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ExxonMobil Oil Corporation - Ruling, September 13, 2002

Ruling, September 13, 2002

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

Alleged Violations of Articles 3, 17, and 71 of the Environmental Conservation Law,
Article 12 of the Navigation Law of the State of New York and Title 6 of
the New York Compilation of Codes, Rules, and Regulations,

- by -

EXXONMOBIL OIL CORPORATION,

Respondent.

RULINGS OF THE ADMINISTRATIVE LAW JUDGE:
STAFF'S MOTION TO CLARIFY AND/OR DISMISS RESPONDENT'S AFFIRMATIVE DEFENSES
AND
PETITION TO AMEND COMPLAINT AND RESPONDENT'S MOTION FOR
A PROTECTIVE ORDER AND CROSS-MOTION TO COMPEL MEDIATION

Case No. D1-0001-02-06

Background

Department of Environmental Conservation (DEC or Department) staff issued a notice of hearing and complaint to the respondent, ExxonMobil Oil Corporation (ExxonMobil) dated June 14, 2002. In these pleadings, staff alleges that the respondent violated the Environmental Conservation Law (ECL), the Navigation Law, and Title 6 of the New York Compilation of Codes, Rules, and Regulations (6 NYCRR) by failing to contain a discharge of petroleum from its site located at 705 Route 347, Smithtown, New York (Exxon Station). The spill was reported to the Department on or about September 29, 1998. On February 9, 1999, the Department and Exxon (a predecessor of ExxonMobil) entered into a stipulation to remediate this spill. Based upon staff's assessment that the respondent has not carried out the terms of this stipulation, staff commenced this proceeding with the service of the complaint. Subsequent to the service of the complaint, the parties engaged in settlement discussions and temporarily agreed to a stay of this case and others pending those negotiations.(1) However, staff has now decided to move forward with these matters.

Benjamin A. Conlon, Esq. represents the Department staff in this matter. Joseph T. Walsh, III, Esq. of McCusker, Anselmi, Rosen, Carvelli & Walsh represents ExxonMobil.

Pending before me on this matter are staff's undated motion for dismissal or clarification of affirmative defenses and its petition to amend its complaint and respondent's motions to compel mediation and for a protective order dated August 19, 2002. I have reviewed the following submissions to make these rulings:

  • Staff's notice of hearing and complaint dated June 14, 2002.
  • Respondent's answer and affirmative defenses dated July 22, 2002.
  • Staff's undated motion for dismissal of or clarification of affirmative defenses.
  • ExxonMobil's memorandum of law in support of cross-motion to compel mediation and in opposition to motion for dismissal or clarification of affirmative defenses dated August 19, 2002.
  • Affirmation of Joseph T. Walsh, III, Esq. in support of cross-motion dated August 19, 2002.
  • ExxonMobil's motion for protective order dated August 19, 2002.
  • Staff's response to ExxonMobil's cross-motion and opposition and petition to amend complaint dated September 3, 2002.
  • ExxonMobil's opposition to staff's petition to amend complaint dated September 13, 2002.
  • Affirmation of Joseph T. Walsh, III, Esq. in opposition to Department staff's petition to amend the complaint dated September 13, 2002.

On August 19, 2002, shortly after receiving respondent's papers, I received e-mail communications from the parties with respect to staff's request that I "stay" my review of respondent's papers. Mr. Conlon explained that Mr. Walsh relies upon details of the settlement discussions in his arguments and staff determined that this was improper and prejudicial to its position. I arranged for a conference call to be held on August 21, 2002. After hearing the parties' arguments, I ruled that based upon a preliminary review of the papers I had not found the respondent's statements to be prejudicial as they did not contain any specific references to settlement offers.(2) Accordingly, I considered all of the above described papers in making these rulings.

Discussion

Affirmative Defenses

Staff has moved to dismiss or obtain clarification of all of respondent's affirmative defenses (1-16) with the exception of ExxonMobil's seventh affirmative defense. In its response, ExxonMobil has withdrawn its fifth and fifteenth affirmative defenses. See, footnote 1, p. 1, memorandum in opposition.

An affirmative defense is a matter that is the respondent's burden to plead and prove and includes such defenses as collateral estoppel, statute of limitations, and release. See, CPLR 3018(b). As explained by Professor Siegel, an affirmative defense raises a matter that is not plain from the face of the complaint. See, New York Practice, 2d Ed., Siegel (1991) at 393-394. CPLR 3211(b) allows a party to move to dismiss a defense if it "is not stated or has no merit." The obvious reason is to avoid addressing matters at trial that have no relevancy to the claims. In ruling on a motion to dismiss a defense, the courts apply the standards used to evaluate a motion to dismiss a complaint for failure to state a cause of action. The truth of the factual allegations of the defense is assumed but whether there are grounds for the defense is the question. CPLR 3211(a)(7).

Section 622.4(c) reiterates the CPLR's requirements in stating that "[t]he respondent's answer must explicitly assert any affirmative defenses together with a statement of the facts which constitute the grounds of each affirmative defense asserted."

In its first affirmative defense, the respondent provides that the complaint fails to state a claim against ExxonMobil upon which relief may be granted. Essentially, this is a motion to dismiss the staff's complaint without any specification as to the basis of this motion. Section 622.3(a) of 6 NYCRR provides the requirements for a complaint as follows: (i) a statement of the legal authority and jurisdiction under which the proceeding is to be held; (2) a reference to the particular sections of the statutes, rules and regulations involved; and (iii) a concise statement of the matters asserted. The staff's complaint meets these requirements as it sets forth the basic facts asserted in ¶¶ 1-12 and in ¶¶ 13-17, the complaint provides the statutory bases for the violations alleged. In essence, the staff alleges that the respondent owned a petroleum bulk storage tank at the Exxon Station that leaked resulting in a plume of methyl tertiary-butyl ether (MTBE). Staff also recites its version of the history related to the stipulation and respondent's subsequent actions and/or inactions with respect to remediation. While this recitation is not lengthy or greatly detailed, the regulations do not require such specificity. However, the respondent has failed to meet the requirements of 6 NYCRR § 622.4 by not providing any grounds for this defense.

In DEC attorney Conlon's responding affirmation in ¶ 13 he states that "[s]taff acknowledges that [r]espondent's first affirmative defense, while baseless, may be allowed to stand." Since there is no support for staff's change in position on this affirmative defense I am at a loss as to the rationale. Because the respondent has failed to identify the grounds for the defense, I grant the staff's motion for clarification with respect to this affirmative defense.

In its second affirmative defense, the respondent states that "[a]ny damages alleged in the complaint were caused by factors beyond the control or responsibility of ExxonMobil and are solely the responsibility of third parties . . ." Here again, the respondent has failed to state the facts that form the basis for this allegation by not identifying any third party or the legal grounds for avoidance of liability. Moreover, assuming that there is a third party involved, if ExxonMobil was the owner of the facility as it acknowledges in its answer, ¶ 2, for at least "a certain period of time," it is possible that it is liable even if there was an intervening actor. See, State v. Green, 96 NY 2d 403 (2001) (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.") Thus, this affirmative defense lacks the detail necessary for staff to respond and I grant staff's motion for clarification.

In its third affirmative defense, again without alleging any facts, the respondent merely states that it is not responsible for the claims alleged by staff. This affirmative defense is at best superfluous as the answer already denies the basic contentions of staff. And, since there is no specificity, it provides no inkling as to what could be expected at hearing. As this defense adds nothing to respondent's pleading, I grant staff's motion to dismiss it.

Respondent's fourth affirmative defense repeats its claim in the second affirmative defense without adding any information and I grant staff's motion to dismiss it due to its redundancy.

I am dismissing respondent's sixth affirmative defense that merely invokes, without any factual or legal grounds, a laundry list of equitable defenses. This claim defeats the purpose of 6 NYCRR § 622.4(c) because it leaves wide open the potential defenses the respondent is seeking to assert. That is not the purpose of an answer or affirmative defense. The purpose of this responsive pleading is to put the parties and court on notice as to specifically what defenses the respondent is asserting and will eventually seek to prove. As stated above, staff presented in clear terms the specific allegations of this case. Thus, there is no reason that the respondent does not have sufficient understanding to assert now its defenses in terms that are understandable. To the degree that it found the complaint wanting in clarity, as staff states in its moving papers, the respondent had an opportunity within ten days of service of the complaint to move for a more definite statement. 6 NYCRR § 622.4(e). With respect to estoppel, the State is rarely estopped from carrying out its statutory responsibilities. See, Wedinger v. Goldberger, 71 NY2d 428, 441 (1988). In case ExxonMobil can demonstrate that this matter fits within one of those rare exceptions, it can amend its answer to clarify this affirmative defense.

With respect to the seventh affirmative defense, the respondent notes in its memorandum, fn 1, p. 1, that staff has not specifically objected to this defense in its motion. In this affirmative defense, the respondent claims without providing any detail that "the Department has failed to comply with the Commissioner's Civil Penalty Policy." I am directing that the respondent clarify this defense by providing information as to how staff has failed to meet the policy's directives. Without more specificity, staff as well as the ALJ are left to guess what claims the respondent will seek to prove at hearing. And, without more information, it will be impossible for the parties and the ALJ to ascertain what discovery is warranted.

In its eighth affirmative defense, ExxonMobil states that it "has acted in good faith in addressing site conditions." This bare statement, without more specificity, does not meet the requirements of 6 NYCRR § 622.4(c). The respondent is directed to clarify this statement.

Respondent's ninth affirmative defense provides that "[t]he Department cannot establish a prima facie case under any regulation cited." While this statement is general, a review of the complaint reveals that despite the complaint's caption referencing alleged violations of "6 NYCRR", there is only one reference to an alleged violation of a regulation (as opposed to statutory citations). That is found in the "Wherefore" clause of the complaint, ¶ V, "[f]inding Respondent in violation of 6 NYCRR Part 703, for causing exceedences of water quality standards." However, while the complaint may be lacking in this regard, the affirmative defense does not provide sufficient information to determine what the respondent is arguing. Therefore, I direct the respondent to clarify this affirmative defense.

In the tenth affirmative defense, the respondent claims that the complaint is barred by the doctrine of preemption and/or related doctrines. There is insufficient information provided in this defense to ascertain what law preempts the Department's action in this case. Moreover, there is no information specifying exactly what actions of staff are preempted. As to the statement with respect to "related doctrines," the parties and this administrative law judge should not have to guess as to what those may be. Assuming that the respondent is challenging the cited statutes that staff is applying to the alleged facts, an agency cannot review the acts of the legislature in an administrative proceeding. Rather, the Department is charged with carrying out the obligations set forth in the law. See, Johnson v. Robison, 415 U.S. 361, 368 (1974). And, as discussed with respect to the fifth affirmative defense, such a general statement is insufficient to meet the requirements of 6 NYCRR § 622.4(c). Accordingly, I am dismissing this affirmative defense.

In its eleventh and thirteenth affirmative defenses, the respondent is claiming that the Department failed to provide a hearing within a reasonable time and/or is "barred by the applicable statute of limitations and common law." With respect to the defense of staff's failure to proceed within a reasonable time, the Court of Appeals has set forth criteria to determine what constitutes a reasonable period for provision of a hearing in each case. Cortlandt Nursing Home v. Axelrod, 66 NY2d 169 (1985). While unlike the facts in Cortlandt in which the petitioners requested a hearing, the reasonableness of any delay can still be assessed based upon the period that transpired from the date staff discovered the alleged violations until its action to enforce the law. See, Manor Maintenance Corp., et al, Rulings of the ALJ (March 25, 1992). Cortlandt provides that claims of delay may be assessed by determining (1) the nature of the private interest allegedly compromised by the delay; (2) the actual prejudice to the party; (3) the causal connection between the conduct of the parties and the delay; and (4) the underlying public policy advanced by government regulation. 66 NY2d at 178.

In this affirmative defense, the respondent has not set forth any information that relates to these factors sufficiently to support this claim. Thus, I am directing the respondent to clarify this defense. As for the statute of limitations claim, there is none that applies to these administrative proceedings and therefore this defense must be dismissed. With respect to the mention of "common law", this statement provides no information as to what defense the respondent is mounting. Therefore, I am dismissing this defense.

With respect to the twelfth affirmative defense, the respondent alleges that the Department acquiesced and knew of ExxonMobil's conduct. This statement leads nowhere in terms of explaining how it is a defense. Assuming this is meant as a claim of estoppel, I am directing the respondent to clarify its answer as with respect to the sixth affirmative defense. Also, to the extent that the respondent means this defense to mitigate civil penalties that staff seeks, I will allow it to clarify the defense.

In its fourteenth defense, the respondent claims that DEC's allegations "are barred by the doctrine of unclean hands." There are no facts to support this claim and therefore, I am directing the respondent to clarify.

As for the sixteenth and last affirmative defense, ExxonMobil claims that the complaint is lacking in specificity and therefore, the respondent cannot defend against it. As stated above, I find that the complaint meets the requirements of 6 NYCRR § 622.3(a). Furthermore, as noted by staff, the respondent is too late to move for a more definite statement pursuant to 6 NYCRR § 622.4(e) and has failed to demonstrate that there is good cause to consider such a late application. Accordingly, this defense is dismissed.

Motion to Compel Mediation

In its cross-motion, the respondent argues that staff has prematurely and unilaterally curtailed settlement discussions and therefore, the administrative law judge should order mediation. However, I cannot order such relief. First, Part 622 does not provide any authority for the ALJ to order mediation. Furthermore, this Department's Guide to Mediation Services (copy enclosed) specifically provides that " . . . the Office of Hearings and Mediation Services will not act independently to begin a mediation without the mutual consent of Staff or other necessary parties." As I explained in conference calls with the parties on July 30 and August 21, 2002 and confirmed in my letter to the parties on the same dates, without the agreement of all involved parties there can be no mediation. Accordingly, while I certainly encourage the parties to attempt to resolve any and all matters through discussion and particularly, those matters related to remedial actions, I cannot mandate this action. Therefore, I deny the respondent's motion to compel mediation.

Staff's Petition to Amend the Complaint

Included with staff's September 3, 2002 responses related to the various motions discussed in this ruling is a petition to amend the complaint to add an additional source of the alleged MTBE contamination described in the June 14 complaint - 710 Route 347, Smithtown, New York (Mobil Station) - owned by one of the respondent's predecessors, Mobil Oil Corporation. Section 622.5(b) of 6 NYCRR provides that "[c]onsistent 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."

ExxonMobil strongly opposes staff's motion on the grounds that the remediation for the two sites has always been handled separated by the Department and because staff has recognized that the Mobil facility is a minor contributor to the MTBE off-site plume. ExxonMobil maintains that the two sites do not share a common set of facts. The respondent argues that the staff's request for a two million dollar penalty - increased from $150 million in the original complaint - has no basis. The respondent expresses great concerns about staff's plans to move for summary order based upon its view that discovery is required. Finally, ExxonMobil argues that the Department has not responded to its efforts to move forward on the remediation of the plume resulting from the Exxon location. See, Walsh Aff. and annexed exhibits A-I.

The information included in the spill report form dated December 31, 1998 and annexed to staff's petition indicates that the Mobil Station facility at 710 Route 347 was a spill location. Thus, it is not clear why staff did not include this facility in its original complaint. I have reviewed respondent's arguments but I cannot find that they preclude staff's amendment. The respondent will be able to make these arguments in an amended answer and/or in response to any motion staff makes for a summary order. In its petition, staff maintains that the two sites contribute to the plume and one remediation plan will address both sources - the Mobil and Exxon stations. Thus, it would be optimal to address these alleged sources of contamination in one proceeding and decision. To the extent that this is erroneous, the respondent may bring that proof forward at a future hearing. With respect to the penalties, either in the original complaint or amendment, staff has the burden of demonstrating that those are appropriate.

I do not find that there is prejudice to the respondent in allowing staff to amend the complaint to include this information as the proceeding is in the preliminary stages. Accordingly, I grant staff's petition to amend its petition.

Respondent's Motion for a Protective Order

On or about August 1, 2002, staff served the respondent with its first discovery request. On August 19, 2002, ExxonMobil moved for a protective order based upon its view that staff is seeking discovery beyond what is 'material and necessary' to prepare for hearing in this matter.(3) CPLR § 3103. Specifically, the respondent objects to staff's request for documents related to respondent's "facilities" as the complaint only addresses one facility in Smithtown, New York at 705 Route 347 - the Exxon Station. Respondent makes no other objections to the discovery request.

Section 622.7(a) allows for discovery in DEC enforcement proceedings to be as broad as provided under Article 31 of the CPLR. Pursuant to 6 NYCRR § 622.7(c) a party may seek a protective order to deny or limit the use of any disclosure device "to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice."

As staff identified only one facility in the complaint dated June 14, 2002, I see no reason to allow discovery for other facilities that were not identified in staff's pleadings. Accordingly, I am granting ExxonMobil's motion for a protective order. As the respondent has limited its motion for a protective order to this one issue, I am directing that ExxonMobil respond to staff's discovery request within ten days of receipt of this ruling.

This ruling is limited to the June 14 complaint. After staff serves its amended complaint, it will be free to seek discovery related to the additional facility - the Mobil Station.

Conclusion

I grant staff's motion to dismiss affirmative defenses 3, 4, 6, 10, 11 (as it relates to a statute of limitations or "common law" provision), 12 (as it relates to matters other than penalty mitigation), and 16. I grant staff's motion to clarify affirmative defenses 1, 2, 6 (relating solely to the claim of estoppel), 7, 8, 9, 11 (relating to timeliness of proceeding), 12 (to extent related to mitigation of penalties), and 14. The respondent has withdrawn affirmative defenses 5 and 15. I grant respondent's motion for a protective order as it pertains to the June 14, 2002 complaint. I deny respondent's motion to compel mediation. I grant staff's petition to serve an amended complaint. Staff is to serve the amended complaint by September 23, 2002. In light of staff's intention to serve an amended complaint, the respondent may clarify the affirmative defenses in its amended answer.

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

Dated: Albany, New York
September 13, 2002

TO: Benjamin A. Conlon,
Associate Attorney
NYSDEC - DEE
625 Broadway - 14th Fl.
Albany, New York 12233-5550

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

1. This is one of 25 enforcement matters that have been referred to the Office of Hearings and Mediation Services (OHMS) in July 2002 involving this respondent.

2. During the conference call, Mr. Conlon stated that in a document annexed to one of respondent's submissions in one of the other cases involving ExxonMobil there is reference to a specific settlement offer. However, that did not pertain to this case.

3. The parties agreed to suspend discovery and motion practice during their negotiations. Once staff determined these discussions were concluded, it provided notice to the respondent on August 14, 2002 and per their agreement, ExxonMobil had five days to recommence motion practice.

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