STATE OF NORTH CAROLINA IN THE OFFICE OF
ADMINISTRATIVE HEARINGS
COUNTY OF UNION 08 EHR 1033
LANEY OIL COMPANY, INC. )
UST# 06-088C )
)
)
Petitioner, )
)
v. )
) DECISION
NORTH CAROLINA DEPARTMENT OF )
ENVIRONMENT AND NATURAL RESOURCES)
)
Respondent. )
The above entitled matter was heard before the Honorable Selina M. Brooks, Administrative Law Judge, on June 3, 2009 in Charlotte, North Carolina.
APPEARANCES
The Petitioner, Laney Oil Company, Inc., was represented by Harry B. Crow, Jr.
The Respondent, North Carolina Department of Environment and Natural Resources (DENR), Division of Waste Management (DWM), Underground Storage Tank (UST) Section was represented by Jay L. Osborne Assistant Attorney General.
BURDEN OF PROOF
The Petitioner has the burden to prove that Respondent violated N.C. Gen. Stat. § 150B-23(a) in one of the five ways enumerated in N.C. Gen. Stat. § 150B-23(a)(1-5) when Respondent assessed civil penalty UST 06-088C against the Petitioner.
ISSUES
Did the Respondent violate N.C. Gen. Stat. § 150B-23(a) in one of the five ways enumerated in N.C. Gen. Stat. § 150B-23(a)(1-5), when it assessed a civil penalty and investigative costs totaling $11,300.06 against the Petitioner for violations of 15A NCAC 2N .0405 and .0803, from September 12, 2006 through at least March 18, 2006, for failing to assess a site for the permanent closure of six UST systems and for also failing to submit a UST closure report?
TESTIFYING WITNESSES
For Petitioner:
1. Walter Laney
2. Ronald Thomas
For Respondent:
1. Edward Leach, III
2. Ronald Thomas
3. Spiro Kaltsounis
4. Joseph Schold
5. Robert Davies
EXHIBITS RECEIVED INTO EVIDENCE
For Petitioner:
EXHIBIT 2: Copy of a portion of the Union Observer February 19, 2006 newspaper article addressing Mineral Springs growth plan
EXHIBIT 3: Laney Oil Company, Inc. Uncertified Statement Of Financial Information
For Respondent:
EXHIBIT 1: March 18, 1986 Notification for Underground Storage Tanks
EXHIBIT 2: October 13, 1998 Ownership of UST Systems
EXHIBIT 3: October 13, 1998 Notification for Upgraded UST Systems
EXHIBIT 4: October 23, 2002 Ownership of UST Systems
EXHIBIT 5: Underground Storage Tank Operating Permit Application
EXHIBIT 6: March 26, 1996 Petroleum Underground Storage Tank Annual Fee
EXHIBIT 7: January 27, 2006 UST Permanent Closure of Change-in Service
EXHIBIT 8: January 31, 2006 Inspection Report
EXHIBIT 9: February 12, 2006 Division of Water Quality Chemistry Laboratory Report/ Ground Water Quality
EXHIBIT 10: February 12, 2006 Division of Water Quality Chemistry Laboratory Report/ Ground Water Quality
EXHIBIT 11: February 12, 2006 Division of Water Quality Chemistry Laboratory Report/ Ground Water Quality
EXHIBIT 12: Request for Health Risk Evaluation
EXHIBIT 13: March 27, 2008 Water Supply Well Sampling Results
EXHIBIT 14: April 21, 2006 North Carolina Underground Storage Tank Section Risk, Rank and Abatement Rating Form
EXHIBIT 15: May 2, 2006 Inspection Report
EXHIBIT 16: May 7, 2008 Health Risk Evaluation for Water Supply Well Sampling Results (AB27628)
EXHIBIT 17: June 13, 2008 Reporting & Recordkeeping Requirements
EXHIBIT 18: July 28, 2006 Inspection Report
EXHIBIT 19: August 2, 2006 Reporting & Recordkeeping Requirements
EXHIBIT 20: September 11, 2006 Notice of Violation of 15 A NCAC 2N .0405
EXHIBIT 21: October 5, 2006 from Ronnie Thomas to Ed Leach
EXHIBIT 22: November 6, 2006 Recommendation for Enforcement Action
EXHIBIT 23: November 8, 2006 letter from Ronnie Thomas to Steve Bograd
EXHIBIT 24: November 27, 2006 Acknowledgment of Receipt
EXHIBIT 25: Civil Penalty Assessment UST 06-088C and Transmittal Letter
EXHIBIT 26: NOT OFFERED OR ADMITTED INTO EVIDENCE
EXHIBIT 27: Hand drawn map of site to scale by Ed Leach
EXHIBIT 28: March 20, 2008 E-mail
EXHIBIT 29: March 20, 2008 E-mail
EXHIBIT 30: Disposal Manifests
EXHIBIT 31: June 2, 2009 Business Corporation Information
EXHIBIT 32: April 8, 2009 Respondent’s Prehearing Statement
EXHIBIT 33: Response of Petitioner to Respondent’s First Set of Interrogatories and Production of Documents
EXHIBIT 34: A-1 Environmental Invoice of Professional Services through April 14, 2006
EXHIBIT 35: Unbilled Detail Report as of April 17, 2006
EXHIBIT 36: October 5, 2006 letter from ATC Associates to Ronnie Thomas
EXHIBIT 37: August 10, 2006 letter from ATC Associates to Ronnie Thomas
EXHIBIT 38: September 26, 2008 letter from ATC Associates to Ronnie Thomas
JUDICIAL NOTICE: June 20, 2006 Decision in Laney Oil Company, Inc. v. NCDENR, 05 EHR 0069 and 05 EHR 135.
Based upon careful consideration of the applicable law, testimony and evidence received during the contested case hearing as well as the entire record of this proceeding, the undersigned makes the following:
FINDINGS OF FACT
1. Laney Oil Company, Inc. is a corporation organized and existing under the laws of the State of North Carolina and is in the business of retail distribution of motor fuel products. (Resp. Exh. 31)
2. Pursuant to 15A North Carolina Administrative Code (NCAC) 2N .0203 of the Environmental Management Commission (EMC), Laney Oil Company, Inc. is the owner of six regulated petroleum UST systems formerly located at Retail Outlet #11, NC Highway 75 and Potters Road, Mineral Springs, Union County, North Carolina 28108 (the site). The six UST systems (the USTs), installed on March 18, 1995, are registered with the State as being owned by Laney Oil Company, Inc. (Resp. Exhs. 1-6)
3. This Court has previously concluded that Laney Oil Company, Inc. has not maintained the USTs located at the site in compliance with state regulatory requirements. Laney Oil Company, Inc. has previously been held responsible, as the UST owner, for failure to meet regulatory requirements for the USTs at the site in Laney Oil Company, Inc. v. NCDENR, 05 EHR 0069 and 05 EHR 135. Laney Oil Company, Inc. has taken no action at the site to meet applicable regulatory requirements for the USTs since the issuance of the Decision in Laney Oil Company, Inc. v. NCDENR, 05 EHR 0069 and 05 EHR 135.
4. Spiro Kaltsounis owns the real property, also known as “the site,” on which the USTs are located. Mr. Kaltsounis is not the owner of the USTs at the site; Laney Oil Company, Inc. owned the six USTs previously affixed to that real property. Mr. Kaltsounis repeatedly requested Laney Oil Company, Inc. to remove its USTs from his property. (T p. 201, 202, line 24 - 203, line 1) Mr. Kaltsounis has given permission to Laney Oil Company, Inc. to enter his property to assess the site and to complete an UST closure report. (T pp. 201-203)
5. After landowner Kaltsounis’ requests for the removal of the USTs were denied by Laney Oil Company, Inc., Mr. Kaltsounis contracted for the removal of the USTs. On or about January 31, 2006, removal of the USTs began. (Resp. Exhs. 7-8) The USTs were removed from the site.
6. Respondent sampled monitoring wells located at the site on or about the time of the removal of the USTs. A release of petroleum contaminants was found in excess of state regulatory standards at the site. (Resp. Exhs. 9-11, 27) The contaminants included, but was not limited to, Methyl-tert-butyl ether (MTBE) and benzene, both of which are known carcinogens. (Resp. Exh. 11)
7. This release of contaminants is located within 1,000 feet of a drinking water supply well. Accordingly, the site has been ranked a high risk site by the Respondent. (Resp. Exh. 14)
8. Due to a contractual dispute with agents retained by Mr. Kaltsounis to permanently close the USTs at the site, the USTs were removed from the site, but not permanently closed in a manner meeting the requirements of 15A NCAC 2N .0405 and 15A NCAC 2N .0803. Respondent never received a complete assessment for the site nor did it receive a permanent closure report as required by, among other rules, 15A NCAC 2N. .0405 and 15A NCAC 2N .0803. Assessment of the site and completion of the UST closure report provide important information regarding the presence of contamination at the site.
9. On June 13, 2006, and again on August 2, 2006, the Respondent sent a Notice of Regulatory Requirements (NORR) directing Laney Oil Company, Inc. to properly assess the site and to complete an UST closure report for the USTs. (Resp. Exhs. 17, 19). The NORRs were received by Laney Oil Company, Inc. on June 14, 2006 and August 3, 2006, respectively.
10. Laney Oil Company, Inc. did not respond to the NORRs. On September 11, 2006, Respondent sent to Laney Oil Company, Inc. a Notice of Violation (NOV) directing Laney Oil Company, Inc. to submit a Tank Closure Report. The NOV was received by Laney Oil Company, Inc. on September 12, 2006. (Resp. Exh. 20)
11. In an October 5, 2006 letter from Laney Oil Company, Inc. to Edward G. Leach, III, Laney Oil Company, Inc. alleged that it did not have the financial capability to meet the requirements contained in the NOV. (Resp. Exh. 21)
12. On November 6, 2006, the Respondent sent to Laney Oil Company, Inc. a Recommendation of Enforcement Action, which was received by Laney Oil Company, Inc. on November 7, 2006. (Resp. Exh. 22)
13. In a November 8, 2006 letter from Laney Oil Company, Inc. to Steven E. Bograd, Laney Oil Company, Inc. again alleged that it did not have the financial capability to the requirements contained in the NOV. (Resp. Exh. 24) In a November 27, 2006 letter from Steven E. Bograd to Laney Oil Company, Inc., Mr. Bograd informed Laney Oil Company, Inc. that his responses had been forwarded to the Director of the Division of Waste Management. The November 27, 2006 letter was received by Laney Oil Company, Inc. on November 30, 2006. (Resp. Exh. 24)
14. Laney Oil Company, Inc. had the option to retain its own consultant to complete the initial site assessment and UST closure report. (T pp. 162-164, 187-188). Laney Oil Company, Inc. did not hire a consultant to complete the initial site assessment and UST closure report however.
15. Laney Oil Company, Inc., also had the option to retain the original consultant, ATC Associates, Inc., who, among others, had worked on the site during the prior UST removal. Laney Oil Company, Inc. and ATC Associates, Inc. discussed several contract price amounts. ATC Associates, Inc. agreed to complete the initial assessment and UST closure report for $5,800.00 for Laney Oil Company, Inc (ATC proposal). (Resp. Exh. 36, T pp. 224-225)
16. The ATC proposal was well below the Respondent’s estimate of the cost to complete the assessment and the UST closure report at the site. The Respondent conservatively estimated, using cost estimates applicable in 1993, the cost to be approximately $51,000.00, with $35,000.00 of that amount potentially reimbursable from the North Carolina Commercial Trust Fund (assuming all eligibility requirements to the Trust Fund were met by the applicant). (Resp. Exh. 29) The ATC proposal was also well below the actual amount of money already expended by ATC Associates, Inc. and other subcontractors at the site. Over 1200 tons of contaminated soil had previously been removed by a subcontractor from the site, totaling over $100,000.00 of un-reimbursed or partially reimbursed costs, for which Laney Oil Company, Inc. would not be required to pay. Other un-reimbursed costs were also previously expended at the site, including additional costs by ATC Associates, Inc., for which Laney Oil Company, Inc. also would not be required to pay. (Resp. Exhs. 29-30). Laney Oil Company, Inc. did not retain ATC Associates, Inc. either.
17. Ronnie Thomas testified, and Laney Oil Company, Inc. submitted documentation, purporting to show that Laney Oil Company, Inc. owns real property on which no money is owed that is currently tax valued at $342,660.00. (T pp. 105-110; Pet. Exh. 3)
18. Laney Oil Company receives $39,936.00 per year of rental income from property owned by Laney Oil company, Inc. (T pp. 105-110)
19. Laney Oil Company, Inc. has not assessed the site or completed an UST closure report for the site.
20. On March 20, 2008, a civil penalty was assessed against Laney Oil Company, Inc. for violation of 15A NCAC 2N .0405 and 15A NCAC 2N .0803 for failure to assess the site and to submit an UST closure report. The civil penalty assessment totaled $11,300.06, which was comprised of a $11,000.00 civil penalty and $300.06 in investigative costs. The civil penalty was received by Laney Oil Company, Inc. on Marc 21, 2008. (Resp. Exh. 25)
CONCLUSIONS OF LAW
Based on the foregoing Findings of Fact, I make the following Conclusions of Law:
1. This matter is properly before the Office of Administrative Hearings and the Office of Administrative Hearings has jurisdiction of the subject matter and the parties herein.
2. All parties have been correctly designated, and there is no question as to misjoinder or nonjoinder.
3. The burden of proof is upon the Petitioner to show that the Respondent either acted erroneously or otherwise violated N.C. Gen. Stat. § 150B-23 when Respondent assessed civil penalties against Petitioner.
4. Petitioner is a “person” within the meaning of N.C. Gen. Stat. § 143-215.6A pursuant to N.C. Gen. Stat. § 143-212(4).
5. Respondent is a State agency established pursuant to N.C. Gen. Stat. § 143B-275 et. seq. and vested with the statutory authority to enforce the State’s environmental pollution laws, including laws enacted to regulate underground storage tank systems and to protect the groundwater quality of the State.