95-001941 The Beach And Tennis Club Condominium vs. Department Of Environmental Protection Status: Closed Recommended Order on Monday, July 24, 1995.

Summary: Condominium association not entitled to participate in Florida petroleum liability and restoration insurance program due to lack of financial responsibility.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BEACH AND TENNIS CLUB )

CONDOMINIUM, )

)

Petitioner, )

)

vs. ) CASE NO. 95-1941

)

DEPARTMENT OF ENVIRONMENTAL )

PROTECTION, )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Final hearing in the above-styled case was held on June 16, 1995. Robert

E. Meale, Hearing Officer of the Division of Administrative Hearings,

participated by videoconference from Tallahassee, as did Respondent's counsel

Douglas Beason and representative William Euman. Petitioner's counsel and

representative, as well as the court reporter, attended the hearing in Ft.

Myers.

APPEARANCES

The parties were represented at the hearing as follows:

For Petitioner: Thomas B. Hart

Humphrey & Knott, P.A.

Post OFfice Box 2449

Ft. Myers, Florida 33902-2449

For Respondent: W. Douglas Beason

Assistant General Counsel

Department of Environmental Protection

2600 Blair Stone Road

Tallahassee, Floirda 32399-2400

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner is entitled to participate in

the Florida Petroleum Liability and Restoration Insurance Program, pursuant to

the provisions of Section 376.3072(2)(a)3, Florida Statutes (Supp. 1994).

PRELIMINARY STATEMENT

At the hearing, the parties agree to present a stipulation to the hearing

officer. The facts below are derived from the stipulation. Neither party

called any witnesses. The parties agreed to admission of Hearing Officer

Exhibit 1 as the sole exhibit.

The record was left open to allow Petitioner to review certain materials

and indicate whether it wished to attempt to show that it satisfied the

requirement of financial responsibility, as of December 31, 1993, by one or more

of the means listed in 40 C.F.R. 280, Subpart H. By letter dated June 29, 1995,

Petitioner advised that it would not seek to make such a showing.

The transcript was filed July 10, 1995. The numbered proposed findings of

fact of both parties are adopted or adopted in substance.

FINDINGS OF FACT

1. Petitioner is a residential condominium association.

2. Petitioner owned or operated a 1000-gallon tank to store diesel oil to

operate an emergency power generator. Following the discovery of an underground

discharge, Petitioner closed the tank and reported the discharge to Respondent

on July 12, 1994.

3. Following the receipt of an application, Respondent, by

letter dated March 22, 1995, determined that Petitioner was ineligible to

participate in the Florida Petroleum Liability and Restoration Insurance Program

(Program). The reason cited for the determination is:

Pursuant to Section 376.3072(2)(a)3.a, F.S.

the facility was required to be in compliance

with the Department rules at the time of the

discharge. Pursuant to Section 62-761.480,

F.A.C. owners or operators of storage tank

systems containing petroleum products should

have demonstrated to the Department the ability

to pay for facility cleanup and third-party

liability resulting from a discharge at the

facility. The compliance deadline for financial

responsibility for this facility was December

31, 1993. At the time of discovery of the

discharge, there was no documentation to

demonstrate financial responsibility for this

facility. Therefore, this site is not eligible

for restoration coverage.

4. Petitioner did not make any showing of financial responsibility prior

to December 31, 1993. The significance of the June 29 letter from Petitioner's

counsel is that, even ignoring Petitioner's failure to demonstrate financial

responsibility to Respondent by December 31, 1993, Petitioner cannot prove that

it met the financial responsibility requirements as of such date.

5. Petitioner is a small business under Section 288.703(1).

6. Upon discovery of the discharge, Petitioner promptly reported the

discharge to Respondent and drained and removed the system from service.

7. Petitioner did not intentionally cause or conceal a discharge or

disable leak detection equipment.

8. Petitioner proceeded to complete initial remedial action as defined by

the rules.

9. Petitioner never received an eligibility order from Respondent, so

Petitioner was excused from applying for third- party liability coverage.

CONCLUSIONS OF LAW

10. The Division of Administrative Hearings has jurisdiction over the

subject matter. Section 120.57(1), Florida Statutes. (All references to

Sections are to Florida Statutes (Supp. 1994). All references to Rules are to

the Florida Administrative Code.)

11. Petitioner has the burden of showing that it is eligible to

participate in the Program. Department of Transportation v. J. W. C. Company,

Inc., 396 So. 2d 778 (Fla. 1st DCA 1981).

12. The Legislature created the Program to "provide restoration funding

assistance to facilities regulated by and in compliance with the department's

petroleum storage tank rules." Section 376.3072(1).

13. Section 376.3072(2)(a) provides in relevant part:

Any owner or operator of a petroleum storage

system may become an insured in the restoration

insurance program at a facility provided:

1. A site at which an incident has occurred

shall be eligible for restoration if the insured

is a participant in the third-party liability

insurance program or otherwise meets applicable

financial responsibility requirements. After

July 1, 1993, the insured must also provide the

required excess insurance coverage or self-

insurance for restoration to achieve the financial

responsibility requirements of 40 C.F.R. s.

280.97, subpart H, not covered by paragraph (e).

* * *

3. A site where a discharge is reported to

the department prior to January 1, 1995, where

the owner is a small business under s. 288.703(1),

. . . shall be eligible for [specified] eligible

restoration costs ..., provided that:

a. The facility was in compliance with depart-

ment rules at the time of the discharge.

b. The owner or operator has, upon discovery

of a discharge, promptly reported the discharge

to the department, and drained and removed the

system from service, if necessary.

c. The owner or operator has not intentionally

caused or concealed a discharge or disabled leak

detection equipment.

d. The owner or operator proceeds to complete

initial remedial action as defined by department

rules.

e. The owner or operator, if required and if

it has not already done so, applies for third-party

liability coverage for the facility within 30 days

of receipt of an eligibility order issued by the

department pursuant to this provision.

14. Section 376.3072(2)(b) provides in relevant part:

1. To be eligible to be certified as an insured

facility, for discharges reported after January 1,

1989, the owner or operator shall file an affidavit

upon enrollment in the program and must file an

affidavit each year upon the scheduled date of

payment of the annual registration fee assessed

pursuant to s. 376.303, or, upon the date of

installation of the facility or enrollment in the

program and each year thereafter, if the

facility is a petroleum storage system that is

not subject to the registration fee. ...

2. Except as provided in paragraph (a), to be

eligible, the insured must demonstrate to the

department that at the time the discharge was

reported, the insured had financial responsibility

for third-party claims and excess coverage, as

required by this section and 40 C.F.R. s. 280.97(h)

3. To be eligible, the facility shall be in

compliance with department rules as demonstrated

at the most recent inspection conducted by the

department or the insured demonstrates that any

necessary corrective actions identified at the

most recent inspection have been corrected as

ordered by the department. Should a reinspection

of the facility be necessary to demonstrate

compliance, the insured shall pay an inspection

fee not to exceed $500 per facility . . ..

4. The department shall issue an order stating

that the site is eligible for restoration coverage

if the criteria listed in subparagraphs 1-3 are met.

5. Upon the filing of a discharge notification

with the department, the department may inspect

the facility. The department shall provide

restoration coverage for the facility when a

claim requesting such coverage is filed, unless

a. The insured has failed to abate the known

source of a discharge;

b. The insured has failed to take corrective action

as required by the department; or

c. The insured has intentionally caused or concealed

a discharge or disabled leak detection equipment.

. . .

15. Petitioner makes several arguments as to why it is eligible to

participate in the Program. None of these arguments is persuasive.

16. Petitioner argues that Section 376.3072(2)(b)2 removes the requirement

of financial responsibility for small businesses seeking to participate in the

Program under Section 376.3072(2)(a)3. Petitioner relies on the introductory

clause of Section 376.3072(2)(b)2, "Except as provided in paragraph (a)."

17. Petitioner misreads the Section 376.3072. The purpose of the

introductory clause is to avoid conflict between two subsections of Section

376.3072(2). Section 376.3072(2)(a)1 contains two financial-responsibility

requirements. The first requirement, applicable to incidents occurring on or

before July 1, 1993, requires a certain extent of financial responsibility. This

is the first sentence of Section 376.3072(2)(a)1. The second requirement,

applicable to incidents occurring after July 1, 1993, requires the "required

excess insurance coverage or self-insurance . . . to achieve the financial

responsibility requirements of 40 C.F.R. 280.97, subpart H . . .." This is the

second sentence of Section 376.3072(2)(a)1.

18. The portion of Section 376.3072(2)(b)2 after the introductory clause

restates the more onerous financial- responsibility requirement of the second

sentence of Section 376.3072(2)(a)1. Without the introductory clause, Section

376.3072(2)(b)2 would thus conflict with the first sentence of Section

376.3072(2)(a)1 for incidents occurring on or before July 1, 1993.

19. Petitioner argues that the small-business provisions of Section

376.3072(2)(a)3 do not require financial responsibility for additional reasons.

20. Petitioner argues that its underground storage tank was in compliance

with the rules because it was not subject to the rules. Petitioner relies on

Rule 62-761.300(2)(h) and (p), which exempt from the requirements of Chapter 62-

761:

(h) Any storage tank system used for storing

heating oil for consumptive use on the premises

where stored [and]

(p) Any residential storage tank system[.]

21. It is unnecessary to determine whether tank was subject to the rules.

If Petitioner's tank fell within either or both of these exemptions, then it

would not be subject to the rules. This does not mean that the tank would comply

with the rules and thus be eligible for coverage under the Program. To the

contrary, the Program is reserved for facilities "regulated by and in compliance

with" the rules. If Petitioner's argument were correct, its tank would not be

regulated by the rules and would not be eligible for coverage under the Program.

22. In the alternative, Petitioner argues that, if financial

responsibility is a requirement of the small-business provisions of Section

376.3072(2)(a)3, then Petitioner's tank is not in violation of the rules until

Petitioner is given a chance to correct the violation. Petitioner relies on

Section 376.3072(2)(b)3, which addresses the compliance of facilities and

provides that a participant may show compliance by showing that any violations

cited in the most recent inspection have been corrected.

23. This argument confuses the facility with the owner or operator. The

financial-responsibility requirements are imposed on owners or operators, not

facilities. DEP inspects facilities. Section 376.3072(2)(a)3 provides only

that, when a facility is cited, the participant has a chance to correct the

deficiency. Other provisions make it clear that if an owner or operator lacks

financial responsibility at the relevant time, it is ineligible to participate

in the Program. The inspections and corrective actions described in Section

376.3072(2)(a)3 apply to facilities, not owners or operators.

24. Petitioner argues that it was not subject to the financial-

responsibility requirements due to provisions of 40 C.F.R. 280. Either these

provisions do not apply to Petitioner's tank or, if they do, they are covered in

the discussion of similar provisions contained in Chapter 62-761.

RECOMMENDATION

It is

RECOMMENDED that the Department of Environmental Protection enter a final

order determining that Petitioner is ineligible to participate in the Program.

ENTERED on July 24, 1995, in Tallahassee, Florida.

___________________________________

ROBERT E. MEALE

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

on July 24, 1995.

COPIES FURNISHED:

Virginia B. Wetherell, Secretary

Department of Environmental Protection

Twin Towers Office Building

2600 Blair Stone Road

Tallahassee, FL 32399-2400

Kenneth Plante, General Counsel

Department of Environmental Protection

Twin Towers Office Building

2600 Blair Stone Road

Tallahassee, FL 32399-2400

Thomas B. Hart

Humphrey & Knott, P.A.

P.O. Box 2449

Ft. Myers, FL 33902-2449

W. Douglas Beason

Assistant General Counsel

Department of Environmental Protection

2600 Blair Stone Road

Tallahassee, FL 32399-2400

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.