ANR B Wesco, Inc. ( 2017 )

STATE OF VERMONT
SUPERIOR COURT ENVIRONMENTAL DIVISION
Environmental Division Unit Docket No. 60-6-16 Vtec
Agency of Natural Resources,
Petitioner
v. DECISION ON THE MERITS
Wesco, Inc.,
Respondent
This matter arises out of Respondent Wesco, Inc.’s (Respondent) alleged release in 2011
of gasoline (a hazardous material) into surface water, groundwater and land of the state;
Respondent’s alleged failure to install appropriate overfill protection, failure to install cathodic
protection, failure to make documents, records and report available, and failure to report a
suspected release all at or relating to property at 56 Pearl Street, Essex Junction, Vermont. In a
May 3, 2016 Administrative Order (AO),1 the Vermont Agency of Natural Resources (ANR) alleges
violations of the Vermont Waste Management law, 10 V.S.A. § 6616, and Vermont’s
Underground Storage Tank Rules (VUST Rules). The AO sets out factual allegations describing
Respondent’s prohibited release and associated failures. The AO does not seek further
remediation; however, ANR seeks administrative penalties of $106,466.35 for the violations.2 On
July 1, 2016, Respondent requested a hearing on the AO with this Court.
The Court conducted a merits hearing at the Vermont Superior Court, Costello
Courthouse in Burlington, Vermont on June 15 and 16, 2017. Appearing at the trial were Randy
J. Miller, II, Esq. and John Zaikowski, Esq. representing the Agency of Natural Resources and
Tristram J. Coffin, Esq. representing Respondent.
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The AO was filed with the Court on June 24, 2016.
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This includes $97,000 in penalties set out in the AO, in addition to $9,466.35 to cover the cost of
enforcement.
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Findings of Fact
Based upon the evidence presented at trial, the Court renders the following Findings of
Fact and Conclusions of Law.
1. Respondent owns the Champlain Farms fuel station and convenience store at 56 Pearl
Street, Essex Junction, Vermont.
2. On May 24, 2011, the ANR Department of Public Safety’s Vermont Hazardous Materials
Response Team was notified by the Essex Junction Fire Department that there was a concern of
elevated gasoline vapors in the area of the Post Office Square Shopping Plaza off of Pearl Street
in Essex Junction, Vermont.
3. Respondent’s technician had been dispatched to the site to investigate possible sources
of inventory discrepancy.
4. Upon inspection, ANR discovered explosive levels of petroleum vapors within catch basins
of a storm drain system on the Shopping Plaza property.
5. The Shopping Plaza occupants include retail and commercial businesses open to the
public. There is also a post office at the Shopping Plaza.
6. The Fire Department evacuated the Shopping Plaza and closed the businesses due to the
threat of explosion.
7. Agency personnel inspected the spill buckets for Respondent’s underground gasoline
storage tanks.
8. By the end of the inspection, the owners of the Shopping Plaza had brought in a
consultant and installed a ventilation system on the storm drain where the gasoline vapors had
been detected.
9. On the morning of May 25, 2011, Thomas Unkles, an Agency representative, performed
an inspection. Mr. Unkles was accompanied on the inspection by David McQuade, Wesco’s
Director of Environmental Compliance.
10. In the afternoon, Respondent has its tanks and underground piping system inspected by
a private contractor, Tanknology, Inc.
11. On May 26, 2011, Jerry Tanner, Wesco’s technician, performed a leak inspection.
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12. Agency personnel returned to the site and alleged that a faulty O-ring was the likely
source of the release. Mr. Tanner, however, testified that based on his inspection the O-ring
could not have been the cause of the release. Ultimately, no conclusive or compelling evidence
was presented to indicate the cause or duration of the release.
13. On May 27, 2011, Respondent’s representatives reported to the Agency the inventory
records.
14. On June 1, 2011, Agency personnel returned to the facility and observed the installation
of additional monitoring wells by Respondent’s consultant.
15. On June 3, 2011, Agency personnel requested copies of inventory reconciliation records
for the facility’s gasoline tanks for the period of January 2011 until June 3, 2011 be brought to a
meeting scheduled for June 6, 2011.
16. On June 6, 2011, Agency personnel met with Respondent’s representative and consultant
to discuss remedial steps at the facility.
17. On June 8, 2011, the Agency issued Respondent a Notice of Alleged Violation (NOAV) with
compliance directives to immediately pump, empty and cease operation of the gasoline tanks at
the facility, and to remove the underground storage tanks from the ground and allow contractors
access to remove free product and petroleum contaminated soils from beneath and around the
tanks.
18. On June 9, 2011, Agency personnel reviewed the boring log and monitoring well
construction diagrams prepared and submitted by Respondent’s consultant. The Agency also
applied for an Emergency Order (EO) ordering Respondent to immediately empty underground
storage tanks and cease operation of dispensing activities, and within five days to remove
underground storage tanks, contaminated soils, and free product, and to properly dispose of
these materials.
19. On June 16, 2011, the Environmental Division issued the EO requested by the Agency.
20. In cooperation with the ANR and the Fire Department, Respondent emptied and removed
all underground storage tanks from the facility, removed contaminated soils from beneath and
around the tanks, and disposed of those materials.
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21. The Agency estimated that 2,600 gallons of product was released. But, this estimate was
based entirely on inventory discrepancies, which may or may not be caused by a release. The
Court therefore finds the estimate based on inventory records alone inconclusive.
22. In its “Site Investigation and Corrective Action Report,” Respondent’s environmental
consultant noted that the amount of contaminant removed in the initial venting of the storm
drain is unknown, but estimated that approximately 95.7 gallons of gasoline was removed in later
venting. Ex. 28 at 12. The report also notes that contaminated liquids and solids were removed
from the site in the initial response, but gives no estimate as to the amount of product removed
at that time. Id. at 4. In addition, the report offers a high estimate of 1,592 gallons of gasoline
removed from soils around the site. Id. at 18.
23. The site has been a gas station since the 1950’s and some of the contaminated soil
samples contained MTBE, a compound that was used in gasoline for a period of time prior to
2007. This suggests that some of the contamination occurred in the past. Determining what
contamination is attributable to the release in 2011 and what was historic contamination
complicates whether a significant release occurred.
24. It is also unclear when the 2011 release began.
25. ANR issued an administrative order (AO) dated May 3, 2016, alleging five violations
related to the release.
26. ANR’s cost of enforcement included approximately $9,466.35, attributable to the time
spent by the Agency’s environmental analysts, enforcement officer, and waste management and
prevention representative.
27. Respondent has three prior violations of 10 V.S.A § 8003 or related rules, permits, orders
or assurances of discontinuance in the prior seven years.
Determining Violations and Penalty Assessment
When a respondent requests a hearing on an AO, we have the authority to determine
whether the alleged violation occurred. 10 V.S.A. § 8012(b)(1). ANR carries the burden of
proving the alleged violations by a preponderance of the evidence. Id. § 8013(a). If ANR meets
this burden, we are required to “determine anew the amount of a penalty” that should be
assessed against the respondent challenging the ANR order. Id. § 8012(b)(4). We therefore
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review the evidence before the Court and determine an appropriate penalty assessment,
pursuant to the eight subsections of 10 V.S.A. § 8010(b)(1)–(8).
ANR, and this Court in this proceeding, must consider seven factors when assessing a
penalty:
(1) the degree of actual or potential impact on public health, safety, welfare,
and the environment resulting from the violation;
(2) the presence of mitigating circumstances, including unreasonable delay
by the Secretary in seeking enforcement;
(3) whether the respondent knew or had reason to know the violation
existed;
(4) the respondent’s record of compliance;
(5) [Repealed.]
(6) the deterrent effect of the penalty;
(7) the State’s actual costs of enforcement; and
(8) the length of time the violation has existed.
10 V.S.A. § 8010(b)(1)–(8). The maximum penalty for each violation is $42,500, plus $17,000 for
each day a penalty continues. Id. § 8010(c)(1). Generally, ANR treats multiple violations of the
same permit, or related violations generally, as one violation when calculating penalties. We take
the same approach in this case, and analyze the five violations as a single violation.
The State may also “recapture economic benefit” that the violator may have derived from
the violation, up to the total maximum penalty allowed of $170,000. Id. § 8010(c)(2).
In an effort to standardize penalties and ensure a fair process, ANR enforcement officers
use a form that is based on the seven factors. They rate the severity of the violations from 0 to
3 for factors (1), (3), (4) and (8), and come up with an initial penalty score. The highest possible
initial score is a 15, which equates to an initial penalty of $42,500 for a Class I violation, the
maximum allowed. Classes II, III, and IV carry lower maximum penalties of $30,000, $10,000 and
$3,000 respectively. The initial penalty can then be adjusted based on penalty factors (2), (6) and
(7). If the violator signs an Assurance of Discontinuance, agreeing not to dispute the action, the
final penalty may be reduced by 25%.
Number of Violations
At the outset of the Court’s penalty assessment, we recognize that the Administrative
Order at issue in this matter alleges five violations: 1) the prohibited release of hazardous
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materials into the surface, groundwater or land of the state – 10 V.S.A. § 6616; 2) failure to install
appropriate overfill protection – VUST Rules § 8-406(b)(1)(C); 3) failure to install cathodic
protection – VUST Rules § 8-405(a)(1)(B); 4) failure to make documents, records, and reports
available – VUST Rules § 8-502(e); and 5) failure to report a suspected release – VUST Rules § 8-
506(b)(2).
ANR, and therefore this Court on appeal, has discretion to calculate and assess one
penalty for events that result in more than one violation or to calculate and assess a separate
penalty for each violation stemming from the same activity. In the AO at issue, ANR considered
the five alleged violations in three separate penalty assessments (one for the alleged release (10
V.S.A. § 6616), one for the alleged failure to report a release (VUST Rules § 8-506(b)(2)), and one
for the remaining alleged violations). Because the alleged violations regard the Pearl Street
Station only and relate to the same proximate time, we conduct a single penalty assessment.
Additionally, we take this approach because the evidence does not clearly establish each
separate violation having independent cause for environmental or human health concerns.
The parties do not dispute the core facts of the violations. Respondent offers that the
release at issue was unknown, had a short duration, and a well-intended remedial response by
Respondent. Thus, Respondent contests the amount of ANR fine.
Class of Violation(s)
We conclude that the release in this matter present a Class II violation. A Class II violation
includes violations which present more than a minor violation of a statute listed in 10 V.S.A.
§8003(a) or a rule promulgated under statute listed in 10 V.S.A. §8003(a). ANR suggested that
the events presented a Class I violation as a threat of substantial harm to the public health, safety,
or welfare or to the environment. As detailed below, the release of petroleum did not result in
a threat of substantial harm and we therefore decline to classify the violations as Class I.
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Calculation of Base Penalty:
Penalty Factor 1: Actual or Potential Impact on Public Health, Safety, Welfare and the
Environment
Subsection (1) of 10 V.S.A. § 8010(b) requires consideration of “the degree of actual or
potential impact on public health, safety, welfare and the environment resulting from the
violation.”
In considering ANR’s penalty calculation form, we assign a value of “1” to the degree of
impact on public health, safely, and welfare (ANR form Question 1) as we conclude there was
evidence of minor actual impact or moderate potential impact from the release and response.
The moderate potential impact on public health, safety and welfare stemmed from the risk of
ignition or explosion as well as human exposure to gasoline product and fumes. The potential of
these risks was moderate due to the volume of gasoline release and path that the product
migrated over. The minor actual impact was the closing and evacuation of the Shopping Plaza.
We assign a value of “1” to the degree of impact on the environment (ANR form Question
2) as we conclude there was minor actual impact and moderate potential impact to the
environment from the release. Petroleum was released from the facility, migrating via
groundwater towards the Shopping Plaza property. The credible evidence supports a conclusion
that the violation caused minor actual impact that harmed the environment.
Penalty Factor 3: Whether the Respondent Knew or Had Reason to Know the Violation
Existed
Subsection (3) of 10 V.S.A. § 8010(b) requires consideration of “whether the respondent
knew or had reason to know the violation existed.” The ANR penalty calculation form includes
two parts related to this subsection: 3a, knowledge of the requirements, and 3b, knowledge of
the facts of the violation.
Respondent knew or should have known about their legal requirements under the Waste
Management statute and the facts of the violation. 10 V.S.A § 6616 is only two sentences long
and clearly states that the release of hazardous material to surface or groundwater is prohibited.
Thus, in considering ANR’s penalty calculation form, we assign a value of “1” for Respondent’s
knowledge of requirements (ANR form Question 3a, which assigns a “1” where respondent “had
reason to know about violated requirement”).
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As to Respondent’s knowledge of the facts of the violations we assign a value of “1,”
concluding there is evidence that Respondent “could not have reasonably known that the
violation existed” (ANR form Question 3b). There is not clear evidence that Respondent knew or
should have known about the release before it was discovered. Respondent’s technician had
been dispatched to the site to investigate possible sources of inventory discrepancy. Respondent
alleges that numerous state inspections, in addition to the Tanknology inspections, did not reveal
a faulty O-ring or the other alleged violations. Because the cause of the release remains unknown
today, we cannot conclude that Respondent should have been aware of the release sooner.
Penalty Factor 4: Respondent’s Record of Compliance
Subsection (4) of 10 V.S.A. § 8010(b) requires consideration of “the respondent’s record
of compliance.” The evidence presented shows that Respondent had three previous violations
of ANR’s regulations. In considering ANR’s penalty calculation from, we assign a value of “3” for
this subsection (ANR form Question 4).
Penalty Factor 8: Length of Time the Violation Existed
Subsection (8) of 10 V.S.A. § 8010(b) requires consideration of “the length of time the
violation has existed.” From the evidence, the Court is unable to determine when the release
began. Respondent immediately began responsive action the day it was informed of petroleum
vapors emanating from the storm drain and began working with the Agency to develop an
appropriate response. After an inspection of the facility, the owners of the Shopping Plaza
brought in a consultant and installed a ventilation system on the storm drain where the gasoline
vapors had been detected. The ventilation system was effective at removing significant gasoline
vapors from the storm drain system. Disputed evidence was offered at trial concerning the
discovery of a faulty O-ring, and the details of Respondent notifying the Agency. Respondent
complied with the Agency and pumped all underground storage tanks at the facility, emptied and
ceased operation of gasoline and diesel dispensing activities, removed all underground storage
tanks from the facility, removed free product and petroleum contaminated soils from beneath
and around the tanks, and properly disposed of those materials.
Additionally, the results of the remediation call into question the scale of the release that
occurred in 2011. Evidence from the remediation clearly indicate there were releases that
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predated May 2011. The site has been a gas station since the 1950’s and some of the soil samples
contained MTBE, a compound that was used for a period of time prior to 2007. Determining what
contamination is attributable to the release in 2011 and what was historic contamination
complicates whether a significant release occurred.
In considering ANR’s penalty calculation form, we assign a value of “1”, concluding that
this violation existed for a very short duration (ANR form Question 5).
In adding the above penalty scores we arrive at a base score of 7 which equates to a base
penalty of $12,000 for a Class II violation. See ANR form Question 6.
Penalty Adjustments:
We next consider appropriate adjustments to the base penalty.
Penalty Factor 2: Mitigating Circumstances
Subsection (2) of 10 V.S.A. § 8010(b) requires consideration of “the presence of mitigating
circumstances, including unreasonable delay by the secretary in seeking enforcement.” The
release occurred in 2011. ANR issued Respondent a NOAV on June 8, 2011 and an EO on June 16,
2011. ANR waited until May 2016—nearly five years—to initiate enforcement proceedings. The
consequences of the delay are notable. The State acknowledges that many of the documents
related to this case have been destroyed. The Essex Junction Fire Department no longer has its
notes from the incident. The substantial delay in prosecution has significantly disadvantaged both
parties, particularly Respondent’s ability to present an adequate defense.
Furthermore, Respondent responded promptly and attempted to bring the subject
property into compliance voluntarily including by emptying and removing all underground
storage tanks from the facility, removed contaminated soils from beneath and around the tanks,
and properly disposed of those materials. This evidence weighs heavily against the timeliness of
ANR’s actions.
Based on these facts, the Court reduces Respondent’s penalty based on mitigating
circumstances in the amount of $3,000.
Penalty Factor 6: The Deterrent Effect
Subsection (6) of 10 V.S.A. § 8010(b) requires consideration of “the deterrent effect of
the penalty.” The Secretary may increase the penalty amount up to the maximum allowed in the
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class of violation if the Secretary determines that a larger penalty is reasonably necessary to deter
the respondent and the regulated community from committing future violations. Id. In this
matter the maximum penalty is $30,000 and the base penalty we have calculated is $12,000,
allowing for a maximum deterrent of $18,000.
In reviewing the importance of establishing a penalty that will have a deterrent effect
upon Respondent, we consider that Respondent was cooperative with ANR throughout the
investigation and remediation of the release. Furthermore, we conclude that the short period of
time that the violations existed once Respondent was on notice, and Respondent’s prompt and
complete remediation of the release does not warrant a deterrent portion to be added to the
initial base penalty.
Penalty Factor 7: State’s Actual Costs of Enforcement
Subsection (7) of 10 V.S.A. § 8010(b) requires that we consider “the state’s actual cost of
enforcement.” The value of the time that all ANR personnel committed to responding to
Respondent’s violations, totals $9,466.35. We direct Respondent to reimburse these costs as an
additional penalty for the violations.
Economic Benefit
The Secretary may recapture any economic benefit Respondent may have gained by
violating its permit. 10 V.S.A. § 8010(c).
While we believe that recapturing economic gain from a violation is appropriate, we
conclude that based on the evidence before the Court, it appears that Respondent did not realize
a gain or economic benefit from the violations. Thus, we decline to impose any amount of
additional penalty relating to economic gain.
Reduction for Settlement
Finally, ANR may reduce a respondent’s penalty when the respondent admits the
violation and enters an Assurance of Discontinuance fully resolving the compliance issue. Such a
reduction is not warranted in this matter as Respondent did not resolve their dispute by
settlement.
The Court therefore decreases the base penalty of $12,000 by subtracting mitigation for
ANR’s delay in initiating enforcement and Respondent’s prompt investigation and remediation in
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the amount of $3,000 and adds $9,466.35 as reimbursement of ANR’s costs of enforcement. The
total penalty in this case is $18,466.35.
Conclusion
For the reasons stated above, we conclude that for the five violations at issue within the
May 3, 2016 AO, Respondent shall be liable for a total penalty in these proceedings of $18,466.35.
Rights of Appeal (10 V.S.A. § 8012(c)(4)–(c)(5))
This Decision and the accompanying Judgment Order will become final if no appeal is
requested within 10 days of the date this Decision is received. All parties to this proceeding have
a right to appeal this Decision and Judgment Order. The procedures for requesting an appeal are
found in the Vermont Rules of Appellate Procedure (V.R.A.P.) subject to superseding provisions
in Vermont Rule for Environmental Court Proceedings (V.R.E.C.P.) 4(d)(6). Within 10 days of the
receipt of this Order, any party seeking to file an appeal must file the notice of appeal with the
Clerk of the Environmental Division of the Vermont Superior Court, together with the applicable
filing fee. Questions may be addressed to the Clerk of the Vermont Supreme Court, 111 State
Street, Montpelier, VT 05609-0801, (802) 828-3276. An appeal to the Supreme Court operates
as a stay of payment of a penalty, but does not stay any other aspect of an order issued by this
Court. 10 V.S.A. § 8013(d). A party may petition the Supreme Court for a stay under the
provisions of the Vermont Rules of Civil Procedure (V.R.C.P.) 62 and V.R.A.P. 8.
Electronically signed on November 13, 2017 at 11:05 AM pursuant to V.R.E.F. 7(d).
_________________________________________
Thomas G. Walsh, Judge
Superior Court, Environmental Division
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