88-000181 Clay Oil Corporation, D/B/A Cowarts 66 vs. Department Of Agriculture And Consumer Services Status: Closed Recommended Order on Wednesday, May 11, 1988.

Summary: Refund of portion of bond recommended. Evidence showed violation was inad- vertent and not intended to defraud public.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF AGRICULTURE )

AND CONSUMER SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 88-0181

)

CLAY OIL CORPORATION, )

d/b/a COWARTS 66, )

)

Respondent. )

_______________________________)

RECOMMENDED ORDER

This action came on for hearing before the Division of Administrative

Hearings' duly designated Hearing Officer, Diane Cleavinger, on March 28, 1988,

in Jacksonville, Florida. The parties were represented by counsel:

For Petitioner: Clinton Coulter, Esquire

Department of Agriculture and

Consumer Services

Mayo Building

Tallahassee, Florida 32399-0800

For Respondent: Paul S. Boone, Esquire

1221 King Street

Jacksonville, Florida 32204

The issue in this case is whether the $1,000.00 bond posted by Clay Oil

Corporation in lieu of confiscation of contaminated fuel should be refunded by

the Department of Agriculture and Consumer Services, either in whole or in part

pursuant to Section 525.06, Florida Statutes.

At the hearing, the parties stipulated that all testing of the allegedly

contaminated fuel involved in this case was done properly and that the test

result showed a high end point of 455 degrees Fahrenheit for the tested fuel.

Petitioner called Ben Bowen and William Ford as witnesses and introduced three

(3) exhibits. Respondent called Peter Eyrick as a witness and introduced one

(1) exhibit.

The parties filed proposed recommended orders on April 11, 1988, and April

9, 1988, respectively. Petitioner's and Respondent's proposed findings of fact

have been considered and utilized in the preparation of this Recommended Order

except where such proposals were not supported by the weight of the evidence or

were immaterial, cumulative or subordinate. Specific rulings on the parties'

proposed findings of fact are contained in the Appendix to this Recommended

Order.

FINDINGS OF FACT

1. On November 5, 1987, a customer at Cowarts 66 service station

complained of suspected water in the premium unleaded gasoline the customer had

purchased at Cowarts 66 service station. Pursuant to the complaint, William

Ford, an inspector for the Department, examined the premium unleaded gasoline

storage facility at Cowarts 66 service station. The inspector obtained a sample

of gasoline from the premium unleaded gasoline tank. The sample was examined by

a Department of Agriculture chemist. There was no water found in the sample.

However, the sample showed an end point of 455 degrees Fahrenheit which exceeded

the maximum end point of 437 degrees Fahrenheit allowed by the Department under

its rules governing petroleum products. Rule 5F-2.001(c)(4), F.A.C. The high

end point was caused by the gasoline stored in the tank being mixed with or

contaminated by another petroleum product with a high end point such as diesel

fuel, thereby raising the end point of the premium unleaded. The contamination

was caused by Clay Oil when their delivery driver accidentally mixed two fuels

together and delivered the contaminated fuel to Cowarts 66.

2. On November 6, 1987, the inspector issued a stop sale notice. The

Department then has the right to confiscate the contaminated gasoline. However,

the Department may elect to allow the station to post a bond in lieu of

confiscation. In this case, the Department allowed Cowarts 66 to post a

$1,000.00 bond in return for replacing the contaminated gasoline with gasoline

meeting the Department's standards. The bond was posted the same day as the

stop sale notice. The gasoline was likewise replaced either the same day or the

morning after by Clay Oil. Cowarts 66 was later reimbursed by Clay Oil for the

$1,000.00 cash bond.

3. William Ford testified that he had been an inspector for Petitioner in

the Jacksonville area for 16 years and had been familiar with Clay Oil

Corporation and its operation for the past 10 or 15 years. He knew the

corporation to be a reputable company. Prior to the instant case, he had never

had any dealings with Clay Oil Corporation regarding dispensing of contaminated

fuel. He had never had an occasion to require Clay Oil Corporation to post a

bond.

4. Ford, also, testified that the violation was clearly inadvertent and

not representative of the normal business practices of Clay Oil Corporation.

Furthermore, Ford testified that Clay Oil Corporation had been totally

cooperative with the Department and had made immediate efforts to correct the

violation regarding the contaminated fuel.

5. Clay Oil Corporation's representative, Peter T. Eyrick, testified that

upon being advised that contaminated fuel had been delivered to Cowarts' service

station, he immediately instigated measures to replace the contaminated fuel

with fuel that met Department standards. Furthermore, he testified that he had

no knowledge that contaminated fuel had been delivered or that illegal sales had

occurred until being informed by Cowarts' owner and the Department's inspector.

6. The evidence clearly establishes that this violation was inadvertant

and isolated. The violation is not representative of the normal business

practice of Respondent. The evidence, also, clearly demonstrated that

Respondent had no intent to sell adulterated fuel.

CONCLUSIONS OF LAW

7. The Division of Administrative Hearings has jurisdiction over the

parties to, and the subject matter of this proceeding. Section 120.57(1),

Florida Statutes (1987).

8. This hearing is held pursuant to Section 120.57(1), Florida Statutes.

The Department of Agriculture and Consumer Services is empowered to set minimum

standards of quality with regard to gasoline and oil products. 5F-2.001(1)(a)

F.A.C. provides, with regard to gasoline, to-wit:

(1) GASOLINE.

(c) Distillation Range - ASTM Method

D86.

4. The End Point Shall not exceed

437 degrees Fahrenheit (225 degrees

Celsius).

9. When Gasoline is found to have been below the above mentioned standard,

the Department issues a "Stop Sale Notice" so as to prevent sale of such

gasoline to the consuming public. Chapter 525, Florida Statutes.

10. A vendor who has received a Stop Sale Notice with regard to allegedly

substandard gasoline can lift the Stop Sale Notice by posting a bond and

replacing the allegedly substandard gasoline. Section 525.06, Florida Statutes,

provides in part:

. . . a refundable bond in cash or by

certified check in the amount of the

value of the product subject to

confiscation may be accepted by the

department, pending legal disposition.

The amount of this bond shall be limited

to $1,000.00. If any of the product has

been sold to retail customers, the

department is authorized to make an

assessment equal to retail value of the

product sold, not to exceed $1,000.00.

11. The Department of Agriculture and Consumer Services has had occasion

to construe the various Florida Administrative Code provisions regulating

gasoline and oil in connection with vendors' request for a refund of bonds

posted.

12. In Department of Agriculture and Consumer Services vs. 7-Eleven Food

Stores: 1411-23741 and 1406-10038 and The Southland Corporation, 6 F.A.L.R. 1657

(1983), the Department considered the issue concerning whether the Respondent,

7-Eleven Food Stores and The Southland Corporation sold ethanol enriched

gasoline from two retail outlets in Tampa and Winter Haven from pumps that were

not labeled so as to disclose the contents of the fuel in violation of Chapter

525, Florida Statutes and whether all or part of the $1,000.00 bond posted

pending legal disposition of the matter should be refunded by the Department. 6

F.A.L.R. 1658.

13. It was undisputed that the fuel involved did not meet the standard

concerning ethanol in gasoline. 6 F.A.L.R. 1659.

14. In determining how much, if any, refund the Respondent would be

entitled to receive, the Department found significant the following facts, to-

wit:

The evidence in the record also

establishes that these two violations

were isolated ones, were of a technical

nature and not related at all to any

effort by the Respondent to sell

adulterated or substandard fuel. The

violations were clearly inadvertent and

are not representative of the normal

business practices of the Respondent and

indeed no such other violations have

been shown to have occurred in the past.

The parties stipulated that in excess of

$1,000.00 worth of the ethanol gasoline

was sold to the motoring public.

Inasmuch as the parties agreed that this

violation was unintentional, that the

Respondent had been totally cooperative

with the Petitioner and had made

immediate efforts to correct the

mislabeling of the fuel when it was

brought to its attention, and in view of

the fact that the Respondent had no

knowledge that illegal sales had

occurred until informed by the

Petitioner's representative, these

factors obviate the necessity for the

maximum forfeiture to be extracted from

the Respondent.

6 F.A.L.R. 1662

15. In light of the above facts, the Department refunded $750.00 of

Respondent's $1,000.00 bond.

16. Another case of significance to the instant case is Department of

Agriculture and Consumer Services vs. Cherokee Oil Co., d/b/a Patterson Garage,

6 F.A.L.R. 2249 (1984). The issue involved in this case was whether the gas-

alcohol mix violated the Department's 50 percent evaporated temperature standard

and what disposition to make of the bond posted by Respondent.

17. The evidence was uncontroverted that the Respondent was in violation

of the above mentioned standard concerning its gasoline. The Respondent had no

knowledge of any problem or any reason to believe that there was any deviation

from State standards. 6 F.A.L.R. 2251.

18. In determining what disposition was to be made of the bond posted by

Respondent, the Department stated, to-wit:

Although the statute might be

interpreted to authorize Petitioner to

retain the whole sum, a long line of

cases reflects Petitioner's consistent

interpretation of the statute to allow

the return of part of the bond to the

owner of the non-standard gasoline.

E.g., Department of Agriculture and

Consumer Services v. Mocar Oil Co., No.

82-21446, (Final Order entered Feb. 11,

1983). Department of Agriculture and

Consumer Services v. Big "S" Oil Co.,

No. 81-3217, 4 F.A.L.R. 1319-A (Final

Order entered May 10, 1982); State of

Florida Department of Agriculture and

Consumer Services v. One Stop Oil Co.,

No. 82-342, 4 F.A.L.R. 1320-A (Final

Order entered April 30, 1982); Department

of Agriculture and Consumer Services v.

Romaco, Inc. d/b/a Majik Market, No. 82-

3102, 4 F.A.L.R. 818-A (Final Order

entered February 24, 1982); State of

Florida, Department of Agriculture and

Consumer Services v. Emmet C. Wever

d/b/a Ormand Mall 66 Services, No. 81-

2831, 4 F.A.L.R. 823-A (Final Ordered

entered February 2, 1982). In

construing the statute, deference should

be given to the agency's consistent

interpretation.

6 F.A.L.R. 2254-2255

19. In light of the above, the Department refunded $950.00 of the

Respondent's $1,000.00 bond.

20. Likewise, in Department of Agriculture and Consumer Services vs. Zippy

Mart #145, 6 F.A.L.R. 5931 (Fla. Dept. of Agriculture and Consumer Services

1984), it was undisputed that the Respondent was in violation of Department

standards in that it had inadvertently mingled diesel fuel with its unleaded

gasoline. The Respondent was allowed to post a bond in the amount of $1,000.00,

remove the product from the premises and place new product in the tank. 6

F.A.L.R. 5933.

21. Without expressing a detailed factual basis, the Department refunded

$500.00 of Respondent's $1,000.00 bond.

22. In the instant case as with the above-cited cases, the evidence is

undisputed that the violation was inadvertent and not calculated to defraud the

consuming public. The past operation of Clay Oil Corporation is exemplary and

upon being advised that there was contaminated gasoline at Cowarts 66, it moved

immediately to remove said gasoline from sale and replace it with gasoline which

met the Department's standards. Moreover, Clay Oil Corporation cooperated

completely in assisting the Department with its investigation.

23. Having considered the facts and the applicable law, it is clear that

Clay Oil Corporation is entitled to a refund of a portion of the $1,000.00 bond.

RECOMMENDATION

Based upon the foregoing findings of fact and Conclusions of Law, it is

RECOMMENDED that the Department refund to Clay Oil Corporation $750.00 of

the $1,000.00 bond.

DONE and ORDERED this 11th day of May, 1988, in Tallahassee, Florida.

___________________________________

DIANE CLEAVINGER

Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 11th day of May, 1988.

APPENDIX

CASE NO. 88-0181

Petitioner, Clay Oil Corporation, did not number its paragraphs in its

recommended order. I, therefore, have numbered the paragraphs in its

recommended order sequentially and utilize those numbers in this appendix.

Petitioner's proposed findings of fact contained in paragraphs 1, 2, 3, 4

and 5, have been adopted, in substance, in

so far as material.

Respondent's proposed findings of fact contained in paragraphs 1, 2 and 3,

have been adopted, in substance, in so far as material.

Respondent's proposed findings of fact contained in paragraph 4 has been

adopted, in substance, in so far as material, except for the finding regarding

the number of gallons sold. The number of gallons sold was not shown by the

evidence.

Respondent's proposed findings of fact contained in paragraph 5 was not

shown by the evidence.

COPIES FURNISHED:

Peter T. Eyrick

Clay Oil Corporation

Post Office Box 8

Doctors Inlet, Florida 32030

Harry Lewis Michael, Esquire

Florida Department of Agriculture

and Consumer Services

Mayo Building

Tallahassee, Florida 32399-0800

Paul S. Boone, Esquire

1221 King Street

Jacksonville, Florida 32204

Honorable Doyle Connor

Commissioner of Agriculture

The Capitol

Tallahassee, Florida 32399-0810

Ben Pridgeon, Chief

Bureau of Licensing & Bond

Department of Agriculture

Lab Complex

Tallahassee, Florida 32399-1650