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Blank, Blank & Jacobi - Order, February 4, 2003

Order, February 4, 2003

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

the Alleged Violations of Article 17 of the Environmental Conservation Law, Article 12 of
the Navigation Law, and Parts 612 and 613 of Title 6 of
the New York Compilation of Codes, Rules and Regulations

- by -

Blank, Blank & Jacobi,

Respondent.

Order

DEC File No. R3-900001

WHEREAS:

  1. Pursuant to § 622.3 of Title 6 of the New York Compilation of Codes, Rules and Regulations (6 NYCRR), staff of the New York State Department of Environmental Conservation (DEC or Department) duly served a notice of hearing and complaint upon respondent Blank, Blank & Jacobi on September 27, 2001. The respondent served its answer and amended answer on October 9, 2001 and December 6, 2001, respectively.
  2. The attached report by Administrative Law Judge (ALJ) Helene G. Goldberger is adopted as my decision in this matter concerning respondent's violations of Navigation Law § 173, Environmental Conservation Law (ECL) §§ 17-1005, 17-1009, and 17-1007 and Title 6 of the New York Compilation of Codes, Rules and Regulations (6 NYCRR) §§ 612.2, 613.3, 613.4, and 613.5 based upon the respondent's discharge of petroleum into the environment and its failure to register its underground petroleum storage tank located 158 Sullivan Avenue, Liberty, Sullivan County, New York, tightness test the tank, color code the fill port and keep an inventory of the contents of the tank
  3. As stated in the attached report, the parties did not dispute significantly the failure of the respondent to comply with the applicable law and regulations concerning the underground storage tank. The dispute between the parties centered on the relative culpability of the respondent in light of the State Police's role in operation and abandonment of the tank on the premises of the respondent.
  4. I agree with the ALJ that the hearing record does not support a finding of violation of ECL § 17-0501 by the respondent.
  5. ECL § 71-1929 provides for a maximum penalty of twenty-five thousand dollars per day for each violation of titles 1 though 11 and title 19 of Article 17 and the implementing regulations. Staff requested a penalty of $20,000. The ALJ concurred with staff's assessment of liability but considered a number of mitigating factors that did not appear a part of the staff's calculations. These included the State Police's operation of the facility, that agency's failure to adhere to the applicable legal requirements, the respondent's cooperation in addressing the violations when they were brought to its attention, and the lack of evidence regarding significant environmental harm.
  6. I find that $20,000 should be assessed in this case as recommended by the ALJ with $15,000 suspended pending respondent's compliance with further investigation and remedial measures that are required at the site. I agree with the ALJ that based upon the staff's failure to make its demand for costs during the hearing and the need for ongoing investigation at the site, this request for relief should be denied at this time.

NOW, THEREFORE, have considered this matter, it is ORDERED that:

  1. The respondent is liable for violations of Navigation Law § 173, ECL §§ 17-1005, 17-1009, and 17-1007 and 6 NYCRR §§ 612.2, 613.3, 613.4, and 613.5;
  2. The respondent is to pay a penalty of TWENTY THOUSAND DOLLARS with $5,000.000 of that sum payable to this Department within thirty days of this Order and the remaining sum suspended pending respondent's compliance with this Order;
  3. In accordance with the ALJ's report, the respondent is to comply with Department staff's directives with respect to further investigation and remediation required at the site set forth in its letter of March 18, 2002 to Mr. Blank;
  4. Upon completion of the work required in the March 18, 2002 letter, Region 3 staff is to provide a corrective action plan to the respondent further describing the remaining investigation and remediation activities required to address the oil spill at the site. Staff is to continue to cooperate with the State Police in any of its efforts to assist in these endeavors;
  • The provisions, terms, and conditions of this Order and the attached report shall bind the respondent, its officers, directors, agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of the respondent;
  • All communications between the respondent and the Department in this matter shall be made to the Department's Region 3 Director, 21 South Putt Corners Road, New Paltz, New York 12561.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: ERIN M. CROTTY,
COMMISSIONER

Dated: Albany, New York
February 4, 2003

TO: Gerald Orseck, Esq.
1924 State Route 52
P.O. Box 469
Liberty, New York 12754

Scott A. Herron, Senior Attorney
NYSDEC
625 Broadway
Albany, New York 12233-5500

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

the Alleged Violations of Article 17 of the Environmental Conservation Law,
Article 12 of the Navigation Law and Parts 612 and 613 of Title 6 of
the New York Compilation of Codes Rules and Regulations

by

Blank, Blank & Jacobi,Respondent.

SUMMARY HEARING REPORT

- by -

____________/s/____________
Helene G. Goldberger
Administrative Law Judge

Proceedings

By notice of hearing and complaint dated September 27, 2001, the staff of the New York State Department of Environmental Conservation (DEC or Department) commenced an administrative enforcement proceeding against respondent Blank, Blank & Jacobi (BBJ) for alleged violations of Environmental Conservation Law (ECL) § 17-1009 and § 612.2 of Title 6 of the New York Compilation of Codes, Rules and Regulations (6 NYCRR) for failure to register its petroleum bulk storage facility; ECL § 17-1005 and 6 NYCRR § 613.5 for failure to tightness test its underground storage tank; ECL § 17-1005 and 6 NYCRR § 613.4 for failure to keep daily inventory records for the purpose of detecting tank leaks; 6 NYCRR § 613.3 for failure to permanently mark all fill ports to identify the product inside the tank; and Navigation Law § 173 and ECL § 17-0501 for the illegal discharge of petroleum.

Respondent filed its answer dated October 9, 2001 and its amended answer dated December 6, 2001. On February 28, 2002, the Department staff submitted its statement of readiness to the Office of Hearings and Mediation Services (OHMS) and Administrative Law Judge (ALJ) Helene G. Goldberger was assigned to this matter. The hearing was convened at 10:00 a.m. on April 8, 2002 in the Department's Region 3 office in New Paltz. The hearing transcript was received in the OHMS on April 18, 2002 and the record closed on May 20, 2002 with the filing of the parties' post-hearing briefs.

Staff's Charges

As noted above, the staff has alleged that respondent, as the owner of the property upon which the underground petroleum storage tank was located, is liable for failure to register the tank, perform tightness testing, keep daily inventory of the tank's contents, and mark the fill ports. In addition, staff alleges that respondent's failure to meet these requirements resulted in an unlawful discharge of petroleum into the environment. Based upon an oil spill penalty matrix and an unwritten statewide policy relating to penalties for violations of bulk storage requirements, staff seeks a penalty of $20,000 as well as reimbursement of its "direct and indirect costs relating to the site and remediation" and an order requiring the respondent to register its facility, remove and close all of its underground petroleum tanks, submit a closure report to the Department, and conduct an investigation and remediation of the area that includes appropriate monitoring.

Respondent's Position

Respondent argues that because the State Police installed, maintained, and used the underground petroleum storage facility for fueling its cars, BBJ was not aware of its responsibilities, if any, with respect to the tank. BBJ explains that when the State Police vacated the premises in 1993, it took the pump and assured the respondent that the tank could remain in place as it was empty. Respondent states that it never used the tank and only upon the investigation performed by a prospective buyer of the property did it become aware of the spill and related regulatory requirements. BBJ argues that as soon as it was alerted to this situation, it remedied the violations by registering the tank as well as removing the tank and the contaminated soil. BBJ maintains that the Department staff person who investigated the spill informed the respondent that no further work would be required. Mr. Blank, who is the principal of the respondent partnership, believes that only because he would not agree to the staff's penalty offer is he now being subjected to new requirements that were set forth in a letter dated March 18, 2002 for which the complaint provided no notice.(1)

At the hearing, respondent moved that there be no consideration given to staff's recent requests for further remediation at the site. Respondent expressed the view that the complaint provided no notice of these more recent requirements. I denied this motion because a review of the complaint reveals that staff seeks investigation and remedial relief in broad enough terms to cover its current requests. In addition, the November 26, 2001 letter sent by DEC Environmental Engineer Technician Dolores Wehrfritz to the respondent specifically states that while staff was not seeking additional remedial action "at this time," it "does not take any position regarding whether the investigation undertaken is or is not adequate to fully assess potential environmental contamination at this site." See, Exhibit 21.

BBJ argues that it is the State Police and not the respondent as owner of the land and building that is responsible for the regulatory violations involving the tank including the spill. BBJ offered evidence that the State Police have agreed to take responsibility for the respondent's costs and further remediation. BBJ questioned the Department's demand for relief based upon respondent's actions to comply with the regulatory requirements and the culpability of the State Police. And, based upon the costs associated with cleanup and this proceeding as well as the respondent's poor financial condition, BBJ disputes the propriety of staff's penalty request.

Adjudicatory Hearing

The Department staff was represented by Scott A. Herron, Senior Attorney and Benjamin A. Conlon, Associate Attorney. The staff presented three witnesses: R. Daniel Bendell, Environmental Engineer, Division of Environmental Remediation and Spill Prevention, Dolores Wehrfritz, Environmental Engineer Technician III, and David Traver, Environmental Program Specialist I. The respondent was represented by Gerald Orseck, Esq. of Liberty, New York and Mr. Blank was its sole witness. The parties stipulated to the admission of 22 exhibits and an additional 12 were offered into evidence of which nine were admitted. The exhibit list is annexed to this report.

FINDINGS OF FACT

  1. At a tax foreclosure sale in 1972, Bernard Blank, the predecessor in interest of the respondent, purchased the building and land at 158 Sullivan Avenue, Liberty, Sullivan County, New York, where the underground petroleum storage tank that is the subject of this proceeding is located. At the time of this purchase, the State Police were leasing the barracks on the site. In the rear of these premises existed a 3000 gallon underground gasoline storage tank for patrol car use. In 1977, the State Police and the respondent executed a lease that continued the former's use of the property. In 1993, the State Police vacated the premises and removed the gasoline pump but left the underground tank. The respondent never utilized this equipment.
  2. The State Police never registered the tank or tightness-tested it. There are no records that demonstrate that daily inventory was kept of the contents of the tank by the State Police and it did not color code the fill port.
  3. On August 21, 2001, Ira D. Conklin & Sons, Inc.(IDC) performed an environmental assessment of the premises as part of the Catskill Federal Credit Union's (CFCU) prepurchase arrangements with the respondent. On or about August 21, 2001, it was brought to the attention of the Department staff by IDC that there had been a petroleum spill at these premises. See, Exhibit 16. By letter dated August 28, 2001, staff alerted Mr. Blank of the registration requirements. See, Exhibit 9. And, by letter dated September 5, 2001, Mr. Bendell informed Mr. Blank that containment and removal of the spill had to be addressed immediately and the tank removed in addition to the performance of an investigation and remediation of the site. See, Exhibit 10.
  4. An inspection of the premises on September 10, 2001 by staff revealed that the tank was full, it was overdue for tightness testing, the fill port had no color coding to identify what type of product was stored in the container, and there were no inventory records of the contents of the tank. See, Exhibits 11 and 12. By notice of violation dated September 20, 2001, the Department staff informed Mr. Blank of these violations. See, Exhibit 14.
  5. On September 12, 2001, the Region 3 office of DEC received the respondent's petroleum bulk storage application to register the tank. See, Exhibit 13.
  6. The respondent retained Advanced Oil Recycling (AOR) to perform an environmental investigation associated with the tank and spill and to perform remedial work. On October 2, 2001, AOR conducted this work as set forth in its site investigation report of November 2001. See, Exhibit 17. This work included the excavation and removal of the tank as well as removal of 250 tons of soil around the area of the tank location that indicated petroleum impact. AOR also performed soil sampling and analysis of the remaining soils surrounding the tank location. These test results indicated that soil samples from the bottom of the excavation as well as the eastern, western, and southern walls were "non-detect" for volatile compounds associated with petroleum contamination. However, the northern wall that is adjacent to the building showed BTEX compound levels exceeding the Department's soil cleanup criteria. Following the removal of the tank, the excavation site was back-filled with clean soils and the contaminated soils were stockpiled and covered for sampling, characterization, and for removal to an appropriate disposal site. The material was determined to be non-hazardous and was removed on or about November 20, 2001 to TT Materials Corp. Solid Waste Facility in Wingdale, New York. In AOR's report, it concluded that there was no further action required at the site.
  7. The cause of the petroleum spill was either a cracked fill pipe or broken tank vent that allowed water to infiltrate the tank forcing out petroleum product when the tank filled. While perched water was found in the excavation site, there was no evidence of groundwater. The 3,000 gallons of liquid pumped from the tank were found to be water contaminated with oil. This material was taken to a recycling facility in Ossining, New York. See, last attachment to Exhibit 17.
  8. A portion of the Mongaup River is approximately 35 feet from the property boundary in the parking lot behind the respondent's building where the tank had been located. While staff reported the possibility of petroleum contamination due to a downgradient slope from the site to the river, there was no evidence provided of such contamination in the river. In the second of two borings performed by IDC that revealed the petroleum spill, IDC did find petroleum odors and indications in the soil in the edge of the parking lot closest to the water body. See, Exhibit 16.
  9. While in November 2001, staff determined that further remediation was not needed, a reexamination of the AOR sampling results by staff caused it to reassess this situation. Accordingly, in March 2002, staff asked the respondent to take further steps to assess the potential for groundwater or sensitive receptor contamination and if discovered, to conduct appropriate remediation and monitoring. See, Exhibit 22.
  10. The respondent has discussed these events with the State Police and that agency has agreed to undertake the additional testing described in the March 18, 2002 letter from staff to the respondent. The respondent has provided permission to the State Police and the Department to enter the property and to perform Geoprobe sampling, soil boring, installation of monitoring wells, and whatever other associated work is necessary. As of the hearing, there was no evidence presented of whether the further changes in instructions from staff to the respondent alluded to by both parties would affect the position of the State Police.
  11. In order to preserve its rights to seek contribution from the State Police for the costs borne by it in association with these events, the respondent has filed a claim in the New York State Court of Claims.

DISCUSSION

Liability

There is virtually no contest about the facts surrounding the existence and use of this underground storage tank. The State Police had the tank installed and used it to store gasoline to fuel their vehicles. When the agency left, it took the pump but left the tank in place. Neither the State Police nor the landowner registered the tank with the Department nor did they color code the fill pipe to ensure that only gasoline was placed in the tank. They did not perform tightness testing and there is no evidence that daily inventory was conducted to ensure that product was accounted for and not leaking into the environment. Initially, staff expressed the view that the leak likely occurred after the State Police left. In its post-hearing brief, staff maintains that position. Staff's Br., p. 13. This theory is based upon staff's conclusion that the tank filled with water which could not fuel the police cars. However, as admitted by Department witnesses on cross-examination, it is as likely that oil did leak out during the tenure of the State Police. Tr. 68.

While the respondent considered the tank and pump the domain of its tenant, the State Police, the Navigation Law is more strict in assigning responsibility. Navigation Law § 181 provides that any person who has discharged petroleum shall be strictly liable without regard to fault for all cleanup and removal costs and all direct and indirect damages. While the respondent does not consider itself the discharger because it believed the State Police to be the owner of the tank and associated equipment, this equipment was already on the property when the respondent purchased the property. There is no indication in the description of the property contained in the Judgment of Foreclosure that these were exempted from respondent's purchase. While the lease makes reference to some repairs to the area around the gas pump to be made by the respondent, and to the tenant's ability to remove any of its property, there is no clear statement as to the ownership or maintenance responsibility of the gas pump and tank in the lease. As the tank was left behind on the respondent's property when the State Police vacated, at least at that point BBJ was in the best position to maintain the tank and ensure that it did not spill its contents.

In State v. Green, 96 NY2d 403 (2001), the Court of Appeals confirmed that a landowner is liable as a discharger where it "can control activities occurring on its property and has reason to believe that petroleum products will be stored there." Here, as in Green, BBJ had such control as landowner. The respondent was aware that petroleum products had been stored in the tank and had never made any efforts to ensure that there was regulatory compliance. And, even after the State Police departed and landlord BBJ was left as the only party who could control what occurred with respect to the tank, no measures were taken to ensure that the tank's integrity was intact until the spill was discovered. From the undisputed facts presented at the hearing, it is apparent that the State Police also had responsibility with respect to the tank as the operator. However, since that entity is not before this forum, I cannot make any determinations with respect to that agency's liability.

Section 612.2 of 6 NYCRR and ECL § 17-1009 provide that the owner of any petroleum storage facility with a capacity of over 1,100 gallons must register it with the Department. The respondent had not registered the facility until after the spill and therefore was in violation of this provision until it submitted its application in September 2001. Section 613.5 and ECL § 17-1005 require owners of underground storage tanks to perform tightness testing periodically to ensure the tank's integrity. The respondent failed to comply with this requirement. Had the tightness testing been performed it is likely that the cracked fill pipe and/or broken tank vent would have been discovered and leakage abated at an earlier stage. The respondent maintained at the hearing that the requirement of 6 NYCRR § 613.3 to color code fill ports was not pertinent to the respondent as a non-user of this facility. As staff noted, without such identification, a mistaken delivery could send product into the tank that was not appropriate. The requirement contained in 6 NYCRR § 613.4 and ECL § 17-1007 to maintain inventory records would assist in determining the integrity of the tank. These latter requirements must be met by the operator which is defined in the regulations as "any person who leases, operates, controls or supervises a facility." 613.1(16). Since respondent controlled the facility at least after the State Police departed, it is responsible for failure to comply with these requirements as well.

With respect to the staff's allegations that the respondent violated ECL § 17-0501 by discharging material into the waters of the state "that shall cause or contribute to a condition in contravention of the standards adopted by the department pursuant to section 17-0301," there was no offer of proof. While staff noted the leak's location near the Mongaup River and on a grade that would likely wash material into the waterbody, there was no evidence that any petroleum product reached the river. See, Exhibits 7, 8 and 31. With respect to groundwater, there was also no evidence of such contamination resulting from the investigation that was conducted by respondent's contractor and observed by a DEC staff member, Ms. Wehrfritz. See, Exhibit 16, p. 3. While staff is now asking for a further investigation by respondent that may result in more information about petroleum contamination, we do not have those facts here. Accordingly, I do not find any liability with respect to § 17-0501.

Penalties

As noted by staff in its complaint and closing brief, ECL § 71-1929 provides for a penalty of up to twenty-five thousand dollars per day for each violation of Titles 1 through 11 inclusive and Title 19 of Article 17 or the rules or regulations implementing these laws. The staff has requested a penalty of $20,000 which is clearly less than the maximum that could be derived based upon even a minimum accounting of the four violations noted above.(2) The staff provided the respondent with a copy of the Civil Penalty Policy of 1990 prior to the hearing. However, it relied upon an oil spill penalty matrix and the unwritten recommendations of a statewide group as the bases for its penalty recommendation on the oil spill and bulk storage violations, respectively. Mr. Bendell stated that the statewide group recommends a penalty of $5000 for each violation of the failure to register, tightness test and keep inventories. He also said that the respondent avoided costs of about $2700.00 in failing to comply with these requirements. Tr. 57-60. In response to cross-examination, Mr. Bendell stated that he did not consider any mitigating factors in his recommendation which is made as soon as the violations are discovered. Tr. 77, 80-81, 88-89.

As for the oil spill matrix, Mr. Traver reviewed this form during the hearing. It assigns a point system to various characteristics of a spill and its impacts as well as certain multipliers for lack of cooperation of the discharger. See, Exhibit 31. This matrix then sets penalties for the number of points that fall within ranges such as $0-499 for 1-4 points or as in this case, $5000-19,999 for points 10-15. Mr. Traver calculated the points in this case to be 11 with a multiplier of .25 for negligence and then found the penalty should be $20,000 as he determined that 13 3/4 fell in the high range of this category. This calculation is puzzling for a number of reasons. First, although the form indicates "yes" to the question as to whether the spill resulted in off-site contamination, there was no proof of such contamination presented at the hearing. In addition, the form contains negative answers as to whether the spill reached surface or groundwaters or whether it injured fish or wildlife. See, questions 8-10, Exhibit 31. And, although even the staff's calculation would put the total in the mid-range of this category, staff opted for more than the maximum penalty. Based upon the above factors, I would deduct at least one point from the initial sum with a grand total of 12 3/4 putting the penalty more in the $15,000 range.

As Mr. Bendell's recommendation for the bulk storage violations was $20,000 and Mr. Traver's about the same, staff's request of $20,000 reflects a penalty reduction but not with express acknowledgment of the mitigating factors involved in this case. The 1990 Civil Penalty Policy requires that all monetary penalty calculations begin with the statutory maximum.(3) As noted above, the $25,000 per day per violation set out in ECL § 71-1929 would result in a much larger penalty than staff has requested. But there are certain factors that the policy provides that support a downward adjustment of the penalty in this case. The policy requires that the gravity of the violation and the economic benefits of the non-compliance be assessed. To consider gravity, the factors to consider are: (a) potential harm and actual damage caused by the violations; and (b) relative importance of the type of violations in the context of the Department's overall regulatory scheme.

As of now, there is no indication that the respondent's violations caused any environmental harm beyond the creation of contaminated soils in the vicinity of the tank excavation site. Clearly, there was potential for more harm given the damage to the tank and the ability of precipitation to flow into the tank causing product to be released into the environment. Due to the tank's proximity to the Mongaup River and the slope of the property, oil could have reached these waters and potentially also groundwaters. I agree with staff that the failures to register and test the tank, and to inventory its contents were directly related to the lack of maintenance that resulted in the spill. Even if the spill had occurred during the tenure of the State Police, had the respondent adhered to the regulations either during that time or afterwards, the spill would have been detected earlier or perhaps avoided.

With respect to economic benefit, I find none. While staff calculated approximately $2700 in saved costs by non-compliance, the respondent has now spent many times more than that on remediation and attorney's fees. See, Court of Claims Notice of Claim, Exhibit 20. In addition, staff's conclusion that the respondent "probably" saved more than five thousand dollars by not maintaining a product inventory is purely speculative. See, Staff's Br., p.7.

The policy also includes factors for consideration to adjust the gravity component: (a) culpability, (b) violator cooperation, (c) history of non-compliance, (d) ability to pay, and (e) unique factors. In this case, staff appears to have given short shrift to these mitigating factors -- most of which apply. The respondent did not operate this facility and believed that the State Police had left the tank empty upon its departure. Upon learning of the spill, the respondent took prompt action to register the tank and arrange for removal and remediation according to the guidance it received at the time from staff. There is no prior history of non-compliance. With respect to ability to pay, the respondent made conclusory statements without any documentary evidence that it was losing money on this property and could not afford the twenty-thousand dollar fine. I cannot rely upon these unsupported statements for mitigation of the penalty but I do find the other factors persuasive to recommend adjustment of staff's request.

Last, the "unique" factor to consider here is the role of the State Police and its apparent willingness to assume at least part of the liability here. I do not know why staff chose not to include that agency in this proceeding but given its undisputed role in operation of the tanks and failure to adhere to the applicable regulatory requirements, respondent should not bear as large a penalty as staff seeks.

A review of some other administrative cases in this Department indicates that the penalty staff seeks of the respondent appears too large. In Matter of Max Kent, 1992 WL 406380, the Department fined the discharger $6000 even though it took the respondent two years to address clean-up. In Matter of Suffolk Petroleum Corp., 1989 WL 84740, the Department exacted over $20,000 in fines and expenses but here again there was a two year delay by the respondent to address continuing spills and perform a cleanup. In Webster, (Commissioner's Decision, Mar. 15, 2000) the respondent was fined $10,000 after ignoring staff for three years and failing to register or tightness test four petroleum tanks with a combined capacity of 14,375 gallons. In light of the respondent's relative lack of culpability and Blank's prompt response to the spill, a payable fine of twenty-thousand dollars appears too high, particularly in light of these other cases. This is not to undercut the importance of compliance with the regulations at issue. As can be seen from these facts, adherence to the regulations would likely have prevented the spill.

I decline respondent's request in its post-hearing brief for reconsideration of my decision to preclude the admission of settlement documents into this proceeding. See, BBJ Br., p. 3, fn 4. While the rules of evidence do not strictly apply to administrative proceedings, the policy reasons that support keeping settlement discussions out of trials are equally applicable to this forum. If parties cannot be assured that settlement offers will not be considered in a subsequent hearing, the ability to resolve matters outside of the hearing will be diminished. See, CPLR 3219, 3220, 3221; Prince, Richardson on Evidence, Prof. Farrell, § 8-218 (11th ed. 1995); USA v. Glens Falls Newspapers, 160 F.3d 853 (2d Cir. 1998) (court affirmed decision to preclude public access to settlement documents on basis that such disclosure would prevent negotiated settlement).(4) Respondent's insinuation that there is something underhanded afoot because staff is seeking a greater penalty at hearing than during settlement is baseless. It is perfectly acceptable that the Department staff would maintain its request in the complaint for a greater penalty if it must go to hearing to resolve a matter. Obviously, there is a greater expenditure of resources in a hearing for all parties. To provide staff with no flexibility in penalty calculations and settlements would result in no incentive to settle short of a hearing.

Investigation and Remediation

With respect to the Department's decision to require additional investigation and potential remediation, the respondent believes that this recent directive is based upon animus towards it due to the respondent's resistance to paying a penalty. I cannot make such a conclusion based upon the record. It is quite possible that a second look at AOR's site investigation report made staff concerned about the levels of contaminants found in the north wall of the excavation. See, Exhibit 17, p. 6 and North Wall sample results annexed to AOR report. Staff testified that it was possible to remediate under a building without removing the structure. In addition, the boring performed by IDC on August 21, 2001 indicated evidence of petroleum contamination at the border of the property not far from the Mongaup River. See, Exhibit 16. While it may have been more logical to complete this investigation prior to proceeding with this matter in order to determine the full extent of any environmental damage, there is no reason that this work should not go forward. Accordingly, I recommend that the Commissioner grant staff's request for an order requiring additional investigation and remediation, if required.

With respect to paragraphs A, B, and C in staff's request for relief in the complaint, these actions have already been taken by the respondent as noted above. With respect to staff's request for further investigation and remediation, these measures should be tailored in specific instructions to the respondent in light of the work that has already been conducted on site. In addition, staff should continue to cooperate with the State Police's efforts to participate in any future work.

I do not recommend that the Commissioner grant staff's request for costs the Department has borne related to this spill. While a general demand was made in the complaint for such compensation, there was no specific sum specified and the staff offered no proof at hearing to support this request. For the first time in these proceedings, in its post-hearing brief, staff provides a specific number of $4, 493.00 and support for this demand. See, Staff's Br., p. 2 and Appendix A. However, the respondent has been given no opportunity to rebut this information or to cross-examine Department staff with respect to it. Moreover, because staff has requested that the respondent perform additional work related to the spill, this demand appears premature.

RECOMMENDATION and CONCLUSION

Based upon the foregoing, I recommend that the respondent be found liable for violating Navigation Law § 173, ECL §§ 17-1005, 17-1009, and 17-1007 and 6 NYCRR §§ 612.2, 613.3, 613.4, and 613.5. Accordingly, I recommend that a fine of twenty thousand dollars be assessed and that fifteen thousand dollars of this fine be suspended pending respondent's cooperation with the completion of further investigation and remediation required at the site. I further recommend that the Commissioner require staff to cooperate with the State Police in obtaining that agency's assistance in this work.

I do not find that the respondent violated ECL § 17-0501 and recommend dismissal of this cause of action. In addition, I recommend that the Commissioner deny staff's request for costs associated with the spill and this proceeding.

1 During the hearing, staff also testified to a future letter with directions that it intended to send to the respondent regarding additional remediation requirements.

2 I am not including in this calculation the violation of the Navigation Law as NL § 192 provides that penalties for violations of this law are to be obtained in a court of competent jurisdiction, and this is not such a forum.

3 In response to my questioning at the hearing, Mr. Herron stated that the reference in the notice of hearing regarding written penalty guidance was to the 1990 Civil Penalty Policy. However, the staff's witnesses did not utilize this document in calculating a recommended penalty. Tr. 85, 176.

4 I don't find the finding related to the settlement offer in Vito v. Jorling, 197 AD2d 822 (3d Dep't 1993) relevant to these facts. In that case, the Appellate Division overturned the Department's penalty based upon a lack of support for it. In addition, while I have been unable to uncover where in the record the settlement offer of $500.00 appeared in that matter, the sharp disparity between that offer and the penalty of $59,044.00 appeared to shock the conscience of the court.

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