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DiCostanzo, Benedetto and Edkins Scrap Metal Corporation - Ruling, May 21, 2003

Ruling, May 21, 2003

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 New York State Navigation Law by

Benedetto DiCostanzo and
Edkins Scrap Metal Corporation,

Respondents.

Ruling on Motion for
Order Without Hearing

DEC Case # R2-20020924-299

Summary

This Ruling addresses a motion for Order Without Hearing brought by the Staff of the Department of Environmental Conservation ("DEC Staff"). The ALJ rules to deny DEC Staff's motion with respect to Respondent Benedetto DiCostanzo because DEC Staff has failed to demonstrate its entitlement to judgment as a matter of law and has not shown that Mr. DiCostanzo, individually, is liable for the violations alleged. With respect to Respondent Edkins Scrap Metal Corporation ("ESMC"), the ALJ rules DEC Staff is entitled to summary judgment, as a matter of law on the issue of liability and finds ESMC committed 722 violations: 361 in violations of a duty imposed by Article 12 of the Navigation Law ("NL"); and 361 violations of a duty imposed by Article 17 of the Environmental Conservation Law ("ECL"). Specifically, ESMC failed to comply with the terms of a Stipulation between it and DEC Staff (attached as Appendix A). Finally, the ALJ will immediately hold a hearing on the appropriate civil penalty amount.

Background

ESMC operates an active auto scrap yard at 2265 Richmond Terrace, Staten Island, New York (the "site"). Benedetto DiCostanzo is the President of the Corporation. According to the Respondents, the site has been used as an auto scrap yard for fifty years or more. The site is adjacent to the Kill Van Kull waterway.

A discharge of petroleum occurred at the site on or about November 28, 2000 (DEC Spill No. 0009768). This discharge was observed by Mr. Steven Sangesland, a member of DEC Staff, on November 28, 2000 and December 1, 2000 when he inspected the site. Following these inspections, the Respondent ESMC and DEC Staff negotiated a Stipulation. Mr. DiCostanzo signed the Stipulation on March 1, 2001, as President of ESMC.

On March 20, 2001, Mr. Sangesland of DEC Staff again inspected the site and observed that the discharge had not been cleaned up, that several large pools of oil remained on the surface and a constant stream of petroleum continued to leach from the site into the Kill Van Kull.

On August 20, 2001, DEC Staff signed the Stipulation and it then became effective. By its express terms, the Stipulation is equivalent to an order pursuant to ECL §17-0303 and a directive pursuant to NL §176. Under the terms of the Stipulation, DEC Staff and the Respondent ESMC agreed that no monetary penalty would be imposed. Rather, the Respondent ESMC would clean up and remove the discharge according to a schedule included in a Corrective Action Plan, which was attached to the Stipulation. Specifically, the Corrective Action Plan required the Respondent ESMC to submit to DEC Staff for approval an Investigation Plan detailing the scope of work proposed to investigate the nature and extent of the contamination within 45 days from the effective date of the Stipulation. Such Investigation Plan was due October 5, 2001. As of the date of DEC Staff's motion, the Respondents had not submitted an Investigation Plan.

Within 30 days of DEC Staff's approval of the Investigation Plan, the Respondent ESMC was required to complete the work described in the Investigation Plan and submit a report to DEC Staff. Within 30 days of the completion of the investigation, the Respondent ESMC was required to submit a Remediation Plan to DEC Staff detailing the work proposed to remediate the contamination caused by the spill. Within 30 days of receipt of DEC Staff's approval of the Remediation Plan, the Respondent ESMC was to implement such Plan.

Proceedings and the Positions of the Parties

The instant enforcement matter was commenced by DEC Staff by the filing of a Complaint and a Notice of Motion for an Order Without Hearing dated October 1, 2002. In the Complaint, DEC Staff alleges that the Respondents failed to comply with the Stipulation because the Respondents have failed to timely submit an Investigative Plan. DEC Staff seeks a Commissioner's Order finding the Respondents in violation of the Stipulation and consequently in violation of a duty imposed by Article 17 of the ECL and a duty imposed by Article 12 of the Navigation Law. DEC Staff seeks a Commissioner's Order levying a penalty of $4,512,500, and directing the Respondents to remediate the site according to a plan approved by DEC Staff.

In addition to the allegations in the complaint regarding the violations of the Stipulation, DEC Staff alleges that in March 2001, DEC Staff observed open buckets of petroleum at the site, large pools of petroleum on the ground and a constant stream of petroleum leaching from the site and into the Kill Van Kull. DEC Staff does not indicate that any visits to the site have been made since the Stipulation became effective. Since both causes of action in the complaint involve the violation of the Stipulation and the failure on the part of Respondents to produce an investigative plan, it is difficult to understand the relevance of the observations made March 2001 to the instant motion because these allegations predate the effective date of the Stipulation.

By papers dated October 18, 2002, the Respondents opposed DEC Staff's motion and submitted an Answer. In their Answer, the Respondents include a blanket denial to all assertions in the Complaint, except an admission that Respondent ESMC occupies the site and that Respondent DiCostanzo is its President. The Respondents assert that a dispute of material fact exists in this case regarding liability (but do not assert what this dispute is) and seek a ruling denying DEC Staff's motion.

The Respondents do not contend that they have provided the Investigative Plan that was required to be produced by October 5, 2001 as a condition of the Stipulation. However, the Respondents do contend that they have taken unspecified "corrective ameliorative action" and have commenced an unspecified "procedure for the investigation and correction of the property." Respondents maintain that no petroleum spill occurred at the site, that they have invested substantial sums to investigate and correct leakage from equipment, and that the Kill Van Kull is very polluted. However, the Respondents do not allege that they have ever submitted an Investigative Plan to DEC Staff for approval.

Discussion

DEC's uniform enforcement hearing procedures (Part 622 of Title 6 of the New York Compilation of Codes, Rules and Regulations (6 NYCRR)) provide that a contested motion for order without hearing will be granted if the cause of action or defense is established sufficiently to warrant granting summary judgment under the CPLR in favor of any party (6 NYCRR 622.12(d)). Section 3212 of the CPLR authorizes the granting of a motion for summary judgment if, based upon all papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party.

A hearing is only necessary in a DEC administrative enforcement proceeding when a substantial issue of fact exists and the hearing would serve as a means to resolve this issue. In this case, DEC Staff asserts two causes of action: 1) that the Respondents have not complied with the terms of the Stipulation and thus have violated a duty under ECL Article 17; and 2) that the Respondents have not complied with the terms of the Stipulation and thus violated a duty under Article 12 of the Navigation Law. DEC Staff has demonstrated that the Stipulation was executed, and that Respondent ESMC had a duty to provide an Investigative Plan by October 5, 2001. Respondents do not dispute that no such plan has been provided. Thus, DEC Staff has established that they are entitled to summary judgment as a matter of law on the issue of liability on these two causes of action. Respondent ESMC has violated Article 17 of the ECL 361 times, one violation for each day the Investigation Plan is late (from October 5, 2001, when the Stipulation became effective, through October 1, 2002, when DEC Staff made its motion). Similarly, Respondent ESMC has committed 361 violations of Article 12 of the NL.

In their Answer, the Respondents claim that no "petroleum spill" occurred on November 28, 2000 but rather that the petroleum observed by Mr. Sangesland may have been the result of "leakage from used and junked automobiles stored on the property and not ever amounting to the level of a petroleum spill" (Gilroy Affirmation, paragraph 6). However, the executed Stipulation states that a discharge occurred on November 28, 2000. By executing the Stipulation, the Respondents acknowledged the fact that a discharge had occurred and waived their rights to contest this fact. This fact cannot now be disputed.

Even assuming the merits of the Respondents' argument is adjudicable, the Respondents are attempting to differentiate between the "leakage" of petroleum and the "spilling" of petroleum. The law makes no such distinction. The relevant section of New York State Law defines a discharge as follows:

"Discharge" means any intentional or unintentional action of omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of petroleum into the waters of the state or onto lands from which it might flow or drain into said waters, or into waters outside the jurisdiction of the state when damage may result to the land, waters or natural resources with the jurisdiction of the state (NL §172(8)).

This definition creates no threshold amount for a discharge; there is no difference between a "leak" and a "spill". Both are discharges. Further, the discharge of petroleum is prohibited, unless done pursuant to and in compliance with a state or federal permit (Navigation Law §173). In this case, the Respondents' argument that the petroleum observed at the site on November 28, 2001 was not large enough to be a spill must be rejected, because it is certainly a discharge.

The Respondents also claim that neither Mr. DiCostanzo nor his lawyer remember seeing the Corrective Action Plan when Mr. DiCostanzo signed the Stipulation. The Stipulation is a one page, six paragraph document with the signatures of Mr. DiCostanzo and DEC's Regional Engineer at the bottom. Paragraph 2 of the Stipulation states in its entirety: "Respondent has agreed to cleanup and remove a discharge of petroleum which occurred on November 28, 2000 at Edkins Scrap Metal Corp, 2265 Richmond Terrace, Staten Island, by taking steps and according to the conditions set forth in the Corrective Action Plan attached to this Stipulation." The Corrective Action Plan is a one page, five paragraph document setting forth a schedule of actions to be undertaken. The first paragraph requires the Respondent to "submit to the Department, for its approval, an Investigation Plan, detailing the scope of work proposed to investigate the nature and extent of the contamination caused by the spill" within 45 days of the effective date of the Stipulation. Respondents do not refute DEC Staff's assertion that both the Stipulation and the Corrective Action Plan were sent to the Respondents by DEC Staff with a transmittal letter dated August 20, 2001. Nor do the Respondents assert that the Corrective Action Plan contains any provisions not discussed or agreed to during negotiations. The Respondents' unsupported claim of not remembering seeing the corrective action plan does not create an issue of fact. The Respondents' conclusory denial is insufficient to overcome DEC Staff's prima facie showing that Respondents have not provided an Investigative Plan.

There is no factual dispute in this matter regarding the Respondent ESMC's failure to comply with the Stipulation. Under the terms of the executed Stipulation, the Respondent ESMC had a duty to provide an Investigation Plan to DEC Staff by October 5, 2001. The Respondent ESMC agreed to the terms of the Stipulation as a negotiated settlement to pending enforcement action by DEC Staff. DEC Staff asserts that no Investigation Plan has been received and the Respondent ESMC does not dispute this. The fact is established that no Investigation Plan has been produced, therefore, the Respondent ESMC is in violation of the Stipulation. As the Stipulation recites in paragraph 5, it is the equivalent to an Order pursuant to ECL Article 17 and a Directive pursuant to Article 12 of the NL. Therefore, DEC Staff has thus established entitlement to summary judgment as a matter of law on the issue of liability against Respondent ESMC.

However, DEC Staff has failed to establish entitlement to summary judgment as a matter of law regarding the alleged liability of Respondent DiCostanzo, individually and in addition to his capacity as President of ESMC. Since Mr. DiCostanzo was not a party to the Stipulation, he cannot now be found, based upon the record before me, to be in violation of its terms. Accordingly, with respect to Respondent DiCostanzo, DEC Staff's motion for order without hearing is denied.

Monetary Penalty

The appropriate amount of civil penalty is determined by the application of the facts of a particular case to the Department's Civil Penalty Policy ("CPP") and Bulk Storage and Spill Response Enforcement Guidance Memorandum ("EGM"). The CPP states that if a violation is proven, it should be presumed that a penalty is warranted unless respondent documents compelling circumstances to the contrary. In this case, the record does not yet contain information necessary or adequate for the ALJ to make a recommendation to the Commissioner regarding the amount of penalty.

In its complaint, DEC Staff seeks a Commissioner's Order levying an unspecified civil penalty. In his affirmation in support of the Motion for Order Without Hearing, DEC Staff Attorney David S. Rubinton elaborates and states DEC Staff requests a penalty of $9,025,000.00, half of which to be suspended ($4,512,500.00) providing the Respondents comply with the terms of the Stipulation. DEC Staff calculates the penalty as follows. The Investigation Plan was due on October 5, 2001. DEC Staff calculates that 361 days elapsed between the effective date of the Stipulation and the date they moved for an Order Without Hearing on October 1, 2002. Therefore, DEC Staff calculates that the maximum penalty authorized by law is $9,025,000.00, based upon a maximum daily penalty of $25,000.00 per day as authorized by §192 of the Navigation Law (and/or §71-1929 of the ECL). DEC Staff seeks a penalty in this case equal to half the maximum penalty, $4,512,500.00.

The basis for this request is that the discharge of petroleum is a serious environmental matter. DEC Staff claims that the discharge has not been remediated to date and possess a threat to the water quality of the Kill Van Kull waterway, which is adjacent to the site of the spill. According to DEC Staff, these circumstances, combined with the failure of the Respondents to comply with their obligations under the Stipulation, according to DEC Staff warrant this multimillion dollar penalty.

However, DEC Staff offers no evidence that the discharge continued or was unremediated after the Stipulation became effective and therefore have failed to carry their burden of proof. The discharge occurred on November 28, 2000, as described in the executed Stipulation. DEC Staff observed the discharge on November 28, 2000, on December 1, 2000 and on March 1, 2001. But DEC Staff did not sign the Stipulation, and thus make it effective, until August 20, 2001. DEC Staff offers no proof that any subsequent site visits have been undertaken since the Stipulation became effective to support to its claim that the discharge remains unremediated. In contrast, the Respondents do claim to have taken corrective ameliorative action. Thus, a factual question remains regarding whether the discharge has been remediated. In addition, the record does not contain information regarding the other factors (such as the benefit the Respondent received, the gravity of the harm, etc.) to be considered in the determination of the appropriate civil penalty as set forth in the CPP and EGM. Therefore, triable issues of fact remain regarding the amount of civil penalties which should be imposed. Accordingly, pursuant to section 622.12(f), the ALJ will immediately convene a hearing to assess the amount of penalties to be recommended.

Conclusion

There is no issue of fact that the Respondent ESMC signed the Stipulation and agreed in the attached Corrective Action Plan to provide an Investigative Plan to DEC Staff within 45 days of the effective date of the Stipulation, which was August 20, 2001. DEC Staff alleges that no such Investigative Plan has been submitted. The Respondents do not dispute this assertion. Therefore, DEC Staff is entitled to summary judgment as a matter of law on the issue of Respondent ESMC's liability. The ALJ will immediately convene a hearing to assess the amount of penalties to be recommended.

____________/s/_____________
P. Nicholas Garlick
Administrative Law Judge

May 21, 2003

To: Felix T. Gilroy, Esq.
60 Bay Street
Staten Island, NY 10301

David S. Rubinton, Esq.
NYSDEC Region 2
47-40 21st Street
Long Island City, NY 11101-5407

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