Attorney General: Timothy R.E. Keeney, Commissioner of Environmental Protection, 1994-027 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General Richard Blumenthal

September 16, 1994

Timothy R.E. Keeney
Commissioner of Environmental Protection
79 Elm Street
Hartford, CT 06106

Dear Commissioner Keeney:

In a letter dated July 21, 1994 you wrote to the Attorney General seeking an opinion concerning the status of the Mobil Oil Corporation pursuant to a cost reimbursement request to the Underground Storage Tank Petroleum Clean-up Fund Review Board ("Review Board").

Among the materials provided with the opinion request was a portion of a lease agreement entered into by the State Department of Transportation and Mobil Oil in 1982 whereby Mobil Oil leased a number of service stations from DOT. The lease provided that while the underground storage tanks and all accessory equipment were to be the property of the State, Mobil Oil was responsible for their maintenance, was required to comply with all directives and regulations of EPA and DEP, and was responsible for taking "all steps necessary to prevent and/or contain any spillage of motor fuels and petroleum products including those as may occur as a result of failure of the underground storage facilities. . . ." According to the terms of the lease, all costs incurred as the result of spillage from the storage of motor fuels and petroleum products were the responsibility of Mobil Oil.

Mobil Oil subsequently chose to operate some stations under franchise dealer agreements, where it would be the primary supplier of petroleum products to be stored in and sold from the underground tanks. We have reviewed a copy of the franchise agreement which was provided by Mobil Oil.

With these facts as background you ask whether Mobil Oil can be considered as a third party applicant for reimbursement by the Review Board under Conn. Gen. Stat.  22a-449a through g and Reg. Conn. Agencies  22a-449e-1 for costs incurred as the result of a petroleum leak from an underground storage tank at one of the stations operated under a franchise dealer agreement.

The Review Board may award reimbursement to either an eligible reponsible party or to a third party. Conn. Gen. Stat.  22a-449a(3) defines "responsible party" as "any person or entity . . . which owns or operates an underground storage tank or underground storage tank system from which a release emanates." A third party is a person or entity who is other than a responsible party and who suffers bodily injury, property damage or damage to natural resources.  22a-449c(b). If Mobil Oil qualifies as a third party applicant, it does not have to pay the $10,000 deductible which is charged to a responsible party pursuant to Conn. Gen. Stat.  22a-449c(b).

Mobil Oil does not own the underground storage tanks at issue because its lease with DOT places ownership with the State. The question, then, is whether Mobil Oil "operates" the underground storage tanks at those stations where it has entered into franchise dealer agreements. Webster's Third New International Dictionary defines "operate", in part, as "to arrange and put or keep in operation whether with personal effort or not."

Mobil Oil, through its franchise agreements, has arranged for the operation of and keeps in operation the underground storage tanks at those service stations for its commercial benefit by the sale of Mobil product. See Gulf Refining Co. v. Fox, 11 F. Supp. 425, 430 (D.C. W.Va. 1935) and Ashland Refining Co. v. Fox, 11 F. Supp 431, 433 (D.C. W.Va. 1935) affd, 297 U.S. 381, 80 L.E. 731, 56 S.Ct. 510 (1936) (Refining company held to "operate" gasoline filling stations individually operated by licensed dealers as part of integrated chain store organization so as to be liable for chain store tax).

It is our opinion that Mobil Oil cannot be considered a third party at its franchise dealer operation where it has incurred costs due to a leak of petroleum product from an underground storage tank. Mobil Oil has not suffered any bodily injury or damage to natural resources. If it has suffered any property damage, that damage arose wholly out of its obligation under its lease with DOT to be solely responsible for costs incurred as a result of the release of petroleum product. Under its lease with the DOT, Mobil Oil, not the franchise dealer, is wholly responsible for maintaining the underground tanks, for insuring compliance with EPA and DEP regulations, and for paying the costs for containing any petroleum leaks from those underground tanks. Finally, Mobil exerts control over the franchise dealers with whom it has the franchise dealer agreements and those stations use Mobil product and exhibit the Mobil sign.

Under these circumstances, Mobil Oil "operates" the franchise dealer stations as that term is used within the definition of "responsible party" in  22a-449a(3), and is, therefore, a responsible party, not a third party, and must incur the $10,000 deductible.

Very truly yours,

RICHARD BLUMENTHAL
ATTORNEY GENERAL

Richard F. Webb
Assistant Attorney General


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