Findings Of Fact Prior to July 10, 1984, Son-Mar Propane, Inc. (Son-Mar) was licensed by the Department as a dealer in liquefied petroleum gas, in appliances and in equipment for use of such gas and installation. Virgil Berdeaux was the president of Son-Mar and he and his wife were the sole stockholders. Virgil Berdeaux passed the competency exam which qualified Son-Mar for licensure. Sonny Wade Berdeaux Virgil Berdeaux's son, was the manager of Son-Mar. Son- Mar's business address and place of operation was 16034 U.S. Highway 19 North in Hudson, Florida. Virgil Berdeaux and his wife owned the property located at that address and leased it to Son-Mar. A propane pumping station and a building was located on the property at 16034 U.S. Highway 19. The building housed a pawn shop and supply store for mobile home and RV equipment. Son-Mar operated the pumping station and the stores. It also installed tanks and delivered gas to customers. 1/ On July 10, 1984, a final order was entered by the Department which ordered "[t]hat any and all of [Son-Mar's] licenses issued by the State Fire Marshal Division of Liquefied Petroleum Gas and eligibility to hold said licenses are hereby revoked." The revocation of Son-Mar's licenses was due to its violation of certain safety standards and rules. Specifically, it was found that an employee of Son-Mar, Mr. John Delham, filled a cylinder that had not been recertified, that he lay it horizontally in the customer's van, and that he failed to secure the tank in the van. While the van was still parked at Son-Mar an explosion occurred which destroyed the van and killed its occupant. On July 19, 1984, nine days after Son-Mar's licenses were revoked, Virgil Berdeaux submitted an application for licensure as a dealer in appliances and equipment for use of liquefied petroleum gas, listing the business address as 16034 U.S. Highway 19, Hudson, Florida, and listing the business name as Son- Mar Pawn Shop. On August 3, 1984, twenty-four days after the revocation of Son- Mar's licenses, Sonny Wade Berdeaux submitted an application for licensure as a dealer in liquefied petroleum gas, listing the business address as 16034 U.S. Highway 19, Hudson, Florida. The Department issues several different types of liquefied petroleum gas licenses. A Type 06, Class 02 license, known as a 602 license, is issued to a dealer in appliances and equipment for use of liquefied petroleum gas. The 602 license allows the holder to sell propane appliances and equipment, such as stoves, heaters, and gas grills but it does not permit the holder to install appliances or sell propane gas. A competency examination is not required for this type of license, and there is no inspection of the place of business prior to issuance of the license. Virgil Berdeaux applied for a 602 license. He completed the application and submitted the required fee. The application listed W. C. Johnson, Virgil Berdeaux's son-in-law, as the manager of the business. Bill Johnson had run the pawn shop for Son-Mar. Sonny Wade Berdeaux applied for a Type 06, Class 04 license known as 604 license, which is issued to a dealer in liquefied petroleum gas. This type of license permits the holder to pump liquefied petroleum gas for sale to the public. An applicant for this type of license must pass a competency test and file a surety bond or certificate of insurance. Further, if the licensee has a dispensing station, an inspection of the business location must be performed to ensure that it is in compliance with all safety regulations. Sonny Wade Berdeaux passed the competency examination, filed a certificate of insurance, and submitted the proper fee. Son-Mar held a Type 06, Class 01 license (a 601 license) as a dealer in liquefied petroleum gas, in appliances and in equipment for use of such gas and installation. A 601 license permits the holder to pump liquefied petroleum gas for sale to the public, to sell appliances and equipment for use of liquefied petroleum gas, and to install such appliances and equipment. In essence, it is a combination of a 602 license, a 604 license, and a license to install equipment. Both Sonny Wade Berdeaux and Virgil Berdeaux received letters dated October 8, 1984, which informed them that their applications for licensure had been denied. Both letters referred to the revocation of Son-Mar's licenses and pointed out that the applicants would be operating on the same premises and employing the same staff as Son-Mar. Both letters concluded as follows: Thus, it would appear that your application is seeking licensure for essentially the same entity that has only recently had its liquefied petroleum gas licenses revoked. Therefore, in the interest of public safety, this Bureau cannot permit an Order of Revocation to be obviated by a mere procedural reapplication in your name. The applications for licensure both list the business address as 16034 U.S. Highway 19 in Hudson, Florida. At the time of application Virgil Berdeaux owned that property and Sonny Wade Berdeaux had leased the pumping station. However, on July 1, 1985, the property at 16034 U.S. Highway 19 was sold. The pumping station was moved out along with the inventory that remained in the pawn shop. Neither Virgil Berdeaux or Sonny Wader Berdeaux retained any interest in the property, and at this time neither could operate a business at that location. Although there was testimony concerning the manner in which the business would have been operated and controlled had licensure been granted at the time of applications there was no testimony indicating where or how the business would now be operated. There was no attempt to amend either application to reflect a current business address, and the certificate of insurance entered into evidence lists 16034 U.S. Highway 19, Hudson, Florida, as the location covered. 2/
Recommendation Based on the foregoing findings of fact and conclusions of law; it is RECOMMENDED that a Final Order be entered denying petitioners' applications for licensure. DONE and ENTERED this 21st day of May, 1986, in Tallahassee, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 1986.
Findings Of Fact On November 5, 1987, a customer at Cowarts 66 service station complained of suspected water in the premium unleaded gasoline the customer had purchased at Cowarts 66 service station. Pursuant to the complaint, William Ford, an inspector for the Department, examined the premium unleaded gasoline storage facility at Cowarts 66 service station. The inspector obtained a sample of gasoline from the premium unleaded gasoline tank. The sample was examined by a Department of Agriculture chemist. There was no water found in the sample. However, the sample showed an end point of 455 degrees Fahrenheit which exceeded the maximum end point of 437 degrees Fahrenheit allowed by the Department under its rules governing petroleum products. Rule 5F-2.001(c)(4), F.A.C. The high end point was caused by the gasoline stored in the tank being mixed with or contaminated by another petroleum product with a high end point such as diesel fuel, thereby raising the end point of the premium unleaded. The contamination was caused by Clay Oil when their delivery driver accidentally mixed two fuels together and delivered the contaminated fuel to Cowarts 66. On November 6, 1987, the inspector issued a stop sale notice. The Department then has the right to confiscate the contaminated gasoline. However, the Department may elect to allow the station to post a bond in lieu of confiscation. In this case, the Department allowed Cowarts 66 to post a $1,000.00 bond in return for replacing the contaminated gasoline with gasoline meeting the Department's standards. The bond was posted the same day as the stop sale notice. The gasoline was likewise replaced either the same day or the morning after by Clay Oil. Cowarts 66 was later reimbursed by Clay Oil for the $1,000.00 cash bond. William Ford testified that he had been an inspector for Petitioner in the Jacksonville area for 16 years and had been familiar with Clay Oil Corporation and its operation for the past 10 or 15 years. He knew the corporation to be a reputable company. Prior to the instant case, he had never had any dealings with Clay Oil Corporation regarding dispensing of contaminated fuel. He had never had an occasion to require Clay Oil Corporation to post a bond. Ford, also, testified that the violation was clearly inadvertent and not representative of the normal business practices of Clay Oil Corporation. Furthermore, Ford testified that Clay Oil Corporation had been totally cooperative with the Department and had made immediate efforts to correct the violation regarding the contaminated fuel. Clay Oil Corporation's representative, Peter T. Eyrick, testified that upon being advised that contaminated fuel had been delivered to Cowarts' service station, he immediately instigated measures to replace the contaminated fuel with fuel that met Department standards. Furthermore, he testified that he had no knowledge that contaminated fuel had been delivered or that illegal sales had occurred until being informed by Cowarts' owner and the Department's inspector. The evidence clearly establishes that this violation was inadvertant and isolated. The violation is not representative of the normal business practice of Respondent. The evidence, also, clearly demonstrated that Respondent had no intent to sell adulterated fuel.
Recommendation Based upon the foregoing findings of fact and Conclusions of Law, it is RECOMMENDED that the Department refund to Clay Oil Corporation $750.00 of the $1,000.00 bond. DONE and ORDERED this 11th day of May, 1988, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of May, 1988. APPENDIX CASE NO. 88-0181 Petitioner, Clay Oil Corporation, did not number its paragraphs in its recommended order. I, therefore, have numbered the paragraphs in its recommended order sequentially and utilize those numbers in this appendix. Petitioner's proposed findings of fact contained in paragraphs 1, 2, 3, 4 and 5, have been adopted, in substance, in so far as material. Respondent's proposed findings of fact contained in paragraphs 1, 2 and 3, have been adopted, in substance, in so far as material. Respondent's proposed findings of fact contained in paragraph 4 has been adopted, in substance, in so far as material, except for the finding regarding the number of gallons sold. The number of gallons sold was not shown by the evidence. Respondent's proposed findings of fact contained in paragraph 5 was not shown by the evidence. COPIES FURNISHED: Peter T. Eyrick Clay Oil Corporation Post Office Box 8 Doctors Inlet, Florida 32030 Harry Lewis Michael, Esquire Florida Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32399-0800 Paul S. Boone, Esquire 1221 King Street Jacksonville, Florida 32204 Honorable Doyle Connor Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-0810 Ben Pridgeon, Chief Bureau of Licensing & Bond Department of Agriculture Lab Complex Tallahassee, Florida 32399-1650
The Issue The 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.
Findings Of Fact Based upon the prehearing statement, the testimony of the witnesses, and the documentary evidence received at the hearing, the following findings of fact are made: The Petitioner is a Florida corporation in good standing, authorized to do business in this state. The Petitioner owns and controls the site which is the subject matter of these proceedings. Such site is located in Brevard County, Florida. The Department has identified the subject site as DER facility no. 05- 8500985 (the facility). At all times material to this case, the facility consisted of: three underground storage tanks (UST), one 3000 gallon UST used for storing diesel fuel, one 1000 gallon UST used for storing diesel fuel, and one 1000 gallon UST used for storing gasoline; five monitoring wells; and pipes and pumps related to the foregoing system. The facility constituted a storage tank system as defined in Section 376.301, Florida Statutes, and Rule 17-761.200(38), Florida Administrative Code. The Petitioner holds, and is named insured for, third party pollution liability insurance applicable to the facility. Such insurance was issued pursuant to Section 376.3072, Florida Statutes. The policy for the foregoing insurance, policy no. FPL7622040, was in force from March 22, 1991 through March 22, 1992. The Department issued a notice of eligibility for restoration insurance to Petitioner for the above-described facility. Based upon the foregoing, the Petitioner is a participating owner or operator as defined in Chapter 17-769, Florida Administrative Code. Pursuant to Section 376.3073, Florida Statutes, Brevard County operates a local program that has been approved by the Department. Such local program is managed by the Brevard County Office of Natural Resources Management (County). In July, 1990, a discharge of diesel fuel occurred at the Petitioner's facility. Petitioner's employees estimated that approximately twenty gallons of diesel fuel filled the pump box overflowed from the pump box across the seawall into the adjacent waters. Upon discovering the discharge, Petitioner shut down diesel fuel dispensing until repairs could be made to the apparent cause of the leak. Additionally, the diesel fuel remaining in the pump box and on top of the tank area was removed. Contaminated soil in the pump box was also removed. The apparent cause of the discharge described above was attributed to cracked pipe fittings which were repaired by Glover Oil Co. within a few days of the discharge. No detailed inspection was made to the system to determine if additional sources of discharge existed. Petitioner did not complete a discharge reporting form (DRF) for the above-described incident until April 18, 1991. The April DRF was completed after Petitioner was directed to do so by Ms. DiStasio, an inspector employed by the County. From August, 1990 until May, 1991, at least one monitoring well at the Petitioner's facility showed free product accumulating in the well pipe. The exact amounts of the free product found are unknown, but reports estimated the level at 100 centimeters. From August, 1990 until September, 1991, the Petitioner did not undertake any measure to explore the origin of the free product found in the monitoring well. Further, the Petitioner did not report the monitoring well testing results as a suspected or confirmed discharge. In April, 1991, an inspection of the Petitioner's facility was performed by Ms. DiStasio. That inspection resulted in a letter to the Petitioner that outlined several violations at the facility. Among those violations listed was the Petitioner's failure to report a suspected or confirmed discharge. At the time of the April, 1991 inspection, Petitioner had reported neither the July, 1990 discharge (a known discharge) nor the monitoring well test results (at the minimum a suspected discharge). In connection with the July, 1990 discharge, following the repairs made by Glover Oil, Petitioner did not have the system pressure tested. Only the area visible from the pump box was checked for leakage. In July, 1991, when Ms. DiStasio performed a re-inspection of the facility, she found Petitioner had not (in the interim period, April through July, 1991) taken any steps to test the system or to remove the fuels from the suspect tanks. Since the free product continued to appear in the monitoring well, a pressure test of the system would have definitively answered the discharge question. Alternatively, the removal of the fuels would have prevented further seepage until the system could be pressure tested. On August 6, 1991, the Petitioner issued a letter that advised the County that it had stopped dispensing fuel at the facility. The tanks were not drained, however, until on or about September 11, 1991. Further, the August, 1991, letter acknowledged that the Petitioner "had proposals for initial remedial cleanup related to diesel contamination in the tank field area." Obviously, the Petitioner must have contemplated a need for such cleanup. On September 11, 1991, at the Petitioner's request, Petroleum Equipment Contractors, Inc. attempted to pressure test the 3000 gallon diesel tank. The purpose of the pressure test was to determine if the diesel system had a leak. The company could not even run the test on the tank because of the defective system. A similar test on the Petitioner's gasoline tank passed without incident. Once the Petitioner learned the results of the test, it initiated Initial Remedial Action (IRA) as described on the IRA report filed by Universal Engineering Sciences. The IRA consisted of the removal of the excessively contaminated soil, approximately 74 cubic yards, and the removal of the USTs. The foregoing work was completed on or about September 15, 1991. On October 4, 1991, the Petitioner filed a discharge reporting form dated October 2, 1991, that identified September 11, 1991, as the date of discovery for the discharge. This discharge discovery was allegedly made incidental to the diesel tank pressure testing failure. No reference was made to the months of monitoring well reports showing a free product. On October 8, 1991, Ms. DiStasio prepared a Florida Petroleum Liability Insurance and Restoration Program Compliance Checklist that reported the Petitioner was not in compliance with applicable statutes and rules. When Petitioner applied for restoration coverage under the statute on January 31, 1992, such request was denied by the Department on March 6, 1992. The basis for the denial was as follows: Failure to notify the Department of a positive response to sampling within three working days of testing, pursuant to the rule in effect at the time of the initial response (17-61.050(1), Florida Administrative Code). An inspection by Brevard County on April 17, 1991, revealed that free product had been detected in one monitoring well since July 1990. The discharge reporting form was not submitted until October 2, 1991.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department of Environmental Regulation enter a final order denying Petitioner's claim for restoration coverage under the Florida Petroleum Liability Insurance and Restoration Program. DONE and ENTERED this 31st day of December, 1992, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH 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 31st day of December, 1992. APPENDIX TO CASE NO. 92-2121 RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE PETITIONER: Paragraphs 1, 2, 8, 12, 15, 16, 17, and 18 are accepted. Except as found above, paragraph 3 is rejected as not supported by the record cited. It is accepted that Brevard County acted as the local agent in this case. Paragraph 4 is rejected as not supported by the record. With regard to paragraph 5, substituting "A" for "The" and "confirmed" for "discovered" the paragraph can be accepted; otherwise rejected as contrary to the record. Similarly, with the substitution of the word "confirmation" for "discovery" in Paragraph 6, the paragraph can be accepted; otherwise rejected as contrary to the record. No suitable explanation was offered by the Petitioner for why, if a discharge were not reasonably suspected, it retained the company to immediately remove the USTs upon the failed pressure testing. Clearly, the Club had a notion the tanks were a discharge problem. Paragraph 7 is rejected as contrary to the weight of the evidence. While there was some confusion as to the exact volume of free product in the monitoring well, there was clear evidence that such was reported for many months prior to the confirmation in September, 1991. Further, the main confusion regarding the product found in the well was not as to its existence, but as to the individual's knowledge of the metric measurement of it. One hundred centimeters of product in a two or three inch pipe would not be a minute amount. Except as addressed in the foregoing findings, paragraph 9 is rejected as contrary to the weight of the evidence. Petitioner did not undertake all repairs necessary to abate a discharge problem. Paragraph 10 is rejected as not supported by the weight of credible evidence or irrelevant. Clearly, as early as August, 1990, Petitioner knew or should have known of a discharge problem based upon the monitoring well report; that all of the discharge did not necessarily flow from the fittings that had been repaired is irrelevant. Further, Petitioner did no testing to verify that the replaced fittings had solved the discharge problem (especially in light of the well reports). Paragraph 11 is rejected as an inaccurate restatement of the exhibit. Paragraph 13 is rejected as contrary to the weight of the evidence. Incidentally, the hearing in this case was in the year 1992. Paragraph 14 is rejected as contrary to the weight of credible evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT: Paragraphs 1 through 11 are accepted. Paragraph 12 is rejected as a misstatement of the exhibit cited. Paragraphs 13 through 27 are accepted. COPIES FURNISHED: Brigette A. Ffolkes Assistant General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Scott E. Wilt MAGUIRE, VOORHIS & WELLS, P.A. 2 South Orange Plaza P.O. Box 633 Orlando, Florida 32802 Carol Browner, Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400
Findings Of Fact It was Stipulated by the parties that the Petitioner timely filed a notice of protest and formal written protest (if section 120.53(5), Fla. Stat. (1986) is applicable) and timely filed a petition for formal administrative hearing. The Petitioner did not receive a written notice of the recommended award of the District as intended by paragraph 9 of the General Conditions of the second invitation for bids, and it did file a notice of protest with seventy-two hours of receiving notification of the District's decision to award the contract to Mid America as intended by paragraph 10 of the General Conditions, P. Ex. 3. It was Stipulated by the parties that the substantial interests of the Petitioner are at stake in this proceeding. The Department of Water Resources is involved in groundwater studies throughout the nineteen Florida counties that comprise the District, and is responsible for the District's drilling program. In the past, the District's waterwells have been in the 500 to 800 foot range, and have been constructed of 4, 6, and 8 inch casing. The Water Resources Department is currently constructing a regional groundwater monitoring network in the nineteen counties. The underlying geological formations differ greatly from county to county, and several water tables often have to be Penetrated before the well reaches the Floridan acquifer. To maintain mud circulation, it is often necessary to case off portions of the well from water table to water table. Moreover, wells are often in unconsolidated formations, and casing is needed to provide support for the hole, Particularly in the upper portions of the well. For these reasons, the District plans to construct step or telescoping wells in the regional groundwater monitoring network. The District expects that it will need to set 16 inch casing in the first eighty feet of some of these wells. In about 1984, by competitive bids, the St. Johns River Water Management District (the District) leased a Speedstar 15-III drill rig from Mid America Drilling Equipment, Inc. This rig was a Size larger than the drill rig that is the Subject of this formal administrative hearing, and had been manufactured in 1978. The District was satisfied with the performance of the larger Speedstar drill rig, and had very few problems with it. District staff became familiar with the operation of the rig. As the lease neared the end of its term, the District began to explore the question whether it should continue to lease, or should purchase its own rig. A member of the District Board Suggested that the District consider acquisition of a rig over a period of years by lease-purchase. This suggestion was adopted by the Department of Water Resources of the District. Due to his familiarity with the Speedstar rig, Mr. Munch decided to use that rig as a basis for bid specifications, but to use the next smaller size, a Speedstar SS-135. Mr. Munch copied the specifications from a Speedstar SS-135 specification sheet as the specifications for the first invitation for bids. Mr. Munch has had no education in engineering or in drill rig design. He has a degree and field work experience in geology, and is a licensed water well contractor. He has been a project manager on projects when outside contractors set 16 inch casing in wells as deep as 2,000 feet, but he has not personally set a 16 inch casing. P. Ex. 1 is the first invitation for bids and specifications for the invitation for bids, as well as the bid of the Petitioner, the George F. Failing Company. This invitation for bids was published on or about August 26, 1986. The invitation for bids provided six bid blanks providing six bid alternatives. The bid blanks appeared as follows: One Year Lease $ /month, renewal $ /month Two Year Lease-purchase $ /year, buy-out $ Three Year Lease-purchase $ /year, buy-out $ Four Year Lease/purchase $ /year, buy-out $ Five Year Lease/purchase $ /year, buy-out $ * * * Suggested Purchase Price $ Less 3 percent for payment in 20 days Four bids were received pursuant to this invitation for bids, including the Petitioner's bid and the bid of Mid America Drilling Equipment, Inc., P. Ex. 7. The four bids were opened on September 11, 1986. Mid America was the only bidder that bid a one year lease with an option to renew. Mid America, the Petitioner, and G & R Machine and Welding, Inc., were the only bidders to bid a lease-purchase. The Petitioners bid was $163,565.00 as an outright purchase price for a Failing model CF-15 and, relevant to the second bid, $5,432.00 per month for a three year lease-purchase, with the rig owned at the end of the three year lease period with no further buy-out payment. The Petitioner did not bid a one year lease. P. Ex. 1. Mid America bid $179,823.00 as an outright purchase price on a Speedstar SS135, and $56,340.00 per year for a three year lease-purchase, with a buy-out price of $61,920.00. Mid America also bid a one year lease at $6,125 per month, with a renewal at $5,288.00 per month. P. Ex. 7. Robert Schenk is the District's Director of the Division of General Services, and as such, Mr. Schenk was responsible for District Purchasing and evaluation of the bids received pursuant to the invitation of bids. Mr. Schenk Prepared an analysis of Several of the bids, including G & R Machine, Mid America, and the Petitioner. P. Ex. Mr. Schenk testified that he felt that the Mid America bid was unclear because of the total amount of the bid calculated over the years. He Said that he considered the Mid America bid for a three year lease-purchase to be ridiculous and out of line because it was $50,000 greater than the outright purchase bid. The bid of the Petitioner for a three year lease- purchase was about $32,000 higher than its bid for an outright purchase. P. Ex. 8. G & R Machine also bid a Speedstar SS-15. Mid America's three year lease-purchase bid was about $35,000 higher than the G & R Machine bid for the same three year lease-purchase. ($230,940.00 compared to $195,664.32.) P. Ex. 8. The bid of Mid America was also high compared to the bid of G & R Machine for a four and a five year lease-purchase, but was comparable for a two year lease-purchase and for an outright purchase. The bid of the Petitioner was $16,000 lower than the Mid America or G & R Machine bids for an outright purchase, was $31,000 lower than the G & R Machine bid and $34,000 lower than the Mid America bid for a two year lease-purchase, and was Slightly higher than the G & R Machine bid on all other bids. The bid of the Petitioner was substantially lower than the Mid America bid on all bids analyzed on P. Ex. 8. Although the Mid America bid was high, it was not an unclear bid. The bid of Mid America was clear and unambiguous. P. Ex. 7. Mr. Schenk thought that the Petitioner's bid was the clearest bid received in the first invitation for bids. Apparently on the same day as the bid opening, which was September 11, 1986, Mr. Schenk had one of his assistants telephone Mid America to ask that it clarify its bid. In response, on the same day as the bid opening, September 11, 1986, Mid America sent the District a letter, P. Ex. 9, which effectively lowered its bid for a three year lease-purchase by $36,612.00. This letter was ultimately not considered by the District in the evaluation of the bids. On September 23, 1986, four staff members of the Department of Water Resources, including Mr. Munch and Barbara A. Vergara, Director of that Department, recommended by memorandum to Mr. Schenk that the Mid America bid for a Speedstar SS-135 for an outright purchase price of $179,823.00 be accepted. These staff members were of the opinion that the drill rig bid by the Petitioner "did not meet all of the bid Specifications due to slight manufacturing differences." But they were also of the opinion that "[t]hese differences may not be critical to the performance and capabilities of the equipment." P. Ex. 10. The staff comparison of the Mid America bid and the Petitioner's bid included calculations for rental costs due to the differing delivery times of the equipment, and calculated that the Mid America bid had a net cost of $184,435 compared to the Petitioner's bid having a net cost of $182,013. Attached to the staff recommendation of September 23, 1986, was a comparison of the three drill rigs by specifications. The comparison used the incorrect specification sheet for the Mid America rig, and thus contained the following errors: the rig bid by Mid America had a single sheave, 3 part block, not a double sheave, 4 part block; the rig also had a working hook load of 20,000 pounds, not 32,700 pounds. Two to four days after September 11, 1986, (the date of the letter from Mid America changing its bid for a three year lease-purchase) Robert Auld, the Florida Branch Manager for the Petitioner, learned that such a letter had been requested, written, and received by the District, and called District staff to protest. Mr. Schenk thereafter apparently concluded that solicitation and receipt of the bid change from Mid America had been procedurally erroneous because he testified that as a result of all of the discussion and criticism that surrounded that event, on the second invitation for bids he concluded that he was procedurally unable to contact any of the bidders to request clarification of bids, even though he then thought that the Petitioner's bid was unclear. Mr. Schenk decided to reject all the bids from the first invitation for bids before Mr. Auld's telephone call. P. Ex. 15, p. 10. But he did not communicate this decision to the staff of the Department of Water Resources before they wrote their memorandum that was initiated through the chain of command on September 23, 1986. Mr. Schenk initially decided to reject all of the bids because the bidders had not all bid on all of the requested alternatives. Later, other reasons for rejection of all of the bids became apparent. Another major reason for rejection of all of the bids was because the specifications were drawn from the Speedstar SS-135 specifications, and unfairly eliminated the Petitioner's rig. Mr. Auld admitted that the Failing CF-15 did not meet the specifications of the first invitation for bids because the Failing CF-15 did not have an 8 1/2 inch rotary table, but was of the opinion that it met all other specifications. Mr. Schenk also rejected all of the bids because of the irregularity of having solicited and received the bid change from Mid America. On October 1, 1986, the District informed all bidders that the bids were all rejected and that the purchase would be again advertised for bids. No protest was filed concerning the first invitation for bids, and it was ruled during the formal administrative hearing that the foregoing facts are admissible as explanatory of the basis for the second invitation for bids, and not as a basis for challenge to the first invitation for bids. Mr. Munch then drafted specifications for the second invitation for bids. This time, he Specified "Speedstar SS-135 or equivalent." Mr. Munch had determined from his experience with the rented Speedstar that the Speedstar SS-135 was capable of fulfilling the needs of the District for drilling. His intention was to allow bids for other types of drill rigs that were the equivalent of a Speedstar SS-135. Ms. Vergara defined the term "equivalent" to mean no differences between a Speedstar SS-135 and the alternative drill rig with respect to doing work in the field that needs to be done by the District. At some time before the second invitation for bids was advertised, or at least before the second bids were filed, the District became Primarily (though not exclusively interested in receiving bids on a three year lease-purchase of a drill rig. Both the Petitioner and Mid America knew this before they prepared their second bids. P. Ex. 3 is the second advertisement for bids and was published on November 6, 1986. The advertisement asks for bids on a "lease-purchase of One Rotary Drill Rig." The attached sheet marked "specifications" stated that what was sought was a "[b]id for purchase or one year lease of a new Speedstar 135 rotary drill rig or at least the equivalent equipment with the following options." Following that were eight technical specifications. The second invitation for bids also specified the following: "Bidder must indicate any and all exceptions to specifications. "Bid shall be awarded to the lowest qualified, responsible bidder whose bid meets all specifications in the Invitation to Bid, including delivery, price and other factors most advantageous to the District." All bidders were to bid using the bid blank attached to the invitation for bids. The bid blank was different from the first invitation for bids apparently with the intent to make bid comparisons easier. The bid blank provided the following alternatives for bids: Purchase Price $ Lease Price $ /Month, first year (renewable) $ /Month, second year (renewable) $ /Month, third year One year guarantee non-routine, major maintenance and repair on lease equipment (renewable annually for term of leased $ . Make and Model of Equipment . Manufacturers Warranty . (minimum of 6 months or 1000 hours) Delivery days (from date of order) Delivery Charges $ . Location of Maintenance Services . Since the District was then "primarily" (but not exclusively) "interested in" a three year lease-purchase, the bid blank form was incomplete and unclear. Paragraph A) of the bid blank form clearly provides for a bid for an outright purchase only, not a "lease-purchase." And Paragraph B) provides only for a lease without any mention of purchase; Paragraph B) asks for a price by month for the first year, with the notation that the lease is renewable (apparently at the option of the District, a lease price by month for the second year, with the notation again that the lease is renewable (at the option of the District), and a lease price per month for a third year, with no mention of any further renewability. Paragraph B) says nothing about purchase of the drill rig, ownership at the end of the lease term, or the buy- out price at the end of the lease term. Moreover, the rest of the invitation for bids is similarly incomplete and unclear. Although the first page of the invitation for bids states that bids were requested on a "lease-purchase" of one rotary drill rig, the specification sheet attached to the invitation stated the specification that the bid should be "for purchase or one year lease...." P. Ex. 3 (E.S.). The specification said nothing about a three year lease-purchase. P. Ex. 3, the second invitation for bids, was sent to all entities that had submitted a bid in response to the first invitation for bids. These included five companies that were Speedstar SS-135 dealers and the Petitioner. Only two bids were received in response to the second invitation for bids, one from Mid America and one from the Petitioner. The second Mid America bid is P. Ex. 11. The Petitioner's second bid is P. Ex. 4. The bids were opened on November 20, 1986. The opening was attended by Ron Owens, President of Mid America, and Robert Auld. Mr. Schenk announced that the Petitioner was the apparent low bidder. Mr. Schenk may have only intended his announcement of apparent low bid to have been with relationship to the bid for outright purchase. A bid tabulation sheet was prepared. P. Ex. Mr. Schenk also announced that the recommendation by the staff to the District Board as to which company should be awarded the contract would be made at the next Board meeting. At that time, the next Board meeting was January 14, 1987. The Petitioner's bid, typed on the bid blank required by the District, provided in pertinent part the following: Purchase Price $146,976.00 Lease Price $ NO BID /Month, first year (renewable) (OWNED AT END OF SECOND YEAR) $6,885.00 /Month, second year (renewable) (OWNED AT END OF THIRD YEAR) $4,592.00 /Month, third year One year guaranteed non-routine, major maintenance and repair on lease equipment (renewable annually for term of lease) $NOT AVAILABLE Make and Model of Equipment FAILING MODEL CF-15 Combination Drill GEORGE E. FAILING COMPANY standard Manufacturers Warranty warranty policy will apply, extended for 9 months (minimum of 6 months or 1000 hours) Delivery 120 days (from date of order) Delivery Charges $ NO CHARGE Location of Maintenance Services GEORGE E. FAILING COMPANY 2101 Starkey Road Largo, Florida 33541 Mid America Submitted its bid on the bid blank form as follows: Purchase Price $179,823.00 Lease Price $5,241.00 /Month, first year (renewable) $5,241.00 /Month, Second year (renewable) $5,241.00 /Month, third year (SEE CONDITIONS BELOW) One year guaranteed non-routine, major maintenance and repair on lease equipment (renewable annually for term of lease) $3,000.00 per year Make and Model of Equipment Speedstar SS-135 Manufacturers Warranty 6 months or 1000 hours (minimum of 6 months or 1000 hours) Delivery 21 days (from date of order) Delivery Charges $ Included/No Charge Location of Maintenance Services Ocala, Florida * * * CONDITIONS #1. If the lease is written for a guaranteed 36 month period, there will be a purchase option available at the end for $1.00 #2. If the lease is written as a yearly renewable lease and runs 3 consecutive years there will be a purchase option available after the 36th payment for $8,092.00. The bid of Mid America was for a Speedstar SS-135, and thus complied with the specifications in that respect. The bid of Mid America was clear and enable the District to understand what its annual budgetary obligations might be should the alternatives in the bid be accepted. The Mid America bid provided the following three alternatives: Outright purchase for $179,823, which was $32,847 more than the bid of the petitioner of $146,976. Payment of a total of $188,676 over a three year period plus an additional payment of $8,092 at the end of the lease if the lease were to be written as yearly renewable for 3 consecutive years, for a total cost of $196,768. Payment of a total of $188,676 (plus a $1 buy-out option) over a three year period if the lease were to be written for a guaranteed 36 month period. This is the alternative ultimately accepted by the District. After publication of the second invitation for bids, but before the opening of those bids, Ms. Vergara appeared before the District Board to explain the manner in which the invitation for bids had been drafted. In particular she explained that the invitation used a "brand name or equivalent" specification. She further advised the Board that the staff recommended the Speedstar SS-135 as the equipment most capable of handling the drilling needs of the District, and that any equipment purchased must be at least equivalent to the Speed star SS-135. At some time before the opening of the second set of bids, Mr. Munch and his supervisor, Ms. Vergara, traveled to the offices of Mid America and inspected a Speedstar SS-135. The owner and President of Mid America was Present to explain the design advantages of the Speedstar SS-135. He was a Salesman, and had no background in engineering or drill rig design. None of the District staff visited the Petitioner's place of business to inspect a Failing CF-15. Mr. Munch and Ms. Vergara did not see a Failing CF-15 until preparations began for the formal administrative hearing. In a deposition prior to the formal hearing, Mr. Schenk testified under oath that the staff had already decided that they wanted a Speedstar SS-135 rather than a Failing CF-15 based upon the report of Ms. Vergera to the District Board. In a deposition prior to the formal hearing, Mr. Munch testified that he was never asked which rig he would rather have, that the issue was Strictly a cost decision, that he probably would have had no objection to purchase of the Failing CF-15 had it been cheaper than the Speedstar SS-135, and that the Failing CF-15 would probably have done the job needed by the District to be done. On December 12, 1986, Mr. Schenk sent a memorandum to the District Board concerning the purchase of the rotary drill rig. The memorandum advised the Board that the District had received two bids. It then presented five alternatives for the Board to consider. All of the bid alternatives (alternatives 1 through 4) related to the Mid America bid on the Speedstar SS-135, and presented all of the options bid by Mid America. None of the bid alternatives related to the petitioner's bid. The District Board was not advised as to the comparative purchase prices bid by the two bidders (the Petitioner's price being $32,000 less than Mid America's), it was not advised as to the two interpretations of the three year option in the Petitioner's bid, and it was not advised that under the second interpretation of the Petitioner's three year lease-purchase bid, the Petitioner's bid had a net cost, after accounting for delivery time, that was $9,529 less than the Mid America bid. (See finding of fact 60.) Mr. Schenk thought that paragraph B), as modified by the "CONDITIONS" placed on the bid by Mid America, presented an option to "renew" the lease monthly at $5,241 per month, for an annual cost of $62,892. Evidentially, then, Mr. Schenk thought that the word "renewable" pertained to renewal by month. P. Ex. 15, p. 2, para. 2. With respect to this option, nothing is mentioned about purchase. Mr. Schenk also treated the word "renewable" to be intended to be exercised annually, resulting in a three year lease (renewable annually). The differing use of the word "renewable" came as a result of the modifications placed on the bid form by Mid America. The District Board chose option 3, which was condition number 1 on the bid blank submitted by Mid America, (a guarantee 36 months lease with a purchase option of $1.00) with the addition of the words "Subject to the availability of funds." The Second invitation for bids had Stated in Paragraph 3 of the third page that "all lease-purchase agreements must include a nonappropriation of fund Paragraph as required by Florida Statutes." Thus, the condition that the lease be "guaranteed" was modified by the District consistent with the specification of the invitation for bids relating to the appropriation of funds. On the day of the District Board meeting approving a lease-purchase with Mid America, January 14, 1987, the District entered into a contract with Mid America for the lease-purchase of a Speedstar SS-135. SJRWMD Ex. 3. The lease agreement contains a Paragraph allowing the District to terminate the lease upon nonappropriation of funds, Subject to certain conditions. Id., para. 11. In February, 1987, Mr. Auld learned at a trade show in Orlando that the District had awarded the contract to Mid America. Mr. Auld called Ms. Mildred Horton, the Assistant Executive Director of the District, to ask for the reasons why his bid was not accepted. Ms. Horton wrote a letter to Mr. Auld dated February 17, 1987, Setting forth the reasons for the award to Mid America and attaching two amortization Schedules, one for each bid. The letter and attachments is P. Ex. 6. Ms. Horton stated that the Schedules attached were the only ones in existence, to her knowledge. None of the reasons given by Ms. Horton for the rejection of the Petitioner's bid could have been known prior to the opening of the bids. The amortization schedules attached to Ms. Horton's letter had been prepared by Mr., Schenk. The schedule for the Petitioner's bid showed a total cost over a three year period of $224,344, which resulted in an effective interest rate of 31 percent compared to the outright purchase price on the Petitioner's bid of $146,976. The schedule assumes that the Petitioner's bid was for a monthly payment of $6,885 for two years followed by a monthly payment of $4,592 in the third year. P. Ex. 6. Mr. Schenk testified that he considered the possibility that the Petitioner's bid for a three year lease purchase was $4,592 per month for 36 months, and prepared an alternative amortization table based upon that possible interpretation as well as the amortization table attached to the letter sent to Mr. Auld by Ms. Horton described above. P. Ex. 12. Mr. Schenk concluded, however, that the Petitioner's bid should be interpreted as a bid of $6,885 per month for two years and $4,592 for the third year, for a total cost of $224,344. He testified that it was confusing that the Petitioner's bid did not contain a price for the first year, but he also concluded that the price of $6,885 placed on the second line of paragraph B) of the Petitioner's bid was intended to be a price for both the first year and the second year. He further testified that the Petitioner's bid may have been more understandable had the word "renewable" been stricken on the bid form. Finally, he testified that he disregarded the additions to the Petitioner's bid form because these were "alterations" to the form, but considered the additions to the bid form by Mid America because these were only "additions." As discussed above, after the Second invitation for bids was published, the District was Primarily interested in receiving bids for a three year lease-purchase. The bid blank in the second invitation for bids, however, failed to provide a clear method for bidders to bid that option. Paragraph B) of the bid blank drafted by the District was defective because it did not in any manner state that a purchase (a transfer of ownership) was included in the "lease" for which a price was being asked, because it failed to state whether the District wanted bids on a one year lease- purchase, a two year lease-purchase, a three year lease-purchase, or only a lease for those periods of time, because the word "renewable" was susceptible of being interpreted as renewal from month to month as well as from year to year, as so construed in Mr. Schenk's December 12, 1986 recommendation to the District Board. Paragraph B) was also defective because it failed to provide a place to show the price of the purchase option at the end of the lease, or zero if there were to be none. Without the "CONDITIONS" attached to the Mid America bid, the filled-in blanks of Paragraph B) on the bid form only resulted in a bid on a lease. Mr. Schenk recognized this as he construed Paragraph B) of the form as only asking for a lease bid when he informed the District Board of option number 2 in his memorandum of December 12, 1986. P. Ex. 13. Since the bid form was defective, it was foreseeable that bidders would have to have added additional words to the bid form to make it sensical. It was also foreseeable that different bidders would take different approaches in trying to draft additions to the form to enable them to bid all critical aspects of a lease that included a purchase at the end of the lease. The bid of the Petitioner should have been construed with this foreseeability in mind. In particular, the failure of the Petitioner to place a price on the first line of paragraph B) (relating to the first year) coupled with the placing of a price at the second year line and the third year line, and the addition of the words "owned at end of second year" and "owned at end of third year" should have been construed as the Petitioner's attempt, like the attempt of Mid America, to cure the ambiguities in the bid form. As discussed above, without such words, a price in the first line of paragraph B) of the bid form would have only been a bid for a renewable lease for one year, with no purchase option. The District argues that it did not ask for a bid on a two year lease-purchase, and that the Petitioner's attempt to bid on that as well as on a three year lease-purchase caused confusion. But the problem is that the bid form, as discussed above, did not ask for any purchase associated with a lease, and asked for prices for a lease that could have either a one, two or three year term based upon the option to renew. It was not unreasonable, then, for the Petitioner to have bid a two year lease-purchase. The interpretation of Petitioner's bid as a bid for a total cost of $224,344 over three years is not reasonable. The interpretation of the Petitioner's bid as providing for a total cost of $224,344 over three years results in an interest cost of 31 percent, a rate of interest that is facially unreasonable. But more important if, as assumed in that interpretation, the District were to enter into a contract with the Petitioner at a monthly charge of $6,885 per month for two years, it would own the Failing drill rig at the end of the second year. This is so because the Same line that contains the price ($6,885) also has the added words "owned at end of second year." If it owned the rig after two years, the District Surely would not continue leasing it for the third year at $4,592 per month. Payment of $6,885 for 24 months would cost a total of $165,240, which reasonably compares to Petitioner's outright purchase price of $146,976, plus the cost of paying over a two year period. Since it was more reasonable to construe line two of the Paragraph B) of the Petitioner's bid form as a bid for a two year lease-purchase, the third line should have been given the same construction, that is, to construe the price placed on the line as the price each month for the entire period (here, three years) with ownership automatic at the end of the term. The reasonable interpretation of line 3 of Paragraph B) of the Petitioner's bid is for a lease-purchase for three years at $4,592 per month, for a total cost over three years of $165,312, the rig then being owned by the District at the end of 36 months with no buy-out cost. The reasonableness of this interpretation is further supported by the fact that payment of $165,312 on a machine that cost $146,976 to buy outright results in an interest rate for payment over three years of 7.9 percent, which is a normal and usual interest rate that would be expected in a competitive bid. P. Ex. 12. Mid America's bid offered to deliver in 21 days, while the Petitioner offered to deliver in 120 days. Since the District was then renting drilling equipment at $4,612 per month, it would potentially have incurred about one month extra rental ($4,612) on the Mid America bid, and $18,448 for four months extra rental on the Petitioner's bid, or an additional cost of $13,836 on the Petitioner's bid. Including this cost of rental during the potential delivery period, the net cost of the Petitioner's three year lease-purchase bid was $183,760, and the net cost of the Mid America bid alternative that was accepted by the District was $193,289. Thus, with respect to the bid actually accepted by the District, the Petitioner's bid was $9,529 less than the bid of Mid America. During the formal administrative hearing, it appeared from the evidence that the District relied upon the following additional issues, other than price, as the reasons for selection of the Mid America bid: One year guaranteed non-routine, major maintenance and repair on the lease equipment, renewable annually for the term of the lease. A manufacturers warranty of at least 6 months or 1,000 hours. The delivery date. The location of the maintenance Services. All of the foregoing were bid specifications printed on the bid form. P. Exs. 11 and 4. Of these, only the issue of non-routine maintenance was mentioned in the letter of Ms. Horton to Mr. Auld on February 17, 1987. P. Ex. 6. Mid America bid $3,000 per year for non-routine maintenance. The Petitioner Stated on its bid form that this item was "not available." Non-routine maintenance is needed only at the end of the warranty Period. In the industry, its is well understood that non-routine maintenance normally does not apply and is not Purchased until the end of the warranty period. The District had not purchased the non-routine maintenance at the time of the formal administrative hearing. The prices quoted in the bids, pursuant to the invitation for bids, were to have been fixed only for 90 days. Thus, it is uncertain whether the $3,000 bid of Mid America for non-routine major maintenance would still hold. The term "non-routine, major maintenance and repair" was not further defined by the bid form. Although the Petitioner did not bid on non-routine maintenance, it did offer a one year warranty which was six months beyond the minimum specified by the District. Thus, for this six months period only, the Petitioner effectively provided a free non-routine maintenance offer at least to extent of the warranty. But the Petitioner failed to offer non-routine major maintenance for the 24 month period following the first year of the lease. Both bidders complied with the specifications with respect to the manufacturer's warranty, but the Petitioner offered a warranty that was better by six months. The District Board was incorrectly advised that the Petitioner's warranty was only for 90 days (and thus not in compliance with specifications). P. Ex. 13. The delivery date was considered during the hearing only with respect to the cost of rental of equipment until the new rig would be delivered, and thus was an element of net cost discussed above. The Petitioner's delivery date caused its bid to have an additional rental cost of $13,836 as compared to the Mid America bid, but the Petitioner's total net cost still was lower than the Mid America bid, as discussed above. The Petitioner's location of maintenance services was Largo, Florida, and Mid America's location was Ocala, Florida. Mid America's location is approximately 100 miles closer to Palatka than the Petitioner's location. The difference is a difference of about 4 hours in travel time, roundtrip, or only two hours for delivery of a part. Mr. Schenk testified that this factor carried only "some weight." Mr. Schenk did not know how often maintenance at the seller's location might occur, what percentage of maintenance might be in the field rather than in the seller's shop, or the problems that might occur from lack of a part. From the testimony of Mr. Winchester, who was the only rig expert who testified, and the testimony of Mr. Munch regarding the leased Speedstar rig, it appears that maintenance on the rig for major problems should not occur very often, if at all, and that many problems can be corrected in the field. In most cases, parts will have to come overnight by bus. It is inferred that a part from Ocala will arrive no sooner by overnight bus than a part from Largo by overnight bus. Thus, the closer location of the Mid America shop is of little importance on this record. The February 17, 1987, letter from Ms. Horton to Mr. Auld Stated that the failure of the Petitioner to bid on a one year lease was one of the reasons for not accepting the Petitioner's bid. As discussed above, the District was primarily seeking a three year lease-purchase, not a one year lease, and communicated this to the two bidders. Indeed, it was the existing one year lease that prompted the desire by the Board to explore a purchase over time. The District did not enter into a one year lease with Mid America, either. Thus, a bid on a one year lease was not a material or substantial part of the bid specifications. Specification number 2, listed as a desired option, was that the drill rig have a five speed transmission. The Speedstar SS-135 had a five speed transmission, thus giving it a lower first gear, and the Failing CF-15 did not. There is no evidence that the Petitioner could have have offered a five speed-transmission. On the other hand, there is no evidence that a four speed transmission would not effectively meet the needs of the District. The only evidence was that the five speed transmission would have a lower first gear, but there was not substantial evidence that the District would encounter drilling circumstances needing only the lower gear of the Speedstar SS-135. When the rotary table is retracted on the Speedstar SS- 135, the opening is 18 inches in diameter, thus allowing the Speedstar SS-135 to set 16 inch casing. The Speedstar SS-135 otherwise marginally has the power and related mechanical ability to drill and set 16" casing, particularly lighter PVC casing, to depths of 80 feet in about six hours. Drilling the first 80 feet in six hours is very slow in comparison to the normal operation of either the Speedstar SS-135 or the Failing CF-15, and would be more a matter of use of the mud pump to wear away the soil rather than actually drilling the hole. However, the Speedstar SS-135 is in fact being used in Florida by other owners to drill and set 16 inch casing. When the rotary table is retracted on the Failing CF-15, the opening is 14 1/2 inches in diameter, and thus the Failing CF- 15 does not have any capacity to drill or set 16 inch casing. If the District had chosen the Failing CF-15, in those cases in which it needed to drill and set 16 inch casing, it would have to contract out to a larger drill rig to drill and set such casing. In all other respects the Speedstar SS-135 and the Failing CF-15 are functionally equivalent machines, and are considered to be equivalent in the industry. For the most part, the design differences explained by Mr. Munch with respect to the video tape of views of both machines were not differences causing the machines to be not functional equivalents, except as discussed above. The recommendation of the staff of the District to purchase the Speedstar SS-135 would probably have been the same, based upon factors other than price, had the staff considered the bid of the Petitioner to have been $9,529 less than that of Mid America for a three year lease-purchase, as discussed in finding of fact 60. While the District entered into the process of obtaining bids for the drill rig with a preference for a rig capable of performing like the Speedstar SS-135, it did not intend to favor the Mid America Company over the Petitioner, nor did it act in bad faith. At all times relevant to these invitations for bids and award of the contract, the District did not have rules governing purchasing of commodities or governing the notification to interested persons concerning the procedures for contesting a proposed purchase. It did not have any policy or rule requiring that the lowest bid be accepted without consideration of other factors. It did have written policies, SJRWMD Exs. 1 and 2, providing for the following: Purchases in excess of $5,000 must be advertised in a newspaper of general circulation no less than ten days prior to bid opening. The District Purchasing Director may withdraw the entire proposal, and may reject all bids or parts of bids, if the District's interest will be served by that action. Departments or Divisions of the District submitting requisitions must do so with items described in such terms to allow unrestricted bidding and to afford full opportunity to bid to all qualified bidders. Any purchase order made contrary to the provisions of the purchasing policies shall be of no effect and void.
Recommendation For these reasons, it is recommended that the St. Johns River Water Management District enter its final order that the bid of the George E. Failing Company pursuant to Bid Number 87-01, second call for bids, dated November 6, 1986, was properly rejected because it did not meet all specifications of the invitation to bid. DONE and ENTERED this 28th day of August, 1987. WILLIAM C. SHERRILL 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 28th day of August, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-1606BID The following are rulings upon findings of fact proposed by the parties which have been rejected. The numbers correspond to the numbers used by the parties. Findings of fact proposed by the George F. Failing Company: 2. The third sentence is rejected because Mr. Munch chose the Speedstar SS-135 as a basis for the Specifications due to his familiarity with the leased drill rig of the same make. 6. Not relevant. 19 and 20. Mr. Auld's testimony that a manufacturer's warranty on a 1985 truck would be less inclusive that on a 1987 truck was hearsay, and cannot support a finding of fact as to that point. Thus, those portions of these proposed findings concerning a 1985 truck are irrelevant. 36. Ms. Vergara did not testify that the planned monitoring wells would be 2,000 feet deep. 38. Subordinate to finding of fact 71. 45. Rejected by finding of fact 42. Rejected by finding of fact 50. There is no evidence that the Speedstar SS-135 bid by Mid America was a display model. The delivery date of the Speedstar SS-135 is not in evidence. Findings of fact proposed by the St. Johns River Water Management District: 4. There is no evidence as to the depths of the proposed monitoring well network, and thus a finding of fact that the depth will be 1000 feet cannot be made. 8. The existence of a buy-out price in the first Mid America bid did not cause the bid to be unclear. 12. The fourth sentence, as to what the District thought the second bid blank "should" contain, is not supported by the evidence. The last sentence is rejected because it is not clear that the bid blank was a "renewable lease-purchase in one year intervals." See findings of fact 34, 55, and 56. 14. The evidence is that the Speedstar SS-135 can set 16 inch casing, not 17 1/2 inch casing. The findings concerning the failure of the Petitioner's bid to give the District the option of being able to "exit the lease" in one year is rejected because that option was securely provided in the invitation for bids, so securely so that it was construed by the District to be an implicit part of the Mid America bid that ultimately was accepted by the District. See finding of fact 50 concerning the non-appropriation of funds condition. Additionally, the findings concerning the inability of the District to construe the bid of the Petitioner to know its first year fiscal obligations are rejected for the reasons stated in findings of fact 56 through 58. The second sentence is rejected for the reasons stated in findings of fact 34 and 55. The last sentence is rejected by these findings of fact as well; the ambiguity was created by the bid form, not by the bidders. These findings of fact have essentially been rejected by findings of fact 34 and 55. Further, the word "renewable" was not inconsistent with ownership at the end of a two year period because the word "renewable" could be given the construction given it by Mr. Schenk, renewable from month to month. See finding of fact 49. 22 and 23. Rejected for the reasons stated in findings of fact 34 and 55 through 58. These proposed findings of fact are essentially correct as a matter of law, but are not facts. These findings of fact are rejected by findings of fact 34 and 55 through 58. 27. The last sentence of proposed finding of fact (4) is rejected for the reasons stated in finding of fact 66. 29. Subordinate to finding of fact 71. 32. While these Proposed findings are true and have been Substantially adopted, the proposed findings are not relevant in view of the stipulations contained in findings of fact 1 and 2. COPIES FURNISHED: Dale Twachtmann, Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blairstone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blairstone Road Tallahassee, Florida 32399-2400 Henry Dean, Executive Director St Johns River Water Management District Post Office Box 1429 Palatka, Florida 32078-1429 Linda M. Hallas, Esquire 9455 Koger Boulevard, Suite 209 St. Petersburg, Florida 33702 Wayne E. Flowers, Esquire Post Office Box 1429 Palatka, Florida 32078-1429
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.
The Issue The issue is whether the application of Petroleum Products Corporation for reimbursement of the cost of assessment and clean-up of soil and groundwater contamination at its site in Broward County, Florida, under the State Underground Petroleum Environmental Response Act of 1986 should be granted.
Findings Of Fact The Legislature provided a system for the clean-up of sites contaminated as the result of the storage of petroleum or petroleum products in the State Underground Petroleum Environmental Response Act of 1986 (Super Act), Chapter 86-159, Laws of Florida, codified primarily as Section 376.3071, Florida Statutes. The Super Act contains a reimbursement program funded by the Inland Protection Trust Fund. Section 376.3071(12), Florida Statutes, permits reimbursement of allowable costs for the rehabilitation of sites contaminated from discharges related to the storage of petroleum or petroleum products. Petroleum Products Corporation owns a parcel of land located at 3130 Southwest 17th Street, Pembroke Park, Florida. From 1959 to 1970 Petroleum Products Corporation operated a facility on that land which collected used oil from service stations and automobile dealerships, processed it, and sold it either as fuel oil or lubricating oil. About 90% of 150,000 gallons of used oil processed monthly at the facility was sold as fuel; the remaining oil was sold as lubricating oil, but even when sold as lubricating oil, it was sometimes burned as fuel because re-refined oil makes good fuel. The storage tanks were located on the southeastern portion of the property, near Carolina Road. The facility used a two-phase distillation process. Used oil was distilled to remove water, after which it could be sold as fuel oil. If processed in the second phase, for sale as lubricating oil, it was distilled further, and treated with sulfuric acid and clay to remove additives and residue, and change color. This phase produced a waste consisting of acid/clay sludge. This sludge is generally very black, and has a pH of approximately 3. It is very viscous, and has the consistency of roofing cement; laymen would describe it as tar. It does not flow easily, but is liquid enough to be pumped. This processing also occurred in the southeast part of the property. While the recycling facility produced lubricating oil using the acid/clay treatment from 1959 to 1970, the acid sludge was hauled to a municipal dump, or placed in pits dug into the ground on the north and east of the plant site. When the pits were dug, they were dug below the water level, and there was water in the pits before the sludge was dumped in them. The disposal of sludge in pits on the recycling site was a prevailing industry practice, and violated no regulatory requirements at the time. Operators considered on-site disposal of sludge preferable to hauling sludge to a landfill. During periods of heavy rain, some of the sludge may have overflown the pits and spread to nearby land, where it would become mixed with the surface soil. Petroleum Products Corporation ceased making lubricating oil in 1970, but continued to process used oil into fuel oil. The local Broward County Pollution Control Agency asked Petroleum Products Corporation to remove the acid/clay sludge from its property, and to refill the pits with other fill material. Petroleum Products Corporation acceeded to this request, and a great volume of sludge, perhaps hundreds of thousands of gallons, was removed from the pits, which were then refilled under the supervision of the Broward County Pollution Authority. Receipts Petroleum Products Corporation produced at the hearing, or thereafter from the custody of the U. S. Environmental Protection Agency, show that more than 150 truck loads of sludge were removed and hauled to landfills operated by Metropolitan Dade County or by the City of Surfside. Some pockets of the sludge remain at the site of the pits because they were not completely emptied. The backfill was clean fill, and the area was then bulldozed so that warehouses could be constructed in the area. This filling and bulldozing changed the contour of the land from what it had been in the past. The Department contends that much of the sludge was spread out over an extended area of the site, and not removed to landfills. The evidence is persuasive that almost all of the sludge from the pits was removed to landfills. The testimony of Mr. Blair denying that the sludge was spread was credible. In addition, on-site spreading of the sludge would have been impracticable. As a tar-like substance, if spread out, it would have been tracked everywhere. It would stick to the tracks or wheels of any vehicles operating on the surface, and was so acidic it would burn or irritate the skin of anyone who came in contact with it. It would be extremely difficult to perform maintenance on equipment used to spread the sludge because of the need to clean the sludge off, so that the mechanic would not be burned. In addition, there are a large number of receipts evidencing the systematic hauling of the sludge to landfills. The logic of Mr. McDonnell's testimony is persuasive: If you have the alternate, which they obviously did, of hauling it away and simply dumping it, no one would go out and deliberately choose to do a very difficult job [spreading the sludge over the property] where there is an easy alternative available to them. (Tr. 285) Although the facility ceased its re-refining of lubricating oil in 1970, it continued to collect, process, and sell used oil as a fuel until 1984. About 150,000 gallons per month of used oil were processed and sold as fuel. The oil was typically crank case engine oil which contained the substances normally found in used oil of that type. There is no persuasive evidence that Petroleum Product Corporation ever received any hazardous waste, or mixed used oil with any hazardous waste. Used oil is not listed as a hazardous waste by the U.S. Environmental Protection Agency or by the Department. The used oil collected and recycled at Petroleum Product's facility was pumped into and stored in above-ground storage tanks. There were, over time, from 10 to 25 tanks, which ranged in size from 12,000 to 20,000 gallons. Normally, the facility stored between 400,000 and 500,000 gallons of used oil. Occasionally, the facility also received virgin oil, but it was processed quickly or sold because of its higher value. At the peak of its operation, the facility had 25 to 35 storage tanks. Recycling operations had slim profit margins and were small operations. Storage tanks, pumps, and other equipment were bought used, often from other businesses dealing in virgin petroleum products. That used equipment was often rusty or deteriorating. Tank bottoms could have holes in them as the result of rust from standing water; tanks were sometimes riveted, and would have side or bottom leaks. The tanks had virtually no overfill protection. When oil was pumped in, it would overflow from the top and run down the sides. Operators were typically not careful with the oil, because it had a very low value, about 2 to 5 cents a gallon. A spill of a few thousand gallons was regarded as an inconsequential matter. The pumps used in storing oil often had leaks in packing seals, or had screw joints which would leak. Tank valves, also usually bought as used equipment, were often installed without new stem packing, and also would leak during operation. Almost no preventive maintenance was done, because it was not cost-effective to do so. Equipment was repaired only if its current state of repair interfered with operations, which usually meant that leaks were not repaired until they created a fire hazard. Leaks and spills from used oil storage tanks, including their pumps, valves, and piping, were common. A great volume of used oil leaked or spilled from Petroleum Products Corporation's tanks, pumps, and piping over its 25 year operation. There were also large oil spills resulting from four or five major fires at the facility in the 1960s. The fire in 1963, which may have been the result of vandalism, caused 40,000 to 60,000 gallons of use oil to spill from storage tanks; 8 or 10 tanks were destroyed. There were no dikes, so that the oil flowed freely. When firemen used water on the fire, the oil was absorbed into the soil. Another major fire occurred in October, 1966 in which three oil storage tanks collapsed spilling about 50,000 gallons of oil. Another 25 foot high oil tank collapsed on a firetruck. There is no way to know, with certainty, the volume of used oil, virgin oil, and lubricating oil which spilled or leaked into the ground on the site. It is reasonable to believe that 9 to 12 gallons of oil would have leaked or spilled each day at the facility, which would have resulted in spill of over 100,000 gallons of oil. This estimate, made by Mr. McDonnell, is credible and is conservative, given the volume of oil also spilled during the fires. Petroleum Products Corporation does not contend that the leaks and spills from process tanks, rather than from storage tanks, are eligible for reimbursement of site assessment and cleanup costs. Oil leaked from both, however, and once in the ground, the oils are indistinguishable. Due to the capacity of the tanks and the years they were in use, however, it is reasonable to assume that 15% or less of the leaks and spills were attributable to process tanks. After processing, most of the oil was burned as fuel. Some was used as a lubricant. The only difference between used oil sold as fuel or lubricant was that the lubricating oil had the additives removed and the color changed. Both burn well. There is an insufficient basis in this record to justify the Department's interpretation excluding this site from eligibility for cleanup because oil processing ocurred at the site to produce lubricating oil. Section 376.3071 does not disqualify all or part of a site from eligibility for cleanup reimbursement because a portion of the used oil stored there was ultimately used as lubricants. In 1984 a Department investigator asked Petroleum Products Corporation to install exploratory wells to determine whether there was contamination at the site. Petroleum Products engaged the firm of Dames & Moore to undertake a preliminary investigation, which revealed that there was groundwater contamination in the form of floating hydrocarbons. On April 1, 1985, the United States Environmental Protection Agency and Petroleum Products Corporation entered into a consent order agreement which required the removal of 17 above-ground tanks leaking used oil into the ground, which constituted a continuing source of contamination. Petroleum Products Corporation contracted with Conversion Technology Corporation to recover and recycle the oil and wastes, with Waldron's tank cleaning services to clean the empty tanks and drum the sludge, with Cuyahoga Wrecking Service to make the tanks inoperable, and with Seven & Seven Transporters to remove the waste to a disposal facility. The employee of the U.S. Environmental Protection Agency who was in charge of the site commended Petroleum Products Corporation for its cleanup effort, and wrote as the OSC [on- scene coordinator] for this EPA-monitored cleanup I may say that [Petroleum Products Corporation] exemplified industrial cooperation and responsibility in combating the vexing problem of hazardous waste management. (Petitioner's Exhibit 9) Petroleum Products Corporation cooperated with the Environmental Protection Agency and with the Department in determining how to deal with the contamination. It has already spent approximately $150,000 to perform remedial action. Contamination at the site is of three types: oil floating in the groundwater, soil contamination, and groundwater contamination. It is not possible to clean any individual phase of the contamination without affecting the other phases. Attempts at remediation must be monitored to prevent an influx of organic contaminants into the aquifer. Similarly, the cost related to the cleanup of an individual phase of contamination cannot be isolated because of the inter-related nature of the cleanup phases. The creation of a cone of groundwater depression is necessary for any recovery of the free or floating oil. The cost of recovery of the free product cannot be separated from groundwater cleanup because it is necessary to treat large quantities of groundwater involved in creating a cone of depression. To the extent that a proportion of the cost might be estimated, the cost associated with the recovery of free product would be a minor portion of the overall cleanup. There is currently a free product recovery effort in place at the site, which is intended to prevent further migration of the product off-site. This ongoing action is not considered an element of the site cleanup. The most feasible method of cleanup for the free product will involve the excavation of the soils to create a trench. The free product and ground water will be recovered as they flow into the trench. During October and November of 1984, Environmental Science and Engineering, Inc., a consulting firm working under contract with the Department, assessed the extent of free floating oil in the groundwater under the Petroleum Product Corporation's site. Those consultants found a free floating layer of oil from 5" to 30" thick under approximately one-half of the one acre site Petitioner still owns. The free product generally mirrors the location of the former recycling facility and its storage tanks. The viscosity of the free product is comparable to about 40-weight engine oil. Environmental Science and Engineering estimates that the floating layer of oil contains 20,000 to 60,000 gallons of recoverable petroleum product. The direction of ground water flow and the migration of contaminants off-site is to the east or southeast. The soil above the oil layer has been saturated with oil because of the fluctuations of the layer with movement of the water table as the area experiences heavy rains or dry spells. Wells drilled in the location of the former sludge lagoons to the north and east of the plant site reveal a heavy slightly liquid type of sludge. The oil in the lagoon sites is immobile, and no free product collects in the wells after 24 hours. One sample collected in the mason jar shows a slight degree of oil separation after 24 hours. This anecdotal evidence of separation is not very informative, and is not persuasive that oil separates from the remaining sludge on-site. See, Finding 32, below. A second assessment of soil and groundwater contamination was done by another consulting firm under contract with the Department, Ecology and Environment, Inc. That study showed free floating product at the site. The only calculation of the amount of free floating oil was that done by Environmental Science and Engineering, Inc., see, Finding 29, estimating that there would be 20,000 to 60,000 gallons of recoverable oil. That calculation understates the amount of oil in the ground. The estimate given by George McDonnell of 103,000 gallons is more persuasive. It is consistent that the large amounts of oil which leaked or spilled at the site over a 25 year period. It is unlikely that any appreciable portion of the approximately 103,000 gallons of floating oil has its genesis in the separation of oil from the acid/clay sludge which had been disposed in the two lagoons for the following reasons: Oil associated with acid/sludge would be quite acidic, and have a pH between 2 and 4. The pH scale is not a linear scale, so differences in pH are quite dramatic as the pH values change. Samples of free product shows a uniform pH of approximately 6 or 7. In almost all 31 monitoring or observation wells the pH is consistent with the characteristics of used oil, (a pH of 6 or 7), not the pH of sludge (a pH of 2 to 4). The only sample which disclosed a low pH was that taken in monitoring well number 3 which was located in the former sludge lagoon site. The groundwater flows to the east or southeast. This does not explain the presence of free product to the west and southwest of the sludge pits nor the absence of free product to the east of the pits. The viscosity of the oil is similar to that of 40-weight engine oil and not highly viscous, as the tar-like sludge would be. The oil in the sludge pits is basically immobile and no free product surfaced in the monitoring well after waiting 24 hours. The pH of the free product is nearly neutral. The Department believes that the sludge was mixed with lime rock or fill and spread over the site to increase the pH of the oil. This is unpersuasive. Mixing with lime rock would increase the pH of the sludge (tend to bring it towards neutral) but it would not cause the dramatic lowering of acidity which would bring the sludge to a pH of 6 or 7. In addition, the viscosity of the sludge would not be so changed by mixing the sludge with fill that its viscosity would become similar to that of 40-weight engine oil. To believe that the free product results from sludge disposal rather than leaks ignores the normal operating practice of used oil recovery facilities in the late 50s and 60s where spills from storage tanks, pumps, and piping were very common. Little of the free product has been recovered through the current remediation efforts. If not recovered, over time the approximately 103,000 gallons of floating oil will spread to adjacent property. To recover this oil by conventional trench or well recovery operations will probably cost $250,000 or more. The capital cost of the groundwater recovery/discharge system, with monitoring wells, will be about $85,000; cost of operating and maintenance are approximately $180,000. The firm of Ecology & Environment, Inc., collected soil samples at 56 locations in two phases in its remedial investigation. Forty-six of the samples were taken at shallow depths (27 at 8 inches, 19 at approximately 10 inches); 10 more samples were taken in the old disposal pit sites at depths between 0 and 35 feet). The two primary classes of contaminants found in the soil were lead and organics (hydrocarbons associated with petroleum products). Both contaminants are found in used oil. The lead and organic contaminants were found in the shallow soils over the southern half of the site. Very little contamination was found beyond the main area of site activity. The soil contamination was concentrated in the plant and former disposal pit areas. Samples with high lead concentrations were found in the former disposal pit sites. Contamination extended to a depth of 25 feet in one soil sample from a former pit, where oily plastic sludge was found with fine sand or clay. The two former pit sites are the only places with documented contamination below a 10 foot depth. Although the organic contamination extended laterally further than the lead contamination, Environment & Ecology concluded that the wider distribution did not reflect contamination from Petroleum Product Corporation's activities. The general area has long been the site of commercial and industrial activities, and there are many other possible sources for contamination including a firing range, which would have been disposing of lead bullets fired at the range, a generator plant, and a former spray-painting facility. Solvents and other chemicals used in these activities would contribute to soil and groundwater contamination. The consultants had been told by area businesses that small scale dumping of industrial chemicals in the vicinity has been common. Soil samples revealed a "great deal of heterogeneity." There was no uniform distribution of soils in the shallow zone. This probably occurs because after the reprocessing operations ended in 1970, the land was cleared and filled, so that many of the warehouses now in the area could be constructed. Most of the upper 8 to 10 feet is fill material. The ground water was monitored by installing 38 wells on the site, most of which were screened at depths of 10 to 12 feet. Five intermediate wells with depths of 50 feet and two deep wells of 100 to 200 feet were also installed. Every sample exhibited a pH of between 6.4 and 7.4. The primary contaminants were lead, organics, and chromium. The evidence does not indicate the source of the chromium. It is unrelated to Petroleum Product Corporation's activities. The groundwater contamination, both metal and organic, was only in the shallow zone. It extends laterally roughly to the same extent of the shallow contamination found in the soil. This suggests that the contaminants in the soil migrated due to seepage from rainfall or fluctuation in the water table into the groundwater. The water table is about five feet below the land surface. The Department has argued that the contaminants in the soil and groundwater were caused by mixing and spreading of the sludge material during the early 1970s over the surface of the area. This hypothesis has already been rejected for the reason stated in Findings 7 and 8, above. It is more likely that the soil contamination resulted from frequent spills and leaks of oil from storage tanks years ago. The soil contaminants are those found in used oil. The area generally is flat. There was no impediment to oil spills flowing over a large surface area, following the contour of the land at that time. Depending on the method used to clean up the site, the cost of rehabilitating the area will range between two and forty-six million dollars. It will cost over one million dollars to recover and treat contaminated groundwater. Approximately 110,000 cubic yards of contaminated soil must be removed and treated, the majority of that coming from the area outside the former sludge pits. The presence of contamination at the site is to be expected, given the site's former use. All of the 8 turnpike facilities and 8 maintenance yards operated by the Florida Department of Transportation report petroleum contamination from tanks, and the Department of Transportation has estimated cleanup cost will range from $20 to $30 million, although DER believes the cost may be $5 million. The cleanup will be funded by the Inland Protection Trust Fund, as would the reimbursement in this case. The cost of rehabilitation is in the range of estimates that the Department has received for other petroleum contamination sites. In summary, the Petitioner's site is contaminated primarily from leak and spills of used and virgin oils processed or unprocessed and from storage tanks, pumps and integral piping. Small spills were continuous and some associated with fires were massive. The only portion of the site not contaminated due to leaks and spills is the residual soil and groundwater contamination from the sludge disposal pits, which is a small part of the overall contamination.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Petroleum Products Corporation fo eligibility to participate in the cleanup program funded by the Inland Protection Trust Fund be granted. DONE and ENTERED this 9th day of July, 1990, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1990. APPENDIX Rulings on Findings of Fact proposed the Petitioner: As will be obvious, the proposed order submitted by Petroleum Products Corporation comported closely with the Hearing Officer's view of the evidence, and with some modification was essentially adopted as proposed. Adopted in Finding of Fact 3. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 6. Adopted in Finding of Fact 6. Adopted in Findings of Fact 7 and 8. Adopted in Finding of Fact 8. Adopted in Findings of Fact 9 and 10. Adopted in Finding of Fact 10, to the extent necessary. Adopted in Finding of Fact 11. Adopted in Finding of Fact 12. Adopted in Finding of Fact 13. Adopted in Finding of Fact 14. Adopted in Finding of Fact 15. Generally adopted in Finding of Fact 16. Rejected as subordinate. Rejected as unnecessary and subordinate. Adopted in Finding of Fact 17. Adopted in Finding of Fact 18. Adopted in Finding of Fact 19. Adopted in Finding of Fact 20. Generally adopted in Finding of Fact 21. Adopted in Finding of Fact 22. Adopted in Finding of Fact 23. Adopted in Finding of Fact 24. Adopted in Finding of Fact 24. Adopted in Finding of Fact 24. Adopted in Finding of Fact 28. Adopted in Finding of Fact 29. Adopted in Finding of Fact 30. Adopted in Finding of Fact 31. Adopted in Findings of Fact 31 and 32. Adopted in Finding of Fact 33 Rejected as repetitious of Finding of Fact 6. Rejected, see Findings of Fact 25 and 26. Adopted in Finding of Fact 24. Adopted in Finding of Fact 34. Adopted in Finding of Fact 35. Adopted in Finding of Fact 36. Adopted in Finding of Fact 37. Adopted in Finding of Fact 38. Adopted in Finding of Fact 39. Adopted in Finding of Fact 40. Adopted in Finding of Fact 41. The spreading theory is rejected in Findings of Fact 7 and 8. Rejected as unnecessary. Adopted in Finding of Fact 42. Adopted in Finding of Fact 42. See also the stipulation of the parties entered as Exhibit 22. Rejected as unnecessary. Rulings on Findings of Fact proposed by the Department. Adopted in Finding of Fact 1. Adopted as modified in Finding of Fact 2. Discussed in the Conclusions of Law, see page 20. Adopted in Finding of Fact 3. Adopted in Finding of Fact 3. Implicit in Findings of Fact 3 and 6. Adopted in Finding of Fact 6. Adopted in Finding of Fact 5. Adopted in Finding of Fact 4. Adopted in Finding of Fact 4. Rejected as unsupported by the transcript references given. Adopted in Finding of Fact 5. Adopted in Finding of Fact 5. Adopted in Finding of Fact 5 Rejected as unnecessary. Generally rejected; see Finding of Fact 6 concerning the filling of the disposal pits. While some pockets of sludge remain at the site of the pits, the volume is difficult to determine. In an absolute sense, those pockets may contain a substantial amount of sludge, but on a comparative basis, by far the greatest part of the sludge was removed. Rejected as unnecessary. Generally adopted in Finding of Fact 32(1), but see the final sentence of (1). Generally adopted in Findings of Fact 25, 28, and 34. Generally adopted in Finding of Fact 28, since the recycling facility and storage tanks were on the southern part of the property. Rejected as unnecessary. Adopted in Finding of Fact 26. Adopted in Finding of Fact 26. Adopted in Finding of Fact 3. Implicit in Finding of Fact 11. Adopted in Finding of Fact 11. Adopted in Finding of Fact 4. Rejected because the process tanks necessarily store the product being processed, serving as a vessel to contain the product. Rejected, see Finding of Fact 3 with respect to the turnover in the volume of used oil processed at the facility. Only about 10 percent of the oil was reprocessed as lubricating oil. This is more significant than the volume of the tanks. See also Tr. 24 with respect to the storage capacity, and Finding of Fact 11. Rejected as unnecessary. Rejected because the surficial drainage has probably been changed by the filling and regrading of the property in preparation for building the warehouses. See Finding of Fact 6. The current surficial flow says little about the flow when the facility operated in the late 1950's and throughout the 1960's. Adopted in Findings of Fact 15 through 19. Adopted in Findings of Fact 17 and 18. Adopted in Finding of Fact 17. Generally rejected, the evidence is persuasive that about 50,000 gallons of oil were lost in the 1966 fire. (See Tr. 36-37.) Adopted in Finding of Fact 25. Adopted in Finding of Fact 26. Adopted in Finding of Fact 26. Adopted in Finding of Fact 26. Adopted in Finding of Fact 27. Adopted in Finding of Fact 27. Rejected as unnecessary. Adopted in Finding of Fact 27. Adopted in Finding of Fact 27. Adopted in Finding of Fact 27. Adopted in Finding of Fact 27. Adopted in Finding of Fact 27. Rejected, the free product covers approximately one-half acre. Rejected, the more persuasive evidence is the 103,000 gallons estimated by Mr. McDonnell. See Finding of Fact 31. Rejected as unnecessary. Rejected as unnecessary. See Findings of Fact 28 and 34. Rejected because it is unlikely that sludges are separating in the former sludge lagoon. See Finding of Fact 30. The source of the oil is more likely the substantial loss of oil which occurred from the fires and from leaks over the years which is now floating above the ground water. Generally adopted in Finding of Fact 28. Generally adopted in Finding of Fact 28. Rejected as unpersuasive. Rejected, the source of the free product is not leaching from the disposal pit, but the oil from over flows and leaks during operation as well as large inundations during fires. Adopted in Finding of Fact 4. Adopted in Finding of Fact 4. Adopted in Finding of Fact 4. Rejected, see Finding of Fact 30. Rejected because oil does not separate from the sludge. Rejected for the reason given for rejecting Finding of Fact 63. Rejected, the seepage is not the result of separation in the disposal pits, but from the plume of free product in the ground above the ground water. Rejected as unnecessary, but the similarity of the oil seeping from the sludge pit area to waste oil is consistent with its source as leaks and spills inicident to fires. Rejected because the sludge does not separate. Rejected because the sludge does not separate. Rejected because the sludge does not separate, see Finding of Fact 30. Rejected as unnecessary; obviously as there is no more storage, so there is no more source for leaks or spills. 71-73. Discussed in Finding of Fact 30. Rejected because liquid product will not accumulate. Rejected because the sludge does not separate. Adopted in Finding of Fact 32(1). Adopted in Finding of Fact 32(5). Adopted in Finding of Fact 32(1). Rejected for the reason stated in Finding of Fact 32(5). Rejected for the reason stated in Finding of Fact 32(5). Rejected as unnecessary and for the reason stated in Finding of Fact 32(5). Adopted in Finding of Fact 32(1), which is consistent with the source of the free product being used oil rather than separation from sludge remaining onsite. 83-84. Rejected as unnecessary. Rejected as unnecessary. Rejected because the testimony of Mr. McDonnell has been accepted. Rejected as unnecessary. Adopted in Finding of Fact 27. Rejected as redundant. Adopted in Finding of Fact 34. Adopted in Finding of Fact 34. Implicit in the finding that lead is a contaminant found in used oil. See Finding of Fact 34. Adopted in Finding of Fact 4. Rejected as unnecessary. Generally adopted in Finding of Fact 34. Generally adopted in Finding of Fact 34. Adopted in Finding of Fact 35. Rejected as unnecessary. Rejected as unnecessary; see also, Finding of Fact 6. Adopted in Finding of Fact 32(1). Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary, although there were disposal pits in the north and eastern parts of the property. Adopted in Finding of Fact 34 with respect to location, but the testimony with respect to spreading of the sludge is rejected. See Finding of Fact 7. It is unlikely that sludge was spread over the site. The more likely explanation for the appearance of sludge in the lithologic logs for the southern end of the site is that the disposal lagoons periodically overflowed after heavy rains and provided a mechanism for the active transport of sludge out of the disposal pits into some areas on the southern end of the site. Apparently the northern area now occupied by the warehouses was higher, because no sludge was found in observation wells 4, 5 and 19. Rejected, page 41 of DER's Exhibit 3 shows no sludge at observation well 5, which the proposed finding implies. 107-112. Generally rejected because the testimony with respect to the surface flow from the tank area being to the south is rejected because the grading of the property as the warehouses were built likely changed the contour of the land. Mr. Levin's testimony was not particularly strong; for example, at page 25 of his prefiled direct testimony he states, "And for the shallow soil contamination I would still have to lean towards the fact that the materials were mixed and spread." 113-114. The sludge contamination is not the predominant or source of contamination. Rather, it is the oils which floated across the land and were carried into the soil and resulted from the leaks and spills. 115-120. Generally accepted in Finding of Fact 36, although subordinate to that finding. 121. Generally accepted, although the soil contamination by lead is attributable to leaks and spills from the used oil. 122-124. Rejected as unnecessary. Accepted in Finding of Fact 25. Accepted in Finding of Fact 38. 127-128. Subordinate to Findings of Fact 36, especially the last sentence, and 38. Subordinate to Finding of Fact 39. Subordinate to Finding of Fact 39, especially the last sentence. Rejected as unnecessary. 132-134. Accepted in Finding of Fact 39. 135. Rejected because the soil contamination is the result of leaks and spills of oil. 136-137. Rejected, it is more likely that the neutral pH of the ground water is the result of the essentially neutral contaminant, the used oil. Rejected as unnecessary. Rejected as unnecessary, although consistent with Finding of Fact 39 that the lateral extent of ground water contamination mirrors the soil contamination which has resulted from leaks and spills. 140-141. The predominant source of contamination is leaks and spills. 142. Rejected, the area affected by the leaks and spills is large, due especially to the fires and consequent loss of large amounts of oil from tanks. See Finding of Fact 41. 143-144. Rejected as irrelevant and unnecessary. 145. Although true, not relevant. 146-148. Rejected, whether the Environmental Protection Agency is correct or not in its assessment is not at issue here. This site was contaminated by used oil. 149-150. Although true, not relevant. Implicitly accepted in that no finding with respect to "bias" has been made. Rejected as legal argument. Rejected because the predominate source of contamination is an eligible source. Rejected, but the source here falls within the statutory directive. Rejected. The site here is predominantly contaminated by used oil, which is eligible. The eligible portion is not a minor part of the entire of the contamination. COPIES FURNISHED: R. L. Caleen, Jr., Esquire OERTEL, HOFFMAN, FERNANDEZ & COLE Post Office Box 6507 Tallahassee, Florida 32314-6507 Gary Early, Esquire Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32399-2400 =================================================================
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint issued against him and, if so, what disciplinary action should be taken against him.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Respondent is now, and has been at all times material to the instant matter, registered as a septic tank contractor with the Department. In July 2002, Respondent entered into a contract with Pro Gold Investments Corp. (Pro Gold), whose president and sole owner is Emerico Kemeny Fuller. The contract provided that Respondent would install a "new septic system" for Pro Gold at 453 Blue Road in Coral Gables, Florida (Blue Road Property) for $4,600.00, a job that should have taken only a "few days" to complete. Pro Gold gave Respondent a "job deposit" of $2,300.00. In July 2003, Pro Gold, by Warranty Deed, conveyed title to the Blue Road Property to Maurits de Blank's company, Mortgage Lending Company LLC (MLC), and it also executed a Bill of Sale, Absolute and Assignments of Contracts, which read as follows: PRO GOLD INVESTMENTS CORP, as Seller, in consideration of Ten Dollars ($10.00) and other valuable consideration paid to it by MORTGAGE LENDING COMPANY, LLC, as Buyer, the receipt of which is acknowledged hereby sells, assigns, grants, transfers, and conveys to Buyer all of Seller's right, title, and interest in the following described goods, contracts and personal property: SEE ATTACHED EXHIBIT "A- PROPERTY" AND EXHIBIT "B- CONTRACTS ASSIGNED" Seller covenants and agrees that it is the lawful owner of goods, contracts, rights or interests transferred hereby; that they are free from all encumbrances, except for outstanding amounts due, if any, to those parties set forth on Exhibit "B," and that it has the right to sell, transfer and assign the goods, properties and rights set forth in the attached Exhibit "A," and the right to transfer and assign the contracts, rights or interests shown on Exhibit "B," and will warrant and defend same against the lawful claims and demands or all persons. The "attached Exhibit 'A- Property'" read, in pertinent part, as follows: (Regarding transfer of 453 Blue Road, Coral Gables, Florida, "the Real Property") (Mortgage currently in favor of Mortgage Lending Company, LLC "the Mortgage") All property rights of any kind whatsoever, whether in property that is real, fixed, personal, mixed or otherwise and whether in property that is tangible or intangible, including, without limitation, all property rights in all property of any kind whatsoever that is owned or hereafter acquired by the Company and that is associated with, appurtenant to or used in the operation of the Real Property or is located on, at or upon the Real Property and is associated with or used in connection with or in operation of any business activity conducted on, at or upon the Real Property, and including, without limitation, the following: * * * All right, title, and interest in those certain contracts and agreements [set] forth in the attached Exhibit "B," which are hereby transferred and assigned to Mortgage Lending Company LLC. Among the "contracts and agreements [set] forth in the attached Exhibit 'B,'" was the aforementioned July 2002, contract wherein Respondent agreed to install a "new septic system" for Pro Gold on the Blue Road Property (Septic System Contract). This contract was still executory. Respondent had not done any work on the site in the year that had passed since the contract had been signed. In the beginning of August 2003, Mr. de Blank met with Respondent and advised him that MLC was the new owner of the Blue Road Property and that MLC had also received an assignment of the Septic System Contract from Pro Gold. In response to this advisement, Respondent stated "he did not do assignments." Following this meeting, Mr. de Blank sent Respondent documentation supporting the assertions he had made regarding MLC's ownership of the Blue Road Property and its having been assigned the Septic System Contract. Mr. de Blank then attempted, unsuccessfully, to make contact with Respondent by telephone. He "left messages," but his telephone calls were not returned. These efforts to telephonically communicate with Respondent having failed, Mr. de Blank "decided that it may make some sense to start a letter writing program." As part of that "program," on September 8, 2003, Mr. de Blank sent Respondent the following letter: Re: 453 Blue Road, Coral Gables As background, and in chronological order: Pro Gold Investments purchased the above cited property and obtained a construction loan from our firm. One of the conditions was that all construction contracts would be assignable to our firm in the event of default. Pro Gold Investments entered into contract with your firm to install a new septic tank and drainfield at 453 Blue Road. Pro Gold Investments defaults and forfeits title in lieu of foreclosure. The deed was recorded on August 4, 2003, at Bk/Pg: 21484/4283. Not recorded but attached for your reference is an assignment of contracts to include the contract Pro Gold Investments entered into with your firm. See further attachment. The original can be inspected in my office. At this point, I request you proceed with the work as soon as practical and under identical conditions as originally agreed with Pro Gold Investments. Please call me at . . . to confirm a start date. Mr. de Blank did not receive any response to his letter. He finally was able, however, to reach Respondent on the telephone. During this telephone conversation, Mr. de Blank made arrangements to meet Respondent at the Blue Road Property to discuss Respondent's doing the work Respondent had agreed to do in the Septic System Contract. This meeting between Mr. de Blank and Respondent took place on September 11, 2003. During the meeting, Mr. de Blank went over with Respondent "what the job [was] going to be." Although Respondent indicated that he was "going to put in th[e] septic tank" per the Septic System Contract, Mr. de Blank had his doubts that Respondent would be true to his word. Following the meeting, Mr. de Blank sent Respondent the following letter: Re: 453 Blue Road, Coral Gables We met today to discuss the above referenced job. My understanding is: You will start the job no later than the first week of October and will complete the job no later th[a]n the last week of October. I will obtain a copy of the approved permit. You indicated you will not need a survey.[1] Should you change you[r] mind, you can always refer to a survey I keep on site. You will have your insurance agent mail to my address a certificate of insurance. Though not discussed: I would like a partial release of payments made to date for the job. See further the attachment. Assuming you concur, then please send a signed and notarized copy to Maurits de Blank, Mortgage Lending Company, Post Office Box 430336, Miami, Florida 33143. Note that I prefer for various legal reasons that you use the release form as provided. Once the job has been started, I would like a list of firms supplying materials to the job. Notwithstanding that he had promised Mr. de Blank that he would "start the job no later than the first week of October," by the middle of October Respondent had yet to even "pull a septic tank construction permit from the City of Coral Gables" (that was needed before any on-site work could begin).2 In an attempt to find out from Respondent what was the cause of the delay, Mr. de Blank started a "calling campaign," but Respondent neither answered the telephone when Mr. de Blank called nor returned Mr. de Blank's calls. On October 19, 2003, Mr. de Blank sent the following letter to Respondent (by certified United States Mail, return receipt requested): Re: 453 Blue Road, Coral Gables I need a firm commitment when you will start and finish septic tank at above address. If you cannot perform the work, then I will need a refund of the deposit given to your firm. Please call to discuss. The end of the month was fast approaching, and Respondent had neither contacted Mr. de Blank nor begun the Septic System Contract on-site work. After paying a visit to Coral Gables City Hall and learning that Respondent had still not even "pull[ed] a septic tank construction permit from the City of Coral Gables," Mr. De Blank found another septic tank contractor, Westland Septic Tank Corp., to do the installation work for MLC that Respondent was contractually obligated to perform. MLC paid Westland $4,400.00 to do the work. Westland completed the job some time prior to November 4, 2003. The work passed all of the necessary inspections. Upon learning that MLC had contracted with Westland, Respondent sent Mr. de Blank a letter complaining that Mr. de Blank had not given Respondent an adequate opportunity to meet his obligations under the Septic System Contract. In the letter, Respondent offered to return only $500.00 of the $2,300 down payment he had received from Pro Gold. Mr. de Blank subsequently informed Respondent that this was not satisfactory and that he wanted the "full deposit back." He added that if he did not get it, he would "go to court." Not having received any portion of the "deposit back," Mr. de Blank, acting on behalf of MLC, in mid-November 2003, filed suit against Respondent in Miami-Dade County Court. On May 14, 2004, a Final Judgment was entered in Miami-Dade County Court Case No. 0313813 in favor of MLC and against Respondent "in the amount of $1,675.00 plus court costs in the amount of $121.00." As of the date of the final hearing in this case, Respondent had not made any payments to MLC. In view of the foregoing, it is found that Respondent abandoned for 30 consecutive days, without any apparent good cause, a project in which he was under contractual obligation to complete; and his failure to go forward with the project, combined with his failure to return any of the deposit he had received, caused monetary harm to a party to whom he was contractually obligated.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby: RECOMMENDED that the Department issue a final order finding Respondent guilty of the misconduct alleged in the Administrative Complaint and disciplining him therefor by fining him $500.00 and suspending his registration for 90 days. DONE AND ENTERED this 4th day of February, 2005, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of February, 2005.
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
