Vac-Air Alloys Site - Decision, June 5, 2002
Decision, June 5, 2002
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
In the matter of:
The Billing Dispute for Vac-Air Alloys Site
Site No. 9-07-016
Consent Order Index No. B9-03330-90-05
ALJ's Final Decision
Resolving Disputed Costs
June 5, 2002
In November 1992, Keywell Corporation ("Respondent") and the Staff of the New York State Department of Environmental Conservation ("DEC Staff") executed an order on consent ("1992 Order") regarding the implementation of a Remedial Investigation/Feasibility Study ("RI/FS") for the Vac-Air Alloys site ("Site"). The Site had been characterized by DEC Staff as a Class 2 inactive hazardous waste disposal site, meaning that it presented a significant threat to public health or the environment. Prior to the execution of the 1992 Order, the Respondent had prepared an RI/FS for the site and DEC Staff had approved it. In the 1992 Order, the Respondent agreed to implement the RI/FS, under DEC Staff's oversight and pay DEC Staff's administrative costs.
In the fall of 1996, a second consent order ("1996 Order") was executed by DEC Staff and the Respondent. The 1996 Order required the Respondent to implement the Record of Decision ("ROD"), in which DEC Staff had selected the final remedial alternative for the Site. The 1996 Order also required the Respondent to pay the State's administrative costs "for work performed related to the Site to the effective date of this Order, as well as for reviewing and revising submittals made pursuant to this Order, overseeing activities conducted pursuant to this Order, collecting and analyzing samples, and administrative costs associated with this Order" (p.14).
The 1996 Order also contains a mechanism for resolving disputes relating to the State's administrative costs. This mechanism requires the Respondent to request the appointment of an Administrative Law Judge ("ALJ") from the DEC Office of Hearings and Mediation Services within 45 days of the receipt of a disputed invoice. Once the ALJ is appointed, it is the ALJ's responsibility to develop an administrative record that includes submissions from the parties. Following review of the submissions, the ALJ is empowered to make a final agency decision on the dispute in writing. Only the Respondent is authorized to seek judicial review of the ALJs decision (p. 21).
By letter dated October 29, 1997, DEC Staff billed the Respondent $78,988.05 for activities undertaken at the Site pursuant to the 1992 Order. This bill stated that it was "final" and that this bill included "all expenditures for this site from the payroll period ending February 12, 1992, the date costs were first incurred to March 31, 1996, the date the RI/FS was completed." After discussions and correspondence between the parties, the Respondent paid this bill in full by check dated January 18, 2001.
By letter dated February 11, 2000, DEC Staff billed the Respondent $22,641.61 for activities undertaken by state agencies at the site pursuant to the 1996 Order. This bill included expenditures from April 1, 1996 through March 31, 1999.
By letter dated January 29, 2002, DEC Staff billed the Respondent $27,578.12 for activities undertaken by state agencies at the site pursuant to the 1996 Order. This bill included expenditures from April 1, 1999 through June 20, 2001. The bill also included expenditures incurred by the New York State Department of Health ("DOH") from April 1, 1991 through June 30, 2001. The explanation provided for the billing of these DOH costs in this bill was that these costs were "previously unavailable"; no other explanation was provided.
By letter dated March 13, 2002, the Respondent timely challenged $17,070.16 ("the disputed amount") in the last bill. The disputed amount is for two categories of costs: 1) DOH labor costs incurred between April 1991 and March 1996 ($14,226.19); and, 2) DOH lab costs from February 1992 ($2,843.97). The Respondent requested the appointment of an ALJ to resolve the dispute.
By memo dated March 29, 2002, DEC Staff requested that the Office of Hearings and Mediation Services appoint an Administrative Law Judge. By letter dated April 8, 2002, ALJ P. Nicholas Garlick notified the parties that he had been assigned to the matter. By letter dated April 12, 2002, DEC Staff responded to Keywell's March 13, 2002 letter. As agreed on a conference call with the parties and the ALJ on April 19, 2002, each party provided one additional submission. On May 1, 2002, Keywell provided additional arguments on the dispute and, on May 8, 2002, DEC Staff responded. This closed the record.
Position of the Parties
The Respondent asserts that it is not liable for payment of the disputed amount based upon two grounds: first, that DEC Staff is barred from seeking the disputed amount because the Respondent paid a bill marked "final" in January 2001 which covered costs incurred between 1992 and 1996; and second, that the statute of limitations bars collection of the disputed amount. Each of these grounds is discussed more fully below.
DEC Staff asserts that neither ground asserted by the Respondent is valid and that the disputed amount should be remitted.
Respondent's First Argument:
The Respondent argues that since it paid in full the first bill submitted to it by DEC Staff and that this bill included the phrases "final" and "includes all expenditures" incurred prior to March 31, 1996, that it cannot now be billed for DOH costs incurred prior to March 31, 1996. Therefore, the Respondent argues that its payment of the first bill constitutes a full and complete accord and satisfaction of the State's claim for any and all costs incurred before March 31, 1996. Therefore, the State is estopped from seeking further amounts.
The Respondent's argument fails, however, upon close review of the exact wording of the 1992 Order and the 1996 Order. In the 1992 Order, the Respondent agreed to "reimburse the Department's administrative costs incurred by the Department to ensure compliance with this Order" (p.4, whereas clause 6(ii)). In addition, Paragraph VII of the 1992 Order reads in full:
VII. Payment of Department Costs
Within 30 days after receipt of an itemized invoice from the Department, Respondent shall pay to the Department a sum of money which shall represent reimbursement for the Department's expenses pursuant to this Order (including, but not limited to, direct labor, overhead, travel, analytical costs, and contractor costs) incurred by the State of New York for work performed at the Site to date related to this Order as well as for negotiating this Order, reviewing and revising submittals made pursuant to this Order, overseeing activities conducted pursuant to this Order, and collecting and analyzing samples. Such payment shall be made by certified check payable to the Department of Environmental Conservation. Payment shall be sent to the Bureau of Program Management, Division of Hazardous Waste Remediation, N.Y.S.D.E.C., 50 Wolf Road, Albany, NY 12233-7010. Itemization of the costs shall include an accounting of personal services indicating the employee name, title, biweekly salary, and time spent (in hours) on the project during the billing period. The Department's approved fringe benefit and indirect cost rates shall be applied. Non-personal service costs shall be summarized by category of expense (e.g. supplies, materials, travel, contractual).
Thus, the entire paragraph, from its title through its text, only addresses costs of the DEC and no other state agency. No other mention of state or DEC costs is made in the 1992 Order.
The first and only bill issued by the DEC pursuant to the 1992 Order was for $78,988.05 and was paid in full by the Respondent by a check dated January 18, 2001. The Respondent is correct that the bill is marked "final". However, the Respondent's assertion that DEC represented that this bill included all state costs for the period from February 12, 1992 through March 31, 1996 is clearly erroneous. The language of the bill states "enclosed is a Cost Summary of Expenditures incurred by the New York State Department of Environmental Conservation (NYSDEC) for its activities outlined in the Consent Order... in accordance with Paragraph VII [quoted above].... The cost summary includes all expenditures for this site from the payroll period ending February 12, 1992, the date costs were first incurred to March 31, 1996." It is obvious that DEC Staff is billing the Respondent only for DEC costs because the Respondent only agreed in the 1992 Order to pay DEC costs.
In the 1996 Order, the Respondent agreed to "reimburse the State's administrative costs" (p. 3, whereas clause 6(ii)). In addition, the Respondent agreed to different language regarding the reimbursement of costs. The relevant portion of Paragraph VII of the 1996 Order is reproduced below.
VIII. Payment of State Costs
A. Within 45 days after the receipt of an itemized invoice from the Department, the Respondent shall pay to the Department a sum of money which shall represent reimbursement for the State's expenses including, but not limited to, direct labor, fringe benefits, indirect costs, travel, analytical costs, and contractor costs incurred by the State of New York for work performed related to the Site to the effective date of this order, as well as for reviewing and revising submittals made pursuant to this Order, overseeing activities conducted pursuant to this Order, collecting and analyzing samples, and administrative costs associated with this Order....
This language in the 1996 Order addresses all State expenses, not just those incurred by DEC and there is no limitation as to when the expenses were incurred. In fact, by agreeing to the language quoted above, the Respondent specifically agreed to pay the State's costs before the date of the 1996 Order. Thus, when DEC Staff billed the Respondent pursuant to the 1996 Order for DOH costs incurred before March 13, 1996, it did so in accordance with an agreement duly executed by the Respondent. With this challenge, the Respondent, in effect, seeks to include new terms and conditions in the 1996 Order which would limit when it could be billed for certain costs. The language of the 1996 Order authorizes DEC Staff to collect the disputed amount.
Since the unambiguous language of the Orders clearly state that the Respondent agreed in the 1996 Order to pay past expenses incurred by the State, the Respondent's argument that it would suffer a manifest injustice if it was forced to pay costs incurred by DOH between 1992 and 1996 is without merit. Finally, the Respondent's argument that equitable estoppel prevents the State from seeking reimbursement for older costs is also without merit. The Respondent has not suffered an injury by the delay in billing, no fees or interest were assessed. To the contrary, by not being billed for legitimate expenses for a period of years, the Respondent, in-effect, has enjoyed an interest-free loan from the State.
Respondent's Second Argument: Statute of Limitations
The second ground asserted by the Respondent is that DEC Staff is precluded from collecting the disputed amount by sections 201 and 213(b) of the Civil Practice Law and Rules ("CPLR") which provides a six year statute of limitation for written contracts. Implicit in this argument is the assertion that an Order on Consent is a written contract, which of course it is not (Saraf v. Vacanti, 223 A.D.2d 836 (1996)). A consent order is akin to a plea bargain in which the Respondent agrees to a series of promises in exchange for a reduction in criminal or civil liabilities. Such orders are not contracts and therefore not governed by the CPLR's statute of limitations for written contracts. None of the cases cited by the Respondent are on-point because the facts in each case do not involve a consent order but rather involve disputes between private, non-governmental, parties.
Upon review of the Statements of Position of the Respondent and DEC Staff, for the reasons set forth above, I find that the Respondent is responsible for the disputed amount. Accordingly, the Respondent is directed to pay to the Department the entire disputed amount, in accordance with the provisions of the 1996 Order, within 45 days of this Ruling.
P. Nicholas Garlick
Administrative Law Judge
June 5, 2002
Albany, New York