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Young's Sale and Service v. Underground Storage Tank Indemnification Board and Underground Storage Tank Indemnification Fund

July 20, 2009


The opinion of the court was delivered by: Judge Leavitt

Submitted: May 1, 2009



Young's Sales and Service (Young's) petitions for review of an order of the Pennsylvania Underground Storage Tank Indemnification Board (Board) refusing to cover Young's costs to remedy leaking underground fuel storage tanks. In doing so, the Board adopted the recommendation of its hearing examiner that coverage be denied because fees owed by the prior owner of Young's property had not been paid, as required by the Storage Tank and Spill Prevention Act (Act).*fn1

In 1999, David A. Young, owner of Young's, purchased property at 12 Capitol Hill Road, Dillsburg, from Wicker Enterprises, which had used the property as an automotive service center until 1995. On the site were four underground storage tanks. Three of the tanks had been used to store gasoline for sale and one had stored kerosene. The tanks were emptied by Wicker Enterprises when it closed the service station in 1995, although several inches of product remained in each tank. After purchasing the site, Young's registered the tanks with the Department of Environmental Protection for removal. In 2000, Young's hired a contractor to remove the tanks, as well as a consultant, Jan Peter Ilves, to supervise the removal project. During the removal, soil contamination was discovered around each tank. Young's incurred substantial costs to remove the tanks and to remedy the soil contamination.

On September 15, 2000, Young's submitted a claim to the Underground Storage Tank Indemnification Fund (Fund) seeking reimbursement for its remediation costs. When Young's submitted its claim, it did not know what, if any, fees had not been paid to the Fund by Wicker Enterprises. On September 22, 2000, Jennifer Goodyear, a claims investigator for the Fund, sent a letter to Young's, requesting proof that all fees associated with all the tanks that were ever due under the Act had been paid. On November 17, 2000, Goodyear sent another letter informing Young's that it was not eligible for coverage because past-due "capacity and throughput fees have not been paid for this site." Reproduced Record at 178 (R.R. ___). When his claim was denied, Young appealed to the Executive Director of the Fund. Young's produced checks from 1994 and 1995 establishing that $8,040.73 had been paid to the Fund by Wicker Enterprises as throughput and capacity fees while it was operating the station on the property. However, the Executive Director denied Young's claim on November 9, 2006. Thereafter, Young's sought an administrative hearing from the Pennsylvania Insurance Department.

At the hearing, the Fund's third-party insurance investigator, Marion MacDonald testified that the soil contamination was caused by gasoline and kerosene. In addition, Goodyear, the Fund's investigator, testified that Ilves, Young's consultant, informed her early in the investigation that he believed the contamination was 80 to 90 percent gasoline and the rest was kerosene.

The Presiding Officer found, as fact, that $4,504.37 in fees, interest, and late charges were owed to the Fund. The Presiding Officer did not specify whether the unpaid fees were throughput or capacity fees, to which tank the unpaid fees applied, or for what period of time the outstanding fees were owed. The Presiding Officer recommended that the Board affirm the denial of coverage for non-payment of fees, and the Board adopted that report. Young's now petitions this Court to review the Board's order.

Before this court, Young's argues that the Board erred in denying its application for its remediation costs.*fn2 Young's offers alternative theories to support its claim that it is eligible to have its costs reimbursed even though the prior owner of the property may have been delinquent in the payment of some of the fees.

We begin with a review of the Act, which created the Fund for the purpose of reimbursing underground storage tank owners who "incur liability for taking corrective action. caused by a sudden or nonsudden release from" the tanks. Section 704(a)(1) of the Act, 35 P.S. §6021.704(a)(1). Every owner of an underground fuel storage tank is required to "demonstrate financial responsibility by participating in the [Fund]." Id. Owners participate by paying two types of fees to the Fund, capacity fees and throughput fees. These fees are intended to "provide an amount sufficient to pay outstanding and anticipated claims against the [Fund]." Section 705(d)(1) of the Act, 35 P.S. §6021.705(d)(1). A capacity fee is assessed based on the gallon capacity of each tank, regardless of how much product is in that tank. Section 705(d)(2) of the Act, 35 P.S. §6021.705(d)(2).*fn3 Capacity fees are not applicable to gasoline tanks, although they are applicable to kerosene tanks. Id. A throughput fee, also known as a gallon fee, is assessed for each gallon that is put in the tank. 25 Pa. Code §977.12(b)(2).*fn4 Throughput fees are applicable only to gasoline tanks. Id.

Eligibility for reimbursement of remediation costs is governed by Section 706 of the Act. It sets forth the following requirements that a claimant must satisfy in order to receive a payment from the Fund:

(1) The claimant is the owner, operator or certified tank installer of the tank which is the subject of the claim.

(2) The current fee required under section 705 has been paid.*fn5

(3) The tank has been registered in accordance with the ...

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