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Downeast Energy Corp. v. Fund Ins. Review Bd.
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2000 ME 151
Docket:	Ken-00-22
Argued:	June 5, 2000
Decided:	August 4, 2000

Panel:WATHEN, C.J., and RUDMAN, SAUFLEY, and ALEXANDER, JJ.




DOWNEAST ENERGY CORPORATION v. FUND INSURANCE REVIEW BOARD


SAUFLEY, J.

	[¶1]  DownEast Energy Corporation appeals from a judgment entered
in the Superior Court (Kennebec County, Studstrup, J.), affirming the Fund
Insurance Review Board's determination that DownEast was not entitled to
recover from the Ground Water Oil Clean-up Fund, see 38 M.R.S.A. § 569-A
(Supp. 1999), for expenses incurred in cleaning up contaminated soil on
two of its sites.  We affirm the judgment.
I. BACKGROUND
	[¶2]  This case represents a consolidation of two actions, one
regarding the cleanup of the area surrounding an excavated oil storage tank
at DownEast's South Portland office site and one regarding a cleanup at its
Portland Congress Street Mobil site.  At both sites, DownEast applied for
reimbursement for its cleanup costs from the Ground Water Oil Clean-up
Fund.  See 38 M.R.S.A. § 569-A.  Both applications were ultimately denied by
the Department of Environmental Protection, and in both instances,
DownEast presented a petition for de novo review of its application to the
Fund Insurance Review Board.  The cases were heard before the Board
simultaneously, and have remained consolidated for purposes of this appeal.
 
A.  The South Portland Office Site

	[¶3]  When DownEast began preparation for the removal of an
underground heating oil storage tank at its office site in South Portland, it
retained J.B. Plunkett Associates, Inc., (JBP) to conduct a site assessment
for possible petroleum contamination.  Using guidelines provided by the
Department of Environmental Protection, referred to as the "Hydrocarbon
Spill Decision Tree," JBP advised DownEast that it would be required to
remove all "free product" and to remove or remediate "soil saturated with
gasoline, kerosene, or fuel oil" following the removal of the storage tank.  A
field representative from the Department concurred.  
	[¶4]  After removing the storage tank, DownEast found and removed
five gallons of heating oil that remained on the clay subsurface soils at the
bottom of the excavation.  Twelve soil samples were also taken from the
excavation area.  One sample revealed concentrations of petroleum vapor
above the Department's notification level, and DownEast reported the
finding to the Department's field representative.  JBP also performed "a soil
saturation test on [the contaminated soil] sample . . . which did not identify
petroleum-saturated soils." 
	[¶5]  DownEast then prepared to dispose of some of the surrounding
soil.  In order for DownEast to transport the soil to a disposal facility, it
required certification from the Department regarding the nature of the soil
contamination.  The Department provided the required certification through
what is referred to as a "virgin petroleum letter."{1}  DownEast then removed
over 236 tons of soil from the site and sought reimbursement for the costs
of the removal from the Ground Water Oil Clean-up Fund.  See 38 M.R.S.A.
§ 569-A.  
	[¶6]  Upon DownEast's application for reimbursement, the
Department initially issued an order, containing findings of fact and an
eligibility determination, in which it concluded that DownEast was "eligible
for coverage by the Insurance Fund for eligible costs incurred" in removing
the soil.  According to the order, to receive the reimbursement DownEast
was required to (1) meet the deductible of $2500, (2) provide the
Department with copies of invoices or reports documenting the costs, and
(3) perform any further cleanup to the satisfaction of the Department.  The
order specifically provided that no further cleanup was required.
	[¶7]  When DownEast submitted its invoices, however, the Department
"re-examined" its file regarding coverage of cleanup costs at the South
Portland site and declined to approve payment from the Fund.  It concluded
that because DownEast was required only to remove saturated soil, and
because JBP's tests revealed that there was no such soil at the site,
DownEast was not entitled to any reimbursement from the Fund.  Thus, it
announced that "[s]ince the Department did not require the removal of any
contaminated soils at this site, there are no eligible cleanup costs and
DownEast Energy will not be reimbursed for any expenses."

B.  The Congress Street Mobil Site

	[¶8]  DownEast also removed six underground oil storage tanks at its
Congress Street Mobil site in Portland.  Prior to the removal, DownEast's
consultant, JBP, concluded that this site would similarly be targeted for
baseline cleanup goals.  A Department representative again concurred.
	[¶9]  After the tanks were removed, JBP reported to the Department
that three of the tanks had contaminated the surrounding soil.  The
Department representative evaluated the site and required that "only
saturated soils and free product be removed from the site in accordance
with baseline cleanup goals."  JBP also inspected the site for contamination,
and observed that "no saturated soils or any free product of any kind" were
present in the excavations.{2}  These observations were communicated to
DownEast. 
	[¶10]  Nevertheless, DownEast removed over 3000 tons of soil from
the site, and the Department's representative issued several virgin
petroleum letters to allow DownEast to send the soil to Commercial
Recycling Systems without conducting hazardous waste testing.  In its
report, JBP described the DownEast's rationale for removing the soil:
Additional soils requiring removal for the installation of a new
facility were also transported off-site based primarily on
petroleum contamination. . . .  A total of 3,101.78 tons of soil was
removed (primarily as a result[] of new construction
specifications, not baseline cleanup levels) and transported to
Commercial Paving in Scarborough.
JBP did not note how much, if any, saturated soil was removed.
	[¶11]  DownEast then filed its application with the Department for
eligibility for reimbursement for the cleanup costs incurred at the Portland
Mobil site.{3}  Once again, the Department initially indicated that DownEast
was eligible for reimbursement of eligible costs, but ultimately determined
that none of DownEast's soil removal costs were "eligible" because there
had been no saturated soil or free product found at the site.  Accordingly, it
concluded that DownEast was not entitled to any reimbursement from the
Fund. 
	[¶12]  DownEast appealed both denials to the Board, which conducted
a de novo hearing and reached the same conclusion as the Department. 
DownEast then appealed to the Superior Court, which affirmed the Board's
decision.  This appeal followed.
II. DISCUSSION
A.  Standard of Review

	[¶13]  When the Superior Court has performed an appellate review of
an administrative decision, "we directly review an agency's decision for an
abuse of discretion, error of law, or findings not supported by the evidence
. . .  giv[ing] considerable deference to an agency's interpretation of its own
internal rules, regulations, and procedures and will not set it aside, unless
the rule or regulation plainly compels a contrary result."  Fryeburg Health
Care Ctr. v. Department of Human Servs., 1999 ME 122, ¶ 7, 734 A.2d
1141, 1143 (citing 5 M.R.S.A. § 11007(4)(C) (1989);  Hale-Rice v. State
Retirement Sys., 1997 ME 64, ¶¶ 8, 12, 691 A.2d 1232, 1235, 1236). 
Thus, we review directly the decision of the Board.  See 38 M.R.S.A.
§ 568-A(3-A) (Supp. 1999) (authorizing judicial review of the Board's
actions).

B.  The Groundwater Oil Clean-up Fund

	[¶14]  The primary purpose of the Groundwater Oil Clean-up Fund is
to protect the "quality of the waters of the State, including the ground water
resources."  38 M.R.S.A. § 561 (Supp. 1999).  The Legislature created the
Fund when it enacted a series of other provisions directed at "conferring
upon the department the power to deal with the hazards and threats of
danger and damage posed by the storage and handling of oil in underground
facilities and related activities."  Id.
	[¶15]  In order to provide incentives for the voluntary cleanup of a
spill, the Fund is designed to allow the owner of an underground storage
facility to recover certain "[e]ligible clean-up costs" related to the cleanup of
petroleum discharged from its underground tanks.  See 38 M.R.S.A.
§ 562-A(7-A) (Supp. 1999).  To recover, an owner must, among other
things, make a written request to the Department within 180 days of
reporting the discharge.  See 38 M.R.S.A. § 568-A(1)(A) (Supp. 1999).  The
owner must include in its request a description of the areas threatened by
the discharge and an agreement to pay a deductible, which is defined by the
statute and is based on the number and type of underground tanks owned by
the applicant.  See 38 M.R.S.A. § 568-A(1)(A)(1), (2).  If the applicant meets
these basic requirements for eligibility, the Department issues an order to
that effect and specifies the amount of the applicable deductible.  See 38
M.R.S.A. § 568-A(1)(F).
	[¶16]  Eligibility for recovery, however, does not guarantee that an
applicant will be entitled to recover any of its cleanup costs.
Any payments to or on behalf of applicants for clean-up activities
undertaken by the applicant must be pursuant to a written
agreement between the applicant and the commissioner.  The
agreement must include, but is not limited to:
A.	A plan and schedule for remedial actions;

B.A provision for enforcement of the agreement and
sanctions for nonperformance;

C.Provisions for cost accounting and reporting of costs
incurred in remediation activities;

D.An agreement to clean up the site to the satisfaction of
the commissioner.
38 M.R.S.A. § 568-A(4) (Supp. 1999).
	[¶17]  Moreover, the Commissioner need only pay to the applicant any
eligible cleanup costs that are over and above the applicant's deductible. 
See 38 M.R.S.A. § 568-A(2) (Supp. 1999).  "Eligible cleanup costs" are those
direct expenses, including expenses for site investigation, that:
A.Are necessary to clean up discharges of oil to the
satisfaction of the commissioner;

B.Are cost-effective and technologically feasible and
reliable;

C.Effectively mitigate or minimize damages; and

D.Provide adequate protection of the public health and
welfare and the environment.
38 M.R.S.A. § 562-A(7-A) (Supp. 1999).

C.  Cleanup Requirements

	[¶18]  Because DownEast was the party seeking reimbursement from
the Fund, it bore the burden of proving that it was entitled to
reimbursement.{4}  In particular, DownEast was required to demonstrate that
the expenses it incurred were "necessary to clean up discharges of oil to the
satisfaction of the commissioner."  38 M.R.S.A. § 562-A(7-A)(A).  The Board
concluded that DownEast failed to prove that the soil removal at either site
was "necessary to clean up discharges of oil."  Id.  Thus, it found that
DownEast failed to carry its burden.  We review the record to determine
whether the Board's findings are supported by the record.
	[¶19]  At the hearing, the Department reiterated its position that the
Commissioner required only the removal of "saturated" soil at both sites. 
The Board also heard evidence that the DownEast was aware that only
saturated soil required removal.  Nonetheless, DownEast argues that it was
entitled to reimbursement for contaminated, rather than saturated, soil and
that the Department should not be permitted to change its first response to
DownEast's request for reimbursement.
	[¶20]  The Board found that DownEast was only required to remove
saturated soil in order to clean up the site "to the satisfaction of the
commissioner" and that DownEast was aware of that requirement.  The
record supports that finding.  Regarding the South Portland site, the Board
noted that DownEast did not contest the Department's determination that
no saturated soil was removed from the site.{5}  Because only free petroleum
and saturated soil were required to be removed in order to clean up the site
to the satisfaction of the Commissioner, and, because nothing meeting that
description existed at the South Portland site, the Board concluded that no
soil removal was eligible for reimbursement pursuant to section
562-A(7-A)(A).{6}  As to the Congress Street site, the Board had before it
evidence that, prior to any tank removal, the Department's representative
visited the site and assigned it a similar baseline cleanup status, thus
requiring removal of only saturated soil, and that the site contained little, if
any, saturated soil.  On this evidence, Board was not compelled to conclude
that any or all of the soils removed fell within the definition of those that
were eligible for fund reimbursement.

D.  Equitable Estoppel

	[¶21]  DownEast next argues that the Department should be equitably
estopped from denying reimbursement because the Department's initial
orders, containing findings of fact that all soil removal had been undertaken
at the request of the Department, "led DownEast Energy to believe that the
soil removal was authorized in accordance with applicable law."  See City of
Auburn v. Desgrosseilliers, 578 A.2d 712, 714 (Me. 1990) (allowing
application of equitable estoppel when "the declaration or acts relied upon
. . . induced the party seeking to enforce the estoppel to do what resulted to
his detriment, and what he would not otherwise have done").
	[¶22]  The Department conceded at the hearing before the Board that
several statements included in the standard form orders were "just wrong."  
The orders were issued, however, after the soil had been removed.  Thus,
DownEast could not have relied on the orders in removing the soil. 
Although the Department's use of the standard form orders led to confusion
in the resolution of this matter, the orders cannot form the basis of a claim
for equitable estoppel.  Nor was the Board compelled to find that the
statements contained in the orders were actually correct reflections of
statements or promises made orally to DownEast before the soil was
removed.  Accordingly, the Department cannot be equitably estopped from
denying Fund coverage regarding the South Portland or Congress Street
sites
.
E.  The Hydrocarbon Spill Decision Tree

	[¶23]  DownEast also argues that the Department's "Hydrocarbon Spill
Decision Tree" was treated as if it were an enforceable rule even though the
Decision Tree had not been adopted pursuant to 5 M.R.S.A. §§ 8052-8054
(1989 & Supp. 1999).  There is no dispute that the Decision Tree has not
been adopted as a Department rule.  An agency may, however, provide
guidance for its employees and the public without adopting the guiding
materials as rules, as long as those materials are not intended to have, and
are not given, the force and effect of law.  See York Mut. Ins. Co. of Me. v.
Superintendent of Ins., 485 A.2d 239, 242 (Me. 1984).{7}  
	[¶24]  The Department argues that the Decision Tree was not
intended to supplant the statutory requirements for Fund reimbursement,
and that it does not treat the Decision Tree as if it were a judicially
enforceable rule.  Rather, the Decision Tree is intended to provide guidance
to professionals and site owners in determining what expectations the
commissioner may have regarding the extent of cleanup required at
particular sites. 
	[¶25]  Regardless of the Department's use of the Decision Tree,
however, the Board did not rely on the Decision Tree in its own conclusions
regarding reimbursement eligibility.  The Board relied, instead, on the
language of the statute declaring eligible costs to be those costs that are
"necessary to clean up discharges of oil to the satisfaction of the
commissioner" and cited, correctly, the applicable statute, 38 M.R.S.A.
§ 562-A(7-A).  Finding that the Commissioner had not required removal of
soil unless it was petroleum saturated,{8} and that DownEast was aware of the
requirement, the Board concluded that DownEast had not proved that its
removal of the soil from either site was necessary to meet the requirements
of the Commissioner on the facts specific to each site.{9}  We find no error in
that conclusion.
	The entry is:
Judgment affirmed.


Attorneys for plaintiff: Randall B. Weill, Esq., (orally) Ann R. Robinson, Esq. Joel H. Thompson, Esq. Preti, Flaherty, Beliveau, Pachios & Haley, LLC P O Box 9546 Portland, ME 04112-9546 Attorneys for defendant: Andrew Ketterer, Attorney General Mary M. Sauer, Asst. Atty. Gen., (orally) 6 State House Station Augusta, ME 04333-0006
FOOTNOTES******************************** {1} . Virgin petroleum letters are the Department's method of certifying to the federal government, as well as the disposal facilities accepting waste soil, that the source of any soil contamination is known and is not "hazardous" as defined in certain federal regulations. Here, the source of the contamination, if any, was pure (or virgin) petroleum, which, under federal regulations, is designated nonhazardous for purposes of certain types of soil disposal. The Department therefore issued a virgin petroleum letter for the South Portland site which allowed, but did not require, DownEast to remove soil from the area without conducting expensive hazardous waste testing that would otherwise be required. {2} . In an internal Department document, the representative noted that "[t]hough I observed no free product nor oil saturated soil, much of the tank fill around the gas and diesel was moderate to mildly oil contaminated, and required handling as special waste when removed[] for construction of the new facility." Another Department representative testified before the Board that the mild to moderately contaminated soil could have remained on site without any remediation. {3} . The application form provided to DownEast by the Department was designed for the situation where the applicant applied for eligibility prior to conducting any cleanup activities, and it required the applicant "[t]o perform only those investigative and remedial tasks determined to be necessary by the Department." {4} . Although the statute does not specifically allocate the burden of proof, the parties do not dispute that the burden fell upon DownEast. Cf. Dowley v. Morency, 1999 ME 137, ¶ 11, 737 A.2d 1061, 1066. {5} . After being alerted to soil contamination at the site, the Department representative inspected the site and found no free product and no saturated soil. DownEast's own consultant, JBP, in its final site assessment, noted that "[t]he majority of the removed soil was not heavily contaminated (not petroleum saturated) but was removed to allow more compactable soils to [be] backfilled in the tank excavation." DownEast did not present any evidence of the amount of saturated soils at either site. {6} . Though approximately five gallons of free product were pumped from the excavation, DownEast has made no claim for reimbursement of that cost. {7} . When the guidance or instructions are "intended solely as advice to assist persons in determining, exercising, or complying with their legal rights, duties or privileges," the materials need not comply with the procedures for the adoption of rules pursuant to the Administrative Procedures Act. 5 M.R.S.A. § 8002(9)(B)(4) (1989). {8} . DownEast's argument, although not stated in this fashion, is essentially that the Department should have adopted much more detailed rules regarding eligibility for fund reimbursement. The Legislature chose in this instance to give broad discretion to the Commissioner to allow individual sites to be addressed as best suited for public health and safety. Moreover, in order to permit site owners to understand what is required in particular instances, the legislation anticipates that the owner and the Department enter into a written agreement prior to cleanup. See 38 M.R.S.A. § 568-A(4) (Supp. 1999). DownEast's failure to obtain an agreement prior to the removal of the soil exacerbated the confusion regarding the Department's position in this case. {9} . DownEast conceded before the Board that much of the soil removal was undertaken in order to facilitate new construction on the sites.