OKLAHOMA CITY – An environmental remediation company that was fired from a project to repair leaking underground storage tanks in Grady County appealed to an administrative law judge, an appellate referee, the Oklahoma Corporation Commission and the state Court of Civil Appeals.
It lost every time.
The case concerns a detected leak from underground petroleum storage tanks at the Longhorn Express in Alex, a small town approximately 15 miles southeast of Chickasha.
Then-owner Mohsen Najm received a “notice of violation” letter from the Corporation Commission’s Petroleum Storage Tank Division on Aug. 9, 2001.
Najm hired Enviro-Tec America to be his remediation consultant and assigned his payments from the Petroleum Storage Tank Indemnity Fund directly to Enviro-Tec. The Tulsa-based company performed remediation services on the property from 2002 until mid-2020, court records show.
In late 2006 Henry and Debra McKee acquired the property from a third party. The McKees testified that they sold fuel from the tanks from 2006 until early 2019, Administrative Law Judge David Leavitt wrote.
The McKees decided to remediate the property themselves and hired a new consultant, Oklahoma Environmental Services based in Oklahoma City.
They switched contractors “because they were unhappy with Enviro-Tec’s lack of progress and wanted to remediate the property so they could sell it,” the court record relates.
“No one wants to buy it with the problems and the fuel under the store,” Ms. McKee testified. She also claimed that “over the time period of us having the store, nothing substantial has been done to fix the problem… We have a ball field next to us, and there’s too many kinds who play in that area. That’s a big concern for us.”
The last time Enviro-Tec was on the property performing testing, “their techs left some of the lids off of the [monitoring] wells … which is setting us up for a liability … of someone stepping in these and possible breaking an ankle or an arm or whatever,” Ms. McKee testified.
The McKees filed an application that the Indemnity Fund’s administrator approved, ruling that they were eligible as an “impacted party” to hire a remediation consultant and receive reimbursement from the fund for legitimate expenses.
In a letter dated June 30, 2020, Deanna Atkinson, president of Oklahoma Environmental Services, notified Jamila Crews, president of Enviro-Tec, that OES was assuming immediate oversight of monitoring the underground storage tanks and Enviro-Tec’s access to the McKees’ property was revoked.
A month and a half later Enviro-Tec filed an application for an injunction against OES.
The Petroleum Storage Tank Division requested dismissal of the application, and after conducting a hearing ALJ Leavitt recommended that the Corporation Commission dismiss the application.
Crews testified that her company “has been working for the last 19 years to complete work” on the property. During that time, she said, Enviro-Tec monitored the fuel leak and submitted more than 337 reports, purchase orders and remediation plan to the PSTD.
She testified that Enviro-Tec’s remediation plan was approved on five separate occasions, “and with each approval the PSTD requested additional monitoring” before the company executed its remediation plan, “delaying completion of the work.”
Crews said the remediation plan was last approved in 2017 and Enviro-Tec “anticipated beginning the remediation that year,” but the Petroleum Storage Tank Division’s case manager “became ill and the project was delayed” again. Enviro-Tec anticipated in 2017 that the remediation project would begin “within a year” and that the cost to complete the work “would be around $400,000.”
The McKees “never complained to Enviro-Tec about the work being done on the site,” Crews told ALJ Leavitt.
ALJ, referee support
McKees’ position
The McKees “have the right to remediate their own property and select the consultant of their choice from a list approved by the Commission to assist them in this work,” Leavitt wrote. The ALJ also declared that “any interference-of-contract dispute” between Enviro-Tec and Oklahoma Environmental Services “is outside the jurisdiction” of the Corporation Commission.
After a hearing on May 17, 2021, an appellate referee affirmed Leavitt’s recommendation to dismiss Enviro-Tec’s application for an injunction. The referee also found that Enviro-Tec did not have legal standing to challenge the Indemnity Fund administrator’s determination that the McKees “are eligible … to hire a remediation consultant and receive reimbursement from the Indemnity Fund.”
Enviro-Tec then requested an opportunity to present oral arguments before the Corporation Commission. The commission denied the request and affirmed the referee’s report. The commissioners later issued a final order concluding that Enviro-Tec had no standing to challenge the McKees’ decision, and wrote that the McKees “are impacted parties and thus may choose an approved consultant, remediate their own property, and receive reimbursement from the Indemnity Fund for corrective action taken.
Enviro-Tec then filed an appeal with the Oklahoma Court of Civil Appeals.
Appellate court
rebuffs Enviro-Tec
The Oklahoma Constitution decrees that, as a general rule, the state Supreme Court’s review of Corporation Commission orders “shall not extend further than to determine … whether the findings and conclusions of the Commission are sustained by the law and substantial evidence.”
Enviro-Tec accused the Petroleum Storage Tank Division of “duplicative and wasteful administration of the Underground Storage Tank Indemnity Fund.
Terin Morris, administrator of the indemnity fund, testified that it is not unusual for a property owner to file its own indemnity fund application, and said the PSTD works with the environmental consultant “to create the most efficient remediation possible.”
Enviro-Tec also asserted it had standing to issue a challenge because it was an “assignee of benefits and remediation responsibilities.”
But the appellate court pointed out that it was “only an assignment to receive payments for work performed,” and the legal record established that Enviro-Tec “has been or will be paid or reimbursed for all the work it has completed” if all appropriate documents are submitted.
“Aside from the right to receive payments for work done, it does not assign Enviro-Tec any other rights or benefits,” the court wrote.
In its final order, the Corporation Commission agreed with the administrative law judge in concluding that Enviro-Tec was “merely a contracted environmental consultant, or vendor, for Mr. Najm. Enviro-Tec has no legal right on its own to object to the McKees seeking to remediate their property, hire a consultant, or seek reimbursement from the Indemnity Fund.”
The Court of Civil Appeals agreed with the Corporation Commission on Aug. 12 and affirmed that Enviro-Tec “lacked standing” to seek an injunction against Oklahoma Environmental Services.