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In re Carroll Oil Co.

Case Number: 
No. RCRA-8-99-05
ELR Citation:31 ELR 47280


An administrative law judge (ALJ) denies the U.S. Environmental Protection Agency's (EPA's) motion for reconsideration of the court's order denying an earlier filed motion to amend, and rejects EPA's proposed civil penalty of $ 19,500, in a case involving an oil company's failure to permanently close its underground storage tanks (USTs) within 12 months of a temporary closure in violation of Resource Conservation and Recovery Act regulations. The oil company conceded liability in the matter, acknowledging that the tanks were taken out of use in September 1991 and that none of the tanks have ever been permanently closed.

The ALJ first denies EPA's motion for reconsideration of the court's order denying the Agency's motion to amend the complaint. EPA sought to add two new respondents to its complaint: a second company that allegedly owns the USTs at issue, and the contact person for the USTs. The ALJ denied the motion on procedural grounds because of the last-minute timing and defective nature of the motion. While motions to amend pleadings are liberally granted, courts have recognized that such motions are properly denied where they are made on the eve of trial and the effect of the motion would be to greatly expand the scope of the hearing or alter the nature of the defenses. Here, EPA waited until March 31, 2000, to amend the complaint, despite awareness of the oil company's delinquent status since the filing of the complaint 10 months earlier and despite having concerns about additional possible owners or operators over two months before filing the motion to amend. Moreover, the ALJ did not receive a copy of the motion until 8 days before the cutoff date for motions, and it did not receive the documents EPA relied upon until 11 days later. Even then, no connection between the documents and motion was drawn until barely a week before the hearing. The motion was flawed substantially as well. The two documents relied on by EPA, an invoice and a check stating that a second company is the owner of the USTs at issue, do not on their face support the conclusion that EPA urges the court to reach. Likewise, the record does not support a conclusion that the contact person for the USTs can be held personally liable. EPA knew that the individual was listed as the contact person when it filed its complaint, and there is no evidence that the individual exercised actual control over the UST operations or that he had sufficient personal involvement over the USTs.

The ALJ next rejects EPA's proposed penalty of $ 19,500 and imposes a penalty of $ 3,500; $ 1,000 for each of the three USTs originally identified and $ 500 for the tank the oil company identified at hearing. Following the penalty policy, EPA reached a gravity total of $ 11,500 and added to this amount $ 7,950, which represented the oil company's economic benefit of noncompliance. EPA's adjudicative officers, however, must refrain from treating a penalty policy as a rule and must be prepared to reexamine the basic propositions on which the policy is based. Here, the basic propositions of the penalty policy did not yield an appropriate penalty in this case. Never discerning the nature or amount of remaining liquid in the tanks amounts to a significant flaw in EPA's evaluation of the actual gravity involved. This failure is inconsistent with the policy's announced principle objective of identifying and containing existing contamination and to prevent releases from UST systems. Moreover, a measured assessment of the period of noncompliance cannot ignore a respondent's ability to come into compliance. EPA failed to consider whether the oil company had the financial means to do so. Similarly, EPA's penalty under the statutory penalty criteria--seriousness of the violation and good-faith efforts to comply--remains unjustified. Last, the ALJ declines to enter a compliance order requiring correction of the violative condition within 30 days of a final decision. To do so would be a nullity. The facility at issue is boarded up, not an ongoing concern, and has been in such defunct state since 1992.