SUBJECT: Natural Resources and Environmental Protection Act, 1994 PA 451, as amended; Part 215, Underground Storage Tank Financial Assurance.

Petition of Triad Environmental Services, Incorporated File No. Z0182
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The issue in this contested case is whether Triad Environmental Services, Incorporated (Triad) can remain on the list of Qualified Underground Storage Tank Consultants. The list is maintained by the Michigan Department of Environmental Quality (Department) under the provisions of Part 215, Underground Storage Tank Financial Assurance, Natural Resources and Environmental Protection Act (NREPA), 1994 PA 451, as amended. MCL 324.21501 et seq.; MSA 13A.21501 et seq.

This is the Final Determination and Order of the Department regarding this matter. MCL 24.285; MSA 3.560(185): Executive Order 1995-18 and Delegation Letter No. OAH-324.101 et seq.-01.

This case was heard under Part 215, Underground Storage Tank Financial Assurance, of the NREPA. MCL 324.21501 et seq.; MSA 13A.21501 et seq. Procedurally, the hearing was conducted pursuant to the Administrative Procedures Act (APA), 1969 PA 306, as amended; MCL 24.201 et seq.; MSA 3.560(101) et seq.

Triad, through its then counsel Jay A. Harter, filed a petition for a contested case with this Tribunal by a letter dated November 25, 1997. Mr. Harter subsequently withdrew from the case, whereupon Triad was represented by Mr. Norman Kammeraad the company's President and Chief Environmental Scientist. On December 8, 1998, Ms. Lori J. Zellers, filed an appearance on behalf of Triad and represented it during the hearing on December 10, 1998. The professional staff of the Storage Tank Division (STD) of the Department is responsible for administering Part 215 of the NREPA. The Department is represented by Mr. James L. Stropkai, Assistant Attorney General.

As indicated above, this contested case hearing was initiated by the petition filed by Triad over STD's denial of its application for certification as a Qualified Consultant under §21542 of the NREPA. The petition contends the Department was required to place Triad on the Permanent Qualified Underground Storage Tank Consultant List as a result of the Ingham County Circuit Court's Order in Bio-Tech, Inc., et al v Michigan Department of Natural Resources, No. 95-79852-CZ (1996). Exhibit R-1. The petition states, in pertinent part:

In order to revoke the license granted to Triad Environmental Services, Inc. by the MDEQ, MDEQ is required to follow the four-step procedure outlined in the case of Rogers v State Board of Cosmetology... . The contested case hearing as requested herein is the fourth step in that process.

The foregoing indicates Triad's knowledge that the purpose of this proceeding is to revoke the license it obtained under the Ingham County Circuit Court's Order that inclusion on the approved contractor list prior to October 26, 1993, "...tantamounts to a license". Typically a license revocation proceeding is initiated under the APA by the Agency, rather than the licensee. Although Triad's petition cites no authority for this Tribunal to conduct a contested case hearing on its petition, a formal hearing on the record is required by law before a license may be revoked. MCL 24.292; Rogers v State Bd of Cosmetology, 68 Mich App 751; 244 NW2d 20 (1976). Based on the nature of this proceeding and the fact the Department is the proponent of revocation, prior to the hearing this Tribunal placed both the burden of moving forward and the burden of proof on the Department.

Whenever the Department is moving toward revoking a license, it must comply with the procedural requirements of Section 92 of the Administrative Procedures Act as expressed in Rogers, supra. MCL 24.292. That provision requires the following four step process be followed by the agency:

1. A preliminary notice of facts stating the reasons for non-compliance must be provided to the licensee.

The Department provided notice of facts regarding Triad's non-compliance with §21542(2)(b) of Part 215, specifically Triad's failure to have a Certified Underground Storage Tank Professional on staff. This notice was provided to Triad by letters dated August 13 and 25, 1997. Exhibits R-2 and R-5.

2. An agency must provide the licensee with an opportunity to show it is in compliance with regulatory requirements, this is the so-called "Rogers" hearing.

The Department provided Triad with a notice of this informal opportunity to show compliance by letter dated October 30, 1997. The informal, or "Rogers" hearing, was held on November 6, 1997. Exhibit R-4. Triad was provided with notice of the Department's determination by letter dated November 19, 1997. Exhibit R-6.

3. A notice of hearing which complies with §71 of the APA. MCL 24.271.

4. A formal contested case hearing which complies with §71 of the APA. MCL 24.271.

Consistent with §71, Triad was provided with notice of the formal contested case hearing in a letter from this Tribunal dated May 9, 1998, an Order issued on July 24, 1998, and a letter dated November 23, 1998. As stated above, a formal contested case was held in this matter on December 10, 1998.

Based on the foregoing, I find, as a Matter of Fact, the four step procedure required by the Administrative Procedures Act before revocation of a license may occur, has been met.

During the course of this proceeding the Parties made reference to issues litigated or being litigated in both the Ingham County Circuit Court and the Ottawa County Circuit Court. Orders in both cases are contained in this Tribunal's file. The thrust of the Ingham County Circuit Court case was whether Triad, and others, had licenses under Part 215 to work on underground storage tanks because they were on lists maintained by the Department of Management and Budget and subsequently by the Department of Environmental Quality.

Under Part 215, persons working on underground storage tanks must meet the requirements of a Qualified Underground Storage Tank Consultant (QC). MCL 324.21542(2). One of the requirements of a QC is to have "... 1 or more individuals actively on staff who are certified underground storage tank professionals". MCL 324.21542(2)(b). The requirements necessary for a Certified Underground Storage Tank Professional (CP) designation are found in MCL 324.21543. As stated above, the Ingham County Circuit Court held that Triad's inclusion on the list of QC's is tantamount to a license. The Court also ruled in another Order that ". . .being placed on the interim certified underground storage tank professional list does not constitute a license which requires Defendants to place him on the permanent certified underground storage tank professional list". Bio-Tech, Inc., et al, supra (2-27-96). Regarding the QC list and license issue, the Department has been granted leave to appeal this decision to the Michigan Court of Appeals.

The Ottawa County Circuit Court case was filed by Mr. Kammeraad pursuant to the Revised Judicature Act. That action challenged the Department's refusal to place him on the permanent list of CP's. The Court found:

Review of the record reveals that the MDEQ considered the appropriate factors under the statute and found appellant's experience insufficient to satisfy the statute's requirements. Appellant was given the chance to correct the deficiencies found in the application. The MDEQ reviewed appellant's application following the initial denial, and found that appellant had failed to correct the noted deficiencies. This Court finds that the decision of the MDEQ was made after thoughtful consideration of appellant's application and was not arbitrary and capricious. Norman J. Kammeraad v Michigan Department of Environmental Quality, No. 97-28860-AV, p 7, Sept. 1, 1998.

Mr. Kammeraad filed for leave to appeal that decision to the Michigan Court of Appeals. In an Order dated December 30, 1998, the Court of Appeals denied the application for leave.

Two days before the formal hearing in this matter, Triad filed a Motion For Formal Adjudication requesting that this Tribunal consider the facts surrounding the Department's denial of Mr. Kammeraad's CP status. After the Parties made their respective arguments on the motion at the start of the hearing, this Tribunal ruled on the record that Mr. Kammeraad's status as a CP was not properly at issue in the formal hearing for the following reasons:

1. The CP and QC licenses are separate and distinct licenses.

2. The Petition filed by Triad does not request a review of Mr. Kammeraad's status as a CP.

3. The Ingham County Circuit Court's Order provides that being on the interim CP list does not constitute a license.

4. There is no right to a contested case hearing on initial licensing matters. Kelly Downs v Michigan Racing Commission, 60 Mich App 539; 231 NW2d 443 (1975).

5. The issue of Mr. Kammeraad's status as a CP has been fully ligated before the Ottawa County Circuit Court.

6. There is no legal support for the proposition that Mr. Kammeraad has CP status simply because Triad held a QC license.

7. This Tribunal has no jurisdiction under Part 215 or any other authority to conduct a contested case hearing regarding Mr. Kammeraad's CP status.

Subsequent to the Ruling on Triad's Motion, the Parties stipulated that the only factual issue remaining in this case is whether Triad meets the requirements of a QC, and specifically whether it has an individual on staff who is certified by the Department as a CP. MCL 324.21542(2)(b).

The only witness to testify during the hearing was Mr. Norman Kammeraad, who was called by the Department. Mr. Kammeraad testified he is the president of Triad and is also its Chief Environmental Scientist. He testified he is familiar with the requirement that a QC must have a CP on staff. To that end he noted that on Triad's application for QC status he is listed as its CP. Mr. Kammeraad testified he was denied CP status by the Department, and therefore, he is not a CP and that no other individual was listed by Triad as being certified as a CP by the Department.

I find, as a Matter of Fact, that Triad does not have an individual on its staff who is approved by the Department as a CP. I find, as a Matter of Fact, that Triad does not meet the requirements of a QC as specified in §21542(2)(b) of Part 215.

Triad has requested an award of $241,922 to recover the costs and fees related to this contested case, the two Circuit Court cases and the two Court of Appeals cases. This Tribunal has authority to award, under certain circumstances, to a prevailing party, other than the agency, costs and fees incurred in connection with a contested case. MCL 24.323(1). As set forth below, I find, as a Matter of Fact, that because Triad is not a prevailing party in this contested case, it is not entitled to its costs and fees. Further, in order to award costs and fees there must be a finding that the position of the agency was frivolous. I find, as a Matter of Fact, the Department's position regarding this matter is not frivolous.

1. Based upon the Findings of Fact, I conclude, as a Matter of Law, the procedural requirements of the Michigan Administrative Procedures Act have been satisfied by the Department. Therefore, the Department may properly move forward with revoking Triad Environmental Service, Incorporated's license as a Qualified Consultant.

2. Based upon the Findings of Fact, I conclude, as a Matter of Law, Triad Environmental Services, Incorporated does not meet the requirements of a Qualified Consultant (QC) because it does not have a Certified Professional (CP) on its staff. MCL 324.21542(2)(b).

3. Triad argues that its license may be revoked only for fraud or other cause as determined by the Department in accordance with §21542(5), and the Department has not shown either fraud or other sufficient cause. I conclude, as a Matter of Law, that "other cause as determined by the department" is Triad's failure to have a CP on staff as required by §21542(2)(b). I further conclude, as a Matter of Law, that Triad's failure to have in its employ an individual who is certified by the Department as a CP is sufficient grounds to revoke Triad's license as a QC.

4. Triad contends the Department did not question Triad's QC deficiency of not having a CP in prior evaluations, and that in the past Mr. Kammeraad is the only person ever listed by Triad as its CP. I conclude, as a Matter of Law, assuming this were true, such a scenario does not prevent the Department from subsequently addressing the CP issue, nor does it relieve Triad from continuing to comply with the statutory requirements for maintaining its QC status.

5. Based on the Findings of Fact, I conclude as a Matter of Law, Triad is not entitled to the costs and fees it incurred in this contested case because it is not a prevailing party. MCL 24.322(5). I also conclude, as a Matter of Law, the Department's position in this proceeding is not frivolous. MCL 24.323(1).

Based on the Findings of Fact and Conclusions of Law, it is DETERMINED that Triad Environmental Service, Incorporated's license as a Qualified Underground Storage Tank Consultant shall be REVOKED. It is also DETERMINED that Triad Environmental Service, Incorporated is not entitled to its costs and fees pursuant to the Administrative Procedures Act.

THEREFORE, IT IS ORDERED:

1. Triad Environmental Service, Incorporated's license as a Qualified Underground Storage Tank Consultant is REVOKED and the Department shall remove Triad Environmental Service, Incorporated from the list of Qualified Consultants it maintains under Part 215.

2. Triad Environmental Service Incorporated's request for costs and fees is DENIED.

Date: January 7, 1999
Richard G. Lacasse, Chief
Administrative Law Judge

Petition of Triad Environmental Services, Incorporated File No. Z0182

1 Letter dated November 25, 1997 from Jay A. Harter, Knaggs, Harter, King & Brake, P.C. to the Office of Administrative Hearings, Michigan Department of Environmental Quality (MDEQ).
2 Letter dated August 13, 1997 from Arthur R. Nash, Jr., Chief, Underground Storage Tank Division, MDEQ, to Mr. Norman J. Kammeraad, Triad Environmental Services.
3 Not offered as an exhibit.
4 Letter dated October 30, 1997 from Betty Michalski, Environmental Quality Analyst, Underground Storage Tank Division, MDEQ, to Mr. Norman J. Kammeraad, Triad Environmental Services.
5 Letter dated August 25, 1997 from Arthur R. Nash, Jr., Chief, Underground Storage Tank Division, MDEQ, to Mr. Norman J. Kammeraad, Triad Environmental Services.
6 Letter dated November 19, 1997 from Arthur R. Nash, Jr., Chief, Underground Storage Tank Division, MDEQ, to Mr. Norman J. Kammeraad, Triad Environmental Services.