ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before the Division for a contested case hearing arising out of an administrative order issued by the
Respondent, South Carolina Department of Health and Environmental Control (DHEC), to the Petitioner, Ralph Nichols
and Ralph Nichols d/b/a/ Lake Energy Corporation. The administrative order found the Petitioner liable under the State
Underground Petroleum Environmental Response Bank (SUPERB) Act, S.C. Code Ann. §§44-2-40 et seq. (Supp.2001)
and the regulations promulgated thereunder, specifically 25 S.C. Code Ann. Regs. 61-92.280.70(c) (Supp. 2001). The
Petitioner contends that he is not responsible for the USTs because neither he nor Lake Energy Corporation ever owned
them. DHEC contends that Lake Energy Corporation and Ralph Nichols, as an officer of the corporation, were in fact the
owners of the tanks in question and should be required to bring them into compliance with the requirements of the
SUPERB Act and its regulations.
A contested case hearing was held on this matter at the office of the Administrative Law Judge Division (Division) on
October 24, 2001. During the hearing the Petitioner made a motion to dismiss Ralph Nichols individually. Argument was
heard and it was ordered that Ralph Nichols be dismissed from the case insofar as the administrative order was issued
against him individually. However, the case remains against Ralph Nichols d/b/a Lake Energy Corporation. The caption has
been amended to reflect the change.
MOTION TO DISMISS
Petitioner argues that DHEC may not penalize him under the terms of an administrative order because he was never given
a notice of violation. He asserts that the usual procedure of DHEC regulations was not followed, and therefore he did not
have an opportunity to come into compliance with the applicable regulations before being fined. In this case, DHEC was
justified in issuing an administrative order. Because the notification letter is not required by statute or regulation, it is not a
prerequisite to enforcement action.
Not only were DHEC's enforcement actions valid under its own regulations, but they also afforded Petitioner due process
under the law. "The fundamental requirement of due process is the opportunity to be heard 'at a meaningful time and in a
meaningful manner.'" South Carolina Nat. Bank v. Central Carolina Livestock Market, Inc., 289 S.C. 309, 345 S.E.2d 485
(1986)(quoting Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965)). "Due process does
not mandate any particular form of procedure." Id., (citing South Carolina Ports Authority v. Kaiser, 254 S.C. 600, 176
S.E.2d 532 (1970)). "Instead, due process is a flexible concept, and the requirements of due process in a particular case are
dependent upon the importance of the interest involved and the circumstances under which the deprivation may occur." Id. (citing Walters v. National Ass'n of Radiation Survivors, 473 U.S. 305, 105 S.Ct. 3180, 87 L.Ed.2d 220 (1985)). Petitioner
was fully aware that DHEC asserted problems with the tanks at the location. He testified in a previous hearing regarding the
issue. While he may not have known until he received the administrative order that DHEC was holding Lake Energy
responsible, he was aware of the alleged violations.
As a result of the administrative order, the Petitioner requested and participated in contested case proceedings before this
tribunal with a full opportunity to be heard. Therefore, Petitioner's due process rights were not violated. Petitioner's
motion to dismiss the administrative order for failure to issue a notice of violation is denied.
FINDINGS OF FACT
Having carefully considered the testimony and the arguments of both sides, and taking into account the credibility of the
evidence and witnesses, I find by a preponderance of the evidence:
1. Notice of the time, date and place of the hearing was given to the parties.
2. The real property on which the USTs are installed is located at 127 West Main
Street, Pickens, South Carolina. Henry Bivens was the owner of the real property in the 1940s and leased the property to
Esso Oil Corporation for operation of a gas station. The USTs were installed during the period of Bivens' ownership,
although Esso was the tank owner. In November of 1971, Bivens sold the real property to Ida Lee Bobo; however, Esso
Corporation continued to be the operator of the USTs and gas station. In 1981 Hayes Oil Company became the new owner
and operator of the tanks. That same year Hayes Oil Company sold its assets to Lake Energy Corporation and Lake Energy
began operating the gas station, along with the USTs. Mr. Nichols, as chairman of the board of Lake Energy, negotiated the
sale of the assets of Hayes Oil Company. Testimony was that the bill of sale stated that the assets of Hayes Oil were
purchased, but was silent as to the USTs. A strong inference arises that Hayes sold the tanks to Lake since Lake operated
the same business as Hayes and purchased assets of Hayes. Also in 1981 Lake Energy entered into a lease with Bobo for
the property at 127 West Main Street, Pickens. The lease between Lake Energy and Bobo does not contain any reference to
the USTs.
3. Lake Energy registered the tanks with DHEC on November 20, 1985. Lake
Energy Corporation signed the registration form in the capacity of owner of the USTs. Nichols testified that Lake Energy
was not the owner and that the company signed the DHEC form only because they believed it was proper for the operator
to sign. However, no statement as to capacity in which the form is signed was noted on the form.
4. The real property was transferred from Bobo to Timothy Looper on January 20,
1988. On June 10, 1988, Lake Energy signed another form notifying DHEC that the USTs were no longer in operation.
Again, no designation is made that Lake signed in any capacity other than as owner. Timothy Looper testified he did not
buy the USTs when he purchased the real property on January 20, 1988. Looper supported this view by explaining that
Scott Mace, manager for Lake Energy in Pickens, subsequently tried to sell the USTs to him and then eventually tried to
give them to him. Looper refused to take them and has repeatedly asked Lake to remove them from the property.
5. The existence of Lake Energy Corporation ended on July 31, 1992 when the
Secretary of State revoked Lake Energy's corporate authority for failure to pay taxes.
6. On October 2, 1997, DHEC issued a notice of violation to Timothy Looper.
Subsequently DHEC issued an order imposing civil penalties and ordering that he properly dispose of the tanks as well as
pay overdue tank registration fees. Looper appealed the administrative order and a contested case hearing was held at this
Division. The Honorable Ray N. Stevens, Administrative Law Judge, found that Looper was not the owner of the tanks. He
also found that Lake Energy Corporation owned the tanks.
7. On December 17, 2000, DHEC issued Administrative Order #00-1045-UST to
Lake Energy Corporation, Ralph W. Nichols, d/b/a Lake Energy Corporation, and other officers of Lake Energy. The Order
concluded the following:
a. That the Respondents, either individually or as Lake Energy Corporation, owned and operated the tanks at the time of
the violation;
b. That the Respondents violated 25A S.C. Code Ann. Regs. 61-92.280.70(c) in that they failed to properly abandon the
UST system after 12 months;
- That the Respondents violated 25A S.C. Code Ann. §44-2-60 (A) in that they failed to pay annual registration fees.
DHEC also ordered that the Respondents comply with all provisions of the SUPERB Act and its regulations, including the
proper abandonment of the six tanks, pay a civil penalty of $11,550.00 and pay tank registration fees of $7,998.00.
CONCLUSIONS OF LAW
1. S.C. Code Ann. §§44-2-40 et seq. (Supp. 2001), otherwise known as the SUPERB
Act, governs the regulation of USTs. The Act mandates that DHEC promulgate regulations for the permitting, release
detection, prevention and correction applicable to USTs. DHEC has done this and the regulations are found at 25A S.C.
Code Ann. Reg. 61-92.
2. 25A S.C. Code Ann. Reg. §61-92.280.22 requires that the owners of USTs register
them with DHEC. 25A S.C. Code Ann. Reg. §61-92.280.70 provides that when a UST is closed for more than twelve
months, owners and operators must permanently close it unless it meets certain standards of performance or upgrading. In
order to properly close a UST system, tanks must be emptied of all liquids and accumulated sludges. Subsequently, the
tank must either be removed or filled with an inert solid material. The owner/operator must test the area for any release that
may have occurred by taking soil samples.
3. This issue in this case is whether Ralph Nichols d/b/a Lake Energy Corpoartion is
the owner of the USTs in question. S.C. Code Ann.§44-2-20 (Supp. 2001) provides that an owner of a UST is:
(a) in the case of an UST system in use on November 8, 1984, or brought into use after that date, a person who owns an
UST system used for storage, use, or dispensing of regulated substances; or
(b) in the case of any UST system in use before November 8, 1984, but no longer in use on that date, a person who owned
such UST immediately before the discontinuation of its use; or
(c) a person who has assumed legal ownership of the underground storage tank through the provisions of a contract of sale
or other legally binding transfer of ownership.
4. It is clear from the evidence that in 1981 when Hayes Oil sold its assets to Lake
Energy that Hayes owed the USTs. Nichols has stated on more than one occasion that he purchased the assets of Hayes Oil.
There is no bill of sale to indicate whether the USTs were sold. Nichols states the assets he purchased did not include the
underground storage tanks. However, it seems unlikely that Hayes Oil would not have transferred the tanks. Further, Lake
Energy on two occasions indicated to DHEC on regulatory forms that it was the owner of the tanks. Then, after Timothy
Looper purchased the property, the Pickens manager for Lake Energy Corporation asked Looper to purchase or to accept
the USTs. Looper has previously been found not to own the tanks. Timothy Looper and Timothy Looper d/b/a Main Street
Exxon vs. South Carolina Department of Health and Environmental Control, 98-ALJ-07-0436-CC.
5. I find that Lake Energy Corporation is the owner of the underground storage tanks
located 127 Main Street, Pickens, South Carolina. I also find that Ralph Nichols was the chairman of the board of that
corporation upon its dissolution.
ORDER
NOW THEREFORE based on the aforementioned Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that the Petitioner in this matter
1. Comply with all provisions of the SUPERB Act and the Underground Storage Tank Regulations;
- Properly abandon six (6) underground storage tank systems and submit a site assessment report; and
- Pay a civil penalty of $11,550.00 and tank registration fees of $7,998.00.
AND IT IS SO ORDERED.
____________________________
CAROLYN C. MATTHEWS
Administrative Law Judge
This 19th day March 2002
Columbia, South Carolina |
