United States of America v. Mark Nicholson et al
ORDER AND OPINION re 58 MOTION for Partial Summary Judgment; plaintiffs are directed to file supplemental briefing, addressing the issues raised herein within 14 days from the date of this order. Defendants may file a response, to the supplemental briefing no later than 14 days after the plaintiffs have filed their supplemental briefing. See PDF document for details. Signed by Judge John W Sedwick on 6/24/11. (LSP)
UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
UNITED STATES OF AMERICA,
MARK NICHOLSON, et al.,
ORDER AND OPINION
[Re: Motion at Docket 58]
I. MOTION PRESENTED
At docket 58, plaintiff United States of America (“the government”) moves for
partial summary judgment against defendants Mark Nicholson, the Dale A. Nicholson
Trust, the Nicholson Children’s Trust, Speedy’s Convenience Inc., and Native American
Energy, LLC on Counts 1 through 6 of the Amended Complaint at docket 22.1 At docket
61, defendants oppose the motion. Plaintiff replies at docket 66. Oral argument was
requested at docket 67.
Plaintiff originally moved for partial summary judgment against defendant Brian
Nicholson, but subsequently withdrew its request for partial summary judgment against Brian
Nicholson. Doc. 66 at p. 1, n.1.
The following facts are taken from plaintiff’s statement of facts and are not
disputed by defendants. Speedy’s Convenience Inc. is comprised of two distinct
operations: Speedy’s Truck Stop, which consists of a convenience store, restaurant,
fuel pump for selling retail gasoline, and a repair shop (“the truck stop”), and a
distillation facility (“the distillation facility”), “where transmix has, at times, been
processed back into gasoline and diesel for retail and wholesale sale at the adjacent
truck stop.”2 The truck stop and part of the distillation facility are located on property in
Arizona that was owned by the Dale A. Nicholson Trust from May 1999 until July 2008.
Another part of the distillation facility is located on an adjacent parcel of land in New
Mexico, owned by the Nicholson Children Trust from about May 1999 until the present.
On February 24, 2004, the Arizona Department of Environmental Quality
(“ADEQ”) conducted an inspection of Speedy’s Truck Stop in response to a complaint
alleging illegal dumping. ADEQ inspectors noted evidence of spills and leaks, including
an odor of petroleum from the soil and berm surrounding the main tank farm, two 55gallon containers of oil overflowing onto the soil, a sump containing black liquid running
from the distillation unit to a waste tank, an unlabeled tank partially buried and partially
filled with wastewater, several unlabeled 55-gallon containers of waste, and a spill or
leak from the piping station that flowed into a drain that emptied into a waste tank
southwest of the piping station.
Doc. 59, p. 1, ¶ 2. Transmix is a gasoline and diesel mix produced during
transportation of these fuel products through petroleum product pipelines.
On March 8, 2004, ADEQ issued two Notices of Violation (“NOV”) to “Speedy’s
Truck Stop Inc., Attention: Clyde Fredrickson,” alleging several violations of federal and
state hazardous waste laws. The NOVs requested in part that Speedy’s Truck Stop
submit waste determinations from a third–party contractor for the liquid and sludge in
Tank 23, as well as for twelve 55-gallon drums containing waste. Speedy’s Truck Stop
contracted with Animas Environmental Services (“Animas”), which collected a
wastewater sample from Tank 23 on March 24, 2004. The sample contained 34,000
milligrams per liter (“mg/L”) of benzene. The “toxicity characteristic threshold for
hazardous waste is 0.5 mg/L benzene.”3 On March 31, 2004, Animas contacted a nonhazardous landfarm in New Mexico about accepting approximately 11,000 gallons of
On April 14, 2004, the United States Environmental Protection Agency (“EPA”)
issued a Unilateral Administrative Order (“UAO”) under 42 U.S.C. § 6973 to Native
American Energy, LLC, Dale A. Nicholson Trust dba Speedy’s Truck Stop, Todd
Nicholson, Brian Nicholson, Speedy’s Convenience, Inc., Speedy’s Convenience I, Inc.,
Clyde H. Fredrickson, III, Petro U.S.A., Inc., and PetroUSA, Inc, directing them to cease
all discharges; make proper hazardous waste determinations; collect, characterize, and
dispose of all waste from sumps, trenches, oil/water separators, and waste collection
tanks and drums; and prepare a sampling and analysis plan.4 The UAO stated in part
that failure to comply with the UAO could result in the EPA commencing a civil action
Doc. 59 at p. 5.
Doc. 59-1 at p. 20.
under 42 U.S.C. § 6973(b) to require compliance and to assess a civil penalty for such
failure or refusal. PetroUSA, Native American Energy, and the Dale A. Nicholson Trust
(“respondents”) responded to the UAO affirming each entity’s intent to comply.
On April 23, 2004, the EPA conducted a Spill Prevention Control and
Countermeasures (“SPCC”) inspection at the facility. EPA inspectors observed that
Tanks 23 and 24 were both partially buried, unlabeled, open top tanks, which contained
wastewater. During the inspection, the EPA collected four soil samples and two liquid
samples. The soil samples all demonstrated evidence of petroleum spills, TPH-Diesel,
or indicated the presence of hazardous waste.
On April 30, 2004, respondents submitted a proposal for corrective measures,
which designated Clyde H. Fredrickson III, General Manager of Native American
Energy, as project coordinator.5 On May 5, 2004, the EPA conducted another
inspection at the facility and obtained four additional sample from Tanks 23 and 24.
The collected data indicated that the wastewater in Tank 23 contained between 3 and
20 mg/L benzene and the wastewater in Tank 24 contained 6 mg/L benzene.
In July 2004, respondents conducted an investigation for other potential areas of
concern, and identified three additional areas for potential corrective action: the
drainage ditch along the northwestern property line, the drainage ditch along the I-40
frontage road adjacent to the diesel island, and the drainage trench along the I-40
frontage road adjacent to the gasoline island. The investigation indicated that all three
Doc. 59-1 at p. 95.
areas contained petroleum contaminated soils, and the EPA directed respondents to
submit a corrective action work plan for excavation of the contaminated soils.
In July 26, 2004, Animas asked the EPA for information on how to obtain an EPA
ID number for the distillation facility. On August 5, 2004, the EPA issued a hazardous
waste generator ID number to the Dale A. Nicholson Trust.
In October 2004, the EPA oversaw implementation of the corrective action work
plan at the distillation facility. During the excavation, petroleum contaminated soils in
the drainage ditch near the diesel island were determined to be hazardous waste due to
high concentrations of benzene. In June 2004, respondents cleaned the fuel trenches,
generating nine drums of hazardous waste. Based on the presence of contaminated
soil in the diesel trench, the EPA determined that the sump should be removed. In
November 2004, the EPA oversaw removal of the sump and approximately 40 cubic
yards of contaminated soil.
Between August 14 and 20, 2004, respondents shipped about 21,500 gallons of
hazardous wastewater from Tanks 23 and 24. On September 3, 2004, respondents
shipped 25 drums of hazardous waste offsite.
On February 11, 2005, the EPA sent a letter to Clyde Fredrickson and the Dale
A. Nicholson Trust stating that the activities required under the UAO “have been
completed to the satisfaction of the EPA.”6 The EPA further indicated that it “may
determine that additional monitoring, testing, analysis, reporting or removal is
necessary,” and that it “is evaluating approaches to the residual contamination, and may
Doc. 62 at p. 18.
in the near future require that another phase of the site investigation be conducted.”7
On February 18, 2010, the EPA filed an amended complaint pursuant to Section
3008(a)(1) of the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. §
6928(a)(1), and Section 325(c) of the Emergency Planning and Community Right to
Know Act (“EPCRA”), 42 U.S.C. § 11045, against Mark Nicholson, Brian Nicholson, the
Dale A. Nicholson Trust, the Nicholson Children Trust, Inc., Speedy’s Convenience,
Inc., and Native American Energy LLC pursuant to 42 U.S.C. § 6928(a)(1) and 42
U.S.C. § 11045. The amended complaint alleges seven claims under 42 U.S.C. §
6928(a)(1) and one claim under 42 U.S.C. § 11045. Counts 1 through 7 allege that
defendants violated 42 U.S.C. § 6928(a)(1) by failing to: 1) make a hazardous waste
determination under 40 C.F.R. § 262.11; 2) obtain a permit or grant of interim status in
violation of 40 C.F.R. § 270.1; 3) notify the EPA of hazardous waste generation activity
under 42 U.S.C. § 9610; 4) obtain an EPA ID number as required by 40 C.F.R. §
262.12(a); 5) maintain a complete contingency plan under 40 C.F.R. § 265.51(a); 6)
provide hazardous waste management training in violation of 40 C.F.R. § 265.16; 7)
cover, label, and clean up used oil as required by 40 C.F.R. Part 279. The amended
complaint further alleges defendants violated the EPCRA by failing to submit an
inventory to the tribal emergency response commission, the local emergency planning
committee, and the fire department by March 1 of 2001, 2002, 2003, and 2004.
Doc. 62 at p. 19.
The government filed this civil action to obtain civil penalties for “past and
ongoing violations” of the RCRA, EPCRA, and regulations promulgated to enforce these
statutes. The government now moves for partial summary judgment on the issue of
liability for Counts 1 through 6 against defendants Mark Nicholson, the Dale A.
Nicholson Trust, the Nicholson Children Trust, Speedy’s Convenience Inc., and Native
American Energy, LLC. Counts 1 through 6 allege that defendants violated the RCRA
by failing to 1) make a hazardous waste determination; 2) obtain a permit for storage of
hazardous waste; 3) file a notification of hazardous waste activity with the EPA; 4)
obtain an EPA identification number; 5) maintain a contingency plan; and 6) properly
train employees handling hazardous waste.
Counts 1 through 6 are all brought pursuant to 42 U.S.C. § 6928(a)(1), which is
entitled “Compliance orders” and provides in pertinent part:
... whenever on the basis of any information the Administrator determines that
any person has violated or is in violation of any requirement of this subchapter,
the Administrator may issue an order assessing a civil penalty for any past or
current violation, requiring compliance immediately or within a specified time
period, or both, or the Administrator may commence a civil action in the United
States district court in the district in which the violation occurred for appropriate
relief, including a temporary or permanent injunction.
The plain language of 42 U.S.C. § 6928(a) provides that upon determining that a
person has violated or is violating any requirement of the RCRA, the EPA Administrator
“may issue an order assessing a civil penalty for any past or current violation, requiring
compliance... or both” or the EPA Administrator “may commence a civil action... for
appropriate relief, including a temporary or permanent injunction.” In assessing a civil
penalty, the EPA Administrator “shall take into account the seriousness of the violation
and any good faith efforts to comply with applicable requirements.”8 Section 6928(g)
further provides that a person who violates any requirement of the RCRA “shall be liable
to the United States for a civil penalty in an amount not to exceed $25,000 for each
Here, the EPA Administrator did not file an order assessing a civil penalty for any
past or current violation or demanding compliance, but rather filed a civil action under
§ 6928(a) requesting the court to assess penalties “of up to $27,500 per day for each
violation occurring on or after January 31, 1997, through March 15, 2004, $32,500 per
day for each violation occurring after March 15, 2004, through January 12, 2009, and
$37,500 per day for each violation occurring after January 12, 2009."10 Based on the
plain language of 42 U.S.C. § 6928(a)(1), it appears to the court that the EPA
Administrator has the authority to assess civil penalties for any past or current violation
of the RCRA, taking into account the seriousness of the violations and good faith efforts
to comply with applicable requirements.
Although § 6928(a) provides that the government may file a civil action in district
court “for appropriate relief, including a temporary or permanent injunction,” the
government has not requested injunctive relief, nor does the amended complaint appear
to allege any ongoing violations of RCRA. Moreover, the government issued a
compliance order of sorts under 42 U.S.C. § 6973(a), to which respondents complied.
42 U.S.C. § 6928(a)(3).
The penalty amount was increased in 40 C.F.R. § 19.4.
Doc. 22 at p. 15.
The government’s letter to respondents dated February 11, 2005, stated that the
activities required under the UAO “have been completed to the satisfaction of the
EPA.”11 Although the government’s letter indicated it “may determine that additional
monitoring, testing, analysis, reporting or removal is necessary,” to the court’s
knowledge it has not done so.
Under the circumstances, it is not clear to the court that it is authorized to grant
the relief requested by the government under 42 U.S.C. § 6928(a)(1). Consequently,
the court requests additional briefing from the government explaining why the
government has not exercised its authority under 42 U.S.C. § 6928(a)(1) to assess civil
penalties for any past or current violations of the RCRA, and whether the government is
alleging any ongoing violations of the RCRA for which it seeks injunctive relief. If the
government is not alleging any ongoing violations, the court requests that the
government provide controlling authority demonstrating the court’s authority to assess
civil penalties for purely past violations under 42 U.S.C. § 6928(a)(1). The government
should also make clear what impact the letter of February 11, 2005, has on the
availability of relief for activities prior to that date. In addition, the government should
clearly indicate for each count the dates of the alleged violations for which it seeks
For the reasons set out above, plaintiffs are directed to file supplemental briefing,
not to exceed eight pages, addressing the issues raised herein within 14 days from the
Doc. 62 at p. 18.
date of this order. Defendants may file a response, no more than eight pages in length,
to the supplemental briefing no later than 14 days after the plaintiffs have filed their
supplemental briefing. No reply shall be filed unless requested by the court.
DATED this 24th day of June, 2011.
JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE
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