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Mayes v. Environmental Protection Agency

January 4, 2008


The opinion of the court was delivered by: Thomas A. Varlan United States District Judge



This civil action is before the Court on plaintiff Norman Mayes's ("Plaintiff") Motion for Judgment on the Pleadings [Doc. 35] and defendant Environmental Protection Agency's ("EPA") and defendant Stephen L. Johnson's (collectively, "Defendants") Cross-Motion for Judgment on the Pleadings. [Doc. 36.] Each of the parties has responded to the opposing motion [Docs. 38, 39], and the Court heard argument on the motions on June 26, 2007. At the close of the hearing, the Court took the matter under advisement. After carefully considering the pending motions, related pleadings, the record, and the arguments offered during the hearing, the Court rules on the motions as set forth herein.

I. Procedural History

A brief description of the procedural history of this case is worth noting to put the following issues in context. Plaintiff sought judicial review of an Environmental Appeals Board ("EAB") final order affirming an administrative law judge's decision finding Plaintiff liable for violations of the Resource Conservation and Recovery Act ("RCRA") with respect to certain underground storage tanks ("USTs") on his property. Plaintiff filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit on May 31, 2005. The case was ultimately transferred to this Court from the D.C. Circuit on October 14, 2005. [Doc. 1.] Plaintiff was then ordered to file a complaint as required by Fed. R. Civ. P. 7(a). [Doc. 4.] The complaint was filed February 20, 2006 [Doc. 7] asserting claims against Defendants, as well as the Tennessee Department of Environment and Conservation ("TDEC") and two agents of TDEC, Ms. Roach and Mr. Hyers. The claims against TDEC, Ms. Roach, and Mr. Hyers were dismissed by this Court's Order [Doc. 25] dated September 20, 2006, as were the Fourth Amendment and § 1983 claims against Defendants. On November 9, 2006, Plaintiff filed an amended complaint [Doc. 28] more fully setting forth the basis of his appeal, to which Defendants filed an answer [Doc. 29] on November 21, 2006. The instant motions followed, which are now ripe for adjudication.

II. Relevant Facts

The following relevant background facts are not in dispute, unless otherwise noted. Plaintiff and his wife reside on an approximately eighty-acre tract of land (the "Property") in Powell, Tennessee. Plaintiff acquired the Property from his father, and in approximately 1951 an air strip was placed on the Property. Plaintiff contends that the Property is also used as a farm, with hay as its only current crop, which is harvested twice a year. At some point in time, three USTs were placed on the Property, where they remained until July 2001. The three tanks were designated AV#1 (a 1,000 gallon tank), AV#2 (a 1,000 gallon tank), and AV#3 (a 3,000 gallon tank). All three of the tanks, to a varying extent, contained commercial airplane fuel, though there is a dispute over exactly how tanks AV#1 and AV#2 were used and whether those tanks fell under RCRA's farm exemption.

On April 8, 1986, Plaintiff registered tank AV#3 with the Tennessee Department of Health and Environment. [TR Vol. 1A at Tab 13-4.]*fn1 The 1986 notification indicated that the tank was approximately four years old. [Id.] On February 1, 1990, Plaintiff filed another registration form on a 3,000 gallon tank, presumably tank AV#3, but this form indicated the tank was approximately ten years old. [Id. at Tab 13-5.] On March 17, 2000, TDEC conducted an inspection of the Property, and the inspector observed that there were two unregistered tanks on the property, tanks AV#1 and AV#2. [Id. at Tab 13-8.] Plaintiff told the inspector that tanks AV#1 and AV#2 were farm tanks used to fuel his tractor for farm use, and thus did not have to be registered. [Id.] During the March 17, 2000, inspection, it was determined that tank AV#1 contained thirty-five inches of product and zero inches of water, tank AV#2 contained twenty-two inches of product and five inches of water, and tank AV#3 contained two inches of product and six inches of water. [Id. at Tab 13-9.]

On March 21, 2000, TDEC conducted a follow-up inspection. [Id. at Tab 13-10.] During the follow-up inspection, the TDEC inspector observed that tanks AV#1 and AV#2 had tags located near them, labeled "AVGAS 100" and "AVIA 100." [Id.] The inspectors also observed that there was a barn on the property, as well as at least two tractors, though the inspector did not observe any evidence of frequent agricultural use. [Id.]

Later that same year, TDEC sent Plaintiff a notice stating that Plaintiff had not paid his UST fee and assessing a 5% late fee. [Id. at Tab 13-12.] Payment was due on July 31, 2000, but the notice does not appear to be dated. [Id.] In response, Plaintiff sent TDEC a letter, dated August 1, 2000, stating that the tank in question, AV#3, contained only water and had not been in use for two years or longer, arguing that Plaintiff should not have to pay a fee on a tank not in use. [Id. at Tab 13-13.] In response, TDEC sent Plaintiff a letter dated August 28, 2000, indicating that because the tank in question had not been properly closed or removed prior to July 1, 2000, Plaintiff had incurred the fee, whether the tank was in use or temporarily out of use. [Id. at Tab 13-14.] On September 13, 2000, TDEC sent Plaintiff a third and final notice regarding his unpaid UST fee. [Id. at Tab 13-15.] The letter warned Plaintiff of the possible penalties and fines he could incur if he failed to pay the fee. [Id.]

TDEC next received a letter dated September 25, 2000, allegedly from Plaintiff, attached to which was a form indicating that tank AV#3 was now being used to store an agricultural herbicide rather than aviation fuel. [Id. at Tab 13-16.] Plaintiff contends that he never sent the letter and does not know where it came from. As a result of the letter dated September 25, 2000, and attached change of use form, on October 3, 2000, TDEC updated the status of the tank, cancelled the unpaid invoice, and removed the unpaid fee from Plaintiff's account. [Id. at Tab 13-18.]

TDEC next sent Plaintiff a letter dated October 17, 2000, entitled Notice of Violation. [Id. at Tab 13-19.] The letter informed Plaintiff that he had failed to properly take tank AV#3 out of service and included an application for permanent closure of an UST for Plaintiff to complete and return to TDEC. [Id.]

On or around October 23, 2000, a TDEC employee, Mr. Ryan Hyers, documented a conversation he had allegedly had with Plaintiff earlier that day. [Id. at Tab 13-20.] The report indicated that Plaintiff called Mr. Hyers regarding the October 17, 2000, Notice of Violation, that Plaintiff had stated that tank AV#3 was now being used to hold a non-regulated herbicide instead of airline fuel, and that he had filed the appropriate change of use forms. [Id.] On October 24, 2007, Mr. Hyers called Plaintiff to inform him that a site assessment, including the taking of samples around and below the tank, would be necessary according to "Rule 1200-1-15-.07(2)(c)." [Id.] Plaintiff allegedly told Mr. Hyers "you can take me to court if you want and let's see how strong your damn regulations are." [Id.] Plaintiff also asked to speak to Mr. Hyers's supervisor. [Id.] Mr. Hyers's supervisor, Steve Wilson, also documented his alleged conversation of October 24, 2000 with Plaintiff. [Id. at Tab 13-21.] Mr. Wilson's report indicates that Plaintiff did not believe it was necessary to have the site sampled and that he was being threatened and treated unfairly, but finally indicated that he would fill out the paperwork as best he could. [Id.]

On November 2, 2000, the EPA sent Plaintiff a request for information under RCRA, asking Plaintiff to provide information about any USTs on the Property within fifteen days of receipt of the request. [Id. at Tab 13-22.] On November 6, 2000, the EPA sent Plaintiff a letter indicating that it would be performing "a compliance inspection of the underground storage tank facility" at the Property sometime during the week of November 27, 2000. [Id. at Tab 13-23.] On November 20, 2007, the EPA sent Plaintiff a letter alleging to memorialize telephone conversations between the EPA, Plaintiff, and Plaintiff's contractor, Mr. Jim Miller. [Id. at Tab 13-24.] The November 20, 2007, letter indicated that Plaintiff and Mr. Miller had agreed to schedule the inspection of the USTs at the Property for November 28, 2000, at 2:00 P.M.

On November 28, 2000, Plaintiff submitted to the EPA the information requested in the EPA's letter dated November 2, 2000. [Id. at Tab 13-25.] The documents submitted set forth that all three tanks had at one time contained aviation fuel, that tank AV#3 was temporarily closed, and that of tanks AV#1 and #2, one was out of use and one was used for agricultural use. [Id.] The documents also included an application for closure of the tanks, as well as an affidavit signed by Plaintiff indicating that no herbicides had ever been stored in the tanks in question. [Id.]

Also on November 28, 2000, TDEC and the EPA conducted a site inspection of the Property. [Id. at Tabs 13-27, 13-28, 13-29.] During this inspection, government agents inspected and took samples from the tanks in question. [Id. at Tabs 13-28, 13-29.] It was determined that tank AV#1 contained one and three-fourths inches of product and twenty-five and one-fourth inches of water, tank AV#2 contained thirty-one and five-eights inches of product and two and three-eighths inches of water, and tank AV#3 contained five-eights inches of product and seven and three-eights inches of water. [Id.] Government agents also inspected various outbuildings and equipment on the Property, looking for evidence of the Property's farm use. [Id.] The inspection of the fuel tanks of three tractors on the Property revealed that none of the tractors had aviation fuel in their fuel tanks. [Id.] There is a dispute over whether Plaintiff had prior knowledge of the scope of the search and whether Plaintiff consented to the search of the various outbuildings and equipment. On July 9, 2001, the three tanks were excavated and removed under TDEC supervision. [Id. at Tab 13-35.]

On March 25, 2002, the EPA issued an Administrative Complaint and Compliance Order alleging that: Plaintiff had failed to properly notify either TDEC or the EPA regarding tanks AV#1 and AV#2 in violation of 42 U.S.C. § 6991b and 40 C.F.R. § 280.22; had failed to comply with the UST release detection requirements with respect to tanks AV#1, AV#2, and AV#3 in violation of 42 U.S.C. § 6991b and 40 C.F.R. § 280.40; and that Plaintiff had failed to properly upgrade or permanently close tanks AV#1 and AV#2 before the December 22, 1998 deadline and failed to permanently close and assess the site of AV#3 within twelve months of its temporary closure, all in violation of 42 U.S.C. § 6991b and 40 C.F.R. § 280.70(c).*fn2 [TR Vol. 1A at Tab 1.] On April 20, 2002, Plaintiff filed his answer to the complaint, denying that he was in violation of federal law and requesting a hearing on the matter. [Id. at Tab 2.] On June 5, 2002, the matter was assigned to Administrative Law Judge Barbara A. Gunning ("ALJ"). [Id. at Tab 5.]

On May 8, 2003, Plaintiff filed a motion to suppress all evidence obtained from the November 28, 2000 search of the Property, arguing that the warrantless search was without consent and unconstitutional. [TR Vol. 3 at Tab 27.] On June 3, 2003, the ALJ denied Plaintiff's motion to suppress, finding that Plaintiff had consented to the search. [Id. at Tab 41.] On June 4, 2003, Plaintiff filed a motion to reconsider, asking the ALJ to reconsider her ruling on the motion to suppress. [Id. at Tab 43.] On June 6, 2003, the ALJ denied Plaintiff's motion to reconsider, but ruled that the issue of the legality of the search could be revisited at the hearing scheduled to begin June 9, 2003. [TR Vol 4 at Tab 44 at pp. 6-7.]

From June 9, 2003 through June 13, 2003 the ALJ conducted a hearing on the alleged violations. [TR Vols. 4, 5, 6, 7.] On February 27, 2004, the ALJ issued her Initial Decision, making the following conclusions of law:

1. [Plaintiff] is a "person" as defined by 40 C.F.R. § 280.12.

2. [Plaintiff] is an "owner" and "operator" of three "Underground Storage Tanks" as those terms are defined by 40 C.F.R. § 280.12.

3. [Plaintiff] failed to prove that Tanks #1 and #2 were "farm tanks" as that term is defined in 40 C.F.R. § 280.12.

4. The Underground Storage Tanks are an "existing tank system" as that term is defined by 40 C.F.R. § 280.12.

5. [Plaintiff's] three USTs contained aviation grade petroleum which is a "regulated substance" pursuant to 40 C.F.R. § 280.12.

6. [Defendant's] allegations against [Plaintiff] constitute "continuing violations" and are not barred by the otherwise applicable five-year statute of limitations period. 28 U.S.C. § 2462.

7. [Plaintiff] has not demonstrated that the inspections conducted by [Defendant] were unlawful searches and seizures. [Defendant] has established that the November 28, 2000 inspection was consensual.

8. [Defendant] has the burdens of presentation and persuasion to establish the prima facie case against [Plaintiff]. [Plaintiff] has the burdens of presentation and persuasion for any affirmative defenses and exemptions stated in the regulations.

9. [Plaintiff] failed to prove that Tanks #1, #2, or #3 were "empty" as defined in 40 C.F.R. § 280.70(a).

10. [Plaintiff] failed to prove that Tank #3 had a "change-in-service" as that term is used in 40 C.F.R. § 280.71.

11. Tank #3 was never "temporarily closed" as that term is used in 40 C.F.R. § 280.70.

12. Tanks #1, #2, and #3 are subject to EPA jurisdiction as regulated USTs.

13. [Plaintiff] failed to submit the appropriate "notice" form for Tanks #1 and #2 within 30 days of bringing the tanks into use as required by 40 C.F.R. § 280.22.

14. [Plaintiff] failed to provide a method of release detection for Tanks #1, #2, and #3 by at least December 22, 1993 as required by 40 C.F.R. § 280.40.

15. [Plaintiff] failed to upgrade or, alternatively, close Tanks #1 and #2 by December 22, 1998 as required by 40 C.F.R. §§ 280.21 and 280.70.

16. [Plaintiff] failed to upgrade, or alternatively, close Tank #3 by December 22, 1998 as required by 40 C.F.R. §§ 280.21 and 280.70.

17. The total civil penalty of $66,301 for [Plaintiff's] violations is authorized and in accordance with statutory penalty criteria in Section 9006(c) of RCRA, 42 U.S.C. § 6991e(c), and the applicable penalty policy issued under RCRA. See U.S. EPA Penalty guidance for Violations of UST Requirements; 40 C.F.R. § 22.27(b).

18. The total civil penalty of $66,301 is appropriate and reasonable for [Plaintiff's] violations of the underground storage tank regulations in 40 C.F.R. §§ 280.12 - 280.72.

19. [Plaintiff] is not eligible for or entitled to attorney's fees.

5 U.S.C. § 504; 40 C.F.R. Part 17. [Tr. Vol. 8 at Tab 54 at pp. 50-52.]

On March 27, 2004, Plaintiff appealed the ALJ's Initial Decision. [Id. at Tab 55.] On March 3, 2005, the EAB issued its Final Decision and Order, affirming the ALJ's decision in all respects. [Tr. Vol 8 at Tab 64.] The instant litigation followed.

III. Discussion

A. Standard of Review

Plaintiff's appeal falls under the ambit of the Administrative Procedures Act ("APA"). The APA defines the scope of review as follows:

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall --

(1) compel agency action unlawfully withheld or unreasonably delayed; and

(2) hold unlawful and set aside agency action, findings, and conclusions found to be --

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in ...

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