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ExxonMobil Corporation - Ruling, December 9, 2003

Ruling, December 9, 2003

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Alleged Violation of Article 17 of the Environmental Conservation
Law and Title 6 of the New York Compilation of Codes, Rules and Regulation by:

EXXONMOBIL CORPORATION, CHARLES
G. VETTER, PETE LOUSSEDES, TODD
BARIGHT, ROBERT McGRATH, SAM EL
JAMAL, MOHAMMAD JAMAL, JASON DOBBS,
THOMAS FLORIO, L. SHAW, ISSA ISSA,
DAVINDER SAINI, R. KNOTH, ROSE VOLASKI,
MUA EL JAMAL, M. EL JAMAL, JERRY FLORY
and VIOLET JAMAL,
Respondents.

RULING OF THE ADMINISTRATIVE LAW JUDGE
RE: RESPONDENT'S MOTION FOR PROTECTIVE ORDER

23 Consolidated Bulk Petroleum Storage Cases

Background

New York State Department of Environmental Conservation (DEC) staff issued 23 virtually identical notices of hearing and complaint to the respondents dated June 5, 2002. These matters involve the alleged late filing of registrations for 23 bulk petroleum storage facilities, in violation 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). In response to cross-motions filed by staff and the respondents in August 2002 relating to discovery and dismissal of the complaint and affirmative defenses, I issued rulings dated September 23, 2002. As a result of these rulings, the respondents filed an amended answer dated November 5, 2002. In July 2003, the parties requested a "stay" of the proceedings in order to conduct settlement negotiations. However, in October 2003, based upon an inability to achieve a resolution, staff informed me of its desire to re-commence this enforcement proceeding. Accordingly, a conference call was held on November 7, 2003 to address the status of this and other matters involving the respondent ExxonMobil as well as respondent-dealers.

Among the matters discussed in this conference call was the staff's intention to seek certain financial discovery of the respondents as well as communications among the respondents and their contractor regarding the registration of the service station petroleum storage tanks. See, letter dated November 7, 2003 annexed to this ruling. It is these two items that are now the subject of the respondent-dealers' motion for a protective order dated December 1, 2003 submitted by their counsel Urs Broderick Furrer, Esq. of Harriton & Furrer, LLP. In addition, on December 8, 2003, respondent ExxonMobil by its counsel Joseph T. Walsh, III, and Martiza Berdote Byrne, Esqs. of McCusker, Anselmi, Rosen, Carvelli & Walsh also moved for a protective order related to staff's discovery demand of this respondent seeking the same items.

Discussion

Consistent with the telephone conference call of November 7, staff has sought discovery of the respondents as follows: (1) documentation related to the sale of gasoline or other petroleum products and the income from the facility pertaining to the sale of gasoline or other petroleum products for the period between March 24, 2002 through June 1, 2002; (2) documentation relating to the sale of any and all products other than gasoline or other petroleum products and the income from the facility pertaining to the sale of non-petroleum products for the period between March 24, 2002 through June 1, 2002; and (3) all communications between the dealers, ExxonMobil and ExxonMobil's contractors relating to the alleged violations.

In the respondents' motion for a protective order, their counsel objects to staff's discovery requests on the grounds that they are overbroad, unrelated to the allegations in the complaint, and burdensome.

Staff responds to the respondent-dealers in papers submitted by Associate Attorney Benjamin A. Conlon dated December 7, 2003 that the motion is defective because it fails to meet the requirement in 6 NYCRR § 622.7(c)(1) requiring counsel's statement that a good faith attempt was made to resolve the dispute without resort to motion practice. In addition, staff emphasizes the importance of the registration requirement and respondents' alleged willful disobedience with timely compliance with this regulation. Staff argues in support of its request for communications among the dealers, ExxonMobil, and the third party contractor that this information relates to establishing that ExxonMobil counseled the operator/dealers to continue to remain open despite the alleged failure to timely register. In addition, staff maintain that the financial information is relevant to establishing the penalty as it will reveal the economic benefit obtained by the late registration and also the operation of these facilities without the requisite registrations.

With respect to staff's first argument in opposition to respondents' motions, in our conference call of November 7, the parties had an opportunity to discuss staff's intention to seek the financial data. Counsel on behalf of respondents made clear that they would oppose producing this information and we discussed the relevancy of this information. Obviously, no agreement was reached on production; however, the parties did agree that staff would file a motion to compel the discovery by November 21, 2003. Apparently, staff opted instead to serve respondents with the discovery request to which the respondents filed the motion. In any case, the parties had already discussed the matter in my presence and therefore, I do not find respondent-dealers' motion defective pursuant to 6 NYCRR § 622.7(c)(1). As for staff's other discovery demand, I do not recall any substantive discussion. As noted in footnote 2, ExxonMobil's counsel did provide the § 622.7(c)(1) affidavit. However, I am denying respondents' motion with respect to this demand.

As set forth in the papers of the respondents and in my ruling of September 23, 2002, § 622.7(a) of 6 NYCRR allows discovery in DEC enforcement proceedings to be as broad as provided under Article 31 of the Civil Practice Law and Rules. What discovery documents are "material and necessary" to the prosecution or defense of an action is determined by a test of usefulness and reason. Allen v. Crowell-Collier Publ., 21 NY2d 403, 407 (1968). And, as also stated in my earlier ruling, the burden of meeting discovery requirements must be weighed against the benefits that information will provide the seeker. Andon v. 302-304 Mott St. Associates, 94 NY2d 740, 746 (2000).

Concerning the sale data sought by staff, I do not find these demands sufficiently relevant to the allegations in the complaint to warrant the burden and potential prejudice this production would engender. Staff has charged that the respondents have failed to timely register their bulk petroleum storage tanks. Respondents have defended that their registrations were submitted two days late. ExxonMobil provides in its motion papers (p. 5) that DEC staff issued the registrations in September 2002; however, there is no information from any party as to the basis for this delay. I do not see how the two months' and more of sales information is related sufficiently to the alleged violations. With respect to the economic benefit, there is no showing by staff that the sale of petroleum and/or non-petroleum products during this period relates to any economic benefit of having filed late registrations. In terms of demonstrating the respondents operated their facilities despite having an expired registration, as I stated in the September 23 ruling with respect to staff's demand for inventory information, it would appear that there are other means to establish this that would be less burdensome and invasive. Accordingly, I am granting respondents' motion for a protective order with respect to these discovery demands.

With respect to staff's demand for communications among ExxonMobil, the operator/dealers, and the contractor, it would appear that staff's demand is directly relevant to the complaint. The respondents have alleged in their defense that a third party contractor is responsible for the failure to timely register the tanks. Moreover, this information would relate to staff's claim that there was intentional disregard for the regulation's requirements and this could be germane to penalties. Accordingly, to the extent that this information exists and is discoverable (e.g., not subject to privilege), I am denying the respondents' motion.

Conclusion

Respondents' motion for a protective order with respect to staff's discovery request for information related to sales between March 24, 2002 and June 1, 2002 is granted. Respondents' motion for a protective order with respect to communications among the dealers, ExxonMobil and ExxonMobil's contractors is denied. With respect to this latter information, the respondents are to produce these records by December 31, 2003.

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

Dated: Albany, New York
December 9, 2003

TO: Benjamin A. Conlon,
Associate Attorney
NYSDEC - DEE
Bureau of State Superfund and Voluntary Cleanup
625 Broadway - 14th Floor
Albany, New York 12233-5550

Urs Broderick Furrer, Esq.
Harriton & Furrer, LLP
Talleyrand Office Park
220 White Plains Road
Tarrytown, New York 10591

Joseph T. Walsh, III, Esq.
Maritza Berdote Byrne, Esq.
McCusker, Anselmi, Rosen, Carvelli & Walsh
127 Main Street
Chatham, New Jersey 07928

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