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Bath Petroleum Storage, Inc. and EIL Petroleum, Inc. - Ruling 3, October 23, 2003

Ruling 3, October 23, 2003

In the matter of the alleged violation(s) of the
New York State Environmental Conservation
Law (ECL) Articles 3, 17 and 23, Title 6 of the
Official Compilation of Codes, Rules, and
Regulations of the State of New York
(NYCRR), and permits issued pursuant to
Environmental Conservation Law Article 17,
Title 8 and Article 23, Title 13; and the
application for ECL Article 23 modification
permit; by

BATH PETROLEUM STORAGE, INC.,

and

E.I.L. PETROLEUM, INC.

RULING ON

MOTION TO AMEND

COMPLAINT

DEC Case No: R8-1088-97-01

and

ECL Article 23-1301 Permit Hearing

BACKGROUND

Staff of the New York State Department of Environmental Conservation ("Department Staff") commenced an enforcement action against E.I.L. Petroleum, Inc. and Bath Petroleum Storage, Inc. (collectively referred to herein as "BPSI") by a notice of hearing and complaint dated March 14, 1997. The complaint alleged violations of Environmental Conservation Law ("ECL") Articles 3 and 17 in connection with BPSI's operation of its underground caverns (the "Facility") in Bath, New York. The caverns are used to store liquefied petroleum gases ("LPG"). Department Staff's complaint alleged violations of the Facility's State Pollutant Discharge Elimination System ("SPDES") permit.

By motion dated August 10, 1998, Department Staff moved to amend the Complaint to include additional SPDES violations and to add ten more causes of action that related to alleged violations of ECL Article 23 at the Facility, including allegations of unpermitted expansion of the Facility's underground storage caverns. The amended complaint's prayer for relief also sought revocation of the Facility's Article 23 permit. BPSI opposed Department Staff's motion, which was granted in a ruling dated August 31, 1998 (Matter of E.I.L. Petroleum, et al., 1998 WL 1759901). By letter dated September 25, 1998, Department Staff served a copy of the Amended Complaint and civil penalty calculation.

In November 1999, BPSI moved for summary judgment. Department Staff cross-moved for an order without hearing, and to amend the complaint to add Robert V. H. Weinberg, the president of Bath Petroleum Storage, Inc., and the president, director and principal shareholder of E.I.L., as an individual defendant. Department Staff also sought revocation of the Article 23 permit in its cross-motion. The administrative law judge ("ALJ") issued a ruling, denying BPSI's motion for summary judgment and Department Staff's motion for order without hearing, but granting Department Staff's motion to amend the complaint. Matter of E.I.L. Petroleum, Inc., et al., 2000 WL 33340964 (March 27, 2000). This proposed second amended complaint has not yet been served.

Department Staff now seeks to amend the proposed second amended complaint to make changes to Exhibit A, which specifies the date of certain SPDES violations alleged, as well as the in-stream concentration of total dissolved solids and/or chlorides on those dates. According to Department Staff, these concentration levels were calculated using effluent data provided by BPSI and stream flow data provided by the United States Geological Survey ("USGS"). Department Staff states that at the time the original Exhibit A was prepared, the data provided by the USGS was provisional, and the data subsequently published by the USGS in its annual report for that time period (Water-Data Report NY-97-3) differs from the provisional data. Department Staff also seeks to correct a typographical error with respect to the expiration date of the SPDES permit.

At a conference held on August 25, 2002, Department Staff requested that BPSI stipulate to the proposed amendments. BPSI declined to do so because it had not been afforded the opportunity to review the revised exhibit. The ALJ directed that Department Staff seek BPSI's consent to the amendments in writing, and stated that if BPSI's consent to the amendments was not forthcoming, the request would be considered a motion to amend, with an opportunity for BPSI to respond. By letter dated September 18, 2003, Department Staff requested BPSI's consent, and by letter dated September 22, 2003, BPSI stated that it could not agree to stipulate to the requested changes.

APPLICABLE LAW

Department Staff seeks to amend its complaint pursuant to 6 NYCRR Section 622.5(b), which provides that

Consistent with the CPLR a party may amend its pleading at any time prior to the final decision of the commissioner by permission of the ALJ or the commissioner and absent prejudice to the ability of any other party to respond.

DEPARTMENT STAFF'S POSITION

Department Staff contends that the amendments would make no change to the number, type, or days of violation alleged. In addition, Department Staff points out that the cover letter accompanying the original complaint referred to revisions to data in an attachment to the complaint due to more recent information received from the USGS. According to Department Staff, BPSI was therefore on notice that changes to the data might be anticipated. Department Staff argues that the changes should be permitted in the interests of accuracy, and to avoid any potential for confusion in the future as to Department Staff's allegations. According to Department Staff, the changes will not result in prejudice, unfair surprise, or undue delay.

Finally, Department Staff points out that a pre-hearing conference has not yet been scheduled (see 6 NYCRR §622.8), nor has a statement of readiness been filed, pursuant to 6 NYCRR Section 622.9, and discovery has not yet commenced beyond a demand served by BPSI prior to the amendment of the complaint in 1998.

BPSI's POSITION

By letter dated September 22, 2003, BPSI stated that it was unable to agree to the proposed amendments. BPSI took the position that some of the allegations in the proposed complaint date back eleven years, and contends that Department Staff's amendments are based upon data that Department Staff admitted was available six years ago. BPSI noted that Department Staff did not offer any reason for the delay, and argued that the passage of many years is prejudicial on its face.

DISCUSSION

The Department's enforcement hearing regulations allow for amendment of a complaint even after an answer has been filed "consistent with the CPLR" and "absent prejudice to the ability" of the other party to respond. CPLR 3025 provides that leave to amend a complaint by setting forth additional or subsequent occurrences shall be "freely given" upon such terms as may be just. "The showing of prejudice that will defeat an amendment must be traced back to the omission from the original pleading of whatever it is that the amended pleading wants to add." Matter of 525 West 45th Street Assocs., 2003 WL 22162380, *2 (ALJ Ruling, Sept. 16, 2003).

A party opposing a motion to amend a pleading "must overcome a presumption of validity in favor of the moving party, and demonstrate that the facts alleged and relied upon in the moving papers are obviously not reliable or are insufficient." Peretich v. City of New York, 263 A.D.2d 410, 411 (1st Dept. 1999), citing Daniels v. Empire-Orr, Inc., 151 A.D.2d 370, 371 (1st Dept. 1989) (facts advanced by moving party need not be proven at this stage). In this case, the proposed amendment is appropriate, to ensure the accuracy of the facts recited in Department Staff's complaint.

BPSI claims that Department Staff's delay in seeking these amendments has prejudiced its ability to defend itself, arguing that Department Staff "wrongly assumes that the passage of many years is not prejudicial on its face." This assertion can be raised as an affirmative defense to the new charges. Matter of 425 West 45th Street, at *2 ("In the absence of a hearing, one cannot determine whether the Respondent has been prejudiced to the extent claimed. For that reason, there is no basis for disallowing the complaint's amendment"). Instead, the complaint should be amended to add the revisions sought by Department Staff, and BPSI should be afforded the opportunity to amend its answer to present whatever evidence it has in rebuttal of the charges, and whatever evidence it has to substantiate any asserted claim of prejudice with regard to its ability to defend.

RULING

Department Staff's motion to amend the complaint is granted. Department Staff shall serve the amended complaint by ordinary mail on or before November 17, 2003. Due to the upcoming holidays, BPSI is allowed additional time to serve its Answer, which is to be sent by ordinary mail on or before December 31, 2003. Discovery will conclude by February 27, 2004.

/s/
Maria E. Villa
Administrative Law Judge

Albany, New York
October 23, 2003

TO:Arlene J. Lotters, Esq.
Mineral Resources Program Attorney
Division of Legal Affairs
New York State Department of Environmental Conservation
625 Broadway, Fourteenth Floor
Albany, New York 12233-1500

Richard Sherman, Esq.
Division of Environmental Enforcement
Bureau of Enforcement and Compliance Assurance
New York State Department of Environmental Conservation
625 Broadway, Fourteenth Floor
Albany, New York 12233-5500

Lisa Perla Schwartz, Esq.
New York State Department of Environmental Conservation
Region 8
6274 East Avon-Lima Road
Avon, New York 14414

John J. Privitera, Esq.
William A. Hurst, Esq.
McNamee, Lochner, Titus & Williams, P.C.
75 State Street
P.O. Box 459
Albany, New York 12201-0459

Jerry William Boykin, Esq.
W. Michael Holm, Esq.
Womble, Carlyle, Sandridge & Rice
8065 Leesburg Pike, Fourth Floor
Tysons Corner
Vienna, Virginia 22182-2738

Richard Brescia
New York Propane Gas Association
New York Capitol Consultants
120 Washington Avenue
Albany, New York 12210

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