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Cadosia Valley Lumber Company - Ruling, August 19, 1999

Ruling, August 19, 1999

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

the Alleged Violations of Article 17 of the New York State Environmental Conservation Law
and Article 12 of the Navigation Law

- by -

CADOSIA VALLEY LUMBER COMPANY, INC.,

Respondent.

Administrative Law Judge's Ruling on

Staff's Motion for Order Without Hearing

DEC File No.

R4-2145-99-02

Summary of Ruling

The motion of the staff of the New York State Department of Environmental Conservation (DEC or Department) for an order without hearing is denied for the reasons described below.

Proceedings

The Department staff commenced this proceeding against Cadosia Valley Lumber Company, Inc. (respondent or Cadosia) by service of a notice of motion for order without hearing and supporting documents including an affidavit of DEC environmental engineering technician Thomas Lane upon James and Carme Vitale, Jr., the sole shareholders of Cadosia and the owners of the real property Cadosia is situated upon, and Rodney Richards, Esq. by certified mail on July 20, 1999.(1) In its papers, staff alleges that the respondent had three underground petroleum storage tanks on its property located at Apex-Cadosia Road in Hancock, New York and that it (1) illegally discharged petroleum and failed to properly remediate the spill in violation of the Navigation Law and (2) failed to register, test, or monitor its tanks in accordance with §§ 612.2, 613.4, and 613.5 of Title 6 of the New York Compilation of Codes, Rules, and Regulations (6 NYCRR).(2) Staff requests an order requiring that respondent pay a penalty of $25,000, register the three tanks that were located on the property in accordance with 6 NYCRR § 612.2, and submit a plan to remediate the petroleum contamination at the site.

By certified mail, on July 30, 1999, the respondent served the July 30, 1999 affidavit of Carme Vitale, Jr., the president of Cadosia, in opposition to staff's motion. In summary, the respondent argues that it is not the owner of the real property upon which the tanks were located, that the tanks were not owned by respondent, and that the petroleum contamination that has occurred on this property was the direct result of the work performed by a contractor retained by Agway Petroleum Corporation (Agway) to remove the tanks. Based upon these facts, respondent argues that it is Agway and the contractor who are responsible for the contaminated soil and any violations of 6 NYCRR §§ 612.2 and 613.5.

By letter dated August 10, 1999, Assistant Regional Attorney Ann Lapinski requested an opportunity for staff to reply to the respondent and I granted this request by letter the same day. Rather than a reply, by letter dated August 17, 1999, staff submitted a request to amend its motion to add three new parties -- James Vitale, Carme Vitale, and Agway Petroleum Corporation.

Staff's Evidence

In the affidavit submitted by staff in support of its motion, Region 4 environmental engineer technician Thomas Lane states that on June 24, 1998 he received notice from L & O Mechanical Contractors (L & O or contractor) that they would be removing petroleum tanks from a site owned and operated by the respondent. Mr. Lane came to the site on June 29, 1998 and observed the excavation and removal of the three underground petroleum tanks as well as petroleum contamination of "some of the soil surrounding the tanks." Mr. Lane checked Department records regarding these tanks and found that they were not registered pursuant to 6 NYCRR § 612.2., and that there was no evidence that tightness testing had been performed as required by 6 NYCRR § 613.5, or that there had been periodic monitoring of the tanks required by 6 NYCRR § 613.4. Mr. Lane further states that on August 26, 1998 he received a tank closure report from the contractor noting that the tanks had been removed, samples indicated that soil at the site is contaminated with petroleum, and that while some of this soil was removed from the site during the tank removal, other contaminated soil remained. This report is annexed as Attachment A to Mr. Lane's affidavit.

The cover sheet for Attachment A is a letter from Terri Oswald of L & O to Mr. Lane which indicates that the enclosed tank closure report for the Cadosia Lumber Yard was made on behalf of Agway Energy Products. Attachment B consists of an updated closure report and a cover letter also from L & O Mechanical Contractors by Terri Oswald that says "[w]e made a mistake in placing Agway Energy as the Owner of this site. The Cadosia Lumber Yard is the owner and operator of the existing site." However, Terri Oswald does not explain the basis for this correction in his letter.

Based upon these facts, staff requested that findings be made summarily that the respondent violated the cited regulations and that the relief described above should be ordered.

In its August 17 submission, based upon the information provided by Mr. Vitale in his affidavit, staff now seeks to find Agway Petroleum Corporation and James and Carme Vitale responsible for these alleged violations.

Respondent's Evidence

Carme Vitale, Jr., respondent's affiant in opposition, is the president of Cadosia Valley Lumber Company, Inc. In this affidavit, Mr. Vitale states that the real property from which the three tanks in question were removed is owned by himself and his brother James Vitale. He also states that the tanks are owned by Agway. In support of this claim, the respondent submitted a copy of a customer equipment lease agreement dated June 7, 1957 (Exhibit B to the Vitale affidavit) that sets forth the terms of a lease between The Fowler Oil Company (Fowler) and Vitale Lumber Company. Fowler leased the tanks to Vitale Lumber Company according to this agreement. The lease also has handwriting across it that indicates: "Sold 5/16/67, GLF".(3)

Exhibit C to the Vitale affidavit is a decision and order of Justice Carl J. Mugglin of Delaware County Supreme Court dated June 19, 1996 in a case captioned Carme S. Vitale, Jr. and James F. Vitale v. Dean Fowler Oil Co., Inc. and Agway Petroleum Corporation in which the plaintiffs Vitale alleged trespass by the defendants based upon the tanks' presence on the property and were seeking the removal of the tanks and money damages as their relief. This decision sets forth the background regarding the history of the three petroleum tanks in question.

Vitale Lumber Company, Inc. was incorporated in New York in 1945 and Carme S. Vitale, Sr. was the sole shareholder, director and officer. In June 1957, the Vitale Lumber Company entered into the agreement described above to lease certain equipment for the storage and sale of petroleum products by Fowler. The lease was signed on behalf of Vitale Lumber Company by an employee, Anthony Senia. The equipment was installed on land owned by Carme S. Vitale, Sr. but remained the property of Fowler. In return for the use of the equipment, the agreement required Vitale to purchase petroleum products solely from Fowler.

In or about 1970, Dean Fowler Oil Co., Inc. (Dean Fowler) took over the operations of Fowler in New York State including the Vitale Lumber Company account. In 1972, the plaintiffs obtained the land upon which the Vitale Lumber Company conducted its business and where the tanks are buried from Carme S. Vitale, Sr. Vitale Lumber Company ceased doing business around 1973. Cadosia Valley Lumber, Inc. was incorporated in 1973 and Carme Vitale, Jr. and James F. Vitale are its sole shareholders, directors, and officers. In November 1992, in response to DEC's requirement that the tanks be removed, the plaintiffs requested that Dean Fowler remove the tanks and the company refused to do so. An amended complaint joined Agway to the lawsuit based upon an alternative theory that it was the owner of the tanks.

In this litigation, the court concluded in response to Dean Fowler's motion for summary judgment that the notations on the face of the lease agreement indicate that the tanks were sold to GLF in 1967 and thus, Dean Fowler is not responsible for any trespass or for the tanks' removal. However, the court declined to dismiss the plaintiffs' claim against Agway in this order. The Appellate Division, Third Department affirmed Justice Mugglin's decision in an opinion dated April 17, 1997 Carme S. Vitale, Jr. and James F. Vitale v. Dean Fowler Oil Co., Inc. and Agway Petroleum Corporation, 238 AD2d 794 (3d Dep't 1997). A settlement agreement dated May 30, 1998 between Agway and Carme S. Vitale, Jr. and James F. Vitale and submitted as respondent's Exhibit E indicates that to resolve the pending lawsuit Agway agreed to remove the three tanks and associated equipment located on the Vitale's property. As part of the agreement, the Vitale's agreed to release Agway from future liability regarding the tanks except with respect to any claim of alleged petroleum contamination of the site. The Vitales agreed that any lawsuit that they would bring against Agway for contamination relating to the equipment had to be brought within six months of the completion of the removal of the tanks and the restoration of the excavation. Neither party admitted any liability or ownership as part of the agreement.

With respect to the tank removal, Carme Vitale, Jr. states in his affidavit that in the course of the work, L & O broke a pipe connection and a pipe elbow on June 29, 1998 causing the soil contamination. Mr. Vitale points to sample results annexed as Exhibit F to his affidavit arguing that due to the location of the noted soil contamination, the burst equipment is the likely cause rather than deterioration of the tanks. Mr. Vitale also complains that Mr. Lane was at the site during these incidents and did not direct the contractor to remove the soil, instead waiting a year to bring this proceeding. Mr. Vitale concludes by stating that Agway or L & O are responsible for any violations of the regulations.

Discussion

Section 622.12(a) of 6 NYCRR provides for an order without hearing when "the cause of action is established sufficiently to warrant granting summary judgment under the CPLR in favor of any party." CPLR § 3212(b) provides for summary judgment when no issue of material fact exists between the parties and the movant is entitled to judgment as a matter of law. Friends of Animals v. Association of Fur Mfgrs., 46 NY2d 1065, 1067 (1979). The staff has failed to meet these burdens in its motion.

Fundamentally, the respondent has presented facts that indicate that the Department staff has named the wrong respondent as owner of the land upon which the tanks were removed. It appears from the papers presented that the sole basis for naming the respondent are the August and October letters of Terri Oswald of A & O. There is no explanation for Terri Oswald's remarks and Mr. Carme states that he and his brother own the real property. In addition, the decisions annexed as Exhibits C and D also indicate that the Vitales are the current owners of the property. In effect, staff has acknowledged this possible error by now seeking to add three more respondents.

While there does not seem to be a dispute as to the facts surrounding the removal of the tanks, the cause of the contamination that is noted by staff and the respondent is in question. In addition, neither party has set forth any facts indicating the use of the tanks by respondent, the Vitales, Agway, or any other party. Navigation Law § 181(1) provides, "[a]ny person who has discharged petroleum shall be strictly liable, without regard to fault, for all cleanup and removal costs . . .no matter by whom sustained." In State of New York v. Wisser Company, 170 AD2d 918, 919 (3d Dep't 1991), the Appellate Division notes that this language has been interpreted to impose liability on the owner of the system from which a discharge occurred (citations omitted). The courts have also held parties who are directly involved in activities that lead to a discharge liable. The reasoning for these findings is that these persons are in the best position to prevent or halt a discharge and to effect a cleanup. See, State of New York v. Montayne, 199 AD2d 674, 675 (3d Dep't 1993). Accordingly, in one case this meant the imposition of liability on firefighters who damaged a petroleum storage tank while fighting a fire. Id. at 674 citing Nicol v. Jenkins Fire Co., 192 AD2d 164 (3d Dep't 1993). In Domermuth Petroleum Equipment and Maintenance Corp. v. Herzog & Hopkins, Inc., et al, 111 AD2d 957 (3d Dep't 1985), it was the company that delivered the fuel and repaired the tanks that subsequently ruptured that was held accountable for a discharge of home heating oil. Thus, under the Navigation Law it appears that rather than the property owner, the owner of the tank system and/or the contractor is the responsible party with respect to the allegations concerning the discharge and the failure to contain it.

Again, with respect to the other allegations concerning the failure to register the tanks, tightness test the tanks, and to keep inventory records of the 3 tanks, it is not clear who was responsible for these tasks. Section 612.2(a) of NYCRR provides for the owner of a petroleum storage facility to register with the Department. The definitions contained in 6 NYCRR § 612.1(10) define facility or storage facility as the tanks and associated equipment and 6 NYCRR § 612.2(18) defines owner as the person who has legal or equitable title to the facility. Operator is defined as a "person who leases, operates, control or supervises a facility." 6 NYCRR § 612.1(16). Thus, if the respondent did not own the tanks and related equipment, it was not responsible for registering them pursuant to the regulations.

Similarly, 6 NYCRR § 613.5 requires that the "owner of any underground petroleum storage tank and connecting piping system must have the tanks and pipes periodically tested for tightness. . ." Again, if the respondent is not the owner of the facility, it would not be responsible for testing. Section 613.4 of 6 NYCRR provides that the "operator of an underground storage tank must keep daily inventory records for the purpose of detecting leaks." In the facts alleged in the staff's papers it is not clear who is the operator of this facility and therefore, there is no basis to determine summarily that the respondent are liable for any failure to keep these records.

While it may be appropriate for staff to add the Vitales and Agway as parties to this proceeding, such amendment does not answer the questions of fact and law raised by the pleadings sufficiently to grant a summary order.(4) Accordingly, I do not find Cadosia summarily liable for the alleged violations of Navigation Law §§ 173 and 176 and 6 NYCRR §§ 612.2, 613.4, and 613.5 set forth in the motion papers. Nor can I find the other proposed parties liable based upon the facts presented by staff. Because of these conclusions, I will not address whether or not the relief demanded is appropriate except to note that civil penalties cannot be assessed in an administrative proceeding for violations of the Navigation Law. See, Navigation Law § 192; In the Matter of Wiese, 1992 WL 177431, *5 (NYDEC 1992).

Conclusion

I deny the staff's motion and pursuant to 6 NYCRR § 622.12(e), staff's moving papers and Cadosia's response will be deemed the complaint and answer, respectively. With respect to staff's August 17 request, staff may amend its complaint to add the named parties. Of course, such amendment will require staff to serve the added parties and to provide an opportunity for the service of their answers within 20 days of receipt of the amended complaint. 6 NYCRR § 622.4. Upon receipt of the answers, I direct staff to coordinate a conference call with the representatives of all the parties and me.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: Helene G. Goldberger
Administrative Law Judge

Dated: Albany, New York
August 19, 1999

TO: Rodney A. Richards, Esq.
P.O. Box 1731
Binghamton, New York 13902-1731

James and Carme Vitale
Cadosia Valley Lumber Co., Inc.
Box 297
Newfoundland, PA 18445

Ann Lapinski
Assistant Regional Attorney
NYSDEC - Region 4
1150 North Westcott Road
Schenectady, New York 12306-2014

Richard Williams, Esq.
Agway Energy Products
P.O. Box 4852
Syracuse, NY 13221

Robert A. Barrer, Esq.
Hiscock & Barclay
Financial Plaza
P.O. Box 4878
Syracuse, NY 13221-4878

1. The copy of the return receipt submitted by Department staff as proof of service of the motion papers on Mssrs. Vitale indicates a date of delivery of July 20, 1999. However, the copy of the return receipt for Mr. Richards does not reveal a date. Mr. Richards represents the respondent in this matter.

2. The staff's "motion for order without hearing" also includes a citation to 6 NYCRR § 613.8 which concerns the duty to report a spill. However, there is no allegation of such a failure in any of the supporting papers.

3. GLF was the Grange League Federation, a farmers' cooperative which became part of Agway.

4. In addition, while the Vitales have had notice of staff's motion, there is no indication other than a carbon copy notation at the end of Ms. Lapinski's letter that Agway has been put on notice of these proceedings.

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