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United States v. DiPaolo

December 15, 2006


The opinion of the court was delivered by: Conner, Sr. D.J.


Plaintiff, the United States government, brings this action against defendant Salvatore DiPaolo, Jr. seeking injunctive relief and civil penalties for defendant's failure to comply with a final administrative order issued by the United States Environmental Protection Agency (the "EPA"). Specifically, defendant operated two underground diesel fuel storage tanks in Yonkers, New York, and upon the EPA's inspection of the tanks, it determined that defendant was in violation of the underground storage tank provisions of the Resource Conservation and Recovery Act and the Hazardous and Solid Waste Amendments of 1984 (the "RCRA"). The EPA thereafter filed an Administrative Complaint against defendant, and defendant requested a hearing on the EPA's charges against him. Defendant, however, failed to comply with all pre-hearing procedures and did not attend the administrative hearing. Accordingly, the Administrative Law Judge (the "ALJ") entered a default judgment against defendant assessing civil penalties of $80,317 and ordering him to comply with the EPA requirements applicable to underground storage tanks. To date, defendant has failed to pay the civil penalties and comply with the applicable EPA requirements. On October 20, 2005, plaintiff filed this action seeking the enforcement of the ALJ's Default Order, as well as civil penalties, authorized under the RCRA, not to exceed $32,500 for each day of defendant's continued noncompliance with the order and $11,000 per tank per day for his failure to provide information requested by the EPA regarding defendant's underground storage tanks. Defendant has not filed an answer or expressed an intention to do so. Plaintiff therefore requests that this Court enter default judgment against defendant seeking the relief requested in its Complaint. For the following reasons, plaintiff's motion is granted in part and denied in part.


The following statement of the facts is based on the Complaint,*fn1 plaintiff's Declaration in Support of its Motion for Default Judgment, the EPA's Administrative Complaint and the Default Orders issued by the ALJ. Defendant is the sole owner of a bus company that owns and previously operated two 3,000 gallon underground diesel fuel storage tanks which were installed in 1984. (See Complt. ¶ 1; Pl. Decl. Supp. Mot. Default J. ¶ 24.)

An underground storage tank system ("UST") is a tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground. The federal UST regulations apply only to underground tanks and piping storing either petroleum or certain hazardous substances. Until the mid-1980s, most USTs were made of bare steel, which is likely to corrode over time and allow UST contents to leak into the environment. Faulty installation or inadequate operating and maintenance procedures also can cause USTs to release their contents into the environment. The greatest potential hazard from a leaking UST is that the petroleum or other hazardous substance can seep into the soil and contaminate groundwater, the source of drinking water for nearly half of all Americans. A leaking UST can present other health and environmental risks, including the potential for fire and explosion. In 1984, Congress responded to the increasing threat to groundwater posed by leaking USTs by adding Subtitle I to the Resource Conservation and Recovery Act . . . . Subtitle I required EPA to develop a comprehensive regulatory program for USTs storing petroleum or certain hazardous substances. Congress directed EPA to publish regulations that would require owners and operators of new tanks and tanks already in the ground to prevent, detect, and clean up releases.

Overview of the Federal Underground Storage Tank Program,

On June 21, 2001, May 21, 2002 and June 7, 2002, representatives of the EPA inspected the facility where defendant's tanks were located, and on March 31, 2003, the EPA issued defendant an Administrative Complaint and Notice of Opportunity for Hearing, citing various violations of the RCRA. (See Complt. ¶¶ 44-45; Pl. Decl. Supp. Mot. Default J. ¶ 6.) Specifically, the Administrative Complaint alleged that, pursuant to 40 C.F.R. Part 280 Subpart D, defendant "failed to provide a method or combination of methods of release detection for his two [underground storage tanks]" and "failed to satisfy the upgrade requirements (spill, overfill and corrosion protection) as set forth in 40 C.F.R. § 280.21" or, in the alternative, failed to close the underground storage tanks in accordance with 40 C.F.R. Part 280, subparts F and G. (See Complt. ¶¶ 36, 46.) Incidentally, the EPA's inspection did not reveal that defendant's tanks had leaked, and defendant asserts that they never have.

On May 30, 2003, in response to the Administrative Complaint, defendant filed an Answer and requested a hearing on the EPA's charges. (See id. at ¶ 47.) On July 18, 2003, the ALJ issued a Prehearing Order, setting forth a schedule for the filing of prehearing exchanges, as required under the applicable regulations. (See id. at ¶ 48.) On September 18, 2003, the EPA submitted its prehearing exchange, but defendant failed to submit his response or any statement in lieu thereof, thereby beginning a persistent pattern of default by defendant. (See id. at ¶ 49.) On November 13, 2003, the ALJ extended defendant's deadline to file a prehearing exchange to November 21, 2003. (See id. at ¶ 53.) Defendant was advised on multiple occasions that the failure to submit his prehearing exchange would result in a default judgment against him. (See id. at ¶ 54.) Nonetheless, defendant failed to file the exchange or to request an extension of time to do so. (See id. at ¶ 55.)

On February 23, 2004, the EPA served defendant with its motion for a default judgment. Defendant received copy of the motion, but failed to respond in any way. (See id. at ¶¶ 57-58.) On April 27, 2004, the ALJ issued a Default Order, finding that defendant had violated several EPA requirements regarding underground storage tanks, and assessed against him civil penalties in the amount of $80,317, which were calculated in accordance with 42 U.S.C. § 6991e(d)(2) and applicable federal guidelines. (See Complt. ¶ 59.) The order required defendant to pay the civil penalties by August 28, 2004. (See id. at ¶ 67.) The ALJ concluded that a default judgment was appropriate because defendant offered no explanation for his failure to comply with prehearing exchanges or to show good cause why the default should not be issued. (See id. at ¶ 66.)

On May 5, 2004, the EPA filed a motion requesting that the ALJ modify its order requiring defendant to comply with the EPA's requirements regarding underground storage tanks. (See id. at ¶ 60.) Although defendant received the EPA's motion on May 11, 2004, he did not submit a response. (See id.) On May 24, 2004, the ALJ issued its "Addendum to Default Order," which required that defendant comply with release detection, upgrades and all UST requirements or, in the alternative, cease operation and permanently close all UST systems. (See id. at ¶ 61.) Because the EPA did not receive a receipt of service regarding either the April 27, 2004 Default Order or the May 24, 2004 Addendum to Default Order (collectively, the "Default Orders"), it again served them upon defendant by registered mail on June 9, 2004. (See id. at ¶ 62.) Defendant did not appeal or otherwise respond to the orders, and, pursuant to 40 C.F.R. § 22.27(c), the Default Order and the Addendum to Default Order became effective as a final administrative order no later than July 29, 2004, forty-five days after it was served. (See Complt. ¶ 63.)

Defendant failed to pay the penalties and, on September 8, 2004, the EPA sent a notice of delinquency to defendant, which defendant received on September 13, 2004. (See id. at ¶ 68.) The notice demanded payment of the $80,317, plus accrued interest and handling charges from August 28, 2004. (See id.) To date, defendant has not paid the civil penalties or complied with the requirements applicable to underground storage tanks, as ordered by the ALJ. (See id. at ¶ 69.) An EPA inspection on September 10, 2004 revealed continued noncompliance with federal release detection and upgrade requirements. (See id. at ¶ 71.) During this inspection, defendant informed the EPA's inspectors that one tank was still operational and the other was out of service but not empty. (See id. at ¶ 72.) Pursuant to the EPA requirements, regardless of whether the tanks are operational, all underground storage tanks that are not empty must have a release-detection system. (See id.)

On December 3, 2004, the EPA sent defendant a "Request for Information" letter regarding defendant's tanks which required a response by January 7, 2005. (See id. ¶ 75.)*fn2 Although the EPA received the return receipt on December 8, 2004, evidencing defendant's receipt of the letter, defendant did not respond. (See id.) On February 7th and 9th of 2005, the EPA contacted defendant to inquire as to the status of defendant's response to the "Request for Information" letter, and on February 7, 2005, the EPA faxed defendant another copy of the Request. (See id. at ¶ 76.) Again, defendant did not respond. (See id.) Then, on February 23, 2005, the EPA sent a letter to defendant, advising him that his failure to respond to the "Request for Information" is a violation of the RCRA UST regulations and could result in penalties up to $11,000 per day for each tank. (See id. at ¶ 77.) Defendant still did not respond. (See id.)

In light of defendant's failure to comply with the ALJ's Default Orders and to respond to the EPA's "Requests for Information," plaintiff commenced the instant action on October 20, 2005. (See id. at ¶ 29.)*fn3 The Complaint seeks judgment against defendant for civil penalties in the amount of $80,317, as assessed by the ALJ, plus an additional $32,500 for each day of defendant's continued noncompliance with the Default Orders, as well as $11,000 for each tank per day for his failure to provide information pursuant to the EPA's "Request for Information." (See generally Complt.) Plaintiff also seeks an injunction ordering defendant to comply with the injunctive provisions of the Default Orders and to furnish the information requested by the EPA pursuant to its "Request for Information." (See generally id.)*fn4

We scheduled an initial conference on February 17, 2006 at which defendant appeared pro se. The parties discussed settlement, and the government explained that it would not settle unless defendant submitted a financial disclosure form. The Court ordered defendant to complete and submit a financial disclosure form by May 15, 2006, but defendant failed to do so.*fn5 On May 22, 2006, defendant explained that he could not submit a financial disclosure form because he owed his accountant money, which he was unable to pay at that time. The Court extended defendant's time ...

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