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MSR Productions Inc. d/b/a Village Printer - Order, September 24, 1993

Order, September 24, 1993

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of Alleged Violations of Parts 201 and 751 of Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York, of Environmental Conservation Law Article 72 and of an Order on Consent by

MSR PRODUCTIONS, INC. d/b/a
Village Printer,
Respondent

ORDER

DEC File No. R4-1162-91-03

WHEREAS:

  1. Pursuant to a Notice of Hearing and Complaint issued on January 29, 1993, an administrative enforcement hearing was held before Susan J. DuBois, Administrative Law Judge ("ALJ") on April 27, 1993 at the Department's Region 4 Office located in Schenectady, New York. The Department Staff appeared by Ann Lapinski, Esq. The Respondent appeared by Steven J. Blumenkrantz, Esq.
  2. Upon review of ALJ DuBois's Hearing Report, a copy of which is attached, I concur with its Findings of Fact, Conclusions and Recommendations.
  3. The Respondent violated the September 19, 1991 Order on Consent between it and the Department (Order on Consent R4-1162-91-03). The Order on Consent had imposed a penalty of $3,000 but had suspended the entire penalty provided that the Respondent strictly adhered to the terms of the Order. By failing to comply with the Order on Consent, the Respondent became liable for payment of the suspended penalty. The record of the hearing does not demonstrate any reason for reducing this penalty.

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

  1. The suspended penalty of $3,000 (Three Thousand Dollars) which was specified in the Order on Consent is due and payable by the Respondent to the Department within 30 days from the date of service of this Order upon the Respondent.
  2. The first and third causes of action stated in the January 28, 1993 Complaint are dismissed.
  3. The Respondent is ordered to carry out the actions specified in the Schedule of Compliance to which the Respondent agreed in its April 27, 1993 stipulation with the Department and this Schedule of Compliance is incorporated as part of the present Order.
  4. All communications between the Respondent and the Department concerning this Order shall be made to the Department's Region 4 Director, New York State Department of Environmental Conservation Region 4, 2176 Guilderland Avenue, Schenectady, New York 12306.
  5. The provisions, terms and conditions of this Order shall bind the Respondent, its officers, directors, agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of the Respondent.

NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
/s/
THOMAS C. JORLING,
COMMISSIONER

Dated: Albany New York
September 24, 1993

To: MSR Productions, Inc.
d/b/a Village Printer
400 Pony Farm Road
Oneonta, New York 13820

Steven J. Blumenkrantz, Esq.
189 Main Street
Oneonta, New York 13820

Ann Lapinski, Esq.
NYS Department of Environmental
Conservation, Region 4
2176 Guilderland Avenue
Schenectady, New York 12306

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

In the Matter

- of -

Alleged Violations of Parts 201 and 751 of Title 6 of the Official Compliation of Codes, Rules and Regulations of the State of New York, of Environmental Conservation Law Article 72 and of an Order on Consent

by

MSR PRODUCTIONS, INC., d/b/a
VILLAGE PRINTERS
400 Pony Farm Road, Oneonta, New York 13820
RESPONDENT

Case Nos. R4-1162-91-03
and R4-1484-93-03

HEARING REPORT

by

/s/
Susan J. DuBois
Administrative Law Judge

PROCEEDINGS

Pursuant to Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") Part 622, an administrative enforcement hearing was held to consider the allegations by the New York State Department of Environmental Conservation (the "Department") against MSR Productions, Inc., doing business as Village Printers (the "Respondent"), 400 Pony Farm Road, Oneonta, New York 13820.

The Department alleged that the Respondent violated provisions of 6 NYCRR Parts 751 and 201 by discharging an industrial effluent and by constructing and operating air contamination sources without the required permits. The Department also alleged that the Respondent failed to submit certain documents required under an Order on Consent and failed to pay regulatory program fees for operation of the air contamination sources in 1992.

The Respondent was served with a Notice of Hearing and Complaint which were transmitted by certified mail, return receipt requested, on January 29, 1993. The hearing was held on April 27, 1993 at the Department's Region 4 Office, 2176 Guilderland Avenue, Schenectady, New York before Susan J. DuBois, Administrative Law Judge.

The Department was represented at the hearing by Ann Lapinski, Assistant Regional Attorney, Region 4. The Respondent was represented at the hearing by Steven J. Blumenkrantz, Esq., Oneonta.

On April 27, 1993, prior to the hearing, the parties entered into a stipulation which stated that the Respondent had violated certain provisions of the Order on Consent and had failed to pay regulatory fees for 1992. The stipulation also stated that the only matter remaining in dispute is that of the payment of penalties by the Respondent.

The parties made closing statements on the record at the conclusion of the hearing. The hearing record closed on May 13, 1993, the date on which the Office of Hearings received the transcript.

The Charges

The Department alleged that the Respondent discharged industrial effluent without having a State Pollutant Discharge Elimination System ("SPDES") permit, in violation of 6 NYCRR Section 751.1, and constructed and operated air contamination sources without valid permits, in violation of 6 NYCRR Subdivisions 201.2(a) and (b). The Department alleged that the Respondent violated a September 19, 1991 Order on Consent by failing to submit an approvable plan for the permanent disposal of industrial waste effluent and by failing to submit an adequate revised application for a certificate to operate an air contamination source. The Department also alleged that the Respondent had failed to pay regulatory fees for two air contamination sources in 1992, in violation of Environmental Conservation Law ("ECL") Section 72-0302.

The Answer

The Respondent submitted a reply prepared by its consulting engineer Bernard J. O'Neill, P.E., which included a list of the chemicals used in the Respondent's processes, a description of the Respondent's chemical evaporator and venting system and its emissions, and information on the waste materials generated by the Respondent.

Relief Sought

The Complaint sought an order requiring the Respondent to submit an approvable plan for the permanent disposal of industrial waste effluent and a revised application for a certificate to operate air contamination sources, requiring the Respondent to implement the measures contained in the waste disposal plan, pay the regulatory fee, and pay a penalty of twenty five thousand dollars ($25,000). At the hearing, the Department reduced the requested penalty to three thousand dollars ($3,000), the amount of the suspended penalty in the 1991 Order on Consent.

FINDINGS OF FACT

  1. MSR Productions Inc., doing business as Village Printers (the "Respondent"), owns and operates a facility at 400 Pony Farm Road, Oneonta, New York 13820.
  2. On September 19, 1991 the Respondent entered into an Order on Consent (Number R4-1162-91-03) with the Department of Environmental Conservation (the "Department") regarding the alleged operation of two air contamination sources without permits and the alleged discharge of industrial and hazardous waste effluent without a permit. A copy of this Order on Consent (or "Order") is attached as the latter part of Appendix A of this Hearing Report.
  3. The Order on Consent included a schedule of compliance. Paragraph 2 of the schedule of compliance required that the Respondent, within 30 days of the effective date of the Order, submit an approvable plan for the permanent disposal of industrial waste effluent to the Department for approval. Paragraph 3 of the schedule of compliance required that within 15 days of Department approval of the plan submitted pursuant to paragraph 2, the Respondent must implement the measures contained within the approved plan. The Department did not require the Respondent to apply for a State Pollutant Discharge Elimination System ("SPDES") permit, since the discharge had been disconnected in some manner. As of the date of the Order on Consent, the effluent was being collected in a tank outside the building.
  4. Paragraph 4 of the Order's schedule of compliance required that within 30 days of the effective date of the Order, the Respondent shall submit pursuant to 6 NYCRR 201.3 an application for a certificate to operate air contamination sources. Paragraph 5 of the schedule of compliance required that upon issuance of a certificate to operate, Respondent shall thereafter comply with all provisions, terms and conditions of the certificate to operate.
  5. On April 27, 1993, the Respondent and the Department stipulated that the Respondent had violated paragraphs 2, 3, 4 and 5 of the schedule of compliance of the Order on Consent.
  6. The April 27, 1993 stipulation also stated that the report written by Bernard O'Neill, P.E., and submitted to the Department on March 1, 1993 satisfied the requirement to provide a report on an alternative method of disposal for industrial waste effluent except that Respondent shall modify the report to address the use and disposal of silver in Respondent's processes. (The March 1, 1993 report was attached as part of the stipulation. It is not included in Appendix A of this report, primarily due to the size of the pages, but is included in Exhibit 4 of the hearing record.)
  7. In the April 27, 1993 stipulation, the Respondent agreed to submit an approvable application for a certificate to operate an air contamination source, certified by a professional engineer, to the Department within 30 days of the effective date of the stipulation.
  8. On April 27, 1993, the Respondent and the Department also stipulated that the Respondent did not pay regulatory fees for its air contamination sources in 1992. In the stipulation, the Respondent agreed to pay $200 plus $6.52 interest for the payment of 1992 regulatory fees.
  9. The September 19, 1991 Order on Consent provided for a penalty of $3,000 (three thousand dollars) which was suspended contingent upon Respondent's strict compliance with the terms of the Order on Consent.
  10. The Respondent operates its business under a reorganization plan pursuant to Chapter 11 of the United States Bankruptcy Law. Edward W. May, Jr. is the chief executive officer of the corporation. He came into control of the operations of the Respondent in February, 1990. At that time, the company was already bankrupt, and Mr. May purchased the assets from the bankruptcy trustee.
  11. Between February 1990, when Mr. May assumed control of the Respondent, and May or June 1991, the Respondent installed a number of pieces of equipment at its facility. These included a chemical evaporator, a water wash system, filtration processors, water filtration equipment, and central holding tanks. The approximate cost of these devices was $20,000. This had already occurred prior to the date of the Order on Consent.
  12. In September or October 1991, the Respondent submitted an incomplete application for a certificate to operate air contamination sources. The application was not certified by a professional engineer. The Department returned the application to the Respondent for this certification and for additional information. Mr. May was in Alabama for approximately six months during this time but was in contact with the Respondent's office. The Respondent forwarded the application to an architect for additional work, which was not done. The Respondent later retained Mr. O'Neill to prepare an application. The application had not been submitted to the Department as of the date of the hearing.
  13. The April 27, 1993 stipulation between the Respondent and the Department included a schedule of compliance requiring submission of an application for a certificate to operate air contamination sources, submission of a report regarding the industrial waste effluent which had been discharged, payment of the 1992 regulatory fee and the additional information regarding disposal of silver. If the report on effluent disposal indicates a likelihood of groundwater contamination, the stipulation also requires the Respondent to submit an approvable plan for investigation of potential contamination and, if such contamination is found, a remediation plan.

DISCUSSION

The Complaint in this matter alleged violations of the September 19, 1991 Order on Consent and failure to pay a regulatory fee for air contamination sources in 1992. These subjects were addressed in the April 27, 1993 stipulation. The parties to the hearing stipulated that the only matter remaining in dispute at the time of the hearing was that of payment of penalties by the Respondent.

The Complaint had also alleged that the Respondent had violated 6 NYCRR Section 751.1 (discharging industrial effluent without a SPDES permit, the first Cause of Action) and 201.2 (construction and operation of air contamination sources without a valid permit from the Department, the third Cause of Action). Pursuant to the stipulation, these charges were outside of the scope of the hearing.

The hearing focussed on the reasons why the Respondent had failed to comply with the Order on Consent, the consequences of this failure, and the Respondent's ability to pay a penalty.

Mr. May testified that when he signed the Order on Consent in 1991, he was under the impression that the application would be accepted by the Department under his signature, rather than that of a professional engineer, because of the financial situation of the company. Mr. May did not explain how he had gotten that impression nor who might have told him that, except to say that this was his impression at a meeting when he signed the order.

Attached with the Complaint in the present matter was a letter dated September 27, 1991 to Mr. May from Michael S. Styk, an Environmental Engineer with the Department's Region 4 office, which among other things notified Mr. May that the air application must be prepared under the direct supervision of a professional engineer. While it is not clear that this letter is the same letter referred to by a Department Staff witness at the hearing, the authenticity of the letter which was attached with the Complaint was not contested. According to testimony by Mr. Leone, the Respondent was notified by letter in September or October of 1991 that the application was incomplete. Mr. May also testified that the application had been returned, although he stated that this was for a registered architect's or professional engineer's seal and some additional information. Mr. May testified that he took exception to this requirement but had the file sent to a registered architect, who then failed to do the required work. The date on which the Respondent retained an engineer for this work is unclear.

The Order on Consent also required submission of an approvable plan for the permanent disposal of industrial waste effluent, within 30 days of the effective date of the Order. Some sort of plan was submitted by the Respondent regarding this disposal, but the plan was returned to the Respondent by the Department. Neither party sought to introduce this earlier plan as an exhibit in the hearing record. The current plan was not sent to the Department until after the Department sent out the notice of hearing for the present hearing.

The consequences of the violation relate to both environmental harm and the violation's importance in the regulatory system. No actual or potential environmental harm was demonstrated with regard to the failure to submit an air permit application. This violation did, however, withhold from the Department information which would be used by the Department in quantifying existing contamination sources and making decisions regarding air quality. As with the failure to submit the effluent disposal plan, this violation also undercuts the authority of the Department's orders on consent.

No actual environmental harm was shown with respect to the failure to submit a plan for the permanent disposal of industrial waste effluent. The actual effects of the former discharge of this material have apparently not yet been evaluated. The 1991 Order on Consent required submission of a disposal plan but did not require a study of groundwater quality. Some materials used at the facility could cause groundwater contamination if they were discharged improperly. There was the potential for environmental harm if the Respondent did not adopt some acceptable alternative means of disposing of its effluent, as well as the potential for environmental harm associated with the discharges that had occurred.

With regard to the Respondent's ability to pay a penalty, the Respondent has been in bankruptcy since at least early 1990. It was bankrupt when it agreed to the September 19, 1991 Order on Consent. That Order on Consent imposed a penalty, but suspended the entire penalty provided that the Respondent "strictly adheres" to the terms of the Order on Consent, including the compliance schedule which was incorporated into the Order. Despite its precarious financial situation, and despite having agreed to the Order on Consent, the Respondent failed to adhere to the compliance schedule in a meaningful manner, much less "strictly."

The Respondent provided testimony about the costs of certain additional equipment that it had installed in 1990 and 1991. This equipment was installed prior to the Order on Consent and it is also not clear how much of this equipment is actually pollution control equipment. These costs appear to be only marginally relevant to the Respondent's ability to pay or to the economic costs and benefits of the Respondent's actions under the Order on Consent.

The costs associated with applying for a certificate to operate air pollution sources would be a one-time cost in the general range of $1,000. The Respondent had incurred this cost as of the date of the hearing, by having the application prepared although the application had not yet been submitted. The Respondent had avoided this cost until the time when it had the application prepared.

The requested penalty of $3,000 is considerably less than the maximum which could be imposed for violations of orders of the Commissioner issued pursuant to Environmental Conservation Law Article 19 (Air Pollution Control) and ECL Article 17, Title 8 (Water Pollution control; State Pollutant Discharge Elimination System), as set forth in ECL Sections 71-2103 and 71-1929, respectively.

CONCLUSIONS

  1. The Respondent was obligated to do certain things pursuant to the September 19, 1991 Order on Consent. The Order on Consent required a penalty of $3,000 which was suspended provided that the Respondent strictly adhered to the terms and conditions of the Order and its attached and incorporated schedule of compliance.
  2. The Respondent violated the September 19, 1991 Order on Consent by failing to submit to the Department an approvable plan for the permanent disposal of industrial waste effluent and by failing to submit to the Department an application for a certificate to operate air contamination sources. The Respondent also violated the third and fifth paragraphs of the schedule of compliance which was contained in the Order on Consent, which required compliance with the plan and the certificate to operate.
  3. The Respondent failed to pay a regulatory fee for two air contamination sources in 1992.
  4. The first and third causes of action were not within the scope of the disputed matters identified by the parties, and should be dismissed.

RECOMMENDATION

I recommend that the Respondent be found in violation of the Order on Consent and of ECL Article 72, and be required to pay the suspended penalty of $3,000 (three thousand dollars). I further recommend that the first and third causes of action be dismissed.

The Order resulting from the present hearing should direct the Respondent to carry out the actions specified in the schedule of compliance to which the Respondent agreed in its April 27, 1993 stipulation with the Department.

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