Nello Santacroce & Dominic Fanelli d/b/a Gilroy Associates

Read the official release (epa.gov)

Plain-English summary

EPA Region IX alleged that Nello Santacroce and Dominic Fanelli, doing business as Gilroy Associates, violated Toxic Substances Control Act requirements for a PCB transformer at their storage facility and recreational vehicle park in Gilroy, California. The Environmental Appeals Board held that the region did not prove that Gilroy owned the transformer, which had been purchased by a utility, or that Gilroy operated it. The Board found that electricity passing through the transformer and Gilroy's later dealings with the utility did not establish ownership or active management. It affirmed dismissal of the complaint with prejudice, so the alleged violations and proposed penalty were not imposed on Gilroy in this proceeding.

Decision snapshot

• Cited authorities: TSCA §§ 6(e), 11, 15, and 16; 40 C.F.R. Part 761 and §§ 22.04, 22.24, 22.30, and 22.31.
• Outcome: The complaint was dismissed with prejudice and no penalty was imposed.
• Key point: A property owner is not automatically the operator of utility equipment on its property. EPA must prove ownership or active management of the regulated transformer.

Full text (EPA EAB public release)

586 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
IN THE MATTER OF NELLO SANTACROCE & DOMINIC
FANELLI d/b/a GILROY ASSOCIATES
TSCA Appeal No. 92-6
FINAL DECISION
Decided March 25, 1993
Syllabus

The complainant in this action is U.S. EPA Region IX. Complainant is appealing
an Initial Decision dismissing a complaint against respondents Nello Santacroce and
Dominic Fanelli, doing business as Gilroy Associates (“Gilroy”). The complaint alleged
violations of the Toxic Substances Control Act and implementing regulations covering
use, marking and reporting requirements of transformers containing polychlorinated
biphenyls (“PCBs”). The complaint was dismissed, after a hearing, because the presid-
ing officer concluded that complainant had not established by a preponderance of
the evidence that respondents owned or operated the transformer.

On appeal, issues were raised as to the validity of the EPA inspection document-
ing the alleged violations, ownership and operation of the transformer, and the penalty
calculations.

Held: Complainant failed to establish that respondents either owned or operated
the transformer. The transformer was purchased by the utility serving the site and
there is no documentary evidence that it was purchased on behalf of the site owner,
as complainant alleged. Complainant also has failed to establish that the transformer
is a fixture under California law that would have passed with the fee of the land
to subsequent purchasers of the land. In addition, the actions of respondents which
complainant asserts show ownership of the transformer are inconclusive and do not
prove ownership. Finally, complainant has not established that Gilroy operated the
transformer since the mere use of electricity flowing through the transformer does
not constitute operation of the transformer.

Because complainant has not met its burden of proof in establishing that respond-
ents either owned or operated the transformer, the complaint was properly dismissed.
In light of this determination, respondents’ other objections need not be reached.
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Before Environmental Appeals Judges Nancy B. Firestone,
Ronald L. McCallum, and Edward E. Reich.

Opinion of the Board by Judge Reich:

U.S. EPA Region IX, the complainant in this action, has appealed
the Initial Decision of the presiding officer in this case. That decision,
rendered on August 25, 1992, dismissed the complaint against re-
spondents Nello Santacroce and Dominic Fanelli, doing business as
Gilroy Associates (“Gilroy”). The complaint had alleged that respond-
ents violated certain provisions of the Toxic Substances Control Act
(“TSCA”) and implementing regulations regulating polychlorinated
biphenyls (“PCBs”). The alleged violations relate to a transformer
containing PCBs as a dielectric fluid which is located on the Gilroy
Associates property at 205 Leavesley Road, Gilroy, California.

In the proceedings below, Gilroy raised a number of objections
to the complaint. Gilroy objected to the validity of the inspection
which formed the basis of the complaint, the determination that
Gilroy either owned or operated the transformer at issue, and the
appropriateness of the penalty calculation. In his Initial Decision,
the presiding officer upheld the validity of the inspection but dis-
missed the complaint because complainant had not established by
a preponderance of the evidence that respondents Gilroy and Fanelli
either “owned and operated” or “owned or operated” the transformer
in question.1 Having dismissed the complaint, the presiding officer
did not reach the penalty calculation issues.

Region IX filed an appeal of the Initial Decision,? which the
Environmental Appeals Board has authority to consider under 40
C.F.R. §§ 22.30 and 22.31. The appeal identified as issues presented
for review those issues relating to the validity of the inspection,
the determination of whether respondents owned and operated the
PCB transformer, and whether a civil penalty should be assessed.
Respondents filed a reply reasserting their position on these issues.
For the reasons discussed below, we conclude that complainant has
not established by a preponderance of the evidence that respondents
owned or operated the transformer and, therefore, the complaint must
be dismissed.

1 Initial Decision, at 31.

2Notice of Appeal, dated September 23, 1992.

3Id. at 19-20.

4 Respondents’ Reply to Complainant's Appeal, dated October 13, 1992.

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588 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
I. BACKGROUND

Gilroy Associates is a partnership which owns a storage facility
and recreational vehicle park in the city of Gilroy, California. The
partnership was created by Nello Santacroce and Dominic Fanelli
as general partners expressly for the purpose of owning and operating
that particular site.

The parties have stipulated to the fact that there is a PCB
transformer on the Gilroy site.5 The parties do not agree on the
ownership of that transformer. It is undisputed that the transformer
in question is subject to regulation under the Toxic Substances Con-
trol Act, particularly Section 6(e), 15 U.S.C. § 2605(e), and implement-
ing regulations at 40 C.F.R. Part 761. These regulations establish
manufacturing, processing, distribution and use limitations on PCBs
and PCB items. This particular transformer is subject to regulation
because it contains Inerteen, a dielectric fluid with a high concentra-
tion of PCBs.

On February 17, 1989, two EPA inspectors conducted a “for
cause” inspection of the Gilroy site. It was considered “for cause”
because it was prompted by receipt of an anonymous complaint of
a possible violation.6 Because it was “for cause,” no prior notice was
given to the facility.”

The inspection was conducted by two Region IX inspectors, Mona
Ellison and Mary Grisier. Upon arriving at the site, they went to
a mobile home located thereon and introduced themselves to a Mrs.
Christine Riggins. Mrs. Riggins’ husband was the property manager
of the site but was very ill at that time. After discussing the purpose
of their visit with Mrs. Riggins, they obtained her signature on two
documents, a Notice of Inspection and a TSCA Inspection Confiden-
tiality Notice. They then proceeded to inspect the transformer at
issue.

The Initial Decision contains an extensive description of the in-
spection which will not be repeated here.8 Respondents contest the
validity of the inspection under the Fourth Amendment to the U.S.
Constitution and EPA’s own inspection policies. Among other argu-
ments, respondents assert that Mrs. Riggins was not an “agent in

5 Initial Decision, at 4.

6Tr. at 24-25.

Id. at 21.

8 Initial Decision, at 4-9.

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charge” of the facility? and that the inspectors failed to obtain con-
sent to the inspection as allegedly required by the Fourth Amendment
and EPA policy. The Initial Decision found that Mrs. Riggins was
an agent in charge and that the inspection was lawful. Region IX,
despite prevailing upon this issue below, identified it as an issue
presented for review in this appeal. However, because we determine
that Region IX has not proven that Gilroy either owned or operated
the transformer, we need not reach this issue, obviating the need
for an extensive discussion of the inspection itself.

The transformer was located about five feet from one of the
warehouse buildings on the property, Building Three. It was con-
tained within a chain link fence enclosure, with a padlock on the
access gate. Mrs. Riggins did not have a key to the padlock so the
inspectors used binoculars to read the identification on the transform-
er’s nameplate. It was identified as being manufactured by the Wes-
tinghouse Corporation, serial number 6335051, with a capacity of
493 gallons of Inerteen.1° The inspection showed that neither the
transformer nor the fence was marked with the required M PCB
marking label.11

After the inspection, inspector Ellison determined that the trans-
former was not registered with the Gilroy Fire Department. The
inspection also disclosed that there had been no periodic inspections
of the transformer or maintenance of records.1?

Ms. Ellison then attempted to verify ownership of the trans-
former. She contacted Pacific Gas and Electric Company (“PG&E”),
the utility that supplies electric power to the Gilroy facility. After
an investigation and inspection, PG&E advised Ellison that PG&E
did not own the transformer and that PG&E’s records show that
it was owned by “Gilroy All Storage Company.” 13 PG&E’s position
is detailed in a January 31, 1990 affidavit executed by John J.

9TSCA §11, 15 U.S.C. § 2610, allows inspections only “upon the presentation
of appropriate credentials and of a written notice to the owner, operator, or agent
in charge of the premises or conveyance to be inspected.” The only notice provided
prior to inspecting the transformer was that given to Mrs. Riggins.

10 Initial Decision, at 8.

11Id, at 9.

12 Id.

18Letter from Stuart Svensson, Manager, San Jose Division, PG&E to Mona
Ellison, dated September 14, 1989. (Complainant's Exhibit 3.)

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590 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
Parrinello, its South County Area Manager for the San Jose Divi-
sion,!4 which will be discussed at some length later in this opinion.
Apparently satisfied with Gilroy's liability in this matter, Region
IX issued a TSCA complaint to Mr. Santacroce and Mr. Fanelli,
doing business as Gilroy Associates. The complaint, dated July 18,
1989, alleged that Gilroy Associates “owned and operated” the PCB
transformer and in so doing committed the following violations of
the TSCA PCB regulations:
(1) failure to perform quarterly inspections from May 1981
through the date of inspection in violation of 40 C.F.R.
§ 761.30(a)(1)(ix);
(2) failure to maintain a record of inspections and the mainte-
nance history of the transformer in violation of 40 C.F.R.
§ 761.30(a)(1)(xii);
(3) failure to register the transformer with fire response per-
sonnel in violation of 40 C.F.R. § 761.30(a)(1)(vi);
(4) failure to mark the transformer with the PCB caution
label in violation of 40 C.F.R. § 761.40(c)(1);
(5) failure to mark the surrounding fence with the PCB cau-
tion label in violation of 40 C.F.R. § 761.40(j); and
(6) failure to prepare PCB annual documents for the years
1978 through 1987 in violation of 40 C.F.R. § 761.180(a).15
The complaint assessed a proposed penalty of $29,000 for these
violations. Respondents contested the complaint, resulting in a hear-
ing before Administrative Law Judge Frank Vanderheyden as presid-
ing officer on January 15, 1991, and the Initial Decision which is
the subject of this appeal.
II. DISCUSSION
A. Procedural Objection
Initially, it should be noted that Gilroy has objected to this ap-
peal on procedural grounds. Specifically, it asserts that the petition
was untimely and was incorrectly addressed to the EPA Adminis-
14Complainant’s Exhibit 4.
15Complaint, at 2-5.
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trator rather than to the Environmental Appeals Board. The applica-
ble provision regarding appeal of initial decisions is 40 C.F.R.
§ 22.30(a)(1), which states in pertinent part:

Any party may appeal an adverse ruling or order

of the Presiding Officer by filing a notice of appeal

and an accompanying appellate brief with the Envi-

ronmental Appeals Board and upon all other parties

and amicus curiae within twenty (20) days after the

initial decision is served upon the parties.
Gilroy also points to the following language in 40 C.F.R. § 22.04(a),
which discusses the powers and duties of the Environmental Appeals
Board:

The Administrator delegates authority under the Act

to the Environmental Appeals Board to perform the

functions assigned to it in these rules of practice.

An appeal or motion under this part directed to the

Administrator, rather than to the Environmental Ap-

peals Board, will not be considered.
The provisions quoted above, in their present form, reflect amend-
ments adopted by EPA on February 13, 1992, effective as of March
1, 1992 (57 Fed. Reg. 5320 et seq.).

In this case, the Notice of Appeal states that complainant “hereby
appeals to the Administrator” from the Initial Decision. The appeal
is dated September 23, 1992, precisely 20 days after service of the
Initial Decision on September 3, 1992. It was filed with the Hearing
Clerk in accordance with the version of §22.30(a)(1) that preceded
the February 13 amendments. The Notice of Appeal was forwarded
to the Board by the Hearing Clerk and date stamped as received
by the Board on September 25 at 9:49 a.m. Counsel for respondents
was properly served with the Notice of Appeal and filed a timely
reply. There has been no assertion that respondents were in any
way prejudiced by the Region’s styling its appeal as being “to the
Administrator.” Under these circumstances, the failure to address
the Notice of Appeal to the Board (and the fact that it was stamped
received on September 25) amounted to harmless error at most. The
Board will consider the appeal as if properly filed.16
ie See American Farm Lines v. Black Ball Freight Service, 397 U.S. 582, 539
(1970) (Agency may relax Procedural rules when justice so requires). See also In

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592 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
B. Applicability of PCB Regulations

Turning to the substance of the appeal, we begin by examining
the relevant statutory and regulatory provisions. As previously noted,
polychlorinated biphenyls are regulated under Section 6(e) of TSCA,
15 U.S.C. § 2605(e). That section provides for the comprehensive regu-
lation of the manufacture, processing, distribution in commerce, and
use of PCBs. That section also authorizes the Administrator to adopt
implementing regulations. Section 15 of TSCA, 15 U.S.C. § 2614,
makes it unlawful for “any person” to fail or refuse to comply with
any such rule. Section 16, 15 U.S.C. § 2615, provides that “any per-
son” who violates a provision of Section 15 shall be liable for a
civil penalty not to exceed $25,000 per violation.

The pertinent implementing regulations are in 40 C.F.R. Part 761. The alleged violations are of provisions relating to use (Subpart
B), marking (Subpart C) and reporting (Subpart J). A threshold ques-
tion is to whom do these various requirements apply.

Under the statute, it is unlawful for “any person” to violate
a regulation. The PCB regulations define “person” to mean “any natu-
ral or judicial person including any individual, corporation, partner-
ship, or association * * *.”17 There is no question that respondents
are persons within the meaning of this definition.

More difficult is determining whose conduct is intended to be
governed by each of the regulatory provisions. Certain provisions
are specific as to their applicability and some are not. In the first
category is 40 C.F.R. § 761.180, which requires “each owner or opera-
tor of a facility, other than a commercial storer or disposer of PCB
waste” using or storing PCBs in specified quantities to develop and
maintain certain records, including the annual document which
Gilroy is cited for failing to prepare.

However, less specific are the various use restrictions in 40
C.F.R. §761.30(a), which are introduced with the following language:
PCBs at any concentration may be used in trans-

formers * * * subject to the following conditions.
Similarly, the marking requirements in 40 C.F.R. § 761.40 provide
in part that:
re House Analysis & Associates, CAA Appeal No. 93-1, at 6 n.15 (EAB, Feb. 2,
1993).
17 40 C.F.R. § 761.3.
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(c) As of January 1, 1979, the following PCB Articles

shall be marked with mark My as described in

§761.45(a):

(1) All PCB Transformers not marked under para-

graph (a) of this section [marking of PCB-Contami-

nated Electrical Equipment is not required];

• • & # & & &

() PCB Transformer locations shall be marked as

follows:

(1) Except as provided in paragraph (jX(2) of this

section, as of December 1, 1985, the vault door, ma-

chinery room door, fence, hallway, or means of ac-

cess, other than grates and manhole covers, to a

PCB Transformer must be marked with the mark

M as required by paragraph (a) of this section.
Thus, for the use and marking requirements, the regulations specify
what requirements apply but do not specifically define to whom the
requirements apply.

A similar problem was presented with respect to the PCB dis-
posal regulations (Subpart D) in In re City of Detroit, TSCA Appeal
No. 89-5 (CJO, Feb. 6, 1991). In that case, the Chief Judicial Officer
(“CJO”) noted that “[(tJhe disposal requirements are written in the
passive voice, stating how PCBs must be disposed of, but not saying
who is responsible for an improper discharge of PCBs.” 18 In a foot-
note to that statement, the CJO observed that “[glenerally, the use
of the passive voice in a regulation creates vagueness and confusion
about the persons who are subject to the regulation.”!9 The CJO
then proceeded to analyze how the disposal requirements are meant
to apply, providing guidance which is useful here as well.

The CJO stated that “(blecause Part 761 is divided into separate
subparts governing, inter alia, use, storage and disposal, it is evident
that the regulations on use apply to those who use PCBs; the regula-
tions on storage apply to those who store PCBs; and the regulations
on disposal apply to those who dispose of PCBs.”2° In analyzing

18 City of Detroit, at 13 (emphasis in original).

19 Id. at 13 n.21.

20 Id. at 15 (footnote omitted).

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594 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
whether the disposal requirements apply to a person who owns the
property onto which PCBs have been spilled, the CJO concluded
as follows:

Similarly, the owners of facilities that use or store

PCBs will be subject to the regulations governing

the use and storage of PCBs, because they are the

persons to whom the activities of using and storing

will normally be attributed. The unifying characteris-

tic of all of the enterprises listed above is that they

all engage in a regulated activity, such as using,

manufacturing, storing and disposing of PCBs. In

contrast, a mere title holder to a piece of property

who neither owns nor controls any PCB sources does

not engage in any of those activities.21
Using this analysis, we conclude that the use and marking regula-
tions apply to both owners and operators of a regulated transformer.
The requirements do not apply to an owner of property on which
a transformer is located if that owner neither owns nor controls
(ie., operates) that transformer.??
C. Burden of Proof

Having determined that ownership and operation of the trans-
former, as the regulated PCB Article, are central issues, it is impor-
tant to reiterate that the Region ultimately bears the burden of
proof on these issues. The applicable provision of the Consolidated
Rules of Practice provides:

The complainant has the burden of going forward
with and of proving that the violation occurred as
set forth in the complaint and that the proposed
civil penalty, revocation, or suspension, as the case
may be, is appropriate. Following the establishment
of a prima facie case, respondent shall have the bur-
den of presenting and of going forward with any
defense to the allegations set forth in the complaint.
Each matter of controversy shall be determined by

21 Id. at 17 n.26 (emphasis in original).

22 Since we conclude that the Region has failed to prove that Gilroy either owned
or operated the transformer, we need not address Gilroy's arguments that a person
must be both an owner and operator for liability to attach, or that the Region must
prove that respondents both “owned and operated” the transformer because that was
the way the complaint was framed.

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the Presiding Officer upon a preponderance of the
evidence.
40 C.F.R. § 22.24.

The respective burdens of the parties was elaborated upon by
the Administrator in In re 170 Alaska Placer Mines, More or Less,
NPDES Appeal No. 79-1, at 12 (Adm’r, Mar. 10, 1980), as follows:

The term “burden of proof” is ambiguous. See McCor-

mick, Handbook of the Law of Evidence, § 336 (1972).

It encompasses two separate concepts. Ambrose v.

Wheatly, 321 F. Supp. 1220, 1222 n.6 (D. Del. 1971);

Wigmore, Evidence, §§ 2485-87 (3rd ed.). One is the

burden of going forward with the evidence, which

is a procedural device for the orderly presentation

of evidence. It may shift back and forth as the trial

progresses. Once a party having the burden of going

forward with the evidence has satisfied that burden

by making out an affirmative case in favor of its

position, the burden of going forward with the evi-

dence then shifts to the opposing party to rebut that

evidence with evidence in favor of its own position.

The other “burden of proof” is the burden of persua-

sion, which is a matter of substantive law. It never

shifts from one party to the other at any stage of

the proceedings. It has also been described as the

risk of non-persuasion. Wigmore, Evidence § 2486

(3rd ed.). In other words, the party having the bur-

den of persuasion must bear the risk of not having

his position sustained if the opposing party’s evi-

dence is as persuasive as his own on any disputed

issue of fact. Which party bears the burden of per-

suasion (or the risk of non-persuasion) therefore be-

comes a significant question only where the evidence

on an issue is evenly balanced or if the trier is in

doubt about the facts.
These concepts become particularly important where, as here, the
evidence is scant, contradictory, and subject to varying interpreta-
tions. In this case, the complainant bears the burden of persuasion
by a preponderance of the evidence that Gilroy owned or operated
the subject transformer.

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596 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
D. History of the Gilroy Site

The history of the Gilroy site as detailed in the administrative
record is somewhat incomplete. A company called BG Industries used
the site to manufacture farm implements before the Second World
War. During the war, it manufactured equipment for the army. It
continued to remain there after the war but at some point vacated
the site.23

The administrative record does not show who occupied the site,
if anyone, from the time BG ceased operations there until approxi-
mately 1970, when it was occupied by the California Canners and
Growers (“Cal-Can”). Cal-Can leased the property from approximately
1970 until 1981, when it went bankrupt.24 Most significantly, the
administrative record does not show who either owned or operated
the property in 1953, when the transformer was installed.?5

Respondent Santacroce’s involvement with the site began in ap-
proximately 1972. At that time, Mr. Santacroce was a general con-
tractor and president of Sobey Development (“Sobey”). Sobey made
a loan to a company called Dukor Modular Systems (“Dukor”) with
the real property at the Gilroy site as collateral.26 At the time,
Dukor was not required to furnish a list of the buildings or personal
property because the loan was secured only by the realty, under
a deed of trust.27

Dukor subsequently went bankrupt. It defaulted on the loan and
moved off the property in 1975. At that time, Sobey entered into
an agreement with Dukor for the property not to be included in
bankruptcy proceedings.2® Dukor transferred the property to a com-
pany called Peninsula Development which immediately transferred
it to Sobey.2® Dukor’s president, in his affidavit, Respondents’ Exhibit
7, states that Dukor did not own the transformer and, therefore,

23 Initial Decision, at 14; Tr. at 226.

24 Tr. at 225.

25PG&E indicated that Cal-Can was on the site in 1953 (Parrinello affidavit,
Complainant’s Exhibit 4, at 2) but Gilroy has refuted this (Respondent's Reply to
Complainant’s Appeal, at 4 n.1; Tr. at 225-226; lease attached as Exhibit A to Re-
spondents’ Prehearing Exchange).

26Dukor purchased the property from Hess Oil in 1970. Respondents’ Exhibit
7, at 1. The administrative record does not show how or when Hess Oil acquired
the property.

27 Initial Decision, at 14-15; Tr. at 220-221.

28 Initial Decision, at 15.

29Grant Deed attached as Exhibit B to Complainant’s Motion to Strike Affirmative
Defenses.
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that Dukor could not convey ownership of the transformer to Sobey.
There was no discussion of the transformer at the time.

In 1975, Mr. Santacroce formed Gilroy Associates with Dominic
Fanelli, and Sobey conveyed the property to Gilroy on September
23, 1975.30 There was no discussion of the transformer between Mr.
Santacroce and Mr. Fanelli at that time.31
E. Parrinello Affidavit and Testimony

As previously noted,32 inspector Ellison contacted PG&E after
the inspection in an attempt to determine ownership of the trans-
former. She was advised that PG&E did not own the transformer,
and that PG&E believed it was owned by Gilroy.33 The affidavit
and testimony of John J. Parrinello of PG&E was a cornerstone
of the complainant’s case.

Parrinello indicated that PG&E’s records show that PG&E began
to supply service to Cal-Can at the site in question in 1953.54 Cal-
Can took primary metered service at the then-prevailing distribution
voltage of 4,160 volts, presumably to receive a rate discount. To
obtain this service, according to Parrinello, Cal-Can would have to
have had its own transformer to step down the voltage to 480 volts.
Therefore, PG&E purchased a transformer “on behalf of Cal-Can”
from Westinghouse Corporation.35

The transformer was delivered to the Gilroy site by Westing-
house. There is no indication whether PG&E installed the trans-
former or Cal-Can had its own electrician do it. Normally, this would
be the customer’s responsibility if it owned the transformer. The
transformer is not shown on PG&E maps, and does not have a PG&E
identification number.3®

30 Exhibit A to Respondents’ Prehearing Exchange.

31 Initial Decision, at 16.

32 See notes 13 and 14 and accompanying text.

33 Complainant’s Exhibit 3.

34 As discussed in note 25 supra, Cal-Can apparently was not the tenant in 1953.
However, since the Parrinello affidavit speaks in terms of Cal-Can, we will use that
reference as well.

35 Complainant’s Exhibit 4, at 2-3. While the parties speak of “PG&E” as purchas-
ing the transformer, it appears that it was actually purchased by a utility named
Coast Counties Gas and Electric which was the utility providing power in the Gilroy
area in 1953. Coast Counties was subsequently acquired by PG&E. Notice of Appeal,
at 27; Respondents’ Reply to Complainant's Appeal, at 11.

36 Complainant’s Exhibit 4, at 2.

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598 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

It should be noted that while the Parrinello affidavit identifies
the purchase order number for the transformer, Parrinello acknowl-
edged during the hearing that he had never seen the purchase order,
that he didn’t think that the fact that it was being purchased for
“Cal-Can” would have been on the purchase order, and that there
are no documents to show that it was purchased on behalf of the
customer.37 Parrinello further admitted that while he testified that
purchase of a transformer on behalf of a customer was not an unusual
practice for PG&E, he was not personally aware of what the practice
was in 1953.88

Thus, the Region’s contention that Gilroy must be the owner
is based largely on PG&E’s assertions that PG&E does not own
the transformer. While it may seem self evident, it is worth reiterat-
ing that it is part of the complainant’s burden to show that it was
the respondents that committed the violation. As the CJO stated
in In re City of Detroit, TSCA Appeal No. 89-5 (Order on Motion
for Reconsideration and on Motion to Supplement the Record) (CJO,
July 9, 1991), at 6-7:

It is true that by showing an uncontrolled discharge

of PCBs in a concentration of 50 ppm or greater,

the Agency can establish that someone committed

a disposal violation. To make a case against a par-

ticular respondent, however, it is not enough to show

that someone committed a violation. The Agency

must also show that the Respondent is responsible

for the violation. The Agency’s prima facie case,

therefore, must include a nexus between the Re-

spondent and the violation.
(Emphasis in original.) As such, even if it were shown that PG&E
is not responsible for the transformer, this does not, by itself, prove
that Gilroy is.

In the letter from Stuart Svensson of PG&E,39 the company
states that its records show that the transformer was owned by
“Gilroy All Storage Company.” However, in Mr. Parrinello’s testi-
mony, he was less definitive. While still insistent that PG&E did
not own the transformer, Mr. Parrinello engaged in the following
“37, at 117-118.

38Tr. at 118.

39See note 13 and accompanying text.

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dialogue with Jeffrey Lawson, counsel for Gilroy, and Judge
Vanderheyden.

BY MR. LAWSON:

Q. Well, let’s put it this way. If Gilroy Associates

does not own that transformer, who owns it?

A. Not PG&E.

JUDGE VANDERHEYDEN: That wasn’t the ques-

tion.

THE WITNESS: Okay. Sorry. I do not know.

JUDGE VANDERHEYDEN: That wasn’t—you don’t

know who owns it.

THE WITNESS: No.

JUDGE VANDERHEYDEN: That’s it. That’s your

answer.

He doesn’t know.
Tr. at 103-104.

It should also be recognized that PG&E has interests at least
arguably adverse to that of Gilroy. If PG&E were proven to be the
owner of the transformer, it would be exposed to liability under
TSCA for the violations at issue. Telling in this regard is a note
that Mr. Parrinello wrote to a co-worker asking for certain records
relating to the installation of the electric system for Gilroy. In that
note, Mr. Parrinello indicates that he needs this information “for
a law suit EPA & PG&E vs. Gilroy All Storage.” (Emphasis added.) 4°
Respondents also point to the statement in the Parrinello affidavit
in which he states that he had been asked “to research the ownership
of the subject Gilroy All Storage Transformer and provide documenta-
tion to show PG&E’s non-ownership.”4! When asked at the hearing
whether his investigation had a focus, Mr. Parrinello responded
“Lyles, it did, to show that we did not own the facility.” 4?

40 Respondents’ Exhibit 2.

41 Complainant’s Exhibit 4, at 1.

42 Tr. at 111.

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600 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

In his Initial Decision, Judge Vanderheyden discusses this evi-
dence in concluding that “the evidence proffered by Parrinello cannot
be considered completely objective.” 43
F. Respondents’ Actions as Indicative of Ownership

The Region points to various actions taken by respondents rel-
ative to the transformer as being indicative of Gilroy’s ownership
of it. The first relates to the dealings between Mr. Fanelli and PG&E
at the time PG&E upgraded its main power line. The second relates
to the sampling of the transformer’s dielectric fluid subsequent to
the Region IX inspection.

The first of these events occurred in 1985. At that time, Dominic
Fanelli had some conversations concerning the transformer with rep-
resentatives of PG&E. Because of a change in the operations of PG&E
concerning the main power line, increasing the primary voltage,
Gilroy was presented with several options relative to changes in
their service. One option was removal of the transformer for a
$17,000 removal charge. (It is uncontested that Gilroy does not need
the capability provided by the transformer, though the power cur-
rently runs through it to the warehouse and some rewiring would
be required if the transformer were removed.) Gilroy chose a different
option, which left the transformer in place, with a slightly higher
rate for the power.44

The Region asserts that the fact that Gilroy had to make this
election shows that Gilroy was the owner of the transformer. It con-
tends that, if PG&E had owned the transformer, it would have had
an ongoing obligation to provide power to the facility at 480 volts
as before and thus any election by Gilroy would have been unneces-
sary.45 As we understand it, what the Region is saying is that if
PG&E owned the transformer, then its obligation was to provide
power at the voltage produced by the transformer, i.e., 480 volts.
The fact that there was an incompatibility between the new primary
voltage (21,000 volts) and the primary voltage with which the trans-
former was compatible (4,160 volts) would be PG&E’s problem.

On the other hand, if PG&E’s responsibility were merely to pro-
vide power at the primary voltage to Gilroy, and Gilroy was relying

43Initial Decision, at 28-29. Judge Vanderheyden also notes that the Parrinello
affidavit contained inaccuracies, such as the statement that Cal-Can was the customer
to whom PG&E began to provide service in 1953. Id. at 29.

44 Initial Decision, at 11.

45 Complainant’s Post Hearing Brief, at 23.

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on its own transformer to convert the primary voltage to 480 volts,
then the fact that there was a change in the primary voltage causing
an incompatibility between the new, higher primary voltage and the
transformer was Gilroy’s problem to deal with. To resolve this incom-
patibility, PG&E presented various options to Gilroy and Gilroy chose
to have additional transformers installed, thus maintaining 4160 volt
service to the transformer in question.4¢ This was done to allow
continued utilization of the transformer at issue. This was done at
no cost to Gilroy, but Gilroy lost the primary voltage discount, be-
cause the voltage on the top side of “Gilroy’s” transformer (4160
v.) was no longer the same as that on the service line (21,000 v.).
The Region thus argues that this course of events shows that both
Gilroy and PG&E were acting as if the transformer belonged to
Gilroy.

Respondents deny that this election is indicative of their owner-
ship of the transformer. Respondents assert that Mr. Fanelli was
merely responding to options presented by PG&E. He was not told
at the time that PG&E believed Gilroy owned the transformer or
that the choices being presented were predicated on Gilroy’s alleged
ownership. He was aware only that rate increases for utilities were
a common occurrence and he chose the cheapest alternative for con-
tinued service.47

In weighing this evidence, the presiding officer concluded as fol-
lows:

Complainant postulates that exercising the service
option is inconsistent with respondents’ denial of
ownership and operation. (Com. Op. Br. at 22, 23)
This is transparent legal jugglery. On this record,
a user of the transformer, standing alone, cannot
be converted into the owner or operator of same.
It is perfectly plausible on the facts as found in this
proceeding that respondent, or any other user of
equipment, could request a modification, or no modi-
fication in service, without having ownership in the
equipment.
Initial Decision, at 29. We agree that while this transaction may
show that PG&E believed that Gilroy owned the transformer, it does

46 Complainant’s Exhibit 4, at 4-5.

47 Respondents’ Reply Brief, at 13.

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602 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
not show either that Gilroy believed it was the owner or that in
fact it was the owner.

The other alleged inconsistency between respondents’ actions and
its denial of ownership relates to the sampling of the dielectric fluid.
The facts, as found by the presiding officer, were as follows:

Following the inspection, and telephone conversa-
tions with EPA, Fanelli was advised that the PCB
fluid in the transformer should be tested, and that
equipment should be recorded with the fire depart-
ment and quarterly reports be made to it. Fanelli
called PG&E regarding the taking of a sample and
testing the PCB fluid as he assumed the utility
owned the transformer. The samples from the trans-
former were taken at Fanelli’s request, and Gilroy
paid for the subsequent testing. When Fanelli first
asked PG&E to obtain the sample from the trans-
former, it was with the understanding that the util-
ity would do so at its own expense. Also, at the
time of the telephone conversation with PG&E,
Fanelli was not aware of the position of PG&E that
it denied ownership of the transformer; and that it
was only after Fanelli’s conversation with the
Edendale office of PG&E that he was made aware
that the respondents would have to pay for the sam-
ple. PG&E thereafter put its own lock on the enclo-
sure. Fanelli telephoned the Edenville office of PG&E

. following the taking of the sample; he was advised
that PG&E did not have the facilities for testing
and Gilroy would have to send it to a certified labora-
tory for such a procedure. He got in touch with such
a laboratory that went to the facility, took a sample
and tested it. The person to whom Fanelli spoke
with at the Edenville office of PG&E never denied
the utility owned the transformer.

Initial Decision, at 17-18.

Mr. Fanelli discussed his communications with PG&E relative
to the sampling during the hearing.*® He indicated that in discussing
the inspection with Ms. Ellison, he determined that the transformer
should be tested. He called PG&E because he assumed it was their

48Tr. at 264-268.

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transformer and they sent someone out to take the sample. This
person (Carl Love) called Mr. Fanelli after arriving on site because
the transformer was in a locked enclosure and he did not have a
key. Mr. Fanelli indicated that he didn’t have a key either because
“we always thought it was your lock.” Mr. Fanelli authorized Mr.
Love to cut the lock, and replace it with a PG&E lock.49 Mr. Love
then took a sample.

Mr. Fanelli also described a conversation with a man in the
Edenvale office of PG&E.5° According to Mr. Fanelli, he called to
find out the status of the sample. He was advised that PG&E did
not have the facilities to test the sample and it would have to be
sent to a certified laboratory. The PG&E man gave Mr. Fanelli the
names of several such labs. Mr. Fanelli called one such company,
which picked up the sample from PG&E and tested it at Gilroy's
expense. In response to a question, Mr. Fanelli indicated in his testi-
mony at the hearing that the man in the Edenvale office never
indicated that PG&E denied ownership of the transformer.

Mr. Parrinello also discusses this occurrence in his affidavit.5
Mr. Parrinello’s affidavit provides some additional, and in some re-
spects contradictory, detail. The actual sampling of the transformer
is described in terms similar to that of Mr. Fanelli, although Mr.
Parrinello emphasizes that Mr. Love noted the lack of any PG&E
identification on the transformer and fence and the non-PG&E lock.
However, there is some divergence in the stories after that.

Mr. Parrinello’s affidavit contains the following chronology. Upon
returning from the Gilroy site, Mr. Love researched PG&E maps
and could not find the transformer on them. Mr. Love then went
to a Ms. Davis of PG&E and informed her that the transformer
did not belong to PG&E and that Gilroy would therefore have to
pay for the taking of the sample and the sample analysis. Ms. Davis
then ostensibly contacted Mr. Fanelli and told him that the trans-
former was owned by Gilroy and thus Gilroy would have to pay
for the sampling and analysis. Mr. Fanelli asked how he was sup-

49Mr. Love apparently put a PG&E lock on the enclosure because of the hazard
potential of the high voltage going into the transformer. Tr. at 99.

50Mr, Fanelli could not remember this person’s name but it apparently was a
Mr. Ulloa.

51 Complainant’s Exhibit 4, at 5-7.

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604 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
posed to know if it was his transformer and Ms. Davis agreed to
have the issue researched further.52

According to the Parrinello affidavit, Ms. Davis asked PG&E
Voltage Coordinator Marco Ulloa to research the ownership of the
transformer. Mr. Ulloa reviewed PG&E’s records and contacted Mr.
Fanelli to advise him that Gilroy owned the transformer. Mr. Fanelli
then agreed to pay for having the sample tested. Mr. Ulloa informed
Mr. Fanelli that he should make arrangements with a laboratory
to pick up the sample and analyze it. This, Mr. Fanelli did.

Comparing Mr. Parrinello’s affidavit with Mr. Fanelli’s state-
ment, the most significant discrepancy is whether anyone at PG&E
ever advised Mr. Fanelli that they believed Gilroy owned the trans-
former. According to the Parrinello affidavit, both Ms. Davis and
Mr. Ulloa so advised Mr. Fanelli. Mr. Fanelli, however, specifically
denied that Mr. Ulloa ever advised him that the transformer was
not owned by PG&E 53 and never mentioned being contacted by Ms.
Davis. Mr. Fanelli also indicated that the reason he was given for
PG&E’s not doing the sample analysis was that PG&E did not have
the facilities,5+ whereas the implication in the Parrinello affidavit
is that PG&E did not do the analysis because they did not own
the transformer.

The parties dispute how the foregoing events should be inter-
preted. Respondents emphasize that Mr. Fanelli asked PG&E to sam-
ple the transformer because he believed PG&E owned it. If PG&E
did not believe they owned it, why would they come out to sample
it? Respondents assert that they paid for the analysis because they
were faced with an EPA enforcement action, and were investigating
the transformer as required by EPA in an attempt to comply.5> This,
they argue, cannot be used as proof of ownership.5¢

The Region argues that Gilroy’s actions, in paying for the testing,
was inconsistent with its denial of ownership.57 The Region states

%2In his testimony at the hearing, Mr. Fanelli did not mention any conversation
with Ms. Davis. He apparently recalled only a conversation with Mr. Ulloa. Tr. at
266.

53Tr. at 267.

54Tr. at 266.

55At the hearing, evidence was admitted to show that respondents were then
in compliance with the law, without prejudice to their position that they dispute
liability. Tr. at 270-272.

56 Respondents Reply Brief, at 14-15.

87 Complainant’s Post Hearing Brief, at 24.

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that “[iJf Respondents then believed that they did not own the PCB
Transformer they would have made demands on PG&E to determine
the nature of the fluid. No such demands have been made to
date.” 58

In evaluating this evidence, the presiding officer rejected it as
indicating ownership by Gilroy, concluding as follows:

While respondents paid for the sampling, this is not
a persuasive consideration to saddle them with own-
ership of the equipment. It is reasonable on the facts
to conclude that respondents paid for the sampling
then and there rather than to get into a squabble
concerning ownership of the transformer, an issue
which could be resolved at another time. Also, if
PG&E was denying ownership, why did it come at
all to the transformer to take a sample of the fluid?
Also, Love of PG&E, who took the sample, was un-
able to say the transformer was not PG&Es.
Initial Decision, at 29-30.

We agree with the presiding officer that these circumstances
are ambiguous. It appears that PG&E agreed to sample the trans-
former because, at that time, the PG&E representatives had not
realized that it was not listed as one of their transformers. Thus,
their responding to Mr. Fanelli’s request does not show PG&E’s own-
ership. As to Mr. Fanelli’s agreeing to pay for the sampling, it is
plausible, as the presiding officer found, that Mr. Fanelli simply
chose not to delay analysis of the sample by disputing, at that point,
ownership of the transformer. Thus, we agree that this evidence
is too inconclusive to support the Region’s argument.

G. California Law of Fixtures

Region IX also argues that under California law, the transformer
is a fixture which became affixed to the land and thus was conveyed
with the land even though not specifically mentioned in the docu-
ments of conveyance. The Region is correct that if the transformer
is a fixture, it became a part of the land and passed to each subse-
quent purchaser with the fee of that land.59

58 Id.

59 Southern Pac. Co. v. Riverside County, 35 Cal. App. 2d 380, 386 (Fourth Dist.
1939).

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606 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
The term “fixtures” is defined under California law at Section
660 of the California Civil Code in pertinent part, as follows:
A thing is deemed to be affixed to land when it
is attached to it by roots, as in the case of trees,
vines, or shrubs; or imbedded in it, as in the case
of walls; or permanently resting upon it, as in the
case of buildings; or permanently attached to what
is thus permanent as by means of cement, plaster,
nails, bolts, or screws * * *.
However, despite the seemingly exclusive focus on the method of
attachment, the definition as interpreted is actually more complex.
It is well settled under California law that whether an article
constitutes a fixture is based on a consideration of three factors:
the manner of its annexation to the realty; its adaptability to the
use and purpose for which the realty is used; and the intention
with which the annexation is made.6° In the Seatrain Terminals
case, the court elaborated on the relative weight of these factors
as follows:
In resolving whether an article placed on the prem-
ises constitutes a fixture of personal property, the
aforelisted three elements do not play equal parts.
In making the determination in a particular case
the element of intent is regarded as a crucial and
overriding factor, with the other two criteria being
considered only as subsidiary ingredients relevant to
the determination of the intent. As succinctly stated
in M.P. Moller, Inc. v. Wilson (1936)8 Cal. 2d 31,
37 [63 P.2d 818], “This court has recognized the test
of intention to make the article a permanent addition
to the realty as manifested by the physical facts,
and has accepted the character of the annexation and
the use for which the article is designed as subsidiary
elements employed for the purpose of testing the inten-
tion of permanency.”
Seatrain Terminals at 75 (emphasis in original). Intent, of course,
can be difficult to ascertain, particularly 40 years after the fact.
© Security Data, Inc. v. County of Contra Costa, 145 Cal. App. 3d 108, 117 (First
Dist. 1983); Seatrain Terminals of California v. County of Alameda, 83 Cal. App.
3d 69,74 (First Dist. 1978).
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We believe the relevant intention was that of the owner in 1953,
when the transformer was first installed. As noted, this issue is
complicated still further by the dispute over who owned the trans-
former in 1953.

If the owner was the property owner of the Gilroy site in 1953,
as the Region contends, then it is likely that that owner intended
the transformer to be “a permanent addition to the realty.” The
transformer served a particular need at the Gilroy site and would
have been of questionable use elsewhere. More importantly, the trans-
former was in fact left at the site. There is no indication from the
admittedly spotty administrative record that any owner tried to profit
from the sale of the transformer, apart from the sale of the land,
as personalty.

If the owner of the transformer was PG&E, it is unlikely that
PG&E intended for the transformer to be a fixture. That would,
in effect, be abandoning the equipment. In testifying as to PG&E
practice, Mr. Parrinello indicated that while the company might leave
idle facilities behind, “[vlery seldom would there be transformers,
because transformers are reusable. * * * (Lleaving equipment that
has value, and reusable value out in the field, * * * that is not
a normal practice.” 61 For the same reason, it is unlikely that PG&E
would give up ownership of a new transformer by having it become
a fixture to the property.6?

Respondent, in attempting to explain why PG&E would have
abandoned the transformer it owned, references Mr. Parrinello’s re-
sponse to the question of whether PG&E would use this transformer
today. Mr. Parrinello respond that “if we owned that transformer,
no, we would not have used that transformer, reused that one” be-
cause there are newer transformers on the market.®? Respondents
thus reason that since the transformer would not be reused, it has
no value and that is why PG&E would have decided not to remove
it.64 However, while this may be true now, it has no relevance as
to what would have been intended when the transformer was first
installed.

Tr. at 113-114.

62Under Section 1013 of the California Civil Code, when a person intentionally
affixes his property to the land of another without an agreement permitting him
to remove it, the thing affixed belongs to the owner of the land, unless he requires
the former to remove it.

Tr. at 114.

64 Respondents’ Post-Hearing Brief, at 12.

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608 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

With respect to the method of annexation, the transformer is
bolted to a concrete pad.6° However, despite the wording of Section
660 of the California Civil Code, the method of annexation is not
determinative.6 There is no question that transformers, while not
easily moved, can be moved with modern equipment.®7 In fact, as
Mr. Parrinello testified, transformers are typically removed when no
longer needed.® Therefore, this factor tends to support a conclusion
that a transformer is not normally a fixture.

As to the final factor, its adaptability to the use and purpose
for which the realty is used, this also suggests that the transformer
is not a fixture. While it was needed to meet the power needs of
a particular customer at the site now owned by Gilroy some forty
years ago, it is not essential to the operation of the site itself. It
is not needed by Gilroy or any of the current tenants and could
be removed, with power being supplied to the warehouse directly.
There is nothing in the design of the property that was done with
the express purpose of accommodating the transformer. The trans-
former could be removed without destroying it. Physical connections
between the transformer and the warehouse are minimal. This tends
to support a conclusion that the transformer is not a fixture.

Thus, after a review of the factors relevant under California
law, we conclude that a transformer typically would not be considered
a fixture and the Region has not provided persuasive evidence that
it should be so considered here.7°

Before leaving this subject, we take note of the case of U.S.
Environmental Protection Agency v. New Orleans Public Service, Inc.,
826 F.2d 361 (5th Cir. 1987), cited in the Initial Decision. The presid-

5 Tr. at 255.

® Kruse Metals Mfg. Co. v. Utility Trailer Mfg. Co., 206 Cal. App. 2d 176, 180
(Second Dist. 1962).

*7Tr. at 269.

68 See note 61 and accompanying text.

69 See Security Data, Inc. v. County of Contra Costa, supra at 118-119 (computer
components found not to be fixtures in part because the building was not specifically
to accommodate them, they were not essential to the purpose of the building, and
they could be moved without being destroyed). Contrast this with the situation in
Bank of America v. County of Los Angeles, 224 Cal. App. 2d 108 (Second Dist. 1964),
where the court emphasized the physical integration of certain equipment into the
building and the design of the building to accommodate the equipment as factors
in concluding that the equipment was properly determined to be a fixture. Id. at
113.

70We note that both Mr. Santacroce and Mr. Fanelli testified that, based on
their experience, a transformer would not be classified as a fixture. Tr. at 252, 258.
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ing officer notes that one of the factors used by the court in that
case in determining the status of certain property is the “societal
expectation” of whether that property was an electrical installation
under the Louisiana code.?7! Applying a similar concept here, the
presiding officer states the following:
In the instant matter, absent evidence to the con-
trary, the societal expectation or understanding is
a factor to be weighed concerning ownership or con-
trol of the transformer. Equipment associated with
the home, such as electrical, gas, water and other
meters located on a person’s property are viewed gen-
erally by society as not being owned by the person
having title to the property. Even with larger equip-
ment, such as a fenced-in-transformer, as here, ab-
sent persuasive evidence showing otherwise, the soci-
etal understanding is that such equipment is owned,
operated and controlled by the utility.
Initial Decision, at 28. In its Notice of Appeal, the Region takes
exception to the presiding officer’s reliance on this factor, because
only California law should be used in determining the nature of
the property.72
The New Orleans Public Service case, arising out of a TSCA
enforcement action, focused on whether certain transformers were
“movables” under Louisiana law. By definition, the Louisiana Code
classified “electrical or other installations” as immovables. In discuss-
ing the issue, the court relied upon an analysis in Equibank v. United
States Internal Revenue Service, 749 F.2d 1176 (5th Cir. 1985), deal-
ing with the status of antique crystal chandeliers. The court in New
Orleans Public Service cites five factors discussed in Equibank. The
first three derive from the Louisiana Civil Code and the remaining
two, including societal expectation, “while not specifically enunciated
in the Code, logically flowed from the precepts therein contained.” 73
While there is some logic to the concept of societal expectations,
we do not rely upon it in making our determination. The Region
is correct that the operative law here is that of the State of California.
The court in New Orleans Public Service relied on this factor because
71 Initial Decision, at 27-28.
72Notice of Appeal, at 24-25.
73 New Orleans Public Service at 364.
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610 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
it "flowed" from the Louisiana Code. We find no basis for engrafting
this concept upon the California law.

Nevertheless, for the other reasons discussed previously, we de-
termine that the transformer is not a fixture.

H. Conclusions as to Ownership of the Transformer

It is important to keep in mind that the issue before us is
not who owns the transformer. It is whether the Region, by a prepon-
derance of the evidence, has proven that Gilroy is the owner. As
previously noted, we conclude that it has not.

In the absence of any proof to the contrary, it would have been
reasonable for the Region to assume that the transformer, situated
on the site for forty years, was Gilroy’s property. Thus, Gilroy had
the burden of going forward with some evidence to the contrary.
However, the production by Gilroy of the purchase order showing
that the transformer was purchased by PG&E was sufficient to meet
this burden, shifting the burden back to the Region to show that,
notwithstanding this purchase order, Gilroy is the true owner of
the transformer. This, the Region failed to do.

To prove that Gilroy is the owner of the transformer, the Region
would have to have shown that Gilroy acquired title to the trans-
former. Absent some documentation of the purchase of the trans-
former itself, Gilroy could have acquired title if the transformer were
a fixture under California law which conveyed with the land. Actions
taken by respondents relative to the transformer, as cited by the
Region, may be indicative of whether Gilroy thought it was the owner
but it is clear that such actions would not, by themselves, convert
the transformer into a fixture under California law or vest ownership
in Gilroy where it didn’t otherwise exist. (However, such actions
might be relevant to a determination of whether Gilroy was an opera-
tor of the transformer.)

There is no allegation that the transformer was specifically iden-
tified in any of the title transfer documents when Gilroy (or even
Sobey) purchased the Gilroy site.74 Therefore, since the Region has
not advanced any plausible alternative theory for vesting title in
Gilroy,’5 Gilroy could have acquired the transformer only if it were

74See deeds attached as Exhibit B to Complainant’s Motion to Strike Affirmative
Defenses and Exhibit A to Respondents’ Prehearing Exchange.

78 While it may have been possible for the Region to attempt to argue that Gilroy
acquired title through other processes, such as abandonment by a previous owner,
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a fixture and conveyed with the realty under the deed without need-

ing to be specifically identified.

There are two basic weaknesses in the case as presented by
the Region. First, there is no documentary evidence to confirm that
when PG&E purchased the transformer, it did so on behalf of the
customer on the site. The only record showing title to the transformer
is the purchase order showing that PG&E bought the transformer
from Westinghouse. This document, according to PG&E’s own wit-
ness, did not show that it was being purchased for, and title trans-
ferred to, anyone else. While PG&E has testified to that effect, it
is obviously not a disinterested party, given its own potential liability.

There clearly are indicia that PG&E does not consider the trans-
former to be its property. These include the absence of a PG&E
lock and PG&E markings on the transformer and enclosure, the
fact that the transformer is not shown on PG&E’s maps, and PG&E’s
interaction with Gilroy on the rate to be charged for power. We
do not question that PG&E genuinely believes that it does not own
the transformer. However, mistakes do occur. This is shown, for ex-
ample, by PG&E’s misidentification of the purchaser for whom it
allegedly purchased the transformer. The likelihood of a mistake is
compounded by the fact that the transformer was purchased by Coast
Counties, whose mapping and identification procedures may have
been different than those used by PG&E.76 We do not believe that
the lack of PG&E identification, by itself, allows us to conclude that
the transformer was purchased on behalf of, and title vested in,
an unknown customer when there is not documentary evidence to
support this.

In addition, even if the transformer had been owned by an earlier
occupant of the site, it would have conveyed to Gilroy by virtue
of the deeds, through various owners of the site, only if it were
a fixture. As previously discussed, we do not believe the Region has
shown the transformer to be a fixture under California law.

Therefore, we conclude that the presiding officer was correct in
concluding that the Region failed to meet its burden of proof in
establishing that respondents owned the transformer.
or accession to the real estate, or a combination of abandonment and accession, it
has not pursued those alternative theories in the presentation of its case, and we
see no reason for our analysis of the case to go beyond the rationale already presented
in the text above.

76There was no evidence presented at the hearing or otherwise included in the
administrative record on the practices followed by Coast Counties.

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612 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
I. Operation of the Transformer

The term “operate” is not defined in either the statute or the
regulations. In the Initial Decision, the presiding officer establishes
a definition of “operate” to mean “to put into, or continue in operation
or activity; or put into activity; to put in action and supervise the
working of; to cause to function; to manage; to control or manage
authoritatively. It is defined as meaning to conduct; to carry out;
to carry out or through; to work, as to operate a machine; to run;
to act or work continuously; to perform a work or labor; to direct
to an end; or it may also be appropriately defined as to direct or
supervise the working of.”77 Both parties have accepted this defini-
tion for purposes of this appeal.

Region IX argues that Gilroy is subject to the requirements of
TSCA as an operator. It argues that Gilroy “uses” the transformer
because the electric power passes through the transformer and if
the transformer were inoperative, there would be no power to the
warehouse.7® The Region then argues that the word “use” relative
to the transformer “is on all fours with the words ‘put into operation’
and ‘cause to function’” expressed in the definition of “operate” set
forth in the Initial Decision.79

Respondents argue that the Region has failed to prove that Gilroy
in any way operated the transformer. They point out that neither
of Gilroy’s owners had a key to the transformer enclosure or any
control over it. They state further that Mr. Santacroce was never
even aware of the transformer prior to the February 1989 inspec-
tion.8°

77Initial Decision, at 26-27, quoting 67 C.J.S. Operate § 67, at 873-74.

78Tr. at 14. Gilroy does not dispute that, without another hook-up to the ware-
house, operation of the transformer is needed to continue providing power to the
warehouse. However, Gilroy asserts that it does not need power in the form as provided
by the transformer, only some source of electricity, and the Region has not disputed
this. Tr. at 13.

79Notice of Appeal, at 23. In its Post Hearing Brief, the Region argued that
it was the use of the PCB dielectric fluid rather than the use of the transformer
which was determinative. Post Hearing Brief, at 19. This argument was properly
rejected by the presiding officer (Initial Decision, at 25) and does not appear to be
maintained on appeal.

Respondents’ Reply to Complainant’s Appeal, at 17. Respondents fail to mention
that Mr. Fanelli must have been aware of the transformer at least as early as 1985,
since removal of the transformer was one of the options presented to him at the
time of PG&E's power upgrade.

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NELLO SANTACROCE & DOMINIC FANELL D/B/A GILROY 613
ASSOCIATES:

Respondents specifically urge rejection of the Region’s argument
that “use” of the transformer by having electricity pass through it
equates to “operation” for regulatory purposes. They argue that oper-
ation requires some activity. The “passive nature” of having electricity
flow through the transformer to the building is insufficient. They
further reason that “[i]f the mere fact that electricity flowing through
a device constitutes operation of that device, then every consumer
of electricity is an operator of the entire electrical grid.” ®1

In the Initial Decision, the presiding officer concludes that such
use as Gilroy receives from the transformer is insufficient to establish
its liability. He states that “[o]n this record, a user of the transformer,
standing alone, cannot be converted into the owner or operator of
same.”82 We agree. We think the argument that respondents are
operators simply because electricity flows through the transformer,
without more, is unpersuasive. It is not at all uncommon for land-
owners to have utility-owned equipment on their property which pre-
sumably serves that property. Making all such landowners the “oper-
ators” of such equipment would potentially extend TSCA liability
far beyond the scope of persons to whom the activities contemplated
by the regulations could be reasonably attributed.®%

As previously noted, actions taken by a non-owner which may
not establish ownership may be relevant to show that the non-owner
was an operator. To establish operator status would require proof
of active management of the transformer itself. In this case, the
evidence presented by the Region does not establish active manage-
ment of the transformer. The undisputed evidence shows that, until
the Region’s inspection, that respondents had no contact with, and
took no actions regarding, the transformer. Indeed, they didn’t even
have access to the transformer, since they lacked a key to the enclo-
sure in which it was kept. Thus, respondents cannot be considered
as operators on this basis either.

For these reasons, we find that respondents are not operators
of the transformer, and that the presiding officer properly found
no liability based on their alleged operator status.

81 Id. at 18.

82 Initial Decision, at 29.

83 See note 21 and accompanying text.

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614 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
II. CONCLUSION

Based on a review of the totality of the evidence, and for the
reasons previously discussed, we conclude that complainant has not
established by a preponderance of the evidence that respondents ei-
ther owned or operated the transformer.84 Complainant has thus
failed to establish liability on the part of the respondents and the
complaint in this matter is ordered dismissed with prejudice.

So ordered.

84In light of this conclusion, it is unnecessary to address the other issues noticed

on appeal.
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