08-001473EF Department Of Environmental Protection vs. Z.K. Mart, Inc. Status: Closed DOAH Final Order on Wednesday, May 20, 2009.

Summary: Respondent is liable under Count II of the NOV for failing to submit a site assessment report addendum within 60 days, but Respondent is not liable under Count II because the count was not properly plead.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF ENVIRONMENTAL )

PROTECTION, )

)

Petitioner, )

)

vs. ) Case No. 08-1473EF

)

Z. K. MART, INC., )

)

Respondent. )

)

FINAL ORDER

The final hearing in this case was held on February 10,

2009, in Tallahassee, Florida, before Bram D. E. Canter, an

Administrative Law Judge of the Division of Administrative

Hearings (DOAH).

APPEARANCES

For Petitioner Department of Environmental Protection:

Jason A. Wiles, Esquire

Department of Environmental Protection

3900 Commonwealth Boulevard

The Douglas Building, Mail Station 35

Tallahassee, Florida 32399-3000

For Respondent Z. K. Mart, Inc.:

Robert D. Fingar, Esquire

Gramling & Fingar, LLP

1983 Centre Pointe Boulevard, Suite 200

Tallahassee, Florida 32308-7823

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent violated

certain rules of the Department of Environmental Protection

(Department) related to petroleum contamination site cleanup

criteria as alleged in the Department’s Notice of Violation,

Orders for Corrective Action, and Administrative Penalty

Assessment (NOV); whether Respondent is liable for the

administrative fines and investigative costs assessed by the

Department; whether mitigation of the administrative fine is

appropriate; and whether Respondent should be required to take

the corrective action described in the NOV.

PRELIMINARY STATEMENT

On February 26, 2008, the Northwest District of the

Department issued a three-count NOV against Respondent.

Respondent petitioned for an administrative hearing and the

Department referred the case to DOAH.

The Department filed an Amended Motion for Partial Summary

Final Order, asserting that there were no genuine issues of

material fact as to Respondent’s liability. The motion was

denied, in part because there is no authority for issuance of a

partial summary final order.

Respondent moved for a stay of the proceedings to allow

Respondent time to complete pending litigation with its insurer,

which was denied. However, the case was placed in abeyance for

approximately 50 days.

The Department moved to strike Respondent’s defense that

its insurer was a necessary party and its defense of inability

to pay for further site assessment. That motion was granted.

The Department filed a motion in limine, seeking to prevent

Respondent from presenting evidence regarding insurance

coverage, Respondent’s litigation with its insurer, or financial

inability to pay for corrective actions. The motion was denied

because these matters were deemed relevant to the issue of

mitigating circumstances.

At the final hearing, the Department’s Exhibits 1 and 2

were admitted into evidence. Respondent’s Exhibits 1 through 17

were admitted into evidence. Neither party called a witness.

At the request of the Department, official recognition was taken

of Florida Administrative Code Chapters 62-761 and 62-770.

The one-volume Transcript of the hearing was filed with

DOAH. The parties filed Proposed Final Orders that were

carefully considered in the preparation of this Final Order.

FINDINGS OF FACT

The Parties

1. The Department is the state agency charged with the

power and duty to administer and enforce the provisions of

Chapters 376 and 403, Florida Statutes (2008), 1 and the rules

promulgated in Florida Administrative Code Title 62, pertaining

to petroleum contamination.

2. Respondent Z.K. Mart, Inc., is a Florida corporation,

and owns and operates a retail fueling facility (DEP Facility

No. 8507091) located at 5077 Normand Boulevard, Jacksonville,

Florida (“the facility”).

3. In January 2004, soil sampling in conjunction with the

removal of an underground petroleum storage tank at the facility

showed petroleum contamination.

4. Respondent reported the contamination to the Department

in a Discharge Report Form on January 29, 2004.

5. Respondent removed the tank that was the source of the

contamination, conducted source removal activities, and

submitted various reports to the Department, including a Site

Assessment Report (SAR), submitted in February 2006.

6. In March 2006, the Department determined the SAR was

incomplete and requested that Respondent submit a SAR addendum.

To date, Respondent has not submitted the SAR addendum.

7. Respondent’s insurer, Mid-Continent Casualty Company,

refused coverage for the assessment and cleanup costs associated

with the reported discharge, asserting that the contamination

“arose out of” the tank removal. Respondent contends that the

contamination occurred before the tank removal. In

October 2004, Respondent sued Mid-Continent in the circuit court

for Duval County for wrongful denial of coverage.

8. Respondent requested that the Department also file suit

against Mid-Continent, pursuant to Section 376.309(2), Florida

Statutes, for violating financial responsibility requirements.

In December 2008, the Department sued Mid-Continent. The

litigation is ongoing.

9. Respondent spent over $300,000 to remove 2,503 tons of

contaminated soil and to conduct site assessment activities

associated with the reported contamination.

10. In August, September, and October 2006, Respondent

filed financial affidavits and additional materials with the

Department in support of Respondent’s claim that it was unable

to pay for additional assessment work.

11. By letter dated November 3, 2008, the Department

rejected Respondent’s claim that it was financially unable to

undertake the requested site assessment.

12. Respondent submitted a financial affidavit prepared by

Abdul Khan, the vice president and secretary of Z.K. Mart, Inc.,

which states that the net income of Respondent was $36,479 at

the end of 2005.

13. Financial information for later years, including 2008,

was also submitted by Respondent. However, no financial

analysis was included.

14. No evidence was submitted to establish the estimated

costs of future site assessment activities.

15. It cannot be determined from the financial information

in the record whether Respondent is currently financially able

to conduct additional site assessment activities.

16. The Department states in the NOV that Count I

constitutes a violation of Florida Administrative Code Rule 62-

770.800(5). That rule provides that it is a violation of

Chapters 376 and 403, Florida Statutes, for a responsible party

to fail to submit additional information or meet any time frame

“herein.” The Department explained that Count I was intended to

charge Respondent with failing to complete site assessment.

17. The only applicable time frame in Florida

Administrative Code Rule 62-770.800, entitled “Time Schedules,”

is in subsection (3), which requires a responsible party to

submit additional information within 60 days of the Department’s

request for the information. That violation, however, is more

specifically charged in Count II.

18. Count II of the NOV charges Respondent with violating

Florida Administrative Code Rule 62-770.600(11), which states

that, if a SAR is incomplete, the Department shall inform the

responsible party and the responsible party shall submit a SAR

addendum within 60 days.

19. Counts I and II charge Respondent with the same

offense, failing to submit requested information within 60 days

of the request. As stated in the Conclusions of Law, Respondent

cannot be made to pay administrative fines under a duplicate

charge.

20. Count III of the NOV charges Respondent with liability

for the Department’s investigative costs of $500 incurred in

conjunction with this enforcement matter. These are nominal

costs and were never disputed by Respondent.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

case under Sections 120.569, 120.57(1), and 403.121(2), Florida

Statutes.

22. Section 376.303(1)(j), Florida Statutes, authorizes

the Department to commence an administrative action to enforce

the requirements of Sections 376.30 through 376.319, Florida

Statutes. The charges in the NOV are based on these statutes.

23. If the Department has reason to believe a violation

has occurred, it may institute an administrative proceeding to

establish liability, to recover damages, and to order the

prevention, abatement, or control of the conditions creating the

violation. See § 403.121(2)(a) and (b), Fla. Stat.

24. The Department has the burden of proving by a

preponderance of the evidence that Respondent is responsible for

the violations alleged in the NOV. See § 403.121(2)(d), Fla.

Stat.

25. A final order shall be entered by the administrative

law judge on all matters, including the imposition of

administrative penalties. See § 403.121(2)(d), Fla. Stat.

26. The Department explained that Count I of the NOV was

intended to charge Respondent with failing to complete site

assessment. Count I refers to Florida Administrative Code Rule

62-770.600(10), which provides that “Site assessment activities

shall not be complete until such time as a [SAR] is approved.”

That is merely a statement of process. Later in the NOV, the

Department states that Count I constitutes a violation of

Florida Administrative Code Rule 62-770.800(5). That rule

provides that it is a violation of Chapters 376 and 403, Florida

Statutes, for a responsible party to fail to submit additional

information or meet any time frame “herein.” The only

applicable time frame in Florida Administrative Code Rule 62-

requires a responsible party to submit additional information

within 60 days of the Department’s request for the information.

That violation, however, is more specifically charged in Count

II. There is no time schedule established in the rule for

completion of the SAR or for completion of the site assessment.

27. The Department did not properly charge Respondent with

the failure to complete site assessment, because the law cited

does not impose the duty to complete site assessment.

28. As presented in the NOV, Count I does not charge a

different offense than Count II. Persons cannot be charged

twice for the same offense.

29. For the reasons stated above, Respondent is not liable

under Count I of the NOV.

30. The Department proved that Respondent is liable under

Count II of the NOV, for failing to submit the SAR addendum

within 60 days of the Department’s request.

31. Respondent argued that it should not be liable under

either Count I or Count II because of its financial inability to

pay for site assessment due, in part, to the refusal of Mid-

Continent to cover Respondent’s assessment costs. Respondent

used an analogy of car insurance, but it is widely understood

that a person who is at fault in a traffic accident remains

liable without regard to the existence of auto insurance

coverage.

32. The Department may take into account a facility

owner’s or operator’s financial status in the Department’s

enforcement actions. However, there is no express authority in

Chapter 376 or 403, Florida Statutes, and express authority

would be needed, to make liability for prohibited acts or

noncompliance depend on the financial status of the owner or

operator. Respondent’s financial status is not a defense to its

liability under the NOV.

33. In this administrative enforcement action, the total

amount of all penalties cannot exceed $10,000. See

§ 403.121(2)(b), Fla. Stat. Curiously, the Department sought a

penalty of $10,000 under Count I, leaving no proposed penalty to

assess under Count II.

34. The manner in which the Department distributed the

penalties in its NOV does not prevent the application of the

appropriate statutory penalty for Respondent’s violation under

Count II of the NOV, which was proven by the evidence.

35. Section 403.121(4)(f), Florida Statutes, establishes a

penalty of $500 for the failure to submit required reports.

36. Penalties “may” be assessed for each additional day

during which a violation occurs. See § 403.121(6), Fla. Stat.

Under the circumstances of this case, it would be fair and

reasonable to assess a penalty for seven additional days of

noncompliance, for a total penalty of $4,000 under Count II.

37. Evidence may be received in mitigation and may reduce

a penalty up to 50 percent for mitigating factors, including

good faith efforts to comply prior to or after discovery of the

violations by the Department. See § 403.121(10), Fla. Stat.

38. The Department admits that Respondent made good faith

efforts to comply with the law until early 2006. Under the

circumstances presented, it would be fair and reasonable to

reduce the penalty for Count II by 50 percent, to $2,000.

39. The penalty may be further reduced upon an affirmative

finding that the violation was caused by circumstances beyond

the reasonable control of a respondent and could not have been

prevented by due diligence. Id.

40. Respondent argues that the failure of its insurance

company to cover the costs of site assessment and remediation is

a circumstance beyond its reasonable control that justifies the

further reduction of the penalty to zero. The Department

strongly disagrees.

41. If a respondent could be excused from site assessment

and cleanup by a showing that its insurer denied coverage, the

potential would be created for collusion and other mischief,

because it would be in the financial interest of the insurer to

avoid coverage. Moreover, it is within Respondent’s control, as

illustrated in this case, to sue the insurer to obtain a

judgment for coverage.

42. The financial state of a person or company would

rarely, if ever, constitute circumstances beyond the control of

the person or company.

43. The penalties in this case should not be further

reduced.

44. In Count III of the NOV, the Department seeks to

recover $500 of investigative costs incurred in this enforcement

action. These are nominal costs and were not disputed by

Respondent.

Corrective Action

45. The Departments demands in the NOV that Respondent be

required to submit the SAR addendum and to complete site

assessment and remediation pursuant to the law. Those are

reasonable demands that should be imposed.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that:

1. Within 60 days of this Final Order, Respondent shall

submit a Site Assessment Report addendum to the Department.

2. Respondent shall complete site assessment and any

required contamination cleanup at the facility in conformance

with Florida Administrative Code Chapters 62-761 and 62-770.

3. Within 60 days of this Final Order, Respondent shall

pay $2,000 to the Department for the administrative penalty

assessed under Count II and $500 for the Department’s

investigative costs assessed under Count III. Payment shall be

made by cashier’s check or money order payable to the “State of

Florida Department of Environmental Protection” and shall

include thereon OGC Case No. 07-2195 and the notation “Ecosystem

Management and Restoration Trust Fund.” The payment shall be

sent to the Department of Environmental Protection, Northeast

District Office, 7825 Baymeadows Way, Suite 200-B, Jacksonville,

Florida 32236-7590.

DONE AND ORDERED this 20th day of May, 2009, in

Tallahassee, Leon County, Florida.

BRAM D. E. CANTER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 20th day of May, 2009.

ENDNOTE

1/ All references to the Florida Statutes are to the 2008

codification unless otherwise indicated.

COPIES FURNISHED :

Robert D. Fingar, Esquire

Gramling & Fingar, LLP

1983 Centre Pointe Boulevard, Suite 200

Tallahassee, Florida 32308-7823

Jason Alan Wiles, Esquire

Department of Environmental Protection

The Douglas Building, Mail Station 35

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

Michael W. Sole, Secretary

Department of Environmental Protection

The Douglas Building, Mail Station 35

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

Tom Beason, General Counsel

Department of Environmental Protection

The Douglas Building, Mail Station 35

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

Lea Crandall, Agency Clerk

Department of Environmental Protection

The Douglas Building, Mail Station 35

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to Section 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing the original

Notice of Appeal with the agency clerk of the Division of

Administrative Hearings and a copy, accompanied by filing fees

prescribed by law, with the District Court of Appeal, First

District, or with the District Court of Appeal in the Appellate

District where the party resides. The notice of appeal must be

filed within 30 days of rendition of the order to be reviewed.