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I Mr. 'Dan Moe ' August 14, 1987 Page 2 As discussed with Mr. Meckler, the existence of a bankruptcy proceeding does not stop a government agency from issuing orders to require compliance with health and safety laws. The federal courts have clearly affirmed the power of an agency, such as the Health District, to issue a compliance order in a case such as this, e.g. , In re Quanta Resources Corp. , 739 F.2d 912 (3rd Cir. 1984) . — In addition to Energy Petroleum, the Bank of Stockton also qualifies as an "owner" or "operator" within the definition of the Health & Safety Code. The enclosed bankruptcy papers shows that the Bank is listed as having a security interest in the equipment and fixtures belonging to Energy Petroleum, which includes the underground storage tanks located on Port property and owned by Energy Petroleum. Further, when Energy Petroleum ceased to do business the Bank "stepped into the shoes" -Energy Petroleum's shoes, began making the monthly lease payments on the property, and proceeded to take possession of_assets bf Energy. Petroleum for purposes of .seiiing them. The extent to which the tanks may have been operated while under Bank control has not yet been determined. Because the Bank was unable to sell the bulk plant and underground storage tanks, the Bank has attempted to abandon them. the ground storae tanksank by reason is exercise held ible of",: sor the securitydinterest g However, Y 'interests and voluntary possession, hotemporary, of the tanks. - _._� _.._.,. wever w_..,_....._...�,._ . . - - - - Our present understanding is that no permits have been issued to any underground tanks on the Energy Petroleum property. Additionally, such requirements as precision testing, pipeline leak testing, dispenser meter calibrations .!and quarterly statements have never been met by Energy , Petroleum. You have also informed us that if the ":tanks owned by Energy Petroleum are empty, then the proper agency to order their closure or removal is the fire department. This would be done through the issuance of a 90-day notice, which if unheeded will be turned over to the District Attorney for further action. If the tanks still contain product, then your- department will handle the matter. You indicated that you will begin taking such actions in mid-August to resolve this matter in cooperation with the District Attorney's office. As set forth above, and as confirmed by the enclosed documentation, the Port is neither the owner nor the operator of