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Trahan Petroleum, Inc. - Ruling, March 2, 1998

Ruling, March 2, 1998

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of Alleged
Violations of the Environmental
Conservation Law by

RULING ON MOTION TO
AMEND COMPLAINT

Case No. 92-12;

TRAHAN PETROLEUM, INC.,
R9-3603-92-02

Respondent

March 2, 1998

Summary

The present ruling is on the Department Staff's motion to amend the complaint in the above matter. The motion is granted, with the exception of charges which duplicate each other, and with the requirement that inconsistencies between the Department Staff's letter and the proposed amended complaint be clarified.

Background and Chronology

This hearing was reassigned from Administrative Law Judge (ALJ) Edward Buhrmaster to me due to schedule conflicts.

The initial complaint in this matter was dated April 28, 1992. On October 29, 1992, the Department Staff withdrew the original complaint, without prejudice, and served a new notice of hearing and complaint.

On December 4, 1992, the Respondent served an answer to the October 29, 1992 complaint and also applied for a more definite statement of the allegations. On January 22, 1993, ALJ Buhrmaster denied the motion for a more definitive statement, but, based on his own review of the complaint, ordered that the Department Staff provide a supplemental statement indicating the dates of alleged violations and the penalty calculations. The Department Staff provided this supplemental statement on February 10, 1993.

On February 12, 1993, the Department Staff requested leave to amend the complaint to add an additional well to two of the lists of sites at which violations had allegedly occurred. On February 17, 1993, the Respondent opposed this amendment, and also asserted that the supplemental statement did not provide a specific statement of the allegations.

On March 1, 1993, ALJ Buhrmaster granted the February 12, 1993 motion for leave to amend the complaint. He also stated that the request for a more definite statement had already been considered and denied, and that the Respondent had already apparently received all documentation relating to the allegations. ALJ Buhrmaster's March 1, 1993 letter stated that the Department Staff was to provide copies of the amended complaint on the first hearing date, which at that time was scheduled to be March 8, 1993. The hearing did not begin on that date, however, and the hearing file does not include a copy of this amended complaint. The amendment which was granted on March 1, 1993 is the current complaint, which the Department Staff now proposes to amend.

Since March 1, 1993, there have been negotiations, court decisions and an alternative dispute resolution process regarding this matter, as more fully described below. The administrative hearing has remained adjourned without date while these were taking place.

In late February or early March, 1993, the Respondent filed a petition under Article 78 of the Civil Practice Law and Rules seeking, among other relief, a permanent stay of the Department Staff's enforcement action in this matter. This petition was dismissed by the Supreme Court, Cattaraugus County, and the judgment was affirmed on September 30, 1994 by the Appellate Division (Trahan Petroleum, Inc. v. NYS Department of Environmental Conservation, 207 A.D.2d 976, 617 N.Y.S.2d 673 (4th Dept., 1994)).

During the time between then and October 15, 1997, there were some negotiations between the parties but these did not result in a settlement. On October 15, 1997, the Department Staff moved to amend the complaint again, based on additional inspections done since November 1993 and based on a review of earlier inspection reports. The Department Staff also requested to revise the penalty calculation, which would lead to a lower proposed penalty than would have resulted from the penalty calculation method in the February 10, 1993 supplemental statement.

At some time between October 15, 1997 and the present, the parties requested a neutral evaluation (a type of alternative dispute resolution process) of the matter. ALJ Robert P. O'Connor conducted this evaluation. The matter was returned to the hearing process in January, 1998 and was reassigned from ALJ Buhrmaster.

On January 16, 1998, I had a conference phone call with the parties and set a schedule for correspondence regarding the pending request to amend the complaint. On February 3, 1998, the Department Staff notified the Respondent and me that they did wish to amend the complaint as set forth in their letter of October 15, 1997. On February 18, 1998, the Respondent submitted a letter opposing the amendment. The motion is now ready for a ruling.

The Proposed Amendment of the Complaint

The Department Staff's October 15, 1997 request to amend the complaint proposed to include additional inspection dates at well sites listed in the current complaint, to add or delete well sites from paragraphs alleging violation of particular requirements, to add to the complaint an additional paragraph which would allege that gas has been allowed to leak into the surrounding air at the well sites listed in that paragraph, and to revise the penalty calculation method.

The Department Staff requested the amendment based on new inspections that occurred starting in November, 1993, a review of earlier inspection reports, and their decision to use a penalty calculation method that gives less weight to per diem violations.

The Respondent opposed amendment of the complaint on the basis that the Department Staff had not shown good cause for the amendment (6 NYCRR Section 622.6, of the version of Part 622 effective from 1978 until January 9, 1994). The Respondent stated that the charges were a "moving target" by virtue of amendments, reinspections and recalculations, making the Respondent unable to adequately prepare a defense. With regard to the proposed additional paragraph, the Respondent stated that these charges were based on inspections far in the past and that there was adequate opportunity to make these allegations in prior versions of the complaint.

The Respondent stated that the Complaint charged de minimus violations, and for duplicate violations by charging for signs which were allegedly missing at either the well or the lease road and then a separate charge for missing both of the signs. The Respondent criticized the Department for adding allegations that metal tanks, replaced after the Department had complained about them, constituted debris.

The Respondent stated that the wells listed as dropped or added in Department Staff's October 15, 1997 letter were inconsistent with the lists in the proposed complaint.

Discussion

The applicable version of 6 NYCRR Part 622 (Uniform Enforcement Hearing Procedures) allows for amendment of pleadings at any time prior to the submittal of the hearing officer's report to the Commissioner by leave of the hearing officer or Commissioner on good cause shown (6 NYCRR 622.6, effective September 21, 1978).

The Department Staff has shown good cause for amending the complaint. Many of the changes reflect allegations from inspections that occurred while the hearing was adjourned for other reasons. There would be no reason why the Department Staff would have been precluded from conducting inspections during this time. If those inspections revealed conditions which the Department Staff believed were violations, the alleged violations could either be added to the existing complaint or treated as a separate, new complaint. It is more efficient to allow the new allegations to be added to the existing complaint rather than having two enforcement actions which involve the same respondent, overlapping groups of wells, and (with the exception of proposed paragraph 10) the same regulatory requirements.

Proposed paragraph 10 involves alleged violations whose earliest date is October 13, 1993. These dates are after the most recent amendment of the complaint, which took place on March 1, 1993.

The reason stated by the Department Staff for the proposed revision of the penalty calculation method is that, in their view, the use of the previous method would have given undue weight to per diem violations, and that the proposed method satisfactorily serves enforcement goals. This is good cause to amend a complaint at the present stage of the process, where no testimony has yet been presented that might have been aimed at proving or contesting a different theory of how the penalty should be calculated.

There are, however, inconsistencies in the lists of wells which the Department Staff has presented in various correspondence, which inconsistencies will need to be corrected before an amended complaint is served. These inconsistencies exist among the lists in the October 29, 1992 complaint (amended as proposed in the February 12, 1993 letter), the October 15, 1997 letter and the proposed amended complaint which was attached with the October 15, 1997 letter, as well as within the proposed amended complaint.

Mr. Heyer's letter of February 18, 1998 pointed out a number of these (although contrary to the letter, Beaver #2 (API No. 009-17171) is added at paragraph 4 of the complaint). My review of the lists revealed additional inconsistencies, beyond those identified in Mr. Heyer's letter. For example, in paragraph 4 of the proposed complaint, Mansfield #4 (API No. 013-18504) is not on the October 15, 1997 letter's list of wells to add; in Paragraph 7 of the proposed complaint Rice NY # 47 (API No. 013-15749) is not on the list of the wells to be added and Rice NY #27 (API No. 013-15752) is not on the list of wells to be dropped. There are several other similar inconsistencies. In addition, at least two wells occur with inconsistent names (Chase NY #46/Channey #46, API No. 013-12514; Falcone #6 or Falcon #3, API No. 013-15582).

Paragraphs 7, 8 and 9 will also need to be clarified. Mr. Heyer's letter asserted that the Department was charging three violations for signs missing at two locations. My review of the complaint, however, indicates only two well sites where all three allegations are made with respect to the same well site.

My interpretation of the three paragraphs are that they were intended to be three separate lists: of well sites where only the lease was allegedly not identified, of well sites where only the wells were allegedly not identified, and of well sites where both the lease and the wells were allegedly not identified. There are two wells that appear on all three lists, and two more that appear on the "both" list and one of the other lists. These lists will also need to be clarified, such that the wells appear in only one of these three paragraphs (7, 8 or 9) of the complaint.

Once these inconsistencies are clarified, and the Respondent has answered the amended complaint, any future similar inconsistencies in well names or numbers in the amended complaint or in other correspondence submitted by the Department Staff will be resolved in favor of the Respondent. The Department Staff has the burden both of clearly putting the Respondent on notice of the allegations and of proving the allegations.

Ruling: The October 15, 1997 motion to amend the complaint, renewed on February 3, 1998, is granted. Prior to service of the amended complaint, it will need to be reviewed by the Department Staff to correct the inconsistencies in the well lists as described above. When the Department Staff serves the corrected amended complaint, it is to be accompanied by a letter correctly listing the wells which were dropped from and added to each paragraph of the complaint in making the present amendment.

The Respondent may serve an amended answer within 20 days from service of the amended complaint.

/s/
Susan J. DuBois
Administrative Law Judge

Albany, New York
March 2, 1998

TO: Maureen O. Brady, Esq.
David Stever, Esq.
John Heyer, Esq.

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