Free Motion for Partial Summary Judgment - District Court of Arizona - Arizona

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DANIEL G. KNAUSS United States Attorney District of Arizona SUE A. KLEIN Assistant U.S. Attorney Arizona State Bar No. 11253 Two Renaissance Square 40 N. Central Avenue, Ste. 1200 Phoenix, Arizona 85004-4408 Telephone: (602) 514-7500 E-mail: [email protected] BRUCE S. GELBER, Chief Environmental Enforcement Section Environment & Natural Resources Division U.S. Department of Justice

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America, CIV-04-0626-PHX-JWS Plaintiff, v. John B. Knight, Jr.; Robert D. Brown; National Petroleum Marketing, Inc.; Sunwest Express, Inc.; Navajo Trails, Inc., Defendants. The United States Environmental Protection Agency (EPA) moves for partial summary UNITED STATES' MOTION FOR PARTIAL SUMMARY JUDGMENT ON COUNTS 1, 2, 4, 5, 6 & 7 AND MOTION TO VOLUNTARILY DISMISS COUNT 3

18 judgment on Counts 1, 2, 4, 5, 6, and 7 of the Complaint and asserts that defendants violated 19 provisions of the Resource Recovery and Conservation Act (RCRA) by failing to conduct tests 20 on and monitor underground storage tanks (USTs) and piping systems for releases, to report 21 suspected releases, and to maintain records and financial responsibility relating to the operations 22 of their UST systems. Additionally, EPA moves to voluntarily dismiss Count 3 of the 23 Complaint. This motion is supported by the attached Memorandum of Points and Authorities 24 and separate Statement of Facts filed simultaneously herewith. DANIEL G. KNAUSS 25 United States Attorney District of Arizona 26 s/Sue A. Klein 27 SUE A. KLEIN Assistant U.S. Attorney 28

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MEMORANDUM OF POINTS AND AUTHORITIES The United States EPA moves for partial summary judgment as there is no material fact

3 in dispute that certain of the violations contained in the Complaint occurred. In granting 4 summary judgment, the Court must find that no genuine issue of material fact exists and the 5 moving party is entitled to summary judgment as a matter of law. Fed. R. Civ. P. 56(e). A 6 moving party bears the burden of establishing a lack of genuine issue of material fact. 7 Matsushita Electric v. Zenith Radio Corp. 475 U.S. 574, 585-588 (1986). The moving party 8 may discharge this burden by showing that there is an absence of evidence to support the non9 moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 10 11 Statutory and Regulatory Background EPA filed this Complaint alleging defendants' failure to comply with those portions of

12 RCRA governing underground storage tanks (USTs), 42 U.S.C. § 6991b, et seq. The Complaint 13 alleges the violations occurred at the SuperFuels facility (facility) located in Tuba City , Arizona, 14 on the west corner of the intersection of U.S. Highway 60 and Arizona 264, for the time period 15 March 1999 through December 1999. EPA is the implementing agency with respect to 16 administration of the UST program in Indian Country. The UST regulations, authorized by 17 RCRA, 42 U.S.C. § 6991b, et seq., are designed to require prevention, detection and cleanup of 18 releases from USTs containing petroleum and hazardous substances. RCRA required EPA to 19 establish minimum technical requirements for all UST systems. 42 U.S.C. § 6991b(c). The 20 statutes and regulations promulgated by EPA require owners and operators to conduct tests on 21 USTs and piping systems and to monitor them for releases, to report and investigate suspected 22 releases, and to maintain records and financial responsibility relating to the operations of the 23 USTs, among other things. 40 C.F.R. §§ 280.31(b)(1); 280.50(c); 280.41(a), (b)(1); and 24 280.93(a). There can be more than one owner and/or operator for the facility. United States v. 25 Environmental Waste Control, 698 F. Supp. 1422, 1429 (N.D. Ind. 1988). Defendants failed to 26 comply with these requirements at the SuperFuels facility for the time period of March 1999 27 December 1999. 28
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Factual Background The following facts are not disputed. On November 11, 1999, EPA, in conjunction with

3 the Navajo Nation EPA and Hopi EPO, conducted an inspection of the facility. Plaintiffs' SOF 4 No. 8. At that time, four USTs were being operated for the purpose of dispensing petroleum 5 products (diesel fuel and unleaded gasoline). Plaintiffs' SOF No. 3. Notification of the 6 inspection was sent on November 8, 1999, to John B. Knight, as President of National Petroleum 7 Marketing, Inc. and Sunshine Western, Inc. Plaintiffs' SOF No. 7. Mr. Brown was present at 8 the inspection. Plaintiffs' SOF No. 9. The facility was being operated under the name Sunwest 9 Express. Sunshine Western, Inc. entered into a lease in 1988 with the Navajo Nation under 10 which Sunshine Western operated the facility. Plaintiffs' SOF No. 27. Sunshine Western 11 merged with National Petroleum Marketing. In May of 1989 four new USTs were installed at 12 the facility. Plaintiffs' SOF No. 2. The lease indicated it would expire in August of 1997. 13 Plaintiffs' SOF No. 27. Thereafter, the lease continued on a month-to-month basis. Plaintiffs' 14 SOF No. 27. From August of 1997 through at least December of 1999, Navajo Trails made 15 payments to the Navajo Nation on the lease. Plaintiffs' SOF No. 27. 16 17 18 19 20 21 22 23 24 25 26 27 28
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As a result of the inspection, the following violations, among others, were found to exist: 1) 2) 3) failure to conduct corrosion protections tests as required by 40 C.F.R. § 280.31(b)(1); failure to report suspected releases as required by 40 C.F.R. § 280.50(c); failure to conduct monthly release detection monitoring as required by 40 C.F.R. § 280.41(a); 4) 5) utilization of invalid release detection method pursuant to 40 C.F.R. §280.41(a); failure to provide adequate release detection for piping as required by 40 C.F.R. § 280.41(b)(1). 6) failure to maintain adequate financial responsibility as required by 40 C.F.R. § 280.93(a).

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The Violations Defendants Failed to Conduct Corrosion Tests Every Three Years

Pursuant to 40 C.F.R. § 280.31(b)(1), all owners and operators of steel UST systems

4 equipped with cathodic protection systems must conduct inspections for proper operation by a 5 qualified entity. "[a]ll UST systems equipped with cathodic protection systems must be 6 inspected for proper operation by a qualified cathodic protection tester . . . within 6 months of 7 installation and at least every 3 years thereafter . . ." 40 C.F.R. § 280.31(b)(1). All four steel 8 USTs were equipped with cathodic protection systems, thus corrosion protection functionality 9 tests were required every three years for the tanks. Plaintiffs' SOF No. 5. Corrosion protection 10 functionality tests were performed on the four USTs at the facility on or about March 10, 1995. 11 Plaintiffs' SOF No. 10. Under the RCRA regulations, the next required testing would have been 12 by March 10, 1998. However, Defendants did not perform additional corrosion protection 13 functionality tests until November 15, 1999, twenty months after the three-year deadline. 14 Plaintiffs' SOF No. 10. These violations are not susceptible to correction after the fact. By 15 failing to conduct corrosion tests, defendants violated 40 C.F.R. § 280.31(b)(1) from March of 16 1999 through November of 1999. Summary judgment should be granted as to Count 1 of the 17 Complaint. 18 19 B. Defendants Failed to Report Suspected Releases with 24 Hours

Suspected releases of USTs must be reported within 24 hours if monitoring results from a

20 release detection method indicate that a release may have occurred. 40 C.F.R. § 280.50. On or 21 about November 10, 1999, the facility's statistical inventory reconciliation (SIR) data was given 22 to the facility's SIR vendor, The Verde Companies (Verde), for use in performing SIR as the 23 release detection method for the four USTs. Plaintiffs' SOF No. 15. On or about November 11, 24 1999, Verde provided the SIR analysis for the months of March 1999 through October 1999 to 25 defendants. Plaintiffs' SOF No. 17. In the SIR analysis provided to the defendants, Verde 26 reported that the diesel fuel tank at the facility failed to meet the federal leak detection 27 requirement of having less that a 0.2 gallon per hour leak rate for the months of May, July and 28
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1 August of 1999. Plaintiffs' SOF No. 18. In the SIR analysis, Verde also reported that the two 2 regular unleaded tanks, which were connected by the same piping and subject to a single SIR 3 analysis, failed to meet the federal leak detection requirement of having less than a 0.2 gallon 4 per hour leak rate for the months of March, April, June, July and October of 1999 and had 5 inconclusive results, thus failing to meet the federal requirement during the months of May, 6 August and September of 1999. Plaintiffs' SOF No. 19. Lastly, Verde reported in the SIR 7 analysis that the premium unleaded tank failed to meet the federal leak detection requirement 8 of having less than a 0.2 gallon per hour leak rate for the months of March, April, June, July, 9 August and September of 1999. Plaintiffs' SOF No. 20. 10 When a tank fails to meet the federal leak detection requirement of having less than a 0.2

11 gallon per hour lead rate, as did the four USTs at the facility, it is reasonable to suspect that a 12 release occurred. "Owners and operators of UST systems must report to the implementing 13 agency within twenty-four hours . . . monitoring results from a release detection method required 14 under § 280.41 and § 280.42 that indicate a release may have occurred." 40 C.F.R. § 280.50(c). 15 Within twenty-four hours of receiving the SIR analysis for the months of March through October 16 of 1999, the defendants failed to notify the EPA as the implementing agency. Plaintiffs' SOF 17 Nos. 21, 22. By failing to report the suspected releases within twenty-four hours, defendants 18 violated 40 C.F.R. § 280.50(c). Accordingly, summary judgment should be granted at to Count 19 2 of the Complaint. 20 21 C. Defendants Failed to Monitor Tanks Every Thirty Days

The regulations require defendants to provide release detection of UST systems by

22 monitoring the tanks "at least every 30 days for releases using one of the methods listed is 23 §§ 280.43(d) through (h)." 40 C.F.R. § 280.41(a). SIR, when performed according to the 24 vendor's specifications, meets federal leak detection requirements. Plaintiffs' SOF No. 12. 25 Defendants failed to perform any monthly release detection on the facility's four USTs during 26 the months of March 1999 through October 1999. Plaintiffs' SOF No. 15. Verde was the SIR 27 vendor who reconciled the UST system release detection records for the facility from at least 28
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1 March through October of 1999. Plaintiffs' SOF No. 15. Verde did not receive these records 2 for reconciliation until November 10, 1999. Plaintiffs' SOF No. 15. Therefore, the requirement 3 that each tank be monitored every thirty days was not met during this time period. Pursuant to 4 40 C.F.R. § 280.43(h)(1), the release detection must be performed monthly. These violations 5 are not susceptible to correction after the fact. By failing to perform monthly release detection, 6 defendants violated 40 C.F.R. § 280.41(a). Accordingly, summary judgment should be granted 7 as to Count 4 of the Complaint. 8 9 D. Defendants Failed to Utilize Valid Release Detection Methods

Defendants failed to provide release detection for tanks by monitoring the tanks "at least

10 every 30 days for releases using one of the methods listed in 280.43 (d) through(h)." 40 C.F.R. 11 § 280.41(a). Defendants utilized inventory controls as the method of release detection for the 12 four USTs at the facility in November and December of 1999. Plaintiffs' SOF No. 23. Pursuant 13 to 40 C.F.R. § 280.41(a)(1), UST systems that meet the performance standards in 40 C.F.R. §§ 14 280.20 or 280.21 and that have monthly inventory control that meet the requirements of 40 15 C.F.R. § 280.43(a) or (b), may opt to conduct tank tightness testing in accordance with 40 C.F.R. 16 § 280.43(c) at least every five years until December 22, 1998, or until ten years after the tank 17 is installed or upgraded, whichever is later. Inventory control is not a release detection method 18 listed in 40 C.F.R. § 280.43(d) through (h). However, it is listed as a release detection method 19 under 40 C.F.R. § 280.43(a). Thus, pursuant to 40 C.F.R. § 280.42(a)(1), inventory control is 20 only valid for use as a release detection method, in conjunction with tank tightness testing, until 21 December 22, 1998, or until ten years after the tank is installed, whichever is later. The USTs 22 at this facility were installed in May of 1989 and met the performance standards of 40 C.F.R. 23 § 280.20 at that time. Plaintiffs' SOF No. 5. The last month inventory control could have been 24 used as a valid release detection method for the four USTs at the facility, was May of 1999, ten 25 years after the installation of the tanks. In November and December of 1999, the facility utilized 26 inventory control as a release detection method. Plaintiffs' SOF No. 23. Inventory control was 27 28
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1 not a valid release detection method. 40 C.F.R. § 280.43. Accordingly, summary judgment 2 should be granted as to Count 5 of the Complaint. 3 4 E. Defendants Failed to Provide Adequate Release Detection for Piping

Pursuant to 40 C.F.R. § 280.41(b), "underground piping that routinely contains regulated

5 substances must be monitored for releases." Through at least April, 1999, the underground 6 piping connected to the four USTs at the facility was pressurized and equipped with automatic 7 line leak detectors. Plaintiffs' SOF Nos. 24, 25. Pursuant to 40 C.F.R. § 280.41(b)(1), the

8 facility must provide release detection. Pursuant to 40 C.F.R. § 280.41(b)(1), underground 9 piping that conveys regulated substances under pressure must . . . (ii) have an annual line 10 tightness test conducted in accordance with § 280.44(b) or have monthly monitoring conducted 11 in accordance with § 280.44(c)." 40 C.F.R. § 280.41(b)(1)(ii). Although the piping was 12 equipped with automatic line leak detectors, it was not subjected to a valid line tightness test 13 meeting the requirements of § 280.44(b) until April of 1999. Plaintiffs' SOF No. 25. 14 Prior to that time, the facility was relying on SIR as the monthly monitoring of the piping

15 to comply with 40 C.F.R. § 280.41(b)(1). The facility has no records that the piping was 16 monitored from March of 1999 through October of 1999, as the SIR data was not submitted to 17 the vendor until November 10, 1999. Plaintiffs' SOF Nos. 2, 15-20, 24. Defendants failed to 18 comply with the underground piping monitoring requirements of 40 C.F.R. § 280.41(b)(1) for 19 at least the month of March 1999. Accordingly, summary judgment should be granted as to 20 Count 6 of the Complaint. 21 22 F. Defendants Failed to Maintain the Required Financial Responsibility Pursuant to 40 C.F.R. § 280.93, defendants must "demonstrate financial responsibility for

23 taking corrective actions and for compensating third parties for bodily injury and property 24 damage caused by accidental releases arising from the operations of petroleum [USTs]." 40 25 C.F.R. § 280.93(a). The requirement may be satisfied by a liability insurance policy 40 C.F.R. 26 § 280.98. Defendants failed to maintain any approved method for demonstrating financial 27 responsibility for the USTs at the facility from March of 1999 through at least November 19, 28
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1 1999. Plaintiffs' SOF No. 26. Accordingly summary judgment should be granted as to Count 2 7 of the Complaint . 3 4 Motion to Voluntarily Dismiss Count III of the Complaint Pursuant to Fed. R. Civ. P. 41(a), EPA moves to dismiss Count III of the Complaint

5 regarding failure to investigate a suspected release within seven days. EPA recognizes that if 6 the fact of the suspected releases was not known to defendants until November 11, 1999, when 7 the reporting was provided, the requirement to investigate the suspected releases may not begin 8 to run until that date. This may be so even though defendants failed to monitor and test the tanks 9 as required under the regulations. Therefore, given the ambiguity of this regulation as it relates 10 to the facts of this case, EPA moves to voluntarily dismiss Count 3 of the Complaint. 11 WHEREFORE, the United States EPA respectfully requests this Court grant its Motion for

12 Partial Summary Judgment for the violations pled in Counts 1, 2, 4, 5, 6 and 7 and dismiss Count 13 3 of the Complaint. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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Respectfully submitted this 4th day of May, 2007. DANIEL G. KNAUSS United States Attorney District of Arizona s/Sue A. Klein ________________________ SUE A. KLEIN Assistant U.S. Attorney

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CERTIFICATION I hereby certify that on May 4, 2007, I electronically transmitted the attached document to

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the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants:

6 John W. Sedwick United States District Judge th 7 222 W. 7 Avenue - No. 32 Anchorage, Alaska 99513 8 Ronald Meyer 9 Attorney at Law One Columbus Plaza 10 3636 North Central Avenue Suite 1050 11 Phoenix, Arizona 85012 12 Harold D. Burr, Jr. Burr and Associates, P.C. 13 Eighteen East University Dr., Ste. 206 Mesa, Arizona 85201 14 15 s/N. Stotler 16 ________________________ 17 18 19 20 21 22 23 24 25 26 27 28
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