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Hudson Chromium Co/Sheldon Galfunt - Order, May 5, 1993

Order, May 5, 1993

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

Alleged Violations of Article 19 of the Environmental Conservation Law of the State of
New York and Part 228 of Title 6 of the Official Compilation of
Codes, Rules and Regulations of the State of New York

- by -

SHELDON GALFUNT
and
HUDSON CHROMIUM COMPANY, INC.

RESPONDENTS

ORDER

DEC No. R2-3657-91-05

WHEREAS:

  1. Pursuant to a Notice of Hearing and Complaint dated October 23, 1991, an administrative enforcement hearing was held before Administrative Law Judge ("ALJ") Daniel P. O'Connell on May 28, June 18, and June 19, 1992, at the Region 2 Offices of the Department of Environmental Conservation (the Department) located at Hunters Point Plaza, 47-40 21st Street, Long Island City, New York 11101. The Department was represented by Laurieann Silberfeld, Esq., Assistant Regional Attorney in Region 2. The Respondent, Sheldon Galfunt, was represented by Michael S. Sileo, Esq. from the law firm Schoer and Sileo, Syosset, New York.
  2. Upon review of the record of this proceeding and the attached Hearing Report (the "Report"), I concur with his Findings of Fact and Conclusions except as noted below.

    Alleged Violations of 6 NYCRR Part 228

  3. The evidence in the record demonstrates that the Respondents were using Agateen Aquatic Lacquer L-17-82 and O-So-Fast White Air Dry Conforming Coating in concentrations that exceeded the allowable of volatile organic compounds ("VOC") per gallon limits in violation of 6 NYCRR 228.3(a).
  4. No reliable conclusion can be drawn concerning the whether Agateen Baking Acrylic Lacquer 202WE was being used in concentrations that exceeded the allowable limits of VOCs per gallon because it was not demonstrated that the sample was representative of what was being used.
  5. 6 NYCRR 228.1(a)(2) acts as a transition provision and is intended to establish the effective date for compliance with 6 NYCRR Part 228 ("Part 228"). It has previously been held that the violation of two regulatory provisions can only sustain separate penalties when the proof of one contains some element different from the proof of the other (In the Matter of Steck and Philbin, Order of the Commissioner, March 21, 1993). Here, the cited provision only establishes a general duty to comply with the provisions of Part 228 after May 10, 1984 and therefore does not give rise to independent cause of action.

    Individual Liability of Respondent Sheldon Galfunt

  6. The record establishes that, at the time of the alleged violations, Respondent Galfunt was the secretary and treasury of Respondent Hudson Chromium Company, Inc. ("Hudson"). He managed the day to day affairs of Hudson and was directly in charge of quality control for the paints being used, including their conformance to state standards for VOC content.
  7. 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 64 S. Ct. 134 (1943)). The rationale for holding corporate officers criminally responsible is even more persuasive where only civil liability is involved (United States v. Hodges X-Ray, Inc., 759 F.2d 557 (CA 6th Cir, 1985)).
  8. In cases where the statutory violation does not require any showing of wrongdoing, liability attaches to managerial officers of a corporation where it is shown that, by virtue of the relationship the officer bore to the corporation, he or she had the power to prevent the violation (United States v. Park, supra).
  9. The charges in this case involve alleged violations of 6 NYCRR 228.3(a) which are punishable pursuant to ECL 71-2103. That provision, in contrast to its criminal liability counterpart - ECL 71-2105, requires no showing of wrongdoing.
  10. Contrary to the analysis contained in the Report, it is not necessary to determine whether Respondent Galfunt facilitated the violations or whether he acted reasonably in exercising his supervisory authority. The fact that he was directly responsible for operations and had managerial authority to prevent the violation is sufficient to establish his liability. Whether and to what extent he acted negligently or consciously wrongfully need not be proven to establish his liability but would be considered as one factor in determining an appropriate civil penalty.

    Respondent's Inability to Conduct Independent Analysis

  11. Respondent Galfunt contends that his due process rights were violated because of the Department Staff's failure to provide him with a split sample of the coatings that form a basis of this prosecution. He has not cited nor do I find any legal basis which places an affirmative duty on the Staff to provide him with a split sample.
  12. Respondent Galfunt also maintains that he was entitled to receive the remaining untested portions of any sample in order to subject it to his own independent test. The record shows that, at the time of the request, untested portions of the sample of Agateen Aquatic Lacquer L-17-82, DEC No. 22574/DOH No. 911212036 still existed in the care and custody of the Department of Health.
  13. Respondent Galfunt was entitled to pursuant to 6 NYCRR 622.8 to obtain any remaining sample in order to perform his own independent test (see CPLR 3120). While the record does not demonstrate the Staff's failure to deliver the remaining sample was due to any misconduct, their failure to do so deprived Respondent Galfunt of the possibility of obtaining contradictory evidence.
  14. Moreover, it cannot be stated with any certainty that the remaining sample was incapable of being reliably tested since the Staff themselves attempted to test of the remaining sample. The fact that they were unsuccessful does not demonstrate that other testing methods could not have succeeded.
  15. Under these circumstances, the only meaningful remedy is to dismiss the charge as against Respondent Galfunt relating to this sample.

    Corporate Liability and Relief

  16. Respondent Hudson appeared in the proceeding by counsel, but failed to participate in the hearing. Since Respondent Hudson had notification of both the charges and the hearing date, I find it to be in default.
  17. In determining the appropriate relief, I have considered the circumstances of this matter as they are developed in the record and discussed in the attached Hearing Report.

NOW, THEREFORE, have considered this matter, it is ORDERED that:

  1. Respondents Hudson and Galfunt are found to be liable for violating 6 NYCRR 228.3(a) with respect to the excessive VOC content in the paint represented by sample DEC No. 22576/DOH No. 911212038. The Respondents are jointly and severally assessed a civil penalty of THREE THOUSAND THREE HUNDRED FIFTY DOLLARS ($3,350) for such violation.
  2. Respondent Hudson is found to be liable for violating 6 NYCRR 228.3(a) with respect to the excessive VOC content in the paint represented by sample DEC No. 22574/DOH No. 911212036. Respondent Hudson is assessed an additional civil penalty of THREE THOUSAND THREE HUNDRED FIFTY DOLLARS ($3,350) for such violation.
  3. The charge alleging a violation of 228.3(a) with respect to the coating called Agateen Baking Acrylic Lacquer 202WE (DEC No. 22575/DOH No. 911212037) is dismissed with prejudice.
  4. The charge alleging that Respondents failed to comply with Part 228 by May 10, 1984 in violation of 228.1 is dismissed with prejudice.
  5. All civil penalties assessed pursuant to this Order shall be payable to the Department within 60 days following service of a conformed copy of this Order on the Respondents.
  6. All communications between the Respondents and the Department concerning this Order shall be made to the Department's Region 2 Director, NYSDEC, Hunters Point Plaza, 47-40 21st Street, Long Island City, New York 11101.
  7. The provisions, terms and conditions of this Order shall bind the Respondent Corporation, its officers, directors, agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of the Respondent Corporation.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: THOMAS C. JORLING, COMMISSIONER

Dated: Albany, New York
May 5, 1993

To: Sheldon Galfunt
via certified mail
37 Hicks Avenue
Syosset, New York 11791

Michael G. Sileo, Esq.
via certified mail
Schoer and Sileo
North Shore Atrium
6800 Jericho Turnpike
Syosset, New York 11701

Hudson Chromium, Company, Inc.
via certified mail
20-20 Steinway Street
Queens, New York 11105

Richard C. Agins, Esq.
via certified mail
Agins, Dolgin,
Siegel and Bernstein
342 Madison Avenue
New York, New York 10173

Laurieann Silberfeld, Esq.
Assistant Regional Attorney
NYSDEC-Region 2
One Hunters Point Plaza
47-40 21st Street
Long Island City, New York 11101

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

In the Matter

- of -

Alleged Violations of Article 19 of the Environmental Conservation Law of
the State of New York and Part 228 of Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York

- by -

SHELDON GALFUNT and HUDSON CHROMIUM COMPANY, INC.

RESPONDENTS

DEC No. R2-3657-91-05

HEARING REPORT

- by -

____________/s/____________
Daniel P. O'Connell
Administrative Law Judge

Summary

This Hearing Report addresses the charges alleged against Respondents, Sheldon Galfunt and Hudson Chromium Company, Inc. The Report concludes Respondent Sheldon Galfunt, as a corporate officer, should not be held personally liable for the violations. The Report also concludes Respondent Hudson Chromium Company, Inc. violated 6 NYCRR 228.3(a) on two occasions when employees applied two different coatings containing volatile organic compounds in concentrations greater than the limits specified in 6 NYCRR 228.7. For these two violations, Respondent Hudson Chromium Company, Inc. should be assessed a total civil penalty of $7,700.

Proceedings

The Region 2 Staff of the Department of Environmental Conservation (the Department) duly served a Notice of Hearing and Complaint, dated October 23, 1991, on Respondents Abraham Galfunt, Sheldon Galfunt and Hudson Chromium Company, Inc. The Complaint alleged the Respondents violated Environmental Conservation Law of the State of New York (ECL) Article 19 (Air Pollution Control) and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York (6 NYCRR) Part 228 (Surface Coating Processes) by using coating products containing excessive volatile organic compounds.

On April 14, 1992, Abraham Galfunt and the Department signed an Order on Consent. The Order on Consent settled Abraham Galfunt's liability "individually and as officer, director and owner of Respondent Hudson [Chromium Company, Inc.], for the aforementioned violations" (bracketed material supplied).

On May 20, 1992, the Department moved to amend Paragraph 6 of the Complaint by alleging that Sheldon Galfunt, as Secretary and Treasurer of Hudson, was responsible for and managed Hudson at the time of the alleged violations. Respondent Sheldon Galfunt objected to the proposed amendment. I overruled the objection and granted the Department's motion. The amendment clarified the original allegation about Respondent Sheldon Galfunt's responsibilities at Hudson.

At the Department's Region 2 Offices on May 28, June 18, and June 19, 1992, Administrative Law Judge Daniel P. O'Connell presided over an enforcement hearing as provided by ECL Article 71 and 6 NYCRR Part 622 to consider the charges alleged against Respondents Sheldon Galfunt and Hudson Chromium Company, Inc.

Upon timely receipt of written closing statements from the Department and Counsel for Respondent Sheldon Galfunt, the record of the hearing closed on October 26, 1992.

Laurieann Silberfeld, Esq., Assistant Regional Attorney in Region 2, appeared for the Department. The Department's witnesses included Steven DeSantis, Environmental Engineer Technician III; Zaky Menasha, P.E., Environmental Engineer II; Abraham Galfunt, President, Hudson Chromium Company, Inc. and Sturmis Braun, Chemist, Wadsworth Center for Laboratories and Research, NYS Department of Health.

Michael S. Sileo, Esq. from the law firm of Schoer and Sileo, Syosset, NY, appeared for Respondent Sheldon Galfunt. Respondent Sheldon Galfunt's witnesses included himself; Adalberto Madera, a Sprayer at Hudson Chromium and William Feinstein, President, Very Fine Paint, Inc.

In a letter dated May 27, 1992, Richard Agins, Esq. from the law firm of Agins, Dolgin, Siegel and Bernstein, New York, NY, stated he was the attorney for Respondent Hudson Chromium Company, Inc. (Hudson). However, no one from Agins et al. appeared at the hearing convened on May 28, June 18, and June 19, 1992.

The Department's Position

1. The Charges

The Department contended Sheldon Galfunt was responsible for and managed the operations at Hudson on February 6, 1991. The Department alleged that Respondents Sheldon Galfunt and Hudson violated 228.3(a) three times by applying three different coatings containing volatile organic compounds (VOCs) greater than the standards specified in Table 1 of 228.7. Based on the three alleged violations of 228.3(a), the Department also asserted that Respondents Sheldon Galfunt and Hudson did not comply with the provisions of Part 228 by May 10, 1984 in violation of 6 NYCRR 228.1(a)(2).

2. The Relief

The Department requested an Order from the Commissioner directing the Respondents to submit a schedule to achieve compliance with the regulatory criteria provided in Part 228. Part 228 (Surface Coating Processes) limits the emissions of volatile organic compounds to the atmosphere at facilities located in the metropolitan New York area that paint various products such as large appliances, fabrics, automobile parts and other metal objects. In its closing brief, the Department requested a total civil penalty of not less than $15,000.

The Respondents' Positions

As indicated above, Respondent Abraham Galfunt settled this matter by signing an Order on Consent on April 14, 1992.

Respondent Hudson Chromium Company, Inc. did not file an Answer pursuant to 6 NYCRR 622.5.

Respondent Sheldon Galfunt filed Answers dated May 13, 1992 and June 16, 1992. In each Answer, Respondent Sheldon Galfunt asserted the same two Affirmative Defenses: (1) Respondent Sheldon Galfunt is not a proper party to the subject action, and (2) the charges should be dismissed because the Department did not preserve the samples taken on February 6, 1991 for independent testing by Sheldon Galfunt.

Motion to Dismiss

On April 13, 1992, Respondent Sheldon Galfunt moved to dismiss the charges by asserting that the Department does not have the authority to hold Sheldon Galfunt personally liable for the violations alleged in the Complaint simply because he is a corporate officer of Hudson. The Department opposed the motion, and argued Respondent Sheldon Galfunt could be found personally liable for the actions of Hudson. The Parties written arguments are incorporated herein by reference.

On May 21, 1992, I ruled that only the Commissioner has the authority to dismiss charges based on the merits. Accordingly, I denied Respondent Sheldon Galfunt's motion to dismiss without prejudice to renew it after the hearing. The ruling also provided notice to the Parties that the question of Sheldon Galfunt's personal liability was the Department's burden as an issue of fact. In his closing brief, Respondent Sheldon Galfunt renewed his Motion to Dismiss the charges.

Findings of Fact

Background

  1. The Hudson facility, located at 20-20 Steinway Street, Long Island City (Queen's County), applies paints and other surface coatings to fabricated metal products. Hudson emits approximately 6,800 pounds of volatile organic compounds (VOCs) per year.
  2. On July 23, 1990, Hudson filed applications for permits to operate eleven air emission points vented to the outdoor atmosphere.
  3. During an inspection of Hudson on September 27, 1989, the Department's Region 2 Staff determined Hudson was in compliance with 6 NYCRR 228.1. It is not known whether Hudson was in compliance with 228.1 before September 27, 1989.

    Jurisdiction

  4. Richard Agins, Esq. from the law firm of Agins, Dolgin, Siegel and Bernstein, New York, NY, is the attorney for Respondent Hudson Chromium Company, Inc. (Hudson). Although Mr. Agins did not appear at the hearing convened on May 28, June 18, and June 19, 1992 to represent Hudson, Mr. Agins knew about the May 28, 1992 hearing date and the charges alleged against his client.

    Corporate Structure and Management of Hudson

  5. Sheldon Galfunt held corporate titles of Secretary and Treasurer of Hudson at the time of the February 6, 1991 inspection by the Department.
  6. Abraham Galfunt retired from Hudson in late 1987. After his retirement, Abraham Galfunt retained his title as President of Hudson. From late 1987 until June 1991, Sheldon Galfunt managed the day to day operations of Hudson. After June 1991, Sheldon Galfunt was no longer employed at Hudson, and Abraham Galfunt left his retirement and returned to manage Hudson.
  7. Respondent Sheldon Galfunt supplied Hudson's consulting engineers with information for permit applications filed with the Department. Respondent Sheldon Galfunt placed orders with the manufacturers for the products used at Hudson such as the three coatings which are the subject of this hearing and 2% isopropanol.
  8. Respondent Sheldon Galfunt contacted the manufacturers, and requested advice from them about the problems associated with the products being too thick to spray. Respondent Sheldon Galfunt directed Mr. Madera to follow the manufacturers' recommendations about thinning the coatings for spray gun applications.
  9. It is unknown whether Mr. Madera followed the manufacturers' recommendations when thinning the coatings.

    Inspection and Chain of Custody

  10. On February 6, 1991, the Department Staff inspected Hudson, and collected three, .25 liter, samples. Each of the three samples collected was from a different coating found at Hudson.
  11. Sheldon Galfunt was present during the February 6, 1991 inspection. Respondent Sheldon Galfunt did not collect samples himself or ask the Department Staff to collect samples for independent analysis by Hudson.
  12. The Department maintained the three samples collected on February 6, 1991 in the following manner:
    1. During the 10 o'clock A.M. hour on February 6, 1991, Steven DeSantis obtained three samples from Hudson personnel. Mr. DeSantis sealed the three individual sample containers, and assigned identification numbers 22574, 22575, 22576 to the samples.
    2. Mr. DeSantis kept the three samples in a locked cabinet at the Department's Region 2 Offices from February 6, 1991 until February 28, 1991. On the latter date at 11:20 A.M., Andrew Shanahon from the Department Staff transported the samples to the DOH laboratory in Albany.
    3. Sturmis Braun from the DOH received the three samples at 2:15 P.M. on March 1, 1991. When Mr. Braun received the samples, the seals placed on them by Mr. DeSantis on February 6, 1991 were intact. The samples remained in Mr. Braun's custody until he conducted the analyses requested by the Department Staff.


    Sample Collection and Analysis

  13. To obtain a representative sample of a particular coating for analysis, the surface coating product must be mixed completely. Before conducting any analysis, each sample must then be remixed thoroughly to assure reliable results.
  14. The first (DEC No. 22574/DOH No. 911212036) and third (DEC No. 22576/DOH No. 911212038) samples collected by the Department were taken from two different spray gun reservoirs. Hudson personnel were using the hand held spray guns at the time of the inspection. From this information it can be reasonably inferred that before the Department collected these two samples, the Hudson personnel thoroughly mixed the surface coating products before filling the spray gun reservoirs and continued to agitate the coatings in the reservoirs while operating the spray guns.
  15. The second coating sampled, identified by DEC No. 22575/DOH No. 911212037, was Agateen Baking Acrylic Lacquer 202WE. This sample came directly from the manufacturer's container. It is not known whether the coating product in the manufacturer's container was mixed thoroughly before the Department collected the sample. Also, it cannot be reasonably inferred from other information in the record that the coating was mixed completely before the Department collected the sample.
  16. At the request of the Department, DOH quantified the VOCs present in each of the three individual samples using the analytical methods provided in 40 CFR Part 60, Appendix A, Reference Method 24 (July 1989).
  17. The entire, or nearly the entire, volume of the sample (i.e., .25 liters) was used for the analyses. As a quality control measure, the analyses are done in duplicate.
  18. The sample containers cannot be resealed after the seals placed on the containers at the time of collection are broken. The quality of any remaining volume of sample not used in the analyses degrades because VOCs begin to evaporate.

    Independent Analysis

  19. In letters dated April 29, 1991 and May 13, 1991 the Region 2 Department Staff advised the Respondents that based on the analyses conducted by the DOH, the VOC content of the coating products sampled on February 6, 1991 exceeded the authorized limits.
  20. After receiving the test results from the Department, Respondent Sheldon Galfunt requested the remaining portions of the samples analyzed by the DOH for independent analysis.

    Mr. Menasha of the Region 2 Department Staff informed Sheldon Galfunt nothing remained because the DOH uses most of the sample in performing the analysis.

  21. After the Department informed Respondent Sheldon Galfunt that no portion of the samples collected on February 6, 1991 remained after the DOH performed the analysis, Respondent Sheldon Galfunt had the CMS Group/Charles M. Shapiro Inc. analyze samples taken from the same batches as the coating products originally supplied to Hudson (the Shapiro Analyses).
  22. In December 1991, the Department requested the DOH to re-analyze the first sample (DEC No. 22574/DOH No. 911212036). Since the remaining volume of the sample was small, DOH was able to do a partial re-analysis of the first sample. The results of the re-analysis were similar to the first. The Department never informed the Respondents about the re-analysis. It is not known whether the Department Staff requested the DOH to re-analyze the second and third samples, or whether any remaining portions of the second and third samples existed.
  23. In February 1992, and again in May 1992, Mr. Sileo (Respondent Sheldon Galfunt's attorney) requested the remaining portions of the samples collected on February 6, 1991.

    Mr. Menasha from the Region 2 Department Staff responded to these requests by restating nothing remained because DOH generally uses most of the sample in performing the analysis.



    The First Sample

  24. The Department collected the first sample (DEC No. 22574/DOH No. 911212036) from a spray gun reservoir in use at the time of the inspection by Hudson personnel. The product, called Agateen Aquatic Lacquer L-17-82, is a clear air dry coating supplied to Hudson by the Agate Lacquer Manufacturing Company, Inc.
  25. For DEC No. 22574/DOH No. 911212036, the DOH laboratory reported 6.1 pounds (lb) of non-exempt VOCs per gallon (gal) 0.5 lb/gal.
  26. The concentration of Agateen Aquatic Lacquer L-17-82 (DEC No. 22574/DOH No. 911212036), as provided by the manufacturer, is too thick to apply with a spray gun. Adalberto Madera, the Sprayer at Hudson, routinely adds 2% isopropanol to the Agateen Aquatic Lacquer L-17-82. The manufacturer recommended adding five ounces of 2% isopropanol per gallon of Agateen Aquatic Lacquer L-17-82 to thin the coating for spray applications.
  27. Hudson ordered isopropanol from Agate Lacquer Manufacturing Company, Inc. in August 1990, December 1990, and January 1991. Isopropanol is a non-exempt VOC. Adding isopropanol to a coating will increase the VOC content of the coating.
  28. The Material Safety Data Sheet (MSDS) identifies the coating product and its physical properties, lists the hazardous chemical constituents including VOCs, identifies health hazards associated with using the product, and provides information regarding human exposure, fire hazards, storage and cleanup. The MSDS provides the VOC content in pounds per gallon minus water.
  29. The MSDS provided by the Agate Lacquer Manufacturing Company, Inc. does not list isopropanol as one of the chemical constituents of Agateen Aquatic Lacquer L-17-82 (DEC No. 22574/DOH No. 911212036). According to the MSDS, the VOC content of Agateen Aquatic Lacquer L-17-82 is 2.78 lb/gal.
  30. Neither the MSDS for Agateen Aquatic Lacquer L-17-82 nor any other information in the record establishes what the non-exempt VOC content of a gallon of Agateen Aquatic Lacquer L-17-82 is when 5 ounces of 2% isopropanol are added.

    The Second Sample

  31. Given the significance of mixing and absent information about whether mixing occurred at the time of collection (Finding No. 13), no weight can be given to the DOH test results for the Agateen Baking Acrylic Lacquer 202WE sample (DEC No. 22575/DOH No. 911212037).
  32. As needed, Mr. Madera would add a reducer to thin the Agateen Baking Acrylic Lacquer 202WE (DEC No. 22575/DOH No. 911212037) for spray applications. The manufacturer, Agate Lacquer Manufacturing Company, Inc., provided the reducer, and recommended adding about 3 ounces of reducer per gallon of Agateen Baking Acrylic Lacquer 202WE to thin the coating for spray applications. The chemical content of the reducer is unknown.
  33. Neither the MSDS for Agateen Baking Acrylic Lacquer 202WE nor any other information in the record shows what the non-exempt VOC content of a gallon of Agateen Baking Acrylic Lacquer 202WE is when 3 ounces of the reducer are added.
  34. Hudson ordered the reducer from Agate Lacquer Manufacturing Company, Inc. in August 1990. Because the chemical components of the reducer are unknown, it cannot be determined whether the reducer contains exempt or non-exempt VOCs.

    The Third Sample

  35. The Department collected the third sample (DEC No. 22576/DOH No. 911212038) from the reservoir of another spray gun being used by Hudson personnel at the time of the inspection. The product, called O-So-Fast White Air Dry Conforming Coating, is an air dry enamel coating supplied to Hudson by the Fyn Paint and Lacquer Company. O-So-Fast White Air Dry Conforming Coating contains 1,1,1-trichloroethane which is an exempt VOC pursuant to regulation.
  36. For DEC No. 22576/DOH No. 911212038, the DOH laboratory reported 4.3 lb of non-exempt VOCs per gallon 0.5 lb/gal.
  37. Generally, Mr. Madera does not need to thin the O-So-Fast White Air Dry Conforming Coating (DEC No. 22576/DOH No. 911212038). If the product is too thick to spray, the manufacturer has recommended thinning the O-So-Fast White Air Dry Conforming Coating with 1,1,1-trichloroethane.
  38. 1,1,1-trichloroethane is an exempt VOC because it does not photochemically react with other compounds in the atmosphere.
  39. According to the MSDS provided by Fyn Paint and Lacquer Company, the VOC content of O-So-Fast White Air Dry Conforming Coating is 2.78 lb/gal.

Discussion

Notice to Hudson

Hudson Chromium Company, Inc. received adequate notice of the hearing and the charges. Though Respondent Hudson's attorneys (Agins, Dolgin, Siegel and Bernstein) did not file an Answer to the Complaint or appear at the hearing, Mr. Agins' letters dated May 27, 1992 and September 17, 1992 acknowledge the scheduled hearing date and the charges alleged against Hudson Chromium Company, Inc. Furthermore, Abraham Galfunt and Sheldon Galfunt, who held corporate titles of President, and Secretary/Treasurer, respectively, at the time of the alleged violations were present at the hearing.

Personal Liability of Respondent Sheldon Galfunt

In his Motion to Dismiss, Respondent Sheldon Galfunt asserted the Department does not have the authority to hold him personally liable for the violations alleged in the Complaint simply because Respondent Sheldon Galfunt is a corporate officer of Hudson. Under a theory of corporate officer's liability, the Department argued there is authority to hold Respondent Sheldon Galfunt personally liable for the actions of Hudson. The Department's theory is dependent upon three criteria: (1) the officer is in a position of responsibility to influence corporate policies or activities, (2) there is a connection between the individual's position and the corporate actions which constituted the violations, and (3) the individual's actions or inactions facilitated the violations.

Respondent Sheldon Galfunt was in a position of responsibility to influence corporate policies or activities at Hudson that ultimately resulted in the violations identified below. From late 1987 until June 1991, Sheldon Galfunt contacted the Department about obtaining coating products that complied with Part 228. Respondent Sheldon Galfunt supplied Hudson's engineers with information for permit applications filed with the Department, and placed orders with manufacturers for the products used at Hudson. The record shows the products ordered include isopropanol and reducer. Respondent Sheldon Galfunt contacted the manufacturers, and requested advice from them about the problems associated with the products being too thick to spray. Respondent Sheldon Galfunt then directed Mr. Madera to follow the manufacturers' recommendations about thinning the coatings for spray gun applications.

The second criteria of the Department's theory of corporate liability focuses on the question of whether Mr. Madera followed Respondent Sheldon Galfunt's directive to thin the coatings in the manner recommended by the manufacturer. According to the record of this proceeding, the answer to this question is not known (See Finding No. 9). If Mr. Madera did not follow his supervisor's directive, then the excessive VOC content of the coatings sampled by the Department is the result of too much thinner added by Mr. Madera. Although Respondent Sheldon Galfunt was in a position to influence Mr. Madera's actions as his supervisor at the time of the violations, Mr. Madera's insubordination nullified Respondent Sheldon Galfunt's influence as a corporate officer over Mr. Madera. There is no connection between Respondent Sheldon Galfunt's position as a corporate officer and the violations caused by Mr. Madera and his refusal to thin the coatings the way the manufacturers recommended. The second criteria of the Department's theory of corporate officer liability requires this kind of connection.

It could be argued that Respondent Sheldon Galfunt should have more closely supervised Mr. Madera. However, the Department did not submit any information about what other reasonable supervisory action Respondent Sheldon Galfunt should have taken.

With respect to the third criteria, if Mr. Madera did follow his supervisor's directive when thinning the coatings, then Respondent Sheldon Galfunt acted on bad advise from the manufacturer. Nonetheless, Respondent Sheldon Galfunt did not facilitate the violations because Respondent Sheldon Galfunt acted reasonably when he assumed the manufacturers knew what could be added to the coatings to thin them in a way that complied with the regulations. Under this set of circumstances, Respondent Sheldon Galfunt is not personally liable because his actions or inactions did not facilitate the violations as required by the third criteria of the Department's theory of corporate officer liability.

It could be argued that Respondent Sheldon Galfunt should have periodically tested the VOC content of the thinned mixtures. However, the Department submitted no information about whether spot checking would be considered a reasonable precautionary action that Respondent Sheldon Galfunt should have taken. Frequent independent testing would be costly, and therefore an unreasonable precautionary action.

For the reasons stated above, I find the second and third criteria of the Department's theory of corporate liability were not met. Consequently, the Commissioner should not find Respondent Sheldon Galfunt personally liable for the violations identified below.

Independent Analysis

Respondent Sheldon Galfunt contended the Department deprived him of his right to due process of the law when the Department did not preserve representative samples of the coatings obtained on February 6, 1991. Respondent Sheldon Galfunt argued he could not independently test the samples to obtain contradictory evidence for his defense.

Respondent Sheldon Galfunt's argument presents two distinct questions. The first question is whether the Department was required to provide Respondent Sheldon Galfunt with split samples. The second question is whether Respondent Sheldon Galfunt is entitled to the remaining portions of the samples analyzed by the DOH for independent analysis.

1. Split Samples

According to the Department, there is no rule requiring the Department to provide a Respondent with split samples or to return the remaining portion of an unused sample to a Respondent. Respondent Sheldon Galfunt cites no authority either at the hearing or in his closing brief to support his argument that the Department must provide split samples. Moreover, Respondent Sheldon Galfunt did not request split samples at the time of the inspection.

In addition, the case law referred to by Respondent Sheldon Galfunt in his closing brief does not support his due process claim. The first case, Economico v. Village of Pelham 50 NY2d 120, 125 (1980), underscores the significance of due process in the judicial system. In the second case, Girard v. City of Glens Falls 173 AD2d 116 (3rd Dept. 1991), the Court held that administrative hearings must provide for due process which includes opportunities to be heard and to present relevant evidence.

2. Remaining Samples

After receiving the test results from the Department in April and May 1991, Respondent Sheldon Galfunt requested the remaining portions of the samples analyzed by the DOH for independent analysis. Mr. Menasha of the Region 2 Department Staff informed Sheldon Galfunt nothing remained because the DOH uses most of the sample in performing the analysis. However, in December 1991, the Department requested the DOH to re-analyze the first sample (DEC No. 22574/DOH No. 911212036). The Department never informed the Respondents about the re-analysis.

The Department's failure to provide the remaining portion of the first sample (DEC No. 22574/DOH No. 911212036) analyzed by the DOH prejudiced Respondent Sheldon Galfunt's case. Respondent Sheldon Galfunt was deprived of the possibility of obtaining contradictory evidence. Pursuant to 6 NYCRR 622.8, Respondent Sheldon Galfunt was entitled to the remaining portions of the samples. Consequently, if the Commissioner should find Respondent Sheldon Galfunt personally liable, the charge against him relating to the first sample (DEC No. 22574/DOH No. 911212036) should be dismissed.

6 NYCRR Part 228 and VOCs

There is no issue about whether the Hudson facility must comply with 6 NYCRR Part 228. Part 228 (Surface Coating Processes) limits the emissions of volatile organic compounds to the atmosphere from facilities located in the metropolitan New York area that paint various products such as large appliances, fabrics, automobile parts and other metal objects. The Hudson facility, located at 20-20 Steinway Street, Long Island City (Queen's County), applies paints and other surface coatings to fabricated metal products. Hudson emits approximately 6,800 pounds of volatile organic compounds per year.

For regulatory purposes, volatile organic compounds (VOCs) are divided into two categories: exempt and non-exempt. Pursuant to 200.1(mmm), volatile organic compounds are "any organic compound which participates in atmospheric photochemical reactions ... other than those compounds with negligible photochemical reactivity ... " Section 200.1(mmm) provides a list of exempt VOCs. Of the VOCs identified in the record of this proceeding, only 1,1,1-trichloroethane is listed as an exempt VOC pursuant to 200.1(mmm). Isopropanol does not appear on the list provided in 200.1(mmm), and therefore is considered a non-exempt VOC by regulation.

Analytical Methods

There is no issue regarding the analytical methods used by the NYS Department of Health to evaluate the samples collected on February 6, 1991. The DOH used the analytical methods provided in 40 CFR Part 60, Appendix A, Reference Method 24 (July 1989). CMS Group/Charles M. Shapiro Inc. used the same analytical methods for Respondent Sheldon Galfunt's analyses (See Shapiro Analysis below).

Chain of Custody

Respondent Sheldon Galfunt claimed the Department did not sufficiently establish the chain of custody for the three samples. Respondent Sheldon Galfunt argued that the volatile nature of the samples demands an explanation of how Andrew Shanahon maintained the samples for 27 hours. Respondent Sheldon Galfunt contended that how the samples were preserved during this period relates directly to the reliability of the DOH test results.

Respondent Sheldon Galfunt's claim is unsubstantiated. The Department properly preserved the samples because the seals placed on them during the inspection were intact when Mr. Braun of the DOH received them.

Sample Collection

Based on Mr. Braun's testimony about the importance of thorough mixing to obtain accurate results, Respondent Sheldon Galfunt challenged the reliability of the test results performed by the DOH. Respondent Sheldon Galfunt asserted the Department did not prove that the coatings were mixed thoroughly at the Site before the Department collected the three samples. Absent this proof, Respondent Sheldon Galfunt claimed the test results were not reliable.

Respondent Sheldon Galfunt's claim is not valid about the first (DEC No. 22574/DOH No. 911212036) and the third (DEC No. 22576/DOH No. 911212038) samples. The Department collected these samples from spray gun reservoirs. Hudson personnel were using the spray guns at the time of the inspection. It can be reasonably inferred from this information that Hudson personnel had thoroughly mixed these coatings before filing the spray gun reservoirs and continued to agitate the coatings in the reservoirs while using the spray equipment. Therefore, these two coatings were mixed thoroughly when the Department collected the first and third samples from the spray gun reservoirs.

However, Respondent Sheldon Galfunt's claim is valid for the second sample (DEC No. 22575/DOH No. 911212037) given Mr. Braun's expert testimony about mixing. The Department obtained the Agateen Baking Acrylic Lacquer 202WE sample directly from the manufacturer's container. There is no evidence to show that the product in the container was mixed thoroughly before the Department collected the sample. It cannot be inferred from other information in the record that the lacquer product in the container was mixed thoroughly before the Department collected this sample. Given the significance of mixing and absent information about whether mixing occurred at the time of collection, no weight can be given to the DOH test results for the Agateen Baking Acrylic Lacquer 202WE sample (DEC No. 22575/DOH No. 911212037).

The Shapiro Analyses

Respondent Sheldon Galfunt offered the results of analyses performed by CMS Group/Charles M. Shapiro Inc. CMS Group/Charles M. Shapiro Inc. analyzed samples taken from the same batches as the coating products originally supplied to Hudson (the Shapiro Analyses).

With respect to the reliability of the results of the Shapiro Analyses, how the samples for the Shapiro Analyses were collected is significant because of the importance of thorough mixing. (See preceding discussion) Respondent Sheldon Galfunt did not establish, nor is there sufficient information in the record to infer, that the manufacturers' samples were collected from containers that had been mixed well, and that the Shapiro laboratory completely remixed the samples before analyzing them. Absent this evidence, the results of the Shapiro Analyses, like the test results of the Department's second sample, are not reliable.

The results of the Shapiro Analyses are not reliable for an additional reason. Respondent Sheldon Galfunt did not prove the samples used in the Shapiro Analyses were representative of the samples collected on February 6, 1991 from the two spray gun reservoirs. The record shows Mr. Madera routinely thinned the coats, and there is not information in the record to prove that the coatings tested in the Shapiro analyses were thinned.

The Charges

1. 228.3(a)

The Department alleged the Respondents, Sheldon Galfunt and Hudson, violated 228.3(a) three times. Pursuant to 228.3(a), "[n]o person shall cause or allow emissions of volatile organic compounds to the outdoor atmosphere in excess of those that would be emitted from the use of coating materials that meet the requirements specified in table 1 ... of section 228.7 ... of this Part." Section 228.7 (Table 1) provides a list of painting processes, emission sources and product descriptions with the maximum permitted pounds of volatile organic solvent (minus water) per gallon of coating at application.

At the inspection, the Department collected three different types of coatings for use on fabricated metal products. For clear air dry products such as Agateen Aquatic Lacquer L-17-82 (DEC No. 22574/DOH No. 911212036), the maximum permitted pounds of organic solvent (minus water) per gallon of coating at application is 4.3 lb/gal. For coatings that are air dried or forced warm air dried at temperatures up to 90C such as O-So-Fast White Air Dry Conforming Coating, an air dry enamel product (DEC No. 22576/DOH No. 911212038), and Agateen Baking Acrylic Lacquer 202WE, a baked product (DEC No. 22575/DOH No. 911212037), respectively, the maximum permitted pounds of organic solvent (minus water) per gallon at application is 3.5 lb/gal.

The first sample collected by the Department on February 6, 1991 (DEC No. 22574/DOH No. 911212036) is a clear air dry product called Agateen Aquatic Lacquer L-17-82 that contained 6.1 pounds of VOCs per gallon. This result exceeds the 4.3 lb/gal limit established in Table 1 and is a violation of 228.3(a).

The Department did not prove with any reliability that the second sample called Agateen Baking Acrylic Lacquer 202WE (DEC No. 22575/DOH No. 911212037, a clear baked product, had a VOC content greater than 3.5 lb/gal given the significance of mixing. Consequently, the Respondents did not violate 228.3(a) with respect to this coating product.

The third sample collected by the Department on February 6, 1991 (DEC No. 22576/DOH No. 911212038) is an air dry enamel product called O-So-Fast White Air Dry Conforming Coating that contained 4.3 pounds of VOCs per gallon. This result exceeds the 3.5 lb/gal limit established in Table 1 and is a violation of 228.3(a). The two samples collected on February 6, 1991 that exceeded the prescribed regulatory limits constitute two separate violations.

2. 228.1

As a result of violating 228.3(a), the Department also alleged Respondents, Sheldon Galfunt and Hudson Chromium Company, Inc., failed to comply with Part 228 (Surface Coating Processes) by May 10, 1984 in violation of 6 NYCRR 228.1(a)(2). Section 228.1(a)(2) requires "any owner or operator of a facility involving a coating line described in table 1 ... of section 228.7 ... of this Part, which is located in an nonattainment area for ozone and for which the annual potential emissions of volatile organic compounds from the facility equal or exceed 100 tons per year, will: ... be in compliance with the provisions of this Part within six months after submittal of the proposed compliance schedule, but not later than May 10, 1984" (emphasis added). Section 228.1(b)(2) requires compliance by the same date for facilities with potential emissions of less than 100 tons per year.

The Department's allegation that the Respondents did not comply with 228.1(a)(2) is meaningless because 228.1(a)(2) does not apply to the Respondents' operations. The Department's witness, Mr. Menasha, estimated Hudson's potential emissions level to be 6,800 lb/year after reviewing Hudson's most recent permit applications. Consequently, Hudson must comply with 228.1 (b)(2) rather than 228.1(a)(2) as alleged in the Complaint.

Regardless of which subparagraph of 228.1 applies to the Respondents' operations, the Department alleged the Respondents did not comply with Part 228 (Surface Coating Processes) by May 10, 1984. However, the evidence offered by the Department supports the contrary. Exhibits 11 (a Notice of Compliance Determination) and 12 (a letter from Kenneth Soltesz, Assistant Sanitary Engineer) show the Respondents were in compliance with Part 228 in September 1989. There is no information in the record about whether the Respondents complied with Part 228 before September 1989. Based on this information, the isolated instances of the Respondents' noncompliance established in this hearing are not sufficient to prove that the Respondents did not comply with Part 228 by May 10, 1984. The Respondents did not violate 228.1.

The Material Safety Data Sheets

Respondent Sheldon Galfunt offered the manufacturers' Material Safety Data Sheets (MSDS) for the three coatings. Each MSDS identifies the product and its physical properties, lists the hazardous chemical constituents including VOCs, identifies health hazards associated with using the product, and provides information regarding human exposure, fire hazards, storage and cleanup. For each coating, the MSDS identifies the VOC content in pounds per gallon minus water.

The MSDS's were offered for two purposes. First, Respondent Sheldon Galfunt offered the MSDS's to show that he is not liable for the violations because the VOC content reported on the MSDS's for each coating tested by the Department on February 6, 1991 conformed with Part 228. The second purpose was to establish a mitigating factor in that Respondent Sheldon Galfunt thought the coatings complied with Part 228 based on the information reported in the MSDS's.

The MSDS's do not disprove the violations. Furthermore, whether Respondent Sheldon Galfunt thought the coatings complied with Part 228 based on the information reported in the MSDS's is irrelevant because the Respondents routinely thinned the coatings. Consequently, the VOC concentrations reported in the MSDS's are meaningless. The MSDS's do not explain the effect on the VOC content of the coatings when isopropanol and reducer are added to the coatings before applying the products. To re-emphasize, Part 228 limits the VOC content of a coating when applied, rather than when produced.

Respondent Sheldon Galfunt argued the thinned coatings complied with Part 228. To support this argument, Sheldon Galfunt and Mr. Madera testified the manufacturer prescribed the use of isopropanol and the reducer to thin the coatings with the understanding that the thinned coatings would still comply with Part 228. However, neither the MSDS's nor any other information in the record establish what the non-exempt VOC content of the coatings would be when thinned with isopropanol or the reducer in a manner recommended by the manufacturer. Even if the results from the Shapiro Analyses were considered reliable, these results do not show what the non-exempt VOC content of the thinned coatings would be. Since there is no corroborating evidence to show that thinning the coatings with isopropanol or the reducer would not effect the VOC content of the coatings, I reject Respondent Sheldon Galfunt's argument that the thinned coatings complied with Part 228.

Civil Penalty

ECL 71-2103(1) authorizes civil penalties for violations of ECL Article 19 (Air Pollution Control) and the implementing regulations. In pertinent part, "... any person who violates any provision of article nineteen or any code, rule or regulation which was promulgated pursuant thereto ... shall be liable for a penalty not less than two hundred fifty dollars [$250] nor more than ten thousand dollars [$10,000] for said violation ... " (bracketed material supplied). This provision also authorizes civil penalties for continuing violations.

In its closing statement, the Department requested the Commissioner to assess a civil penalty of not less than $15,000 "to be split equally between the Respondents." The Department argued the requested civil penalty is less than the statutory maximum. According to the Department, the requested civil penalty is consistent with the Commissioner's Enforcement Guidance Memorandum entitled Civil Penalty Policy dated June 20, 1990, and with civil penalties paid with Orders on Consent regarding similar air violations in Region 2.

To decide the proper civil penalty, the Commissioner should rely on the factors identified by the Department. The two violations of 228.3(a) on February 6, 1991 potentially impacted air quality. The established VOC standards exceeded by Hudson are set at levels that, if complied with, will not impact the ambient air quality. Also, Hudson's noncompliance with 228.3(a) on February 6, 1991 is significant from a regulatory perspective because the Department determined that Hudson was in compliance with Part 228 after its inspection in September 1989. The Respondent Corporation, therefore, was aware of its regulatory responsibility to control VOC emissions. Finally, the requested civil penalty is consistent with civil penalties paid with Orders on Consent regarding similar air violations in Region 2. It is important to note that the civil penalties paid as part of an Order on Consent are generally less than civil penalties assessed after a hearing.

The Department argued Respondent Sheldon Galfunt's cooperation, or lack thereof, is a relevant factor in determining the proper civil penalty. Although the Commissioner's Civil Penalty Document identifies a respondent's cooperation as a relevant factor of the penalty calculation, Respondent Sheldon Galfunt's cooperation is not relevant because he should not be held personally liable for the violations.

Though not asserted by the Department, I find the Respondent Corporation's failure to appear an aggravating factor. As discussed above, there is no issue about Hudson's notice of the hearing and the Complaint. However, Hudson did not file an Answer to the Complaint, and Hudson's attorney did not appear at the hearing. This behavior by Hudson's counsel did not work toward resolving this matter and therefore is considered non-cooperative.

The Department provided no explanation of how it apportioned the total requested civil penalty ($15,000). It is assumed therefore, that the Department seeks $3,850 for each of the four violations originally asserted in the Complaint (4 violations asserted x $3,850 per violation = $15,000).

The relevant provision of ECL Article 71 authorizes a minimum civil penalty of $250 and a maximum civil penalty of $10,000 per violation of Part 228. The Department proved there was the potential for environmental harm by showing that the Respondents exceeded the VOC emission standards in a designated non-attainment area for ambient air quality standards. The Department proved that the violations were significant from a regulatory perspective. Also, the requested civil penalty is consistent with other enforcement actions regarding similar violations. I find the Department's request of $3,850 per violation to be reasonable particularly when considering Hudson's lack of cooperation. Therefore, the Commissioner should assess Respondent Hudson Chromium Company, Inc. $3,850 for each violation. Since the Department proved two of the four violations originally asserted in the Complaint, the total recommended civil penalty is $7,700.

Remediation

The Department requested the Commissioner to order the Respondents to submit a schedule to achieve compliance with Part 228. However, the Department did not prove that the Respondents violated 228.1 by failing to submit a compliance schedule by the May 10, 1984 deadline. Since the Respondents did not violate 228.1, there is no need to order this relief requested by the Department.

Conclusions

  1. Hudson Chromium Company, Inc. received adequate notice of the charges and the hearing.
  2. Although Respondent Sheldon Galfunt had significant control over the daily events at Hudson, the Department did not establish a connection between the Respondent Sheldon Galfunt's position and the corporate actions undertaken by Mr. Madera which constituted the violations. Furthermore, the Department did not prove that Respondent Sheldon Galfunt's actions or inactions facilitated the violations. Consequently, Respondent Sheldon Galfunt should not be held personally liable for these two violations.
  3. The Department properly preserved the samples collected on February 6, 1991 because the seals placed on the samples during the inspection were in tact upon delivery of the samples to the NYS Department of Health.
  4. Pursuant to 6 NYCRR 622.8, Respondent Sheldon Galfunt was entitled to the remaining portion of the first sample (DEC No. 22574/DOH No. 911212036).
  5. No weight can be given to the DOH test results for the Agateen Baking Acrylic Lacquer 202WE (DEC No. 22575/DOH No. 911212037) because there is no information about whether this coating was thoroughly mixed before the Department collected the sample on February 6, 1991.
  6. The Respondents did not violate 228.3(a) with respect to the Agateen Baking Acrylic Lacquer 202WE (DEC No. 22575/ DOH No. 911212037).
  7. Respondent Sheldon Galfunt did not demonstrate the reliability of the results from the Shapiro Analyses.
  8. Analyses of DEC No. 22574/DOH No. 911212036, a clear air dry product called Agateen Aquatic Lacquer L-17-82, and DEC No. 22576/DOH No. 911212039, an air dry enamel product called O-So-Fast White Air Dry Conforming Coating showed the VOC content of these two samples to be greater than the regulatory standards provided in Table 1 of 228.7 at the time of application in violation of 228.3(a). There are two separate violations of 228.3(a) because two of the samples collected on February 6, 1991 exceeded the prescribed regulatory standards.
  9. The Respondents did not violate 6 NYCRR 228.1.

Recommendations

  1. The Commissioner should dismiss the charges against Respondent Sheldon Galfunt with prejudice.
  2. The Commissioner should conclude that Respondent Hudson Chromium Company, Inc., violated 228.3(a) on two occasions on February 6, 1991 when personnel at Hudson used two different coatings that contained volatile organic compounds greater than the requirements specified in Table 1 of 228.7.
  3. The Commissioner should assess Hudson Chromium Company, Inc. a civil penalty of $3,850 for each of the two established violations. The total recommended civil penalty is $7,700.
  4. The Commissioner should dismiss, with prejudice, the charge relating to the product called Agateen Baking Acrylic Lacquer 202WE (DEC No. 22575/DOH No. 911212037).
  5. The Commissioner should dismiss, with prejudice, the charge relating to whether Hudson complied with 228.1 by May 10, 1984.
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