Environmental Justice Determination (Attachment B to Region's Response to Comments). In his petition, Mr. Basham asserts that the Region's review was flawed because in conducting its demographic analysis the Region used data from a two-mile rather than a four-mile radius surrounding the proposed EDS wells. Basham Petition at 3. In particular, Mr. Basham states that the EDS wells “will cause a stigma for the entire community” and will have a negative impact on property values beyond a two-mile radius. Id. According to the Region, a two-mile radius for the demographic analysis was used "because of the nature of the injection well operations and the effect the injection wells may have on the surrounding community." Environmental Justice Determination at 3. More particularly, the potential effects considered by the Region included odor and air pollution, surface and groundwater pollution, noise, increased vehicular traffic, and decreased property values. Id. at 3-4. The Region's Environmental Justice review concluded as follows: U.S. EPA determined that EDS's application for a UIC per- Environmental Justice Determination at 5. As the Board has previously explained: The proper scope of a demographic study to consider Envotech, 6 E.A.D. at 283 (quoting In re Chemical Waste Management of Indiana, Inc., 6 E.A.D. 66, 80 (EAB 1995)). Accordingly, we reject Mr. Basham's assertion that the two-mile area in which the Region conducted its demographic analysis was too small. Id. (rejecting challenge to twomile demographic analysis). Issue 6: Finally, Mr. Basham states that he agrees with the comments summarized by the Region in "Comment 56" on pages 23-24 of the Response to Comments document regarding the disproportionate impact of the proposed wells. In particular, Mr. Basham, citing the Region's Environmental Justice Guidelines, argues that the Region should consider the "aggregate impact of the proposed commercial hazardous waste disposal facility along with the existing Detroit Metropolitan Airport, numerous airport-related trucking firms, three petroleum tank farms, asphalt plant and the major interstate highway." Basham Petition at 3. In its response to this comment, the Region stated that it had conducted an Environmental Justice review and concluded that operation of the proposed wells would not result in a disproportionate impact on minority communities. The Region stated, in part: USEPA remains committed to ensuring, to the greatest Response to Comments at 24. As Mr. Basham has not stated why the Region's response to comments on this issue was erroneous or otherwise warrants review, review is denied on this issue. See Federated Oil & Gas, 6 E.A.D. at 726-27.11 14 We note that in its Environmental Justice Determination, the Region considered the existing pollution sources noted by Mr. Basham and concluded that the proposed wells would not have a significant effect on the surrounding community beyond a two-mile radius. In particular, the Region concluded, in part, as follows: 5) Decreased Property Values The proposed site is located in a heavily industrialized area. The area already hosts other industrial facilities including several airport-related trucking firms, three petroleum tank farms and an asphalt plant. Additionally, the runway of the Detroit International Airport and a major interstate are located within a two-mile radius. Since all of the existing facilities have the potential for visible emissions, noise and odors, the existing facilities will likely have a greater effect on property values than the EDS facility. Furthermore, the effect on property values beyond two miles from the site would be negligible. Environmental Justice Determination at 4. Mr. Basham's petition fails to convince us that the Region's determination in this regard was erroneous. * Mr. Basham has also argued that the permits should specify what types of violations would impact human health and the environment. As this issue was not raised during the comment period, however, it was not preserved for review. See supra note 7. III. CONCLUSION For the reasons stated above, the petitions for review are denied in all respects. So ordered. IN RE B&R OIL COMPANY RCRA (3008) Appeal No. 97-3 FINAL DECISION Decided November 18, 1998 Syllabus This is an appeal by B&R Oil Company, Inc. (“B&R”), a petroleum marketing firm based in Granger, Indiana, from an Initial Decision by Administrative Law Judge Carl C. Charneski ("Presiding Officer”) arising out of an administrative action by Complainant EPA Region V (“Region”) against B&R for violations of regulations found at 40 C.F.R. part 280, subpart H. These regulations require owners and operators of petroleum underground storage tanks (“USTs") to, inter alia, demonstrate financial responsibility for taking corrective action and compensating third parties for bodily injury and property damage caused by accidental releases resulting from the operation of USTs. Specifically, the Region asserted that B&R, as a petroleum marketing firm owning between 100 and 999 USTS, failed to demonstrate the requisite financial responsibility by the compliance deadline of October 26, 1989. The financial responsibility regulations at issue specify the amount of coverage that UST owners and operators must obtain, as well as types of financial mechanisms that they must use to show evidence of financial responsibility for petroleum releases. This case arose from B&R's relying on a “state fund”—Indiana's Underground Petroleum Tank Excess Liability Fund (“ELF”)—as its mechanism of financial assurance. B&R and other UST owners in Indiana paid into the ELF through mandatory tank registration fees. The financial responsibility regulations permit such state-organized funds to be used as an alternative to more traditional and expensive mechanisms of assurance such as letters of credit, surety bonds, and private insurance, but require that states submit a description of their state funds for review and approval by the Regional Administrator before the fund can be used to demonstrate financial responsibility. Upon this submission, a state fund automatically becomes an acceptable form of financial assurance pending the Regional Administrator's final determination that the state fund is “equivalent” to other financial mechanisms permitted by the regulations. At the time of these proceedings, state funds had become the overwhelming choice of financial assurance for UST owners and operators in Region V, but unlike other states in the Region, Indiana had not submitted a description of its fund for review and approval by the Regional Administrator. As such, UST owners and operators in Indiana became a target of an enforcement investigation by the Region, which sought to determine whether they were obtaining federally qualified alternative financial assurance, since the state fund was unavailable for this purpose. The Region's administrative action against B&R was prompted by the company's responses to information request letters from the Region, in which B&R stated it was relying solely upon the ELF as its form of financial assurance, because other forms of financial assurance were "prohibitively expensive." In its amended one-count complaint against B&R, the Region, following the Penalty Guidance for Violations of UST Regulations (“Penalty Policy”), proposed a $76,601 penalty, which was calculated primarily to remove the economic benefit the company enjoyed by avoiding the cost of obtaining acceptable private insurance coverage during the alleged period of violation. After an evidentiary hearing, the Presiding Officer issued an initial decision finding B&R liable for violating the financial responsibility regulations. However, the Presiding Officer departed from the Penalty Policy by lowering the Region's proposed penalty to $60,000. On appeal, B&R contends that (1) the Presiding Officer erred in finding B&R liable for violating the financial responsibility regulations because once the ELF was “formally” submitted to the Region for review and approval in July 1991 and thus became an allowable mechanism, the company's liability was extinguished by the ELF's “retroactive” effect; (2) even if B&R was not in compliance with the regulations, the Region practiced illegal selective enforcement against it; (3) the penalty should be "suspended" because of B&R's good faith efforts to comply with the financial responsibility regulations and its “enviable environmental record”; (4) the Region erred in computing B&R's “avoided costs” according to the Penalty Policy because the Region failed to offset those costs with B&R's payments into the ELF and its environmental expenditures; and (5) the Presiding Officer's decision to only lower B&R's penalty to $60,000 was “arbitrary” and “capricious.” Held: (1) B&R's "retroactivity" defense to liability is untimely and will not be considered. (2) B&R's affirmative defense of selective enforcement is without merit. Specifically, the Region did not “single out” B&R among a group of similarly situated violators or otherwise invidiously discriminate against it. Rather, the Region investigated a group of UST owners sharing similar characteristics, and began enforcement action against B&R when it determined that B&R was the only violator of the financial responsibility regulations within the group. The Region's decision to narrow its enforcement investigation to the State of Indiana was rational. Also, in light of the enforcement discretion that courts have traditionally accorded regulatory agencies because of constraints on their resources, the Region acted reasonably by limiting its enforcement investigation to a small number of UST owners. (3) B&R did not exhibit good faith sufficient to merit a suspension or reduction of its penalty because, while openly acknowledging that the ELF did not qualify as an acceptable instrument of financial assurance, the company nevertheless insisted upon relying on the ELF as its form of assurance without making diligent attempts to procure alternative coverage. The company's substantial environmental work in replacing and upgrading its USTS does not demonstrate good faith because it was undertaken in anticipation of meeting a separate regulatory requirement. (4) B&R's payments into the ELF are not appropriate offsets against the costs B&R avoided by not obtaining appropriate financial assurance because these payments were made into a financial mechanism that did not provide coverage equivalent to a functioning, federally approved state fund. Also, granting an offset would subvert a primary purpose of the Penalty Policy, which is to remove the competitive advantage that violators gain through noncompliance. Allowing B&R to offset its avoided costs with payments all UST owners made would contravene the Penalty Policy by giving B&R a financial boost over its compliant competitors. In addition, B&R's environmental expenses in replacing and upgrading tanks were mandated by a separate regulation and are thus not appropriate setoffs against its avoided costs. |