02-004850 Asher G. Sullivan, Jr., D/B/A St. Augustine Trust vs. Department Of Environmental Protection Status: Closed Recommended Order on Wednesday, November 12, 2003.

Summary: The owner of underground storage tanks was not eligible for restoration coverage because he did not maintain financial responsibility, i.e., insurance coverage, upon the report of the discharge to the Department of Environmental Protection.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ASHER G. SULLIVAN, JR., d/b/a )

ST. AUGUSTINE TRUST, )

)

Petitioner, )

)

and ) Case No. 02 - 4850

)

ASSAD O. KNIO and SELMA KNIO, )

)

Intervenors, )

)

vs. )

)

DEPARTMENT OF ENVIRONMENTAL )

PROTECTION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause was heard by Charles A.

Stampelos, the assigned Administrative Law Judge of the Division

of Administrative Hearings, on Septe mber 4, 2003, in

Tallahassee, Florida.

APPEARANCES

For Petitioner Asher G. Sullivan, Jr., d/b/a

St. Augustine Trust:

Gary S. Edinger, Esquire

305 Northeast First Street

Gainesville, Florida 32601

For Intervenors Assad O. Kn io and Selma Knio:

Sidney F. Ansbacher, Esquire

Upchurch, Bailey & Upchurch, P.A.

Post Office Drawer 3007

St. Augustine, Florida 32085

For Respondent Department of Environmental Protection:

Stan M. Warden, Esquire

Department of Environmental Protection

The Douglas Building

3900 Commonwealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

STATEMENT OF THE ISSUE

The issue presented is whether, pursuant to Section

376.3072, Florida Statutes, Petitioner, Asher G. Sullivan, Jr.,

d/b/a St. Augustine Trust, is eligible for restoration coverage

pursuant to the Florida Petroleum Liability Restoration and

Insurance Program (FPLRIP), Section 376.3072, Fl orida Statutes.

PRELIMINARY STATEMENT

On or about October 8, 2002, Petitioner filed a claim with

the Department of Environmental Protection (Department) for

restoration coverage under FPLRIP for the clean - up of a petroleum

discharge at DEP Facility No. 558515938.

On October 21, 2002, the Department issued a letter to

Petitioner concluding that Petitioner's facility (DEP Facility

No. 558515938; Chevron - 207) was not been properly enrolled in

FPLRIP pursuant to Section 376.3072(2)(b)2., after September 3,

1998, and therefore, the facility was "not eligible for state

assisted petroleum product remediation."

On or about November 7, 2002, Petitioner filed a timely

Request for Formal Administrative Hearing with the Department,

and the Department forwarded t he request to the Division of

Administrative Hearings (DOAH) on December 19, 2002, for the

assignment of an administrative law judge to conduct a final

hearing.

On January 14, 2003, a Petition to Intervene was filed on

behalf of Assad O. Knio and Selma Knio (Intervenors), who

formerly owned the facility referred to above and hold the

mortgage on the property. On January 21, 2003, intervention was

granted. (Intervenors support Petitioner in this case.)

On July 3, 2003, the Department filed a Motion for Summary

Order, which was treated as a motion to relinquish jurisdiction

pursuant to Section 120.57(1)(i). Petitioner and Intervenors

filed separate responses to the Department's motion. On July 14,

2003, the Department's motion was denied.

On July 11 , 2003, Petitioner and Intervenors filed a

Unilateral Pre - Hearing Stipulation, in light of the pending

hearing date, which was continued.

On September 3, 2003, the Department filed a Motion in

Limine to prohibit Petitioner and Intervenors from providing

e vidence concerning specific terms of Petitioner's insurance

agreement and "concerning any date of petroleum discharge." The

Department's Motion in Limine was considered during the final

hearing and the motion was denied, subject to noting the

Department's standing objection to evidence offered in support of

these two issues, and further subject to the caveat that the

Department make an objection to specific evidence regarding both

issues.

On September 3, 2003, the Department filed a Pre - Hearing

Statement. At the outset of the final hearing, the parties

agreed to certain facts which required no proof at hearing.

These facts are included in Petitioner's and Intervenors

Unilateral Pre - Hearing Stipulation, at pages 6 - 8, as follows:

1. All of the parties ha ve standing.

2. Petitioner owns the following described

FDEP Facility: Café Erotica Restaurant, 2620

S.R. 207, Elkton, Florida 32033, FDEP Facility

No. 558515938.

3. Petitioner last held a certificate of

insurance on the Facility, which states it has

an annual term of September 3, 1997, through

September 3, 1998.

4. On August 2, 1998, FLIPA, as agent for

Petitioner's insurance company, sent a letter

to Petitioner asking for information to renew

the policy. On September 11, 1998, FLIPA wrote

again to Petitioner, saying that the policy was

canceled on September 3, 1998.

5. Petitioner removed the underground

storage tanks at the Facility on or about

September 15, and filed a Discharge Reporting

Form on September 17, 1998.

6. Petitioner applied with Respondent for

site coverage for the discharge under the

Florida Petroleum Liability Restoration

Insurance Program ("FRLRIP") under Section

376.3072(2)(b), Florida Statutes.

7. By October 21, 2002, letter (the "Denial

Letter"), the Respondent denied FPLR IP

eligibility stating that the Facility was

ineligible because the Facility was not

"properly enrolled" in FRLRIP after September

3, 1998.

8. [deleted]

9. The Respondent did not issue an

eligibility order "upon report of [the]

discharge," as set forth in Section

376.3072(2)(b)4, Florida Statutes.

10. That basis of denial at paragraph E.7.,

above, remains the Respondent's position today.

11. Lewis Cornman was the Respondent's

representative who made the determination of

denial reflected in the Denia l Letter. He

still concurs with the position set forth in

E.7., above.

12. Mr. Cornman relied on the dates in the

Certificate of Eligibility generated by FLIPA

as agent for the Respondent in determining to

deny the Petitioner's request.

13. The petrol eum discharge that was

reported on or about September 15, 1998, has

not been abated.

After granting several continuances, the final hearing was

held on September 4, 2003, in Tallahassee, Florida.

During the final hearing, the parties agreed to the

admis sion of Joint Exhibits A through R. Petitioner presented

the testimony of Asher G. Sullivan, Jr. Intervenor presented the

testimony of Lewis J. Cornman, Jr., Environmental Manager for the

Department of Environmental Protection; Robert D. Fingar,

Esquire; and William C. Zegel, P.E., D.E.E. Petitioner offered

Exhibit 1, a policy of insurance, to which the Department

objected. Ruling on the admissibility of Petitioner's Exhibit 1

was reserved, and the objection is overruled.

The Department, rather than calling Mr. Cornman during its

case - in - chief, was authorized to present its case, in part,

through cross - examination of Mr. Cornman. The Department's

Exhibit 1 was admitted without objection. The Department also

called Mr. Sullivan during its case - in - chi ef.

The one - volume Transcript (referred to herein by the symbol

(T:) followed by a page reference) of the final hearing was filed

with DOAH on October 1, 2003. After granting two unopposed

extensions of time, all the parties filed separate proposed

recom mended orders, and they have been considered in the

preparation of this Recommended Order.

All citations are to Florida Statutes (2002), unless

otherwise indicated.

FINDINGS OF FACT

The Parties

1. Asher G. Sullivan, Jr., owns and is the trustee of the

Asher G. Sullivan, Jr. St. Augustine Trust (Trust). The Trust

owns a Florida Department of Environmental Protection Facility

known as Café Erotica Restaurant, 2620 S.R. 207, Elkton, Florida

32033, FDEP Facility No. 558515938. See Endnote 1. The Trust

p urchased the property in or around 1995. Neither Mr. Sullivan

nor the Trust ever operated a petroleum facility or a gas

station on the property. However, the property, when purchased

by the Trust, had underground petroleum storage tanks. (The

parties st ipulated that all of the parties have standing.)

2. Intervenors, Assad O. Knio and Selma Knio, formerly

owned the property, and currently hold the mortgage on the

property.

3. The Department is charged with the statutory

responsibility pursuant to Sectio n 376.3072, to determine

whether facilities are eligible to participate in FPLRIP.

Insurance and Eligibility

4. A Certificate of Insurance was issued by Commerce &

Industry Insurance Company to Asher G. Sullivan, Jr. St.

Augustine Trust, certifying "th at it has issued liability

insurance covering the following underground storage tank(s):

CHEVRON - 207 2630 SR 207 ELKTON FL 32033 7 Tanks." 1 The effective

date of the Certificate of Insurance, Policy No. FPL8079861, was

September 3, 1997, and the period o f coverage was from

September 3, 1997, to September 3, 1998. The limits of

liability are $1 million for each loss and $1 million for all

losses, exclusive of legal defense costs. (Mr. Sullivan

believed that a similar certificate of insurance and policy

c overed the facility's tanks on the property between September

1996 and September 1997 which was renewed thereafter.)

5. The Certificate of Insurance was issued

for taking corrective action and

compensating third parties for bodily injury

and property da mage caused by sudden

accidental releases and non - sudden

accidental releases, in accordance with and

subject to the limits of liability

exclusions, conditions and other terms of

the policy arising from operating the

underground storage tank(s) identified

a bove.

6. Subparagraphs 2.d. and e. of the Certificate of

Insurance provide:

d. Cancellation or any other termination of

the insurance by the 'Insurer', except for

non - payment of premium and misrepresentation

by the insured, will be effective only upon

written notice and only after the expiration

of 60 days after a copy of such written

notice is received by the insured.

Cancellation for non - payment of premium or

misrepresentation by the insured will be

effective only upon written notice and only

after expiration of a minimum of 10 days

after a copy of such written notice is

received by the insured.

e. The insurance covers claims otherwise

covered by the policy that are reported to

the 'Insurer' within six months of the

effective date of cancellation o r non - renewal

of the policy except where the new or renewed

policy has the same retroactive date or a

retroactive date earlier than that of the

prior policy, and which arise out of any

covered occurrence that commenced after the

policy retroactive date if applicable and

prior to such policy renewal or termination

date. Claims reported under such extended

reporting period are subject to the terms,

conditions, limits, including limits of

liability and exclusions of the policy.

The authorized agent of the in surer certified, at the bottom of

page two of the Certificate, "that the wording of this

instrument is identical to the wording in 40 CFR 280.97(b)(2)

and that the 'Insurer' is licensed to transact the business of

insurance in one or more states." See 40 C.F.R. Section

280.97(b)(2)2.d. and e. See Finding of Fact 50.

7. Petitioner's Exhibit 1 was issued by Commerce &

Industry Insurance Company, and is entitled "Florida Storage

Tank Third - Party Liability and Corrective Action Policy

(Policy)." It is more than a fair inference that this is the

Policy referred to in the Certificate of Insurance. This Policy

states that it

is a Claims - Made - and - Reported policy for third

party liability coverage. It is a Release -

Reported Policy for corrective action

coverage . This policy is site - specific: only

scheduled tanks are covered.

This insurance is excess over any restoration

(corrective action) funding for storage tanks

whose owners qualify for and are eligible for

reimbursement from the Florida Inland

Protectio n Trust Fund as part of the

Restoration Insurance Program of the Florida

Petroleum Liability and Restoration and

Insurance Program.

8. The Policy provides conditions for cancellation and

non - renewal and, in part, states: "B.1. The NAMED INSURED may

c ancel this policy by mailing or delivering to the Company

advance written notice of cancellation. 2. If this policy has

been in effect for more than ninety (90) days the Company may

cancel this policy or the coverage afforded by this policy with

respect to a particular Storage Tank System only for one or more

of the following reasons: a. Nonpayment of premium . . . ."

(Emphasis in original.) Condition B.3. provides: "If the

Company cancels this policy for [nonpayment of premium], the

Company will mail or deliver to the Named Insured first listed

in the Declarations, written notice of cancellation, accompanied

by the reasons for cancellation at least" ten days before the

effective date of cancellation. (Emphasis in original.)

9. Conditions B.4.a. and b. of the Policy provide:

4. Non - Renewal:

a. If the Company decides not to renew

this policy the Company will mail or

deliver to the Named Insured written

notice of nonrenewal, accompanied by

the reason for nonrenewal, accompanied

by the reason for nonrenewal, at least

forty - five (45) days prior to the

expiration of this policy.

b. Any notice of nonrenewal will be

mailed or delivered to the Named

Insured's last mailing address known to

the Company. If notice is mailed,

proof of mailing will be suf ficient

proof of notice.

(Emphasis in original.)

10. On or about September 12, 1997, the Department issued 2

a "Notice of Eligibility" (Notice) to Asher G. Sullivan, Jr.

St. Augustine Trust, for a term of eligibility effective

September 3, 1997, and an ex piration date of September 3, 1998. 3

This Notice related to Petroleum Liability and Restoration

Insurance Program Coverage. The Notice also stated:

The following operator/operator [Asher G.

Sullivan Jr. St. Augustine Trust] has

demonstrated financial re sponsibility for

third party liability for contamination

related to the storage of regulated

petroleum products and is therefore eligible

for Restoration Coverage under the Petroleum

Restoration Insurance Program, Section

376.3072, Florida Statutes, for th e

facilities listed on the attached sheet(s),

contingent upon continued compliance with

Chapter 376, F.S., and Chapter 62 - 761,

F.A.C. and/or 62 - 762, F.A.C.

(Consistent with the Certificate of Insurance mentioned above,

the facility name is Chevron - 207.)

11. F PLRIP provides third - party liability and excess

coverage to owners and/or operators who have registered storage

tank systems, such as underground storage tanks (USTs).

12. There are several ways to demonstrate financial

responsibility, including, but not limit ed to, obtaining

insurance, as here. See Fla. Admin. Code R. 62 - 761.400(3). As

an owner of USTs, Petitioner was required to demonstrate

financial responsibility in the amount of $1 million per

occurrence and $1 million on an annual aggregate amount.

40 C.F.R. Section 280.93(a)(1) and (b)(1); Fla. Admin. Code R.

62 - 761.400(3)(b).

13. Participation in FPLRIP was voluntary to the extent

that not every owner or operator of a UST, such as Petitioner,

was required to participate in this state program,

notwithstand ing the state and federal requirements that

financial responsibility be demonstrated by virtue of ownership

or operation of a UST. See , e.g. , Sections 376.301(18) and

376.309; Fla. Admin. Code R. 62 - 761.400(3); 40 C.F.R. Section

280.93. However, if insur ance, such as the insurance policy

obtained in this case, was chosen as the financial

responsibility mechanism, participation in FPLRIP was required

because federal law required first dollar coverage for financial

responsibility. 40 C.F.R. Section 280.93( a)(1) and (b)(1).

Stated otherwise, here, the Policy had a $150,000 deductible,

and FPLRIP provides the first $150,000 worth of coverage,

subject to a deductible. Section 376.3072(2)(d)2.d. See also

Fla. Admin. Code R. 62 - 761.400(3)(a)3. ("Financial

res ponsibility requirements for petroleum storage systems

containing petroleum products may be supplemented by

participation in the [FPLRIP] to the extent provided in Section

376.3072, F.S.")

14. Because Petitioner chose insurance as the financial

responsibility mechanism, the Department relied on the

Certificate of Insurance to determine the financial

responsibility of Petitioner of the Chevron - 207 facility. Once

this Certificate of Insurance was issued, the Department issued

a Notice of Eligibility to the Petit ioner, so the facility could

be eligible to participate in FPLRIP. See Endnotes 3 and 5.

15. The Department determined that Petitioner demonstrated

financial responsibility under FPLRIP for a term of one year,

here from September 3, 1997, through September 3 , 1998. This

meant that, under the Department's interpretation of FPLRIP by

Lewis J. Cornman, Environmental Manager for the Department, 4 a

discharge would be covered under FPLRIP only if it occurred and

was discovered during the insurance policy period (h ere

September 3, 1997 through September 3, 1998) set forth in the

Notice of Eligibility. See (T: 67 - 70, 75 - 77, and 83.)

16. A penalty or deductible amount may be imposed if the

discharge is not reported to the Department in a timely fashion,

i.e. , within 24 hours after discovery of the discharge

(suspected release). Section 376.3072(2)(d)2.f.(I). (Thus, the

filing of an untimely report would not affect coverage or

eligibility under FPLRIP.) (T: 68 - 69.)

17. Mr. Fagin, an expert witness testifying on behalf of

I ntervenors, opined that FPLRIP "is a discovery and reporting

period program," which means that Petitioner is not eligible

under FPLRIP because the date of discovery and report of the

discharge was subsequent to the end of the insurance policy

period, Septe mber 3, 1998, unless the Policy period is extended.

Mr. Fagin focused on Section 376.3072(2)(b)4., which states in

part: "Upon report of a discharge, the department shall issue

an order stating that the site is eligible for restoration

coverage unless th e insured . . . cannot demonstrate that he or

she has obtained and maintained the financial responsibility for

third - party claims and excess coverage as required by

subparagraph 2." 5 Mr. Fagin reads this subsection to require

that "upon report of a discha rge," a facility owner, such as

Petitioner, must maintain financial responsibility (here

maintain a policy of insurance) on the date the discharge was

discovered , here September 15, 1998, and reported , here

September 17, 1998. (T: 106, 108, and 113.)

18. Fo r Mr. Fagin, the crux of the issue is whether

Petitioner's insurance policy was effective on September 15,

1998, and September 17, 1998. The answer to this question, for

Mr. Fagin, is whether the 10 or 60 - day provisions set forth in

Subparagraph 2.d. of t he Certificate of Insurance, see Finding

of Fact 6, apply to extend the Policy past September 3, 1998,

and through September 15 and 17, 1998. For Mr. Fagin, it does

not matter if the discharge was discovered prior to September 3,

1998, because of his and Mr. Cornman's interpretation of

Subsection 376.3072(2)(b)4. See Finding of Fact 39.

19. Mr. Fagin opines that the 10 - day provision applies

here, extending the Policy expiration date (or the effective

date of cancellation or non - renewal) at least until

Septemb er 21, 1998, 10 days after the September 11, 1998 letter,

see Finding of Fact 25. (T: 91 - 92.) See also Endnote 9.

20. Mr. Fagin believes the Department's (Mr. Cornman)

interpretation, see Finding of Fact 15, is reasonable even if,

according to Mr. Fagin, it may lead to a potentially absurd

result whereby there may be insurance coverage under the terms

of the Policy (but no coverage under FPLRIP) when a discharge is

reported within the six - month extended reporting period (after

the expiration of the Policy) an d if the discharge occurred

during the term of the Policy, here prior to September 3, 1998.

See Findings of Fact 40 - 44, finding that the discharge occurred

at Petitioner's facility prior to September 3, 1998.

The Policy is Not Renewed by Petitioner or Ter minated

by the Insurer

21. By letter dated August 2, 1998, Ben Harrison, Account

Manager for FPLIPA, 6 wrote Mr. Sullivan a letter addressed to

Asher G. Sullivan, Jr. St. Augustine Trust, referencing Policy

FPL8079861, the subject of the Notice of Eligibility and

Certificate of Insurance, and stated:

In May, 1998 we mailed renewal application

to be used in renewing reference policy. We

requested that application be returned to us

by July 3, 1998.

To date, we have not received the required

paperwork that wo uld allow us to quote this

account. Please forward application and

affidavit and any tight test information

that you have concerning underground tanks.

We cannot quote this account without the

required paperwork. Policy cannot be

renewed if paperwork is not received.

22. Mr. Sullivan received the August 2, 1998, letter prior

to September 3, 1998. Mr. Sullivan had the opportunity to renew

the Policy before September 3, 1998. (T: 23, 30.) Mr. Sullivan

did not respond to the August 2, 1998, letter "[b]ecaus e

[according to Mr. Sullivan] the tanks were due to be pulled out

before September the 3rd." (T: 29 - 30.) Mr. Sullivan thought,

in reference to the August 2, 1998, letter, that if he did not

"sign and renew the application, there would not be any

insuranc e after September 3rd." In other words, Mr. Sullivan

did not make any attempt prior to September 3, 1998, to renew

the Policy, including providing any information to the insurance

company or its agent, Mr. Harrison. (T: 30.)

23. Mr. Sullivan did not mail or deliver or otherwise give

any notice of cancellation of the Policy to the insurance

company, or its agent. (T: 41 - 42.)

24. Mr. Sullivan maintains that he had insurance coverage

for the discharge in question "[b]ecause there was a six - month

tail - end coverage, and also [he] was supposed to be notified by

the insurance company within 10 days of the cancellation of

insurance." (T: 40.) (But, Mr. Sullivan defers to his legal

counsel regarding coverage issues.) (T: 45.) Mr. Sullivan

stated that he did not receiv e a letter from the insurance

company or FPLRIP until the September 11, 1998, letter that the

insurance would be cancelled. (T: 40.) He interpreted this

letter to mean that the Policy would not be renewed. (T: 20.)

25. On September 11, 1998, Mr. Harrison advised Mr.

Sullivan, by letter, that the Policy expired on September 3,

1998, and stated:

If policy holder has not been approved by

the Department of Environmental Protection

under another EPA approved financial

responsibility mechanish [sic], policy

hol der no longer has access to the State

Restoration Fund for new discharges. Excess

coverage over the State Fund has also

expired.

We have had no response from the renewal

application that we mailed out nor from my

letter of Aug [sic] 2, 1998 stating tha t we

could not quote the account nor bound

without the application and affidavit.

If you have any questions on how to

reinstate the policy please call us at 1 -

800 - 475 - 4055.

(Emphasis in original.)

26. Mr. Harrison testified by deposition. In 1989, he

began working for the Florida Petroleum Liability Insurance

Program Administrators in Cocoa, Florida. His duties included

issuing quotes, mailing out renewal paperwork applications, and

upon receipt, converting "the indications into policies once the

money and appropriate paperwork comes in." FPLIPA began with

the issuance of third - party liability insurance. When the State

of Florida began reducing the amount that they would provide for

cleanup, FPLIPA provided, through AIG, the excess coverage that

was requir ed.

27. According to Mr. Harrison, the Policy at issue in this

case, was terminated because the Petitioner did not renew it.

28. Mr. Harrison refers to his September 11, 1998, letter,

as a "letter informing [Mr. Sullivan] that his coverage had

lapsed" or expired. Mr. Harrison did not intend that either his

August 2, or September 11, 1998, letters be considered as

notice(s) of termination or cancellation of the Policy.

29. Mr. Harrison was the account manager on all of the

files related to Mr. Sullivan.

30. Mr. Harrison stated that if the Policy was to be

terminated, he would have had to notify Petitioner in writing

and if the Policy was not going to be renewed by the insurance

company, he would have had to notify Petitioner in writing 60

days prior to the renewal date. Mr. Harrison advised that

termination letters are furnished by FPLIPA for an insurance

company, here referring to AIG. 7

Discovery and Reporting of the Discharge

31. Several petroleum USTs were located at the facility

and on the property owned by the Trust. A fter a one to two - week

delay, on or about September 15, 1998, the storage tanks were

removed from the property by a contractor who Mr. Sullivan

believes was named Pipeline Industries (Pipeline). 8 The removal

operation was performed over the course of seve ral days. During

the course of removal, Pipeline informed him that there was a

discharge of petroleum found on the property.

32. The tanks on the property were removed intact on

September 15, 1998. At that time, it was certified that the

tanks were empty, and were removed without holes in them. (It

appears that the Department reported the tanks as empty in

February 1996.) (T: 128, 146.)

33. Pipeline filed a Discharge Report Form with the

Department on September 17, 1998. This Form recites that a

discharge wa s confirmed on the property on September 15, 1998.

34. Within less than a week, upon learning of the

discharge, Mr. Sullivan's right - hand - man, J.C. Brunel, advised

Commerce & Industry Insurance Company that the storage tanks had

been removed and that there was a discharge. Thereafter, and on

some unknown date, the insurance company advised Mr. Sullivan

that no coverage would be provided.

35. Mr. Sullivan was made aware of the existence of the

storage tanks before the Trust bought the property. He believes

that th e last time that the site was used as a gasoline station

was probably in 1992. Mr. Sullivan was not aware of any other

spills or discharges that might have occurred on the property

other than what was reported by Pipeline in September 1998.

36. Mr. Sulliv an has no personal knowledge when the

discharge occurred. He was on the property on and off at the

time when Pipeline removed the storage tanks, but probably not

on - site when the tanks were actually removed. Pipeline could

have caused the discharge, but it is uncertain.

37. Mr. Sullivan relied upon his hired experts (ECT) to

determine when the petroleum discharge occurred, the extent of

the discharge, and the cost of the clean - up.

The Discharge

38. As noted above, the Discharge Report Form indicates

confirm ation of a discharge on September 15, 1998.

39. The Department contends that the discharge occurred on

September 15, 1998, after the insurance policy expired on

September 3, 1998. Mr. Cornman determined that the site was

ineligible because the site was not properly enrolled in FPLRIP

because Petitioner did not maintain financial responsibility

when the discharge occurred after the time period of coverage,

i.e. , after the Policy expired on September 3, 1998. This

position was based on the Notice of Eligibili ty which states the

coverage existed from September 3, 1997 through September 3,

1998. See also Findings of Fact 10 and 15.

40. Petitioner contends, in part, that the discharge

occurred during the policy period, i.e. , prior to September 3,

1998, and was timel y reported during the extended reporting

period. In the alternative, Petitioner contends that the Policy

was never properly terminated or cancelled by the insurance

company or its agent (by not providing appropriate notice of

termination or cancellation) and, as a result, the Policy was

still effective on September 15, 1998, and September 17, 1998,

the dates when the discharge was discovered and the report

submitted to the Department, respectively. Thus, Petitioner

contends that Petitioner is eligible und er FPLRIP, having

maintained insurance coverage through and including the report

of discharge. See Finding of Fact 18.

41. The only scientific evidence presented in this case as

to when the petroleum discharge occurred on the property was

elicited from Dr. Wi lliam Case Zegel. Dr. Zegel has a chemical

engineering undergraduate degree; and a doctor of science degree

in chemical engineering. Dr. Zegel has been associated with

Water and Air Research, Incorporated, in Gainesville, Florida,

since 1979. He is pres ident of the company and principal

engineer. He is a licensed professional engineer in the State

of Florida. Dr. Zegel has substantial experience in determining

how chemicals are released into the environment.

42. Dr. Zegel is familiar with the property at issue in

this proceeding. He was on - site for a day. He spent

approximately 100 hours analyzing the site conditions and the

petroleum discharge related to the property owned by Petitioner.

Further, he reviewed data collected by "ECT," in particular, two

sets of data taken about 600 days apart. From this data, he

could determine how things changed on the property. He also

performed what is called "reverse modeling" to determine when a

discharge may have occurred on the property. While stating that

the modeling, and the estimates derived therefrom, are not

precise as to a particular day or month, Dr. Zegel stated that

one estimate indicated that the discharge occurred before

March 12, 1999, and a second wave of modeling indicated that the

discharge occur red in November 1998. (T: 124, 140.)

43. After identifying specific details of the available

data, and his analysis, Dr. Zegel's opined that the discharge

occurred prior to September 15, 1998, and that the release into

the environment occurred before that d ate. He also opined that

the discharge on the property occurred perhaps as early as 1996.

It is not probable that the discharge would have occurred after

September 15, 1998.

44. It seems odd that no discharge was detected prior to

September 15, 1998, given t he status of the tanks.

Nevertheless, Dr. Zegel's testimony is credible and persuasive.

The weight of the evidence, including no expert opinion to the

contrary, supports the finding that the discharge reported to

the Department on September 17, 1998, occ urred prior to

September 3, 1998, although the specific date of the discharge

is unknown.

Petitioner's Application for Coverage under FPLRIP

45. Mr. Sullivan, on behalf of the Trust, applied, with

the Department, for restoration coverage for the discharge unde r

FPLRIP.

46. On October 21, 2002, the Department issued a letter to

Mr. Sullivan on behalf of the Trust, denying FPLRIP eligibility,

stating that the facility was ineligible because the facility

was not "properly enrolled in FRLRIP after September 3, 1998."

Stated otherwise, the Department determined that the site was

ineligible because the site was not properly enrolled in FPLRIP

and Petitioner did not maintain financial responsibility because

the discharge occurred after coverage expired on September 3,

1 998. The Department relied on the dates in the Notice of

Eligibility generated by FPLIPA as agent for the Department in

determining the denial of Petitioner's request. As of the

October 21, 2002, letter, and when Mr. Cornman testified, the

only informati on provided the Department regarding the date of

discharge was the discharge confirmation date (September 15,

1998) reported by Petitioner on September 17, 1998.

The Environmental Protection Agency's (EPA)

Regulations and Interpretations

47. In 1988, the EPA promulgated financial responsibility

requirements applicable to owners and operators of USTs

containing petroleum, which included amendments to 40 C.F.R.

Part 280, Subpart H. See 53 Fed. Reg. 433322, 1988 WL 258482

(Oct. 26, 1988) for the EPA's explanati on of the regulations.

See also 52 Fed. Reg. 12786, 1987 WL 131023 (April 17, 1987.)

48. In 1989, the EPA amended several provisions of

40 C.F.R. Part 280, Subpart H and, material here, 40 C.F.R.

Sections 280.97(b)(1) and (b)(2), pertaining to financial

resp onsibility requirements for UST's containing petroleum. The

1989 amendments refined required language of endorsements to

existing insurance policies and certificates of insurance for

insurance and risk retention group coverage. See 54 Fed. Reg.

47077 - 02, 1989 WL 287711 (Nov. 9, 1989) for the EPA's

explanation of the amendments.

49. Currently, 40 C.F.R. Section 280.97 deals with

"[i]nsurance and risk retention group coverage." Subsection

280.97(a), provides: "An owner or operator may satisfy the

requirements of [Section] 290.93 [sic] by obtaining liability

insurance that conforms to the requirements of this section from

a qualified insurer or risk retention group. Such insurance may

be in the form of a separate insurance policy or an endorsement

to an existi ng insurance policy."

50. Subsection 280.97(b) provides in part: "Each

insurance policy must be amended by an endorsement, worded as

specified in paragraph (b)(1), or evidenced by a certificate of

insurance worded as specified in paragraph (b)(2) of this

s ection . . . ." Pertinent here, Subsections 280.97(b)(2)2.d.

and e. provide:

d. Cancellation or any other termination of

the insurance by the ["Insurer" or "Group"]

will be effective only upon written notice and

only after the expiration of 60 days after a

copy of such written notice is received by the

insured. Cancellation for non - payment of

premium or misrepresentation by the insured

will be effective only upon written notice and

only after expiration of a minimum of 10 days

after a copy of such writt en notice is

received by the insured.

[Insert for claims - made policies:

e. The insurance covers claims otherwise

covered by the policy that are reported to the

["Insurer" or "Group"] within six months of

the effective date of cancellation or non -

renewal of the policy except where the new or

renewed policy has the same retroactive date

or a retroactive date earlier than that of the

prior policy, and which arise out of any

covered occurrence that commenced prior to

such policy retroactive date, if applicab le,

and prior to such policy renewal or

termination date. Claims reported under such

extended reporting period are subject to the

terms, conditions, limits, including limits of

liability, and exclusions of the policy.]

* * *

51. The issues confronting the EP A in 1989, and which

prompted the revisions set forth above, pertained to, in part,

the EPA's efforts to make clear that the mandatory language in

the certificate of insurance (Subsection 280.97(b)(2)2.e.)

"requires that a claims - made insurance contract co ver claims for

any occurrence that commenced during the term of the policy and

that is discovered and reported to the insurer within six months

of the effective date of the cancellation or other termination

of the policy." 54 Fed. Reg. at 47079. "This pr ovision was

meant to address concerns that a claims - made policy might leave

a gap in coverage if, for example, a claim is reported after the

expiration of a policy for a release that began prior to the

policy expiration date." Id. The issue for the EPA w as whether

insurers should be required to provide an extended reporting

period and the EPA stated its intention "that insurers provide

extended reporting period coverage only where the termination or

non - renewal of the policy results in the owner or operat or

having no coverage for releases that occurred during the time

period of the previous policy and which are reported within six

months after the termination or non - renewal of that policy. For

discussion purposes, EPA has labeled this predicament as a 'ga p'

in coverage." Id.

52. The EPA identified "only two situations where the

termination of a policy results in a 'gap' in coverage, and thus

only two situations where the insured whose policy is terminated

must obtain extended reporting period coverage. The f irst

situation occurs when the insured renews his existing policy or

purchases a new policy and the renewed policy contains a

retroactive date subsequent to the retroactive date of the

insured's previous insurance policy. The second situation

occurs where the policy is terminated or is not otherwise

renewed and the insured elects a financial assurance mechanism

other than insurance (such as a guarantee, surety bond, etc.) as

a replacement. EPA is today promulgating revised language to

clarify EPA's intend ed interpretation of paragraph 2.e. of the

Endorsement contained in [Subsection 280.97(b)(1)] and of

paragraph 2.e. of the Certification contained in [Subsection]

280.97(b)(2)."

53. Additionally, the EPA defines "termination," as used

in Subsections 280.97(b) (1) and (2), to mean "only those changes

that could result in a gap in coverage as where the insured has

not obtained substitute coverage or has obtained substitute

coverage with a different retroactive date than the retroactive

date of the original policy ." 40 C.F.R. Section 280.92; 54 Fed.

Reg. at 47080.

54. Relevant here, the EPA amended Subsections

280.97(b)(1)d., 280.97(b)(2)d., and 280.105(a)(2) [now

280.109(a)(2)]

to allow an insurer to terminate an insurance

contract for non - payment of premium or

m isrepresentation by the insured after a 10

day notice period. EPA does not intend for

this shortening of the coverage period from

60 to 10 days to apply to termination for any

reason other than non - payment of premium or

misrepresentation. The Agency is a ware that

some state insurance laws mandate a longer

period following cancellation. In order to

accommodate these state - specific situations,

the amended language of [Section]

280.97(b)(1) Endorsement paragraph d and

[Section] 280.105(a)(2) [now 280.109(a) (2)]

specifies that the mandatory coverage period

following termination for non - payment of

premium or misrepresentation shall be a

'minimum of 10 days.' The insurer is still

bound to provide the owner or operator with

written notice of cancellation with t he 10

day period beginning upon receipt of notice

by the owner or operator.

54 Fed. Reg. at 47080. See also Endnote 9.

55. Conversely, the EPA expressly did not amend

the requirement for a six - month extended

reporting period following cancellation for

non - payment of premium or misrepresentation.

As noted in the previous section, the [EPA]

believes that such a reporting period must be

mandatory for all claims - made insurance

contracts used to demonstrate financial

assurance, regardless for the reason for

te rmination. The six - month extended

reporting period is essential to avoiding gaps

in coverage that could threaten human health

and environment, especially in cases where the

owner or operator may have as few as 10 days

upon receipt of notice of cancellati on to

obtain substitute coverage. The distinction

between the two provisions, extended reporting

period and the effective date of cancellation,

is that even if a policy is cancelled for non -

payment of premium, the extended reporting

period merely extends the time during which an

insured may report occurrences covered by the

policy for which he or she has already paid.

Thus the extended reporting provision does not

provide the insured with a benefit for which

he or she has not paid. In contrast, any

delay in the effective date of a policy

cancellation or termination due to regulatory

requirements provides insureds who failed to

pay their premium coverage for which they have

not paid.

Id. at 47080 - 47081.

CONCLUSIONS OF LAW

Jurisdiction

56. The Division of Ad ministrative Hearings has

jurisdiction over the subject matter of, and the parties to,

this proceeding. Sections 120.569 and 120.57(1).

The Parties - Standing

57. Petitioner and Intervenors have standing in this

proceeding.

58. The Department of Environmental Pro tection has the

statutory duty to determine eligibility for restoration coverage

under FPLRIP.

Burden of Proof

59. This is a de novo proceeding designed to formulate

final agency action. Petitioner has applied for restoration

coverage under FPLRIP. Petitio ner has the burden of showing by

a preponderance of the "credible and credited evidence"

entitlement to restoration coverage under FPLRIP. Department of

Transportation v. J.W.C., Inc. , 396 So. 2d 778, 789 (Fla. 1st

DCA 1981); Section 120.57(1)(j). If thi s preliminary showing is

made by Petitioner, the application cannot be denied "unless

contrary evidence of equivalent quality is presented by the"

Department. Id.

Eligibility Pursuant to FPLRIP

60. In 1976, Congress passed the Resource and Recovery Act

(RCRC) , Pub. L. No. 94 - 580, 90 Stat. 2795 (1976)(codified as

amended at 42 U.S.C. Sections 6901 - 6991). Among other matters

covered under RCRA, Congress provided for the regulation of

USTs, 42 U.S.C. Section 6991 et seq. , including authorizing the

Administrator of EPA to adopt regulations pertaining to

financial responsibility. 42 U.S.C. Section 6991b(d).

Insurance was one of several mechanism which could be used to

demonstrate financial responsibility. 42 U.S.C. Section

6991b(d)(1).

61. Consistent with this aut horization, in 1988, the EPA

promulgated financial responsibility regulations, 40 C.F.R.

Parts 280 and 281. See 53 Fed. Reg. 43322, 1988 WL 258482

(Oct. 26, 1988). Several of these regulations, material here,

were amended in 1989. 54 Fed. Reg. 47077 - 02, 1989 WL 287711

(Nov. 9, 1989).

62. All owners or operators of defined petroleum storage

tanks must demonstrate financial responsibility as a matter of

federal law as implemented by federal regulations. 40 C.F.R.

Section 280.93(a)(b). An owner or operator may use one or a

combination of mechanisms, including insurance coverage.

40 C.F.R. Sections 280.94(a)(1) and 280.97. If insurance is

chosen, the certificate of insurance must conform to the

requirements of 40 C.F.R. Section 280.97, including, and

materi al here, Subsections 280.97(b)(2)2.d. and e., printed in

full in Finding of Fact 50. The dollar amount of financial

responsibility is set forth in 40 C.F.R. Section 280.93. For

example, $1 million is required for owners or operators of one

to 100 petrole um underground storage tanks. 40 C.F.R. Section

280.93(b)(1).

63. The State of Florida requires each owner of a defined

facility "to establish and maintain evidence of financial

responsibility" "to meet the liabilities which may be incurred

under ss. 376.30 - 3 76.319." Section 376.309(1). See Endnote 3.

64. The Department has the authority to, in part,

establish rules for the regulation of USTs, Section

376.303(1)(a), and the Department has done so, including but not

limited to, promulgating rules regarding the re gistration and

financial responsibility of USTs. Fla. Admin. Code R. 62 -

761.400(3)(b)("Underground storage tank systems. The minimum

requirements for financial responsibility for USTs containing

petroleum products shall be the same as provided by C.F.R. Title

40, Part 280, Subpart H.")

65. In an effort to supplement the owner or operator's

financial responsibility, the State of Florida enacted FPLRIP.

Section 376.3072. See also Fla. Admin. Code R. 62 -

761.400(a)3.("Financial responsibility requirements for

p etroleum storage systems containing petroleum products may be

supplemented by participation in [FPLRIP] to the extent provided

by Section 373.3072, F.S.")

66. The Department administers FPLRIP. This program

provides restoration funding assistance to facilitie s regulated

by the Department's petroleum storage tank rules. Section

376.3072(1).

67. Subsection 376.3072(2)(a)1. provides: "A site at which

an incident has occurred shall be eligible for restoration if

the insured is a participant in the third - party liabili ty

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

(d)." See Section 376.3072(4)(c), for a definition of

"incident." Material here, Subsection 376.3072(2)(d)2.d.,

provides: "For discharges reported to the department from

January 1, 1997, to De cember 31, 1998, the department shall pay

up to $150,000 of eligible restoration costs, less a deductible

of $10,000." "Beginning January 1, 1999, no restoration

coverage shall be provided." Section 376.3072(2)(d)2.e.

68. "To be eligible to be certified as a n insured

facility, for discharges reported after January 1, 1989, the

owner or operator shall file an affidavit upon enrollment in the

program . . . . Thereafter, the facility's annual inspection

report shall serve as evidence of the facility's complianc e with

department rules. The facility's certificate as an insured

facility may be revoked only if the insured fails to correct a

violation identified in an inspection report before a discharge

occurs. The facility's certification may be restored when the

violation is corrected as verified by reinspection." Section

376.3072(2)(b)1.

69. Subsections 376.3072(2)(b)2. and 4. provide:

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

be eligible to be certified as an insured

facility, the applicant must demonstrate to

t he department that the applicant has

financial responsibility for third - party

claims and excess coverage, as required by

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

that the applicant maintains such insurance

during the applicant's participation as an

insu red facility.

* * *

4. Upon a report of a discharge, the

department shall issue an order stating that

the site is eligible for restoration coverage

unless the insured has intentionally caused

or concealed a discharge or disabled leak

detection equipment , has misrepresented facts

in the affidavit filed pursuant to

subparagraph 1., or cannot demonstrate that

he or she has obtained and maintained the

financial responsibility for third - party

claims and excess coverage as required in

subparagraph 2.

(Emphasi s added.) (In 1996, the Legislature, in part and

material here, amended Subsections 376.3072(2)(b)2. and 4.

Ch. 96 - 277, Section 8, at 1159 - 1160, Laws of Fla. See House of

Representatives as Further Revised by the Committee on

Appropriations Bill Analysi s & Economic Impact Statement, CS/HB

1127 (April 24, 1996)(Series 19, Carton 2689, Florida State

Archives)).

70. In this case, Petitioner timely provided the

Department with a Certificate of Insurance, evidencing third -

party and excess coverage, for Petition er's facility which

housed several USTs. The Department issued Petitioner a Notice

of Eligibility based on the Certificate of Insurance. Thus, the

Department determined that Petitioner demonstrated financial

responsibility at the time the Notice of Eligi bility was issued,

which enabled Petitioner to be eligible to participate in

FPLRIP.

71. The term of Petitioner's insurance policy expired of

its own terms on September 3, 1998.

72. On September 17, 1998, a Discharge Report Form was

filed with the Department, conf irming a discharge at the

facility on September 15, 1998.

73. During this de novo hearing, Petitioner proved that

the discharge, which was the subject of the Discharge Report

Form, most likely occurred prior to September 3, 1998, within

the Policy period. The discharge was reported to the Department

within the extended reporting period recited in the Certificate

of Insurance.

74. In order for Petitioner to be eligible for restoration

coverage under FPLRIP, for the first - dollar coverage up to

$150,000, and subject to the statutory deductible, " [u]pon

report of a discharge ," Petitioner must demonstrate that he has

obtained and maintained the financial responsibility for third -

party claims and excess coverage as required in subparagraph 2.

Section 376.3072(2)(b)4. S ubsection 376.3072(2)(b)2. requires

Petitioner to demonstrate that he complied with the financial

responsibility requirements required by Section 373.3072 and

40 C.F.R. Section 280.97, and "maintains such insurance during

[Petitioner's] participation as an insured facility." These

requirements were enacted in 1996. Ch. 96 - 277, Section 8, at

1159 - 1160, Laws of Fla. None of the parties offered any

extrinsic evidence of legislative intent, and independent

research discloses none. See Conclusion of Law 69, referring to

a legislative staff analysis.

75. The plain language of these provisions requires

Petitioner, having selected insurance and FPLRIP as the

mechanisms for financial responsibility, to have an appropriate

insurance policy in effect on September 17, 1 998, the date the

Discharge Report Form was filed with the Department. The fact

that the discharge was reported to the Department within the

six - month extended reporting period does not satisfy the

requirements of Subsections 376.3072(2)(b)2. and 4., beca use the

Policy, or part of the financial responsibility mechanism,

expired on September 3, 1998. This analysis reflects the

Department's interpretation and is entitled to great deference.

AmeriSteel Corp. v. Clark , 691 So. 2d 473, 477 (Fla. 1997). The

D epartment's view is not contrary to the statute's plain and

ordinary meaning. See PAC for Equality v. Department of State,

Florida Elections Commission , 542 So. 2d 459, 460 (Fla. 2d DCA

1989). See also Florida Department of Education v. Cooper , Case

No. 1D - 4040, 2003 WL 22508245 (Fla. 1st DCA No. 6, 2003). (A

liberal construction of Chapter 376, Part II, Florida Statutes,

does not change the result. See Alto v. State of Florida,

Department of Environmental Protection , Case No. 1D02 - 4579, 2003

WL 2250828 3 (Fla. 1st DCA. Nov. 6, 2003)).

76. This does not end the inquiry because Petitioner

contends that the Policy period was extended through and

including, at least, September 21, 1998, because the insurance

company did not give Petitioner notice of cancellation or

termination of the Policy pursuant to the terms of the

Certificate of Insurance and 40 C.F.R. Section 280.97(b)(2)d.

See Findings of Fact 18 and 19.

77. Petitioner contends that the Policy period should be

extended, at the very least, 10 days from the date of FPLIPA's

September 11, 1998, letter advising Petitioner of the expiration

of the Policy. If the Policy is extended, then the Policy would

have been effective, i.e. , not expired, on September 17, 1998,

and Petitioner necessarily would have maintained t he insurance

"[u]pon report of the discharge," consistent with Subsections

376.3072(2)(b)2. and 4.

78. Whether the 10 or 60 - day notice provisions apply in

this case is not without doubt. During the promulgation of, and

amendments to, 40 C.F.R. Section 280.97, and in particular in

1988 and 1989, the EPA generated a substantial amount of

information regarding its interpretation of these provisions

(and other provisions including the extended reporting

provision) and, at times, the discussion is confusing. See ,

e.g. , Findings of Fact 47 - 55. 9

79. There is only one cited case on the subject,

Federated Mutual Insurance Company v. Germany , 712 So. 2d 1245

(Fla. 5th DCA 1998). In Federated Mutual Insurance Company ,

Germany leased and operated a service station and carri ed

pollution liability insurance which included liability coverage

for third - party bodily injury and property damage. On

October 6, 1989, and retroactive to September 12, 1989, Germany

sent the insurance company (Federated) a letter of cancellation,

advis ing that Germany decided to move coverage to the state

insurance program. After Germany turned over control of the

station, a successor transferee discovered petroleum

contamination on March 19, 1990. On March 29, 1990, the

Department also "discovered fr ee product in a monitoring well."

Federated was notified shortly thereafter.

80. A Notice of Violation was issued three and a half

years later. The then owners of the property sued their

predecessors. Cross - claims were filed. Germany filed a third -

party co mplaint against Federated.

81. According to the court's opinion, the trial court was

asked to determine whether then existing 40 C.F.R. Section

280.97(d) applied. (This subsection required the endorsement to

include the following: '(d) Cancellation or any ot her

termination of the insurance by the insurer will be effective

only after the expiration of 60 days after a copy of such

written notice is received by the insured." Compare 53 Fed.

Reg. at 43375 - 43376, which cited this provision as 40 C.F.R.

Section 28 0.97(1)2.d.)

82. Also, the "cancellation" provisions of the insurance

policy were recited which, in part, allowed Germany to cancel by

giving written notice of cancellation and also allowed Federated

to cancel by, in part, giving Germany notice of cancellation at

least 10 days before the effective date of cancellation if

cancelled for nonpayment of premium or 30 days for any other

reason.

83. The trial court initially denied Federated's motion

for summary judgment. A successor judge also denied a renewed

motion fi led by Federated, construing the 60 - day (C.F.R.)

provision in favor of Germany.

84. The court reversed and determined that the claim was

not covered under the policy because the 60 - day provision

"plainly applies only where the insurer has initiated the

cancell ation or other termination of an insurance policy. If

there is any genuine doubt about who cancels a policy, i.e. ,

whether an insured cancels or merely requests an insurer to

cancel, this question is answered in the policy." Id. at 1248.

(Emphasis in or iginal.)

85. The court also noted that the 60 - day provision was

mandated by federal rule and that

if ambiguity is perceived, the court's duty is

to attempt to determine the intent of the

rule, not to construe the rule in favor of

coverage. The obvious purpos e of the

provision is to protect a policyholder from a

sudden gap in coverage caused by an insurer's

involuntary cancellation or termination of the

policy. See 54 Fed. Reg. 47077 - 02 (1989); see

also Cat 'N Fiddle, Inc. v. Century Ins. Co. ,

213 So. 2d 701 (Fla. 1968)(purpose of

provision in insurance policy providing for

cancellation only after notice to insured for

prescribed period is to permit insured to

obtain insurance elsewhere without exposure).

The sixty - day delay in cancellation is

designed to per mit a policyholder to obtain

new coverage prior to the effective date of

the cancellation or other termination (such as

non - renewal). It is not meant to apply where

the policyholder has sent a notice of

cancellation of the policy to the insurer, who

then cancels the policy at the insured's

request and on the date the insured requests.

Id. at 1248. (Emphasis in original.)

86. Here, the insurer did not cancel or terminate the

Policy and neither did the insured. Mr. Sullivan, on behalf of

the Trust, was advis ed of, and received notice of, the

opportunity to renew the Policy prior to September 3, 1998.

Mr. Sullivan was advised: "Policy cannot be renewed if

paperwork is not received." Mr. Sullivan knew that if he did

not "sign and renew the application, there would not be any

insurance after September 3rd."

87. "The lapse or expiration of an insurance policy is

distinguishable from a policy cancellation: when the insurer

acts to terminate a policy during its term, the policy has been

cancelled; when the insured fails to pay a renewal premium

before the policy expiration date, however, the policy has

lapsed . . . . These principles are consistent with the general

rule that a contract which specifies the period of duration

terminates on the expiration of such per iod." Unruh v.

Prudential Property and Casualty Insurance Company , 3 F. Supp.

2d 1204, 1206 (D. Kan. 1998). (Citations omitted.) "The

general rule than an insurance policy lapses if the insured

fails to pay the renewal premium before the policy expirati on

date may be modified by a statutory requirement of notice." Id.

at 1207. (Citations omitted.) "Contractual requirements of

notice may also avoid a lapse of the policy." Id. (Citations

omitted.) See also Mountain Fuel Supply v. Reliance Insurance

C ompany , 933 F.2d 882, 890 n.11 (10th Cir. 1991).

88. In this case, there was no involuntary cancellation or

termination of the Policy. Federated Mutual Insurance Company ,

712 So. 2d at 1248. The Policy expired by its express terms and

the 10 or 60 - day provis ions referred to herein do not apply to

extend the period of coverage. Petitioner did not prove that it

maintained insurance coverage on the reporting date, and

accordingly did not maintain financial responsibility when the

discharge was reported to the D epartment on September 17, 1998.

Therefore, Petitioner is not eligible to participate in FPLRIP.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Environmental Protection

enter a fin al order that Petitioner is not eligible for

restoration coverage under FPLRIP.

DONE AND ENTERED this 12th day of November, 2003, in

Tallahassee, Leon County, Florida.

S

___________________________________

CHARLES A. STAMPELOS

Administrative Law Judge

Di vision 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

t his 12th day of November, 2003.

ENDNOTES

1 / The parties stipulated that Petitioner owns the facility at

2620 S.R. 207, whereas the Certificate of Insurance is issued to

the facility (Chevron - 207) located at 2630 S.R. 207. There is

no dispute in this proceeding that the property described in the

Certificate of Insurance is at the approximate location as the

facility owned by Petitioner, and which is the site of the

discharge.

2 / The Notice of Eligibility was generated by the agent, here

the Florida Petroleum Liability Insurance Program

Administrators, Inc. (FPLIPA), for the insurance company, here

Commerce & Industry Insurance Company, and the Department. The

Notice was sent to the Department and verified, and then sent to

the applicant.

3 / "Each owner of a facility is required to establish and

maintain evidence of financial responsibility. Such evidence of

financial responsibility shall be the only evidence required by

the department that such owner has the ability t o meet the

liabilities which may be incurred under ss. 376.30 - 376.319."

Section 376.309(1). A "'[f]acility' means a nonresidential

location containing, or which contained, any underground

stationary tank or tanks which contain hazardous substances or

pol lutants . . . ." Section 376.301(18). "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 . . . . Thereafter, the

facility's annual inspection report shall serve as evidence of

the facility's compliance with department rules . . . ."

Section 376.3072(2)(b)1. Petitioner is the owner of a site and

"facility" which contained several USTs.

4 / Mr. Cornman oversees eligibility for clean - up programs with

the Department, including FPLRIP; the early Detection Incentive

Program; the Petroleum Clean - up Participation program; and the

Tank Restoration Program. He is also the compliance and

insurance subsection administrator and oversees c ontracts and

financial responsibility requirements.

5 / Subsection 376.3072(2)(b)2. provides: "Except as provided in

paragraph (a), to be eligible to be certified as an insured

facility, the applicant must demonstrate to the department that

the applicant has financial responsibility for third - party

claims and excess coverage, as required by this section and

40 C.F.R. s. 280.97(h) and that the applicant maintains such

insurance during the applicant's participation as an insured

facility." Pursuant to the Notice of Eligibility, the

Department determined that, at the time of the issuance of this

Notice, Petitioner was eligible for restoration coverage under

the FPLRIP, subject to continued compliance. See Finding of

Fact 10.

6 / The Department contracted with FPLIPA, which in turn, issued

insurance policies on behalf of the insurance company, here

Commerce and Industry Insurance Company.

7 / The deposition of Mr. Harrison was attended by all counsel of

record for the parties in this case, and by Douglas M . Halsey,

Esquire, on behalf of AIG Insurance Company.

8 / Mr. Sullivan stated that the storage tanks were scheduled to

be removed prior to September 3, 1998, and that any delay in the

removal was due to Pipeline.

9 / With respect to the shortened 60 - da y period adopted in 1988,

the EPA stated: "As noted earlier, a 60 - day notice period is

standard in many states. In addition, insurers, for example,

could protect themselves by establishing an appropriate schedule

of premium payment. Insurers could requi re payment 90 days

before the expiration date of coverage for the maintenance or

renewal of the policy. An insurer could then terminate the

policy with 60 days notice if an insured does not meet the

schedule of payment within 30 days of the premium due da te. The

Agency therefore is requiring a 60 - day notice period for

termination of coverage in the event of non - payment of premium

by an insured." 53 Fed. Reg. at 43357. See also 53 Fed. Reg.

at 43349 - 43351. The quoted language was referred to by

Mr. Fing ar. (T: 95 - 96.) (The 60 - day period was shortened to 10

days in 1989 for cancellation by the insurer for non - payment of

premium or misrepresentation by the insured. 40 C.F.R. Section

280.97(b)(2)2.d.) In referring to the 10 - day period, Mr. Fingar

sugges ts that the EPA is "imposing a burden on the insurance

company by attaching another 10 days onto the policy period.

(T: 96.) Mr. Fingar also stated that the EPA wanted "to ensure

some sort of overlap so that there would be continuous coverage,

and so the y imposed this 10 - day burden on the first insurance

carrier to prevent that gap from occurring." (T: 94.)

COPIES FURNISHED :

Gary S. Edinger, Esquire

305 Northeast First Street

Gainesville, Florida 32601

Sidney F. Ansbacher, Esquire

Upchurch, Bailey and Upchurch, P.A.

Post Office Drawer 3007

St. Augustine, Florida 32085 - 3007

Stan M. Warden, Esquire

Department of Environmental Protection

The Douglas Building

3900 Common wealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

Teri L. Dona ldson, General Counsel

Department of Environmental Protection

The Douglas Building

3900 Common wealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

Kathy C. Carter, Agency Clerk

Department of Environmental Protection

The Douglas Building

3900 Common wealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommen ded Order should be filed with the agency that

will issue the final order in this case.