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Bath Petroleum Storage, Inc. and EIL Petroleum, Inc. - Ruling 3, August 4, 2000

Ruling 3, August 4, 2000


NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
___________________________________________________________________

In the matter of BPSI/EIL Denial of Application to Renew and Transfer SPDES
Permit NY-0004278 for Bath Petroleum Facility, Town of Bath,
Steuben County.

ALJ RULING ON ISSUES

DEC # 8-4624-00008
_________________________________________________________________

Introduction

These proceedings involve the Department Staff's ("DEC Staff's") determination to deny the renewal of the existing State Pollutant Discharge Elimination System ("SPDES") permit of Bath Petroleum Storage, Inc./EIL Petroleum, Inc. ("BPSI"). DEC Staff's basis for the permit denial was the failure of BPSI to provide all required information in the SPDES permit renewal application. DEC Staff asserts this information is necessary to determine whether the proposed discharge will contravene any applicable standards, criteria, limitations, rules and regulations. BPSI disputes DEC Staff's assertion that inadequate information was provided and has requested a hearing pursuant to 6 NYCRR 621.13(d) to review DEC Staff's denial. Pursuant to this request a legislative hearing and issues conference were held on July 10, 2000 to solicit public comment on the dispute and explore whether there were any issues that would warrant the convening of an adjudicatory hearing.

Based upon my review of the transcripts of this hearing and issues conference and the over 80 exhibits submitted by the parties, I find that there are no issues necessitating the convening of an adjudicatory hearing. Further, I find that BPSI's legal right to a hearing pursuant to 6 NYCRR 621.13(d) and independent review of the facts and circumstances surrounding the denial by DEC Staff of BPSI's SPDES permit renewal application has been met.

History of the Facility

BPSI maintains a facility for the underground storage of liquid petroleum gas ("LPG") on Eagle Valley Road in Bath, Steuben County, New York. In 1982, BPSI took over this facility from Mobil Corporation and thereafter, the Department transferred the SPDES permit from Mobil to BPSI. The SPDES permit allows BPSI to discharge brine, displaced by the storage of LPG in the salt caverns to the Cohocton River.

In 1984, 1989 and 1994 the Department issued SPDES permit renewals to BPSI. In 1990, the permit was modified to change the permittee's name to EIL Petroleum, Inc., of which BPSI is a wholly-owned subsidiary.

In the early 1990's, BPSI applied for and received permits from DEC's Division of Mineral Resources to expand the size of its underground facility. This expansion was subsequently undertaken by BPSI.

In 1996, DEC Staff sought to modify the SPDES permit with regard to the facility's industrial classification, reporting requirements and a recalculation of the amount of brine that could be discharged. BPSI objected, and after a lengthy hearing process, Deputy Commissioner Crotty ruled in 1998 that DEC Staff was justified in seeking the modifications and the permit was modified.1

Procedural History

BPSI's SPDES permit at issue here, had an expiration date of September 12, 1999. On March 10, 1999, BPSI submitted a timely application for renewal of its SPDES permit to DEC Staff. In response, on April 29, 1999 DEC Staff sent BPSI the first Notice of Incomplete Application that listed 30 distinct items that needed to be fully addressed before the application could be deemed complete. In addition, DEC Staff noted that 6 NYCRR Part 621.13(f) required that this permit renewal be treated as a new application.

On June 23, 1999, BPSI responded by sending additional information to DEC Staff. The next day, June 24, 1999, DEC Staff sent BPSI a second Notice of Incomplete Application and provided a revised list of the information necessary to complete the application.

On August 11, 1999, BPSI again responded by sending a "SPDES Permit Engineering Report" prepared by Day Engineering, P.C. ("Day Report") for the facility. The following day, August 12, 1999, DEC Staff sent a third Notice of Incomplete Application stating that most of the information sought by DEC Staff in the first Notice of Incompleteness had not yet been provided.

On August 23, 1999, BPSI again responded. On September 10, DEC Staff sent BPSI a fourth Notice of Incomplete Application stating that the application was still grossly deficient.

Also on September 10, 1999, under a separate cover, DEC Staff informed Bath that the Day Report was unapprovable as an engineering report for the facility.

On September 24, 1999 BPSI again responded with additional information. Finally on December 8, 1999, DEC Staff denied the SPDES permit renewal on the basis of insufficient information and included a 6 point "Summary of Information Requested".

On January 7, 2000, BPSI's counsel contacted the Department of Environmental Conservation's Office of Hearings and Mediation Services ("OHMS") requesting a hearing pursuant to 6 NYCRR Part 621.13(f). On February 17, 2000 a Hearing Request Form was sent by DEC Staff to the OHMS. BPSI then filed suit in Supreme Court, Livingston County, requesting review of DEC Staff's decision to deny the permit renewal. Oral arguments were heard on February 23, 2000. On April 28, 2000, Acting Supreme Court Justice Gerald Alonzo granted DEC Staff's motion to dismiss on the grounds that BPSI failed to exhaust administrative remedies and remanded this matter back to the OHMS.

Legislative Hearing

As noticed in the Notice of Public Hearing, published in the Environmental Notice Bulletin of June 7, 2000 and the Steuben-Courier Advocate of June 9, 2000, on July 10, 2000, I convened the public legislative session of the hearing at the DEC regional sub-office on Coon Road in Bath, New York. Approximately 10 people were in attendance; 4 individuals gave oral presentations and no written statements were offered. Public comments concerned the effect of the discharge on the fishery in the Cohocton River and the lengthy nature of this dispute.

Issues Conference

As announced in the Notice of Public Hearing, immediately after the legislative hearing was adjourned, I convened the issues conference in this matter, also at the DEC Bath sub-office. The purpose of the conference was to determine what issues, if any, would require adjudication. In that regard, offers of proof, oral arguments and exhibits were made part of the record. Participants at the issues conference were DEC Staff and BPSI.

DEC was represented by Lisa Perla Schwartz, Assistant Regional Attorney, from DEC's Region 8 office.

BPSI was represented by John J. Privitera from McNamee, Lochner, Titus and Williams in Albany, New York, and Jerry Willian Boykin and W. Michael Holm from The Jefferson Law Firm in McLean, Virginia.

DEC Staff's Position

DEC Staff asserts that BPSI's permit renewal application was properly denied because BPSI failed to provide sufficient information with the SPDES permit renewal application to allow DEC Staff to determine whether the proposed discharge will contravene any applicable standards, criteria, limitations, rules and regulations.

BPSI's Position

BPSI asserts that adequate information was indeed provided to DEC Staff, or, in the alternative, that DEC Staff was precluded from requesting such information in the context of a permit renewal proceeding.

Issues for Adjudication

The central issue in this matter is whether BPSI's SPDES permit renewal application was properly denied by DEC Staff. This would be the central issue if a hearing were to be held. In addition, the parties have raised a number of other issues stemming from and related to this central issue.

Sufficiency of the Application

Section 70-0117(2) of the Environmental Conservation Law (ECL) states that "at any time during the review of an application for a permit or a request by a permit holder for renewal ... of an existing permit, the department may request additional information from the applicant or permit holder with regard to any matter contained in the application or request when such information is necessary for the department to make any findings or determinations required by law.... Failure by the applicant or permit holder to provide such information may be grounds for denial by the department of the application or request."

Further, the regulations specific to the SPDES program state that upon receipt of a SPDES permit renewal application that DEC Staff shall determine whether "the department has up-to-date information on the permittee's production levels, permittee's waste treatment practices, and the nature, contents, and frequency of the permittee's discharge" and whether "the discharge is consistent with applicable effluent standards and limitations, water quality standards, and other legally applicable requirements." (6 NYCRR Part 755 (b)(2) and (3)). If DEC Staff determines that the applicant has failed to provide up-to-date information or that the discharge is not consistent with what is legally required, "the department shall take appropriate action to secure compliance, including but not limited to modification of the permit." (6 NYCRR Part 755(d)).

In response to BPSI's initial renewal application, DEC Staff produced a list of some thirty specific pieces of information it deemed necessary to adequately review the permit application (See, DEC Staff's first Notice of Incomplete Application dated April 29, 2000). Over the next eight months, BPSI made a number of submittals to supplement the information in the SPDES renewal application and DEC Staff sent at least four more Notices of Incomplete Application before finally denying the application on December 8, 1999. The law on this point is clear; if information that DEC Staff identifies as necessary to evaluate a SPDES permit renewal application is requested and not provided by an applicant, DEC Staff is empowered to deny such application (ECL § 70-0117(2)). While there are multiple other pieces of requested information that have not been provided, for the purposes of this decision an examination of only one specific item, for illustrative purposes, will suffice.

Engineering Report. In the first Notice of Incomplete Application (April 29, 1999), DEC Staff requested a "revised engineering report which details facility operation in at least the coming 5 year permit term (especially including All waste streams which generate brine, including freshwater used to solution caverns, pipe flushing, periodic cavern washing, and the displacement of product with fresh water)" (paragraph 3). The last engineering report for the facility was completed in 1975 by Mobil. The reason cited by DEC Staff to support their request of an updated engineering report was a change to the scope of the BPSI facility. This change occurred in the early 1990s, after BPSI applied for and was granted permits pursuant to Article 23 of the ECL to expand its facility. This expansion increased the size of the facility and the number of wells on site. Since this expansion did not increase the discharge to the Cohocton beyond the then permitted levels, no revision was necessary to the SPDES permit at that time. In 1994, when DEC Staff last renewed BPSI's permit, no request was made for a revised engineering report, apparently due to an oversight by DEC Staff.

On August 11, 1999, BPSI submitted the Day Report that consisted of eleven pages of text and seventeen appendices. On September 10, 1999, DEC Staff responded that the Day Report did not constitute an approvable engineering report. In that letter, DEC Staff stated "[t]he purpose of an engineering report is to document the manner of wastewater generation (waste characteristics and volumes for each waste stream), potential methods of treatment, and explore disposal options. This information is necessary to develop a discharge permit which is sufficiently protective of the environment while taking into account both water quality standards and available technology." This letter also contained ten pages of questions regarding the contents of the Day Report.

While BPSI has made efforts to address some of the questions raised in DEC Staff's September 10, 1999 letter, no amended Day Report (or other engineering report) has been submitted and many engineering questions asked by DEC Staff still remain unanswered. As DEC Staff stated in the "Summary of Information Requested" attached to the December 9, 1999 letter denying the renewal application, "the application must include a new engineering report" which describes "projected facility operations in detail over at least the coming 5 year permit term, and in particular must address all operations which generate brine, including fresh water solutioning of caverns, pipe flushing, periodic cavern washing and displacement of product with fresh water." (Paragraph 2).

This request by DEC Staff that the applicant provide up-to-date information in the form of an approvable engineering report for the facility is neither unusual nor evidence that BPSI is receiving special scrutiny. In fact providing such information is routine practice for industrial dischargers that have expanded their facilities or do not have a current engineering report on file with the department. To date, this request has not been complied with, and thus alone is sufficient grounds to deny the permit renewal application.

It is also important to note that the engineering report is not a minor piece of information, but a collection of important engineering facts regarding the facility, certified as true by a licensed Professional Engineer. There appear to be numerous other pieces of information that have been requested and not provided, but it is not necessary to evaluate them since the application is clearly incomplete. In sum, for the foregoing reasons, I find that DEC Staff did not act improperly by denying the application.

Collateral Estoppel/Res Judicata

BPSI asserts that because DEC Staff modified BPSI's SPDES permit in 1998 (after an adjudicatory hearing), DEC Staff is estopped from seeking additional information regarding the facility. Specifically, BPSI argues that DEC Staff's request for additional information regarding the facility's anticipated operations for the five year term of the SPDES permit renewal constitutes a relitigation of issues decided in the previous adjudicatory hearing regarding modification of the expired SPDES permit. Thus, according to BPSI, DEC Staff should have raised all issues regarding the permit in the last adjudicatory hearing, and, because it failed to do so, the agency is now precluded from requesting additional information.

This argument fails on at least two counts. First, the dispute regarding the 1998 SPDES permit modification involved changing the facility's industrial classification, reporting requirements and a recalculation of the amount of brine that could be discharged. DEC Staff's review of the SPDES permit renewal, which is at issue here, involves a facility-wide review to evaluate the discharge to river, the processes within the plant that generate the discharge, and the technology used to control or reduce the quantity of discharge. Clearly, this is a much broader review of the facility and therefore, not the same issue adjudicated in 1998. Second, as noted earlier, ECL section 70-0117(2) specifically empowers DEC Staff to request additional information from applicants seeking permit renewals without limitation. The Legislature clearly intended DEC Staff not only to be empowered, but to be obligated, to protect the environment by minimizing discharges through review of both environmental quality data and on-site engineering practices at regulated facilities.

Other Issues Suggested by the Parties for Adjudication

DEC Staff's Alleged Selective Treatment of BPSI. BPSI asserts that Acting Supreme Court Justice Alonzo's April 28, 2000 Ruling directed the OHMS to conduct an adjudicatory hearing on this issue. In dismissing BPSI's claim against DEC Staff for failure to exhaust administrative remedies, Justice Alonzo stated "the issues first need to be addressed administratively, and the Agency [DEC] will have an opportunity to review its actions, correct improper conduct or decisions, if any, and develop a record for meaningful judicial review if it becomes necessary." I do not read Justice Alonzo's statement as directing an administrative hearing on the issue of selective enforcement. Rather, he is stating hornbook law, that before judicial relief can be sought, administrative remedies must be exhausted. Further, there is no statutory or regulatory authority for the OHMS to conduct a hearing regarding the issue of selective enforcement. Consequently, I find that this issue is not appropriate for an adjudicatory hearing.

Burden of Proof. The issue of which party has the burden of proof in an adjudicatory hearing was also raised as an issue for this ruling. Since I find that no adjudicatory hearing is necessary, this issue is moot.

Nature of the Hearing. DEC Staff has suggested, that should BPSI prevail in an adjudicatory hearing and BPSI's renewal application be held to be complete, that the appropriate outcome is for the case to be remanded back to DEC Staff for further processing of the application. BPSI objects to this and believes that the appropriate outcome would be for the SPDES permit to be issued. Since I find that there is no need for an adjudicatory hearing in this matter, this issue is also moot.

Conclusion

Based upon my review of the transcripts of this hearing and issues conference and the over 80 exhibits submitted by the parties, for the reasons set forth above I find that there are no issues necessitating the convening of an adjudicatory hearing. Further, I find that BPSI's legal right to a hearing and independent review of the facts and circumstances surrounding the denial by DEC Staff of BPSI's SPDES permit renewal application has been met.

Appeals

This ruling may be appealed to the Commissioner on an expedited basis. 6 NYCRR 624.8(d)(2). Ordinarily, expedited appeals must be filed with the DEC Commissioner in writing within five days of the disputed ruling. 6 NYCRR 624.6(e)(1). However, I provide that any appeals must be sent to Commissioner John P. Cahill and received at the Office of the Commissioner (NYSDEC, 50 Wolf Road, Albany, New York 12233-1010) before 5 p.m. on August 15, 2000. Any responses to any appeals must be received before 5 p.m. on August 22, 2000. The parties shall ensure that transmittal of all papers is made to me and all parties at the same time and in the same manner as transmittal is made to the Commissioner. Please send two copies of any appeal that is filed. No submissions by telecopier will be accepted. Appeals should address this ruling, rather than merely restate a party's contentions. Any request for an adjustment to the appeal schedule must be made to DEC's Chief Administrative Law Judge, Daniel E. Louis, at the Office of Hearings and Mediation Services.


/s/
P. Nicholas Garlick
Administrative Law Judge

Albany, New York
August 4, 2000

TO: Lisa Perla Schwartz, Esq.
Assistant Regional Attorney
NYSDEC, Region 8
6274 East Avon-Lima Road
Avon, New York 14414-9519

Gregory Allen, Esq.
Associate Counsel
NYSDEC
50 Wolf Road
Albany, New York 12233

John J. Privitera, Esq.
McNamee, Lochner, et al.
75 State Street, Box 459
Albany New York 12201-0459

Jerry W. Boykin, Esq.
Michael Holm, Esq.
The Jefferson Law Firm
6862 Elm Street, 7th Floor
McClean, Virginia 22101

1 Decision of the Deputy Commissioner, In the Matter of the Proposed permit modification of the State Pollutant Discharge Elimination System ("SPDES") Permit No. 00004278 issued to BATH PETROLEUM STORAGE, INC., a subsidiary of EIL PETROLEUM, INC. (August 28, 1998).

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