United States
Environmental Protection
Agency
Office
Admir
Washn
305R82103
v>EPA Administrative Law J
& EPA Administrators
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Civil Penalty Decision^
(Under TSCA)
Volume: 4
January, 1986 to September, 1986
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the Matter of ]
]
NEW YORK CITY BOARD OF EDUCATION ] Docket No. II-TSCA-ASB-84-0207
]
]
Respondent ]
]
]
TOXIC SUBSTANCES CONTROL ACT:
Appropriate penalty under the circumstances of this case, part-
icularly considering the respondent's expenditures and efforts to abate
asbestos in its school system, is $10,000.
Appearances:
Bruce Adler, Esquire, Office of Regional Counsel,
United States Environmental Protection Agency,
Region II, 26 Federal Plaza, New York, New York,
for the Complainant;
Charles N. Weinstock, Assistant Corporation Counsel,
Law Department, The City of New York, 100 Church
Street, New York, New York 10007, for the Respondent,
BEFORE: J. F. Greene
Administrative Law Judge
Decided March 31 , 1986
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INITIAL DECISION
This matter arises under 15 U.S.C. §2615(a)(l), Section 16(a)(l) of the
Toxic Substances Control Act, (15 U.S.C. §2601 ^t se<±., hereafter "the
Act)," which provides for the assessment of a civil penalty for violations of
Section 15 of the Act, 15 U.S.C. 2614. Section 15 makes it unlawful to, among
other things, "fail or refuse to comply with . . . any rule promulgated or
order issued under Section 5 or 6 "(15 U.S.C. §2604-2605) of the Act. Promulgated
under Section 6 of the Act on May 27, 1982, 47 Federal Register 23369, was Sub-
part F - Friable Asbestos - Containing Materials in Schools, known as the
"asbestos in schools rule," 40 C.F.R. §763.100 et. seq. ]_/ In this civil •
action, the United States Environmental Protection Agency, whose Director,
Environmental Services Division, Region II, is the complainant herein, seeks
assessment of civil penalties against the respondent pursuant to Section 16
U. S. C. §2615(a)(l) and 2(B) for alleged violations of the Act and the asbestos
in schools regulations [hereafter "the Rule"].
The complaint alleges, in 89 Roman numbered "counts" which have provided
a forced refresher course in Roman numerals to the parties and to the court, and
in 359 Arabic numbered paragraphs, that respondent New York City Board of
Education failed to comply with various record-keeping, notification, and
testing requirements set forth in the asbestos in schools regulations in con-
nection with 88 New York City schools under the respondent's control.
T7"Friable material" is defined [40 C.F.R. §763.103(d)] as "any material
applied onto ceilings, walls, structural members, piping, ductwork, or any other
part of the builidng which, when dry, may be crumbled, pulverized, or reduced to
powder by hand pressure).
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Specifically, violations of 40 C.F.R. §763.111 (a) 2J were charged in
connection with 33 schools; violations of 40 C.F.R. §763.111(b) were charged
in connection with five schools; 3J violations of 40 C.F.R. §763.Ill(c) were
charged with respect to 52 schools; 4Y a violation of 40 C.F.R. §763.111(d).
was charged with respect to one school; violations of §763.114(a)(l), (2) and
(3) were charged with regard to eight schools j>/; violations of 40 C.F.R.
§763.114(a)(4)(i) were charged with respect to 80 schools; 6J, _7/;
21 §763.Ill (a) provides that "local education agencies shall post in the primary
administrative and custodial offices and in the faculty common rooms of each
school under their authority a completed copy of the . . . Notice to School
Employees unless no friable asbestos-containing material is present in the school.
The notice shall remain posted indefinitely in any school which has friable
asbestos-containing material."
3/ §763.m(b) provides that "local education agencies shall provide to all
persons employed in school buildings under their authority which contain friable
asbestos-containing materials a written notice of the location, by room or building
area, of all friable asbestos-containing materials in the school."
4/ §763.Ill (c) provides that certain information on interim procedures to reduce
exposures A guide for Reducing Asbestos Exposure (set out in full in the
section) must be provided to all custodial or maintenance employees.
5/ §763.114(a)(l )(2)(3) (Record keeping) provide that local education agencies
"shall compile and maintain in the administrative office of each school under
their authority a record which shall include: (1) The name and address of the
school: (2) a list of all school buildings associated with the school, indicating
whether each building has been inspected for friable materials in compliance with
§763.105, and which buildings contain friable materials: (3) copies of the Notice
to School Employees, found in §763.111(a).
6f §763.114(a)(4)(l) provides that "local education agencies shall compile and
maintain in the administrative office of each school, for each school building which
contains friable materials, a blueprint, diagram, or written description of the
building which identifies clearly the location(s) and approximate area(s) in square
feet of each sampling area of such material(s), the locations at which samples were
taken, and the identification number of each sample, and which shows or describes
clearly whether each sampling area of friable material contains asbestos, including
an estimate of its percent asbestos content as determined by calculating the average
of the percent asbestos contents of all samples taken in that area."
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violations of 40 C.F.R. §763.ll4(a)(4)(11) were charged regarding 27 schools 8/,
2/; violations of 40 C.F.R. §763.114(a)(5) were alleged in connection with 49
schools IP/; violations of 40 C.F.R. §763.114(a)(6) were charged in connection with
eleven schools; ]]_/ violations of §763.105(a) and (b) were charged in connection
with two schools; 12/ and violations of 40 C.F.R. §763.107 and 109 were charged
II Nine of the 80 allegations were dropped when the schools in connection with
which they were made were found to have been constructed after 1978 (40 C.F.R.
§763.117(c)(2)(ii)).
Bf §763.114(a)(4)(ii) provides that a copy of all laboratory reports and all
correspondence with laboratories concerning the analysis of samples taken in *
accordance with §763.107 shall be maintained in the administrative office of each
school, regarding each school building which contains friable materials.
9J Nine of the 27 allegations were dropped when the schools in connection with
which they were made were found to have been constructed after 1978, 40
C.F.R. §763.117(c)(2)(ii)..
IP/ 40 C.F.R. §763.114(a)(5) provides that the record maintained in the administra-
tive office of each school, if the school contains friable asbestos-containing
materials, must contain copies of the Guide referred to in note 4 above, and one cop>
of Asbestos-Containing Materials in School Buildings: A Guidance Document, Parts 1
and 2 (EPA No. C00090). which can be obtained by calling 800-424-9065.
ll/ 40 C.F.R. §763.H4(a)(6) provides that "a statement that the requirements
of the [asbestos in schools] rule have been satisfied signed by the person re-
sponsible for compliance with the rule and including the date and the person's
name and title.
12/ 40 C.F.R. §763.105 (Inspection for Friable Material) provides that (a) Local
education agencies shall inspect each school building which they lease, own, or
otherwise use as a school building, to locate all friable material, (b) This
inspection shall consist of looking for and touching all suspect materials,
including surfaces behind suspended ceilings or other non-permanent structures which
may be entered during normal building maintenance or repairs. For further informa-
on inspection procedures, officials should consult Chapter 4 of Asbestos-Containing
Materials in School Buildings: A Guidance Document, Part 1 (EPA no. C00090).
?articular attention should be paid to the recommendation regarding respirators.
Copies of the document can be obtained by calling 800-424-9065."
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with respect to 19 schools. 13/, 14/ The penalty originally sought in the
complaint for the 252 alleged infractions was $237,900.
Subsequent to be issuance of the complaint, however, the complainant
dropped the counts relating to eleven schools 15/ (19 charges).
137 40 C.F.R. §763.107, Sampling Friable Material, provides that: "(a) If
Triable materials are found in a school building, local education agencies
shall identify each distinct sampling area of friable materials within the
school building, take at least three samples from locations distributed through-
out the sampling area, and label each sample container with a sample identifica-
tion number unique to the sampling location and building, (b) Officials should
consult Asbestos-Containing Materials in School Buildings: A Guidance Document,
Part 1, Chapter 5, for further information on sampling procedures.The requirement
that three samples be taken in each sampling area supersedes the recommendation
made in the Guidance Document to take one sample per 5000 square feet of friable
material. (F)Sampling locations should be randomly distributed within the
sampling; the locations should not be selected simply for convenience or ease
of reaching the sample, or because the sampler judges the location to be representa-
tive. Samples shall be taken using small scalable containers; samples shall
penetrate the depth of the friable material to the substrata."
14/ 40 C.F.R. §763.109, analyzing friable material, provides: "local education
agencies shall have all samples of friable material analyzed for asbestos using
Polarized Light Microscopy (PLM), supplemented where necessary by X-ray Diffrac-
tion, in accordance with Interim Method for the Determination of Asbestiform
Minerals in Bulk Insulation Samples, which is found under appendix A of this
Subpart.Persons interested in analyzing bulk samples for asbestos can obtain
copies of the document by calling 800-424-9065 (in Washington, D.C., call 554-14040),
A list of laboratories capable of conducting analyses of friable materials can be
obtained by calling 800-334-8571 .... Officials should consult Asbestos-
Containing Materials i-n School Buildings: A Guidance Document, Part ], Chapter 6,
for further information on analysis of friable materials."
J_5/ Counts LVI, LIX, LXVIII, LXXIV, LXXV, LXXXIII, LXXXIV, LXXXV, LXXXVI, LXXXVII,
and LXXXVIII.
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Subsequently, also, respondent's motion to dismiss those portions of 13
counts relating to violations of 40 C.F.R. §763.107 and 109 resulted in a
ruling on October 31, 1985, that where the respondent could show (a) it
had complied with the testing procedures set out at 40 C.F.R. §763.117(a)
(l)(i)» (ii)» and (iii), and (b) the friable materials tested contained
no asbestos based upon at least 3 samples, the testing procedure of
§763.107, 109 was not applicable. Consequently, since respondent has shown
both (a) and (b), the charges based upon §763.107 and 109 are dismissed. 16/
Respondent also moved to dismiss five charges of violations of §763.114
(a)(4)(ii), wherein it is required that laboratory reports and correspondence
with laboratories concerning analyses of samples taken in accordance with
§763.107 must be maintained, for each building which contains friable materials,
in the school's .administrative office asbestos file.
Respondent points out that there are exceptions to the laboratory reports
requirement of §763.1l4(a)(4)(ii). One exception is implicitly provided by
§763.117(c)(l), which creates an exception to the sampling requirement of
§763.107. Respondent is correct in observing that if a local education agency
16/ Allegations of violations of §763.107 and 109 appear in counts LXIV - LXVII, LXIX
LXXIII, and LXXVI - LXXXI (15 alleged violations, in all; the three alleged viola-
tions of §763.107 and 109 that appeared in the counts set out in not 15 above are not
included, as those counts were dropped from the complaint.
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is exempted by §763.117(c) from the requirement of taking samples of friable
materials, it will not have any laboratory analyses of those samples (or
correspondence relating to them) to keep in its asbestos files. However,
in order to be exempt from taking samples in the first place, respondent must
qualify for the exemption. The exemption from sampling upon which respondent
relies to reach the end result of not having to maintain laboratory reports
is conditioned upon the school's asbestos file containing two items:
a. A signed statement which certifies that any
friable materials in the school shall be
treated for purpose of the Rule as asbestos-
containing; and
b. Information as to the location of such materials
in the school buildings.
In this case, although the record adequately demonstrates that the friable
materials in the schools mentioned in counts LXV, LXVII, LXXII, LXXIII, and
LXXVIII were treated as asbestos containing 17_/, and while the complainant
stipulated that the asbestos files in these schools contained information as
to the location of the materials 18/ nothing in the record discloses whether
the asbestos files contained the necessary certification described in (b) above,
upon which the exemption is partly based. While the maintenance of laboratory
17/ Affidavit of Mr. John Cesario, Manager of the respondent's Asbestos Task
~R)rce, which coordinates and supervises the respondent's asbestos abatement
program and is responsible for compliance with the Rule (at pp. 1, 3).
18/ Stipulation of Withdrawal, page 2, fl3
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reports for a school where the friable materials were treated as asbestos con-
taining, (i.e. there are no reports) may be viewed as internally contradictory,
nonetheless true that a condition for the exemption has not been shown to have
been met, and, as a consequence, the five charges cannot be dismissed. 19/
It is clear that the above information must, under the language of this section,
be in the file before the sampling and analyses of friable materials may be
omitted. The violations here, however, are minor at best.
Ill/Respondent notes that there is an explicit exemption to the sampling and
analysis requirements — and hence the maintenance of laboratory reports —
in §763.117(c)(2)(i) for schools where "the local education agency has con-
ducted abatement programs that result in the elimination of all friable
asbestos materials from the school either by removal or encapsulation," and
advances its count LXXVIII school as being exempt because its friable asbestos
materials were encapsulated before the date of the complainant's inspection,
Cesasio affidavit at p. 2. However, this argument overlooks the fact that
the encapsulated materials were discovered (and encapsulated) during the
respondent's "Phase I" program that dealt only with friable materials located
in areas frequented by students, teachers, and building employees. The
school in question was later found (during "Phase II") to have friable
materials located in boiler and pipe insulation (p. 3, Cesario affidavit).
Therefore, this school falls under the §763.117(c)(l) exception discussed
above which requires, as a condition of applicability, that the school's
asbestos file contain certification and information as to the location of
the materials. It is not necessary to reach the question of whether the
abatement and encapsulation would have to have occured before the effective
date of the Rule. Respondent's program, a's it affected the count LXXVIII
school, occurred before the date of complainant's inspection.
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It was stipulated, during the proceeding, that all of the remaining 70
charges of violations of §763.114(a)(4)(i) would be dropped 20/ 26 charges
of violations of §763.114(a)(5) were dropped 21/ because the guidance doc-
uments specified by the Rule had not been furnished by the U.S. EPA, although
they had been requested by the respondent. Also dropped for various reasons
were one charge of violation of §763.114(a)(6), 22/ one charge of violation of
§763.111(a), two charges of violations of §763.Ill(c), 22/ and two charges that
respondent failed to include the Guide for Reducing Asbestos Exposure in the
schools' asbestos files (counts XXXVII and XLIX) as required by §763.114(a)(5). 23/
One allegation (from count XLIX) that the school's asbestos file did not
include a signed statement that the Rule had been complied with, as required
by 40 CFR §763.114(a){6), 24/ was dropped.
Withdrawals, dropped charges and counts, and dismissal of 13 charges relating
to respondent's analysis of samples, therefore, leave 170 charges remaining in
the complaint. 25/
20/ See Stipulation of Withdrawal, page 2, fi3. 70 such charges remained after
eTeven whole counts were dropped.
21 / Stipulation of Withdrawal, p. 2.
22/ Stipulation of Withdrawal, pp. 3, 4, referring to counts XXXVI and XLIII.
23/ Stipulation of Withdrawal, p. 3.
24/ Stipulation of Withdrawal, p. 4.
2J>/ I. e. 31 charges of violations of 40 CFR §763.111(a); 5 charges of violations
of 40 CFR §763.111(b); 49 charges of violations of 40 CFR §763.111(c); one charge
of violation of 40 CFR §763.Ill(d); 18 charges of violations of 40 CFR §763.114
-(a)(4)(ii); eight charges each of violations of 40 CFR §763.114(a)(1)-(4); 26
charges of violations of 40 CFR §763.114(a)(5); 10 charges of violations of 40
CFR §763.114(a)(6); two charges each of violations of 40 CFR §763.105(a) and (b).
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Turning to the remaining specific allegations, it is determined that, based
upon this record, respondent has demonstrated that it did provide to its custodial
and maintenance employees copies of the Guide for Reducing Asbestos Exposure
required to be provided by 40 CFR §763.111(c), with instructions to them to dis-
tribute the Guide to their own employees. 26/ While numerous custodians'
employees interviewed by U. S. E.P.A. investigators could not recall receiving
it, the respondent's testimony that it instructed its employees to distribute the
Guide (TR 155, 157, 158 2!7/) is sufficient to demonstrate that it carried out
its responsibility under 40 CFR §763.Ill(c). Accordingly, the 49 allegations
«
relating to failure to provide the Guide will be dismissed.
At counts XLVII and LXI1, specifically at H190 and 51250, the complaint charges
that the respondent did not inspect for friable materials, in violation of 40 CFR
§763.105(a) and (b). The evidence in support of these charges consists of in-
spection reports that noted the presence of friable materials on the pipe insula-
tion in the administrative office of PS 170, in Brooklyn (fl 190) and on pipes in
the first floor gym/lunchroom in PS 158, Manhattan. In count XXIII, PS 202 in
Brooklyn, fl 94 charges that the respondent failed to include in the posting and
26/ The respondent employees the custodians; the custodians hire their own
employees, TR 155; R. Ex. 11. •
277 See also stipulations at fl38; it is noted that the respondent also sent
circulars to its custodial employees in connection with its own asbestos
abatement program in 1979, before the Rule was promulgated.
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warnings required by 40 CFR §763.111(a) the presence of friable asbestos insula-
tion in "student occupied areas." The evidence supporting this charge consists
of the fact that U.S. E.P.A. inspection reports revealed the presence of such
materials in those areas. Regarding the alleged violations of 40 CFR §763.105(a)
and (b), the evidence does not establish that the respondent failed to inspect
PS 158 and PS 170. The evidence is equally consistent with the proposition that
the material became friable subsequent to inspection. Regarding PS 202, likewise,
the asbestos containing materials may well have become friable after the notices
were posted. While it may be argued that the notices posted pursuant to 40 CFR
§763.Ill(a) ought to be amended if and when additional friable materials are found,
the Rule does not require amendments or posting of new notices. Moreover it is
possible that the materials became friable subsequent to the last annual inspec-
tion performed by the respondent, in which case the presence of the material
could not reasonably have been known. It is noted that the Rule does not re-
quire the annual inspections that the respondent performs.
At count LXXXIX, the complaint alleges that respondent failed to warn and
notify parents and employees about friable asbestos-containing materials in the
auditorium fan room plenum chambers of South Shore High School, Brooklyn. The
respondent's evidence establishes that encapsulation was carried out in this
school, and responds that the inspector pulled off material, thus breaking
the encapsulation. In testimony, the complainant countered that the area was in
fact encapsulated in 1984, after the 1983 visit that revealed the presence of
friable materials. In connection with this area, it seems likely that the encap-
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sulation may have failed to cover the area, resulting in its contracted for dis-
covery during the 1983 U.S. E.P.A. inspection. It is difficult to impose the
penalty sought with respect to this violation, considering the extensive steps
taken by the respondent to abate asbestos at the school (R. Ex. 17, 29, 30), and
considering the respondent's conviction that it had succeeded.
The respondent does not seriously dispute the remaining charges, arguing
that the penalty is excessive for what it views as minor infractions. It points
out that the number of schools (988 - 1000 schools) and the magnitude of its respon-
sibilities makes it humanly impossible to carry out an asbestos program without
any errors. It urges, too, that the abatement program was carried out in
1978 - 1980, has cost at least $15,000,000 and has been successful in
removing or encapsulating all of the asbestos containing friable materials
found in New York City schools. The respondent's Asbestos Task Force, started in
1978, but operating informally even before then, had 25-26 full time employees
working to deal with the asbestos problem.
Remaining in the complaint at this point are 31 violations of the rule that
requires the posting of notices 28/, 5 violations of the rule that requires written
notice to be given to school employees, 29/ one violation of the rule that requires
results of inspection'and analyses to be provided to the parent-teacher associa-
tion 30/, 17 violations of the rule that requires laboratory reports and corres-
pondence to be placed in the schools' asbestos file 31/; violations, with respect
287 40 CFR §763.111(a)
29/ 40 CFR §763.111(b)
30/ 40 CFR §763.Ill(d)
31/ 40 CFR §763.114(a)(4)(ii)
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to eight schools, of the record keeping requirements of §763.114(a)(l) [name
and address of school], §763.114(a)(2) [list of all school buildings associated
with the school indicating whether each building has been inspected for friable
materials]; 26 violations of the rule that requires each school's asbestos file
(in schools where friable asbestos-containing material is found) to contain
copies of the Guide and the Guidance Document Parts 1 and 2, 32/ and ten .
violations of the rule that requires the file to contain a signed statement
that the Rule has been complied with. 33/ Against these violations admitted
except for the violation of 40 CFR §763.111(a), (b), and (d) at count LXXXIX which
the respondent strongly denies because of its abatement contracts relating to that
school, must be considered any factors that could mitigate the penalty sought.
For each of the violations mentioned above except for those relating to count
LXXXIX and the eight counts 34/ where violations of four recordkeeping require-
ments are charged in connection with each of the eight schools, $1,300.00 is
sought. For each of the eight counts and count LXXXIX, $6,000.00 is sought.
Upon consideration of the entire record, which includes much evidence
of the respondent's early and significant activities, and the abatement
of asbestos in its schools, it is clear that a substantial reduction of
the penalty (remaining after the dropped and dismissed counts and charges
are excluded) is warranted. 35/ Considering the nature and extent of respondent's
successful program, and considering that parents and employees were
32J TO CFR §763.1141 a)(5)
33_/ 40 CFR §763.114(a)(6)
34/ Counts I, VII, XL, XLII, XLIII, L, LIV, and LXI; i.e. 40 CFR §763.114(a)
IT), (2), (3), and (4).
35/ See generally Respondent's exhibit and testimony of Mr. Cesario, TR pages
- 170.
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informed, on the whole, with relatively few exceptions, of the respondent's
asbestos problem, it is concluded that a penalty of $10,000 is appropriate for
the remaining 117 charges.
FINDINGS OF FACT AND CONCLUSION OF LAW
Respondent is a local education agency as that term is defined at 40
CFR §763.103(e), and is subject to the Act and regulations issued thereunder
at 40 CFR §763, subpart F.
Respondent violated 40 CFR §763.111(a) in the manner charged in the
*
complaint, (excluding count XX) with respect to 31 schools, including the
school referred to in count LXXXIX, 11358.
Respondent violated 40 CFR §763.Ill(b) as charged in the complaint, and
respect to five schools charges.
Respondent violated 40 CFR §763.Ill(d), as charged in count LXXXIX of the
complaint.
Respondent violated 40 CFR §763.114(a)(4)(ii) as charged in the complaint,
except for the ten charges that were dropped with respect to 17 schools.
Respondent violated 40 CFR §763.114(a)(l) as alleged in the complaint,
§763.114(a)(2), and §763.114(a)(3), and §763.114(a)(4), as alleged in the com-
*
plaint with respect to eight schools.
Respondent violated 40 CFR §763.114(a)(5) as alleged in the complaint (not
including 25 charges dropped relating to this section), with respect to 26 schools,
Respondent violated 40 CFR §763.114(a)(6) as alleged in the complaint,
except for the allegation in count V, which was dropped.
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Respondent did not violate 40 CFR §763.105(a) and (b) as alleged in the com-
plaint; respondent did not violate 40 CFR §763.111(a) as alleged in the complaint
at count XXIII, 1194.
The appropriate penalty, considering all of the factors mentioned above,
is $10,000.
ORDER
Pursuant to section 16(a)(l) of the Toxic Substances Control Act, 15 U.S.C.
§2615(a)(l), a civil penalty of $10,000 is hereby assessed against respondent
New York City Board of Education for the violations of the Act found herein.
Payment shall be made by cashier's check or certified check, within
thirty (30) days of the effective date of this Order, payable to the Treasurer,
United States of America, and delivered to:
EPA - Region II
(Regional Hearing Clerk)
P. 0. Box 360188M
Pittsburgh, PA 15251
"J, 'F. Greene ~^
xAdministnative Law Judge
April 25, 1986
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the Matter of
General Motors Corporation,
Respondent
) Docket No. TSCA-V-C-384
Toxic Substances Control Act - Marking of PCB Transformers - the
large PCB Mark ML is mandatory on all PCB transformers and another form
of label may not be substituted to accommodate a company's internal
procedures.
Appearance for Complainant:
Appearance for Respondent:
Tamara A. Stewart, Esquire
Office of Regional Counsel
U.S. Environmental Protection Agency
Region V
230 South Dearborn Street
Chicago, IL 60604
William D. Brusstar, Jr., Esquire
General Motors Corporation
7057 New Center One
Detroit, MI 48202
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INITIAL DECISION
This is a proceeding under the Toxic Substances Control Act ("TSCA"),
Section 16(a), 15 U.S.C. 2615(a), for the assessment of civil penalties
for alleged violations of a rule issued under Section 6(a) of the Act,
15 U.S.C. 2605(a), regulating the manufacturing, processing, distribution,
use, disposal, storage and marking of polychl orinated byphenyls ("PCBs"),
40 C.F.R. Part 761. ]_/ The complaint, issued by EPA Region V, alleged
that Respondent General Motors Corporation, Central Foundry, Danville
Plant, had failed to mark two PCB transformers as required by the PCB
regulations, 40 C.F.R. 761.40(c)(1). A penalty of $7500 was requested.
Respondent answered denying the violations and requesting a hearing.
The parties submitted a joint stipulation of facts and moved to
dispense with the hearing and to decide the matter on the stipulated
facts and record. This motion was granted by my order of December 2,
1985. Both parties have filed proposed findings of fact, conclusions of
law and proposed order with supporting briefs. 2/ On consideration of
the entire record and the submissions of the parties, and for the reasons
_]_/ TSCA, Section 16(a) provides in pertinent part as follows: "(1) Any
person who violates a provision of Section 15 shall be liable to the
United States for a civil penalty in an amount not to exceed $25,000 for
each such violation. Each day such violation continues shall, for the
purposes of this subsection, constitute a separate violation of Section 15."
TSCA, Section 15, makes it unlawful among other acts, for any person to
"(1) fail or refuse to comply with . . . (c) any rule promulgated . . .
under Section . . . 6."
21 The following exhibits submitted with the prehearing exchange, being
referred to in the stipulations of fact or briefs of the parties, are
admitted into evidence: Complainant's Exhibit 1; Respondent's Exhibits 1-4.
Complainant's Exhibit 2 in its prehearing exchange is a laboratory report,
(next page).
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hereafter given, a penalty of $2,000 assessed.
Findings of Fact
1. Respondent General Motors Corporation, a Delaware Corporation, had
on June 6, 1984, a place of business at 1-74 and G Street, Danville,
Illinois 61832, called General Motors Central Foundry Division, Danville
Plant (Respondent1 s proposed finding, No. 1).
2. On that date the plant manufactured grey iron castings and had as
part of its equipment three PCB transformers and 364 large, low-voltage
PCB capacitors in service (Respondent's proposed finding, No. 2).
3. On June 6, 1984, two employees of EPA Region V inspected the plant
for compliance with TSCA PCB regulatons (Respondent's proposed finding,
No. 3).
4. During the inspection, the EPA inspectors observed two PCB transformers,
Serial Nos. 20381-A2 and 20381-A1, containing in total about 1,768 gallons
of PCB fluid, which were not marked with the M(_ PCB label described in
40 C.F.R. 761.45(a). A third PCB transformer, Serial No. 93645-A1, was
properly marked with the ML PCB label. Complainant's Exh. 1 , p. 3.
(Footnote No. 2 cont'd.)
and in view of the stipulations of fact, appears to be unnecessary.
Complainant's Exhibit 3, the TSCA Civil Penalty Guidelines and PCB Penalty
Policy, is published in the Federal Register, 45 Fed. Reg. 59770, and is
a document of which I may take official notice so that it is not necessary
to admit it into evidence.
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5. Mark ML, as described in 40 C.F.R. 761.45(a) reads as follows:
CAUTION
Contains
PCBS
(Polychlorinated Biphenyls)
Atoxic environmental contain nant requiring
special handling and disposal in accordance with
U.S. Envi rortnental Protection Agency Regulations
40 CFR 761--For Disposal Information Contact
the nearest U.S. E.P.A. Office
In case of accident or spill, call toll free the U.S.
Coast Guard National Response Center:
800:424-8802
Also Contact
Te 1 . No.
The words "Caution" and "PCBs" are in larger letters than the rest of the
text. The mark is bordered by striping and the letters and striping must
be on a white or yellow background. The mark must be at least 6 inches
square and sufficiently durable to equal or exceed the life (including
storage for disposal) of the PCB Article or Equipment. _3/
6. Respondent's two transformers had metal signs attached to them which
read as follows:
3/ If the PCB Article or Equipment is too small to accommodate a mark
6 inches square, the mark may be reduced proportionately in size down to
a minimum of 2 inches square. The transformers here were large enough to
accommodate a 6 inch label.
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CAUTION
The fl uid in this tank
contains Polychlorinated
Byphenyls And Must Be
Disposed Of By Special
Methods. Contact Material
Control For Shipping
Instructions To An Approved
Disposal Company. Do Not
Allow Any Of This Fluid To
Get Into Our Landfill Or
Sewers. Report Spills To
Plant Engineering.
The signs were 36 by 18 inches in size, and had black letters on a yellow
background, except that the word CAUTION was yellow on black. Stipulation
of Facts and Respondent's Exhs. 1 and 2.
7. At the time of the inspection, Respondent had in effect a spill pre-
vention control and countermeasure plan. ..This plan provided that upon
discovery and initial action regarding a pollutant spill, information about
the spill such as its location, the type of material spilled, estimated
quantity spilled, and measures taken to confine the spill and prevent
further spillage, must be given to "Plant Protection", who would then
notify certain persons in the plant. In the event of an accidental dis-
charge or spill to the Vermillion River or to any possible tributary on
or near the property (west storm sewer outfall, settling basin), the
appropriate State and Federal agencies were to be notified. Sole authority
for this notification was with the Manager of Plant Engineering and
Maintenance or in his absence the Superintendent of Plant Engineering or
the Superintendent of Maintenance. Stipulation of facts No. 3; Respondent's
Exh. 4, pp. 9, 12.
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Discussion, Conclusions and Penalty
Respondent argues that the use of its own label was justified by its
internal procedures for having designated departments contact the EPA on
disposal problems and the Coast Guard on accidents or spills rather than
the viewer of the sign, bj While such procedure may serve the company's
purposes, it is not at all clear that it is the equivalent of the instructions
on the M[_ Mark insofar as giving prompt notification to the Coast Guard or the
EPA. For example, having the observer of the accident or spill contact the
proper department who would then call the Coast Guard could delay the notifi-
cation to that Agency. Moreover, the Mark Mj_ label gives a specific telephone
number for the Coast 'Guard and was designed to also provide a specific tele-
phone number for the person to contact in the company. The notification on
Respondent's label is inferior in this respect. While it gives the name of
the designated department, it gives neither the department's plant location
nor a telephone number, presumably on the assumption that whoever views the
acident or spill will be cognizant of this information. The possibility
that this may not always be the case in a plant of Respondent's size is in-
dicated by the fact that in its procedures for internal notification of a
4/ Respondent's Brief at 2, 7, 9.
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spill, Respondent gives both the company telephone extension and the home
phone of the persons who are to be notified. j>/
Complainant argues that the use of the word "shall" in 40 C.F.R.
761.45 in prescribing the marking format shows that the drafters of the
regulation intended the use of the M|_ Mark to be mandatory. J5/ Respondent
counters that the history of the rule shows that it was the information
imparted by the label that was important and not the format. Referring to
the statement from the preamble of the proposed rule that the label was
designated to contain enough information to alert someone to the presence
of PCBs, provide a reference concerning disposal of PCBs and provide a re-
porting point in the event of an accident or spill, 42 Fed. Reg. 26569
(May 24, 1977), Respondent says, that since its label accomplished these
objectives and meets the size, durability and color specifications, the
label is an acceptable marking under the regulations for its PCB trans-
formers. II
5/ See Respondent's Exhibit 4, at 9-10. Respondent contends that time
would be saved by its procedure because Plant Engineering, the Department
to be notified in the event of a spill or accident, was in a position to
make the most knowledgeable notification, and that this would eliminate
the step of having the Coast Guard call Plant Engineering to obtain the
information when someone else called the Coast Guard first. Brief at
8-9. There could, however, still be a delay in notifying the Coast Guard,
who may be interested in being notified as soon as possible. In any
event, Respondent seems to have overlooked that the ML Mark provides for
designating the phone number of someone in the company to contact. The
company contact on being notified can call the Coast Guard. Presumably,
this would obviate the need of having the Coast Guard first call plant
management to find out whom to contact when it is called by someone other
than the designated contact, which Respondent argues is a step that would
have been taken under the Mark Mj_ format of notification.
6 / Complainant's proposed findings of fact, conclusions of law and brief
at 14.
TJ Respondent's brief at 5-9.
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8
The final rule contained a change in the marking requirement which
should have warned Respondent that its interpretation was suspect. The
format of the ML Mark in the proposed rule provided only for notifying
the Coast Guard in case of an accident or spill. _8/ The final rule
provided also for contacting some other person. In explaining the change,
the Agency stated:
Numerous utilities and other
industries suggested that their own
telephone numbers be placed on the
marking label as the contact in case
of a spill. EPA believes such an
addition to the label would improve
responses to spills, and hence that
suggestion has been accepted. _9/
What is significant is that the change did not permit the company
telephone number to be a substitute for the Coast Guard number but added
it as an additional contact, with the "instructions to call the Coast
Guard still being retained. When one turns to the support document for
the final marking and disposal regulations, the intention of the EPA to
have one uniform Mj_ Mark is made even clearer. There it is stated in
pertinent part as follows:
Section 761.44 Marking Formats
Numberous utilities and other industries, however, urged
that their own telephone number be placed on the marking label
as the person to contact in case of a spill. This would be
either in addition to or in place of the Coast Guard emergency
8/ 42 Fed. Reg. 26576 (May 24, 1977).
9/ 43 Fed. Reg. 7153 (February 17, 1978).
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nunber required by the present regulations. Some comments
suggested further that alternative labels be accepted in
place of the uniform national marking requirements ....
The suggestion for placing the utility's telephone
number on the label has been accepted, and the standard label
format has been reworked to include a space for that number.
However, the idea of accepting other label formats has been
rejected. A single national label for PCB articles has regu-
latory advantages since it will alert whoever sees the article
to the presence of PCBs in it more efficiently than company-by-
ccmpany 1 abel ing wi 11. 10/
It is clear from the legislative history that the use of the Mj_
Mark is mandatory, and that companies may not, as Respondent contends,
substitute their own formats to accommodate their own procedures.
Finally, it must be noted that Respondent's own Spill Prevention
Control & Counter-measure Plan requires that all PCB material and equipment
be marked with the M|_ 1 abel.'J_l_/ Indeed, Respondent offers no explanation
as to why it considered it necessary to leave the M|_ Mark off of two of the
transformers but not off the third transformer. Thus, Respondent's argument
that the substition of its own label for the ML Mark was necessitated by
Respondent's procedures is unpersuasive. What is really indicated is that
the ML Marks were missing from the two transformers because Respondent had
neglected to make sure that they were on there.
10/ PCB Marking and Disposal Regulations, Final Action - Support Document
at 36. This document is referred to in the preamble to the final disposal
and marking rule, 43 Fed. Reg. 7150 (February 17, 1978). It is, accordingly,
a document of which I may take official notice.
ll/ Respondent's Exhibit 4, Appendix H, p. 6.
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10
It is concluded, therefore, that Respondent has violated TSCA, Section
15, 15 U.S.C. Section 2614, and 40 C.F.R. 761.40(c)(l) by failing to mark
properly two PCB transformers.
The Penalty
Complainant has classified the penalty as a level 5 major violation in
the penalty matrix for the PCB Penalty Policy, which calls for a penalty
of $5,000. 1 2/ Complainant would adjust this initially determined penalty
upwardly by 50 percent because of what it contends are numerous other prior
violations of TSCA, two of them assertedly being marking violations. 137
The total penalty proposed is $7,500.
The violation^ however; is the kind which would seem to fall more
appropriately among the minor violations in level six. The transformers
are located on company property and in a location which is likely to be
accessible only to employees, except possibly in cases of emergency such
as a fire or when some plant work in the area has to be done by an outside
person. 14/ Respondent's label does more than simply notify someone
unfamiliar with the situation that PCBs are present and enable them to
identify the PCB items, which notification is sufficient to place a
J2/ 45 Fed. Reg. 59777 (Sept. 10, 1980).
13/ Upward adjustments of 50% are specified for two or more previous vio-
lations of TSCA and of 100% if there have been two or more prior violations
which are the sa-ne or closely related to the violation currently under
consideration. 45 Fed. Reg. 59774.
14/ Stipulation of Facts; Respondent's Exhibit 3.
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11
violation in level five. Here the label identified the appropriate plant
personnel to be notified, and also contains some precautionary handling
instructions. The nature of the violation is not so much a concern with
the adequacy of the notification, although as previously noted it is
deficient in some minor respects, as in the EPA's concern that there be
one national, uniform label.
The Complainant also contends that the initially determined penalty
should be increased by 50% because of prior TSCA violations by Respondent.
As Respondent points out, the stipulation of facts refers only to the
issuance of six prior TSCA complaints against Respondent. It is silent
on whether the complaints vent to a hearing resulting in a formal determi-
nation of liability, the nature of the orders issued, and whether the
settlement amounts were allocated to any particular allegation of the
complaint. In short, it is impossible to tell from the record whether
the prior violations were such that an_ upward adjustment should be made
in order to deter future violations of the kind involved here. 15/
Accordingly, I find that the appropriate penalty to be assessed is
$2,000.
15/ See 45 Fed. Reg. 59773.
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ORDER 16/
Pursuant to Section 16(a) of the Toxic Substances Control Act,
15 U.S.C. 2615(a), and for the reasons stated above, a civil penalty of
$2,000 is hereby assessed against General Motors Corporation.
Payment of the full amount of the civil penalty assessed shall be
made within sixty (60) days of the service of the final order by submitting
a certified or cashier's check payable to the United States of American and
ma i1ed to:
EPA - Region V
(Regional Hearing Clerk)
P.O. Box 70753
Chicago, IL 60672
_
Gerald Harwood
Administrative Law Judge
DATED: January 13, 1986
Washington, D.C.
16/ Unless an appeal is taken pursuant to the Rules of Practice, 40
C.F.R. 22.30, or the Administrator elects to review this decision on
his own motion, the Initial Decision shall be come the final order of
the Administrator. See 40 CD.F.R. 22.27(c).
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BEFORE THE ADMINISTRATOR
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
In the Matter of: )
Mexico Feed & Seed Company, Inc.)
and )
Jack Pierce d/b/a
Pierce Waste Oil Service, Inc.
TSCA Docket No. VII-84-T-312
and
TSCA Docket No. VII-84-T-323
(Consolid ated)
TSCA Appeal No. 85-2
FINAL DECISION
Respondent, Jack Pierce d/b/a Pierce Waste Oil Service,
Inc., appeals from an initial decision by Administrative Law
i/
Judge Marvin E. Jones (Presiding Officer). As a result of
pre-hearing negotiations, the parties stipulated that violations
of regulations implementing the Toxic Substances Control Act
(TSCA) of 1976, as amended, had occurred. The Presiding Officer
\_/ Respondent Jack Pierce was sued in his individual capacity
predicated upon a theory that he had done business in Missouri
on behalf of Pierce Waste Oil Service, Inc. without necessary
authority from the Missouri Secretary of State. See fn. 12,
infra.
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-2-
held that Jack Pierce (Pierce) was individually liable and
imposed a stipulated penalty of $29,000. For the reasons stated
2/
below, that decision is affirmed.
I.
Pierce Waste Oil Service, Inc. (PWO) was incorporated in
Delaware in 1964 and Jack Pierce was appointed Chief Executive
I/
Officer and President. The purpose of the corporation was
to collect waste oil across a multi-state territory and trans-
port it to PVJO's refinery in Springfield, Illinois. In 1967,
Jack Pierce entered into an oral lease with James Covington,
sole proprietor of Mexico Feed & Seed (MF&S) in Mexico, Missouri.
Under the terms of the lease, PWO leased a site on MF&S1 property
to place one, and eventually three additional, storage tanks as
a temporary holding facility for waste oil. PWO planned to
collect waste oil from customers in the Mexico area and store
it at MF&S until a sufficient amount accumulated for economical
transport to PWO' s Springfield refinery.
On June 27, 1984, and July 5, 1984, inspections of the Mexico
site by an authorized representative of the United States
Environmental Protection Agency (Complainant) revealed violations
2/ 40 CFR §22.30 provides that initial decisions of presiding
officers may be appealed to the Administrator.
_3/ In 1964, the corporation's four shareholders were: Jack
Pierce (49%); his wife, Helen Pierce (1%); his brother, Perry
Pierce (49%); and Perry's wife, Twylah Pierce (1%).
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-3-
of TSCA and its implementing regulations. On July 20 of that
I/
year, separate coniplaints were filed against MS&F, Jack
Pierce and Moreco Energy, Inc. (Moreco). PWO was not named as
a party-Respondent in the complaint, evidently because of its
5/
dissolution in February 1984. On April 5, 1985, the complaint
aaainst Moreco was dismissed without prejudice. The complaints
I/
against Pierce and MF&S were consolidated for hearing.
At the hearing, held on June 11 and 12, 1985, the parties
entered into a stipulation on the record (prior to the taking of
evidence) in which the two remaining Respondents admitted the
violations alleaed in the four counts of the complaints, and
I/
Complainant agreed not to seek penalties exceeding $29,000.
The hearing was then held to determine which of the Respondents
4_/ Mexico Feed & Seed was incorporated on January 1, 1980, and
leased the site of its operations, including the portion holding
the four storage tanks, from James Covington. Unless otherwise
noted, the sole proprietorship and the corporation are collectively
referred to as "MS&F."
5/ On or about March 5, 19S3, PWO sold all of its assets to
Moreco pursuant to an asset purchase agreement. P^O dissolved
its corporate status in Delaware in February 1984.
6_/ The site was cleaned up on August 6, 1984, pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act.
!_/ Count One alleged that samples from the four waste oil tanks
contained significant amounts of PCB; that Respondents failed
to maintain the tanks in a proper facility; absence of a Spill
Prevention and Countermeasure Plan; absence of documentation of
proper design, construction and operation of the tanks; and
that the tanks were not dated when placed in storage. See 40
CFR §761.3(v); 40 CFR §761.65(b) (1 ); 40 CFR §761.65(c)(7 ) ( ii ) ;
40 CFR §761.65{c)(7 )(i) ; 40 CFR §761.60(c ) (3) and (8). Count
Two alleged that the tanks were not properly marked. See 40
CFR §76K40(a)(l) and 40 CFR §761.45(a). Count Three alleged
(next page)
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-4-
was responsible for the stipulated violations and the $29,000
stipulated penalty. At the close of the hearing, Complainant's
motion to amend the complaint to add James Covington as a
party-Respondent was granted. The Presiding Officer then held
that Respondent Jack Pierce was individually and solely liable
for the civil penalty in the amount of $29,000. On appeal, Pierce
raises two arguments: whether the Presiding Officer correctly
found by a preponderance of the evidence that PVJO had not
transferred ownership of the waste oil tanks to James Covington
in 1976; and, in the alternative, whether the order requiring
payment of the civil penalty should be clarified so as to limit
Pierce1 s personal liability to the extent of the proceeds which
he holds from the sale of FdO to Moreco. For the reasons that
follow, I affirm the initial decision and clarify the extent of
Respondent Pierce's personal liability.
II.
Pierce"s defense at the hearing was premised on a theory
that PWO had transferred ownership of the site to James Covington
(Footnote No. 7 cont'd)
that Respondents failed to maintain and develop records on the
disposition of PCBs and PCB items and to maintain an annual
document each July 1, covering calendar years 1978 through
1983, including specified information. See 40 CFR §761.1 SO(a ) (1 )-
(3). Count Four alleged that soil samples from a spill around
the tank were analyzed and found to contain PCBs indicating an
improper disposal of that substance. See 40 CFR §761.60(a) and
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-5-
in August or September of 1976, at least two years before the
TSCA regulations which are the subject of this complaint came
into effect. In support, Pierce adduced testimony from himself,
his son and two PWO drivers which suggests that in 1973 or 1974
James Covington orally agreed to accept ownership of the tanks
in exchange for three years of rent-free use of the site by
PWO. Pierce testified that he desired to pull out of the Mexico
site due to security problems. He testified that he tendered
ownership of the tanks to Covington in August or September of
1976. A FWO driver (Sailer) testified that while in the course
of emptying the tanks for the final pull-out, he witnessed the
tender by Pierce and an acceptance of the tanks by Covington.
A second F/JO driver (Waller) testified that he returned to the
Mexico sits in 1978 to empty the tanks in response to a routine
"customer call." Pierce introduced documentary evidence of the
Asset Purchase Agreement reached with Moreco in 1983 which,
while listing storage tanks at other Pierce facilities as
valuable assets, did not itemize the tanks or ground lease at
the Mexico site.
Covington denied that he ever discussed a transfer of
ownership of the tanks with Pierce. He testified that he had
been in the feed and seed business for thirty years and had no
desire to enter the waste oil business. iMF&S1 bookkeeper
testified that she continued to bill FWO for rent until 1980,
though no copies or records of the bills were retained. William
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-6-
Robnette was called as a witness by Covington and testified
that he became associated with MF&S in 1979 and became a share-
holder when the business was incorporated in December 1979.
Robnette testified that during discussions with Covington about
MF&S1 incorporation, Covington stated that the oil tanks belonged
to Jack. Pierce, that Pierce had not paid rent for several years
and Covington wanted Pierce to remove them. Covington introduced
into evidence a lease agreement between himself and Mexico Feed
& Seed Company, Inc., effective January 1, 1980, which does not
list the tanks or their contents as an asset.
Conflicting testimony was presented concerning the date
that Pierce sent Waller to empty the leaking tank: based on
Waller's testimony, Pierce maintained that the tank was emptied
in 1978? Covington introduced evidence that the leak and Pierce1 s
clean-up occurred in February 1980. Robnette testified that
the cleanup occurred after he became associated with MF&S in
August 1979.
On appeal, analysis of the sufficiency of the evidence is
guided by the standard of whether the issue has been resolved
I/
by a preponderance of the evidence. Questions of fact
raising issues of credibility among competing witnesses are to
be determined, in the first instance, by the Presiding Officer
I/
based upon his first-hand observation of the testimony.
8/ 40 CFR §22.24.
9/ See Pryor v. Schweik
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-7-
Absent overwhelmingly compelling reasons to the contrary, de-
ference is accorded to the Presiding Officer's determinations
1 O/
of credibility.
After a thorough review of the record, the transcript and
the post-hearing submissions, I conclude that the Presiding
Officer correctly determined that there was no agreement between
Respondent and James Covington to transfer ownership of the
instant waste oil tanks. In the face of testimony virtually
unsubstantiated by documentation, the Presiding Officar reasonably
credited Covington's testimony that he never discussed acquiring
ownership of the tanks; that he has never had an interest in
the waste oil business; and that he had no alternative use for
the tanks. I agree with the Presiding Officer that Covington
would need far more than storage tanks to enter the waste oil
business.
Further, the Presiding Officer found that Pierce sent Waller
to investigate in response to Covington1s telephone call con-
cerning the leaking tank in February 1980 based on an assessment
of the credibility of the witnesses. I defer to that judgment.
Pay slips offered into evidence by MF&S establish that Robnette
did not begin work for that company until August 1979. Robnette
testified that the leak occurred during the spring of 1980
following commencement of his employment. Pierce1s immediate
10/ See DeSarno v. Dept. of Commerce, 761 F.2d 657 (D.C. Cir.
1985); Grissenauer v. Dept. of Energy, 754 F.2d 361 (D.C. Cir.
1985).
-------
-8-
response to the leak, upon being advised that it might pollute
a nearby creek, was inconsistent with his argument that owner-
ship of and responsibility for the tanks transferred to Coving-
ton four years earlier. Finally, I note that Pierce assumed
ownership of the waste oil in the tanks during each visit to
pump them out.
Based upon this conflicting evidence, and in light of the.
deference owed to the Presiding Officer concerning questions of
credibility, I hold that Pierce has not proven by a preponderance
of the evidence that he and Covington reached an agreement to
!!/
transfer ownership of the tanks. The Presiding Officer did
not err in assigning sole liability to Jack Pierce.
Respondent Pierce also seeks clarification of the order
imposing a civil penalty of $29,000 upon him individually. In
the body of his Initial Decision, the Presiding Officer held
Jack Pierce personally liable for the obligations of Pierce
Waste Oil Services, Inc. "to the extent of the property, or
proceeds thereof, that have come into his hands" pursuant to
the asset purchase agreement with Moreco and liquidation of
\2/
PWO. Initial Decision at 24. Yet, in his Final Order,
ll/ Pierce bore the burden of proof that the transfer of owner-
ship took place, which is in the nature of an affirmative
defense. See 5 U.S.C. §556(d); 40 CFR §22.24.
12/ The Presiding Officer premised his opinion on Missouri
"statutory and case law which holds that a person doing business
(next page)
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-9-
the Presiding Officer held simply that the civil penalty should
be assessed against "Respondent Jack Pierce, an individual."
Id . at 26.
Absent objection by Complainant, I am persuaded that the
Presiding Officer intended to impose personal liability on Jack
Pierce to the extent that proceeds from the sale of PWO have
come into his hands. The minutes of the board of directors'
meetings disclose that Jack Pierce owned a fifty per cent share
of F."?0 at the time of dissolution of the corporation in March
1984. The asset purchase agreement reveals that in March 1983
Moreco agreed to pay to Fi-JO an aggregate of. $1,750,000 in notes
and mortgages. The sum was payable in 120 equal monthly
installments commencing May 1, 1983. Jack Pierce should be
able to meet the terms of the Final Order from his share of the
proceeds realized upon dissolution of PWO. Therefore, for the
purposes of this case and contingent upon Respondent's compliance
with the full terms of the Final Order, I enter the following:
(Footnote No. 12 cont'd)
in the state, on behalf of a corporation not Qualified to do
business in the state, will be personally liable for the corpor
tion's obligations to the extent of its property and effects
that shall have come into his hands. Mo. Rev. Stat. §351.525
(1984); see Mercantile Trust Co., National Association, et al.
v. Mosby, et al., Mo. App. , 623 S.W.2d 22 (1981).
Pierce Waste Oil Services, Inc. never had authority to do
business in Missouri. Certificate of Secretary of State of
Missouri, September 5, 1985, appended to Respondent Mexico Feed
& Seed, Inc.'s Reply Brief.
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-10-
FINAL ORDER
A civil penalty of $29,000.00 is assessed against Respondent
Jack Pierce for stipulated violations of the Toxic Substances
Control Act and its implementing regulations. The penalty is
payable to the extent that the property or proceeds of the
corporation have come into Respondent's hands. Payment shall
be made within sixty (60) days of this final order, unless
otherwise agreed to by the parties. A cashier's check or
certified check made payable to the Treasurer, United States of
America, for the full amount of the penalty shall be forwarded
to the Regional Hearing Clerk, EPA-Region VII, P.O. Box 350748M,
Pittsburgh, PA 15251.
So ordered.
q £• CT
Ronald L. McCallum
Chief Judicial Officer (A-101)
L77D
Dated: •—>
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CERTIFICATE O? SERVICE
I hereby certify that copies of the foregoing Final Deci-
sion in the matter of Mexico Feed & Seed Company, Inc., and
Jack Pierce d/b/a Pierce Waste Oil Service, Inc., Docket Nos.
VII-84-T-312 and VII-84-T-323, (consolidated), TSCA Appeal No.
85-2, were either mailed or hand-delivered the following:
By certified mail,
return receipt requested
By 1st class mail,
postage prepaid:
By hand-delivery:
G. Edwin Proctor, Jr., Esq.
Heavner, Jarrett & Kimball,
900 Bryant Building
1102 Grand Avenue
Kansas City, MO 64016
Arthur A. Benson II, Esq.
1430 Commerce Tower
911 Main Street
Kansas City, MO 64105
Honorable Marvin E. Jones
Administrative Law Judge
U.S. EPA, Region VII
726 Minnesota Avenue
Kansas City, KS 66101
Henry F . Rompage
Office of Regional Counsel
U.S. EPA, Region VT I
726 Minnesota Avenue
Kansas City, KS 66101
Diana Reid
Regional Hearing Clerk
U.S. EPA, Region VII
726 Minnesota Avenue
Kansas City, KS 66101
Bessie Hammiel
Hearing Clerk
Office of Administrative
Law Judges
U.S. EPA Headquarters
401 M Street, S.W.
Washington, DC 20460
P.C
Eileen J.
Secretary
Judicial
Earnhardt
to the Chief
Officer
Dated: FEB 2 8
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UNITED STATES EWIROrriEHTAL PROTECTION' AGENCY
BEFORE THE ADMINISTRATOR
In the flatter of
Substation Maintenance, Inc.,
Respondent
Docket No. TSCA-V-C-407
Toxic Substances Control Act - Rules of Practice - Default - Where
Respondent failed to comply with ALJ's order requiring the exchange of
prehearing information, Respondent was found to be in default pursuant
to § 22.17 of the Rules of Practice (40 CFR Part 22), to have admitted
violations charged and assessed full amount of penalty proposed in
complai nt.
Appearances for Respondent:
Appearance for Complainant:
Robert W. Russell
Chief Executive Officer
Substation Maintenance, Inc.
480 N. Main Street
Grafton, Ohio 44044
Don P. McFadden
Registered Agent for Substation
Maintenance, Inc.
One Public Square, Suite 1000
Cleveland, Ohio 44113
James L. Kimbler, Esq.
P. 0. Box 153
Lodi, Ohio 44254
Levi Wood, Esquire
Assistant Regional Counsel
Office of Regional Counsel
U.S. EPA, Region V
230 South Dearborn Street
Chicago, Illinois 60604
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Default Order
This proceeding under § 16(a) of the Toxic Substances Control Act
(15 U.S.C. 2615(a)) was commenced on June 13, 1985, by the issuance of a
complaint charging Respondent, Substation Maintenance, Inc., with viola-
tions of the Act and regulations. Specifically, Respondent was charged
with failure to properly store at its Grafton, Ohio facility 17 drums of
PCB solids and a PCB transformer, to date all PCB articles when they are
placed in storage, to clean up spilled PCBs and with illegal disposal of
PCBs in violation of § 15 of the Act and applicable regulations, 40 CFR
§§ 761.65(b)(l), 761.65(c)(5), 761.65(c)(8) and 761.60(a). For these
alleged violations, it was proposed to assess Respondent a penalty totaling
$15,000.
Respondent answered, denying the alleged violations and requesting a
hearing.
The proceeding was assigned to the undersigned ALJ on August 7, 1985,
and by letter, dated August 12, 1985, the parties, failing settlement,
were directed to supply certain prehearing information on or before
October 2, 1985. Specifically, Respondent was ordered to furnish a summary
of any evidence relied upon to support denial of substantive allegations
of complaint, to supply a summary of evidence to support allegations that
all the PCB materials in question had been removed from the Grafton facil-
ity, that said materials were placed there under license from Transformer
Services of Ohio, Inc. and to supply financial data, if Respondent con-
tended the proposed penalty was beyond its ability to pay. Neither party
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3
conplied \.ith this directive and by.an order, dated fJoveriber 13, 1985,
the parties were directed to furnish the informaiton on or before December 13,
1985. The order specifically provided that failure to comply would result
in dismissal of the proceeding with prejudice in accordance with 40 CFR 22.
20 or entry of a default order pursuant to 40 CFR 22.17.
Complainant furnished its prehearing information under date of Decem-
ber 13, 1985. Respondent failed to comply with the order of November 13,
1985, and has not given any reason for such failure or otherwise responded
to the order. Under date of January 23, 1986, Complainant, noting the above
failure, moved for a default order pursuant to 40 CFR 22.17. Respondent has
not responded to the motion in any manner.
Respondent's failure to comply with the ALJ's order constituting a
default in accordance with 40 CFR 22.17(a) and an admission of the factual
allegations of the complaint, I hereby make the following:
Findings of Fact
1. Respondent, Substation Maintenance, Inc., is a corporation incorpo-
rated under the laws of the State of Ohio.
2. On October 17, 1984, Respondent maintained a place of business and a
facility in Grafton, Ohio.
3. On October 17, 1984, Respondent had 17 drums of PCB solids, three
PCB transformers and 42 large PCB capacitors in storage for disposal
at the mentioned facility.
4. The 17 drums of PCB solids and three PCB transformers mentioned above
were placed in storage more than 30 days prior to October 17, 1984,
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4
and the drums and one of the transformers (American Transformer, Serial
No. 960361) were stored in an area lacking continuous curbing.
5. The 17 druns of PCB solids, three PCB transformers and 42 large PCB
capacitors referred to above were not dated with the date these
articles were placed in storage.
6. Two of the mentioned PCB transformers were in a metal bin containing
approximately two inches of an oil-water mixture on October 17, 1984,
which mixture contained PCBs at a concentration of 21 ppm.
7. The American PCB transformer referred to in finding 4 had a two-foot
x two-foot oil spot beneath its drain tap on October 17, 1984, indi-
cating an uncontrolled discharge of PCBs.
Conclusions
1. Respondent's action in storing 17 drums of PCB solids (PCB articles)
and one PCB transformer for more than 30 days in an area lacking con-
tinuous curbing constitutes a violation of 40 CFR 761.65(b)(l).
2. Respondent's failure to mark the date the 17 drums of PCB solids,
three PCB transformers and 42 large PCB capacitors were placed in
storage constitutes a violation of 40 CFR 761.65(c).
3. Respondent's failure to clean up the PCBs in the oil and water mixture
in the bin containing two PCB transformers constitutes a violation of
40 CFR 761.65(c)(5).
4. The uncontrolled discharges of PCBs from American Transformer, Serial
No. 960361, is an illegal disposal of PCBs in violation of 40 CFR 761.
60(a).
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5. Tui liid above violations of the regulations and § 15 of the Act,
Respondent is liable for a penalty in the amount of $15,000 in accord-
ance with § 16(a) of the Act.
Discussion
Respondent, being in default for failure to comply with the ALJ's order
of November 13, 1985, is deemed, pursuant to 40 CFR 22.17(a), to have
admitted the allegations of the complaint and in accordance with the cited
section is liable for the full amount of the penalty of $15,000 proposed in
the complaint.
ORDER
Respondent, Substation Maintenance, Inc., having been found to have
violated the Toxic Substances Control Act and regulations promulgated
thereunder in the particulars recited above, is assessed a penalty in the
amount of $15,000 in accordance with § 16(a) of the Act. Payment of the
full amount of the penalty shall be made by forwarding a cashiers or
certified check, payable to the Treasurer of the United States to the
following address within 60 days of receipt of this order:*
Regional Hearing Clerk
Region V, U.S. EPA
P. 0. Box 70753
Chicago, Illinois 60673
Dated this 24th day of February 1986.
Spencer T. Nissen
Administrative Law Judge
In accordance with 40 CFR 22.17(b), this default order constitutes an
initial decision, which pursuant to 40 CFR 22.27(c) will become the final
order of the Administrator unless appealed in accordance with § 22.30 or
unless the Administrator elects, sua sponte, to review the same as therein
provided. .
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UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
f'-JN THE MATTER OF:
r ^
/ GARDEN CITY UNIFIED SCHOOL
DISTRICT #457,
RESPONDENT
TSCA Docket Number VII-84-T-273
TOXIC SUBSTANCES CONTROL ACT (TSCA)
1. The Toxic Substances Control Act (TSCA) and regulations promulgated
pursuant thereto (40 C.F.R. Part 763, Subpart F) exist for the
protection of members of the public and are thus regulatory in nature
and, as such, are liberally construed and broadly interpreted to
effectuate the purposes of the Act.
TOXIC SUKSTANCE_S CONTROL ACT (TSCA)
2. Respondent's "inspection", in 1982, which admittedly did not include
the inspection of maintenance, storage or utility facilities, integral
parts of "school buildings", that Respondent had a duty to inspect and
which resulted in an inaccurate and negative report respecting the
presence in said buildings of asbestos-containing materials, the
presence of which was positively confirmed by an inspection performed
by Respondent in 1984, was not an "inspection" as contemplated by the
regulations and did not serve to excuse Respondent from its inspection,
analysis and record keeping duties nor its duties to warn and notify, as
provided by said regulations.
TOXIC SUBSTANCES CONTROL ACT (TSCA)
3. Respondent was authorized to contractually delegate its duties under
applicable rules and regulations, but remained responsible for proper
performance of such duties as provided by 40 C.F.R. 763.100.
TOXIC SUBSTANCES CONTROL ACT (TSCA)
4. Intent to violate is not an element of violations for which civil
penalties are assessed; however, intent or the absence thereof may be
shown as an aggravating or mitigating circumstance attendent thereto.
TOXIC SUBSTANCES CONTROL ACT (TSCA)
5. An appropriate civil penalty is properly determined if it accords with
the Act, regulations and announced Agency policy. Where Respondent
exceeded its duties under the rules and comprehensively, though
belatedly, removed and abated all offending materials, which are the
focus of rules here applicable, a substantial reduction of penalty,
proposed under applicable Civil Penalty Guidelines, was compatible
with the Act, regulations and announced Agency Policy and was there-
fore appropriate.
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APPEARANCES
For Complainant; Rupert G. Thomas
Assistant Regional Counsel
U.S. Environmental Protection Agency
Region VII
726 Minnesota Avenue
Kansas City, Kansas 66101
For Respondent: Ward Loyd , Esquire
LOYD & GRISELL
Suite 316, Warren Building
103 West Chestnut Street
Garden City, Kansas 67846
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INITIAL DECISION
By Complaint filed December 20, 1984, Complainant, United States
Environmental Protection Agency (hereinafter "EPA" or "the Agency"),
Region VII, charges Respondent, Garden City Unified School District #457,
a local education agency ("LEA" - hereinafter "Respondent" or "457") with
violation of the Toxic Substances Control Act, (hereinafter "TSCA" or "the
Act"), 15 U.S.C. 2601 et seq., and the regulations promulgated pursuant
thereto, i.e., 40 C.F.R. Part 763.
Count I of said Complaint charges that 457 violated 40 C.F.R. 763.114
which requires that each LEA retain in Its administrative office:
(b)(l) a list of all schools under its authority, whether each such school
was inspected for friable material, and which school or schools contain
friable material;
(2) a record of friable material, in such schools, which were sampled and
analyzed and which materials contain asbestos, and
(3) the total area in square feet of friable asbestos-containing material
(present) in each such school.
It is further alleged that such LEA is further required by Section 763.114(c)
to maintain in its administrative office a completed EPA Form 7730-1 entitled
"Inspections for Friable Asbestos-Containing Materials", and that Respondent,
though required by Section 763.115 to comply with said regulations at an
earlier date, did not so comply until July 17, 1984, for which failure a
civil penalty in the sum of $1300.00 is proposed.
Count II of said Complaint charges that Respondent, at the time of subject
EPA inspection on August 2, 1984, had failed to comply with applicable regula-
tions, in that certain records were not, by 457, compiled and maintained
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reflecting a timely inspection by 457 at the Alta Brown Elementary
School for friable materials (Section 763.105); nor that samples of friable
material found by its said inspection were, by 457, analyzed (Section
763.109), nor that warnings and notifications were issued (when) said
friable material (was) determined to contain asbestos (Section 763.111).
For said failure, the assessment of a civil penalty in the sum of $6,000.00
Is proposed .
Count III of said Complaint charges that, at the time of the inspection
by EPA on August 2, 1984, the required warnings and notifications, herelnabove
described, had not been made by 457 (respecting the presence of asbestos-
containing friable material at the Garden City Senior High School); that
samples of said friable material at said school were, after being analyzed,
reported, on July 16, 1984, as containing 80 to 85 per cent asbestos, and
that the failure of 457 to timely comply with the requirements of 40 C.F.R.
Sections 763.105, 763.107, 763.109, 763.111 and 763.114(a) promulgated pur-
uant to Section 6 of TSCA, 15 U.S.C. 2605(a), renders 457 in violation of
the Act, for which violation a civil penalty in the amount of $6000.00 is
proposed.
Respondent, in its Answer, admits that, on August 2, 1984, an EPA repre-
sentative (inspector) met with "selected officials of 457", and denies any
inspection beyond that limited to "responses to requests for technical assis-
tance and advice or investigation"; that all 457 district buildings were
inspected for asbestos-containing materials during a period ending on
November 3, 1978; that said inspections and the results thereof were con-
ducted with the knowledge and assistance of John C. Irvin, Chief of the
Occupational Health Section of the Kansas Department of Health and Environment
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("KDHE") and Jay Nordyke, EPA, Regional VII, Technical Field Advisor of the
School Asbestos Program. Respondent further answers that, pursuant to 40
C.F.R. 763.115 and 763.117, Its election (on June 6, 1984) to treat any
friable material discovered, by Its said Inspections, as "asbestos-containing"
exempts it from compliance with said EPA regulations. Respondent admits that,
In conjunction with Its regularly scheduled building inspection program, it
discovered, in the two schools identified by EPA in subject Complaint, the
existence of friable material, potentially asbestos-containing. Respondent
states that the existence and location of such friable material was brought
to the attention of the aforesaid representatives of KDHE and EPA.
Respondent further states, in its Answer, that it had not sufficient time
to comply with the reporting and recordkeeping requirements of the regula-
tions "by virtue of the proximity of the return of the testing results and
by virtue of the fact that the schools were not in session and the adminis-
trative personnel and the parties to be notified were not available by the
date of the alleged inspection."
On the basis of the record, including the testimony elicited at a hearing
held in Kansas City, Missouri, on November 26, 1985, and the exhibits then and
there received in evidence, and upon consideration of the findings proposed
by the parties, I make the following
FINDINGS OF FACT
1. Respondent, Unified School District No. 457, Finney County, Kansas, a
Kansas public school district, is a "local education agency"/"school"
(§763.103[e][1]). The school district is located around a city with a popula-
tion of approximately 35,000, has a student enrollment nearing 6,000 and has
845 employees, of which 375 are teachers. Of 25 buildings, 16 are school
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buildlngs within the definition of §763.103(h). (Respondent [hereinafter
"R"J Exhibit [hereinafter "Ex") 23; Transcript [hereinafter "TR"] p. 129.)
2. Dr. Jim Phlfer (hereinafter "Phifer") has, since June 25, 1984, served
as Superintendent of Garden City Unified School District 457, and Chief
Executive Officer of the Board of Directors of said school district.
3. Mr. Jerald Cromer (hereinafter "Cromer") is Director of Plant Facilities
of Garden City Unified School District 457. Cromer has been employed by
Respondent since 1977, and assumed the duties of Director of Plant Facilities
in 1980.
4. Dr. Kenneth Frisbie (hereinafter "Frisble") is the Principal of Garden
City Senior High School. His contract of employment provides that he be
given the entire month of July for vacation (TR 142).
5. Mr. Merle Weiderstein (hereinafter "Welderstein") is Principal of Alta
Brown Elementary School. Weiderstein has been employed by Respondent for
thirty-three (33) years. He has a 10-month contract and was not on duty"
the month preceding August 4, 1984 (TR 153).
6. Richard F. Makowski (hereinafter "Makowski") is employed by the U.S.
EPA, Region VII, as an Asbestos Compliance Inspector. Makowski notified
Phifer that he would be visiting Respondent's school district on August 2,
1984, to conduct an Asbestos-ln-School Inspection. Phifer and Makowski
agreed to the August 2, 1984 visit by Makowski (TR 137).
7. Wolfgang Brandner is employed by the U.S. EPA, Region VII, as the
Regional Asbestos Coordinator.
8. Makowski met with Cromer on August 2, 1984, and conducted an inspection
of Respondent's educational facilities, including Alta Brown Elementary
School and Garden City Senior High School.
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9. In the absence of Phlfer, Cromer Is next In line of command and the most
knowledgeable person to deal with questions relating to asbestos in the school
district (TR 137).
10. When Makowski met with Cromer on August 2, 1984, he requested any and all
records in regard to asbestos (TR 6). Cromer made available to Makowski all
the records he had pertaining to asbestos (TR 97).
11. Croraer possesses a master key for the buildings (TR 120). The principals
of the respective schools, and head custodians, possess keys to the principals'
offices and faculty lounges (TR 120).
12. During Makowski's inspection of Respondent's schools on August 2, 1984,
the maintenance/custodial staff were in the building of Garden City Senior
High School (TR 103).
13. Makowski was given a copy of EPA Form 7730-1, signed by Dr. Jim Phifer,
and dated July 25, 1984, from the file(s) delivered to him for review by
Cromer (TR. 108; R Ex-60).
14. At the time of Makowski's inspection on August 2, 1984, Respondent had not
given notice of the existence of asbestos in the schools to parents or the
Parent-Teacher Organization ("PTO") (TR 109-110). A taped interview with Cromer
in the boiler roora of Alta Brown Elementary School, subsequent to Makowski's
visit, was twice shown, on August 20, 1984, on a local TV channel to apprise
the community of the asbestos problem (TR 110).
15. EPA Form 7730-1, dated July 29, 1982, and executed by Cromer, was not
in the files given to Makowski by Cromer during Makowski's inspection on
August 2, 1984. Said form was sent to the EPA, Region VII, subsequent to
the August 2, 1984 inspection of Respondent's schools by Richard Makowski
(TR 122; R Ex-5).
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16. The Notices of Warning, EPA Form 7730-3, were not posted in the faculty
lounge and other areas in the high school until after the August 2, 198A
inspection by Makowskl.
17. Friable asbestos-containing material was removed from the senior high
school boiler room in August, 1984, at a time when nobody was on the premises,
as it was completed before the start of school. Notices of the presence of
said materials were posted during the week of August 5, 1984 (TR 149).
18. Frisbie, superintendent of the senior high school, testified that
Respondent, in 1984, realized and acknowledged, for the first time, that
asbestos-containing material was present in the school building. After that
time, the school exerted a systematic effort to comply with all applicable
regulations (TR 150), including posting of required notices and warnings
.(TR 144-154).
19. Wiederstein, Principal of the Alta Brown Elementary School (TR 151),
testified that the friable asbestos-containing material was removed from said
school prior to the start of classes in the fall of 1984 (TR 156). Upon his
return to his school on August 5 or 6, 1984, he posted Form 7730-3 (Notice to
. Employees) and about the end of August, 1984, he notified the PTO of the pre-
sence of asbestos at the Alta Brown Elementary School (TR 154).
20. On June 6, 1984, Croraer, Director, Department of Buildings and Grounds
for Respondent, certified, in accordance with 40 CFR 763.1l7(c), that all
"friable" materials in the boiler and piping insulation in Respondent's
buildings should be treated as asbestos-containing materials. On May 10, 1985,
Respondent's Superintendent of Schools, Phifer, notified Complainant that
such election had been revoked and no longer binding on Respondent (R Ex-24).
21. During July, 1984, Cromer prepared a memo advising "All School Employees"
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that a preliminary Inspection of the Alta Brown Elementary and Senior High
buildings was made and that It was suspected that insulation convering the
boilers and steam and hot water lines contained friable asbestos; that samples
of such insulation had been taken and testing was being performed to determine
If asbestos was present. Said memo cautioned all employees to wear protective
breathing devices If they entered such areas (R Ex-11; TR 85).
22. In July, 1984, Cromer notified principals Weidersteln and Frisbie, by
identical memos, that friable asbestos materials were found in the boiler
room of the main (Alta Brown Elementary and senior high) school buildings
and that such materials would be removed prior to the opening of school.
He furnished each principal with a completed EPA Form 7730-3 (Notice to
School Employees) and advice for completing the notification (R Ex-12 and
Ex-13; TR 86-87). Said Form 7730-3 was meant to advise where records were
kept concerning said friable materials; as the July, 1984, Form 7730-3
advised where the friable materials were 1ocated , a corrected form properly
filled out was sent to each principal in March, 1985 (R Ex-16; R Ex-19; TR
88-89).
23. In March, 1985, the principals each prepared and forwarded to parents of
their respective students a notice stating that samples of the Insulation
covering the boilers and piping were analyzed and found to contain asbestos
materials and that said insulation was removed in summer, 1984 (R Ex 17;
R Ex-19).
24. By memorandum, dated July 29, 1982, Jerald Cromer, Respondent's Director
of the Department of Buildings and Grounds, notified Dr. Horace Good, then
Respondent's Superintendent of Schools, that "EPA has mandated that school
districts make a complete visual inspection of all district buildings to
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identlfy asbestos-containing friable materials", and that such inspection must
be completed prior to June, 1983. I/ The memo further stated that said
inspection was completed and attached a completed EPA Form 7730-1, showing all
buildings of Respondent had been inspected and that no asbestos-containing
friable material was found (R Ex 4; TR 69-70).
25. Said 1982 inspection, made by Respondent's Building and Grounds Director
Cromer, did not include inspection of steam pipes, boilers or utility
tunnels which were difficult to get to and not readily accessible (TR 71).
26. The school buildings of the Respondent were also inspected in the summer
of 1984, said inspection being conducted by Gene Myers at the direction of
Cromer (R Ex-7; TR 77-78).
27. As a result of the 1984 inspection, friable material was discovered in
the Senior High School main building and the Alta Brown Elementary School
building (R Ex-5 and Ex-7).
«
28. Based upon sampling and testing, after discovery of friable material in
1984, it was determined that the friable materials were asbestos-containing,
and the school district had architects prepare specifications for removal of
the materials, and advertised for bids for removal (R Ex-8 and R Ex-9).
29. All friable asbestos-containing materials identified as a result of the
inspection, sampling and testing as aforesaid, was removed by the school
district prior to commencement of the 1984-1985 school year (TR 148-149, 156).
30. The Respondent's School Service Center is a facility separate and apart from
its Central /dministrative Offices, the latter being the facility in which the
!_/ 47 FR 23360 was corrected by 47 FR 25145 (June 10, 1982) to show that the
Effective date of the Rule is June 28, 1982, and that all portions of the Rule
"shall be complied with by June 28, 1983."
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offlce of the Superintendent of Schools is located and where the official
files and records of the school district are maintained (TR 95, 129-130).
31. Makowski testified that on August 2, 1984, he requested, of Cromer, to
see all records in Respondent's files pertaining to the ashestos in schools
TR 15-16). He examined only the compiled files on asbestos information
given to him in Cromer's office (TR 17) and was not aware of or advised
that any records existed which were not included in those then furnished to
him by Cromer (TR 15).
32. On the occasion of subject inspection, school was not in session and,
except for custodial personnel at the Abe Huber Junior High School and
the Garden City Senior High School, the school buildings inspected were
not occupied, and had to be unlocked for purposes of the Makowski inspec-
tion (TR 98).
33. Cromer stated that in 1982 and thereafter, inspections of all the school
buildings were made; however, such inspections were not on a scheduled basis
and were not documented. He emphasized to maintenance people (sometime after
summer, 1983 [TR 75]) that they must start keeping the boiler rooms clean;
as a result, the boilers were "washed down" with water. In the summer of
1984, it was apparent that the insulation on the boilers had deteriorated,
which Cromer attributed to moisture from the boilers being "washed down.'
An inspection on June 6 and June 7, 1984, located such friable materials in
the Alta Brown Elementary and Senior High schools (TR 77-79; R Ex-7). As
a result of the 1984 inspection, Phifer executed a 7730-1 (Notice of
Inspection for Friable Materials), dated July 25, 1984 (TR 80; R Ex-6).
As a result of sampling and testing, It was confirmed that the boiler wrap
(insulation) was asbestos-containing (TR 81-82) and, after a permit was
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obtalned from the KDHE, dated August 17, 1984 (R Ex-10), said asbestos-
containing boiler wrap was removed from said schools (TR 83) on a week-end when
school was not In session (TR 84).
34. Complainant admits that Respondent Is now In compliance with the "EPA
Asbestos-in-Schools Regulations", said compliance having been achieved after
June 28, 1983, and after the Inspection on August 2, 1984 (C's Brief, page 8).
35. While a majority of a school population may not have access to a boiler
room or to tunnels underneath buildings, there is always the possibility that
maintenance activities can cause the transfer of asbestos-containing materials
to a place where the school population will be exposed. Examples include
tracking of such materials (Inadvertently or unknowingly dropped or disturbed
or purposely placed in containers that do not prevent a dispersion of some
amount of said materials) in areas frequented by the school population (TR 38;
47 FR 23364).
36. EPA's policy from July, 1983, until June, 1984, was to issue a Notice of
Noncorapliance (a letter of warning assessing no penalties), listing viola-
tions detected at the school district and affording the school district a
limited time, usually thirty (30) days, to provide proof of compliance. This
policy was changed in June, 1984, because, on the basis of data compiled
nationwide, it did not prove to be effective in accomplishing its objective,
as an increase, rather than a decrease, in violations was noted (TR 52-53;
47 FR 23362).
37. Removal of asbestos-containing material was not required by any rules
pertinent to the Complaint made by EPA or the requested hearing held on
l<3ovember 26, 1985 (TR 54).
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38. EPA operates a Technical Assistance Program (hereinafter "TAP"), available
to any and all school districts, to give advice and to answer inquiries con-
cerning compliance with "Rules for Identification and Notification of Friable
Asbestos-Containing Materials in Schools." Respondent used TAP in 1979 (TR 59;
47 FR 23361).
39. Cromer testified that there were portions of subject buildings that he
omitted inspecting, e.g., steam pipes, boilers and utility tunnels, which
were considered "very difficult to get to", but which he considered a "vul-
nerable area." (TR 71).
40. Subsequent to the EPA inspection on August 2, 1984, Respondent set up a
program whereby the asbestos-containing materials were removed and its buildings
are regularly inspected quarterly for "friable material"; custodians have been
instructed to be observant during their daily clean-up duties, and principals
have been asked to make monthly inspections (TR 73).
41. Inspections on June 6 and 7, 1984, revealed friable materials in the boiler
rooms at Alta Brown Elementary School and the senior high school (TR 79), which,
after sampling and testing, were found to be asbestos-containing (TR 81; R Ex-8).
42. In July, 1984, Respondent employed architects to prepare specifications for
bids to remove said materials from the boilers (TR 81; R Ex-9). A permit from
KDHE, authorizing disposal of said material after its removal, was obtained
(R Ex-10) and said materials were removed and disposed of in August, 1984
(TR 83).
43. Upon finding that said asbestos-containing materials were present in
Respondent's school buildings, all school employees were notified by memo
(R Ex-11; TR 85), as were the principals of Al ta Brown Elementary School and
the senior high school (R Ex-12 and Ex-13).
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44. EPA's Penalty Policy was adopted on June 22, 1984. The alleged violation
that Respondent failed to meet the 1983 deadline for compliance with the
Asbestos in Schools Rule is considered a minor violation hecause the Respondent
had made good-faith efforts to address the asbestos issue after the said dead-
line (TR 41). The alleged violations of failure to warn (employees by posted
notices pursuant to §763.111) and notify (the PTO or parents) were each con-
sidered significant. Under the Penalty Policy Matrix, minor violations are
assessed a $1,300 civil penalty; significant violations are assessed a $6,000
civil penalty (TR 40; 52).
45. Samples of the boiler pipe wrappings, removed from subject buildings of
Respondent in 1984, were analyzed for asbestos type and percentage by Midwest
Research Institute in Kansas City, Missouri, and were found to contain, by
volume, 50% to 85% asbestos (C Ex-5).
CONCLUSIONS OF LAW
1. The rule here applicable is that provided in 40 C.F.R. Part 763, Subpart F
§763.100 et seq.) which requires local education agencies ("LEA"), including
Respondent, to identify friable asbestos-containing material ... by visually
inspecting (§763.105) (their school buildings) for friable materials, sampling
such materials (§763.107), having samples analyzed (§763.109) and the further
requirements as are set forth in §763.100 (Scope and Purpose) providing for
warning and reducing exposure of the public to such materials by issuing Notices
supplying pertinent information respecting the health effects of the presence of
said materials in said buildings, and to keep records of such inspections, sampling
analysis accomplished and the Notices thereof so given (§763.111, §763.114).
2. Respondent is authorized to contractually delegate its duties under said rule,
but is responsible for proper performance of such duties (§763.100; TR 57).
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3. Intent to violate is not an element of any violation for which civil
penalties are assessed (see §16[a], TSCA, 15 USC 2615[a]; cf. 15 USC 2615[b]);
however, Intent or the absence thereof may be shown as an aggravating or miti-
gating circumstance attendant to such violation.
4. Respondent had a duty to inspect each of its school buildings, including
maintenance, storage or utility facilities essential to their operation, to
locate all friable material (§763.103[h][5]; §763.105]).
5. Respondent's failure to locate subject friable asbestos-containing mate-
rials and to comply with §763.105, §763.107, §763.109, §763.111 and §763.114
on or before June 28, 1983, supports the charges of violations set forth in
the Complaint (47 FR 23360; 47 FR 25145; §763.115).
6. Complainant has, on this record, made a prima facie case in showing the
existence, in 1984, of asbestos-containing materials In Respondent's Alta
Brown Elementary School and Garden City Senior High School. Respondent has
the burden of presenting and going forward with any defense to the allegations
set forth in the Complaint (Consolidated Rules of Practice Coverning the
Administrative Assessment of Civil Penalties, etc., 40 CFR Part 22, §22.24).
7. Any Form 7730-1 (Report of Inspection for Friable Asbestos) prepared by
Respondent and dated In 1982 (R EX-5) which evidences that no asbestos-
containing materials were present in July, 1982, does not reflect that a proper
and adequate inspection, as required by applicable regulations, was then made,
as the substance of said Form 7730-1 Is directly refuted by Form 7730-1, pre-
pared by Respondent on July 25, 1984, which evidences, after Inspection, that
asbestos-containing materials were present (R Ex-6; TR 71).
8. The proper designation, by Agency regulations, of certain records to be kept
necessarily implies an obligation to produce them (In the matter of Kansas City
Star Co. , citing in re Grand Jury Proceedings, 601 F.2d 162 [1979]).
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-16-
9. An appropriate civil penalty Is properly determined If It Is In accord
with pertinent provisions of the Toxic Substances Control Act (TSCA), regula-
tions promulgated pursuant thereto, and Agency policy, compatible with appli-
cable regulations, which has been consistently adhered to by the Agency (see
memorandum dated November 16, 1983: "Settlement with Conditions" ["SWC"]).
DISCUSSION
I have found that, on this record, a civil penalty should be assessed
against Respondent for the reasons given herelnbelow. The amount of said
civil penalty has been determined pursuant to 40 C.F.R. 22.27(b) which provides
that said amount must accord with the criteria provided for in the Act, and
upon consideration of the Agency Guidelines.
Respondent, in its defense, stresses that it first discovered subject
friable materials on June 6 and 7, 1984 (R Ex-7), and the testimony of its
Director of Plant Facilities, Croraer, that the boiler wrap had not previously
*
been in a friable condition and that he attributed its "deterioration" to
the fact that custodians had "washed down" the boilers as a means of cleaning
them (TR 77, cited in Respondent's Brief, page 13). Respondent's premise is that
the genesis of its duties under the Act was the "discovery" of said asbestos-
containing friable materials. With this, I do not agree.
To hold that said 1982 inspection report relieves Respondent of its duties
to protect the public from asbestos-containing material, admittedly present at
the time of the report, would completely emasculate the Act. To the contrary,
regulatory provisions are liberally construed and broadly Interpreted to effec-
tuate the purposes of the Act. On that basis, I find that said 1982 "Inspection",
if made as contended by Respondent 2j, was not an Inspection as contemplated by
2/ Complainant objected to the consideration of Respondent's Exhibit 6 (EPA Form
7730-1 [Inspection 7/29/82]) because said document was not furnished or claimed
to exist until after said EPA Inspection of August 2, 1984.
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-17-
the applicable regulations. Admittedly, boiler wrap and tbe utility facilities
were not then Inspected. 40 C.F.R. 763.103(d) defines friable material as any
material applied onto . . . piping, ductwork or any other part of the building
structure which, when dry, may be crumbled, etc. §763.105(b)(5) Includes mainte-
nance, storage or utility facilities in the definition of "school buildings."
Croraer recounted that an "inspection" was made In 1982, but that such
inspection did not include steam pipes, boilers or utility tunnels (TR 71;
Finding 25). It logically follows that the 1982 condition of the subject
materials was not then determined by Cromer or anyone else. It was after
Summer, 1983, and after Cromer attended a seminar in Chicago (TR 75), that
he started to stress maintenance inspections, by discussions mainly with
plumbers and electricians, generally on the need ... to Identify areas of
concern (TR 76).
Cromer stated (TR 71):
"I did not crawl tunnels. I did not look at steara
pipes. The issue of steam pipes came up and we
realized that that was a vulnerable area ...
There were a lot of conditions that happened . . .
that we should be looking at our steam pipes and
our boilers and our utility tunnels."
It is thus apparent and I here find that the "discovery" marie in 1984
should have been made earlier and would, upon proper inspection, have been
made prior to June 28, 1983. The procedures followed so strictly - at a
time subsequent to subject EPA inspection - would have been instituted in a
timely manner and thus have afforded protection to the public as contemplated
by the Act and applicable regulations.
Any and all contentions of the parties presented for the record have been
considered and any suggestions, requests or arguments Inconsistent with the
foregoing Initial Decision are hereby denied.
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-18-
CIVIL PENALTY
40 C.F.R. 22.27(b) provides that I shall determine the dollar amount of the
recommended civil penalty to be here assessed In accordance with any criteria
set forth In the Act and that I must consider any civil penalty guidelines
issued underg the Act. Section 16 of the Act, 15 USCA §2615(a)(2)(B) provides
that:
"... in determining the amount of a civil penalty (I)
shall take into account the nature, circumstances,
extent and gravity of the violation or violations and
with respect to the violator, ability to pay, effect
on ability to continue in business, any history of prior
violations, the degree of culpability, and such other
matters as justice may require."
The nature and circumstances of the violations have been hereinnbove
described. Whereas, the friable material was discoverable, its accessability
was difficult. Its asbestos-containing character made it a most hazardous
material. Upon consideration of the foregoing, I conclude that the gravity of
the violation was properly characterized by the Agency as being "significant."
I have further considered Respondent's history of abating such hazardous mate-
rial that was readily apparent, e.g., the abatement in 1979 of the "asbestos
problems" at Abe Huber (gymnasium and hallways) and Alta Brown (classroom).
I have further considered and take notice that the Agency has, for settle-
ment purposes, reduced penalties substantially on the condition that compliance
with the regulations Is fully achieved. 3/ This policy is altogether consistent
3V Settlement with Conditions (SUC), TSCA Guidance Manual and Policy
Compendium, inclvKHng in-house memorandum, November 16, 1983.
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-19-
with the provisions of the regulations to the effect that if no asbestos-containing
materials are found ("the focus of the rules"), the school is exempt from the
record keeping and notification requirements, provided that the determination that
a friable material does not contain asbestos is based on at least three samples
of said friable material (§763.117[a][3]). Further, If, In the time prior to
June 28, 1983, the LEA has eliminated all such materials previously discovered,
e.g., by removal, Subpart F of Part 763 does not apply (§763.117[c][2];
47 FR 23367, May 27, 1982).
Upon consideration of the provisions of the criteria set forth in the Act
and upon consideration of the Agency guidelines, I find that Respondent, by its
action In completely removing the offending materials and by formulation of its
program to exert a systematic effort to comply with all applicable regulations
by regularly making inspections for the protection of its employees, its
students and the public in general, comes within the policy adhered to by the
*
Agency. In the premises, I find that an appropriate penalty to he assessed
against Respondent is 10% of that proposed by subject Complaint, or a total
sum of $1,330.00.
Upon consideration of the post-hearing submissions of the parties, the
conclusions reached and in accordance with the criteria set forth in the Act
and the provisions contained in regulations promulgated pursuant to the Act,
I recommend the adoption by the Administrator of the following:
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-20-
FINAL ORDER kj
For violation of Section 15 of the Toxic Substances Control Act
(15 USC 2614) and regulations promulgated thereunder (40 C.F.R. Part 763,
Subpart F), as charged by Counts I, II and III of the Complaint, a civil
penalty in the total sum of $1,330.00 is assessed against Respondent Garden
City Unified School District 457, in accordance with Section 16(a) of the
Act (15 USC 2615[a]). Payment of the full amount of the civil penalty shall
be made, within 60 days of the service of the Final Order upon Respondent,
by forwarding a certified or cashier's check In the amount of $1,330.00,
payable to the Treasurer of the United States, to
Mellon Bank
U.S. EPA - Region VII
Regional Hearing Clerk
Post Office Box 360748M
Pittsburgh, Pennsylvania 15251.
It is so ORDERED.
DATED: March 19, 1986
Marvin E. Jones
Administrative Law Judge
4_/ Unless an appeal is taken pursuant to the rules of practice, 40 C.F.R.
22.30, or the Administrator elects to review this decision on his own motion,
the Initial Decision shall become the Final Order of the Administrator (see
40 C.F.R. 22.27[cl).
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CERTIFICATE OF SERVICE
I hereby certify that, in accordance with 40 CFR 22.27(a), I have this
date forwarded to the Regional Hearing Clerk of Region VII, U.S. Environmental
Protection Agency, 726 Minnesota Avenue, Kansas City, Kansas 66101, the Original
of the foregoing Initial Decision of Marvin E. Jones, Administrative Law Judge,
and have referred said Regional Hearing Clerk to said Section which further
provides that, after preparing and forwarding a copy of said Initial Decision
to all parties, she shall forward the Original, along with the record of the
proceeding, to the Hearing Clerk (A-110), EPA Headquarters, Washington, D.C. ,
who shall forward a copy of said Initial Decision to the Administrator.
DATE: March 19, 1986
. _ .
Mary Lou Clifton
Secretary to Marvin E. Jones, ADLJ
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IN THE MATTER OF
GARDEN CITY UNIFIED SCHOOL
DISTRICT #457,
RESPONDENT.
Docket No. TSCA-VII-S4-T-273
CERTIFICATION OF SERVICE
In accordance with Section 22.27(a) of the Consolidated
Rules of Practice Governing the Administrative Assessment of
Civil Penalties ... (45 Fed. Reg., 24360-24373, April 9, 1980),
I hereby certify that the original of the foregoing Initial
Decision issued by the Honorable Marvin E. Jones along with
the entire record of this proceeding was served on the
Hearing Clerk (A-110), Environmental
Protection Agency,
20460 by certified
a copy was hand-delivered
Thomas, Office of
401 M Street, S.W., Washington, D.C.
mail, return receipt requested; that
to Counsel for Complainant, Rupert G
Regional Counsel, Environmental Protection Agency, Region 7,
726 Minnesota Avenue, Kansas City, Kansas 66101; that a copy
was served by certified mail, return receipt requested on
Respondent's attorney, Ward Loyd, Esquire, Loyd & Grisell,
Suite 316 Warren Building, 103 West Chestnut Street,
Garden City, Kansas 67846.
If no appeals are made (within 20 days after service of
this Decision), and the Administrator does not elect to
review it, then 45 days after receipt this will become the
Final Decision of the Agency (45 F.R. Section 22.27(c), and
Section 22.30).
Dated in Kansas City, Kansas this 20th day of March 1986.
Diana G.
Regional
Reid/
Hearing
Clerk
cc: Honorable Marvin E. Jones
Administrative Law Judge
U. S. Environmental Protection Agency
726 Minnesota Avenue
Kansas City, Kansas 66101
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,'
BEFORE THE ADMINISTRATOR
IN RE
STATE OF WEST VIRGINIA,
DEPARTMENT OF HIGHWAYS
Respondent
RCRA-III-136
INITIAL DECISION
CO
CO
1. Toxic Substances Control Act - PCB - Acclerated decision as to liability
should issue where Respondent, in its Answer, admits the factual allegations
which comprise the violations alleged in the Conplaint.
2. Toxic Substances Control Act - Penalty Calculation - Where the Agency
correctly applied the Agency's published penalty policy in arriving at 1±ie
proposed penalty, the burden for showing that such penalty amount should be
reduced shifts to the Respondent.
3. Toxic Substances Control Act - Penalty Calculation - The mere fact that a
Respondent is a government entity and supported solely by tax revenues is not
a valid basis for reducing a penalty.
4. Toxic Substances Control Act - Penalty Calculation - Presentation of data
which purports to show that, in other cases the Agency has, through settlement,
accepted a reduced penalty is not a persuasive or valid reason to reduce a
penalty in any other case.
-------
- 2 -
Appearances:
Henry H. Sprague, Esquire
U.S. Environmental Protection Agency
Region III
Philadelphia, Pennsylvania
Robert F. Bible, Esquire
West Virginia Department of Highways
Charleston, West Virginia
INITIAL DECISION
This matter is before me for decision on the sole issue of the arrount of
the civil penalty to be assessed.
Procedural Background
Following the issuance of the Complaint in this matter and the filing of
an Answer, the Complainant moved for an accelerated decision pursuant to
40 C.F.R. § 22.20 on the question of liability for the offenses set out in
the Complaint on the basis that the Answer admitted the material facts which
comprised the three Counts of the Complaint.
The motion was granted and an Acclerated Decision on the question of
liability was issued on January 7, 1986. That Decision, which is attached
hereto and made a part of this Decision, required the parties to advise the
Court no later than February 6, 1986 as to whether they wished to submit the
question of the amount of the penalty on briefs without a hearing. The
parties, being unable to informally resolve the penalty issue, elected to
submit that question on briefs and forego a hearing.
I have carefully considered the briefs filed, the materials submitted
by the parties pursuant thereto as well as the documents provided in the
prehearing exchange, to the extent that I find them to be reliable, admissi-
ble and relevant.
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— 3 —
Discussion
The Cotrplainant alleged three separate violations, hereinafter referred
to as Counts I, II and III. The first Count involved the failure to inspect
and keep records on 18 PCB transformers used in the Respondent's Wheeling
Interstate 70 tunnel. The Complaint sought a $10,000 penalty for these two
violations. The failure to inspect and to keep records thereof constitute
. tuo separate violations for which the Agency elected to levy one penalty.
The Answer alleged that the inspections were actually 'made, but admitted
that no record of such inspections were kept. The Court, in its Accelerated
Decision, supra, suggested that some possible reduction of this penalty be
considered, given the fact that the inspections were made. The Ccnplainant
replied that the $10,000 penalty was coribined and since only one penalty was
sought for two violations, either of which would spearately warrant a $10,000
penalty, no reduction is warranted.
The second Count involved the failure to mark the PCB transformers with
the required markings specified in the regulations. A $15,000 penalty was
proposed for this violation.
As to Count III, the Complaint alleged and the Answer admitted that the
Respondent failed to keep records involving the use and quantities of materials
involved in the 18 transformers. The records are to be kept and form the
basis of an annual document prepared for each facility on July 1 of every
year and that in this instance the Respondent failed to maintain annual
documents for the 18 transformers for the calendar years 1978, 1979, 1980,
1981 and 1982 as required by 40 C.F.R. § 761.180(a). For this violation, the
Complaint sought a penalty of $2,000.
-------
The total of all of the above-mentioned violations is $27,000. ,' However,
since the inspection occurred on the basis of a request for assistance by
the Respondent to the EPA to assist it in dealing with the PCS items in its
possession, the Agency reduced the total penalty by 15 per cent, arriving at a
net penalty of $22,950.
The penalties suggested were calculated by utilizing the Agency penalty
policy concerning PCB violations which appeared in the Federal Register and
were effective on April 24, 1980. This penalty policy is accepted by the
Court as being a rationale and logical means of calculating penalties and its
terms and conditions appear to be consistent with the statutory requirements
and the intent of Congress in establishing the penalty philosophy associated
with PCB violations. Like several previous penalty policies adopted by the
Agency for calculating civil penalties involving other statutes, this document
describes in seme detail a methodology for determining the seriousness of the
violations in several aspects and ultimately utilizes a matrix which attempts
to incorporate all of the elements inherent in the violation consistent with
the requirements of the statute. The matrix on one axis breaks down tfie
violations as to the extent of potential damage into major, significant and
minor categories; and then on the other axis it establishes a six-point range
of figures which attempt to reflect the circumstances surrounding the
violation. These circumstances are characterized as high range, mid-range,
and low range, with each range having two figures associated with it. Each
«
of the figures numbering one through six have associated with them a different
penalty amount and once the proper designation of the two axis are determined
by analysis of the violations it becomes a matter of applying these designa-
tions to the matrix and coming up with proposed civil penalties which are
then incorporated into the Complaint. This exercise results in a base number
-------
which is called the gravity-based penalty and then the penalty policy goes on
to describe hew additions or substractions to this base number may be calcu-
lated when one applies certain required factors to the violations, such as:
culpability, history of prior violations, ability to pay, good faith, and
such other matters as justice may require. Seme of these adjustments may
only be in an upward direction, seme of them only in a downward direction and
seme can possibly go either way depending on the facts of the case.
In this particular case, the extent of potential damage in all instances
was determined to be in the Major category because of the quantity of PCBs
involved. The number of gallons of PCBs involved in this matter was 3,203.
According to the penalty policy, violations involving over 1,100 gallons of
PCBs are considered to be Major in extent and therefore the Major category
was chosen in regard to all three Counts of the Complaint since they involve
the same PCS transformers and obviously the same volume of PCBs. Since the
Count I involved a "use" violation under the regulations, the penalty policy
suggests that two levels in the matrix are appropriate — level 2 or level 4.
V
In this case since the use violation was not "improper use" which would
require it to be placed in level 2, but rather a failure to keep records of
the required use inspections, the violations was set at level 4 which resulted
in the suggested penalty of $10,000.
As to Count II the marking violation, is Major for the reasons discussed
above and since marking violations fit only one level of the matrix according
to the penalty policy, that being level 3, this results in a penalty of
$15,000.
As to Count III the record-keeping violation, this was also of necessity
a Major violation on the probability scale and level 6 was chosen on the
circumstances matrix, because, although the Respondent did not conpile its
-------
reports as required by the regulations, all the information necessary to do
so was in the Respondent's possession. Instead of using level 4 in the
matrix EPA used level 6 to indicate a lower probability of damage. Applying
these elements to the matrix one arrives at a proposed penalty of $2,000 for
Count III of the Conplaint.
The Conplainant points out that even though these violations had con-
tinued over a period of years and therefore the Agency, if it had chosen,
could have legitimately assessed multiple day violations for these failures
to comply which would have amounted to several million dollars, they elected
to assess only a single day violation thus through the exercise of discretion
utilized an approach to the calculation which worked to the substantial
benefit of the Respondent.
The Respondent, in its brief on the penalty issue, makes several
— arguments. The first of which is that the Agency is seeking an extremely
high penalty against this Respondent in relation to the penalties actually
obtained from other persons who have violated the PCS regulations. The
Respondent arrives at this conclusion by an examination of Volume 8 of the
BNA Chemical Regulation Reporter which shows that during 1984 and 1985, PCS
penalties actually assessed averaged a little over $6,000, whereas proposed
penalties for the next following period averaged $57,000 for an extrapolated
reduction of 89 per cent. The Respondent then suggested that applying this
reduction to the proposed penalty in this case would result in a final assess-
*
ment of $2,525. The Respondent then goes on to cite two exanples of the
arbitrariness of the Agency's penalty in this case citing a violation of
the Clean Air Act against the City of Philadelphia where the penalty was
reduced fron $327,000 to $20,000, and secondly, a criminal action against
Holley Electric Corporation under TSCA where a proposed penalty of $60,000
was sought and a ultimate penalty of $15,000 was assessed.
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- 7 -
The Respondent also argues that since it is a governmental agency and
is funded from state tax revenues and therefore the taxpayers of West
Virginia will ultimately pay any penalty assessed, this factor should
mitigate against the assessment of the penalty requested.
The Respondent further argues that the proposed penalty does not serve
the purpose stated by the Agency in its March 10, 1980 announcement, i.e.,
that the penalties' be appropriate for the violations comnitted; and that
economic incentives for violating TSCA should be eliminated; and that persons
will be deterred frcm corrmitting TSCA violations. Applying this philosophy
to the instant case, the Respondent argues that since it is a state agency
there is no monetary gain to it for ccrrmitting a violation and that there is
no need to deter the Respondent frcm ccmrdtting TSCA. violations since there
was never any intent on the part of the agency to violate TSCA in the first
place.
The Respondent also alludes to some concern it had about the fact that
the informal settlement negotiations entered into between it and the Agency
was sabotaged by the fact that new counsel was assigned to the case and he
reverted to the initial position of seeking the full penalty as originally
assessed.
As part of its submission, the Complainant moved to exclude from the
Court's consideration the 36 pages of enclosures which the Respondent had
attached to its brief and further urges the Court to strike any discussions
relative to settle-rent negotiations between the parties prior to submitting
this matter to the Court on briefs. Some of the materials referred to by the
Complainant in its motion to exclude have to do with documentation of the
Respondent's efforts to come into compliance with the regulations following
the intial inspection during which the deficiencies were pointed out to the
-------
state. /The Complainant takes the position that actions taken by a Respondent
following the notification by the Agency of prior violations is irrelevant
in calculating a penalty. As to these matters, the Court agrees with the
Ccnplainant that good-faith efforts to corrply, after the fact, in most
instances, have no bearing on the calculation of the penalty which had its
genesis and basis in violations which occurred in the past. As to the refer-
ence to settlement negotiations, such matters are ordinarily excluded by the
rules of practice applicable to these cases and in any event the arguments
set forth by the Respondent in this regard are of no probative value. The
Court will, therefore, exclude frcm its consideration any references to what
transpired during settlement negotiations and will not, for purposes of this
exercise, consider what the Respondent did to come into compliance following
its notification of the existence of the violations by the Agency.
As to the other arguments made by the Respondent in support of its
position that the proposed penalty is too high, such arguments are in my
judgement not persuasive. The recitation of statistical information gathered
from a reputable legal publication suggesting considerable reduction of
proposed penalties following and growing out of informal settlement negotia-
tions of other TSCA cases is of no particular value. This is true because
in the first place the Court has no idea as to what the circumstances of each
of the reported cases were and secondly, as pointed out by the Ccnplainant,
in many cases the Agency will settle a case prior to a hearing for a substan-
•
tially reduced amount for several reasons not the least of which is to save
the Government the cost and time of trying a case, and secondly, that nor-
mally such settlements are made in the context of prompt remedial action
being taken by the Respondent, a situation which does not necessarily exist
in circumstances where trial is required.
-------
Apparently the Respondent simply does not like the result obtained by
applying the Agency's penalty policy to the facts in this case. My review of
the Agency's procedures in applying the facts in'this case to the rationale
contained in the penalty policy reveals that such exercise was done properly
and it applied the correct factors in arriving at the proposed penalty
amounts set forth in the Ccrnplaint. Ihe Respondent's argument that it being
a tax supported state agency in sane way places it in a special category when
one cones to the point of calculating a penalty is totally without merit.
The statute and the regulations make no special case for governmental entities
at any level and as pointed out by the Complainant, a governmental agency who
is charged with protecting the health and safety of the citizens it serves
certainly should provide an exemplary example to the private sector and the
fact that it has no financial motives for violating the Act in no way
diminishes the potential harm that its violations pose to the environment and
the general public. I am, therefore, of the opinion that the arguments set
forth by the Respondent in its initial and reply briefs on the issue of the
proper amount of the penalty are not persuasive and do not provide the Court
with any rational, legal or logical basis to reduce the penalty proposed by
the Conplaint.
Accordingly, it is concluded that a total penalty of $22,950 should be
assessed for the violations found in this case.
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J.U —
ORDER1
Pursuant to § 16(a) of the Toxic Substances Control Act (15 U.S.C.
2615(a)), a civil penalty of $22,950 is hereby assessed against the Respondent,
State of West Virginia, Departjnent of Highways, for the violations of the Act
found herein.
Payment of the full amount of the civil penalty assessed shall be made
within sixty (60) days of the service of the final order upon Respondent by
submitting a certified or cashier's check payable to the United States of
America. The check shall be forwarded to:
EPA - Region 3
(Regional Hearing Clerk)
P. O. Box 360515M
Pittsburgh, PA 15251
DATED: March 21, 1986
Thomas B. Yost / '
Administrativ^ Law Judge
1 40 C.F.R. § 22.27(c) provides that this Initial Decision shall becorre the
Final Order of the Administrator within 45 days after its dervice upon the
parties unless: (1) an appeal is taken by a party to the proceedings, or
(2) the Administrator elects, sua sponte, to review the Initial Decision.
40 C.F.R. § 22.30(a) provides that~such appeal maybe taken by filing a Notice
of kAppeal within twenty (20) days after service of this Decision.
-------
IN RE
STATE OF WEST VIRGINIA,
DEPARTMENT OF HIGHWAYS
Respondent
•RGRA-III-136
ACCELERATED DECISION
Pursuant to 40 C.F.R. § 22.20, the Corrplainant has moved for an accelerated
decision solely on the issue of the Respondent's liability.
In support of the motion, the Corrplainant argues that the Answer filed by
the Respondent essentially admitted the material facts which comprise the elements
of the three Counts set out in the Cornplaint.
In its reply to the motion dated December 30, 1985, the Respondent argues
that the motion should be denied as to Count I of the Cornplaint since a genuine
issue of material fact exists as to that Count. In support of its position,
Respondent states that Count I contains two parts, i.e., (1) the failure to
make visual inspections of the PCB transformers as required by 40 C.F.R.
§ 761.30(a)(l)(ii), and (2) failure to maintain a record of such inspections
and to keep such records for three years following the disposition of said
transformers as required by 40 C.F.R. § 761. 30(a) (1) (iv). In its Answer, the
Respondent admitted that it failed to keep the required records, but stated
that the inspections were made and on a more frequent basis than the Agency's
rules require. Respondent argues that the Ccnplainant's own inspection reports,
which have been filed as exhibits in this case, support these statements^
Respondent makes no arguments as to Counts II and III of the Ccnpl
L—> •* '-*• ••";'v «'-
\V '' •"'"-• ^ 'V7
\V:-.. V ,v/
-------
My review of the pleadings and other documents filed on the parties reveal
that the Respondent has admitted violating Counts II and III of the Ccrrplaint
and a portion of Count I, as discussed above.
It is clear, therefore, that an accelerated decision as to those admitted
violations is appropriate, and I so find. As to the contested portion of
Count I, since the proposed penalty therefore is not described but rather a
single penalty of $8,5000.00 is proposed for the whole Count, I suggest that
the parties may wish to discuss the matter toward the end that the Ccrrplainant
may decide to adjust the penalty as to the "failure to inspect" element. I say
this since the record indicates that these inspections were, in fact, made. If
the Ccnplainant decides to drop that portion of Count I having to do with the
failure to inspect, the question of the amount of the penalty could be submitted
to the Court on briefs without the necessity of a hearing.
Accordingly, it is hereby ordered that:
1. The Respondent violated Counts II and III of the Complaint and
the recordkeeping portion of Count I.
2. The parties should consult on the issue of the amount of the
penalty in an attempt to settle that question.
3. If the parties are unable to resolve the penalty issue, they should
explore the notion of presenting that matter to the Court on briefs without
a hearing.
4. The parties shall advise the Court, no later than February 6, 1986,
*
as to how they wish to proceed with this case.
EATED: January 7, 1986
Thcmas B.
Administrative Law Judge
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CERTIFICATION OF SERVICE
I hereby certify that the original of the foregoing was served on the
Regional Hearing Clerk, USEPA Region III; and that true and correct copies
were served on: Henry H. Sprague, Esquire, U.S. Environmental Protection
Agency, Region III, 841 Chestnut Building, Philadelphia, Pennsylvania 19107;
• • '
and Robert F. Bible, Esquire, West Virginia Department of Highways, A519,
1900 Washington Street, East, Charleston, West Virginia 25305 (service by
certified mail return receipt requested). Dated in Atlanta, Georgia this 7th
day of January 1986.
Sandra A. Beck t-
Legal Assistant to Judge Yost
HONORABLE THOMAS B. YOST
U.S. ENVIRQNMEOTAL PROTECTICN AGENCY
345 COURTLAND STREET
ATLAOTA, GEORGIA 30365
404/347-2681, Ccnro. 257-2681, FTS
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the Matter of )
LTV Steel Company, ) Docket No. TSCA-V-C-495
Respondent j
DEFAULT ORDER
This is a proceeding under the Toxic Substances Control Act, Section
16(a), 15 U.S.C. 2615(a) for the assessment of civil penalties for alleged
violations of a rule issued under Section 6(a) of the Act, 15 U.S.C. 2605
(a), regulating the manufacturing, processing, distribution, use, disposal,
storage and marking of polychl orinated byphenyls, 40 C.F.R. Part 761. _!_/
The complaint, issued by EPA Region V, alleged that Respondent LTV Steel
Company, Inc. had improperly disposed of PCBs. A penalty of $25,000 was
requested. Respondent answered admitting the violation but contending that
a civil penalty was inappropriate, and requesting a hearing.
Respondent has now filed a notice withdrawing its request for a hearing
and consenting to the issuance of an order assessing the penalty proposed
in the complaint, and in the alternative has moved to strike its answer and
_!_/ TSCA, Section 16(a) provides in pertinent part as follows: "(1) Any
person who violates a provision of Section 15 shall be liable to the
United States for a civil penalty in an amount not to exceed $25,000 for
each such violation. Each day such violation continues shall, for the
purposes of this subsection, constitute a separate violation of Section 15."
TSCA, Section 15, makes it unlawful among other acts, for any person to
"(1) fail or refuse to comply with . . . (c) any rule promulgated . . .
under Section . . . 6."
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issue a default order on consent assessing the penalty proposed in the
complaint. Complainant in its response says it has no objection to
Respondent's notice of withdrawal and motion in the alternative, and
further states that a default order is appropriate.
On consideration of Respondent's motion and Complainant's response
thereto, Respondent's answer is stricken. Respondent is found in default
and an order assessing the penalty proposed in the complaint is issued.
ORDER 2/
Pursuant to Section 16(a) of the Toxic Substances Control Act, 15
U.S.C. 2615(a), a civil penalty of $25,000, is hereby assessed against
Respondent LTV Steel Company, Inc.
Payment of the full amount of the civil penalty assessed shall be
made within sixty (60) days of the service of the final order by submitting
a certified or cashier's check payable to the United States of America and
mailed to:
EPA - Region V
(Regional Hearing Clerk)
P.O. Box 70753
Chicago, IL 60673
Gerald Harwood
Administrative Law Judge
Dated: May 21 , 1986
Washington, D.C.
2J Unless an appeal is taken pursuant to the Rules of Practice, 40
C.F.R. 22.30, or the Administrator elects to review this decision on
his own motion, the Default Order shall become the final order of the
Administrator. See 40 C.F.R. 22.27(c).
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR '
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f (
2
unreliable. The depositions were also held to constitute admissions of
parties and thus also admissible under Federal Evidence Rule 801(d)(2).
Toxic Substances Control Act - Strict Liability - Owners and Operators
Where evidence failed to establish that holder of bare legal title to
property upon which PCBs were located, participated in operation of busi-
ness or contributed in any way to violations of PCB regulation (40 CFR
Part 761), holder could not be held liable for such violation and complaint
as to such holder was dismissed.
Toxic Substances Control Act - Rules of Practice - Determination of
Penalty - Remittance - Disposal - Where evidence established that payment
of penalty and proper disposal of PCBs were beyond Respondent's financial
capability and it appeared that only possibility of accomplishing proper
disposal of PCBs and retention of Respondent as a viable business entity
was remission of penalty, penalty would be remitted, provided PCBs were
removed from storage and disposed of in accordance with the regulation.
Appearances for Complainant: James Thunder, Esq.
Debra A. Klassman, Esq.
U.S. EPA, Region V
Chicago, Illinois
Appearances for Respondent J. Ross Haffey, Jr., Esq.
George J. Huth: Edward G. Bohnert, Esq.
Bernard, Haffey & Bosco Co., L.P.A,
Lyndhurst, Ohio
Appearance for Respondent Frederick C. Bougher, Esq.
Joyce Nichols: Laribee & Cooper
Medina, Ohio
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3
Initial Decision
This is a proceeding under § 16(a) of the Toxic Substances Control
Act (15 U.S.C. 2615(a)). The proceeding was commenced on December 7, 1983,
by the issuance of a complaint charging Respondent, Huth Oil Company, with
violations of the Act and applicable regulations concerning PCBs, 40 CFR
Part 761.17 Specifically, Respondent was charged with maintaining on
April 15, 1983, a tank (No. 60-B) holding approximately 25,000 gallons of
waste oil and sludge containing PCBs in concentrations of 50 ppm or greater
in violation of 40 CFR 761.60(a), failure to mark the mentioned tank
with the ML label illustrated in 40 CFR 761.45(a) as required by § 761.40
(a)(l) and failure to develop and maintain annual PCB documents as required
by 40 CFR 761.180(a). For these alleged violations, it was proposed to
assess a penalty totaling $40,000.
Respondent through counsel answered, denying knowledge of PCBs on the
premises, denying applicability of the cited regulations, denying responsi-
bility for the alleged PCBs and requesting a hearing. As affirmative defenses,
Respondent alleged that it maintained records, but the records were destroyed
in a fire, that if PCBs are in the tank, they were secreted therein in oil
If Section 15 entitled "Prohibited Acts" (15 U.S.C. 2614) provides
in pertinent part:
It shall be unlawful for any person to--
(1) fail or refuse to comply with (A) any rule promul-
gated or order issued under section 4, (B) any requirement
prescribed by section 5 or 6, or (C) any rule promulgated or
order issued under section 5 or 6;
* * *
The instant rules were promulgated under § 6(e) of the Act.
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delivered to the premises by others at times unknown to Respondent and that
the PCBs were delivered to the premises prior to the effective date of the
regulations. After lengthy prehearing proceedings during which it appeared
that the matter might be settled, Complainant on May 15, 1985, filed a motion
for leave to amend the complaint. The amended complaint sought to add as a
respondent, one Joyce Nichols upon the ground that she was the record owner
of the property upon which Tank No. 60-B was located. The amended complaint
designated the proceeding as George J. Huth, d/b/a Huth Oil Company and
Joyce Nichols and clarified the basis for Count I as failure to remove the
contents of Tank No. 60-B from storage prior to January 1, 1984, as required
by 40 CFR 761.65(a) and (b). Respondent Nichols filed an answer, denying
for want of knowledge the factual allegations of the complaint, alleging,
inter alia, that she held title to the premises in question as fiduciary
for Respondent, George J. Huth and requesting a hearing.
A hearing on this matter was held in Cleveland, Ohio on February 18, 19
and 20, 1986. At the hearing, Complainant moved to add a further count to
the complaint, and to increase the proposed penalty by 5,000 to $45,000,
because Tank No. 60-B was allegedly leaking at the time of an inspection
on September 5, 1985.
Based on the entire record including the proposed findings and conclu-
sions and briefs of the parties, I make the following:
Findings of Fact
1. Respondent, George J. Huth, d/b/a Huth Oil Company, is the owner ,of
the property at 2891-3006 E. 83rd Street, Cleveland, Ohio. Mr. Huth
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5
has been in the used or recycled oil business for 38 years and pur-
chased the property from Ashland Oil Conpany, Inc. in 1981.
2. The mentioned property was conveyed by George J. Huth to Respondent,
Joyce Nichols, by quit-claim deed, dated November 29, 1983 (Com-
plainant's Exh S).
3. The property was reconveyed by Joyce Nichols to George J. Huth by
quit-claim deed, dated December 4, 1985. This reconveyance was as a
result of a lawsuit, George J. Huth v. Joyce Nichols, Case No. 85-
085768-CV, Court of Common Pleas, Cuyahoga County, Ohio (complaint
and amended complaint in the above styled action, Complainant's
Exhs YjV and R and Order of Partial Dismissal, dated December 24,
1985, Nichols1 Exh 1). In this action, plaintiff, inter alia, denied
that the conveyance referred to in the preceding finding was his free
act and deed.
4. On April 15, 1983, the mentioned property was inspected by a team of
EPA employees from the National Enforcement Investigation Center (NEIC),
consisting of Russell Forba, Joyce Kopatich and Tom Newman (Tr. 331,
342). This inspection was part of a project, No. A-20, Waste Oil
Recyclers, the purpose of which was to gather information as to the
practices of waste oil recyclers, and the constituents of waste oil
and was conducted pursuant to § 307 of the Resource, Conservation and
Recovery Act (RCRA) (42 U.S.C. 6927), rather than the Toxic Substances
Control Act (Tr. 329, 352, 354, 442-43).
2J Although the transcript index of exhibits (Tr. 1-B) does not
reflect that Complainant's Exh Y, the amended complaint in the mentioned
action was admitted into evidence, the transcript at 578-79, which is
consistent with the ALJ's personal record, shows that this exhibit was,
in fact, admitted.
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5. The mentioned team conducted inspections of nine facilities handling
used or waste oil in New York and 14 in Ohio (Tr. 336). The names of
facilities handling used or waste oil were furnished by the States.
Huth Oil Company was on the list of such facilities furnished by the
State of Ohio and Huth was the fifth such facility to be inspected
by the team in Ohio (Tr. 349).
6. Mr. Forba, a senior environmental engineer for NEIC, was the project
coordinator or supervisor, responsible for all sampling activities,
including manner of collection, preservation, etc. (Tr. 337-38).
Ms. Kopatich and Mr. Newman were technicians who performed the actual
sample collection. The technicians traveled in a van which contained
sampling equipment, 8 oz. bottles, materials for cleaning sampling
equipment, lockers for storing collected samples, etc.
7. All inspections in connection with the Waste Oil Recycler's project
including that of Huth Oil were unannounced and TSCA notice of inspec-
tion forms were not issued (Tr. 352). Mr. Forba, who traveled in a
rented car, arrived at the Huth Oil Company facility at approximately
10 o'clock in the morning of April 15, 1983 (Tr. 351). He conferred
with a Mr. Lou Fernandez, an employee of Huth Oil Co., explaining
the purpose of the visit (Tr. 353). Mr. Fernandez stated that they
would have to contact the owner, Mr. Huth, and apparently called him,
for he (Huth) arrived at the facility a short time later.
8. Mr. Forba conferred with Mr. Huth in his (Huth's) car, informing him
that the purpose of the visit was to gather information under RCRA for
regulation development purposes, that they wanted information as to
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7
where he obtained his oil, how it was processed, to whom it was sold
and that they would be collecting samples (Tr. 354-55). Mr. Huth was
cooperative, giving permission for samples to be taken, but declining
the offer for split or duplicate samples, stating that he didn't need
them (Tr. 356).
9. Mr. Huth informed Mr. Forba that he handled primarily crankcase oil
and that approximately 20% was off-spec oil from Mobil Oil Company
(Tr. 357-58). Mr. Huth designated various tanks by their capacity,
e.g., Tank Nos. 250 and 158 for a 250,000-gallon tank and a 158,000-
gallon tank, respectively. The mentioned tanks were for storing oil,
while other tanks contained road oil and various sludges (Tr. 359).
The tanks containing sludges, designated 60-A and 60-B, had been
accumulating wastes for many years (Tr. 360-61). Mr. Huth was told
that if the sampling disclosed substances that were regulated, the
information would be furnished to the State of Ohio and U.S. EPA,
Region V.
10. Concluding his discussion with Mr. Huth, Mr. Forba was shown around the
facility and the location of the tanks by Mr. Fernandez. He (Fernandez)
estimated the contents and quantities in the various tanks (Tr. 362-63).
Mr. Forba then toured the facility with the technicians, Joyce Kopatich
and Tom Newman, who either tagged the tanks to be sampled or marked
them with a marker pen (Tr. 368). Tags were affixed to the valve or
port in the tank from which the samples were to be drawn (Tr. 209).
Although Tank No. 60-B had four ports or valves on its exterior,, the
only valve from which material could be drawn was the bottom valve
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8
which was three or four feet above ground level (Tr. 365-66). After
this tour, the technicians returned to the van and prepared the
bottles for sampling by affixing labels thereto with numbers that
corresponded to numbers on the tanks (Tr. 209-304).
11. Mr. Forba assigned station numbers, Nos. 51 through 61, to the ten tanks
to be sampled (Tr. 377-78; Chain of Custody Record, Complainant's Exh
C; Logbook, Complainant's Exh AA-1). Although he originally intended
that the tanks would be sampled in the sequence of the station numbers,
this did not in fact occur, because it was not convenient (Tr. 379).
For example, Station No. 60, Tank No. 40 was sampled at 10:35 a.m.,
while Station No. 51, Tank No. 70, was sampled at 10:58 a.m. These
are not necessarily precise times, but are approximations written
on the sample tags by Mr. Forba (Tr. 399).
12. While Ms. Kopatich and Mr. Newman were drawing the samples, Mr. Forba
was in the van preparing tags for the sample bottles (Tr. 388-89). The
tags contained preprinted tag numbers, e.g., N-4950, and had previously
been marked with the project code, A-20. Information placed on the
tags by Mr. Forba included identification of the facility and the date.
When the samples were brought to the van by the technicians, Mr. Forba
wrote the station and tank numbers and the time the sample was taken on
the tag, the technicians and Mr. Forba signed the tags and the tags
were tied to the bottles (Tr. 391, 399-400, 403).
13. A total of 14 samples were taken, three of which were from Tank No.
40 and one of which was a mineral oil blank for quality control pur-
poses (Tr. 396, 426-27; Tags, Complainant's Exhs K & X). After all the
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9
samples were collected, the sample bottles with tags were inserted
in zip-lock plastic bags, placed in a one-quart metal can packed with
vermiculite, lids were placed on the cans and secured with clips
and the cans placed in an ice chest (Tr. 215, 430). The Receipt for
Samples and Chain of Custody Record were prepared and signed by the
NEIC representatives. The Receipt for Samples was also signed by
Mr. Fernandez as representative of Huth Oil and the inspection was
completed at 12:00 noon.
14. The samples were delivered to the NEIC laboratory in Denver by
Mr. Newman on May 2, 1983 (Tr. 218, 224; Chain of Custody Record,
Complainant's Exh C). Receipt of the samples was acknowledged by
Mr. Timothy Meszzaros, a chemist and laboratory sample custodian
(Tr. 20, 24, 25; Chain of Custody Record). A pink copy of the Chain
of Custody Record (Complainant's Exh C-l) was delivered to Mr. Newman
who in turn gave it to Mr. Forba.
15. The Huth samples were analyzed for the presence of chlorinated paraf-
fins, various metals and PCBs (Tr. 539-40). PCB analyses were con-
ducted by Mr. Eric Nottingham, an NEIC chemist, with the assistance
of a Ms. Janet Harris (Tr. 520). The analyses were conducted in
accordance with EPA Test Method "The Determination of Polychlorinated
Biphenyls in Transformer Fluid and Waste Oils," September 1982, Com-
plainant's Exh L (Tr. 523-24). Sample No. N-4950 from Tank No. 60-B
tested 500 parts per million (ppm) PCBs (Aroclor 1242) (Tr. 536-37,
539-40; Complainant's Exh J). Mr. Forba was informed of the results
of the analyses by Mr. Nottingham and Mr. Forba relayed the informa-
tion by telephone to the Ohio EPA and to U.S. EPA, Region V (Tr. 434).
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16. On July 29, 1983, the Huth Oil Company facility was inspected by
Ms. Patricia Klahr, an environmental scientist employed by the Ohio
EPA (Tr. 81-83; Investigation Report, Complainant's Exh E). The
purpose of the inspection was to inform Huth Oil Company of the PCB
contamination, of Huth's responsibilities in connection therewith, to
verify that the oil was on the site and that the tank was not leaking.
Ms. Klahr conferred with George Huth, identified as President of Huth
Oil Company, and they proceeded to Tank No. 60-B. Mr. Huth estimated
the contents of the tank as approximately 25,000 gallons (Tr. 86).
Mr. Huth is quoted as saying that Tank No. 60-B had been taken out of
service over ten years ago because the topmost valve leaked and that
nothing had been taken out of or added to the tank during that period
(Tr. 89; Complainant's Exh E). Mr. Huth is also reported as stating
that he formerly handled oil from electric utilities, which may have
been the source of the PCBs, and that he did not feel responsible for
their disposal. Ms. Klahr provided Mr. Huth with a PCB label as
illustrated in 40 CFR 761.45 and Mr. Huth affixed the label to Tank
No. 60-B (Tr. 89, 107).
17. The Huth Oil Company facility was next inspected on September 5, 1985,
by Messrs. David Fisher, George Carter and Michael Dalton of the Ohio
EPA as a result of a call from the Cleveland Fire Department that a
PCB-labeled oil storage tank at the Huth Oil Company facility was
leaking (Tr. 124; Inter-Office Communication, with enclosure, dated
January 26, 1986, Complainant's Exh H). Proceeding to Tank No. 60-B,
which had a PCB label, Mr. Fisher observed oil leaking from the third
port from the bottom at the rate of approximately two drops per
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11
minute (Tr. 134, 138). Amplifying this testimony, he indicated the
actual leak was from the pipe leading from Port No. 3 to a point near
the ground (Tr. 138, 140, schematic, Complainant's Exh E). He stated
that the oil was collecting in a pool approximately six inches by six
inches at the base of the tank. He testified that oil on one side of
the tank had accumulated to within one-foot of the top of the dike
surrounding the tank, which he estimated at approximately two-feet in
height (Tr. 140-41, 148, 149-50). Mr. Huth was informed that the leak
should be repaired and the material disposed of immediately (Tr. 142).
On September 12, 1985, Mr. Huth called Mr. Fisher and told him that the
leak had been stopped.
18. The proposed penalty, totaling $45,000, was computed in accordance with
the PCB Penalty Policy (Complainant's Exh F), based on an estimated
quantity of 25,000 gallons of PCB contaminated oil (Tr. 168-74).
Because this worked out to 5,000 kilograms (kg) or more, the extent
of potential damage was determined to be major and the probability of
damage was determined to be in the mid-range (Circumstances Level 3),
resulting in a proposed penalty of $15,000 for the violation alleged
in Count I of the complaint, improper storage. An identical penalty
of $15,000, based on the same reasoning, was proposed for Count II of
the complaint, failure to mark the tank with a PCB label (Tr. 182-87).
The penalty proposed for the violation alleged in Count III, failure
to maintain records, was $10,000, the extent of potential damage again
being classified as major, based on the quantity of PCBs, and pro-
bability of damage (Circumstances) being regarded as Level 4. As to
Count IV, leaking of PCBs, improper disposal is Circumstance Level 1,
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but inasmuch as the area contaminated was less than 150 sq. ft., the
extent of potential damage was considered to be minor and a penalty
of $5,000 was proposed (Tr. 190-91). Huth Oil Company's ability to
pay was not considered, it being regarded as the company's obligation
to submit information in that respect.
19. Evidence as to the financial condition of the sole proprietorship,
Huth Oil Company, was introduced through Mr. James Jenkins, a certi-
fied public accountant with the firm of Jenkins, Kucharson and
Company. Mr. Jenkins prepared financial statements for Huth Oil
Company, i.e., a balance sheet as of December 31, 1985 and a state-
ment of income for the year ending December 31, 1985, and a draft
1985 income tax return for Mr. Huth (Huth Exhs 2 and 3). The finan-
cial statements are compilations, i.e., based solely on information
furnished by the owner, and are not audited nor is their accuracy
vouched for by the preparing accountants.A/ The balance sheet shows
a net worth of just under $200,000, of which approximately 37.5% con-
sists of current assets (cash, accounts receivable and merchandise
inventory). The amount of cash was established to Mr. Jenkin's satis-
faction by bank statements and accounts receivable were established
by invoices (Tr. 628-29). Merchandise (reclamation oil) inventory
constitutes just over 25% of net worth. Inventory value was based
solely on Mr. Huth's representation. Fixed assets—land, buildings
and improvements, equipment, tanks and vehicles, net of depreciation--
constitute the remaining 62.5% of net worth or owner's equity. Current
3/ Pursuant to motion of counsel for Huth, the ALJ entered an order
on February 21, 1986, directing that these exhibits be treated as con-
fidential. Although confidential status of the exhibits will be retained,
it is considered that the information therein can be discussed in general
terms without breaching confidences. This is especially true, because
neither the motion nor the order referred to the transcript.
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13
liabilities in excess of $36,000 include a loan of $23,000 from John
Huth, brother of Respondent George J. Huth, which is payable on demand
and in arrears as to interest.
20. Although the Huth Oil statement of income for the year ending December 31,
1985, reflects a net income in excess of $30,000, the draft income tax
return reflects a loss and no taxable income. Complainant has stipulated
that the cost of removing and properly disposing of the oil is $136,000
(Tr. 650).
21. Although present in the hearing room, Respondents George J. Huth and
Joyce Nichols, were not called as witnesses. Their depositions, taken
on July 11, 1985, in connection with the litigation referred to in
finding 3, were, however, admitted into evidence over the vigorous
objections of counsel for Respondents.I/ Mr. Huth, 83 years of
age at the time of the hearing, was partially handicapped from birth
(A-6, 7). The impression created by the deposition is that he is a
strong-willed man, in full possession of his faculties and possessing
a good memory. Except for approximately one year, Mr. Huth has
always operated his oil business from the 83rd Street address men-
tioned in finding 1 (A-12). In early June 1974, the office and records
of Huth Oil Company were destroyed in a fire, which Mr. Huth attributed
to arson (A-19, 20). Regarding PCBs, he denied knowing of their
presence, but acknowledged having a suspicion PCBs might be there
(A-30).
4/ Tr. 586, Complainant's Exhs A & B. For reasons discussed infra at
21, it is concluded that the depositions were properly admitted under Rule
22.22 (40 CFR Part 22) and also under Federal Evidence Rule 801(d)(2),
concerning admissions by a party opponent. Deposition references will be
to the exhibit letter followed by the page number.
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22. Respondent, Joyce Nichols, was employed as a bookkeeper by Huth Oil
Company in about 1972. Although Ms. Nichols had other duties in
addition to bookkeeping, Mr. Huth stated that he personally handled
almost all sales work, because it was a specialized business, requir-
ing knowledge of chemistry, the qualities of oil, etc. (A-21, 22, 37).
At some point in time not precisely ascertainable from the record,
Ms. Nichols formed a sole proprietorship called Action Oil and entered
into a contract in late 1981 or early 1982 with Mr. Huth to supply oil
to Huth Oil Company, which included the lease to Action of a Mack
truck (A-25 - A-28). According to Mr. Huth, he dealt with Ms. Nichols
concerning oil purchases for a couple of months before he knew she
owned Action Oil (A-27, 35).
23. On January 26, 1981, George J. Huth and Joyce Nichols entered into
a purchase agreement whereby Joyce Nichols purported to purchase all
of the assets of Huth Oil Service for the sum of $100,408.42 (Com-
plainant's Exh P). Notwithstanding that the assets transferred included
oil and inventory valued at $50,000, accounts receivable valued at
$1,000, a 1979 Mack truck valued at over $34,000l/ and other equip-
ment, the initial down payment of only $3,000 was due within 15 days
of the agreement and additional payments were contingent on annual
profits in excess of $20,000 from the business being realized. More-
over, the accompanying instrument of indebtedness provides that upon
Mr. Huth's death, any remaining indebtedness is to be canceled.
5_/ Although Mr. Huth denied that the signatures on the purchase
agreement and agreement of indebtedness were his, the fact that the pur-
chase agreement included a Mack truck indicates that he may have been
confused as to the supposed contract and lease agreement with Action Oil
(finding 22).
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Mr. Huth denied that the signatures on the purchase agreement and on
the quit-claim deed conveying the 83rd Street property to Ms. Nichols
were his (A-38, 39, 89-93, 95-97). He was adamant that Ms. Nichols
would not be able to operate the business, because it was too
specialized, and testified that he operated it 99% on his own.
24. Ms. Nichols, who now resides in Las Vegas, Nevada, testified that she
obtained an Ohio real estate license during the period 1977-79 and
that, in addition to selling real estate, she engaged in the waste oil
business under the names Huth Oil and Action Oil (B-7, B-9, 10). Action
Oil was formed in 1982. The waste oil businesses were conducted from
the East 83rd Street address in Cleveland mentioned in finding 1.
Ms. Nichols stated that her affiliation with Huth Oil and activities
in the oil business terminated in the fall of 1984 (B-ll, B-25).
25. Referring to the purchase agreement (finding 23), Ms. Nichols testi-
fied that she operated Huth Oil Company from the date of the agreement,
January 26, 1981, until the fall of 1984 (B-22-24). According to
Ms. Nichols, Mr. Huth stayed around and did whatever he wanted to do.
She claimed that the conveyance of the 83rd Street property to her
(finding 2) was part of a transaction whereby she sold Action Oil to
a firm called Speedy Oil (B-52-54, 57-59). Although she indicated
that Mr. Huth could have the property back at any time he wished, she
testified that she could not be certain Mr. Huth knew she had acquired
title to the property (B-59, 60).
/
Conclusions
1. Samples and evidence obtained at the inspection of the Huth Oil Com-
pany facility on April 15, 1983, were properly admitted into evidence
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and are for consideration in resolving the issues presented by this
proceeding.
2. The depositions of George J. Huth (Complainant's Exh A) and Joyce
Nichols (Complainant's Exh B) taken in the action styled, George J.
Huth vs. Joyce Nichols, No. 85-085768-CV, Court of Common Pleas,
Cuyahoga County, Ohio, contain relevant evidence and were properly
admitted into the record of this proceeding under Rule 22.22 (40 CFR
Part 22). Moreover, the depositions constitute admissions and thus
were properly admitted pursuant to Federal Evidence Rule 801(d)(2).
3. On April 15, 1983, Tank No. 60-B at the Huth Oil Company facility
contained PCBs at a concentration of 500 ppm.
4. The sludges and PCBs in Tank No. 60-B had been placed there more
than ten years prior to the inspection, were being stored for dis-
posal and thus were required to be removed from storage and properly
disposed of prior to January 1, 1984 (40 CFR 761.65(a)).
5. At the time of an inspection on July 29, 1983, Tank No. 60-B was not
marked with the ML label illustrated in 40 CFR 761.45 as required by
§ 761.40.
6. At the time of an inspection on July 29, 1983, Respondent did not have
records on the use and dispositon of PCBs as required by 40 CFR 761.
180.
7. At the time of an inspection on September 5, 1985, Tank No. 60-B was
leaking which constitutes an improper disposal of PCBs (40 CFR 761.3
and 60(d)).
8. Although Ms. Nichols held bare legal title to the property upon which
Tank No. 60-B is located during the period November 29, 1983 to
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December 4, 1985, the evidence fails to establish that she partici-
pated in the operation of the business or contributed in any way to
the violations found herein and thus the complaint as to her will
be dismissed.
9. For the violations found herein, Respondent George J. Huth, d/b/a
Huth Oil Company is liable for a civil penalty in the amount of $45,000.
This penalty will be remitted and canceled, however, provided Respondent
removes from storage and properly disposes of the contents of Tank
60-B and decontaminates the tank in accordance with 40 CFR 761.79 on
or before December 1, 1986.
Discussion
Respondent Huth has filed a motion to strike all evidence, testimony
and documents obtained directly or indirectly as a result of the EPA
inspection of the Huth Oil Company facility on April 15, 1983 (Motion,
Proposed Findings and Conclusions and Brief In Support Thereof, filed
April 8, 1986). The basis of the motion is that the inspection was a
violation of Huth's constitutional rights and also a violation of statute.
Huth cites familiar cases, e.g., Camara v. Municipal Court, 387 U.S. 523
(1967); See v. Seattle, 387 U.S. 541 (1967) and Marshall v. Barlow's. Inc.,
436 U.S. 307 (1978) for the proposition that Fourth Amendment guarantees
against unreasonable searches and seizures are applicable in civil as well
as criminal proceedings and that warrantless searches are generally un-
reasonable (Brief at 2, 3). No issue need be taken with the mentioned
proposition in order to reject the claim Huth's constitutional rights were
violated, because it is well settled that a search conducted pursuant to
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a valid consent is constitutionally permissib.le and that whether such
consent has been given is a question of fact. Schneckloth v. Bustamonte,
412 U.S. 218 (1973). See also Agland Incorporated, I. F. & R. Appeal No.
83-2 (Final Decision, April 18, 1985). Here, the evidence permits only
one conclusion, i.e., that Mr. Huth voluntarily consented to the inspection
and the taking of samples (findings 7-10). There is no evidence of threats
or coercion. Moreover, Mr. Huth was informed that if regulated substances
were found the Ohio EPA and U.S. EPA, Region V would be notified (finding
9), thus negating any claim of deception or entrapment.A/ It is concluded
that Mr. Huth voluntarily consented to the inspection and that a warrant for
that purpose was unnecessary.
Turning to the alleged statutory violations, the inspection of April 15,
1983, was performed under RCRA rather than TSCA (finding 4). Huth points
out that RCRA § 3007 (42 U.S.C. 6927), relied upon as authority for the
inspection, mandates that a copy of results of any analyses on samples
collected shall be furnished promptly to the owner, operator or agent in
charge and that this was not done in the Huth inspection or at any of the
other facilities inspected by the Forba inspection team (Brief at 11, 12).
Huth also points to Mr. Forba's testimony (Tr. 341) that NEIC had made a
decision prior to commencing Waste Oil Recycler's project inspections that
testing for the presence of PCBs would be accomplished and argues that
6/ Respondent's claim to the contrary (Brief at 6, 7) is not supported
by the record and is rejected.
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inspections for TSCA enforcement purposes must be conducted under § 11 (15
U.S.C. 2610) of that Act.I/
Huth says that the cited section of TSCA provides no express authority
for the collection of samples and emphasizes the statutory language (§ ll(a))
"Such an inspection may only be made upon the presentation of appropriate
TJ Brief at 13-15. TSCA § 11 (15 U.S.C. 2610) provides in pertinent
part:
(a) In General—For purposes of administering this Act,
the Administrator, and any duly designated representative of
the Administrator, may inspect any establishment, facility,
or other premises in which chemical substances or mixtures
are manufactured, processed, stored, or held before or after
their distribution in commerce and any conveyance being used
to transport chemical substances, mixtures, or such articles
in connection with distribution in commerce. Such an inspec-
tion may only be made upon the presentation of appropriate
credentials and of a written notice to the owner, operator, or
agent in charge of the premises or conveyance to be inspected.
A separate notice shall be given for each such inspection, but
a notice shaTl not be required for each entry made during the
period covered by the inspection. Each such inspection shall
be commenced and completed with reasonable promptness and shall
be conducted at reasonable times, within reasonable limits, and
in a reasonable manner.
(b) Scope--(l) Except as provided in paragraph (2), an inspec-
tion conducted under subsection (a) shall extend to all things within
the premises or conveyance inspected (including records, files,
papers, processes, controls, and facilities) bearing on whether the
requirements of this Act applicable to the chemical substances or
mixtures within such premises or conveyance have been complied with.
(2) No inspection under subsection (a) shall extend to—
(A) financial data,
(B) sales data (other than shipment data),
(C) pricing data,
(D) personnel data, or ,
(E) research data (other than data required by this Act or
under a rule promulgated thereunder),
unless the nature and extent of such data are described with reason-
able specificity in the written notice required by subsection (a)
for such inspection.
* * * *
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credentials and of a written noti.ee to the owner, operator, or agent in
charge of the premises or conveyance to be inspected." Written notices of
inspection were not issued to Huth or any of the other facilities inspected
during the Waste Oil Recycler's project (finding 7) and arguing by analogy
to the reasons for the exclusionary rule in criminal cases, Huth asserts that
evidence obtained in violation of the statute should be excluded to preserve
judicial integrity, deter official lawlessness and give meaning to the command
of the Act (Brief at 16). Huth also complains that the inspection on July 29,
1983, conducted by Ms. Klahr of the Ohio EPA was conducted without issuing
the required statutory notice.
In Electric Service Company, TSCA Appeal No. 82-2 (Final Decision,
January 7, 1985), where Complainant relied in part on an inspection con-
ducted by a representative of the Ohio EPA, who was not an authorized
representative of U.S. EPA and who did not issue a notice of inspection
as required by § ll(a) of TSCA, the Judicial Officer rejected arguments
that the evidence should be excluded, holding that Respondent's consent
to the inspection operated as a waiver of the statutory notice require-
ment. As an alternative basis for the decision, the Judicial Officer
cited Respondent's failure to raise a timely objection. The alternative
basis is not applicable here, because counsel specifically objected to
admission of the report of analyses of Huth samples upon the ground that
a copy of the report was not provided Huth as required by § 3007 of RCRA
(Tr. 542). Although this may fall short of an objection that a written
notice of inspection was not issued as required by TSCA, counsel may be
forgiven for this omission, if it be such, because the April 15 inspection
purported to be conducted under RCRA. Under these circumstances, the
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21
objection is construed as encompassing failure to follow requisites to an
inspection prescribed by TSCA. Because, however, consent operates as a
waiver of statutory no less than constitutional objections to a search and
seizure, it is concluded that the objection is not well taken, that evidence
obtained in the April 15 inspection of the Huth facility was properly
admitted and is for consideration herein. Electric Service Company, supra.
Accordingly, the motion to strike is lacking in merit and is denied. The
evidence shows that Huth also consented to the inspection of July 29, 1983,
and the same ruling is applicable.
As indicated previously, the depositions of Respondents, George J. Huth
and Joyce Nichols, in the Court of Common Pleas action identified in finding
3, were admitted into evidence over the vigorous objections of counsel for
Respondents (finding 21). On brief, Ms. Nichols has renewed her objections
and filed a motion to strike (Brief in Support of Proposed Findings of Fact,
Conclusions of Law and Proposed Order, and Motion, filed April 9, 1986).
The basis is that in accordance with FRCP Rule 32 depositions taken in prior
proceedings, in order to be admissible, must involve the same subject matter
and parties or their representatives or successors in interest (Brief at 2,
3). Because neither the parties nor the issues are the same, Nichols argues
that the depositions were improperly admitted and should be stricken from the
record. She also cites Federal Evidence Rule 804(b)(l), listing former
testimony as an exception to the hearsay rule provided the declarant is
unavailable as a witness, which is obviously not the case here.
Rule 22.22(a) of the Rules applicable to this proceeding (40 CFR Part
22) provides in pertinent part "The Presiding Officer [ALJ] shall admit all
evidence which is not irrelevant, immaterial, unduly repetitious, or otherwise
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unreliable or of 1-ittle probative value, * * * *." The depositions of
Mr. Huth and Ms. Nichols are obviously relevant, cannot be characterized as
unduly repetitious and clearly have probative value. Accordingly, it is
concluded that the depositions were properly admitted under Rule 22.22
irrespective of whether they would be admissible under the Federal Rules of
Evidence.
Moreover, it is concluded that the depositions were and are admissible
under Federal Evidence Rule 801(d), Statements Which Are Not Hearsay, and
in particular (d)(2), providing in pertinent part: "(2) Admissions By Party-
Opponent--The statement is offered against a party and is (A) his own state-
ment, in either his individual or a representative capacity * * *." FRCP
Rule 32(a), cited by Nichols, provides that in order for a deposition taken
in one action to be admissible in a subsequent action, the subsequent action
must involve the same subject matter and the same parties or their representa-
tives or successors in interest. The requirement for substantial identity
of issues and parties is readily understandable when a deposition of an
unavailable witness is offered in a subsequent action..§/ No such restric-
tions are applicable either in logic or in law, however, where the deposi-
tion contains statements constituting admissions offered against a party..?/
8/ See Federal Evidence Rule 804(b)(l) and Hub v. Sun Valley Co.,
682 F.2d 776 (9th Cir. 1982).
97 See, e.g., United States v. Riley, 684 F.2d 542 (8th Cir. 1982)
(guilty plea in state prosecution); United States v. Heffington, 682 F.2d
1075 (5th Cir. 1982) (grand jury testimony) and 4 Ueinstein's Evidence
801-184 et seq. While neither of the cited cases involve depositions,
it is anomalous indeed, if admissibility of sworn statements in the presence
of counsel is to be more circumscribed than extrajudicial statements. Cases
cited by Nichols, Alamo v. Pueblo International, Inc., 58 F.R.D. 193 (D.
Puerto Rico 1972) and United States v. Silliman, 6 F.R.D. 262 (D. N.J. 1946),
although containing statements supporting her view of the rule, are not con-
trolling, because the depositions were taken in actions to which the party
against whom the depositions were offered was not a party and both decisions
predate the adoption of the Federal Rules of Evidence.
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The statement need only be contrary to a party's interest when offered at
trial.IP./ Ms. Nichols' statement (finding 25) that she operated Huth Oil
Company from January 26, 1981, until the fall of 1984 is clearly against her
interest insofar as this proceeding is concerned and thus admissible as an
admission by a party under Federal Evidence Rule 801(d)(2)(A).
Respondents have insisted that complainant carry the burden placed upon
it by Rule 22.24 (40 CFR Part 22) of establishing the violations charged by
a preponderance of the evidence.il/ The findings with respect to samp-
ling, chain of custody and testing clearly establish that Tank No. 60-B
contained PCBs at a concentration of 500 ppm on April 15, 1983 (finding 10-
15). Respondents have made no claim to the contrary.
The conclusion that the sludges and PCBs in Tank No. 60-B had been
placed there more than ten years prior to the inspection on April 15, 1983,
is based on statements Mr. Huth made to inspectors (findings 9 and 16).
Huth has made no attempt to show that the facts are otherwise. Indeed,
questions by counsel for Huth indicate that the waste oil (sludges) in
10/ Auto-Owners Ins. Co. v. Jensen, 667 F.2d 714 (8th Cir. 1981).
ll/ Complainant's motion for an accelerated decision upon the ground
that there was no dispute as to material fact was denied (Opinion and Order,
dated January 24, 1986). On brief, Complainant has alluded to FRCP provi-
sions whereby Respondents and.their counsel would be subject to sanctions
for refusal to admit that Tank No. 60-B contained PCBs at a concentration
in excess of 50 ppm and for unreasonably delaying and multiplying the pro-
ceedings (Brief at 10 et seq.). This argument is based upon the report of a
consultant, Marine Pollution Control, employed by Huth which was apparently
directed primarily toward the means and costs of disposal of the PCBs and
which indicates Tank No. 60-B contained PCBs at a concentration of 222 ppm
(proposed Huth Exhibit 4). Complainant predicates error on the denial of its
motion to reopen the record to admit the exhibit into evidence after the
proffer was withdrawn (Tr. 589-601). Decisions as whether to reopen the
record after a party has rested are discretionary with the presiding ALJ
and in any event, the exhibit is not in evidence solely because of counsel's
objection (Tr. 591-93).
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Tank No..60-B may have been there for almost 20 years (Tr. 556). Because
"disposal" is defined as including "* * actions related to containing,
transporting, destroying, degrading, decontaminating, or confining PCBs
and PCB items" (40 CFR 761.3) and there appears to be no authorized use
for this material, it is clear that the PCBs were stored for disposal
within the meaning of the regulation. Because the PCBs were stored for
disposal prior to January 1, 1983, in accordance with 40 CFR 761.65(a)
they were required to be removed from storage and properly disposed of
prior to January 1, 1984.l^/
The evidence clearly establishes (finding 16) and Respondent Huth
has admitted-H/ that Tank No. 60-B was not marked with an ML label as
illustrated in 40 CFR 761.45 prior to the inspection of July 29, 1983.
There is also no real dispute that at the time of this inspection,
Respondent did not have records on the use and disposition of PCBs as
required by 40 CFR 761.180. While initially maintaining that required
records were destroyed in the June 1974 fire described by Mr. Huth (find-
ing 21), Huth has denied knowledge of the presence of PCBs and thus can
12/ Because PCBs were in Tank No. 60-B several years prior to the
April 18, 1978, effective date of initial regulations implementing § 6(e)
of the Toxic Substances Control Act (43 FR 7156, February 17, 1978), an
argument can be made, as indicated in affirmative defenses in Huth's answer,
that the regulation is being given retroactive effect and that any disposal
of the PCBs is a CERCLA (Superfund) matter (42 U.S.C. 9601 et seq.). The
note at 40 CFR 761.60 makes clear, however, that PCBs and PCB items land-
filied prior to February 17, 1978, are exempt from the requirement of
removal from storage and disposal. Here, Huth's storage of PCBs continued
after the effective date of the regulation and it is concluded that the
mentioned fact is appropriately for consideration in the determination of
the penalty. In any event, this argument has not been repeated on brief
and is deemed to have been abandoned.
13/ Response of George J. Huth, d/b/a Huth Oil Company, to Motion
For An Accelerated Decision, received January 6, 1986, footnote 2.
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25
hardly be expected to have maintained records on their use and disposition.
The evidence clearly establishes, with no contention being made to the con-
trary, that Tank No. 60-B was leaking on September 5, 1985 (finding 17).
Regarding Respondent Nichols, the question is whether her testimony
that she operated Huth Oil Company from January 26, 1981, until the fall of
1984 (finding 25) together with the fact that she held bare legal title to
the 83rd Street property upon which the Huth Oil facility is located during
the period November 29, 1983, to December 4, 1985, is sufficient to fasten
upon her responsibility for the violations found. For the reasons herein-
after appearing, it is concluded that this question must be answered in the
negative. Unlike RCRA.jA/ the Toxic Substances Control Act is not a
strict liability statute and it has been held that an owner was not jointly
and severally liable for improper storage of PCBs resulting from cleanup
operations by its licensee where there was no showing that the owner was in
any way involved in the cleanup activities, Suburban Station, Docket No.
TSCA-III-40 (Initial Decision, September 4, 1984). This decision was based
upon the absence of any indication in the Act or regulation that liability
was to be placed upon owners irrespective of whether they had caused or
contributed to the violation.^/ Accordingly, it is concluded that
_14/ Arcom, .Inc., Drexler Enterprises, Inc., et al., RCRA (3008)
Appeal No. 86-6 (Final Decision, May 19, 1986).
15/ Suburban Station, supra, cited Amoco Oil Co. v. Environmental
Protection Agency, 543 F.2d 270 (D.C. Cir. 1976), holding that a regulation
under Clean Air Act imposing strict liability on refiners as lessors of
retail gasoline outlets for violations of unleaded gasoline regulation was
invalid where there was no indication in the Act that Congress intended
liability to be imposed without regard to fault. See also Amoco Oil Co.
v. United States, 450 F.Supp. 185 (D.C. Mo. 1978) (word "leases" in
unleaded gasoline regulation could not be interpreted as applicable to owner,
lessor of retail gasoline station so as to hold owner strictly liable for
violations of unleaded gasoline regulation attributable to activities of
lessee).
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26
Ms. Nichols1 bare legal title to the 83rd Street property, acquired after
the PCBs were discovered and the violations found,!§/ is insufficient to
hold her liable therefor.
More troublesome, is the evidence Ms. Nichols operated Huth Oil
Company from the date of the purchase agreement, January 26, 1981, until
the fall of 1984. This period encompasses the inspections of April 15 and
July 29, 1983, the notification to Respondent Huth of the presence of PCBs
and the receipt of an explanation as to the requirements of the regula-
tion with respect thereto. There can, of course, be no question that an
operator of a facility where PCBs are stored is responsible for compliance
with the PCB regulation, is liable for civil penalties for violations of
the regulation and can be required to properly dispose of PCBs, stored in
contravention thereof. The question is whether Ms. Nichols was such an
operator. Irrespective of how Ms. Nichols regarded herself, it is clear
that Mr. Huth did not regard her as an operator of Huth Oil Conpany and
indeed, did not consider her capable of doing so (finding 23). Mr. Huth
apparently considered that the only contract he signed with Ms. Nichols
involved the purchase of oil and the lease of a Mack truck (finding 22).
See also note 5, supra. Moreover, it is significant that there is no
evidence of Ms. Nichols1 presence during any of the inspections of the
Huth facility and that in each instance, the owner and the person in charge
of the facility was Mr. Huth. Under these circumstances, it is concluded
that Ms. Nichols has not been shown to be an operator of the Huth Oil
16/ Nichols emphasizes that she was not the owner of the property on
April 15, 1983 (Proposed Findings of Fact and Conclusions of Law).
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Company facility so as to be responsible for the violations of the PCB rule
herein found.1Z/
The evidence clearly establishes that Mr. Huth was the operator of
the Huth Oil Company facility when the PCBs were placed in Tank No. 60-B,
that he was the owner and operator at the time of the inspections on April 15
and July 29, 1983, and so far as the record discloses, was the operator, if
not the legal owner, at the time of the inspection on September 5, 1985.
Moreover, he was the owner and operator at the time of the hearing. Accord-
ingly, there can be no question as to Huth's liability for penalties and
responsibility for disposal of the PCBs.
Turning to the penalty, the amount thereof was calculated in accord-
ance with the PCB Penalty Policy, 45 FR 59770 et seq. (September 10, 1980)
and a penalty so calculated is prima facie appropriate.!^/ The record
reflects, however, that either insufficient or no consideration was
given to two of the factors required to be taken into account by § 16(a)
(2)(B) of the Act in determining the penalty, namely, ability to pay and
degree of culpability. Regarding the former, the evidence reflects that
Huth Oil Company has a net worth of just under $200,000 (finding 19) and
•17/ While it might be considered "poetic justice" to hold Ms. Nichols
jointly and severally liable for the violations of the regulation herein
found, this is not the forum for determining the legality or propriety of
her transactions with Mr. Huth. In addition to the one-sided nature of the
purported purchase agreement (finding 23), and the fact she held title to
the 83rd Street property, the record reflects that she had a deed to >
Mr. Huth's residence and that her name was on his bank accounts.
Lissner Corporation, Docket No. RCRA-V-W-84-R-065 (Initial Decision,
July 30, 1985).
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a penalty of $45,000 is conceivably within the firm's ability to pay .ii/
It should be noted, however, that over 25% of net worth is represented
by oil inventory and it is common knowledge that the price of oil has
declined substantially since December 31, 1985, the date of the statements.
It is therefore concluded that ability to pay or more accurately, the
lack thereof, warrants a 25% reduction in the proposed penalty of $45,000.
Regarding the degree of culpability, the fact that the PCBs were placed
long prior to the effective date of the PCB rule and that Mr. Huth was
unaware of their presence would ordinarily warrant a reduction of from
20% to 25% in the base penalty of $40,000. This reduction is not and should
not be applicable to the $5,000 assessed for the improper disposal repre-
sented by the leaking PCBs found in the inspection on September 5, 1985,
because this was long after Huth was aware of the presence of PCBs. Mr. Huth
acknowledged having a suspicion that PCBs might be present (finding 21) and
under those circumstances the adjustment for lack of culpability is limited
to 10%. Application of these adjustments would result in a total penalty
of $29,750. Because, however, this reduction would reduce the incentive to
properly dispose of the PCBs, the full amount of the proposed penalty of
$45,000 will be assessed.
Payment of the penalty will do nothing to eliminate the threat to
the environment represented by the improperly stored PCBs and the penalty
19/ It is recognized that the financial statements are compilations,
i.e., based solely on representations of Mr. Huth. There is, however, no
inherent reason for refusing to accept such statements and if the financial
picture thereby presented is in accord with other evidence, including
impressions from the appearance of Respondent, which the deposition estab-
lishes is the case here, the statements are clearly acceptable probative
evidence. It is worthy of note that many small business concerns are in no
position to furnish historical costs, consistent inventory evaluations, etc.,
required for audited and verified financial statements.
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will be canceled and remitted, provided Respondent Huth removes
from storage and properly disposes of the PCBs and decontaminates Tank No.
60-B in accordance with 40 CFR 761.79 on or before December 1, 1986.20/
It is recognized that the PCB Penalty Policy provides that cleanup costs
are part of the cost of the violation and that ordinarily a reduction in the
penalty for such costs is not appropriate (45 FR at 59775). Here, however,
there is little chance of the violation being repeated, except for the
continuing violation of improper storage, and the costs of properly dis-
posing of the PCBs, stipulated to be $136,000, may well be beyond Huth's
financial capability. Under these circumstances, remission of the penalty
appears to be the only possible means of accomplishing proper disposal of
the PCBs at no cost to the government and of Huth remaining a viable business
entity. In any event, 1 am not bound by the Penalty Policy (40 CFR 22.27
(b)).
ORDER
Having been found to have violated the Act and regulation as charged
in the complaint, a penalty of $45,000 is assessed against Respondent,
George J. Huth, d/b/a Huth Oil Company in accordance with § 16(a)(2)(B) of
the Act (15 U.S.C. 2615). This penalty will be canceled and remitted,
however, provided Respondent removes and properly disposes of the PCBs
in Tank No. 60-B and decontaminates the tank in accordance with 40 CFR
761.79 on or before December 1, 1986.
2(V See, e.g., O'Leary v. Moyer's Landfill, Inc., 523 F.Supp. 642
(D.C. Pa. 1981) (civil penalties under Clean Water Act and RCRA v;ould not
be imposed where court determined money would be better spent on remedial
measures).
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The complaint as to Respondent Joyce Nichols is dismissed..?.!/
Dated thi:
day of June 1986.
Sp^ncerT. Nissen
Administrative Law Judge
21/ Unless appealed in accordance with Rule 22.30 (40 CFR Part 22) or
unless the Administrator elects, sua sponte, to review the same as therein
provided, this initial decision will become the final order of the Admini-
strator in accordance with Rule 22.27(c).
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the Matter of )
Frankfort Power and Light, ) Docket No. TSCA-II-PCB-85-0268
Respondent )
Toxic Substances Control Act - Rules of Practice - Default Orders - •
Withdrawal of Answer and Request For Hearing - Where Respondent withdrew
its answer and request for hearing, but, nevertheless, insisted that pro-
posed penalty was excessive and record provided substantial support for
this contention, Complainant's motion for a default order in accordance
with Rule 22.17 (40 CFR Part 22) was denied.
Toxic Substances Control Act - Rules of Practice - Determination of
Penalty - Lack of Culpability - Where evidence established that only reason
Respondent was required to prepare an annual document was that PCB oil, PCB
contaminated soil and debris resulting from cleanup activities after a
capacitor explosion exceeded 45 kilograms specified by 40 CFR 761.80(a) and
proper disposition of PCBs and PCB materials was accomplished, Respondent's
lack of culpability was held to justify a substantial reduction in penalty
proposed for failure to prepare an annual document.
Appearance for Complainant: Paul Simon, Esq.
U.S. EPA, Region II
New York, New York
Appearance for Respondent: John J. Bono, Esq.
Frankfort, New York
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2
Initial Decision
This is a proceeding under § 16(a) of the Toxic Substances Control Act
(15 U.S.C. 2615(a)).I/ The complaint issued October 16, 1985, alleged that
in 1981 Respondent used or stored more than 45 kilograms of PCBs at one time
and that at the time of an inspection on July 23, 1985, did not have an
annual document for the year 1981 as required by 40 CFR 761.180(a). For
this alleged violation, it was proposed to assess Respondent a penalty of
$6,000.
Respondent, through counsel, filed an answer denying the alleged vio-
lation and setting forth various affirmative defenses, which may be sum-
marized as lack of knowledge of the requirement, that the necessary infor-
mation was available in its files, administrative confusion arising from
changes in department heads and the Village Board and financial difficulties.
A hearing was requested.
By letter, dated November 27, 1985, the ALJ directed that the parties
exchange certain prehearing information on or before January 17, 1986.
Information requested from Respondent consisted of a summary of evidence to
_!/ Section 15 entitled "Prohibited Acts" (15 U.S.C. 2614) provides
in pertinent part:
It shall be unlawful for any person to—
(1) fail or refuse to comply with (A) any rule promul-
gated or order issued under section 4, (B) any requirement /
prescribed by section 5 or 6, or (C) any rule promulgated or
order issued under section 5 or 6;
* * *
The instant rules were promulgated under § 6(e) of the Act.
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3
support the allegation that all information required to prepare an annual
document for the year 1981 was available in its files and financial state-
ments or other evidence to support the assertion payment of the proposed
penalty would be an undue hardship. Complainant furnished the information
required of it in a timely fashion. Respondent, however, failed to do so
and indeed, failed to make any reply to the ALJ's letter.
On February 25, 1986, the ALJ issued an order directing Respondent to
show cause, if any there be, on or before March 17, 1986, why a default
order finding the violation charged, and assessing the penalty proposed, in
the complaint should not be entered.
By letter, dated March 14, 1986, addressed to counsel for Complainant,-
counsel for Respondent forwarded documents showing, inter alia, capacitors
on hand, list of capacitors removed from service in 1981, manifests and
certificates of disposal for capacitors removed from service and recent
test results on transformers. The letter stated that my sole request at
this point is that the penalty be minimized as much as possible. In a
letter of even date addressed to the ALJ, counsel for Respondent purported
to enclose copies of documents furnished opposing counsel and stated that
"* * * the Village of Frankfort withdraws its request for hearing and
answer'to the complaint."Jl/ The ALJ did not receive this letter.
By letter, dated April 30, 1986, Complainant's counsel forwarded to
the ALJ the mentioned correspondence and noting the withdrawal of the
answer and request for hearing, moved for the entry of a default order
pursuant to Rule 22.17(b), 40 CFR Part 22. In a letter, dated May 6, 1986,
2J The withdrawal was referred to in the letter to Complainant's
counsel and was stated to be "* * in the light of your contention that
there is no defense to this matter on the part of the Village of Frankfort
and that failure or lack of knowledge of the requirement of preparation and
filing of an annual document constitutes no defense."
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4
Respondent's counsel referred to a telephone conversation between counsel
and representatives of the parties and expressed amazement that the
penalty imposed would be $6,000, stating that he assumed this was a deter-
mination to be made by the ALJ. The letter stated that the proposed penalty
amounted to $2.00 plus for every inhabitant of the village, alleged that it
had paid out one-half of its real property tax revenue on two notes, leaving
very little to operate the village and again requested that consideration
be given [to reducing] the amount of the penalty.
In a letter, dated May 20, 1986, the ALJ pointed out that inasmuch as
counsel's letter, dated May 6, 1986, indicated that it desired to contest
the appropriateness of the penalty, the letter withdrawing its request for •
hearing was considered to be occasioned by a misunderstanding and that it
would be inappropriate to grant Complainant's motion for a default order.
Respondent was directed to file a statement as to whether it desired a
hearing on the penalty or whether it wished the ALJ to decide that issue
on briefs and any further documentary evidence submitted by the parties.
By letter, dated May 23, 1986, counsel for Respondent stated that it did
not desire a hearing on the penalty, did not have a brief to submit,
authorized imposition of the required penalty on whatever papers have thus
far been submitted and repeated its withdrawal of its answer and request
for a hearing.
Notwithstanding that withdrawal of an answer*!/ and request for a
hearing will ordinarily be construed as an admission of the facts alleged
in the complaint and a consent to the imposition of the proposed penalty,
3/ While Rule 22.15(e) (40 CFR Part 22) provides that an answer may
be amended upon motion granted by the ALJ, it is at least questionable to
construe this provision as requiring consent to withdrawals of answers.
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5
i.e., authorizing a default order, Respondent insists that the penalty pro-
posed is excessive, the record provides substantial support for that con-
tention and Complainant's motion for a default order is denied.
Findings of Factj/
1. Respondent, Frankfort Power and Light, is owned and operated by the
Village of Frankfort, New York.
2. Respondent purchases power from the New York Power Authority and dis-
tributes it to 1,650 customers in the Village.
3. Respondent does not own or maintain any PCB transformers and does not
now have, or has it, since the effective date of the PCB rule, owned .
or maintained 50 or more PCB Large High or Low Voltage capacitors.
4. In June 1981, at a date not precisely determinable from the record,
three of Respondent's PCB capacitors exploded. The explosion was
apparently caused by lightning.
5. As a result of cleanup activities conducted after the explosion, 22
drums of PCB contaminated soil and debris were accumulated. These
drums were delivered to Cecos International, Inc., an environmental
firm, on November 30, 1981, and proper disposition thereof accomplished.
6. Additionally, five drums of PCB capacitors and one drum of PCB oil were
delivered to Ensco, Inc., El Dorado, Arkansas on November 30, 1981, and
subsequently incinerated. This disposal by Respondent was apparently
caused by or related to the mentioned capacitor explosion.
4_/ Findings are based on a DEC memorandum, dated June 22, 1981 (Exh A
to answer) concerning a June 17, 1981, site inspection; the report, dated
August 28, 1985, of an EPA inspection conducted on July 23, 1985, and
various documents enclosed with counsel for Respondent's letter, dated
March 14, 1986.
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6
7. The 22 drums of PCB contaminated soil and debris and the drum of PCB
oil referred to in findings 5 and 6 weighed more than 45 kilograms.
8. Respondent did not prepare an annual document for the year 1981.
Conclusions
1. Because Respondent did not own or maintain any PCB transformer and
did not own or maintain 50 or more PCB High or Low Voltage capacitors,
the only reason it was obligated to prepare an annual document for
the year 1981 is because the PCB oil and PCB contaminated soil and
debris resulting from cleanup activities after the June explosion
exceeded 45 kilograms in weight. See 40 CFR 761.180(a).
2. Although Respondent's failure to prepare an annual document for the year
1981 is a violation of 40 CFR 761.180(a), on this record, the viola-
tion appears inadvertent and Respondent is in no sense a "lucky"
violator.
3. An appropriate penalty for the mentioned violation is $1,500.
Di scussi on
Among the factors which § 16(a)(2)(B) of the Act requires the Admini-
strator to consider in determining the amount of the penalty are ability
to pay and degree of culpability. While Respondent has alleged financial
stringency as a reason for reducing the proposed penalty, data to support
such contention are not in the record.^./
_5_/ In this connection, data on revenues, expenses, bonded indebted-
ness, tax rates, etc., would have been helpful.
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7
There is, however, ample evidence from which to conclude the viola-
tion was inadvertent and that culpability is lacking. As we have seen,
the only reason Respondent was required to prepare an annual document for
1981 is that the weight of PCB oil, PCB contaminated soil and debris
resulting from cleanup activities after the capacitor explosion exceeded
45 kilograms (40 CFR 761.180(a)). The capacitor explosion was apparently
caused by lightning and cannot be attributed to acts of Respondent. Clean-
up activities were promptly undertaken and proper disposition was made of
the PCB oil contaminated soil and debris. Under these circumstances,'the
fact that no damage did or can result from the violation is not a fortuity
and Respondent is in no sense a "lucky" violator. It is therefore my con- •
elusion that the proposed penalty is much too high and that an appropriate
penalty is the sum of $l,500.i/
ORDER
Respondent, Frankfort Power and Light, having violated the Act and
regulation as charged in the complaint, a penalty of $1,500 is assessed
against it in accordance with § 16(a) of the Act (15 U.S.C. 2615(a)). Respon
dent shall pay the full amount of the penalty by sending a cashier's or
&J This result is reached without regard to the PCB Penalty Policy
(45 FR 59770, September 10, 1980), by which I am not bound (Rule 22.27(b)).
The quantity of PCBs involved, however, make this a borderline violation
separating significant and minor violations (45 FR 59776), which authorizes
a 25% reduction in the gravity-based penalty, and if Respondent were given
credit for a portion of the cleanup costs totaling almost $6,800 (Id. at
59775), a substantially similar result could be reached following the
penalty policy.
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8
certified check payable to the Treasurer of the United States to the
following address within 60 days of the receipt of this order:Z/
Regional Hearing Clerk
U.S. EPA, Reg. II
P. 0. Box 360188M
Pittsburgh, Pennsylvania 15251
Dated this 19th day of June 1986.
T. Nissen
Administrative Law Judge
1J Unless appealed in accordance with Rule 22.30 (40 CFR Part 22), or,
unless the Administrator elects, sua sponte, to review the same as therein
provided, this decision will become the final order of the Administrator in
accordance with Rule 22.27(c).
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BEFORE THE ADMINISTRATOR
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
In the Matter of: )
)
Jackson Brewery Development Corp.) TSCA Appeal No. 86-1
New Orleans, Louisiana )
)
and )
)
NOLA Demolishing Corporation )
New Orleans, Louisiana )
)
and )
)
New Orleans Public Service, Inc. )
New Orleans, Louisiana )
)
Respondents )
)
Docket No. TSCA-VI-83C )
FINAL ORDER
Respondent, New Orleans Public Service, Inc. (NOPSI),
appeals from an Initial Decision issued on December 16, 1985,
by Administrative Law Judge Gerald Harwood (Presiding Officer).
In that Initial Decision, the Presiding Officer held NOPSI and
NOLA Demolishing Corporation (NOLA) to be in violation of the
Toxic Substances Control Act of 1976 (TSCA) and its implement ing
regulations. Specifically, the Presiding Officer held that
NOPSI and NOLA improperly disposed of PCB-contaminated electrical
eouioment (transformers) in violation of 40 CFR Part 761. The
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Presiding Officer assessed civil penalties of $17,000 against
I/
NOPSI and $1,000 against NOLA. Pursuant to a pre-hearing
negotiated settlement, the case against Jackson Brewery Develop-
ment Corporation (Jackson) was dismissed.
In this appeal, NOPSI argues that the Presiding Officer
erred in holding that NOPSI was the owner of the transformers
by virtue of their not being component parts of the building in
which they were installed. In the alternative, NOPSI argues
that it abandoned the transformers in June 1979, prior to the
effective date of the regulations allegedly violated. Finally,
NOPSI argues that the imposed penalty is excessive.
After a thorough review of the record, I hold that the
Presiding Officer correctly found by a preponderance of the
evidence that NOPSI owned the transformers on the effective date
of the regulations; that under Louisiana law the transformers
were not component parts of the building; and that NOPSI failed
to prove its defense of abandonment. NOPSI has not raised any
additional arguments concerning these issues that were not
raised beforehand fully addressed by the Presiding Officer.
Accordingly, I adopt the findings of fact and conclusions of
_!/ 40 CFR §22.30 provides that initial decisions of presiding
officers may be appealed to the Administrator or his delegatee.
2/ That an appellate administrative tribunal may adopt the
findings, conclusions, and rationale of a subordinate tribunal
without extensive restatement is well-settled. United States
v. Orr, 474 F.2d 1365 (2d Cir. 1973); Carolina Freight Carrier
Corporation v. United States, 323 F.Supp. 1290 (w.D. N.D. 1971);
In re Chemical Waste Management, Inc., RCRA (3008) Appeal No.
84-8, Order Adopting the Presiding Officer's Initial Decision
as Final Agency Action (September 5, 194); and cases cited- in
(next page)
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law of the Initial Decision by reference.
As to NOPSI's argument that the proposed civil penalty is
excessive, NOPSI does not dispute that the penalty was properly
I/
calculated under the TSCA-PCB Civil Penalty Policy. Rather,
NOPSI argues that the assessed $17,000 penalty is inequitable
as compared to the $1,000 assessed against NOLA and the $5,000
pre-hearing settlement negotiated with the Jackson Brewery
Development Corporation (Jackson). I disagree. The Presiding
Officer properly considered the equities of this case in assessing
a $1,000 penalty against NOLA; specifically, NOLA is a small
company which is no longer in business, it was responsible for
notifying EPA of the instant PCB violation, and its owner is
of poor health and low income. The settlement agreement with
Jackson is not relevant to this case, but I note in passing
that Jackson expended more than $100,000 to clean up the spill
I/
prior to any determination of liability. This fact clearly
influenced the penalty resulting from Jackson's settlement
(Footnote 2 cont'd)
Ciba Geigy v. Farmland Industries, FIFRA Corap. Docket. No?. 33, 34
and 41 (Op. of the Judicial Officer, April 30, 1981).
V See 45 Fed. Reg. 59777 (September i-Q, 1980). Using the
prescribed penalty calculation formula, the Presiding Officer
determined that the transformers-contained an amount of PCBs
sufficient to place the violation within the significant range
of the matrix for the extent of potential damages. Improper
disposal is a level one violation in the penalty matrix. These
factors yield a recommended penalty of $17,000. j_d. at 59777-
59778.
4/ See In the Matter of Briggs & Stratton Corp., TSCA Appeal No.
81-1, at 20-22 (Final Decision, February 4, 1981)(penalties
imposed in separate PCB actions cannot be compared, particularly
as between settled cases and adjudicated cases).
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negotiations. The Initial Decision is affirmed.
FINAL ORDER
A civil penalty of $17,000.00 is assessed against New
Orleans Public Service, Inc., and a civil penalty of $1,000.00
is assessed against Hamilton Singleton doing business as NOLA
Demolishing Corporation. The penalties shall be paid within 60
days unless otherwise agreed by the respondents and Region VI.
Payments shall be made by cashier's check or certified check,
for the full amounts of the penalties, payable to the EPA-Region
VI, (Regional Hearing Clerk), P.O. Box 360582M, Pittsburgh, PA
15251 .
So ordered.
c P _ n
(_ . (J^ *.
Ronald L. McCallum
Chief Judicial Officer
. ,
—
Dated:
8 B3S
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- 5 -
CERTIFICATE OF SERVICE
I hereby certify that copies of the foreqoina Final Order
in the matter of Jackson Brewery Development Corporation, NOLA
Demolishing Corporation, and New Orleans Public Service, Inc.,
TSCA Appeal No. 86-1, were sent to the following persons in the
manner indicated:
By certified mail,
return reciept reauested:
By 1st class mail,
postage prepaid:
By hand-delivery:
Eugene G. Tagcjart, T.A,
Monroe & LeMann
1424 Whitney Building
New Orleans, LA 70130
James W. Ingram,
U.S. EPA, Region
1201 Elm Street
Dallas, TX 75270
ESQ.
VI
Thomas L. Giraud, Esg.
Giraud, Cusimano & Verderame
610 Poydras Street, Suite 201
New Orleans, LA 70130
Ms'. Carmen Lopez
Regional Hearing Clerk
U.S. EPA, Region VI
1201 Elm Street
Dallas, TX 75270
Honorable Gerald Harwood
Administrative Law Judge
U.S. EPA, Headauarters
401 M. Street, SW
Washington, DC 20460
Bessie Hammiel
Hearing Clerk
Office of Administrative
Law Judges (A-110)
U.S. EPA, Headauarters
401 M. Street, 'SW
Washington, DC 20460
Eilee/n J~]Earnhardt
Secretary to the Chief
Judicial Officer
Dated:
F?
8
v
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
c r
In the Matter of )
)
Henrico County Public Schools, ) Docket No. TSCA-III-164
)
Respondent )
Toxic Substances Control Act - Asbestos-In-Schools Rule - Rules of
Practice - Accelerated Decisions - Where Respondent had inspected its
school facilities for the presence of friable materials and encapsulated
materials determined to contain asbestos prior to the June 28, 1983,
deadline for compliance with the Asbestos-In-School Rule (40 CFR Part
.763, Subpart F), exemption in 40 CFR 763.117(c)(2) applied and complaint
based on contention exemption was not applicable, because encapsulation
was not permanent, was dismissed.
Appearance for Complainant: Henry H. Sprague, Esq.
Assistant Regional Counsel
U.S. EPA, Region III
Philadelphia, Pennsylvania
Appearance for Respondent: J. T. Tokarz, Esq.
Henrico County Public Schools
Highland Springs, Virginia
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2
Accelerated Decision
This proceeding under § 16(a) of the Toxic Substances Control Act (15
U.S.C. 2615(a)) was commenced on December 20, 1985, by the issuance of a
complaint charging Respondent, Henrico County Public Schools, with violations
of the Act I/ and applicable regulations, 40 CFR Part 763, Subpart F. The
complaint alleged, inter alia, that in an inspection of two of Respondent's
schools (John Randolph Tucker (JRT) High School and Montrose Elementary
School), conducted on September 19, 1985, friable asbestos-containing
materials were discovered,±/ but that records maintained at Respondent's
central administrative office failed to include information required by
40 CFR 763.114(b)(3), to-wit: the square footage of friable asbestos-
containing materials in each school and the number of employees who regularly
17 Section 15 entitled "Prohibited Acts" (15 U.S.C. 2614) provides
in pertinent part:
It shall be unlawful for any person to--
(1) fail or refuse to comply with (A) any rule promul-
gated or order issued under section 4, (B) any requirement
prescribed by section 5 or 6, or (C) any rule promulgated or
order issued under section 5 or 6;
* * *
The instant rules were promulgated under § 6(a) of the Act.
2/ The inspection report, Complainant's proposed Exhibit 1, reflects
that friable materials were present in auditorium ceiling and on piping
and boiler at JRT High School and on boiler and piping at Montrose Elemen-
tary School. Additionally, the report states that encapsulation of friable
asbestos materials was not holding in damaged spots on ceiling and rear wall
in auditorium at JRT High School and that encapsulation was not holding or
was incomplete on piping at Montrose Elementary School. Respondent operates
50 schools (250 school buildings) and Complainant speculates that similar con-
ditions may prevail at other schools (Initial Brief at 10, note 3). Purchase
orders attached to Respondent's answer indicate that asbestos insulation has
been removed from tanks and piping in field house and gym at JRT High School
and from boilers and piping at Montrose Elementary School.
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3
work therein. The complaint further alleged that Respondent had failed to
sample friable materials at JRT High School as required by § 763.107(a);
had failed to have the samples analyzed for asbestos as required by § 763.
109; had failed to post in the primary administrative and custodial offices
and in faculty common rooms "Notice To School Employees" (EPA Form 7730-3)
announcing the presence of friable asbestos-containing materials; had failed
to provide to all persons employed in said school a written notice of the
location, by room or building, of all friable asbestos-containing materials;
had failed to provide to all custodial or maintenance employees "A Guide For
Reducing Asbestos Exposure" (EPA Form 7730-2) and had failed to provide
notice of the results of inspection and sampling of friable materials to the
appropriate PTA or in the absence thereof, directly to the parents of pupils,
all as required by § 763.111. Respondent was also charged with failure
to maintain records required by § 763.114 in the administrative offices of
JRT High School and Montrose Elementary School and failure to notify the
PTA or absent thereof, the parents of pupils, of the results of analyses of
friable materials at Montrose Elementary School. For these alleged viola-
tions, it was proposed to assess a penalty totaling $13,300..r/
Respondent answered, alleging that it had conducted an inspection of
all buildings to determine the presence of friable materials prior to the
issuance of 40 CFR Part 763, Subpart F on May 27, 1982, and that materials
•
identified as containing friable asbestos were either removed or encapsulated
prior to May 27, 1982. Respondent further alleged that it had each sample
3_/ Complainant considers that Respondent's action in removing much
of the asbestos-containing materials found during the inspection entitles
Respondent to a substantial reduction in the proposed penalty, because it
argues on brief that the ALJ should order Respondent to pay a penalty of at
least SI,330 (Initial Brief at 10).
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4
of friable materials analyzed for the presence of asbestos utilizing
Polarized Light Microscopy. Respondent admitted that it was not in com-
pliance with the notice and recordkeeping requirements of §§ 763.111 and
114. Respondent also admitted to the presence of friable asbestos-containing
materials on September 19, 1985, in areas mentioned in the complaint (note
2, supra). It was alleged that the exposure of such materials was the
result of deterioration and damage to the encapsulation which had occurred-
since the last annual inspections on April 29, 1985 (JRT) and December 19,
1984 (Montrose). Respondent insisted, however, that because of its inspec-
tion and encapsulation activities, it was entitled to the exemption set
forth in § 763.117(c)(2) and, consequently, was not in violation of the Act
and regulations.
After an exchange of prehearing information ordered by the ALJ , the
parties agreed that this matter could be resolved on the basis of the
mentioned prehearing exchanges and the briefs of the parties..!/ In accord-
ance with Rule 22.20 (40 CFR Part 22), this posture of the case is being
treated as a motion for an accelerated decision.
Although the parties have not expressly entered into a stipulation
of facts, findings proposed by Complainant and Respondent include, in
addition to the fact that Respondent is a "local education agency" (LEA)
as defined in 40 CFR 763.103(e), that material found to be friable in the
two schools here concerned during the EPA inspection on September 19, 1985,
had been inspected by Respondent, determined to contain asbestos, and
4/ Letters from respective counsel, dated June 4 and June 10, 1986.
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5
encapsulated prior to June 28, 1983.1/ Additionally, each parties'
proposed findings state that the material was friable as a result of
damage to, or deterioration of, the encapsulation.
The section of the regulation (40 CFR 763.117(c)(2)), which Respon-
dent contends exempts it from the requirements of the rule it is charged
with violating,!/ provides as follows:
§ 763.117(c): "(2) No provision of this subpart applies to any
school if:
(i) The local education agency has conducted abatement pro-
grams that result in the elimination of all friable asbestos
materials from the school either by removal or encapsulation
of the materials.
(ii) No part of the school building was built before January
1979. "I/
Respondent contends that, because it had eliminated friable asbestos
materials from the schools here concerned by encapsulation, a method speci-
fically allowed by § 763.117(c)(2)(ii), quoted above, it is entitled to
the exemption therein provided and that Complainant cannot prove a violation
of the rule by establishing that encapsulation completed prior to the
j>/ Initial Brief of Complainant, dated July 10, 1986, and Rebuttal
Brief of Respondent, dated July 24, 1986. Proposed findings do not
specifically include date of encapsulation. Respondent has, however,
alleged, and Complainant has not disputed, that encapsulation at Montrose
Elementary was completed in May 1982 and at JRT High School in
December 1982. Although, as published, the rule required compliance with
all aspects of Part 763, Subpart F by May 27, 1983 (§ 763.115), the
final date for compliance was extended to June 28, 1983 (47 FR 25145,
June 10, 1982).
6_/ Charges relating to Respondent's alleged failure to inspect and
analyze have been dropped (Complainant's Initial Brief at 1).
_7_/ The schools at issue here were constructed prior to January
1979 and § 763.117(c) (2) (ii ) is not applicable.
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6
required date for compliance has been damaged or deteriorated since that
date (Initial Brief at 4, 5). Respondent quotes from the preamble to the
regulation (47 FR at 23367), which makes it clear that materials can be
rendered nonfriable by encapsulation and that once this has occurred the
requirements of the rule have been satisfied.^/ Respondent emphasizes that
there is nothing in the language of the rule or the accompanying comments
that conditions the exemption on the continued efficacy of the encapsulation,
and that the rule does not require elimination of asbestos from school
buildings, but only requires recordkeeping and notification, if friable
asbestos materials were found during inspection and sampling (Id. at 6).
Respondent also points out that the rule does not require continuous inspec-
tions and analysis, but one time compliance and argues that this position
is supported by the Agency's "Revised Enforcement Response Policy For The
B/ 47 FR 23367
"* * *
The Agency has also determined that, in a school
where previously discovered friable asbestos-containing
material has been removed or satisfactorily encapsulated
so that it is no longer friable, the provisions of this
rule should not apply. By undertaking these corrective
actions, school officials not only will have substantially
complied with the identification requirements, they will
also have removed the types of materials which are the
focus of the recordkeeping and notification parts of this
rule.
* * * *'
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7
Friable Asbestos-Containing Materials In Schools Identification and Notifi-
cation Regulation" (June 22, 1984).I/
Complainant says that before promulgating use regulations such as the
Asbestos-In-Schools Rule, the Administrator is required by § 6(a) of the
Act to find an unreasonable risk of injury to health or the environment
from exposure to the substance under consideration and quotes from the
preamble to the regulation (47 FR 23361) as to the risks of asbestos
exposure (Initial Brief at 3-5). Complainant also says that the purpose of
the Asbestos-In-Schools Rule is to identify friable asbestos-containing
materials and to notify employees and parents of students of the existence
of such materials so that action may be taken to avoid or reduce the risks
of asbestos exposure. It argues that the rule should be liberally con-
strued to effectuate this purpose.
Complainant asserts that, in order to fully understand the exemption
in § 763.117(c)-(2) (i ), it is helpful to review the other exemptions in
§ 763.117. Section 763.117(a) exempts schools from the provisions of
§§ 763.105, 763.107 and 763.109 requiring inspection, sampling and analysis
of friable materials, provided the schools have been inspected for friable
materials and each type of friable material has been sampled and analyzed
using Polarized Light Microscopy or Electron Microscopy, prior to the effec-
tive date of the rule. This exemption does not apply, if the determination
_9_/ Language relied upon is as follows:
The cited policy document provides under "Exemptions" at 2: "Schools
which satisfactorily abated (See 'Compliance Assistance Guidelines')
asbestos-containing materials before June 28, 1983, are exempt from
all requirements of the rule." Tne mentioned document also provides:
"Also, the rule requires that the activities be performed only once.
Therefore, there will be no repeat violations" (Id. at 10).
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8
friable material did not contain asbestos was based on fewer than three
samples and, of course, the notification and recordkeeping requirements of
§§ 763.111 and 763.114 are applicable, if friable asbestos-containing
materials were found. In accordance with § 763.117(a) (3), schools in which
no friable asbestos-containing materials were found are also exempt from
the notification and recordkeeping requirements of §§ 763.111, 763.114 and
the compliance requirement of § 763.115, provided the school retains a copy
of all laboratory reports and all correspondence with the laboratory
concerning samples taken and maintains in the school record a signed certi-
ficate to the effect that to the best of the signer's knowledge the school
did not contain friable asbestos-containing materials. An exemption is
provided in § 763.117(5) for schools which can document that no friable
asbestos-containing materials were used in the construction, modification
or renovation and in accordance with § 763.117(c)(1), schools are exempt
from the inspection, sampling and analysis requirements of §§ 763.105,
763.107 and 763.109, if the school record contains a signed statement
certifying that any friable materials will be treated as asbestos containing.
Asserting that Respondent has misread § 763.117(c)(2)(i) quoted above,
Complainant contends that the word "elimination" means "complete eradica-
tion." It argues that the use of the word "elimination" together with the
other exemption provisions in § 763.117, summarized above, strongly imply
that mere encapsulation, without a follow-up program to ensure that asbestos
remains encapsulated, does not satisfy the elimination requirement (Initial
Brief at 9). Complainant emphasizes that encapsulation is rarely permanent
and quotes from the preamble to the regulation to the effect that where
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9
•encapsulation is undertaken, a program for periodic re-evaluation should be
instituted as a check for further damage or deterioration.I2/
Complainant argues that an LEA, which identifies friable asbestos
containing material, and elects to encapsulate rather than remove the
material, is responsible for ensuring that the encapsulation is permanent
(Initial Brief at 9, 10). It argues that, if encapsulation is not permanent,
the LEA is required to notify employees and parents as required by § 763.
Ill and keep records of the location of friable asbestos materials as
required by § 763.114. According to Complainant, any other result would
emasculate the rule and allow poorly encapsulated or damaged material to
remain unnoticed and unrecorded, with the consequence that employees and
students would be unaware of the risks to which they are being subjected.
Relying to the foregoing arguments, Respondent emphasizes that despite
the findings of unreasonable risk of injury to health or the environment,
EPA. has not required total elimination of asbestos from schools (Rebuttal
Brief at 2}. Respondent states the belief that the ultimate Agency goal
10/ The provisions cited is as follows:
"* * *
EPA strongly recommends that, where a local educa-
tion agency determines that a'management program
for friable asbestos-containing material is the
most appropriate response, the local education
agency should institute a program to advise and
educate its employees of the need for caution and
proper procedures. Such a management program should
also include a provision for periodic reevaluation
of the material to determine whether the management
program has prevented further damage or deterioration,
* * * *"
(47 FR at 23360).
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10
is elimination of health risk rather that simple notification and record-
keeping requirements and that it should be obvious a higher societal benefit
can be achieved through abatement activities. It argues that had Com-
plainant's present position been known, i.e., that abatement activities
undertaken to comply with the rule do not satisfy its purpose and intent
because of subsequent events, such as damage or deterioration, it would
have discouraged rather than encouraged, abatement activities with con-
sequent negative effects on health.
Respondent disputes Complainant's attempt to read the word "elimination"
in § 763.117(c)(2)(i ) as requiring complete eradication, pointing out that
"elimination" can be either by removal or encapsulation. Respondent points
out that Complainant's acknowledgment "encapsulation is rarely permanent"
(ante at 8) cuts against its present argument that elimination means
complete eradication. Respondent also points out that the nature of the
follow-up program Complainant would require in order for encapsulation to
comply with the rule has not been defined either in the rule or Complainant's
briefll/ and that Complainant is attempting to remove encapsulation from
the rule by administrative interpretation. Respondent further argues that
Complainant's present interpretation of the § 763.117(c) (2) (i ) amounts to a
partial repeal of the exemption without rulemaking and adequate notice to
Respondent and other LEAs (Id. at 5, 6).
In its Reply Brief, Complainant relies on guidance documents, e.g.,
Asbestos-Containing Materials in School Buildings, A Guidance Document
ll/ Complainant states that as a general matter, inspections performed
at reasonable intervals, depending on the quality and condition of the
material to be inspected, and continued maintenance or repair of damaged or
deteriorating encapsulated asbestos, is all that is necessary to satisfy
the elimination requirement of the exemption (Reply Brief at 6, 7).
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11
(March 1979) and Guidance for Controlling Asbestos-Containing Materials in
Buildings, EPA 560/5-85-024 (June 1985), to support the proposition that
mere encapsulation, without subsequent monitoring and repair, has never
been considered to be a viable abatement measure by EPA (Id. at 1-5).
Complainant asserts that, because of the health benefits of the rule, exemp-
tions should be narrowly construed and reiterates the argument that, because
Respondent's encapsulation activities did not result in the complete elimi-
nation of friable asbestos-containing mater^ls from the schools at issue,
Respondent is not entitled to the exemption in § 763.117(c)(2)(i).
Discussion
The regulation will not support the interpretation Complainant attempts
to place upon it. Section 763.117(c)(2)(i) provides for an exemption from
the requirements of 40 CFR Part 763, Subpart F, if the LEA has conducted
abatement programs that result in the elimination of all friable asbestos
materials either by removal or encapsulation. Obviously, encapsulation
is a permissible method of qualifying for the exemption and the word
"elimination" must be read in this context. The guidance documents cited
by Complainant make it clear that EPA was well aware that encapsulation is
rarely permanent, but instead requires continuous inspection and maintenance.
It is therefore untenable to suggest that "elimination" as used in § 763.
117(c)(2)(i) means complete'eradication of friable asbestos-containing
materials from schools.
No issue need be or is taken with Complainant's depiction of the find-'
ings the Administrator was required to make in order to promulgate the rule
at issue under § 6(a) of the Act or of the risks of asbestos exposure. The
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12
rule perhaps could or should have required removal of all friable asbestos-
containing materials from schools or stopping short of removal, and
recognizing that encapsulation is merely a containment method, specifically
set forth requirements for continuing inspection and maintenance of encap-
sulated materials. Logically, the rule could then have conditioned the
exemption on continued efficacy of the encapsulation, i.e., compliance with
inspection and maintenance requirements. The problem with Complainant's
position is that the rule was not so written—the language of the preamble
(note 10, supra) and the guidance documents cited by Complainant constituting
recommendations and not requirements of the rule.ii/ It is recognized that
the language "satisfactorily encapsulated" in the preamble describing the
§ 763.117(c)(2)(i) exemption (note 8, supra) might be regarded as lending
support to Complainant's contention that implicit in the rule is a require-
ment for continued efficacy of the encapsulation. At most, however, "satis-
factorily" implies some minimum standard encapsulation was initially
required to meet and inasmuch as the parties have in effect stipulated that
friable asbestos materials found in the inspection were the result of damage
to, or deterioration of, the encapsulation, the manner in which encapsulation
was initially accomplished is not at issue.
Contrary to Complainant's position, the other exemptions in § 763.117,
summarized ante at 7, 8, support the conclusion the regulations envision
12/ Instructive here is the Introduction of the Revised Enforcement
Response Policy (note 9, supra) which provides in pertinent part: "* *
The inspection and notification requirements of the rule are now mandatory.
Certain other activities associated with asbestos in schools, such as
abatement procedures, are not requirements of the rule. However, since
these activities are often logical consequences of complying with the rule,
EPA will continue to offer advice to school personnel on how to control
hazards from friable asbestos-containing material through the Regional
Asbestos Coordinators."
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13
one-time compliance and that despite the health concerns involved, a
prime consideration of the drafters of the rule was to minimize burdens
on LEAs. This is evident in the exemption from the inspection, sampling
and analysis requirements of §§ 763.105, 763.107 and 763.109 provided in
§ 763.117(a)(1) for schools which had previously accomplished these
activities. Moreover, the problem present here of subsequent damage or
deterioration would seem equally likely in a school which had been
inspected and found to contain no friable asbestos-containing materials,
yet such a school is exempt from the notification and recordkeeping
requirements (§ 763.117(a) (3)) and no provision is made for subsequent
inspection, sampling and analysis.
In view of the foregoing, it follows that if the Agency is to con-
dition the exemption in § 763.117(c)(2)(i ) on continued efficacy of the
encapsulation, it must do so by further rulemaking.il/ It also follows
that Complainant has not shown a violation of the rule and that the
complaint will be dismissed.!^./
13/ See, e.g., U.S. Nameplate Company, RCRA (3008) Appeal No. 85-3
(Final Decision,. March 31, 1986) (Agency could not use background documents,
which were not published in Federal Register, to support contention a listed
hazardous waste, F006 wastewater treatment sludges from electroplating
operations, included sludges from chemical etching).
_14/ Garden City Unified School District No. 457, TSCA Docket No.
VII-84-T-273 (Initial Decision, March 19, 1986), cited by Complainant, is
distinguishable, because in that case various steam pipes, boilers and
utility tunnels had not been inspected by Respondent.
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14
ORDER
The complaint is dismissed.li/
Dated this
day of July 1986.
""SpWcer T. Nissen
Administrative Law Judge
15/ In accordance with Rule 22.20(b) this decision is an initial
decision, which unless appealed in accordance with Rule 22.30, or unless
the Administrator elects, sua sponte, to review the same as therein pro-
vided will become the final order of the Administrator in accordance with
Rule 22.27(c).
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UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
TSCA Docket Number VII-85-T-146
IN THE MATTER OF:
MID-MO ELECTRIC COMPANY,
RESPONDENT
TOXIC SUBSTANCES CONTROL ACT
Where evidence shows that payment of an appropriate civil penalty plus
the cost of cleanup and disposition of PCBs present on Respondent's
premises contemplates an outlay of funds which Respondent is incapable of
paying, and where it is determined that money will be better spent on
remedial measures, it is proper to defer payment of a substantial portion
of said penalty to afford Respondent the means, time and opportunity to
accomplish such cleanup and disposition and to condition a subsequent
remission of said amount on the completion of said cleanup and disposition
in strict accordance with applicable regulations.
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APPEARANCES
For Complainant; Rupert G. Thomas, Assistant
Regional Counsel
U.S. Environmental Protection Agency
Region VII
726 Minnesota Avenue
Kansas City, Kansas 66101
For Respondent; Erwin L. Milne, Esquire
STOCKARD, ANDERECK, HAUCK,
SHARP & EVANS
101 West McCarty Street
Post Office Box 1280
Jefferson City, Missouri 65102-1280
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INITIAL DECISION
By Complaint filed November 1, 1985, Complainant, the Regional
Administrator of the United States Environmental Protection Agency
(hereinafter "EPA" or "the Agency"), Region VII, charges in three Counts
that Respondent, Mid-Mo Electric Company (hereinafter "Mid-Mo" or
"Respondent"), a Missouri corporation, violated federal regulations
40 C.F.R. Part 761 addressing the use, disposal and marking of poly-
chlorinated biphenyls (hereinafter "PCB"s) and thereby violated
Section 15 of the Toxic Substances Control Act (hereinafter "TSCA" or
"the Act"), 15 U.S.C.A. Section 2614.
Count I of said Complaint charges that Mid-Mo violated 40 C.F.R.
761.40(a) for the reason that three (3) PCB large high or low voltage capa-
citors, located on Respondent's facility in the basement foundation of a
burned building and in a tank storage area, were not marked "ML" (as
illustrated in 40 C.F.R. 761.45[aJ). For said violation, it is proposed that
a civil penalty in the sum of $1500 should be assessed against Respondent.
Count II charges that said three PCB capacitors, described in Count I,
were ruptured and leaking and, therefore, were in storage for disposal;
that said capacitors were not stored in a storage facility complying with
the requirements of 40 C.F.R. 761.65(b); that said capacitors were not dated
to indicate the date when each and all of said capacitors were placed in
storage, as required by 761.65(c)(8), and that Respondent's failure to so
comply with said regulations renders Respondent in violation of Section 15(1)
of the Act, for which an additional civil penalty totaling $1500 is proposed.
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Count III charges that at the time of an inspection by EPA on
April 11, 1985, PCBs were present in four described areas of Respondent's
facility as a result of uncontrolled discharges, which constitute the disposal
of PCBs; that said disposal did not comply with the disposal requirements of
Section 761.60(a)(l) and renders Respondent in violation of the Act. For
such violations, it is proposed that an additional penalty, totaling $25,000,
should be assessed.
On November 20, 1985, Respondent's Answer, in letter form and dated
November 18, 1985, was filed by Respondent's manager, Gregory H. Gunn, who
requested an informal conference and a hearing; he stated that two of the
three capacitors were located in the basement of a building which burned down
in a fire that occurred on January 6, 1975, completely destroying the entire
building, and that he and others connected with Respondent were of the opinion
that said capacitors were "rendered harmless by the fire." As to the third
capacitor which was found in the middle of a tank storage area on the south
portion of subject facility, they concluded after inquiry that said capacitor
was dumped on Respondent's premises by a person or persons unknown. Respondent
admits that the two first-mentioned capacitors were ruptured, but its manager
is of the opinion that the two said capacitors showed no signs of leaking;
the third capacitor, it is admitted, had a broken bushing and was obviously
leaking .
An adjudicatory hearing was convened in Room 2507 in the Federal Office
Building at 911 Walnut Street in Kansas City, Missouri, on Tuesday,
May 20, 1986, beginning at 9:30 a.m. At said hearing, Respondent, then
represented by its president, Harold Gunn, and its manager, Gregory Gunn,
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stipulated (Transcript [hereinafter *'TR] 5) to the facts and findings of
the report of EPA inspector, David Ramsey (Complainant [hereinafter "C"])
Exhibit (hereinafter ["EX"] 1, except it did not agree that It was respon-
sible for the existence of a PCB capacitor found on the south side of
Respondent's property in the tank storage area (TR 6). Respondent stipulated
that all the soil samples taken were representative and that sampling and
analysis thereof were proper and correct (TR 6) and further agreed that
Complainant's Exhibits 1 through 5 might be offered in evidence; said exhibits
were thereafter received without objection (TR 52).
On the basis of the record, including the testimony elicited at the
hearing, the facts stipulated to by the parties, the exhibits then and there
offered and received in evidence, and upon consideration of the findings
proposed by the parties, I make the following
FINDINGS OF FACT
1. Respondent is Mid-Mo Electric Company, Sedalia, Missouri, a corporation
incorporated under the laws of the State of Missouri.
2. Respondent's stocks are owned by Harold Gunn, George Gunn and Gregory
Gunn. Harold Gunn is president of the corporation, George Gunn, vice
president and Gregory Gunn, secretary (TR 80-81).
3. Respondent has been in business at the same location since 1955 (TR 59).
A. Respondent is engaged in the business of purchasing, selling and
repairing electric transformers and capacitors.
5. On or about April 11, 1985, an inspection of Respondent's facilities
was conducted by David Ramsey, an enforcement officer for the EPA, pursuant
to §11 of TSCA, 15 U.S.C. §2610.
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6. Harold Gunn is semi-retired from the business. He visits the business
on the average of once per week over the last two years, and his involve-
ment is basically advisory (TR 68).
7. Harold Gunn has worked in the field of engineering or been associated
with engineering firms for most of his working years, and has personally
made many categories of inspections (TR 55).
8. Harold Gunn first became aware of the EPA regulation dealing with PCBs
in the latter part of the 1970s (TR 64).
9. The property comprising Respondent's business is approximately six
acres, three-fourths of which is utilized for activities dealing with
transformers and capacitors (TR 16). A part of Respondent's property is
utilized for a bait shop (TR 16).
10. Respondent's property is unfenced and has three driveways. Respondent
is the only business in Sedalia and surrounding areas dealing in the
sale and repair of capacitors and transformers (TR 67).
11. Seven to ten people are employed by Respondent (TR 67;83). The employees
who pick up and deliver transformers or capacitors do not work set hours,
but the hours they work depends on the needs of the customers (TR 68).
12. Respondent has received gifts of transformers, of which Respondent's
employees pick up and deliver to Respondent's place of business (TR 66).
13. Respondent's property is used mostly to unload and store transformers
(TR 63).
14. Oil from transformers is placed in tanks located on Respondent's
property and, until a little more than a year ago, the oil was used by
Respondent as fuel for its oven to bake transformer coils (TR 74).
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—7 —
15. Respondent had PCB oil in its tanks located on its premises from
which David Ramsey, an EPA inspector, took samples (TR 61).
16. On occasion, the tanks were washed out with solvent and the residues
disposed of by Respondent (TR 62).
17. Customers of the bait shop located on Respondent's property can use
any of the three driveways located on said property (TR 88), and there is
no fence separating the bait shop from the transformer-capacitor business
operated by Respondent (TR 86).
18. Respondent is not sure how much of the subject six acres of its
property is PCB-contaminated (TR 103).
19. Gregory Gunn was aware that PCB capacitors were required to be disposed
of (TR 84). Gregory Gunn is the manager of Respondent's business (TR 83).
20. Gregory Gunn attended a seminar on PCBs several months prior to the
date of the inspection conducted by David Ramsey (TR 88).
21. During the inspection of Mid-Mo Electric Company on April 11, 1985,
David Ramsey, the EPA representative, observed three PCB large capacitors,
as defined at 40 C.F.R. §761.3, which were not marked in accordance with
40 C.F.R. §761.40(a).
22. During the inspection of Respondent's facilities on April 11, 1985,
two of the three PCB large capacitors were located in the basement foun-
dation of a building which burned down in the 1970's; the third was in a
tank storage area south of the Respondent's main shop, on the ground
along with other materials such as transformers (TR 12-13).
23. During said inspection of Respondent's facilities on April 11, 1985,
David Ramsey observed apparent PCB leaks and/or spills and obtained five
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Q _.
soil and oil samples from different areas which detected widely varying
ranges of PCBs present (TR 12).
25. The third capacitor was located in a tank storage area some 125 feet
south of the Respondent's main shop and near a driveway accessible to fre-
quent customers' vehicle traffic; said third capacitor had a broken bushing
and was leaking on the ground (TR 18; 22).
26. Respondent's president and manager both stated that they were unaware
of the presence of the third capacitor and were without knowledge how it came to
be located on said property. Harold Gunn, president of Respondent corporation,
stated he had examined the area in question approximately one week before
the EPA inspection and had not detected the presence of said third capacitor
(TR 56).
27. In Ramsey's opinion, oil from said third capacitor had leaked onto the
ground within the two years preceding his inspection (TR 20).
28. The oil content in the soil, from which David Ramsey took the samples,
appeared to have been spilled or placed there at different times (TR 29).
29. In proposing a penalty against Respondent, EPA used a matrix provided
by EPA guidelines, which takes into consideration the extent of the environ-
mental harm and the circumstances of possible harm (TR 31).
30. Complainant proposes the assessment of civil penalty in the total sum
of $28,000 against Respondent for three alleged violations of TSCA. TSCA
provides for a maximum penalty of $25,000 per day for each violation of the
Act (TR 31).
31. The penalty assessed against Respondent in Count III of the Complaint
is based upon the area of PCB contamination of its property (TR 39).
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32. The soil sample taken by David Ramsey from Respondent's property in
the area of said third capacitor contained 64,000 parts per million (here-
inafter "ppm"), 6.4 percent, which is extremely high in the soil. Ten ppm
PCB, or higher, is considered significant (TR 46).
33. PCBs are much heavier than oil and water (TR 48). Once PCB oil comes
into contact with the ground, PCB will cling to the soil if the oil evaporates
(TR 49-50).
34. If PCBs are in the soil, when it rains the water passing through the
soil will absorb the PCBs in the parts per billion range until they are gone.
It could take a very long time for a significant amount of PCBs to be so
absorbed (TR 50).
35. Respondent's manager, Gregory Gunn, stated that Respondent has always
kept a card record of every transformer that comes in and goes out (TR 90).
Respondent has, since the filing of subject Complaint, become familiar with
the marking, dating and record keeping regulations (TR 91-92).
36. Since the filing of the Complaint, Respondent has shipped subject capac-
itors to "an ecology place" (TR 92). Respondent has not acted to "clean up"
the land but has negotiated with three different people who have made proposals
for formulating a detailed plan for the clean-up (TR 93).
37. Respondent is making an effort to contract for clean-up of its installa-
tion at a reasonable cost (TR 97).
38. Gross sales of Respondent's business, in a representative 12-month period,
are $400,000 to $500,000 (TR 70, 79).
39. Respondent made its last distribution of profits in 1977 (TR 85). For
at least the last two years, Respondent has experienced an operating loss
(TR 79). Harold Gunn, Respondent's president, has not received a salary or
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dividend for five years.
AO. Of the three firms contacted by Respondent relative to a "clean up" of
PCBs on its premises, National Electric quoted a price of $25,000 for a
detailed plan "to clean up". Two other firms asked $1000 just to "corae in
and then start and go from there", and were vague about how much the final
cost of the "clean up" would be (TR 93). Said three firms were included
by EPA on a list of people available to do a "clean up" of PCBs (TR 95).
CONCLUSIONS OF LAW
1. In failing to mark said PCB capacitors at the time of their removal from
use, Respondent violated AO C.F.R. 761.AO(a).
2. Subject PCB capacitors were in storage for disposal and, as such, were
required by applicable regulations to be stored in a facility which complied
with the requirements of AO C.F.R. 761.65(b). By its failure to so store
said capacitors, Respondent violated said Section 761.65(b).
3. By its failure to date said capacitors to indicate when each and all said
capacitors were placed in storage, Respondent violated the provisions of
AO C.F.R. 761.65(c)(8).
A. Under the facts and circumstances evidenced by the record, PCBs found in
the areas sampled by subject EPA inspection resulted from leaking of subject
capacitors as a result of uncontrolled discharges, which leaking constitutes
the disposal of PCBs (Section 761.13), which does not comply with and thus
violates AO C.F.R. 761.60(a)(1).
DISCUSSION
The Toxic Substances Control Act specifically recognizes that PCBs are
hazardous chemical substances and comprehensively provides for their regula-
tion (15 U.S.C. 2605[e]).
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That Respondent is in violation of the Act, and regulations promulgated
pursuant thereto, is unquestioned. The findings in the EPA inspection report
(C EX 1) are not controverted by Respondent, but stipulated to be accurate.
The analyses of the samples (C EX 4), on which the violations are grounded,
are also stipulated to.
The two capacitors in the basement of a burned building were ruptured
and the soil and ash were sampled by EPA (Sample -01, C EX A). Even though
the fire occurred in the mid-1970s (TR 13), the PCBs , spilled from the
capacitors, still were present in the soil and ash at the time of the EPA
inspection in April, 1985.
Clearly, the charges in all three Counts are amply supported on this
record .
Respondent's manager stated that they were of the opinion that the
capacitors were rendered harmless (Respondent's Answer [letter], dated
November 18, 1985). However, Harold Gunn, Respondent's president, was know-
ledgeable in this area and acknowledged (TR 72) that most old capacitors
"had PCB oil in them." It was the duty of Respondent to determine whether
said capacitors contained PCBs and, absent a determination that they did not
contain PCBs, their disposal is required to comply with applicable regulations
pertaining to the disposal of capacitors (Section 761.60[b][2][i]). The
burned capacitors were obviously "disposed of", as their useful life was
terminated (Section 761.3). It is pertinent here to point out that "disposal"
is defined to include spills, leaks and other uncontrolled discharges of
PCBs. The Complaint does not address Respondent's failure to dispose of said
capacitors prior to January 1, 1984, as required by Section 761.65(a).
Count II of the Complaint charges its failure to store them in compliance
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-12-
with Section 761.65(b) and its failure to date them as required by
Section 761.65(c)(8). The charge that said capacitors were not marked is not
controverted, and the requirement that the "storage area" be marked is not
addressed (Section 761.40[a][10]).
By reason of the foregoing, a civil penalty should be and is herein-
below assessed as provided by the Act and regulations.
CIVIL PENALTY
Section 16(a)(l) of the Act, 15 U.S.C.A. 2615(a)(l), provides that any
person who violates Section 15 (i.e., fails to comply with promulgated
regulatory rules) shall be liable to the United States for a civil penalty
in an amount not to exceed $25,000 for each such violation.
Section 16(a)(2)(B) provides that:
"... in determining the amount of a civil penalty (I)
shall take into account the nature, circumstances, extent
and gravity of the violation(s) and with respect to the
violator, ability to pay, effect on ability to continue
in business, and history of prior violations, the degree
of culpability, and such other matters as justice may
require."
40 C.F.R. 22.27(b) provides that I shall determine the dollar amount
of the recommended civil penalty to be here assessed in accordance with any
criteria set forth in the Act and that I must consider any civil penalty
guidelines issued under the Act.
The purpose of the guidelines is to assure that TSCA civil penalties
be assessed in a fair and consistent manner; that the penalties are appro-
priate for the violation committed; that economic incentives for violating
TSCA are eliminated,and that the exaction of a penalty will effectively
deter further violations (See 45 FR No. 177, page 59770, dated
September 10, 1980). On this record, upon consideration of the matrix
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provided in the guidelines (45 FR, page 59771), the nature of the violations
is indicated by the circumstances (probability of damage) and the extent of
extent of potential damage. I find that an appropriate penalty to be assessed
for the violation charged by Count III is $20,000. The contamination extends
extends over an area of two to three acres and such area is frequented by
employees of Respondent and members of the public (Findings 10 through 13).
Respondent's failure to mark subject capacitors (Count I) warrants the
assessment of a $1500 civil penalty, as proposed by Complainant. The extent
is minor but the circumstances (probability of damages) is in the mid range.
On this record, the circumstances present a much greater threat or proba-
bility of damage to the public health and the environment where Respondent
did not recognize its duty and obligation to determine whether said
capacitors contained PCBs and wrongly assumed that the fire in January, 1975,
had "destroyed" the PCBs. Respondent's president acknowledged (TR 72) that
(most) capacitors built in the 1970s contained PCBs, and the assumption that
the PCBs did not exist after said fire where, in fact, they were present,
heightens the probability of damage. The hazardous character of PCBs is
recognized by the statute (Section 6[e] of the Act, 15 U.S.C.A. §2605[e]).
The only issue raised by Respondent is that it was unaware of the
presence of said third capacitor found in the tank storage area which
Harold Gunn believed was thrown there by persons unknown (TR 56-57). The
EPA inspector acknowledged Mr. Gunn's apparent surprise (TR 13) at finding
said capacitor in that area, but estimated from the appearance of the soil
that said spill had been present at the site for a period of approximately
two years (TR 20; Finding 27). Even if Respondent's contention should be
found credible, the area of contamination otherwise existing is extensive
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and significant, and the civil penalty hereinabove assessed is appropriate.
I have also considered the financial condition of "the violator."
It appears that since the 1975 fire, Respondent's profits have declined
and the business has experienced an operating loss in recent years. Respondent
has recognized the necessity and its obligation to "clean up" the PCBs present
on subject premises, and to thereafter mark and date all PCB articles coming
into and leaving their premises - and to properly store and inspect same in
order to detect and prevent discharges of PCBs into the environment. On this
record, I find that payment of the total penalties penalty hereinabove
assessed ($23,000), along with the cleanup of Respondent's premises and the
disposition of said materials, present an outlay of funds which, if not beyond
Respondent's financial capability, present a threat to, or will impair, its
continued operation as a viable business entity. The costs of the cleanup
are considered a part of Respondent's cost of its violation and it would here
appear that the cost of cleanup will exceed any economic benefits to Respondent
resulting from subject violations.
In George B. Huth, d/b/a Huth Oil Co., et al., TSCA-V-C-196 (1986), it
was determined that a reduction in the appropriate penalty would serve to
decrease the incentive to properly dispose of PCBs as required by applicable
regulations. However, because the evidence there indicated that payment of
the said civil penalty plus the cost of proper disposition of subject PCBs
were beyond Respondent's financial capabilities, it was found that remission
of said penalty, on the condition that a timely and satisfactory disposition
occur, was the only means of facilitating such disposition of the hazard
presented . Huth cites O'Leary vs. Moyers Landfill, Inc., 523 FS 642
(DC Pa 1981) where civil penalties under the Clean Water Act and RCRA were
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not imposed when the Court determined the money would be better spent
on remedial measures.
In the premises, I find it appropriate to provide that $20,000 of the
civil penalty, hereinabove found to be appropriate, be deferred on the con-
dition that Respondent undertake and complete the cleanup and disposition
of subject PCBs on the subject six acres, in accordance with applicable
regulations, on or before January 1, 1987. The Respondent shall be ordered
to pay the remaining sura of $3000 within 30 days from and after the date
hereof. If, on January 1, 1987, said cleanup and disposition has been
accomplished to the satisfaction of Complainant, then and in that event said
$20,000 of the penalty herein assessed will be remitted. Should Respondent
fail or refuse to accomplish said cleanup and disposition in the manner and
time hereinabove provided, then and in that event, said remaining $20,000
shall be due and payable.
Upon consideration of the post-hearing submissions of the parties, the
conclusions reached and in accordance with the criteria set forth in the Act
and regulations, I recommend the following
FINAL ORDER !_/
For violation of Section 15 of the Toxic Substances Control Act
(15 U.S.C. 2614) and regulations promulgated thereunder (40 C.F.R. Part 761)
as charged by Counts I, II and II of the Complaint, a civil penalty in the total
sum of $23,000 is assessed against Respondent Mid-Mo Electric Company, a Missouri
corporation, in accordance with Section 16(a) of the Act (15 U.S.C. 2615[a]).
\J Unless an appeal is taken pursuant to the rules of practice, 40 C.F.R.
22.30, or the Administrator elects to review this decision on his own
motion, the Initial Decision shall become the Final Order of the
Administrator (see 40 C.F.R. 22.27[c]).
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1. It is Ordered that payment of $3,000 of said civil penalty shall be made
within 30 days of Service of the Final Order upon Respondent by forwarding a
Certified or Cashier's check in said amount, payable to the Treasurer of the
United States of America at the address hereinbelow more fully set forth.
2. It is further Ordered that payment of $20,000 of said civil penalty is
hereby deferred until January 1, 1987.
3. It is further Ordered that said $20,000 civil penalty shall he fully
and finally remitted provided, and on the condition that, Respondent shall,
on or before January 1, 1987, undertake and complete the cleanup and dispo-
sition of all PCBs heretofore discharged on its subject premises in accordance
with applicable regulations and to the satisfaction of Complainant herein.
A. Payments of said civil penalty in the amounts and at the times hereinabove
provided shall be made by forwarding a Certified or Cashier's check, payable to
the Treasurer of the United States, to
Mellon Bank
U.S. EPA - Region VII
Regional Hearing Clerk
Post Office Box 3607A8M
Pittsburgh, Pennsylvania 15251.
It is so ORDERED.
DATED: August 11 , 1986
Marvin E. Jones
Administrative Law Judge
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CERTIFICATE OF SERVICE
I hereby certify that, in accordance with 40 CFR 22.27(a), I have this
date forwarded to the Regional Hearing Clerk, Office of Regional Counsel,
United States Environmental Protection Agency, Region VII, 726 Minnesota Avenue,
Kansas City, Kansas 66101, the Original of the foregoing Initial Decision of
Marvin E. Jones, Administrative Law Judge, and have referred said Regional
Hearing Clerk to said Section which further provides that, after preparing and
forwarding a copy of said Initial Decision to all parties, she shall forward the
Original, along with the record of the proceeding, to the Hearing Clerk (A-110),
EPA Headquarters, Washington, D.C., who shall forward a copy of said Initial
Decision to the Administrator.
DATED: August^!, 1986
(I
Mary Lou Clifton
Secretary to Marvin E. Jones, ADLJ
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IN THE MATTER OF
MID-MO ELECTRIC COMPANY
Respondent.
TSCA Docket No. VII-85-T-146
CERTIFICATION OF SERVICE
In accordance with Section 22.27(a) of the Consolidated
Rules of Practice Governing the Administrative Assessment of
Civil Penalties ... (45 Fed. Reg., 24360-24373, April 9, 1980),
I hereby certify that the original of the foregoing Initial
Decision issued by the Honorable Marvin E. Jones, along with
the entire record of this proceeding was served on the Hearing
Clerk (A-110), Environmental Protection Agency, 401 M Street,
S.W., Washington, D.C. 20460 by certified mail, return receipt
requested; that a copy was hand-delivered to Counsel for
Complainant, Rupert G. Thomas, Office of Regional Counsel,
Environmental Protection Agency, Region 7, 726 Minnesota
Avenue, Kansas City, Kansas 66101; that a copy was served by
certified mail, return receipt requested on Respondent's
attorney, Erwin L. Milne, Stockard, Andereck, Hauck, Sharp
and Evans, 101 West McCarty Street, P. 0. Box 1280,
Jefferson City, Missouri 65101.
are made (within 20 days after service of
the Administrator does not elect to
it, then 45 days after receipt this will become the
If no appeals
this Decision) and
review
Final Decision of the'Agency (45 F.R. Section 22.27(c), and
Section 22.30).
1986.
Dated in Kansas City, Kansas this
day of
Diana (IT Reid
Regional Hearing Clerk
cc: The Honorable Marvin E. Jones
Administrative Law Judge
U. S. Environmental Protection Agency
726 Minnesota Avenue
Kansas City, Kansas 66101
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