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Trahan Petroleum, Inc. - Ruling 3, September 2, 1998

Ruling 3, September 2, 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 AFFIRMATIVE
DEFENSES AND FOR A
PROTECTIVE ORDER

Case Nos. 92-12; R9-3603-92-02

September 2, 1998

On June 17, 1998, the Department Staff moved to dismiss four of the affirmative defenses which were stated in the Respondent's May 20, 1998 Answer. The Department Staff also moved, on June 17, 1998, for a protective order regarding items in the Respondent's June 10, 1998 Notice to Produce.

Motion to Dismiss

The Respondent's May 20, 1998 Answer stated twenty-two affirmative defenses. The Department Staff's motion to dismiss requests that the following four affirmative defenses be dismissed:

  • 14th affirmative defense, which alleges that the Department has arbitrarily and capriciously singled out the Respondent for prosecution for de minimus violations, and that the Respondent believes that this prosecution is taking place because the Respondent is defending itself rather than agreeing to an order on consent;
  • 15th affirmative defense, which alleges that the Respondent is being prosecuted by the Department at the behest of private parties (who are not identified in the Answer) with an alleged interest in the wells, and that the prosecution of the complaint serves a private purpose rather than a public purpose;
  • 18th affirmative defense, which alleges that the relief sought by the Department would constitute an unconstitutional taking of property of the Respondent without compensation and due process;
  • 19th affirmative defense, which alleges that, "The Respondent's rights to due process of law are violated by one or more of the actions of the Department for reasons more fully set forth in the Affirmative Defenses herein."

The Respondent submitted a reply to the motion on June 30, 1998.

"An affirmative defense consists of new matter in avoidance which, even if the facts alleged in the complaint are true, tends to defeat the complainant's right to relief, but such new matter cannot be proved under a denial (See N.Y. Jur. Pleadings, 145)." (Matter of Tomaino, Interim Decision of the Commissioner, August 31, 1998.) Examples of affirmative defenses are statute of limitations and release. If alleged and proved, either of these events would bar a claim.

Here, the Respondent's 14th, 15th, 18th and 19th affirmative defenses essentially allege selective enforcement, unconstitutional taking and violation of due process. These allegations, however, are not true affirmative defenses because they do not allege facts which excuse the conduct alleged in the complaint or mitigate the relief sought. As such, each of the four defenses should be stricken.

On the other hand, this ruling is not intended to preclude consideration of facts which pertain to due process, taking, or selective enforcement to the extent that such facts may also be otherwise relevant, for example to witness credibility or to denial of the complaint's allegations. (See Matter of Tomaino, supra). Moreover, this administrative proceeding is not the appropriate forum for consideration of the Respondent's selective enforcement and taking claims (Di Maggio v. Brown, 19 N.Y. 2d 283; 303 West 42nd Street Corporation v. Klein, 46 N.Y.2d 686; Cannon v. Urlacher, 155 A.D.2d 906 (4th Dept., 1989; Spears v. Berle, 48 N.Y.2d 262; Haines v. Flacke, 104 A.D.2d 26 (2nd Dept., 1984)).

Ruling: The 14th, 15th, 18th and 19th affirmative defenses are dismissed.

Motion For a Protective Order

In their June 17, 1998 correspondence, the Department Staff also requested a protective order with regard to items requested in the Respondent's notice to produce. Paragraphs 1 through 8 of the notice to produce request documents, physical evidence, names of witnesses, test results, photographs and other materials. The Department Staff stated that they had already provided much of this information to the Respondent. In its June 30, 1998 response the Respondent stated that it would be satisfied with a statement which confirmed that certain items were previously submitted and that any additional items were submitted with a new discovery response, or which confirmed that there were no further items related to the requests in paragraphs 1 through 8 of the notice to produce.

The Department Staff's motion also stated that paragraph 1 of the discovery request is overly broad and non-specific, and that paragraphs 7 and 8 need to be more specific since there may be photographs or documents that related to the properties in question but which are not relevant to this proceeding.

The motion for a protective order with respect to paragraphs 1 though 8 of the notice to produce is granted to the following extent: the Department Staff does not need to produce any materials which have already been provided to the Respondent in earlier discovery. The materials which need to be provided under paragraphs 1 through 8 are also limited to those things which are relevant to the allegations in the Complaint, to the affirmative defenses which have not been dismissed, and to the calculation of the proposed penalty. As discussed further below regarding paragraph 10, this would include information relevant to damages associated with the alleged violations.

Paragraph 9 of the notice to produce requests information relating to other investigations conducted by the Department, which the Respondent clarified as meaning investigations in the oil and gas program. The Department Staff objected to this request for a number of reasons including that it is relevant only to the Respondent's 14th affirmative defense. The Respondent's reply agreed that the information was relevant to the affirmative defenses.

The 14th affirmative defense has been dismissed, so paragraph 9 of the notice to produce is not relevant to the subjects in dispute in the hearing. The motion for a protective order is granted with respect to paragraph 9 of the notice to produce.

Paragraph 10 of the notice to produce requests "a statement of damage or injuries known to the Department to have resulted from shut-in wells, temporarily abandoned wells or untested wells, of the Respondent or others." The Department Staff objected to this on the basis that the governing statute does not require a showing of damages to prove a violation.

The Department Staff is alleging various violations but is also seeking imposition of a penalty. The factors discussed in the Department's Civil Penalty Policy (dated June 20, 1990) include potential harm and actual damages to the environment or human health. The information sought in paragraph 10 of the notice to produce is relevant to this penalty factor. The motion for a protective order is denied with respect to paragraph 10 of the notice to produce.

The Department Staff did not request a protective order with regard to paragraph 11 of the notice to produce.

Paragraph 12 of the notice to produce requests a statement of the standards applied by the Department to determine if and when charges are made in oil and gas matters. The Department Staff objected to this paragraph on the basis that the information is protected by attorney-client privilege (CPLR §3101(b) or CPLR §3101(d) (presumably material prepared for litigation). The Respondent's response to the motion stated that this paragraph relates only to information utilized by the Department in the formulation of its strategy for procedures involved in this action.

The motion for a protective order is granted with respect to paragraph 12 of the notice to produce.

Paragraphs 13 and 14 request information regarding contacts between the Department and "third parties" regarding any of the issues raised in this matter, and discussion of allegations made or evidence supplied by "third parties." Paragraph 14 could also be read as requesting a statement of the time, place and nature of any internal departmental discussions of the allegations or any relevant issues generally, beyond those involving "third parties." The Department Staff objected to these requests on the basis that they are not relevant to any element of the Staff's burden of proof, but only to the 15th affirmative defense, and that paragraph 14 seeks information protected by the attorney-client privilege. The Respondent's reply to the motion stated that paragraphs 13 and 14 of the notice to produce should be enforced if the 15th affirmative defense is not dismissed, and that internal Department discussions would not necessarily involve an attorney.

The motion for a protective order is granted with respect to paragraphs 13 and 14 of the notice to produce, without prejudice to a new, more specific discovery request as discussed in the following paragraph. The 15th affirmative defense has been dismissed, with the qualification stated above about related questions that might be asked to impeach the testimony of Department witnesses. In addition, paragraphs 13 and 14 are overly broad and paragraph 14 requests information about the Department's preparations for litigation, which appears to be relevant only to finding information prepared for litigation.

The Respondent's papers do not identify the "private parties" or "third parties" who are allegedly influencing the Department Staff's prosecution of this matter, although the reference to an unidentified case in U.S. District Court for the Southern District of New York (Answer, paragraph 25) suggests that the Respondent knows the identity of these parties. If the Respondent wishes to request information concerning contacts between the Department Staff and these parties, the Respondent will need to identify the parties in question. The Department Staff would then have the opportunity to move for a protective order if there were reasons to object to the new request.

Paragraph 15 of the notice to produce requests a statement setting forth the Department's internal policies or standards relating to certain listed terms. The motion for a protective order states that the Department Staff does not have such a statement and should not be required to generate such a document. The motion for a protective order is granted with respect toparagraph 15 of the notice to produce.

/s/
Susan J. DuBois
Administrative Law Judge

Albany, New York
September 2, 1998

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

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