Saddle Mountain Corp Inc. - Ruling, March 6, 2002
Ruling, March 6, 2002
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
In the Matter of the Alleged Violations of Article 17 of the Environmental Conservation Law
- by -
Saddle Mountain Corporation, Inc. DBA Camp Timber Lake
RULINGS OF THE ADMINISTRATIVE LAW JUDGE
File No. R4-2001-1022-132
This action began with service of a complaint dated December 14, 2001. The complaint alleges that the Respondent, Saddle Mountain Corporation, Inc., owns and operates Camp Timberlake in Shandaken, which contains a wastewater treatment plant operating under a State Pollutant Discharge Elimination System (SPDES) permit. According to the complaint, the permit authorizes the Respondent to discharge 34,000 gallons per day of treated wastewater to Jay Hand Hollow Brook for the period from June 1 to October 1.
The complaint sets out 36 different causes of action. The first nine allege the late submission of various Discharge Monitoring Reports (DMRs) in violation of the SPDES permit and Environmental Conservation Law (ECL) Section 17-0511. Causes of action 10 to 27 allege various discharge-related violations of the permit and ECL 17-0511:
- Violation of the daily maximum limit for Biological Oxygen Demand (BOD) (causes of action 10-16);
- Violation of the daily maximum limit for ammonia (causes of action 17-22);
- Violation of the daily minimum limit for dissolved oxygen (cause of action 23);
- Violation of the daily maximum limit for settleable solids (causes of action 24-26); and
- Violation of the daily maximum limit for suspended solids (cause of action 27).
Causes of action 28 to 36 allege that the Respondent failed to notify the Department of violations related to daily maximums for BOD and ammonia at the time of the violations or in the DMRs it submitted, in violation of the SPDES permit and ECL 17-0511.
Cause of action 37 alleges that, at the time of an August 1, 2001 inspection, the Respondent failed to have its wastewater treatment plant under the responsible supervision of a Grade 1 chief operator or assistant/shift operator certified pursuant to 6 NYCRR Part 650, in violation of 6 NYCRR 650.4.
The Respondent submitted an answer dated January 11, 2002, denying the charges and asserting 11 affirmative defenses.
By papers dated January 25, 2002, Department Staff moved for a ruling either dismissing all the affirmative defenses or requiring that they be clarified. According to Department Staff, none of the affirmative defenses contain facts or grounds to support their claims, meaning that they are essentially bare allegations. Department Staff's motion is based on 6 NYCRR 622.4(c) and (f). Section 622.4(c) provides that the Respondent's answer "must explicitly assert any affirmative defenses together with a statement of the facts which constitute the grounds of each affirmative defense asserted." Pursuant to Section 622.4(f), Department Staff "may move for clarification of affirmative defenses within 10 days of completion of service of the answer on the grounds that the affirmative defenses pled in the answer are vague or ambiguous and that staff is not thereby placed on notice of the facts or legal theory upon which respondent's defense is based."
By papers dated February 7, 2002, the Respondent opposed the motion of Department Staff. The Respondent argues that the motion fails to demonstrate how Department Staff is not placed on notice of the facts or legal theory asserted in the defenses. According to the Respondent, many of its defenses are purely legal in nature and do not require the pleading of facts, and where a defense is based on factual matter, sufficient facts have been set forth. Finally, the Respondent argues that to the extent the answer does not provide adequate notice, the sole remedy is to require clarification of affirmative defenses, since the administrative law judge (ALJ) lacks authority to dismiss them.
Apart from challenging the affirmative defenses, Department Staff moved for a protective order, also by papers dated January 25, 2002. This motion addressed parts of the Respondent's first request for the production of documents, dated January 14, 2002. Department Staff's motion is based on 6 NYCRR 622.7(c), which allows a party against whom discovery is demanded to move for a protective order "in general conformance with CPLR [Civil Practice Law and Rules] section 3103, to deny, limit, condition or regulate the use of any disclosure device in order to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice." Department Staff claim that the challenged parts of the document request are an unreasonable annoyance, and will result in prejudice by requiring Department Staff, at great expense, to search potentially thousands of files for material that would be considered irrelevant if certain affirmative defenses are dismissed.
The Respondent opposed Department Staff's motion in papers dated February 7, 2002, claiming that the challenged portions of its document demand are relevant to the assessment of penalties requested in the complaint, and that Department Staff had not adequately explained its alleged retrieval burden.
Department Staff moved for another protective order by papers dated February 15, 2002, this time in relation to parts of the Respondent's second request for production of documents, dated February 7, 2002. Again, Department Staff objected on the basis of unreasonable annoyance and prejudice, also challenging the relevance of the requested material.
The Respondent, by papers dated February 22, 2002, opposed Department Staff's motion, countering Department Staff's claims and also arguing that the motion should be dismissed not only on the merits, but because it is not accompanied by an affidavit under 6 NYCRR 622.7(c) reciting good faith efforts to resolve the discovery dispute without resort to a motion.
On February 25, 2002, I held a conference call with counsel for the parties to discuss the pending motions as well as the matter's general status. The parties reported that settlement attempts have not been successful. Department Staff is represented by Richard E. Ostrov, assistant Region 4 attorney in Schenectady. The Respondent is represented by Robert H. Feller, Esq., of Feller & Ferrentino in Albany.
Because of the connection between the document demands and the matters asserted in the affirmative defenses, this ruling addresses the affirmative defenses first, with the intent of focusing the issues that will be addressed in the upcoming hearing.
The parties disagree as to whether the ALJ has authority to dismiss affirmative defenses, as argued by Department Staff, or can merely require their clarification, as argued by the Respondent. In fact, both remedies are available to Department Staff. Department Staff may (but is not required to) move for clarification of affirmative defenses pursuant to 6 NYCRR 622.4(f). In the alternative, or in addition to such a motion, Department Staff may seek the dismissal of an affirmative defense where, for instance, it is raised inappropriately in the administrative forum (for example, a claim of selective prosecution, which belongs in a court challenge), or where the facts alleged, even if proved at hearing, would not bear on the issue of liability for the charged violations.
As an example, in the Matter of Ward, Downes and Green Island Tree Spray (Rulings of the ALJ, December 17, 1997), I dismissed an affirmative defense of waiver because public officers have no power or authority to waive law enforcement on behalf of the public, and therefore such a defense could not prevail as a matter of law.
Recognizing that all ALJ rulings are subject to the Commissioner's review [6 NYCRR 622.10(d)], an ALJ has ample authority to dismiss affirmative defenses pursuant to 6 NYCRR 622.10(b)(1)(i), which grants the ALJ power to rule upon motions and requests, including those that decide the ultimate merits of the proceeding. Also, the ALJ has power to admit or exclude evidence [6 NYCRR 622.10(b)(1)(vii)], to preclude irrelevant testimony or argument [6 NYCRR 622.10(b)(1)(xii)], and to do all acts and take all measures necessary for the maintenance of efficient conduct of the hearing [6 NYCRR 622.10(b)(1)(x)]. Dismissing affirmative defenses that do not bear on liability for charged violations assures that the hearing and preparations devoted to it are focused on issues that could make a difference to the outcome, that issues inappropriate to the administrative forum are not pursued, and that issues not relevant to liability (but only to remedy) are put in their proper perspective.
Each of the affirmative defenses is addressed below:
1. To the extent that any DMRs were submitted late, the cause is due entirely to the negligent or intentional acts of Eustice & Horowitz, P.C. (E&H) who has been delegated the responsibility to submit such reports. Respondent always provided the required monitoring information to E&H in a timely fashion and took all reasonable measures to ensure that E&H would make timely submittals.
Ruling: This is not properly an affirmative defense and, therefore, it is dismissed. As a matter of law, the Respondent cannot delegate to others its responsibilities under a Department permit. Whatever arrangement the Respondent had with E&H, the Respondent remains liable to the Department as permittee. Even so, the arrangement may be explained at the hearing to the extent it bears on culpability as a factor in setting civil penalties. Also, the Department is entitled to discovery regarding this arrangement, including any agreements or contracts between the Respondent and E&H.
"Ordinarily, a contractor's failure to perform as required by the contract is not a basis for penalty adjustment. A violator bears the responsibility of selecting a contractor that will perform required tasks satisfactorily and of monitoring the contractor's performance to assure compliance." [DEC Civil Penalty Policy, 6/20/90, pages 10-11.] Whether this case presents special circumstances warranting a penalty reduction will be considered at hearing. To consider whether the Respondent took all reasonable measures to ensure compliance, I will consider what the Respondent did against what would be expected by way of monitoring.
2. To the extent that any limits in the SPDES permit were exceeded, such exceedences are due to an Act of God and beyond the reasonable control of the Respondent.
Ruling: Staff's motion for clarification of this defense is granted because it is vague and lacks a supporting statement of facts. Until this defense is explained, one cannot know what bearing it would have on liability for the alleged exceedences.
3. In the course of constructing extensive renovations of the wastewater treatment plant in 1994, the Respondent proposed a design that was rejected by the New York City Department of Environmental Protection (NYCDEP). [The answer says the design was rejected by this agency, but that assertion has been corrected by the Respondent's counsel.] NYCDEP compelled the Respondent to implement a different design that did not conform to the best professional judgment of the Respondent's consulting engineer. To the extent that any exceedences occurred, they are due in whole or in part to the defective design that was imposed on the Respondent by NYCDEP.
Ruling: This defense is dismissed. The Respondent's objections were waived once it accepted the SPDES permit and began operating the wastewater treatment plant under the new design. Design defect issues are no longer timely and are beyond the scope of this enforcement hearing.
4. To the extent that a written non-compliance report is required by the SPDES permit (and Respondent maintains that it is not) and to the extent that any non-compliance occurred for which such reports were not submitted, the cause is due entirely to the negligent or intentional acts of E&H. E&H has been delegated all responsibility and the Respondent has exercised all reasonable controls over E&H to ensure that it reported according to the required provisions of the SPDES permit.
Ruling: This defense is dismissed for the same reasons given with regard to the first affirmative defense. Whatever arrangement the Respondent had with E&H, the Respondent remains liable to the Department as permittee.
5. The Respondent's facility is exempt from the requirement of having a certified operator pursuant to 6 NYCRR Part 650.
Ruling: This defense requires clarification as to the legal theory supporting the alleged exemption. Also, a statement of supporting facts is necessary. The conclusory statement that the facility is exempt does not give adequate notice to Department Staff.
6. To the extent that the Respondent is required to have a certified operator, the Department is estopped from pursuing this action because it gave permission for the Respondent to operate during the 2001 season without a certified operator on the condition that the existing operator be certified by the start of the 2002 season. The Respondent readily agreed to this condition.
Ruling: This defense is dismissed. The charge that the wastewater treatment plant operator was not certified is based on an August 1, 2001 inspection, whereas the so-called permission to operate without a certified operator is based on an August 13, 2001 letter from Department inspector Suzanne Ports to Jay Jacobs, president of Saddle Mountain Corp., and subsequent oral communications between the Department and the Respondent which the Respondent claims supplement and clarify the parties' agreement. Needless to say, any permission received on or after August 13 would be unavailing with regard to a violation that is alleged to have occurred on August 1. Beyond that, the Respondent has provided a copy of the August 13 letter, and all it does is explain the violation, offer assistance toward its correction, and request information about the Respondent's plans to ensure adequate certification and staffing prior to the opening of the 2002 season.
Even if this defense is construed as one of waiver (that is, the Department voluntarily relinquished its authority to take enforcement action), it would be unavailing since, as Department Staff point out, public officers have no power or authority to waive law enforcement on behalf of the public [57 NYJur 2d, Estoppel, Ratification and Waiver, Section 77]. Therefore, an argument based on waiver would not be considered as a matter of law.
7. This enforcement action is a violation of the 1993 Memorandum of Agreement between the Department and NYCDEP concerning the New York City Watershed Protection Program. Under the agreement, NYCDEP is to take the lead in enforcement actions against facilities in the Respondent's class. By violating the agreement, the Department is exposing the Respondent to multiple enforcement actions based on the same underlying set of facts.
Ruling: This defense is dismissed. Even if the Department and NYCDEP have an agreement regarding their respective enforcement roles, such an agreement could not divest the Department of its statutory jurisdiction to address violations of Article 17 and permits issued pursuant to that article. The Respondent's analogies to the respective roles of the state and federal governments with regard to enforcement of federal environmental statutes are misplaced, since these arrangements are set out in statutes, not inter-agency memoranda. Should NYCDEP later take enforcement action for the same violations as those alleged in the Department's complaints, the Respondent's expressed concerns about inconsistent enforcement and double jeopardy would then be timely. At this point, in the absence of any NYCDEP action, such concerns are premature.
8. The complaint is defective in that it does not set forth a specific amount that the Department seeks as a civil penalty for the alleged violations.
Ruling: This defense is dismissed. Nothing requires that the complaint include an amount for the requested penalty. The Department's penalty policy says Department Staff should request a specific penalty amount, and should provide an explanation of how that amount was determined. However, according to the policy, this is a recommendation, not a requirement. Also, the penalty policy anticipates that the requested penalty will be set out orally at the hearing (or by written submission, at the discretion of the judge or prosecutor), and not in the complaint itself. Finally, this is not a civil action under the CPLR, nor is the Department seeking damages, so the Respondent's reference to damage clauses in civil court litigation is misplaced.
A complaint in a Department enforcement action must contain:
- A statement of the legal authority and jurisdiction under which the proceeding is to be held;
- A reference to the particular sections of the statutes, rules and regulations involved; and
- A concise statement of the matters asserted [6 NYCRR 622.3(a)(1)(i)-(iii)].
With regard to civil penalties, adequate notice is provided by advising the Respondent of its maximum potential liability. This requires clarity as to the statutory provisions under which penalties are sought, the number of alleged violations, and whether the violations are alleged to be of a one-time or continuing nature. In this case, the complaint references ECL 71-1929 as authority for assessing penalties of up to $25,000 a day for each violations, and 37 separate violations are alleged, each in a separate identified cause of action. Furthermore, during our conference call, Department Staff indicated that none of the violations should be construed as continuing for the purpose of calculating a potential statutory maximum penalty.
During our conference call, Department Staff counsel said that the total penalty it will request at hearing is $19,500, and that it can provide a penalty breakdown by charge. This breakdown has since been provided under Department Staff counsel's cover letter of February 28, 2002, and should be helpful to see if settlement can be reached. At the least, it should help the Respondent decide how vigorously it wants to defend against particular charges.
9. To the extent that the complaint is read to request the imposition of the maximum statutory penalty for each alleged violation, such request is beyond the reasonable exercise of enforcement discretion and is politically motivated.
10. The prosecution of this action by the Department is unconstitutional in that it constitutes discriminatory enforcement.
Ruling: The Department asserts, and the Respondent now concedes, that claims of malicious prosecution and discriminatory enforcement must be raised in a judicial proceeding rather than an administrative hearing. I agree, and for that reason these defenses are dismissed. Because they were made part of the answer, these defenses are preserved for any judicial proceeding that might follow the resolution of this matter.
11. When equitable factors are considered, even if a violation is found, no penalty is
appropriate. The Respondent has always cooperated with all requests from the Department and NYCDEP. The Respondent has never sought to delay or stonewall any action taken by these agencies.
Ruling: As an affirmative defense, this is dismissed because, even as framed by the Respondent, it does not bear on liability for the violations. However, the cooperation of a violator in remedying violations is relevant to the adjustment of civil penalties, according to the Department's general civil penalty policy. Therefore, evidence of the Respondent's efforts to correct the violations cited in the complaint shall be entertained at the upcoming hearing. No further clarification of the Respondent's claim is necessary at this time.
Motions for Protective Orders
Department Staff has two pending motions for protective orders. The first concerns paragraphs 11 to 19 of the Respondent's first notice to produce. These paragraphs embody requests for all documents, including but not limited to orders, concerning facilities operating pursuant to a SPDES permit within the jurisdiction of the Department's Region 4 that allege or determine that:
- One or more DMRs were submitted late (paragraph 11);
- One or more DMRs were not submitted (paragraph 12);
- A non-compliance event report form was not submitted at the time of a SPDES permit violation or with the month's DMR.(paragraph 13);
- The permit limit for BOD was violated (paragraph 14);
- The permit limit for ammonia was violated (paragraph 15);
- The permit limit for dissolved oxygen was violated (paragraph 16);
- The permit limit for settleable solids was violated (paragraph 17);
- The permit limit for suspended solids was violated (paragraph 18); or
- The facility failed to be operated under the supervision of an operator certified at the appropriate level pursuant to 6 NYCRR Part 650 (paragraph 19).
Basically, the Respondent is looking for records about violations of the type charged in Department Staff's complaint. Department Staff objected to the demands, claiming they relate to issues of discriminatory enforcement and prosecutorial motivation which are not appropriate subjects for the administrative hearing. As noted above, the Respondent now concedes these defenses must be raised in court. Furthermore, the Respondent has agreed not to pursue discovery on these defenses here, reserving whatever rights it has in this regard for the civil courts.
The Respondent now claims that the requested material is relevant to the assessment of civil penalties. The Respondent says it seeks to demonstrate what the fines are in other similar cases and that these fines are significantly lower than the statutory maximum. (Based on the conference call and Department Staff counsel's follow-up letter, we know that Department Staff is not seeking the statutory maximum for any of the violations; in fact, except for the charge concerning operator certification, for which a $3,000 penalty is sought, no cause of action is tied to a penalty greater than $500.) As the Respondent points out, the Department's civil penalty policy states that in an adjudicatory hearing, Department Staff should request a specific penalty amount, and should explain how that amount was determined, with reference to five different factors, including other similar cases.
In that regard, the Respondent's request is clearly overbroad, and therefore compliance with the request would be an unreasonable annoyance for Department Staff, who would be prejudiced by searching for documents that are largely irrelevant. Of the documents requested, the only ones that are relevant are the orders issued after hearing for violations of the type charged by Department Staff. The penalties assessed in consent orders should not be considered, since, as a settlement inducement, they are typically lower than the penalties Department Staff would seek at hearing for the same violations. Of course, documents other than those resolving cases, and documents related to alleged violations that were never pursued for enforcement purposes, would have no relevance whatsoever for penalty purposes.
Department Staff's motion for a protective order with regard to paragraphs 11 to 19 of the first notice to produce is granted. The only documents that Department Staff need produce at this time are any final Department orders resolving adjudicated violations of the type charged in its complaint, and then only those orders that it would offer to support its recommended penalty for any particular violation. (If the Department Staff does not intend to make comparisons to similar cases, then nothing needs to be produced.)
For its part, the Respondent may, as part of its case, offer any Department orders issued after hearing resolving similar SPDES violations, whether from Region 4 or elsewhere. Because the Respondent's counsel can retrieve these orders himself, by computer or inspection at this office, it would put an unreasonable burden on Department Staff to gather them, especially if Department Staff is not relying on them to support its penalty request.
Department Staff's second motion for protective order concerns paragraphs 2 to 5 of the Respondent's second notice to produce. Those paragraphs request the following:
- All documents concerning the discharge of treatment wastewater effluent through overland flow.
- All documents concerning the performance of sand filter wastewater treatment systems in wastewater treatment plants.
- All documents concerning the performance of wastewater treatment systems having a surface water discharge that include or in any way rely upon sand filters during the calendar year 2000.
- All documents related to coordination of enforcement authority between the Department and other state agencies or between the Department and municipalities of the state, such as enforcement protocols.
Department Staff's motion with respect to paragraphs 2 to 4 is granted. The documents requested in these paragraphs relate to the Respondent's third affirmative defense, which I have dismissed.
The Respondent wants to relate the violations alleged in this matter to NYCDEP's previous rejection of an overland flow system proposed by the Respondent and NYCDEP's imposition of another, allegedly defective system instead. While the Respondent wants to prove that it was improperly prevented from exploring a treatment alternative that would have prevented any exceedences, this enforcement action is not the place to do that.
In an affidavit opposing Staff's motion, the Respondent's counsel indicated that based on several communications with Department Staff (as it turns out, Department Staff counsel), the Respondent has good reason to believe that, at the hearing, Department Staff will argue that the overland flow design would have numerous permitting problems, implying that it is not a practical alternative. In fact, Department Staff counsel, during our conference call, said he did not intend to introduce such issues at the hearing, claiming they are irrelevant, though he would respond to design issues allowed into the record over his objection. I agree with Department Staff counsel that a comparison of the Respondent's proposed overland flow system with the system actually in place when the violations occurred is not relevant to a decision on the pending charges. The relative efficacy of the two systems, and whether overland flow is a practical alternative, are permitting issues that do not belong in this enforcement proceeding.
Because the Respondent's wastewater treatment system contains no overland flow discharge, documents concerning discharge through overland flow are not relevant and need not be produced. With regard to documents concerning the performance of sand filter wastewater treatment systems, Department Staff counsel represents that he has already provided the Respondent with the inspection reports and correspondence regarding the operation of its system including the sand filters. No disclosure on the general issue of sand filters is required.
Finally, Department Staff's motion with respect to paragraph 5 is also granted. The documents requested in this paragraph relate to the Respondent's seventh affirmative defense, which I have dismissed. Because the Department cannot divest itself of its statutory enforcement jurisdiction by agreements or protocols with other state agencies or municipalities, requiring the production of such enforcement documents, especially those having nothing to do with the SPDES program, would be pointless.
Summary of Rulings
- Department Staff's motion to dismiss is granted with regard to the first, third, fourth, sixth, seventh, eighth, ninth, tenth and eleventh affirmative defenses, though the claims in the first and eleventh defenses will be entertained to the extent they bear on penalty assessment.
- Department Staff's motion to clarify is granted with regard to the second and fifth affirmative defenses. Additional clarification shall be provided to Department Staff counsel and me by way of a written supplement to the answer, to be postmarked or delivered no later than 10 days from the date of these rulings.
- The Department's motions for protective orders are granted.
- If there are any orders that the Department Staff wants to offer at the hearing, to show the disposition of cases similar to this one, they shall be postmarked or delivered to the Respondent's counsel no later than 10 days from the date of these rulings.
Once the 10-day period has run, I will set up a conference call with the parties' counsel to discuss remaining pre-hearing matters, settlement opportunities, and hearing dates.
Administrative Law Judge
Albany, New York
Dated: March 6, 2002
TO: Richard E. Ostrov, Esq.
NYS Dept. of Environmental Conservation
Division of Legal Affairs, Region 4
1150 North Westcott Rd.
Schenectady, NY 12306-2014
Robert H. Feller, Esq.
Feller & Ferrentino
488 Broadway - Suite 512
The Broadway Arcade
Albany, NY 12207