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Exxonmobil Oil Corporation, f/k/a Mobil Oil Corporation - Ruling, October 21, 2013

Ruling, October 21, 2013

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
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In the Matter of the Alleged Violations of Article 12 of the
New York State Navigation Law, Article 17 of the New York
State Environmental Conservation Law and Titles 6 and 17
of the Official Compilation of Codes, Rules and Regulations of
of the State of New York by:

EXXONMOBIL OIL CORPORATION,
f/k/a Mobil Oil Corporation,

Respondent.

Rulings of the Administrative Law Judge on Respondent's
Motion to Dismiss and Staff's Motion for Order Without Hearing

DEC Case No. 02-20060731-318
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Proceedings

By notice of hearing and complaint dated March 11, 2013, the Region 2 staff of the New York State Department of Environmental Conservation (Department or DEC) commenced this proceeding against Exxon Mobil Oil Corporation f/k/a Mobil Oil Corporation (Exxon). Exxon served an answer dated April 5, 2013 and a motion to dismiss dated July 11, 2013. On August 7, 2013, Department staff submitted to the DEC Office of Hearings and Mediation Services (OHMS) the pleadings and its opposition to the motion to dismiss and a cross-motion for an order without hearing. Chief Administrative Law Judge (CALJ) James T. McClymonds assigned the matter to me and on September 13, 2013, I received respondent's affirmations in support of Exxon's motion to dismiss and in opposition to the staff's motion for order without hearing.

Representing Exxon is Paul G. McCusker, Esq. of McCusker, Anselmi, Rosen and Carvelli of Florham Park, New Jersey. Representing staff is John K. Urda, Assistant Regional Attorney of the Department's Division of Legal Affairs, Region 2 office in Long Island City, New York.

Staff's Charges

In this proceeding, the staff alleges that on or about November 15, 1989, an oil spill occurred at the respondent's petroleum bulk storage (PBS) facility located at a gasoline station at 51 Kingsland Avenue, Brooklyn, New York. Department staff alleges that Exxon failed to report the spill, failed to notify the Department of its removal of tanks, failed to renew its registration that expired in October 1993, and has failed to remediate the spill. Based upon these allegations the staff claims that the respondent is in violation of Navigation Law (NL)

§§ 173, 175, 176; Environmental Conservation Law (ECL) §§ 17-0501 and 17-0807; §§ 32.3, 32.5 of Title 17 of the Official Compilation of Codes, Rules and Regulations of the State of New York (NYCRR) and 6 NYCRR §§ 750-1.4(a), 612.2(d), 613.8, 613.9(c).

Staff seeks an order from the Commissioner finding the respondent in violation of the abovementioned laws and regulations, imposing a penalty of not less than $75,000, ordering Exxon to clean up and remove the contamination pursuant to a DEC-approved work plan, and paying all State costs relating to the spill.

Respondent's Position

Exxon argues that the Department has brought its proceeding decades late and that there is no proof that Exxon is the responsible party rather than the non-party landowner (Donato Passarella) who Exxon claims also owned tanks at this property. Exxon contends that the delay in bringing the proceeding is prejudicial to the respondent because there are no records and witnesses available to provide relevant information. Exxon maintains therefore that because the first five of the Department's causes of action require proof of a discharge of petroleum as a prerequisite to liability, there must be a dismissal. Moreover, with regard to the sixth claim concerning the removal of the tanks without notification to DEC, Exxon argues that because relevant documentation has likely been destroyed during the period that the Department staff delayed in bringing the proceeding, the respondent is entitled to a dismissal. With respect to the allegation concerning unpermitted discharges to groundwater pursuant to 6 NYCRR § 750-1.4(a), Exxon maintains that since the regulation was not effective until 2003, it does not apply. With respect to the relief sought by staff, Exxon contends that it is amenable to continue to participate in cleanup and does not protest the penalty sought. However, the respondent maintains that its opposition to settlement of this matter rested on staff's insistence that it admit liability.

Staff's Response

In response to Exxon's motion, Department staff moved for summary order arguing that there is no question that Exxon is liable for the discharge as owner of the tanks and the respondent cannot show unreasonable delay in staff's prosecution. With respect to Exxon's claim regarding the allegation of groundwater contamination, staff states that because the contamination is a continuing violation, the fact that the regulation was not promulgated until 2003 is irrelevant. Concerning the alleged delay in bringing the proceeding, staff argues that Exxon failed to meet the criteria set out in Cortlandt Nursing Home v. Axelrod, 66 NY2d 169 (1985) and that the inordinate number of spills the staff had to address from November 1989 through May 2008 mandated prioritization. Staff argues that when the spill came to its attention in 2005, it proceeded expeditiously.

DISCUSSION

Motion to Dismiss

1. Failure to State a Claim

To the extent that Exxon is stating that Department staff has failed to state a claim, as discussed in Matter of Solow Corporation, ALJ Ruling (ALJ Maria E. Villa, February 23, 2005) (and as referenced in staff's papers), in order for the respondent to prevail on its motion to dismiss, the documentary evidence produced by Exxon must conclusively establish its defenses to the allegations as a matter of law. Leon v. Martinez, 84 NY2d 83, 88 (1994). I must accept as true the allegations in the complaint as well as any submissions in opposition to the motion. CPLR § 3211; 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144, 152 (2002); Sokoloff v. Harriman Estates Dev. Corp., 96 NY2d 409, 414 (2001). The Department staff must be accorded "the benefit of every possible inference." Sokoloff, 96 NY2d at 414 (citations omitted).

Applying these standards to this matter, I conclude that Exxon's motion must fail. There is no dispute that contamination was found at the site as early as November 1989. Nor is there a dispute that Exxon did maintain PBS tanks at this facility at least through February 1990. Staff's complaint pleads sufficient allegations to state a claim for respondent's liability for the contamination. The respondent's motion papers do raise questions as to whether it is possible that the landowner's tanks were the source of the discharge rather than Exxon's, but do not conclusively establish a defense as a matter of law. Thus, respondent's motion to dismiss on the ground staff fails to state a claim is denied.

2. Cortlandt Defense

The main argument put forward by Exxon is that too much time has passed for it to summon the evidence needed to demonstrate that the leaks were not caused by its tanks. As recently stated by Justice Rumsay in Stasack v. DEC, Index No. 3490-13 (Cortland County Supreme Court, September 30, 2013), "[i]t is now well settled that regulatory hearing delays such as encountered here do not deprive the agency of jurisdiction; at most, upon a showing of substantial prejudice, unreasonable delay may constitute an erroneous exercise of authority." (citations omitted.) Looking at the factors set forth in Cortland Nursing Home v. Axelrod, 66 NY2d 169, 179 (1985) and cited by both parties, as in Matter of Manor Maintenance (ALJ Edward Buhrmaster, Hearing Report August 1992), one must determine, upon a hearing record, whether or not this matter meets those factors thus requiring dismissal. Upon the information before me at this time, Exxon has not shown sufficient prejudice to its ability to defend.

The Court of Appeals set forth in Cortlandt as follows: "an administrative body in the first instance, and the judiciary in review, must weigh . . . (1) the nature of the private interest allegedly compromised by delay; (2) the actual prejudice to the private party; (3) the causal connection between the conduct of the parties and the delay; and (4) the underlying public policy advanced by governmental regulation" [66 NY2d 169, at 178].

As to the private interest that has been allegedly compromised by the delay, I do not agree with staff that due process is not a concern of this forum. If the respondent is truly unable to find the relevant information necessary to mount a defense due to the inordinate passage of time caused by the Department's inaction, this is a due process concern that is fundamental to a fair administrative hearing process. However, at this juncture, as noted by the discussion below with respect to actual prejudice, it has not been established that Exxon's rights have been undermined.

The second Cortlandt factor is whether administrative delay has caused actual prejudice to the party in mounting a defense to the proceeding [66 NY2d at 180]. Here, Exxon claims prejudice because the time that has passed since the alleged discharge is longer than the document retention schedules of Exxon and its contractor, thus potentially precluding access to relevant records. Mr. William Tyree of Tyree Service Corporation, the entity that was alleged to have removed the tanks at the site for Exxon, states in his certification submitted in support of the motion to dismiss that based on Tyree policy all documentation relating to the February 1990 tank excavation has been destroyed. He states further that Tyree has performed a search of its records and has none relating to either the 1989 or 1990 tank excavations. Certainly, the lack of documentation of Exxon's tank removal due to the passage of time could be prejudicial to the respondent. Yet, despite this alleged lack of documentation, both Mr. Tyree and another affiant on behalf of Exxon state in their respective certifications that the respondent's five 550 gallon tanks were removed on or before October, 1989 and the one 4,000 gallon tank was removed in February 1990. Certifications of William Tyree, ¶¶ 2-3; Laurie M. McCarthy, ¶¶ 5-6. Also, while Exxon's motion and Ms. McCarthy's certification provide that "documentation notifying the Department of a substantial modification, may have been destroyed", there is no definitive indication of whether that is the case. Exxon Motion, ¶ 47; McCarthy Cert., ¶ 24.[1] In addition, Mr. Urda notes that Exxon does not identify what documents would have been lost that DEC would not have in its files. Urda Aff., ¶ 52. These statements undermine the respondent's claims with respect to actual prejudice.

In any case, it does not seem necessarily vital to know precisely on what dates the tanks were removed because as Mr. Urda notes, if the tanks were removed before October and the spill was discovered in November, the spill could have been caused by the pre-existing tanks. Urda Aff., ¶ 57; Haggerty Aff., ¶ 30.[2]The Department staff points to the respondent's own testing results from certain monitoring wells identifying an older gasoline product containing lead that would have been supplied between 1960 and1980. Exhibit K to Haggerty Aff. However, one monitoring well indicated newer compounds that would have been used in gasoline between 1980 and 2006. Id. Based on these somewhat conflicting results, a hearing is needed.

The third Cortlandt factor is "the causal connection between the conduct of the parties and the delay." The staff maintains that due to the overwhelming number of spill cases in the Region 2 offices, it had to prioritize. Because the initial spill report indicated a very small amount of petroleum, the matter did not come to the Department staff's attention until the City contacted it in 2005. Urda Aff., ¶¶ 45-46; Haggerty Aff., ¶¶ 9-11, 13. After some initial confusion, staff maintains that once it determined Exxon to be responsible for the spill, it alerted the respondent. Urda Aff., ¶¶ 46-47; Haggerty Aff., ¶¶ 9-11. The Court of Appeals in Cortlandt stated that it would not be appropriate to penalize an agency for a delay that was caused by inadequate resources. However, in Cortlandt the court was not addressing a delay of this magnitude. Again, a hearing such as the one held on Manor Maintenance is required in order to ascertain whether a delay caused by the Department staff is responsible for prejudice to the respondent's ability to defend itself.

The last Cortlandt factor addresses the policy concerns advanced by the governmental regulation. Clearly, the purposes of the Navigation Law, the ECL and the accompanying regulations at issue are to prevent petroleum spills and to expedite their cleanup. Regardless of the time that has transpired, the environment remains contaminated and the spill must be addressed. The purpose of a hearing in this matter would be to address whether the delay has undermined the ability to determine the appropriately responsible party. At this juncture, I do not find that Exxon has established a Cortlandt defense sufficiently to warrant dismissal based upon the time lapse.

3. Unpermitted Discharge into Groundwater

Exxon argues that the Department staff's third cause of action - unpermitted discharge of petroleum into groundwater without a State Pollutant Discharge Elimination System (SPDES) permit - based in part on 6 NYCRR § 750-1.4(a), fails as a matter of law because the regulation was not promulgated until April 11, 2003, years after the alleged violation. Exxon Motion, fn. 3. However, as staff counters, the violation continues and in addition, there can be no issue that the overarching statute, ECL § 17-0807, which took effect prior to the alleged violation, is applicable. Urda Aff., ¶ 25.

Motion for Order Without Hearing

In response to Exxon's motion to dismiss, staff filed its opposition in addition to a cross-motion for summary order. For the staff to achieve summary relief pursuant to 6 NYCRR

§ 622.12(a), based upon all the papers and proof filed, staff's causes of action must be established sufficiently to warrant granting summary judgment pursuant to the CPLR. 6 NYCRR § 622.12(d). If Exxon shows the existence of a material fact in dispute, there must be a hearing. 6 NYCRR § 622.12(e). See also, Flacke v. NL Indus., 228 AD2d 88, 890 (3d Dep't 1996); State v. Williamson, 8 AD3d 925, 928 (3d Dep't 2004). Based upon the discussion below, I find that the staff's motion must also fail.

While the law is clear with respect to the liability of a tank owner vis a vis a discharge, the facts in this case with respect to the ownership of various tanks are murky. Mr. Urda explains that Exxon is responsible for the Department staff's "confusion" due to its failure to advise DEC when it closed and removed the tanks. Urda, Aff., ¶ 16. According to staff, it was this omission by Exxon that led to an FIR including the "Mobil Tanks on the Passarella Tanks registration." Zielinski Aff., ¶ 16. Mr. Zielinski explains in his affidavit that the Mobil tanks were registered with DEC and installed on December 1, 1966 and December 1, 1971. Zielinski Aff., ¶ 5. Mr. Zielinski describes the tanks as "single-wall steel construction . . . and wholly unprotected." Id., ¶ 6. He further explains that the tanks, though removed by 1990, were not closed in the Department's records because of Exxon's failure to report the closure. Id., ¶¶ 8, 10. According to Mr. Zielinski, in 1995, DEC administratively closed the Exxon tanks based upon Mr. Passarella's separate registration of a new set of fiberglass-reinforced plastic tanks replacing the Exxon ones.Id., ¶¶ 9, 12.

Staff also submits the affidavit of Donato Passarella who admits to owning the subject property and gas station from July 9, 1971 until September 15, 2011, when he sold the property to his son John. Mr. Passarella confirms that Exxon removed its last tank in 1990. Passarella Aff., ¶ 2. However, he maintains that the only tanks during the period of 1971 "until about 1990" were Exxon's and he installed his own tanks in 1990. Passarella Aff., ¶¶ 3-7. He agrees with staff in this affidavit that the site could not hold a second set of tanks. Id., ¶ 5.

Exxon counters that Donato Passarella owned tanks that were installed in 1965 at the same site. Answer, p. 8. The respondent disputes the Department staff's conclusion that Mr. Passarella submitted an incomplete application form leaving out the page for recording tank information. McCusker Aff., ¶¶ 39-40; Zielinski Aff., ¶ 16; Ex. E annexed to Zielinski Aff. Exxon also contests staff's claim that this omission combined with Exxon's failure to report the tank closure resulted in the clerical error of carrying over the Exxon tanks to the Passarella registration. Zielinski Aff., ¶¶ 16-26. Exxon points out that the Passarella FIR states that the tanks were installed in 1965 while Exxon's FIR shows its tanks were installed in 1971. McCusker Aff., ¶¶ 39-42. In addition, while Department staff and Mr. Passarella maintain that it would be impossible for two sets of tanks to reside in this property (Haggerty Aff., ¶ 6; Ex. N), John Wolf, the senior project manager for Kleinfelder, states that the site could have accommodated all the tanks. Wolf Aff., ¶ 4; Ex. A.

This confusing paper trail does not lend itself to summary judgment. Rather, the many questions raised by the documents presented and the competing interpretations of them would be appropriately aired and answered in a hearing. For example, the letter dated June 4, 2013 from the New York City Fire Department to Mr. Urda provides a chronology regarding the installation and removal of storage tanks at the site. Ex. A to Urda Aff. However, the dates and number of tanks do not appear to coincide with the information provided by staff or Exxon. As the Third Department concluded in Flacke v. NL Indus., supra, the Department's delay in this matter should not entitle staff to an inference that the respondent's inability to produce records (if proven) means that required information was not maintained or produced at an earlier time.

The courts in this State have found landowners as well as owners of petroleum storage facilities to be dischargers under the Navigation Law. In White v. Regan, 171 AD2d 197 (3d Dep't 1991), the court found it appropriate to impose liability on an owner of a system from which a discharge occurred regardless of whether the owner caused the discharge. In State v. King Serv., 167 AD2d 777 (3d Dep't 1990), the court rejected the argument that the payment and removal costs should be borne by the entity which owned the system at the time the discharge occurred or began. The courts have interpreted the law as establishing liability against the owner that is in the best position to address the discharge in the most expeditious manner. White v. Regan, supra. In Blank, Blank & Jacobi (Commissioner's Order, February 4, 2003), the State Police purchased, installed and abandoned an oil tank that leaked. The ALJ found and the Commissioner affirmed that the current owner of the property and tank was responsible as a discharger citing State v. Green, 96 NY2d 403 (2001). In Green, the Court of Appeals found that a landowner is liable as a discharger where it "can control activities occurring on its property and has reason to believe that petroleum products will be stored there."

Most recently, in Matter of Huntington and Kildaire, Inc. v. Grannis, 89 AD3d 1195 (3d Dep't 2012), the Third Department held that to find liability under ECL § 17-0501, it was not necessary that there be proof of ownership of the tanks or the act of "discharging." In Huntington, the petitioners owned the property while it was being used as a gas station over many years and were on notice of that use. On these bases, the court found them to be dischargers within the meaning of the statute. It is possible however for a party to seek contribution in a civil proceeding under the Navigation Law if a link can be established between the party's actions and the discharge. Schenectady Industrial Corp. v. Upstate Textiles, Inc., 689 F.Supp.2d 282 (NDNY 2010); Dora Homes, Inc. v. Epperson, 344 F.Supp.2d 875 (EDNY 2004).

Based upon this analysis, both Exxon and the landowners could be pursued for potential liability and remediation. It is within staff's purview to determine the appropriate respondents in a given enforcement matter.See, Matter of Berger, Hearing Report (ALJ Sherman, May 28, 2010) (decision to include certain landowners in dam safety case up to the Department staff). In this proceeding, it will be staff's burden to establish that it was Exxon's tanks from which the discharge resulted. See, White v. Regan, supra; 6 NYCRR § 622.11(b).

In the motion papers presented by both parties, there is ample evidence of the investigation and beginning remediation efforts by the respondent. I do not deduce that these efforts equal an admission of liability by Exxon, but given the cooperation demonstrated by this work, I would ask the parties to consider whether mediation might prove effective to resolve this matter without a hearing. In the event there is agreement to pursue mediation, an ALJ from this office could be assigned to facilitate the discussions.

CONCLUSION

Based upon the foregoing, I deny the respondent's motion to dismiss and the staff's motion for summary order. Should the parties with to pursue mediation, I ask that they contact me so that Chief ALJ McClymonds can assign an ALJ as mediator. Otherwise, I will contact the parties within a short period to discuss setting a hearing date.

/s/
____________________
Helene G. Goldberger
Administrative Law Judge

Dated:|Albany, New York
October 21, 2013


[1] Ms. McCarthy states also in her certification that "a thorough review of documents in ExxonMobil's possession indicates no communication from the Department regarding the site until April 5, 2006 . . ." Cert., ¶ 18. This statement would seem to contradict one that documents are not available. Cert., ¶ 22.

[2]SUP> Exxon argues that in its complaint the Department hinged its case against the respondent based upon an excavation that took place on November 15, 1989 and subsequently changed its argument to making that the reporting date. As the Court of Appeals held in Leon v. Martinez, supra,the complaint is given a liberal construction in a motion to dismiss and the court is free to consider affidavits that address any defects. This issue can be addressed at hearing. The Department's pleading need only provide a "concise statement of the matters asserted." 6 NYCRR

§ 622.3(a)(iii).

Appendix

In support of the respondent's motion to dismiss, Mr. McCusker submitted:

Motion to Dismiss dated July 11, 2013

Affirmation in Support of Exxon's Motion to Dismiss dated July 11, 2013

Exhibit A - Complaint dated March 11, 2013 w/Exhibit A - PBS Facility Information Report (FIR)

Exhibit B - NYSDEC Spill Report Form

Exhibit C - Answer dated April 5, 2013

Exhibit D - Rulings of CALJ in Matter of Cobleskill Stone Products, Inc. dated January 18, 2012

Exhibit E - Order of Commissioner in Matter of Manor Maintenance dated February 12, 1996

Certification of William Tyree dated July 10, 2013

Certification of Laurie M. McCarthy dated July 10, 2013 w/Exhibit A - PBS FIR.

In support of staff's opposition to motion to dismiss and cross-motion for an order without hearing, Mr. Urda submitted:

Affirmation of John K. Urda dated August 7, 2013

Exhibit A - Letter dated June 4, 2013 from NYC Fire Department to John Urda w/attached inspection report, forms indicating installation of tanks, plans, and correspondence

Affidavit of Leszek Zielinski, Environmental Engineer 2 dated August 6, 2013

Exhibit A - DEC PBS FIR

Exhibit B - PBS FIR

Exhibit C - PBS FIR

Exhibit D - PBS FIR

Exhibit E - PBS Application dated March 17, 1992

Exhibit F - PBS Application dated February 27, 1995

Affidavit of Donato Passarella dated August 6, 2013

Exhibit A - Deeds and Recording Documents

Exhibit B - Affidavit of Michael J. Haggerty, Environmental Program Specialist 1 dated August 6, 2013

Exhibit A - NYSDEC Spill Report Form dated November 15, 1989

Exhibit B - NYSDEC Spill Report Form dated May 17, 2000

Exhibit C - Letter dated September 20, 20025 from James Romeo, Project Director, NYCDDC to Sally Dewes, NYSDEC re: June 13, 2000 Site Investigation Report

Exhibit D - Letter dated December 7, 2009 from Joel Adrian, P.G. and Seth D. Herman, Senior Project Manager, Kleinfelder to Mark C. Tibbe, DEC Division of Environmental Remediation re: Subsurface Investigation Work Plan

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Exhibit E - Letter dated August 25, 2010 from Joel Adrian, P.G. and Cosmo Lettich, Project Geologist, Kleinfelder to Sarah Carlson re: Site Status Update Report/Subsurface Investigation Report

Exhibit F - Letter dated July 22, 2010 from Ted Healey, Staff Scientist, Newfields to Cosmo Lettich, Project Geologist, Kleinfelder re: Chemical Fingerprinting of NAPL Sample

Exhibit G - Letter dated March 11, 2011 from Victoria Creteur, Project Manager and Jesse N. Gallo, Senior Environmental Scientist, Kleinfelder to Michael Haggerty, DEC re: Supplemental Subsurface Investigation Work Plan w/figures and e-mail from M. Haggerty to Scott Bushroe dated March 18, 2011 re: 51 Kingsland Avenue

Exhibit H - Letter dated March 13, 2012 from Juliana de la Fuente, Project Manager and David Liers, Project Hydrogeologist, Kleinfelder to Michael Haggerty, DEC re: Site Status Update Report/Supplemental Surface Investigation Report

Exhibit I - E-mail dated April 24, 2012 from Michael Haggerty to J. de la Fuente re: March 12, 2012 Site Status Update Report/Supplemental Subsurface Investigation Report

Exhibit J - E-mail dated June 7, 2012 from Michael Haggerty to J. de la Fuente re: May 9, 2012 Status Update Report

Exhibit K - Letter dated August 16, 2012 from Juliana de la Fuente, Project Manager and David Liers, Project Hydrogeologist, Kleinfelder w/site plan re: Chemical Fingerprinting Report Summary; letter dated July 16, 2012 from Kerylynn Krahforst, Staff Scientist, Newfields to David Liers, Kleinfelder re: Chemical Fingerprinting

Exhibit L - E-mail dated November 21, 2012 from Michael Haggerty to Laurie M. McCarthy re: SP# 89-08110; letter dated December 21, 2013 from Juliana de la Fuente, Project Manager and David Liers, Project Hydrogeologist, Kleinfelder to Michael Haggerty re: Remedial Action Plan; RAP dated December 21, 2012

Exhibit M - E-mail dated December 26, 2012 from Michael Haggerty to Laurie M. McCarthy re: Corrective Action Plan (CAP); letter dated January 25, 2013 from Juliana de la Fuente, Project Manager and David Liers, Project Hydrogeologist, Kleinfelder to Michael Haggerty re: CAP; CAP dated January 25, 2012 [sic]

Exhibit N - E-mail dated July 23, 2013 from Michael Haggerty to Laurie M. McCarthy Re: Site Status Update Report; Groundwater Elevation Contour and Hydrocarbon Distribution Map

Exhibit O - Letter dated May 24, 2013 from Juliana de la Fuente, Project Manager and David Liers, Project Hydrogeologist, Kleinfelder to Michael Haggerty re: Site Status Update Report; Site Status Update Report.

In further support of the respondent's motion to dismiss and in opposition to staff's motion for order without hearing, Mr. McCusker submitted:

Affirmation of Paul G. McCusker dated September 13, 2013

Affirmation of John Wolf dated September 13, 2013 w/Exhibit A - site plan.

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