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Valley Corners Realty, Inc. - Order, October 9, 2003

Order, October 9, 2003

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Alleged Violations of Article 17 of the Environmental
Conservation Law of the State of New York and Part 612 of Title 6 of the
Official Compilation of Codes, Rules and Regulations of the State of New York

- by -

VALLEY CORNERS REALTY, INC.,
Respondent.

ORDER

Case No. R3-601289

WHEREAS:

  1. The attached report submitted by Administrative Law Judge ("ALJ") Maria E. Villa, concerning the motion by Staff of the Department of Environmental Conservation ("Department Staff") for an order without hearing, is adopted as my decision in this matter. Section 622.12(d) of title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") provides that "[a] contested motion for order without hearing will be granted if, upon all the papers and proof filed, the cause of action or defense is established sufficiently to warrant granting summary judgment under the CPLR in favor of any party."
  2. Department Staff's motion for an order against Valley Corners Realty, Inc. ("Valley Corners Realty") for a violation of an Order on Consent, entered into on or about November 10, 2000, concerning violations of article 17 (Water Pollution Control) of the New York State Environmental Conservation Law ("ECL"), and part 612 of 6 NYCRR, should be granted.
  3. Because no material issues of fact are in dispute, no hearing is required to determine the facts supporting the need for Valley Corners Realty to comply with the Order on Consent, and Department Staff is entitled to judgment as a matter of law.
  4. Valley Corners Realty failed to remove the underground storage tanks at the Facility, has not submitted a closure report, and failed to pay the penalty assessed, all as required pursuant to the Order on Consent.
  5. In determining the appropriate relief for the violations that were established, the facts of this case as determined in the ALJ's report have been taken into account.

NOW, THEREFORE, having considered this matter, it is ORDERED that:

  1. Department Staff's motion, pursuant to 6 NYCRR 622.12, for an order without hearing is granted.
  2. Valley Corners Realty is adjudged to have violated an Order on Consent entered into on or about November 10, 2000. The Order on Consent required that Valley Corners Realty (1) remove all underground storage tanks at the Facility within sixty days of November 30, 2000; (2) submit a closure report within ninety days of November 30, 2000; and (3) pay a $35,000 civil penalty, with $10,000 payable, and $25,000 suspended pending compliance with the Order on Consent. The Order on Consent provided for payment of the $10,000 in installments of $1,000. The first installment was due thirty days after November 30, 2000, with the remaining installments due at thirty day intervals thereafter.
  3. For the violations set forth in Paragraph II of this Order, Valley Corners Realty is assessed a civil penalty of thirty-five thousand dollars ($35,000). Payment of the penalty shall be made by certified check, cashier's check, or money order, payable to "NYSDEC," and mailed to the address below within sixty days of service of this Order upon Valley Corners Realty.
  4. Valley Corners Realty shall remove the underground storage tanks at the Facility within thirty days of service of this Order upon Valley Corners Realty.
  5. Valley Corners Realty shall submit a closure report to the Department within thirty days of the tank removal.
  6. The Valley Corners Realty is subject to additional civil penalties, pursuant to ECL 71-1929, of up to $25,000 per day for each day of continuing violation, if Valley Corners Realty fails to comply with the terms, provisions and conditions of this Order.
  7. All communications between Valley Corners Realty and the Department concerning this Order shall be made to the Department's Division of Environmental Enforcement, New York State Department of Environmental Conservation, Bureau of State Superfund and Voluntary Cleanup, 14th Floor, 625 Broadway, Albany, New York 12233-5550, Attention: Scott A. Herron, Esq.
  8. The provisions, terms and conditions of this Order shall bind Valley Corners Realty, its officers, directors, agents, servants, employees, successors and assigns and all persons, firms, and corporations acting for or on behalf of Valley Corners Realty.

For the New York State Department
of Environmental Conservation

/s/
By: Erin M. Crotty, Commissioner

Dated: Albany, New York
October 9, 2003

To: Scott A. Herron, Esq.
New York State Department of
Environmental Conservation
Division of Environmental Enforcement
625 Broadway, 14th Floor
Albany, NY 12233-5500

Laura Zeisel, Esq.
Drake, Sommers, Loeb, Tarshis & Catania, PLLC
One Corwin Court
Post Office Box 1479
Newburgh, New York 12550

George Hertzel
Valley Corners Realty Inc.
P.O. Box 555
2 Peekskill Hollow Road
Putnam Valley, New York 10579

STATE OF NEW YORK: DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Alleged Violations of Article 17 of the Environmental
Conservation Law of the State of New York (ECL), and Title 6 of the Official
Compilation of Codes, Rules and Regulations of the State of New York
(6 NYCRR) Part 612 by

VALLEY CORNERS REALTY, INC.,
Respondent.

Report Concerning Motion for
Summary Order

Case No. R3-601289

August 25, 2003

PROCEEDINGS

The Staff of the New York State Department of Environmental Conservation ("Department Staff") moved for a summary order without hearing against Respondent, Valley Corners Realty, Inc. ("Respondent" or "Valley Corners"). The motion asserted that Respondent is in violation of Article 17 of the Environmental Conservation Law ("ECL") and Part 612 of Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR"). Specifically, Department Staff alleged that Respondent is the owner and operator of a petroleum bulk storage facility, located at 2 Peekskill Road, Putnam Valley, New York (the "Facility"), which was the subject of an Order on Consent entered into between the Department and Respondent on or about November 10, 2000. Department Staff's motion contended that Respondent failed to comply with the terms of the Order on Consent, and maintained that no material issue of fact exists and Department Staff is entitled to judgment as a matter of law for the violations alleged.

Department Staff's motion was made pursuant to 6 NYCRR Section 622.12(a), which provides that "[i]n lieu of or in addition to a notice of hearing and complaint, the department staff may serve, in the same manner, a motion for order without hearing together with supporting affidavits reciting all the material facts and other available documentary evidence." Department Staff submitted two affidavits in support of the motion, one sworn to by R. Daniel Bendell, an Environmental Engineer for the Region 3 Division of Environmental Remediation Bureau of Spill Prevention and Response (the "Bendell Affidavit"), and the other sworn to on July 1, 2002 by Elissa Armater, a legal assistant in the Division of Environmental Enforcement (the "Armater Affidavit"). In addition, Department Staff submitted the Affirmation of Scott A. Herron, Esq. By letter dated November 21, 2002, Department Staff provided proof of personal service of the motion upon Respondent on November 5, 2002 to the administrative law judge ("ALJ") assigned to the motion.

George Hertzel, the manager of Valley Corners, telephoned the ALJ on Saturday, November 9, 2002, but failed to identify himself in his voicemail message or leave a telephone number where he could be reached. Mr. Hertzel stated that he would call back the following week. After waiting for another call, the ALJ wrote to Respondent's counsel of record and Department Staff by letter dated November 18, 2002 to inquire whether a conference call should be scheduled. On November 22, 2002, Mr. Hertzel telephoned the ALJ and left a voicemail message requesting that a conference call be held to discuss Department Staff's motion.

The conference call was held on December 13, 2002. During the call, Mr. Hertzel stated that he intended to retain counsel to represent him. The ALJ directed that any response to the Department's motion be served by January 17, 2003. On January 16, 2003, Laura Zeisel, Esq., of the law firm of Drake, Sommers, Loeb, Tarshis & Catania telephoned the ALJ to advise that she had been retained by Respondent, and to request an extension of the time to answer. Department Staff did not object to the requested extension, or to a subsequent request, and the extensions were granted. Respondent's submission included an answer to the motion (the "Answer"), as well as the Affidavit of George F. Hertzel, the manager of Valley Corners, sworn to February 21, 2003 (the "Hertzel Affidavit").

POSITIONS OF THE PARTIES

Department Staff's motion stated that Respondent is in violation of the Order on Consent (Staff's Exhibit A) which required, among other things, that Respondent remove the underground storage tanks at the Facility within sixty days of November 30, 2000, and submit a closure report within ninety days of that date. In addition, Respondent agreed to pay a civil penalty of $35,000, with $10,000 of the penalty payable, and $25,000 suspended pending compliance with the Order on Consent.

The Order on Consent indicates that the Facility consists of three 2,000 gallon underground storage tanks (Tanks 1, 2, and 5); two 3,000 gallon tanks (Tanks 3 and 6); and one 4,000 gallon tank (Tank 4). All of the tanks are steel, without cathodic protection. The Bendell Affidavit states that Mr. Bendell inspected the Facility on January 24, 2003, to determine Respondent's compliance with the Order on Consent. According to the Bendell Affidavit, Respondent had not removed the Facility's tanks and connecting piping systems, as required by the Order on Consent. In addition, the Bendell Affidavit states that Respondent had not submitted a closure report to the Department. Although the Bendell Affidavit is undated, it is signed and notarized. Moreover, it is substantiated by Respondent's admissions, in the Answer, that the tanks at the Facility have not been removed, and that no closure report has been submitted. Answer, at ¶ 9.

The Order on Consent provided for payment of the $10,000 portion of the penalty in installments of $1,000. The first installment was to be paid thirty days after November 30, 2000, with the remaining installments due at thirty day intervals thereafter. Department Staff alleged that Respondent submitted the first $1,000 payment on February 8, 2001, but the bank returned Respondent's check due to insufficient funds. Armater Affidavit, Staff's Exhibit B. According to Department Staff, Respondent has not made any subsequent payments, and the entire civil penalty remains unpaid. Armater Affidavit, Staff's Exhibit C.

In its motion, Department Staff stated that Respondent was sent a notice, dated February 20, 2001, advising Respondent that his check had been returned due to insufficient funds, and that the second payment was delinquent and must be paid within fifteen days. Staff's Exhibit E. According to Department Staff's motion, Scott A. Herron, Esq. contacted Respondent's then-counsel on April 16, 2001 to advise him of his client's failure to comply with the Order on Consent.

The motion sought an order from the Commissioner: (1) requiring Respondent, within thirty days, to remove the underground storage tanks at the Facility; (2) ordering Respondent to submit a closure report for the removal of the tanks within sixty days of the date of the Commissioner's Order; and (3) ordering Respondent to pay the entire $35,000 civil penalty assessed in the Order on Consent, and assessing an additional civil penalty of $25,000 per day for each day that Respondent fails to comply with the Commissioner's Order.

In the Answer, Respondent admitted entering into the Order on Consent, but denied any admission of liability, and also denied that the Order on Consent was entered into knowingly. Answer, at ¶ 5. According to the Hertzel Affidavit, Valley Corners' counsel at the time the Order on Consent was signed was not familiar with Department practice. The Hertzel Affidavit stated that if Respondent had been represented by experienced counsel, and understood that a hearing before an administrative law judge could have been requested, Respondent would have done so, and would not have signed the Order on Consent. Hertzel Affidavit, at ¶ 2. As a first affirmative defense, Respondent alleged that entry into the Order on Consent "was not made with full knowledge of the options available to Respondent, and therefore was not done knowingly and/or voluntarily." Answer, at ¶ 12.

Respondent argued further, in its second affirmative defense, that "[i]t was impossible for Valley Corners to comply with all of the terms of the Order on Consent due to Respondent's financial situation." Answer, at ¶ 14. In its Answer, Respondent alleged that Valley Corners forwarded a $1,000 check to the Department on or about December 8, 2000, the day before Respondent understood the payment was due. Answer, at ¶ 7. Respondent alleged further that the Department did not negotiate the check for several weeks, and at the time the check was tendered to the Department, sufficient funds were available to cover the check. Id. Respondent admitted that Valley Corners had not made any further payments since that first installment. Answer, at ¶ 8.

The Hertzel Affidavit stated that Valley Corners was experiencing financial difficulties at the time the Order on Consent was signed, but that Respondent intended to comply. Hertzel Affidavit, at ¶2. According to the Hertzel Affidavit, the bank would not lend the monies necessary for the tank removal without some assurance of sufficient cash flow to act as security. Hertzel Affidavit, at ¶ 4. The Hertzel Affidavit indicates that the Valley Corners property had only recently been purchased back from the Internal Revenue Service for $250,000, which had seized it for a tax lien. Id. This amount was secured by loans secured by Mr. Hertzel's personal property; thus, Mr. Hertzel had no real property to guarantee another loan to finance the tank removal. Id.

The Hertzel Affidavit stated further that the service station and towing business was very slow during the winter of 2000-2001, due to the sluggish economy and the events of September 11, 2001. Hertzel Affidavit at ¶ 5. In his Affidavit, Mr. Hertzel admits that he probably did receive a call from his attorney, telling him to provide a replacement check for the $1,000 installment payment that was returned, but that he did not do so, because he did not have the funds to cover a replacement check. Hertzel Affidavit at ¶ 7.

Mr. Hertzel's Affidavit goes on to say that he is still attempting to obtain a loan to cover the tank removal, and that because he has paid back most of the money borrowed to purchase the property, he is hopeful that he will be able to do so. Hertzel Affidavit at ¶ 8. According to the Hertzel Affidavit, Mr. Hertzel is in contact with a tank removal contractor, and is waiting for an estimate of the costs of removal. Hertzel Affidavit at ¶ 10. The Hertzel Affidavit states that all of the tanks were pumped dry and "closed up" prior to December 1998, no sales of gasoline have been made, and no product has been present at the Facility since that time. Hertzel Affidavit, at ¶ 11. According to the Hertzel Affidavit, if additional penalties are imposed, it will only create further difficulties for Valley Corners as Respondent attempts to obtain funding. Hertzel Affidavit, at ¶ 9.

DISCUSSION

Motion for Order without Hearing

Department Staff requested an order without hearing against Respondent pursuant to 6 NYCRR Section 622.12. That provision is governed by the same principles applicable to summary judgment, pursuant to New York Civil Practice Law and Rules 3212. Section 622.12(d) provides that a contested motion for an order without hearing will be granted if, upon all the papers and proof filed, the cause of action or defense is established sufficiently to warrant granting summary judgment under the CPLR in favor of any party. Section 3212(b) of the CPLR provides, in relevant part, that a motion for summary judgment shall be granted "if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party. . . . [T]he motion shall be denied if any party shall show facts sufficient to require a trial of any issue of fact."

The party moving for summary judgment must submit evidence sufficient to demonstrate the absence of any material issues of fact. Alvarez v. Prospect Hospital, 68 N.Y.2d 320, 324 (1986). The non-moving party may not rely merely on conclusory statements and denials, but must lay bare its proof. Hanson v. Ontario Milk Producers Coop., Inc., 58 Misc. 2d 138, 141-142 (Sup Ct. Oswego County 1968). If the non-moving party fails to deny a fact in the motion, that fact is deemed admitted. Kuehne & Nagel, Inc. v. Baiden, 36 N.Y.2d 539, 544 (1975); Richard Locaparra, d/b/a L&L Scrap Metals, Commissioner's Decision and Order, 2003 WL 21633072, *2 (June 16, 2003).

In this case, there are no substantive disputes of fact that would require a hearing. Department Staff has submitted proof that Respondent violated the Order on Consent. Respondent admits the violation. Respondent's submission offers reasons for Respondent's failure to comply, and also asserts that, had Respondent been properly advised, and been aware of other options, Valley Corners would not have entered into the Order on Consent. These arguments do not amount to a factual dispute. Thus, Respondent has failed to meet its burden, on a motion for order without hearing, to raise an issue of fact, and to refute Department Staff's allegations. It is undisputed that the Facility's tanks have not been removed, no closure report has been submitted, and Respondent has failed to pay the civil penalty assessed.

The remaining points raised in the Answer and the Hertzel Affidavit do not raise issues of fact that would require a hearing. Mr. Hertzel's contention that he would not have signed the Order on Consent if he had understood that requesting a hearing was an option is not persuasive. There has been no proof offered that Respondent was not competent to enter into the Order on Consent. Moreover, the Order on Consent itself provides, at Paragraph 10, as follows:

[i]n settlement of Respondent's civil liability for the aforesaid violations, Respondent has waived its right to a hearing herein as provided by law and has consented to the issuing and entering of this Order on Consent ("Order") pursuant to the provisions of Articles 17 and 71 of the ECL, and has agreed to be bound by the provisions, terms and conditions herein.

Emphasis supplied. This paragraph also makes clear, contrary to Respondent's denial in Paragraph 5 of its Answer, that Valley Corners was, in fact, admitting liability for the violations detailed in the Order on Consent. The Order on Consent does not contain any provisions stating, for example, that execution of the Order on Consent does not constitute an admission of liability by Respondent.

Respondent's argument that Valley Corners lacks the financial resources to perform its obligations under the Order on Consent does not preclude granting the relief requested by Department Staff. Section 622.12(f) provides that

[t]he existence of a triable issue of fact regarding the amount of civil penalties which should be imposed will not bar the granting of a motion for an order without hearing. If this issue is the only triable issue of fact presented, the ALJ must immediately convene a hearing to assess the amount of penalties to be recommended to the commissioner.

Here, other than the statements in the Hertzel Affidavit, Respondent did not provide any documentation in support of its asserted inability to pay, stating only that Mr. Hertzel "can, and would, document all of the above more fully if a hearing were scheduled on this matter." Under the circumstances, this statement is insufficient to raise a triable issue of fact which would require a hearing. As there are no disputed issues of fact, and no persuasive argument against entry of the order requested by Department Staff, the motion for summary order is granted.

Section 71-1929(1) of the Environmental Conservation Law states that

[a] person who violates any of the provisions of, or who fails to perform any duty imposed by titles 1 through 11 inclusive and title 19 of article 17, or the rules, regulations, orders or determinations of the commissioner promulgated thereto or the terms of any permit issued thereunder, shall be liable for a penalty of not to exceed twenty-five thousand dollars per day for each violation, and, in addition thereto, such person may be enjoined from continuing such violation as hereinafter provided.

The $35,000 penalty sought by Department Staff is appropriate, given the nature and circumstances of the violation, as described above. Essentially, the Department is seeking compliance with the terms of the Order on Consent, which Respondent has already signed. Respondent, by failing to comply with the Order on Consent, has deprived himself of the benefit of the suspended penalty, and will therefore be obliged to pay the entire $35,000.

Department Staff also requests a provision in the Commissioner's Order assessing an additional civil penalty of $25,000 per day for each day that Respondent fails to comply, citing to Section 71-1929. In requesting this prospective relief, Department Staff's motion does not specify a penalty amount, nor does the motion provide a method of calculating the days of violation, but simply reiterates the total penalty available under the statute. While it is appropriate to include a reference to this statutory section in the Commissioner's Order, so that the Respondent is on notice as to any additional penalties that may be assessed, a showing by Department Staff as to the nature and duration of any future non-compliance is required. If, as Respondent represents in its Answer, a loan is likely to be forthcoming, and the requirements under the Order on Consent are fulfilled, there will be no occasion to impose additional penalties. Therefore, I recommend that Department Staff's motion for an order without hearing be granted, and that the penalty requested by Department Staff be assessed, except to the extent that Department Staff's motion seeks prospective relief pursuant to ECL Section 71-1929.

FINDINGS OF FACT

The facts determinable as a matter of law are as follows:

  1. Respondent owns and operates a petroleum bulk storage facility at 2 Peekskill Hollow Road, Putnam Valley, New York.
  2. The Facility consists of three 2,000 gallon tanks (Tanks 1, 2, and 5); two 3,000 gallon tanks (Tanks 3 and 6); and one 4,000 gallon tank (Tank 4). All of the tanks are steel, without cathodic protection.
  3. On November 10, 2000, Respondent executed an Order on Consent in this matter, which required that Respondent (1) remove all underground storage tanks at the Facility within sixty days of November 30, 2000; (2) submit a closure report within ninety days of November 30, 2000; and (3) pay a $35,000 civil penalty, with $10,000 payable, and $25,000 suspended pending compliance with the Order on Consent. The Order on Consent provided for payment of the $10,000 in installments of $1,000. The first installment was due thirty days after November 30, 2000, with the remaining installments due at thirty day intervals thereafter.
  4. Department Staff inspected the Facility on January 24, 2002. The inspection revealed that Respondent had not removed the underground storage tanks at the Facility.
  5. Respondent has not submitted a closure report for the removal of the tanks, as required under the Order on Consent.
  6. Respondent has failed to pay the civil penalty required under the Order on Consent.

CONCLUSIONS

  1. Respondent violated the Order on Consent by failing to remove the underground storage tanks at the Facility, submit a closure report, and pay the civil penalty.
  2. The civil penalty is authorized, pursuant to ECL 71-1929, which provides for a penalty of up to $25,000 per violation per day, and injunctive relief.

RECOMMENDATION

I recommend that the Commissioner grant the relief requested by Department Staff in its motion for summary order.

____________/s/_______________
Maria E. Villa
Administrative Law Judge
NYS Department of Environmental Conservation
Office of Hearings and Mediation Services
625 Broadway, First Floor
Albany, New York 12233-1550

Dated: Albany, New York
August 25, 2003

To: Scott A. Herron, Esq.
Senior Attorney
New York State Department
of Environmental Conservation
Bureau of State Superfund and
Voluntary Cleanup
625 Broadway, 14th Floor
Albany, New York 12233-5550

Laura Zeisel, Esq.
Drake, Sommers, Loeb, Tarshis & Catania, PLLC
One Corwin Court
Post Office Box 1479
Newburgh, New York 12550

George Hertzel
Valley Corners Realty Inc.
P.O. Box 555
2 Peekskill Hollow Road
Putnam Valley, New York 10579

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