March 2, 1994
Arthur Mouberry Groundwater Section Chief Post Office Box 29535 Raleigh, North Carolina 27626-0535
RE: Advisory Opinion – W. O. Abbitt Estate; Eligibility for Reimbursement from the State Commercial Leaking Underground Storage Tank Fund, G.S. §143-215.94A et seq.
Dear Mr. Mouberry:
You have requested guidance from this office concerning the eligibility of the Estate of W. O. Abbitt for reimbursements from the State Commercial Leaking Underground Storage Tank Fund,
G.S. §143-215.94A et seq. This advisory opinion provides that guidance.
QUESTION: Is the personal representative of an estate an appropriate recipient of Commercial Fund reimbursements when underground storage tanks are removed prior to the death of the decedent? The question may be divided for analysis as follows: 1) does the estate step into the shoes of the decedent as a tank owner or operator; and 2) if it does, was the decedent eligible to participate in the Commercial Fund.
CONCLUSION: The personal representative of an estate may apply for reimbursements from the Commercial Fund. When he does so, he does step into the shoes of the decedent; thus, the estate’s eligibility is dependent upon the decedent’s actions. In the W. O. Abbitt Estate matter the decedent was eligible, and, therefore, the W. O. Abbitt Estate would likewise be eligible.
FACTS
W. O. Abbitt operated a grain mill which used two 1000 gallon motor fuel underground storage tanks (UST’s). Affidavits by the office and plant managers at the mill indicate the tanks were not used after 1985 or 1986. The tanks were removed by Mr. Abbitt in February of 1990, but no discharge was reported to DEM at that time. Mr. A. C. Bailey of A. C. Bailey Equipment Company of Williamston, who removed the tanks, informed Law Engineering that no soil samples were collected beneath the tank when it was removed in February, 1990 and at that time petroleum fumes were smelled, but they "were not that strong." (Report of Preliminary Environmental Site Assessment and Soil Sampling, September 30, 1991.) Soil samples collected at the site on August 14, 1991 showed semi-volatile contamination of 1200 mg/kg at 5 feet.
Mr. Abbitt died in August of 1990. Mr. Abbitt’s will did not make a specific devise of the mill site. Instead, the will made monetary bequests to numerous individuals and organizations. With regard to real property, the will stated:
I hereby authorize and direct my Executor to sell all of my property, both real and personal, and convert the same to cash. My Executor is hereby granted all the powers set forth in Section 32-27 of the General Statutes of North Carolina.
In addition to such powers I hereby authorize and direct my Executor to sell all of the real and personal property belonging to me at the time of my death and I hereby direct him to give deeds or bills of sale for same. He shall sell such property at public or private sale and shall pay the proceeds, after payment of costs of the sale, over to my estate. I hereby authorize and direct my Executor to sell such property at public or private sale and in such a manner in his sole and absolute discretion determines to be fit and proper.
It is my desire but not my will that the business that I have built and maintained knows as "Abbitt’s Mill" located on Hamilton highway here in Martin County continue after my death and that the trade name "Abbitt’s Mill" and "Abbitt’s Meal" continue to be used after my death and it is my desire but not my will that the business continue after my death so that my employees would have employment until their retirement.
The executor of the will, William Peele, was appointed Commissioner of the Court to sell the mill in March of 1991. Due to upset bids, five sales of the property were held. During the fourth sale, the executor was informed of the 1990 tank removal by Mr. Bailey. Mr. Peele stated at both the fourth sale and the last sale on July 26, 1991 that the estate would be responsible for seeing that the site was clean. The sale price, $250,500.00, was escrowed pending site assessment.
On August 14, 1991 Law Engineering was hired to do a site assessment. Contamination was found and Law Engineering continued assessment by installing monitoring wells. At a meeting at the Clerk of Court’s office on October 15, 1992, Mr. Peele learned for the first time of the duty to report the release to the State. In December of 1992 the release was reported by Mr. Peele when he delivered a copy of Law’s report concerning the site. As of March, 1993 the cleanup was reported to be nearly complete. The estate applied for reimbursement from the State Commercial Leaking Underground Storage Tank Fund.
LAWS APPLICABLE TO THE CLAIM
The Commercial Leaking Underground Storage Tank Fund ("the fund") was established by Part 2A, Article 21A of Chapter 143 of the General Statutes. Owners or operators of tanks are eligible for reimbursement of costs deemed reasonable and necessary by the Department subject to a deductible. It is necessary to review the law of estates to determine whether the executor may make a claim on the fund as an "owner or operator" since the tanks were removed prior to Mr. Abbitt’s death.
Chapter 28A of the General Statutes governs the administration of decedent’s estates. In that Chapter, the term "personal representative" is used in lieu of executor, as provided in G.S. §28A1-1(5), and that term is used below instead of executor.
The power of the personal representative commences at the time of his appointment. G.S. §28A13-1. Basically, the personal representative serves in a fiduciary capacity and has such powers as are conferred by statute and the will. G.S. §28A-13-2. Extensive powers are granted to the personal representative by G.S. §28A-13-3. Among the relevant powers of the personal representative are the powers to take possession, custody or control of personal property; to abandon or relinquish rights in valueless property; to employ attorneys or agents to advise him; to continue business operations of the decedent; to sell or lease personal or real property; and to distribute assets as authorized by the will. G.S. §28A-13-3(a). Prior to exercising possession, custody or control over real property, the personal representative must petition the Clerk of Court to obtain an order authorizing his possession, custody or control. G.S. §28A-13-3(c). Finally, all demands whatsoever against the decedent, and the right to prosecute or defend any actions in favor of the decedent, survive to and against the personal representative. G.S. §28A-18-1(a). The contamination may be said to be a liability of the real property. If such claim is contingent or unliquidated, the clerk of court may provide for payment of the claim. G.S. §28A-19-5.
APPLICATION OF LAW TO FACTS
Estate as "owner or operator" The first issue to be addressed is whether the estate may be considered an "owner or operator" within the meaning of G.S. §143-215.94B in order to recover from the fund. Put simply, the issues are: (1) whether the estate can step into the shoes of the decedent as owner or operator and (2) if so, was the decedent eligible to participate in the fund.
The answer to the first question is that the estate would be liable for cleanup to the same extent as the decedent pursuant to G.S. §28A-18-1(a), and, likewise, would be able to claim any right to the fund to which the decedent was entitled. This moves us to the crucial inquiry in the instant matter — was W. O. Abbitt eligible. Generally, an owner or operator of a tank may not recover from the fund unless the release is discovered or reported within 120 days of the removal of the tanks. G.S. §143-215.94B(b). In this case more than 120 days elapsed between the removal of the tanks and the report. The issue then becomes whether there is sufficient evidence that the release was "discovered" within 120 days of the tank removal. The facts as to this point reveal that a petroleum odor was detected at the time of the tank removal and that the levels of semi-volatile contamination found more than a year later were high.
In several cases now in litigation DEM has taken the position that the tank owner or operator should have known about the release when the tanks were removed based on the high levels of contamination at the time of the tank removal. In those cases DEM has taken the position that the tank owner or operator is disqualified from recovery under the fund because the release was discovered prior to June 30, 1988. G.S. §143-215.94N(a). Applying the same logic to the same term as used in G.S. §143-215.94(B)(b), it should be concluded that the Abbitt Mill release was discovered within 120 days of the tank removal based on the levels of soil contamination found at the site a year later. This interpretation is also compelled by the definition of "discovered release" in 15A NCAC 2P .0202(b)(4) which includes "a release which an owner or operator … has a reasonable basis for knowing has occurred."
Daniel C. Oakley Senior Deputy Attorney General
Philip A. Telfer
Special Deputy Attorney General