EPA EAB Board decision
Docket RCRA (9006) 99-1
Decided February 25, 2000
Citations affirmed
V-1 Oil Company
In re V-1 Oil Company (EAB RCRA (9006) Appeal No. 99-1): underground storage tank penalty affirmed
Apply this precedent to your situation
This is citable Board precedent from 2000, and it may have been appealed since. Ezel checks how it stands today and answers your situation, with citations.
Final EAB decision
This Environmental Appeals Board Final Decision and Order is a final disposition of the RCRA section 9006 appeal. The Board upheld liability for failing to permanently close two underground storage tanks and affirmed the $25,000 civil penalty. The full text below is the official EPA release.
About this page: The plain-English summary and decision snapshot below were written by Ezel based on the official EPA EAB release. The full text is the agency's own release.
Read the official release (epa.gov)
Plain-English summary
V-1 Oil Company temporarily closed two underground storage tanks at its facility in Twin Falls, Idaho, but did not permanently close them within the required period. V-1 argued that filling the tanks with water changed their service and that an EPA guidance booklet excused compliance with the detailed regulatory requirements. The Environmental Appeals Board held that a change in service required advance notice, a site assessment, and cleaning and emptying the tanks, and V-1 had not completed the required steps. The Board rejected V-1's equitable-estoppel and fair-notice defenses, upheld liability, and affirmed the $25,000 civil penalty. The Board also issued a compliance order.
Decision snapshot
- Cited authorities: 40 C.F.R. §§ 280.70, 280.71, and 280.72, and 42 U.S.C. §§ 6991b and 6991e.
- Outcome: Liability, the $25,000 civil penalty, and the compliance order were affirmed.
- Key point: Following a plain-English guidance summary does not replace compliance with the notice, assessment, and tank-cleaning requirements for a change in service.
Full text (EPA EAB public release)
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V–1 OIL COMPANY 729
IN RE V–1 OIL COMPANY
RCRA (9006) Appeal No. 99–1
FINAL DECISION AND ORDER
Decided February 25, 2000
Syllabus
V–1 Oil Company (“V–1”) appeals from an Initial Decision assessing a civil penalty
of $25,000 for violation of 40 C.F.R. § 280.70(c). This regulation requires the permanent
closure of underground storage tanks containing petroleum and other regulated substances
(USTs) that have been temporarily closed for more than 12 months and do not meet cer-
tain performance standards or upgrading requirements for USTs.
The Complaint was filed by U.S. Environmental Protection Agency Region 10 (“the
Region”) in 1995 after V–1 failed to permanently close two USTs located at V–l’s facility in
Twin Falls, Idaho. In its Amended Complaint, the Region sought a penalty of $36,674 for
the violation, alleging that the USTs were temporarily closed before mid-July 1991, and
were not permanently closed within 12 months thereafter. In November 1993, the Idaho
Division of Environmental Quality of the Idaho Department of Health and Welfare
(“IDEQ”) notified V–1 that the two USTs must go through permanent closure.
Subsequently, Region 10 also advised V–1 it was in violation of 40 C.F.R. § 280.70(c).
With respect to liability, V–1 argues on appeal that it was exempt from the closure
requirements because it had effected a change-in-service of its USTs by emptying the tanks
and filling them with water. V–1 claims it had followed the procedure for a change-in-serv-
ice outlined in an EPA booklet, Musts for USTs, which was distributed to members of the
regulated community. V–1 also raises the affirmative defenses of equitable estoppel and
lack of fair notice, all predicated on its alleged compliance with the Musts for USTs guid-
ance. As to the penalty, V–1 argues that no penalty should be assessed; alternatively, if a
penalty is assessed it argues that the $25,000 penalty should be substantially reduced.
Held: (1) V–1 is liable for violation of 40 C.F.R. § 280.70(c). V–1 temporarily closed
its two USTs in May or June 1991, and did not permanently close the USTs within 12
months thereafter. A change-in-service is an alternative to permanent closure (although it
contains requirements substantially the same as permanent closure). Under 40 C.F.R.
§§ 280.71 and.72, there are three conditions precedent to effectuating a change-in-service—
notifying the regulatory authority 30 days in advance of intent to make a change-in- serv-
ice, conducting a site assessment, and cleaning and emptying the USTs by removing all
liquid and accumulated sludge. V–1 did not perform the first two conditions. (The
Presiding Officer did not expressly rule on whether V–1 satisfied the third condition).
Accordingly, V–1 did not effectuate a change-in-service; it therefore was required by 40
C.F.R.§ 280.70(c) to implement permanent closure.
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730 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
(2) V–1’s affirmative defenses are rejected. (a) The Musts for USTs guidance provides
an accurate, plain English summary of the three basic steps to effectuate a change-in-serv-
ice and directs the reader to the regulations for the specific requirements. Compliance with
a guidance document does not substitute for full compliance with the regulatory require-
ments of 40 C.F.R. §§ 280.70(c), .71, and .72. (b) V–1’s defense of equitable estoppel is
rejected, as V–1 has failed to establish an essential element of estoppel against the gov-
ernment—affirmative misconduct. (It is accordingly unnecessary to reach V–1’s arguments
regarding the other elements of estoppel.) (c) V–1’s fair notice defense is not meritorious.
The applicable regulations are clear and unambiguous and thus meet the principles for
establishing fair notice. In addition, V–1 was given pre-enforcement notice of the Region’s
interpretation.
(3) The penalty assessment of $25,000 is affirmed. (a) Although EPA has the discre-
tion to choose not to impose a penalty, the Region appropriately exercised its discretion
here to seek one. The tanks were not removed from the ground until October 1997, more
than five years after V–1 was obliged to implement permanent closure and almost four
years after V–1 had unmistakably been put on notice of its regulatory obligation. (b) As to
the amount of the penalty, both because of the importance of the permanent closure
requirements to the UST regulatory program and because of the potential for harm to the
environment, there is ample support for the Presiding Officer’s conclusion that the viola-
tion is serious. The Board agrees with the Presiding Officer’s finding that V–1 did not act
in good faith after being notified by IDEQ in late 1993 and subsequently by EPA that it
was in violation of the UST regulations.
Before Environmental Appeals Judges Scott C. Fulton,
Edward E. Reich, and Kathie A. Stein.
Opinion of the Board by Judge Stein:
I. INTRODUCTION
This case presents issues of first impression for the Environmental
Appeals Board (the “Board”) concerning the regulatory requirements at
40 C.F.R. part 280, subpart G, for permanent closure of underground stor-
age tanks (“USTs”). The underlying regulations were issued pursuant to
section 9003(c)(5) of the Resource Conservation and Recovery Act
(“RCRA”), 42 U.S.C. § 6991b(c)(5), and are part of a comprehensive reg-
ulatory program for USTs that contain petroleum or other regulated sub-
stances. See 40 C.F.R. pt. 280; see also In re B&R Oil Co., 8 E.A.D 39, 42
(EAB 1998). At issue are regulations, designed to minimize future envi-
ronmental harm, which generally require the permanent closure of USTs
that have been temporarily closed for more than a year. The parties do
not dispute that effectuation of a change-in-service from a regulated to a
non-regulated use of the USTs would be a defense to the allegations in
the complaint of failure to permanently close the USTs. Accordingly, we
must also consider what steps are necessary to effectuate a change-in-
service from a regulated to a non-regulated use, and whether these steps
were followed in this case. In addition, we consider whether a tank
owner or operator may be deemed to have effected a change-in-service
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V–1 OIL COMPANY 731
because it allegedly followed the procedure set forth in an EPA booklet
that summarizes the applicable regulatory requirements, and assumed
that by following that procedure that it would be in compliance with the
actual regulations.
V–1 Oil Company (“V–1” or “the company”) has appealed an Initial
Decision issued February 1, 1999, in which the Presiding Officer assessed
a civil penalty of $25,000 and issued a compliance order to the company
for one violation of RCRA section 9006, 42 U.S.C. § 6991e, and 40 C.F.R.
§ 280.70(c). The underlying complaint was filed by U.S. EPA Region 10 (“the
Region”). Section 280.70(c) provides that owners and operators of certain
USTs that have been temporarily closed for more than 12 months must per-
manently close the USTs at the end of the 12-month period in accordance
with regulatory requirements set forth at 40 C.F.R. §§ 280.71–.74.1 The
Presiding Officer held that V–1 had violated section 280.70(c) by main-
taining two USTs that formerly held gasoline in temporary closure status
for more than 12 months without then implementing permanent closure.2
Initial Decision at 6. V–1 acknowledges that its gasoline-containing USTs
were taken out of service in May or June 1991,3 and that it did not imple-
ment permanent closure procedures within 12 months thereafter.4
However, V–1 argues that it was not required to implement permanent
closure under section 280.70(c) because it effected a change-in-service of
the USTs by removing the gasoline and filling the USTs with water, a non-
regulated substance. It asserts that USTs that have undergone a change-
in-service are exempt from regulatory permanent closure requirements,
V–1’s Appeal Brief (“Appeal Brief”) at 6, a point the Region does not dis-
pute. Tr. at 34. V–1 does not claim that it followed the specific procedures
for effecting a change-in-service set forth in sections 280.71 and .72.
Instead, it contends that it should be deemed to have satisfied the regu-
latory requirements because it complied with a summary of the regula-
tions set forth in a booklet that the U.S. Environmental Protection Agency
(“EPA”) published and distributed, titled Musts for USTs
1
The regulations allow for an extension to be granted under certain circumstances.
40 C.F.R. § 280.70(c).
2
The complaint treats V–1’s alleged failure to close the two USTs as a single “facility”
violation rather than treating each failure to close an UST as a separate violation.
See Complaint ¶ 15; Hearing Transcript (“Tr.”) at 164–65; Initial Decision at 11 n.12.
3
Answer to Amended Complaint ¶ 5; Tr. at 242–44.
4
See Answer to Amended Complaint ¶ 13, admitting the allegation that, as of June 24,
1997, when the Amended Complaint was filed, “neither EPA nor IDEQ has received any
documentation that respondent has complied with the permanent tank closure require-
ments at this facility.” See Amended Complaint ¶ 13.
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732 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
(EPA/530/UST–88–008, Sept. 1988). Appeal Brief at 2–4. See Court Exhibit
(“Ct. Ex”) 2, quoted infra in parts II.A and III.A.
V–1 also raises two other affirmative defenses. First, it claims that
EPA is equitably estopped from charging it with the regulatory violation
because V–1 relied on the Musts for USTs to its detriment, and that the
requisite elements to establish equitable estoppel against the government
are present. Appeal Brief at 9–11. Second, V–1 contends that it was
denied due process of law because it did not have “fair notice” of the
conduct the regulations prohibited. Id. at 12. Finally, V–1 argues that,
even if it violated section 280.70(c), it should not be assessed a civil
penalty, or it should be assessed a substantially reduced penalty, because
it acted in good faith. Id. at 15.
For the reasons set forth below, we conclude that V–1 did not effect
a change-in-service but rather violated 40 C.F.R. § 280.70(c) as alleged.
We also find its affirmative defenses lack merit. With respect to the penal-
ty assessment, we have independently reviewed it and conclude that a
civil penalty of $25,000 is appropriate.
II. BACKGROUND
A. Statutory and Regulatory Background
RCRA section 9006(d)(2), 42 U.S.C. § 6991e(d)(2), provides that “[a]ny
owner or operator of an underground storage tank who fails to comply
with—(A) any requirement or standard promulgated by the Administrator
under section 6991b [RCRA § 9003 release detection, prevention, and cor-
rection regulations] * * * shall be subject to a civil penalty not to exceed
$10,000 for each tank for each day of violation.” Pursuant to RCRA sec-
tion 9003, EPA has issued regulations at 40 C.F.R. part 280, subpart G, that
establish permanent closure procedures for USTs that have been taken
out of service.
As explained in the preamble to the regulations, “the principal objec-
tive of the UST system closure requirements is to identify and contain
existing contamination and to prevent future releases from UST systems no
longer in service.” Underground Storage Tanks; Technical Requirements
and State Program Approval; Final Rules (“Final Rules for Underground
Storage Tanks”), 53 Fed. Reg. 37,082, 37,181 (Sept. 23, 1988) (emphasis
added). The preamble adds that “[a]vailable information suggested that
UST systems improperly closed in the past have had undetected releases
that later required corrective action,” and that “it is particularly important
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V–1 OIL COMPANY 733
to require proper management procedures for out-of-service UST systems
so that contamination due to improperly closed UST systems can be pre-
vented from posing a threat of additional releases in the future.” Id. To
that end, section 280.70(c) provides in relevant part that:
When an UST system is temporarily closed for more than
12 months, owners and operators must permanently
close the UST system if it does not meet either perform-
ance standards in § 280.20 for new UST systems or the
upgrading requirements in § 280.21 * * *. Owners and
operators must permanently close the substandard UST
systems at the end of this 12-month period in accordance
with §§ 280.71–280.74, unless the implementing agency
provides an extension of the 12-month temporary closure
period.
Section 280.71(b) in turn prescribes two methods for permanently
closing an UST that has been temporarily closed for 12 months. Pursuant
to that regulation, after all liquids and accumulated sludges have been
removed from the UST, the UST may either be removed from the ground
or it may be closed in place and filled with an insert solid substance.
Although not expressly referenced in section 280.70(c), section 280.71(c)
provides a third option to owners and operators, termed a “change-in-
service,” as an alternative to permanent closure. Section 280.71(c) pro-
vides: “Continued use of an UST system to store a non-regulated sub-
stance is considered a change-in-service. Before a change-in-service,
owners and operators must empty and clean the tank by removing all liq-
uid and accumulated sludge and conduct a site assessment in accordance
with § 280.72.”
This option of effecting a change-in-service was not made available
in the proposed regulations but was added to the regulations in response
to public comments. See Final Rules for Underground Storage Tanks, 53
Fed. Reg. at 37,183. EPA explained in the preamble to the regulations that
it added language allowing a change-in-service so that UST owners were
not forced to dispose of USTs that were intact and could be put to an
alternative use. It stated that:
[T]he permanent closure requirements set forth in the
proposed rule precluded the reuse of UST systems for
unregulated substances. As a result, sound tanks could be
forceably discarded even though this would serve no
environmental purpose. Therefore, final § 280.71(c) gives
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734 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
owners or operators a third method of closing an UST sys-
tem.5 This method allows the owner or operator to com-
plete a change-in-service, which will allow the tank to be
used to store non-regulated substances.
53 Fed. Reg. at 37,183 (emphasis added).
A tank owner or operator wishing to effect a change-in-service must
comply with three requirements. First, “[a]t least 30 days before beginning
* * * a change-in-service under paragraph[] * * * (c) of this section, * * *
owners and operators must notify the implementing agency of their
intent to * * * make the change-in-service * * *.” 40 C.F.R. § 280.71(a).
Second and third, as quoted previously, “[b]efore a change-in-service,
owners and operators must empty and clean the tank by removing all liq-
uid and accumulated sludge and conduct a site assessment in accordance
with § 280.72.” Id. § 280.71(c). The regulation further specifies that “the
required assessment of the excavation zone under § 280.72 must be per-
formed after notifying the implementing agency but before completion of
* * * a change-in-service.” Id. § 280.71(a). These requirements are sub-
stantially the same as the requirements for implementing permanent clo-
sure, with the exception that the tank can be used for non-regulated uses
after a change-in-service has been effectuated.6 Both sets of requirements
are designed to protect human health and the environment by prevent-
ing future releases from those USTs that do not meet current environ-
mental standards.
At the time EPA issued the UST regulations, it published a booklet
titled Musts for USTs, which was distributed to owners and operators of
USTs, including V–1, as a means of bringing the regulatory requirements
to their attention.7 The title page of Musts for USTs states, “[a] Summary of
5
Although the preamble refers to a change-in-service as a third method of closure,
based on our review of the text of the regulations, we think that this option is best
described as an alternative to permanent closure, albeit one with substantially similar
requirements. See infra n.32.
6
See 40 C.F.R. § 280.71(a) (providing that owners and operators of USTs undergoing
permanent closure must notify the implementing agency at least 30 days before beginning
permanent closure); id. § 280.71(b) (providing that, to permanently close a tank, owners
and operators of USTs undergoing permanent closure must “remov[e] all liquids and accu-
mulated sludges” from it); id. § 280.71(c) (providing that the required assessment of the
excavation zone under section 280.72 must be performed before completing permanent
closure).
7
See, e.g., Tr. at 312 (testimony of Mr. Robert Clayton, vice-president of V–1, describ-
ing a meeting held by the Idaho Division of Environmental Quality of the Idaho
Continued
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V–1 OIL COMPANY 735
the New Regulations for Underground Storage Tank Systems.” The first
page of the booklet contains the statement that Musts for USTs “briefly
describes the new technical requirements” for USTs and the statement
that “the complete regulations” are published in the Federal Register.
Musts for USTs at 1. In addition, Musts for USTs contains a summary of the
requirements, including a summary of the procedure for effecting a
change-in-service.
B. Factual Background
V–1 is a regional oil company that sells propane and/or gasoline in
six states. Initial Decision at 2. The company has approximately 250
employees. Id. V–1 sold both propane and gasoline at its gas station in
Twin Falls, Idaho (“the Facility”) from 1978 to “approximately June 1991,”
when it discontinued gasoline sales at that location. Id. V–1 stored gaso-
line at the Facility in two USTs, one holding 12,000 gallons and the other
holding 6,000 gallons.8 Id. Both USTs were at least 14 years old at the time
they were taken out of service.9 Neither met EPA’s performance standards
for new tanks and neither met EPA’s upgrading requirements.10 Id. at 6.
V–1 stopped pumping gasoline at the Facility in May or June 1991,
leaving open the possibility of starting up the pumps again if market
conditions improved. Id. at 2. See also Respondent’s Proposed Alternative
Findings of Fact ¶ 5, at 2 (Mar. 26, 1999). It removed “as much material
from the tanks as was practical at the time,” 11 and filled the tanks with
Department of Health and Welfare and the Petroleum Storage Tank Fund “to familiarize
* * * the industry with what was going to be expected of them” under new UST regula-
tions. Musts for USTs was distributed at the meeting.) .
EPA re-issued the booklet in July 1990. The information about UST closures in the July
1990 version of the Musts for USTs is identical to the information in the September 1988
booklet. However, the later booklet refers the reader to the September 23, 1988 Federal
Register for the complete text of the UST regulations. Tr. at 221. The parties disagree as to
whether V–1 had received both the 1988 and 1990 versions, or only the 1988 version, at
the time it ceased gasoline operations at its facility in Twin Falls, Idaho. See Tr. at 221, 237.
8
V–1 filed a Notification for Underground Storage Tanks, dated December 18, 1985,
on which it provided information about the USTs. The Region’s (“Complainant’s”) Exhibit
(“C Ex”) 2.
9
See Notification for Underground Storage Tanks, dated July 12, 1991. C Ex 3 and
Respondent’s Exhibit (“R Ex”) 2; see also infra n. 16.
10
The USTs were constructed of steel and were not lined, double-walled, or cathodi-
cally protected. Initial Decision at 3, 12.
11
C Ex 10 (Letter from Kent W. Gauchay, V–1’s attorney, to Ellen Van Duzee, EPA’s
UST Coordinator for Idaho, Mar. 7, 1994).
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736 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
“city water.” 12 V–1 does not claim that it intended to use the water for a
specific purpose but explains that it had followed that procedure to com-
ply with Musts for USTs, which “suggested we * * * put water in” the tanks
to effect a change-in-service. Tr. at 281.
On July 12, 1991, V–1 filed an amended Notification for
Underground Storage Tanks (EPA form 7530–1) (“Amended Notification”)
(C Ex 3, R Ex 2), with the Idaho Division of Environmental Quality of the
Idaho Department of Health and Welfare (“IDEQ”),13 notifying IDEQ that
certain information that it had previously filed had changed.14 Initial
Decision at 3. V–1 checked the boxes on the Amended Notification indi-
cating that the two USTs were “temporarily out of use,” 15 and it also
checked the boxes on the same form indicating that the same two USTs
had each undergone a change-in-service.16 Initial Decision at 3. In
12
According to V–1’s President, Mr. Gary Huskinson:
[W]e sold the gasoline off as much as the retail pumps would pump out. Then
we * * * pumped down to about a quarter of an inch of the product out of the
tank, then we filled them with a hose with city water and there was a little sludge
on the top * * * and we took that off * * * and filled the tanks so clear water was
showing * * * in the tops of the fill pipes.
Tr. at 247–48.
13
RCRA section 9002, 42 U.S.C. § 6991a, requires owners of USTs that store regulated
substances to notify duly designated State or local agencies of the existence of the tanks.
In Idaho, IDEQ is authorized to receive notification of the existence of USTs or a change
in the status of an UST. See Tr. at 134.
14
See supra n.8.
15
The other two categories for “Status of Tank” on the form were “currently in use”
and “permanently out of use.”
16
We note that the record contains copies of two different versions of the Amended
Notification, identified as R Ex 2 and C Ex 3. On a copy provided by V–1 to the Region as
part of its prehearing exchange (C Ex 3), the “change-in-service” boxes are not checked.
Tr. at 96–97. However, the “change-in-service” boxes are checked on a copy produced by
V–1 for the first time at the hearing (R Ex 2). See Tr. at 42, 94–97. The original form filed
with IDEQ was not available for inspection at the hearing. To resolve questions relating to
the inconsistency between the two copies of the Amended Notification, counsel for the
parties telephoned IDEQ during a break in the hearing to inquire about the appearance of
the original form. They informed the Presiding Officer that IDEQ had stated during that
telephone conversation that “white out” had been applied to the “change-in-service” boxes
on the original form. Tr. at 101. The Region then stipulated that, if there had been check
marks in the “change-in-service” box on the original, they had been “whited out” before
the copy identified as C Ex 3 was made. See Tr. at 129. The Region’s attorney declined to
stipulate that V–1 had intended to check the change-in-service boxes because he “didn’t
know who whited it out or when it was whited out.” Id. at 129–30. There is no evidence
in the record as to who changed the form or when the change occurred.
Continued
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V–1 OIL COMPANY 737
response to questions on the form whether it had performed a site assess-
ment for either tank, V–1 circled “no” for both tanks.
On November 29, 1993, IDEQ sent a letter to V–1 that notified V–1
that the two USTs must be permanently closed pursuant to 40 C.F.R.
§ 280.70(c) because they had been temporarily out of use for more than
12 months. C Ex 4. The letter quotes from the regulations. On December
12, 1993, V–1 replied to IDEQ’s letter, acknowledging that the USTs had
been “placed out of use,” and asking IDEQ “to allow excavation to occur
in more favorable weather conditions.” C Ex 6 (Letter from Robert E.
Clayton, vice-president and safety director of V–1, to IDEQ (Dec. 12,
1993)). IDEQ subsequently referred the matter to EPA. Tr. at 135.
On February 2, 1994, Ms. Ellen Van Duzee, EPA’s UST Coordinator
for Idaho, inspected the two USTs (Tr. at 37) and found petroleum prod-
uct floating in the fill tubes of both tanks. Tr. at 105–08. Ms. Van Duzee
issued an “Expedited Enforcement Compliance Order and Settlement
Agreement” (commonly referred to as a “field citation”) on February 4,
1994, seeking permanent closure of the two USTs in accordance with
40 C.F.R. § 280.70(c), and a $300 penalty. C Ex 7. See Initial Decision at
4–5. On that occasion, she discussed the UST regulations with Mr.
Huskinson and explained the UST closure requirements to him. Tr. at
61–62. According to Ms. Van Duzee, Mr. Huskinson “never raised a
change-in-service as a defense” during that conversation. Id. at 64; Initial
Decision at 7. V–1’s attorney responded to the field citation by letter of
March 7, 1994, in which he stated that V–1 had “filled the tanks with an
unregulated substance-water,” and that, although the “applicable regula-
tions are cumbersome and unclear,” V–1 “believes it acted within the
scope of the applicable regulations.” C Ex 10 at 2.
Ms. Van Duzee then referred the matter to Mr. Todd Bender, UST
Coordinator for Region 10. Tr. at 70. Mr. Bender explained to Mr.
Huskinson in a telephone conversation that took place some time in July
1994 that V–1 was in violation of EPA regulations. Tr. at 138–39. Mr.
Bender then sent V–1 a letter on July 12, 1994, with the words “Attention:
Last Chance” in large letters on the first page. C Ex 8. The letter stated
that the Region would bring an enforcement action if V–1 did not sign
the Compliance Order and Settlement Agreement, and thereby resolve
the matter by the informal field citation procedure. A copy of the UST
The Presiding Officer found that V–1 had filed an Amended Notification form with
check marks in both “change-in-service” boxes. Initial Decision at 3. The Region has not
challenged that finding on appeal. We will assume, therefore, for purposes of this decision,
that the change-in-service boxes were checked.
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738 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
regulations was enclosed. Id. V–1’s attorney responded to the letter on
V–1’s behalf on July 21, 1994, asking for “additional time to make a final
decision” concerning what to do with its tanks. C Ex 9 at 2 (Letter from
Kent W. Gauchay to Todd Bender, Region 10 (July 21, 1994)). Among
other issues, he questioned Mr. Bender’s statement that V–1 was required
to conduct a site assessment, stating that he had “read 40 CFR 280.71(c)
and 280.72” and that he had a “different interpretation” from Mr.
Bender’s. Id. at 1.
After V–1 refused to accept Region 10’s proposed settlement offer,
the Region withdrew it,17 and issued an administrative complaint
(“Complaint”) on June 3, 1995. The Complaint, as subsequently amend-
ed (“Amended Complaint”), alleges that V–1 is the owner and/or opera-
tor of two USTs that have been used to store regulated substances with-
in the meaning of section 9001 of RCRA, 42 U.S.C. § 6991, and EPA reg-
ulations at 40 C.F.R. § 280.12;18 that neither tank meets the performance
standards at 40 C.F.R. § 280.20 or the upgrading requirements at 40 C.F.R.
§ 280.21;19 that the tanks have been in temporary closure status for more
than 12 months;20 and that V–1 has failed to comply with the regulatory
permanent closure requirements for both tanks.21 The Amended
Complaint seeks a civil penalty of $36,674.22 Amended Complaint ¶ 19.
V–1 filed an answer on August 9, 1995, asserting that it was not sub-
ject to the regulatory requirements at 40 C.F.R. § 280.70 because its USTs
were filled with an unregulated substance (water) “in compliance with
the * * * Musts for USTs.” Answer ¶ 6; see also Answer ¶¶ 11, 16. V–1 also
alleges that EPA is equitably estopped from charging it with the violation.
Answer ¶ 16.
The Presiding Officer conducted a hearing on October 15 and 16,
1997. V–1 maintained during the hearing and in its posthearing brief that
17
C Ex 11 (Notice of Withdrawal) (Aug. 4, 1994).
18
Amended Complaint ¶ 4.
19
Id. ¶ 5.
20
Id. ¶ 6.
21
Id.
The initial Complaint sought a civil penalty of $23,334. EPA moved to amend the
22
Complaint on May 21, 1997, to increase the penalty amount to $36,674, “to reflect almost
2 years of continued non-compliance since the filing of the original complaint.” Letter from
Region 10 to Presiding Officer, May 21, 1997. The Presiding Officer granted the motion on
June 12, 1997. Order (ALJ, June 12, 1997).
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V–1 OIL COMPANY 739
it was not required to comply with the permanent closure requirements
of 40 C.F.R. § 280.70 because it had effected a change-in-service of its
tanks, following the procedure described in Musts for USTs. It maintained,
therefore, that its tanks were no longer subject to regulation by EPA. V–1
further argued that EPA was equitably estopped from charging it with the
violation, and that it did not have “fair notice” of the prohibited conduct.
Finally V–1 contended that it should not be assessed a civil penalty, or
that any penalty assessed should be substantially smaller, because it had
acted in good faith.
C. The Initial Decision
The Presiding Officer issued an Initial Decision on February 1, 1999,
holding that V–1 had violated 40 C.F.R. § 280.70(c) when it temporarily
closed its USTs in May or June 1991, and failed to implement permanent
closure of the USTs within 12 months thereafter. Initial Decision at 6. The
Presiding Officer stated that “[t]here is no dispute here that the two [USTs]
were not used to store gasoline for more than 12 months” and that the
USTs did not meet upgrading requirements. Id. at 6. He said that the dis-
pute “centers on” whether V–1 had temporarily closed the USTs or had
effected a change-in-service. Id. The Presiding Officer concluded that V–1
had temporarily closed the USTs, citing four reasons for that conclusion.
Id. at 6–8. First, he stated that the testimony by V–1’s officials “shows that
[V–1] intended the UST closure to be temporary only,” and was “in direct
conflict with the notion that the company sought to engage in a change-
in-service” when it drained the USTs and filled them with water. Id. at 7.
Second, the Presiding Officer noted that neither V–1’ s president nor its
vice-president had “offered the explanation that the tanks had undergone
a change-in-service,” when faced with enforcement efforts by IDEQ and
EPA. Id. He found it particularly “telling” that Mr. Huskinson had not
mentioned that a change-in-service had occurred when an EPA repre-
sentative visited the company on February 4, 1994. Id. Third, the
Presiding Officer stated that V–1 did not suggest any purpose (other than
compliance with Musts for USTs) for filling the tanks with water. Id. at
7–8. Fourth, the Presiding Officer noted, as further “evidence that the
USTs did not undergo a change-in-service,” that V–1 had not performed
a site assessment. He stated, “[r]espondent cannot now argue that its USTs
had undergone a change-in-service when it failed to follow the clearly
prescribed regulatory steps for effecting such a change.” Id. at 8.
The Presiding Officer then rejected V–1’s three defenses: (1) that V–1
should not be held liable for violating the regulations because it had com-
plied with Musts for USTs; (2) that EPA was equitably estopped from charg-
ing V–1 with the violations because it had misled V–1 into believing that
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740 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
compliance with Musts for USTs satisfied its legal obligations; and (3) that
V–1 did not have “fair notice” of the prohibited conduct. Id. at 9. The
Presiding Officer stated that: “[a] fatal flaw common to all three defenses
is that respondent equates compliance with Musts for USTs, a general
guidance document, as compliance with Section 280.70(c), a promulgat-
ed regulation. This is not so.” Id. He added that V–1 is charged with
knowledge of section 280.71(c), commenting that even V–1 admits it is
“highly regulated,” and therefore it should not be surprised that it is sub-
ject to regulation. Id. at 10. Moreover, he noted that “V–1 was directed to
those regulations by the EPA general guidance document that it relied
upon.” Id. at 11. He added that IDEQ had notified V–1 on November 29,
1993, that it had not effected a change-in-service, and had called V–1’s
attention to the applicable regulations. Id.
The Presiding Officer assessed a civil penalty of $25,000 for the vio-
lation of 40 C.F.R. § 280.70(c), stating that “a substantial penalty is war-
ranted here because of the serious nature of the violation and V–1’s lack
of good faith, as evidenced by its failure to promptly close the tanks after
being informed by the IDEQ, on November 29, 1993, that the provisions
of Section 280.70(c) applied to its operation.” 23 Id. at 11. He stated that he
had also taken into account Region’s 10’s financial analysis regarding the
economic benefit derived by V–1 for its non-compliance. Id. at 14 n.16.
The Presiding Officer explained that V–1’s violation was serious
because “failure to comply with the closure provisions of Section
280.70(c) poses significant health and environmental risks.” Id. at 12. He
emphasized that these risks are “well illustrated in this case” because
V–1’s USTs were located in a residential area with wells close by, and
because the tanks were 20 years old,24 “asphalt coated or constructed of
bare steel, and were not lined, double-walled, or cathodically protected.”
Id. He concluded that the “condition of these aging tanks, therefore,
increased the likelihood that corrosion would cause the gasoline-con-
taminated water [in the tanks] to be released into the environment.” 25 Id.
The Presiding Officer concluded that “V–1 did not act in good faith
once notified by the IDEQ and EPA that it was in violation of Section
23
V–1 removed the USTs on October 1, 1997. Initial Decision at 5.
24
According to evidence in the record, the USTs were approximately 14 years old at
the time they were taken out of service and therefore were approximately 20 years old at
the time of the Initial Decision.
25
He referred to testimony by the Region’s UST program enforcement coordinator that
“gasoline-contaminated water contained in V–1’s USTs posed a threat to the environment.”
Id. at 13.
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V–1 OIL COMPANY 741
280.70(c).” Id. at 13. He concluded that V–1’s initial belief that it had
effected a change-in-service, based on its reliance on Musts for USTs, was
not “that unreasonable,” but that V–1‘s failure to comply with the regula-
tions after it received IDEQ’s November 29, 1993, letter, and after its con-
tacts with EPA personnel “evidences a lack of good faith.” Id. The
Presiding Officer stated that the refusal of Mr. Huskinson to accept the
July 12, 1994 “last chance” letter from Mr. Bender provided “[a]dditional
evidence of V–1’s lack of good faith.” 26 Id. at 13 n.14. The Presiding
Officer added that V–1’s only efforts to monitor the USTs for leakage after
it filled the tanks with water in 1991 was to “check the water level in the
tanks on a quarterly basis,” and that these efforts were not sufficient to
warrant a penalty reduction. Id. at 14. The Presiding Officer directed V–1
to satisfy the terms of the Compliance Order set forth in the Region’s
Amended Complaint. Id. at 14–15.
D. The Appeal
V–1 filed this appeal with the Board on February 25, 1999, reiterat-
ing that it did not violate 40 C.F.R. § 280.70(c). V–1 contends that its USTs
“had undergone a change-in-service” when V–1 filled them with water,
an unregulated substance, and that, because a change-in-service was
effected, the USTs are no longer subject to regulation by EPA.27 Appeal
Brief at 6. V–1 states that it had followed the procedure for effecting a
change-in-service of its two USTs that was described in Musts for USTs,28
and that, pursuant to Musts for USTs, EPA has no authority to regulate
USTs “[o]nce it is determined that the tank is filled with an unregulated
substance.” Id. at 7. It contends that V–1 effected a change-in-service
when it “removed the gasoline from the tanks, quit filling the tanks with
gasoline, quit selling gasoline * * *, cleaned the tanks of all gasoline and
sludge and filled the tanks with water, all consistent with an EPA publi-
cation.” Id. at 8. V–1 argues that the evidentiary record supports a con-
clusion that it effected a change-in-service. V–1 further argues that the
26
According to Mr. Bender, he sent the letter to Mr. Huskinson by certified mail, and
the letter was returned to him “as unaccepted.” Tr. at 140.
27
V–1 asserts on page 4 of its Appeal Brief that “the tanks were temporarily closed”
and had undergone a change-in-service. It asserts on page 5 that “the tanks were still in
use, were filled with water, and were not closed, either temporarily or permanently.” It
argues on page 6 that its tanks could be temporarily closed and also have undergone a
change-in-service because it could “make a change-in-service to a non-regulated sub-
stance” of an UST it had temporarily closed, and then make another change-in-service
“back to a regulated use” at some future time.
28
The pertinent text of Musts for USTs is quoted infra in part III.A.2.a.
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742 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
Presiding Officer had erred when he rejected V–1’s affirmative defenses
of equitable estoppel and lack of fair notice. Id. at 9. It maintains that, for
“nearly two-and-a half (2 1⁄2) years after filling the tanks with water,” V–1
was not informed that Musts for USTs “was inaccurate, and could not be
relied upon.” Id. at 4. Finally, V–1 maintains that no civil penalty should
be assessed even if it had violated the regulations, because V–1 had acted
in good faith, and that, if any civil penalty is assessed, a $25,000 civil
penalty is too high. Id. at 15. It contends that compliance with Musts for
USTs represents “substantial, if not complete compliance with the appli-
cable regulations.” Id.
The Region responds that the Presiding Officer’s liability holding and
penalty assessment should be upheld, arguing that:
Musts for USTs is not the law. The regulations govern, not
the pamphlet, and Respondent’s appeal makes no men-
tion of how it complied with either 40 C.F.R. §§ 280.70(c)
or 280.71. While Musts for USTs accurately summarizes
the law applicable to UST owners, it is merely a summa-
ry, and cannot supersede the applicable regulations it
summarizes.
Complainant’s Reply Brief (“Region’s Brief”) at 2. The Region maintains
that the “Presiding Officer’s view of the evidence was right,” and that
“[o]ther than the disputed checked-off box [on the Amended
Notification],29 there is no credible evidence in the record that V–1 ever
contemplated a change in service under § 280.71(c).” Id. at 3, 4. The
Region urges the Board to uphold the $25,000 civil penalty amount,
agreeing with the Presiding Officer that “V–1’s violations were serious,
and V–1’s actions lacked good faith.” Id at 2. It argues that “V–1 stalled
for years and refused to comply with the law.” Id. The Region notes that
the $25,000 penalty amount is “substantially less than the penalty request-
ed by the Region under the UST penalty policy,” 30 but it does not chal-
lenge the penalty amount. Id.
29
See supra n.16.
Todd Bender of the Region calculated the $36,674 penalty amount in accordance
30
with the U.S. EPA Penalty Guidance for Violations of UST Regulations. Ct. Ex.1; see Tr. at
153, 157. He testified that he calculated a gravity-based penalty component, based on the
potential for harm of the violation and the extent of deviation from the regulatory require-
ments, and then added to the gravity-based penalty amount an additional sum to reflect
the economic benefit to V–1 of its non-compliance. Tr. at 156, 163–64. See C Ex 11 (UST
Penalty Computation Worksheet). Mr. Bender calculated a total gravity-based penalty of
Continued
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V–1 OIL COMPANY 743
III. DISCUSSION
We hold V–1 liable for violating 40 C.F.R. § 280.70(c), as charged in
the Amended Complaint, because it failed to permanently close two USTs
that did not meet updated performance standards within 12 months fol-
lowing the temporary closure of the USTs.31 As explained below, we find
that V–1 temporarily closed its USTs in May or June 1991 and did not at
that time or thereafter effect a change-in-service of the USTs. We reject
V–1’s other affirmative defenses. Finally, we affirm the Presiding Officer’s
assessment of a $25,000 civil penalty.
A. Liability
1. Violation of Section 280.70(c)
The 40 C.F.R. part 280, subpart G regulations that govern “Out-of-
Service UST Systems and Closure” provide at section 280.70(c) that, if an
UST system has been temporarily closed for more than 12 months and
does not meet certain regulatory performance standards or upgrading
requirements for USTs, it must be “permanently closed in accordance
with §§ 280.71–.74.” As an alternative to implementing permanent closure
of an out-of-service UST, the subpart G regulations allow UST owners
and operators to effect a change-in-service of the UST. See Final Rules for
Underground Storage Tanks, 53 Fed. Reg. at 37,183.32 Sections 280.71(c)
and .72 collectively require that the UST owner or operator must comply
$32,288, based on 1,846 days of noncompliance (the number of days from July 12, 1992 (12
months and 1 day after V–1 filed its Amended Notification) to August 1, 1997, an estimated
date on which V–1 would achieve compliance). Tr. at 156, 173. (The actual date of com-
pliance did not occur until October 1, 1997). He calculated the economic benefit of non-
compliance as $4,836 and added that amount to the gravity-based penalty figure. Tr. at 157.
31
Although we are affirming the Presiding Officer’s holding, we are not adopting in
full the Presiding Officer’s reasoning, but are instead setting forth our own rationale. See
40 C.F.R. § 22.31(a). “The Board reviews the Presiding Officer’s factual and legal conclu-
sions on a de novo basis,” and may “adopt, modify, or set aside” the Presiding Officer’s
findings and conclusions. In re H.E.L.P.E.R., Inc., 8 E.A.D 437, 447 (EAB 1999).
32
Although the Preamble refers to a change-in-service as a third method of closing an
UST, a change-in-service is better described as an alternative to permanent closure, but one
with requirements that are substantially the same as those required for permanent closure.
The regulations in several places refer separately to permanent closure and changes-in-
service, thus reinforcing the view that a change-in-service is not a method of permanent
closure. See, e.g., 40 C.F.R. § 280.71 (titled “Permanent closure and changes-in-service”); id.
§ 280.72 (“assessing the site at closure or change-in-service”).
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744 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
with three regulatory requirements before a change-in-service can be
effected. As previously described supra n. 6, these requirements are sub-
stantially the same as the requirements imposed on a tank owner or oper-
ator undertaking permanent closure of an UST, and allow owners and
operators of USTs to effect a change-in-service only after undertaking
action designed to assure that the USTs will not pose an environmental
risk in the future.
V–1 concedes that it “temporarily closed” its USTs in May or June
1991. Appeal Brief at 4, Respondent’s Proposed Alternative Findings of
Fact (Mar. 26, 1999) ¶ 5. In any event, the record amply supports the
Presiding Officer’s finding that V–1 temporarily closed its tanks in May or
June 1991. Initial Decision at 6; see Tr. at 243–44, 255, 323; C Ex 10. Mr.
Huskinson testified that V–1’s decision to close its gasoline operation in
mid-1991 was not a permanent decision and that the company would re-
enter the gasoline market if economic conditions changed. Id. at 244. Mr.
Robert Clayton, V–1’s Vice President, testified that “at the time we closed
these [tanks] down it was a decision by the company to close them down
temporarily.” Tr. at 323.
As discussed below, the company did not effect a change-in-service
of its USTs, a regulatory alternative to permanent closure, because it did
not comply with the regulatory conditions precedent to effecting a
change-in-service. Since it did not effect a change-in-service of its USTs,
it was required to implement permanent closure of the tanks by the end
of the 12-month temporary closure period. The regulatory requirements
for effecting a change-in-service are discussed below.
The first requirement is that, “[a]t least 30 days before beginning
* * * a change-in-service * * * owners and operators must notify the imple-
menting agency of their intent to * * * make the change-in-service * * *.”
40 C.F.R. § 280.71(a). V–1 did not satisfy that requirement. As the Region
argues, there is no evidence in the record that V–1 notified either IDEQ
or EPA of its intent to effect a change-in-service prior to draining the USTs
of gasoline and filling them with water in May or June 1991. Region’s
Brief at 7. Assuming that V–1’s Amended Notification was intended to
provide notice to IDEQ of V–1’s intent to effect a change-in-service,33 V–1
did not submit the Amended Notification until July 12, 1991, after V–1
had already filled its USTs with water. See R Ex 2; C Ex 3; Tr. at 284–86.
The second requirement is that, “before a change-in-service,” own-
ers and operators must “conduct a site assessment in accordance with
33
See supra n. 16.
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V–1 OIL COMPANY 745
§ 280.72.” 40 C.F.R. § 280.71(c). Section 280.72 contains detailed regula-
tory requirements for the type of site assessment that must precede a
change-in-service. Specifically, it provides that:
Before * * * a change-in-service is completed, owners and
operators must measure for the presence of a release
where contamination is most likely to be present at the
UST site. In selecting sample types, sample locations, and
measurement methods, owners and operators must con-
sider the method of closure, the nature of the stored sub-
stance, the type of backfill, the depth to ground water,
and other factors appropriate for identifying the presence
of a release. The requirements of this section are satisfied
if one of the external release detection methods allowed
in § 280.43 (e) and (f) is operating in accordance with the
requirements in § 280.43 at the time of closure, and indi-
cates no release has occurred.
The regulations are clear that “the required assessment of the excavation
zone under § 280.72 must be performed after notifying the implementing
agency but before completion of * * * a change-in-service.” 40 C.F.R.
§ 280.71(a).34
The Presiding Officer found that V–1 did not comply with the site
assessment requirements. Initial Decision at 8. His findings are fully sup-
ported by the evidence in the record. V–1 circled “no” in response to the
questions on the Amended Notification as to whether it had conducted a
site assessment for either UST. See R Ex 2; C Ex 3. Moreover, Mr.
Huskinson testified that he was “not sure what a site assessment is.” Tr.
at 285. Therefore, by its own admission, as well as the Presiding Officer’s
finding, it failed to satisfy that requirement.
V–1 argues on appeal that it substantially satisfied the regulatory
requirement because it made “a determination that its’ [sic] tanks had
caused no damage to the environment.” Appeal Brief at 8. V–1 contends
that it “conducted tank and line tightness tests,” and that it made a “visu-
al inspection of the property” which revealed no contamination. Id.
These procedures do not constitute a site assessment performed in accor-
dance with the requirements of section 280.72. As Todd Bender stated at
the hearing,“the regulations require an external monitoring method, as
34
Section 280.74 contains the further requirement that owners and operators prepare
and maintain records that demonstrate compliance with the requirements set forth at sec-
tion 280.72.
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746 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
opposed to an internal monitoring method,” to determine whether a
release has occurred, and the tank tightness testing and inventory control
methods V–1 used are both considered “internal” methods. Tr. at 142–43.
He stated that EPA had expressly noted in the preamble to the regula-
tions that it had rejected suggestions that it allow internal release detec-
tion monitoring methods for the reason that these methods do not assess
the condition of the environment outside the tank. Tr. at 146. V–1’s visu-
al inspection of the property does not satisfy the regulatory requirement
that it “measure for the presence of a release where contamination is
most likely to be present at the UST site.” See 40 C.F.R. § 280.72(a).
The third regulatory requirement is that, “[b]efore a change-in-serv-
ice, owners and operators must empty and clean the tank by removing
all liquid and accumulated sludge.” 40 C.F.R. § 280.71(c) (emphasis
added). The parties dispute whether that requirement was met. V–1
claims that it “cleaned the tanks of all gasoline and sludge.” Appeal Brief
at 8. The Region disagrees, argues that “V–1 did not remove all liquid and
accumulated sludge as required by the regulations.” Region’s Brief at 7.
The Presiding Officer does not expressly rule on whether V–1 removed
all accumulated liquid and sludge from these USTs, although he does
observe that the water was not pure, noting in particular evidence
adduced at the hearing that the tanks were so contaminated from petro-
leum that V–1 had a difficult time disposing of the water it had placed in
the tanks. Initial Decision at 4 n.3, 7 n.9. Since we have concluded that
V–1 did not satisfy two other conditions precedent to a change-in-serv-
ice, we need not resolve that issue in this appeal.
For the foregoing reasons, we have concluded that V–1’s tanks were
temporarily closed and that the tanks did not undergo a change-in-serv-
ice. Therefore, V–1 had a regulatory duty under section 280.70(c) to
implement permanent closure of the tanks within 12 months of their tem-
porary closure. Since it is uncontroverted that V–1 failed to implement
permanent closure within 12 months, we hold V–1 liable for violating
section 280.70(c).
2. Affirmative Defenses
All of V–1’s three affirmative defenses hinge upon its alleged com-
pliance with the Musts for USTs guidance. As explained in pt. III.B.2.a
below, V–1 did not even satisfy all the steps outlined in the Musts for
USTs guidance. More significantly, none of its affirmative defenses are
meritorious on the facts of this case.
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V–1 OIL COMPANY 747
a. Compliance with the Musts for USTs Guidance
V–1 argues, as its first of three affirmative defenses, that it did not
violate 40 C.F.R. § 280.70(c) because it effected a change-in-service of its
USTs as described in Musts for USTs. Appeal Brief at 6. Musts for USTs
states that:
Closing Permanently
If your tank is not protected from corrosion and it
remains closed for more than 12 months * * * you
must follow requirements for permanent closure:
Three Exceptions to Permanent Closure:
The requirements for permanent closure may not apply
to your UST if it meets one of the following conditions:
* * * * * * *
You can change the contents of your UST to an unregu-
lated substance, such as water. Before you make this
change, you must notify the regulatory authority, clean
and empty the UST, and determine if any damage to the
environment was caused while the UST held regulated
substances * * *.
Ct. Ex 2 at 23.
According to V–1:
V–1 sold off as much gasoline as possible from the two
tanks. Then the company * * * removed additional gaso-
line and sludge from the tank[s]. V–1 then filled the tanks
with water. V–1 then monitored the tanks on a regular
basis. At no time did it appear that any of product leaked
from the tanks.
Appeal Brief at 3. V–1 argues that “once it is determined that the tank is
filled with a non-regulated substance [water], then EPA has no authority
to regulate the UST.” Id. at 7. It contends that the Presiding Officer’s hold-
ing that V–1 was required to conduct a site assessment is erroneous
because “Musts for USTs makes no mention of the requirement of a site
assessment.” Id. at 8.
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748 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
We note, preliminarily, that V–1 did not, in fact, comply with Musts
for USTs, as it asserts. Musts for USTs, quoted supra, clearly states that
“[b]efore you make this change, you must notify the regulatory authori-
ty.” The record contains no evidence that V–1 gave prior notice either to
IDEQ or EPA that it intended to take its gasoline tanks out of service, and
V–1 does not claim to have given such notice. See supra part II.B. This
omission is not insignificant, as such advance notice alerts the regulatory
agency to the fact that a tank may be undergoing a change-in-service and
enables the agency to verify whether a change-in-service has been prop-
erly effectuated (e.g., whether a site assessment has been conducted).
Moreover, V–1’s argument that Musts for USTs made no mention of a
site assessment requirement is disingenuous. Musts for USTs advises the
reader it must determine if any damage was caused to the environment.
If in fact, as V–1 testified, it did not know what a site assessment was, see
supra part III.A.1, or was uncertain what was meant by the reference in
the guidance to the need to determine if any damage was caused to the
environment, surely it was obligated to consult the regulations or the reg-
ulatory authority to complete its understanding. In fact, the General
Instructions to the Amended Notification that V–1 filled out in July 1991
specifically advised V–1 of the requirement for a site assessment and
where to get information about site assessment requirements. See R Ex 2
at 6 (“If this [change-in-service] has occurred you must complete a site
assessment because this change is considered the same as closing a tank.
* * * A site assessment is required for all tanks closed since December 22,
1988. Site assessment requirements can be obtained from the Idaho
Division of Environmental Quality at the address provided in page 1 of
this form.”).
In any event, we reject V–1’s argument that compliance with Musts
for USTs constitutes compliance with the regulations. An EPA guidance
document does not have the force of law, In re Steeltech, Ltd., 8 E.A.D.
577, 584–85 (EAB 1999); In re Ash Grove Cement Co., 7 E.A.D. 387, 402
(EAB 1997), quoting from In re Environmental Waste Control, Inc., 5
E.A.D. 264, 273 (EAB 1994) (“[T]he Agency’s proposed regulations and
guidance document do not have the force of law * * *.”). Therefore, even
if V–1 had followed the procedure summarized in Musts for USTs, it would
not substitute for full compliance with all of the regulatory requirements.
b. Equitable Estoppel
V–1 argues, as a second affirmative defense, that EPA is equitably
estopped from charging it with a violation of 40 C.F.R. § 280.70(c). Appeal
Brief at 9. The company contends that it has established the five requi-
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V–1 OIL COMPANY 749
site elements for estopping a government agency from bringing an
action, as set forth in U.S. v. Arkwright, 690 F. Supp. 1133 (D.N.H. 1988).
It asserts that: (1) EPA knew “the facts” in that it was aware of the exis-
tence of V–1’s USTs and it was also aware of the information contained
in Musts for USTs with respect to a change-in-service; (2) EPA intended
that Musts for USTs would be relied on by the public, including V–1; (3)
V–1 was “ignorant to the fact that following the publication would be
incomplete compliance;” (4) V–1 relied on EPA’s conduct to its injury, in
that it has been assessed a civil penalty; and (5) the writing, publishing
and distributing of Musts for USTs constituted affirmative misconduct on
the part of EPA. Appeal Brief at 10–12. V–1 adds that “the harm caused
by reliance on the EPA publication is greater than a public interest in
strict compliance when no environmental damage has been done,” and
therefore, that it is entitled to equitable relief. Id. at 12. The Region
responds that, although V–1 has accurately enumerated the traditional
elements of an equitable estoppel against the government, it has not
demonstrated that they apply here. Region’s Brief at 11. The Region
argues that, “[n]ot only has V–1 failed to prove the traditional elements of
estoppel, it has not cited facts to support a finding of affirmative mis-
conduct.” Id.
As explained below, we reject V–1’s allegation that EPA is equitably
estopped from charging it with a violation of section 280.70(c) on the
ground that V–1 has not demonstrated any affirmative misconduct on the
part of EPA. Our reasons are set forth below. Since V–1 has failed to
establish an essential element for an equitable estoppel against the gov-
ernment, we need not reach V–1’s arguments regarding the other ele-
ments of estoppel.
“Courts have applied estoppel to the federal government only in the
narrowest of circumstances. In order to establish estoppel against the
government, a party must prove affirmative misconduct by the govern-
ment in addition to the four traditional elements of the [equitable estop-
pel] doctrine,” In re Newell Recycling Co., 8 E.A.D. 598, 631 (EAB 1999)
(emphasis added), quoting In re Linkous v. United States, 142 F.3d 271,
277 (5th Cir. 1998); In re B.J. Carney Indus., Inc., 7 E.A.D. 171, 196 (EAB
1997) (“A party seeking to estop the government bears a heavy burden
of demonstrating the traditional elements of estoppel and some ‘affirma-
tive misconduct’ on the part of the government.”). Affirmative miscon-
duct, in this context, refers to “an affirmative misrepresentation or affir-
mative concealment of a material fact by the government,” Linkous, 142
F.3d at 278.
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750 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
There are strong public policy reasons for strictly limiting claims of
equitable estoppel against the government. “When the Government is
unable to enforce the law because the conduct of its agents has given rise
to an estoppel, the interest of the citizenry as a whole in obedience to
the rule of law is undermined.” Heckler v. Community Health Services,
467 U.S. 51, 60 (1984), quoted in B.J. Carney, 7 E.A.D. at 196. The pub-
lic interest in restricting the availability of equitable estoppel claims
against the government is particularly compelling where the protection of
public health and/or the environment is at issue. See B.J. Carney, 7 E.A.D.
at 202, n.39.
V–1 claims, without elaboration, that EPA’s “writing, publishing and
distribution” of Musts for USTs “all constitute affirmative misconduct”
because these acts were “intentionally done and is more than mere neg-
ligence.” Appeal Brief at 11. As best we can discern from its brief, V–1’s
argument is based on the fact that Musts for USTs advises owners they can
effect a change-in-service by filling an UST with an unregulated sub-
stance and does not specifically state that an actual site assessment is
required. See id. at 10–11. V–1’s argument is without merit.35 We do not
find the summary of the regulations that appears in Musts for USTs to be
misleading, let alone to meet the more demanding standard necessary to
constitute affirmative misconduct. The booklet states that, before effect-
ing a change-in-service, the tank owner and/or operator must: (1) “noti-
fy the regulatory authority,” (2) “clean and empty the UST,”and (3) “deter-
mine if any damage to the environment was caused by the UST when it
held regulated substances.” See Musts for USTs at 23. In our view, these
brief descriptive phrases in Musts for USTs provide an accurate, plain
English summary of the three basic steps one must take to effect a
change-in-service, appropriate for its purpose of alerting its readers to the
new UST requirements. It does not purport to be a comprehensive recita-
tion of the regulatory requirements; rather, the reader is directed to the
regulations for specific details.36
35
Although we recognize that it would have been helpful to readers of Musts for USTs
if the original booklet had contained a citation to the volume and pages of the Federal
Register where the complete regulations appear, Musts for USTs specifically states that it is
a summary of the regulations and advises readers that “[y]ou can find the complete regu-
lations in the Federal Register.” Ct. Ex 2 at 1.
36
In any event, the Amended Notification which V–1 filled out in July 1991 specifically
advised V–1 of the requirement for a site assessment and where to get information about
site assessment requirements. See supra part III.A.1.a. In these circumstances, it would not
be reasonable for V–1 to claim either it lacked knowledge of the facts or that it detrimen-
tally relied on the lack of a site assessment requirement in Musts for USTs.
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V–1 OIL COMPANY 751
c. Fair Notice
We also reject V–1’s third affirmative defense, that it did not have
“fair notice” of the prohibited conduct. In support of that defense, V–1
argues that the “regulations are not clear on the face,” and therefore “V–1
followed Musts for USTs * * * and for 2 1⁄2 years thought it was in full com-
pliance.” Appeal Brief at 14. V–1 quotes from U.S. v. Hoechst Celanese
Corp., 964 F. Supp. 967, 979 (D.S.C. 1996), aff’d in part, rev’d in part, 128
F.3d 216 (4th Cir. 1997), cert. denied, 118 S. Ct. 2367 (1998), which artic-
ulates the fair notice doctrine as follows:
Fair notice is not provided unless a regulated party act-
ing in good faith is able to identify with ‘ascertainable
certainty,’ on the face of regulations and other public
statements issued by the agency, the standard to which
the regulating agency expects it to conform. * * * Unclear
or ambiguous regulations do not provide the requisite
notice. * * * [However, a] regulated party may also be
found to have been given fair notice of the agency’s
interpretation in those situations where, prior to the com-
mencement of enforcement efforts, the regulated party
was given actual notice of the interpretation.
Id. at 12. V–1 argues that “the regulations are not clear on the face,” and
that “V–1 was given no agency interpretation at all, prior to the enforce-
ment procedure by EPA, other than what was found in the Musts for USTs
publication.” Id. at 13–14. The Region responds that the record does not
support V–1’s fair notice argument because V–1 has not pointed to any
ambiguities in the regulation, and because the evidence does not support
V–1’s assertion that it received no interpretation of the regulation by EPA
before EPA initiated the enforcement proceeding. Region’s Brief at 13–14.
We have considered fair notice questions, which implicate due
process concerns, in several prior cases. See, e.g., B.J. Carney Indus.,
Inc., 7 E.A.D. at 193–96 (rejecting due process claim because regulations
provided reasonable warning of the conduct they prohibit and because
company was given pre-enforcement notice of agency interpretation); In
re Richard Rogness and Presto-X Co., 7 E.A.D. 235 (EAB 1997) (express-
ing serious doubts about a theory of liability based on fair notice con-
cerns but concluding that liability ultimately turned on a different theo-
ry); In re CWM Chem. Serv., Inc., 6 E.A.D. 1 (EAB 1995) (due process
precludes finding of violation based on failure to conduct dry weight
measurements where regulations were silent and failed to provide notice
of how to measure PCB concentrations). Our recent cases have relied on
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752 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
the standards set forth in General Elect. v. EPA, , 53 F.3d 1324, 1328–29
(D.C. Cir. 1995):
If, by reviewing the regulations and other public state-
ments issued by the agency, a regulated party acting in
good faith would be able to identify, with “ascertainable
certainty” the standards with the which the agency
expects the parties to conform, then the agency has fair-
ly notified a petitioner of the agency’s interpretation.
53 F.3d at 1329. The D.C. Circuit also held that the agency’s pre-enforce-
ment contact may provide notice for due process purposes. Id. As
explained below, measured against the principles which guide us in
reviewing fair notice challenges, V–1’s claim does not withstand scrutiny.
In this case, the Presiding Officer held that “[t]here is no ambiguity
in this regulation.” Initial Decision at 10. He characterized the closure
provision at section 280.70(c), in particular, as “plainly worded.” Id. The
Presiding Officer added that, even if V–1 had mistakenly believed that it
had effected a change-in-service of its USTs prior to November 29, 1993,
the company was informed by IDEQ on that date that it had not done so,
and that it was required to implement permanent closure. Id. at 11.
V–1 has not demonstrated any error in the Presiding Officer’s analy-
sis or conclusion. Although V–1 claims that the regulations are not clear,
its appeal brief does not cite any particular regulatory language that V–1
found either confusing or ambiguous. We find not only section 280.70(c)
to be clear and unambiguous but also the provisions of section 280.71,
which spell out the procedure for effecting a change-in-service. V–1’s
contention that it was not advised of EPA’s interpretation of the regula-
tion before the Region initiated the enforcement action is not supported
by the record. As described supra in part II.B, the Region made repeat-
ed efforts to advise V–1 of EPA’s interpretation of section 280.70(c) as
applied to V–1 both in writing and in person before it commenced this
enforcement proceeding. See, e.g., Region 10’s July 12, 1994 letter to V–1
(C Ex 8); Tr. at 61–63. Mr. Huskinson concedes that, at the conferences
he attended where Musts for USTs was discussed and distributed, the reg-
ulations were “probably brought up” as well. Tr. at 289. Additionally, with
particular regard to the requirement for a site assessment, the Amended
Notification that V–1 signed in July 1991 specifically states that, if you
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V–1 OIL COMPANY 753
mark the “change-in-service” block on the form, “you must complete a
site assessment.” 37 Id. at 6.
Moreover, the Hoechst decision does not support V–1’s lack of fair
notice defense. In that case, Hoechst argued that it should not be held
liable for a regulatory violation because the regulation was unclear and
because Hoechst did not have fair notice of EPA’s interpretation of the
regulation prior to the enforcement action against it. The Federal District
Court agreed. On appeal, the Fourth Circuit Court of Appeals reversed
the lower court decision in part, holding that, although Hoechst initially
lacked fair notice of EPA’s interpretation of the regulation, it was subse-
quently informed by EPA Region 4 officials of EPA’s interpretation of the
regulations, and could not rely on a fair notice defense for violations that
occurred after the time of such notice. U.S. v. Hoechst Celanese Corp., 128
F.3d 216, 229–30 (4th Cir. 1997). Based on the Hoechst decision, even
were we to agree with V–1 that the subpart G regulations were unclear
(a conclusion we do not reach), we would conclude that V–1 cannot
avail itself of the fair notice doctrine because it received actual notice of
EPA’s interpretation of the regulations prior to this enforcement action.
B. Civil Penalty Assessment
The Region’s Amended Complaint sought a $36,674 civil penalty
against V–1 for violating 40 C.F.R. § 280.70(c) as well as issuance of a
Compliance Order. The Presiding Officer assessed a civil penalty of
$25,000, and issued the Compliance Order as requested.
The Presiding Officer based his penalty assessment solely on the
statutory criteria of RCRA section 9006(c), rather than on the EPA penal-
ty policy implementing the statute on which the Region relied in pro-
posing the penalty. See Ct. Ex. 1 (“UST Penalty Policy”). Initial Decision
37
V–1 relies on U.S. v. Hoechst Celanese Corp., 964 F.Supp. 967, 979 (D.S.C. 1996),
aff’d in part, rev’d in part, 128 F.3d 216 (4th Cir. 1997), quoting the following language
from that opinion:
[F]air notice requires that as long as an agency has not given any pre-enforce-
ment warning of what its interpretation of a given regulation is, then the issue
for the court is * * * whether the regulated party received, or should have
received, notice of the agency’s interpretation in the most obvious way of all: by
reading the regulations.
The quoted language does not help V–1. First of all, V–1 has given us no reason to con-
clude that the regulatory language is unclear, and therefore, that it does not give adequate
notice of the regulatory requirements. Second, V–1 did receive pre-enforcement warning
of EPA’s interpretation of the regulations.
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754 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
at 12. Under section 9006(c), 42 U.S.C. § 6991e(c), the Presiding Officer
is charged with “assess[ing] a civil penalty, if any, which [he or she] deter-
mines is reasonable taking into account the seriousness of the violation
and any good faith efforts to comply with the applicable requirements.” 38
The Presiding Officer stated that “[a] substantial penalty is warranted here
because of the serious nature of the violation and V–1’s lack of good
faith, as evidenced by its failure to promptly close the tanks after being
informed by the IDEQ, after November 29, 1993, that the provisions of
Section 280.70(c) applied to its operation.” Id. He also stated that he took
into account the testimony of Charlotte Resseguie, an economic benefit
analyst, who analyzed the economic benefit to V–1 as a result of its non-
compliance.39 Id. at 14 n.16; see also Tr. at 225–35; supra part II.C.
V–1 argues on appeal that “the imposition of any penalty is inap-
propriate” since V–1’s behavior constituted “substantial, if not complete
compliance with the applicable regulations.” Appeal Brief at 15. It also
contends that if a penalty is imposed, a $25,000 penalty amount is inap-
propriate. Id. V–1 maintains that, although the Presiding Officer was
required by statute to take V–1’s good faith into account, he “discussed
only the seriousness of the alleged violation” and did not take into
account V–1’s “good faith effort” to comply with applicable regulations.
Id. The Region responds that the Presiding Officer considered both fac-
tors the statute requires to be considered and that his “finding of lack of
good faith by V–1, along with the seriousness of the violation, justified
the penalty he assessed.” Region’s Brief at 16.
V–1’s argument that no penalty should be imposed requires little dis-
cussion. Although EPA has the discretion to choose not to impose a
penalty, we believe that EPA appropriately exercised its discretion here
to seek one. As discussed supra part II.A, we reject any suggestion that
V–1’s conduct constituted “substantial, if not complete compliance” with
the regulations. Moreover, the violation is serious, as discussed infra, and
V–1 stalled for years in complying with its regulatory obligations. Indeed,
the tanks were not removed from the ground until October 1997, just
Section 9006(c) vests authority to issue compliance orders and assess penalties in
38
the Administrator. The Administrator’s authority to issue such compliance orders and assess
penalties under RCRA section 9006 has been delegated to the Board. 40 C.F.R.
§§ 22.01(a)(4), 22.04(a). The Presiding Officer conducts the administrative hearing on such
matters and issues an Initial Decision. Id. § 22.03.
39
“The economic benefit component represents the economic advantage that a viola-
tor has gained by delaying [and] * * * avoiding costs associated with compliance.” UST
Penalty Policy at 8. Its purpose is to “remov[e] any significant economic benefit that the
violator may have gained from noncompliance.” Id. at 4.
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V–1 OIL COMPANY 755
prior to the administrative hearing in this matter, more than five years
after V–1 was obligated to implement permanent closure, and almost four
years after V–1 had unmistakably been put on notice of its regulatory
obligation.
We now turn to V–1’s challenges to the amount of the penalty. After
considering the statutory factors of RCRA section 9006(c), the applicable
penalty guidelines which we consider pursuant to 40 C.F.R. § 22.27(b),40
the Presiding Officer’s penalty analysis, and the record, we uphold the
assessment of a $25,000 civil penalty.41
First, we agree with the Presiding Officer that the violation is serious
(see supra part II.C.). V–1 does not challenge the Presiding Officer’s con-
clusion that the violation was “serious” in its Appeal Brief. However, it
asserts in its Proposed Alternative Findings of Fact that there is no evidence
in the record indicating that its USTs caused environmental harm.
Respondent’s Proposed Alternative Findings of Fact ¶ 13, at 4 (Mar. 26,
1999). This violation is serious because of its potential for harm, regardless
of whether actual harm occurred. Proof of actual harm to the environment
need not be proven to assess a substantial penalty. See In re Everwood
Treatment Co., 6 E.A.D. 589, 602–03 (EAB 1996), aff’d, Everwood
Treatment Co. v. EPA, No. 96–1159–RV–M (S.D. Ala., Jan. 21, 1998).
As EPA stated in the Preamble to the UST regulations, “the principal
objective of the UST system closure requirements is to identify and con-
tain existing contamination and to prevent releases from UST systems no
longer in service.” 53 Fed. Reg. at 37,181. “Given the large size of the
40
Section 22.27(b) of title 40 of the Code of Federal Regulations requires considera-
tion of any civil penalty guidelines issued by EPA under the statute.
41
The Presiding Officer stated as a rationale for using the statutory criteria of RCRA
section 9006, rather than the UST Penalty Policy, that “[w]hile use of this [the UST] Penalty
Policy may provide for a more consistent national approach by EPA, and in some cases
may even be helpful to the judge in determining the appropriate penalty to be assessed
(see 40 C.F.R. § 22.27(b)), the Environmental Appeals Board is correct in stating that ulti-
mately it is the statutory penalty criteria against which the judge is to measure the facts
adduced at hearing and assess a civil penalty.” Initial Decision at 11–12. He cited as author-
ity In re Employers Ins. of Wausau, 6 E.A.D. 735, 759 (EAB 1997). In Wausau, after a
detailed discussion of a Presiding Officer’s obligations with respect to penalty assessment,
we concluded that “the Presiding Officer’s penalty assessment decision is ultimately con-
strained only by the statutory penalty criteria and by any statutory cap limiting the size of
the assessable penalty, by the Agency’s regulatory requirement (40 C.F.R. § 22.27(b)) to
provide ‘specific reasons’ for rejecting the complainant’s penalty proposal, and by the gen-
eral Administrative Procedure Act requirement that a sanction be rationally related to the
offense committed (i.e., that the choice of sanction not be an ‘abuse of discretion’ or oth-
erwise arbitrary and capricious.).” 6 E.A.D. at 758–59.
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756 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
existing universe and the proportion of these UST systems that have
leaked or are presently leaking, there is a need to * * * alleviate this
important threat to the nation’s groundwater resources.” Id. at 37,097.
EPA noted in Musts for USTs that “[s]everal million underground storage
tank systems in the United States contain petroleum or hazardous chem-
icals. Tens of thousands of these USTs, including their piping, are cur-
rently leaking. Many more are expected to leak in the future,” and that
leaking USTs can cause fires or explosions and can contaminate ground
water. Musts for USTs at 1.
Furthermore, in this case, as the Presiding Officer observed, “the
condition of these aging tanks * * * increased the likelihood that corro-
sion would cause the gasoline-contaminated water to be released into the
environment.” Initial Decision at 12. Morever, any release of gasoline-
contaminated water has the potential to cause “significant environmental
harm” because of the residential character of the area where the tanks
were located and the fact that wells were located nearby. Id. at 13. Both
because of the importance of the permanent closure requirements to the
UST regulatory program and because of the potential for harm, we
believe there is ample support for the Presiding Officer’s conclusion that
the violation is serious.
Second, we agree with the Presiding Officer that V–1 did not act in
good faith after it was notified in late 1993 initially by IDEQ and subse-
quently by the Region that it was in violation of the UST regulations. As
the Presiding Officer states, “V–1 has not offered a sufficient explanation
as to why it took so long to comply with the UST regulation,” after being
advised by the Region that it was not in compliance. Id. at 13.
Moreover, we regard the Presiding Officer’s observation that V–1
acted in good faith prior to November 1993 as charitable at best. See
Initial Decision at 13. In truth, as noted supra, V–1 did not even satisfy
all of the steps outlined in Musts for USTs (for example, it did not notify
the regulatory authority before purporting to effect a change-in-service).
Furthermore, the Musts for USTs guidance advised V–1 to consult the reg-
ulations to ascertain the specific requirements with which it must com-
ply. Musts for USTs at 1. The fact that the Musts for USTs guidance did not
specifically state that a “site assessment” is required to effect a change-in-
service is immaterial—Musts for USTs provides notice of a site assessment
requirement by advising the reader it must determine if any damage to
the environment was caused while the USTs held regulated substances.
Moreover, the site assessment requirement is highlighted in the General
Instructions to the Amended Notification that V–1 filed with IDEQ in
1991. R Ex 2, at 6. See supra part III.A.2. Thus, by no later than July 1991,
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V–1 OIL COMPANY 757
V–1 had received actual notice of the site assessment requirement.
Nevertheless, since we have concluded that the seriousness of the viola-
tion, coupled with V–1’s lack of good faith after November 1993, amply
supports the assessment of a civil penalty of $25,000, we are not basing
our penalty assessment on any lack of good faith V–1 may have demon-
strated before November 1993.
We recognize that this penalty amount is substantially above the
$300.00 amount contained in the field citation the Region issued to V–1
in 1994. We nonetheless find it to be reasonable, particularly in light of
the company’s continued non-compliance after the field citation was
issued. The amount assessed is substantially below that which could have
been assessed given the years of non-compliance,42 and, in our view, is
fully warranted. We thus affirm the $25,000 penalty assessment.43
IV. CONCLUSION
The Presiding Officer’s finding that V–1 Oil Company is liable for
violation of 40 C.F.R. § 280.70(c) is affirmed. A civil penalty of $25,000 is
assessed. V–1 shall pay the full amount of the civil penalty within sixty
(60) days of receipt of this final order, unless otherwise agreed by the
parties. Payment shall be made by forwarding a cashier’s check or certi-
fied check in the full amount payable to the Treasurer, United States of
America, at the following address:
Mellon Bank
EPA Region 10 (Regional Hearing Clerk)
P.O. Box 360903M
Pittsburgh, PA 15251
42
As noted supra part II.A, RCRA section 9006, 42 U.S.C. § 6991e(d)(2), authorizes the
assessment of a civil penalty of up to $10,000 per day per tank for violations of any regu-
latory requirement or standard imposed pursuant to RCRA section 9003 (release detection,
prevention, and correction regulations). The Debt Collection Improvement Act of 1996
directs EPA to make periodic adjustments of maximum civil penalties to take into account
inflation. See 31 U.S.C. § 3701. Inflation adjusted penalty amounts have been published at
40 C.F.R. § 19.1 et seq., and apply to violations occurring after January 30, 1997. For any
such violations, a penalty of up to $11,000 per day per tank may be assessed. V–1 was in
violation of the permanent closure requirements from May or June 1992 until at least
October 1997. Indeed, it is not even clear that it has presently complied with all of the site
assessment requirements for permanent closure of the USTs.
43
The Region has not appealed the Presiding Officer’s decision to decrease the rec-
ommended penalty from $36,674 to $25,000. Although we believe the Presiding Officer
could have provided a more detailed rationale for his departure from the penalty proposed
by the Region, see supra n.22, we decline to disturb the penalty on this basis in the absence
of such an appeal.
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758 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
V–1 is required to comply with the terms of the Compliance Order
set forth at pages 14 and 15 of the Initial Decision to the extent that it has
not already done so.
So ordered.
VOLUME 8
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