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United States v. Delek Logistics Operating, LLC

United States District Court, W.D. Arkansas

November 8, 2019

UNITED STATES OF AMERICA and STATE OF ARKANSAS Plaintiffs,
v.
DELEK LOGISTICS OPERAITNG, LLC, and SALA GATHERING SYSTEMS, LLC, Defendants.

          DUANE (DAK) KEES United States Attorney Western District of Arkansas

          MARK W.WEBB Assistant United States Attorney Western District of Arkansas

          BRUCE S. GELBER Date Deputy Assistant Attorney General Environment and Natural Resources Division

          ANNA GRACE Trial Attorney Environmental Enforcement Section Environment and Natural Resources Division

          Misty Foy, Esq., Dara Hall, Esq., Robert J. Looney, Esq., Todd Lopez, LeAnn Johnson Koch, Esq.

          CONSENT DECREE

         TABLE OF CONTENTS

         I. JURISDICTION AND VENUE......................................................................... 3

         II. APPLICABILITY.................................................................................. 4

         III. DEFINITIONS................................................................................................................... 5

         IV. CIVIL PENALTY............................................................................................................................7

         V. INJUNCTIVE RELIEF....................................................................................................................8

         VI. REPORTING REQUIREMENTS..................................................................................................12

         VII. STIPULATED PENALTIES.........................................................................................................14

         VIII. FORCE MAJEURE........................................................................................................................18

         IX. DISPUTE RESOLUTION.............................................................................................................20

         X. INFORMATION COLLECTION AND RETENTION.................................................................23

         XI. EFFECT OF SETTLEMENT/RESERVATION OF RIGHTS.............................................. 25

         XII. COSTS............................................................................................................... 27

         XIII. NOTICES......................................................................................................... 27

         XIV. EFFECTIVE DATE.......................................................................................................................30

         XV. RETENTION OF JURISDICTION........................................................................................... 30

         XVI. MODIFICATION...........................................................................................................................30

         XVII. TERMINATION............................................................................................................................31

         XVIII. PUBLIC PARTICIPATION......................................................................... 31

         XIX. SIGNATORIES/SERVICE....................................................................................... 32

         XX. INTEGRATION.............................................................................................................................32

         XXI. FINAL JUDGMENT.................................................................................................................... 33

         XXII. 28 U.S.C. SECTION 162(F)(2)(A)(II) IDENTIFICATION..........................................................33

         XXIII. APPENDICES......................................................................................................................... 41

         WHEREAS, Plaintiffs United States of America, on behalf of the United States Environmental Protection Agency ("EPA"), and the State of Arkansas (the "State" or "Arkansas"), on behalf of the Arkansas Department of Environmental Quality ("ADEQ"), have filed a complaint and amended complaint in this action alleging that Delek Logistics Operating, LLC ("Delek Logistics"), and SALA Gathering Systems, LLC ("SALA") ("Defendants"), violated Sections 301(a) and 311(b)(3) of the Clean Water Act ("CWA" or "Act"), 33 U.S.C. §§ 1311 (a) and 1321 (b)(3), and violated certain provisions of the Spill Prevention Control and Countermeasure ("SPCC") regulations, 40 C.F.R. Part 112. The Complaint also alleges that Defendants violated the Arkansas Hazardous Waste Management Act ("AHWMA"), Ark. Code Ann. §§ 8-7-201 - 227, and the Arkansas Water and Air Pollution Control Act, Ark. Code Ann. §§ 8-4-101 - 409, and APC&EC Regulations 2.409 and 2.410;

         WHEREAS, the Complaint alleges that beginning on March 8, 2013, Defendants discharged crude oil into waters of the United States and waters of the State from Defendants' oil pump station and storage tank facility located in Magnolia, Arkansas (the "Magnolia Facility"). The United States asserts in the Complaint three claims for relief related to the discharge of oil and the failure to design and maintain adequate containment and spill prevention at the Magnolia Facility. Arkansas, joining the Complaint as a co-plaintiff, asserts two claims for relief related to the discharge of oil and the alleged improper manifesting, transportation, and disposal of hazardous wastes;

         WHEREAS, Defendants assert that subsequent to the oil spill in 2013, they, or their affiliated entities, undertook the following actions at the Magnolia Facility: (1) installed or enhanced berms and graded soil to ensure oil spills occurring outside of tank containment would flow into an existing containment pond ("East Pond"); (2) increased secondary containment capacity of East Pond to approximately 4, 800 barrels; (3) removed all in ground strainers and replaced them with above ground strainers; (4) installed supervisory control and data acquisition ("SCADA") monitored leak detection meters on pipelines; (5) installed SCADA monitored gages and high level alarms on all production tanks; (6) installed 24-hour hydrocarbon monitors and/or infrared video cameras for leak detection; (7) installed pressure transmitters to the suction side of all product discharge pumps; (8) installed SCADA controlled, electronically operated isolation valves to the discharge side of all product discharge pumps; (9) installed alarms on seal leak detectors at pumps and on pump sumps; (10) converted an existing warehouse in the vicinity of Magnolia Facility to store emergency response equipment for Delek's and its affiliated entities' operations in southern Arkansas; (11) tested station piping to three times the normal operating pressure and is bringing underground lines aboveground for ease of inspection going forward; (12) tested or inspected all check valves on pump discharges and installed motor operated valves as a back-up to the check valves; and (13) is implementing a "dead leg" removal program;

         WHEREAS, Delek Logistics Partners, LP ("Delek Partners"), the parent corporation of Delek Logistics and SALA and the owner/operator identified in the SPCC and FRP plans for the Magnolia Facility, joins as a party to the Consent Decree for purposes of fulfilling the Consent Decree obligations with respect to SPCC and FRP regulations;

         WHEREAS, EPA conducted an inspection of the Magnolia Facility and reviewed the Magnolia Facility's SPCC and FRP plans on October 15 and 19, 2018, respectively. On November 9, 2018, and March 8, 2019, EPA notified Defendants of alleged SPCC and FRP violations at the .Magnolia Facility that are in addition to the SPCC violations alleged in the Complaint and further described in Appendix A to this Consent Decree ("Magnolia Facility Additional Alleged SPCC and FRP Violations"). Defendants and Delek Partners (hereinafter "Delek") do not admit or deny the additional alleged SPCC and FRP violations described in Appendix A (the "Additional Alleged Violations"), but agreed to and have taken steps to address them. A description of the work undertaken by Delek to address the Additional Alleged Violations is set forth in Appendix B to this Consent Decree ("Description of Work Completed by Delek to Address Additional Alleged SPCC and FRP Violations"). Delek Partners has submitted to EPA a compliance certification, attached as Appendix C to this Consent Decree, certifying under penalty of law that the work described in Appendix B has been completed;

         WHEREAS, Defendants filed an answer to the Complaint denying any liability to the United States or Arkansas arising out of the claims alleged in the Complaint and Delek Partners is not a party to the Complaint and does not admit or deny the allegations in the Complaint;

         WHEREAS, the Parties recognize, and the Court by entering this Consent Decree finds, that this Consent Decree has been negotiated by the Parties in good faith and will avoid litigation among the Parties and that this Consent Decree is fair, reasonable, and in the public interest;

         NOW, THEREFORE, before the taking of any testimony, without the adjudication or admission of any issue of fact or law except as provided in Section 1 and with the consent of the Parties, IT IS HEREBY ADJUDGED, ORDERED, AND DECREED as follows:

         I. JURISDICTION AND VENUE

         1. This Court has jurisdiction over the subject matter of this action, pursuant to 28 U.S.C. §§ 1331, 1345, and 1355, and Sections 309(b) and 311(b)(7)(E) of the Act, 33 U.S.C. §§ 1319(b) and 1321(b)(7)(E), and over the Parties. This Court has jurisdiction over Delek Partners and Delek Partners' obligations in this Consent Decree, pursuant to the All Writs Act, 28 U.S.C. § 1651, and Fed. R. Civ. Proc. 19(a), because its cooperation is necessary for implementation of this Consent Decree. This Court has supplemental jurisdiction over the State law claims asserted by the State pursuant to 28 U.S.C. § 1367. Venue lies in this district pursuant to Sections 309(b) and 311(b)(7)(E) of the Act, 33 U.S.C. §§ 1319(b), 1321(b)(7)(E), and 28 U.S.C. §§ 1391(b) and 1395(a), because the violations alleged in the Complaint are alleged to have occurred in, and Defendants conduct business in, this judicial district. For purposes of mis Decree, or any action to enforce this Decree, Delek consents to this Court's jurisdiction over this Decree and any such action to enforce this Decree and over Delek, and Delek consents to venue in this judicial district.

         2. For purposes of this Consent Decree, Delek agrees that the Complaint states claims upon which relief may be granted pursuant to Sections 301(a), 309(b), and 311(b) of the Act, and 40 C.F.R. Part 112.

         II. APPLICABILITY

         3. The obligations of this Consent Decree apply to and are binding upon the United States and Arkansas, and upon Delek, and any successors, assigns, or other entities or persons otherwise bound by law.

         4. No. transfer of ownership or operation of the Facilities, whether in compliance with the procedures of this Paragraph or otherwise, shall relieve Delek of its obligation to ensure that the terms of the Decree are implemented. At least 30 Days prior to such transfer, Delek shall provide a copy of this Consent Decree to the proposed transferee and shall simultaneously provide written notice of the prospective transfer, together with a copy of the proposed written agreement, to EPA Region 6, the United States Attorney for the Western District of Arkansas, the United States Department of Justice, and the State of Arkansas, in accordance with Section XIII (Notices). Any attempt to transfer ownership or operation of the Magnolia Facility without complying with this Paragraph constitutes a violation of this Decree.

         5. Delek shall provide a copy of this Consent Decree to all officers, employees, and agents whose duties might reasonably include compliance with any provision of this Decree, as well as to any contractor retained to perform work required under this Consent Decree. Delek may fulfill the requirement to provide such persons with a copy of the Decree by including the Consent Decree on a website or database to which such persons have access, and by providing such persons with notice of the location of the Decree and a url or other electronic link that displays an electronic copy of the Decree. Delek shall condition any contract to perform work required under this Consent Decree upon performance of the work in conformity with the terms of this Consent Decree.

         6. In any action to enforce this Consent Decree, Delek shall not raise as a defense the failure by any of its officers, directors, employees, agents, or contractors to take any actions necessary to comply with the provisions of this Consent Decree.

         III. DEFINITIONS

         7. Terms used in this Consent Decree that are defined in the Act or in regulations promulgated pursuant to the Act shall have the meanings assigned to them in the Act or such regulations, unless otherwise provided in mis Decree. Whenever the terms set forth below are used in this Consent Decree and Appendices, the following definitions shall apply:

"ADEQ" shall mean the Arkansas Department of Environmental Quality and any of its successor departments or agencies;
"Arkansas" shall mean the State of Arkansas;
"Complaint" shall mean the complaint and amended complaint filed by the United States and Arkansas in this action;
"Consent Decree" or "Decree" shall mean this Decree and all appendices attached hereto (listed in Section XXIII (Appendices));
"Date of Lodging" shall mean the date when this Consent Decree is filed with the Court;
"Day" shall mean a calendar day unless expressly stated to be a business day. In computing any period of time under this Consent Decree, where the last day would fall on a Saturday, Sunday, or federal holiday, the period shall run until the next business day;
"Defendants" shall mean Delek Logistics Operating, LLC, and SALA Gathering Systems, LLC;
"Delek Partners" shall mean Defendants' parent corporation, Delek Logistics Partners, LP.
"Delek" shall mean Delek Logistics Operating, LLC, SALA Gathering Systems, LLC, and Delek Logistics Partners, LP;
"EPA" shall mean the United States Environmental Protection Agency and any of its successor departments or agencies;
"Effective Date" shall have the definition provided in Section XIV;
"El Dorado Facility" shall mean the office and warehouse located at 1001 School Street, in El Dorado, Arkansas;
"FRP" shall mean the Facility Response Plan as defined in 40 C.F.R. Part 112;
"Magnolia Facility" shall mean the oil pump station and storage tank facility located at 800 Columbia Road 25, near Magnolia, Arkansas;
"Paragraph" shall mean a portion of this Decree identified by an arabic numeral;
"Parties" shall mean the United States, Arkansas, and Delek;
"Section" shall mean a portion of this Decree identified by a roman numeral;
"State" or "Arkansas" shall mean the State of Arkansas;
"United States" shall mean the United States of America, acting on behalf of EPA.

         IV. CIVIL PENALTY

         8. Within 30 Days after the Effective Date, Defendants shall pay to the United States the sum of $1, 705, 460.00 as a civil penalty, together with interest accruing from January 25, 2019, at the rate specified in 28 U.S.C. § 1961 on the Date of Lodging.

         9. Defendants shall pay the civil penalty due by FedWire Electronic Funds Transfer ("EFT") to the U.S. Department of Justice account, in accordance with instructions provided to Defendants by the Financial Litigation Unit ("FLU") of the United States Attorney's Office for the Western District of Arkansas after the Effective Date. The payment instructions provided by the FLU will include a Consolidated Debt Collection System ("CDCS") number, which Defendants shall use to identify all payments required to be made in accordance with this Consent Decree. When making the payment, Defendants shall specify that the payment is made for CWA civil penalties to be deposited into the Oil Spill Liability Trust Fund pursuant to 33 U.S.C. § 132 l(s) and 26 U.S.C. § 9509(b)(8). The FLU will provide the payment instructions to:

Misty Foy, Esquire
Senior Counsel
Delek Logistics Operating, LLC
(615)435-1431
misty.foy@delekus.com and
legalnotices@delekus.com

         on behalf of Defendants. Defendants may change the individual to receive payment instructions on their behalf by providing written notice of such change to the United States and EPA in accordance with Section XIII (Notices).

         At the time of payment, Defendants shall send notice that payment has been made: (1) to EPA via email at cinwdacctsreceivable@epa.gov or via regular mail at EPA Cincinnati Finance Office, 26 W. Martin Luther King Drive, Cincinnati, Ohio 45268; (2) to the United States via email or regular mail in accordance with Section XIII; and (3) to EPA in accordance with Section XIII. Such notice shall state that the payment is for the civil penalty owed pursuant to the Consent Decree in United States and State of Arkansas v. Delek Logistics Operating, LLQ and SALA Gathering Systems, LLC, and shall reference the civil action number, the CDCS Number, and DOJ case No. 90-5-1-1-11308.

         10. Defendants shall not deduct any penalties paid under this Decree pursuant to this Section or Section VII (Stipulated Penalties) in calculating its federal or State income tax, 11. No. later than 30 Days after the Effective Date, Defendants shall pay $550, 000.00 as civil penalties to Arkansas for deposit into the Hazardous Substance Remedial Action Trust Fund, in accordance with Ark. Code Ann. § 8-7-509(c)(2).

         12. Payment shall be made by check or EFT in accordance with instructions to be provided to Defendants. If by check, the check shall be made payable to the Arkansas Department of Environmental Quality, referencing Action No. 7322 and mailed to:

Attn: J. Michael Bynum
Fiscal Division, ADEQ
5301 Northshore Drive
North Little Rock, ARK 72118-5317
BynumJ@adeq.state.ar.us

         V. INJUNCTIVE RELIEF

         13. The compliance requirements set forth in Paragraphs 14 to 18 below, and as further set forth in Appendix D to this Consent Decree, shall apply to the Magnolia Facility, and, where specified, to the El Dorado Facility.

         14. Delek shall not use Tank 364 inconsistent with its status as permanently closed, as defined by the regulation at 40 C.F.R. § 112.2, unless, prior to such use, Delek provides adequate secondary containment for Tank 364.

         15. Confirmatory Sampling. Within 180 days of the Date of Entry of the Consent Decree, Defendants shall conduct confirmatory sampling on the unnamed creek and Little Comie Bayou, from the point of discharge to the location of the third (furthest downstream) weir installed during the response activities, according to the requirements below.

a. Defendants shall collect one sample each of surface water (if water is present in the creek), soil, and sediment at quarter mile intervals.
b. The soil samples shall be collected along the creek bank and the sediment samples shall be collected along the creek bed, at depths up to 48 inches using a hand auger.
c. Defendants shall have the samples analyzed for oil and grease and compare those results against Arkansas Water Quality Standards, APCE&EC Reg. 2.510 for oil and grease (15 mg/1).
d. Defendants shall have the soil and sediment samples analyzed for benzene, toluene, ethylbenzene, and xylene, and compare those results against the following:

Industrial (ppm)

Benzene

5.1

Toluene

47, 000

Ethyl Benzene

25

Xylene

2500

e. Defendants shall submit the sample results to ADEQ within 30 days of receipt of the lab report. If the sample results indicate no exceedances for benzene, toluene, ethylbenzene, or xylene, and oil and grease as indicated in subparagraph 15.c and d above, Defendants will have no further obligation to perform sampling or remediation related to the release under this Consent Decree.
f. If the sample results indicate an exceedance for benzene, toluene, ethylbenzene, or xylene or for oil and grease as indicated in subparagraph 15.c and d above attributable to the release, Defendants shall conduct a screening level risk assessment. The screening level risk assessment shall be submitted to ADEQ within 90 days of the submission of the sample results.
g. If the screening level risk assessment indicates that there is a potentially unacceptable human health or ecological risk, Defendants shall submit a site specific risk assessment and, if justified by the site specific risk assessment, a plan for monitoring or remedial action within 90 days after the submission of the screening level risk assessment. Any plan for monitoring or remediation shall take into consideration the level of potential risk posed by remaining residual compounds, natural attenuation and future biodegradation of organic compounds, and potential ecological impacts caused by remediation.
h, Defendants shall begin implementation of the site specific monitoring/ remediation plan within 90 days of ADEQ approval.
i. If the screening level risk assessment indicates that there is no potentially unacceptable human health or ecological risk, Defendants shall have no further obligation to conduct sampling or perform remedial action related to the release under this Consent Decree.

         16. Spill Response Training. Defendants shall provide spill response training annually to all employees that work at the Magnolia Station. Within one year of the entry of this Consent Decree, Defendants shall provide supplemental training to designated first responders. This supplemental training shall be in addition to other regularly scheduled training under existing requirements or company protocols and shall be conducted for at least three (3) years. The supplemental training shall include participation in hands-on spill response field activities and strategies. Additionally, within one year of the entry of the Consent Decree and every other year after, Defendants shall conduct training and/or planning exercises with state and local emergency response agencies. Defendants shall submit to EPA and ADEQ by July 31 of each year a summary letter report documenting the spill response training and the supplemental spill response training described above for the year prior. At a minimum, the report must include the names of attendees, the dates and locations of the training, and a summary of the training conducted.

         17. Spill Response Materials Caches. Within 180 days after the Date of Entry of this Consent Decree, Defendants shall assemble and place caches of spill response materials and equipment at the Magnolia and El Dorado Facilities, in spill response trailers at each facility. The equipment and supplies in the caches shall be sufficient for emergency response actions at those facilities and shall include, but not be limited to, the quantities and types of equipment listed in Appendix D to this Consent Decree. Defendants annually shall check the inventory of each cache and confirm each cache is in place and complete. For the three years after the entry of this Consent Decree, Defendants shall submit to EPA and ADEQ on July 31 a summary letter report documenting the status of each cache.

         18. Where any compliance obligation under this Section requires Delek to obtain a federal, state, or local permit or approval, Delek shall submit timely and complete applications and take all other actions necessary to obtain all such permits or approvals. Delek may seek relief under the provisions of Section VIII (Force Majeure) for any delay in the performance of any such obligation resulting from a failure to obtain, or a delay in obtaining, any permit or approval required to fulfill such obligation, if Delek has submitted timely and complete applications and have taken all other actions necessary to obtain all such permits or approvals.

         VI. REPORTING REQUIREMENTS

         19. In addition to any other reporting requirements under this Decree, on January 3 ] (for the reporting period July 1 - December 31) and on July 31 (for the reporting period (January 1-June 30) of each calendar year, starting with the earliest of these dates following the Effective Date of this Consent Decree, Delek shall submit to the United States and Arkansas a semi-annual report (paper or electronic copy) containing the following information:

a. A description of activities occurring the previous semi-annual period relevant to this Consent Decree that includes, but is not limited to, the status of implementation of the Consent Decree requirements; and
b. A description of any non-compliance with the requirements of this Consent Decree, and an explanation of the violation's likely cause and of the remedial steps taken, or to be taken, to prevent or minimize such violation.

         20. If Delek violates, or has reason to believe that it may violate, any requirement of this Consent Decree, Delek shall notify the United States and Arkansas of such violation and its likely duration, in writing, by facsimile or email, within ten business days of the Day Delek first becomes aware of the violation, with an explanation of the violation's likely cause and of the remedial steps taken, or to be taken, to prevent or minimize such violation. If the cause of a violation cannot be fully explained at the time the report is due, Delek shall so state in the report. Delek shall investigate the cause of the violation and shall then submit an amendment to the report, including a full explanation of the cause of the violation, within 30 Days of the Day Delek becomes aware of the cause of the violation. Nothing in this Paragraph or the following Paragraph relieves Delek of its obligation to provide the notice required by Section VIII (Force Majeure), 21. Whenever any violation of this Consent Decree or any other event affecting Delek's performance under this Decree, or the performance of the Magnolia Facility, may pose an immediate threat to the public health or welfare or the environment, Delek shall notify EPA and Arkansas orally and by electronic transmission as soon as possible, but no later than 24 hours after Delek first knew of the violation or event. This notification requirement is in addition to the requirements set forth in the preceding Paragraph, and any other reporting obligations under law.

         22. All submissions required under this Decree are Reports subject to the requirements of Paragraphs 23 through 27, and the stipulated penalty provisions under Paragraph 31.

         23. All Reports shall be submitted to the persons designated in Section XIII (Notices).

         24. Each Report submitted under this Section shall be signed by an officer or other authorized representative of the submitting party and include the following certification:

1 certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system, or those persons directly responsible for gathering the information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete, I have no personal knowledge that the information submitted is other than true, accurate, and complete, I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations.

         25. This certification requirement does not apply to emergency or similar notifications where compliance would be impractical.

         26. The reporting requirements of this Consent Decree do not relieve Defendants or Delek Partners of any reporting obligations required by the Act or implementing regulations, or by any other federal, state, or local law, regulation, permit, or other requirement.

         27. Any information provided pursuant to this Consent Decree may be used by the United States and the State in any proceeding to enforce the provisions of this Consent Decree and as otherwise permitted by law.

         VII. STIPULATED PENALTIES

         28. Defendants and Delek Partners shall be liable for stipulated penalties to the United States and Arkansas for violations of this Consent Decree as specified in Paragraphs 29-31 below, unless excused under Section VIII (Force Majeure). A violation includes failing to perform any obligation required by the terms of this Decree according to all applicable requirements of this Decree and within the specified time schedules established by or approved under this Decree.

         29. Late Payment of Civil Penalty. If Defendants fail to pay a civil penalty required to be paid under Section IV (Civil Penalty) when due, Defendants shall pay a stipulated penalty of $2, 500 per Day for each Day that each payment is late. For purposes of this Paragraph, if Defendants fail to pay the civil penalty owed to the United States, Defendants shall pay such stipulated penalty to the United States; if Defendants fail to pay the civil penalty owed to Arkansas, Defendants shall pay such stipulated penalty to Arkansas.

         30. Compliance Milestones. The following stipulated penalties shall accrue per violation per Day for each violation described in this Paragraph 30:

Penalty Per Violation Per dav Period of Noncomnliance
$500..................................................1st ...

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