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Trahan Petroleum, Inc. - Ruling, May 7, 1998

Ruling, May 7, 1998

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of Alleged Violations of the Environmental
Conservation Law ("ECL") by

TRAHAN PETROLEUM, INC.,
Respondent

RULING ON MOTIONS TO DISMISS AND
FOR MORE DEFINITE STATEMENT OF
COMPLAINT

Case No. 92-12; R9-3603-92-02

May 7, 1998

On March 18, 1998, the Respondent moved for a more definite statement of the complaint in this matter. On March 27, 1998, the Respondent moved for dismissal of the complaint. The present document contains my rulings on both of these motions. The deadline for filing of the answer has been extended while these motions have been under review.

The Department Staff submitted a memorandum in opposition to the motion to dismiss on April 13, 1998 and the Respondent replied to this memorandum on April 20, 1998. The Department Staff submitted a surreply dated April 24, 1998, which was faxed to me from the Region 9 office on April 30, 1998.

Motion For a More Definite Statement

Under the Department's enforcement hearing procedures, 6 NYCRR Part 622, a respondent may move for a more definite statement if the complaint is so vague or ambiguous that the respondent cannot reasonably be required to frame an answer.

The correspondence regarding prior motions for a more definite statement of the complaint, and the Department Staff's clarification of the complaint at the request of Administrative Law Judge Edward Buhrmaster, are summarized in my ruling of March 2, 1998. ALJ Burhmaster's March 1, 1993 letter found no need for further clarification of the complaint. The current complaint follows the format of the earlier complaint, with certain wells added or deleted and with the addition of a paragraph alleging that gas was being allowed to leak into the surrounding air at specified wells on specified dates, in violation of 6 NYCRR 556.2(b).

I find no reason to require further clarification of the complaint. The complaint identifies the regulatory provisions that were allegedly violated, and for each of these identifies the wells at which the violations allegedly took place, dates related to the allegations and, for Paragraph 4 of the complaint, the objects which were considered to be debris at each well site. The complaint also states the maximum penalty and the requested penalty and describes the other relief sought. The complaint notifies the Respondent of the allegations clearly enough that it is reasonable to expect that the Respondent can frame an answer.

Ruling: The motion for a more definite statement of the complaint is denied.

Motion to Dismiss

The March 27, 1998 motion to dismiss contends that the complaint (1) fails to join necessary parties, (2) fails to provide a more definite statement, and (3) is deficient in that the Department has acted in excess of its authority, abused its discretion, misinterpreted Article 23 of the Environmental Conservation Law, and acted arbitrarily and contrary to sound resource management practices.

I am denying the motion to dismiss. As explained below, the landowners are not necessary parties. There is no need for a more definite statement, as explained above. Finally, Respondent's jurisdictional, legal, and factual arguments do not support dismissal of the complaint; they amount to defenses to Staff's claims on the merits. They cannot be addressed until after the testimony and exhibits are received at the hearing on the merits. Moreover, as Staff points out, the previous decisions of the Supreme Court and the Appellate Division in Trahan Petroleum, Inc. v. DEC, 1See 207 A.D. 2d 976 (4th Dept, 1994). in dismissing Respondent's petition to enjoin the Department from continuing with this enforcement proceeding, fully support a conclusion that the Department Staff's legal basis for commencing this proceeding is not totally groundless despite Respondent's contrary contentions. The complaint, as amended in 1998, alleges that:

2: Ten wells were denied shut-in status by the Department, but were not subsequently plugged as required by the Department's rules.

3: Four wells were not tested, despite the Department's direction to do so pursuant to the rules.

4: Fifty-three well sites contained debris in violation of the rules.

5: Seventy-eight well sites were contaminated with discharged brine in violation of the rules.

6: Improper brine storage at 140 wells.

7, 8, 9: Improper lease and/or well site identification at 104 wells.

10: Gas leakage to the ambient air at 50 wells.

The relief sought includes:

  1. Finding Respondent in violation of Article 23 of the ECL and its implementing regulations.
  2. A civil penalty of $1,242,700.
  3. Testing and reporting for 15 designated wells, pursuant to a schedule.
  4. Plugging or sale of wells that are not commercially productive, under Department supervision pursuant to a schedule.
  5. Removal of debris.
  6. Replacement of certain tanks and storage tanks.
  7. Proper brine disposal.
  8. Proper identification of lease and well sites.

The Respondent's correspondence regarding the motion generally denies the allegations, and asserts various legal defenses, each of which will need to be addressed at the hearing. However, the complaint should not be dismissed at this stage. The Respondent will have an opportunity to submit an answer, as discussed at the end of this ruling.

Necessary Parties

The Respondent argues in its motion to dismiss that the landowners upon whose property the wells are located are necessary parties to the hearing and that the complaint should be dismissed since the landowners were not notified or joined as parties. A similar argument was made in the March 1, 1993 motion to dismiss, which was not ruled on due to the CPLR Article 78 petition filed by the Respondent at about the same time. The March 1, 1993 motion to dismiss and the March 27, 1998 motion to dismiss differ in that the first motion also argued that the working interest owners were necessary parties, in addition to the landowners.

With regard to the landowners, the 1993 motion also stated that, "many such landowners have their homes served by natural gas from the wells subject of the action" (18). The present motion states that "landowners may have their homes served by natural gas from the wells subject of the action by the express terms of their leases, or otherwise" (18)(emphasis added). Exhibit A of the present motion states that, "despite the fact that some wells are 'shut in,' various wells are producing gas for use by the landowners in their homes for heating and cooking, which service would cease were the wells to be plugged" (Exhibit A, 18). The motion does not identify which, if any, of the landowners currently obtain gas for residential use from the wells which might be plugged as a result of this enforcement matter. The Department Staff is seeking an order which would require testing and possibly plugging of only a subset of the wells for which violations are alleged (see Paragraphs III and IV of the complaint).

The landowners, including any who obtain gas for their homes from the wells, are not necessary parties. The Department is not alleging that the landowners violated the ECL, nor is the Department proposing that the landowners be ordered to do anything. The landowners are, however, potential witnesses who could be called by either party in connection with issues relating to the effects of shutting-in or to temporarily abandoning wells. The landowners' interests are similar to those of a landlord or a customer of a company where some of the company's operations might be terminated due to revocation of a permit, but where the landlord or customer does not have a role in the alleged violation or in providing the relief sought. Such landlords or customers are not necessary parties to the hearing even though they might lose rent or have business difficulties if the permit were revoked as a result of the hearing. While adverse impacts on certain landowners may potentially occur, such impact can be avoided by identifying any such landowner in the course of the hearing and taking appropriate measures as the circumstances may warrant at that time.

With regard to the March 1, 1993 motion, the working interest owners are not necessary parties. The reasons are similar to those stated above with regard to the landowners.

Other Arguments For Dismissal

The motion to dismiss next presents arguments that may be summarized as stating that plugging wells would deprive New York State of an energy resource for no reason and in violation of state policy, and would deprive the Respondent and the landowners of a resource without due process or compensation. Compliance with the ECL and state policy and any impacts on the energy resource could be evaluated by the Commissioner based upon the hearing record, after both parties have presented their evidence as well as arguments. The hearing would provide the process for contesting this.

The affidavit in support of the motion states that the Respondent has shown sufficient good cause for extension of the shut-in or temporary abandonment of the wells, and cites numerous attached documents which were exchanged between the Respondent and the Department Staff. Rather than being reasons to dismiss the motion, these are questions which relate to whether the Commissioner should grant the relief sought by the Department Staff and are questions which would be contested in the hearing.

The latter part of the Respondent's affidavit and the brief in support of the motion discuss the Respondent's assertions about the scope of the Department's authority under ECL 23-0305(8)(d) and that the Department has exceeded its authority, assertions that various terms used in the Department's regulations are undefined or vague, and arguments in the brief that the evidence will show that violations did not occur with regard to brine storage, identification of leases and other allegations. The Appellate Division decision (Trahan Petroleum, Inc. v. New York State Department of Environmental Conservation) has already agreed that the Department may proceed with this case. The argument that the complaint should be dismissed on the basis of the Respondent's prediction of what the evidence will show is circular, since if the complaint is dismissed no evidence would be presented.

The motion to dismiss also contends that the relief sought is inconsistent with the complaint, specifically, that Paragraph III of the requested relief in the complaint included wells which were not included in the allegations of the complaint dealing with failure to plug and test certain wells. The Department Staff argues that they have exercised their discretion in seeking remediation but not a penalty with regard to these wells, and that the Respondent has shown no prejudice or lack of due process.

Paragraph 80 of Mr. Heyer's affidavit contains errors in listing which wells are missing from the allegations in the complaint. There are, however, wells for which the complaint seeks an order that the wells be tested, but for which there is no allegation that the wells were shut-in without permission (complaint 2) nor that the Respondent failed to test the wells in response to the Department's June 27, 1991 letter (complaint 3). These wells are: Wehrenberg #3, Abbey #3, Abbey #4, Auffinger #2, and Steward #2. At the hearing, Staff will need to show reasons why it believes it is entitled to the relief requested with respect to these five wells.

The Department Staff is requested to clarify whether the well listed in Paragraph III of the complaint as "Neil #7" is the same well as "Neil NY #7" (API No. 013-15272) and whether "Gostomski #34" is the same well as "Gostomski NY #34" (API No. 013-17149).

Ruling: The March 27, 1998 motion to dismiss is denied.

March 1, 1993 Motion to Dismiss

The hearing record which was transferred to me does not indicate that a ruling was made on the March 1, 1993 motion to dismiss. The March 1, 1993 ruling is very similar, although not identical, to the March 27, 1998 motion to dismiss. To the extent that the earlier motion differs from the later one, the March 1, 1993 motion is denied.

Time Period For Answer

The Respondent requested, and I granted, an extension of the time to file an answer until after rulings on the motion for a more definite statement and the motion to dismiss. The answer to the amended complaint will be due 10 days after Respondent's receipt of the present rulings.

/s/
Susan J. DuBois
Administrative Law Judge

Albany, New York
May 7, 1998

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

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