Accurate Asbestos Transport - Ruling, July 18, 1994
Ruling, July 18, 1994
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
In the matter of
the application of ACCURATE ASBESTOS TRANSPORT, INC.
for a permit to construct and operate a solid waste management facility;
permit to operate a process, exhaust, or ventilation system (Air Contamination Source)
pursuant to Environmental Conservation Law Article 3, Title 3 (General Functions);
Article 70 (Uniform Procedures);
Article 27, Title 7 (Solid Waste Management and Resource Recovery Facilities);
Article 19 (Air Pollution Control) and Article 8 (Environmental Quality Review);
and also pursuant to Title 6 of the Official Compilation of
Codes, Rules and Regulations of the State of New York (6 NYCRR)
Part 621 (Uniform Procedures); Part 624 (Permit Hearing Procedures);
Part 360 (Solid Waste); Part 212 (General Process Emission Sources);
Part 617 (State Environmental Quality Review)
RULINGS UPON PARTY
STATUS AND ISSUES
A Notice of Public Hearing dated December 9, 1993 was served upon all interested parties on or about December 9, 1993 and was thereafter published on December 13, 1993 in the New York City edition of the newspaper Newsday and published in the December 15, 1993 issue of the Department's Environmental Notice Bulletin.
The Notice of Hearing set a public legislative hearing for January 12, 1994 at 6:00 P.M. at the Red Hook Community Center, 71 Sullivan Street, Brooklyn, New York 11231 and set an issues conference for January 13, 1994 at 10:00 A.M. at the Department's Region 2 Offices, 47-40 21st Street, Long Island City, New York 11101.
At the public legislative hearing unsworn oral and written statements upon the application were received from members and representatives of the public, and at the issues conference the New York City Community Board Six and the Red Hook Civic Association (collectively "Intervenors") petitioned for party status upon a consolidated basis asserting that they each have raised substantive and significant issue(s) for adjudication and demonstrated that they each have adequate environmental interest in this matter (6 NYCRR 624.5(d)(1).
The Department and the Applicant claimed at the issues conference that there were no issues for adjudication and that the permits requested should be issued upon the conditions contained in the draft permits, also claiming that the Intervenors, while having an adequate environmental interest in the matter, were not capable of raising a substantive and significant issue for adjudication.
Administrative Law Judge ("ALJ") John H. Owen, who presided at both the public hearing and issues conference, allowed the Intervenors some time to submit material outlining their proposed proof upon the issue(s) they desired be adjudicated, and the ALJ allowed the Applicant and the Department to submit thereafter comments in reply.
The Intervenors made their submission, and the Department and the Applicant submitted comments in reply. In so doing the Department changed its position, then claiming there was in fact at least one issue for adjudication.
The Intervenors claimed that there were issues concerning 1) the fitness of the Applicant to be granted the permits sought 2) whether there was a genuine public need for the facility and 3) whether the Applicant has been denied a permit previously for the same or a substantially similar facility or activity. In its reply submission the Department agreed that the issues of fitness should in fact be adjudicated. The Applicant in its reply submission continued to maintain there were no issues for adjudication and that the permits sought should be issued as conditioned.
What we have here are two periods of operation absent permits, various alleged violations of New York City's agencies regulations, alleged absence of genuine public need for the facility, and alleged prior denial of permit(s).
Except for genuine public need (which will be dealt with later) all of the questions come down to a question of operator fitness.
DISCUSSION OF PROPOSED ISSUES
THE FITNESS ISSUE
The Intervenors claim that the fitness issue meets the standards for adjudication in that the documentation forwarded with their submission shows significant unlawful acts by the present principals of the Applicant going back many years and places the burden upon the Applicant to explain why it or related or predecessor entities were operating without permits prior to being granted a right to operate in and by an Order on Consent (dated May 1, 1981) and another (dated October 11, 1991).
The fitness issue here has three aspects: 1) the circumstances under which there were operations absent authorization; 2) the relevance, gravity and significance of violations of law and/or the consent orders; and 3) prior denial of permits.
OPERATIONS ABSENT PERMITS
Intervenors cite the Commissioner's Interim Decision in the Matter of the Application of Conover Transfer Station and Recycling Corp. (DEC Project No. 2-6102-00008/1-0) dated August 21, 1992 for the proposition that the matter of operating absent a permit is a matter to be explored at a hearing despite the fact that the applicant has operated under the consent orders without any violation of their terms.
The Department in its reply papers cites Conover for the proposition that actions prior to entering into a consent order could be grounds for a hearing on fitness despite good operating practices and could be grounds for permit denials. The Department also cites Matter of CECOS International Inc., DEC Application No. 90-85-0551 (March 13, 1990) for the proposition that a demonstration of rehabilitation may well call for the issuance of appropriately conditioned permits. The Department claims that the CECOS ruling is reflected in the Commissioner's Record of Compliance Enforcement Guidance Memorandum ("ROC/EGM") dated March 5, 1993.
In its reply submission the Applicant contends that CECOS and the ROC/EGM (the Applicant does not refer to Conover or American Transfer) foreclosed consideration of operator fitness as an adjudicatory issue where an applicant has fully complied with a consent order. The Applicant claims that it has so complied over a period of about 30 months. In support of this claim the Applicant refers to Department inspection reports over this period that reveal no violations of the consent order and cites the Commissioner's Interim Order in the Matter of the Application of Dutchess Quarry, Project No. 3-1358-55/10, August 13, 1992. The Applicant further contends that compliance with the terms of an Order on Consent is a matter solely for the Department's judgement, citing Matter of Harry M. Greenfield, DEC Project No. 2-6303-00003.
In dealing with the submissions on this sub-issue, it is well to begin by making some distinctions and setting out some parameters, rules and guidelines.
There is a distinction to be made between operating without authorization and violating a consent order. Generally speaking the lack of a permit relates to the period prior to the consent order and the violation of a consent order may only take place after the consent order is issued. For these reasons, discussion of alleged consent order violations will be deferred and taken up together with the alleged violations of law.
On the fitness and other permit issues the business status of the Applicant is relevant. Here Exhibit 16 to the application (a background affidavit sworn to by Frank Campo) shows the Applicant to be a closely held corporation controlled by two individuals: Frank Campo and Nicholas Infantino. The same exhibit shows "Other Solid Waste Management Affiliations" to be Canal Carting, Best Container, Accurate Medical Waste, Inc., and Accurate Environmental Waste Inc.
The permit application (Exhibit 46) is the prior Order on Consent dated May 1, 1981 between the Department and Best Container Service, Canal Carting Inc. and Nicholas Infantino that shows they had been hauling, storing and transferring solid waste without permit(s) at 39 Ferris Street and other sites in Brooklyn.
Where an applicant is a closely held corporation it is proper to examine the character and fitness of its principals (American Transfer) and, by extension, other business entities in which those principals have or had a substantial interest (ROC/EGM, page 5).
Specifically the ROC/EGM states at page 5:
"For purposes of considering the suitability of a permittee or application, the...guidelines should be applicable not only to the immediate entity but to any other corporation, partnership, association or organization in which the permittee or applicant holds or has held a substantial interest or in which it has acted as a high managerial agent or director or any other individual, corporation, partnership or organization which holds a substantial interest or the position of high managerial agent or director in the permittee or applicant.
For purposes of this policy "high managerial agent" shall have the same meaning as that term is given in Section 20.20 of the Penal Law. Substantial interest has the same meaning as is given that term in Section 27-1517 of the ECL."
Nicholas Infantino had sufficient authority in Best Container Service and Canal Carting, Inc. to execute the 1981 consent order on their behalf and Nicholas Infantino is one of only two persons in control of the Applicant.
Conover held that:
"The mere fact that the applicant began operations without any authorization from the Department means that it must demonstrate its fitness as part of its overall burden of proof on the application. Whether or not the applicant is a party to a consent order does not preclude consideration of the acts giving rise to the order even where the terms of the order are fully complied with." (page 1), and that:
"The record will need to be developed on the circumstances surrounding the applicant's illegal commencement of operations, including the state of mind of those who made the management decision to do so. Consistent with the Department's Record of Compliance Policy, the final determination on this permit will consider these circumstances as well as the subsequent compliance history of the applicant." (page 3)
I see nothing in CECOS, cited by the Applicant which would foreclose inquiry as to the circumstances under which three of Mr. Infantino's corporations have operated without permits for various periods since sometime prior to the 1981 consent order and up to the 1991 consent order.
There is a question here whether Mr. Infantino and the entities under which he has operated have pursued a course of conduct of avoiding the Department's (and other authorities') regulatory permit controls. The same question appears to apply as well to Mr. Campo.
The Applicant should explain satisfactorily the circumstances under which its principals and its related entities have operated without permits prior to the 1991 consent order. The period prior to the 1981 consent order is too remote in time to be the subject of inquiry.
VIOLATIONS OF LAW
On the question of violations of law (which may also include violations of an existing consent order) the intervenors seek to buttress their position by pointing to indications that the Applicant has been in fact operating in violation of the 1991 Order on Consent, although never so cited by the Department.
Specifically the 1991 Order on Consent requires the Applicant, a related corporation (Best Container Services, Inc.) and one of its principals (Frank Campo) to comply with all applicable laws, rules and regulations (Sec. XV, p. 8) and to obtain all necessary approvals (Sec. XVI, p. 8). The intervenors claim, and the documents from them seem to be in support, that the Applicant has violated the Order on Consent by 1) violating the New York City zoning law by operating in an M2-1 zone without a variance or other approval, 2) violating the New York City Building Code by operating an asbestos transfer station under a New York City Certificate of Occupancy (No. 133553) limiting operation to a shop for the repair of cranes and cargo hoists, 3) violating the Order on Consent's Compliance Schedule checklist by failing to supply the Department with detailed explanations of any violations of the New York City environmental laws or zoning resolution, and 4) violating, both prior to and subsequent to the Order on Consent, various regulations of New York City's Sanitation Department, Health Department, Building Department, Bureau of Highways, and other New York City agencies.
The Certificate of Occupancy for 39 Ferris Street was issued October 10, 1952 and so far as appears was never reissued or amended to authorize the actual operations taking place there since at least 1981. Although the Applicant has not contested the Intervenors' allegation that it is operating in violation of the New York City zoning law, the record does not show how long this has been taking place.
The complaints from neighbors and the various alleged municipal violations by the Applicant and related entities controlled by the same principals at 39 Ferris Street and elsewhere (to which the intervenors' documentation relates) cover a period of about 12 years beginning before the first consent order and ending after the second consent order.
My assessment of the applicability of the precedents cited on this sub-issue begins with what I consider the major precedent: CECOS.
CECOS speaks of two extremes concerning applicants who have compliance problems, one having to do with applicants who have "...intentionally or by management neglect operated outside of the law and have done so criminally or with gross negligence...", the other having to do with applicants who have had "...transgressions but have acted responsibility in dealing with them and in improving operations to prevent recurrences..." (page 4). CECOS also found that past conduct is the best available indicator of future conduct (page 5).
In American Transfer, where the applicant apparently was not operating under a consent order, the Commissioner held that the character and fitness of the applicant's principals was properly adjudicated in connection with a proposed asbestos transfer station in the Bronx.
Dutchess Quarry involved the proposed intervenors seeking to use a Town Court charge of mining without a permit that was dismissed in the interests of justice, to contest the applicant's fitness. Upon this issue the Commissioner concluded that the allegation could not be used "without any further offer of proof" (page 1). The Commissioner also concluded that similar administrative charges resolved by an Order on Consent could not be used either since "The terms of the order preclude its use..." (page 1).
Greenfield stands for the propositions that where judging compliance with a consent order involves technical knowledge not possessed by the intervenors, the Department's judgement shall control and that the Department has no jurisdiction to determine otherwise unadjudicated charges of violating local ordinances.
Although issued shortly after Conover, Greenfield does not mention Conover. If the Commissioner had determined to change the policy stated in Conover, he surely would have taken the opportunity that the Greenfield matter offered.
The Applicant's reliance on CECOS, Dutchess Quarry and Greenfield, in support of its position that the ALJ should not look further into the fitness issue, is misplaced.
Here, without an adjudicatory hearing, it is most difficult if not impossible to determine where this Applicant falls between the CECOS extremes; and as in CECOS past conduct properly assessed at a hearing is the best indicator of future conduct. As in Conover a record must be made on the circumstances surrounding the applicant's principals illegally commencing operation without authorization and on later compliance. Contrary to Dutchess Quarry the consent order here does not prevent inquiry into the circumstances of operating without authorization or the later compliance history. Contrary to Greenfield judging consent order or other violations here is not a matter requiring technical knowledge.
Concerning violations of law only adjudicated municipal or other violations are admissible. Unresolved building, zoning or other New York City regulatory matters may not be dealt with at this hearing. Only convictions or other final dispositions of charges or claims, supported by proper certificates of conviction or other disposition, may be inquired into concerning the circumstances, gravity, significance and resolution.
While the certificates are indispensable they are expected to show only cryptic notations of the section of law or regulation violated together with a short-hand description of the offense such as "Dumping without a permit." Such documents could be submitted without a hearing but a record would still have to be made on the circumstances, gravity and significance of the incident in question. This in turn could involve the testimony of affected neighbors, agency investigators or other persons who are not parties or who are not authorized to make written submissions.
Attempting to properly assess incidents on paper alone would result in a futile, drawn out process of submissions, replies, then more submissions and replies. These papers would reveal nothing about credibility. There would be no spontaneous responses as in cross-examination. (Similar considerations apply as well to the Applicant's explanation of the circumstances of operating without authority.)
Here also the Applicant must explain under oath the circumstances and disposition of all adjudicated violations of law by the principals or their entities.
PRIOR PERMIT DENIALThe intervenors' submission on the question of whether there has been prior denial of a permit for the same or substantially similar facility or activity consisted in its entirety of the following:
"Upon information and belief, CB6 represents that the Respondents had also been denied a permit by the NYS DEC in April 1985 for a substantially similar, indeed less restrictive, project [ROC EGM IV (3) (c)]."
The Intervenors' minimal showing on the prior permit denial issue has been denied by neither the Applicant nor the Department, the two parties who should know best.
Since the failure to deny may have been an oversight by the Department and the Applicant it will not be considered an admission but rather a question of fact; and further, since prior permit denial is a factor to be considered under the ROC/EGM (page 5), this issue of fact is for determination at the adjudicatory hearing. It follows, then, since consistency in issuing permits is important to the Department, this sub-issue also has the potentiality to result in permit denials.
The allegations concerning fitness are sufficiently serious and sufficiently documented to require an adjudicatory hearing. This is not to say, however, that there has been any issue determination at this point, rather only issue identification. On the other hand, and depending largely upon the Applicant's response, the fitness issue has the potentiality to result in permit denials.
All aspects of the fitness issue come down to a question, the standard if you will, of whether the Applicant may be relied upon to faithfully implement the permit conditions and to be an environmentally responsible member of the Red Hook community.
The Public Need Issue
The Intervenors claim that the relevance of the issue of need for the proposed facility is established by the Commissioner's Order in American Transfer Company, DEC Project No. 2-6006-0005/ 00001-0 (December 24, 1991) where permits to operate an 800 cubic yard per day asbestos-handling transfer station were denied based upon findings that neither the applicant nor the Department had demonstrated a need for that type of facility. The intervenors also cite an alleged statement by a former Department Regional Permit Administrator to the effect that there was no need for further asbestos-handling transfer stations in Region 2. The time of this alleged statement is not supplied except that it is said to pre-date the issuance of New York City's Comprehensive Solid Waste Management Plan ("SWMP") dated March 1992 and submitted to the Department as required by 6 NYCRR 360.15. The "SWMP" itself is also cited and quoted by intervenors:
"There are sufficient private transfer stations in operation to handle the transfer requirements for commercial waste." (SWMP page 5-2)
As to public need for the facility the Applicant contends that the Department need not consider need and in fact is foreclosed from doing so since there is no applicable statute or regulation mentioning such a consideration. Although the Department has pointed out that in Conover public need was determined to be an issue for hearing, it does appear that the Department considers operator fitness as the only issue for adjudication in this matter.
In my view, however, public need is only for an applicant to claim (and Applicant has not claimed here) where, for instance, that applicant has a tainted compliance history or whose project or facility will result in environmental harm. In other words, such an applicant would claim that its compliance history or the environmental harm should be overlooked because of the serious public need for the project or facility.
Hence it is concluded that public need has not been established as an issue for adjudication.
Having closely examined the submissions and considered them in the light of the applicable law and regulations, I conclude that:
- The New York City Community Board Six and the Red Hook Civic Association each possess adequate environmental interest and have raised both substantive and significant issues for adjudication.
- The New York City Community Board Six and the Red Hook Civic Association are each granted party status upon a consolidated basis.
- There is one issue for adjudication: the fitness of the Applicant to receive the permits sought.
- Although the Applicant has the burden of proof upon the fitness issue, in order to have an orderly and fair adjudicatory hearing, the intervenors are directed to furnish all other parties and the ALJ with copies of any and all certificates of conviction or other disposition that they intend to offer at the hearing ten (10) days before the hearing. In order to be admitted into evidence each disposition document must be properly signed, sealed or otherwise authenticated according to law.
- As to the prior permit denial question, the Department Staff is directed to furnish the parties and the ALJ, twenty (20) days before the hearing, sufficient documentation to show exactly what permit(s) the Applicant previously sought, the disposition of the application(s), and the reasons for the disposition(s).
An adjudicatory hearing shall be held at the Department's Region 2 Headquarters, August 23, 1994, at 10:00 AM and continue subsequent days as necessary.
Pursuant to 6 NYCRR former 624.4(f) and 624.6 (d) these rulings may be appealed to Commissioner Langdon Marsh. Any appeals must be received at the Commissioner's office no later than July 29, 1994. The parties may file responses to the appeals no later than August 5, 1994. Copies of all appeals and responses must be sent to the ALJ and the other parties.
By: John H. Owen
Administrative Law Judge
July 18, 1994
Albany, New York