Order No. P.941004
IN THE MATTER of Section 46 of the Petroleum Products Act, R.S. P.E.I. 1988, Cap. P-5.1
- and -
IN THE MATTER of alleged non-compliance by LOWELL H. STEAD with Regulation No. 18 made under the Petroleum Products Act, supra, in respect of the operation of the Shell Canada Products Limited bulk storage plant at MONTAGUE.
Tuesday, the 4th day of October, A.D., 1994
BEFORE
Linda Webber, Chairman
Myrtle Jenkins-Smith, Commissioner
Decision and Order
Appearances and Witnesses
Participants in the hearing and the parties for whom they appeared were as follows:
FOR LOWELL STEAD INC. (LOWELL H. STEAD) - RESPONDENT:
Counsel:
Mr. Eugene P. RossiterAppearance:
Mr. Lowell H. Stead
FOR THE COMMISSION:
(Mrs.) H. Doris Pursey, Director - Petroleum Division
Mr. Harry MacDonald (Witness) - Assistant to Director - Petroleum Division
RECORDING SECRETARY:
(Mrs.) Faye Weeks
Decision
I. INTRODUCTION
On the 24th day of August, 1994, the Director of the Petroleum Division of the Island Regulatory and Appeals Commission ("the Commission") issued a Notice of Hearing concerning alleged non-compliance of Regulation No. 18 made under the Petroleum Products Act, supra by Lowell H. Stead in respect of the operation of the Shell Canada Products Limited bulk storage plant at Montague. The alleged non-compliance related to the dispensing of motor fuels into the fuel supply system of vehicles from the loading rack of the above-mentioned Shell bulk plant operated by Lowell Stead Inc. (Lowell Stead) at Montague under Petroleum Products License No. R4033-00 (Retail-Distributor - Bulk Storage) issued under the Petroleum Products Act, supra. Lowell Stead Inc. (Lowell H. Stead) is also the holder of Petroleum Products License No. R4037-00 (Retail-Distributor - No Bulk Storage) issued under the Act. This Notice indicated that a show cause hearing was to commence on Thursday, the 22nd day of September, 1994 at the hour of 9:00 a.m. in the Hearing Room of the Commission. This Notice of the hearing was served on Lowell H. Stead by Mr. Harry MacDonald, Commission Staff Member, on 25 August 1994, and a copy of this same Notice was forwarded by certified mail on 26 August 1994 to Shell Canada Products Limited (owner and supplier of the outlet), Atlantic Marketing Centre, 35 MacDonald Avenue, Dartmouth, Nova Scotia B3B 1C6 (Att'n.: Mr. Richard Latimer, Area Manager - Atlantic District).
II. EVIDENCE
Eight documents were identified as Exhibits at this hearing by the Chairman on behalf of the Petroleum Division with regard to the matters before the Commission, and no objection was raised by the Respondent with respect to the admission of any of them. Mr. Harry MacDonald, Assistant to the Director of the Petroleum Division, gave evidence that on 16 August 1994 at approximately 3:15 p.m., the fuel supply system of a pulp transport truck bearing P.E.I. License Plate No. TV 362, Tag No. 201530, was being fueled at the loading rack of the Shell Canada Products Limited bulk storage plant located at Montague, P.E.I. (as set out in Exhibit 3), and that he investigated further and determined that this was not an isolated incident, and that during the period 2 to 10 August 1994, there had been at least eighteen incidents of similar non-compliance of Regulation No. 18 (as set out in Exhibit No. 5). Mr. MacDonald also testified that in the situation indicated in Exhibit 3, the operator of the truck was in control of the actual fuelling. These matters of non-compliance had been discussed with Mr. Stead at the outlet on 16 August 1994, and confirmed in a letter dated 23 August 1994 (Exhibit 6). Mr. MacDonald also stated that he expected Mr. Stead knew of the rule because in previous years, he had seen posted on the wall of Mr. Stead's outlet a letter from the Public Utilities Commission which stated that wheeled vehicles could not legally be fueled at that outlet. Mr. MacDonald testified that when these alleged violations were referred to the Commission, on the information then before it, the Commission decided that it would be necessary to fix a date and time for a show cause hearing.
Mr. Rossiter acknowledged the facts as stated with respect to the non-compliance set out by the Commission's witness in all cases cited, and spoke to the matter of penalty. Mr. Rossiter asked for a lenient penalty, suggesting that a warning would be sufficient, and also suggesting that the desire for this service indicated by those who purchased the fuel should be taken into account when assessing the seriousness of the breach of the Regulation. During the course of Mr. Rossiter's remarks, it came to light that Mr. Stead has continued to violate this Regulation to the present time, even after his discussions with Mr. MacDonald and receipt of the letter (Exhibit No. 6) and the Notice of Hearing (Exhibit No. 7). Mr. Stead was asked to confirm to the Commission on record that he would discontinue this practice immediately, which he did.
No representative of Shell Canada Products Limited, owner and supplier of the bulk plant operated by Lowell H. Stead, appeared at the hearing, nor was the Commission contacted by any representative of the Company with regard to the above-noted non-compliance. The receipt of the Notice of Hearing, however, was acknowledged by a Company representative by signature on the registration card on 30 August 1994.
III. BACKGROUND/LEGISLATION
Section 19 of the Petroleum Products Act reads as follows:
"The Commission (the Island Regulatory and Appeals Commission) may from time to time designate the form, the method of dispensing and the class or classes of licenses which may be issued."
One of these classes of license is "Retail-Distributor". Generally speaking, retail-distributors are licensed under the Act to distribute motor fuels and heating fuels from bulk plants with licensed tank trucks to fixed storages of retail dealers and ultimate consumers.
Regulation No. 18 made under the Petroleum Products Act reads as follows:
"No retail distributor shall deliver fuel directly to the fuel supply system of any vehicle required to be registered under the Highway Traffic Act R.S.P.E.I. 1988, Cap. H-5."
This Regulation exists due, in part, to the potential hazards which are associated with this type of activity if not performed from properly controlled and equipped sites.
Regulation No. 1 (1) reads as follows:
"Every licensee shall comply with the provisions of the Act and these regulations, and shall conduct its business or exercise its privileges in accordance with the class, terms, conditions and restrictions of the license under which it operates."
Several other Regulations under the Act come into play and spell out certain requirements of retailers who are licensed to deliver motor fuels directly into fuel supply systems of vehicles. For instance, some of the other pertinent Regulations are as follows:
Regulation No. 2 (1) - (Petroleum Products Act)
"Every licensee shall comply with the Fire Prevention Act R.S.P.E.I. 1988, Cap. F-11, and the regulations, codes and standards adopted thereunder." (NOTE: These codes include the National Fire Protection Association Standards No. 30 and 30A.).
NFPA Standard 30 entitled "Flammable and Combustible Liquids Code" cites the following definitions of "Bulk Plant or Terminal" and "Automotive Service Station":
"Bulk Plant or Terminal". That portion of a property where liquids are received by tank vessel, pipelines, tank car, or tank vehicles and are stored or blended in bulk for the purpose of distributing such liquids by tank vessel, pipeline, tank car, tank vehicles, portable tank, or container.
"Automotive Service Station". That portion of a property where liquids used as motor fuels are stored and dispensed from fixed equipment into the fuel tanks of motor vehicles and shall include any facilities available for the sale and service of tires, batteries and accessories and for minor automotive maintenance work. Major automotive repairs, painting and body and fender work are excluded.
NFPA 30A "Automotive and Marine Service Station Code" defines "Bulk Plant or Terminal" identical to the above, and "Automotive Service Station" is defined in slightly broader terms, as follows:
"Automotive Service Station". That portion of a property where liquids used as motor fuels are stored and dispensed from fixed equipment into the fuel tanks of motor vehicles or approved containers and shall include any facilities for the sale and service of tires, batteries, and accessories. This occupancy designation shall also apply to buildings, or portions of buildings, used for lubrication, inspection and minor automotive maintenance work, such as tune-ups, and brake system repairs. Major automotive repairs, painting, and body and fender work are excluded.
These codes set out various standards to be met with respect to the type and location of equipment and operation thereof at the several types of outlets defined.
The following Regulations under the Petroleum Products Act are also significant in this matter:
Regulation No. 2 (3) - (Petroleum Products Act)
"No motor fuel shall be dispensed through a nozzle which is not in accordance with the requirements of the Fire Prevention Act and the Island Regulatory and Appeals Commission."
Regulation 14 - (Petroleum Products Act)
"14 (1) All pumps used at retail outlets shall be of a type approved by the Department of Consumer and Corporate Affairs (Canada) and the Commission.
14 (2) No pump shall be used at a retail outlet unless it indicates the price per litre, the volume dispensed, and the total cost of the sale."
It should be noted that product pricing is regulated by the Commission and price is determined based on the grade of product and the class of outlet from which it is purchased.
IV. FINDINGS
The Commission has determined that at least nineteen breaches of Regulation 18 have taken place at the Shell Canada Products Limited bulk plant operated by Lowell Stead Inc. (Lowell H. Stead) at Montague under Petroleum Products License No. D4033-00 and/or by Lowell Stead Inc. (Lowell Stead) operating under Petroleum Products License No. R4037-00 issued by the Commission under the Petroleum Products Act, supra.
This determination is made based on the following:
1. Mr. MacDonald gave evidence establishing that eighteen breaches took place between the dates 2 and 10 August 1994 and another breach took place on 16 August 1994.
2. Mr. Stead's lawyer admitted that these breaches occurred.
The activities of Mr. Stead are considered by the Commission to be extremely dangerous, and indicate a lack of responsibility bordering upon gross negligence. Although there have been slight changes in the wording of Regulations over the years, the basic restriction of not permitting the fueling of vehicles at bulk plants has been in place for at least thirteen years, and should not come as a surprise to this licensee in view of earlier correspondence in this regard from the Commission. Mr. Stead has been licensed to operate the Shell Canada Products Limited bulk plant since 1973, and first applied for licensing to operate his own retail-distributor (no bulk storage) business under the Petroleum Products Act of this Province in October of 1972.
It is therefore of great concern to the Commission that such action has been taken by this operator, who is not only unlicensed to perform this service, but who, by allowing the uncontrolled fueling of at least one vehicle by the operator of that vehicle at a bulk storage plant, placed lives at risk. This risk comes from the design and nature of bulk plant outlets and the potential explosion that could be caused by uncontrolled sources of ignition being in close proximity to fuel dispensing of this type. For that reason, the Commission considers this non-compliance an extremely serious matter.
For a facility to be licensed to dispense motor fuels directly into fuel supply systems of motor vehicles, it must be properly equipped and staffed. Regulation No. 11 (2) (a) and (b) made under the Act requires every retailer of these fuels to at all times provide competent, trained pump attendants for the dispensing of motor fuels at manned outlets and at split-service outlets, and to provide competent, trained console operators to control the dispensing of motor fuels at self-serve outlets. The non-compliance with Regulation 18 which occurred on 16 August 1994 was further compounded by the fact that the operator of the vehicle was himself in charge of the actual fueling of the vehicle in question.
Adequate and competent staff is required to properly operate a motor fuels outlet, with activities beyond the actual fueling to include such things as accepting and recording deliveries and sales, doing dip readings, maintaining inventory records, etc. Requirements with respect to license classes are determined depending on what services are being offered. As well, there are problems created by unfair competition with properly licensed retailers because the price of the product would also be inappropriate for the retail situation.
Overall, the impression that has been left with the Commission is that prior to being brought to task over the violations referred to in this Order, the operator has knowingly violated the laws of the Province and shown serious disregard for the safe and proper operation of the facility which he controls. The Regulations made under the Petroleum Products Act and the Fire Prevention Act requirements are made for the purpose of ensuring that those handling these dangerous commodities do so properly and safely. The operator here has not appeared to understand or respect that these requirements are essential if this is to be achieved.
Order
THE COMMISSION HEREBY ORDERS AS FOLLOWS:
1. THAT a financial penalty of Two Thousand Dollars ($2,000.00) be paid by Lowell Stead Inc. (Lowell H. Stead) to the Commission within fifteen days of the issuance of this Order with regard to the above-noted breaches and that further non-compliance of the Petroleum Products Act and/or Regulations and Commission Orders may involve suspension or cancellation of a license or licenses in addition to any other penalties available under the Petroleum Products Act.
DATED at CHARLOTTETOWN this 4th day of OCTOBER, A.D., 1994.
BY THE COMMISSION:
Chairman
Commissioner