2100 gallon, or approximately 50 barrel, capacity. The two tanks at the Miami facility have a 1764 gallon capacity. These four tanks, known as "sump" tanks, perform other functions in addition to temporarily holding amounts of product from which samples are taken. Strainers in the pipeline sometimes become clogged from impurities in the product being transported. When this happens, the product is back washed within the pipeline through the strainers to unclog them. The product used in this back wash operation is then cleansed and placed in the tanks for subsequent re- injection in the pipeline with the batch of product from which it originated. The contaminants are placed in a strainer tank. The strainer tank is necessary for the effective operation of the pipeline. It was conceded in testimony of Petitioner's witness at hearing that this tank is not a petroleum storage system. Maintenance of the system sometimes requires the draining of product from the pipeline into the sump tanks. As soon as the maintenance is completed, the product is re-injected into the pipeline with the batch from which it was drawn. A safe pipeline system requires the existence of the sump tanks to hold maintenance drainage material. The tanks at the Port Everglades station are also used to hold product when pressure builds up in the pipeline system from thermal causes or other conditions which require that pressure in the system be relieved. The product drawn off at these times is re-injected in the pipeline into the batch of product from which it originated. Some form of pressure relief is necessary for safe and effective operation of the pipeline system. The process of reinserting the product back into the pipeline is a manual operation to the extent that personnel are required to open certain valves. The product is not automatically re-injected. However, the sump tanks exist solely to "take care of the individual stations or terminal." While possible to operate the pipeline without the tanks, there is no use or purpose for them except as part of the pipeline facility. An additional tank exists at the Port Everglades station as part of a scavenger system for recovery of product from the ground, but no evidence was presented to show the tank was stationary or registered. The tank is not a petroleum storage system pursuant to section 376.301(11), Florida Statutes. In addition to the two sump tanks, two barrel shaped tanks sit above the ground at the Miami International Airport terminal. These tanks have the capacity to hold 1000 barrels or 42,000 gallons of petroleum product. Neither of these tanks is registered with the Department, nor was evidence introduced that they were otherwise licensed or comply with petroleum storage system requirements of section 376.301(11), Florida Statutes. These barrel tanks were identified at hearing as a relief tank and a settling tank. The relief tank serves the same purpose of providing pressure relief for the system as do the sump tanks at the Port Everglades station. As with the sump tanks, the product is re-injected into the pipeline as soon as the upset condition causing overpressurization is past. The tank also serves to hold certain types of contaminated product until the owner can remove it from the system. The other barrel tank at the Miami station is used as a "settling" tank to filter contaminants from petroleum product. This tank is a treatment or process tank, as opposed to a petroleum storage system. The barrel tanks at the Miami Station, like the sump tanks there and at the Port Everglades station, serve only the product transportation function of the pipeline. They are necessary for safe and effective functioning of that transportation system. Each of the Petitioner's tanks is integrally related to the transportation of product from Port Everglades to Miami. Their sole purpose is the safe and effective functioning of the pipeline. As established by testimony of John Svec, Respondent's expert on petroleum storage facilities, the Petitioner's tanks function for the convenience of the transportation system. The process of taking the product out of the pipe line, holding it, and putting it back into the pipe line is a transportation function. While the Petitioner's tanks temporarily hold petroleum product, they do not store that product in order to provide a supply for future use within the context of that term's use in the field of petroleum marketing. The term "supply" means the buying or selling of product. The Petitioner does not engage in buying and selling. Custody of materials is assumed solely for transportation of that material by the Petitioner's facility. The holding function of the tanks is a part of the overall purpose of the entire pipeline facility to transport petroleum product. Petitioner's exhibit 11 establishes that the original Senate version (Senate Bill 206) of the SUPER Act of 1986 made no mention of pipeline facilities for purpose of inclusion under coverage of the Act. The committee substitute for Senate Bill 206 did include pipelines. This inclusion was carried over to the committee substitute for the committee substitute, only to be deleted from the final enrolled version of the Act.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered denying the Petitioner's application for reimbursement eligibility. DONE AND RECOMMENDED this 17th day of June, 1988, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of June, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-5374, 87-5305 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. PETITIONER'S PROPOSED FINDINGS Included, finding 1 and 6. Included, finding 13. Rejected as unnecessary for result reached. Rejected, unnecessary to result reached. Rejected, unnecessary to result reached. Rejected, unnecessary to result reached. Rejected, unnecessary to result reached. Included in finding 8. Summarily included in finding 11. Summarily included in finding 14. Summarily included in finding 16 with exception of the last two sentences. Testimony on this point indicated holding tanks do provide relief for system pressures. Rejected, unnecessary to result reached. Generally included throughout findings. Not necessary for result reached. Not necessary for result reached. As to manual valves, included in finding 17. Remainder rejected as unnecessary for result reached. Opinion as to tanks rejected as unnecessary to conclusion reached concerning the system. Unnecessary to result reached. Unnecessary to result reached. RESPONDENT'S PROPOSED FINDINGS Unnecessary to result. Unnecessary to result. Unnecessary to result. Included in finding 6. Included in finding 6. Included in finding 6. Included in finding 7. Included in finding 12 and 13. Included in finding 8. Included in finding 14. Included in finding 15. Included in finding 16. Included in finding 17. Included in finding 20. Included in finding 18. Included in finding 19. Included in finding 20. Included in finding 21. Included in finding 23. Included in part in finding 21. Remainder rejected as unnecessary. Included in finding 23. Included in part in findings 23 and 24. Included in finding 24. Included in finding 24. Included in finding 25. COPIES FURNISHED: Richard A. Pettigrew, Esquire Luis R. Figueredo, Esquire 5300 Southeast Financial Center 200 South Biscayne Blvd. Miami, Florida 33131-2339 E. Gary Early, Esquire Department of Environmental Regulation 2600 Blair Stone Road Twin Towers Office Bldg. Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire Department of Environmental Regulation Twin Towers Office Bldg. 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Dale Twachtmann Secretary Department of Environmental Regulation Twin Towers Office Bldg. 2600 Blair Stone Road Tallahassee, Florida 32399-2400 =================================================================
The Issue The issue for determination is whether Petitioner is liable for the costs and expenses incurred by Respondent in responding to a pollutant discharge, occurring on November 6, 1992, at the waters off John Lloyd State Park, Dania, Florida, and for damages to natural resources resulting from the pollutant discharge.
Findings Of Fact On November 6, 1992, a DC-7 airplane crashed off the Atlantic Coast of Florida, more particularly, 100 yards from John Lloyd State Park, and one quarter of a mile north of Dania Pier in Dania, Florida. The DC-7 was a chartered cargo airplane and had departed from Miami International Airport. The DC-7 was chartered from Claudio Castillo by Miguel Delpino, United States General Manager of Aerochago Airlines, to carry cargo for Aerochago Airlines. Even though Aerochago Airlines owned aircraft, its aircraft was unavailable due to maintenance work being performed. During the flight from Miami International Airport, the DC-7 developed engine trouble, i.e., two of its engines failed. The aircraft began to lose altitude. In an attempt to regain altitude, the captain of the aircraft dumped 3,000 gallons of aviation fuel. However, the DC-7 failed to regain altitude and crashed. Remaining on the crashed aircraft were 3,000 gallons of aviation fuel and 150 gallons of motor oil. When the DC-7 crashed, only the crew and two passengers were on board. One of the passengers was Mr. Castillo. On the same day of the crash, the Florida Marine Patrol (FMP) of the Department of Natural Resources, now the Department of Environmental Protection (DEP), arrived at the crash scene at 3:20 a.m. and investigated the crash. The DEP had four employees investigating the crash: three FMP officers and one employee from the Office of Coastal Protection. The remaining aviation fuel and motor oil in the crashed DC-7 was discharging into the coastal waters. The DEP employees attempted to abate the discharge. The equipment necessary for the employees' investigation of the crash and abatement of the discharge and the cost for the equipment were the following: (a) a DEP vehicle at a cost of $7.00; (b) a twin engine vessel at a cost of $120.00; (c) an underwater sealant kit at a cost of $16.66; (d) scuba tanks at a cost of $9.00; and (e) photographs at a cost of $24.00. The total hours expended by DEP's four employees were 36 hours, at a cost of $685.84. Due to the DC-7 leaking aviation fuel and motor oil into Florida's coastal waters, removal of the aircraft from the Atlantic Ocean was necessary. DEP contracted with Resolve Towing and Salvage (RTS) to remove the DC-7. RTS is a discharge cleanup organization approved by DEP. RTS' contractual responsibilities included removal of the entire DC-7 aircraft and all debris within 100 yards of the center of the aircraft; disposal of the aircraft; plugging the engines to help stop the leakage; and removal and delivery of the engines which failed to the National Transportation Safety Board (NTSB) and the Federal Aviation Authority (FAA). Because the submerged DC-7 was located in an environmentally sensitive coral and sea-plant area, RTS was required to use extreme care in removing the aircraft. The contractual cost was fixed at $34,000.00 A DEP employee, Kent Reetz, was at the scene of the crash during RTS' cleanup. His responsibility was to monitor the removal of the DC-7 by RTS and to ensure that the aircraft's removal was in compliance with DEP's standards. During the removal of the DC-7 from the water, the fuselage ruptured, scattering debris which was dangerous to the public and to the coral and sea-plants. DEP determined that RTS was not responsible for the fuselage rupturing, but that the rupture was caused by several storms, prior to the aircraft's removal, and by the aircraft being submerged for an extended period in salt water. DEP contracted with RTS to remove the dangerous debris emitted when the fuselage ruptured. The contractual cost was fixed at $9,050.00 The total contractual cost between DEP and RTS was $43,050.00. DEP paid RTS from the Coastal Protection Trust Fund. In responding to the pollutant discharge, DEP incurred a total cost of $43,912.50. DEP assessed damages to the natural resources based upon the amount of pollutants discharged which were 3,000 gallons of aviation fuel and 150 gallons of motor oil. Using the statutory formula, DEP assessed damages to the natural resources in the amount of $57,898.72. Based upon the costs incurred by DEP in responding to the pollutant discharge in the amount of $43,912.50 and the damages to the natural resources in the amount of $57,898.72, DEP sought reimbursement and compensation from Mr. Castillo in the total amount of $101,811.22. DEP invoiced Mr. Castillo for reimbursement of the costs and for compensation for the damages. DEP provided Mr. Castillo with detailed and itemized expense documents for the costs that it had incurred in responding to the pollutant discharge. The documents showed the expenses incurred, what each expense represented, and the formula for computing each expense. Further, DEP provided Mr. Castillo with a document showing the amount of the damages to the natural resources, the formula for computing the damages, and how the damages were computed. The charter of November 6, 1992, was not the first time that Mr. Delpino had chartered the same DC-7 from Mr. Castillo. Prior to and, again, at the previous charter, Mr. Castillo represented to Mr. Delpino that he, Mr. Castillo, was the owner of the DC-7. The owner of a chartered aircraft is responsible for obtaining the aircraft's crew and insurance and for maintaining the aircraft. For the previous charter, Mr. Castillo was responsible for obtaining the DC-7's crew and the insurance and for maintaining the aircraft. Mr. Delpino had no reason to expect the charter for November 6, 1992, to be any different. Furthermore, Mr. Castillo did not inform Mr. Delpino that the responsibilities would be different. For the present charter, as before, Mr. Castillo handled all matters relating to the crew, insurance, and maintenance. Regarding the insurance, Mr. Castillo presented to Mr. Delpino an insurance certificate which, after the crash, was discovered to be false. Also, regarding maintenance, prior to the crash, the two engines which failed were to be removed and repaired, but, although they were removed, they were returned without being repaired. Mr. Castillo was the owner of the DC-7. Also, the crash of the DC-7 was investigated by several federal governmental agencies, including the FAA, the U.S. Coast Guard, and the NTSB. Both the Coast Guard and the NTSB issued reports on the crash, which identified Mr. Castillo as the owner of the DC-7. Mr. Castillo was responsible for the discharge of the 3,000 gallons of aviation fuel and 150 gallons of motor oil from the DC-7 into Florida's coastal waters.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection (DEP) enter a final order assessing Claudio Castillo $43,912.50 for costs related to DEP responding to the pollutant discharge on November 6, 1992, at Florida's coastal waters off John Lloyd State Park, Dania, Florida, and $57,898.72 for damages to natural resources resulting from the pollutant discharge--all totaling $101,811.22. DONE AND ENTERED this 26th day of August, 1997, in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 26th day of August, 1997.
The Issue The issue in this case is the amount of reimbursement to which Petitioners are entitled under the Petroleum Cleanup Reimbursement Program. Petitioners--supported by the Intervenor, Environmental Corporation of America (ECA)--seek reimbursement of contractor markups; Respondent, the Department of Environmental Protection (Respondent, DEP, or the Department), seeks to recover alleged overpayments related to interest payments.
Findings Of Fact Petitioners funded efforts to rehabilitate (clean-up) petroleum and petroleum product contamination at the Joy Food Store (some, former Coastal Mart) facilities involved in these cases. As such, they were the persons responsible for conducting site rehabilitation (PRFCSR) at those sites. Cloyd Toney, Case No. 98-2021, funded a contamination assessment report (CAR) at former Coastal Mart #688 in Fort Lauderdale, Florida. James Scelfo, Case No. 98-4535, funded a CAR at former Coastal Mart #430 in Gainesville, Florida. Leo Cohen and Mark Grosby, Case No. 98-4537, funded a remedial action report (RAP) at Joy Food Store #669 in Kissimmee, Florida. Leo Cohen and John H. Roth, Case No. 98-4538, funded a CAR at Joy Food Store #667 in Kissimmee, Florida; Cloyd Toney, Case No. 98-4540, funded a CAR at Joy Food Store #662 in Eaton Park, Florida. Luella R. Ceaser, Case No. 98-4541, funded a CAR at former Coastal Mart #684 in Pompano Beach, Florida. Peter D. Kleist, Case No. 98-4543, funded a RAP and Remediation Action (RA) at Joy Food Store #704 in Cocoa, Florida. As PRFCSR's, Petitioners filed applications with the Department of Environmental Protection (DEP, Department, or Respondent) for reimbursement under an amnesty program created by Section 376.3071, Florida Statutes, for owners who notified the Department that their property was contaminated by petroleum or petroleum products. Under the statutory reimbursement program someone (usually the site owner) typically would hire a contractor to rehabilitate petroleum-contaminated sites. All contractors performing site rehabilitation tasks would have to file a Comprehensive Quality Assurance Plan ("CompQAPP") with the Department. Field work not performed under and in accordance with the CompQAPP would not be accepted by the Department. The contractor would then perform up to four rehabilitation program tasks, often through subcontractors and suppliers. The first potential program task would be an Initial Remedial Action (IRA). In an IRA, site-contaminated soil at the site would be identified by taking soil samples (soil borings), the contaminated soil would be removed, and the excavation would be backfilled with uncontaminated soil. The next step would be preparation of a Contamination Assessment Report (CAR). The purpose of the CAR would be to define the vertical and horizontal extent of groundwater contamination. Definition of groundwater contamination would require installation and sampling of groundwater wells. Additional soil samples sometimes would be necessary. The third step would be the Remedial Action Plan (RAP). In a RAP, a system to remediate the groundwater at a site is designed and approved. The final program task would be the Remedial Action (RA), which would implement the system designed in the RAP. Upon completion of a program task, the site owner, operator, or his designee would submit a reimbursement application to the Department for payment for the costs of the rehabilitation activities. Petitioners each claimed a 15% "second-tier" markup on the amount they funded (i.e., paid) the Intervenor, Environmental Corporation of America (ECA), a company owned and operated by Jack Ceccarelli. The amount each paid to ECA included ECA's 15% "first-tier" markup on amounts it said it paid subcontractors for site rehabilitation work. Ceccarelli's Initial Involvement in Clean-up Projects Ceccarelli worked for Joy Food Stores from December 1980 until August 1992. Joy, which sold gasoline at its stores, was owned and operated by Mike Hughey. Hughey hired Ceccarelli, who worked his way up from lower-echelon positions to eventually become responsible for overall operations of Joy Food Stores (Joy). In 1986, Joy leased some of its retail facilities to a competitor doing business under the name Coastal Mart. After petroleum contamination was discovered at these and numerous other Joy locations, Coastal Mart sued Joy in early 1992. Meanwhile, Joy began to rehabilitate (assess and clean-up) its sites under the amnesty program created by Section 376.3071, Florida Statutes. Joy initiated its clean-up projects under the so-called "state-lead" program. Under this program, the Department would contract directly with a private contractor to perform the rehabilitation work at an eligible site and pay the contractor monthly for work performed. However, the Department only had ten approved contractors doing work under the "state-lead" program. As a result, clean-up progressed slowly state-wide, and a large backlog of work developed. Clean-up of the Joy sites was at a standstill. When Ceccarelli left Joy in August 1992, he formed a petroleum clean-up company called Environmental Directions Incorporated ("EDI"). Subsequently, he approached Hughey with a proposal to clean-up the Joy and Coastal sites, using the reimbursement program, third-party financing, and multiple subcontractors. Hughey agreed with Ceccarelli that Ceccarelli's proposal could be a way to settle the Coastal Mart lawsuit. In February 1993, Ceccarelli secured a financing agreement from Clean America Corporation (CAMCOR) and environmental consulting services from Environmental Solutions and Services, Inc. (ESSI) based in Longwood, Florida. Under the arrangements made by EDI, ESSI contracted directly with Joy and agreed to compensate EDI as "Project Coordinator." EDI was to be compensated at an hourly rate of $100 for project coordination (described as "client/funder coordination), with a minimum of 50 hours per week for the Coastal/Hughey (i.e., Joy) sites; EDI also was to receive 2% of ESSI's 15% contractor markup. Joy settled the Coastal Mart lawsuit in February or March 1993 by taking back the Coastal Mart locations. These sites were included in the seven applications at issue in these cases. Clean-up work proceeded on the basis of those contractual agreements, with some amendments, but CAMCOR never provided funding, and ESSI reluctantly made only a partial payment to EDI in August 1993. In October 1993, ESSI was bought by Omega Environmental Services (Omega). Omega confirmed the prior contractual arrangements and continued with the clean-up work begun by ESSI. But since CAMCOR never funded the enterprise, Omega was not paid for its work and did not pay EDI under the prior contractual provisions. In October 1994, Omega bought Gurr and Associates (Gurr), another environmental consulting firm. Initially, Omega operated Gurr as a subsidiary but later dissolved Gurr and operated it as a division of Omega. Gurr/Omega initially continued under Omega's prior contractual arrangements, but Gurr/Omega still was not being paid by CAMCOR, and Gurr/Omega still was not paying EDI. When lack of financing began to threaten the continued viability of the clean-up projects, Ceccarelli sought alternative funding through another company he incorporated under the name Environmental Corporation of America (ECA). An immediate problem confronted by ECA in getting financing was that a prospective funder's anticipated profit was at risk of erosion by passage of time between funding and reimbursement from the Department, which was taking anywhere from eight months to two, even three years. From August 1993 through August 1994, the law allowed the Department to pay interest to claimants pending processing of reimbursement applications. These interest payments compensated funders for the time value of money and protected their anticipated profit from being eroded by passage of time during which reimbursement applications remained pending. After August 1994, interest payments from the Department ceased. See Conclusion 70, infra. The practical effect was to put the funders' rate of profit at risk. As a result, to help entice funders, other contractual means were devised to replace the interest previously paid by the Department. Eventually, ECA entered into contracts with funders to provide funding for the Joy and Coastal Mart sites. Each Agreement to Fund between ECA and the funders of these sites provided: INTEREST "Contractor" agrees to pay "Funder" a rate of interest equal to the published prime interest rate (Nations Bank) fixed at time of funding on such funds advanced by "Funder". Interest shall be payable twelve (12) months in advance. An additional five percent (5%) will be deposited in a reserve account to be paid to the Funder as follows: two and one-half percent (2 1/2%) at the end of month fifteen and two and one-half percent (2 1/2%) at the end of month eighteen. Reimbursement by the State in less than eighteen months may result in an interest adjustment due "Contractor" from "Funder" or reserve account. Any interest paid by the State of Florida under Section 62-773.650 will accrue to "Contractor" on the same basis as it was paid "Contractor" to "Funder" and shall be paid by "Funder" to "Contractor" within five(5) days of funders [sic] receipt of disbursement from the State of Florida to "Funder". Reimbursement by the State which takes more than eighteen (18) months will result in an interest adjustment due "Funder" from "Contractor" at the rate of prime fixed at the time of funding plus three percent (3%) for months 19 and beyond, paid quarterly in advance to the escrow account and paid to the Funder quarterly in arrears. ECA also entered into a series of agreements with Gurr/Omega, each called a Participation Agreement for Rehabilitation of Petroleum Contamination Site. Under these agreements, ECA was said to be acting for "its investors." Gurr/Omega was identified as having "heretofore entered into contracts with reimbursement eligible site owners or operators to fund, manage and rehabilitate specific sites." Gurr/Omega was required to "provide all labor, equipment and materials and [was to have] performed all work needed to complete certain specified sites selected and approved by ECA." Gurr/Omega was to "complete such performance in strict compliance with all applicable statutes rules and regulations and to the satisfaction of FDEP." Gurr-Omega would submit its invoices for remediation work to ECA, which would pay Gurr/Omega with money obtained from third-party investors. ECA would receive an assignment of Gurr/Omega's right to reimbursement from the State of Florida. In effect, Gurr/Omega gave up its contractor markup on invoices submitted by its subcontractors and suppliers; instead, ECA charged a contractor markup on Gurr/Omega's invoices. ECA would then be responsible for preparing reimbursement packages for submission to the Department. Each Participation Agreement for Rehabilitation of Petroleum Contamination Site also contained a provision requiring Gurr/Omega to pay ECA a share of what ECA was required to pay the funders under the corresponding Agreement to Fund. ECA hired Restoration Assistance, Inc., to prepare reimbursement applications for all of the Joy and Coastal sites, including the sites funded by Petitioners in these cases. (In addition to preparing reimbursement applications, Restoration Assistance had a subcontract with Halliburton NUS, which had a contract with the Department to review reimbursement applications filed by others for completeness and entitlement to reimbursement.) ECA would send Restoration Assistance a package of invoices and technical documentation for each application. Restoration Assistance would compare the invoices with the technical documentation to determine whether costs in the invoices were allowable and to categorize the costs and enter the costs and other required information in the appropriate places on the reimbursement applications. In some cases, Restoration Assistance noted costs not believed to be allowable and recommended their deletion. In some cases, ECA required invoices to be adjusted so that they only included allowable costs. In other cases, ECA required Gurr/Omega to pay portions of payments it received from ECA into a retention account for "anticipated denials." The packages sent to Restoration Assistance included invoices from Gurr/Omega and from ECA. ECA's invoices included a 15% contractor markup on Gurr/Omega's invoices. In some cases, Gurr/Omega also marked-up subcontractor and subcontractor invoices it paid for rehabilitation work. Sometimes, after review by Restoration Assistance, the funders paid the invoices, and the application packages were returned to Restoration Assistance with certifications from the funders and an attestation from a certified public accountant (CPA) that the costs reflected in the invoices had been "incurred," i.e., in fact paid. Restoration Assistance would then file the completed application with the Department. After application packages were completed, ECA's "investors" would "fund" (pay) all invoices and markups. At approximately the same time, ECA would pay Gurr/Omega's invoices, and ECA and Gurr/Omega would make the initial interest payments required under the applicable Agreement to Fund and Participation Agreement for Rehabilitation of Petroleum Contamination Site. However, the reimbursement packages did not include any evidence of the interest payments by Gurr/Omega and ECA or their agreements to make interest payments, respectively, to ECA and Petitioners. Nor were the interest payments or agreements to pay interest made a part of the CPA's attestation that all costs were "incurred." ECA began filing reimbursement applications for "its investors" in November 1994. The Scelfo application was filed in February 1995; the Ceaser application was filed in March 1995; the Toney and Grosby applications were filed in March 1996; and the Roth and Kleist applications were filed in May 1996 (among 30 applications filed that month, which were the last filings by ECA, except for a handful filed in September 1996.) At about the time ECA began filing applications for "its investors," the Department was trying to decide how to deal with serious problems that had arisen in the reimbursement program. It had come to the Department's attention that entities known as Environmental Trust, Inc. (ET) and Sarasota Environmental Investors, Inc. (SEI), together with other entities related through interlocking ownership and directorship arrangements, were filing reimbursement applications claiming "first-tier" markups for a so-called contractor called Gator Environmental, Inc. (Gator), who was not involved until after rehabilitation work already had been completed by Tower Environmental, Inc. (Tower). It seemed Gator's primary function actually was to perform a "due diligence" site inspection for the funders. In addition, participants at various levels of the rehabilitation efforts in these applications, including the ultimate funders, ET and SEI, were claiming reimbursement for the full amount of invoices when they only paid a discounted portion of the invoices, which were being factored by a related financing company called American Factors Group (AFG). The Department began to devise a means of addressing problems like these in the context of the applicable statutes and rules. In September 1994, the Department began to require reimbursement applicants to provide documentation showing that entities claiming contractor markups "added value" to the rehabilitation effort. Specifically with respect to Gator, the Department wanted to know the date and duration of its involvement; if Gator came on the scene after the CAR submittal for which reimbursement was being claimed, no markup would be allowed for Gator. In October and November 1994, the Department held meetings to discuss the ET case in general and the "factoring" (discounting) of invoices in particular. It was decided at these meetings that Gator's charge for a CPA's due diligence was not "integral" to site rehabilitation since it was related to financing, not rehabilitation. It also was decided that the Department would not reimburse the difference between invoices and the factored (discounted) amount paid since the difference between the two represented carrying charges (i.e., interest) not reimbursable under applicable rules. In time, the Department denied these portions of approximately 46 reimbursement applications filed by ET and a related entity, Sarasota Environmental Investors, Inc. (SEI). At about the time these decisions were being made on the ET and SEI applications, the Department informed its contract application reviewers (such as Restoration Assistance), orally and later in writing, that additional documentation would be required to support claims for contractor markups to determine whether the contractor's activities were "integral to site rehabilitation associated with active management and oversight of subcontractors and vendors." Reviewers were informed that, in asking for additional information, they should inform applicants: Costs integral to site rehabilitation associated with active management and oversight of subcontractors and vendors may include: negotiation of contracts with subcontractors and vendors; development of specifications and solicitation of quotes for equipment and supplies; scheduling and coordination of subcontractor activities; and on-site supervision of activities performed by subcontractors. The following are examples of activities that are not considered integral to site rehabilitation: . . . activities performed as due diligence on behalf of the funding entities. Reviewers also were advised that they could deny contractor markups for the following reasons: Although the activities performed appear to include some amount of active management and oversight of subcontractors and vendors, they can not be differentiated from non- reimbursable activities and/or activities that appear not to be integral to site rehabilitation. Therefore, these activities do not constitute sufficient responsibility and participation to warrant the 15% markup claimed . . . . The documentation provided does not demonstrate a sufficient level of effort integral to site rehabilitation . . . in actively managing and overseeing subcontractors and vendors to warrant the 15% markup. The activities documented do not show any active management and oversight of subcontractors and vendors and do not constitute sufficient responsibility and participation integral to site rehabilitation to warrant the 15% markup claimed . . . . In December 1994, John M. Ruddell, Director of Waste Management for the Department, submitted a draft revision of Florida Administrative Code Rules Chapter 62-773 (the rules for the reimbursement program), which included elimination of markups entirely. However, the draft revision never went to rulemaking. In January 1995, the Department instructed Restoration Assistance, acting in the role of the Department's contract reviewer, to act in accordance with the decisions made at the Department's staff meetings in September, October, and November 1994. Specifically, Restoration Assistance was instructed not to allow a markup for Gator, not to allow the cost of the CPA's due diligence for funding purposes, and not to pay the difference between invoices and the factored (discounted) amounts actually paid. As reflected in an April 1995 intra-office memorandum, the Department continued to take the positions that factored (discounted) general contractor invoices could not be paid in full and that: II. The next tier entity (e.g., management company) may be allowed claims for actual project management work and value-added services; services provided by the general contractor and duplicated by the management company should not be claimed by the management company. Management company claims (e.g., markups) would be denied if the general contractor's claims simply passed through (e.g., one month time period) the management company to the responsible party without any services provided. However, if the management company only provided cash flow services for a majority of the program task period and no other service was provided, then a markup on the general contractor's claims would be allowable. In August 1995, the Department instructed its reviewers as to an application involving Gator. The reviewers were told not to allow Gator a markup if it did not become involved until after the work was completed. They were told that if Gator was involved in rehabilitation work, not to pay for management costs duplicative of "services provided by the subs or the resp[onsible] party." They also were instructed that Gator's non-duplicative management, if any, "counts towards the total project management percentage of personnel time." ET and SEI filed approximately 46 petitions for formal administrative proceedings on their application denials between September 1995 and February 1996. These cases were referred to DOAH. In October 1995, Charles Williams, the Administrator of the Department's Petroleum Clean-Up Section, e-mailed a memorandum to its contract reviewers reiterating instructions regarding contractor markups. The memorandum also noted a claim for reimbursement of a 15% contractor markup where the work of the so-called general contractor "was limited to a 1 hour meeting with the sub." In January 1996, the Department referred another 37 related cases to DOAH, each having two counts--one challenging reimbursement application denials, and another challenging the Department's alleged use of unadopted rules (the Department's various memoranda regarding factoring and markups) in denying the applications. These and other related cases were consolidated for final hearing in April 1996. In internal correspondence of contract reviewer Halliburton NUS, sent through the Department's contract manager, Grace Rivera, in May 1996, Halliburton's reviewers were instructed to apply an "8-hour" benchmark for gauging contractor participation. Part of the internal correspondence stated: Middle Man Markup: A funders [sic] service is funding, so pay the 15% markup. Also allow a 15% markup to a "middleman" who has done work for the site for at least 8 hours during the time that the work was going on. Do not allow the 15% if the middleman did not do any value added services while the site work was going on, or if their [sic] was no funding. Before you deny a markup because there was no work done by the middleman while site work was going on, call the PR [person responsible] and ask if "any information was not included in the application" to see if they had hours they did earlier but did not claim. In October 1996, a Recommended Order was entered in the ET and SEI cases upholding the application denials. The Department entered a Final Order adopting the ALJ's Recommended Order, and ET and SEI appealed to the District Court of Appeal, First District. In October 1996, Charles Williams sent Sewell, Todd, and Broxton, Inc. (STB), which reviewed reimbursement applications filed by Restoration Assistance, a letter providing "Written Confirmation of Verbal Guidance for Review of Reimbursement Claims with General Contractor Markups." The letter referred to a meeting of September 18, 1996, and Williams' October 1995 e-mail. It also referred to the Department's January 1996 decision to have reviewers request "additional documentation of general contractor activities that may have been performed beyond those billed in the claim prior to denying their markup." It stated: "This was done because several firms had indicated that they did not bill all of their activities due to the management time limitations in the rule." It referred to the Department's guidance in February 1996 as to the wording of such requests for additional documentation. Finally, it noted that the contractor markup issue was discussed at a public workshop in July 1996 on proposed clarifications to Florida Administrative Code Rules Chapter 62-773. Prior to October 1996, the Department only entered a few orders of determination (OOD's) on the reimbursement applications submitted by ECA for "its investors." Out of 29 OOD's, contractor markups were paid on 12 applications and denied on 17. Meanwhile, as to the other applications, the Department requested more documentation and information as to ECA's involvement in these and other projects. ECA responded to this request and provided the Department with a variety of documents, but the Department delayed its determination. After the Recommended Order in the ET and SEI cases in October 1996, the Department entered 41 more OOD's; 45 more OOD's were entered in November 1996. All denied ECA's markups. Subsequently, another 117 OOD's were entered on the applications filed by ECA for "its investors." Of these, ECA's markups were paid on 32 applications; the rest were denied. Petitioners' applications were denied in October 1996 or later. With respect to the Petitioners in these cases, the Department disallowed the following amounts of ECA markup: Toney (Case No. 98-2021), $8,120.80; Scelfo (Case No. 98-4535), $6,495.29; Cohen and Grosby (Case No. 98-4537), $5,302.33; Cohen and Roth (Case No. 98-4538), $10,303.12; Toney (Case No. 98- 4540), $9,293.40; Ceaser (Case No. 98-4541), $4,231.91; and Kleist (Case No. 98-4543), $13,446.66. These amounts included ECA's 15% markups, plus Petitioners' 15% markups on ECA's markups. The Department did not reduce any ECA claims by the interest payments required under the applicable Agreement to Fund and Participation Agreement for Rehabilitation of Petroleum Contamination Site. By the time of the presentation of evidence during the hearing in the ET and SEI cases in April 1996, the Department had information that many rehabilitation efforts were arranging to replace the post-application interest the Department no longer was paying. See Conclusion 75, infra, Findings of Fact 120-121. Certainly, by the summer of 1996, the Department was aware of these kinds of arrangements. But the Department was not looking beyond the contents of the application packages to ascertain whether such arrangements were involved, and the ECA application packages contained no evidence of the interest payments being made in accordance with the applicable Agreement to Fund and Participation Agreement for Rehabilitation of Petroleum Contamination Site. During discovery in these cases, the Department obtained evidence that interest payments were made in accordance with the applicable Agreement to Fund and Participation Agreement for Rehabilitation of Petroleum Contamination Site. At that point, the Department sought to recover those interest payments, together with any markups on them. Subsequently, Petitioners stipulated to receipt of the following interest payments from ECA under the Agreement Petitioner to Fund: DOAH Case Interest Amount Cloyd Toney 98-2021 $6,282.52 James Scelfo 98-4534 $6,670.50 Cohen/Grosby 98-4537 $4,030.68 Cohen/Roth 98-4538 $7,783.00 Cloyd Toney 98-4540 $7,160.79 Luella Ceasar 98-4541 $4,135.42 Peter Kliest 98-4543 $8,469.25 There also was evidence that Gurr/Omega paid ECA : $3,688.56 of interest under the Participation Agreement for Rehabilitation of Petroleum Contamination Site for Cohen and Grosby, Case No. 98- 4537, Joy Food Store #669; and $2,789.72 of interest under the Participation Agreement for Rehabilitation of Petroleum Contamination Site for Luella Ceaser, Case No. 98-4541, Coast Mart #684. (There was no evidence of other interest payments from Gurr/Omega to ECA with respect to these cases.) However, under the Participation Agreement for Rehabilitation of Petroleum Contamination Site, those payments constitute part of the interest payments from ECA to Petitioners. The documentation and evidence establish that, in all the Joy/Coastal clean-up projects, including the seven funded by Petitioners in these cases, ESSI-Omega-Gurr/Omega was a full service contractor employing all the licensed geologists and engineers, draftsman, project coordinators, field technicians, and support staff necessary to rehabilitate theses sites. ESSI- Omega-Gurr/Omega personnel planned, performed, supervised, and supported all field activities performed at these sites--e.g., preparation of field work plan, including locating, scheduling, drilling, installing and sampling of soil borings and monitoring wells; designing monitoring well and remedial action system specifications, disposal of contaminated soil; measuring monitoring well water levels and conductivity. (All field work was performed under the ESSI-Omega-Gurr/Omega CompQAPP.) ESSI-Omega-Gurr/Omega personnel contracted and interacted with laboratories obtaining all soil and water sampling test kits and sampling results. ESSI-Omega-Gurr/Omega personnel analyzed all soil and water sampling test results and re-directed the scope of the rehabilitation of these sites accordingly. ESSI-Omega-Gurr/Omega personnel obtained permission and access from neighboring property owners to install monitoring wells on their property. ESSI-Omega-Gurr/Omega personnel interacted with local state and county officials securing permits, responding to their inquiries, and requesting permission to conduct additional remediation activities. ESSI-Omega-Gurr/Omega owned, rented, or bought all equipment, vehicles, instruments, tools, and materials used to remediate these sites. ESSI-Omega-Gurr/Omega office personnel performed, supervised, reviewed, and supported all activities necessary to produce the CAR's and RAP's for these sites. They wrote, reviewed, edited, and typed the reports; they drafted all figures, maps, tables, and indexes. ESSI-Omega-Gurr/Omega office personnel recorded, tracked, and invoiced all their work, the work of all their subcontractor activities, and their costs. At the outset of rehabilitation work on the Joy/Coastal site, Ceccarelli and Hughey discussed the overall rehabilitation effort on the sites. Hughey wanted the clean-up to proceed as quickly as reasonably possible. He also wanted work at the various sites to be timed and performed so as to disrupt retail operations as little as possible. Hughey expected EDI to communicate his concerns and desires with ESSI and make sure that ESSI's performance of the Joy-ESSI contract would conform with those concerns and desires. At the outset, Ceccarelli met with ESSI's executives in Orlando, Florida, to carry out Hughey's desires. EDI also assembled helpful historical information on the sites, including information Joy developed in connection with the Coastal Mart lawsuit. As ESSI became Omega, and Omega became Gurr/Omega, and EDI became ECA, Ceccarelli continued in his role as liaison between ESSI-Omega-Gurr/Omega and Joy and general overseer of the projects. In addition to meeting with ESSI-Omega-Gurr/Omega's executives, Ceccarelli discussed various aspects of the projects with ESSI-Omega-Gurr/Omega personnel, especially those housed in their Tampa office, which was in the same building as EDI/ECA; Ceccarelli, in turn, discussed these things with Hughey on a regular basis. Ceccarelli also had ESSI-Omega-Gurr/Omega prepare monthly summary progress reports, which Ceccarelli reviewed and went over with Hughey. Ceccarelli also usually visited the sites, including at least six of the seven sites at issue in these cases. (The invoice for Joy Food Store #669 in Kissimmee was missing from Petitioners' Exhibit 4, and no other documentation evidenced a site visit.) Sometimes, Hughey accompanied Ceccarelli on a site visit. ECA's invoice for Joy Food Store #688 in Ft. Lauderdale (Case No. 98-2021) billed for eight hours for travel and a site visit, plus another 6.75 hours of general contractor management and administration time for such things as: review of well installations; review of the scope of work for the CAR with Omega; review with the Broward Natural Resources Department; estimate of the cost to complete and scheduling work; and review the CAR after preparation by ESSI-Omega-Gurr/Omega. Of this time, only 8.75 hours was claimed as management time on the reimbursement application forms prepared by Restoration Assistance. ECA's invoice for Coastal Mart Store #430 in Gainesville (Case No. 98-4535) billed for four hours for travel and a site visit, plus another 7.5 hours of general contractor management and administration time for such things as: reviewing the file for a work plan; reviewing monitor well installations; reviewing a drilling well report (or soil borings); reviewing the CAR after preparation by ESSI-Omega-Gurr/Omega; and reviewing of invoices/billings. Of this time, only 11.5 hours were claimed as management time on the reimbursement application forms prepared by Restoration Assistance. As mentioned in Finding 50, supra, ECA's invoice for Joy Food Store #669 in Kissimmee (Case No. 98-4537) was missing from Petitioners' Exhibit 4. But Restoration Assistance's Personnel Supplementary Form for Management/Project Management time shows 12 hours of general contractor management time. ECA's invoices for Joy Food Store #667 in Kissimmee (Case No. 98-4538) billed for four hours for travel and a site visit, plus another 26.25 hours of general contractor management and administration time for such things as client consultation (probably with Hughey); sorting site data and review of site file; review of wells with client (possibly due to problems with well installation); review with senior project manager; review of well installation; and review of CAR and CAR addendum after preparation by ESSI-Omega-Gurr/Omega. Of this time, 26.25 hours were claimed as management time on the reimbursement application forms prepared by Restoration Assistance. ECA's invoice for Joy Food Store #662 in Eaton Park (Case No. 98-4540) billed for three hours for travel and a site visit, plus another 17.25 hours of general contractor management and administration time for such things as reviewing scope of work and budget; copying and data and setting up files; reviewing hand auger data; coordinating well installation; reviewing additional wells; reviewing groundwater results; reviewing site access requests and data; reviewing the CAR and CAR addendum after preparation by ESSI-Omega-Gurr/Omega. Of this time, only three hours were claimed as management time on the reimbursement application forms prepared by Restoration Assistance. ECA's invoice for Coastal Mart Store #684 in Pompano Beach (Case No. 98-4541) billed for 2.5 hours for pro rata share of travel and a site visit, plus another 11.25 hours general contractor management and administration time for such things as data reviewing and compiling information for CAR; reviewing the CAR; project coordination in Broward County; reviewing billings; and reviewing general project coordination. All of this time was claimed as management time on the reimbursement application forms prepared by Restoration Assistance. ECA's invoice for Joy Food Store #704 in Cocoa (Case No. 98-4543) billed for 6.5 hours for travel and a site visit, plus another 24.5 hours of general contractor management and administration time for such things as client consultations; the sorting and review of file data; review with senior project manager; financial review and tracking; review of RAP with client and sub; review of file and prepare invoice; and review of and response to Brevard County RAP questions with sub. Of this time, only 13.5 hours were claimed as management time on the reimbursement application forms prepared by Restoration Assistance. The Department contends that part of ECA's invoice for Joy Food Store #662 is not legitimate because it records Ceccarelli's review of the CAR addendum on February 10, 1995, the same day the CAR addendum was signed and sealed by the project geologist in Orlando. The Department also contends that another part of ECA's invoice for Joy Food Store #662 is not legitimate because it records the review of a well drilling report on March 7, 1994, the same day the wells were installed. The installation of these wells took eleven hours, and the Department contends that the chances of generating a well-drilling report that day under these circumstances are minimal. The explanation for these discrepancies probably lies in the way in which Ceccarelli prepared his invoices. Ceccarelli admittedly was far from meticulous in keeping track of the time he spent on these projects, in part because of his personal disinclination and in part because of ECA's understanding that meticulous time-keeping was not critical for reimbursement of a markup. To the contrary, it was ECA's understanding that the Department would not reimburse for excessive management time for ECA when ECA was being compensated in the form of the 15% markup on ESSI-Omega-Gurr/Omega's invoices. Indeed, Restoration Assistance reduced ECA's management time in at least five of the seven claims for reimbursement at issue in these cases. (This could not be ascertained for Joy Food Store #669 without the invoice for that store.) For the most part, the activities listed in ECA's invoices were not recorded contemporaneously with the performance of the listed activity. Rather, the invoices were created based on Ceccarelli's review of his personal calendar, telephone bills, and reports generated by ESSI-Omega- Gurr/Omega. The Department contends also that part of ECA's invoice for Joy Food Store #684 is not legitimate because it indicates a total of 4.25 hours for project coordination activities on July 1, 1994, November 14, 1994, and January 31, 1995, while the CAR for this facility was finalized on April 15, 1994. This length of time appears to be erroneous; it probably represents time spent on the RAP phase of rehabilitation at that site, not the CAR phase. The CAR reimbursement claim should be reduced by $488.25 for ECA's time, and by $73.24 for Ceaser's 15% markup. The evidence on Joy Food Store #684 also was that Gurr/Omega paid ECA $649.00 for anticipated denials. These moneys were deposited in an escrow account, and the record is void as to whether these costs were denied by the Department or whether ECA ever returned these moneys to Gurr/Omega. But the disposition of the escrow fund would be a matter for ECA and Gurr/Omega to resolve; it would not affect Ceaser's reimbursement application. The Department criticizes the lack of documentation evidencing what Ceccarelli claims he did on these projects; the lack of such documentation contributed to the Department's doubts as to the veracity of the invoices. But in the numerous cases of Ceccarelli's review of work by ESSI-Omega-Gurr/Omega recorded in the invoices, no EDI/ECA work product was generated, so none could be produced. Documentation supplied to the Department supported ECA's claims that ESSI-Omega-Gurr/Omega sent EDI/ECA reports to review and supported some other claims of time spent on the projects, as well as ECA's claim that a considerable amount of time spent on these projects was not recorded in ECA's invoices. There also came a point in time when ECA stopped responding to Department requests for additional information because ECA came to believe that the Department intended to deny ECA's markups regardless what documentation was produced. ECA came to this belief based in part on learning during a meeting with Department staff that Charles Williams had issued notices of intent to deny ECA's markups in some cases without even looking at documentation produced by ECA. When the parties began to litigate, documents were produced only in response to discovery requests. Ceccarelli testified that his telephone records were not produced because the Department did not ask for them. The Department also criticized Ceccarelli's inability to recall in detail from memory what he did during the time recorded in the invoices for these projects. But, under the circumstances, it was understandable for him not to have such a clear, detailed recollection. It was not proof of dishonesty.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection enter a final order: granting Petitioners' claims for ECA's 15% markups, together with Petitioners' 15% markups on ECA's markups, as follows: Petitioner DOAH Case Amount Cloyd Toney 98-2021 $8,120.80 James Scelfo 98-4534 $6,495.29 Cohen/Grosby 98-4537 $5,302.33 Cohen/Roth 98-4538 $10,303.12 Cloyd Toney 98-4540 $9,293.40 Luella Ceasar 98-4541 $4,231.91 Peter Kliest 98-4543 $13,446.66 requiring recovery of overpayments of interest paid from ECA to Petitioners, plus ECA's 15% markups on the interest payments, plus Petitioners' 15% markups on ECA's markups, as follows: ECA's Interest Overpayments Petitioner DOAH Case Interest Amount Cloyd Toney 98-2021 $6,282.52 James Scelfo 98-4534 $6,670.50 Cohen/Grosby 98-4537 $4,030.68 Cohen/Roth 98-4538 $7,783.00 Cloyd Toney 98-4540 $7,160.79 Luella Ceasar 98-4541 $4,135.42 Peter Kliest 98-4543 $8,469.25 ECA's Markups on ECA's Interest Cloyd Toney 98-2021 $942.38 James Scelfo 98-4534 $1,000.58 Cohen/Grosby 98-4537 $604.60 Cohen/Roth 98-4538 $1,167.45 Cloyd Toney 98-4540 $1,074.12 Luella Ceasar 98-4541 $620.31 Peter Kliest 98-4543 $1,270.39 Petitioners' Markups on ECA's Markups on ECA's Interest Cloyd Toney 98-2021 $141.36 James Scelfo 98-4534 $150.09 Cohen/Grosby 98-4537 $90.69 Cohen/Roth 98-4538 $175.12 Cloyd Toney 98-4540 $161.12 Luella Ceasar 98-4541 $93.05 Peter Kliest 98-4543 $190.56 requiring recovery of the $561.49 overpayment on the Ceasar reimbursement application (Case No. 98-4541) reflected in Finding 61, supra. DONE AND ENTERED this 16th day of December, 1999, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON 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 16th day of December, 1999. COPIES FURNISHED: J. A. Spejenkowski, Esquire Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Bradford C. Vassey, Esquire Environmental Corporation of America 205 South Hoover Street, Suite 101 Tampa, Florida 33609 Carter B. McCain, Esquire MacFarlane, Ferguson & McMullen 400 North Tampa Street, Suite 2300 Tampa, Florida 33601 Kathy Carter, Agency Clerk Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Teri Donaldson, General Counsel Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
The Issue The issue to be determined in this case is whether CJC Properties, Ltd. (CJC), is eligible for state restoration funding assistance under the Petroleum Contamination Participation Program or the Florida Petroleum Liability and Restoration Insurance Program for one or more discharges of gasoline at DEP Facility No. 378943938 (“the facility”).
Findings Of Fact The Facility CJC is a Florida Limited Partnership. It is the current owner of property located at 5691 U.S. Highway 27 North, in Tallahassee. Prior to CJC’s acquisition of the property, the property was owned by Carolyn J. Chapman, John W. Chapman, Jane Chapman Latina, and Carolyn Chapman Landrum (“the Chapmans”). The property was leased to various entities and operated as a gas station. The tanks and dispensers remained in service until November, 1995. The last operator of the facility was Lake Jackson 76, Inc. There were five underground petroleum storage tanks at the facility. Before 1991, one of the tanks at the facility was used for regular, leaded, gasoline. When leaded gasoline was phased out, the tank was used for unleaded gasoline. Site Assessments and Sampling Data On November 30, 1995, the Chapmans employed Petroleum Contractors, Inc., to remove the five storage tanks. During the tank removal, Environmental and Geotechnical Specialists, Inc. (“EGS”) performed an assessment to determine whether the facility was contaminated with petroleum or petroleum products. The Underground Storage Tank Removal Report prepared by EGS noted that all five tanks appeared to be intact. Soils in the tank pit wall and bottom were not discolored. No significant contamination was observed directly below the tanks. Soil from the tank pit was stockpiled on the site. EGS observed no significant signs of contamination of this soil. The soil stockpile was also screened with a Flame Ionization Detector Organic Vapor Analyzer (OVA). No organic vapors were detected. An OVA detects any organic vapor, but is used as a screening tool to find petroleum vapors. Department rules require that an OVA reading be performed both unfiltered and filtered. The filtered reading screens out everything but methane and is “subtracted” from the unfiltered reading to determine the presence of petroleum vapors. Twenty-four soil samples were taken from various depths at nine locations in the tank pit. These samples were tested using an OVA. Nine of the soil samples, taken from four locations, had corrected OVA readings indicative of petroleum contamination. EGS concluded that “soil contamination detected in the tank pit is likely the result of a leak in the piping” between the dispensers and the tanks. Soil samples were also taken from three borings in the vicinity of the dispenser island and OVA-tested. In boring D-2, organic vapors were detected from the surface to a depth of approximately seven feet. The OVA readings from D-2 declined with depth. EGS reported that “some contamination was detected beneath a dispenser; however, it does not ‘appear’ to significantly extend below six (6) feet.” EGS did not report both filtered and unfiltered OVA readings for the soil samples taken from the dispenser area, as it had done for soil samples taken from the tank pit and the stockpile. For the dispenser area soil samples, EGS reported a single OVA reading for each sample, without indicating whether the reading was “corrected” after filtering. For this reason, the Department contends that these data are unreliable. CJC points out that EGS stated in the text of its report that the soil samples were filtered. CJC also argues that, because the filtered OVA readings for soil samples taken from the tank pit area were not different from their unfiltered readings, the OVA readings for the soil samples from the dispenser area would not have changed after filtering. The preponderance of the evidence is that the contamination in the dispenser area was petroleum. Based on EGS’ findings during the tank removal in November 1995, Petroleum Contractors, Inc., filed a Discharge Reporting Form on December 1, 1995, stating that there had been a discharge of unleaded gasoline at the facility. In January 1996, the Chapmans applied to participate in FPLRIP based on the discharge reported on December 1, 1995. By order dated January 26, 1996, the Department determined that the reported discharge was eligible for state-funded remediation assistance under FPLRIP. In 1997, another consultant, Levine Fricke Recon (LFR) conducted a site assessment at the facility and submitted its Interim Site Assessment Report to the Department. As part of its own soil sampling at the site, LFR collected a “direct push” soil boring in the dispenser island area, near the place where EGS had reported organic vapors. The boring data showed no petroleum vapors until the interval 16-to-20 feet below ground surface. LFR also collected and analyzed groundwater samples from the site. It reported that a sample taken from beneath the former diesel dispenser contained lead. Because lead occurs naturally in soils, its presence in a water sample does not confirm that a discharge of leaded gasoline occurred. In 1998, LFR conducted a second assessment of the facility site. It installed and sampled four shallow monitoring wells, designated MW-1S through MW-4S, and three deep monitoring wells, designated MW-2D through MW-4D. Groundwater samples from MW-3S and MW-3D were analyzed for lead, ethylene dibromide (EDB), and 1,2-Dichloroethane. All three substances are usually detected in a groundwater sample contaminated with leaded gasoline. On August 28, 1998, LFR submitted its Interim Site Assessment II to the Department, which shows lead and EDB were found in a sample taken from MW-3S, but not 1,2-Dichloroethane. LFR did not conclude or express a suspicion in either of its two assessment reports that leaded gasoline had been discharged at the facility. The deadline for submitting a Discharge Reporting Form or written report of contamination was December 31, 1998. A site assessment report received by the Department before January 1, 1999, which contained evidence of a petroleum discharge, was accepted by the Department as a “report of contamination.” The petroleum discharge information received by the Department before January 1, 1999, consisted of the Underground Storage Tank Removal Report, the FPLRIP claim, the Interim Site Assessment Report, and the Interim Site Assessment Report II. Post Deadline Site Assessment Data After the statutory deadline, LFR submitted its Interim Site Assessment III. This report includes January 1999 groundwater sampling data from four monitoring wells which show the presence of low levels of EDB. When EDB is found in a groundwater sample, it is a common practice to re-sample the well from which the sample was taken. Of the wells that showed the presence of EDB, only MW- 10D was re-sampled, after January 1, 1999. There was no EDB present in the groundwater when MS-10D was re-sampled. In June 2000, as part of the remediation of the contamination at the facility, an area of contaminated soil was removed to a depth of 14 feet. The area of soil removed included the former dispenser area. In January 2003, the Department notified CJC that the $300,000 FPLRIP funding cap would soon be reached. In March 2003, CJC signed a Funding Cap Transition Agreement, acknowledging that “At no time will the DEP be obligated to pay for cleanup of this discharge any amount that exceeds the funding cap.” CJC further acknowledged that it “is responsible for completing the remediation of the discharge in accordance with Chapter 62-770, F.A.C.” In 2005, CJC re-sampled one of the monitoring wells for lead and EDB. Neither substance was present. The site is not currently being actively remediated. Periodic groundwater sampling indicates that concentrations of contaminants are dropping. No further active remediation has been proposed. The cost to complete remediation is a matter of speculation. The record evidence is insufficient to make a finding about future remediation costs. Eligibility Determinations On September 2, 2003, CJC submitted a PCPP Affidavit to the Department, seeking state funding under PCPP. On October 30, 2003, the Department denied CJC eligibility for PCPP funding on the basis that the contamination was covered under FPLRIP and, therefore, was excluded from funding under PCPP. The Department has never granted PCPP eligibility for the cleanup of a discharge previously being funded under FPLRIP. Apparently, in 2005, CJC hired Glenn R. MacGraw, an expert in the assessment of petroleum-contaminated sites, to review the EGS and LFR assessments. In a letter to CJC’s attorney dated August 19, 2005, MacGraw expressed the opinion that “at least 2 discharges have occurred on this site, one in the former tank area, and one in the former dispenser area.” MacGraw’s opinion that there had been a discharge of leaded gasoline was based on the detection of EDB and lead in the groundwater. He also thought the presence of methyl tetra-butyl ether (MTBE) in groundwater samples taken from the tank pit area showed a tank leak of unleaded gasoline. CJC requested FPLRIP funding for the other alleged discharges at the facility. On March 23, 2006, the Department issued a letter formally stating its disagreement that there were other reported discharges and denying eligibility for FPLRIP funding. On March 30, 2006, the Department issued an Amended Order of Ineligibility under PCPP. The amended order added a second ground for denial, that the reported discharge was not shown to have occurred before January 1, 1995. Whether There Was A Second Discharge Eligible for Funding CJC argues that the presence of lead and EDB in the groundwater sample taken from MW-3S shows that there was a discharge of leaded gasoline at the facility. However, LFR reported that the well screen for MW-3S had probably been damaged during installation, because a significant amount of filter sand was observed in the purge water. The Department contends, therefore, that the source of the lead detected in the groundwater sample from MW-3S could have been (naturally) in the soil that entered the well. The Department also discounts the detection of EDB in the groundwater sample because EDB is an ingredient of some pesticides and can show up in groundwater when pesticide has been applied to the overlying land. Furthermore, EDB was not detected in the groundwater sample taken from MW-3D, a deeper well located near MW-3S. MacGraw does not think the EDB came from a pesticide application, because the EDB contamination at the site occurs in an elongated “plume,” in the former dispenser area, whereas one would expect to see EDB distributed evenly over the site if the source was a pesticide application. MacGraw mapped the plume of EDB by using data obtained after the discharge reporting deadline. Michael J. Bland, a Department employee and expert in geology and petroleum site assessment, believes the data from the facility are insufficient to confirm the presence of EDB or its distribution. LFR reported in its Interim Site Assessment that no significant soil contamination was found near the dispenser island. Groundwater samples from MW-3D, a deep monitoring well near MW-S3, showed no EDB, lead, or 1,2-dichlorothane. Bland opined that, if the detection of EDB in the shallow well was reliable, EDB would have been detected in the deep well, too, because EDB is a “sinker.” EDB is persistent in groundwater, so when it is not detected when a well is re-sampled, reasonable doubt arises about the detection in the first sample. Of all the wells sampled in 1999 that showed EDB, only MW-10D was re-sampled in 2003. When the well was re-sampled, there was no EDB. CJC contends that EDB was not found in the re-sampling of MW-10D because of the soil removal in 2000, but the Department contends that the soil removal would not have affected the presence of EDB in MW-10D, because the well is significantly down-gradient of the area of soil removal. It was undisputed that the presence of 1,2- dichoroethane in MW-S3 was not reliably determined. There is insufficient evidence in the record to establish that the contamination reported in the dispenser area is the source of contamination which persists at the facility. The reported contamination only affected the top six feet of soil. The soil removal to a depth of 14 feet in that area in 2000 should have fully remediated the reported contamination. The data upon which CJC relies in claiming eligibility under FPLRIP or PCPP for a second discharge are, at best, incomplete and ambiguous. CJC failed to prove by a preponderance of the evidence that a discharge of leaded gasoline occurred. CJC also failed to prove that the reported contamination in the dispenser is associated with a discharge that still exists to be remediated with state assistance.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Department of Environmental Protection enter a final order determining that CJC is ineligible to participate in the Petroleum Cleanup Participation Program for the discharge reported to the Department on December 1, 1995, and that CJC has not demonstrated eligibility to participate in the Petroleum Cleanup Participation Program or the Florida Petroleum Liability and Restoration Program for any other discharges. DONE AND ENTERED this 9th day of July, 2008, in Tallahassee, Leon County, Florida. BRAM D. E. CANTER 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 9th day of July, 2008.
