In re Frank Mustafa
An Administrative Law Ludge (ALJ) assesses a $ 74,105 civil penalty against a gasoline service station owner and operator for violating Resource Conservation and Recovery Act (RCRA) § 9002(a) and for failing to comply with the notification and release or leak detection requirements of RCRA's underground storage tank (UST) regulations. Count I of the U.S. Environmental Protection Agency's (EPA's) complaint alleged that the owner and operator of six gas stations located on St. Croix in the U.S. Virgin Islands, failed to notify the Virgin Islands Department of Planning and Natural Resources (DPNR) of the existence of the USTs as § 9002(a) and 40 C.F.R. § 280.3 require. Count II alleged that the owner failed to meet the release and leak detection requirements for each UST system, as 40 C.F.R. §§ 280.40(a) and 280.41(b)(2) require. While the owner admitted his liability for failing to comply with the UST regulations, he argued that EPA should have reduced the penalty because the chaotic circumstances in Hurricane Hugo's aftermath made it extremely difficult for his to comply with the regulations . The ALJ first holds that an accelerated decision for EPA on the owner's liability for the violations is appropriate, because the parties stipulated that no genuine issue of material fact exists as to the owner's liability. The ALJ also holds that the owner waived by stipulation his right to a formal hearing.
In considering the size of the penalty it would assess against the owner, the ALJ holds that no economic benefit accured to the owner from his failure to notify EPA or the DPNR of the UST systems he owns or operates, and that the proper dollar amount for this factor is "O" for count I. The ALJ also holds, however, that there is no basis for reducing EPA's assessment of $5,480 for the economic benefit the owner gained from the count II violations. The owner offered no evidence showing that his economic benefit from noncompliance was of a lesser amount, and he advanced no meaningful arguments to support his claims that EPA improperly calculated his economic benefit.
Regarding the gravity-based component for the count I violations, the ALJ holds that the extent of the owner's deviation from the notification requirements is "major." The owner was in substantial noncompliance for failing to notify the proper authorities as required. The ALJ rejects the owner's argument that the appropriate designation for the notification violations is "minor" because he learned about those requirements only six weeks before the Hurricane Hugo's devastation that the owner claims made compliance with the notification requirements extremely difficult. The law charges the owner with knowledge of the U.S. code and associated rules and regulations. In addition, the owner received actual notice of the notification requirements on July 25, 1989, when the DPNR sent him a notice-of-violation (NOV) letter for his failure to comply with the notification requirements. The ALJ finds that the owner had ample opportunity between the date he received the NOV, July 25, 1989, and the arrival of Hurricane Hugo on September 17, 1989, to complete and file the required forms. The ALJ also concludes that potential of harm to the regulatory program from this deviation is "moderate," resulting in a matrix value of $ 1,000. Classifying the potential for harm as "moderate" is reasonable given the seriousness of the violation. The combination of the major deviation and the moderate potential for harm results in a matrix value of $ 1,000 for purposes of the owner's penalties. Assessing the penalty for the count I violations for each of the 6 USTs yields $ 6,000.
Turning to the gravity-based component for the count II violations, the ALJ holds that the owner's failure to provide any method of release detection was a "major" deviation from the regulatory requirement. The ALJ holds that this major deviation presented only a "moderate" potention for harm, resulting in an initial matrix value of $1,000. Because an undetected release of petroleum from the USTs into the aquifer underlying the gas stations would not threaten local water supplies, the potential for harm was "moderate." Moreover, EPA's penalty policy emphasizes that the potential-for-harm factor measures the probability that a release or other harmful action would arise from the violation. The ALJ finds that the owner's failure to provide a method of release detection does not create a major probability that a release would occur. The combination of a major deviation and a moderate potential for harm results in an initial matrix value of $ 1,000. Thus, the penalty for the count II violations for each of the 6 USTs yields $ 6,000.
The ALJ holds that a 20 percent upward violator-specific adjustment is appropriate for the count I violations, based on the owner's degree of noncooperation, willfulness, and negligence for filing the notification forms late. The ALJ considers Hurricane Hugo an "act of God," and the owner's failure to give the UST notification requirements the highest priority in the hurricane's aftermath is understandable. The ALJ also holds that a 10 percent upward adjustment is appropriate for the count II violations, since the owner has not offered any evidence that he has complied with the release detection requirements. The ALJ gives the owner the benefit of the doubt, however, on his assertion that he could not find qualified personnel to perform annual tank tightness testing in the period following Hurricane Hugo. In reaching the conclusions concerning the upward adjustments, the ALJ fully considered the owner's spirit of cooperation in stipulating to his liability and in waiving a hearing on the penalty, which greatly streamlined the adjudication process and conserved EPA resources. The ALJ declines to make an upward adjustment for previous violations, since the NOV the DPNR issued was but a step in the continuum calminating in the issuance of the complaint. The ALJ further holds that a 15 percent downward adjustment for both the count I and II violations is appropriate given the chaotic physical, social, and economic conditions of St. Croix immediately following Hurricane Hugo. The owner should not be held to the same high standard of compliance with the UST requirements for the period immediately following Hurricane Hugo as he should for times when conditions were normal. Thus, taking all of the adjustments into account, the ALJ determines that the net upward adjustments are 25 percent for Count I and 5 percent for count II.
The ALJ holds that an environmental sensitivity multiplier (ESM) of 1.5 is appropriate for both the count I and II violations. A release of petroleum from the owner's USTs would have a moderate impact on the local environment and public health, because the USTs are located over an aquifer which accounts for 67 percent of the total annual groundwater withdrawal in the U.S. Virgin Islands.
The ALJ holds that a days-of-noncompliance multiplier (DNM) of 4 is appropriate for count I, because some interval of time during the five-year period from May 8, 1986, the date the UST regulations became effective, through June 1991, the date the authorities required the owner to comply with the UST regulations, should be discounted. The ALJ considered the length of time the DPNR took to master the new regulatory requirements and inform the owner of the changes in the law; the fact that the owner, as an unsophisticated gas station operator on a small and isolated Caribbean island, is illequipped to monitor changes in the law; and that EPA should have considered the chaotic period following Hurricane Hugo. The ALJ also holds that a DNM of 2.5 is appropriate for count II, because some allowance should be made for the difficulties facing the inhabitants of St. Croix in the hurricane's aftermath in late 1989 and early 1990.
The ALJ holds that there is no basis on which to make a conclusive findings on the owner's ability to pay the penalty imposed. The owner offered no evidence, such as affidavits, audited financial statements, or tax returns, to support an inability to pay the penalty. The ALJ finds unpersuasive the owner's argument that the penalty EPA proposed is not fair and equitable when compared with other situations in which EPA imposed far lower penalties for more egregious and dangerous violations. Even if EPA had assessed a lower penalty in another similar case, such an assessment would not be controlling.
The ALJ orders the owner to pay a total civil penalty of $ 74,105 for the count I and II violations; to submit to the DPNR all required notifications pursuant to RCRA § 9002(a) and 40 C.F.R. §§ 280.3 and 280.22, for those UST systems for which such notifications have not yet been submitted; and to comply with 40 C.F.R. § 280.4 by providing a method of release detection that meets the specifications listed in 40 C.F.R. § 280.40(1)-(3) for each UST system he owns or operates.