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

Supreme Court of Pennsylvania, Middle District

June 17, 2013


ARGUED: November 29, 2011.

Appeal from the Order of the Commonwealth Court entered on July 20, 2009 at No. 58 C.D. 2009 vacating and remanding the decision of the Underground Storage Tank ndemnification Board dated December 15, 2008 at No. UT06-12-014 978 A.2d 1051 (Pa. Cmwlth. 2009)




Following the release of regulated substances from four underground storage tanks located on its property, Appellee Young's Sales and Service submitted a claim with Appellant Underground Storage Indemnification Fund (the "Fund") seeking reimbursement of the remediation costs it incurred. We granted review to consider whether the Commonwealth Court correctly held that Section 706(2) of the Storage Tank Spill Prevention Act ("Spill Act" or the "Act"), [1] which conditions eligibility for reimbursement on tank fees having been paid, applies on a per tank basis. For the reasons that follow, we conclude it does not. Accordingly, we reverse the order of the Commonwealth Court, and we reinstate the order of Appellant Underground Storage Indemnification Board (the "Board") denying Appellee's claim.

In 1999, Appellee purchased property located at 12 Capitol Hill Road in Dillsburg, Pennsylvania (the "Property") from Wicker Enterprises ("Wicker"). Wicker used the Property as an automotive service station until 1995, when it ceased operations of the service center. In connection with Wicker's operation of the service station, the Property contained four underground storage tanks, three of which were located in the same excavation and used to store gasoline, and one of which was located in a separate excavation some 90 feet away and was used to hold kerosene. Wicker emptied all four tanks in 1995 when it ceased operation of its automotive service center; however, several inches of residual product remained in each of the four tanks. Upon purchasing the Property from Wicker, Appellee registered each of the tanks with the Pennsylvania Department of Environmental Protection for removal, and, in 2000, hired a contractor and consultant to remove the tanks. During the removal process, Appellee and the contractor discovered soil contamination around each tank. As a result, Appellee incurred substantial costs to remove the tanks and rectify the soil contamination. Because no holes were observed in the tanks or lines at the time of removal, it was considered likely that the release was the result of leaks at pipe junctions between the tanks and the product dispensers.

On September 15, 2000, Appellee thereafter submitted a claim to the Fund seeking reimbursement for the costs of remediation associated with the four tanks. Jennifer Goodyear, a claims investigator for the Fund, sent a letter to Appellee requesting the information the Fund needed to determine Appellee's eligibility for claim payment, including proof that the tank fees the Spill Act requires had been paid.[2] Not having received all of the information requested, on November 17, 2000, Goodyear sent another letter informing Appellee that its claim was not eligible for coverage because records revealed that capacity fees owed on the kerosene tank and throughput fees owed on the gasoline tanks were not paid. The Fund closed Appellee's claim file, but, thereafter, reopened it twice to receive proof from Appellee of tank fee payment. Appellee produced checks from 1994 and 1995 establishing that Wicker paid $8, 040.73 to the Fund while Wicker was still operating its service station on the Property. In the Fund's view, however, Appellee did not establish that tank fees were paid in full, and on that basis, again denied Appellee's claim in August 2006. Appellee sought review from the Executive Director of the Fund, who affirmed the Fund's denial of Appellee's claim. Appellee filed an appeal with the Board and requested a formal administrative hearing.[3]

Following the hearing, the Presiding Officer issued a report and recommendation, in which he assessed Appellee's eligibility for recovery against the several criteria listed in Section 706 of the Spill Act. See 35 P.S. § 6021.706. With regard to Section 706(2), which mandates that "[t]he current fee required under Section 705 has been paid, " the Presiding Officer noted that delinquent tank fees will disqualify a claimant from eligibility for reimbursement. He reviewed the evidence of record to determine whether Appellee proved, as it asserted, that all applicable fees had been paid on its tanks, and found that Appellee did not sustain its burden of proof with regard to fee payment. See 35 P.S. § 6021.706(2). Specifically, the Presiding Officer found that only some of the tank fees had been paid in 1994 and 1995, a tank fee delinquency existed at the time Appellee's claim arose in 2000, and that $4, 504.37 in tank fees, interest, and late charges remained outstanding. Accordingly, under Section 706(2), the Presiding Officer recommended that the Fund's determination that Appellee was ineligible for coverage of its claim due to its failure to pay tank fees in full be affirmed. In so doing, however, the Presiding Officer did not specify whether the fees that Appellee owed were throughput and/or capacity fees, nor did he specify the tank or tanks on which fees were outstanding.

Appellee filed exceptions to the Presiding Officer's report and recommendation with the Board. The main thrust of the exceptions was that Appellee remained eligible for coverage of the clean-up costs related to the gasoline tanks on its Property because, under the circumstances, no throughput fees were outstanding and only capacity tank fees that related to the kerosene tank were at issue.

The Board rejected Appellee's exceptions. It accepted the Presiding Officer's findings and concluded that Appellee did not prove its eligibility for recovery from the Fund by demonstrating that all outstanding tank fees were paid at the time the release was discovered and presented no evidence to support its contention that, since Wicker Enterprises stopped using the gasoline tanks in 1995 and the tanks were empty at the time of their removal in 2000, there could be no unpaid fees properly attributable to the gasoline tanks. The Board further observed that, even if it accepted Appellee's contention that Section 706(2)'s eligibility requirement is written in terms of individual tanks, the evidence indicated that the contamination which was remediated was related to all four of Appellee's tanks. Accordingly, the Board adopted the Presiding Officer's report and recommendation and affirmed the Fund's denial of Appellee's claim.

Appellee thereafter appealed to the Commonwealth Court. On appeal, Appellee reiterated its argument that, since the record demonstrated that no throughput fees were assessable on the gasoline tanks after 1995, and that it did not incur throughput fees of its own, it was eligible to recover the costs associated with the remedial efforts it took as to the gasoline tanks, even if capacity fees on the kerosene tank were outstanding. Stated differently, Appellee maintained that Section 706(2) does not preclude eligibility for recovery on a claim as to one tank, for which all fees are current, even if fees on other tanks are owed. Accordingly, Appellee urged the court to reject the contention put forward by the Fund and the Board that, under Section 706(2), coverage of its claim depended on its showing that both the throughput and capacity fees owed as to all four of the tanks had been paid.

In a published, unanimous opinion, a panel of the Commonwealth Court agreed with Appellee that the Spill Act "does not state that the fees on all tanks on all properties owned by a claimant must be current before any claim may be presented." Young's Sales and Serv. v. Underground Storage Tank Indem. Bd., 978 A.2d 1051, 1055 (Pa. Cmwlth. 2009). The court reasoned that, since Section 706 of the Spill Act refers to "the tank" in the singular when setting forth the requirements of eligibility for recovery from the Fund, and does not refer "to a 'site' on which multiple tanks owned by a claimant are located[, ] [i]t follows that the legislature intended for 'the current fee required under Section 705' to apply per tank." Id. (quoting 35 P.S. §§ 6021.706, 6021.706(2)) (emphasis original).

Despite its construction of Section 706(2), however, the court determined it could not resolve the issue of Appellee's eligibility for claim payment. While acknowledging that the Fund's witnesses at the administrative hearing testified as to the amount in tank fees which had not been paid, the court observed that the witnesses did not specify which fees on which tanks were delinquent. Id. As a result, the court further noted that the Presiding Officer, in his report and recommendation, found only that all fees were not current and did not specify whether the unpaid fees were capacity or throughput. Id. Concluding that the administrative adjudication was, therefore, incomplete, the court vacated the Board's order and remanded the case for more specific findings on which fees were owed, and on which tank, and for what time-period. Id. In the court's view, such findings were essential to its ability to address Appellee's argument that, in the event all throughput fees were paid, then it is eligible for Fund reimbursement of the costs associated with the cleanup caused by gasoline contamination. Id.

The Board and the Fund (collectively "Appellants") petitioned this Court for allocatur, seeking our review of the Commonwealth Court's ruling that Section 706(2)'s eligibility requirement applies on a per tank basis. We granted review. Young's Sales and Serv. v. Underground Storage Tank Indem. Bd., 609 Pa. 500, 17 A.3d 331 (2009) (order).

As reflected in the General Assembly's legislative findings that accompany the Spill Act, the Act is premised on the recognition that: Pennsylvania's lands and waters "constitute a unique and irreplaceable resource from which the well-being of the public health and economic vitality of this Commonwealth is assured;" these resources have been contaminated by releases from both active and abandoned storage tanks of regulated substances;[4] contamination of this sort threatens the well-being of affected residents and must be prevented through improved safeguards on storage tank construction and installation; complete restoration of contaminated resources is difficult; and corrective action, when required, is costly. 35 P.S. ยง 6021.102(a)(1)-(6). In addition, the Act is founded on the General Assembly's declaration that storage tank releases of regulated substances pose ...

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