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Danny Fotrune & Co., Inc. - Order, October 5, 2000

Order, October 5, 2000

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

Alleged violations of Article 23, Mineral Resources, of
the Environmental Conservation Law
by:

Palumbo Block Company, Inc.,
Danny Fortune & Co., Inc.,
Fortunato Palumbo and Anthony Palumbo,
Respondents.

ORDER Case No. R3-1999-0909-52

WHEREAS:

1. Pursuant to Article 71, Title 27 of the Environmental Conservation Law of the State of New York (ECL) and Part 622 of Title 6 of the Compilation of Codes, Rules and Regulations of the State of New York (6 NYCRR), a complaint issued on September 13, 1999 and an amended complaint issued on October 25, 1999, an expedited administrative enforcement hearing was held before Administrative Law Judge (ALJ) Kevin J. Casutto. The complaints alleged Respondents were unlawfully mining without a permit at the Dover Industrial Park site, Dover, New York. The hearing was held on January 13, 14, 20, 21, 24, and February 8, 2000 and the record closed on March 20, 2000. The ALJ issued his recommended decision (RD) on May 2, 2000. Comments on the ALJ's recommended decision were filed on May 23, 2000 and replies were filed on June 5, 2000, pursuant to Part 622.18.

2. The Department of Environmental Conservation ("Staff"), was represented by Dominic R. Cordisco, Esq. The Respondents were represented by Laura Zeisel, Esq.

Discussion

3. The ALJ recommended Staff's requested monetary penalty of $54,250 be reduced to $12,250 and that Staff's requested reclamation of 4.2 acres at the site be granted. Central to the following discussion is the ALJ's ruling denying Staff's motion for leave to conform the pleading to the evidence, or the proposed third amended Complaint. Denying the motion limited the scope of the charges to those included in the first and second amended Complaints. The second amended Complaint alleges a violation spanning ten months, from October 1998 to August 1999 and not sixty-eight months as proposed by Staff in its motion. Staff's comments on the ALJ's RD seek to reverse his ruling.

Motion for leave to conform pleadings

4. I find that the ALJ did not abuse his discretion in denying the motion at the close of the evidentiary hearing. See, CPLR 3025 (c). The motion was properly denied based on the prejudice to the Respondents and because the evidence adduced at the hearing is contrary to the requested amendment.

5. The ALJ properly recognized the resulting prejudice to Respondents if the motion were granted. See, Symbax v. Bingaman(1), 219 A.D.2d 552, 553 1st Dept 1995. Pursuant to 6 NYCRR 622.5 (b), ALJs have wide discretion in considering a motion to amend the pleadings on a case by case basis.(2) Staff's assertion that the ALJ misapplied CPLR 3025 (b) and (c), and its legal framework for 3025 (b), is without merit. The granting of a motion under either CPLR 3025 (b) or (c) would have resulted in significant prejudice to the Respondents.

6. Here, the prejudice that would result if the motion under CPLR 3025 (c) were granted would be significant, particularly considering the amendment to the Complaint previously granted by the ALJ. Further, Staff brought the motion after all evidence was presented and witnesses examined:

"Upon a motion pursuant to CPLR 3025 (c) the effect on the orderly prosecution of the trial may be taken into account" Murray, 43 NY2d at 405. See also, Gonfiantini v. Zino, 184 AD2d 368, 369, 584 NYS2d 847 (First Dep't 1992) and Mohammed v. City of New York, 242 AD2d 321, 321, 661 NYS2d 249 (Second Dep't 1997).

The orderly review of the evidence would be upset under these facts. Specifically, granting the Staff's motion would force Respondents to make additional defenses(3), request additional discovery, and the evidentiary hearing process that was completed would need further testimony and evidence.(4)

7. The Staff's witness at hearing addressed dates that do not conform to the requested amendment. In other words, Staff seeks to amend the pleading beyond the proof adduced at hearing, and there is no basis in law for such an amendment.

8. The purpose of specificity in pleadings is to place the other party on notice. Here, Respondents had no notice of the new allegations, which this is precisely the situation that CPLR 3025(c) seeks to preclude. Granting Staff's motion would delay the process and conflict with the Staff's earlier motion for an expedited hearing, which the ALJ granted. RD p. 19.

9. Staff had enough time to notice and amend the pleading throughout the hearing process and had already made two amendments to its initial complaint. Allowing another amendment at such a late date would unduly delay the administrative process and would be unreasonable:

"(J)udicial discretion in allowing such an amendment on the eve of trial should be 'discrete, circumspect, prudent and cautious (Smith v Sarkisian, 63 AD2d 780, 781, aff'd on mem below 47 NY2d 746). Furthermore, it is incumbent upon a movant who has been guilty of extended delay in seeking leave to amend to make a showing of reasonable excuse for delay(see Mathieson v Mead, 168 AD2d 736, 737; Hypertronics Inc v Digital Equip. Corp. 159, AD2d 607, but see March v. St Volodymyr Ukranian Catholic Church, 117 AD2d 864, 865)." (Italics added)[Mohammed, 242 AD2d at 321; Thompson v. O'Connor, 178 Ad2d 752, 753, 577 NYS2d 504(Third Dep't, 1991)]

Here, Staff has proffered no reasonable excuse for its delay, and its assertion of typographical error is unpersuasive under these circumstances.(5)

10. The Respondents were not on notice of the omitted facts(6) and were surprised by the requested inclusion of the amended dates to Staff's pleading. Had Respondents received notice they arguably would have made a motion for a protective order and prepared their case differently. DiMauro, 105 A.D.2d at 240. Even if they suspected that such omitted facts would be at issue, their doubts were eliminated when testimony of one of Staff's experts stated that the dates to be included in their case did not include the dates Staff wished to include through the motion to conform the pleadings.(7)

11. In summary, although motions under CPLR 3025 are to be liberally construed absent prejudice or surprise to the respondent, the prejudice that would result under the circumstances of this case, would be significant. Accordingly, I find that the ALJ's ruling denying Staff's motion was not an abuse of discretion.

Construction Exemption

12. The Mined Land Reclamation Law (MLRL) provides that excavation, removal and disposition of minerals from construction projects is exempt from the definition of "mining" under the MLRL. This is the so called 'construction exemption'. ECL 23-2705.8; 6 NYCRR 420.1(k). The Department's guidance provided to Staff and the public regarding the construction exemption is found in Technical Guidance Memorandum (TGM) MLR-92-2 issued May 4, 1992.

13. The Respondents raised the construction exemption as an affirmative defense. They stated that their excavation of proposed Building II area was exempt from the MLRL permitting requirements because the excavation was necessary for the construction of Building II. The ALJ found, however, that Respondents never applied for nor received such exemption. RD fact 71; RD pp. 24, 26. The ALJ rejected Respondents' contention that successive regulatory revisions of 6 NYCRR 420.1(k) have broadened the construction exemption and relied upon a plain reading of the regulations and guidance provided by the Department's TGM MLR-92-2. RD conclusion 3.

14. Respondents contend that the ALJ has either improperly enlarged the powers of the agency through his expansive interpretation of the statute or changed the statute's meaning. According to Respondents, the ALJ erred in stating that excavation of a building site that they are constructing over a period of years, as here, would never qualify for a construction exemption because the excavation is not consistent with ECL Article 23 or any meaningful interpretation of the MLRL exemption. The statute provides no time limitation for excavation. Respondents' Comments p. 17.

15. Further, Respondents argue the ALJ created a permit requirement to obtain an exemption where the legislature has indicated that none exist. The ALJ stated one should make an application for an exemption, where in fact, no application forms exist. Rather, as charged by Respondents, Staff grants construction exemptions on an ad hoc basis. Accordingly, the Respondents conclude the ALJ has imposed a new regulatory requirement requiring one to apply for such an exemption when no application is necessary. Respondents' Comments p. 18.

16. In considering this issue I recognize the construction exemption process varies from the traditional permit application process of submitting an application and receiving a Staff response. Under the mining program, contractors are allowed the flexibility of excavating material for construction purposes without a permit. Although Staff does not make the construction exemption part of the permit application process, individuals proposing to excavate should consult with Staff in advance or risk being held liable for mining without a permit. The difficulty arises where contractors mine beyond the 1000 ton annual limit in reliance upon the exemption absent any Staff concurrence. Those proceeding to excavate without consulting with Staff in advance do so at their own peril -- potentially in violation of the permitting regulations.

17. The overall intent of the MLRL is to "...foster and encourage the development of an economically sound and stable mining industry, and the orderly development of domestic mineral resources and reserves necessary to assure satisfaction of economic needs compatible with sound environmental management practices". ECL 23-2703(1). It is the also the policy of the State to cause reclamation of affected lands. The construction exemption must be analyzed consistent with this clear public policy mandated by the legislature.

18. While the MLRL provides for an exception to the rule, the exception must not defeat the rule or be construed in such a way that the purpose of the broader rule is consumed by the exception. An "(e)xception must be strictly construed in order that the major policy underlying the legislation itself is not defeated. They extend only so far as their language fairly warrants, and all doubts should be resolved in favor of the general provision rather than the exception". NY Statutes Section 213.

19. The concept of a mining exemption was previously addressed in a Declaratory Ruling. In that matter, a prior alleged construction project did not fit the construction exemption because the proposed project failed to provide a definite and implementable plan "that (would) result in timely completion...or proper reclamation or restoration of the site". Theodore Miller Declaratory Ruling, (1999). Accordingly, the construction exemption must be construed in conformity with the purpose and meaning of the MLRL. The reclamation and restoration of natural resources is the broader goal in order "to protect the health, safety and welfare of the people, as well as the natural beauty and aesthetic value in the affected areas of the state". ECL 23-2703(1).

20. Here, Respondents purport to rely upon 1986 advice by Staff approving a construction exemption to Respondents for an area adjacent to the concrete block manufacturing plant or Building I. The Respondents directly infer that such advice carries over to all subsequent projects at the site, including Building II. Under the facts presented here, it strains a reasonable mind to conclude that the 1986 construction exemption universally applied to all future construction at the Dover Industrial Park site.

21. There is sufficient evidence to conclude that Respondents were knowledgeable about construction exemptions in the MLRL, given their experience in sand and gravel mining business which required Department permits and oversight approvals. Consequently, a prudent sand and gravel business decision maker would have consulted with Staff to ensure they were operating in conformance with the law. Respondents had secured a previous construction exemption in 1986 at the same site and in close proximity to proposed Building II. This demonstrates they were astute enough in 1986 to ensure that they were proceeding within the law. They should have invoked another consultation process before excavating for Building II.(8) Moreover, in December 1993, correspondence from Staff placed Respondent Anthony Palumbo on notice that only excavation and grading which was consistent with an approved site plan would be exempt from the permitting requirements of Article 23 of the ECL.

22. The record shows about a five-year hiatus between constructing Building I and Building II. There is no time limitation specified in the regulations, statute or TGM-92-2 to undertake and cease a construction exemption activity. I note the TGM-92-2 provides for a 12 month limitation for excavations related to agriculture and pond construction but not to structures. Instead, the guidance provides that reclamation of all excavated areas must be accomplished concurrently with the excavation or soon after. Under the circumstances present here, Respondents could have mined up to the threshold of 1000 tons per year without a permit and once reaching that threshold, ceased further excavation. The facts specific to this case demonstrate the construction exemption does not apply. The ALJ's analyses overall has a rational basis and his conclusion that Respondent mined without approval is affirmed.

Liability of Respondents

23. The ALJ found all four Respondents were liable for mining without a permit. RD p. 35-39. Fortunato Palumbo and Anthony Palumbo exercised direct control over the corporate Respondents. RD conclusions 7&8. Respondents assert the preponderance of the evidence showed none of the Respondents to have engaged in the excavation and removal of materials during the periods alleged in the complaint. Respondents' Comments p. 16.

24. It is well established that a corporate officer may be held criminally liable for violations of statutes enacted to protect the public health, safety and welfare, where that officer had the authority and responsibility to prevent the violation. United States v. Park, 95 S.Ct. 1903 (1975); United States v. Dotterweich, 65 S.Ct 134 (1943). The rationale for holding corporate officers liable is even more persuasive where only civil liability is involved. See, United States v. Hodges X-Ray, Inc., 759 F2d 557 (CA 6th Cir, 1985).

25. I concur with the ALJ's analyses finding all named Respondents to be liable for mining without a permit. The Palumbo family corporations are interconnected corporations, fungible entities tied to the individual family members, including Respondents Fortunato Palumbo and Anthony Palumbo. As discussed in the ALJ's RD, no financial records are kept of the distinct corporate activities, another facet interconnecting the four Respondents. As the ALJ correctly noted "...the picture that emerges is that the family members, including Respondents Fortunato Palumbo and Anthony Palumbo operate the closely-held family businesses in some (or many) respects as one business entity." RD p. 36; Finding 82, 83; Conclusion 7&8.

26. The record demonstrates that Respondent Fortunato Palumbo held such a position of authority and responsibility with respect to Corporate Respondent Danny Fortune. See, Matter of Ronald Edgar, Productive Recycling, Inc., and Productive Recycling Corp., Commissioner's Order, June 18, 1993. The ALJ properly extended this reasoning to the Respondent Anthony Palumbo because he had the authority and responsibility to prevent the violation, and had a present or future ownership interest in the corporate Respondents. He also held himself out as the company's representative at Town Board meetings and in interactions with Staff.

The ALJ's Findings of Fact

27. Respondents assert that certain aspects of the ALJ's RD are predicated upon misunderstandings and/or misstatements of fact which should be corrected to reflect an accurate record. Respondents' Comments p. 3. Staff argues that the ALJ's Findings of Fact were proper on the extent and depth of excavation. Accordingly, while Respondents seek to create an 'accurate record', Staff centers on the excavation aspect of the hearing. I find that the Respondents' numerous criticisms of the ALJ's reporting to be de minimus, and thus are harmless errors. For example, the ALJ reported a Dutch Supply Co., but the correct nomenclature is the Dutchess Supply Co. He also reported that the aggregate used to produce cement blocks was sand and gravel instead of screened coarse sand as the aggregate actually used in producing cement blocks. He reported that Building I was owned by Respondent Palumbo Block instead of Danny Fortune Inc., as the appropriate owner. There are other additional, similar harmless errors but they will not be addressed further here. However, the information pertaining to the extent and depth of excavation complained of by Respondents bears significantly upon the underlying enforcement action and deserves greater attention.

28. Respondents argue that the finished floor elevation for proposed Building I on the site plan was reported by the ALJ to be 430 feet above sea level (ASL) when in fact the finished approved floor plan for Building I is 422 feet ASL. Respondents' Comments pp. 6-7. Respondents contend part of the ALJ's reporting of the floor plan at 430 feet ASL, was to credit the testimony of Staff witness Martin regarding elevations on other portions of the site. The ALJ rejected the Respondents' contention that the finished floor elevation of Building I set the elevation of all subsequent buildings in the industrial park. RD p. 32.

29. The 422 feet ASL elevation was found by the ALJ based upon the preponderance of the evidence. RD p. 9, finding 25,31. Cf. RD p. 8, finding 21. He used this elevation to calculate the amount of material excavated and then arrived at a penalty figure. It is noted that the record is not clear on this point and the estimates of the floor elevation varies widely. The finding of the ALJ is based upon the preponderance of the record evidence after considering the testimony and exhibits. I find the 422 feet ASL elevation to be reasonable. The ALJ's finding that 422 feet ASL is the proper elevation is hereby adopted.

30. The Respondents contend that Finding of Fact 39 is in error. I agree in part. Finding of Fact 39 states:

"The Respondent Anthony Palumbo designed the Building II site plans and the Respondent Fortunato Palumbo reviewed and approved the plans in his capacity as a licensed professional engineer. Anthony Palumbo represented the corporate Respondents Danny Fortune & Co., Inc. (the site owner and Building II owner) and Palumbo Block, Inc. (the builder), before the Dover Town Planning Board."

The second sentence of that finding should read 'Anthony Palumbo represented the corporate Respondent Danny Fortune & Co., Inc., (the site owner and Building II owner) before the Dover Town Planning Board.'

31. Respondents further assert there is nothing in the record to suggest Respondent Palumbo Block Co., Inc., had anything to do with Building II. I disagree and refer to Finding of Fact 66 & 67 and the ALJ's discussion section which ties the determination of liability against Respondent Palumbo Block Co. Accordingly, all four Respondents are liable for mining without a Department mining permit.

32. The remaining matters not specifically addressed are without merit or otherwise are de minimus.

NOW, THEREFORE, having considered this matter, and being duly advised it is ORDERED that:

I. The Conclusions reached in the ALJ's RD are hereby adopted as my own and I also adopt the ALJ's recommendations. The Findings of Fact are adopted as well, subject to my comments in this Order.

II. The ALJ's rulings in the RD as to Respondents' affirmative defenses, are hereby adopted.

III. A penalty of $12,250 is due and payable within thirty days of service upon the Respondents of a conformed copy of this Order.

IV. The Respondents are directed to reclaim 4.2 acres of the Dover Industrial Park site affected by the unpermitted mining activities and in a manner consistent with the regulatory requirements of 6 NYCRR 422.3, within nine months of the date of this Order.

V. Any change in this Order shall not be made or become effective, except as specifically set forth by written order of the Commissioner or the Commissioner's designee, such written order being made either upon the written application of the Respondent, or upon the Commissioner or the Commissioner's designee's own findings.

VI. This Order resolves only those violations specifically articulated and described herein and in no way limits the Department's authority to enforce any other violations not described herein in the manner that the Department shall deem appropriate.

VII. For the purpose of ensuring compliance with this Order, and with applicable provisions of the ECL and regulations promulgated thereunder, representatives of the DEC shall be permitted access to the Site and to relevant records in order to inspect and/or perform such tests as may be deemed appropriate to determine the status of Respondents' compliance.

VIII. All communications between the Respondents and the Department concerning this Order shall be made to the Department's Region 3 Director, NYSDEC, New Paltz, New York.

IX. The provisions, terms and conditions of this Order shall bind the Respondents, their officers, directors, agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of the Respondents.

FOR THE NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION

______________/s/_______________
By:John P. Cahill, Commissioner

Dated: Albany, New York
October 5, 2000

TO:Laura Zeisel, Esq
169 Main Street
P.O. Box 9
New Paltz, NY 12561

Dominic Cordisco, Esq.
Regional Attorney
NYSDEC Region 3
21 South Putt Corners Road
New Paltz, NY 12561

STATE OF NEW YORK DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1550

In the Matter

- of -

Alleged violation of Article 23, Mineral Resources, of the Environmental Conservation Law of the State of New York by:

PALUMBO BLOCK COMPANY, INC.,
DANNY FORTUNE & CO., INC.,
FORTUNATO PALUMBO and
ANTHONY PALUMBO,

Respondents.

NYSDEC NO. R3-1999-0909-52

HEARING REPORT

AND

RECOMMENDED DECISION

- by -

_________________/s/_________________
Kevin J. Casutto
Administrative Law Judge

May 2, 2000

SUMMARY

This Report addresses an expedited enforcement hearing concerning allegations that the Respondents conducted sand and gravel mining without a permit required pursuant to ECL Article 23 (Mineral Resources). The ALJ concludes that the two corporate Respondents and two individual Respondents are liable for mining without a permit from October 1998 to August 1999 at the Dover Industrial Park, Dover, New York. Further, these activities also violated the terms and conditions of an Order on Consent dated December 3, 1998. The ALJ rejected the Respondents' affirmative defenses, including a defense that the activities in contention should be eligible, retroactively, for a Mined Land Reclamation Law construction exemption. The ALJ concluded that the Respondents' activities do not qualify for this exemption and would not qualify, even if the Respondents had applied timely.

The Department Staff requested a monetary penalty of $54,250.00, but for reasons discussed in the report, the ALJ recommends imposition of a monetary penalty of $12,250.00. The ALJ recommends granting Staff's request for an order of reclamation for the 4.2 acre disturbed area.

PROCEEDINGS

Pursuant to Article 71, Title 27 of the Environmental Conservation Law of the State of New York ("ECL") and Part 622 of Title 6 of the Official Compilation of Code, Rules and Regulations of the State of New York ("6 NYCRR"), an expedited administrative enforcement hearing was held before Administrative Law Judge ("ALJ") Kevin J. Casutto, New York State Department of Environmental Conservation, ("DEC" or the "Department") Office of Hearings and Mediation Services. The hearing was held on January 13, 2000, January 14, 2000, January 20, 2000 January 21, 2000, January 24, 2000 and February 8, 2000 in the Department's Region 3 Office, New Paltz, New York.

This enforcement action was commenced by Notice of Hearing and Complaint dated September 13, 1999 issued and duly served by the Staff of the Department's Region 3 Office ("Staff"). Staff alleges that the Respondents Palumbo Block Company, Inc., Danny Fortune & Co., Inc., Fortunato Palumbo and Anthony Palumbo (the "Respondents") are unlawfully mining without a permit (NYSDEC Case No. R3-19990909-52; the "Dover enforcement action") at the Dover Industrial Park site, Dover, New York. Staff initially alleged that the Respondents excavated an area of the site pursuant to Town of Dover Planning Board approval in 1993 to construct a building called "Building II" (the "site"), but over excavated. Thereby, Staff asserts the Respondents engaged in mining without a permit in violation of Environmental Conservation Law ("ECL") Article 23, ("Mineral Resources"), Title 27 ("Mined Land Reclamation Law").

The Respondent Palumbo Block Company, Inc. ("Palumbo Block"), separately, has applied for a Mined Land Reclamation permit pursuant to ECL Article 23 for a proposed mine in Ancram, Columbia County, New York (NYSDEC Case No. 4-1020-00035/00001; the "Ancram permit action"). The Respondent Danny Fortune & Co., Inc. ("Danny Fortune"), separately has applied for a modification of its Mined Land Reclamation permit pursuant to ECL Article 23 and a Solid Waste Management Facility permit pursuant to ECL Article 27 and related permits, to construct and operate a new construction and demolition debris landfill in Dover, Dutchess County, New York (NYSDEC Case No. 3-1326-00031/00003; the "Dover permit action"). The Department Staff (of Regions 3 and 4) or Interveners in the Dover and Ancram permit actions have raised the issue of Applicants' "record of compliance" history, including the present allegations.

Upon motion of the Respondents pursuant to the provisions of 6 NYCRR §622.13, this enforcement action was scheduled for expedited fact finding. Further, the Respondents agreed that the hearing need not be bifurcated, but instead that all issues raised by the Staff's Amended Complaint would be addressed in an expedited hearing.

Initially, Department Staff was represented in this action by Katherine Hudson, Assistant Regional Attorney, NYSDEC Region 3.

On or about November 9, 1999, Ms. Hudson resigned her employment with the Department to accept another position. Thereafter, Department Staff was represented by Dominic Cordisco, NYSDEC Central Office Assistant Counsel. Staff called as their witnesses Robert Burgher, NYSDEC Land Surveyor, Robert J. Martin, NYSDEC Mined Land Reclamation Specialist II, Bradford H. Kendall, former Dover Town Planning Board Member, Richard Hawthorne, Town of Dover Planning Board Chairperson Ann Larsen and former Town Planning Board Chairperson Donna P. Hearn.

The Respondents appeared and were represented by Laura Zeisel, Esq., New Paltz, New York. The Respondents presented the following witnesses: Fortunato Palumbo, Anthony Palumbo, Mary Palumbo Sprong, Town of Dover Supervisor Jill Way, Town of Dover Building Inspector Terry J. Binotto.

Final hearing transcripts were received by the Office of Hearings and Mediation Services on February 16, 2000. The hearing record was closed on March 8, 2000 upon receipt of the parties' closing briefs(9).

Background

The Respondent Danny Fortune owns the site known as Dover Industrial Park, located west of New York State Route 22 in Dover Plains, New York. The site is approximately 70 acres and is bounded on the east by railroad tracks formerly of the Harlem Railroad and on the southeast by Dover Furnace Road. Respondent Fortunato Palumbo is an owner and the President of this corporate Respondent.

The Respondent Fortunato Palumbo and the estate of his brother Carmine Palumbo (not a Respondent in this proceeding) own five closely-held corporations that engage in interrelated business enterprises: Respondent Danny Fortune & Co., Inc. (a land acquisition and holding company), Respondent Palumbo Block (a concrete block manufacturing company), Palumbo Sand and Gravel Co., Inc. (a mining company), Palumbo Brothers Construction Co., Inc. (a construction company), and Dutch Supply Co., Inc. (a construction supply company.) The Respondent Fortunato Palumbo, through the corporate Respondents Danny Fortune and Palumbo Block owns various mining interests in New York State including the Ancram and Dover sites described above. Additionally, the Respondent Fortunato Palumbo through the corporate Respondent Danny Fortune is an owner and developer of the Dover Industrial Park.

The Respondent Anthony Palumbo is the son of Carmine Palumbo. The children of Fortunato and Carmine Palumbo, including the Respondent Anthony Palumbo, serve as employees, managers or officers of the corporations, as further described below.

In December 1989, construction of the first building in the Dover Industrial Park was completed ("Building I" or the "Block Plant"). Building I is used by the Respondent Palumbo Block for the manufacture of concrete blocks.

On December 21, 1993, the Town of Dover Town Planning Board granted the Respondents site plan approval to construct a second building in the Dover Industrial Park ("Building II"). The proposed Building II location was an area of the site northwest of the existing Block Plant.

Excavation and grading of the Building II site commenced soon after issuance of the Town site plan approval and Town building permit in December 1993. This excavation and grading continued slowly over the ensuing years through the late summer of 1999, when the Respondents voluntarily ceased all activities in the Building II area because of Staff's concerns over the extent of the excavation. Other than excavation and grading, no foundation or structural component of Building II was constructed.

The Department Staff's Position

Staff asserts that from December 1993 through August 1999, the Respondents excavated an area of approximately 2.2 acres for proposed Building II and disturbed an additional 2.0 acres. Further, Staff contends that the Respondents' excavation of minerals from October 1998 to August 1999 (i.e., through July 1999), exceeded the Town's site plan approval for Building II and constituted mining without a permit in violation of ECL §23-2711(1) and 6 NYCRR §421.1(a). Staff concludes that the Respondents removed more than 59,000 cubic yards of minerals (sand and gravel) during this ten-month period.

Staff was granted leave to amend its initial Complaint twice prior to hearing. On November 23, 1999, Staff was granted leave to amend adding a second cause of action, alleging a new theory of liability. In the second cause of action Staff alleges that the Respondents' excavation activities also violate the provisions of an Order on Consent dated November 5, 1998 (fully executed on December 3, 1998, the "December 1998 Order on Consent.") However, Staff specified that no additional monetary penalty would be requested for the new cause of action. Staff also Amended paragraph six of the Complaint, regarding the period during which the alleged mining without a permit occurred. Staff amended the alleged violation period from "December 1993 through August 1999" in the initial Complaint, to "October 1998 to August 1999" in the First Amended Complaint (and this language remained unchanged in the Second Amended Complaint.)

In the initial Complaint, Staff alleged that 42,000 cubic yards of minerals had been excavated. Subsequently, in January 2000, Staff performed a new site survey. Based upon the new survey Staff alleged that much more than 42,000 cubic yards of minerals had been excavated. On January 11, 2000, Staff was granted leave to amend the damages clause of the Complaint from a request for monetary damages of $55,000.00 to a request for an amount "to be determined by the facts and applicable law at the hearing of this case, and to be calculated in accordance with the Department's Civil Penalty Policy(10)." In their closing brief, Staff has requested a monetary penalty of $54,250.00.

Staff's Second Amended Complaint charges the Respondents with two violations. First, Staff alleges a continuing violation of the ECL and NYCRR for mining without a permit from October 1998 to August 1999. In the second cause of action, Staff alleges that the Respondents' excavation activities also violate the provisions of the December 1998 Order on Consent. Staff seeks a civil monetary penalty and an order requiring the Respondents to cease and desist from any further mining activity at the Dover Industrial Park. Staff also seeks an order requiring the Respondents to reclaim all 4.2 acres of the Dover Industrial Park site affected by the alleged unpermitted mining activities.

At the conclusion of the Staff's rebuttal case, Staff moved to amend the Complaint yet again, this time to conform the pleadings to the facts adduced at hearing. Staff sought to expand the period during which the alleged mining without a permit occurred, from "October 1998 to August 1999", to "December 1993 through August 1999" (essentially the period identified in Staff's initial Complaint; In a bench ruling, this motion was denied [see, below, Discussion § at 18.])

The Respondents' Position

Each Respondent filed an Answer dated October 4, 1999. The Respondents denied the substantive allegations in the Complaint that allege mining without a permit, but admitted several other facts alleged in the Complaint.

The Respondents each asserted one defense and five Affirmative Defenses. As a defense, the Respondents assert that the Complaint does not state a cause of action. The five affirmative defenses are: 1) the action is barred by the "double jeopardy" clause of the Fifth Amendment of the United States Constitution, applicable to the States by the Fourteenth Amendment; 2) the action is barred under the doctrine of equitable estoppel; 3) the action is barred by collateral estoppel; 4) the mining permit requirement alleged by Staff is inapplicable to the activities complained of; and 5) the action is barred by the statute of limitations.

In response to Staff's First Amended Complaint, the Respondents each filed Amended Answers dated December 22, 1999. Each Amended Answer recites the defense and affirmative defenses summarized above.

In response to Staff's Second Amended Complaint, the Respondents each filed Amended Answers dated January 28, 2000. Again, each Amended Answer recites the defense and affirmative defenses summarized above.

The primary issues of this hearing were: 1) the applicability to the Respondents' activities of the MLRL Article 23 exemption from mining permit requirements for excavation required for construction of a building (the construction exemption) 2) the circumstances and extent of the Dover Town Planning Board's construction approval for proposed Building II, 3) the current elevation of the Building II area, and lastly, 4) the volume of minerals excavated from October 1998 to August 1999.

OFFICIAL NOTICE

Official notice was taken of the Commissioner's Civil Penalty Policy Enforcement Directive, issued June 20, 1990.

FINDINGS OF FACT

  1. The Respondent Fortunato Palumbo and the estate of Carmine Palumbo own five closely-held corporations that engage in interrelated business enterprises: Respondent Danny Fortune & Co., Inc. ("Danny Fortune"; a land acquisition and holding company), Respondent Palumbo Block Company, Inc. ("Palumbo Block"; a concrete block manufacturing company), Palumbo Sand and Gravel Co., Inc. (a mining company), Palumbo Brothers Construction Co., Inc. (a construction company), and Dutch Supply Co., Inc. (a construction supply company; collectively, the "family businesses".) The Respondent Fortunato Palumbo held these interests at all relevant times herein.
  2. The Respondent Fortunato Palumbo is the President of both corporate Respondents. He was President of the two corporate Respondents at all relevant times herein.
  3. Additionally, the Respondent Fortunato Palumbo through the corporate Respondent Danny Fortune is an owner and developer of the Dover Industrial Park.
  4. Fortunato Palumbo signed the building permit application for proposed Dover Industrial Park, Building II in his personal capacity. He did not indicate any corporate managerial title.
  5. Further, in his capacity as a licensed professional engineer, Fortunato Palumbo approved many drawings that are critical to this proceeding, including the approved Building I site plans (approved by the Dover Town Planning Board on August 20, 1987 [Exhibit 8]) and the approved Building II site plan (approved by the Dover Town Planning Board on December 21, 1993 [Exhibit 9]).
  6. Although advanced in years, the Respondent Fortunato Palumbo continues work regularly at the Palumbo family business offices located in Building I of the Dover Industrial Park, and he did so at all relevant times herein.
  7. As early as 1993 Carmine Palumbo and the Respondent Fortunato Palumbo, were turning over control of the family businesses to their children, including the Respondent Anthony Palumbo.
  8. The Respondent Anthony Palumbo is the son of the former Carmine Palumbo. He has experience in residential and commercial real estate construction, but holds no engineering degree. For a period in or about 1994, the Respondent Anthony Palumbo was Vice President of the corporate Respondent Danny Fortune.
  9. From October 1998 through July 1999, Anthony Palumbo was employed as a construction manager for the corporate Respondent Palumbo Block and some or all of the other Palumbo family companies. More specifically, the Respondent Anthony Palumbo was the site manager of the Dover Industrial Park, Building II area.
  10. Anthony Palumbo represented the Respondent Danny Fortune and the Palumbo family businesses before the Dover Town Planning Board regarding the Building II site plan review and approval in 1993.
  11. The children of the Respondent Fortunato Palumbo and Carmine Palumbo, including the Respondent Anthony Palumbo, serve as employees, managers or officers of the corporations, as further described below.

The Dover Industrial Park and Building I

  1. The Town of Dover, Town Planning Board requires a separate site plan approval for each new structure in the Town and in the Dover Industrial Park.
  2. The Respondent Danny Fortune owns the Dover Industrial Park, located west of New York State Route 22 in Dover Plains, New York. The Dover Industrial Park is approximately 70 acres and is bounded on the east by railroad tracks formerly of the Harlem Railroad. The Dover Industrial Park is bounded on the southeast by Dover Furnace Road. The Industrial Park was already zoned for industrial/manufacturing enterprises when acquired by the Respondent Danny Fortune.
  3. In August 1986, the Town Planning Board, under Chairperson Donna Hearn, granted the Respondents Danny Fortune, Palumbo Block and Anthony Palumbo site plan approval for Building I of the Dover Industrial Park.
  4. Building I of the Dover Industrial Park ("Building I" or the "Block Plant") was proposed by the Respondents to be a concrete block manufacturing facility for the corporate Respondent Palumbo Block, owned by the Respondent corporation Danny Fortune. Sand and gravel are essential materials in the manufacture of concrete blocks such as the concrete blocks to be manufactured at the Block Plant.
  5. On August 19, 1986, the Town Planning Board authorized Chairperson Hearn to sign the approved site plan. However, Chairperson Hearn did not sign the approved site plan until August 1987; and then, only after the Palumbo family had commenced litigation against the Town Planning Board.
  6. The Respondents received site plan approval to construct Building I on August 20, 1987.
  7. In December 1989, construction of the first building in the Dover Industrial Park, Building I, was completed.
  8. The corporate Respondent Palumbo Block owns Building I in the Dover Industrial Park, which is the sole block manufacturing plant for the corporation.
  9. "Finished floor elevation" of a building means the elevation of the interior first floor above grade.
  10. The Building I site plan (sheet 1) identifies a finished floor elevation of 430 feet asl(11) ("430 feet" or "elevation 430") for proposed Building I.
  11. Air pollution control requirements that became effective while the Building I site plan was pending before the Town Planning Board required installation of a baghouse. This new requirement increased the final proposed Building I height above the Town's zoning height restriction. To avoid exceeding the Town's height requirement, the proposed elevation of Building I was lowered.
  12. Prior to construction, the proposed finished floor elevation of Building I was 422 feet.
  13. The actual ("as built") exterior ground elevation of Building I is 421.8 feet in the southeast corner and 418.3 feet in the southwest corner. By comparison, the approved Building I site plan shows a proposed exterior ground elevation approximately two feet higher - - for the southeast corner, 424 feet and for the southwest corner 420 feet.
  14. The actual Building I finished floor is approximately at elevation 422.
  15. The Respondent Anthony Palumbo obtained a Building I access driveway permit from Dutchess County. He supervised the initial stages of the construction of Building I including site preparation work and installation of footings and drainage. When the site preparation reached the street level, his cousin, Anthony P. Palumbo, assumed supervision of the construction.
  16. In December 1989 the Town of Dover issued a Certificate of Occupancy certifying that Building I had been constructed in accordance with the approved site plans, although Building I was constructed at a lower elevation than was approved by the Town Planning Board.
  17. Following the construction of Building I, in or about 1995, the Respondents began construction of a Quonset hut, proposed for winter storage of sand necessary for the Building I block manufacturing. That structure collapsed under snowfall during construction, and was abandoned.
  18. In 1997 and 1998 the Respondents constructed an accessory building (also called the "small block building") close to Building I. The Respondents completed construction of the accessory building in 1998. Maintenance activities were moved from Building I to the accessory building to allow winter sand storage inside Building I.
  19. The Town of Dover has not issued a certificate of occupancy for the accessory building, although construction has been completed.
  20. The finished floor of the accessory building is at the same elevation as the finished floor of Building I, approximately at elevation 422.
  21. The Town never required the Respondents to submit "as built" drawings of Building I or the accessory building, and none were submitted.

The Construction Exemption

  1. Technical Guidance Memorandum ("TGM") MLR-92-2 (issued May 4, 1992) identifies four factors that Staff should consider in determining whether a proposed project qualifies for a MLRL construction exemption. An exemption should be granted only if the applicant for construction exemption demonstrates compliance with all four factors:
    1. All necessary local, state and federal approvals shall have been obtained for the project;
    2. The excavation and/or grading work undertaken is necessary to prepare the site for construction;
    3. The excavation takes place within the project area and is an integral part of the project activities; and
    4. Reclamation of all excavated areas must be accomplished concurrently with excavation or soon after.
  2. By letter dated September 26, 1986, the predecessor of Staff MLR Specialist Robert Martin granted a MLRL construction exemption to the Respondent Fortunato Palumbo for development of then-proposed Building I in the Dover Industrial Park. The exemption was granted with the understanding that construction of Building I would occur concurrently with (or soon after) the substantial excavation necessary for the project.
  3. By letter dated December 20, 1993, Mined Land Reclamation Specialist Robert Martin granted a construction exemption to the Respondents Anthony Palumbo and Palumbo Block for regrading and slope stabilization excavation activities in the area immediately behind Building I. This exemption was based upon review of the approved Building I site plans (dated June 1987, revised June 16, 1987, approved by the Town of Dover Planning Board on August 20, 1987.) The exemption was limited to excavation and grading consistent with the approved plans.
  4. The Respondents neither applied for, nor received, any MLRL construction exemption for proposed Building II.

The Charge of Mining Without a Permit at the Building II Area

  1. The present enforcement action alleges excavation in the Building II area of the Dover Industrial Park ("Building II"), an area northwest of Building I and immediately south of the excavated area addressed by the December 3, 1998 Order on Consent. This area of the Industrial Park is the location of proposed Building II. (The Building II area is depicted in red ink on Exhibit 44; the area addressed by the December 1998 Order on Consent, separate and distinct from the Building II area, is depicted in black ink on Exhibit 44.)
  2. In September 1993, the Respondents sought site plan approval from the Town Planning Board for proposed Building II.
  3. The Respondent Anthony Palumbo designed the Building II site plans and the Respondent Fortunato Palumbo reviewed and approved the plans in his capacity as a licensed professional engineer. Anthony Palumbo represented the corporate Respondents Danny Fortune & Co., Inc. (the site owner and Building II owner) and Palumbo Block Co., Inc. (the builder), before the Dover Town Planning Board.
  4. On December 21, 1993, the Town Planning Board granted site plan approval to the Respondents for proposed Building II. Then, the Respondent Anthony Palumbo applied for a Building II building permit, which was issued by the Town Building Department on December 27, 1993.
  5. At first, the Respondents proposed to place Building II immediately north of where it is depicted in the approved site plans. Subsequently, proposed Building II was relocated so that it would be closer to Building I.
  6. In presenting the project to the Town Planning Board, the Respondents did not have a tenant for Building II. Nor have they secured a tenant for proposed Building II since then.
  7. Instead, since December 1993 the Respondents have forestalled construction of Building II until a tenant is secured, if ever. Meanwhile, the Respondents have been excavating the proposed Building II area with no intention of going forward with Building II construction other than excavation until they secure a suitable tenant for the proposed building.
  8. The Respondents solicited a potential tenant for proposed Building II through the Dutchess County Economic Development Corporation.
  9. The Respondents purchased a steel frame for Building II that remains, unassembled, at the Dover Industrial Park in the Building II area.
  10. The Respondents cooperated with Department Staff to the extent that when Staff identified a potential concern at the Dover Industrial Park, the Respondents voluntarily ceased activities related to the issue of concern until the issue was resolved.
  11. The Respondent Fortunato Palumbo was the licensed professional engineer who certified the Building II site plans submitted to the Town Planning Board. The site plan engineering drawings contain significant errors regarding the elevation of topographic locations.
  12. The site plans approved by the Town Planning Board are subject to interpretation regarding the elevation of proposed Building II. The Town Planning Board approval for proposed Building II is unclear regarding the proposed grading of the land around Building II and is unclear regarding the proposed elevation at which Building II was to be situated.
  13. The Building II building permit was issued by the Town of Dover on December 27, 1993 and expired one year later, December 27, 1994. The Building II building permit has not been renewed. The Respondents do not presently hold any Town of Dover building permit for construction of Building II or any other construction at the Dover Industrial Park.
  14. In December 1993, after receiving Town of Dover site plan approval, the Respondents applied to the Dutchess County Department of Health ("DCDOH")for Building II septic system approval.
  15. The Respondents submitted plans to the DCDOH that depicted a proposed elevation of 422 feet for Building II (and elevation 420 for the septic system.) However, the plan sheets depicting the 422 elevation were never submitted to the Dover Town Planning Board. Nor were these plan sheets submitted to Department Staff before Staff commenced this enforcement hearing.
  16. The Respondents never received septic system approval from the DCDOH for a Building II septic system. Instead, the DCDOH indicated that DCDOH could not complete a review of the septic system proposal until the septic system area was excavated to an elevation of 420 feet, and a percolation test was performed.
  17. In late December 1993, soon after obtaining Town site plan approval and the building permit for Building II, the Respondents commenced site preparation for Building II by regrading and excavating the site.
  18. The Respondents continued these activities sporadically from January 1994 until the late July 1999. In late July 1999, in response to Staff's concern about the depth and extent of excavation, the Respondents ceased all activities in the Building II area of the Industrial Park. The Respondents created a gravel pit with a surface area of approximately 97,104 square feet(12) within the Building II area. Of that, an area of approximately 54,180 square feet are within the approved Building II site plan area; approximately 42,924 feet are outside the approved Building II site plan area. Therefore, from January 1994 to July 1999, the Respondents excavated an area of approximately 2.2 acres for proposed Building II. Further, the Respondents disturbed an additional 2.0 acres, a total affected area of 4.2 acres.
  19. The Respondents transported offsite at least some sand and gravel excavated from the Building II area. Further, the Respondents transported at least some of the minerals to the Palumbo Sand and Gravel Co., Inc., sand and gravel mine in the Town of Dover, where the Respondents sold the minerals.
  20. No reclamation has occurred in the Building II area.
  21. Regarding the extent of excavation necessary to pour the foundation footings for a commercial building such as Building II, perimeter excavation would be required to a depth of at least 42 inches below the finished floor elevation. The depth of excavation is a site-specific determination to be made by the licensed professional engineers or site developers responsible for constructing the building.
  22. Further, normally, excavation will occur to a depth of at least 24 inches below the proposed "finished floor elevation." The depth of excavation necessary below the proposed "finished floor" is a site-specific determination to be made by the licensed professional engineers or site developers responsible for constructing the building.
  23. The depth of excavation necessary below the proposed Building II parking lot elevation will usually extend below the proposed final grade for the lot and will vary with site-specific conditions. Such deepened excavation is a generally accepted practice in the construction trade, in preparation for ramp and roadway construction of sufficient load-bearing capacity.
  24. In reviewing this application for site plan approval, the Town Planning Board did not require drawings depicting this area of the site in greater detail than 10-foot elevation interval lines. The Building II site plan approval depicts only 10-foot elevation interval lines.
  25. The existing (undisturbed) topography in the Building II area was at an elevation between 420 feet and 430 feet in the easterly portion of the Building II area. As the land rose to the west or southwest, the majority of the Building II area topography rose to an elevation greater than 430 feet but less than 440 feet.
  26. The approved site plan depicts a proposed elevation line at elevation 430, located south of proposed Building II. This line travels in a northwesterly direction from near the proposed access road to just beyond the southwesterly corner of the proposed storage area, where it turns and travels to the north beyond the northwest corner of proposed Building II.
  27. The proposed 430 elevation line on the approved site plan represents the southern and western perimeter of a level area, at elevation 430. That is, the approved site plan depicts proposed Building II (and the associated parking lot and storage area) as a level area at elevation 430(13).
  28. No railings are depicted for the parking lot on the approved site plan, nor are any steps depicted between the parking lot and the building (as would be expected if the parking lot was proposed on a slope or at a lower elevation than the building. Therefore, on the approved site plan, Building II, the storage area and the parking lot are proposed as a level area.
  29. The Respondents have not commenced construction of Building II, other than to excavate the site over a period of approximately six years (January 1994 through July 1999.) No foundation, footings or other structural component has been constructed for proposed Building II. Portions of the excavated area are as low as elevation 406. The average elevation of the floor of the excavated area is elevation 412.9.
  30. From October 1998 through July 1999, the Respondents continued excavating the Building II area. During this period, Ms. Renee Garrett was a Dispatcher employed by one or more Palumbo family businesses.
  31. Renee Garrett directed truck drivers employed by either the Palumbo Sand & Gravel Co., Inc., or the Respondent Palumbo Block to excavate the Building II area during slow times for the businesses, when the trucks were not needed elsewhere.
  32. From October 1998 through July 1999, the Respondents continued excavating sand and gravel from the Building II area. At least some of the sand and gravel were transported to the Palumbo Sand and Gravel mine site, Dover, New York, where it was sold.
  33. The Respondents maintained no financial records regarding such transactions between Palumbo family corporate entities, including the corporate Respondents, or between family corporations and third party purchasers of the sand and gravel.
  34. Some material remains stockpiled at the Building II area. However, this material is overburden topsoil, not sand or gravel.
  35. The Respondents never applied for or received a Departmental MLRL permit authorizing mining in the area of proposed Building II or for any part of the Dover Industrial Park.
  36. Prior to July 1999, MLR Specialist Robert Martin visited the Dover Industrial Park on at least three occasions, once in September 1998 and twice in June of 1999. On each of those occasions, the purpose of MLR Specialist Martin's site visit was to inspect the area immediately north of the Building II area, not the Building II area. During the three site visits, Specialist Martin made no representation to the Respondents regarding excavation of the Building II area.
  37. Then, on July 21, 1999, MLR Specialist Martin met with the Respondent Anthony Palumbo and said that the Department Staff was reviewing two potential violations at the Respondents' sites. One potential violation concerned silt ponds at the Palumbo Sand & Gravel site, Route 22, Dover, New York(14). The other potential violation concerned mining without a permit at the Dover Industrial Park in the proposed Building II area (and resulted in the present enforcement action.)
  38. Following the July 21, 1999 meeting with MLR Martin, the Respondent Anthony Palumbo and Mary Palumbo Sprong decided that all work in the Building II area should be stopped. Soon after July 21, 1999, at the direction of the Respondent Anthony Palumbo and Mary Palumbo Sprong, the Respondents voluntarily ceased all further excavation and activities in the Building II area. Staff had not directed the Respondents to do so, and no formal enforcement proceeding had been initiated at that time.

The Volume of Minerals Excavated

  1. From January 1994 through August 1999, the Respondents excavated approximately 59,500 cubic yards of minerals. Of the 59,500 cubic yards, approximately 33,300 cubic yards were excavated within the Town-approved Building II site plan area and approximately 26,200 cubic yards were excavated outside the Town-approved Building II site plan area.
  2. The Respondents conducted half the total Building II area excavation before July 1998.
  3. The Respondents excavated half the 59,500 cubic yards of minerals - - 29,750 cubic yards - - during the fourteen-month month period from July 1998 to August 1999 (i.e., through July 1999.)
  4. On September 13, 1999, Inspector Binotto accepted a draft for a Certificate of Occupancy fee from the Respondent Fortunato Palumbo and issued a Certificate of Occupancy for the accessory building. Then, by letter dated September 15, 1999, the Inspector returned the uncashed fee draft to the Respondent and advised that the Certificate of Occupancy "was without authority and therefore invalid since I have recused myself from all matters concerning Dover Industrial Park or the Palumbo Sand and Gravel Mine."

Compliance History

  1. Palumbo Sand and Gravel Co., Inc., Carmine Palumbo and the Respondents Danny Fortune and Anthony Palumbo entered into an Order on Consent dated June 6, 1994 regarding violations at the sand and gravel mine located east of Sherman Hill Road near the intersection of Sherman Hill Road and N.Y.S. Route 22, Dover, Dutchess County, New York.
  2. This Order on Consent addressed the activities of the parties to the Order on Consent, including Respondents Anthony Palumbo and Danny Fortune, in commencing construction of a solid waste management facility at the Palumbo Sand and Gravel Co., Inc., mine site in Dover, New York, absent required departmental permits, including an ECL Article 27 permit to construct and an ECL Article 15 stream disturbance permit.
  3. The parties to the June 6, 1994 Order on Consent, including Respondents Anthony Palumbo and Danny Fortune, engaged in regrading, land clearing and berm construction at the mine site absent the required ECL Article 27 solid waste management facility permit. These activities were consistent with the Engineering Report submitted by the named parties - including the Respondents Danny Fortune and Anthony Palumbo - as part of their ECL Article 27 permit application to construct a landfill at the mine site. Further, the parties to the Order on Consent disturbed an area in the northeastern portion of the mine immediately adjacent to the Swamp River including the bed and the banks of the Swamp River; this section of the Swamp River is a Class C(T) fresh surface water trout stream.
  4. The Respondent Anthony Palumbo signed the June 6, 1994 Order On Consent individually and, for the corporate Respondent Danny Fortune, in his capacity as Vice-President of Danny Fortune.
  5. The Respondent Danny Fortune entered into an Order on Consent fully executed on December 3, 1998 regarding excavation of portions of the Dover Industrial Park (mining without an ECL Article 23 MLRL permit) in an area north of the Block Plant, Building I. Paragraph (2)(a) of the Order on Consent requires that Danny Fortune cease all further mining in areas north of Building I that are not designated to be regraded on plans that have received final approval from the Dover Town Planning Board. This Order on Consent imposed a civil penalty of $3,500.00 ($1,500.00 immediately payable, $2,000.00 suspended) and required site reclamation.
  6. The Respondent Fortunato Palumbo signed the December 3, 1998 Order On Consent for the corporate Respondent Danny Fortune, in his capacity as President of Danny Fortune.
  7. Lastly, the Respondent Danny Fortune entered into a Modified Order on Consent dated July 7, 1999, resulting from the Respondent Danny Fortune's failure to reclaim timely the area described in the December 1998 Order on Consent.

DISCUSSION

I. Jurisdiction

Environmental Conservation Law ("ECL") Article 23, the Mined Land Reclamation Law, was adopted in 1974, effective April 1, 1975. A primary goal of the Mined Land Reclamation Law is to provide for the reclamation of lands affected by mining activities to protect the public health, safety and welfare and protect the natural beauty and aesthetic values in the affected area of the state. ECL §23-2703. Under ECL Article 23, mining is broadly defined. Mining includes the extraction, preparation or processing of overburden material or minerals. ECL §23-2705(8).

Jurisdiction and authority to initiate this administrative enforcement action are based upon ECL §§3-0301(1), 3-0301(1)(g), 3-0301(1)(n), 3-0301(2)(g), 3-0301(2)(h), 23-2719 and Article 71, Title 13 (Enforcement of ECL Article 23).

Pursuant to ECL §23-2711(1) and 6 NYCRR §421.1(a), after September 1, 1991, within any twelve successive calendar months, it is unlawful to mine from any mine site more than 1000 tons or 750 cubic yards of minerals (whichever is less) from the earth without a Departmental mining permit.

Pursuant to ECL §23-0705(8) and 6 NYCRR §420.1(k)(effective January 18, 1995), "mining" means the extraction of overburden and minerals from the earth; the preparation and processing of minerals, including any activities or processes or parts thereof for the extraction or removal of minerals from their original location and the preparation, washing, cleaning, crushing, stockpiling or other processing of minerals at the mine location to make them suitable for commercial, industrial, or construction use; exclusive of manufacturing processes, at the mine location; the removal of such materials through sale or exchange, or for commercial, industrial or municipal use; and the disposition of overburden, tailings and waste at the mine location.

Further, pursuant to ECL §23-0705(8) and 6 NYCRR §420.1(k) (effective January 18, 1995), "mining" shall not include the excavation, removal and disposition of minerals from construction projects, exclusive of the creation of water bodies, or excavations in aid of agricultural activities.

Historically, from April 24, 1986 through January 17, 1995, 6 NYCRR §420.1(k) provided that "mining" shall not include excavation or grading when conducted solely in aid of onsite farming or construction. Excavation or grading is deemed to be conducted solely in aid of onsite farming or construction when the operator presents to the Department objective evidence which leads the Department to reasonably conclude that actual farming or construction will occur at the site of excavation or grading concurrently with that excavation or grading or soon after it is finished. For purposes of the construction exemption, the Department may consider an approved building permit and site plans as objective evidence.

Historically, from September 30, 1976 through April 23, 1986 6 NYCRR §420.1(k) provided that excavation and removal of 1,000 tons or more of minerals incidental to farm improvements or construction projects shall not be considered to be excavation or grading conducted solely in aid of on-site farming or construction, if such minerals are removed for the purpose of sale, exchange, commercial, industrial or municipal use."

Pursuant to 6 NYCRR §420.1(j), "mineral" means any naturally formed, usually inorganic, solid material located on or below the surface of the earth. For the purposes of this title, peat and topsoil shall be considered minerals.

Pursuant to 6 NYCRR §420.1(m), "overburden" means all of the earth, vegetation and other materials which lie above or alongside a mineral deposit.

Pursuant to 6 NYCRR §420.1(h), "mine" means any excavation from which a mineral is to be produced for sale or exchange, or for commercial, industrial or municipal use; all haulageways and all equipment above, on or below the surface of the ground used in connection with such excavation, and all lands included in the life of the mine review by the department.

II. Staff's Renewed Motion to Amend

In Staff's closing brief, Staff renewed the motion to amend the Second Amended Complaint, purportedly to cure a typographical error in the Complaint. Staff initially requested this relief by oral motion at the conclusion of the evidentiary hearing. That motion was denied from the bench.

The alleged violation period in Staff's initial Complaint was January 1994 through August 1999 (Initial Complaint, ¶6). Staff was granted two opportunities to amend the Complaint before hearing. With the First Amended Complaint and the Second Amended Complaint, Staff amended the violation period from "January 1994 through August 1999" to "October 1998 to August 1999" (Initial Complaint, ¶6, First Amended Complaint, ¶6, Second Amended Complaint, ¶6.) In short, the initial Complaint period was modified by the First Amended Complaint and unchanged in the Second Amended Complaint. Then, at the conclusion of the hearing, Staff made an oral motion to file a Third Amended Complaint to enlarge the period at issue to January 1994 through August 1999 (essentially the period alleged in Staff's initial Complaint.) The Respondents objected, asserting prejudice.

Staff contends that the Respondents had advance notice of the six-year violation period because it was recited in Staff's (twice amended) initial Complaint. This argument must be rejected. The hearing was held based upon the allegations set forth in the Second Amended Complaint. That complaint provided notice to the Respondents of the allegations at issue, and specifically, the period at issue - October 1998 to August 1999. The Respondents relied upon the Second Amended pleading - - not the initial pleading - - in preparing their case and examining Staff's witnesses.

Under the Department's enforcement hearing rules, consistent with the CPLR a party may amend its pleadings anytime before the final decision of the Commissioner, absent the ability of the other party to respond. 6 NYCRR §622.5(b). Although the general principle under Part 622 and the CPLR is that leave to amend is to be freely granted in the absence of a showing of prejudice, judicial discretion in allowing amendment is in the broad discretion of the court. Leave to amend on the eve of trial should be discrete, circumspect, prudent and cautious. Thompson v Connor, 178 AD2d 752, 577 NYS2d 504 [Third Dep't. 1991], Dougherty v Wade Lupe Constr. Co., Inc., 98 AD2d 868, 869, 470 NYS2d 812 [Third Dep't. 1983]. This principle applies more so at the conclusion of the evidentiary hearing. Particularly when the facts upon which the motion is based were known to the movant since the inception of the action and no reasonable excuse was given for the delay in making the application. Mohammed by Ahmed, 242 AD2d 321 [Second Dep't. 1997], Dougherty v Wade Lupe Constr. Co., Inc., supra.

Evidence was received during six hearing days based upon an alleged violation period of ten months - - October 1998 to August 1999. Staff had ample opportunity to bring this motion before the adjudicatory hearing commenced but failed to do so. Staff's assertion of typographical error is not persuasive, particularly in view of the timing of thmotion. Lastlyly, the Respondents were granted an expedited hearing in this matter, pursuant to 6 NYCRR 622.13. This is an additional factor that militated against granting Staff's motion.

If Staff's amendment were granted, the Respondents would be substantially surprised and prejudiced. The amendment would be a significant amendment of the charges, expanding the period from ten months to 68 months and would have resulted in substantial delay. The remedy for this surprise and prejudice would have required adjourning the hearing and scheduling additional hearing dates to allow the Respondents additional cross-examination of all Staff witnesses on the expanded period of alleged violation (Staff has not yet requested to present additional witnesses on the expanded violation period). Also, the Respondents would have to be afforded an opportunity to present additional evidence, possibly additional witnesses, to address this substantially expanded violation period.

Such a remedy was untenable at that point in the proceedings. No appeals were filed on that bench ruling. In sum, I find no reason to disturb the ruling denying Staff's motion to amend the Second Amended Complaint.

III. The Respondents' Affirmative Defenses

A. The Construction Exemption

The Respondents assert as an affirmative defense that their excavation of the proposed Building II area was exempt from the MLRL permitting requirements because the excavation was necessary for the construction of Building II. Yet the Respondents never applied for nor received a Departmental construction exemption for proposed Building II.

Within the ECL Article 23 definition of mining, the following activities are excluded: The excavation, removal and disposition of minerals from construction projects (exclusive of the creation of water bodies, or excavations in aid of agricultural activities, not at issue here.) ECL §23-0705(8) [laws of 1991, c 166, §228]. This provision is commonly called the construction exemption from the MLRL permit requirements. The exemption also is set forth in the MLRL regulations, 6 NYCRR §420.1(k).- 6 NYCRR §420.1(k)

The Respondents contend that successive regulatory revisions of 6 NYCRR §420.1(k) have broadened the construction exemption, and that the Building II excavation should be exempt under the current definition. Furthermore, in 1992, the Department issued a guidance document to be used in reviewing applications for construction exemptions. (Technical Guidance Memorandum ["TGM"] MLR-92-2 issued May 4, 1992.) The Respondents contend that this guidance document is more restrictive than the broadened construction exemption and should not be applied in evaluating the Respondents' activities.

The initially promulgated mining regulation provision that addressed the construction exemption stated,

"Mining...shall not include excavation of grading when conducted solely in aid of on-site farming or construction. Excavation and removal of 1,000 tons or more of minerals incidental to farm improvements or construction projects shall not be considered to be excavation or grading conducted solely in aid of on-site farming or construction, if such minerals are removed for the purpose of sale, exchange, commercial, industrial or municipal use." 6 NYCRR §420.1(k) (effective September 28, 1976.)

The 1986 regulatory revision provided that,

"Mining...shall not include excavation or grading when constructed solely in aid of onsite farming or construction. Excavation or grading is deemed to be conducted solely in aid of onsite farming or construction when the operator presents to the department objective evidence which leads the department to reasonably conclude that actual farming or construction will occur at the site of excavation or grading or concurrently with that excavation or grading or soon after it is finished. For the purposes of the construction exemption, the department may consider an approved building permit and site plans as objective evidence..." 6 NYCRR §420.1(k) (effective April 24, 1986.)

Lastly, the current provision, promulgated in 1995, provides that,

"Mining shall not include the excavation, removal and disposition of minerals from construction projects, exclusive of the creation of water bodies, or excavations in aid of agricultural activities." 6 NYCRR §420.1(k) (filed January 3, 1995, effective January 18, 1995.)

- Technical Guidance Memorandum MLR-92-2

Prior to 1992, Department Staff evaluated applications for ECL Article 23 construction exemptions on an ad hoc basis. On May 4, 1992, the Department issued TGM MLR-92-2, providing written guidance to be used in reviewing applications for construction exemptions. Departmental guidance documents, including TGM MLR-92-2 are available to the regulated community and the public. It is well settled that Departmental guidance documents such as the TGM are not unpromulgated rules or regulations.

TGM MLR-92-2 identifies four factors that Staff should consider in determining whether a proposed project qualifies for a construction exemption. An exemption should be granted only if the applicant for construction exemption shows compliance with all four factors:

  1. All necessary local, state and federal approvals shall have been obtained for the project;
  2. The excavation and/or grading work undertaken is necessary to prepare the site for construction;
  3. The excavation takes place within the project area and is an integral part of the project activities; and
  4. Reclamation of all excavated areas must be accomplished concurrently with excavation or soon after.

- The Building I Construction Exemption

By letter dated September 26, 1986, Staff MLR Specialist Robert Martin's predecessor granted a MLRL construction exemption to the Respondent Fortunato Palumbo for development of then-proposed Building I in the Dover Industrial Park. The exemption was granted with the understanding that construction of Building I would take place concurrently with (or soon after) the substantial excavation necessary for the project.

- Excavation of the Area Immediately Behind Building I

On December 7, 1993, MLR Specialist Martin observed an area of excavation, approximately 300 feet by 350 feet, immediately behind Building I. The Respondents never applied for a mining permit for this area of the Industrial Park. By letter dated December 9, 1993, Specialist Martin advised the Respondent Anthony Palumbo, as representative for Palumbo Sand and Gravel Co., Inc., that a MLRL permit is required, unless a construction exemption is obtained.

The Respondents gave Staff documentation showing that the excavation was necessary for slope stabilization. By letter dated December 20, 1993, Specialist Martin granted a construction exemption to the Respondents Anthony Palumbo and Palumbo Block for the grading and slope stabilization excavation activity immediately behind the Building I Block Plant. This construction exemption was based upon review of the Building I approved site plans dated June 1987, revised June 16, 1987, approved by the Town of Dover Planning Board on August 20, 1987 and a grading plan. The exemption was limited to excavation and grading consistent with the approved plans for construction of Building I.

- Proposed Building II and the Construction Exemption

In September 1993, the Respondents sought site plan approval from the Town Planning Board for proposed Building II. At first, the Respondents proposed to place Building II immediately north of where it is depicted in the approved site plans. Subsequently, proposed Building II was relocated so that it would be closer to Building I. The Respondent Anthony Palumbo obtained Board approval for Building II on December 21, 1993. Then, Anthony Palumbo applied for a Building II building permit, which was issued by the Town Building Department on December 27, 1993.

By late 1993, the lower Hudson Valley economy was slow. The Respondents contend that they planned to construct Building II on speculation. In presenting the project to the Town Planning Board, the Respondents did not have a tenant for Building II. Nor have they secured a tenant for proposed Building II since then. Instead, since December 1993 the Respondents have forestalled construction of Building II until a tenant is secured, if ever. The Respondents explained that once a tenant is secured, the building and amenities can be built to suit the tenant's needs. Meanwhile, the Respondents have been excavating the proposed Building II area. Yet, the Respondents have no intention of constructing Building II (beyond the continued excavation) until they may secure a suitable tenant for the proposed building.

The Respondents have not built any structure and their building permit expired in late 1994 and has not been renewed. It is uncontroverted that Respondents never applied for or received a MLRL permit or a Departmental construction exemption for proposed Building II.

Staff asserts that the Respondents never intended to construct proposed Building II. Instead, Staff contends that the Respondents' Building II construction proposal was a sham perpetuated upon the local and state government agencies so that the Respondents could mine the Building II area without the environmental review attendant upon obtaining an ECL Article 23 MLRL permit. The Respondents acknowledge that they have not constructed Building II.

The Respondents described this manner of construction as building on speculation. But, building to a tenant's needs is different from building on speculation. Since the Respondents planned to build to suit a tenant's needs, the Respondents could have chosen not to do any site preparation or excavation until a tenant was secured. Or, the Respondents could have started site preparation or excavation for Building II in the hopes that they would secure a tenant before reaching the MLRL mining exemption limitation(15) and later apply for a mining permit in anticipation of exceeding the mining permit threshold. However, excavation of the site over a period of years - with no construction completed or even contemplated in the foreseeable future - is not consistent with ECL Article 23 or any meaningful interpretation of the MLRL construction exemption.

The record shows that the Respondents obtained all local approvals for the Building II project before commencing excavation in the Building II area. The Respondents also purchased a steel structure for Building II (still stored, unassembled, at the Building II area) and made bona fide efforts to solicit suitable tenants for Building II. Therefore, I conclude that the Respondents did have genuine construction plans for Building II. Staff's contention that the Respondents' Building II proposal was a sham must be rejected.

The Respondents acknowledge that they never applied for, or received, a construction exemption for their activities in the Building II area. Nonetheless, the Respondents contend that their excavation activities in the Building II area are eligible for the construction exemption and therefore, the Department should not assess any sanctions against them. In essence, the Respondents contend that a Building II construction exemption should be granted retroactively. The Respondents also contend that no statutory or regulatory provision requires that a construction exemption will be forfeited if a building permit or other local approval lapses.

However, the TGM is reasonably consistent with the purpose of ECL Article 23, to assure reclamation of mine sites within the state. Moreover, the Respondents' argument assumes that they were granted a Building II construction exemption previously, that would later be forfeited due to the lapsing of the building permit; that is not so. Accordingly, although I conclude that the Respondents' Building II proposal was a bona fide construction proposal, the Respondents never obtained a MLRL permit or a construction exemption for Building II. Nor have the Respondents established that the TGM construction exemption criteria would apply to their excavation of the Building II area. In sum, no construction exemption could apply.

However, even if the Respondents' retroactivity argument is considered, arguendo, the Respondents' excavation of the Building II area would not qualify for a MLRL construction exemption under the TGM. Regarding the first TGM factor, the Respondents did obtain all local approvals before commencing excavation (the Town site plan approval and a Town building permit.) Staff does not assert that any other local approvals were required. But, the Building II building permit was issued on December 27, 1993 and expired one year later, December 27, 1994. The building permit has not been renewed. Staff contends that from October 1998 to August 1999, the Respondents held no valid Building II building permit. Therefore, Staff contends, absent the local construction approval of a valid building permit, the Respondents cannot avail themselves of the construction exemption in any event. With respect to TGM factor two (that the excavation or grading work is necessary to prepare the site for construction), the Respondents failed to establish that the depth of excavation was necessary to prepare the site for the construction of Building II. Regarding factor three (that the excavation takes place within the project area and is an integral part of the project activities), the Respondents failed to establish that the depth of excavation was an integral part of the project activities.

Lastly, regarding the fourth factor (that reclamation of all excavated areas must occur concurrently with excavation or soon afterwards), the Respondents have been excavating and grading the site since January 1994, but have not built any structure or reclaimed any of the excavated Building II area. Therefore, since a period of approximately six years has elapsed since the Respondents began excavating the Building II area, the Respondents have not performed reclamation concurrently with or soon after the Building II excavation occurred.

The Respondents counter that the fourth factor exceeds the statutory grant of authority in ECL Article 23; that is, no statutory or regulatory provision requires that the construction project must be completed at any particular point in time after excavation has commenced. The Respondents assert that the current operative language of the construction exemption is that mining includes "the excavation, removal and disposition of minerals from construction projects..." But, since local approvals were obtained in 1993, it is the 1986 regulatory revision that was in effect, not the current (1995) revision. The 1986 regulatory revision required that excavation or grading would be deemed conducted solely in aid of onsite construction when the operator presents Staff with reasonable objective evidence that actual construction will occur at the site concurrently with the excavation or grading or soon after it is finished. Equally important, the TGM was issued while the 1986 revision was in effect. Therefore, the Respondents' argument, based upon the 1995 revision of 6 NYCRR §420.1(k) must be rejected.

Moreover, a person seeking a construction exemption under ECL §23-0705(8) and 6 NYCRR §420.1(k), whether the current regulation or the previous version, must construct something. To interpret the construction exemption otherwise, would lead to implausible results and make a mockery of the mined land reclamation law. This conclusion is consistent with several Declaratory Rulings cited by Staff: Syragram Realty, Declaratory Ruling, DEC 23-01 (June 17, 1980) [Construction exemption not applicable where the eventual construction activity was merely speculative and the removal of the minerals benefitted the petitioners.], Matter of Irvington Union Free School District, Declaratory Ruling 23-04 (March 23, 1984) [Construction exemption applicable where the proposed project would not result in an economic transaction with respect to the extracted minerals and project would result in the productive use of the land for improved school district playing fields]. Diane and Edward O'Neal, Declaratory Ruling, DEC 23-09 (November 27, 1996), [The 1991 amendment to the MLRL deletes the reference to "solely in aid of on-site farming and construction" from the definition of "mining" and adds clarifying language that "mining shall not include the excavation, removal and disposition of minerals from construction projects, exclusive of the creation of water bodies, or excavation in aid of agricultural activities." L. 1991, c. 166, Section 228. The 1991 amendments, however, do not change the standards articulated in Syragram Realty or Irvington Union Free School District, Theodore Miller, Declaratory Ruling, DEC 23-10, (January 28, 1999) [the ultimate disposition of the minerals was an important factor in all of the earlier rulings.]

Next, the Respondents contend that when the Town Planning Board granted site plan approval for Building I, the Board granted "conceptual approval" for the entire 70-acre Dover Industrial Park. Consequently, the Respondents contend that all subsequent development within the Dover Industrial Park is entitled to the MLRL construction exemption from mining permit requirements. This second argument confuses the local Town review with Departmental review. Moreover, the Respondents failed to establish that the Town Planning Board granted a conceptual approval (or even that the Board had authority to grant such a conceptual approval). In any event, it is uncontroverted that the Town Planning Board requires a separate site plan approval for each new structure in the Town and in the Dover Industrial Park. The Respondents' conceptual approval argument must be rejected.

Finally, the testimony of MLR Specialist Robert Martin and Mary Palumbo Sprong establish that some sand and gravel excavated from the Building II area was transported offsite. At least some of that material was transported to the Respondents' nearby Palumbo Sand and Gravel Mine in the Town of Dover. It is reasonable to assume that the Respondent Fortunato Palumbo (through one of the five family corporations, possibly a corporate Respondent) sold the sand and gravel from that location. As discussed below, this benefitted the Palumbo family businesses, including the individual Respondents (see, infra, "Penalties.")

In sum, the Respondents have neither applied for nor received a Departmental construction exemption for their Building II construction project. Further, the Respondents' activities at the site would not meet the TGM MLR 92-2 guidance requirements for issuance of a construction exemption in any event. Therefore, the Respondents' contention that their excavation and grading of the Building II area should be exempt from MLRL permitting requirements under the construction exemption must be rejected.

B. Double Jeopardy

The Respondents assert as an affirmative defense that this enforcement action is barred by the "double jeopardy" clause of the Fifth Amendment of the United States Constitution (applicable to the States by the Fourteenth Amendment.) The Respondents contend that the excavation at issue in this proceeding was addressed previously by the December 1998 Order on Consent. This issue was asserted by the Respondents in a pre-hearing motion to dismiss the Complaint.

My November 23, 1999 ruling denied the Respondents' double jeopardy motion to dismiss. I ruled that the present allegations are separate and distinct alleged violations with respect to both time and place from the violations addressed in the December 1998 order on consent. By letter dated March 13, 2000 (after filing of closing briefs), the Respondents confirmed that they decided not to elaborate further on this issue in their closing brief in view of the November 23, 1999 ruling on pre-hearing motions.

C. Collateral Estoppel

The Respondents claim that the Department is barred from bringing this enforcement action because the violations at issue in this proceeding were previously addressed in the 1998 Order on Consent. As discussed above, the instant action addresses a separate and distinct alleged violation from those violations addressed in the 1998 Order on Consent. Furthermore, the alleged violation addressed herein was not discovered by the Department Staff until after issuance of the 1998 Order on Consent. The Respondents' claim of collateral estoppel affirmative defense must be dismissed.

D. Equitable Estoppel

It is well settled that the doctrine of equitable estoppel may not be invoked against a governmental agency to prevent it from discharging its statutory duties. Matter of E.F.S. Ventures Corp. v Foster, 71 NY2d 359, 369, Parkview Associates v. City of New York, 71 NY2d 274 (1988). However, when manifest injustice would otherwise result, equitable estoppel may be invoked against the state. Eden v bd. Of Trustees of State University, 49 AD2d 277, 374 NYS2d 686 [Third Dep't. 1975].

MLR Specialist Robert Martin visited the Dover Industrial Park on at least three occasions, in September 1998 and twice in June 1999. The Respondents contend that on any of those occasions, Specialist Martin could have raised the issue of propriety of the Building II excavation, but he did not do so. From these circumstances, the Respondents drew the assumption that there was no problem with the Building II excavation. The Respondents contend that Specialist Martin's failure or omission to discuss the Building II excavation on any of those occasions justifies the Respondents' assumption that their Building II excavation activities were in compliance with Departmental requirements. Furthermore, they conclude that they will suffer manifest injustice if the doctrine of equitable estoppel is not applied against the Department in the present case.

However, MLR Specialist Martin was at the Dover Industrial Park on those occasions to inspect the area north of the Building II area, not the Building II area. MLR Specialist Martin made no representation to the Respondents regarding the Building II area because the purpose of his inspections concerned the area north of the Building II area.

In sum, the Respondents' contention that an assumption of compliance reasonably may be drawn from MLR Specialist Martin's silence regarding the Building II area, is illogical. This argument must be rejected; the Respondents' equitable estoppel affirmative defense must be dismissed.

E. Statute of Limitations

The Respondents did not pursue this affirmative defense at hearing or address it in their closing brief. Therefore, this affirmative defense is deemed abandoned.

Lastly, the Respondents contend that because the Town of Dover is opposed to the Respondent' proposal for a construction and demolition debris landfill at their mine site in the Town of Dover, Town officials have intentionally attempted to obstruct the Respondents commercial enterprises. However, the Respondents did not allege an affirmative defense of selective enforcement in their pleadings and have not pursued this claim in their closing brief. In any event, constitutional issues such as selective enforcement generally may not be addressed in the administrative forum.

IV. The 1997 Building Permit Application

The Town of Dover issued four building permits for the Dover Industrial Park: a Building I building permit, in March 1988, a Building II permit on December 27, 1993, a Quonset hut building permit issued in or about 1995 and an accessory building permit, issued on May 21, 1997. Construction of the Quonset hut, a sand storage shed to be attached to the north end of Building I, began in or about 1995. However, while under construction, the Quonset hut roof collapsed due to heavy winter snows; it was never rebuilt.

The initial Building II permit expired by its terms after one year. Conflicting evidence was received regarding whether the accessory building permit is a building permit for a reconfigured Building II. The Respondents contend that the 1997 building permit application was for a small accessory building (also called the "small block building") intended to serve Building I, not for Building II(16). This accessory building has been constructed next to Building I in the path of the access road extension for proposed Building II. As explained below I conclude that the 1997 accessory building permit was not for a reconfigured Building II.

Dover Town Building Inspector Binotto stated that this accessory building is, in fact, Building II. Inspector Binotto explained that a separate site plan approval is required for each new building proposed in the Town of Dover, including each new building proposed for the Dover Industrial Park. The Town Planning Board has approved only two site plans for the Dover Industrial Park, the 1987 site plan approval for Building I and the 1993 site plan approval for Building II (apparently the Building I site plan was sufficient for the Quonset hut project.)

On December 27, 1993, Inspector Binotto issued a building permit the Respondent Anthony Palumbo for proposed Building II at the Dover Industrial Park. That permit indicates that the Respondent Danny Fortune is the owner of the land and building, and "Palumbo Brothers Construction," another of the five Palumbo family corporate entities, is the builder.

Subsequently, on or about May 21, 1997, Inspector Binotto issued a building permit to the Respondent Fortunato Palumbo for the accessory building at the Dover Industrial Park. The 1997 permit indicates that the Respondent Danny Fortune is the owner of the land and building, and the Respondent Palumbo Block is the builder. Foundation plans for the accessory building, dated May 20, 1997 (certified by the Respondent Fortunato Palumbo, P.E.) are in evidence, but the Respondents have not established that these plans were ever submitted to the Town.

Building I already had been completed by 1997, and the Quonset hut had been abandoned. Since the Town requires that a building permit must be supported by an approved site plan, Inspector Binotto concluded that the 1997 permit for the Dover Industrial Park was supported by the 1993 Town Planning Board approval for then-proposed Building II (i.e., this was the only other site plan approved by the Town Planning Board.) Inspector Binotto testified that the 1997 building permit was issued under the approved Building II site plan for proposed Building II, now reconfigured and relocated as the accessory building. The Inspector acknowledged that the accessory building is much smaller than as depicted on the approved site plan for Building II and that it is in a different location than depicted on the approved Building II site plan. But, Inspector Binotto stated that such departures from approved site plans are common in commercial development.

The Town Planning Board site plan review and approval process for Building II and the Town Building Department issuance of the Dover Industrial Park building permits exemplify the lax procedures employed by Town of Dover officials during this time. Inspector Binotto's conclusion that the accessory building is Building II, ignores the fact that the Building II area had been in various stages of excavation since 1993. In view of the substantial excavation that had occurred in the Building II area by 1997, it is reasonable that the Inspector would have asked the Respondents to explain that excavation. But, he did not do so. At hearing, neither Staff nor the Respondents contended that the accessory building is Building II.

Inspector Binotto's reasoning that the accessory building is a reconfigured Building II is not credible and must be rejected. Further, I reject Staff's theory of liability, presented for the first time in their closing brief, that Inspector Binotto's testimony should be credited in this regard and consequently, no building permit was issued for the Respondents' excavation of the Building II area. Instead, I credit the Respondents' explanation that the accessory building was a third structure proposed for the Dover Industrial Park. In view of the Town's lax review procedures, the accessory building permit was issued absent a site plan approved by the Dover Town Planning Board. The construction of the accessory building has been completed. But, the Town of Dover has not issued a certificate of occupancy for it, presumably due to the Town officials' realization of the inconsistent procedures that led to issuance of the 1997 building permit.

V. Thehe Proposed Elevation of Building II

The approved Building II site plan depicts the existing undisturbed topography of the Building II area with 10-foot elevation interval lines. (However, east of the Building II area [directly north of Building I], the existing topography is depicted at 5-foot elevation intervals.) The proposed Building II interior road access is an extension to the north of the existing interior Dover Industrial Park access road from Dover Furnace Road that serves Building I. The approved Building II site plans depict the existing (undisturbed) topography in the Building II area rising from an elevation between 420 feet above sea level ("420 feet" or "elevation 420") and 430 feet in the easterly portion of the Building II area, to an elevation greater than 430 feet (but less than 440 feet) as the land rises to the west or southwest. The approved site plans depict the land rising to the west or southwest, with the majority of the Building II area topography at an elevation greater than 430 feet but less than 440 feet.

The approved site plans also depict a proposed elevation line at elevation 430, located south of proposed Building II in a northwesterly direction from near the proposed access road to just beyond the southwesterly corner of the storage area, where it turns and travels to the north beyond the northwest corner of proposed Building II. The testimony at hearing was in conflict as to the interpretation of this proposed elevation line and the proposed elevation of Building II. Staff's witnesses including current Town Planning Board Chair Ann Larsen (at the time, a Board Member), former Town Planning Board Chair Donna Hearn and former Town Planning Board Member Brad Kendall testified that during the Board review of proposed Building II, Anthony Palumbo stated that the proposed finished floor elevation of Building II was elevation 430. The witnesses agreed that the approved Building II site plans, support their conclusion that the Building II proposed elevation was 430 feet. Staff witnesses Robert Burgher and Robert Martin also interpreted the proposed elevation line at elevation 430, to depict a proposed Building II elevation of 430 feet.

MLR Specialist Robert Martin provided an interpretation of the approved site plan that the proposed 430 elevation line represents the southern and western perimeter of a level area, at elevation 430. That is, the approved site plan depicts proposed Building II (and the parking lot and storage area) as a level area at elevation 430(17).

But the Respondents contend that the Building II area was approved at a flat level grade, with no slope, at an elevation of 422 feet, not elevation 430(18). In support of this interpretation, the Respondents Fortunato Palumbo and Anthony Palumbo disputed that they proposed elevation 430 for Building II, or that the approved Building II site plan depicts an elevation of 430 feet for Building II. Mary Palumbo Sprong, P.E., stated that the proposed 430 elevation line on the approved site plans, that MLR Specialist Martin interprets to indicate a level plane, actually represented the top of a "cut."

Further, the Respondents contend that because Building I is at a finished floor elevation of 422 feet, then all development in the Dover Industrial Park was approved for the same finished floor elevation of 422 feet. The Respondents assert that Building Inspector Binotto's testimony supported their interpretation that Building II would normally be constructed at the same elevation of Building I. But, Inspector Binotto later clarified that testimony. Instead, he testified that he would expect any accessory buildings to Building I to be at the Building I elevation, but not necessarily unrelated buildings in other areas of the Industrial Park (such as proposed Building II.) In any event, the approved Building II site plan is not consistent with a finished floor elevation at 422 feet.

I credit Specialist Martin's interpretation as most consistent with the approved site plan. The Respondents' contention that the Building II area was approved at elevation 422 must be rejected. But, I credit the Respondents' contention that the Building II area is proposed as a level area. This contention is supported by the approved site plans. No railings are depicted for the parking lot as would be expected if it were proposed on a slope; nor are any steps depicted between the parking lot and the building.

This interpretation of the approved Building II site plan also is consistent with the testimony of the Town of Dover Planning Board witnesses. I find their testimony corroborative of the conclusions I describe above. The testimony of the Town of Dover Planning Board witnesses was given little weight on this issue because their explanation is not supported clearly by the Planning Board minutes of the Building II review and approval and because the Town is opposed to the Respondents' proposed landfill project.

- Elevation of the Proposed Building II Septic System

Regarding the depth of excavation of the Building II area, the Respondents contend that the excavation was necessary, in part, to obtain a percolation test result necessary for Dutchess County Department of Health ("DCDOH"; the "DCDOH plans") septic system approval. Once the Dover Town Planning Board granted site plan approval for Building II, the Respondent Anthony Palumbo submitted another set of plans to the DCDOH seeking approval of a septic system for proposed Building II. (1001-1002; Ex. 13B). The DCDOH plans showed components of a septic system that would extend several feet deeper than the floor elevation of the building.

Yet the Respondents never obtained DCDOH septic system approval for Building II. Instead, the DCDOH indicated they could not approve the septic system plans until the area in which the proposed septic system was proposed had been excavated to an elevation of 420 feet, and a percolation was test performed.

The Respondents' pursuit of septic system approval is a collateral issue because the Respondents never had the intention to construct anything until they obtained a tenant for the proposed Building II. Further, the Respondents never sought a construction exemption from the Department for proposed Building II or for the septic system approval excavation, although they had sought and obtained such an exemption for Building I and for slope stabilization of the area behind Building I.

- The July 21, 1999 Inspection

On July 21, 1999, MLR Specialist Martin met with the Respondent Anthony Palumbo (and Mary Palumbo Sprong) and indicated that the Department Staff was reviewing two potential violations at the Respondents' sites. One potential violation concerned silt ponds at the Palumbo Sand & Gravel site, Route 22, Dover, New York (Staff later advised the Respondents that no violation would be pursued with respect to the silt ponds.) The second potential violation concerned mining without a permit at the Dover Industrial Park in the proposed Building II area, and resulted in the present enforcement action.

The Respondents contend that July 21, 1999 was the first time that MLR Specialist Martin suggested that excavation of the Building II area below the 430 elevation was a violation of "mining without a permit."

Later on July 21, 1999, Mary Palumbo Sprong met with Inspector Binotto in response to a Freedom of Information Law request she filed with the Town. During this meeting, Inspector Binotto stated that he had recently advised Town of Dover officials of his opinion that the approved elevation of Building II was approximately 420 feet, but that the Town officials "didn't want to hear that opinion"; and that he felt he was under pressure from Town officials because he expressed that opinion.

Following the July 21, 1999 meeting with MLR Specialist Martin, the Respondent Anthony Palumbo and Mary Palumbo Sprong decided that all work in the Building II area should be stopped. The Respondents voluntarily ceased any further excavation of the Building II area although Staff had not directed them to do so and no formal enforcement proceeding had been initiated.

Soon after July 21, 1999 Inspector Binotto recused himself from all Palumbo matters before the Town of Dover because he is a neighboring property owner of one of the Palumbo sites and also because one or more Town of Dover officials had asked him to do something that he believed might be unethical.

VI. Thehe Volume of Minerals Excavated

Concerning the depth of excavation necessary for the construction of a commercial building such as Building II, Building Inspector Binotto explained that excavation would be required to a depth of at least 42 inches below the finished floor elevation, to pour the foundation footings. Essentially, this would be an excavated perimeter trench around the building's footprint. Inspector Binotto added that sometimes excavation may exceed 42 inches below the floor depending upon site-specific conditions. In the Inspector's opinion, the depth of excavation below the proposed finished floor is a site-specific determination made by the licensed professional engineers or site developers responsible for constructing the building. Regarding excavation for construction of the Building II parking lot, Inspector Binotto stated that the excavation will usually be below the final grade for the lot and that the extent of necessary excavation varies with site-specific conditions.

Staff Land Surveyor Burgher estimated that from January 1994 through August 1999, the Respondents created a gravel pit with a surface area of approximately 97,104 square feet within the Building II area. Of that, an area of approximately 54,180 square feet are within the approved Building II site plan area; approximately 42,924 feet are outside the approved Building II site plan area.

For the Minerals Bureau/Specialist Martin's interpretation described above, Land Surveyor Burgher calculated that from January 1994 through August 1999, the Respondents excavated approximately 59,500 cubic yards of minerals. Of the 59,500 cubic yards, approximately 33,300 cubic yards were excavated within the approved Building II site plan area and approximately 26,200 cubic yards were excavated outside the approved Building II site plan area.

Once the jurisdictional threshold is mined (i.e., 1000 tons or 750 cubic yards within 12 successive calendar months, whichever is less [ECL §23-2711(1) and 6 NYCRR §421.1(a)]), each day of operation without a permit during the twelve-month period, whether or not it occurred before the jurisdictional threshold was reached, constitutes a violation of ECL Article 23. Carlson Associates, et al., Commissioner's Order, September 1, 1993.

The testimony of MLR Specialist Martin and Land Surveyor Burgher interpreting a June, 1998 aerial photograph, established that between one-half and one-third of the excavation occurred before July 1998(19). In estimating the volume of minerals removed from October 1998 to August 1999 (the period identified in the Second Amended Complaint), I assumed half the 59,500 cubic yards of minerals (29,750 cubic yards), was excavated before July 1998. For July 1998 through August 1999, fourteen months, I have apportioned the excavated minerals equally, 2,125 cubic yards of minerals per month. Therefore, for the ten-month period alleged in the Second Amended Complaint, 21,250 cubic yards of minerals were excavated.

VII. Liabilityty of the Respondents

Beyond Staff's conclusory statements regarding the liability of "the Respondents" in their closing brief, the Department Staff did not marshal evidence in the record to explain why, by a preponderance of the evidence, any or all of the Respondents have violated the ECL. Staff, without explanation, has treated the named Respondents as one Respondent. Staff has not offered any analysis of the liability of each Respondent or of the relationship between and among the Respondents to justify such treatment. Staff has named the two individual Respondents only individually, not in their capacity as agents, employees, directors or shareholders of either corporate Respondent. However, the record would sustain such findings as discussed below.

The Respondents, in their closing brief, contend that the evidence adduced at hearing did not prove that any of the Respondents committed the acts alleged. Therefore, the Respondents conclude that Staff has failed to prove their case and the charges should be dismissed. As explained below, this argument is rejected.

- The Corporate Respondents

The Respondents assert that Staff failed to show by a preponderance of the evidence that the corporate Respondents are responsible for any of the activities at the site. Further, the Respondents contend that the Respondents Danny Fortune and Palumbo Block should not be held liable because Staff did not show which particular corporation (of the five corporate Palumbo entities) was acting at a particular point in time, or which corporate role a particular family member was fulfilling when particular activities, events or omissions occurred.

The Building II building permit indicates that the Respondent Danny Fortune is the owner of the land and the proposed building and the Respondent Palumbo Block Co., Inc., is the builder. The corporations are all owned by the Respondent Fortunato Palumbo (and the estate of Carmine Palumbo). Moreover, the record in this proceeding establishes that the Palumbo family corporations are interconnected corporations, fungible entities to the individual family members, including the Respondents Fortunato Palumbo and Anthony Palumbo. For example, the truck Dispatcher directed the trucks of two of the corporations as if they were one.

Another example is the Respondents' testimony that they maintained no records that would keep the corporate activities distinct regarding disposition of sand and gravel transported offsite. Although the Building II excavation benefitted Palumbo Sand & Gravel, Inc., and possibly the Respondent Palumbo Block, the Respondents have represented that no compensation was paid to the Respondent Danny Fortune for the excavated minerals. Mary Palumbo Sprong (and MLR Specialist Robert Martin) stated that some excavated minerals was trucked to the Palumbo Sand & Gravel, Co., Inc., mine site in Dover, New York. This shows that Palumbo family corporate entity Palumbo Sand and Gravel Co., Inc., received the benefit of the excavated minerals, and the corporate Respondent Danny Fortune was deprived of the value of the mineral deposits. Yet the Respondents maintain that no financial records exist regarding such transactions.

Nevertheless, throughout these transactions, the Respondent Fortunato Palumbo and the estate of Carmine Palumbo have gained as the owners of the five closely-held family corporations. In sum, the Respondents cannot use the five closely-held family corporations to avoid liability for activities at the Dover Industrial Park, activities exclusively within the control of the Palumbo family and corporate entities. Instead, the picture that emerges is that the family members, including the Respondents Fortunato Palumbo and Anthony Palumbo operate the closely-held family businesses in some (or many) respects as one business entity. Whether the employees of one corporation or the other were excavating the Building II area did not matter to the Respondents. Whether one corporation was enriched at the expense of another of the family corporation, did not matter to the Respondents. The net effect of the Building II excavation was an enrichment of the Respondents.

- The Respondent Fortunato Palumbo

The Respondents contend that individual Respondent Fortunato Palumbo was not responsible for the Building II excavation that occurred from October 1998 to August 1999, the period identified in the Complaint(20). This contention must be rejected.

The Respondent Fortunato Palumbo was (and continues to be) an owner and corporate officer of the Dover Industrial Park and all five Palumbo family corporate entities - - including the two corporate Respondents herein. Fortunato Palumbo signed the building permit application for proposed Building II by his personal signature; that is, he did not indicate any corporate managerial title. Further, in his capacity as a licensed professional engineer, he approved many drawings that are critical to this proceeding, including the Building I site plans approved by the Dover Town Planning Board on August 20, 1987 and the Building II site plans approved by the Dover Town Planning Board on December 21, 1993.

He continues work every day at the family's business offices located in Building I of the Dover Industrial Park. Ms. Sprong, his daughter, stated that in recent years, Fortunato Palumbo's activities are limited to office work, due to his advanced years. Ms. Sprong stated that between October 1998 and July of 1999, the corporate Respondents Danny Fortune and Palumbo Block continued the ongoing excavation of the Building II area.

The Respondent Fortunato Palumbo, in his individual and corporate capacities, was a high-level manager of the five family corporate entities, including the two corporate Respondents. Fortunato Palumbo was in a position to prevent corporate violations that occurred with the continued excavation of the Building II area between October 1998 and July of 1999. He knew or should have known of the continuing excavation. It is implausible for the Respondents to contend that Fortunato Palumbo had no responsibility for the Building II excavation that occurred from October 1998 to August 1999. Such a contention is even more implausible for the earlier period of January 1994 through October 1998, since presumably, in earlier years he was more active in site management and the "office" work of the family businesses. In sum, it is reasonable to conclude that the Respondent Fortunato Palumbo exercised managerial control or approval over the Building II excavation activities from October 1998 to August 1999.

As stated above, whether the employees of one corporation or the other were excavating the Building II area did not matter to the Respondent Fortunato Palumbo. Whether one corporation was enriched at the expense of another of the family corporation, did not matter to the Respondent Fortunato Palumbo. The net effect of the Building II excavation was an enrichment of the individual Respondents, including the Respondent Fortunato Palumbo.

- The Respondent Anthony Palumbo

The Respondents contend that individual Respondent Anthony Palumbo was not responsible for the Building II excavation that occurred from October 1998 to August 1999, the period identified in the Complaint. This contention must be rejected.

The Respondent Fortunato Palumbo stated that as early as 1993 Carmine Palumbo and he, sole owners of the Palumbo family corporations, were turning over control of the family businesses to their children, including the Respondent Anthony Palumbo (son of Carmine Palumbo.) With this goal in mind, beginning in 1993, Fortunato Palumbo took a less active role in the Dover Town Planning Board review of Building II site plan approval. Instead, his nephew, the Respondent Anthony Palumbo, represented Danny Fortune, Palumbo Block and the Palumbo family businesses before the Dover Town Planning Board. He coordinated the Building II site plan approval process before the Town Planning Board.

The Respondent Anthony Palumbo was not merely as an employee of the corporate Respondent Palumbo Block, but was the day-to-day manager of the Dover Industrial Park Building II excavation. He acted as manager of the Industrial Park, Building II area for both corporate Respondents. Each time MLR Specialist Martin went to the site in 1998 and 1999, Anthony Palumbo represented the Palumbo family businesses (including the corporate Respondents) in responding to Staff's inquiries or concerns. In July 1999, Anthony Palumbo (with Mary Palumbo Sprong) met with MLR Specialist Martin. Upon learning that Specialist Martin questioned the extent of the Building II excavation, Anthony Palumbo (and Mary Palumbo Sprong) voluntarily directed the cessation of excavation activities in the Building II area by the two corporate Respondents. The authority to direct employees of the Respondent corporations to cease activities is indicative, at a minimum, of the Respondent Anthony Palumbo's high-level managerial role and authority at the Dover Industrial Park.

In view of Anthony Palumbo's role as corporate representative and day-to-day manager for the two corporate Respondents, the Respondent Anthony Palumbo was high-level manager of the two corporate Respondents, at all relevant times herein.

In sum, the Respondent Anthony Palumbo was in a position to prevent the continued excavation of the Building II area. He knew or should have known of the continuing excavation. Since Anthony Palumbo represented the Palumbo family businesses in dealings with Staff and directed the cessation of Building II excavation activities in July 1999, concluding that he exercised managerial control or approval over the Building II excavation activities from October 1998 to August 1999 is reasonable.

Lastly, from Fortunato Palumbo's statement that as early as 1993, he and Carmine Palumbo were "turning over control" of the family businesses to their children, I conclude that the children (including the Respondent Anthony Palumbo), have a managerial interest and a current or future ownership interest in the Palumbo family businesses.

Therefore, the Respondents, corporate and individual, should be held liable for the alleged violations.

PENALTIES

ECL § 71-1307 and 6 NYCRR §425.1 provide for a maximum administrative civil monetary penalty of Five Thousand Dollars ($5,000.00) for each violation of ECL § 23-2711 or 6 NYCRR §421.1(a), and an additional penalty of One Thousand Dollars ($1,000.00) for each day in which the violation continues.

- The Civil Penalty Policy

The Civil Penalty Policy outlines the factors to be considered in establishing a penalty, among them, the economic benefit of delayed compliance and the gravity of the violation. The gravity component is based upon consideration of several factors including potential environmental harm, actual environmental damage, regulatory significance, culpability and history of non-compliance.

At the conclusion of the hearing, without explanation, Staff provided a monetary penalty analysis based upon their initial Complaint, not the Second Amended Complaint. Further, Staff did not present any analysis of "economic benefit" in their penalty analysis beyond a statement that sand and gravel has some economic value and there is a reasonable likelihood that the Respondents sold at least some excavated minerals. Staff did not provide any estimate of the value of this material. Accordingly, an "economic benefit" penalty component was not considered in this report.

Concerning the "gravity component", Specialist Martin stated that the Respondents' excavation did not cause any substantial adverse environmental impacts.

Staff seeks a monetary penalty of $54,250.00, based upon an assumption that the Respondents excavated 300 cubic yards of minerals per day. This results in 198 violation days over the 68-month period of January 1994 to August 1999. Staff calculated a penalty of $5,000.00 for the first day, and $250.00 per day for the remaining 197 days of violation, a total requested penalty of $54,250.00.

However, the current Complaint alleges a violation period of ten months (October 1998 to August 1999), not 68 months. I have reduced Staff's requested penalty to reflect the period alleged in the current Complaint. Apportioning Staff's estimated 198 violation days over the 68 months (i.e., continuing Staff's assumption of 300 cubic yards per day) results in approximately three violation days per month. For the ten-month violation period, 30 violation days. Assessing a penalty of $5,000.00 for the first day and $250.00 for the remaining 29 days (i.e., applying Staff's requested daily penalty assessment), results in a monetary penalty of $12,250.00.

Staff also seeks an order of the Commissioner directing the Respondents to reclaim all 4.2 acres of the Dover Industrial Park site affected by the unpermitted mining activities within nine months of the issuance of a Commissioner's Order, consistent with the requirements of 6 NYCRR Section 422.3.

Compliance History

Staff does not assert that the Respondents' history of non-compliance is an aggravating factor for purposes of penalty assessment. Regarding the 1998 and 1999 Orders on Consent entered into by the Respondents, Fortunato Palumbo and other witnesses for the Respondents stated that the family decided to enter into the Orders on Consent to avoid possible delay in the continued processing of the family's construction and demolition debris landfill application for the Palumbo Sand and Gravel Mine site in the Town of Dover.

In the Civil Penalty Policy, the Commissioner has stated that undertaking any action that requires a Departmental permit, without first obtaining the permit, is always a serious matter, not a mere "technical" or "paper work" violation, even if the activity is otherwise in compliance. (See, Civil Penalty Policy, at 8, "Importance to Regulatory Scheme"). Therefore, the violation of mining without a permit should be considered a very serious violation. However, regarding the Respondents' history of non-compliance, MLR Specialist Martin stated that in the past the Respondents have voluntarily ceased any controverted activities upon learning of Staff's concern, and they did so in this instance. (See, Civil Penalty Policy at 10, "History of Non-Compliance.")

CONCLUSIONS

  1. The Respondents obtained all local approvals for the Building II project before commencing excavation in the Building II area. However, the Respondents never applied for, or received, a Departmental construction exemption for their activities at the Building II area. Further, those activities would not qualify for the exemption in any event.
  2. The Respondents did have bona fide construction plans for Building II.
  3. The ECL Article 23 MLRL construction exemption does not apply to the Respondents' activities at the Building II area. Although the Respondents' Building II proposal was a bona fide construction proposal, the Respondents never obtained a MLRL permit or a construction exemption for Building II. Nor have the Respondents established that the Technical Guidance Memorandum MLR 92-2 construction exemption criteria would apply to their excavation of the Building II area. A person seeking a MLRL construction exemption, whether under the current regulation or the historic regulation, must construct something.
  4. The Respondents' five affirmative defenses should be dismissed.
  5. From October 1998 to August 1999 (i.e., through July 1999), the Respondents mined more than 1,000 tons or 750 cubic yards of minerals from the Dover Industrial Park Building II area absent an ECL Article 23 Mined Land Reclamation permit.
  6. The Respondents violated ECL §23-2711 and 6 NYCRR §421.1(a) by mining without a permit at the Dover Industrial Park Building II area absent a Mined Land Reclamation permit from October 1998 to August 1999. The Respondents conducted mining activities on 30 days during this period. By these activities, the Respondents also violated the December 3, 1998 Order on Consent (¶2a), in that from December 3, 1998 to August 1999, the Respondent Danny Fortune conducted mining in the areas north of Building I that are not shown as areas to be regraded on plans that have received final approval from the Dover Town Planning Board.
  7. The Respondent Fortunato Palumbo was an owner, corporate officer and high-level manager of the two corporate Respondents. The Respondent Fortunato Palumbo was in a position to prevent the continued excavation of the Building II area. He knew or should have known of the continuing excavation that occurred from October 1998 to August 1999, even more so for the earlier period of January 1994 through October 1998, since in earlier years he was more active in site management and the "office" work of the family businesses. Therefore, the Respondent Fortunato Palumbo, individually, is liable for the violation of mining without a MLRL permit at the Dover Industrial Park, Building II area from October 1998 to August 1999.
  8. The Respondent Anthony Palumbo was not merely as an employee of the corporate Respondent Palumbo Block, but acted as the day-to-day manager and as a high-level manager of both corporate Respondents with respect to the Dover Industrial Park Building II project. He coordinated the Building II site plan approval process before the Town Planning Board. He functioned as the site manager of the Industrial Park, Building II area for both corporate Respondents. Each time MLR Specialist Martin went to the site in 1998 and 1999, Anthony Palumbo represented the Palumbo family businesses in responding to Staff's inquiries or concerns. In July 1999, Anthony Palumbo (with Mary Palumbo Sprong) met with MLR Specialist Martin. Upon learning that Specialist Martin questioned the extent of the Building II excavation, Anthony Palumbo (and Mary Palumbo Sprong) directed the voluntary cessation of the corporate Respondents' excavation activities in the Building II area. The authority to direct employees to cease activities is indicative, at a minimum, of the Respondent Anthony Palumbo's managerial role and authority at the Building II area of the Dover Industrial Park.
  9. In sum, the Respondent Anthony Palumbo was in a position to prevent the continued excavation of the Building II area. He knew or should have known of the continuing excavation. Since Anthony Palumbo represented the Palumbo family businesses in dealings with Staff and directed the cessation of Building II excavation activities in July 1999, concluding that he exercised managerial control or approval over the Building II excavation activities from October 1998 to August 1999 is reasonable. Further, the Respondent Anthony Palumbo holds not only a managerial interest in the two corporate Respondents, but also, a current or future ownership interest. Therefore, the Respondent Anthony Palumbo, individually, is liable for the violation of mining without a MLRL permit at the Dover Industrial Park, Building II area from October 1998 to August 1999.
  10. The net effect of the Building II excavation was an enrichment of the Respondents. Therefore, the Respondents, corporate and individual, should be held liable, jointly and severally, for the violations.

RECOMMENDATIONS

Upon consideration of the foregoing, and upon a complete review of the record of this enforcement hearing, my recommendation is that the Commissioner imposes a civil monetary penalty and an order of reclamation, as follows:

  1. The charges against the Respondents alleging mining at the Dover Industrial Park, Building II area absent a Mined Land Reclamation permit from October 1998 to August 1999, in violation of ECL §23-2711(1), 6 NYCRR §421.1(a) and the December 3, 1998 Order on Consent, should be sustained.
  2. A civil monetary penalty of Five Thousand ($5,000.00) Dollars for the first day of violation, and Two Hundred and Fifty ($250.00) per day for each subsequent day of violation of ECL Article 23, a total penalty of Twelve Thousand Two Hundred and Fifty (12,250.00) Dollars, should be assessed jointly and severally against the Respondents, due and payable within thirty days of service upon Respondents of a conformed copy of the Order.
  3. The Respondents should be ordered to perform reclamation at the site in accordance with the recommendations of, and subject to the approval of, the Department Staff. Such reclamation shall include but not be limited to reclamation of all 4.2 acres of the Dover Industrial Park site affected by the unpermitted mining activities described herein consistent with the regulatory requirements of 6 NYCRR Section 422.3, within nine months of the issuance of a Commissioner's Order.

1 In fact, Symbax states that "(w)here amendment of the complaint to conform the evidence presented at trial [CPLR 3025(c)] prejudices the party by the interjection of a new or alternate theory supported by previously unpleaded facts, it is an abuse of discretion." (citations omitted.)

2 6 NYCRR 622.5(b) states 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".

3 Respondents had originally included a defense of Double Jeopardy before Staff amended the dates of the alleged violation from January 1994 - August 1999 to October 1998 - August 1999. Although this might have put Respondents on notice of the facts to be pleaded despite the actual dates referenced in the pleading, the testimony of one of Staff's experts clarified that the dates of the violations did not include those that staff requested to be included at the close of the evidentiary hearing. Respondents' Reply pp. 3-4.

4 The ALJ stated, "[t]he amendment would be a significant amendment of the charges, expanding the period of delay from ten months to 68 months and would have resulted in substantial delay. The remedy for this surprise and prejudice would have required adjourning the hearing and scheduling additional hearing dates to allow the Respondents additional cross-examination of all Staff witnesses on the expanded violation period.... Also, the Respondents would have to be afforded an opportunity to present evidence, possibly additional witnesses, to address this substantially expanded violation period." RD p. 19.

5 "Staff's assertion of typographical error is not persuasive, particularly in view of the timing of the motion ... Respondents were granted an expedited hearing in this matter, pursuant to 6 NYCRR 622.13, an additional factor which militated against granting Staff's motion." RD p.19 Additionally the procedural history indicating that Staff had amended its initial pleading dates from October 1994 - August 1999 to October 1998 - August 1999 after Respondent answered with a defense of Double Jeopardy, and that those dates remained unchanged through another pleading until the latter dates were purportedly noticed at the close of the evidentiary hearing conflicts with Staff's argument of unnoticed typographical error. RD p. 18.

6 "The hearing was held based upon the allegations set forth in the Second Amended Complaint. That complaint provided notice to the Respondents of the allegations at issue, and specifically, the period at issue--October 1998 to August 1999. The Respondents relied on the Second Amended pleading--not the initial pleading-- in preparing their case and examining Staff's witnesses". RD p. 18.

7 "If there were any doubt about the explanation for the change in dates set forth in the complaint, it is completely eliminated by the October 21, 1999 Affidavit of Robert L. Martin, the Departments Mined Land Reclamation Specialist...submitted in response to Respondents' motion to dismiss the complaint on the grounds of double jeopardy. In his affidavit, (he) explains that '(a)lthough the 1998 and 1999 mining violation areas are located on the same parcel of land(the Dover Industrial Park site), they are separate and distinct locations on the site... and they occurred during different periods of time(the 1998 violation involved excavation activities which occurred prior to and up to September 15, 1998; the 1999 violation involves excavation activities which occurred after the September 1998 Notice of Violation and the November 1998 Consent order (emphasis added).' It is thus clear that the dates of the alleged violations of law...was intentional." (Respondents' Reply pp. 3-4.

8 It bears noting that all mining permits shall expire either annually or at the end of five years depending on the issue and expiration dates. It is not unreasonable to apply either one of those time periods to the construction exemption as it provides guidance as to a reasonable time when an exemption should expire.

9 The record was held open beyond this date for the limited purpose of determining the exact effective dates of historic provisions of the mining regulations concerning the "construction exemption". This was determined on or about March 22, 2000.

10 No additional monetary penalty was contemplated, or would be countenanced, based upon the second cause of action.

11 Above sea level.

12 For comparison purposes, one acre is 43,560 square feet.

13 This is depicted on Ex. 103, cross-sections labeled NYS DEC Minerals Bureau Interpretation, Building II site plan, X-section A-A and X-section B-B.

14 Staff later advised the Respondents that no violation would be pursued with respect to the silt ponds.

15 1,000 tons or 750 cubic yards. See, ECL §23-2711(1) and 6 NYCRR §421.1(a).

16 The Respondents state that an area inside Building I had been used for equipment maintenance. With completion of the accessory building, equipment maintenance was moved into the accessory building. The area within Building I that the Respondents previously used for this maintenance function is now used for indoor sand storage to support the full year concrete block manufacturing process.

17 This is depicted on Ex. 103, cross-sections labeled NYS DEC Minerals Bureau Interpretation, Building II site plan, X-section A-A and X-section B-B.

18 Depicted on Ex 103, cross-sections "Respondents Interpretation of Site Plan BLD-II X-Section A-A and X-Section B-B.

19 Exhibit 19, aerial photograph.

20 In the alternative, in view of Staff's motion to amend the alleged violation period, the Respondents contend that Fortunato Palumbo was not responsible for the excavation from January 1994 through August 1999.

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