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Owner-Operator Liability

August 18, 2014

A recently decided Pennsylvania Superior Court case is of interest with respect to pertinent environmental issue clean-up cost liability .  The case dealt with a dealer sale and repurchase of a site. 

In the case, the gasoline station owners ("Owner") instituted legal action against Sunoco under the Storage Tank and Spill Prevention Act ("Tank Act") seeking to recover clean-up costs and diminution of value of their location caused by the release of gasoline from an underground storage tank. 

The Owner, originally owned and operated the property, sold it to Sunoco in 1965.  Sunoco owned the property until 1976 and then sold it back to the original Owner.  After the sale, Sunoco continued to deliver gasoline to the station.

In 1999, the Owner learned underground storage tanks were leaking and contaminating the property.  The Owner removed the storage tanks and began the clean-up of the contamination.  The leak was reported to the Pennsylvania Department of Environmental Protection ("USTIF") seeking recovery of clean-up costs.  USTIF concluded the Owner would be reimbursed 100% of the clean-up costs if they could prove the release occurred after 2/1/1994, a statute effective date.  Upon further research, USTIF concluded some of the gasoline spilled before 1985 and perhaps before 1980.  USTIF then decided to prorate reimbursement at 43% of the clean-up costs.

The Owner then instituted an action against Sunoco for the balance of the clean-up costs and diminution of value of the property because Sunoco owned the property prior to 1976.  Sunoco contended it was not the owner/operator; that no proof was provided the leak occurred prior to 1976; and that the statute of limitations had run. 

The Trial Court found in favor of Sunoco.  The Owner then appealed to the Pennsylvania Superior Court.  The Superior Court concluded the case would be decided against Sunoco specifically and only if Sunoco could be deemed an owner or operator for the purposes of the Tank Act in which event the other issues would, as a result, not then be relevant. 

The Owner contended the Trial Court erred in holding Sunoco was not an owner or operator for purposes of the Tank Act, arguing Sunoco could be considered an "owner" if the release occurred while it owned the property prior to 1976.  In the alternative, the Owner claimed Sunoco is an "operator" under the statute because the Owner continued purchasing and dispensing Sunoco gasoline after the Owner repurchased the property in 1976, claiming periodically filling an underground storage tank with gasoline demonstrates a level of supervision or control that would qualify Sunoco as an "operator". 

The Tank Act provides the owner or operator of a storage tank and/or the landowner or occupier on whose land the storage tank is or was located shall not allow pollution resulting from or a release to occur from a storage tank.  The Tank Act grants a right of action for any interested person to bring a civil suit against any owner, operator, landowner, or occupier who is in violation of the Tank Act.  Accordingly, even a private citizen can maintain an action for violation of the Tank Act. 

 In the case of a storage tank in use on and after the effective date of the Tank Act or brought into use after the date of the Act and/or any person who owns or has an ownership interest in the storage tank used for storage, containment, or use or dispensing of regular gasoline could be held liable for a release.

The Trial Court concluded that Sunoco could not be classified as a "owner" because the Act applies to owners of storage tanks on the date the Tank Act became effective.  Sunoco resold the property to the owners in 1976 prior to the effective date of the Tank Act and had relinquished any ownership interest.  Any argument that Sunoco was an owner was not accepted by the Trial Court. 

However, the Owner argued Sunoco is an "operator" under the Tank Act.  The Tank Act defines "operator" as any person who manages, supervises, alters, controls, or has responsibility for the operation of a storage tank.  The record demonstrated after Sunoco resold the property to the Owner, it continued to deliver gasoline to the property for a period of several years.  The Trial Court held, however, such delivery alone is insufficient to classify Sunoco as an operator for purposes of the Tank Act.  Nothing in the record evidences Sunoco managed, supervised, altered or controlled the tanks during the time the Owner owned the property.  The Superior Court said that it could not find a supplier as an operator solely because it delivers gas to an underground storage tank over which it does not exercise control.  Hence, the Superior Court agreed Sunoco could not be deemed an "operator".  To conclude otherwise, the Superior Court said an oil company could be deemed to be an "operator" of storage tanks at every gas station to which it delivers product and that the Tank Act was not intended to have such broad application.

Accordingly, the Superior Court held Sunoco was neither an owner nor operator and the Owner, thus, had no claims against Sunoco.  Since the Superior Court held summary judgment was proper in favor of Sunoco on these issues, the Superior Court did not consider a statute of limitations issue nor any proof the leak may have occurred while Sunoco owned the property pertinent. 

The case is particularly interesting because it touches on the liability of a major oil company that had owned, sold but continued to supply gasoline to a site and for the indicated factual reasons, could not be held liable as an operator for clean-up costs or loss of property value of a service station under the Tank Act.  

This article was written by Norman P. Zarwin, Esquire and published in the Alliance of Automotive Service Providers of Pennsylvania and Delaware magazine. 


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