McPartlin, James and 53rd Street Service Station - Order, December 29, 1994
Order, December 29, 1994
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
In the Matter of Alleged Violations of Article 19 of the New York State Environmental Conservation Law and Parts 201 and 230 of the Codes, Rules and Regulations of the State of New York
- by -
James McPartlin and
53rd Street Service Station
783 10th Avenue Manhattan, New York 10019
- Pursuant to a Notice of Hearing and Complaint dated December 2, 1993, an administrative enforcement hearing was held before Administrative Law Judge Edward Buhrmaster on June 8, 1994. Staff of the Department of Environmental Conservation ("DEC") was represented by Laurieann Silberfeld, an assistant attorney in DEC's Region 2 office. The Respondents were represented by Abbot Neil Solomon, Esq., of New York City.
- Upon a review of the attached Hearing Report, I accept its Findings of Fact, Conclusion and Recommendation, except as noted below.
- Following prior Department precendent, I concur with ALJ Buhrmaster's conclusion that two separate causes of action should not be sustained where both have identical elements of proof (In the Matter of Steck and Philbin, Order of the Commissioner, March 29, 1993). However, in this case, I find that proof of a violation of 6 NYCRR §230.2(c) does not have the identical elements of proof as does a violation of the July 21, 1989 Order issued to Respondent McPartlin. In the latter case, there is an additional element of proof which requires a showing that the transfer of gasoline without the stage II vapor recovery equipment occurred more than sixty days after the effective date of the Order.
- The Respondents were previously advised that any case they had for varying the stage II vapor collection system requirement would need to be pursued through an application pursuant to 6 NYCRR §230.8. in order that the merits of their claim could be evaluated in the proper forum. Respondents have failed to do so and have continued to operate wholly outside the boundaries of the law. Without additional incentives, there is a high likelihood that the Respondents' entitlement to a variance will remain unresolved. Therefore, it is appropriate to impose an additional suspended penalty to ensure that the issue of Respondents' entitlement to a variance will be resolved with finality.
NOW, THEREFORE, having considered this matter, it is ORDERED that:
- The Respondents are jointly and severally assessed a civil penalty in the amount of FORTY-TWO THOUSAND EIGHT HUNDRED DOLLARS ($42,800) for violation of 6 NYCRR 230.2(c) and the July 21, 1989 Order issued to Respondent McPartlin during the period between September, 1989, and June, 1994.
- TEN THOUSAND DOLLARS ($10,000) of the above penalty shall be suspended on the condition that within ninety (90) days of the service of a conformed copy of this Order on either of the Respondents, they have either installed Stage II vapor recovery equipment at the facility in question or have submitted a request for a variance containing all supporting arguments and documentation upon which the Respondents intend to rely. Upon the Staff's determination that Respondents have failed to comply with either of these options, the suspended penalty shall become due and payable immediately.
- The unsuspended portion of civil penalty assessed in paragraph I of this Order, THIRTY TWO THOUSAND EIGHT HUNDRED DOLLARS ($32,800), shall be due and payable within sixty (60) days following the service of a conformed copy of this Order upon either one of the Respondents.
- If Respondents timely apply for variance, no further enforcement action shall be taken against them regarding the failure to install a stage II vapor collection system, except for violations of this Order, so long as the variance request is pending before the Department. If the Department makes a final decision to deny the variance, Respondents must install the stage II vapor collection system within thirty (30) days of such denial or such other time as provided by the Department at the time of the denial. In such an event, Respondents shall immediately cease pumping gasoline from the 4,000 gallon tank and lock and seal the two affected nozzles.
- Failure to strictly adhere to the terms of this Order shall constitute a violation of 6 NYCRR Part 230.
- All communications between the Respondents and DEC concerning this order shall be made to the Department's Region 2 Director, One Hunters Point Plaza, 47-40 21st Street, Long Island City, New York, 11101.
- 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.
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
DATED: Albany, New York
December 29, 1994
TO: James McPartlin, President
53rd Street Service Station, Inc.
783 10th Avenue
New York, New York
Laurieann Silberfeld, Esq.
NYSDEC - Region 2
47-40 21st Street
Long Island City, New York 11101
A complaint dated December 2, 1993, was issued against James McPartlin and 53rd Street Service Station ("Respondents"). Based on this complaint, an enforcement hearing was held on June 8, 1994, at the Region 2 office of the New York State Department of Environmental Conservation ("the Department", or "DEC"), Hunters Point Plaza, 47-40 21st Street, Long Island City, New York.
The Department Staff was represented by Laurieann Silberfeld, an assistant Region 2 attorney. The Respondents were represented by Abbot Neil Solomon, Esq., of 24 Fifth Avenue, Suite 1617, New York, New York, 10011. The Respondents' written answer, dated June 2, 1994, was provided at the hearing.
The hearing included testimony from one DEC employee, Anthony J. Tagliaferro, and various arguments from the parties' attorneys. At the hearing's conclusion a schedule was set for written closing statements: first from DEC Staff, and then from the Respondents. DEC Staff's closing statement was received in timely fashion on July 25, 1994. No closing statement was received from the Respondents.
The hearing record closed on August 24, 1994, the deadline for Respondents' submission of their closing statement.
Department Staff Charges
The Respondents are charged with three violations arising from their operation of the 53rd Street Service Station at 783 10th Avenue, Manhattan:
- Operation of the facility as an air contamination source without a DEC certificate, in violation of 6 NYCRR 201.2(b);
- Transfer of gasoline into motor vehicle fuel tanks without a stage II vapor collection system, in violation of 6 NYCRR 230.2(c); and
- Violation of a Commissioner's order of July 21, 1989, which directed that Mr. McPartlin either install the stage II system within 60 days or cease pumping gas and lock all pumps that were the subject of stage II requirements.
In its closing statement DEC Staff requests a total civil penalty of $62,800: $40,000 representing what Staff describes as the maximum one-day penalty available for the three violations, and $22,800 to account for the continuing nature of the violations and the resulting environmental harm. The $40,000 figure is apportioned as follows: $15,000 for the first violation as noted above, $15,000 for the second violation, and $10,000 for the third violation.
Staff's complaint also requests that the Respondents be directed to submit a schedule to achieve compliance with Parts 201 and 230, and that the Commissioner grant such other and further relief, including injunctive relief, as may be deemed just and proper.
Position of the Respondent
The Respondents admit they do not have a certificate to operate the service station as an air contamination source. They admit they do not have a stage II vapor collection system.
The Respondents allege two defenses:
- that the 53rd Street Service Station was incorporated on June 6, 1992, on which date Mr. McPartlin was relieved of individual liability; and
- that due to the financial and leasehold situation of the service station, it would cause an undue economic burden to require the corporation to install stage II equipment.
FINDINGS OF FACT
- 53rd Street Service Station is located at 783 10th Avenue in Manhattan. It dispenses gasoline and diesel fuel to vehicles.
- Since June 6, 1992, the station has been operated by Respondent 53rd Street Service Station, Inc. Respondent James McPartlin is president of this corporation.
- Prior to June 6, 1982, the service station was operated by Mr. McPartlin as proprietor.
- The service station has eight storage tanks: two 4,000-gallon tanks (one for gasoline and the other for diesel fuel) and six 550-gallon tanks (all of which are used for gasoline).
- Gasoline is dispensed from the 4,000-gallon gasoline tank through two separate nozzles.
- These nozzles lack a stage II vapor collection system despite a Department order, dated July 21, 1989, which directed that such a system be installed within 60 days. This order, issued to Respondent McPartlin, directed that he cease pumping gas and lock the affected pumps if he failed to install the stage II system prior to the deadline.
- According to the order, the directive to install a stage system was made "without prejudice to Respondent's right to apply for a variance under 6 NYCRR 230.8, or to Staff's authority to grant said variance upon a proper and sufficient showing."
- As of June 8, 1994, when this hearing was held, the Respondent had not applied for this variance and none had been granted by DEC Staff.
- The Respondents have no certificate to operate the service station as an air contamination source.
Although it is charged in different ways, this case arises from one main problem: the Respondents' continuing failure to install a stage II vapor collection system. This problem has been addressed through two separate enforcement actions. The first action resulted in a Commissioner's order, dated July 21, 1989, which established the Part 230 violation and directed its correction. The second action (the one addressed by this report) concerns the Respondents' failure to install the stage II system on nozzles connecting to its 4,000-gallon gasoline tank. This failure violates the prior order because the tank continues to be in use.
Respondents' Compliance "Burden"
The Respondents admit that they have no stage II system in place, and that the service station operates in violation of the consent order. According to their counsel, the Respondents can't live up to the consent order because it would cause what their answer describes as an "undue economic burden."
Respondents' counsel estimated that a stage II upgrade would cost $30,000, which he said the Respondents don't have. The Respondents also claim they operate as a month-to-month tenant of the City of New York. According to their counsel, Mr. McPartlin, as president of 53rd Street Service Station, Inc., has made numerous attempts through the local community board to secure a long-term lease or purchase the property from the city. These attempts, however, have not been successful. In the meantime, the Respondents contend that their month-to-month tenancy prevents their being able to secure a bank loan, and therefore to perform the stage II upgrade.
DEC allows variances from the requirements of Part 230 "where it can be shown to the satisfaction of the commissioner that a gasoline dispensing site . . . cannot comply with the requirements of this Part for reasons of . . . economic feasibility." Upon the submission of satisfactory evidence, the Commissioner can accept a lesser degree of control or a compliance schedule less rigorous than that laid out in the regulations. [See 6 NYCRR 230.8; variances.]
DEC's variance allowance was mentioned specifically in the 1989 order resolving the first enforcement action. In that action Respondent McPartlin made virtually the same hardship arguments as those advanced here. The ALJ even recommended that a short-term renewable variance be granted; however, the Commissioner disagreed, finding in his order that "the variance requested by Respondent is not appropriately invoked in the context of an enforcement hearing."
The prior order assessed a civil penalty of $450, an amount the ALJ said had been estimated by DEC Staff as the appropriate penalty for Mr. McPartlin's failure to install a stage II system. McPartlin was also directed to install stage II within 60 days of service of the order, subject to extensions Staff might grant to facilitate compliance.
According to the prior order, Mr. McPartlin was directed to cease pumping gas and lock all pumps that were subject to stage II if he failed to install the system within the order's deadline. However, the order also reminded him of his right to apply for a variance under 6 NYCRR 230.8, and of Staff's authority to grant the variance upon a proper and sufficient showing.
In their answer to these most recent charges, the Respondents assert they are "in the process of applying for a variance until that time whereby the City of New York willingly sells the property to the respondent or, in the alternative, commits to a long-term lease allowing for the required financing." As of the hearing date, however, no variance request had been filed, almost five years after the first order was issued.
At this most recent hearing Respondents' counsel offered three witnesses, including Mr. McPartlin, to demonstrate that compliance with Part 230 is not economically feasible. I declined to hear these witnesses based on the prior Commissioner's order, which said that variances could not be entertained as part of an enforcement proceeding. Beyond that, I noted that hearing the claims would be wasteful and inefficient, especially since in the prior order, the Commissioner had noted that the month-to-month tenancy had existed approximately 20 years, and compliance with stage II could not be delayed indefinitely on that basis.
Part 201 Allegation
DEC Staff has charged the Respondents' continuing failure to install stage II equipment in three different ways: (1) as a violation of Part 230, (2) as a violation of the 1989 order, and (3) as a violation of 6 NYCRR 201.2(b). Section 201.2(b) provides that with certain exceptions, no person shall operate an air contamination source without having a valid Department certificate. The Respondents admit they have no certificate, and the Department alleges this violates Section 201.2(b) because the Respondents' "gasoline dispensing operations" are an air contamination source.
The Respondents' alleged violation of Part 201 should not be considered separately from the other violations since they all stem from the same source - - the failure to install stage II. According to DEC's witness, Mr. Tagliaferro, the dispensing of gasoline without stage II protections results in increased emissions of volatile organic compound (VOC) vapors when compared to operations having this equipment. DEC's own Part 230 enforcement guidance memorandum (EGM) states it is the purpose of that part to control VOCs associated with the loading and unloading of gasoline, and that stage II vapor recovery systems for gasoline stations "are a critical component of New York State's effort to control air pollution in the New York City Metropolitan area."
VOCs were the only air contaminants referred to in this matter, and therefore, I presume, they alone are the environmental problem. Resolving this problem does not entail getting a Part 201 certificate, but rather complying with Part 230 or securing the requisite variance.
That the Part 201 violation does not warrant separate consideration is confirmed by the prior enforcement action, where Mr. McPartlin was charged with the same Parts 201 and 230 violations that are alleged here. In the prior action the Part 201 allegation was not resolved one way or the other, either in the ALJ's report or in the Commissioner's order. Mr. McPartlin was not directed to obtain a certificate to operate, even though it was part of Staff's requested relief. Neither the ALJ's report nor the Commissioner's order explained why the Part 201 violation was not upheld. I presume it was felt either that no Part 201 certificate was legally required, or that the main concern was Part 230 compliance, and that compliance with Part 201 was superfluous.
Having addressed the Part 201 allegation, one still must consider whether the other two charges - - violation of Part 230 and violation of the consent order - - are in fact one and the same. I conclude that they are because they share the same elements: the requirement that stage II equipment be installed, and the failure to install that equipment. This failure violates both the consent order and Part 230, but does not constitute two separate violations and does not warrant two separate penalties, contrary to the position taken in Staff's closing statement.
Staff's only cited authority is ECL 71-2103, which sets a penalty framework for the two remaining charges. Staff reads this section as creating two violations, but I do not. Rather, I would draw the Commissioner's attention to People v. Horne, 121 Misc. 2d 389, 468 NYS2d 433 (Sup. Ct., Kings County, 1983), which states that the charging of the same offense in separate counts of an indictment would violate New York law [468 NYS2d 433, at 437]. Although this decision stems from a criminal law context, its principle should be extrapolated to administrative proceedings, testing whether one cause of action requires proof of a fact that the other does not.
Here the remaining allegations share the same elements, as noted above. Therefore, they are treated as one for the purpose of penalty assessment, and the violation of the prior order is considered only as an aggravating factor in relation to the violation of Part 230.
On July 6, 1988, DEC released an air pollution control enforcement guidance memorandum (EGM). Among other things, the memorandum provides penalty assessment guidelines for violations of Part 230. It uses matrices to set minimum payable penalties and identifies various penalty adjustment factors.
According to matrix 4 in the EGM, the minimum payable penalty for the Respondents' violation of Part 230 is $22,800. This penalty is calculated based on the following factors:
- There are two nozzles on the affected tank;
- The minimum penalty set by the matrix is $100 per nozzle per month; and
- As of the hearing date, the violation had continued for 57 months (9/89 to 6/94).
The penalty equals $200 per month x 57 months x 2 (the "2" being a multiplier which is employed in those cases not resolved by a timely compliance order). According to the EGM, the $22,800 total is a minimum payable penalty. This penalty is meant to disgorge the economic benefit from non-compliance and to penalize the violator. It accounts for the gravity of the violation and is designed to make non-compliance more expensive than compliance.
The EGM stresses that the matrices only calculate minimum penalties, and that "Staff should seek much higher penalties when such features as recalcitrance, deliberate delay in coming into compliance or evasion of the regulatory process is a factor."
In this case recalcitrance is a factor warranting an upward penalty adjustment. The Respondents have defied the prior order directing them either to install stage II or seek the required variance. They have defended on an economic hardship argument that the Commissioner explicitly rejected when it was raised in the first enforcement action.
The fact this is a second adjudicated violation of Part 230 requires a much stiffer penalty than the $450 which was assessed the first time. On the other hand, Staff's recommended penalty of $62,800 is excessive and has been formulated in a manner inconsistent with the EGM.
I recommend a penalty of $32,800 for the continuing violation of Part 230 for the period between September, 1989 and June, 1994. This includes $22,800 (the minimum payable penalty set by the EGM matrix) plus a $10,000 upward adjustment based upon the Respondents' recalcitrance. This penalty is well below the maximum authorized by ECL 71-2103 and appropriately accounts for the violation presented.
In its closing statement Staff writes that its $62,800 penalty takes into consideration the length of time that has passed since Respondents were first ordered to install a stage II system, Respondents' violation of the 1989 order, and the cumulative environmental harm which has resulted from Respondents' continuing violations. Actually, the $32,800 recommended in this report accounts for all these factors with the exception of environmental harm.
At the hearing Staff calculated about $65,000 in environmental harm based on estimating the tonnage of excess VOCs emitted because Stage II has not been installed, and then equating that tonnage to a dollar amount of harm. But in its closing statement Staff abandoned the $65,000 figure, recognizing the limitation of its ability "to place an accurate value on the resulting environmental harm - - one which truly accounts for the cost to the City's already heavily impacted air resources."
Staff's consideration of cumulative environmental harm without providing a dollar figure even it would rely on to accurately gauge this harm is a troubling aspect of its penalty request. This and Staff's method of penalty formulation, which is inconsistent with the EGM, warrant disregarding Staff's penalty recommendation.
Responsible Corporate Officer Liability
Mr. McPartlin was the only Respondent in the first enforcement action, which resulted in the 1989 order. In this second action both he and 53rd Street Service Station, Inc., have been cited.
The incorporation of the service station in June, 1992, has been raised as a defense in the Respondents' answer. This has been done on Mr. McPartlin's behalf, to relieve him of personal liability for violations continuing since that time.
This defense must fail since, by all accounts, Mr. McPartlin is a responsible corporate officer of 53rd Street Service Station, Inc. By his own counsel's admission, McPartlin is president of the corporation. As such, he can be held liable for statutory violations arising from operations for which he has managerial responsibility [United States v. Park, 421 U.S. 658 (1975); United States v. Dotterweich, 320 U.S. 277 (1943)].
The "responsible corporate officer" doctrine imposes liability on parties who have, by reason of their position in the corporation, responsibility and authority either to prevent or promptly correct a violation, yet fail to do so. The Park court found that three elements must be established before liability is imposed upon a corporate officer: (1) the individual must be in a position of responsibility which allows the person to influence corporate policies or activities; (2) there must be a nexus between the individual's position and the violation in question such that the person could have influenced the corporate actions which constituted the violations; and (3) the individual's actions or inaction facilitated the violations. (Id. at 673-74.)
Here Mr. McPartlin is president of 53rd Street Service Station, Inc. He was the only named Respondent in the prior proceeding, where he was found by the ALJ to be "proprietor and operator" of the station. The prior Commissioner's order - - which he is now alleged to have violated - - was issued against him personally. When Mr. Tagliaferro's follow-up inspection in July, 1993, established the continuing violation, Mr. McPartlin called the Department on behalf of the corporation.
Even the Respondents' answer, furnished as part of this proceeding, refers to the efforts of "James McPartlin, as president of 53rd Street Service Station," to secure financing for the stage II installation, to change the facility's rental arrangement, and to spend money for site testing and the design of plans for a complete station upgrade. There was no proof (or, for that matter, even an assertion) that the decisions not to install stage II - - and to continue operations without it - - were made or influenced by anyone except Mr. McPartlin himself.
As a responsible corporate officer, Mr. McPartlin should share liability for any and all penalties assessed against 53rd Street Service Station, Inc. In fact, the two Respondents should be held jointly and severally liable since they are both equally culpable for the continuing nature of the Part 230 violation which was established at this hearing.
Finally, the corporation should not escape liability merely because it is named in the captions of the notice of hearing and complaint as "53rd Street Service Station" and in the body of the complaint as "a business concern." The complaint's failure to use the reference "Inc." and to refer to the business explicitly as a corporation is irrelevant to jurisdiction since there has never been any question about who is being charged. The Respondents' arguments to the contrary are hereby rejected.
The Respondents, James McPartlin and 53rd Street Service Station, Inc., have violated 6 NYCRR 230.2(c) for the period between September, 1989, and June, 1994, by virtue of their continued operation of a 4,000-gallon gasoline tank without a required stage II vapor collection system.
For this violation, the Respondents should be jointly and severally assessed a civil penalty in the amount of $32,800.