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Oil Company, Inc. - Order, July 9, 1998

Order, July 9, 1998

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

Alleged Violations of Articles 15, 17, 19, 25, 71 and 72 of the New York State
Environmental Conservation Law, Article 12 of the New York State Navigation Law and Title 6
of the Official Compilation of Codes, Rules and Regulations of the State of New York,
Parts 201, 211, 229, 231, 608, 613, 661, 703, 750 and 751, and Title 17 of
the Official Compilation of Codes, Rules and Regulations of the State of New York, Parts 30 and 32,

- by -

OIL CO., INC.,
d/b/a and formerly known as EAGLE OIL,
also formerly known as WECHTER PETROLEUM CORPORATION;
WILLIAM S. NAPPO, Sr.
individually and as President and Chief Executive Officer of Oil Co., Inc.,
d/b/a Eagle Oil Co., Inc.; and
WILLIAM K. NAPPO, individually and as Secretary of Oil Co., Inc.,
d/b/a Eagle Oil Co., Inc.

(Nassau County)

Respondents.

ORDER

NYSDEC
Case No.
R1-5340-93-05

WHEREAS:

  1. Staff of the Region 1 Office of the New York State Department of Environmental Conservation ("Staff") duly served a Notice of Hearing and Complaint upon Respondents, thereby initiating an administrative enforcement hearing.
  2. An evidentiary hearing on the administrative action was commenced on November 17, 1997 at the Department's Region 1 Office, Stony Brook, New York, and continued on nine additional dates, concluding on January 29, 1998.
  3. Staff appeared and was represented at the hearing by Assistant Regional Attorney Louise Aja, Region 1 Office, Stony Brook, New York. The Respondents were represented by Marvin E. Kramer & Associates, PC, 1325 Franklin Avenue, Suite 165 Garden City, New York, Marvin E. Kramer, of counsel.
  4. Upon review of the record and the Hearing Report of ALJ Casutto (the "Report"; copy attached), I hereby adopt the ALJ's Findings, Conclusions and Recommendations as my own.
  5. I concur with the ALJ's recommendation concerning relief for reasons stated in the Report. The Respondents have been operating the facility without necessary permits, environmental harm has occurred, and Respondents have disingenuously and unlawfully claimed that they have been excused from compliance with environmental protection requirements by reason of their filings under the Bankruptcy Act. The Respondents should not be allowed to continue operating the facility.

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

  1. The Respondents Oil Co., Inc., William S. Nappo, Sr. and William K. Nappo, Jr. have violated the Environmental Conservation Law, the Navigation Law and related regulations by operating the Major Oil Storage Facility ("MOSF") located at One Sheridan Boulevard, Inwood, New York, since August 1, 1992 without an MOSF license, operating an air contamination source since November, 1990 without a Certificate to Operate and causing SPDES discharges since March 1, 1993 without a SPDES permit. The Respondents' violations are set forth in detail in the ALJ's Report and Appendix "A" thereto.
  2. The corporate Respondents and William S. Nappo, Sr. and William K. Nappo, Jr. individually are jointly and severally liable to pay the monetary penalties assessed below, and to implement the other actions ordered below. The Respondents shall pay monetary penalties as set forth in the Report's Penalty Chart, Appendix A, a total monetary penalty of Three Million Four Hundred Ninety Nine Thousand Six Hundred and Eighty ($3,499,680.00) Dollars.
  3. Within thirty days from the date of this Order:
    1. The Respondents must take all the tanks at the facility permanently out of service in accordance with the requirements of 6 NYCRR 613.9(b);
    2. The Respondents must submit a plan to Department Staff for review and approval, for the closure of all of the MOSF storage tanks vapor recovery systems and air contamination sources;
  4. Within 90 days from the date of this order the Respondents must submit to the Department Staff a tidal wetlands restoration plan capable of Department approval. That plan must address restoration of the tidal wetlands and adjacent area and navigable water resources of the site, and also must include an implementation schedule. Upon the Department Staff's review and approval of the restoration plan, the Respondents shall implement the plan. The Respondents shall consult with the Department Staff's reviewing unit sufficiently in advance of the submittal date for document approval, to assure that the document will be capable of approval, and shall allow thirty days for preliminary Staff review. ("Capable of Department approval" means the Department Staff can grant approval, as determined solely by the Staff, after minimal revision. "Minimal revision" means that the Respondents can incorporate such revision as indicated by the Department Staff and resubmit the required document within fifteen days after receiving Staff's comments and obtain subsequent Staff approval of the document.)
  5. Charges for which penalties have not been imposed are dismissed.
  6. All communications between Respondents and Department Staff concerning this Order shall be made to: Mr. Ray Cowen, Region 1 Regional Director, New York State Department of Environmental Conservation, Loop Road, Building 40, Stony Brook, New York, 11790-2356.
  7. The provisions, terms and conditions of the Order shall bind the Respondents, their agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of the Respondents.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: John P. Cahill, Commissioner

Dated: Albany, New York
July 9, 1998

To: Marvin E. Kramer, Esq.
Marvin E. Kramer & Associates, P.C.
Attorneys for Respondents
1325 Franklin Avenue, Suite 165
Garden City, New York 11530

Oil Co. Inc., also formerly known as
and d/b/a Eagle Oil, also formerly
known as Wechter Petroleum Corp.
One Sheridan Boulevard
Inwood, NY 11696

William S. Nappo, Sr.
President and Chief Executive Officer
Oil Co., Inc., d/b/a Eagle Oil Co., Inc.
One Sheridan Boulevard
Inwood, NY 11696

William K. Nappo
Secretary
Oil Co., Inc. d/b/a Eagle Oil Co., Inc.
One Sheridan Boulevard
Inwood, NY 11696

Louise M. Aja, Esq.
Assistant Regional Attorney
Region 1, NYSDEC
Building 40, SUNY Campus
Stony Brook, NY 11790-2356

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

Consolidated Hearing

In the Matter

- of -

Alleged Violation of Articles 15, 17, 19, 25, 71 and 72 of the New York State
Environmental Conservation Law (ECL) and Parts 201, 211, 229, 231, 608, 613, 614, 661, 703, 750
and 751 of Title 6 of the Official Compilation of Codes, Rules and Regulations of
the State of New York and Article 12 of the New York State Navigation Law and Title 17,
Parts 30 and 32 of the Official Compilation of Codes, Rules and Regulations of the State of New York,

by

OIL CO., INC., d/b/a AND

FORMERLY KNOWN AS EAGLE OIL,

ALSO FORMERLY KNOWN AS
WECHTER PETROLEUM CORPORATION;
WILLIAM S. NAPPO, SR.,
INDIVIDUALLY AND AS PRESIDENT
AND CHIEF EXECUTIVE OFFICER OF
OIL CO., INC., D/B/A
EAGLE OIL CO., INC.;
AND WILLIAM K. NAPPO, JR.,
INDIVIDUALLY AND AS Secretary
OF OIL CO., INC.,
d/b/a EAGLE OIL CO., INC.,

RESPONDENTS.

NYSDEC Case No.
Rl-5340-93-05

HEARING REPORT

- by -

____________/s/_____________
Kevin J. Casutto
Administrative Law Judge

TABLE OF CONTENTS

SUMMARY

PROCEEDINGS

  1. Staff's Position
    1. The Notice of Hearing and Complaint
      • - Air Pollution Control Violations
      • - Tidal Wetlands and Water Resources Violations
      • - Water Pollution Control and State Pollutant Discharge Elimination System Violations
      • - Oil and Navigation Law Violations
    2. Allegations Withdrawn by Staff
    3. Staff Request for Relief
  2. The Respondents' Position

    The Answer

    - The Affirmative Defenses

  3. Written Rulings

    FINDINGS OF FACT

    1. Background
    2. Permits and Licenses

    DISCUSSION

    1. Permit History of the Facility
    2. The Affirmative Defenses
    3. Alleged Air Pollution Control Violations
      1. Respondent Oil Co., Inc.'s Alleged Violation of 6 NYCRR 201.2(b), Operating an Air Contamination Source Without a Certificate to Operate
      2. Respondent Oil Co.'s Alleged Violation of 6 NYCRR 229..7, Filling Trucks While the Vapor Recovery System Was Not Operating
      3. Respondent Oil Co.'s Alleged Violation of 6 NYCRR 200.7, Improperly Maintaining an Air Contamination Source
  4. Alleged Tidal Wetlands Violation

    Respondent Oil Co., Inc.'s Alleged Violation of 6 NYCRR 661.8, Causing or Permitting to Be Caused, the Release and Disposal of Petroleum Products into the Waters of Mott Basin, Tidal Wetlands.

  5. Alleged Water Program and SPDES Violations
    1. Respondent Oil Co., Inc.'s Alleged Violation of ECL 17-0803 and 6 NYCRR 751.1(a), Exceeding Their SPDES Effluent Limitations for Benzene, Toluene and Xylene.
    2. Respondent Oil Co., Inc. has violated ECL 17-0803 and 6 NYCRR 751.1(a), Failing to Submit Discharge Monitoring Reports, on 6 occasions.
    3. Respondent Oil Co., Inc. has violated ECL 17-0803 and 6 NYCRR 751.1(a), Failing to Submit Adequate DMR's on 23 Occasions
    4. Respondent Oil Co., Inc. has violated ECL 17-0803 and 6 NYCRR 751.1(a), Failing to Submit NCR's
    5. Respondent Oil Co., Inc.'s Alleged Violation of ECL 17-0803, ECL 17-0507, ECL 17-0511 and ECL 17-0701, Discharging Parameters Not Allowed to Be Discharged under the Respondent's SPDES Permit.
    6. Respondent Oil Co.'s Alleged Violation of ECL 17-0803 and 6 NYCRR 751.1(a), Operating the Oil-water Separator Without a SPDES Permit.
  6. Alleged Oil Program and Navigation Law Violations
    1. Alleged Violation of NL 174, Operating an MOSF Without a License.
    2. Alleged Violation of NL 174 and 17 NYCRR 30.8, Failing to Submit Monthly Reports of Total Number of Barrels of Product Transferred to the MOSF.
    3. Alleged Violation of 6 NYCRR 613.6(a) and (c), Failing to Conduct Monthly Facility Inspections and Failure to Maintain Inspection Reports.
    4. Alleged Violation of 6 NYCRR 613.6(b), Failing to Perform Ten-Year Tank Inspections.
    5. Alleged Violation of 6 NYCRR 613.6 (e) and 6 NYCRR 613.9(a), Failing to Take Out of Service Tanks That Have Not Received Ten-Year Inspections.
    6. Alleged Violation of 6 NYCRR 613.6(d) and 6 NYCRR 613.9, Failing to Take Out of Service Deficient Tanks.
    7. Alleged Violation of 6 NYCRR 613.3(c)(6), Failing to Maintain Adequate Secondary Containment at the Facility.
    8. Alleged Violation of 6 NYCRR 613.3(b), Failing to Color Code Fill Ports at the Facility.
    9. Alleged Violation of 6 NYCRR 613.5(a), Failing to Perform Tightness Tests for the Underground Storage Tanks at the Facility.
    10. Alleged Violation of 6 NYCRR 613.6(d), Failing to Perform Remedial Measures on Aboveground Storage Tanks at the Facility.
    11. Alleged Violation of 6 NYCRR 613.3(c)(6)(iv), Failing to Discharge Stormwater That Was Uncontaminated and Free of Sheen.
  7. Liability of the Individual Respondents William S. Nappo, Sr. and William K. Nappo, Jr.

RELIEF 44

  1. Civil Penalties
  2. Permit Denial (Record of Compliance)

RECOMMENDATIONS

Appendix A, Monetary Penalty Chart

Summary

This hearing report addresses an enforcement action against Oil Co., Inc., d/b/a Eagle Oil, (a Chapter 11 federal bankruptcy petitioner), William S. Nappo, Sr., (personally and as President and Chief Executive Officer of Oil Co., Inc., and William K. Nappo, Jr. (personally and as Secretary of Oil Co., Inc., the Respondents. The Complaint alleges violations of water, air and tidal wetlands regulation and Navigation Law and regulation. The ALJ concludes that the Respondents have operated a major oil storage facility since 1987 without a Certificate to Operate an air contamination source (required for the storage tank vapor recovery system). Further, the Respondents have operated the facility since 1993 without a Major Oil Storage Facility license or a State Pollutant Discharge Elimination System permit. The Respondents, for the most part, have not challenged the Department Staff's factual assertions but instead have asserted 16 affirmative defenses, that would mitigate or preclude sanctions resulting from Department Staff's allegations.

The ALJ concludes that the Respondents operated the facility without required permits and also committed more than a dozen other violations, including continuing violations. The violations resulted in actual environmental harm, including petroleum discharges to Mott Basin (in violation of the then-effective SPDES permit conditions) and air contamination emissions. The ALJ recommends that the Commissioner find that the corporate Respondent, Oil Co., Inc., and the two individual Respondents, William S. Nappo, Sr. and William K. Nappo, Jr. are jointly and severally liable, so that the individual Respondents are personally liable for the penalties and other sanctions imposed for the corporate violations.

Department Staff seeks monetary penalties of $4,382,670.00 in this matter. The ALJ recommends a total penalty of $3,499,680.00. The ALJ rejects Department Staff's request for a determination that the Respondents are unsuitable and unfit to hold environmental permits. The Respondent Oil Co. applied for a Certificate to Operate in 1992, but Department Staff suspended its review of that permit application pursuant to 6 NYCRR Part 621.14. The Respondents neither have applied for nor hold any other Departmental permits. Staff did not provide the Respondents with notice of a request for a suitability determination regarding the application for a Certificate to Operate in the Complaint. Therefore, the ALJ does not recommend addressing suitability and fitness in this action.

Nonetheless, the ALJ recommends that the Commissioner direct the Respondents to close the facility, pursuant to a closure plan approved by Department Staff because the Respondents have been unable to operate the facility in compliance with environmental regulations virtually since the Respondent assumed operation of the facility in 1987, and have been operating without any permits since 1993.

Proceedings

Pursuant to Article 71 of the Environmental Conservation Law of the State of New York ("ECL") and the Official Compilation of Code, Rules and Regulations of the State of New York, Title 6 ("6 NYCRR") Part 622, an enforcement hearing was held before Administrative Law Judge ("ALJ") Kevin J. Casutto, New York State Department of Environmental Conservation ("NYSDEC" or the "Department"), Office of Hearings and Mediation Services. The hearing was conducted concerning a Complaint, dated October 24, 1996, issued and duly served upon the Respondents by the Department Staff of the Department's Region 1 Office ("Staff"). The Department Staff amended its Complaint pursuant to 6 NYCRR 622.5(a) on November 13, 1996. Staff filed a Statement of Readiness dated October 10, 1997. The adjudicatory hearing was commenced on November 17, 1997 in the Department's Region 1 Regional Office, Loop Road, Building 40, Stony Brook, New York 11790-2356. The hearing was continued on nine additional dates, concluding on January 29, 1998. Minutes of the November 18, 1998 proceedings were irretrievably lost by the stenographic service, and a new record was created subsequently concerning those proceedings.

Staff appeared by Louise Aja, Assistant Regional Attorney, Region 1, Stony Brook, New York. To support its case, Staff called the following witnesses: Environmental Program Specialist I John Myslinski, Environmental Engineer I Anthony Leung, Senior Marine Resource Technician Larry Pasciutti and Environmental Analyst II Roger Evans. Staff also presented witness John Hofmann, a former Department employee, Nassau County Department of Health Public Health Engineer Carlos Pareja and Nassau County Department of Health Bureau of Environmental Sanitation Inspector Paul Hamann.

The Respondents appeared and were represented by Marvin E. Kramer & Associates, PC, 1325 Franklin Avenue, Suite 165 Garden City, New York, Marvin E. Kramer, of counsel. The Respondents presented the following witnesses: environmental consultant Gaylord Hansen, Michael Rowe, P.E., Vice-President, KAR Engineering, Harris Polansky, C.P.A., Edward Schwartz, C.P.A., John Licata (a former NYSDEC employee, currently employed as a civil engineer by the N.Y.S. Department of Transportation), environmental consultant Harold Berninger, proprietor, Berninger Environmental, Inc., and environmental consultant John Joseph Heaney, President, Walden Associates.

Following the hearing, the ALJ set a schedule for filing initial closing memoranda and reply memoranda. The complete hearing transcript was received by the Office of Hearings by February 23, 1998. The parties' initial memoranda were received on or before April 7, 1998, and the hearing record was closed on April 28, 1998 with receipt of the parties' reply memoranda.

Introduction

The Respondent Oil Co., Inc. also known as Eagle Oil ("Oil Co."), has operated a major petroleum storage facility at One Sheridan Boulevard, Inwood, New York (the "site" or the "facility") since 1987. The facility is situated along tidal wetlands that border Mott Basin. A Major Oil Storage Facility ("MOSF") is a facility which has the capacity to store at least four hundred thousand gallons of petroleum product. The facility is subject to regulation under Major Oil Storage Facility program, the Tidal Wetland program, the Air Pollution Control program and the Water/State Pollutant Discharge Elimination System program.

At all relevant times, the Respondent William S. Nappo, Sr. has been the President of Respondent Oil Co. and his son, Respondent William K. Nappo, Jr. has been the Secretary of the Respondent Oil Co. (collectively, the "Respondents".) Other than the period of September 1992 through February 1993, the Respondents admit operating the facility since 1989. From September 1992 through February 1993, the Respondents assert (as an affirmative defense) that they relinquished operation of the facility to another entity, Grayshark Enterprises (and subsequently the U.S. Marshall). That affirmative defense is discussed further below.

  1. Staff's Position
    1. The Notice of Hearing and Complaint

      Department Staff assert that the Respondents have operated the MOSF site since 1989 with a lengthy history of noncompliance with environmental regulatory requirements, including operating the facility without environmental permits. Staff assert this history has been documented by the Nassau County Department of Health, the U.S. Coast Guard and Department Staff. Staff's case alleges violations in four regulatory programs: water, oil (including MOSF regulations), air and tidal wetlands.

      Staff's Complaint alleges twelve "causes of action" which are summarized as follows:

      - Air Pollution Control Violations

      In its first cause of action, Staff asserts violations of Environmental Conservation Law Articles 19 and 72 and 6 NYCRR Parts 201, 211, 229 and 231 because the Respondents did not operate their emission control device in a satisfactory state of maintenance and repair; the Respondents commenced construction and/or operated an air-contamination source without having a valid "permit to construct" and "certificate to operate" issued by the Commissioner and the Respondents have not paid regulatory fees.

      - Tidal Wetlands and Water Resources Violations

      Staff's Complaint also asserts violations of ECL Articles 15 and 25 and 6 NYCRR Parts 608 and 661 for certain tidal wetland and water resources violations (second through tenth causes of action). However, during the December 3, 1997 hearing, Staff withdrew the second through fifth and seventh through tenth causes of action of the Complaint, thereby withdrawing all alleged water resources and tidal wetlands violations, other than as alleged in the sixth cause of action.

      - Water Pollution Control and State Pollutant Discharge Elimination System Violations

      In its eleventh cause of action, Staff asserts violations of ECL Article 17 and 6 NYCRR Part 751 for exceedences of effluent limitations in the Respondent Oil Co.'s State Pollutant Discharge Elimination System ("SPDES") permit (while that permit was in effect); discharging pollutants to the waters of the State of New York without a SPDES permit (after expiration of the SPDES permit); various discharge violations and various reporting violations.

      - Oil and Navigation Law Violations

      In its twelfth cause of action, Staff asserts violations of ECL Article 17 and 6 NYCRR Part 613 and 17 NYCRR Parts 30 and 32, in that the Respondents, operators of a Major Oil Storage Facility as that term is defined in Navigation Law ("NL") 172, 17 NYCRR 30.2(c) and 6 NYCRR 610.2 (g), have continuously operated their facility without a license since April 1, 1989; failed to maintain an adequate secondary containment system in accordance with 6 NYCRR 613.3 (c)(6); failed to color code fill ports in accordance with 6 NYCRR 613.3(b); failed to repair equipment deficiencies; failed to properly treat storm water and other discharges from the MOSF in accordance with 6 NYCRR 613.3(c) (6) (iv) and failed to take the actions necessary to cleanup and remove spill number 86-7001 in accordance with 17 NYCRR 32.5(b); and various reporting violations and testing violations under 6 NYCRR Part 613 and 17 NYCRR Part 30.

    2. Allegations Withdrawn by Staff

      Following commencement of the hearing, Department Staff withdrew the following allegations:

      First Cause of Action (Article 19, Air Violations): Complaint paragraphs 6, 9, 10, 13, 14, 17, 18, 19, 20, 21, 22 and 23.

      Second, Third, Fourth, Fifth Due to an oversight by Staff, the Amended Complaint actually does not contain a Fifth Cause of Action., Seventh, Eighth, Ninth and Tenth Causes of Action (Articles 15 and 25, Tidal Wetland Violations).

      Eleventh Cause of Action (Article 17, Water/SPDES Violations): Complaint paragraphs 101, 102, 103, 104, 105, 106, 111 and 112.

      Twelfth Cause of Action (ECL Article 17 and Navigation Law, MOSF Violations): Complaint paragraphs 145, 146, 147, 160, 161 and 162.

    3. Staff's Request for Relief

      Staff seeks a monetary penalty in the amount of $4,382,679.00 (revised in Staff's closing brief from $4,395,933.00 recited in the Complaint), assessed jointly and severally against the Respondents. Staff also seeks an order directing the Respondents to investigate and remediate spill number 86-7001 and to restore the tidal wetlands and their adjacent area. Additionally, Staff seeks a determination that the individual Respondents are unsuitable to perform any activities regulated under the Environmental Conservation Law and the Navigation Law; and further that the Commissioner order the Respondents to take all tanks at their facility permanently out of service in accordance with 6 NYCRR 613.9(b) and close down their air contamination sources.

      In the alternative, Staff seeks an order of the Commissioner requiring the Respondents to perform the remedial activities (identified in (V) of the Complaint's prayer for relief).

  2. The Respondents' Position

    The Answer

    The Respondents' Answer, dated January 14, 1997, denies (or denies knowledge or information sufficient to form a belief as to) each allegation of the Complaint. The Answer alleges seven affirmative defenses.

    - The Respondents' Affirmative Defenses

    In addition to the seven affirmative defenses set forth in their Answer, the Respondents filed an Amended Answer alleging nine additional affirmative defenses.

    The Respondents do not challenge Staff's factual proof regarding the history of the facility and the alleged violations. Instead, these affirmative defenses form the basis of the Respondents' defense. The Respondents' 16 affirmative defenses are summarized below:

    1. The Respondents are not the owners of the facility.
    2. The Respondent Oil Co. commenced occupancy of the premises on or about July 17, 1987.
    3. That neither the Respondent Oil Co. nor Eagle oil has ever been known as Wechter Petroleum Corporation.
    4. That neither the Respondent William S. Nappo, Sr. nor the Respondent William K. Nappo, Jr. have any personal liability.
    5. That the Respondent Oil Co. is a debtor in possession pursuant to Chapter 11 of the United States Bankruptcy Code.
    6. That the Department is guilty of laches in this matter.
    7. That the Respondents William S. Nappo, Sr. and William K. Nappo, Jr. acted solely in their capacity as President, director or officer of the Respondent Oil Co.
    8. That the conduct of the landlord, Lisbon Ventures, Inc. should be considered as a mitigation of damages.
    9. That by Order of the United States Bankruptcy Court, the property on which the facility is located is free and clear of all liens and encumbrances.
    10. That a petroleum spill occurred in or about 1982 at Two Sheridan Boulevard, Inwood, New York, a gasoline station then operated by Wechter Petroleum Corporation located across Sheridan Boulevard opposite the Respondents' facility. Further, that this spill radically increased the burden of the Respondent oil Co.'s oil/water separator.
    11. That the Department caused the Respondents to sustain damages resulting from the 1982 Wechter spill (NYSDEC Spill Number 82-1877) by not completing the spill's remediation.
    12. That the Respondent Oil Co. , Inc. because of its bankruptcy, has been unable to bear the economic burden of the repairs that the facility requires.
    13. That in 1992 the Respondent Oil Co. negotiated with Grayshark Enterprises, Inc. to operate and remediate the facility.
    14. That by reason of the securing of the facility by the U.S. Marshall's office in 1992, the Respondent Oil Co. was deprived of revenue of between four hundred thousand ($400,000) dollars and six hundred thousand ($600,000) dollars.
    15. That the Department "blacklisted" the Respondents.
    16. That the Respondents have been deprived of their due process rights.
  3. Written Rulings

    Three written rulings were issued prior to the hearing. The Respondents filed a pre-hearing motion to dismiss, asserting that the present action is stayed by the federal bankruptcy law automatic stay provision (11 USC 362). On December 31, 1996, this motion was denied. The Department is a governmental unit and Department Staff brought the present action to enforce regulations that are based upon the Department's police and regulatory power. Fixing liability including civil penalties for a Respondent (debtor's) failure to comply with environmental laws falls within the police and regulatory powers exception to the automatic stay provision. 11 USC 362.

    The Respondents filed a pre-hearing motion requesting use of interrogatories during discovery. On March 13, 1997 this motion was denied because the case is not so unusually complex as to require interrogatories, and in any event the Respondents failed to explain how interrogatories would expedite the proceeding (6 NYCRR 622.7[b][2]).

    On October 6, 1997 Staff's motion to allow pre-filed testimony to be filed by former NYSDEC employee John Hofmann, a Staff witness, was granted.

    During the hearing, Staff filed a motion seeking an order of preclusion regarding evidence and claims relating to documents that the Respondents provided to Staff on December 12, 1997. Separately, the Respondents sought leave to file an Amended Supplemental Answer to Staff's Amended Complaint, alleging nine additional affirmative defenses. On January 6, 1997 Staff's motion to preclude evidence was denied and the Respondents' motion to amend their answer was granted.

    On January 29, 1998, the Respondents were granted time to obtain foundational documentation in support of their offer into evidence of Exhibit 422. Exhibit 422 is a letter from the New York State Department of Tax and Finance regarding that Department's issuance of a "terminal operator's license" to an entity identified as Grayshark Enterprises, Inc. The letter does not identify the facility for which the license was issued, but the Respondents assert it is the Oil Co. facility.

    By letter dated February 11, 1998, the Respondents indicated that they were unable to obtain foundational documentation for Exhibit 422, but continued their offer of Exhibit 422 into evidence. In the February 11 letter, the Respondents also sought to admit into evidence a federal District Court Complaint. Staff had no objection to admissibility of this complaint. On March 4, 1998, the Respondents' motion to admit Exhibit 422 was denied and their motion to admit the federal Complaint was granted (Exhibit 433).

Findings of Fact

Additional findings of fact are rendered in the Discussion section for each allegation.

I. Background

  1. The Respondent Oil Co., Inc. ("Oil Co.") is a Connecticut corporation transacting business as Eagle Oil, with offices for the transaction of business at One Sheridan Boulevard, Inwood, New York (the "facility" or the "site").
  2. The Respondent William S. Nappo, Sr. is President and Chief Executive Officer of corporate Respondent Oil Co.
  3. The Respondent William K. Nappo, Jr. is Secretary and day to day Manager of corporate Respondent Oil Co's facility located at One Sheridan Boulevard, Inwood, New York.
  4. The Respondent Oil Co., commenced operation of the facility on or about July 17, 1987.
  5. The facility has a total storage capacity exceeding 618,000 gallons.
  6. Staff initiated an enforcement action against the Respondents Oil Co., William S. Nappo, Sr. and William K. Nappo, Jr. by Notice of Hearing and Verified Complaint dated October 24, 1996, duly served upon the Respondents.
  7. The Respondents William S. Nappo, Sr. and William K. Nappo, Jr., corporate officers of Respondent Oil Co., were charged both in their corporate and personal capacities.

    II. Permits and Licenses

  8. The Respondent Oil Co. initially received an MOSF license for operation of the facility, effective from December 30, 1987 to March 31, 1988. Subsequently, the Respondent Oil Co. applied for and received annual renewals of the license until the MOSF license expiration on July 30, 1992.
  9. The Respondent Oil Co., held a valid SPDES permit from March 1, 1988 through March 1, 1993 (SPDES permit No. 002399). The Respondents did not file a renewal application for this permit.
  10. The Respondent Oil Co., has operated the facility without a certificate to operate an air contamination source (an air pollution control permit) since assuming operation of the facility in 1987.
  11. On January 14, 1992, the Respondent Oil Co. filed an application for a certificate to operate with the Department's Region 1 Office.
  12. However, on February 6, 1992, Staff suspended processing of the air permit application, citing 6 NYCRR 621.3(f).

    Discussion

    Jurisdiction and authority to initiate this administrative action is based upon Environmental Conservation Law 3-0301(l)(b), (e), (g), (I), (n) and (x); and ECL 3-0301(2)(d), (f), (g), (h) and (p); ECL Articles 15, 17, 19, 25, 71 and 72 and 6 NYCRR Parts 200, 201, 211, 229, 231, 608, 613, 614, 661, 703, 750 and 751; and Navigation Law Article 12; and 17 NYCRR Parts 30 and 32.

    I. Permit History of the Facility

    The Respondent Oil Co. commenced operation of the facility on or about July 17, 1987. A Major Onshore Storage Facility ("MOSF") license is required for petroleum storage facilities having a total combined petroleum storage capacity of at least 400,000 gallons. Navigation Law 172, 17 NYCRR 30.2(c) and 6 NYCRR 610.2(g). The facility has a total storage capacity exceeding 618,000 gallons, and therefore requires an MOSF license. The Respondent Oil Co. initially received an MOSF license for operation of the facility, effective from December 30, 1987 to March 31, 1988. Subsequently, the Respondent Oil Co. applied for and received annual renewals of the permit until its license expired on July 30, 1992. Staff asserts that the Respondents have continuously operated the facility without an MOSF license since then.

    The facility requires a SPDES permit for the outfall of its surface water oil/water separator into Mott Basin. ECL Art 17, Title 8. The Respondent Oil Co. received SPDES Permit No. 002399, effective from March 1, 1988 through March 1, 1993. On September 26, 1990, Staff modified the SPDES permit to convert "action levels" for benzene, toluene and xylene into effluent limitations. The Department received no SPDES permit renewal application from the Respondents, and the existing SPDES permit expired on March 1, 1993.

    The facility also requires an air pollution control permit for its tank farm vapor recovery system. 6 NYCRR 201.2(b). Since assuming operation of the facility in 1987, the Respondent Oil Co. has operated the facility without an air pollution control permit. On January 14, 1992 the Respondent Oil Co. filed an application for such a permit with the Department's Region 1 Office. However, on February 6, 1992, Staff sent the Respondent Oil Co. notice of suspension of processing of the air permit application, citing 6 NYCRR 621.3(f).

    The Respondent Oil Co.'s continued operation of the MOSF facility after expiration of the MOSF license, expiration of the SPDES permit, and in the absence of an air pollution control permit is well documented in the record. Staff initially asserted that the Respondent Oil Co. required a tidal wetlands permit for alterations made to the bulkhead system (fronting Mott Basin), but later withdrew these charges.

    II. The Affirmative Defenses

    All of the Respondents' affirmative defenses are rejected. Many of the Respondents' affirmative defenses are not relevant or are misplaced. Several affirmative defenses are discussed immediately below and others are discussed in the context of the relevant allegations. Those affirmative defenses pertaining to the Respondent Oil Co.'s operation of the MOSF facility without permits are discussed below and are rejected.

    The Respondents assert in their third affirmative defense that neither Oil Co. nor Eagle Oil has ever been known as Wechter Petroleum Corporation (Wechter), and that neither Oil Co. nor Eagle Oil is a successor in interest to Wechter. The Respondents assert in their tenth affirmative defense that an earlier Wechter petroleum spill at Two Sheridan Boulevard (located across the street from the Respondent facility) caused groundwater contamination that migrated onto the Respondent Oil Co.'s facility.

    The caption in this action identifies the corporate Respondent Oil Co. Inc., as "formerly known as Wechter Petroleum Corporation". The Respondents are in error in asserting that Staff named Wechter as a party to this action, or that Staff withdrew a claim against Wechter. During the hearing, there was some discussion regarding the occurrence of "Wechter" in the caption of this proceeding. The Respondents' counsel contended that Oil Co. is not a successor in interest to Wechter and Staff apparently accepted counsel's explanation.

    However, Staff correctly noted that Wechter is not a party to this proceeding. In their closing brief, the Respondents mistakenly assert that Staff withdrew charges against Wechter. Staff neither made nor withdrew charges against Wechter nor did Staff move to amend the caption in this proceeding.

    In their tenth affirmative defense, the Respondents assert that a petroleum spill occurred at Two Sheridan Boulevard, Inwood, New York in or about 1982. Two Sheridan Boulevard is a gasoline station (then operated by Wechter Petroleum Corporation) located across Sheridan Boulevard, opposite the Oil Co. facility. (NYSDEC Spill Number 82-1877; the "Wechter spill"). Staff do not deny the occurrence of the 1982 Wechter spill, but Staff have not sought to prove that the Respondents are successors in interest to Wechter regarding liability for remediation of that spill. The uncontroverted evidence shows that the 1982 Wechter spill resulted in a groundwater contamination plume. Further, that the Department, using State spillfund resources, contracted out the remediation of that spill.

    Even accepting the Respondent counsel's assertion that Oil Co. is not a successor in interest to Wechter, the Respondents' third and tenth affirmative defenses are not relevant to the allegations of the Complaint because Staff have not sought to hold the Respondents liable for alleged acts or omissions of Wechter. The tenth affirmative defense is discussed in greater detail below. Apparently, Wechter operated the One Sheridan Boulevard MOSF facility prior to the Respondent Oil Co., Inc.

    The Respondents assert in their sixth affirmative defense that the Department is guilty of laches in this matter. The common law doctrine of laches does not apply against the state when it enforces laws or regulations for the benefit of the public interest. Cortlandt Nursing Home v. Axelrod, 66 N.Y.2d 169, 177, 499 N.Y.S.2d 1030, 489 N.E.2d 1304 (1985), cert. denied 476 U.S. 1115; see, also, State Administrative Procedure Act 301. A laches defense is separate and distinct from a defense under SAPA 301.

    SAPA 301 provides that "[i]n an adjudicatory proceeding, all parties shall be afforded an opportunity for hearing within a reasonable time." Staff cited SAPA and Cortlandt, supra, in its closing brief. The Respondents, in their reply brief, attempted to recast this defense, stating that since SAPA 301(1) requires a hearing within a reasonable time, the doctrine of laches applies to every situation where a hearing was not conducted within a reasonable time. But the Respondents' claim of a defense under SAPA 301(1), raised for the first time in their closing reply brief, is untimely and without merit. The Respondents' sixth affirmative defense must be rejected.

    The Respondents assert in their ninth affirmative defense that by order of the United States Bankruptcy Court, the property on which the facility is located is free and clear of all liens and encumbrances. The Respondents offered into evidence a deed purportedly conveying the One Sheridan Boulevard property (the facility) from Lisbon Ventures, Inc. to RET Capital Corp. By offer of proof, the Respondents' counsel explained that at the time of the transfer in September 1996, Lisbon was a federal bankruptcy petitioner and the One Sheridan Boulevard property (the site) was sold by Order of the Bankruptcy Court to RET. The Respondents assert that the Bankruptcy Court's Order conveyed the property to RET "free and clear of any liens and encumbrances and other interests"; and therefore, the Order precludes any liability on or after September 1996. Furthermore, the Respondents assert that the language of the Order acts as a shield to the Respondents against any liability for occurrences (or omissions) prior to the date of the conveyance, even though none of the Respondents were not a party to that transaction.

    Staff's objection to admissibility of the deed and Order was sustained, based upon lack of relevance. That is, the most the Bankruptcy Court's Order could have done is to protect RET. Neither RET nor Lisbon are parties to this action. The Bankruptcy Court's Order did not purport to protect the Respondents. The Respondents' ninth affirmative defense must be rejected.

    The Respondents assert in their twelfth affirmative defense that the Respondent Oil Co. has been unable to bear the economic burden of the repairs that the facility requires, due to its bankruptcy status. The Respondent Oil Co.'s financial inability to comply with regulatory criteria is not a defense. This affirmative defense is rejected.

    The Respondents assert in their fifteenth affirmative defense that the Department Staff's determination not to issue a renewal SPDES permit or a new air pollution control permit (or MOSF license) to the Respondent Oil Co, essentially "blacklisted" the Respondents. In their sixteenth affirmative defense, the Respondents assert they have been deprived of their due process rights. However, pursuant to 6 NYCRR Part 621, processing and review of a permit application may be suspended with written notice to the applicant if an enforcement action has been or is commenced against the applicant for alleged violations of law related to the activity for which the permit is sought or for alleged violations of the ECL related to the facility or site. 6 NYCRR 621.3(f). Staff provided such written notice to the Respondent Oil Co. Suspension of processing and review may remain in effect pending final resolution of the enforcement action. 6 NYCRR 621.3(f). Staff relied upon 6 NYCRR 621.3(f) in its determination to suspend processing of any permit application that Respondents may have filed, including the application for a Certificate to Operate an air contamination source.

    In any event, the Respondents' challenge to Staff's conduct does not comprise an affirmative defense to the present action. Staff's conduct could be reviewed under Part 621 or by application to the Commissioner, with respect to a particular permit application. The Respondents have made no such attempt at relief, and cannot now raise this suspension of processing as an affirmative defense. The Respondents' fifteenth and sixteenth affirmative defenses are rejected.

    III. Alleged Air Pollution Control Violations

    A. Respondent Oil Co., Inc.'s Alleged Violation of 6 NYCRR 201.2(b)Regulation then in effect (eff. June 17, 1972 through September 15, 1988, as amended.), Operating an Air Contamination Source Without a Certificate to Operate

    Findings of Fact:

  13. The facility requires a vapor recovery system (including a flare vent) for its aboveground tank farm. Vapors from the tanks are forced into the vapor recovery system and burned, so that no vapors are be emitted directly to the outside air.
  14. Carlos Pareja, a Nassau County Department of Health ("NCDOH") Public Health Engineer performed an inspection of the facility on March 22, 1988. The Respondents were unable to produce a certificate to operate for the vapor recovery system on March 22, 1988.
  15. Other NCDOH inspections on May 12, 1989, July 11, 1991, October 22, 1991 and November 26, 1997 revealed the Respondent Oil Co.'s continued operation of the facility without a certificate to operate.
  16. The vapor recovery system was operative on July 16, 1991.

    Discussion

    Pursuant to 6 NYCRR 201.2(b), ". . . no person shall operate an air contamination source without having a valid certificate to operate (a permit) issued by the Commissioner." Staff assert that from on or about December 15, 1987 to present, the Respondent Oil Co. has operated a vapor recovery system (including a flare vent) for its aboveground tank farm at the facility; that the vapor recovery system is an air contamination source; and that the Respondent Oil Co. has never obtained an air pollution control permit for the vapor recovery system. As with several other violations alleged by Staff, the Respondents concede the violation or do not substantially contest Staff's factual proof in support of the allegation.

    The vapor recovery system is an air contamination source. 6 NYCRR 201.2(b). Whether the vapor recovery system was functioning from July 11, 1991 to July 16, 1991 is not relevant to the charge of operating without a Certificate to Operate. At the time of the incident, the Respondent William K. Nappo, Jr. explained to the inspector that the system had only recently broken down, and they were not able to have the unit serviced until several days later. Staff assert that the telephone report of the Respondent William K. Nappo, Jr. that the unit had been repaired and was again functioning on July 16, 1991 should not be credited because the Respondents offered no documentation or other proof to substantiate the repair. However, nothing in the record indicates any further complaints were received. Therefore, I find it more likely than not, that the vapor recovery unit had, in fact, been repaired and was again functioning on July 16, 1991.

    Conclusions of law are rendered in the Discussion section for each allegation.:

    1. The Respondent Oil Co. operated an air contamination source without a permit from March 22, 1988 until November 26, 1997 in violation of 6 NYCRR 201.2(b). However, the Amended Complaint is dated November 13, 1996. It is my recommendation that any continuous penalties in this action are limited to the date of the Complaint. Staff calculated penalties on an annual basis from November, 1990. Therefore, for purposes of penalty calculation, the violation period is from November 1990 to November 1996 (six years), six yearly violations of 6 NYCRR 201.2(b).

    B. Respondent Oil Co.'s Alleged Violation of 6 NYCRR 229..7, Filling Trucks While the Vapor Recovery System Was Not Operating

    Findings of Fact

  17. On May 12, 1989, a NCDOH inspection revealed that the Respondent Oil Co.'s gas vapor recovery system was not operating but trucks were still being filled. As a result of this activity, gasoline vapors were released into the atmosphere.
  18. The vapor recovery system was not functioning from July 11, 1991 to July 16, 1991. Despite this problem, the Respondent Oil Co. continued to operate the facility; gasoline vapors were being emitted directly into the atmosphere.
  19. On February 14, 1992, the vapor recovery unit again was inoperable. Yet, the Respondent Oil Co. continued to operate the facility.

    Discussion

    Pursuant to 6 NYCRR 229.7, gasoline transport vehicles shall not be filled from the gasoline bulk plant if the vapor recovery system is not operating. The uncontroverted evidence shows that on May 12, 1989, July 11, 1991 and February 14, 1992 the Respondent Oil Co. caused gasoline vapors to be emitted directly into the atmosphere. If the vapor recovery system was operating, the vapors would be forced into the system and burned rather than being emitted directly to the atmosphere. Further, the NCDOH inspector reported that the Respondent William K. Nappo, Jr. admitted that the facility was experiencing problems with the vapor recovery system. At the time, the Respondents stated that they repaired the system as soon as possible and reported it operating on July 16, 1991.

    The Respondents do not deny the violations occurred, but contend that any failure of the vapor recovery system was intermittent, requiring routine maintenance, and should be excused.

    Conclusions of Law:

    2. The Respondent Oil Co. violated 6 NYCRR 229.7, filling trucks while the vapor recovery system was not operating, on three occasions, May 12, 1989, July 11, 1991 and February 14, 1992 a total of three violations.

    C. Respondent Oil Co.'s Alleged Violation of 6 NYCRR 200.7, Improperly Maintaining an Air Contamination Source.

    6 NYCRR 200.7 requires that any person who owns or operates an air contamination source which is equipped with an emission control device, operate the device and keep it in a satisfactory state of maintenance and repair in accordance with ordinary and necessary practices, standards, and procedures.

    Findings of Fact

  20. A facility inspection on July 7, 1991 revealed that the vapor recovery system was inoperable. The vapor recovery system remained inoperable until September 26, 1991.
  21. A facility inspection on February 14, 1992 revealed that the vapor recovery system was not operating because the nozzles were clogged with soot.

    Conclusions of Law

    3. The Respondent Oil Co., Inc. violated 6 NYCRR 200.7 by improperly maintaining an air contamination source for the 81 days between July 7, 1991 and September 26, 1991, and on February 14, 1992, a total of 82 violation days.

    IV. Alleged Tidal Wetlands Violation

    A. Respondent Oil Co., Inc.'s Alleged Violation of 6 NYCRR 661.8, Causing or Permitting to Be Caused, the Release and Disposal of Petroleum Products into the Waters of Mott Basin, Tidal Wetlands.

    Pursuant to 6 NYCRR 661.5(a)(2), any type of use designated as an "incompatible use" is a use not compatible with the type of area involved or with the preservation, protection of enhancement of the present and potential values of tidal wetlands if undertaken in that area. Such uses are subject to the tidal wetland permit requirements. Pursuant to 6 NYCRR 661.5(b)(52), disposal of any chemical, petrochemical or other toxic material, including pesticide, where not authorized by law, is an "incompatible use" when conducted in or adjacent to any regulated tidal wetlands Pursuant to 6 NYCRR 661.8, after August 20, 1977, no person shall conduct a new regulated activity on any tidal wetland or any adjacent area without first obtaining a tidal wetlands permit.

    Findings of Fact:

  22. Official notice was taken of tidal wetlands map No. 604-496, which depicts the facility and adjacent tidal wetlands.
  23. Three types of tidal wetlands exist in the area immediately adjacent to the facility: shoals and mud flats, intertidal marsh and littoral zone.
  24. Self-reporting monthly Discharge Monitoring Reports filed by the Respondent Oil Co. show toxic effluent limit exceedences occurred on 30 occasions.

    Conclusions of Law:

    4. The Respondent Oil Co. violated 6 NYCRR 661.8 on 30 occasions between May, 1991 and March 1, 1993, a total of 30 violations.

    V. Alleged Water Program and SPDES Violations

    A. Respondent Oil Co., Inc.'s Alleged Violation of ECL 17-0803 and 6 NYCRR 751.1(a), Exceeding Their SPDES Effluent Limitations for Benzene, Toluene and Xylene.

    Pursuant to 6 NYCRR 751.1(a), no person shall discharge or cause a discharge of any pollutant in a manner other than as prescribed by a State Pollutant Discharge Elimination System (SPDES)permit. See, also, ECL 17-0803.

    Findings of Fact

  25. The Respondent Oil Co. held a SPDES permit which indicated an effective date of March 1, 1988 until March 1, 1993 (SPDES permit No. 002399).
  26. Staff modified the Respondent Oil Co.'s SPDES permit on September 26, 1990 to convert action levels for benzene, toluene and xylene into effluent limitations. The effective date for the effluent limitations was May 1, 1991. Benzene, toluene and xylene are toxic parameters.
  27. The Respondents did not seek review of the SPDES permit modification.
  28. The Respondents did not file an application for renewal of Respondent Oil Co.'s SPDES permit that indicated an expiration date of March 1, 1993.
  29. As a condition of its SPDES Permit, the Respondent Oil Co. was required to file monthly Discharge Monitoring ReportsSee, Ex. 270 at 7 (SPDES permit DMR requirement); and 6 NYCRR 751.1(a) and ECL 17-0803 (requirement that discharges be made in accordance with the terms of the SPDES permit.). The Respondent's DMR's for the months of June, July, August, September, October and December 1991 and January, February, March and April 1992 show 30 effluent limitation exceedences for toluene, benzene and xylene.
  30. Additionally, the Nassau County Department of Health collected waste water samples at the facility on July 31, 1991 and November 31, 1991 and the Department Staff collected waste water samples at the facility on August 14, 1991, a total of nine samples. All nine sample results indicated exceedences of the permit's effluent limitations for toluene, benzene and xylene.

    Discussion

    The Respondents do not challenge the facts developed by Staff. Instead, the Respondents assert three defenses. First, the Respondents assert that the SPDES permit modification was illegal; therefore no effluent limitations are valid. Consequently, the Respondents assert, no violations occurred. However, the Respondent Oil Co. did not seek a hearing on Staff's proposed modification to impose more stringent effluent limitations, pursuant to 6 NYCRR Part 621 when the proposed modification became effective. 6 NYCRR 621.14. The opportunity to challenge the modification has long since passed. The Respondents' contention that the modification is invalid must be rejected.

    Secondly, the Respondents assert that contaminated groundwater originating from the 1982 Wechter spill migrated onto the Respondent Oil Co's facility, causing the SPDES permit exceedences. This theory has been rejected (as discussed below, Discussion V[E]).

    Lastly, it is uncontroverted that the Department, utilizing state spillfund resources, retained a contractor to remediate this spill, since Wechter did not do so. The Respondents assert that the Department Staff failed to complete the 1982 Wechter spill remediation, and thereby caused the Respondents to sustain damages resulting from migration of the groundwater contamination plume onto the Respondent Oil Co.'s facility. The Respondents failed to provide any legal authority for their contention of state liability. More importantly, as noted in the preceding paragraph, the Respondents failed to establish that the 1982 Wechter plume migrated onto the facility. Therefore, this defense is rejected.

    Conclusions of Law:

    5. The Respondent Oil Co. waived any objection to the SPDES permit modifications of May, 1991. The Respondents' contention that the SPDES permit modification was illegal, is in error and is rejected.

    6. The Respondent Oil Co. violated ECL 17-0803 and 6 NYCRR 751.1(a) on 39 occasions.

    B. Respondent Oil Co., Inc., has violated ECL 17-0803 and 6 NYCRR 751.1(a), Failing to Submit Discharge Monitoring Reports, on 6 occasions.

    Staff asserts that the Respondent Oil Co., did not file monthly Discharge Monitoring Reports for the months of September, October, November and December 1992 and January and February, 1993, a total of six DMR'S.

    Findings of Fact

  31. Monthly filing of DMR's is a requirement of the Respondent Oil Co.'s SPDES permit.
  32. The Respondent Oil Co. did not file DMR's for the months of September, October, November and December 1992 and January and February, 1993, a total of six DMR'S.

    Discussion

    The Respondents do not deny that Respondent Oil Co. did not file DMR's for the six months alleged by Staff. Instead, the Respondents assert their thirteenth and fourteenth affirmative defenses: The Respondents assert that they were unable to file monthly DMR's for the period of September 1992 through February 1993 because during that period, the Respondents subleased the facility to another entity, Grayshark Enterprises, Inc. or in the alternative, the facility was under the control of the U.S. Marshall's office. The Respondents further assert that as a result of the U.S. Marshall's office taking control of the facility from Grayshark in 1992, the Respondent Oil Co. was deprived of revenues of between $400,000.00 and $600,000.00 dollars. In sum, the Respondents assert they were not in possession or control of the facility during that time.

    However, the Respondents offered no competent evidence to support these claims; nor does the record contain any evidence to show that the Respondents were not in control of the facility and not able to file the DMR's for the period of September 1992 through February 1993.

    Conclusions of Law:

    7. The Respondents' thirteenth and fourteenth affirmative defenses are rejected. The Respondent Oil Co. is responsible for complying with all terms and conditions of its SPDES permit, and therefore is liable for failing to file six DMR's for the period of September 1992 through March 1, 1993, a total of six violations of ECL 17-0803 and 6 NYCRR 751.1(a).

    C. Respondent Oil Co., Inc. has violated ECL 17-0803 and 6 NYCRR 751.1(a), Failing to Submit Adequate DMR's on 23 Occasions

    Findings of Fact:

  33. In June, July, August, September, October, November and December 1991, the Respondent Oil Co. failed to report "flow", seven DMR non-toxic effluent limitation reporting omissions in 1991.
  34. In May 1992 and June 1992, the Respondent Oil Co. failed to report toluene, benzene or xylene effluent limits, six toxic effluent limitation reporting omissions in 1992.
  35. In January, February, March, April, May and June 1992, the Respondent Oil Co. failed to report "flow". In May and June 1992, the Respondent Oil Co. failed to report "pH" and "oil and grease", ten DMR non-toxic effluent limitation reporting omissions in 1992.

    Conclusions of Law:

    8. The Respondent Oil Co. failed to report 17 non-toxic limitation parameters on DMR's in 1991 and 1992. The Respondent Oil Co. failed to report six toxic limitation parameters on DMR's in 1992. The Respondent Oil Co. violated its SPDES permit conditions on a total of 23 occasions, a total of 23 violations.

    D. Respondent Oil Co., Inc. has violated ECL 17-0803 and 6 NYCRR 751.1(a), Failing to Submit NCR's

    All SPDES permit general conditions, including the Respondent Oil Co.'s SPDES permit, require the submission of a Non-Compliance Report ("NCR") whenever a Discharge Monitoring Report shows noncompliance.

    Findings of Fact

  36. In 1991 and 1992, the Respondent Oil Co. failed to submit NCR's on several occasions when the facility's waste water outfall exceeded SPDES permit effluent limitations.
  37. The facility's waste water outfall exceeded SPDES permit effluent limitations in June, July, August, September, October, and December 1991, and January, February, March and April 1992.
  38. The Respondent Oil Co. failed to submit NCR's for the reported exceedences on these 10 DMR'S.

    Conclusions of Law:

    9. The Respondent Oil Co. failed to submit NCR's for the months of June, July, August, September, October, and December 1991 DMR'S, and the January, February, March and April 1992 DMR'S, in violation of its SPDES permit general condition requiring the submission of an NCR whenever a DMR shows noncompliance; a total of 10 violations.

    E. Respondent Oil Co., Inc.'s Alleged Violation of ECL 17-0803, ECL 17-0507, ECL 17-0511 and ECL 17-0701, Discharging Parameters Not Allowed to Be Discharged under the Respondent's SPDES Permit.

    ECL 17-0507 (similar to ECL 17-0701) provides that "[i]ncreasing or altering the content of the wastes through an outlet or a point source into the waters of the state by a change in volume or physical, chemical or biological characteristics without a SPDES permit so [sic] to do as provided by 17-0701 or title 8 hereof, or standards, criteria, limitations, rules or regulations promulgated or applied pursuant thereto, is prohibited." ECL 17-0511 provides that "[t]he use of existing or new outlets or point sources, which discharge sewage, industrial waste or other wastes into waters of this state is prohibited unless such use is in compliance with all standards, criteria, limitations, rules and regulations promulgated or applied by the department pursuant to [ECL Article 17]."

    Staff assert that the Respondents caused 15 violations of discharging unpermitted substances, also toxic parameters, into Mott Basin through Respondent Oil Co.'s oil-water separator.

    Findings of Fact

  39. The Respondent Oil Co.'s SPDES Permit authorizes the discharge of "stormwater and recovery well treatment system discharge" and imposes effluent limitations which restrict the "pH" range and require periodic monitoring of six specified parameters including benzene, toluene and xylene. (As explained above, effluent limitations for these parameters became effective May 1, 1991 and remained in effect until March 1, 1993, when the Respondent Oil Co.'s SPDES permit expired.)
  40. On July 31, 1991 and November 13, 1991, the Nassau County Department of Health obtained waste water samples from the facility.
  41. Analysis of the July 31, 1991 sample indicated the presence of Ethyl benzene, n-Propyl benzene, Isopropyl benzene, 1,2,4-Trimethyl-benzene, 1,3,5-Trimethylbenzene, n-Butyl benzene and Naphthalene, seven toxic parameters.
  42. Analysis of the November 13, 1991 sample indicated the presence of Ethyl benzene, n-Propyl benzene, Isopropyl benzene, 1,2,4-Trimethyl benzene, 1,3,5-Trimethyl benzene, n-Butyl benzene, Naphthalene and MTBE, eight toxic parameters.

    Discussion

    The Respondents contend in their tenth affirmative defense that the contaminated groundwater plume resulting from the 1982 Wechter spill has migrated onto the facility and is seeping into the manholes of the surface water collection system piping that leads to the Respondent Oil Co.'s oil/water separator. They contend that this infiltration of contaminated groundwater into the facility's surface water collection system places too great a burden on the oil/water separator, and is the cause of the Respondents' continued SPDES exceedences for effluent discharges into Mott Basin.

    In September 1997, the Respondents retained the services of John Joseph Heaney, P.E., President of Walden Associates, an environmental consulting firm. Mr. Heaney presented evidence in support of the Respondents' theory that groundwater at the facility is contaminated as a result of migration of the 1982 Wechter groundwater contamination plume onto the Oil Co. facility. The Respondent Oil Co.'s oil/water separator is part of the facility's surface water collection system. The oil/water separator is a primary method of treatment, designed to treat stormwater runoff at this facility by removal of floating oil and grit. The separator is unable to treat the dissolved petroleum constituents found in contaminated groundwater.

    Mr. Heaney provided an opinion that would support this theory, but only in response to a hypothetical question. The Respondents failed to provide competent factual evidence to prove their theory by a preponderance of the evidence. Mr. Heaney stated the theory that groundwater may be seeping into the manholes of the surface water collection system. Yet, he collected samples only from the monitoring wells at the facility, not from the manholes. Further, Mr. Heaney did not obtain samples from the monitoring wells that are closer to the oil/water separator. He performed no tests to determine that the piping leading to the oil/water separator is actually leaking. Lastly, Mr. Heaney collected four monitoring well samples on January 13, 1998, but two of the monitoring wells showed no contamination (monitoring well numbers 2 and 14 showed no contamination; 11 and 13 showed contamination).

    Other petroleum product leaks at the facility could account for the monitoring well test results of wells 11 and 13. For example, in 1992, the Department's consultant noted during tank inspections that tank 15 had a large hole at the base of the girth weldExhibit 117, pweld Exhibitaff notes that Mr. Heaney conceded he was instructed by the Respondents specifically to address Respondents' theory of how contaminated groundwater could enter the oil/water separator. Lastly, the Respondent Oil Co. is the facility's former SPDES permit holder and operator. Therefore, the Respondent Oil Co. is responsible for the outfall discharges into Mott Basin from the facility. ECL 17-0803.

    In sum, the Respondents offered speculation and hypothesis, but failed to show by a preponderance of the evidence that the groundwater contamination found in monitoring wells 11 and 13 was caused by the contamination plume resulting from the 1982 Wechter spill.

    Nonetheless, SPDES permittees are not prohibited from discharging wastewater that contains compounds that are not specifically set forth as effluent limitations in their permits so long as the compounds are constituents of the wastewater that is allowed to be discharged. Staff have mischaracterized the SPDES statutory framework, which provides that discharges of various categories of wastewater will be allowed, subject to limitations on the quantities and concentrations of specified compounds normally found in the category of wastewater being discharged. Atlantic States Legal Foundation v Eastman Kodak, 12 F3d 353, 357 (2d Cir. 1993).

    The Respondent Oil Co.'s SPDES permit authorizes the discharge of "stormwater and recovery well treatment system discharge" and imposes effluent limitations which restrict the pH range and require periodic monitoring of six specified parameters including benzene, toluene and xylene. Under the SPDES (and NPDES) regulatory program, these limitations are intended to function as indicator compounds. Staff is mistaken in asserting that the compounds identified on July 31, 1991 and November 13, 1991 are "unauthorized" because they are not specifically listed among the effluent limitations in the permit.

    Conclusions of Law:

    10. The Respondent Oil Co. did not violate its SPDES permit or ECL 17-0507 by discharging wastewater containing the 15 specific chemical compounds into Mott Basin through Oil Co.'s oil-water separator.

    F. Respondent Oil Co.'s Alleged Violation of ECL 17-0803 and 6 NYCRR 751.1(a), Operating the Oil-water Separator Without a SPDES Permit.

    ECL 17-0803 states that "[i]t shall be unlawful to discharge pollutants to the waters of the state from any outlet or point source without a SPDES Permit issued pursuant hereto..." ECL 17-0505 states "[t]he making or use of an outlet or point source discharging into to the waters of the state, and the operation or construction of disposal systems, without a valid SPDES permit as provided by section 17-0701 or title 8 hereof are prohibited."

    Staff assert that the Respondent Oil Co.'s DMR's for the years 1993, 1994, 1995, 1996 and 1997 prove the Respondent Oil Co.'s continuous operation of the oil/water separator for 42 months after expiration of the SPDES permit (on March 1, 1993). Staff pursue these violations as a single monthly violation for each month a DMR was submitted after March 1, 1993, even though Staff contend that daily violations (and daily penalties) could be pursued under ECL 17-0505.

    Findings of Fact:

  43. Deputy Regional Permit Administrator Roger Evans, the Department's document custodian for Region 1 SPDES permit applications, stated that the Department had not received an application for SPDES permit renewal for the facility.
  44. Department Staff sent an August 7, 1992 letter to the Respondent Oil Co. which states, in part, "[i]t is imperative that you address the above-noted deficiencies as quickly as possible since your current SPDES permit expires March 1, 1993 and renewal may be denied if outstanding violations still exist at that time."
  45. Staff sent the Respondent Oil Co. a SPDES permit renewal application, but Respondent Oil Co. never submitted the renewal application to Staff.
  46. Mr. Evans stated that if the Respondent(s) had filed an application for SPDES permit renewal, Staff would have suspended processing of the renewal application, pursuant to an internal Staff memorandum and in accordance with 6 NYCRR Part 621.
  47. The Respondents continued to pay annual regulatory fees associated with a SPDES permit, even after the March 1, 1993 permit expiration.
  48. The Respondent Oil Co., did not have a SPDES permit from March 1, 1993 to October 31, 1996.

    Discussion:

    The Respondents assert that their payment of annual regulatory fees, should be viewed as a substitute for a valid SPDES Permit. However, Staff assert that pursuant to ECL 72-0201(2) and ECL 72-0602, the Respondent Oil Co. is required to pay regulatory fees regardless of whether they maintain a valid SPDES permit. ECL 72-0201(2) requires that all persons subject to regulation under a state environmental regulatory program including those persons holding existing permits, certificates or approvals under such programs shall be liable for fees authorized by this article on and after April first, nineteen hundred eighty-three (emphasis supplied). ECL 72-0201(2). Further, ECL 72-0602 requires that all persons required to obtain a permit or certificate pursuant to the SPDES program shall submit annually to the Department a regulatory fee. ECL 72-0602.

    Staff contend that it would be illogical to interpret ECL 72-0201(2) and ECL 72-0602 as requiring that only SPDES permittees pay regulatory fees; if that were the case, then persons engaging regulated SPDES activities without a permit would receive the additional economic benefit of avoiding payment of regulatory fees.

    Conclusions of Law:

    11. ECL 72-0602 expressly states that all persons required to obtain a SPDES permit are liable for regulatory fees. See, also, ECL 72-0201(2) [suggesting that persons operating a regulated SPDES pollution source without a permit may be liable for regulatory fees].

    12. The Respondent Oil Co. is responsible for regulatory fees due after March 1, 1993 (the expiration date of their SPDES permit) through November, 1996.

    13. Payment of regulatory fees under ECL Article 72 is not a substitute for a SPDES permit.

    14. The Respondent Oil Co., Inc., violated ECL 17-0505 and 17-0803 by operating the oil-water separator without a SPDES permit from March 1, 1993 to October 31, 1996, a period of 44 months, a total of 44 violations of ECL 17-0505 and 17-0803.

    VI. Alleged MOSF Program and Navigation Law Violations

    A. Alleged Violation of NL 174, Operating an MOSF Without a License.

    It is uncontroverted that the Respondents operate a Major Oil Storage Facility as that term is defined in NL 172, 17 NYCRR 30.2 (c) and 6 NYCRR 610.2 (g)A "major facility" is a facility having a total combined above-ground and underground storage capacity of 400,000 gallons or more..

    Findings of Fact:

  49. The Respondent Oil Co.'s initial MOSF license was issued effective from December 30, 1987 through March 31, 1988.
  50. The Respondent's second MOSF license was issued for the period of May 16, 1988 to March 31, 1989. No MOSF license was issued to the Respondent Oil Co. after expiration of this second MOSF license.
  51. The Respondent Oil Co. filed an MOSF license application for the March 1989 to April 1990 MOSF license year.
  52. In an exchange of correspondence between Department Staff and the Respondent Oil Co., Staff explained that Respondent Oil Co.'s 1988/1989 MOSF license would not be renewed due to the Respondent Oil Co.'s non-compliance with license conditions. Staff further notified the Respondent Oil Co. that operation of the facility after March 31, 1989 without an MOSF license would constitute a violation of Article 12 of the Navigation Law.
  53. The Respondent Oil Co. applied for an MOSF license for the license year of April 1, 1991 through March 31, 1992.
  54. Staff denied that application and the Respondent Oil Co. pursued an administrative appeal of Staff's denial, pursuant to 6 NYCRR Part 610 and 17 NYCRR part 30.
  55. Staff moved to dismiss the appeal on procedural grounds. The Commissioner granted Staff's motion to dismiss, noting that ". . . even considering the merits of Appellant's revised notice of appeal, it is also deficient because it fails to raise any legal defense that could be considered." Commissioner's Decision, Matter of Oil Co., Inc., d/b/a Eagle Oil, DEC License No. 1-1662 (May 13, 1993).
  56. The Respondent Oil Co. continued to operate the facility after issuance of the final agency determination. Each time NCDOH Staff or Department Staff visited the facility they found tanks in use and other indications that the facility was continuing to operate.

    Conclusions of Law:

    15. The Respondent Oil Co., Inc., has not held a valid MOSF license since expiration of its license on March 31, 1989.

    16. The Respondent Oil Co., continuously operated the facility from May 13, 1993 (the date of the Commissioner's Decision on the appeal) to November 13, 1996 (the date of Staff's Amended Complaint) without an MOSF license, in violation of Navigation Law 174 and 17 NYCRR 30.3, a total of 1279 days of continuing violation.

    B. Alleged Violation of NL 174 and 17 NYCRR 30.8, Failing to Submit Monthly Reports of Total Number of Barrels of Product Transferred to the MOSF.

    Each MOSF licensee must submit a monthly report to the Department, indicating the total number of barrels of petroleum transferred to the licensee's facility during the previous month. NL 174(5) and 17 NYCRR 30.8(a). Department Staff request that the Commissioner find that the Respondent Oil Co. has caused 26 violations of 17 NYCRR 30.8 and NL 174(5) because the Respondent Oil Co. failed to file their monthly reports with the Commissioner in May 1992, July 1992 and every month including and since March 1996.

    Findings of Fact:

  57. Office of Management and Budget Head Account Clerk Barbara Barrell is the Department's document custodian for these monthly reports.
  58. Ms. Barrell's affidavit (and the Respondent Oil Co.'s fee report statement, attached to the affidavit), uncontroverted in the record, show that during the months of May 1992, July 1992, March 1996 and every month since March 1996, the Respondent Oil Co.,Inc. has failed to submit these monthly reports to the Department.

    Conclusions of Law:

    17. In Staff's closing brief, Staff moved to amend this cause of action from seven alleged monthly reporting violations to 26 alleged violations. The Respondents did not object to the motion to amend. Staff's motion to amend its pleadings from seven alleged violations to 26 alleged violations is granted.

    18. The Respondent Oil Co. has violated NL 174(5) and 17 NYCRR 30.8(a) by failing to file monthly reports indicating the total number of barrels of petroleum transferred to the facility during the previous month, for the months of May 1992, July 1992 and March 1996 through October 1996 (the month prior to the date of the Complaint), a total of 10 monthly reporting violations.

    C. Alleged Violation of 6 NYCRR 613.6(a) and (c), Failing to Conduct Monthly Facility Inspections and Failure to Maintain Inspection Reports.

    Pursuant to 6 NYCRR 613.6(a) and (c), an MOSF operator must inspect the facility at least monthly, must maintain inspection reports and must make such reports available to Department Staff. Further, under 6 NYCRR 613.6 (c), the monthly inspection reports must be kept by MOSF operators for a period of at least ten years.

    Staff asserts that the Respondents have not filed these reports nor maintained such reports at least since their filing of Oil Co.'s bankruptcy petition in November, 1990.

    Findings of Fact:

  59. Staff inspector Leung testified he had not received monthly inspection reports for the facility; his predecessor, Mr. Hofmann testified that he believes he may have received one or two reports, he but did not receive reports for the facility on a regular basis.
  60. Mr. Leung is the Department's Region 1 document custodian for these reports (as was his predecessor, Mr. Hofmann).
  61. The Respondents offered no evidence that the monthly facility inspections either had been performed or were submitted to the Department.

    Conclusions of Law:

    19. The Respondent Oil Co., failed to perform monthly facility inspections and failed to maintain documentation of such inspections, as required by 6 NYCRR 613.6(a) and (c) from December 1990 through October, 1996, a period of 71 months.

    D. Alleged Violation of 6 NYCRR 613.6(b), Failing to Perform Ten-Year Tank Inspections.

    6 NYCRR 613.6(b) addresses the ten-year inspection requirement for aboveground MOSF storage tanks. Pursuant to 6 NYCRR 613.6(b)(1)(i), the operator of an MOSF must perform a detailed inspection of each aboveground tank having a storage capacity of 10,000 gallons or more. 6 NYCRR 613.6(b)(1) provides the schedule for these inspections and requires that the inspections be performed when the tank is ten years old or within five years of the effective date of the Part 613 regulations, whichever is later. The regulations became effective on December 27, 1985.

    Staff initially asserted that 12 aboveground tanks at the facility were due for a ten-year inspection on December 27, 1990The twelve tan1990 The

    Tank #10: over 10,000 gallons and installed in September 1928;

    Tank #11: over 10,000 gallons and installed in September 1928;

    Tank #12: over 10,000 gallons and installed in April 1977;

    Tank #13: over 10,000 gallons and installed in September 1927;

    Tank #14: over 10,000 gallons and installed in September 1979;

    Tank #15: over 10,000 gallons and installed in January, 1933;

    Tank #18: over 10,000 gallons and installed in January, 1933;

    Tank #19: over 10,000 gallons and installed in January, 1933;

    Tank #20: over 10,000 gallons and installed in January 1933;

    Tank #21: over 10,000 gallons and installed in January, 1933;

    Tank #22: over 10,000 gallons and installed in January, 1933;

    Tank #23: over 10,000 gallons and installed in January, 1933.

    However, Staff have revised the allegation to 11 tanks, because Staff believe that aboveground tank number 13 was eventually taken out of service.

    Findings of Fact:

  62. A July 25, 1991 inspection of the facility revealed that the aboveground tanks appeared to be in poor condition.
  63. By letters dated July 29, 1991 and August 7, 1991 (each addressed to "Mr. William S. Nappo, Sr., Oil Co. Inc., d/b/a Eagle Oil Co."), Staff advised the Respondent Oil Co and the Respondent William S. Nappo, Sr., Sr. that the Respondent Oil Co. must immediately perform ten-year tests on all the aboveground tanks at the facility, as required by 6 NYCRR 613.6.
  64. The Respondent Oil Co. never performed ten-year tank inspections on the aboveground tanks.
  65. The Department Staff eventually hired a contractor, Miller Environmental Group ("MEG"), under the state Spillfund program to perform the ten-year tank inspections.
  66. Through the Respondent Oil Co.'s federal bankruptcy action, the Department received reimbursement of half of the cost of having the inspections performed.
  67. The Respondents have offered no evidence to prove that they caused ten-year tank inspections to be performed on any of the facility's aboveground tanks.
  68. The Respondents' explanation as to why the Respondent Oil Co. did not perform the tank tests, is the Respondent Oil Co.'s status as a bankruptcy petitioner - - i.e., lack of monetary resources for compliance (fifth affirmative defense).

    Conclusions of Law:

    20. The Respondent Oil Co. violated 6 NYCRR 613.6(b) by failing to perform ten-year tank inspections on 11 aboveground MOSF storage tanks, 11 violations of 6 NYCRR 613.6 (b).

    E. Alleged Violation of 6 NYCRR 613.6 (e) and 6 NYCRR 613.9(a), Failing to Take Out of Service Tanks That Have Not Received Ten-Year Inspections.

    Any portion of a facility that is not inspected as required must be taken out of service. 6 NYCRR 613.6(e) and 6 NYCRR 613.9.

    Findings of Fact:

  69. The uncontroverted evidence is that ten-year inspections have not been performed on tanks 12 and 19, yet the Respondent Oil Co. has not taken these tanks out of service, but instead has continued to use these aboveground MOSF tanks.

    Conclusions of Law:

    21. The Respondent Oil Co. violated 6 NYCRR 613.6 (e) by failing to take out of service Tank No. 12 and Tank No. 19; two violations of 613.6 (e).

    F. Alleged Violation of 6 NYCRR 613.6(d) and 6 NYCRR 613.9, Failing to Take Out of Service Deficient Tanks.

    6 NYCRR 613.6(d) requires that remedial measures must be promptly taken to eliminate any other deficiency which could result in failure of the facility to function properly or to store and contain the product in storage. 6 NYCRR 613.6(d); see, also, 6 NYCRR 613.9.

    Findings of Fact:

  70. In the early 1990's, the Department Staff, using state Spillfund resources, contracted with Miller Environmental Group to perform testing, inspections and remedial work at the facility. In turn, Miller Environmental Group subcontracted some of this work to RAF Services, Inc., a professional engineering firm ("RAF"). RAF prepared an Engineering Inspection Report on the Respondent Oil Co.'s bulkhead (dated August 28, 1992; the "Bulkhead Report".
  71. Upon receiving the 1992 engineering inspection report for the Respondent Oil Co.'s bulkhead, Mr. Hofmann, former supervisor of the Department's Region 1 MOSF regulatory program, sent excerpts of the report to N.Y.S. Assistant Attorney General Nancy Stearns. He requested that Assistant Attorney General Stearns advise the bankruptcy court that bulkhead repairs should be made a greater priority than the returning to service any of the facility's tanks then out of service.
  72. Mr. Hofmann sent excerpts of this bulkhead report to the Respondent William S. Nappo, Sr. Mr. Hofmann's September 4, 1992 letter to Respondent William S. Nappo, Sr. states, "I must insist that your tank rehabilitation work exclude tank #Is 18, 21, 22 & 23 until such time that the old bulkhead area is replaced as recommended by the Engineering Report."
  73. Mr. Hofmann attached excerpts from the report to his letter:

    (Section 5.2 Evaluation of Findings: "The failure of the old bulkhead has allowed tidal influences to effect the foundation and the secondary containment and potentially the tanks within this secondary containment. An observation of tanks 22 and 23 which appear to have significant uneven settlement, is that the failure of the old bulkhead may be a contributing factor to this uneven settlement. Tank 18 and to a lesser extent Tank 21, based upon preliminary data supplied by PC Engineering also show signs of unacceptable settlement" (Exhibit 126).

  74. The Bulkhead Report prepared by RAF Services, Inc. recommends that the old existing bulkhead should be abandoned and the new existing bulkhead extended approximately 100 feet.
  75. On September 9, 1992, Mr. Hofmann had a conversation with the Respondent William S. Nappo, Sr. and the Respondent stated that tanks 18, 21, 22 and 23 would not be put back in service until the bulkhead was repaired.
  76. Further, on September 25, 1992, Department Staff obtained an Order of the Bankruptcy Court (Judge Robert John Hall) that prohibited the Respondent Oil Co. from putting the four tanks back into service until necessary repairs on the old bulkhead were completed.
  77. The Respondents never notified Department staff that the old bulkhead had been repaired, but regularly continued to use tanks 18, 21, 22 and 23 after September 25, 1992.
  78. Some work had been performed on the bulkhead. During his November 28, 1995 inspection, Mr. Leung observed gravel and a cap on top of the bulkhead area that were apparent recent additions. But, Staff had no knowledge of the nature or extent of work performed on the bulkhead.
  79. On February 5, 1997, the old bulkhead was buckling slightly. On previous inspections, Mr. Leung observed that the bulkhead cap was flat, but on February 5, he found that the sheet metal was slightly creased in one section, indicating some movement problem or settlement problem within the bulkhead area.

    Discussion:

    The Respondents assert that necessary repairs to the old bulkhead were performed, consistent with the Bankruptcy Court's Order. In furtherance of this contention, Michael Rowe, P.E., stated that he reviewed the bulkhead report and had inspected the bulkhead. He interpreted the report statement that "the failure of the old bulkhead may be a contributing factor to this uneven settlement" as hypothesis requiring further study. To that end, Mr. Rowe stated that his firm performed a computer modeling analysis of the bulkhead structure. Based upon this information, Mr. Rowe provided an opinion that the bulkhead is a structure "with integrity". However, the Respondents never provided the computer modeling data to Staff or offered that data into evidence. This omission seriously detracts from the credibility of Mr. Rowe's opinion that the bulkhead is a structure with integrity. Therefore, Mr. Rowe's testimony on this issue, unsupported by the modeling data, is given minimal evidentiary weight.

    Conclusions of Law:

    22. The Respondent Oil Co. violated 6 NYCRR 613.6(d) and 613.9 both because the Respondent failed to inform Department Staff of any bulkhead work performed and because the Respondent never submitted any reports or other documentation to the Department to show that bulkhead repairs had been performed and that the bulkhead is structurally sound.

    G. Alleged Violation of 6 NYCRR 613.3(c)(6), Failing to Maintain Adequate Secondary Containment at the Facility.

    A secondary containment system must be installed around any MOSF aboveground tank and must be constructed so that spills of petroleum and chemical components of petroleum will not permeate, drain, infiltrate or otherwise escape to the groundwaters or surface waters before cleanup occurs. 6 NYCRR 613.3(c)(6).

    Findings of Fact:

  80. The secondary containment system at the facility is cracked and has not been repaved or otherwise repaired. It has been in such a condition at least since Mr. Leung has held his present position with the Department.
  81. The facility's secondary containment system has exhibited such cracks and has remained unrepaired since January 1, 1993.

    Conclusions of Law:

    23. The cracked condition of the secondary containment system would allow any petroleum spill to penetrate into the land and the subsurface, eventually impacting the groundwater.

    24. The Respondent Oil Co. violated 6 NYCRR 613.3(c)(6). Although Staff allege this violation continues since April 1990, the record supports a violation period beginning January 1, 1993 (through November 13, 1996, the date of the Complaint).

    H. Alleged Violation of 6 NYCRR 613.3(b), Failing to Color Code Fill Ports at the Facility.

    Pursuant to 6 NYCRR 613.3(b), MOSF operators must permanently mark all tank fill ports to identify the product inside the tank. Staff assert that the Respondent Oil Co. Has failed to comply with 6 NYCRR 613.3(b). Staff seek assessment of a single violation on this allegation, although additional penalties could be sustained.

    Findings of Fact:

  82. The Respondent Oil Co. failed to color code the pipelines and the tank fill ports at the facility.
  83. At least since 1993, the pipelines and the tank fill ports have not been color coded.

    Conclusions of Law:

    25. The Respondent Oil Co., Inc. violated 6 NYCRR 613.3(b) by failing to color code the pipelines and the tank fill ports at the facility.

    I. Alleged Violation of 6 NYCRR 613.5(a), Failing to Perform Tightness Tests for the Underground Storage Tanks at the Facility.

    Pursuant to 6 NYCRR 613.5(a), MOSF underground petroleum storage tanks must be tightness tested in accordance with the schedule set forth in that regulation. The schedule identifies three categories of tanks, "A" through "'C". Category A tanks are unprotected, and require initial testing when the tank is 10 years old; Category B tanks are corrosion resistant and require initial testing when the tank is 15 years old. Category A and B tanks require retesting every 5 years after the initial test. Category C tanks are corrosion resistant and have a leak protection system or are new tanks installed in conformance with 6 NYCRR Part 614. 6 NYCRR 613.5(a). Pursuant to 6 NYCRR 613.9(c), the owner of a tank which is permanently closed must notify the Department prior to closure of the tank.

    Staff assert that the Respondent Oil Co.'s most recent MOSF license application identifies four underground petroleum storage tanks at the facility: Tank #26 (installation date of June 1976) and Tank #29 and Tank #30 (installation date of January 1977). The license application identifies no installation date for Tank #28. The Respondent Oil Co. has not filed any underground tank tests with the Department for Tanks #26, #28 #29 and #30. Staff contends that the Respondent Oil Co. has not informed the Department that the four tanks have been removed or abandoned, citing 6 NYCRR 613.9(c). Staff concludes that since the four tanks have not been removed or abandoned, it is reasonable to presume that the Respondent Oil Co. has continued using these four underground storage tanks.

    The Respondents submitted no evidence to rebut a presumption that the Tanks are Category A tanks. 6 NYCRR 613.5(a), Table 1. Nor did the Respondents offer any evidence that the Respondent Oil Co. has abandoned or removed these tanks, or that the four tanks ever have been tightness tested. However, 6 NYCRR 613.9(c) requires the owner, not the operator of a tank which is permanently closed to notify the Department prior to closure of the tank. Pursuant to 6 NYCRR 613.1(c), the definitions of 6 NYCRR 612.1(c) apply to Part 613. 6 NYCRR 612.1(c)(18) defines an owner as any person who has legal or equitable title to the facility. 6 NYCRR 612.1(c)(16) defines an operator as any person who leases, operates, controls or supervises a facility.

    Conclusions of Law:

    26. The Respondents do not deny that the Respondent Oil Co. operates the facility (other than the six month period identified in their affirmative defense). However, Staff have not proven that the Respondent Oil Co. is the owner of the facility. 6 NYCRR 612.1(c)(18). Therefore, this allegation should be dismissed.

    J. Alleged Violation of 6 NYCRR 613.6(d), Failing to Perform Remedial Measures on Aboveground Storage Tanks at the Facility.

    Pursuant to 6 NYCRR 613.6(d), if an inspection reveals any deficiency that could result in failure of an MOSF facility to function properly or to store and contain the petroleum product in storage, then remedial measures must be taken promptly to eliminate the deficiency.

    Staff assert that since 1992, ten aboveground storage tanks at the facility have had deficiencies that could result in the failure of the tanks to function properly or store and contain the product in storage. Staff further assert that the Respondent Oil Co. has taken no remedial measures to remedy the deficiencies, in violation of 6 NYCRR 613.6(d).

    Findings of Fact:

  84. Due to Respondent Oil Co.'s status as a federal bankruptcy petitioner, Staff contracted with Miller Environmental Group to perform inspections, tests and remedial work at the facility.
  85. Inspection of the facility's aboveground tanks was performed by MEG. The tank inspection requires temporarily taking the tank out of service.
  86. MEG subcontracted preparation of the final engineering tank inspection reports to RAF Services, Inc. (Exhibits 116 through 125 are the final engineering tank inspection reports for the ten tanks at issue, each certified by an RAF Professional Engineer.)
  87. RAF prepared the ten aboveground storage tank reports between August 1992 and November 1992 (the "tank report[s]"].
  88. The tank report certification for each report states that it is complete technically and acceptable for laboratory test, field measurements for thickness and other information contained in the report.
  89. Following is a summary of tank deficiencies summarized in the Engineering Tank Inspection Reports for the ten tanks:

    1) Tank #11

    The final Engineering Tank Inspection Report for Tank #11 indicates that "the existing tank foundation will require some repair and grouting... Recommendations have been made to install an epoxy coating/sealer on the tank interior, repair the existing tank nozzle and to perform a full hydrostatic test prior to returning the tank to service." Exhibit 116, 0, Inspection Certification.

    2) Tank # 15

    The final Engineering Tank Inspection Report for Tank 15 indicates that "[t]he tank was found to have a failed floor. A large hole was found just at the base of the girth weld. The existing floor must be replaced with a new double bottom... The floating roof seal must be replaced and upgraded to include both primary and secondary seals, and skirting needs to be added to the perimeter of the roof..." Exhibit 117, 0, Inspection Certification.

    3) Tank #20

    The final Engineering Tank Inspection Report for Tank 20 indicates that "[t]he shell and floor plate rivets have corroded in some areas and these should be repaired... The Center column support should be modified to comply with [engineering standard] API 650. The floating roof seal must be replaced and upgraded to include both primary and secondary seals and the support legs for the roof repaired..." Exhibit 118, 0, Inspection Certification.

    4) Tank #23

    The final Engineering Tank Inspection Report for Tank 23 indicates that "[t]he tank "as is" should be condemned. All portions of the tank from the existing floor and below should be removed. A new foundation (sic] installed and new floor installed on which the existing tank shell may be properly reutilized if the tank is to be returned to service... The tank was found to have significant problems. The tank shell has shifted, and is off center from its foundation support. The tank foundation will require extensive leveling and reconstruction in order to allow this tank to return to service." Exhibit 119, 0, Inspection Certification.

    5) Tank #21

    The final Engineering Tank Inspection Report for Tank 21 indicates that "[t]he tank was found to have settlement problems. The tank shell will have to be leveled to correct out-of-plumb and out-of-plane conditions. The tank shell in the area of a 2 inch by 5 foot insert should be repaired... The existing second floor is fillet welded on one side only and is nonconforming... A number of tank penetrations must be modified to meet API 650/653 standards..." Exhibit 120, 0, Inspection Certification.

    6) Tank #22

    The final Engineering Tank Inspection Report for Tank 22 indicates that "[t)he tank was found to have significant problems. The tank foundation will require extensive leveling and reconstruction. The tank floor has a double bottom. The floor plates have been installed in a nonstandard orientation and the sketch plate extension is below standard..." Exhibit 121, 0, Inspection Certification.

    7 ) Tank #18

    The final Engineering Tank Inspection Report for Tank 18 indicates that "[t]he tank was found to have a number of problems which include the following: The tank foundation will have to be releveled to correct the tilt of the tank shell. The existing epoxy/fiberglass floor covering should be removed to allow a thorough inspection of the steel floor plates. The lower shell rivets have corroded in some areas and will require some form of repair..." Exhibit 122, 0, Inspection Certification.

    8 ) Tank #14

    The final Engineering Tank Inspection Report for Tank 14 indicates that "... The center column support should be modified to comply with API 650. The floating roof seal must be replaced and upgraded to include both primary and secondary seals and the support legs for the roof repaired. The floating roof column and gauge tube seals require replacement and skirting needs to be added to the perimeter of the roof..." Exhibit 123, 0, Inspection Certification.

    9) Tank #13

    The final Engineering Tank Inspection Report for Tank 14 indicates that "[t]he tank was found to have a number of problems which include the following: The tank foundation will have to be releveled to correct the tilt of the tank shell. The existing epoxy floor covering should be removed to allow a thorough inspection of the steel floor plates. The lower shell rivets have corroded in some areas and will require some form of repair..." Exhibit 124, 0, Inspection Certification.

    10) Tank #10

    The final Engineering Tank Inspection Report for Tank 14 indicates that "... the interior girth weld had some pitting which should be grounded out and rewelded. The existing tank nozzles and two other penetrations were found not to meet API standards and these should be modified to meet the existing standards... Additionally, the existing tank foundation will require some repair and grouting." Exhibit 125, 0, Inspection Certification.

    Discussion:

    The Respondents presented testimony to attempt to show that they performed some repairs to several of the tanks. But, Staff witness Leung stated that the Respondents never provided any documentation to the Department Staff to show that any repairs had been made to any of the tanks. More than 20 inspection reports show that the Respondent Oil Co. restored the ten tanks to service and continued to use them. In view of the Respondent Oil Co.'s lack of any documentation of repairs, the Respondents' evidence is given little weight.

    Conclusions of Law:

    27. Each of the ten aboveground storage tanks have deficiencies that could result in the failure of the facility to function properly or store and contain the product in storage, within the meaning of 6 NYCRR 613.6(d).

    28. The Respondent Oil Co.'s failure to repair any of the tanks and Respondent's continued use of each tank without repair, constitutes a violation of 6 NYCRR 613.6(d). The Respondent Oil Co., Inc. failed to repair any of the ten tanks identified above, and continued using these deficient tanks in violation of 6 NYCRR 613.6(d), as follows:

    Tank #10: 9/l/92 through 11/16/96 = 1536 days

    Tank #11: 9/l/92 through 11/16/96 = 1536 days

    Tank #13: 9/l/92 through 11/16/96 = 1536 days

    Tank #14: 9/l/92 through 11/16/96 = 1536 days

    Tank #15: 9/l/92 through 11/16/96 = 1536 days

    Tank #20: 9/l/92 through 11/16/96 = 1536 days

    Tank #21: 9/l/92 through 11/16/96 = 1536 days

    Tank #22: 9/l/92 through 11/16/96 = 1536 days

    Tank #23: 9/l/92 through 11/16/96 = 1536 days

    Tank #18: 12/l/92 through 11/16/96 = 1445 days;

    a total of 15,269 days.

    K. Alleged Violation of 6 NYCRR 613.3(c)(6)(iv), Failing to Discharge Stormwater That Was Uncontaminated and Free of Sheen.

    Pursuant to 6 NYCRR 613.3(c)(6)(iv), stormwater or any other discharge at a facility must be uncontaminated and free of sheen prior to discharge; and stormwater which is contaminated must be treated to reduce petroleum concentration to 15 parts per million or less and to remove any visible sheen prior to discharge. 6 NYCRR 613.3(c)(6)(iv). Staff have treated this allegation as one violation for purposes of penalty assessment, although additional penalties could be sustained.

    Findings of Fact:

  90. Both Mr. Leung and his predecessor, Mr. Hofmann, observed a sheen on Mott Basin near the oil/water separator outfall, during facility inspections.
  91. Specifically, Mr. Hofmann observed a sheen on the surface water at the area of the eroded bulkhead during his site inspection of August 27, 1992.
  92. Mr. Leung observed a sheen on Mott Basin during his site inspections of March 8, 1993 and January 20, 1995. During the January 20, 1995 inspection, Mr. Leung issued a Request for Immediate Cleanup form to the Respondent Oil Co.
  93. Mr. Myslinski also reported observing sheen during his inspections of the facility.
  94. The Respondent Oil Co.'s DMR's show that the facility's stormwater discharges had petroleum concentrations in excess of 15 parts per million as required by the modified permit.

    Conclusions of Law:

    29. The Respondent Oil Co. violated 6 NYCRR 613.3(c)(6)(iv) on at least three occasions because discharges at a facility were not uncontaminated and free of sheen prior to discharge and because the Respondent Oil Co. failed to treat stormwater to remove visible sheen prior to discharge. At Staff's request, this has been treated as one violation for purposes of penalty calculation.

    VII. Liability of the Individual Respondents William S. Nappo, Sr. and William K. Nappo, Jr.

    The Respondents allege in their fourth affirmative defense that neither Respondent William S. Nappo, Sr. nor Respondent William K. Nappo, Jr. have any personal liability in this matter. The Respondents further allege in their seventh affirmative defense that the Respondents William S. Nappo, Sr. and William K. Nappo, Jr. acted solely in their capacity as President, Director or officer of Oil Co.

    The Staff, in asserting personal liability of these Respondents, rely upon United States v. Park, 95 S. Ct. 1903 (1975), United States v. Dotterweich, 65 S. Ct. 134 (1943), United States v. Hodges X-Ray, Inc., 759 F.2d 557 (6th Cir. 1985), U.S. Pollution Abatement Services of Oswego Inc., 763 F.2d 133 (1985), New York Site Development Corporation. v. NYSDEC, No. 18,899-92 (N.Y. Supreme Court (J. Sol Dunkin, Queen's County), March 9, 1993), Avory L. Clark v. Pinehill Homes, 112 A.D.2d 755 (4th Dept. 1985), In the Matter of Ronald Edgar, Productive Recycling, Inc., and Productive Recycling Corporation, (Commissioner's Order, June 18, 1993; 1993 WL 267974), In the Matter of Jackson's Marina, Inc., Gordon Jackson, James H. Rambo, Inc. and Thomas Samuels, (Commissioner's Order, November 6, 1991 [NYSDEC Files Nos. 1-1967 and 1-3563]) and In the Matter of Lillian Costanzo, Frederick DeCaprio and Nationwide Exterminating & Deodorizing, Inc. (Commissioner's Order, Feb. 4, 1988 [1988 WL 1582941).

    A corporate officer may be held criminally liable for violations of statutes enacted to protect public health, safety and welfare, where that officer had the authority and responsibility to prevent the violation. Further, the rationale for holding corporate officers responsible is more persuasive where only civil liability is involved. In cases where the statutory violation does not require any showing of wrong doing, 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. Dotterweich, supra, Hodges X-Ray, supra, In the Matter of Galfunt and Hudson Chromium Co. Inc., Commissioner's Order, May 5, 1993, Productive Recycling, supra, Jackson's Marina, supra,

    Findings of Fact:

  95. The Respondent William S. Nappo, Sr. was a principal, President, and Chief Executive Officer of Respondent Oil Co. at all relevant times.
  96. The Respondent William K. Nappo, Jr. was Secretary of Respondent Oil Co. and day to day manager of the facility at all relevant times.
  97. The Respondents William S. Nappo, Sr. and William K. Nappo, Jr. were the two individuals who represented the Respondent Oil Co., during Department Staff's site visits. For example, Mr. Myslinski testified that in August, 1992, the Respondent William S. Nappo, Sr. stated that he (Nappo, Sr.) was the principal person in charge of the facility and he had final decision making capacity concerning the facility.
  98. Staff addressed virtually all correspondence regarding the facility to the Respondent William Nappo, Sr. or the Respondent William Nappo, Jr. They were the corporate representatives from whom responses were received on matters including discharge monitoring reports, permit applications, and letters regarding violations found or work being performed at the site.
  99. The Respondents William Nappo, Sr. and William Nappo, Jr. were the two individuals with whom other agencies (the Nassau County Department of Health and the Fire Marshall) met during visits to the site.
  100. The Respondent William K. Nappo, Jr. was responsible for the hiring employees, contractors and consultants for the corporate Respondent, Oil Co.
  101. The Respondent William S. Nappo, Sr. personally assumed and paid corporate debts of the Respondent Oil Co., in excess of a million dollars.

    Conclusions of Law:

    Respondent William S. Nappo, Sr.

    30. The Respondent William S. Nappo, Sr., in conjunction with Respondent William K. Nappo, Jr., was day-to-day manager of the Respondent Oil Co., Inc. He was a high managerial agent of the corporate Respondent Oil Co., Inc., and was in a position to prevent the corporate violations that occurred at the facility.

    31. Therefore, the Respondent William S. Nappo, Sr., is liable for the violations of the corporation both in his capacity as principal, President and Chief Executive officer of Oil Co., Inc. and personally.

    Respondent William K. Nappo, Jr.

    32. The Respondent William K. Nappo, Jr. (Nappo Jr.), in conjunction with Respondent William S. Nappo, Sr., was day-to-day manager of the Respondent Oil Co. The Respondent William K. Nappo, Jr. was a high managerial agent of the corporate Respondent Oil Co., and was in a position to prevent the corporate violations that occurred at the facility.

    33. Therefore, the Respondent William K. Nappo, Jr., is liable for the violations of the corporation both in his capacity as Secretary of Oil Co., Inc. and personally.

Relief

  1. Civil Penalties

    Since the Respondents have not challenged Staff's factual evidence, Staff's request for monetary penalties is granted, as modified below.

    The Department Staff seeks a total penalty in this matter of $4,382,679.00 as follows:

    Violation Penalty
    First Cause of Action (Air Violations) $65,000
    Sixth Cause of Action (Tidal Wetland Violations) $150,000
    Eleventh Cause of Action (SPDES/Water Violations) $634,679
    Twelfth Cause of Action (MOSF violations) $3,533,000
    Total penalty requested by Staff $4,382,679

    Staff have revised its monetary penalty request to conform to the proof at hearing. Staff justifies its request for this monetary penalty based upon six factors:

    (1) The Respondents have operated and continue to operate the facility without required environmental permits, including an MOSF license, a SPDES permit and a certificate to operate an air contamination source.

    (2) The Respondents' facility has not been in compliance since soon after Respondents first began operating the facility.

    (3) The Respondents have caused actual environmental harm, particularly to Mott Basin including discharge of petroleum constituents to the waters of Mott Basin, harm to fish in Mott Basin which is a class I receiving water and harm to the tidal wetlands caused by petroleum contamination.

    (4) The Respondents have demonstrated their unwillingness to cooperate with the Department and to remediate or upgrade the facility in any manner.

    (5) The Respondents' violations are numerous and cover a multitude of programs.

    (6) The Department Staff do not seek the maximum penalties authorized under the law. Instead, Staff calculated an economic benefit component only with respect to the SPDES or water program violations.

    Staff's SPDES penalty calculation is consistent with the Department's Civil Penalty Policy (page 5, "Benefit Component Analysis") and the Water Program Enforcement Guidance Memorandum (issued December 13, 1984; Penalty for Past Violations and (I)(A)(2), Economic Benefit). Staff's SPDES penalty calculation shows that in circumstances similar to Oil Co.'s, other facilities have upgraded or replaced inadequate oil/water separators and have added additional treatment systems. Staff calculated the economic benefit realized by the Respondent Oil Co. for not replacing its oil/water separator, at $114,179.00. This amount has been reduced to $102,580.00, to reflect a period of May 1, 1991 through November 13, 1996.

    The Respondents, to a large extent, have not disputed Staff's factual evidence. Instead, the Respondents have argued that due to the Respondent Oil Co.'s bankruptcy status (or other affirmative defenses interposed), penalties are inappropriate or should be mitigated. This report rejects the Respondents affirmative defenses. Moreover, the Respondent's bankruptcy status is not a sufficient reason to mitigate penalties. Civil Penalty Policy, IV(E)(4) (issued June 20, 1990). Although Staff notified the Respondents of the Civil Penalty Policy (and other Departmental guidance documents) in the Notice of Hearing, the Respondents made no attempt to provide a penalty assessment analysis consistent with the guidance provided therein. For example, the Respondent Oil Co.'s accountant testified in this proceeding and made reference to corporate tax returns, but the Respondents failed to offer any tax returns or similar financial documentation into evidence.

    In their Reply Brief, the Respondents for the first time raise the issue that permit denial, suspension or refusal to renew a permit is prohibited by the Bankruptcy Code, citing U.S. Bankruptcy Code, Article 525 and 262. Previously, by pre-hearing motion, the Respondents unsuccessfully sought to dismiss this administrative action, asserting that it is stayed by the federal bankruptcy law automatic stay provision. The Respondents' present argument is untimely and will not be considered further.

    Staff's request for monetary penalties have been adopted, other than as revised. Attached to this report is a penalty chart reflecting Staff's requested monetary penalty and the recommended monetary penalty for each allegation that has been proven (Penalty Chart, "Appendix A").

  2. Permit Denial (Record of Compliance)

    The Respondents have been operating and continue to operate the facility without any Departmental permits. The Respondents have filed a new application for an air permit (for their vapor recovery system). The Respondents have operated the facility since 1987 without a certificate to operate an air contamination source, and only filed an application for that permit in 1992. Staff have suspended processing of that application pending a disposition on this enforcement action. The record reflects that the Respondents have not reapplied for a new MOSF license, since unsuccessfully appealing Staff's denial of their renewal application, and have not filed a SPDES permit renewal application (or new application) since the expiration of their SPDES permit in 1993.

    Staff have proven a lengthy history of violations in this action and contends that if the Respondents had any permits, Staff would be seeking to revoke these permits as part of this matter. However, in making this statement, Staff ignores the application for a Certificate to Operate an air contamination source, which is pending before the Department.

    Staff request that the Commissioner apply the Department's Record of Compliance Enforcement Guidance Memorandum (issued February, 1993; hereinafter referred to as "ROC-EGM") to find the three Respondents unsuitable to hold Departmental permits. This is a determination that could be reviewed only in the circumstance where Staff have moved to revoke or deny permits. However, Staff's Complaint provides no notice to the Respondents of Staff's intent to deny the Respondent Oil Co.'s pending air permit application (The Respondents neither hold nor have applied for any other permits). Therefore, a "record of compliance" determination regarding the individual Respondents William S. Nappo, Sr. and William K. Nappo, Jr. and the corporate Respondent Oil Co., should await a determination by Staff to deny that permit (certificate to operate) with notice to the Respondents, consistent with the provisions of 6 NYCRR Part 621. Following the Commissioner Decision in this matter, Staff should immediately resume review and processing of the Respondents' application for the Certificate to Operate.

    In any event, the facility cannot operate without the MOSF, SPDES and air permits. Therefore, the Commissioner should order the Respondents to close the facility until such time as they may obtain the necessary Departmental permits.

Recommendations

1) The Respondents should be found liable for violations as discussed above. Monetary penalties should be imposed as set forth above and in the Penalty Chart, Appendix A;

Violation Penalty
Air Violations (First Cause of Action) $60,000.00
Tidal Wetland Violations (Sixth Cause of Action) $150,000.00
SPDES/Water Violations (Eleventh Cause of Action) $628,080.00
MOSF violations (Twelfth Cause of Action) $2,661,600.00
total monetary penalty $3,499,680.00

2) Penalties should be imposed jointly and severally on the Respondents Oil Co., Inc., d/b/a Eagle Oil, William S. Nappo, Sr., in his capacity as President and CEO of Oil Co., Inc., and personally and William K. Nappo, Jr. in his capacity as Secretary and manager of Oil Co., Inc., and personally.

3) The Commissioner should direct that within thirty days from the date of the Commissioner's Order, the Respondents must take all the tanks at the facility permanently out of service in accordance with the requirements of 6 NYCRR 613.9(b); and further, the Respondents must submit a plan to Department Staff for the closing down of the MOSF storage tank vapor recovery system air contamination source for Staff's review and approval.

4) The Commissioner should direct that within thirty days from the date of the Commissioner's Order, the Respondents must submit to the Department Staff a tidal wetlands restoration plan capable of Department approval; further, that the plan must address restoration of the tidal wetlands and adjacent area and navigable water resources of the site, and also must include an implementation schedule; further, that upon the Department Staff's review and approval of the restoration plan, the Respondents shall implement the plan. The Commissioner should direct that the Respondents consult with the Department Staff's reviewing unit sufficiently in advance of the submittal date for document approval, to assure that the document will be capable of approval, and should allow thirty days for any preliminary Staff review desired. ("Capable of Department approval" means the Department Staff can grant approval, as determined solely by the Staff, after minimal revision. "Minimal revision" means that the Respondents can incorporate such revision as indicated by the Department Staff; resubmit the required document within fifteen days after receiving Staff's comments; and obtain subsequent Staff approval of the document.)

5) Any charges for which penalties have not been recommended should be dismissed.

Appendix A

Penalty Calculation Chart
Oil Co., Inc., d/b/a Eagle Oil, et al.
NYSDEC Case No. R1-5340-93-05
Staff's Alleged Violation Statute/Regulation Maximum Statutory Monetary Penalty Staff's Request ALJ Recommendation
AIR ECL 71-2103
$10,000.00 plus
$10,000.00 per day
Failure to possess
Certificate to Operate from
11/90 to 1998
(7 yrs)
(Hrg. Rpt. III A)
6 NYCRR 200.7,
6 NYCRR 201.2[b]
and 6 NYCRR 229.7
$5,000. x 7 yrs
= $35,000.00
$30,000.00
($5,OOO. x 6 yrs; 11/90 to 11/96)
Filling trucks while vapor
recovery system not operating
(III B)
6 NYCRR 229.7 $10,000. x 3
occasions =
$30,000.00
$30,000.00
Improper Maintenance of an
Air Contamination Source
(III C)
6 NYCRR 200.7 $0.
(Staff requested
no penalties in
its Complaint)
$0.
(81 days of violation)
Total Air Penalty: $60,000.00
TIDAL WETLANDS ECL 71-2503
$10,000.00 per day of
continuing violation
Disposal of petroleum
products into a tidal wetland
without a permit
(IV A)
6 NYCRR 661.5(b)
(52) and 661.8
$5,000. X 30
occasions =
$150,000.00
$150,000.00
Total Tidal Wetlands Penalty: $150,000.00
SPDES/WATER
[SPDES Permit Conditions eff.
from May 1, 1991 through February 28, 1993]
ECL 71-1929
$25,000.00
per day of
violation
Exceeding SPDES Limitations
(Toxic, DMR's and Sampling)
(V [A])
ECL 17-0803,
6 NYCRR 751.1(a)
39 Violations x
$1000. =
$39,000.00
$39,000.00
Failure to Report Toxic
Limitation Parameters on DMR's
(V [C])
ECL 17-0803,
6 NYCRR
751.1(a)
6 Violations x
$1000. =
$6,000.00
$6,000.00
Failure to Report Non-Toxic
Limitation Parameters on
DMR's (V [C])
ECL 17-0803,
6 NYCRR
751.1(a)
17 Violations x
$500 =
$8,500.00
$8,500.00
Non-Submittal, DMR's (V [B]) ECL 17-0803,
6 NYCRR
751.1(a)
6 Violations x
$4500. =
$27,000.00
$27,000.00
Non-Submittal, NCR's
(V [D])
ECL 17-0803,
6 NYCRR
751.1(a)
10 Violations x
$500. = $5,000.
$5,000.00
Discharging Unpermitted
Toxics (V[E])
ECL 17-0507
(and SPDES
Permit
Condition)
15 Violations x
$1,000. =
$15,000.00
$0. (Dismissal of this
charge is recommended)
Discharging without a valid
SPDES permit from
March 1, 1993 through
September 30, 1997 (V [F]
Discharge w/o permit 42
monthly violations x
$ 10,000. = $420,000.00
$440,000.
(March 1, 1993 through
October 30, 1996 =
44 months x $ 10,000.)
SPDES Economic Benefit
Realized by Non-Compliance:
Initial Capital Cost (Relief )
New Separator +
Carbon =$40,000.00
$40,000.00
SPDES Economic Benefit
Realized by Non-Compliance:
Cost of Capital (Relief )

Cost of Capital
(Pert - P) =
$31,279.00
(Time Delay =
May 1, 1991 through
September 30, 1997 =
2343 days,
Interest Rate =9%)
$26,280.00
(Time Delay = May 1, 1991
through November 13, 1996
= 2049 days;
P = $40,000.;
e = natural log = 2.178
r = Interest Rate = 9%;
t = Time in years = 5.614
ert = 1.657)
SPDES Economic Benefit
Realized by Non-Compliance:
(Relief)
Monthly O&M
(Elect. + Carbon
+ Maint.) =$550/month x 78
months =$42,900.
(total economic benefit
calculation =$114,179.00)
$36,300.00
($550./month x 66 months)
(total economic benefit
calculation = $102,580.00)
Total SPDES Penalty $628,080.00
MOSF ECL 71-1929
and NL 192
$25,000.00
per day of
violation
Operation of the MOSF
facility without an MOSF
License (VI [A])
NL 174 and
17 NYCRR 30.3
$987,500.00;
(August 1, 1992
to December 31,
1997; 1975 days
x $500./day)
$639,500.00;
(May 13 1993 to November
16 1996; total #
violation days = 1279 days
x $500.00/day)
Failure to submit and failure
maintain monthly reports
indicating the total number
of barrels of petroleum transferred
to the licensee's facility
(June and July, 1992 = 2 months;
1996 and 1997, 24 months;
= 26 monthly violations) (VI [B])
NL 174 and 17
NYCRR 30.8
26 x $5,000. per
violation =
$130,000.00
$50,000.00
(May and July, 1992; March
1996 through October 1996,
= 10 monthly violations x
$5,000. per violation)
Failure to conduct monthly
facility inspections and
failure to maintain reports
of such inspections
December, 1990 plus 1991
through 1997 (12 x 7 = 84
violations)= 85 monthly
violations (Calculated since
November 13, 1990
(Bankruptcy Petition Date) (VI [C])
6 NYCRR 613.6
(a) and (c)
85 x $1,000. per
violation =$85,000.00
71 x $1,000. per violation
= $71,000.00
(December, 1990 through October
1996 = 71 monthly violations
Failure to perform ten-year
inspections (Tanks 10, 11, 12,
14, 15, 18, 19, 20, 21, 22, 23) (VI [D])
6 NYCRR 613.6 (b) 11 tanks x$10,000
/violation =$110,000.00
$110,000.00
Failure to close tanks 18,
21, 22 & 23 (Continuing
Violations) (VI [F])
6 NYCRR 613.9 (a) 4 tanks x$10,000
/violation =$40,000.00
$40,000.00
Failure to close tanks 12 and
19 (Continuing Violations) (VI [E])
6 NYCRR 613.6(e)
and 613.9 (a)
2 tanks x$10,000
/violation = $20,000.00
$20,000.00
Failure to maintain adequate
secondary containment
(Calculated from November 13,
1990 to December 31, 1997:
1990 = 45 days; 1991
to 1997 =365 x 7 = 2555;
a total of 2600 violation days (VI [G])
6 NYCRR 613.3 (c)(6)(i) 2,600 days x$100.00
/day = $260,000.00
$141,500
(1,415 days x $100.00/day;
January 1, 1993 to
11/16/96 = 1415 total
violation days)
Failure to color code fill ports
(Calculated as a one time violation)(VI [H])
6 NYCRR 613.3 (b) 1 x $10,000. =
$10,000.00
$10,000.00
Failure to tightness test tanks
27,test tanks 29(Calculated
as a one time violation)(VI [I])
6 NYCRR 613.5 (a) 1 x $10,000. =
$10,000.00
$0. (Dismissal of this
charge is recommended)
Failure to perform remedial measures:
Tank #10 (9/1/92 through 1997 = 1945 days)
Tank #11 (9/1/92 through 1997 = 1945 days)
Tank #13 (9/1/92 through 1997 = 1945 days)
Tank #14 (9/1/92 through 1997)= 1945 days
Tank #15 (9/1/92 through 1997) = 1945 days
Tank #20 (9/1/92 through 1997 = 1945 days)
Tank #21 9/1/92 through 1997 = 1945 days)
Tank #22 (9/1/92 through 1997 = 1945 days)
[cont'd in next cell]
6 NYCRR 613.6(d) $1,936,000.00
(19,360 days x
$100.00 per day)
$1,559,600.00 (15,269 days x $100.00/day)
Tank #10 (9/1/92 through 11/16/96 = 1,537 days)
Tank #11 (9/1/92 through 11/16/96 = 1,537 days)
Tank #13 (9/1/92 through 11/16/96 =1,537 days)
Tank #14 (9/1/92 through 11/16/96) = 1,537 days
Tank #15 (9/1/92 through 11/16/96) = 1,537 days
Tank #20 (9/1/92 through 11/16/96 = 1,537 days)
Tank #21 9/1/92 through 11/16/96 = 1,537 days)
Tank #22 (9/1/92 through 11/16/96 = 1,446 days)
[cont'd in next cell]
Tank #23 (9/1/92 through 1997= 1945 days)
Tank #18 (12/1/92 through 1997
= 1855 days); a total of 19,360 days (VI [J])
Tank #23 (9/1/92 through
11/16/96 = 1,945 days)
Tank #18 (12/1/92 through
11/16/96 = 1,446 days);
a total of 15,596 days
Failure to properly treat stormwater
treat stormwaterscharges(Calculated
as a one time violation)(VI [K])
6 NYCRR 613.3(c)(6)(iv) 1 x $20,000.00 $20,000.00
Total MOSF Penalty $2,661,600.00
Total Monetary Penalty $3,514,680.00
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