SUBJECT: Request for Variation from Michigan's Underground Storage Tank Rules to approve Petitioner's use of reduced steel tank wall thickness for the construction of atmospheric steel underground storage tanks. Variation is requested pursuant to Rule 29.2103(h) of the Underground Storage Tank Rules promulgated under Part 211 of the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended.

Petition of Plasteel, Inc.
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The petition for a contested case hearing of Plasteel, Inc., (Petitioner) requests a variation from the Underground Storage Tank Rules for approval to use its steel underground storage tanks in Michigan.

Pursuant to Section 85, MCL 24.285; MSA 3.560(185), of the Michigan Administrative Procedures Act, this is the Final Determination and Order of the Michigan Department of Environmental Quality in this matter.

This matter was brought under Part 211 of the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended, and the administrative rules, specifically 1990 AACS, R 29.2101 et seq. Plasteel requests a variation of the requirements for steel tank thickness pursuant to Rule 3(h). Authority for granting Petitioner a contested case hearing is found in Rule 3(i).

The formal hearing on this matter was conducted on April 21, 1997, pursuant to the Administrative Procedures Act, 1969 PA 306, as amended; MCL 24.201 et seq.; MSA 3.560(101) et seq.

The Petitioner is represented by Rick Sharpe, Vice President, Plasteel, Inc. The Department of Environmental Quality, (Department) is represented by Amy Carter, Chief, Program Support Section, Underground Storage Tank Division. A list and description of the exhibits entered on the record is attached to this Final Determination and Order. All exhibits were received by stipulation of the Parties.

The standards for steel thicknesses of underground storage tanks are found in the underground storage tank administrative rules. 1994 AACS, R 29.2103(j). This Rule incorporates by reference 1992 AACS, R 29.4101 to R 29.4504 of the Michigan Administrative Code Supplement titled "Storage and Handling of Flammable and Combustible Liquids". Rule 1992 AACS, R 29.4103 of those rules incorporates by reference the national fire protection association pamphlet no. 30, 1990 edition, entitled "Flammable and Combustible Liquids Code". Chapter 2 of that Code adopts, by reference, the standards of Underwriters Laboratories, Inc. "Standard for Steel Underground Tanks for Flammable and Combustible Liquids", UL 58. Table 3.1 of UL 58 provides the minimum steel thicknesses for underground storage tanks as adjusted for capacity and diameter.

The Petitioner manufactures steel underground storage tanks which are used for the storage of combustible and flammable liquids. The Petitioner constructs, or contracts other manufactures to construct, steel tanks. The tanks are then coated with a fiber-glass substance for external corrosion protection. The tanks are constructed in accordance with UL 1746 (External Corrosion Protection Systems for Steel Underground Storage Tanks) and UL 58 (Steel Underground Tanks for Flammable and Combustible Liquids) except for the UL 58 steel thickness requirements. Part II of UL 1746 provides the construction requirements for composite tanks. Part II states composite tanks are to be fabricated using steel tanks that comply with UL 58, except the thickness of steel used may be reduced as specified in Table 12.1, provided the tank is additionally tested in accordance with paragraph 15.2. Paragraph 15.2 requires a water load test, an earth load test and an external pressure test to be conducted on tanks having the reduced wall thickness.

It is uncontested the steel tanks manufactured by the Petitioner do not meet the steel thickness requirements found in UL 58. Mr. Sharpe testified the tank wall thickness is 1 gage less than that required by UL 58 because of the corrosion protection material used in the fabrication process. The Petitioner argues a variation from the UL 58 standard is appropriate for its tanks because they comply with UL 1746 and a variation would not result in an increased hazard to life, property, or the environment. The Department asserts the Petitioner is capable of manufacturing steel tanks in accordance with UL 58 and a variation would result in an increased hazard to life, property, or the environment.

Andrea R. Zajac, Chief, Division-Technical Review Unit, Underground Storage Tank Division, is a geological engineer. She testified the Department learned the Petitioner's tanks did not comply with the UL 58 standard for steel thickness when a tank located in the Grand Rapids area imploded. The tank was in operation for approximately 5 years and was being tested, as required by law, for structural integrity. Ms. Zajac testified the Petitioner's tanks were originally approved for sale and use in Michigan by the Department based upon the information supplied by the Petitioner. The information states the Petitioner's tanks comply with UL 58. Exhibit R-4.

Ms. Zajac testified the imploding of the tank discussed above led the Department to investigate all of the Petitioner's tanks. This in turn led to the discovery Petitioner's tanks were constructed with a reduced tank wall thickness. The Department then prohibited use of the Petitioner's tanks in Michigan for storage of flammable and combustible liquids. As a result of this action, the Petitioner applied to the Department for a variation from the Underground Storage Tank (UST) rules for its tanks.

To obtain a variation from the UST rules, a Petitioner must meet the requirements of Rule 3(h):

A person may request a variation from the application of a rule by applying to the state fire marshal with a satisfactory explanation of why compliance is not possible. . . . The state fire marshal may make a variation upon finding that the variation does not result in an increased hazard to life, property, or the environment. 1990 AACS, R 29.2103(h).

The first requirement the Petitioner must show to obtain a variation for its tanks is to provide a satisfactory explanation of why it cannot comply with the UL 58 steel thickness standard. Mr. Sharpe testified the Petitioner is not incapable of complying with the UL 58 tank thickness standard. He maintains the tanks manufactured by, or for, the Petitioner meet the UL 1746 thickness standard and, therefore, the Petitioner should be granted an variation to the standards contained in UL 58. The Department asserts that because the Petitioner is capable of producing a tank in compliance with the UL 58 standard, it is not entitled to variation from that standard.

The arguments of the Parties present a purely legal question regarding the meaning of the first sentence of Rule 3(h).

A person may request a variation from the application of a rule by applying to the state fire marshal with a satisfactory explanation of why compliance is not possible. (Emphasis added). 1990 AACS, R 29.2103(h).

The issue is whether the Petitioner may receive a variation from the UL 58 standard if it is capable of complying with that standard. When determining the meaning of statutory language, a court must look to legislative intent by considering the plain meaning of the language used in the law. Victorson v. Department of Treasury, 439 Mich 131, 482 N.W.2d 685 (1992). If the language of a statute is clear and unambiguous, then a court must apply the language as written and may not engage in interpreting the language. Id. at 137. The rules of statutory interpretation apply equally to the interpretation of administrative rules. MCL 24.232(1); MSA 3.560 (132).

I conclude, as a matter of law, the language of Rule 3(h) is clear and unambiguous and must be applied as written. In this case it is uncontested the Petitioner is capable of manufacturing tanks in compliance with the standards contained in UL 58. Rule 3(h) requires a person seeking a variation to make a satisfactory showing of why they cannot comply with the applicable standard. In order to do so, facts must be presented in support of the request for variation. In this case, the facts presented regarding this issue are uncontested and I find the Petitioner is capable of producing tanks in compliance with the applicable standards.

Assuming the Petitioner did have a satisfactory reason for being unable to comply with the UL 58 tank thickness standard, the inquiry then turns to the language in the last sentence of Rule 3(h):

The state fire marshal may make a variation upon finding that the variation does not result in an increased hazard to life, property, or the environment. 1990 AACS, R 29.2103(h).

This language of the Rule is factually driven. The threshold question is whether the variation results in an increased hazard to life, property or the environment. The Petitioner asserts a variation would not increase the hazard to life, property, or the environment. The Department asserts a variation would increase the hazards enumerated in the Rule.

Petitioner contends paragraph D of the forward to UL 58, supra., allows tanks to be approved if, through testing, they are determined to be equivalent to the UL 58 requirements. In support of this assertion, Mr. Sharpe introduced a letter dated February 8, 1996, he received from Underwriters Laboratories, Inc. Exhibit P-6. Mr. Sharpe testified Petitioner's tanks were performance tested in 1979 and 1980. The Petitioner asserts its tanks are manufactured to the equivalent strength of the UL 58 requirements and are of an appropriate steel thickness as provided in UL 1746. In a letter from Underwriters Laboratory, Inc., to Mr. Sharpe dated March 1, 1996, UL provides: "As you know, tanks manufactured and Listed under UL 1746 are required to comply with the requirements in UL 58 except that the steel thickness may be reduced one gage size provided appropriate additional performance test (sic) are conducted with acceptable results." (Emphasis added). Exhibits P-8 through P-10, certificates of compliance from Underwriters Laboratories, Inc., state the Petitioner's tanks comply with UL 1746 and UL 58. Mr. Sharpe testified the Petitioner has 6,000 to 8,000 tanks in service since 1980 and there have been no failures due to reduced steel wall thickness. He testified there have been 10 to 12 tank failures since 1980 due to either improper installation or operation.

Mr. Makhoul Kadri, Environmental Engineering Specialist, Underground Storage Tank Division, testified that UL 1746 is a standard for corrosion protection and does not add to structural integrity. He testified that while corrosion protection is important, it is not a valid reason to reduce the strength of steel tanks. He testified UL 1746 applies to fiberglass tanks and should not be used to determine the minimum requirements of tank wall thickness. Mr. Kadri testified he knows of no evidence showing a reduced steel wall tank which complies with UL 1746 is the equivalent in structural integrity to a tank meeting the UL 58 standards. Mr. Kadri testified UL 1746 does not contain structural criteria and the Petitioner's certificates of compliance are for UL-1746 only. In Mr. Kadri's opinion, the Petitioner's product increases the risk of the hazards enumerated in the Rule because of the reduced wall thickness of the tanks.

Mr. Kadri testified UL 1746 was approved by Underwriters Laboratory, Inc. after the effective date of the UST administrative rules and it is, therefore, not a standard which is incorporated by reference in the administrative rules. He testified the Department's process of accepting a request for a variation is to require the manufacturer to obtain a certificate for variation from Underwriters Laboratory, Inc. The certificate is then acknowledged by the Department. Mr. Kadri testified the Department requested such a certificate from the Petitioner, but none was provided.

Ms. Zajac and Mr. Kadri, opined the Petitioner's tank imploded because of the combination of it being installed in an area with a high water table and the reduced wall thickness of the tank. Ms. Zajac testified tanks with reduced wall thickness, such as the Petitioner's, have increased risks in Michigan because of generally high water tables. Mr. Sharpe opined the implosion of this tank was the result of improper procedures by the company who tested the tank. He speculated the vacuum test done on the tank exceeded the tank's limits. He testified there was no reason given by the tank testing company for the imploded tank.

Mr. Sharpe asserts that tanks constructed in accordance with 1992 AACS, R 29.4403 are approved by the Department. Under this Rule, tanks constructed in accordance with the standards found in UL 1746 are acceptable. Mr. Sharpe testified the tanks manufactured by the Petitioner comply with UL 1746 and it is an appropriate standard to grant a variation. Mr. Kadri testified the reference by Mr. Sharpe to 1992 AACS, R 29.4403 is inappropriate because that rule applies only to oil burning equipment and is not part of the UST rules. See also, Exhibits R-11 and R-12.

I find, as a matter of fact, the Petitioner has failed to show that a variation to UL 58 for its tanks will not result in an increased hazard to life, property, or the environment. I find, as a matter of fact, the Petitioner's reduced wall thickness tanks may increase the hazard to life, property, or the environment.

1. The Department of Environmental Quality, Office of Administrative Hearings, has jurisdiction over this matter. 1994 PA 451, as amended, Part 211; 1992 AACS, R 29.2103(i).

2. The Petitioner has the burden to show its tanks are entitled to a variation pursuant to 1994 AACS, R 29.2103(j).

3. A variation to the Underground Storage Tank Rules regarding thickness requirements of steel tanks may be granted if it is shown compliance with UL 58 is not possible, and the variation will not result in an increased hazard to life, property, or the environment. 1992 AACS, R 29.2103(h).

4. Based on the findings of fact, I conclude the Petitioner has not shown it cannot construct steel tanks in accordance with UL-58.

5. Based on the findings of fact, I conclude the Petitioner has not shown a variation will not result in an increased hazard to life, property, or the environment.

6. Based on the findings of fact, I conclude the Petitioner is not entitled to a variation from the Underground Storage Tank Rules, specifically the UL 58 requirements for steel thicknesses of underground storage tanks.

7. I conclude 1992 AACS, R 29.4403 and its reference to UL 1746 applies only to oil burning equipment and is immaterial to this case.

8. I conclude UL 1746 is not incorporated by reference by the Underground Storage Tank Rules for storing flammable and combustible liquids.

Based upon the Findings of Fact and the Conclusions of Law, it is DETERMINED the Petitioner is not entitled to a variation from the Underground Storage Tank Rules.

THEREFORE, IT IS ORDERED: The Petitioner's request for a variation from the requirements of the Underground Storage Tank Rules is DENIED.

Dated: October 10, 1997

Richard G. Lacasse
Chief Administrative Law Judge

SUBJECT: Request for Variance to R29.2103 of Michigan's Underground Storage Tank Rules, Section 280.109(j), to approve UL 1746, 1993, for the Construction of Atmospheric Steel Underground Storage Tanks.

Petition of Plasteel, Inc.

PETITIONER'S EXHIBITS

P-1 Michigan Underground Storage Tank Rules, January 1991.
P-2 Storage and Handling of Flammable and Combustible Liquids, July 1992, Reprinted 1995.
P-3 Flammable and Combustible Liquids Code, 1990 Edition, ANSI/NFPA 30, An American National Standard, August 17, 1990.
P-4 Standard for Safety, External Corrosion Protection Systems for Steel Underground Storage Tanks, Underwriters Laboratories, Inc., UL 1746, ISBN 1-55989-062-2.
P-5 UL Letter dated September 19, 1989.
P-6 UL Letter dated February 8, 1996.
P-7 UL Letter dated March 1, 1996.
P-8 UL Certificate of Compliance, Certificate Number: 200396 - MH18314C, Issue Date: March 20, 1996 to Joor Mfg. Inc., Report Reference: MH18314, August 10, 1989.
P-9 UL Certificate of Compliance, Certificate Number: 200396 - MH18314B, Issue Date: March 20, 1996 to Joor Mfg. Inc., Report Reference: MH18314, January 29, 1985.
P-10 UL Certificate of Compliance, Certificate Number: 200396 - MH18314A, Issue Date: March 20, 1996 to Joor Mfg. Inc., Report Reference: MH18314, December 17, 1980.
P-11 Paper clip packet of letters: Plasteel, Inc. Letter dated February 21, 1996; Michigan Department of State Police (MDSP), Fire Marshall Division (FMD) Letter dated November 30, 1988; Fax Transmittal Sheet from MDSP FMD dated October 22, 1990; Sheet with heading: SUBJECT 1946 - May 1987, Outline of Proposed Investigation for Corrosion Protection Systems for Steel Underground Storage Tanks, UL 1746, First Draft - May 1987; Sheet with heading: Part II - Composite Tanks, page number 23; photocopy of the cover of Storage and Handling of Flammable and Combustible Liquids, July 1992, Reprinted 1995 with copies of pages 43 and 44 and a Faxed Transmission Report dated February 21, 1996 @ 15:26, receiver: 12192661012, pages sent: 05, duration: 04:20 with a Post-It Fax Note dated 2/21/96, # of pages 10, To Dennis Tvdor, Co. Zorn from Rick, Co. Plasteel.
P-12 Paper clip packet: Plasteel, Inc. Letter dated May 2, 1996 (5) pages; a copy of page 4 from the Storage and Handling of Flammable and Combustible Liquids, July 1992, Reprinted 1995 and a copy of the cover of the Storage and Handling of Flammable and Combustible Liquids, July 1992, Reprinted 1995.
P-13 Paper clip packet: Michigan Department of Environmental Quality (MDEQ), Underground Storage Tank Division (USTD) Letter dated January 27, 1997 and the Pre-Hearing Statement (4) pages from MDEQ, USTD.
P-14 MDEQ, USTD Letter dated August 5, 1996, (4) pages.

RESPONDENT'S EXHIBITS

R-1 MDEQ, USTD Letter dated January 27, 1997 with Pre-Hearing Statement.
R-2 Michigan Underground Storage Tank Rules, January 1991, DEQ, USTD.
R-3 Storage and Handling of Flammable and Combustible Liquids, July 1992, Reprinted 1995.
R-4 Pamphlet entitled: Plasteel Double-Wall Underground Storage Tanks, Plasteel Elutron.
R-5 Standard for Safety, Steel Underground Tanks for Flammable and Combustible Liquids, UL 58.
R-6 MDEQ, USTD Letter dated January 31, 1996.
R-7 Plasteel Letter dated February 21, 1996.
R-8 Plasteel Letter dated May 2, 1996 with copies of the UL Certificate of Compliance, Certificate Number: 200396 - MH18314O, Issue Date: March 20, 1996 to Zorn Industries Inc., Report Reference: MH18314, December 17, 1990; UL Certificate of Compliance, Certificate Number: 200396 - MH18314N, Issue Date: March 20, 1996 to Zorn Industries Inc., Report Reference: MH18314, December 14, 1990; UL Certificate of Compliance, Certificate Number: 200396 - MH18314M, Issue Date: March 20, 1996 to Zorn Industries Inc., Report Reference: MH18314, December 13, 1990.
R-9 MDEQ, USTD Letter dated March 21, 1996.
R-10 MDEQ, USTD Letter dated August 5, 1996.
R-11 MDEQ, USTD Letter dated May 31, 1996.
R-12 MDSP FMD Letter dated July 25, 1996.
R-13 Plasteel Letter dated January 14, 1997 with a copy of the Pre-Hearing Statement dated January 14, 1997 with attachments.
R-14 Plasteel Letter dated January 25, 1996.
R-15 Plasteel Letter dated July 16, 1996.
R-16 A photocopy of pages from the NFPA 30A, Automotive and Marine Service Station Code, 1990 Edition.
R-17 Relevant Excerpts of Applicable Sections of the National Fire Protection Association (NFPA) Pamphlets NFPA 30, and NFPA 30A, 1990 Edition, which are Adopted by Reference, and Amended, in R29.4103 of Michigan Administrative Code (FL/CL Rules).
R-18 A photocopy of Executive Order No. 1995-18, Michigan Department of Environmental Quality, Michigan Department of Natural Resources Executive Reorganization.
R-19 A photocopy of Executive Order No. 1994-7, Leaking Underground Storage Tank Program, Underground Storage Tank Regulatory Program, Michigan Underground Storage Tank Financial Assurance Policy Board, Underground Storage Tank Division, Michigan Department of Natural Resources.