STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF SURRY 02 EHR 0329

ELWOOD MONTGOMERY, )

Petitioner, )

)

vs. ) DECISION

)

N.C. DEPARTMENT OF ENVIRONMENT )

AND NATURAL RESOURCES, DIVISION )

OF WASTE MANAGEMENT, )

Respondent. )

This contested case was heard before Administrative Law Judge Beryl E. Wade on June 25, 2002, and July 9, 2002, in High Point, North Carolina. Petitioner Elwood Montgomery was represented by Gus L. Donnelly, Esquire. Respondent North Carolina Department of Environment and Natural Resources, Division of Waste Management, was represented by Assistant Attorney General William W. Stewart, Jr.

ISSUE

Whether Petitioner has met its burden of proof by establishing that Respondent acted erroneously when Respondent assessed against Petitioner a civil penalty and investigative costs in the total amount of $8,723.41 for violations of 15A NCAC 2N .0402 and 15A NCAC 2N .0504?

APPEARANCES

For Petitioner: Gus L. Donnelly

ATTORNEY AT LAW

Post Office Box 1112

Mount Airy, North Carolina 27030

For Respondent: William W. Stewart, Jr.

ASSISTANT ATTORNEY GENERAL

NC Department of Justice

Post Office Box 629

Raleigh, North Carolina 27602-0629

EXHIBITS RECEIVED INTO EVIDENCE

For Petitioner: None

For Respondent:

1. February 18, 2002 Assessment of Civil Penalty

2. UST Section Compliance Penalty Matrix

3. Notice of Intent to Install Underground Storage Tank(s)

4. UST Permit From July 1, 2001 to June 30, 2002

5. UST Permit Application Including Uncompleted Compliance Questionnaire

and Check Issued by Elwood Montgomery

6. May 18, 2001 Response to Application for UST Permit

7. Response to May 18, 2001 Request Including June 8, 2001

Completed Compliance Questionnaire

8. June 29, 2000 Check Issued by Elwood Montgomery

9. July 10, 2000 Response to Application for UST Permit

10. July 12, 2000 Completed Compliance Questionnaire

11. Letter Received July 3, 2000 From Elwood Montgomery

Requesting Waiver of Late Fees

12. UST Permit Application as Mailed to Elwood Montgomery

13. UST Permit From January 4, 1999 to June 30, 1999

14. UST Permit Application as Mailed to Elwood Montgomery

15. UST Permit Application Including Completed

Compliance Questionnaire

16. Facsimile Cover Sheet Including UST Permit

Application and Completed Compliance Questionnaire

17. UST Permit From July 15, 1997 to June 30, 1998

18. UST Permit Application Including Uncompleted Compliance

Questionnaire

19. June 30, 1997 Response to Application for UST Permit

20. July 14, 1997 Completed Compliance Questionnaire

21. UST Permit From July 1, 1996 to June 30, 1997

22. UST Permit Application Including Completed Compliance Questionnaire

23. August 27, 2001 Notice of Compliance Inspection to be

Conducted September 6, 2001

24. UST General Requirements Inspection Checklist

25. September 7, 2001 Notice of Violation

26. Cover Letter with Additional Information Including Leak Test Report

and Tank Warranty Validation Card

27. November 29, 2001 Recommendation for Enforcement Action Letter

28. April 3, 2002 Permit Notification

29. UST Permit Application Including Completed Compliance Questionnaire

and Copy of April 3, 2002 Permit Notification

30. Two Printouts of DWM UST Fees and Permits Information

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. Petitioner, Elwood Montgomery is the owner of the real property located at Big Man BP, 232 Starlite Dr., Mt. Airy, Surry County, North Carolina (hereinafter “the Site”). (Tp, v. II, p. 55; Response to Request for Admission No. 1) Petitioner has owned the land at the Site since 1989. (Tp, v. II, p. 55) Petitioner is also the owner of the convenience store/service station located at the Site. (Tp, v. II, p. 5)

2. 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.

3. Petitioner contends that he should not have been assessed a civil penalty because he does not believe that he is the owner of the three UST systems located at the Site. (Response to Request for Admission No. 3) Petitioner contends that the three UST systems are owned by Harrell Oil Company of Mt. Airy for a period of ten years, and then the UST systems would belong to Petitioner. (Tp, v. II, pp. 12-13; Petition; Petitioner’s Prehearing Statement)

4. On January 1, 1993, one 12,000-gallon UST system with three compartments was installed on the Site by Harrell Oil Company, Inc. (Tp, v. II, p. 7; Resp. Exhs. 3, 5, 12, 14-16, 18, 22, 24, 29; Response to Request for Admission No. 4) For purposes of billing, permitting, and compliance in this case, Respondent considers each compartment to be a separate tank. (Tp, v. I, p. 81) Therefore, the subject UST system is considered to be three tanks because it is compartmentalized into three sections. (Tp, v. I, p. 81; Resp. Exh. 15)

5. On September 6, 2001, the Division of Waste Management (hereinafter “DWM”) conducted a compliance inspection at the Site. (Resp. Exhs. 1, 24, 25) This inspection revealed that the cathodic protection system had not been tested by a qualified tester and 0.2 gph leak rate tests were not being performed with the Automatic Tank Gauge (hereinafter “ATG”). (Resp. Exhs. 1, 24, 25)

6. The DWM thereafter mailed numerous documents to Petitioner, because the DWM viewed the Petitioner as an owner within the meaning of the UST statutes and regulations.

7. On September 7, 2001, the DWM sent Petitioner by certified mail a Notice of Violation (hereinafter “NOV”) stating that, per 15A NCAC 2N .0402 the cathodic protection system was not being tested by a qualified tester and per 15A NCAC 2N .0504 0.2 gph leak rate tests were not being performed with an ATG. (Resp. Exhs. 1, 25) This NOV was received by Petitioner on September 18, 2001. (Resp. Exhs. 1, 25)

8. On November 29, 2001, the DWM sent Petitioner by certified mail a letter notifying him of potential enforcement action. (Resp. Exhs. 1, 27) This letter was received by Petitioner on December 3, 2001. (Resp. Exhs. 1, 27)

9. On February 18, 2002, Respondent issued a civil penalty assessment against the Petitioner. (Resp. Exh. 1) The civil penalty was assessed as follows: 1) $6,300.00 for failure to test the cathodic protection system by a qualified tester in accordance with 15A NCAC 2N .0402 for the period of time from July 1, 1993 through at least February 2, 2002, and 2) $2,100.00 for failure to perform monthly 0.2 gph leak rate tests with an ATG in accordance with 15A NCAC 2N .0504 for the period of time from September 6, 2000, through at least February 2, 2002. (Resp. Exh. 1) Respondent also assessed investigative costs in the amount of $323.41. (Resp. Exh. 1) The civil penalty and investigative costs total $8,723.41. (Resp. Exh. 1)

10. Petitioner admits that, from July 1, 1993 through February 2, 2002, he failed to have the cathodic protection system tested by a qualified tester in accordance with 15A NCAC 2N .0402. (Response to Request for Admissions No. 8) Petitioner also admits that, from September 6, 2000 through February 2, 2002, he failed to perform monthly 0.2 gph leak rate tests with an ATG in accordance with 15A NCAC 2N .0504. (Response to Request for Admissions No. 9).

11. Jack Stewart is employed as a salesman with Southern Pump and Tank Company. (Tp, v. I, p. 33). He sells UST systems. (Tp, v. I, p. 35) Southern Pump and Tank had a contractual agreement with Petitioner to sell Petitioner a UST system with three compartments. (Tp, v. I, pp. 34, 39-40) Southern Pump and Tank did not have a contractual agreement with Harrell Oil Company of Mt. Airy regarding any UST systems at the Site. (Tp, v. I, pp. 34, 40-41)

12. Joseph Harrell is corporate president of Harrell Oil Company of Mt. Airy. (Tp, v. I, p. 43) He believes that Elwood Montgomery is the owner of the UST systems at the Site. (Tp, v. I, p. 43) Mr. Harrell testified that Harrell Oil Company of Mt. Airy does not own the UST systems at the Site. (Tp, v. I, p. 43)

13. At the time of installation of these tanks, Harrell Oil Company of Mt. Airy did not intend to be the owner of the tanks. (Tp, v. I, pp. 49, 59-60, 62) Mr. Harrell specifically noted that when the UST systems were installed in 1993, he and Petitioner agreed that Harrell Oil Company of Mt. Airy would install the tanks and Petitioner would own the tanks. (Tp, v. I, p. 49) Harrell testified that Harrell Oil Company of Mt. Airy has never submitted any documents to Respondent stating that it is the owner of the UST systems at the Site. (Tp, v. I, pp. 44-45) Mr. Harrell sent a “Tank Warranty Validation Card” to Respondent indicating that Petitioner is the owner of the UST systems at the Site. (Tp, v. I, p. 45-46; Resp. Exh. 26)

14. Ruth Strauss currently is the head of Respondent’s Permits and Inspection Branch. (Tp, v. I, p. 70) Ms. Strauss assessed the penalty in this matter. (Resp. Exhs. 1-2; T, v. I, pp. 75-76)

15. Respondent received a form entitled “Notice of Intent to Install Underground Storage Tank(s).” (Resp. Exh. 3; T, v. I, pp. 79-80) This is a standard form notifying Respondent of a tank installation. (Tp, v. I, p. 79-80) This form was received by Respondent on November 23, 1992. (Resp. Exh. 3) The form gives Respondent notice that a tank is scheduled to be installed at the Site, and that Petitioner is the tank owner and contact person. (Tp, v. I, pp. 79-80, Resp. Exh. 3) The form is signed by Petitioner. (Tp, v. II, p. 39; Resp. Exh. 3) The form is the only document that was created around the time of tank installation. (T v. II, pp. 39-40)

16. Respondent began issuing permits for operating UST systems in July, 1996. (Tp, v. I, p. 102) Since 1996, every UST operating permit issued for this Site lists Petitioner as owner of the UST systems. (Tp, v. I, pp. 82, 95-96, 97; Resp. Exhs. 4, 13, 17, 21, 30). Petitioner has been issued these permits in response to his applications for operating permits. (Tp, v. I, pp. 83-87, 88-89, 91-92, 97; Resp. Exhs. 5, 7, 10, 15, 16, 20, 22).

17. In applying for an operating permit, the owner or operator of a UST system must complete a compliance questionnaire, thereby certifying that the UST system meets certain requirements. (Tp, v. I, pp. 83-84; Resp. Exhs. 6-8, 9-10, 12, 14-16, 18-20, 22, 29). The instructions sent with each UST permit application packet to Petitioner stated that the UST owner or operator must sign and date the application. (Tp, v. I, pp. 94- 97; Resp. Exhs. 12, 14) The place for such a signature is found at the bottom of the compliance questionnaire. (Resp. Exhs. 12, 14)

18. Seven compliance questionnaires span a time period from 1996 through 2002. (Resp. Exhs. 7, 10, 15, 16, 20, 22, 29) Petitioner’s name is printed and signed in the spaces provided at the bottom of all seven completed compliance questionnaires. (Resp. Exhs. 7, 10, 15, 16, 20, 22, 29) On six of the seven completed compliance questionnaires (except for the year 1998), the printed handwritten portion above “Print Name and Title” reads “Elwood Montgomery/Owner.” (Resp. Exhs. 7, 10, 16, 20, 22, 29) Recently, on May 17, 2002, such a compliance questionnaire was submitted to Respondent. (Resp. Exh. 29)

19. Whenever there has been a deficiency in an application for a UST permit, Respondent sent a letter to Petitioner as tank owner requesting a correction. (Tp, v. I, pp. 87-88, 90-91, 97; Resp. Exhs. 6, 9, 19) Petitioner has consistently made the requested corrections, including the correction that the UST application be signed by the UST owner. (Tp, v. I, pp. 88-90, 91-92, 97; Resp. Exhs. 7, 10, 20)

20. Respondent received a handwritten letter from Petitioner on July 3, 2002. (Tp, v. I, pp. 93-94; Resp. Exh. 11) Petitioner requested in this handwritten letter that UST late fees be waived for this facility and signed the letter “Elwood Montgomery Owner.” (Tp, v. I, pp. 93-94; Resp. Exh. 11)

21. Santiago Vila was previously employed with Respondent and conducted compliance inspections as part of his duties. (Tp, v. I, pp. 125)

22. Mr. Vila conducted a compliance inspection of the Site on September 6, 2001. (Tp, v. I, p. 125; Resp. Exh. 24) As a result of this inspection, Mr. Vila mailed to Petitioner a NOV setting forth corrective actions requested of Petitioner. (Tp, v. I, pp. 126-129; Resp. Exh. 25) In the NOV, Mr. Vila stated that Respondent considered Petitioner an owner of the UST systems at the Site. (Tp, v. I, pp. 126-127)

23. Petitioner never responded regarding the NOV. (Tp, v. I, pp. 127, 129)

24. Michael Phelps currently is employed as an environmental engineer with Respondent. (Tp, v. I, pp. 134-135) Mr. Phelps recommended this matter for enforcement. (Tp, v. I, p. 136)

25. Prior to recommending enforcement, Mr. Phelps reviewed and evaluated the official file that Mr. Vila had compiled in this matter. (Tp, v. I, p. 135) Included in this material, Mr. Phelps reviewed the materials sent to Respondent and admitted into evidence as Respondent’s Exhibit 26. (Tp, v. I, pp. 136-139) Mr. Phelps explained why the materials admitted as Respondent’s Exhibit 26 were not sufficient to correct the violations. (Tp, v. I, pp. 136-139)

26. Mr. Phelps sent Petitioner a letter advising Petitioner that enforcement action was being considered. (Tp, v. I, p. 139; Resp. Exh. 27) The letter informed Petitioner that he could provide information to Respondent within 10 days following receipt of the letter. (Resp. Exh. 27) Petitioner never responded to this enforcement letter. (Tp, v. I, pp. 140-141)