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Lester v. Department of Environmental Protection

Commonwealth Court of Pennsylvania

January 13, 2017

Andrew Lester, Petitioner
v.
Department of Environmental Protection, Respondent

          Argued: November 15, 2016

          BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE P. KEVIN BROBSON, Judge.

          OPINION

          ROBERT SIMPSON, Judge.

         Andrew Lester petitions for review from an order of the Environmental Hearing Board (EHB) that dismissed his appeal of a Department of Environmental Protection (DEP) administrative order requiring him to permanently close underground storage tanks pursuant to the Storage Tank and Spill Prevention Act (Storage Tank Act).[1] The EHB determined that both "owners" and "operators" were subject to the Storage Tank Act's closure requirements. Further, it determined DEP reasonably found that Andrew Lester was an "operator" under the Storage Tank Act and its regulations where he identified himself as the operator on various forms and took actions consistent with exercising control and responsibility for the underground storage tanks at issue.

         In this appeal, Andrew Lester asks whether the EHB erred in determining he was an "operator" under the Storage Tank Act and its regulations and, therefore, financially liable for removal of the tanks. He also questions whether the imposition of such financial responsibility constitutes a "taking" of property or violates his right to substantive due process. Upon review, we affirm.

         I. Background

         The EHB made the following findings. Kenneth D. Lester owns property located at 10417 State Route 6, Mead Township, Warren County, which formerly operated as a retail petroleum fueling station and an automobile repair service station known as Ken's Keystone (the property). Ken's Keystone was a full-service gas station consisting of a garage, convenience store and gas pumps.

         The following four underground storage tanks are located on the property (collectively, the tanks):

Tank Number

Date of Installation

Contents

Capacity (gallons)

005

Unknown

Diesel

1, 000

006

3/9/1999

Diesel

10, 000

007

3/9/1999

Gasoline

8, 000

008

3/9/1999

Gasoline

4, 000

         The tanks are registered with DEP. They are "underground storage tanks" as that term is defined in Section 103 of the Storage Tank Act, 35 P.S. §6021.103. Kenneth D. Lester is the "owner" of the tanks as that term is defined in Section 103 of the Storage Tank Act. The tanks generally meet the performance standards for underground storage tank systems set forth in 25 Pa. Code §245.421.

         In November 2009, Certified Inspector Daniel Galvin inspected the tanks and found that all four tanks were non-compliant as to tank construction and corrosion protection, tank release detection and piping release detection. The November 2009 inspection also reported that Tank No. 008 was noncompliant as to piping construction and corrosion protection, and Tank Nos. 007 and 008 were noncompliant as to overfill prevention.

         In February 2010, Andrew Lester, the owner's son, attended a meeting with Phil Smith, Arthur Meade and Dan Peterson of DEP's Environmental Cleanup Program to discuss "each of the violations and what it would take to resolve or abate the violations" regarding the tanks. EHB Adj., 6/24/15, Finding of Fact (F.F.) No. 13 (citing EHB Hr'g, Notes of Testimony (N.T.), 1/15/15, at 210-11, Dep't Ex. N); Reproduced Record (R.R.) at 52a-53a.

         Andrew Lester subsequently submitted a Storage Tank Registration Amendment Form to DEP, registering the tanks as temporarily out-of-service as of June 23, 2010. Andrew Lester signed the form and checked the box for "facility operator." F.F. Nos. 14-15; Joint Stip. of Facts at ¶¶11, 12; Dep't Ex. A; R.R. at 27b-28b, 65b.[2] The tanks have been temporarily out-of-service since June 23, 2010, and have not been operated. The tanks were required to be permanently closed if they were not put back into service by June 23, 2013.

         In May 2011, DEP issued an administrative order to Kenneth Lester and Andrew Lester revoking the permit-by-rule for operation of the tanks and ordering Kenneth Lester and Andrew Lester to, among other things, empty and cease operations of the tanks until DEP reinstated the permit-by-rule. The Court of Common Pleas of the 37th Judicial District (Warren County Branch) subsequently granted DEP's petition to enforce its 2011 order.

         Thereafter, in August 2013, DEP inspected the property and observed the tanks were not permanently closed. A few weeks later, DEP sent a notice of violation to Kenneth Lester at the property's mailing address, informing him the tanks had not been closed and that the registration fees and Underground Storage Tank Indemnification Fund (USTIF) fees were not paid. Andrew Lester received this notice of violation.

         In November 2013, Certified Inspector Wray DeLarme inspected the tanks and found that none of the tanks were compliant with respect to overfill prevention or registration certificate display.

         In February 2014, DEP issued an administrative order (the "closure order") to Kenneth Lester and Andrew Lester requiring: (a) Kenneth Lester to pay $400 in registration fees to DEP for the tanks within 30 days; (b) Kenneth Lester and Andrew Lester to pay a total of $280.95 to the USTIF for fees owed on Tanks Nos. 005 and 006 and simultaneously provide proof of payment of the fees to DEP within 30 days; (c) Kenneth Lester and Andrew Lester to submit a completed Underground Storage Tank System Installation/Closure Notification Form to DEP in accordance with 25 Pa. Code §245.452, within 30 days; (d) Kenneth Lester and Andrew Lester to permanently close the tanks in accordance with 25 Pa. Code §§245.452-53, within 90 days; (e) Kenneth Lester and Andrew Lester to measure for the presence of a release of a regulated substance by sampling in a manner consistent with a DEP technical document titled "Closure Requirements for Underground Storage Tank Systems" and as required by 25 Pa. Code § 245.453(a), before permanent closure was completed; (f) Kenneth Lester and Andrew Lester to begin corrective action in accordance with 25 Pa. Code, Subchapter D, and as required by 25 Pa. Code § 245.453(b), if contaminated soils, contaminated groundwater or free product as a liquid or vapor was discovered; and, (g) Kenneth Lester and Andrew Lester to submit to DEP a copy of a properly completed closure report in accordance with the DEP technical document entitled "Closure Requirements for Underground Storage Tank Systems, " and as required by 25 Pa. Code §245.452(f), within 45 days of the permanent closure of the tanks.

         In March 2014, Andrew Lester, representing himself, filed a notice of appeal of the closure order with the EHB. Kenneth Lester did not appeal the closure order.[3]

         In December 2014, about a month before the EHB hearing, counsel entered an appearance on behalf of Andrew Lester and attempted to file an amended notice of appeal to add a claim that DEP's order constituted a taking of property in violation of the Pennsylvania and U.S. Constitutions. DEP filed a motion to strike the amended notice of appeal. The EHB subsequently issued an opinion and order in which it granted DEP's motion to strike.

         A hearing on the merits of Andrew Lester's appeal ensued before the EHB. DEP presented the testimony of David Hall, a DEP Water Quality Specialist Supervisor in its Storage Tanks Program, and Arthur Meade, who formerly served as a DEP Water Quality Specialist. Andrew Lester testified on his own behalf.

         After the hearing, the EHB issued an adjudication in which it dismissed Andrew Lester's appeal of DEP's closure order. In its adjudication, the EHB set forth the following discussion. This appeal concerns a DEP administrative order requiring Andrew Lester and Kenneth Lester, jointly and severally, to take certain actions directed toward permanently closing four underground storage tanks located on the property. DEP bears the burden of proof to show its issuance of an administrative order is supported by a preponderance of the evidence, is authorized by statute, and is a proper exercise of its authority. 25 Pa. Code §1021.122. The EHB's review is de novo: it is not limited to considering the facts that were available to DEP at the time it issued its order. Warren Sand & Gravel Co., Inc. v. Dep't of Envtl. Res., 341 A.2d 556 (Pa. Cmwlth. 1975) (en banc).

         At the outset, the EHB acknowledged DEP's observation that, under the EHB's rules, any issues not argued in post-hearing briefs are waived, as well as DEP's contention that Andrew Lester only raised a single issue in his post-hearing brief. The EHB agreed that one issue for resolution was whether Andrew Lester was an "operator" under the Storage Tank Act and its regulations; however, it otherwise declined to construe Andrew Lester's post-hearing brief so narrowly. To be sure, the EHB stated, Andrew Lester took the term "brief" quite literally, but he nevertheless raised additional issues such as whether DEP staff directed or misled him to improperly characterize himself as an "operator" and whether he could be liable for closure of the tanks when he had no ownership interest in them. EHB Adj. at 7.

         For its part, DEP argued that it properly determined Andrew Lester was an operator of the tanks. The term "operator" is defined in Section 103 of the Storage Tank Act and its regulations as: "Any person who manages, supervises, alters, controls or has responsibility for the operation of a storage tank." Id.; see 25 Pa. Code §245.1. The EHB noted DEP relied on two different lines of argument in support of its determination.

         First, it argued the 2011 order of the Court of Common Pleas of the 37th Judicial District (Warren County Branch) collaterally estopped Andrew Lester from denying he was an operator of the tanks. Second, DEP argued that the way Andrew Lester filled out certain forms, and the actions he took, supported its finding that he was an operator. In particular, DEP asserted, in 2009, 2010 and 2013, Andrew Lester specifically identified himself as the tanks' manager or operator on various DEP forms. DEP further argued Andrew Lester's actions from 2009 through 2014, including submission of the forms, were sufficient to constitute management or supervision of the tanks and to show responsibility for operation of the tanks.

         Responding to these assertions, the EHB declined to find Andrew Lester was collaterally estopped from claiming he was not the operator of the tanks.[4]

         Nevertheless, the EHB ultimately found Andrew Lester was an "operator" of the tanks under the Storage Tank Act. While no single piece of evidence or action taken by Andrew Lester was dispositive, the EHB stated, in the aggregate, DEP met its burden of proving Andrew Lester "manages, supervises, alters, controls or has responsibility for the operation" of the tanks. Section 103 of the Storage Tank Act. The EHB noted it was sympathetic to the difficulties Andrew Lester encountered in trying to reopen or sell Ken's Keystone, whether for his own benefit or that of his father. Nevertheless, it credited the testimony of DEP's witnesses, and it found the weight of evidence was against Andrew Lester.

         The EHB also noted that DEP relied heavily on various forms that Andrew Lester signed to support its belief that he met the definition of an operator of the tanks under the Storage Tank Act and its regulations.

To that end, in November 2009, a third-party inspection of the tanks was performed. On the DEP form documenting the inspection, Andrew Lester was listed as the representative present during the inspection. Andrew Lester checked the box on the form identifying himself as "Operator" instead of the other possible choices of "Owner, " "Employee, " or "None." EHB Adj. at 9. On the signature line of the same form, Andrew Lester listed his title as "Manager." Id.

         In June 2010, after Arthur Meade, a DEP Water Quality Specialist, contacted Andrew Lester regarding violations related to the tanks, Andrew Lester submitted a Storage Tank Registration Amendment Form, on which he checked two boxes identifying himself as "Facility Operator" rather than "Facility Owner, " "Responsible Official, " or "Property Owner." Id.

         Finally, in November 2013, another third-party inspection was performed. On the inspection form, Andrew Lester again marked the box identifying himself as "Operator" rather than "Owner, " "Employee, " or "None." Id. at 10. On the November 2013 inspection form, however, Andrew Lester listed his title as "Operator" on the form's signature line as opposed to "Manager"—the designation he used on the November 2009 inspection form. Id.

         The EHB explained it was not clear that Andrew Lester truly understood the nature of the forms or that his designation on the forms would impose legal obligations on him. Andrew Lester testified that both DEP and the third-party inspectors induced him to, or at least suggested that he, mark his status as "Operator." Id. at 10. However, the EHB stated, Andrew Lester's explanations of why he identified himself as an "Operator" or "Manager" when he believed himself to be merely an employee were not convincing. Id. The record revealed that Arthur Meade highlighted a box for Andrew Lester to check that would designate him as "facility operator" on the Storage Tank Registration Amendment Form in June 2010. Id. Nevertheless, Andrew Lester already represented himself as the "Operator" on the Operations Inspection Form completed approximately seven months earlier. Id. The EHB did not find the various forms indicating Andrew Lester to be "Manager" or "Operator" of the tanks to be dispositive, but on the whole, it stated, the evidence from these forms weighed in favor of DEP. Id.

         In addition to the forms, the EHB stated, there were several pieces of written communication by DEP over a several-year time-period involving the tanks at the property that were submitted as exhibits. The EHB explained a review of these communications showed DEP was not consistent in how it communicated with Andrew Lester about issues with the tanks.

         To that end, in December 2009, DEP sent a notice of violation relating to the November 2009 inspection. The notice of violation was addressed to Kenneth Lester only and was not clearly directed to Andrew Lester. Despite executing the November 2009 inspection form as the facility operator, Andrew Lester was only copied on the December 2009 notice of violation. A follow-up notice of violation, however, issued in February 2010, was addressed to both Kenneth Lester and Andrew Lester. DEP stated that the failure to fully comply with these two violation notices led to DEP issuing an un-appealed 2011 order in which it identified Andrew Lester as operator of the tanks.

         The EHB further stated, despite the fact that DEP clearly identified Andrew Lester as the operator of the tanks in that order, subsequent communications in 2013 about the ongoing tank issues were addressed only to Kenneth Lester. Neither a January 2013 letter about the temporary out-of-service deadline for the tanks nor a September 2013 notice of violation resulting from a compliance evaluation conducted by DEP were addressed or copied to Andrew Lester.

         However, the EHB stated, when DEP issued the closure order in February 2014, which is currently under appeal, it once again asserted Andrew Lester was the operator of the tanks. The final piece of written correspondence from DEP, a Storage Tank Registration/Permit Invoice dated October 6, 2014 listed "Andy Lester" as the "Owner/Contact" of Ken's Keystone. Id. at 11. The EHB stated it found the inconsistencies in DEP's written communications troubling, given the serious consequences that can result from a determination that a party is an operator. It stated that individuals who are potentially subject to the Storage Tank Act and its regulations and obligations deserve clear communication from DEP regarding their status. Nevertheless, when viewed in conjunction with the evidence as a whole, the EHB explained, these inconsistencies were insufficient to outweigh other evidence supporting its decision regarding Andrew Lester's status as an operator.

         The EHB explained that DEP identified various actions undertaken by Andrew Lester after 2009 to support its contention that he was the operator of the tanks. From 2009 until 2014, it appeared DEP only spoke with Kenneth Lester once; all other verbal communication about the facility was with Andrew Lester.

         In February 2010, Andrew Lester, on his own, attended a meeting with DEP at its Regional Office in Meadville to discuss the resolution of violations with the tanks. Additionally, the EHB stated, there was testimony from both Andrew Lester and DEP witnesses that, on more than one occasion over the years, Andrew Lester attempted to obtain delivery of gasoline from a wholesale fuel provider to restart gasoline sales at Ken's Keystone. He was ultimately unsuccessful in those efforts, but in the EHB's opinion, this supported a determination that Andrew Lester exercised a certain degree of control over, and responsibility for, the tanks consistent with that of an operator.

         The EHB explained there was no question that Andrew Lester's course of conduct was consistent with having greater control over the tanks and the facility than that of a mere employee. The main issue regarding his actions was whether he acted in his own interest or for his father's interest as a representative. The EHB explained it generally found the testimony of DEP's witnesses, David Hall and Arthur Meade, credible on this point. Neither witness recalled any statement from Andrew Lester indicating he was merely acting on his father's behalf. Andrew Lester testified to the contrary, but, the EHB stated, there was nothing in the written record to support his contention that he acted solely on his father's behalf. Overall, the EHB did not find sufficient evidence to support a conclusion that Andrew Lester's actions were only undertaken as a representative of his father. Reviewing the record as a whole, the EHB concluded DEP reasonably determined Andrew Lester exercised sufficient control over and responsibility for operation of the tanks such that he met the Storage Tank Act's definition of an "operator." See Section 103 of the Storage Tank Act.

         Finally, the EHB examined whether, as an operator, Andrew Lester was responsible for closure of the tanks. The EHB noted Andrew Lester appeared to argue that, because he had no ownership interest in the property, he could not be liable for the costs of closing the tanks. He relied on two cases, one of which was Lehigh Gas & Oil v. Pennsylvania Department of Environmental Resources, 671 A.2d 241 (Pa. Cmwlth. 1995). There, the EHB explained, Lehigh Gas & Oil appealed the EHB's determination that the company did not overcome the Storage Tank Act's statutory presumption that an owner or operator of an underground storage tank is liable for all damages, contamination, or pollution within 2, 500 feet of the facility, without proof of fault, negligence or causation. This Court affirmed the EHB's adjudication, determining that "Lehigh [Gas & Oil] failed to overcome, by clear and convincing evidence, the rebuttable presumption." Id. at 247.

         The EHB found it difficult to decipher the purpose of Andrew Lester's citation to Lehigh Gas & Oil—at this stage, neither damages, nor contamination, nor pollution was at issue. Rather, the EHB was concerned with whether Andrew Lester was responsible for closure of the tanks. The EHB noted the Storage Tank Act clearly holds owners and operators responsible for closure of tanks. See Section 502(c) of the Storage Tank Act, 35 P.S. §6021.502(c); see also Section 501(a)(6), (9), (10) of the Storage Tank Act, 35 P.S. §6021.501(a)(6), (9), (10) (requiring DEP to adopt and implement an underground storage tank program which includes, among other things, "requirements for the closure of tanks, " "methods and procedures for the removal of reporting underground storage tanks from service, " and, "requirements for intended and completed closure of tank facilities by owners and operators.").

         The EHB noted Andrew Lester also cited Luther P. Miller, Inc. v. Underground Storage Tank Indemnification Board, 965 A.2d 398 (Pa. Cmwlth. 2009), for the proposition "that the owner of the underground storage tank is presumptively the one required to register" with DEP. Andrew Lester's Post-Hearing Br. at 3. The EHB stated this was hardly a controversial position—both the Storage Tank Act and its regulations provide that the owner of an underground storage tank is required to register the tank. See Section 503(a) of the Storage Tank Act, 35 P.S. §6021.503(a); 25 Pa. Code § 245.41. The EHB explained the question in Miller, which is not at issue here, was whether a corporation was eligible to receive indemnification from the USTIF after it failed to comply with DEP's registration requirements.

         In contrast, the case presently before the EHB concerned whether Andrew Lester could be held responsible for closing the tanks at Ken's Keystone, with the answer turning on whether he was an "operator" under the Act and its regulations. Having found Andrew Lester was an "operator" of the tanks, the EHB explained, he was responsible under the Storage Tank Act, along with his father (the owner), for their closure.

         In its conclusions of law, the EHB stated, both an "owner" and an "operator" are responsible for closure of underground storage tank facilities in conformance with the Storage Tank Act. Section 502 of the Storage Tank Act. The EHB explained DEP proved by a preponderance of the evidence that Andrew Lester was an "operator" of the tanks as that term is defined in Section 103 of the Storage Tank Act and its regulations. Thus, it dismissed Andrew Lester's appeal. This appeal followed.[5]

         II. Issues

         On appeal, [6] Andrew Lester states two issues:

1.Is an individual with no ownership interest in a closed gasoline station and real estate or to the empty storage tanks situated thereon who was induced to sign a document by an agent of [DEP] as an 'operator' financially liable for the removal of the storage tanks?
2. Does the imposition of a financial responsibility for the removal of empty gasoline storage tanks on a person with no ownership interest therein constitute a taking of his property in violation of Article 1, Section 1 of the Pennsylvania Constitution to enjoy and defend life, liberty, and acquiring, possessing, and protecting property and Amendment 5 of the United States Constitution prohibiting depriving a person of property without due process of law?

Pet'r's Br. at 4 (Statement of Questions Involved).

         III. Discussion

         A. "Operator" Responsibility

         1. Contentions

         Andrew Lester first asserts DEP is attempting to impose financial responsibility for removal of underground storage tanks and remediation of any spillage against him despite the fact that he has no ownership interest in the property or the underground storage tanks. Rather, they are owned by his father, Kenneth Lester, who is the owner by deed and holder of the mortgage on the property. Andrew Lester argues the basis of DEP's action against him is its Storage Tank Registration Amendment Form, which was completed by Arthur Meade, a DEP employee, and presented to Andrew Lester who signed the contact information, which Meade highlighted. Andrew Lester contends Meade testified he did this in an attempt to give guidance to individuals such as Andrew Lester who needed assistance completing the form.

         Andrew Lester maintains the tanks were placed out of service and were pumped down by their owner as required by DEP. He asserts the tanks contained a de minimis amount of product and the service pumps were disconnected from the tanks. As such, there was nothing to operate. Andrew Lester argues it is solely on the basis of DEP's Storage Tank Registration Amendment Form that liability is sought against him. He contends this was a misrepresentation and fraud committed on him by an individual with superior knowledge of the law and the consequences of his execution of the form to his detriment.

         Andrew Lester argues that at the EHB hearing, he and DEP entered into a stipulation of facts. He asserts it is undisputed that he is not the owner of the gas station or the underground storage tanks. Additionally, the stipulation establishes: (1) Kenneth D. Lester is an adult with a mailing address of 892 Lance Street, Sebastian, Florida, 32958; (2) Kenneth D. Lester owns the property, which was formerly operated as a retail fueling station; (3) at the property, Kenneth D. Lester owns and operated underground storage tanks; (4) Kenneth D. Lester is the owner of the tanks; and, (5) the tanks have been temporarily out-of-service since June 23, 2010 and have not been operated.

         Andrew Lester contends that at the hearing David Hall, a DEP Water Quality Specialist Supervisor, testified that between November 2009 and December 2014, the tanks were pumped and contained less than an inch of product. N.T. at 85. Andrew Lester testified his father emptied the tanks and nothing further was done because there was no need to do so given that he pumped the tanks down. N.T. at 140. Andrew Lester asserts that, what should be readily apparent is that DEP is attempting to hold him financially responsible for removal of the underground storage tanks that have been out of service on the basis that he is an "operator." He argues his father, who owns the tanks and the ...


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