The Issue The issue is whether the challenged two working day notice provision of existing Rule 5F-11.047(1), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority as defined in Section 120.52(8), Florida Statutes.
Findings Of Fact The Department is the state agency charged by law with regulation of the liquefied petroleum (LP) gas industry. Sections 570.07(16)(k), 570.07(23), 527.055, and 527.06, Florida Statutes. Petitioner bears the name "1st Propane of Bushnell," a registered fictitious name of Par-Gas, Inc. Petitioner is a Category I liquefied petroleum gas distributor, licensed and regulated by the Department. There are approximately 460 licensed LP gas dealers in Florida. Florida’s licensed LP gas dealers include one-man operations, mom and pop family-owned businesses, regional marketers and national multi-state marketers. LP gas operations in Florida are unique compared to other states, in that Florida has many small volume users. The Department issues the Category I LP gas dealer license only to entities, not to individuals. The license permits the licensee gas company to transport LP gas, fill LP gas containers, sell LP gas containers, and to service, install, or repair appliances or equipment that use LP gas. Most LP gas dealers own the LP gas tank or cylinder installed at the customer location. Accordingly, when the dealer delivers LP gas to its customer, it is filling or refilling its own container; unless the customer owns the container, then the dealer fills the customer’s container. LP is a by-product of the oil refining process. The most common LP gas in Florida is propane. LP gas has a boiling point of minus 44 degrees Fahrenheit. The very cold LP gas is stored in the container under pressure of approximately 145 pounds per square inch (PSI).1 LP gas expands approximately 270 times as it changes from a liquid to a vapor. LP gas vapor is one and one-half times heavier than air. Because LP gas is heavier than air, when released into the air, LP gas vapor drops, pools and accumulates in low areas. It will not disperse in areas where there is no wind movement. A spark from static electricity, electric motors, automobile fan motors, exhaust pipes, catalytic converters, air conditioning compressors or lit cigarettes will ignite LP gas, causing explosion or fire. LP gas is more volatile than natural gas. Unlike natural gas which is delivered to the customer by pipe, LP gas is typically stored at residential, commercial or school installations in a pressurized container. Two kinds of LP gas containers are tanks and cylinders. Other LP gas system components include the regulator, valves, interior and exterior piping, meter, and appliances. The National Fire Protection Association, Standard 58, LP Gas Code 2001 Edition, ("NFPA 58") makes the container owner responsible for ensuring his containers are suitable and qualified for service. LP gas tanks are typically horizontal and much larger than LP gas cylinders. Tanks used in residential and commercial applications, generally range in size up to 1,000 gallons. Tanks are deemed permanent installations. Cylinders are generally upright and have a specified lifetime, after which they must be re-qualified by the owner. Cylinders are deemed temporary or portable installations. LP gas cylinders and tanks are both “liquefied petroleum gas equipment” within the meaning of Chapter 527, Florida Statutes. Rule 5F-11.047, Florida Administrative Code, governs LP gas container disconnections in Florida. The genesis of Rule 5F-11.047, Florida Administrative Code, dates back to the 1940’s and 1950’s and a State Regulation2 that allowed only the LP gas tank owner, or those authorized by him, to disconnect a tank from a customer’s system. In 1958, Florida’s Attorney General, Richard Ervin, became concerned that the Regulation could be applied in an anti-competitive manner, but in 1959, the Regulation was amended to allow one gas company to disconnect another company’s tank whether or not it was authorized, provided advance notice was given to the gas company owning the tank. In the 1970’s this “advance notice” concept was continued and again adopted, this time in an administrative rule promulgated under Chapter 120, Florida Statutes. In 1990, The Department of Insurance (“DOI”) promulgated Rule 4B-1.008, Florida Administrative Code, under Chapter 120, Florida Statutes.3 In 1994, DOI’s Rule 4B-1.008, Florida Administrative Code, was properly transferred to the Department without changes. The Department properly filed Rule 5F-11.047, Florida Administrative Code, for adoption without changes as required by Chapter 120, Florida Statutes, and Chapter 1S-1, Florida Administrative Code, effective March 15, 1994. When the Rule was initially adopted in 1990, David Rogers wrote a letter4 to DOI on behalf of The Florida Propane Gas Association (“The Association”) recommending rule language which became Rule 4B-1.008, Florida Administrative Code. The same language lives on in challenged Rule 5F-11.047(1), Florida Administrative Code. The Association specifically recommended the Rule language “in the interest of safety to the propane industry and consumers” and because the Rule allowed “orderly disconnects to be made in a safe manner.” As stipulated by the parties at final hearing, Rogers’ October 31, 1990, letter is the Association’s past and present position on Rule 5F-11.047(1), Florida Administrative Code. Other states have tank disconnect rules similar to Florida’s Rule, and other states have modeled their disconnect rules after Florida’s Rule 5F-11.047(1), Florida Administrative Code. No company has ever challenged Rule 5F-11.047(1), Florida Administrative Code, except Petitioner. Petitioner challenges only the two working day notice requirement of Rule 5F-11.047(1), Florida Administrative Code, alleging it is an invalid exercise of delegated legislative authority. Section 120.52(8), Florida Statutes. Petitioner alleges that the “Department has exceeded its grant of rulemaking authority because Section 527.06, Florida Statutes, does not specifically include nor contemplate or require notice to cylinder, tank and system owners prior to a disconnection;” that the existing rule enlarges, modifies and contravenes the specific provisions of Sections 527.06 and 527.07, Florida Statutes, in that neither statutory provision requires or authorizes a 48-hour/two working day pre-disconnection notice to an LP gas tank or system owner”; that the existing rule is arbitrary and capricious in that the pre-disconnection notice requirement has no relation or connection to any health, safety or welfare concerns; and that the Rule does not promote the health, safety or welfare of the public and, therefore, cannot be supported by competent substantial evidence. Petitioner also alleges that application of the two working day notice requirement has an anti-competitive effect on the LP gas market. Rule 5F-11.047(1), Florida Administrative Code, pertains to disconnecting LP gas containers. No statute prohibits a person or gas company from disconnecting another gas company’s LP gas container. However, Section 527.07, Florida Statutes, prohibits a person or gas company from filling, refilling, using, or delivering another gas company’s LP gas container without authorization from the gas company that owns the container. Section 527.07, Florida Statutes, reads: No person, other than the owner and those authorized by the owner, shall sell, fill, refill, deliver, permit to be delivered, or use in any manner any liquefied petroleum gas container or receptacle for any gas or compound, or for any other purpose. Section 527.07, Florida Statutes, is one of the statutes implemented by Rule 5F-11.047(1), Florida Administrative Code, the other being Section 527.06, Florida Statutes. As a practical matter, when a gas customer wants to change LP gas companies, his new choice of companies cannot use his existing gas company’s LP gas container unless authorized by the existing company, which owns the installed container. So, if the customer does not own his own container5 and authorization to use the existing company’s container is not obtained, the existing container will have to be disconnected so the new company can install its own container. Section 527.07, Florida Statutes. When one gas company disconnects another gas company’s container in order to install its own container, it is called a “switch-out” or “changeover.” Rule 5F-11.047, Florida Administrative Code, determines when the disconnect notification must occur. When disconnected, a LP gas container is either empty (out-of-gas)6 or it contains LP gas. If the tank is empty, the tank owner must be notified within 24 hours after the empty tank has been disconnected. See Rule 5F-11.047(2), Florida Administrative Code. Thus, no advance notice is required when the customer is out-of-gas. However, if the existing container contains gas (hereinafter referred to as a “gas-filled container”),7 Rule 5F-11.047(1), Florida Administrative Code, requires the new, incoming gas company to give two working days advance notice to the existing gas company/tank owner that it intends to disconnect the existing container after two working days. Rule 5F-11.047(1), Florida Administrative Code, reads: No person, firm or corporation, other than the owner and those authorized by the owner, shall connect or disconnect any cylinder, tank, or system containing liquefied petroleum gas, except in an out- of-gas situation, unless due and sufficient notice has been given by any person, firm or corporation to the owners of any cylinder or tank, prior to disconnecting or connecting such cylinder, tank, or system. Due and sufficient notice shall be received by the owners at least two (2)working days prior to installing the cylinder, tank, or system of said person, firm, or corporation, and shall be evidenced by a signed receipt. Acceptable evidence of receipt of notification shall be a signed certified mail receipt, signed receipt of hand delivery or facsimile transmission receipt. If after two working days the cylinder, tank, or system has not been disconnected by the owner, the said person, firm or corporation may then disconnect downstream of the system regulator or meter. It shall be mandatory that the person, firm or corporation who so disconnects any such cylinder or tank, whether empty or full, upon the premises of a consumer, does so in a manner that renders the cylinder or tank tight with valves turned off, the cylinder or tank service valve plugged with brass or steel fittings, and all other cylinder, tank or system openings properly plugged. In addition, any cylinder, tank, or system disconnected must be done so in a manner that is in compliance with the requirements of NFPA 58. (Emphasis supplied). The advance notice requirement only applies to gas-filled containers. After receiving two working days notice, the existing company/tank owner has several options: 1) The tank owner/company can disconnect and remove its gas-filled container from the property within the two working days; 2) swap containers with the incoming company, exchanging the existing container with a similar container delivered to its storage yard by the incoming company; 3) sell the existing gas-filled container to the incoming company or the consumer; 4) coordinate a switch-out with the incoming company; or 5) if it knows and trusts the safety training of the incoming company’s personnel, it can authorize the incoming company to disconnect its tank and put it in an agreed-upon safe location at the customer property until it can be picked up in a reasonable time. Disconnecting a gas-filled container is an inherently dangerous activity even though the person doing the disconnect has been properly trained. If the existing gas-filled container is sold or swapped to the incoming gas company, the inherently dangerous disconnect is not required. By contrast, after a gas- filled container is disconnected it must be temporarily stored on the customer property if it is not immediately removed. As established by testimony of the Department’s safety expert even trained persons sometimes store gas-filled containers on customer property in an unsafe and improper manner. Even LP gas companies’ employees are known to violate the two working day notice requirement leaving another company’s gas-filled container, unplugged, unprotected hazardous, unsafe condition on the consumer’s property. The two working day notice requirement of Rule 5F-11.047(1), Florida Administrative Code, provides sufficient time for the two gas companies to work out the switch-out or terms of transfer. Less than two working days' notice would not be sufficient to promote the safe handling of LP gas and proper installation of LP gas equipment. The Department presented the testimony of a Suburban Propane (“Suburban”) employee, Tom Ross. Ross is Suburban’s Florida regional manager. Suburban is a multi-state marketer and is the third largest propane company in Florida. Suburban’s 29 Florida locations are licensed by the Department and serve 80,000 customers. Suburban has twice as many LP gas containers in the field in Florida as any other region due largely to the fact that Florida has a lot of small volume users. Ross testified that training of personnel to perform disconnect varies, some companies providing better training than others. Suburban prefers to disconnect its own gas-filled tanks primarily because it knows the training its employees have received, and has no idea what kind of training a competitor company’s personnel may have received. Ross testified that as it relates to Suburban, Rule 5F-11.047(1), Florida Administrative Code, promotes the safe handling of propane gas. The two working day notice requirement gives Suburban the opportunity to evaluate the safety/liability of the situation and the potential safety/liability involved in moving the tank. Safety/liability issues related to the disconnect and removal of the gas-filled tank may make it advantageous for the existing tank owner to negotiate a tank swap with the company taking over the account. In that circumstance, no disconnect is required. The Department presented the testimony of Mike Ivestor. Ivestor is the operations manager of Quality Propane in Havana, Florida, a small mom-and-pop, independent LP gas company. Ivestor knows his own employees have been properly trained, but he cannot be sure how well all his competitors train their employees. Ivestor has a good relationship with most, but not all, competitors in his market. There are some LP gas companies Ivestor would not want to disconnect his company’s tanks. In the past, competitor gas companies have disconnected Quality Propane tanks and left them on a customer's property in unsafe condition. Two working days allows Ivestor sufficient time to coordinate with the incoming gas company a time to disconnect his tank so as to not interfere with the new installation or disrupting service to the customer. If Ivestor knows the incoming company, he may authorize it to disconnect his gas-filled container and temporarily store it in an agreed-upon place at the customer property which Ivestor knows is safe. Ivestor is concerned about his company’s liability when he has no control over who, when, or how his gas-filled tank is disconnected and set aside. Petitioner and the Department stipulated that if one gas company disconnects another company’s gas-filled container and relocates it on the customer’s property, it creates liability for the owner of the container. Rule 5F-11.047, Florida Administrative Code, is a safety rule, not a rule that regulates competitiveness. Further, the two working days' notice promotes proper installation and transporting of LP gas equipment. Rule 5F-11.047, Florida Administrative Code, states that it implements Section 527.06, Florida Statutes. The Florida Legislature provided in Section 527.06(1), Florida Statutes, that: The department may adopt rules necessary to effectuate any of the statutory duties of the department in the interest of public health, safety, and welfare and to promote the safe handling of liquefied petroleum gas and proper installation, storing, selling, utilizing, transporting, servicing, testing, repairing, and maintaining of liquefied petroleum gas equipment and systems. The department shall adopt rules reasonably necessary to assure the competence of persons to safely engage in the business of liquefied petroleum gas, including, but not limited to, the licensure, testing, and qualifying of such persons for the protection of the health, welfare, and safety of the public and persons using such materials. These rules shall be in substantial conformity with generally accepted standards of safety concerning the same subject matter and shall not extend, modify, or conflict with any laws of this state or the reasonable implications of such laws.” The Florida Legislature also provided in Section 527.06(2), Florida Statutes that: (2) The department shall promulgate and enforce rules setting forth minimum general standards covering the design, construction, location, installation, and operation of equipment for storing; handling; transporting by tank truck, tank trailer, or pipeline; and utilizing liquefied petroleum gases and specifying the odorization of such gases and the degree thereof. The rules shall be such as are reasonably necessary for the protection of the health, welfare, and safety of the public and persons using such materials and shall be in substantial conformity with the generally accepted standards of safety concerning the same subject matter. Petitioner and the Department each presented testimony of Vicki O’Neil in their respective case-in-chief. Ms. O’Neil has been Bureau Chief of the Bureau of LP Gas Inspection since August 1994. She oversees Bureau licensing, training, investigations, examinations, and the marketing assessment program. Ms. O’Neil testified that the Department’s interpretation of Section 527.06(1), Florida Statutes, is that the Department may take reasonable steps necessary to ensure the public’s safety through the rule-making process, and that the safe handling of LP gas is in the interest of the public health, safety, and welfare. This has been the Department’s interpretation of Section 527.06, Florida Statutes, since 1994 when responsibility for LP gas regulation was transferred from the DOI to the Department, along with Ms. O’Neil. As established by Ms. O’Neil's testimony, the Department’s policy is that proper installation, storing, selling, utilizing, transporting, servicing, testing, repairing, and maintaining of LP gas equipment and systems is in the interest of the public health, safety, and welfare and that Rule 5F-11.047, Florida Administrative Code, is an exercise of the Department’s power and duty to promote those public interests. The Department’s policy is that Rule 5F-11.047(1), Florida Administrative Code, is a safety rule necessary to promote the safe handling of LP gas. Rule 5F-11.047(1), Florida Administrative Code, is a safety rule, which is in substantial conformity with the published standards of the National Fire Protection Association and is also in substantial conformity with generally accepted standards of safety. As a result of the two working day notice requirement, the incoming and outgoing LP gas companies can dialogue about the proposed disconnection, repairs, safety, or hazardous conditions that might exist. The dialogue may also result in the two companies swapping tanks; thus, the inherently dangerous process of disconnecting the tank is avoided altogether. In light of recent terrorist events in this country, law enforcement has taken a heightened interest in LP gas and gas-filled LP gas containers. Security bulletins from various federal agencies, including the U.S. Department of Transportation, show the potential for terrorist groups to target commercial LP gas tanks and hazardous material storage facilities. There is a potential for theft of even small quantities of these materials for the purpose of making weapons of mass destruction. Each Category I LP gas dealer must have one “master qualifier” at each business location. Each Category I LP gas dealer must also have one “qualifier” for each 10 employees performing LP gas work. A gas company employee does not have to be a qualifier or a master qualifier to connect or disconnect LP gas containers for the company. Any gas company employee can disconnect gas-filled containers if he or she has been trained by the gas company to do so. These employees are not required to receive training or testing from the Department. The gas company must only document employee training in their company files. The Department generally does not know if a company employee is actually performing disconnects correctly or not, nor whether the employee has ever been disciplined by the employer for safety violations. The quality of employee training varies from company to company. For this reason, some LP gas companies prefer to have their own trained employees disconnect their tanks. Even though companies train their employees, some have been known to leave disconnected gas-filled containers in unsafe, hazardous condition on a customer’s property. As established by testimony of Ernest Barany, an employee of the Department within the Department’s Bureau of LP Gas Inspection for seven years and current supervisor of the Department’s LP gas inspectors, the Rule’s two working day notice requirement applies to LP gas containers in residential and commercial locations, LP gas dispensers, and containers installed in school facilities. Further, the two working day notice requirement of the Rule promotes public safety and the safe handling of LP gas. The two working day notice requirement of the Rule promotes the proper installation, storage, selling, and transporting of LP gas equipment. A customer’s existing gas company usually has superior knowledge of safety conditions at the LP gas installation because it installed the container and/or the entire LP gas system; has been delivering LP gas into the container; has maintained and/or repaired the system; and knows about any "red-tag" situations that exist on the LP gas system. In the LP gas industry, a red tag is a warning of an unsafe or hazardous condition in a LP gas system. The red tag is a paper tag hung by a wire from the tank cover or an appliance or other system component to warn all persons who see it that there is a problem or unsafe condition in the system. A gas company/tank owner will red-tag its LP gas container, appliance, or other system component when a temporary repair has been made or when the gas company knows of a defect in the system. A common temporary repair requiring a red tag is when the on-and-off valve leaks gas that can be detected at the threads between the handle and the body of the valve. The leak can be temporarily stopped by fully opening the valve and then with hand pressure turning the valve counterclockwise a little harder. A red tag would then be put on the tank saying "don’t refill until a permanent repair is made." Next, when the tank goes empty the repair can either be made on site or by changing the container on a scheduled basis. Customers sometimes remove a red tag after it is placed on the system by the current gas company. If the red tag is removed, the new, incoming LP gas company coming to disconnect the gas-filled container would not be aware that the system has a problem, defect, or temporary repair unless the existing gas company/tank owner has informed them. Accidents have occurred because customers have removed red tags without the knowledge of the gas company. The two working day notice requirement allows the existing company to address safety matters that are unknown to the incoming company, thus promoting a safe transfer of gas service. A switch-out or changeover requires more that just safely disconnecting the gas-filled container. If a gas company does not disconnect and remove its own gas-filled container, the gas-filled container must be disconnected and temporarily stored on the consumer’s property by the new incoming company. A disconnected gas-filled container is more dangerous than a disconnected empty container. Gas-filled containers temporarily stored on the customer’s property present a variety of safety concerns. If a gas-filled cylinder is disconnected and stored on its side at the customer location, liquid propane coming into contact with the safety valve can cause the valve to fail and leak. A gas filled cylinder can fall over creating a hazardous situation if it is punctured, or falls, and begins to roll or hits a person or vehicle. Failure to comply with Rule 5F-11.047(1), has resulted in at least one fatality in Florida because the tank was stored improperly on the customer property. Sometimes there is no safe place to temporarily store a gas-filled container on the customer property. In metropolitan markets there are unique safety concerns requiring that a gas-filled container be removed immediately upon disconnection. In some metropolitan areas there are limited property lines on residential tanks, underground tanks, commercial tanks that are stacked up behind strip malls with no place to move them, and tanks that are installed around schools or parks that could be tampered with by children. Without advance notice the tank owner cannot address these safe/liability concerns and responsibility for mishaps fall squarely on him. The two working day notice requirement gives the tank owner time to review customer records, evaluate the situation, and coordinate the disconnection and removal of its gas-filled tank. Sometimes the terrain makes safe temporary storage impossible or immediate removal of the tank required. In flood plain areas, local ordinances require the container to be chained or bolted down or bracketed to a wall. Vehicular traffic conditions at some locations require that a gas-filled container be protected behind a barrier. If the location requires that the new container be installed behind the existing barrier, the disconnected gas-filled container may end up stored in an un-barricaded area. The gas company that owns the existing installed container, has an investment in it, has serviced the customer location, and often will know whether or not there is a safe place to temporarily store the disconnected gas-filled container on the property. Two days' advance notice allows the existing gas company time to assess the safety situation unique to a customer location, thus promoting a safe transfer of gas service. Some LP gas containers are buried underground and must be excavated so the incoming gas company can install its own container underground. A crane, back-hoe, or other special equipment may be required to unearth and move the tank. The existing tank owner may also have to locate existing utilities and obtain governmental authorization or permits to excavate the tank. Some localities require the tank owner to notify local fire or building officials or apply for permits to move the container. If the tank is buried, other buried utilities on the property must be located before excavation. A gas-filled container sometimes must have the gas pumped out of it before the tank can be transported on Florida roads. This usually requires special equipment and two different kinds of trucks. The existing tank owner also has to schedule his employees to do the work. The Rule gives the tank owner the time to work out the logistics and scheduling of equipment to draw the gas out of the tank before it can be transported from the consumer’s property. In 1958, Florida’s tank disconnect rule was called LP Gas Regulation 11, of the Fire Marshall’s rules. LP Gas Regulation 11, Circa 1958 reads: No person, firm or corporation, other than the owner and those authorized by the owner so to do, shall connect or disconnect or transport or carry any means of conveyance whatsoever, any cylinder or tank containing Liquefied Petroleum Gas, whether in the liquid or vapor state. Thus, in 1958 all disconnects were prohibited unless authorized by the tank owner. A tank owner could monopolize a customer’s LP gas system by simply withholding authorization for the disconnect. The Insurance Commissioner at the time asked for an opinion from the Attorney General because he was troubled that a natural gas supplier was disconnecting LP gas containers without authorization from the owner. Voicing public safety concerns, the Attorney General opined that: Serious problems of public safety are involved in the disconnecting of L.P. gas cylinders and tanks and the above rule has its legitimate purpose in insuring public safety. I am of the opinion that this regulation can be legitimately enforced against the private utility in question, however, it must be applied in terms of public safety and not in such a manner as will unreasonably restrict competition. Acknowledging the serious public safety concerns related to LP gas tank disconnections, Attorney General Ervin also saw the potential evil of construing Regulation 11 to prohibit tank disconnections “under any circumstances.” “Advanced reasonable notice” was the cure. Attorney General Ervin opined: Said rule should not be construed to prohibit the private utility from disconnecting the L.P. gas tanks and cylinder under any circumstances. If after reasonable notice to the LP gas dealer said dealer does not disconnect his cylinders or tanks, the private utility should be permitted to disconnect them if it does so in a manner which leaves the tanks or cylinders in a safe condition. If the private utility should persist in failing to give reasonable notice and in leaving the tanks and cylinders in an unsafe condition, the State Fire Marshal may hold a hearing . . . and issue a cease and desist order. Subsequent to the Attorney General’s July 3, 1958, Opinion, on February 27, 1959, Regulation 11 was amended after Public Hearing. The revised, adopted Regulation 11 provided for “due and sufficient” notice to the tank owner prior to disconnecting his tank. Thus, in similar fashion to Rule 5F-11.047(1), Florida Administrative Code, if the notified tank owner did not disconnect his tank after a reasonable time, the tank could be disconnected by the company desiring to install its own tank.
The Issue The issue in this case is whether Respondent's decision to reject the galvanized pipe replacement bid of Petitioner as non- responsive was erroneous, an abuse of discretion, arbitrary or capricious.
Findings Of Fact Petitioner, Expertech Network Installation, Inc., is a division of Bell Canada. Petitioner is a construction and engineering division of the parent company. It was set up to expand the parent's operations into the United States about nine years ago. Petitioner has steadily replaced its Canadian employees with U.S. employees over those years. The City is a governmental entity established under the laws of the State of Florida. By contract with the DOAH, the City has agreed to utilize Administrative Law Judges to hear, inter alia, bid protests involving the City. On May 7, 2007, the City issued Invitation to Bid No. ITB-PW060607-88. The Invitation to Bid sought bids for replacement of approximately 38,000 linear feet of two-inch galvanized pipe and associated appurtenances with 38,000 feet of four and six-inch DR18 PVC piping and associated appurtenances. The replacement would include approximately 385 service connections with Sch-80 PVC piping, all within the area known as Section 4 of the City. In addition, the scope of work included relocation of approximately 460 linear feet of eight-inch PVC water main pipe and associated appurtenances with 600 linear feet of eight-inch DR18 PVC piping and appurtenances along State Road 78. A total specification package and complete set of drawings for the aforementioned work was prepared by the City's consulting engineer, TetraTech-HAI (hereinafter "Ttech"). The specifications and drawings by Ttech were made a part of the Invitation to Bid. A pre-bid conference was held on May 16, 2007. At that conference, several issues were discussed, resulting in issuance of an Addendum to the Invitation to Bid. The Addendum was issued the same day as the conference and included the following paragraph: Will the City allow directional drilling on the galvanized pipe replacement project? No. All references to directional drillingon the galvanized pipe replacement projectare to be modified to jack & bore. All water main piping proposed to cross driveways shall be installed via jack & bore or open cut methods. Water main piping proposed to cross roadways, including long side services, shall be installed by jack & bore methods. Directional drilling is acceptable for the roadway crossings on the SR 78 Water Main Replacement portions only. Please see the enclosed revised Measurement and Payment section of the specifications (01025) and revised bid schedule. (Emphasis in original document.) The Addendum also extended the due dates for bids by one week, to June 13, 2007. No protest was filed with the City with respect to the terms, conditions or specifications contained in the Invitation to Bid and the Addendum. On Wednesday, June 13, 2007, the City opened the bids. Petitioner's bid was the low bid for the project. Its bid included a price of $1,816,224, as compared to the second lowest bidder, Guymann (whose bid came in at $1,987,561).1 The bids were then reviewed by Ttech for conformity to the Invitation to Bid. On July 31, 2007, Ttech notified the City that it was recommending approval of the Guymann bid despite Petitioner being the low bidder. The justification for that recommendation was as follows: The lowest apparent bidder on the project was Expertech Network Installation, Inc. (Expertech) with a total bid of $1,816,224.00. [Ttech] reviewed Expertech's bid package and found that the required list of at least five completed projects of the type as the Galvanized Water Main Replacement project was not included in the package. [Ttech] contacted Expertech concerning the incomplete bid package and requested that Expertech provided the required list of at least five projects completed by Expertech of similar type as the Galvanized Water Main Replacement project. The list provided by Expertech did not include any completed projects of the type as the Galvanized Water Main Replacement. On August 7, 2007, the City issued its Notice of Intent to Award, stating that the procurement division of the City would recommend award of the bid to Guymann as the most responsive, responsible bidder meeting the terms, conditions, and specifications set forth in the Invitation to Bid. Petitioner timely filed a Notice of Intent to Protest; its Formal Written Protest was timely filed on August 24, 2007, along with the required bond. There are three methods of drilling utilized for laying pipe in the ground: directional drilling, open cut drilling, and jack & bore drilling. A brief discussion of each is necessary in order to understand the dispute in this matter. Directional drilling is done utilizing a machine that is guided underground using steel rods. A person above ground with a sounding device directs the steel rods from one point to another. Directional boring is used when trenching or excavating is not practical. Directional boring minimizes environmental disruption. Jack & bore drilling (or auger drilling) is similar to directional drilling in that it has an entrance pit, and then the pipe is manually jacked along the desired path while simultaneously excavating the soil. It is often used in projects that have to go under existing roads or driveways. Open cut drilling is the old, traditional method of digging a trench in the ground and laying the pipe in the open cut. The Invitation to Bid, at page 10 of 53, included a request for each bidder to provide evidence of its experience with similar projects. Paragraph 5 asked for a list "of the last five projects of this type your organization has completed."2 Paragraph 6 asked for a list "of projects of this type that your organization is currently engaged in." The lists of projects were to be completed as set forth in a table attached to the Invitation to Bid. The table is recreated below: PROJECT YOUR CONTRACTOR REQUIRED ACTUAL NAME, TITLE CONTRACT OR SUB COMPLETION COMPLETION ADDRESS & AMOUNT DATE DATE & LOCATION PHONE # In its Bid, Petitioner provided a document entitled "Bidders Qualifications" in response to paragraph 5. The document was not on the table provided and was not entirely responsive to the information requested (i.e., it did not indicate whether Petitioner was contractor or subcontractor; there were no completion dates, and there were no contact persons). Nonetheless, the list contained eight completed projects. Those projects included two water main projects; the other six completed projects were telecommunication projects. While both types of projects would include drilling, there are distinct differences between the two. For example, water and wastewater projects require pressure testing, bacterial testing, and permitting that telecommunication projects do not. Petitioner's list also included projects that involved directional drilling. Since directional drilling was specifically prohibited in the galvanized pipe replacement project, those projects would not be deemed substantially similar in type.3 During the initial review of the bids, Ttech had specifically asked Petitioner to provide the required list of five completed projects of a similar type. In response, Petitioner submitted a list of four projects, which were listed as "Currently in Progress." Again, the projects were submitted on a form other than the table provided in the Invitation to Bid. When Ttech followed up with the project contacts, it found that there had been no open cut drilling on two of them; the other two had not yet begun. However, by the date of final hearing the projects were substantially complete. After Petitioner had submitted its list of projects, a meeting was called at the City. Petitioner was represented at the meeting along with City personnel and a representative from Ttech. Notes from that meeting, though inconclusive, seem to indicate that the requirement for five completed jobs of a similar nature was discussed. It is unclear whether Petitioner's representative was still at the meeting when this was discussed. However, it does not appear that anyone from the City or Ttech sent Petitioner a written request to provide evidence of additional work performed. Nor is there any evidence that the City or Ttech had an obligation to do so. At any rate, Petitioner did not submit any evidence of similar projects other than those discussed above. There were notes made by attendees of the meeting. None of the notes submitted into evidence was conclusive as to all issues that were discussed at that time. However, in notes relating to a telephone conversation five days later, Ttech's representative noted discussing with Petitioner the need to provide evidence of five similar projects, which means that at the time of the June 9, 2007, meeting, Ttech was still attempting to get the required list of projects from Petitioner. The projects submitted by Petitioner include directional drill excavation projects, which involved at least some open cuts (i.e., to make tie-ins at each end of the directional drill section). None of those projects was substantially similar in type to the proposed project, but did include some open cut work.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the City of Cape Coral upholding its rejection of Petitioner's bid for the galvanized pipe replacement project. DONE AND ENTERED this 9th day of November, 2007, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 November, 2007.
The Issue This proceeding is for the purpose of resolving a territorial dispute regarding the extension of gas service to areas of The Villages of Sumter Lake (“The Villages”) in Sumter County, Florida, pursuant to section 366.04(3)(b), Florida Statutes, and Florida Administrative Code Rule 25-7.0472; and whether a Natural Gas System Construction, Purchase, and Sale Agreement (“Agreement”) between the City of Leesburg (“Leesburg”) and South Sumter Gas Company (“SSGC”) creates a “hybrid” public utility subject to ratemaking oversight by the Public Service Commission (“Commission”).
Findings Of Fact The Parties and Stipulated Issues PGS is a natural gas local distribution company providing sales and transportation delivery of natural gas throughout many areas of the State of Florida, including portions of Sumter County. PGS is the largest natural gas provider in Florida with approximately 390,000 customers, over 600 full-time employees, and the same number of construction contract crews. PGS’s system consists of approximately 19,000 miles of distribution mains throughout Florida. PGS operates systems in areas that are very rural and areas that are densely populated. PGS currently serves more than 45,000 customers in Sumter and Marion counties. PGS is an investor-owned “natural gas utility,” as defined in section 366.04(3)(c), and is subject to the Commission’s statutory jurisdiction to resolve territorial disputes. Leesburg is a municipality in central Florida with a population of approximately 25,000 within the city limits, and a broader metropolitan service area (“MSA”) population of about 50,000. Leesburg provides natural gas service in portions of Lake and Sumter counties. Leesburg is a “natural gas utility” as defined in section 366.04(3)(c). Leesburg has provided natural gas service to its customers since 1959, and currently serves about 14,000 residential, commercial, and industrial customers both within and outside its city limits via a current system of approximately 276 miles of distribution lines. Leesburg is subject to the Commission’s statutory jurisdiction to resolve territorial disputes. SSGC is a Florida limited liability company and an operating division of The Villages. SSGC is the entity through which The Villages has entered into a written contract with Leesburg authorizing Leesburg to supply natural gas services to, initially, the Bigham developments. The issues of cost of capital and amortization and depreciation are not applicable to this dispute. The Dispute A territorial dispute is a disagreement over which natural gas utility will serve a particular geographic area. In this case, the area in dispute is that encompassed by the Bigham developments. PGS argued that the dispute should be expanded to include areas not subject to current development, but that are within the scope of anticipated Villages expansion. The extension of this territorial dispute beyond the Bigham developments is not warranted or necessary, and would have the effect of establishing a territorial boundary in favor of one of the parties. As a result of the Agreement to be discussed herein, SSGC has constructed residential gas infrastucture within Bigham, and has conveyed that infrastructure to Leesburg. Leesburg supplies natural gas to Bigham, bills and collects for gas service, and is responsible for upkeep, maintenance, and repair of the gas system. The question for disposition in this proceeding is whether service to Bigham is being lawfully provided by Leesburg pursuant to the standards applicable to territorial disputes. Natural Gas Regulation PGS is an investor-owned public utility. It is subject to the regulatory jurisdiction of the Commission with regard to rates and service. Its profits and return on equity are likewise subject to regulation. Leesburg is a municipal natural gas utility. The Commission does not regulate, or require the reporting of municipal natural gas utility rates, conditions of service, rate-setting, or the billing, collection, or distribution of revenues. The evidence suggests that the reason for the “hands- off” approach to municipal natural gas utilities is due to the ability of municipal voters to self-regulate at the ballot box. PGS argues that customers in The Villages, as is the case with any customer outside of the Leesburg city limits, do not have any direct say in how Leesburg sets rates and terms of service.1/ That may be so, but the Legislature’s approach to the administration and operation of municipal natural gas utilities, with the exception of safety reporting and territorial disputes, is a matter of legislative policy that is not subject to the authority of the undersigned. History of The Villages The Villages is a series of planned residential areas developed under common ownership and development. Its communities are age-restricted, limited to persons age 55 and older. It has been the fastest growing MSA for medium-sized and up communities for the past five years. The Villages started in the 1970s as a mobile home community known as Orange Blossom Gardens in Lake County. That community proved to be successful, and the concept was expanded in the 1980s to include developments with golf courses and clubhouses. Residents began to customize their mobile homes to the point at which the investment in those homes rivaled the cost of site-built homes. In the 1990s, The Villages went to site-built home developments. By then, one of the two original developers had sold his interest to the other, who proceeded to bring his son into the business. They decided that their approach of building homes should be more akin to traditional development patterns in which growth emanates from a central hub. Thus, in 1994, the Spanish Springs Town Center was built, with an entertainment hub surrounded by shopping and amenities. It was a success. By 2000, The Villages had extended southward to County Road (“CR”) 466, and a second town center, Lake Sumter Landing, was constructed. The following years, to the present, saw The Villages continue its southward expansion to State Road (“SR”) 44, where the Brownwood Town Center was constructed, and then to its southernmost communities of Fenney, Bigham North, Bigham West, and Bigham East, which center on the intersection of CR 468 and CR 501. The Villages currently constructs between 200 and 260 residential houses per month. Contractors are on a computerized schedule by which all tasks involved in the construction of the home are set forth in detail. The schedule was described, aptly, as rigorous. A delay by any contractor in the completion of the performance of its task results in a cascading delay for following contractors. Gas Service in the Area Gas mains are generally “arterial” in nature, with relatively large distribution mains operating at high distribution pressure extending outward from a connection to an interstate or intrastate transmission line through a gate station. Smaller mains then “pick up” growth along the line as it develops, with lower pressure service lines completing the system. In 1994, Leesburg constructed a gas supply main from the terminus of its existing facility at the Lake County/Sumter County line along CR 470 to the Coleman Federal Prison. In August 2009, PGS was granted a non-exclusive franchise by the City of Wildwood to provide natural gas service to Wildwood. SSGC Exhibit 6, which depicts the boundaries of the City of Leesburg, the City of Wildwood, and the City of Coleman, demonstrates that most, if not all, of the area encompassed by the Bigham developments is within the Wildwood city limits. In 2015, the interstate Sabal Trail transmission pipeline was being extended south through Sumter County. The line was originally expected to run in close proximity to Interstate 75. Even at that location, Leesburg decided that it would construct a gate station connecting to the Sabal Trail pipeline to provide backfill capabilities for its existing facilities in Lake County, and for its Coleman prison customer. In 2016, the Sabal Trail pipeline was redirected to come much closer to the municipal limits of Leesburg. That decision made the Leesburg determination to locate a gate station connecting to the Sabal Trail pipeline much easier. In addition, construction of the gate station while the Sabal Trail pipeline was under construction made construction simpler and less expensive. By adding the connecting lines to the Sabal Trail pipeline while it was under construction, a “hot tap” was not required. In May 2016, PGS began extending its gas distribution facilities to serve industrial facilities south of Coleman. It started from the terminus of its existing main at the intersection of SR 44 and CR 468 -- roughly a mile and a half west of the Lake County/Sumter County line and the Leesburg city limit -- along CR 468 to the intersection with U.S. Highway 301 (“US 301”), and extending along US 301 to the town of Coleman by January 2017. The distribution line was then extended south along US 301 to Sumterville.2/ In addition, Sumter County built a line off of the PGS line to a proposed industrial customer/industrial park to the south and west of Coleman, which was assigned to PGS. It is common practice for investor-owned utilities to extend service to an anchor customer, and to size the infrastructure to allow for the addition of customers along the route. By so doing, there is an expectation that a line will be fully utilized, resulting in lower customer cost, and a return on the investment. Nonetheless, PGS has not performed an analysis of the CR 468/US 301 line to determine whether PGS would be able to depreciate those lines and recover the costs. The CR 468/US 301 PGS distribution line is an eight- inch line, which is higher capacity in both size and pressure. The entire line is ceramic-coated steel with cathodic protection, which is the most up-to-date material. PGS sized the CR 468/US 301 distribution line to handle additional capacity to serve growth along the corridor. Although PGS had no territorial or developer agreement relating to any area of The Villages when it installed its CR 468/US 301 distribution line, PGS expected growth in the area, whether it was to be from The Villages or from another developer. Although it did not have specific loads identified, the positioning of the distribution line anticipated residential and commercial development along its route. Nonetheless, none of the PGS lines were extended specifically for future Villages developments. PGS had no territorial agreement, and had no discussion with The Villages about serving any development along the mains. PGS constructed a gate station at the intersection of CR 468 and CR 501 connecting to the Sabal Palm pipeline to serve the anchor industrial facilities. The Sabal Trail gate station was not constructed in anticipation of service to The Villages. Gas Service to The Villages In 2017, The Villages decided to extend gas service to its Fenney development, located along CR 468. Prior to that decision, The Villages had not constructed homes with gas appliances at any residential location in The Villages. The Villages has extended gas to commercial facilities associated with its developments north of SR 44, which had generally been provided by PGS. The Villages’ development in Fruitland Park in Lake County included commercial facilities with gas constructed, installed, and served by Leesburg. Prior to the time in which the Fenney development was being planned, The Villages began to require joint trenching agreements with various utilities contracted to serve The Villages, including water, sewer, cable TV, irrigation, and electric lines. Pursuant to these trenching agreements, The Villages’ contractors excavate a trench to serve residential facilities prior to construction of the residences. The trenches are typically four-feet-wide by four-feet-deep. Each of the utilities install their lines in the trench at a designated depth and separation from the other utility lines in order to meet applicable safety requirements. Using a common trench allows for uniformity of installation and avoids installation mishaps that can occur when lines are installed after other lines are in the ground. The trenching agreements proved to be effective in resolving issues of competing and occasionally conflicting utility line development. The PGS CR 468 distribution line runs parallel to CR 468 along the northern boundary of the Fenney development. Therefore, PGS was selected to provide service when the decision was made to extend gas service into Fenney. PGS entered into a developer agreement with The Villages that was limited to work in Fenney. PGS was brought into the Fenney development project in August 2017, after four development units had been completed. Therefore, PGS had to bring gas service lines into residences in those units as a retrofitted element, and not as a participant to the trenching agreements under which other utilities were installed. There were occasions during installation when the PGS installation contractor, R.A.W. Construction, severed telephone and cable TV lines, broke water and sewer lines, and tore up landscaped and sodded areas. As a result, homes in the four completed Fenney development units were delayed resulting in missed closing dates. However, since PGS was not brought in until after the fact for the four completed developments, it is difficult to assign blame for circumstances that were apparently not uncommon before joint trench agreements were implemented, and which formed the rationale for the creation of joint trench agreements.3/ The Villages was not satisfied with the performance of PGS at its Fenney development. The problems described by The Villages related to construction and billing services. The Villages also complained that PGS did not have sufficient manpower to meet its exceedingly rigid and inflexible construction requirements. Mr. McDonough indicated that even in those areas in which PGS was a participant in joint trenching agreements, it was incapable of keeping up with the schedule. Much of that delay was attributed to its contractor at the time, R.A.W. Construction. After some time had passed, PGS changed contractors and went with Hamlet Construction (“Hamlet”), a contractor with which The Villages had a prior satisfactory relationship. After Hamlet was brought in, most of the construction-related issues were resolved. However, Mr. Lovo testified that billing issues with PGS were still unsatisfactory, resulting in delays in transfer of service from The Villages to the residential home buyer, and delays and mistakes in various billing functions, including rebates. In late 2017, as the Fenney development was approaching buildout, The Villages commenced construction of the Bigham developments. The three Bigham developments were adjacent to one another. The Bigham developments will collectively include 4,200 residential homes, along with commercial support facilities. By September 27, 2017, Leesburg officials were having discussions with Mr. Geoffroy, a representative of its gas purchasing cooperative, Florida Gas Utility (“FGU”), as to how it might go about obtaining rights to serve The Villages’ developments. Mr. Rogers inquired, via email, “[w]hat about encroachment into [PGS] territory north of 468, which is where they plan to build next? [PGS] has a line on 468 that is feeding the section currently under development.” Some 15 minutes later, Mr. Geoffroy described the “customer preference” plan that ultimately became a cornerstone of this case as follows: Yes, the areas that the Villages “plans” to build is currently “unserved territory”, so the PSC looks at a lot of factors, such as construction costs, proximity of existing infrastructure and other things; however, the rule goes on to state that customer preference is an over-riding factor; if all else is substantially equal. In this case, simply having the Villages say they will only put gas into the homes if Leesburg serves them, but not TECO/PGS, will do it. (emphasis added). On November 16, 2017, Leesburg was preparing for a meeting with The Villages to be held “tomorrow.” Among the topics raised by Mr. Rogers was “territorial agreement?” to which Mr. Geoffroy responded “[d]epends on which option [The Villages] choose. If they become the utility, then yes. If not, you will eventually need an agreement with [PGS].” During this period of time, PGS had no communication with either Leesburg or The Villages regarding the extension of gas service to Bigham. PGS became aware that Hamlet was installing gas lines along CR 501 and CR 468 in late December 2017. PGS had not authorized those installations. Bigham West adjoined Fenney, and PGS had lines in the Fenney development that could have established a point of connection to the Bigham developments without modification of the lines. In addition, each of the three Bigham developments front onto CR 468 and are contiguous to the CR 468 PGS distribution line. The distance from the PGS line directly into any of the Bigham developments was a matter of 10 to 100 feet. The cost to PGS to extend gas service into Bigham would have been minimal, with “a small amount of labor involved and a couple feet of pipe.” PGS met with Leesburg officials in January 2018 to determine what was being constructed and to avoid a territorial dispute. PGS was directed by Leesburg to contact The Villages for details. Thereafter, PGS met with representatives of The Villages. PGS was advised that The Villages was “unappreciative” of the business model by which The Villages built communities, and a public utility was able to serve the residential customers and collect the gas service revenues for 30 or 40 years. The Agreement The Villages was, after the completion of Fenney, unsure as to whether it would provide gas service to Bigham, or would continue its past practice of providing all electric homes. The Villages rebuffed Leesburg’s initial advances to extend gas service to The Villages’ new developments, including Bigham. Thereafter, The Villages undertook a series of discussions with Leesburg as to how gas service might be provided to additional Villages’ developments in a manner that would avoid what The Villages’ perceived to be the inequity of allowing a public utility to serve The Villages’ homes, with the public utility keeping the revenues from that service. Leesburg and The Villages continued negotiations to come to a means for extending gas service to The Villages’ developments, while allowing The Villages to collect revenues generated from monthly customer charges and monthly “per therm” charges. SSGC was formed as a natural gas construction company to engage in those discussions. SSCG was, by its own acknowledgement, “an affiliate of The Villages, and the de facto proxy for The Villages in this proceeding.” On January 3, 2018, Leesburg internally discussed how to manage the issue of contributions in aid of construction (“CIAC”). It appeared to Mr. Rogers that gas revenues would continue to be shared with The Villages after its infrastructure investment, with interest, was paid off, with Mr. Rogers questioning “is there a legal issue with them continuing to collect revenue after their capital investment is recovered? Admittedly that may not occur for 15 years.” A number of tasks to be undertaken by The Villages “justifying the continued revenue stream” were proposed, with Mr. Geoffroy stating that: While this may seem a large amount for very little infrastructure, I think it would probably be okay. Because [PGS] distribution is so close, and the Villages has used them previously, it would be relatively easy for the Villages to connect to [PGS] and disconnect from [Leesburg], at any point in the future. In order to get and retain the contract, this is what [Leesburg] has to agree to win the deal. Not sure anyone has rate jurisdiction on this anyway, other than [Leesburg]. Those discussions led to the development of the Agreement under which service to Bigham was ultimately provided. The Agreement was a formulaic approach to entice The Villages into allowing Leesburg to be the gas provider for the residents that were to come. The Agreement governs the construction, purchase, and sale of natural gas distribution facilities providing service to residential and commercial customers in The Villages’ developments. On February 12, 2018, the Leesburg City Commission adopted Resolution 10,156, which authorized the Mayor and City Clerk to execute the Agreement on the Leesburg’s behalf. The Agreement was thereupon entered into between Leesburg and SSGC, with an effective date of February 13, 2018. Then, on February 26, 2019, the Leesburg City Commission adopted Ordinance 18-07, which enacted the Villages Natural Gas Rate Structure and Method of Setting Rates established in the Agreement into the Leesburg Code of Ordinances. The Agreement has no specific term of years, but provides for a term “through the expiration or earlier termination of [Leesburg]’s franchise from the City of Wildwood.” Mr. Minner testified that “the length of the agreement is 30 years from when a final home is built, and then over that overlay is the 30-year franchise agreement from the City of Wildwood.” However, SSGC’s response to interrogatories indicates that the Agreement has a 30-year term. Though imprecise, the 30-year term is a fair measure of the term of the Agreement. For the Bigham developments, i.e., the Agreement’s original “service area,” facilities are those installed into Bigham from the regulator station at the end of Leesburg’s new CR 501 distribution line, and include distribution lines along Bigham’s roads and streets, all required service lines, pressure regulator stations, meters and regulators for each customer, and other appurtenances by which natural gas will be distributed to customers. The Agreement acknowledges that Leesburg and SSGC “anticipate that the service Area will expand as The Villages® community grows, and thus, as it may so expand, [Leesburg and SSGC] shall expand the Service Area from time to time by written Amendment to this Agreement.” SSGC is responsible for the design, engineering, and construction of the natural gas facilities within Bigham. SSGC is responsible for complying with all codes and regulations, for obtaining all permits and approvals, and arranging for labor, materials, and contracts necessary to construct the system. Leesburg is entitled to receive notice from SSGC prior to the construction of each portion of the natural gas system, and has “the right but not the obligation” to perform tests and inspections as the system is installed. The evidence indicates that Leesburg has assigned a city inspector who is on-site daily to monitor the installation of distribution and service lines. SSGC has, to date, been using Hamlet as its contractor, the same company used by PGS to complete work at Fenney. Upon completion of each section in the development, SSGC provides Leesburg with a final inspection report and a set of “as-built” drawings. SSGC then conveys ownership of the gas distribution system to Leesburg in the form of a Bill of Sale. Upon the conveyance of the system to Leesburg, Leesburg assumes responsibility for all operation, maintenance, repairs, and upkeep of the system. Leesburg is also responsible for all customer service, emergency and service calls, meter reading, billing, and collections. Upon conveyance, Leesburg operates and provides natural gas service to Bigham through the system and through Leesburg’s facilities “as an integrated part of [Leesburg’s] natural gas utility operations.” In order to “induce” SSGC to enter into the Agreement, and as the “purchase price” for the system constructed by SSGC, Leesburg will pay SSCG a percentage of the monthly customer charge and the “per therm” charge billed to Bigham customers. Leesburg will charge Bigham customers a “Villages Natural Gas Rate” (“Villages Rate”). The “per therm” charge and the monthly customer charge for each Bigham customer are to be equal to the corresponding rates charged by PGS. If PGS lowers its monthly customer charge after the effective date of the agreement, Leesburg is not obligated to lower its Villages Rate. Bigham customers, who are outside of Leesburg’s municipal boundaries and unable to vote in Leesburg municipal elections, will pay a rate for gas that exceeds that of customers inside of Leesburg’s municipal boundaries and those inside of Leesburg’s traditional service area. A preponderance of the evidence indicates that for the term of the agreement, The Villages will collect from 52 percent (per Mr. Minner at hearing) to 55 percent (per Mr. Minner in deposition) of the total gas revenues paid to Leesburg from Bigham customers. The specific breakdown of revenues is included in the Agreement itself, and its recitation here is not necessary. The mechanism by which The Villages, through SSGC, receives revenue from gas service provided by Leesburg, first to its “proxy” customer and then to its end-user customers, is unique and unprecedented. It has skewed both competitive and market forces. Nonetheless, PGS was not able to identify any statute or rule that imposed a regulatory standard applicable to municipal gas utilities that would prevent such an arrangement. The evidence establishes that, under the terms of the Agreement, Leesburg is the “natural gas utility” as that term is defined by statute and rule. The evidence establishes that SSGC is, nominally, a gas system construction contractor building gas facilities for Leesburg’s ownership and operation. The evidence does not establish that the Agreement creates a “hybrid” public utility. Extension of Service to the Bigham Developments Leesburg’s mains nearest to Bigham were at SR 44 at the Lake County/Sumter County line, a distance of approximately 3.5 miles from the nearest Bigham point of connection; and along CR 470, a distance of approximately 2.5 miles to the nearest Bigham point of connection. When the Agreement was entered, neither the Leesburg 501 line nor the Leesburg 468 line were in existence. At the time the Agreement was entered, Leesburg knew that PGS was the closest provider to the three Bigham developments. In order to serve Bigham, Leesburg constructed a distribution line from a point on CR 470 near the Coleman Prison northward along CR 501 for approximately 2.5 miles to the southern boundary between Bigham West and Bigham East. Leesburg constructed a second distribution line from the Lake County line on SR 44 eastward to its intersection with CR 468, and then southward along CR 468 to the Florida Turnpike, just short of the boundary with Bigham East, a total distance of approximately 3.5 miles. The Leesburg CR 468 line will allow Leesburg to connect with the Bigham distribution line and “loop” or “backfeed” its system to provide redundancy and greater reliability of service to Bigham and other projects in The Villages as they are developed. The new Leesburg CR 468 line runs parallel to the existing PGS CR 468 line along its entire CR 468 route, and crosses the PGS line in places. There are no Commission regulations that prohibit crossing lines, or having lines in close proximity. Nonetheless, having lines in close proximity increases the risk of, among other things, complicating emergency response issues where fire and police believe they are responding to one utility's emergency when it is the other’s emergency. Safety Although PGS was the subject of a Commission investigation and violation related to a series of 2013-2015 inspections, those violations have been resolved to the satisfaction of the Commission. Mr. Szelistowski testified that PGS has received no citations or violations from the Commission, either from a construction standpoint or an operation and maintenance standpoint, for the past three years. Mr. Moses testified that both PGS and Leesburg are able to safely provide natural gas service to customers in Sumter County. His testimony is credited. Given the differences in size, geographic range, nature, and density of areas served by the PGS and Leesburg systems, the prior violations are not so concerning as to constitute a material difference in the outcome of this case. All of the distribution and service lines proposed by Leesburg and PGS to serve and for use in the disputed territory are modern, safe, and state-of-the-art. Reliability As stated by Leesburg in its PRO, “[t]he reliability of a natural gas distribution system to serve a designated area depends on the nature, location and capacity of the utility's existing infrastructure, the ability of the utility to secure the necessary quantities of natural gas, and the ability of the natural gas utility to supply gas in a safe manner.” As set forth herein, the location of PGS’s existing infrastructure, vis-a-vis the disputed territory, weighs strongly in its favor. As to the other reliability factors identified by Leesburg, both parties are equally capable of providing reliable service to the disputed territory. Both PGS and Leesburg demonstrated that they have the managerial and operational experience to provide service in the disputed area. There was no evidence to suggest that end-user customers of either Leesburg or PGS, including PGS’s Fenney customers, are dissatisfied with their service. Regulatory Standards for Territorial Disputes Rule 25-7.0472 establishes the criteria for the resolution of territorial disputes regarding gas utilities. Rule 25-7.0472(2)(a) Rule 25-7.0472(2)(a) includes the following issues for consideration in resolving a territorial dispute regarding gas utilities: The capability of each utility to provide reliable natural gas service within the disputed area with its existing facilities and gas supply contracts. Leesburg currently obtains its natural gas supply from the Florida Gas Transmission (“FGT”) distribution system, and purchases natural gas through FGU, a not-for-profit joint action agency, or "co-op" for purchasing natural gas. FGU's membership consists of city or governmental utility systems in Florida that distribute natural gas to end-user customers, or that use natural gas to generate electricity. FGU purchases and provides gas and manages interstate pipeline capacity for its members. FGU's members contractually reserve space in interstate transmission lines. FGU aggregates its members’ contracts into a single consolidated contract between FGU and the interstate pipelines and collectively manages its members’ needs through that contract. FGU has flexibility to transfer pipeline capacity from one member to benefit another member. Leesburg currently takes its natural gas through a "lateral" pipeline from the FGT transmission line. Gas travels through one of two gate stations, one in Haines Creek, and the other near the Leesburg municipal airport, both of which are located in Leesburg’s northeast quadrant. At the gate stations, transmission pressure is reduced to lower distribution pressure, and the gas is metered as it is introduced into Leesburg’s distribution system. The FGT transmission capacity is fully subscribed by FGU. Leesburg has not fully subscribed its lateral pipeline and has sole access to its lateral line capacity. Prior to the entry of the Agreement, and Leesburg/SSGC’s extension of distribution lines along CR 501 and CR 468, Leesburg’s distribution lines extended into Sumter County only along CR 470 to the Coleman Federal Prison. One other Leesburg line extended to the county line along SR 44, and then north to serve a residential area in Lake County. Leesburg argues that it has already extended lines, and is providing service to thousands of homes in Bigham, and that those facilities should be considered in determining whether it can “provide reliable natural gas service within the disputed area with its existing facilities.” PGS did not know of Leesburg’s intent to serve Bigham until late December 2017, when it observed PGS’s Fenney contractor, Hamlet, installing lines along CR 468, lines that it had not approved. PGS met with Leesburg officials in January 2018 to determine what was being constructed and to avoid a territorial dispute. PGS was directed by Leesburg to contact The Villages for details. PGS filed its territorial dispute on February 23, 2018, 10 days from the entry of the Agreement, and three days prior to the adoption of Ordinance 18-07. Construction of the infrastructure to serve Bigham occurred after the filing of the territorial dispute. Given the speed with which The Villages builds, hundreds of homes have been built, and gas facilities to serve have been constructed, since the filing of the territorial dispute. To allow Leesburg to take credit for its facilities in the disputed territory, thus prevailing as a fait accompli, would be contrary to the process and standards for determining a territorial dispute. The territory must be gauged by the conditions in the disputed territory prior to the disputed extension of facilities to serve the area. Leesburg’s existing facilities, i.e., those existing prior to extension to the disputed territory, were sufficient to serve the needs of Leesburg’s existing service area. The existing facilities were not sufficient to serve the disputed territory without substantial extension. 2. The extent to which additional facilities are needed. Both PGS and Leesburg have sufficient interconnections with transmission pipelines. Prior to commencement of construction at Bigham, the area consisted of undeveloped rural land. As discussed herein, the “starting point” for determining the necessity of facilities is the disputed territory property before the installation of site-specific interior distribution and service lines. To find otherwise would reward a “race to serve.” PGS demonstrated that it is capable of serving the disputed territory with no additional facilities needed. Its distribution mains are located directly adjacent to the disputed territory from the Fenney development from the west, and are contiguous to each of the Bigham developments from CR 468. The PGS CR 468 line was not constructed in specific anticipation of serving Bigham, and its cost is not fairly included in PGS’s cost to provide natural gas service to the disputed area presently and in the future. PGS’s existing distribution mains are capable of providing service to Bigham literally within feet of a point of connection. PGS’s cost to reach the disputed territory from its existing facilities in Fenney was estimated at $500 to $1,000. The cost of connecting the interior Bigham service lines to PGS’s CR 468 line is, at most, $10,000. PGS’s total cost of extending gas distribution lines to serve Bigham is, at most, $11,000. The evidence demonstrated that Leesburg required substantial additional facilities to serve the disputed territory. In order to meet the needs for reliable service to Bigham established in the Agreement, Leesburg constructed a new high-pressure distribution line from the existing CR 470 line north along CR 501 to Bigham for a distance of 2.5 miles at a cost of $651,475. The CR 501 line was constructed in specific anticipation of serving Bigham and is fairly included in Leesburg’s cost to provide natural gas service to the disputed area presently and in the future. In order to meet the needs for reliable service to Bigham established in the Agreement, Leesburg constructed a new high-pressure distribution line along SR 44 and CR 468 to Bigham for a distance of 3.5 miles at a cost of $560,732. The CR 468 segment of Leesburg’s line is adjacent and parallel to PGS’s existing CR 468 pipeline. Leesburg plans to connect the CR 468 line with the CR 501 line by way of a regulator station to create a system loop. Although Leesburg’s CR 468 pipeline is, ostensibly, not the primary distribution line for Bigham, it is directly related to the CR 501 line, and provides desired redundancy and reliability for Bigham, as well as infrastructure for the further expansion of Leesburg’s gas system to The Villages. Thus, the cost of extending Leesburg’s CR 468 line is fairly included in Leesburg’s cost as an “additional facility” to provide “reliable natural gas service,” to the disputed area presently and in the future. Leesburg’s total cost of extending gas distribution lines designed as primary distribution or redundant capability to serve Bigham is a minimum of $1,212,207. In addition to the foregoing, Leesburg, in its response to interrogatories, indicated that it “anticipates spending an amount not to exceed approximately $2.2 million dollars for gas lines located on county roads 501 and 468.” Furthermore, Leesburg stated that “[a]n oral agreement exists [between Leesburg and SSGC] that the amount to be paid by Leesburg for the construction of natural gas infrastructure on county roads 468 and 501 will not exceed $2.2 million dollars. This agreement was made . . . on February 12, 2018.” That is the date on which Leesburg adopted Resolution 10,156, which authorized the Mayor and City Clerk to execute the Agreement on Leesburg’s behalf. The context of those statements suggests that the total cost of constructing the gas infrastucture to serve Bigham could be as much as $2.2 million. PGS argues that Leesburg’s cost of connecting to the Sabal Trail transmission line should be included in the cost of serving the disputed territory. Leesburg began planning and discussions to connect to Sabal Trail as early as 2015, when the construction of Sabal Trail through the area became known. Leesburg entered into a contract for the Sabal Trail connection in February 2016. The Sabal Trail connection was intended to provide Leesburg with additional redundant capacity for its system independent of service to The Villages. The cost of constructing the Sabal Trail gate station is not fairly included in Leesburg’s cost to provide natural gas service to the disputed area presently and in the future. Rule 25-7.0472(2)(b) Rule 25-7.0472(2)(b) includes the following issues for consideration in resolving a territorial dispute regarding gas utilities: The nature of the disputed area and the type of utilities seeking to serve it. The area in dispute was, prior to the commencement of construction, essentially rural, with rapidly encroaching residential/commercial development. Although the area was generally rural at the time PGS installed its CR 468/US 301 distribution line, there was a well-founded expectation that development was imminent, if not by The Villages, then by another residential developer. The disputed territory is being developed as a master-planned residential community with associated commercial development. The Bigham developments are currently proximate to the Fenney development. Other non-rural land uses in the area include the Coleman Federal Prison and the American Cement plant. As indicated, Leesburg is a municipal gas utility, and PGS is a public gas utility. The utilities seeking to serve the disputed territory are both capable, established providers with experience serving mixed residential and commercial areas. There is nothing with regard to this factor that would tip the balance in either direction. 2. The degree of urbanization of the area and its proximity to other urban areas. As it currently stands, the disputed territory is bounded to its south and east by generally undeveloped rural property, to its south by rural property along with the Coleman Prison and American Cement plant, to its west by the Fenney development and additional undeveloped rural property, and to its north by low-density residential development. The disputed territory is characterized by residential areas of varying density, interspersed with commercial support areas. The nearest of the “town centers,” which are a prominent feature of The Villages development, is Brownwood Paddock Square, which is located north of SR 44, and a few miles north of Fenney and Bigham. The town center is not in the disputed territory. The terms “urban” and “rural” are not defined in Florida Administrative Code chapter 25-7, or in chapter 366. Thus, application of the common use of the term is appropriate. “Urban” is defined as “of, relating to, characteristic of, or constituting a city.” Merriam-Webster, https://www.merriam- webster.com/dictionary/urban. “Rural” is defined as “of or relating to the country, country people or life, or agriculture.” Merriam-Webster, https://www.merriam- webster.com/dictionary/rural. The disputed territory was rural prior to the development of Bigham. The area is becoming more loosely urbanized as The Villages has moved into the area and is expected to experience further urban growth to the south and east. Fenney and Bigham are, aside from their proximity to one another, not currently proximate to other urban areas. There is nothing with regard to this factor that would tip the balance in either direction. 3. The present and reasonably foreseeable future requirements of the area for other utility services. Since the disputed territory is a completely planned development, there are requirements for basic utilities. Leesburg provides other utility services to the greater Leesburg MSA and the Villages Fruitland Park development, including electric, water, and sewer service, and has, or is planning to provide such services to other developments for The Villages in the area. Leesburg’s ability to provide other utility services to The Villages in addition to gas service is a factor in Leesburg’s favor. Rule 25-7.0472(2)(c) Rule 25-7.0472(2)(c) establishes that the cost of each utility to provide natural gas service to the disputed area presently and in the future is an issue for consideration in resolving a territorial dispute regarding gas utilities. Various costs are broken out in subparagraphs 1. through 9. of the rule, and will be addressed individually. However, it is clear, as set forth in the facts related to rule 25-7.0472(2)(a) above, that the cost of extending service into Bigham was substantially greater for Leesburg than for PGS. The individually identified costs include the following: Cost of obtaining rights-of-way and permits. There was no evidence to suggest that the cost of obtaining rights-of-way and permits for the construction of the gas infrastructure described herein varied between Leesburg and PGS. There is nothing with regard to this factor that would tip the balance in either direction. 2. Cost of capital. The parties stipulated that the issue of cost of capital is not applicable to this dispute. 3. Amortization and depreciation. The parties stipulated that the issues of amortization and depreciation are not applicable to this dispute. 4. through 6. Cost-per-home. The cost-per-home for extending service to homes in Bigham includes the costs identified in rule 25-7.0472(2)(c)4. (labor; rate per hour and estimated time to perform each task), rule 25-7.0472(2)(c)5. (mains and pipe; the cost per foot and the number of feet required to complete the job), and rule 25- 7.0472(2)(c)6. (cost of meters, gauges, house regulators, valves, cocks, fittings, etc., needed to complete the job). The cost-per-home for Leesburg and SSGC is $1,800 (see ruling on Motion to Strike). In addition, Leesburg will be installing automated meters at a cost of $72.80 per home. The preponderance of the evidence indicates that the PGS cost-per-home is $1,579, which was the cost-per-home of extending service in the comparable Fenney development. The cost-per-home is a factor -- though slight -- in PGS’s favor. 7. Cost of field compressor station structures and measuring and regulating station structures. None of the parties specifically identified or discussed the cost of field compressor station structures and measuring and regulating station structures in the Joint Pre- hearing Stipulation or their PROs. Thus, there is little to suggest that the parties perceived rule 25-7.0472(2)(c)7. to be a significant factor in the territorial dispute. As a result, there is nothing with regard to this factor that would tip the balance in either direction. 8. Cost of gas contracts for system supply. None of the parties specifically identified or discussed the cost of the respective gas contracts for system supply in the Joint Pre-hearing Stipulation or their PROs. Thus, there is little to suggest that the parties perceived rule 25-7.0472(2)(c)8. to be a significant factor in the territorial dispute. As a result, there is nothing with regard to this factor that would tip the balance in either direction. 9. Other costs that may be relevant to the circumstances of a particular case. There was considerable evidence and testimony as to the revenues that would flow to SSGC under the 30-year term of the Agreement. SSGC's revenues under the Agreement are not relevant as they are not identified as such in rule 25-7.0472, and are not directly related to the rates, which will likely not exceed PGS’s regulated rate. Rule 25-7.0472(2)(d) Rule 25-7.0472(2)(d) includes that the Commission may consider “other costs that may be relevant to the circumstances of a particular case.” This factor is facially identical to that in rule 25-7.0472(2)(c)9., but is, nonetheless, placed in its own rule section and must therefore include costs distinct from those to provide natural gas service to the disputed area presently and in the future. Cost of service to end-user customers. Due to the nature of the Agreement, Leesburg will charge a “Villages Rate” that will be equal to the fully regulated PGS rate.4/ Thus, as a general rule, the cost of service to end-user customers will be the same for PGS and Leesburg. There is nothing with regard to this factor that would tip the balance in either direction. 2. Uneconomic duplication of facilities. Neither section 366.04(3), nor rule 25-7.0472, pertaining to natural gas territorial disputes, expressly require consideration of “uneconomic duplication of facilities” as a factor in resolving territorial disputes. The Commission does consider whether a natural gas territorial agreement “will eliminate existing or potential uneconomic duplication of facilities” as provided in rule 25-7.0471. A review of Commission Orders indicates that many natural gas territorial dispute cases involve a discussion of uneconomic duplication of facilities because disputes are frequently resolved by negotiation and entry of a territorial agreement. In approving the resultant agreement, the Commission routinely considers that the disposition of the dispute by agreement avoids uneconomic duplication of facilities. See In re: Petition to Resolve Territorial Dispute with Clearwater Gas System, a Division of the City of Clearwater, by Peoples Gas System, Inc., 1995 Fla. PUC LEXIS 742, PSC Docket No. 94-0660-GU; Order No. PSC-95-0620- AS-GU (Fla. PSC May 22, 1995)(“[W]e believe that the territorial agreement is in the public interest, and its adoption will further our longstanding policy of avoiding unnecessary and uneconomic duplication of facilities. We approve the agreement and dismiss the territorial dispute.); In re: Petition by Tampa Electric Company d/b/a Peoples Gas System and Florida Division of Chesapeake Utilities Corporation for Approval of Territorial Boundary Agreement in Hillsborough, Polk, and Osceola Counties, 1999 Fla. PUC LEXIS 2051, Docket No. 990921-GU; Order No. PSC-99-2228-PAA-GU181 (Fla. PSC Nov. 10, 1999)(“Over the years, CUC and PGS have engaged in territorial disputes. As each utility expands its system, the distribution facilities become closer and closer, leading to disputes over which is entitled to the unserved areas. The purpose of this Agreement is to set forth new territorial boundaries to reduce or avoid the potential for future disputes between CUC and PGS, and to prevent the potential duplication of facilities.”); In re: Joint Petition for Approval of Territorial Agreement in DeSoto County by Florida Division of Chesapeake Utilities Corporation and Sebring Gas System, Inc., 2017 Fla. PUC LEXIS 163, Docket No. 170036-GU; Order No. PSC-17-0205-PAA-GU (Fla. PSC May 23, 2017)(“The joint petitioners stated that without the proposed agreement, the joint petitioners’ extension plans would likely result in the uneconomic duplication of facilities and, potentially, a territorial dispute . . . . [W]e find that the proposed agreement is in the public interest, that it eliminates any potential uneconomic duplication of facilities and will not cause a decrease in the reliability of gas service.”). There are Commission Orders that suggest the issue of uneconomic duplication of facilities is an appropriate field of inquiry in a territorial dispute even when it does not result in a territorial agreement. See In re: Petition to Resolve Territorial Dispute with South Florida Natural Gas Company and Atlantic Gas Corporation by West Florida Natural Gas Company, 1994 Fla. PUC LEXIS 1332, Docket No. 940329-GU; Order No. PSC-94-1310-S-GU (Fla. PSC Oct. 24, 1994)(“On March 31, 1994, West Florida filed a Petition to Resolve a Territorial Dispute with South Florida and Atlantic Gas On August 26, 1994, West Florida, South Florida, and Atlantic Gas filed a Joint Petition for Approval of Stipulation, which proposed to resolve the territorial dispute by West Florida's purchase of the Atlantic Gas facilities . . . . We believe that approval of the joint stipulation is in the public interest because its adoption will avoid unnecessary and uneconomic duplication of facilities.”). The evidence in this case firmly establishes that Leesburg’s extension of facilities to the Bigham developments, both through the CR 501 line and the CR 468 line, constituted an uneconomic duplication of PGS’s existing gas facilities. As set forth in the Findings of Fact, PGS’s existing gas line along CR 468 is capable of providing safe and reliable gas service to the Bigham developments at a cost that is negligible. To the contrary, Leesburg extended a total of roughly six miles of high-pressure distribution mains to serve the Bigham developments at a cost of at least $1,212,207, with persuasive evidence to suggest that the cost will total closer to $2,200,000. This difference in cost, even at its lower end, is far from de minimis, and constitutes a significant and entirely duplicative cost for service. Leesburg argues that if uneconomic duplication of facilities is a relevant factor, “the evidence of record demonstrates that the City will suffer significant financial impact if it is not permitted to continue to serve the Bigham Developments.” The fact that Leesburg, with advance knowledge and planning, was able to successfully race to serve Bigham, incurring its “financial impact” after the territorial dispute was filed, does not demonstrate either that PGS meets the standards to prevail in this proceeding, or that PGS should be prevented from serving development directly adjacent to its existing facilities in the disputed territory. Rule 25-7.0472(2)(e) Rule 25-7.0472(2)(e) establishes that customer preference is the “tie-breaker” if all other factors are substantially equal. The Villages is the “customer” for purposes of the selection of the provider of natural gas service to Bigham. There is no dispute that The Villages, as the proxy for the individual end-user customers, has expressed its preference to be served by Leesburg. The direct financial benefit to The Villages, and Leesburg’s willingness to enter into a revenue sharing plan -- a plan that, if proposed by PGS, would likely not be allowed by the Commission in its rate- setting capacity -- no doubt plays a role in that decision. Gas service to end-user customers living in in Bigham will be a revenue-generating venture for The Villages if served by Leesburg, and will not if served by PGS. Leesburg and SSGC have suggested that customer preference should occupy a more prominent role in the dispute since gas service, unlike electric, water, and sewer services, is an optional utility service. SSGC argued that since The Villages expressed that it would forego providing gas service to its developments if PGS is determined to be entitled to serve -- a position oddly presaged by Mr. Geoffroy in his September 27, 2017, email with Leesburg (see paragraph 35) -- and “in consideration of the business practices, size, track record of success, and economic import of The Villages,” the preference of The Villages for service from Leesburg should “be a significant factor in the resolution of this dispute.” Neither of those reasons can serve to elevate customer preference from its tie-breaker status as established by rule.
Conclusions For Petitioner: Andrew M. Brown, Esquire Ansley Watson, Esquire Macfarlane Ferguson & McMullen Suite 2000 201 North Franklin Street Tampa, Florida 33602 Frank C. Kruppenbacher, Esquire Frank Kruppenbacher, P.A. 9064 Great Heron Circle Orlando, Florida 32836 For Respondent South Sumter Gas Company: John L. Wharton, Esquire Dean Mead & Dunbar 215 South Monroe Street, Suite 815 Tallahassee, Florida 32301 Floyd Self, Esquire Berger Singerman, LLP Suite 301 313 North Monroe Street Tallahassee, Florida 32301 For Respondent City of Leesburg: Jon C. Moyle, Esquire Karen Ann Putnal, Esquire Moyle Law Firm, P.A. 118 North Gadsden Street Tallahassee, Florida 32301
The Issue The issues in this case concern the question of whether implementation of the consent agreement threatens the substantial interests of Petitioners in the surface waters and ground water resources at and around Seaboard's used oil facility located off Route 314A in Oklawaha, Marion County, Florida. Petitioner, State of Florida, Department of Environmental Regulation, gave public notice of its intent to implement a consent agreement with Respondent. The other Petitioners opposed the agreement asserting that the waters of the State were threatened by the agreement and requested a final hearing.
Findings Of Fact On March 7, 1988, Seaboard's used oil facility located off Route 314A in Oklawaha, Marion County, Florida, on Little Lake Bryant was inspected by a DER representative. At the time of the inspection pools of used oil were observed on the ground. Four 4,000 gallon above-ground tanks were being used to store used oil. Additionally, several old tank-truck bodies were used to store petroleum produces. These tanks did not have an impervious containment area to prevent used oil from spilling directly onto the ground and to prevent free runoff of precipitation. An underground tank (made from a septic tank) was being used to temporarily store water contaminated with used oil, which was gravity drained from the bottom of the used oil transport trucks. No impervious containment existed around the opening of the underground tank to prevent any spillage during transfer from directly reaching the ground. The underground tank was plugged and has no connection to a drain field. This tank is located in a flood plain. A 2,000 gallon above-ground tank and a 3,000 gallon above-ground tank were used to store water contaminated with used oil from the pumped underground tank. DER, in response to the March 7, 1988 inspection and subsequent site visits, negotiated a consent agreement with Seaboard. The consent agreement was executed on March 30, 1989 by Seaboard and filed with DER's Clerk on April 12, 1989. A copy of the consent agreement may be found as DER's Exhibit 1 admitted into evidence. The consent agreement specifies corrective actions to be taken by Seaboard, subject to DER approval, in order to address the problems identified at Seaboard's used oil facility. Paragraph 10 of the consent agreement addresses protection against spills directly reaching the ground. Impervious containment is required by the agreement for all above-ground used oil storage tanks but not the old truck bodies. Impervious containment is required for product transfer areas where transport trucks, pumps and hoses would operate, but not in the vicinity of the old truck bodies. A concrete containment dike surrounding the above-ground tanks is required to control drainage of rain, snow, sleet, fog, etc., but not around the truck bodies. (DER's Exhibit 1). The concrete pads already poured by Respondent are not impervious and the sides of these containment areas are not high enough to contain a major tank failure. Paragraph 11 of the consent agreement addresses operation of the underground tank in order to prevent leaks. Seaboard is required to provide protection against spillage during product transfer between transport trucks and the underground tank and provide for cleanup of spilled material. Nothing addresses the problems of the tank lying in a flood plain. (DER's Exhibit 1). Paragraph 12 of the consent agreement requires Seaboard to implement "Preliminary Contamination Assessment Actions". These actions provide the framework for determining if the problems identified at Seaboard's used oil facility have resulted in contamination of the soil, surface waters and ground water. The actions required are subject to prior DER approval. The actions represent standard conduct in these and similar types of cases. (DER's Exhibit 1). If the surveys and tests required by the agreement indicate soil, sediment, surface water or ground water contamination, DER can pursue any or all of the following: (1) institute an administrative proceeding requiring further assessment and cleanup; (2) institute a civil action in circuit court; or (3) perform the necessary corrective actions at the facility and recover the costs of such actions from Respondent, Seaboard. (DER's Exhibit 1). Notice was given of DER's proposed consent agreement with Seaboard by publication in the Ocala Star Banner of August 10, 1989. The Petitioners live around Little Lake Bryant, Oklawaha, Florida, where Seaboard's used oil facility is located. The Petitioners timely filed the petitions leading to the present hearing. The Petitioners are Helen V. Pierce, Mr. and Mrs. Marvin Pierce, Mr. and Mrs. Maurice Warner, Mr. and Mrs. Robert J. Painter, Sr., Mr. and Mrs. William E. Hartman, Mr. and Mrs. Bruce Hallman, Mr. Robert J. Painter, Jr., Mr. and Mrs. Elmer Weinheimer, Mr. and Mrs. Henry Allan Gwin, Mr. and Mrs. Edwin Jones, and Mr. and Mrs. Daryl N. Driscoll. Mr. and Mrs. Elmer Weinheimer and Mr. and Mrs. Marvin Pierce, Petitioners in this case, did not attend the hearing. The other Petitioners attended the hearing. Introduction of waste oil into the waters of Little Lake Bryant would endanger the waters of the lake around which all of the Petitioners live. They use this lake for recreational purposes.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the DER enter a Final Order approving a consent agreement incorporating the following four recommendations: installation of impervious areas with high enough walls to retard a spill under all tanks; removal of the underground tank from the flood plain; installation of monitoring wells in sufficient quantity in new and old areas; and frequent inspection. DONE AND ORDERED this 24th day of January, 1990, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 1990. COPIES FURNISHED: Mr. Dale H. Twachtmann Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson, Esq. General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Otis Ted Holly Route 4, Box 851 Silver Springs, FL 32688 Francine M. Ffolkes, Esq. Assistant General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Elbert Gray Route 1, Box 1293A Oklawaha, FL 32679 =================================================================
The Issue The issue in this case is whether, in connection with Respondent’s employment of Petitioner, Respondent unlawfully discriminated against Petitioner on the basis of his race or national origin.
Findings Of Fact Introductory Facts Petitioner Lincoln Nicholson (“Nicholson”) is a black man who was born in Jamaica. Respondent City of Sunrise, Florida (the “City”), is a municipality located in Broward County. The City operates its own natural gas utility. Nicholson began working for the City in its Gas Department as a Gas Service Person I (“GSP-I”) on August 7, 2000. As of the date of the final hearing, Nicholson was still employed by the City in that capacity. Nicholson contends that not only is he qualified for employment as a Gas Service Person III (“GSP-III”), which is a more senior, higher-paid position in the City’s Gas Department than the one he presently holds, but also that he actually has been performing the functions of a GSP-III. Nicholson claims that but for his race or national origin, the City would have either hired him as a GSP-III or promoted him to that position. He charges that the City has committed acts of intentional employment discrimination by refusing to offer him the higher- ranking position. The City admits that Nicholson meets the minimum qualifications for hire as a GSP-III but denies the allegations of intentional discrimination; it maintains that it filled the position for which Nicholson applied with a better (or at least equally) qualified candidate, namely, the City employee who had previously held the position. The Material Historical Facts On September 13, 1999, the City posted a notice advertising its intention to hire a qualified person to work as a GSP-III in the City’s Gas Department. According to the notice, the job would entail “supervisory and technical work” in the areas of “cathodic protection, corrosion and leak control on a natural gas distribution system.” The notice identified the minimum qualifications for the position, the relevant one, for present purposes, being this: --Must possess a Cert[ificate] of Competency as a Master or Journeyman Gas Fitter from the Central Examining Board of Plumbers of Broward County or equivalent. The position in question had opened up a few weeks earlier, when the incumbent, a longtime employee of the City named Roger Black, took a job as a Utility Operator Trainee in the City’s Utilities Department. Although this move resulted in a reduction in salary for Mr. Black and hence was technically a “demotion,” the evidence shows (and it is found) that Mr. Black transferred voluntarily and that his performance as a GSP-III had always been rated at least satisfactory. On or about October 11, 1999, an individual named Douglas Blau applied for the GSP-III position. Mr. Blau was well qualified for the position——indeed, he was arguably over- qualified1——and via memorandum dated April 14, 2000, Gas Department Director Harry Zehender recommended to Personnel Director James Harris that Mr. Blau be hired. The City then began “processing” Mr. Blau’s application. Meanwhile, on April 17, 2000, Nicholson applied for the job. Nicholson had approximately 25 years’ experience working in the field of natural gas distribution, although, at the time of applying for the GSP-III position, he had been working outside that field for about a year and a half. The evidence leaves no doubt, however——and the City stipulated——that Nicholson met all the minimum qualifications for employment as a GSP-III. Nicholson interviewed for the position with Alistair MacLeod, the Gas Department’s Supervisor. At some point, either during the interview or later, Mr. MacLeod told Nicholson that the GSP-III position had been filled by another applicant, meaning Mr. Blau, who had been recommended for employment but not yet offered the job.2 Because Mr. Blau was the putative successful applicant for the GSP-III post, Nicholson was asked if he were interested in taking a more junior position as a GSP-I. Nicholson responded affirmatively; was offered the job on July 11, 2000; accepted the City’s offer; and, as mentioned, began working for the City as a GSP-I on August 7, 2000. Around the time Nicholson came to work for the City, Mr. Black applied for his old job back.3 The City did not interview Mr. Black because he was known to the personnel responsible for making the decision to hire. He was not offered the position because Mr. Blau was still in line to receive it. On or about September 14, 2000, Mr. Blau informed the City that he was no longer interested in the GSP-III position. The next week, on September 22, 2000, Nicholson submitted a supplement to his application for the GSP-III position.4 The City did not interview Nicholson because he was known to the personnel responsible for making the decision to hire. About ten months later, the City chose Mr. Black, who is white, to fill the vacant GSP-III position——the very position that Mr. Black had vacated nearly two years earlier, in August 1999. He returned to his former position on July 21, 2001.5 Mr. Black’s Qualifications Nicholson argues that Mr. Black should have been disqualified from consideration for the GSP-III position because he did not, Nicholson alleges, possess a valid Certificate of Competency as a Master Gas Fitter. In support of this contention, Nicholson proffered a copy Mr. Black’s certificate numbered 91-CMGF-562-X, which specifies an expiration date of August 31, 1992, together with a letter from the Broward County Records Custodian dated July 14, 2003, which attests that Mr. Black’s Certificate of Competency No. 91-CMGF-562-X is active for the period from August 2, 2002 through August 31, 2004. From these papers Nicholson infers that Mr. Black’s Certificate of Competency as a Master Gas Fitter must have been inactive between August 31, 1992 and August 2, 2002——and hence “invalid” when he returned to his old job as GSP-III in July 2001. The City, however, as part of its Composite Exhibit 1, put into evidence a copy of Mr. Black’s Certificate of Competency No. 91-CMGF-562-X from the mid-1990s, showing an expiration date of August 31, 1996. This, of course, does not prove that Mr. Black’s certificate was active in July 2001, but it does falsify Nicholson’s inference that Mr. Black failed to renew his certificate for ten straight years. As a result, the undersigned declines to infer that Mr. Black’s certificate was, more likely than not, inactive as of July 21, 2001. Further, the notice that the City posted regarding the available GSP-III position stated that a Certificate of Competency as a Master Gas Fitter “or [its] equivalent” was required. The undersigned agrees with the City that an inactive certificate reasonably can be deemed the equivalent of an active certificate for the purpose of meeting this qualification, since, as the City proved, a GSP-III does not need to possess the authority conferred by the Broward County certificate in order to perform the job; rather, the City is interested in employing persons who have the underlying knowledge and experience necessary to obtain such a certificate.6 Thus, the undersigned finds alternatively that the City, as it suggests, reasonably could have determined, without intending to discriminate unlawfully, that Mr. Black at least possessed the equivalent of a Broward County Certificate of Competency as a Master Gas Fitter. In sum, Mr. Black was, in fact, a qualified applicant for the GSP-III position. Is Nicholson Better Qualified Than Mr. Black? Nicholson contends that he was the superior applicant vis-à-vis Mr. Black, for two reasons that the undersigned considers worthy of note. The first is Nicholson’s claim that he is (and at all times material has been) responsible for “cathodic protection,” which is a method of corrosion control, while Mr. Black has been assigned to other duties. Describing cathodic protection as the major function of a GSP-III, Nicholson contends that he is de facto doing the job without the benefits of the title, whereas Mr. Black, who has the title and attendant benefits, is not doing the job. It is found that Nicholson is, in fact, responsible for cathodic protection and that this function historically has been undertaken primarily by a GSP-III rather than a GSP-I such as Nicholson. However, the evidence also persuasively establishes that all Gas Department service personnel are expected to perform a variety of tasks, including cathodic protection. Presently, the fact that Nicholson is qualified and able to perform cathodic protection frees Mr. Black to handle other functions. On this record, the undersigned is not persuaded that Nicholson necessarily does a better job of cathodic protection than Mr. Black would do or that Mr. Black is incapable of doing the work. Instead, the evidence shows that the City is attempting to make the highest and best use of its employees. The second plausible basis for Nicholson’s contention that he is better qualified than Mr. Black is that Nicholson has more years of experience in the field of natural gas distribution——some 25 years versus about 12 for Mr. Black as of the time the decision to hire was made. If all experience-years were necessarily equal, then Nicholson would have a point. But, obviously, all experience-years are not necessarily equal. In this instance, the undersigned finds that the City reasonably viewed Mr. Black’s 12 years’ service in the City’s Gas Department, which included a number of years working as a GSP- III, as more relevant experience than Nicholson’s. The undersigned is ultimately not persuaded that Nicholson was necessarily the better qualified candidate, as compared to Mr. Black, but instead finds that the City, as it suggests, reasonably could have decided, without intending to discriminate, that Mr. Black was at least equally qualified, if not more so. Ultimate Factual Determinations The City’s proffered reasons for hiring Nicholson as a GSP-I rather than a GSP-III, and for later selecting Mr. Black to fill the vacant GSP-III position after Mr. Blau, the putative successful applicant, removed himself from consideration, are legitimate, nondiscriminatory reasons for the decisions in question. By putting forward these legitimate, nondiscriminatory reasons, the City obviated the need to determine whether Nicholson presented a prima facie case of discrimination in connection with either of these decisions. The undersigned is not persuaded, and therefore does not find, that the grounds asserted by the City for its employment decisions are actually a pretext for unlawful discrimination. In sum, Nicholson has not established by the greater weight of the evidence that the City discriminated unlawfully against him when it hired Nicholson as a GSP-I or when it later chose Mr. Black, instead of Nicholson, to fill the GSP-III position for which Nicholson had also applied.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the FCHR enter a final order dismissing Nicholson’s Petition for Relief. DONE AND ENTERED this 19th day of September, 2003, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM 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 19th day of September, 2003.
The Issue The issue to be determined in this case is whether the Notice of Intent to Issue Order Requiring Access to Property (“Access Order”) issued by the Department of Environmental Protection (“Department”) and directed to Glenda Mahaney, as the property owner, is a valid exercise of the Department’s authority.
Findings Of Fact Petitioner Glenda Mahaney is a natural person and the owner of the property identified in the Access Order. The Department is the state agency which has been granted powers and assigned duties under chapters 376 and 403, Florida Statutes, for the protection and restoration of air and water quality and to adopt rules and issue orders in furtherance of these powers and duties. Background The groundwater beneath a parcel of land adjacent to Petitioner’s property was contaminated with petroleum when the land was used in the past for auto salvage operations. Initial groundwater sampling near the border of Petitioner’s property showed groundwater contamination by gasoline constituents which exceeded Groundwater Cleanup Target Levels (“GCTLs”). In other words, the contamination was at levels that required cleanup. However, later sampling showed the concentration of contaminants had decreased below GCTLs, probably as a result of natural attenuation. The existing data suggests that any groundwater contamination beneath Petitioner’s property is probably now at a level that would not require cleanup. However, the Department issued the Access Order because the Department is not certain about the contamination beneath Petitioner’s property and because Petitioner has continually requested further investigation. Petitioner believes contamination from the auto salvage site has caused illness in a tenant and even contributed to other persons’ deaths. However, no expert testimony was received on this subject and no finding is made about whether contamination exists on Petitioner’s property which has caused illness or death. The Department’s Site Investigation Section wants access to Petitioner’s property in order to determine whether contamination has migrated beneath Petitioner’s property and, if it has, the extent and concentration of the contaminants. The Department wants to: (a) install up to five temporary groundwater monitoring wells, (b) collect groundwater samples from the wells, (c) collect a groundwater sample from Petitioner’s potable water well, and (d) remove the monitoring wells after the sampling. The Access Order includes terms related to advance notice, scheduling, and related matters. Liability Although Petitioner believes petroleum contamination is present and wants it cleaned up, she objects to the provision of the Access Order related to liability. Paragraph 9(e) of the Access Order provides: Ms. Mahaney shall not be liable for any injury, damage or loss on the property suffered by the Department, its agents, or employees which is not caused by the [sic] negligence or intentional acts. Petitioner insists that she should not be liable under any circumstances for injuries or damages suffered by Department’s agents or employees who come on her property for these purposes. She demands that the Department come onto her property “at their own risk.” At the final hearing, the Department stated that it did not intend to impose on Petitioner a level of liability different than the liability that would already be applicable under Florida law. The Department offered to amend Paragraph 9(e) of the Access Order to indicate that Petitioner’s “liability, if any, shall be determined in accordance with Florida law.” Scope of the Investigation Petitioner objects to the proposed groundwater sampling because she does not believe it is extensive enough. Petitioner also believes the Department should test for soil contamination. The Department’s expert, David Phillips, testified that the proposed monitoring well locations were selected based on the direction of groundwater flow in the area and the wells are along the likely path of migration of any contaminated groundwater from the former auto salvage site. Another Department witness, Tracy Jewsbury, testified that no soil contamination was found on the auto salvage site, so the Department has no reason to expect there would be soil contamination on Petitioner’s property that came from the auto salvage operation. The Department will use the data collected from the wells to determine if contamination is present and whether future contamination assessment and/or remediation activities are necessary.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection withdraw the Access Order or, alternatively, that Paragraph 9(e) of the Access Order be amended to provide that Ms. Mahaney’s potential liability, if any, shall be determined in accordance with Florida law. DONE AND ENTERED this 15th day of November, 2017, in Tallahassee, Leon County, Florida. S BRAM D. E. CANTER 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 COPIES FURNISHED: Filed with the Clerk of the Division of Administrative Hearings this 15th day of November, 2017. William W. Gwaltney, Esquire Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed) Glenda Q. Mahaney Post Office Box 123 Mount Dora, Florida 32756 Lea Crandall, Agency Clerk Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed) Robert A. Williams, General Counsel Department of Environmental Protection Legal Department, Suite 1051-J Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed) Noah Valenstein, Secretary Department of Environmental Protection Douglas Building 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 (eServed
The Issue Whether petitioner should take disciplinary action against respondent for the reasons alleged in the administrative complaint?
Findings Of Fact The parties stipulated that respondent Veterans Gas and Appliance Co., Inc., trading as Veterans Gas Company, now holds and has at all pertinent times has held a license issued by petitioner. Petitioner has licensed respondent as a "[d]ealer in liquefied petroleum [LP] gas, in appliances and in equipment for use of such gas and installation." Petitioner's Exhibit No. 1. Respondent has been in business for 25 years or so, at least. (T.48) On December 8, 1983, Clyde K. "Ken" Wallace, a gas serviceman in respondent's employ, was at the office of the Veterans Gas Company in Fort Walton, when a Mr. Wright telephoned, requesting that LP gas be delivered to the Ships Chandler in Destin, Mr. Wright's place of business. Mr. Wallace set out by himself for Destin in a bulk-fill truck to make the delivery. When he arrived, he found he could not enter the driveway, so he parked on the south side of U.S. Highway 98 about 15 feet from the Ships Chandler tank. He knew where the tank was because he had filled it the previous winter, the last time he had been there. Standing with two young ladies in the doorway of the Ships Chandler, Mr. Wright greeted him, saying something like, "I'm glad to see you. We're freezing." Mr. Wallace set right to work. Initially unable to remove the dome which blocked access to the underground tank, he asked Mr. Wright for a claw hammer. With the hammer he succeeded in removing the dome, and then announced he was going to turn off the service valve, which is the valve that allows gas to enter the building from the tank. Mr. Wright asked him not to turn the valve off, saying he was going to ignite the pilot light in his furnace, and disappeared into the store. Mr. Wallace took the dust cap off and, hooking up the hose to the fill valve, pumped one hundred gallons of LP gas at the rate of 25 to 30 gallons a minute, according to the meter on the truck. Before introducing LP gas into the tank, Mr. Wallace never turned off the service valve or any other valve through which LP gas flowed before passing through the regulator and into the system of pipes. In fact, he never touched the service valve, and did not know for sure whether it was on or off. Furnace apparently lit, Mr. Wright reemerged from his store after a few minutes, a check in hand to pay for the gas. Earlier on, at some point during their conversation, Mr. Wright asked Mr. Wallace whether he knew if nearby shop owners heated with gas or otherwise used gas, or something to that effect. Mr. Wallace said he did not know. The question arose because the complex had been a motel with central gas heat before it had been remodeled into shops and offices; and the conversion had taken place since the preceding winter. Mr. Wright wondered aloud whether or not his neighbors owed him money for gas. Mr. Wallace saw Mr. Wright enter one shop door, leave, enter another, leave, and so forth, presumably inquiring of the people inside whether they used gas. By the time he disengaged the hose and closed the fill valve, Mr. Wright was nowhere to be found. Mr. Wallace indicated on the invoice that it had been paid, dropped it on a desk or counter in the Ships Chandler, and left. After Mr. Wallace had driven off, an explosion occurred causing a fire and injuries to two persons. Explosion, fire and injuries occurred not in the Ships Chandler, but on the premises occupied by Way and Associates, Inc. Whoever did the remodeling cut the gas line and neglected to cap it, so that LP gas pumped into the Ships Chandler tank, ended up in a space between the dry wall and the outside wall in the building Way and Associates, Inc. occupied. Ignition of the LP gas accumulated there caused the explosion. Respondent had nothing to do either with the remodeling or with the initial installation of the gas pipes. If Mr. Wallace had followed standard industry practice, he would have turned off the service valve before pumping LP gas into the fill valve of an empty system. After pumping LP gas into the tank, he would have turned off the pump; he would have asked Mr. Wright to turn off all appliances, and, once the appliances were off, he would have turned the service valve back on to charge the system. Then he would have turned the service valve off again, in order to listen carefully. If he had done that, he would have heard LP gas moving through the regulator, even after the service valve was closed, and he would have realized that gas was leaking. Mr. Wallace, who started working for respondent in July of 1982, is qualified as a gas service man but not as a gas appliance service man. Like other new drivers respondent hires, Mr. Wallace went out with an older driver or the manager to learn the route and safety procedures for at least two weeks before going out on his own, but he was never told to check for leaks when introducing LP gas into an empty system.
The Issue Whether Petitioner's site located at 2188 N.W. 20th Street, Miami, Florida, is eligible to participate in the Early Detection Incentive Program.
Findings Of Fact Petitioner is the owner of a gasoline service station located at 2188 N.W. 20th Street, Miami, Florida 33142. Tomas Pequeno, Sr., is the President and owner of X.O. # 1 Corporation. International Petroleum currently operates the facility located at 2188 N.W. 20th Street, Miami, Florida 33142 pursuant to a lease agreement with X.O. #1 Corporation. The mailing address of the subject facility and of X.O. #1 Corporation is 12190 S.W. 99th Street, Miami, Florida 33186. Aurelio Rodriguez is part owner of International Petroleum and has been the manager and operator of the facility in question since 1988. Since 1988 Tomas Pequeno, Sr., has delegated authority to his son, Tomas Pequeno, Jr., to act on his behalf with regard to the business of X.O. #1 Corporation and the facility located at 2188 N.W. 20th Street, Miami, Florida 33142. At the subject facility there are six underground storage tanks which receive and dispense petroleum products. These underground storage tanks are owned by X.O. #1 Corporation and constitute part of the property leased to International Petroleum. At all times pertinent to this proceeding, there were functioning monitoring wells on the premises for the purpose of detecting leaks in the underground storage system. At the formal hearing, Tomas Pequeno, Jr., testified that on September 21, 1987, an odor of petroleum in one of the monitoring wells on the subject site was detected during a routine inspection of the premises. Mr. Pequeno, Jr., was advised by the inspector that there might be a leak in the system. On November 17, 1987, Mr. Pequeno, Jr., caused the tanks on the premises to be relined. No leaks were detected by the tests that were conducted following the relining of the tanks. Paragraph 9 of the Pretrial Stipulation filed by the parties on July 24, 1991, is as follows: 9. That the date of discovery of petroleum contamination at this facility was September 21, 1987, as indicated by Tomas Pequeno. On December 9, 1988, Petitioner submitted to Respondent an "Early Detection Incentive Program Notification Application" which was signed by Tomas Pequeno, Sr., as president of X.O. #1 Corporation. This form had been completed by Tomas Pequeno, Jr., and given to his father for his execution. This form represented that contamination at the site was detected September 21, 1987, by a manual test of the monitoring wells, that the number of gallons lost was unknown, that the petroleum contamination was due to leaking storage tanks, and that the system had been repaired. The cause of the leak in the piping and the cause of the leak in the tanks were stated as being unknown. Mr. Pequeno, Jr., testified at the formal hearing that: "There was never a discharge from that site and there is not a discharge right now at this moment." Mr. Pequeno, Jr., also answered in the affirmative to the following question: "Mr. Pequeno, are you testifying there is no contamination at this facility?" 1/ Mr. Pequeno, Jr., testified further that he submitted the Early Detection Incentive Program Notification Application as a precaution in the event contamination was discovered. The testimony of Mr. Pequeno, Jr., at the formal hearing contradicted the representations made on the Early Detection Incentive Program Notification Application. At all times pertinent to this proceeding both Mr. Pequeno, Jr., and Mr. Rodriguez were aware that the primary purpose of a monitoring well is to detect leaks from a petroleum storage system. At all times pertinent to this proceeding both Mr. Pequeno, Jr., and Mr. Rodriguez were aware of the existence of the monitoring wells on the subject site. The Dade County Department of Environmental Management (DERM) had asked the operator of the facility to submit monitoring reports. 2/ Mr. Rodriguez was unable to recall when DERM first requested the monitoring reports, but it is clear from his testimony that the request was made several months before the hearing. The operator knew that monitoring system checks were required and had been requested by DERM to provide reports of those monitoring system checks. The failure to conduct regular, periodic monitoring system checks creates the risk that a leak in a petroleum storage system will continue undetected. Neither the operator nor the owner monitored the underground petroleum storage system on a regular basis until July of 1991, when the operator began to monitor the system on a regular basis and began to keep a log of the results. Since September 21, 1987, Petitioner was aware that a sample of water from one of the monitoring wells (monitoring well #9) at the subject facility consistently contained the odor of petroleum. At the time of the formal hearing, monitoring well #9 still contained the odor of petroleum. On January 26, 1989, Mr. Rodriguez, as the operator of the facility, received a copy of the Pollutant Storage Tank System Inspection Report form completed by a DERM inspector. This report placed the operator of the facility on notice that evidence of a discharge of pollutants had been discovered at the facility. On March 3, 1989, DERM sent to Petitioner by certified mail a letter which provided, in pertinent part, as follows: The Department of Environmental Resources Management acknowledges that you have applied for a state administered cleanup under the "Early Detection Incentive Program" ... . However, a review of the Department's records reveals that the source of contamination has not been determined. Therefore, the discharge of hazardous materials from the underground storage system to the adjacent soils or waters may be continuing. * * * ... [Y]ou are required to: Immediately upon receipt of this letter, CEASE and DESIST from any further unauthorized discharges to the ground and/or groundwater of Dade County. Immediately upon receipt of this letter, hydrostatically test, and repair any leaks to all underground tanks and transmission lines at the subject site. Within thirty (30) days of receipt of this letter, submit to this Department certifica- tion that all underground tanks and transmis- sion lines at the subject site are tight and are not discharging contaminants to the environment. ... The letter dated March 3, 1989, was received by Petitioner on March 7, 1989. By that letter, Petitioner was placed on notice that there was a risk that a discharge of hazardous materials from the underground storage system to the adjacent soils and waters was continuing. By that letter, Petitioner was also placed on notice that DERM required that it hydrostatically test all underground tanks and transmission lines at the subject site in order to determine if leaks existed in the tanks and lines. By that letter, Petitioner was also placed on notice that DERM required that Petitioner certify that all underground tanks and transmission lines at the subject site are tight and are not discharging contaminants to the environment. Mr. Pequeno, Jr., believed that by having the tanks relined and repaired in November 1987, Petitioner had complied with the requests made in DERM's letter of March 3, 1989. On March 13, 1989, Mr. Pequeno, Jr., called DERM to determine whether the tests that were conducted following the relining and the repair of the tanks in November 1987, satisfied the requirements contained in DERM's letter of March 3, 1989. When Mr. Pequeno, Jr., did not get a response to his inquiry, he assumed that Petitioner was in compliance. Petitioner took no steps until two years later to hydrostatically test its underground tanks and transmission lines. On March 21, 1991, Petitioner had a tank tightness test conducted at the facility. The tank system tightness test conducted on March 21, 1991, indicated that five tanks did not test tight. There was no evidence that Petitioner has filed a certification with DERM that all underground tanks and transmission lines at the subject site are tight and are not discharging contaminants to the environment. No fuel transmission line tightness test has been conducted pursuant to DERM's March 3, 1989, request. As of the date of the formal hearing, Petitioner had not performed a complete investigation to determine the source of contamination as DERM had requested. The underground storage system at the subject site were continuously used for the storage and dispensing of petroleum products from September 21, 1987, to the date of the formal hearing. At all times pertinent to this proceeding deliveries of petroleum products were made to the tanks which had been identified by Petitioner as leaking. Petitioner's failure to conduct a complete investigation to determine the source of contamination, its failure to repair the tanks which failed the tank tightness, and its continued use of these tanks, create the risk that a discharge of hazardous materials may be continuing at the present time. By letter dated February 13, 1991, Respondent denied Petitioner's eligibility to participate in the Early Detection Incentive Notification Program. This letter provided, in pertinent part, as follows: The Department of Environmental Regulation has completed its eligibility review of your Early Detection Incentive Notification Application. Based upon information given in this application and a compliance verification evaluation, the Department has determined that this site is not eligible for state-administered cleanup pursuant to Section 376.3071(9), Florida Statutes (1986) for the following reasons: Failure to have storage tanks tightness tested. Request was made by the Department of Environ- mental Resources Management (DERM) on March 3, 1989. This shall be construed to be gross negligence in the maintenance of a storage system. According to Section 376.3071(9)(b)3, Florida Statutes, sites shall not be eligible for state- administered cleanup where the owner or operator has been grossly negligent in the maintenance of a petroleum storage system. By Pre-Trial Stipulation filed July 24, 1991, the parties entered into certain factual stipulations and framed the following two issues of law to be resolved: Whether X.O. #1 Corporation was grossly negligent as defined under Section 376.3071(9)(b)3, Florida Statutes, for failing to immediately investigate and abate the source of a petroleum contamination by conducting a tank and line tightness test pursuant to a request by DERM (Dade County Department of Environmental Resources Management). Whether X.O. #1 Corporation was grossly negligent as defined under Section 376.3071(9)(b)3, Florida Statues, for failing to make monthly monitoring system checks where such systems are in place.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered by the Florida Department of Environmental Regulation which denies the application of Petitioner to participate in the Early Detection Incentive Program for its facilities located at 2188 N.W. 20th Street, Miami, Florida 33142. RECOMMENDED in Tallahassee, Leon County, Florida, this 25th day of September, 1991. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of September, 1991.
The Issue Whether Petitioner's service station site known as Siesta Key Exxon Village, at 5201 Ocean Boulevard, Sarasota, Florida, is eligible for state administered cleanup pursuant to Section 376.3071(9), Florida Statutes.
Findings Of Fact Weeks Oil Company, Inc., owns and operates a service station, Siesta Key Exxon, located at 5201 Ocean Boulevard, Sarasota, Florida. On December 21, 1988, Petitioner applied, pursuant to the Early Detection Incentive Program (EDI), for state assistance due to a suspected discharge of gasoline at the facility. The application indicated that a manual test of a monitoring well, conducted on December 16, 1988, detected contamination. After free product was discovered in the monitoring wells in December, 1988, subsequent monitoring well reports for the months of January - May, 1989, indicated the presence of free petroleum product. The January, 1989, monitoring report indicates six inches of free product; the February, 1989, monitoring report indicates twelve inches of free product; the March, 1989, report failed to indicate the presence of free product; and both the April and May, 1989, monitoring reports indicate the presence of sixteen inches of free product. Purity Well Company, the monitoring well contractor retained by Weeks Oil, bailed free product out of the monitoring wells once a month during the period January through May, 1989. On May 23, 1989, Richard Steele of the Sarasota County Pollution Control Division conducted an Early Detection Incentive Program Inspection at Siesta Key Exxon, 5201 Ocean Boulevard, Sarasota, Florida, DER Facility #588521170. During the inspection, Mr. Steele examined the monitoring well reports for Siesta Key Exxon for the months of January through May, 1989. Evidence of contamination was indicated by each month's monitoring well report, and the amount of free product indicated by the monitoring well reports increased over time. During the May 22, 1989, inspection, Mr. Steele observed a minimum of two feet of free product in monitoring well number three. As part of the Early Detection Incentive Program inspection, Mr. Steele requested inventory records for Siesta Key Exxon, which records were provided on June 7, 1989. Inventory records for January, February, March and April, 1989, indicated a total shortage of 441 gallons of gasoline. Mr. Steele's inspection report of May 22, 1989, indicates that no initial remedial action other than the bailing of monitoring wells occurred subsequent to the December, 1988, EDI application. During the May 22, 1989, inspection, Mr. Steele was neither provided with any evidence of repairs to the petroleum storage system made for the purpose of acting upon monitoring well reports, nor did he visually observe any evidence of repair. By letter dated May 24, 1989, from Richard Steele to Weeks Oil Company, Mr. Weeks was informed of the presence of two feet of free product in monitoring well number three and specifically requested a tank tightness test. The May 24, 1987, letter requested Mr. Weeks to send the results of the tank tightness test to the Sarasota County Pollution Control Office or the Department of Environmental Regulation district office. Mr. Weeks discussed with Steele the fact that the contaminants appeared to come from tanks no longer in service, which tanks were scheduled for relining. Mr. Weeks did not consider it practicable to test tanks scheduled for relining and thought Steele agreed that he could delay the testing until the tanks were refitted. Mr. Steele never made such a commitment, and the tank test was never conducted. On October 20, 1989, the tanks at Siesta Key Exxon were excavated and fiberglass coated. The August 22, 1989 ineligibility determination cites as the reason for denial, the failure of Weeks Oil to conduct a tank tightness test as requested by Sarasota County or otherwise immediately investigate and repair the contamination source as required by Chapter 17-61, Florida Administrative Code, The ineligibility letter concludes that failure to immediately investigate and repair the contamination source as required by Chapter 17-61, Florida Administrative Code, shall be construed as gross negligence in the maintenance of a petroleum storage system, which precludes participation in the Early Detection Incentive Program. A tank tightness test should be performed by the owner or operator of a petroleum storage system where there are any discrepancies in inventory records or monthly monitoring system checks. Rule 17-61.050(4)(c) 3., Florida Administrative Code, requires upon discovery of an inventory discrepancy that investigation of the system "shall not stop until the source of the discrepancy has been found, the tank has been tested, repaired, or replaced, or the entire procedure has been completed." Pursuant to Rule 17-61.050(6), Florida Administrative Code, the owner or operator of a storage system shall test the entire storage system whenever the Department has ordered that such a test is necessary to protect the lands, ground waters, or surface waters of the state. Specifically, the Department may order a tank test where a discharge detection device or monitoring well indicates that pollutant has been or is being discharged. Given the inventory record discrepancy and the amount of free product continually observed in the monitoring wells at Siesta Key Exxon, it was appropriate for Mr. Steele to request a tank tightness test. The bailing of a contaminated monitoring well is not an appropriate method of determining the source of petroleum contamination. The failure of Weeks Oil Company, Inc., to timely conduct a tank test as requested by Sarasota County, acting on behalf of the Department, creates a risk of or the potential for greater damage to the environment because a continual unchecked discharge leads to the release of more petroleum product into the environment.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Environmental Regulation enter a Final Order denying the application of Petitioner to participate in the Early Detection Incentive Program. ENTERED this 3rd day of May, 1990, in Tallahassee, Florida. K. N. AYERS, Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 1990. COPIES FURNISHED: Janet D. Bowman, Esquire Department of Environmental Regulation Twin Towers Office Building 2400 Blair Stone Road Tallahassee, FL 32399-2400 James B. Weeks, Jr. Weeks Oil Company Post Office Box 100 Sarasota, FL 34230 Dale H. Twachtmann Secretary Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson General Counsel Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, FL 32399-2400
