HOMES OIL v. DEPT. OF ENVIRONMENT

• Decision Date: 30 November 2000
• Docket Number: No. 2917,2917
• Citation: 762 A.2d 1012,135 Md. App. 442
• Parties: HOMES OIL COMPANY, INC. v. MARYLAND DEPARTMENT OF THE ENVIRONMENT.
• Court: Court of Special Appeals of Maryland

762 A.2d 1012

135 Md. App. 442

HOMES OIL COMPANY, INC. v. MARYLAND DEPARTMENT OF THE ENVIRONMENT.

No. 2917, Sept. Term, 1999.

Court of Special Appeals of Maryland.

November 30, 2000.

David A. DuGoff, Chevy Chase, for appellant.

Jennifer L. Wazenski, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on the brief), Baltimore, for appellee.

Argued before HOLLANDER, THIEME¹ and ADKINS, JJ.

THIEME, Judge.

Appellant Homes Oil Company, Inc., appeals from the decision of the Circuit Court for Montgomery County granting summary judgment in favor of appellee, Maryland Department of the Environment ("MDE"), pertaining to appellant's petition of appeal of MDE's administrative decision. Appellant presents the following question for review, which we have rephrased and consolidated for clarity:

Did the trial court err in granting appellee's Motion for Summary Judgment regarding appellant's petition of appeal of MDE's administrative decision?

We answer "no" to this question and explain.

Facts

Appellant owned and operated gas stations in Maryland, and was cited by appellee for oil contamination at two of its gas stations—one in Upper Marlboro and one in Hyattsville. Appellant was ordered to remedy these environmental concerns and implemented plans to do so. After successfully cleaning up the sites, appellant received notices of compliance from MDE for both sites.

In 1995, appellant applied to appellee for reimbursement of costs associated with the removal and off-site treatment of contaminated soil at these sites, pursuant to the Maryland Oil Contaminated Site Environmental Cleanup Fund ("Fund") of Title 4, subtitle 7 of the Environment Article. The Fund was created by the General Assembly in 1993 and amended in 1996. The parties agree that the 1996 amendment does not directly affect this case, as this action is based on events occurring prior to 1996. Following is a reproduction of the relevant portions of Title 4, subtitle 7 of the Environment Article, as it read prior to the 1996 amendment:

§ 4-701 provides relevant definitions:

(a) In general.—In this subtitle the following words have the meanings indicated.

(b) Cleanup.—"Cleanup" means abatement, containment, removal, and disposal of oil and the restoration of the environment.

(c) Fund.—"Fund" means the Oil Contaminated Site Environmental Cleanup Fund.

(d) Oil.—"Oil" has the meaning provided in § 4-401(g) of this title.

(e) Site rehabilitation.—

(1) "Site rehabilitation" means cleanup actions taken in response to a release from an underground oil storage tank.

(2) "Site rehabilitation" includes investigation, evaluation, planning, design, engineering, construction, or other services undertaken and expenses incurred to investigate or clean up affected soils, groundwater, or surface water.

(f) Third party claim.—"Third party claim" means any civil action brought or asserted by any person against any owner or operator of any underground oil storage tank for damages to person or property which damages are the direct result of oil released from tanks covered under this subtitle.

(g) Underground oil storage tank.— "Underground oil storage tank" has the meaning provided in § 4-401(k) of this title.

§ 4-702 provides legislative findings and intent:

(a) Findings.—The General Assembly finds and declares that:

(1) The storage of oil in underground oil storage tanks is a major cause of groundwater contamination in this State;

(2) Groundwater resources are vital to the population and economy of this State; and

(3) The preservation of the State's groundwater resources is in the public interest.

(b) Additional Findings.—The General Assembly further finds that where contamination of groundwater has occurred due to leaking underground oil storage tanks, remedial measures have often been delayed for long periods due to high costs of such remedial measures. These delays result in the continuation and intensification of the threat to the public health, safety, and welfare, in greater damages to the environment, and in significantly higher costs to clean up the contamination and rehabilitate the site.

(c) Intent.—The General Assembly intends this subtitle to provide adequate financial resources and incentives for the expeditious cleanup and rehabilitation of contaminated sites without delay.

§ 4-704 provides for the establishment of the fund:

(a) Established.—There is an Oil Contaminated Site Environmental Cleanup Fund.

(b) Uses.—The Fund shall be used to:

(1) Reimburse an owner or operator of an underground oil storage tank for site rehabilitation costs incurred on or after October 1, 1993 resulting from contamination caused by releases from an underground oil storage tank;

(2) Provide funds for site rehabilitation activities carried out by the Department or under the Department's direction and control; and

(3) To the extent provided in the State budget and in an amount not to exceed 3% of the revenues in the Fund during the fiscal year, provide funds for the Department's administration of this subtitle.

(c) Exemptions from subtitle.—The provisions of this subtitle do not apply to an underground storage tank that is:

(1) Exempt from the requirements of § 4-409(b)(3) of this title;

(2) Owned by a state, county, or municipal corporation; or

(3) Owned by a local education agency.

§ 4-705 is the reimbursement provision of the fund[²]:

(a) Application.—The owner or operator of an underground oil storage tank may apply to the Fund for reimbursement, on or after October 1, 1993, for usual, customary, and reasonable costs incurred on or after October 1, 1993 in performing site rehabilitation.

(b) Deductibles; limitation.—Any reimbursement from the Fund is subject to:

(1) For owners or operators of six tanks or fewer, a deductible of $15,000;

(2) For owners or operators of more than 6 but not more than 15 tanks, a deductible of $20,000;

(3) For owners or operators of more than 15 but not more than 30 tanks, a deductible of $30,000;

(4) For owners or operators of more than 30 tanks, a deductible of $40,000; and

(5) A limit of $125,000 per occurrence.

(c) Eligibility.—To be eligible for reimbursement from the Fund, an owner or operator shall:

(1) Certify that the discharge is not the result of a willful or deliberate act;

(2) Submit a corrective action plan, schedule, and cost estimate to the Department that shall include provisions for the environmentally sound treatment or disposal of contaminated soils that meet all federal and State requirements and standards; and

(3) Certify that the discharge is from a tank registered under § 4-411.1 of this title.

(d) False certification.—if the owner or operator knowingly submits a false certification under subsection (c) of this section, that owner or operator is not eligible for reimbursement under this subtitle.

(e) Only cost-effective and reasonable expenses are eligible.—Only expenses that are cost-effective, reasonable, and consistent with a corrective action plan approved by the Department may be eligible for reimbursement from the Fund.

(f) Cost of replacing or retrofitting tanks not eligible.—The cost for replacement or retrofitting of underground oil storage tanks and associated piping is not eligible for reimbursement, and the Department may not incur these costs or expend moneys from the Fund for these purposes.

In 1994, MDE adopted in Title 26, Subtitle 10, Chapter 14 of the Code of Maryland Regulations ("COMAR") regulations to assist in the Fund's implementation.³ MDE established a method to prioritize applicants to the Fund based upon environmental risk and the total amount of an applicant's underground storage tanks within Maryland. The most relevant provision of COMAR to the dispute in this case is 26.10.14.05, which includes a schedule of eligible reimbursement costs:

A. The Department shall reimburse an applicant only for the following site rehabilitation costs if they are cost effective, reasonable, and consistent with an approved application:

(1) Soil handling, including excavation, transportation, and proper disposal—up to $20 per ton up to 100 tons per site;

(2) Soil treatment—up to:

(a) $30,000 per installation,

(b) $10,000 per year for operation and monitoring;

(3) Ground water pumping and treatment, and soil treatment—up to:

(a) $45,000 per installation,

(b) $17,500 per year for operation and monitoring;

(4) Ground water pumping and treatment, and soil treatment—up to:

(a) $55,000 per installation,

(b) $17,500 per year for operation and monitoring;

(5) Well bailing or monitoring, or both,—up to $12,500 per year for operation;

(6) Subsurface investigation—up to $8,000.

B. The Department may approve other site rehabilitation costs for reimbursement if it determines the costs are for effective and necessary site rehabilitation activities.

COMAR, Title 26, Subtitle 10, Chapter 14

Appellant claims that it "excavated and treated 2,131 tons of contaminated soil from the Upper Marlboro site ... at a cost of over $105,000" and that it "excavated and treated 3,517 tons of contaminated soil from the Hyattsville site ... at a cost of over $175,000." Interpreting its own regulations, MDE determined that the costs in question were for "soil handling" and "soil treatment," and reimbursed appellant $32,263.08 for the Upper Marlboro site and $36,410.01 for the Hyattsville site. These amounts were established primarily as a result of the maximum allowable reimbursement limits for "soil handling" and "soil treatment" under § .05A of COMAR 26.10.14.

Appellant, dissatisfied with the amount of the reimbursement provided by appellee, requested that MDE reconsider its determination and provide it with additional reimbursement under § .05B of COMAR 26.10.14 for "other site rehabilitation costs for reimbursement" that appellant claimed were "for effective and necessary site rehabilitation activities." MDE rejected appellant's request, stating in a letter to appellant that it believed "that additional reimbursement would...