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Legal Watch: Volume 12
Prepared by William H. BodeCase Summary: From 1986 until 1999, a retail gas station in Hartland Michigan with five underground tanks owned by Bulk Petroleum Corporation and Darshan’s Michigan Stations One, Inc. leaked gasoline. Michigan’s Department of Environmental Quality (“DEQ”) issued a Unilateral Administrative Order to clean-up the site in 1993, but the site was not completely remediated until 2001. The UST owners filed an incomplete Final Assessment Order in October 2002. A new environmental consultant was hired, and a final FAR was submitted to the DEQ on October 30, 2003. The DEQ then filed a complaint against defendants for violation of the UAO and sought penalties of $3,364,400. At a hearing on August 5, 2003, the trial court imposed a $1,090,000 penalty on defendants for failure to submit a statutorily complete FAR. Defendants paid the penalty on December 9, 2003. On January 21, 2005, the DEQ moved for additional penalties, seeking the remainder of the $3,364,400. At a March 2005 hearing, the trial court granted DEQ’s motion for additional penalties in the amount of $1,418,900, based on the seriousness of the violation and the UST owners’ non-compliance. The trial court also ruled that defendants waived the statute of limitations defense to the penalties by stipulating to summary disposition on the untimely filing of the FAR at the earlier proceeding. Defendant UST owners appealed and the Michigan Court of Appeals affirmed the penalties. The Appeals Court held that Michigan law provides for a penalty for failure to file a FAR under this schedule: $100 per day for the first 7 days; $500 per day for the next 7 days; and not more than $1000 per day beyond 14 days. Further, the Court held that Michigan law permits the DEQ to recover, based on the “seriousness of the violation and any good faith efforts by the violator,” a fine of not more than “$10,000 for each underground tank system for each day of noncompliance with a (regulatory) requirement…” The Court held that the trial court had adequately assessed the evidence and the fine was justified. The Court rejected the defendants’ claim that the two-year statute of limitations precluded any fines, noting that the defendants had failed to properly assert this defense in their Answer to the Complaint or to preserve it at trial.
Bode & Grenier, LLP
1150 Connecticut Ave., NW
Washington, D.C. 20036
Telephone: 202-862-4300 | Email: email@example.com
FINES TOTALING $2,508,900 LEVIED AGAINST UST OWNERS FOR FAILURE TO FILE A TIMELY "FINAL ASSESSMENT REPORT" UPHELD BY MICHIGAN APPEALS COURT
LESSON: A cavalier attitude to state or federal environmental orders can result in huge fines for what may appear to be minor violations. In this case, the original environmental consultants apparently dragged their feet in completing a satisfactory FAR and the result was harsh. Terminal Operators are advised to hire environmental consultants with a reputation for timely and competent work. The environmental consultant should be given tight deadlines for completion of assigned tasks. Attorney General and Department of Environmental Quality v. Bulk Petroleum Corporation, Darshan’s Michigan Station One, Inc. and Darshan Dhaliwa
MOTIVA SUCCESSFULLY CHALLENGES TAX ASSESSMENT OF TERMINAL BY CITY OF STRATFORD -- VALUATION REDUCED TO $6,510,400 FROM $13,750,700
LESSON: Terminal Operators can successfully challenge tax assessments by local municipalities that overvalue their facility. A key factor in overturning an overvalued assessment is the retention of an appraiser with more experience that the appraiser(s) hired by the municipality. Here the Court was very impressed with the Credentials of Motiva’s appraiser. This case also has this implication: As the value of terminals has skyrocketed in the last few years, and the costs of building new terminals has also soared, terminal operators may anticipate similarly higher valuations of their facilities by astute Municipal tax assessors in the future. (Motiva Enterprises, LLC v. Town of Stratford)
Please address any comments or questions to Mr. Bode at 202-862-4300 or firstname.lastname@example.org.
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