Al Turi Landfill, Inc. - Decision, April 15, 1999

Decision, April 15, 1999

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1010

In the Matter

- of -

the Application of AL TURI LANDFILL, INC.
for a permit to construct and operate an expansion of its solid waste landfill
in the Town of Goshen, Orange County.

DEC Application No. 3-3330-00002-21

DECISION

April 15, 1999

DECISION OF THE COMMISSIONER

Introduction

This Decision relates to the attached hearing report of Administrative Law Judge (ALJ) Edward Buhrmaster issued February 11, 1999 concerning the application of Al Turi Landfill, Inc. (the Applicant) to expand a landfill the Applicant owns and operates in the Town of Goshen, Orange County. Comments on the ALJ's report were filed by the Applicant, the Department Staff (Staff), and Orange Environment Incorporated (OEI) on March 9, 1999 and responses were filed by these parties on March 16, 1999. I adopt the ALJ's hearing report and recommended decision, subject to my comments below, and hereby deny the application.

Background

The Applicant seeks a 6 NYCRR Part 360 permit from the Department to expand its existing municipal solid waste landfill in the Town of Goshen, Orange County, New York. The project includes a lateral expansion into an 18-acre area next to the existing landfill footprint and a 17-acre expansion above the eastern portion of the landfill, including sections that were previously closed.

In my Interim Decision of September 14, 1998, I affirmed the ALJ's ruling, which found that an adjudicatory hearing was necessary to evaluate the Applicant's fitness to receive an expansion permit. As part of the adjudication of the fitness issue, I agreed with the ALJ that the Applicant's prior criminal history, its record of environmental compliance and its proposed voting trust arrangement are relevant for consideration.

My Interim Decision also directed that the ALJ and the parties first pursue the fitness question on the grounds that if the Applicant is found to be unfit to receive the permit, then non-fitness issues (e.g. the substantive merits of the application) become moot.

The ALJ's report includes pertinent findings of fact concerning, inter alia, the Applicant's criminal history, its environmental compliance record, odor problems at the Applicant's landfill, and the need for expansion of the Applicant's landfill. (Report, pp.10-26).

As for the Applicant's criminal history, briefly stated, the Applicant and its three principal shareholders Nicholas Milo, Thomas Milo and Louis Corso, (each have a one-third ownership interest) pled guilty in September 1997 in the U.S. District Court for the Southern District of New York to felony charges related principally to the filing of false tax returns. The Applicant pled guilty to the crime of conspiracy, admitting that between 1983 and 1988, the Applicant and others "conspired willfully and knowingly and unlawfully to defraud the United States" by issuing checks to J&T Recycling Corp., an entity owned solely by Nicholas Milo, for non-existent equipment rentals. On March 30, 1998, the Applicant was placed on probation until the end of July 2000 and fined $910,000.

The Applicant's three sole shareholders were also immersed in the tax fraud scheme. Nicholas Milo pled guilty to conspiracy to defraud the IRS and to commit extortion for activities between 1984 and 1988 involving unlawful payments falsely recorded as equipment rental income from another carter to preclude competition. He was sentenced to a 41 month prison term to be followed by two years of supervised release, and ordered to make restitution to the United States Internal Revenue Service (IRS) in the amount of $3,099,695. Thomas Milo pled guilty to conspiracy to commit mail fraud and to defraud the IRS for activities between 1981 and 1987 involving a fictitious invoice-payment scheme. He received a 36 month sentence to be followed by three years of supervised release, and ordered to make restitution totaling nearly $3.2 million to the IRS and Westchester County. Louis Corso pled guilty to aiding and abetting in the preparation and presentation of a fraudulent and false tax return. The crime involved a $120,000 fraudulent deduction in a 1989 tax return for a company in which he had 50% interest. Mr. Corso received a seven month prison sentence to be followed by one year of supervised release, and a $30,000 fine.

The Applicant's criminal history is also reflected in the September 1997 guilty pleas entered by several companies whose major shareholders were also the stockholders of the Applicant. Those companies included, inter alia, Suburban Carting Corp. ("Suburban"), whose sole shareholder was Thomas Milo. Suburban pled guilty to conspiracy charges for tax law violations between 1960 and 1993, and also admitted to offering a bribe to a labor official and accepting checks on fictitious invoices. Suburban further admitted that its acting officials knew its conduct was unlawful. Suburban received a five year probation term, was fined $780,000, and was ordered to make restitution totaling $885,304. Eight other corporate entities, either fully or partly owned by the Applicant's shareholders, also pled guilty to United States tax law related charges in the September 1997 proceeding.

Discussion

Under New York Law, it is well established that agencies with licensing authority have implicit discretion to pass upon the fitness of an applicant. Matter of CC Lumber Co., Inc. v. Waterfront Commission of New York Harbor, 31 NY2d 350,358 (1972); Matter of Barton Trucking Corp. v. O'Connell, 7 NY2d 299, 308-309 (1959). Prior willful violations of law are relevant on the issue of a license applicant's fitness. Matter of Olsen v. Town of Saugerties, 161 AD2d 1077 (3d Dept 1990). Indeed, several previous Commissioner's Decisions have addressed an applicant's fitness to receive a Department permit. See e.g., Matter of American Transfer Company, Decision of the Commissioner, December 24, 1991; Matter of Bio-Tech Mills, Inc., Decision of the Commissioner, May 18, 1983.⁽¹⁾

An analysis of an applicant's fitness must include an application of Correction Law §§752 and 753 if the applicant's prior criminal history is at issue, and a review of the Department's Environmental Guidance Memorandum (EGM), which sets forth the policy and procedures related to the suitability of an applicant to receive a permit. Here, the ALJ properly applied and interpreted both the statute and the guidance.

New York Correction Law §752 prohibits the denial of a permit application based upon an applicant's prior criminal history unless: "(1) there is a direct relationship between one or more of the previous criminal offenses and the specific license or employment sought; or (2) the issuance of the license or the granting of the employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public." Hence, an applicant can be considered unfit if either of the statutory criteria are met.

New York Correction Law §753 lists the factors the Department must consider when evaluating a previous criminal conviction. Such factors include:

(a) The public policy of this state... to encourage the licensure and employment of persons previously convicted of one or more criminal offenses.

(b) The specific duties and responsibilities necessarily related to the license or employment sought.

(c) The bearing, if any, the criminal offense or offenses for which the person previously convicted will have on his fitness or ability to perform one or more such duties or responsibilities.

(d) The time which has elapsed since the occurrence of the criminal offense or offenses.

(e) The age of the person at the time of occurrence of the criminal offense or offenses.

(f) The seriousness of the offense or offenses.

(g) Any information produced by the person, or produced on his behalf, in regard to his rehabilitation and good conduct.

(h) The legitimate interest of the public agency or private employer in protecting property, and the safety and welfare of specific individuals or the general public.

The ALJ correctly found that either prong of §752 is a proper basis to find the Applicant unfit, and properly weighed the §753 factors (Report, pp. 31-34). Clearly, a "direct relationship" exists between the 1997 criminal convictions and the permit sought. The Applicant, its sole shareholders, and numerous corporate entities owned by the Applicant's stockholders pled guilty to crimes involving conspiracies to defraud the government. These crimes are not mere paperwork violations and cannot be glossed over simply on the grounds, as the Applicant asserts, that the Applicant has not to date filed a false or misleading statement to the Department or that the Applicant's engineer will be the person to submit reports to the Department.

The guilty plea entered plainly shows that the Applicant and its principals have been untruthful in preparing business documents and tax returns for the IRS. The truthfulness of the permittee is a critical issue for the Department as the ALJ properly notes. (Report, p.29). Specifically, the honesty and integrity necessary for a permittee's fulfillment of its reporting duties forms the cornerstone of the permitting process, and thus the felony pleas on crimes related largely to the filing of false tax returns are especially troublesome given the Department's historic and necessary reliance on accurate and truthful self-reporting.

In the instant case, the Applicant is engaged in the business of landfilling mixed municipal solid wastes and is governed by the technical and paperwork-intensive obligations of the Department's Part 360 regulations, the terms and conditions of its existing permit, and the Department's policy guidance. Given the frequent interaction and oversight required for this activity between the Applicant and Department, the Department has a reasonable expectation that the information provided by a permittee will be accurate and truthful. The crimes to which the Applicant, its shareholders, and the other corporations pled guilty are obviously problematic for the Department when so much of the day-to-day activities of a landfill turn on self-policing and self-reporting. In short, these crimes indicate deception and fraud against the government, and thus bear directly on the applicant's suitability to receive a Part 360 permit.

Moreover, it is not "sheer speculation" to take the nature of these offenses into account when considering the likelihood of a repeat episode. Sheer speculation would be predicting unlawful future behavior in the absence of a conviction; here, there is hard, uncontroverted proof that the Applicant and its principals have been dishonest in their business practices and in their interaction with a governmental agency.

With respect to whether issuance of the permit would involve an "unreasonable risk to property or to the safety or welfare of specific individuals or the general public" (Correction Law §752), I find the Applicant unfit on that basis as well. The Department's Part 360 municipal solid waste landfilling requirements are designed for maximal environmental and public health protection given the current information available to the Department. The Applicant argues that it will adhere to these requirements through its engineering consulting firm on the premise that because the engineering firm acts on behalf of the Applicant, the prospect of unreasonable risk to the public is eliminated. Notwithstanding the buffer an engineering firm may provide, the applicable regulations clearly show that the Applicant, not the engineering firm, performs the bulk of the day-to-day operational self-reporting. See, e.g. 6 NYCRR Parts 360-1.14(f)(3), 360-2.17(q) (self-inspection requirements); 360-1.14(i)(recordkeeping requirement concerning receipt of unauthorized wastes); 360-1.4(c) (self-reporting requirement); 360-2.17(t)(operator required to submit annual report).

With respect to the Applicant's day-to-day landfilling operations, some problems have been documented by DEC inspectors. The record indicates overall that, of the documented operational problems, odors were the most frequent. The record indicates a number of remedial activities concerning odors and that in spite of attempts at odor control, nuisance odors have continued on a recurrent basis. This problem was not fully solved even in the presence of the on-site monitoring and inspections. The aggravating factors of environmental non-compliance, coupled with the foregoing crimes, are sufficient to conclude there is an unacceptable risk by issuing the permit to the Applicant.

In addition to the Correction Law, the Department's Record of Compliance Enforcement Guidance Memorandum (EGM) also provides a basis for denying the application at issue. This EGM establishes the policy and procedure by which the Department seeks to evaluate the suitability or fitness of an applicant for a DEC permit. The EGM expressly allows the Department to consider events such as whether the Applicant or its principals have "engaged in conduct that constitutes fraud or deceit," or whether they have been "convicted of the crime of filing a false instrument or making a false statement to the Department or any other agency regarding compliance with the laws of any state or the United States" in determining wether to deny, suspend, modify or revoke a permit (EGM, pg.5).

As the ALJ properly found, the crimes of the Applicant, its principals, and their affiliates meet both of the above- referenced EGM criteria for permit denial. In short, the convictions raise legitimate issues concerning the Applicant's trustworthiness, and thus constitute a proper base for denial under the EGM.

The Applicant also asserts that its record demonstrates rehabilitation, arguing that ten years have passed since the occurrence of its criminal offenses and that tax audits made almost yearly since 1989 found no violations. The ALJ considered the Applicant's argument supporting rehabilitation and weighed it against the other §753 factors, but ultimately found it unpersuasive. I agree with the ALJ's rejection of the Applicant's purported rehabilitation as a controlling factor, particularly given the seriousness of the crimes and the direct bearing they have on the Applicant's ability to honestly perform its duties as a permittee.

The Applicant contends further that the ALJ disregarded prior Department decisions to issue permits to entities "with similar or worse compliance records." As support for this premise, the Applicant relies in large part on A-1 Compaction Corp., Decision of the Commissioner, June 23, 1994, and Modern Landfill, Order on Consent, July 17, 1995. Applicant's reliance on these two matters is misplaced.

In A-1 Compaction, the respondents were convicted of bribery and conspiracy to commit bribery. The factual basis of those crimes, however, is wholly distinguishable as it involved a longstanding trucking industry practice of giving New York State Police weight station staff holiday turkeys, hams and liquor in connection with the ticketing of vehicles and trucks. While not diminishing the seriousness of such offenses, those weight station dealings, while clearly improper, did not involve the deceit and untruthfulness inherent in the crimes that led to the September 1997 pleas. Additionally, while the A-1 corporation was fined $40,000 and its principal was sentenced to four months in prison, the Applicant in the instant case was fined $910,000 and its principals were ordered imprisoned for terms of 7 months, 36 months, and 41 months and either fined heavily or ordered to make restitution in large amounts.

With respect to Modern Landfill, the principal pled guilty to federal racketeering charges. The principal agreed to transfer his stock interest to a family member who then put it in a trust overseen by other family members. Preliminarily, the Modern Landfill Order on Consent was executed on July 17, 1995, prior to my tenure, and the reasons underlying the settlement were not advanced by the Applicant on the record, nor was there a showing of similar circumstances justifying a comparable arrangement here.

The Trust arrangement proffered by the Applicant and reviewed in the hearing was rejected by the ALJ. The ALJ's analysis, which I concur with, centered on the burden and practical impossibility of policing the trusteeship.

Subsequent to the hearing, the Applicant modified the adjudicated Trust arrangement in its comments to the ALJ's Recommendation. The Applicant now proposes to make its Trust arrangement identical to the Modern Landfill arrangement approved by the Department through the Consent Order. The new proposal transfers all three of the principals' interests into trusts, (whereas the initial proposal involved only two of the three principals) and does so after those interests are transferred to their wives.

Based on these particular facts, I reject the use of the trusteeship concept, as offered at the hearing and as proffered in Applicant's comments. Given the nature of the unlawful activities committed by the Applicant and my determination of its unsuitability to receive a permit to expand the landfill, the Trust arrangement under either scenario would not alleviate concerns about its conduct. Moreover, it would impose an extraordinary burden on the Department to police the landfill operation, and would draw the Department further into the operation of the landfill than is appropriate.

As for the issue of the need for the landfill expansion, the ALJ concluded that based on the evidence proffered, the benefit to the State of the landfill expansion does not outweigh the Applicant's poor fitness. I agree.

The issues of need for and utility of the landfill expansion were evaluated in this proceeding as possible reasons for entering the Trust arrangement. The ALJ agreed with Department staff that New York has a need for more in-state disposal capacity to meet its objective to be self-sufficient in the disposal of solid waste. However, as staff and the ALJ also noted, this need can be met by any disposal facility meeting Part 360 requirements, and hence no special need for this expansion exists. Moreover, the benefit of this proposed expansion does not outweigh the burdens the Trust arrangement suggested here would impose on the Department to effectively oversee its implementation and operation.

Final Agency Decision

This Decision constitutes the Department's final agency decision. My conclusion that the Applicant is unsuitable for a Departmental Part 360 permit for their proposed landfill expansion makes it unnecessary to continue with a hearing on the technical aspects of the permit application.

For the New York State Department
of Environmental Conservation

/s/
By: John P. Cahill, Commissioner

Dated: Albany, New York
April 15, 1999

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1550

In the Matter

- of -

the Application of AL TURI LANDFILL, INC. for a permit to
construct and operate an expansion of its solid waste landfill
in the Town of Goshen, Orange County.

DEC Application No. 3-3330-00002-21

HEARING REPORT

- by -

/s/
Edward Buhrmaster
Administrative Law Judge

February 11, 1999

TABLE OF CONTENTS

PROCEEDINGS

Background and Brief Project Description

Legislative Public Hearing

Issues Conference

Rulings on Issues and Party Status

Commissioner's Interim Decision

The Adjudicatory Hearing

POSITIONS OF THE PARTIES

Position of the Applicant

Position of the Department Staff

Position of Orange Environment

FINDINGS OF FACT

Criminal History of Al Turi Landfill, Its Principals, and Related Companies

Applicant's Environmental Compliance Record

Odor Problems at the Al Turi Landfill

Breakout of Landfill Leachate Into the Wallkill River

Environmental Compliance Record of Companies Related to Al Turi's Principals

Need for Expansion of Al Turi Landfill

DISCUSSION

Introduction

Applicant Deemed Unfit

DEC Enforcement Guidance Memorandum

Correction Law

Use of Permit Conditions to Address Compliance Issues

Applicant's Trust Arrangement

Evaluation of Trust Proposal

Public Need for Landfill Expansion

Disputed Terms of the Trust Proposal

Monitoring of Applicant's Operations

Federal Court Monitor

DEC's Environmental Monitors

Environmental Compliance Record

Odor Problems

Landfill Leachate Breakout

Ticketed Violations of ECL

Denial of Permit to Champion Recycling Industries

CONCLUSIONS

RECOMMENDATION

PROCEEDINGS

Background and Brief Project Description

Al Turi Landfill, Inc. ("the Applicant") proposes to construct and operate an expansion of its landfill on Hartley Road in the Town of Goshen, Orange County. The project involves a lateral expansion into an 18-acre area adjacent to the southeast boundary of the existing landfill footprint, and a 17-acre vertical expansion above the eastern part of the landfill, including sections that were previously closed.

The vertical expansion would increase the maximum height of the landfill to 650 feet above sea level from the currently approved elevation of 525 feet above sea level. The lateral part of the expansion area is currently vacant or occupied by the scale house, roads, and other accessory land uses.

The expansion area would accept a maximum of about 8,400 tons of non-hazardous solid waste per week, which is equal to the currently approved weekly tonnage. The landfill expansion would be expected to last from 7 to about 11 years, depending on the rate of waste receipt, providing an additional 4 million cubic yards of operational airspace.

Solid waste landfilling at the Al Turi facility has been ongoing since 1968. Al Turi Landfill, Inc. purchased the site in 1974 and has been filling there ever since. Site operations at the old Al Turi landfill, immediately north of the current facility, began in 1968 and ended in 1983. That landfill is now a Class 2 inactive hazardous waste disposal site.

To move ahead with its expansion project, the Applicant requests a permit to construct and operate a solid waste management facility. The issuance of such permits is controlled by the Department of Environmental Conservation ("the Department" or "DEC") pursuant to Title 7 of Article 27 of the Environmental Conservation Law ("ECL").

In conjunction with its permit application, the Applicant also requests the following four variances from the requirements of Part 360 of Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR Part 360"):

1. A variance from the prohibition against siting a landfill over a primary water supply aquifer or principal aquifer [6 NYCRR 360-2.12(c)(1)];
2. A variance from the requirement to conduct a site selection study [6 NYCRR 360-2.12(a)];
3. A variance from the minimum required separation between the base of the constructed liner system and the seasonal high groundwater elevation [6 NYCRR 360-2.13(d)]; and
4. A variance from the use of select soil in the overliner system [6 NYCRR 360-2.13(j)].

As lead agency under the State Environmental Quality Review Act ("SEQRA", ECL Article 8), DEC determined that the project is a Type I action and issued a Positive Declaration on October 27, 1989. A two-volume Draft Environmental Impact Statement ("DEIS") dated March, 1996, was prepared for the project. The DEIS has been supplemented by two additional submissions, one dated February, 1997, and the other dated June, 1997. The project was noticed as complete by Department Staff on December 10, 1997.

Legislative Public Hearing

A legislative hearing to receive comments on the permit application was held during the evening of February 19, 1998, at the C.J. Hooker Middle School in Goshen. About 100 people attended, and there were 10 speakers from the general public. Also, the record was held open until March 2 for the submission of written comments.

Oral and written comments were mostly negative about both the existing landfill and the planned expansion. Many public speakers challenged the character and fitness of the Applicant and its principals because they had recently pled guilty to federal felonies. While Department Staff said that the expansion should be denied because the Applicant is unfit, Orange Environment, a citizens' group, argued that the Applicant's existing permit should be revoked for the same reason.

Members of the public expressed concern about possibly hazardous materials entering the landfill if the Applicant could not be trusted to monitor itself and the Department could not maintain constant vigilance. One speaker said that the Department should investigate the Applicant's reported links to organized crime.

Neighbors of the landfill voiced concerns about the landfill's impact on public health. Oral and written comments included many complaints about landfill-generated odors affecting nearby residents and drivers along Route 17-M, and concerns that odors would worsen if the landfill gets higher.

Issues Conference

On February 25, 1998, I presided over an issues conference at the Goshen Town Hall, the purposes of which were to determine what issues bearing on permit issuance would require adjudication, and who would participate in any adjudicatory hearing that would be required.

Department Staff moved that the hearing be bifurcated so that the issue of the Applicant's fitness could be heard and decided by the Commissioner before other, technical issues about the project itself were identified and addressed. This motion was joined by the two petitioners for intervenor status, Orange Environment and Orange County, and opposed by the Applicant. I denied the motion for reasons stated on page 5 of my rulings on party status and issues, which are dated June 19, 1998. Rather than bifurcate the proceeding, I said that fitness would be considered in my rulings at the same time as all other proposed issues.

Because the application documents had been supplemented shortly before the issues conference and Staff intended to revise its draft permit to account for the new information, Orange Environment and Orange County requested an additional month to supplement their petitions. I granted this request over the Applicant's objection.

The issues conference reconvened on April 7, 8 and 9, 1998, also at the Goshen Town Hall. Department Staff continued to oppose permit issuance, claiming that the Applicant is unfit. Orange Environment agreed with Staff, and its arguments were discussed at length along with other claims in the prospective intervenors' revised petitions.

Rulings on Issues and Party Status

In my rulings on issues and party status, I said an issue exists as to whether the Applicant is suitably fit to receive the landfill expansion permit. The issue, I said, would have to be considered in light of three considerations: (1) the felony convictions of the Applicant, its three owners, and several companies in which the owners have or had major interests; (2) an environmental enforcement history represented by consent orders and other settlement documents; and (3) a record of landfill inspection reports for the period from 1993 forward.

I ruled that, in addressing the fitness issue, the hearing would also consider a proposal by the Applicant to remove two of its three principals - - Nicholas and Thomas Milo - - from the landfill's operation by placing their interests in trust. The hearing, I said, would examine whether the trust arrangement would effectively accomplish its purpose, and whether the Department, as a matter of policy, should participate in the arrangement. On the latter question, I said that it was possible that the need for or utility of the extra space to be created by the landfill expansion would have to be weighed against the obligation of the Department to police the trust arrangement.

In addition to identifying the fitness issue, I ruled that certain of the Applicant's plans, the submission of which Staff said could be deferred until after permit issuance, had to be provided beforehand, as part of this hearing. I noted that the information to be included in the plans was "reasonably necessary" to determine whether or on what terms the project is approvable [see 6 NYCRR 621.15(a)], and that some of it is required by regulation to be part of a landfill application. Orange Environment had requested that the information be provided now rather than after a permitting decision, and I agreed, adding that once the plans were provided, Orange Environment would have an opportunity to raise issues based on the new information.

Because I found that Orange Environment could contribute meaningfully to the record on the fitness issue, I granted its petition for full party status. However, I denied Orange County's petition for party status since the County had not proposed any issues for adjudication and neither supported nor opposed the project. Orange County requested full party status because the Al Turi Landfill is located there and because the decision whether to permit its expansion would affect the county's plan for managing its solid waste. This interest in the hearing outcome, I said, was not sufficient by itself to warrant further participation.

Commissioner's Interim Decision

On September 14, 1998, Department Commissioner John P. Cahill issued an interim decision denying appeals to my rulings from the Applicant and Orange Environment. The decision affirmed my rulings in all respects and remanded the matter to me for further proceedings.

The Commissioner denied appeals by the Applicant to restrict the fitness inquiry to its criminal convictions and to defer until after the hearing its submission of the additional plans that I had directed be provided. The Commissioner also affirmed my ruling requiring the Applicant to submit a request for a variance from a regulatory requirement [at 6 NYCRR 360-2.12(a)(1)(v)] that unconsolidated deposits underlying the proposed landfill expansion be at least 20 feet thick as measured from the base of the constructed liner system. The application assured only a 10-foot thickness, and the Commissioner rejected the Applicant's claim that it qualified for an exception to the requirement under 6 NYCRR 360-2.12(a)(2), agreeing with me that the expansion of the Al Turi landfill is not expressly identified as an element of Orange County's solid waste management plan.

Finally, the Commissioner denied an appeal by Orange Environment which challenged my exclusion of certain non-fitness issues that it had proposed under SEQRA and the Part 360 regulations.

The Adjudicatory Hearing

The adjudication of the fitness issue occurred on October 28 and 30 as well as November 12 and 13, 1998, at the Goshen town and village halls.

The permit applicant, Al Turi Landfill, Inc., was represented at the adjudicatory hearing by Stephen L. Gordon, Christopher McKenzie, and Michael Murphy, Esqs., of Beveridge & Diamond, P.C., in New York City.

DEC Staff was represented by Jonah Triebwasser, Esq., of the Department's Region 3 office in New Paltz.

Orange Environment was represented by its legal counsel, Scott Thornton, Esq., of New Hampton, and Michael R. Edelstein, Ph.D., of Goshen, the group's president.

To the extent possible, the Applicant's record of compliance was established through the introduction of documents confirming criminal convictions and the resolution of various civil actions for violation of laws and regulations protecting the environment and public health. The compliance issue also involved a review of DEC's record of inspection reports for the Al Turi landfill going back as far as 1993, even though the violations recorded in the reports had not been subject to enforcement action.

The need for the expansion was addressed primarily through the testimony of various people familiar with solid waste disposal practices in the lower Hudson Valley and the potential for such practices to change based on legislation which has been proposed at the federal level and in other states, particularly Pennsylvania, where much of the area's waste now goes for landfill disposal.

Apart from producing documents confirming information in its record of compliance form (Hearing Exhibit No. 1), which is part of the permit application, the Applicant presented testimony from various witnesses. On issues pertaining to landfill operations and their compliance with environmental laws and regulations, the Applicant presented Anthony P. Russo, an environmental consultant from Middletown; Charles T. Bazydlo, a Newburgh attorney who also consults for various waste management facilities; Joseph Gambino, president of Al Turi Landfill, Inc., who also oversees its on-site activities; and Michael Murphy, one of the Applicant's attorneys, who did a statistical analysis of the landfill's DEC inspection history.

As to landfill need, the Applicant presented several experts on the waste disposal business: Richard A. Peluso, an engineer with EMCON of Mahwah, New Jersey, which developed the landfill expansion application; Jack T. Fugett, an environmental consultant from Philadelphia, Pa.; and Kenneth J. Rogers, a consultant to various waste management facilities in New Jersey. The Applicant also presented William J. Better, the Columbia County attorney, who talked about that county's waste management practices, including its use of the Al Turi Landfill.

Finally, the Applicant also presented an attorney, Walter Mack, who, as part of an agreement resolving criminal charges against Al Turi and its principals, has been appointed by a federal court to monitor the corporation's activities.

As to the landfill's inspection history, DEC Staff presented testimony from the two environmental monitors who are assigned to the facility, Zachary J. Cogon and William P. Meyers. Also, Steven J. Parisio, an engineering geologist with DEC's solid waste program, testified about a recent breakout of leachate-contaminated groundwater into the Wallkill River.

On the issue of need for the expansion, DEC Staff presented Thomas Lynch of the Department's Division of Solid and Hazardous Materials in Albany. Michael Merriman, deputy permit administrator for DEC's Region 3, spoke briefly about Staff's updating of its draft expansion permit.

Witnesses for Orange Environment included Judy New, a landfill neighbor who spoke about odors that she said were coming from the facility. Orange Environment also presented Neil Watt, one of DEC's Environmental Conservation Officers, regarding two tickets he had issued to the Applicant.

Finally, on the issue of need, Orange Environment presented Kelly Lease, a research associate at the Institute for Local Self-Reliance in Washington, D.C. On behalf of Orange Environment, Ms. Lease investigated the amount and sources of waste going into the Al Turi landfill, as well as available disposal capacity both within and outside of New York State.

The hearing included a short presentation by the Applicant's counsel, Mr. Gordon, on the proposal to put the interests of two of the Applicant's three principals in trust. After the presentation, an opportunity was provided for Department Staff and Orange Environment to ask questions about the proposal.

At the conclusion of the hearing, a schedule was set for the submission of one round of closing briefs. The parties subsequently agreed to a short extension of the schedule. Timely briefs were received from all parties on or before December 22, 1998.

Just prior to the briefing deadline, motions were made by Department Staff and Orange Environment to reopen the evidentiary record for receipt of four reports by the federal court monitor, Mr. Mack, concerning his oversight activities. These reports were not available when Mr. Mack testified, but he provided them to the parties later, after their release was cleared through the judge to whom he reports.

During a January 5, 1999, conference call, I heard arguments about whether the reports should be received and whether Mr. Mack should be brought back for further testimony. I ruled that the reports would be received, but that Mr. Mack would not have to testify again. Orange Environment and Department Staff had requested that the hearing reconvene so Mr. Mack could be questioned about the reports. I found it unnecessary to reopen the record since I could review the reports in conjunction with the testimony Mr. Mack had already provided about his monitoring ctivities.

Because the monitor's reports (Exhibit Nos. 172 - 175) are voluminous and only portions of them are relevant to this proceeding, the parties agreed to a schedule by which Orange Environment and Department Staff would have until noon on January 11, 1999, to provide me brief written arguments about what the reports reveal on the fitness issue, and the Applicant would have until 5 p.m. on January 13, 1999, to respond.

With the timely filing of the Applicant's papers, the hearing record closed.

While the fitness issue has been adjudicated, Department Staff has been reviewing the plans that my issues ruling directed be provided as part of this hearing. According to the Applicant, the plans were all provided late last summer. However, as of mid-November, 1998, when the adjudicatory hearing ended, Staff's review of them had not been completed.

Should the Commissioner find the Applicant suitably fit to receive an expansion permit, the hearing must reconvene to see what issues might exist in relation to the newly-provided information. Should the Commissioner find the Applicant unfit, that determination should be considered the final agency action on the permit application, and no further administrative proceedings should be undertaken unless that determination is reversed by a reviewing court and the matter remanded to the Department.

POSITIONS OF THE PARTIES

Position of the Applicant

The Applicant is suitably fit to receive a permit to expand the landfill.

Denial of the permit is precluded by New York State's Correction Law and by precedents established in other DEC permitting decisions. Permit denial is unwarranted by the Applicant's criminal record or its environmental compliance history.

The trust arrangement proposed by the Applicant addresses any concerns the Department might have by removing Thomas and Nicholas Milo, two of Al Turi's three principal owners, from the day-to-day management of the facility. Also, oversight by the federal court monitor and the Department's on-site environmental monitors will ensure that the landfill complies with Part 360 and the requirements of the trust agreement. The trust proposal places limited additional burdens on the Department, and need not be broadened to include Louis Corso, Al Turi's third principal, whose continued involvement with the facility is likely to help ensure compliance.

The expansion of the landfill is necessary to help meet the state's goal of self-sufficiency in disposal of its solid waste.

New York depends too heavily on the exportation of its waste for disposal in states like Pennsylvania and Virginia, whose officials want to curb this practice.

Position of the Department Staff

The Applicant and its three principals are unfit to hold a DEC permit by virtue of their felonious acts. These felonies, involving as they do a breach of trust, directly affect the Applicant's suitability to hold a permit and comply with the ECL and its supporting regulations.

Permit denial is warranted given considerations in Department regulations, prior Commissioner's decisions, and an enforcement guidance memorandum addressing record of compliance issues. Denial of the permit is not precluded by the Correction Law.

The Applicant's trust proposal is a "mere public relations fig leaf" which affords the public no real protection, while imposing substantial obligations on the Department. Exclusion of Louis Corso from the trust arrangement would mean that "an admitted felon would still have his hands on the corporation's tiller." The safeguards afforded by activities of the federal court monitor and DEC's on-site inspectors do not allay concerns about the Applicant's fitness.

There is no short-term need for the landfill expansion, since closure of the existing facility once it reaches capacity would not precipitate a waste disposal emergency for the landfill's customers. Over the long term, the expansion of the Al Turi landfill could be needed to help the state manage its own waste disposal, without exporting waste out-of-state. However, should that need arise, the forces of the marketplace would produce new facility owners, with clean records, to carry the expansion forward.

Position of Orange Environment

The Applicant and its three principals are unfit to hold a DEC permit by virtue of their felony convictions and the poor environmental compliance history of the existing landfill, which includes persistent odor problems and the recent breakout of leachate into the Wallkill River.

The proposed trust arrangement in no way mitigates fitness concerns, and the activities of the federal court monitor, even in combination with DEC inspections, cannot ensure that the facility will be operated in compliance with Part 360. If implemented, the trust arrangement would deeply involve DEC in oversight duties which it cannot and should not fulfill.

To preserve capacity while its permit application is pending, the Applicant has already diverted most of its waste stream away from the landfill, and replacement capacity is available elsewhere to serve its customers.

Concerns about future restrictions on New York's ability to export its waste are speculative and should not be factored into DEC's permitting decision. The responsible way to anticipate such restrictions is to encourage waste avoidance, reduction and reuse, and to promote facilities that turn waste into a useful product, like the Pencor-Masada plant now under review in Middletown, Orange County.

Whether the expansion is needed or not, need is not relevant to the Applicant's fitness.

FINDINGS OF FACT

- - Criminal History of Al Turi Landfill, Its Principals, and Related Companies

1. As part of a single proceeding against 21 defendants in the case of United States v. Gigante, et. al., No. 96 Crim. 466 (S.D.N.Y.), in September 1997, the Applicant, Al Turi Landfill, Inc., and its three principals pled guilty in the U.S. District Court for the Southern District of New York to felony charges related principally to the filing of false tax returns in the 1980's, as detailed below.
2. The Applicant, Al Turi Landfill, Inc., pled guilty to the crime of conspiracy to evade and defeat a large part of the income taxes owed by Al Turi, co-defendant Thomas Milo (one of Al Turi's three principals), and their co-conspirators. More particularly, Al Turi admitted that "from in or about 1983 through in or about 1988, Al Turi together with J&T Recycling Corp. and others conspired willfully and knowingly and unlawfully to defraud the United States by impeding the lawful functions of the Internal Revenue Service." The Applicant admitted that in furtherance of that conspiracy, on various occasions from 1983 to 1988, it issued checks to J&T Recycling Corp. for non-existent equipment rentals. On March 30, 1998, the Applicant was placed on probation until the end of July 2000, and was also fined $910,000. [See Hearing Exhibit No. 2, superseding information; Exhibit No. 3, plea minutes of September 30, 1997; and Exhibit No. 4, U.S. District Court judgment of conviction.]
3. Al Turi's federal corporate income tax returns for the years 1989 through 1996 have been audited by the Internal Revenue Service ("IRS"). The first examination, covering the years 1989 through 1993, uncovered no violations of federal tax law. However, based on IRS interpretations of certain provisions of the Internal Revenue Code, the IRS auditor's findings resulted in some changes to Al Turi's tax returns for those years. The changes related principally to the timing of deductions claimed by Al Turi for additions to a reserve it had established for closure and post-closure costs for the landfill facility, and to the amortization of site preparation costs. No penalties were assessed against Al Turi or its shareholders due to the resulting adjustments in Al Turi's income for 1989 through 1993. A subsequent examination by another IRS auditor for the year 1995 resulted in no changes to Al Turi's tax return as reported for that year. An IRS survey of Al Turi's tax return for 1996 resulted in a determination that no audit was warranted. [See Exhibit No. 58, Affidavit of Edwin Teadore, CPA.]
4. As part of the Gigante proceeding, pleas to crimes were also entered by Nicholas Milo, Thomas Milo, and Louis Corso (each of whom has a one-third ownership interest in Al Turi Landfill, Inc.), as detailed below. [See Findings of Fact No. 5 - 7.] Apart from being shareholders, Thomas Milo is also treasurer of Al Turi, and Louis Corso is vice president and, since 1990, managing director of the corporation.
5. Nicholas Milo pled guilty to the crime of conspiracy to defraud the IRS and to commit extortion. He acknowledged that between 1984 and 1988 he received money from Allen Ferraro, a principal of APF Carting, which was paid on Ferraro's belief that other carters would not compete against him in Westchester County. Milo said that he received the money as the sole owner of J&T Recycling Corp., the operator of a landfill in Dutchess County. Milo said that J&T falsely reported the money in its books and records as income from equipment rental, while at the same time issuing checks to Route 55 Corporation that it falsely recorded as payments for equipment rental. On February 26, 1998, Nicholas Milo was ordered imprisoned for 41 months, with service of sentence to begin on April 14, 1998. Upon release from prison, he shall be on supervised release for a term of two years. Nicholas Milo and J&T (whose plea is described separately below) were also ordered to make restitution to the IRS in the amount of $3,099,695. [See Exhibit No. 5, superseding information; Exhibit No. 6, plea minutes of September 30, 1997; and Exhibit No. 7, U.S. District Court judgment of conviction.]
6. Thomas Milo pled guilty to the crime of conspiracy to commit mail fraud and to defraud the IRS. He acknowledged that in the period between 1981 and 1987, he was aware that Louis Mongelli, through his company, ISA New Jersey, had obtained extensions to a contract for the Westchester County transfer station. He said that, pursuant to an agreement with Mongelli that was not disclosed to the county, he and Mongelli agreed that Mongelli, Milo and certain of Milo's companies would share the profits Mongelli was making on the contract. Milo said that between 1981 and 1987 Mongelli made significant payments to him and certain of his companies, including Mamaroneck Truck Repair. According to Milo, the payments were disguised through the issuance of false and fictitious invoices that went through the mail, and he and others agreed to use the invoices in the preparation of various corporate tax returns. On February 23, 1998, Thomas Milo was ordered imprisoned for 36 months, with service of sentence to begin on April 23, 1998. Upon release from prison, he shall be on supervised release for a term of three years. Milo was also ordered to make restitution to Westchester County in the amount of $1,692,632 and to the IRS in the amount of $1,474,034. [See Exhibit No. 8, superseding information; Exhibit No. 9, plea minutes of September 30, 1997; and Exhibit No. 10, U.S. District Court judgment of conviction.]
7. Louis Corso pled guilty to the crime of aiding and assisting in the preparation and presentation of a fraudulent and false tax return. He said that in 1990 Enviro Express, a company in which he had purchased a 50 percent interest, filed a false tax return for the calendar year 1989, unlawfully deducting $120,000 in payments to Compaction Systems Corp. of Connecticut, Inc., as consulting expenses. This fraudulent deduction led to an understatement of the company's ordinary income. Mr. Corso acknowledged that he assisted in the tax return's preparation, knowing that the $120,000 were unlawfully deducted. On February 24, 1998, Louis Corso was ordered imprisoned for 7 months, with service of sentence to begin on April 15, 1998. Upon release from prison, he was to be on supervised release for a term of one year, including three months of home confinement with exceptions only for employment or such other activities as are expressly approved in advance by his probation officer. Corso was also fined $30,000. [See Exhibit No. 11, superseding information; Exhibit No. 12, plea minutes of October 7, 1997; Exhibit No. 13, U.S. District Court judgment of conviction; and Exhibit No. 14, sentencing minutes of February 24, 1998.]
8. Finally, as part of the Gigante proceeding, various companies in which major shareholders of the Applicant were large stockholders pled guilty in September 1997 to crimes related principally to the filing of false tax returns, as detailed below. [See Findings of Fact No. 9 - 13.]
9. Trottown Transfer, Inc. (100% owned by Suburban Carting Corp., which is 100% owned by Thomas Milo), Chestnut Equipment Leasing Corp. (100% owned by Thomas Milo), DMF Excavating Corp. (now dissolved, formerly 40% owned by Thomas Milo), Mamaroneck Truck Repair, Inc. (100% owned by Suburban Carting Corp.), and Recycling Industries Corp. (100% owned by Thomas Milo) pled guilty to conspiracy to violate U.S. tax laws. More particularly, they admitted that from in or about 1963 to mid-year 1993, they conspired between and among themselves and others to have false documents prepared which would enable false, misleading information on tax returns to be filed on their and others' behalf. On March 30, 1998, all five corporations were placed on probation for a term of five years. Also, Trottown Transfer, Inc. was fined $48,000 (see Exhibit No. 18), Chestnut Equipment Leasing Corp. was fined $100,000 (Exhibit No. 21), DMF Excavating Corp. was fined $280,000 (Exhibit No. 24), Mamaroneck Truck Repair, Inc. was fined $68,000 (Exhibit No. 27), and Recycling Industries Corp. was fined $32,000 (Exhibit No. 30).
10. Suburban Carting Corp. (100% owned by Thomas Milo) pled guilty to conspiracy to violate U.S. tax laws. More articularly, it admitted that as part of a conspiracy from 1960 to 1993 it made and subscribed income tax forms on behalf of itself and other corporations, to assist in preparing tax returns that were not truthful and accurate, in violation of Title 26 of the U.S. Code. In addition, Suburban admitted that it offered to pay money to a labor official in violation of law, and that on various occasions between 1960 and 1993 it accepted checks upon fictitious and mischaracterized invoices. As to each of the charges against it, Suburban admitted that its acting officials knew that what it was doing was wrong and unlawful. On March 30, 1998, Suburban was placed on probation for a term of five years. Also, it was fined $780,000 and ordered to make restitution in the amount of $885,304, including $805,632 to Westchester County and $77,936 to the IRS. [See Exhibit No. 31, superseding information; Exhibit No. 32, plea minutes of September 30, 1997; and Exhibit No. 33, U.S. District Court judgment of conviction.]
11. J&T Recycling Corp. (100% owned by Nicholas Milo) pled guilty to conspiracy to defraud the U.S. and the Internal Revenue Service. More particularly, it admitted that as part of a conspiracy with others between 1984 and 1988, it received money from Allen Ferraro, a principal in APF Carting Co., that it falsely recorded in its books and records as income from equipment rental. J&T also acknowledged that, during the same period of time, it issued checks to Route 55 Corp. that it falsely recorded as payments for equipment rental. J&T admitted that at the time these acts were committed, its agent knew that they were wrong, unlawful and in violation of U.S. law. On March 30, 1998, J&T was placed on probation for a term of five years. [See Exhibit No. 34, superseding information; Exhibit No. 35, plea minutes of September 30, 1997; and Exhibit No. 36, U.S. District Court judgment of conviction.]
12. Enviro Express (50% owned by Thomas Milo, 50% owned by Louis Corso) pled guilty to making a false tax return. It admitted that in 1990 it filed a false 1989 return by taking certain false deductions for payments to Compaction Systems Corp., knowing that what it was doing was wrong and in violation of tax laws. On March 30, 1998, Enviro Express was fined $102,000 for this crime. [See Exhibit No. 37, superseding information; Exhibit No. 38, plea minutes of September 30, 1997; and Exhibit No. 39, U.S. District Court judgment of conviction.]
13. Acorn Equipment Leasing Corp. (40% owned by Thomas Milo) pled guilty to subscribing a false 1989 U.S. tax return. It admitted that the return was false in that it reflected as deductions certain payments that either were based on fictitious invoices or included artificially inflated purchase prices, thereby resulting in overstated deductions and understated income. Acorn acknowledged that when the return was subscribed, its agent, Thomas Milo, knew that it was false and unlawful. On March 30, 1998, Acorn was fined $68,000 for this crime. [See Exhibit No. 40, superseding information; Exhibit No. 41, plea minutes of September 30, 1997; and Exhibit No. 42, U.S. District Court judgment of conviction.]
14. Pursuant to the terms of their plea agreements in the Gigante proceeding, various corporate defendants including Al Turi Landfill, Inc., accepted the supervision of a court-appointed monitor for a period of five years from their sentencing on March 30, 1998. The federal court monitor is Walter Mack, a Manhattan attorney and partner with the firm of Doar, Devorkin & Rieck.
15. Under terms of a written agreement (Exhibit No. 15) to which Al Turi Landfill, Inc., is a party, Mr. Mack's job includes overseeing Al Turi's operations to ensure that it complies with all federal, state and local laws, including environmental laws, and the terms of its sentence. Mr. Mack has powers to inspect and review corporate records, premises and operations. His costs and those of any agents he retains for business, legal, accounting and investigative services are paid by the defendants. For environmental compliance issues that might arise, Mr. Mack has retained Michael Gerard, Esq., of Arnold & Porter. Also, Mr. Mack has asked that Al Turi provide him with any Notice of Violation that is issued by DEC.

    - - Applicant's Environmental Compliance Record

16. The Applicant's record of environmental compliance over the last 10 years includes three violations of Department law or regulation, as noted in tickets that were issued by DEC Environmental Compliance Officers. These three matters were resolved without trial in local justice courts, as noted below.
17. On January 22, 1993, the Applicant violated ECL Section 17-0501 by "allowing organic or inorganic matter to discharge into the waters of the state, causing a contravention of water standards." The situation involved a heavy rain event in which stormwater containing some clay sediment was running from the landfill property via a stream connecting a small on-site siltation pond and an off-site wetland area. The stormwater did not come in contact with any solid waste or leachate, and as soon as the Applicant discovered the situation, it was remedied by installing silt fences, hay bales, and siltation ponds. The matter was settled by the Applicant's payment of a $1,500 fine. (See Exhibits 43 - 45, and testimony of ECO Watt.)
18. On May 16, 1995, the Applicant violated 6 NYCRR 360-2.17(j) by "recirculating leachate without Department approval and no double liner." The incident arose as Al Turi personnel were removing some ponded stormwater runoff which had collected in a depression of a landfill cell. While pumping the stormwater into a water wagon tank, the operator noticed a leak in the tank. The operator then drove the water tank truck a short distance to the top of the landfill, and drained the stormwater in the leaking tank over the landfill's interim liner, so that the water then flowed directly into the leachate collection system. Had the operator instead driven the leaking water truck to the leachate pond, the stormwater would have leaked for a long distance upon the unlined roadway. Al Turi's violation occurred in this emergency situation, and was settled by payment of a $200 fine. (Exhibits 46 and 47.)
19. On December 27, 1995, the Applicant violated 6 NYCRR 360-1.7(a)(1)(i) by operating a solid waste management facility without a DEC permit. The charge related to fill material delivered by a third party, Star Recycling, Inc., to an area just north of the Al Turi landfill for construction of a driveway. The operator of a DEC-licensed C&D transfer station, Star had agreed to provide Al Turi with clean fill as defined by DEC. However, DEC personnel who inspected the material said that it contained wood and insulation products. Deeming the material unacceptable, DEC ordered it removed. The Applicant responded expeditiously to remediate the affected area, and the matter was settled by payment of a $2,500 fine. (See Exhibits 48 - 50, and testimony of ECO Watt.)

    - - Odor Problems at the Al Turi Landfill

20. The Applicant's record of environmental compliance also includes various violations of Part 360 as set forth in Department inspection reports completed by Zachary J. Cogon and William P. Meyers, two environmental monitors who regularly inspect the Al Turi landfill. A review of their reports for the years 1993 to 1998 indicates recurrent problems particularly with the control of waste-related odors. While inherent to landfill operations, such odors are manageable to the extent that measures can be taken to minimize their off-site impacts.
21. Odors at the Al Turi landfill are caused primarily by the exposure of waste at the landfill's working face and the subsequent decomposition of the waste after it has been covered. On occasion, odors are caused on a short-term basis by the unearthing of waste to make liner improvements or to place gas vents.
22. Landfill odors are controlled principally by the placement of daily cover, usually soil, at the working face. In addition, the landfill operators spray an odor neutralization agent on the waste as it is being compacted, and they distribute pellets which tend to mask or neutralize odors in parts of the facility where the problem is particularly severe. The operators also use a hydroseeder to spray an odor suppressant on the waste and the internal facility roadways.
23. The decomposition of waste within the landfill creates odorous methane gas. The facility collects the gas in wells that are set within the waste mass. The collected gas is then conveyed via pipeline to an on-site facility that uses it to generate electricity. The excess gas is burned in an enclosed flare.
24. Even with these various measures in place, odors from the landfill frequently create an off-site nuisance, particularly along Route 17-M, immediately south of the facility. Odors attributable to the landfill may sometimes also be detected along Hartley Road (immediately east of the landfill) and Echo Lake Road (more than a half-mile north of the landfill, as far east as its intersection with Cheechunk Road and as far west as its intersection with Golf Links Road). The location and extent of off-site odor problems depend on weather conditions such as wind direction and air inversions. On occasion, the landfill's odors are disturbing to nearby residents, some of whom have complained to the Department.
25. Other facilities in the general vicinity of the Al Turi landfill also generate waste odors. These include two waste management facilities within 300 feet of the northeast edge of the landfill property: the Northern Recycling solid waste transfer station and All-Waste Systems, Inc., which includes a waste container storage area. Other nearby odor sources are the Strong Farm, almost a mile from the landfill (which generates silage and manure odors), the transfer station and leachate storage facilities associated with the closed Orange County Landfill (also about a mile from the landfill), the sewage treatment plants for Goshen and Middletown, and for the Mid-Hudson Psychiatric Center (which generate sewage odors), and the compost facility operated by Carol Equipment Corp. directly across Route 17-M from the landfill (which emits musty, moist odors from mulched wood and yard waste).
26. While the sources noted above also generate solid waste odors, as do waste-hauling truck trailers that move frequently along Route 17-M, DEC's trained and experienced monitors can generally distinguish odors of the Al Turi landfill from those generated elsewhere. For instance, even though the Northern Recycling facility generates many of the same types of odors as the Al Turi landfill, the landfill also generates gas and sludge odors that Northern Recylcing does not. Also, the concentration of landfill gas odors along the Route 17-M corridor suggests that they are created by the Al Turi facility, which abuts the road, rather than by the Orange County Landfill, which is some distance away. Finally, odors from landfill gas differ in quality from those attributable to such things as silage and composting. The odor from a wood mulch or compost facility is sweet, almost molasses-like, whereas the odor of landfill gas has a smell like rotten eggs.
27. Odor violations at the facility are due to a combination of control measures being somewhat ineffective and not being implemented to the Department's satisfaction. Except for the spraying of waste during compaction, which is a function of the compactor machinery, odor control measures are performed by landfill personnel, and may not be carried out when the facility is short-staffed. On occasion the Department's monitors have arrived on site to find that odor-controlling sprays and powders have not been applied. These odor control measures would be more effective if they were implemented more consistently by landfill personnel.
28. During 1998 the landfill received much less waste than it had before, but it also reduced the number of staff available for routine operations. In matters of general maintenance like keeping cover in place, the Applicant generally moves diligently and responsibly to address violations that can be corrected quickly and easily. For violations whose correction requires a large expenditure of manpower and equipment, however, corrective action may be delayed.
29. Pursuant to its current DEC permit (Exhibit No. 145), the facility has established an odor complaint hotline for use by the public to report nuisance conditions. However, the hotline has received no complaints since it started during the fall of 1997, apparently because neighbors are not aware of the hotline or are reluctant to complain directly to the Applicant.
30. The Applicant is required by its permit to investigate all complaints that are received on the odor hotline and to take all necessary corrective actions. In addition, the Applicant has its own employees patrol the site perimeter daily to inspect for odors, and their findings are summarized in a monthly report that is furnished to DEC. The Applicant also conducts interviews with people who live within one mile of the landfill's center, to gauge off-site odor impacts.
31. Odor control problems were apparent at the time of the adjudicatory hearing, with inspector Cogon noting landfill gas odors along Route 17-M as recently as October 26 and 27, 1998.

    - - Breakout of Landfill Leachate Into the Wallkill River

32. A second problem occurring at the time of the hearing involved landfill leachate entering the Wallkill River through a groundwater seep in the riverbank. The seep, which causes water discoloration, was first discovered by Orange Environment, whose president, Dr. Edelstein, photographed the discharge from a boat on September 27, 1998. (His photographs were transmitted to me and the other parties by a letter from Scott Thornton, Orange Environment's attorney, on October 20, 1998, which was received by Department Staff on October 22.)
33. The seepage of leachate may have been several months old when it was finally detected by Orange Environment. Because the riverbank is not regularly inspected by DEC monitors, they did not discover it first.
34. During the afternoon of October 26, 1998, environmental monitor Cogon noted three areas of iron discoloration at the edge of the river's waterline, from between eight to 30 or 40 feet long, east of the outfall from the facility's leachate treatment plant. Mr. Joseph Gambino, Al Turi's president, told Cogon that the facility became aware of the condition on October 24, at which time its consultants collected a surface water sample from the seep area for chemical analysis.
35. The orange-colored discharge was noted by Mr. Cogon in an October 26, 1998, inspection report (Exhibit No. 142) as a violation of 6 NYCRR 360-1.14(b)(2), which requires that leachate be prevented from entering surface waters.
36. In a letter dated October 27, 1998 (Exhibit No. 141), Steven Parisio, an engineering geologist employed at the Department's Region 3 office, advised Mr. Gambino that the discharge of leachate required immediate corrective action, and that sampling for chemical analysis was not an adequate substitute.
37. Mr. Parisio wrote that when iron staining is observed downgradient of a landfill, a determination should be made whether the staining is associated with an active (i.e., flowing) leachate seep, and that if an active seep is occurring, any flow should be intercepted, collected and prevented from entering the river. On the other hand, if no flow is observed, Mr. Parisio wrote that it may be feasible to remove iron-stained soil and monitor the area to see if the staining reappears. Mr. Parisio's letter directed that a report of corrective actions taken or planned should be submitted to DEC's regional solid waste engineer as soon as possible, but no later than October 30.
38. Iron discoloration was noted again during an inspection by monitor Cogon on October 29, as confirmed by his follow-up report (Exhibit No. 143). As of October 29, no work had been taken to contain or remediate the discharge, and Mr. Cogon cited it again as a violation of 6 NYCRR 360-1.14(b)(2). During the site inspection, Mr. Gambino told Mr. Cogon that he had received some preliminary, inconclusive water quality data, and that he was still waiting for test results from soil samples.
39. On October 30, Mr. Gambino sent a letter (Exhibit No. 157) to Mr. Parisio taking issue with the Department's allegation of illegal leachate discharge. Al Turi claimed that the orange discoloration could be the result of naturally occurring iron sources in the soils and groundwater. Because its consultants had not observed any "flowing" condition, Al Turi concluded that the only action which might be warranted would be to carefully remove the orange deposits and see if they reappear.
40. On November 3, Mr. Parisio and Mr. Meyers from Department Staff joined Al Turi personnel and their consultants in obtaining a water sample that could be considered representative of the discharge causing the iron precipitation. The relative warmth of the liquid sampled compared to the ambient surface water temperature in the river showed that the sample was collected prior to any mixing with the surface water.
41. On November 9, Mr. Parisio advised Mr. Gambino by letter (Exhibit No. 158) that a final determination regarding the specific cause of the iron precipitation (i.e., leachate or leachate-impacted groundwater) and selection of an appropriate long-term corrective measure would depend on results of a full analysis of the sample collected on November 3. Mr. Parisio wrote that, in the interim, Al Turi should continue to monitor the shoreline for signs of leachate discharge, and collect or otherwise prevent any detectable flow of iron-discolored water from entering the river.
42. On November 12, Mr. Parisio received the final laboratory analysis of the water sample collected on November 3. (See Exhibit No. 155.) The results confirmed that the discharge was leachate-impacted groundwater, because it contains certain chemicals that are leachate indicators.
43. Groundwater flows to the area of the discharge from a portion of the facility where landfilling has been completed for some time. That portion of the facility has a soil liner which would be considered substandard under the new Part 360 regulations. As leachate travels through groundwater from the landfill to the river, it chemically changes the iron that already exists in the soil and allows that iron to move with the water flow. Ultimately, the iron accumulates as a precipitate where the groundwater discharges to the surface, within a few inches of the river level, and is exposed to atmospheric oxygen.
44. The discharge is a manifestation of groundwater contamination that has been present along the landfill perimeter and measured in monitoring wells over many years, and does not represent a more concentrated leachate seep from the facility's leachate lagoons or collection system. Furthermore, surface water sampling does not indicate that the discharge is having an adverse impact on the river, though this may be due to inadequacies in Al Turi's surface water monitoring, so it is hard to draw firm conclusions on this point.
45. As of mid-November, 1998, Al Turi management was cooperating with the Department in monitoring the river shoreline daily for signs of further discharge.
46. In the early 1990's, Al Turi put an overliner over older areas of the landfill where the liner, while compliant with regulations in place when it was installed, is considered substandard according to current regulations. The overliner is intended to direct leachate from the substandardly lined areas to the double-lined area along Route 17-M. The current capping of the old Al Turi landfill is also intended to further reduce the potential for leachate to affect the Wallkill River.

    - - Environmental Compliance Record of Companies Related to Al Turi's Principals

47. Thomas Milo, a one-third shareholder of Al Turi Landfill, Inc., is the sole shareholder of Suburban Carting Corp., which collects, transports and disposes of solid waste. Over the last 10 years, Suburban has been charged with three violations related to its operations, as noted below. [See Findings of Fact No. 48 - 50.]
48. DEC charged Suburban with transporting a quantity of regulated medical waste to a nonpermitted facility, in violation of 6 NYCRR Part 364. The violation was alleged to have occurred on or about May 26, 1989. According to Suburban, the incident arose when a standard garbage container that was picked up by Suburban for disposal contained a small amount of medical waste of unknown origin that had been disposed of improperly. Neither admitting nor denying the violation, Suburban settled the case by entering into a consent order and paying a $3,000 penalty. (Exhibit No. 51.)
49. DEC charged Suburban with having no fire extinguisher at a solid waste transfer station Suburban operated in New Rochelle, Westchester County, in violation of 6 NYCRR Part 360. The violation was alleged to have been revealed during a facility inspection on or about December 1, 1989. Neither admitting nor denying the violation, Suburban settled the case by entering into a consent order and paying a $500 penalty. (Exhibit No. 52.)
50. The Westchester County Board of Health charged Suburban with allowing an oil spill and failing to take immediate preventive action to minimize the resulting damage to the public and the environment, in violation of the county's sanitary code. Suburban admitted the violations, which were alleged to have occurred on July 18, 1996, and paid a fine of $500. According to Suburban, the violations occurred when a fuel pump nozzle inadvertently popped out while an employee was fueling a vehicle, resulting in the spillage on the ground of a small quantity of fuel. In settling the case, Suburban represented that it had instructed employees not to leave trucks during fueling, and to notify the county's health department in the event of a spill. (Exhibits 53 and 54.)
51. Thomas Milo and Louis Corso, who are each one-third shareholders of Al Turi Landfill, Inc., are 50 percent shareholders of Enviro Express, Inc., which operates solid waste transfer stations in Connecticut. The City of Milford Department of Health charged Enviro Express with discharging and exposing garbage and other organic filth on transfer station property and adjacent land, thereby producing an offensive odor and risking the transmission of infective material, in violation of Connecticut's health code. Enviro Express attributed the violation, noted during a July 9, 1991, inspection, to an unanticipated heavy volume of waste that was generated during the July 4 holiday weekend, which it said caused an overflow of a small amount of liquid matter onto the transfer station property and adjacent land. Enviro Express claims that it immediately removed the excess matter and cleaned up the affected properties, in compliance with Health Department directives. No fines were required to be paid. (Exhibits 55 and 56.)
52. Thomas Milo serves as secretary of F&H Sanitation, which also collects, transports and disposes of solid waste. DEC charged F&H with operating a solid waste transfer station in the Town of Kent, Putnam County, without a Part 360 permit. The violation, on October 16, 1991, involved the transfer of waste from trucks into open-top containers. The case was settled with payment of a $2,500 fine and removal of the containers from the site. (Exhibit No. 57.)
53. On January 8, 1997, the Connecticut Department of Environmental Protection denied Champion Recycling Industries, Inc., a permit to construct and operate a solid waste transfer station in New Haven, Connecticut. (The final agency decision is Exhibit No. 163.) At the time the application was made, Thomas Milo was an officer and director of the corporation, and had a minority ownership interest. Champion Recycling's application was denied because the compliance history of its affiliates (including Suburban Carting) cast doubt on its ability and will to construct and operate the transfer station in accordance with the Connecticut agency's permits and legal requirements.

    - - Need for Expansion of Al Turi Landfill

54. During October, 1998, the last month reviewed during the administrative hearing, the Al Turi landfill received 5,239.39 tons of material: 3,624.95 tons of municipal solid waste, 1,314 tons of construction and demolition (C&D) debris, and 300.44 tons of sludge from municipal sewage treatment plants. [See Exhibit 164, which reflects monthly tonnages of material received, by category, since 1992, as determined by the weighing of trucks entering and exiting the facility.]
55. Generally speaking, the landfill received less material in 1997 and 1998 than it did in the years 1992 to 1996, when annual tonnages ranged between roughly 229,000 (in 1995) and 379,220 (in 1992). In 1997, only 164,000 tons were received, and, for the first 10 months of 1998, 58,000 tons. (Exhibit No. 164.) This is well below the 8,400 tons per week of non-hazardous solid waste allowed by the current DEC permit, and reflects an effort by landfill management to preserve air space and thereby continue operations while the application to expand is still pending.
56. Since 1992, the vast majority of material received by the landfill has been municipal solid waste. Between 1992 and 1997, the landfill also received incinerator ash from Dutchess County; however, none was received in 1998, due to a business decision by Dutchess County to send its ash elsewhere. From July of 1993 to January of 1998, the facility received small amounts of petroleum-contaminated soil approved by DEC for use as a form of daily cover. Since September of 1995, the landfill has also received varying amounts of C&D debris.
57. During the years 1992 to 1998, the landfill received sewer and septic sludge, although the amount received fell from, on average, 1,000 tons per month in 1996 and 1997 to between 200 and 300 tons per month in 1998. The facility's receipt of less sludge in 1998 was part of an effort by landfill management to address the strong odors generated by the material.
58. In 1997, about 2.5 million tons of solid waste were generated in DEC's Region 3, which includes Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester Counties. Of that amount, about 900,000 tons were recycled, leaving the rest to be disposed of at landfills or waste-to-energy facilities. [See Exhibit No. 75: "Where Will The Garbage Go? 1998," Report of the Legislative Commission on Solid Waste Management, July 1998, Exhibit No. 75, Table 7, p.14.]
59. There are two waste-to-energy facilities in Region 3: one in Dutchess County and the other in Westchester County. There are also two large active solid waste landfills: the Al Turi landfill in Orange County, and the Sullivan County landfill. Almost all of the region's waste that does not go to one of these facilities is exported out of state for disposal, mostly to Pennsylvania, but also to Virginia and Ohio.
60. Region 3 lacks sufficient disposal capacity for its solid waste, as does New York generally. In 1997, New York State exported 3.7 million tons of waste, and with the closing of New York City's Fresh Kills landfill at the end of 2001, that amount should double. Region 2 (New York City) was responsible for 2.8 million tons of the state's 1997 waste exports, and Region 3 (the lower Hudson Valley) was responsible for 393,000 tons. [Exhibit No. 75, Table 7, p.14.]
61. Historically, between 50 and 75 percent of the waste disposed of at the Al Turi landfill has originated within Orange County. [Exhibit 83, Orange County Solid Waste Management Plan (SWMP) 1995/1996 Update, p. 3-3.] For the period between 1989 and 1995, about 54 percent of waste received at the landfill came from Orange County, 17 percent from Dutchess County, 13 percent from Rockland County, 11 percent from Westchester County, and 3 percent from Columbia County. (Greene, Putnam and Ulster counties, New York City, and out-of-state each accounted for one percent or less.) [Exhibit 115, Evaluation of Waste Disposal Needs for Communities Serviced by the Al Turi Landfill, prepared for the Applicant by Environmental Compliance Services, Inc., February 1996, Figure 3-1.]
62. Currently, residual waste generated in Orange County is either disposed of at the Al Turi landfill, or is accepted at transfer stations in the county for ultimate hauling, by private contractors, to out-of-state processing or disposal facilities. Contractually privatized, out-of-state disposal of residual waste received at the county's transfer stations is the county's preferred disposal method, the county having no intent to construct a new landfill of its own. [Exhibit 84, Orange County SWMP 1995/1996 Update, p.2-11.]
63. Orange County waste disposed of out-of-state goes primarily to the Keystone Sanitary Landfill in Dunmore, Pennsylvania.
64. Over the long term, and depending on prevailing economic, legal, regulatory, political, environmental and technical conditions, Orange County intends to work toward regional solutions or continue to use private sector services to haul, process and/or dispose of residual wastes in permitted facilities within New York State, to mitigate the effect of any future restrictions or bans on the interstate transportation of waste. [Exhibit No. 84, Orange County SWMP 1995/1996 Update, p.2-11 and 2-12.]
65. Over the last few years, several private firms have attempted to site facilities in Orange County that would process mixed waste. A proposal for such a facility was submitted in response to a Request for Proposals issued by the City of Middletown. The proposal, by a company called Pencor-Masada, is to produce ethanol from organic waste. The proposal is currently being evaluated by Middletown officials. [Exhibit No. 120, Orange County SWMP 1995/1996 Update, p. 2-7.]
66. Columbia County disposes of non-recycled municipal solid waste under a five-year contract with Al Turi landfill that expires in 2002.
67. Now, as a result of Al Turi's own restrictions on the amount of waste that the landfill receives, this waste from Columbia County is diverted to a transfer station operated by Al Turi for the Town of Ramapo, and from there it goes to the Keystone Landfill in Pennsylvania, which is Al Turi's designated backup disposal location in its contract with the county.
68. Columbia County generates about 20,000 tons per year of mixed municipal solid waste, out of which about 2,500 tons per year is C&D debris. The county uses convenience stations and a full-scale transfer station for transporting solid waste out of the county for disposal. [Exhibit 94, Columbia County SWMP Update, 1995.]
69. In 1996 and 1997, Columbia County took about 10,000 tons of municipal solid waste per year to the Al Turi landfill, and hauled its C&D debris elsewhere. The county would like to truck its C&D debris to Al Turi, but to do that would require buying different types of roll-off carts. Until it is decided whether the Al Turi landfill can expand, the county is not willing to make that financial commitment.
70. In developing its solid waste management plan, Columbia County rejected building its own landfill or waste-to-energy facility. If Al Turi is unable to expand, the county would have to find other alternatives for waste disposal, perhaps at a higher cost. These could include use of out-of-county incinerators to the extent such facilities have readily available capacity.
71. A waste-to-energy incinerator in Dutchess County handles most of that county's non-recycled solid waste. In 1997, the last year for which information is available, the facility was operating near its design capacity of 146,000 tons per year.
72. Westchester County owns and operates a large resource recovery facility in Peekskill that incinerates most of the county's municipal solid waste, though some is exported from the county for disposal in landfills. Over the years, some of this exported waste, from seven of Westchester County's 43 municipalities, has been taken by private haulers to the Al Turi landfill.
73. Westchester County's resource recovery facility has a design capacity of 821,000 tons per year. In 1997, the last year for which information was available, the facility received 657,000 tons of waste, indicating it has available capacity to receive some of the waste that now leaves the county for disposal.
74. The expansion of the Al Turi landfill would afford 8,400 tons per week (equaling 436,800 tons per year) of disposal capacity for non-hazardous municipal and commercial waste, incinerator ash and other wastes as described in Department Staff's draft permit (Exhibit No. 162).
75. If the landfill is unable to expand, customers who had been using it will move their waste elsewhere in the disposal market, be it in inside or outside of New York State. The cost to the customer will change based on factors such as the distance to the new disposal facility and the tipping fee charged by that facility. Waste could go to either another landfill or a resource recovery facility.
76. Within New York State, the Sullivan County landfill has about 125,000 tons per year of unused capacity that could go for waste that otherwise would be sent to the Al Turi landfill. Also, the Westchester County resource recovery facility, a waste-to-energy incinerator, has operated over the last several years with about 160,000 tons per year of unused capacity that, depending on county officials' approval, could also be available to Al Turi's customers. An additional 200,000 tons per year of unused capacity exists at the American Ref-Fuel incinerator in Niagara County.
77. Outside of New York State, there is available capacity at landfills in eastern Pennsylvania including the Keystone Sanitary Landfill in Dunmore and the Chrin Landfill in Easton. In northern New Jersey, there is available capacity at the incinerator operated by American Ref-Fuel in Newark, and the Union County incinerator. If capacity was contracted for or otherwise became unavailable at one of these facilities, other capacity would open elsewhere in the market.
78. Bills that would allow states to bar the importation of solid waste have been circulating in Congress for several years. While none have passed, that could change this year in light of the large-scale waste exportation by states like New York and the potential for more resulting from the expected closure of New York City's Fresh Kills landfill at the end of 2001.
79. As New York's waste exportation has increased, so has opposition to it by state officials in Pennsylvania and Virginia, which receive a lot of New York's waste.
80. New York State officials are concerned that some legislation will pass Congress during 1999 that would allow states to ban, restrict or tax waste imports.
81. According to New York's solid waste management plan 1997/98 update (Exhibit No. 69, page ix), the state's objective is to "make every effort" to ensure that its waste is disposed of in-state. In the planning period through 2003, where waste exports remain a necessity, the state would commit to reasonable restrictions on the interstate transportation of waste and only use facilities in communities that are willing waste recipients.
82. New York's solid waste management plan lists self-sufficiency in the management of municipal solid waste as a state objective due to the following uncertainties related to out-of-state waste exportation:

    (1) Potential bans or limits on interstate waste disposal by the U.S. government or receiving states;

    (2) Unforeseen closure of receiving facilities;

    (3) Uncontrolled escalation of interstate disposal and transportation costs; and

    (4) Uncertain long-term, out-of-state capacity.

    [See Exhibit No. 137, "Review of Local Solid Waste Management Plans," DEC Technical Administrative Guidance Memorandum (TAGM) dated June 4, 1996.]

83. Even in the absence of federal laws curbing interstate waste shipments, Pennsylvania and Virginia have legislation pending that, as a practical matter, could limit New York's ability to export its waste to those states.
84. Legislation proposed by Governor Ridge in Pennsylvania and given a good chance of enactment there would, among other things, place a three-year moratorium on the issuance of permits for new disposal facilities, reduce the state's permitted waste disposal capacity by one-third, require new disposal facilities to obtain host community agreements, and impose new fees on vehicles carrying solid waste.
85. Virginia has measures pending before its legislature that would impose a new tax on every ton of waste disposed of within that state. These measures could help Virginia price itself out of the interstate waste disposal market.

DISCUSSION

Introduction

Broadly stated, the issue now before the Department is whether the Applicant, Al Turi Landfill, Inc., is sufficiently fit to receive a permit to expand its facility. I conclude that it is not, and therefore that the permit should be denied. While the hearing was exhaustive in considering the Applicant's record of compliance, I am especially concerned about the recent criminal convictions of the Applicant, its three principals, and various companies in which these principals are major stockholders.

While no testimony was taken on these matters, the court documents compiled by the Applicant and received as exhibits (including plea minutes and judgments of conviction) speak for themselves. As part of the Gigante proceeding, the Applicant Al Turi Landfill, Inc., pled guilty to conspiracy to evade and defeat a large part of its income tax liability. It admitted that for five years during the mid-1980's it conspired "willfully and knowingly and unlawfully to defraud the United States by impeding the lawful functions of the Internal Revenue Service."

Al Turi's three principals also pled guilty to various crimes: Nicholas Milo to conspiracy to defraud the I.R.S. and to commit extortion, Thomas Milo to conspiracy to commit mail fraud and to defraud the I.R.S., and Louis Corso to aiding and assisting in the preparation and presentation of a fraudulent and false tax return. Finally, various companies owned in whole or in part by Al Turi principals pled guilty to crimes involving tax fraud, as outlined in my findings of fact.

Applicant Deemed Unfit

The criminal record of the Applicant, its principals, and their affiliates leads me to conclude that Al Turi Landfill, Inc., is unfit to receive an expansion permit.

There is no serious doubt (and, in fact, the Applicant concedes) that fitness may be considered as a basis for permit denial. As New York's Court of Appeals ruled long ago in Matter of Barton Trucking Corp. v. O'Connell [7 NY2d 299, 308, 197 NYS2d 138 (1959)], "So far as the character and fitness of [a] proposed licensee is concerned, all the relevant case law in this State expressly or impliedly holds that the licensing official has implicit discretion to pass upon the fitness of the applicant."

The fitness of a permit applicant relates not only to its competence but to its trustworthiness. As I noted in my issues ruling, past fraudulent activity by the Applicant and its principals is especially relevant to the permitting decision, since the Department needs assurance that it can trust a permittee's honesty and integrity. Even where, as here, the fraud was directed at the IRS, the DEC, as another regulating authority, must consider how it bears on the Applicant's veracity, general character, and dependability.

DEC Enforcement Guidance Memorandum

DEC has promulgated an Enforcement Guidance Memorandum ("EGM" Number II.24, issued 8/8/91, revised 2/93) which establishes the policy and procedures by which it ensures that persons who are unsuitable to carry out responsibilities under Department permits are not authorized to do so. It has also developed a form on which permit applicants are expected to disclose their record of legal compliance. According to the Department's EGM, DEC's interests in protecting the environment and preserving the state's natural resources allow it, as the circumstances may warrant, to consider as a basis for permit denial a number of "events" including whether the Applicant or its principals have "engaged in conduct that constitutes fraud or deceit," or whether they have been "convicted of the crime of filing a false instrument or making a false statement to the Department or any other agency regarding compliance with the laws of any state or the United States" [EGM, pages 4 and 5].

Here, both such "events" have been established. The criminal attempts to evade tax liability involved fraud upon the IRS and deceit through the generation of false business records. Such conduct as part of the Applicant's business activities raises serious doubt about its trustworthiness to comply with duties under the ECL and any expansion permit it might receive, especially since DEC's regulatory scheme depends on permittees to self-monitor and self-report their activities.

As noted by Department Staff, the EGM also allows the Department to consider as a basis for permit denial "whether a permittee or applicant has been convicted of a crime related to the permitted activity under any federal or state law." I did not cite this provision in my issues ruling, and do not rely on it here, since I construe the "permitted activity" in this case to be "landfilling" rather than, in Staff's broader usage, the management of waste.

In its closing brief, Staff invokes this provision of the EGM because the objectives of the conspiracy to which various pleas were entered included concealing the distribution of profits from an illegal "property rights" system - - in other words, a system by which companies unjustifiably claim "rights" to every stop where they pick up garbage. Staff argues that the criminal activities in undertaking this scheme to control trash collection relate directly to the disposal of that trash and, therefore, to the subject matter of the permit application. I find this reasoning inconsistent with the explicit language of the EGM, and do not think it supports a separate, independent basis for considering the crimes that are enumerated above.

Correction Law

State law forbids DEC as a public agency from denying a permit "by reason of the applicant's having been previously convicted of one or more criminal offenses, or by reason of a finding of lack of "good moral character" when such finding is based upon the fact that the applicant has previously been convicted of one or more criminal offenses," unless:

(1) there is a "direct relationship" between one or more of the previous criminal offenses and the specific permit sought; or

(2) the issuance of the permit would involve "an unreasonable risk to property or to the safety or welfare of specific individuals or the general public." [Correction Law Section 752.]

In my opinion, both criteria have been met, affording two different bases for permit denial.

Addressing the first ground, there is clearly a direct relationship between the crimes outlined in this report and the permit to expand the Al Turi landfill. According to Correction Law Section 750(3), "direct relationship" means that the nature of the criminal conduct for which the person was convicted has a direct bearing on his fitness or ability to perform one or more of the duties or responsibilities necessarily related to the license or employment sought."

Here, that conduct involves such things as fraud against the government and the falsification of business records to conceal illegality. Conduct of this nature - - whether by the Applicant, its three principals, or companies in which those principals are involved - - bears directly on their fitness to meet obligations under Part 360 and Staff's draft permit.

As Staff points out, the Department's long-standing method of regulation presumes voluntary compliance, self-reporting, and a substantial reliance upon the honesty and integrity of permit holders, which is why the agency would not want to permit an Applicant whose trustworthiness is open to serious question.

Part 360 imposes stringent requirements for the operation of solid waste management facilities generally [6 NYCRR 360-1.14] and landfills in particular [6 NYCRR 360-2.17], including requirements for self-inspection [360-1.14(f)(3), 360-2.17(q)], recordkeeping [360-1.14(i)] and self-reporting [360-1.4(c), 360-2.17(t)]. Also, the draft permit imposes other obligations that the permittee notify the Department promptly of certain events [special conditions 13 - 22] and record and report certain information on a regular basis [special conditions 23 - 27].

Even though the Department would have a role in monitoring the facility's activities, it is not the Department's job to ensure compliance in the first instance. That is the permittee's job, which it is expected to perform by diligent monitoring and the recording and reporting of information that can help the Department fulfill its role in protecting the environment and public health.

While acknowledging that DEC's fundamental concern is with the accuracy of written submissions it would receive, the Applicant argues in closing that "the vast majority of the submissions that must be made to the Department now and in the future are not even prepared by Al Turi," but instead by engineers and other hired professionals who, it argues, would not risk their licenses by submitting false or misleading documents to DEC. In particular, the Applicant cites requirements that:

(1) The engineering plans, reports and specifications submitted as part of a solid waste management facility application must be prepared and certified by a licensed engineer [360-1.9(e)],

(2) A licensed engineer must certify that construction occurs in accordance with the approved engineering design [360-1.2(b)(121), 360-1.11(e), and 360-2.13 generally], and

(3) Laboratory analyses must be performed by a state-certified laboratory [6 NYCRR 360-1.14(h), 360-2.11(c)(5)(iv), and 360-2.11(d)(4)(i)].

Certainly, one must concede that engineering input is necessary both to develop an application and to ensure that the project actually constructed meets the permitted design. However, the application is already before us, and its flaws, if any, can be addressed in the hearing process. Also, the fitness issue relates to concerns about the day-to-day operation of the facility, not about its construction.

As noted above, it is up to the permittee, in the first instance, to assure that operations meet the requirements of the law and the permit. This requires duties of self-policing, self-recording and self-reporting that involve the permittee directly, which is why the permittee's honesty is so important to the regulatory scheme. Once the facility is designed and constructed, it is up to the permittee alone, not its engineering consultants, to ensure compliance.

Not only do the Applicant's crimes bear directly on its fitness to receive a new landfill permit, but the issuance of that permit would involve an unreasonable risk to the welfare of the general public. When operated improperly, landfills can have serious adverse consequences for their neighbors. They can cause odors, groundwater contamination, and any number of other severe, often hard-to-remediate problems that are of legitimate interest to DEC in its statutory role of protecting the environment and controlling pollution in order to enhance the people's health, safety and welfare. [See ECL Sections 1-0101 and 3-0301.]

Environmental protection demands that a landfill receive only the types and quantities of waste allowed by its permit, and that the waste be handled properly. Where past crimes indicate that, to conceal illegality, a permittee has generated false business records and submitted fraudulent information to the government, the risk of letting it continue operations is too great. That the Applicant's crimes involve the tax laws, not the environmental laws, is secondary to its use of fraud, deception and other illegality for the sake of its financial advantage.

In making determinations under Section 752 of the Correction Law, DEC is obliged to consider the following factors:

- - The state's public policy to encourage the licensure of persons previously convicted of one or more criminal offenses;

- - The specific duties and responsibilities necessarily related to the permit being sought;

- - The bearing, if any, that the criminal offenses for which the applicant was previously convicted will have on his fitness or ability to perform one or more such duties or responsibilities;

- - The time which has elapsed since the occurrence of the criminal offenses;

- - The age of the person at the time of the occurrence of the criminal offenses;

- - The seriousness of the offenses;

- - Any information produced in regard to the person's rehabilitation and good conduct; and

- - The legitimate interest of the public agency in protecting property, and the safety and welfare of specific individuals or the general public. [Correction Law Section 753(1).]

While some of these factors would, in this case, tend to support permit issuance, others do not. The duties and responsibilities related to the permit already have been noted above, as has DEC's legitimate interest in protecting the welfare of the general public. That the Department depends so much on its permittees' integrity, and that its environmental and public welfare interests are recognized by statute, both weigh against permit issuance.

Also weighing against permit issuance are the nature and seriousness of the offenses committed by the Applicant, its three principals, and their affiliates. They involve putting one's business interests ahead of one's legal obligations. They include fraud and deception, which bears directly on permittees' duties of honest self-reporting. Staff's concern that if one can lie to the IRS, one can lie to DEC, is well-founded, since the offenses bear on the Applicant's veracity generally.

As for the seriousness of the offenses, the court records speak for themselves. The Applicant itself willfully conspired to evade and defeat a large part of its income taxes, issuing checks for equipment rentals that did not exist. Nicholas Milo extorted the principal of a carting firm and falsely reported the money he received, to defraud the IRS. Thomas Milo conspired to commit mail fraud and defraud the IRS through an elaborate scheme involving false and fictitious invoices. Louis Corso aided and assisted in the preparation and presentation of a fraudulent federal tax return which took an unlawful $120,000 deduction to understate the income of a company in which he had a 50 percent interest.

These crimes and others by companies affiliated with Al Turi principals, most of them also involving fraud, involved sophisticated efforts to hide illegality and evade taxation. They span three decades, from the early 1960's to 1993, though most, including Al Turi's own, occurred in the 1980's. Their seriousness is underscored by the $910,000 fine that was imposed on Al Turi Landfill, Inc., the millions of dollars in restitution Nicholas and Thomas Milo were ordered to make to the IRS, and the prison sentences that were imposed on all three of Al Turi's principals.

Counsel for the Applicant argues that, of all the crimes, those committed by Al Turi and Louis Corso are the most relevant, since Al Turi is the Applicant and Mr. Corso, unlike the Milos, is actively involved in Al Turi's day-to-day management. I agree, but the crimes of Al Turi and Mr. Corso, even if taken alone, are still quite serious.

Admittedly, Mr. Corso's plea concerned only one illegal act, which the federal judge took to indicate that prosecutors considered Mr. Corso "more peripheral in the overall situation" and "substantially less culpable" than other Gigante defendants. However, the one act Mr. Corso did commit - - assistance in the preparation of a false tax return - - raises the same concerns that stem from all the crimes considered together.

These concerns persist regardless of how the law classifies the conduct. Department Staff and Orange Environment have made a great deal about how the Applicant and its three principals are convicted felons, as if this alone would support denial of the expansion permit. Conversely, the Applicant's closing brief argues that the conduct for which Al Turi and Louis Corso pled guilty as federal felonies would be cognizable under New York State law as misdemeanors. [See Exhibit No. 59, reproducing sections 105.05 and 175.30 of the Penal Law.]

Even if the Applicant's legal argument is correct, the Department's EGM does not distinguish between felony and misdemeanor offenses, and neither does the Correction Law. While the Correction Law requires one to look at the "seriousness" of a crime, nothing establishes that a felony offense is serious (warranting permit denial) and a misdemeanor is not. At any rate, the crimes discussed here are felonies, so how New York would treat similar conduct is irrelevant.

The Correction Law also allows the agency to consider the age of the person when an offense is committed. While I do not consider this a key factor, the crimes committed certainly were not youthful indiscretions. They were committed by men of age and experience, as part of their business activities.

All this being said, there are some factors that weigh in favor of permit issuance, though I think they should not control the permitting decision. One such factor is the state's public policy to encourage the licensure and employment of all persons previously convicted of one or more criminal offenses [Correction Law Section 753(1)(a)]. This factor works in favor of the Applicant's principals, but no differently than it would for any convicted criminal.

Another factor favoring the Applicant is the many years that have passed since the criminal offenses outlined in this report, none of which extend past 1993. As argued in closing by the Applicant, more than 10 years have elapsed since the criminal offenses to which Al Turi pled, and Louis Corso's plea concerns an event that occurred nine years ago.

The time that has passed since the crimes were committed has allowed the Applicant an opportunity to create a record with regard to rehabilitation and subsequent good conduct. This is relevant under the Correction Law as well as DEC's EGM, which requires (at page 4 of 11) that the Department consider evidence that a violator is "rehabilitated and has re-established a reasonable record of compliance with the relevant laws."

As evidence of rehabilitation, the Applicant notes that it has had no tax violations since 1989, despite regular audits or reviews by the IRS. This assertion is uncontested by the other parties.

The Applicant also touts its record of compliance with environmental laws, which is a matter of dispute primarily between the Applicant and Orange Environment. Since Mr. Corso became managing director in 1990, the Applicant has been ticketed for environmental violations only three times. These matters (one in 1993 and two in 1995) were settled for minor fines totaling $4,200.

The Applicant's environmental compliance record, which also includes its inspection history, is addressed later in this discussion. However, its criminal record is not in dispute. While this record taints the Applicant, each year it keeps "clean" tends to restore its fitness.

Still, it is hard to say to what extent the Applicant and its principals have been rehabilitated and deserve the public's trust. Perhaps they have merely become more careful in light of the attention that recently has been put on their business activities. If that attention is removed, their conduct might change.

While the adjudicatory hearing was held, Nicholas and Thomas Milo were still in prison, and Louis Corso and Al Turi Landfill, Inc., were on probation. If rehabilitation is related to having served one's sentence, their rehabilitation is not yet complete.

Also, because compliance with the law is expected in the first place, the reestablishment of a good compliance record should not, by itself, have too great an influence on the permitting decision, especially when considered against the nature, duration and overall seriousness of the crimes that were committed.

Use of Permit Conditions to Address Compliance Issues

The Applicant cites DEC case precedent for the general proposition that permit denial may not always be warranted if permit conditions can be fashioned to adequately address concerns stemming from a poor compliance history.

In his CECOS International decision (March 12, 1990, page 4), the Commissioner distinguished between applicants "who have intentionally or by management neglect operated outside the boundaries of the law and have done so criminally or with gross negligence" (for whom hazardous waste permits must be denied) and those "who have had transgressions but have acted responsibly in dealing with them and in improving operations to prevent recurrences" (for whom permits should not necessarily be denied, but whose permits may require special conditions "to ensure that any operations they undertake will be implemented properly and in full compliance with the law").

The use of permit conditions to provide compliance assurances was later discussed in the Laidlaw Environmental Services decision (June 28, 1994, page 1), in which the Commissioner said that reviewing an applicant's compliance history "provides the Department with the opportunity to impose permit conditions which increase assurance of compliance in situations where applicants have compliance problems that are not severe enough to warrant denial."

Applicant's Trust Arrangement

Recognizing that the Commissioner might not be comfortable with its record of compliance, the Applicant has proposed an arrangement which it says would effectively remove Nicholas and Thomas Milo, two of Al Turi's three principals, from either direct or indirect control over the operation and management of the corporation, by placing their interests in irrevocable trusts. This arrangement, combined with oversight by DEC and the federal court monitor, is intended by the Applicant to remove any fitness-related bar to permit issuance.

In my issues ruling, I said that the trust proposal, which was first advanced at the issues conference, would be examined to determine whether it would effectively accomplish its purpose, and whether the Department, as a matter of policy, should participate in the arrangement. On the latter question, I said that the need for or utility of the extra space to be made available by the landfill expansion would be weighed against the burdens the Department would shoulder by monitoring the trusteeships.

I have stressed that any need for the facility would not make the Applicant more fit. However, I have also said that it might provide an incentive to accept the trust arrangement so the expansion can go forward and the extra space it would afford can be used for the sake of both Al Turi's customers and the state's own goal of self-sufficiency in solid waste disposal.

The Applicant's proposal is embodied in and explained by a series of documents which it prepared and which were received as hearing exhibits:

- - A draft trust agreement (Exhibit No. 60), which would be signed by Nicholas and Thomas Milo as well as their respective trustees;

- - A draft order on consent (Exhibit No. 61), which would be signed by the Department, Al Turi Landfill, Inc., and Al Turi's three principals (the Milos and Louis Corso), allowing the Department to enforce the terms and conditions of the trust agreement; and

- - A written explanation of the trust agreement and consent order (Exhibit No. 62), prepared by the Applicant's counsel. (Based on the other parties' comments during the adjudicatory hearing, the Applicant submitted slightly revised versions of the trust agreement and order on consent as Exhibits "B" and "C" of its closing brief.)

The Applicant claims that its proposal is similar to an arrangement the Department entered into in 1995 with the principals of Modern Landfill in Lewiston, Niagara County, after one of those principals, Steve John Washuta, pled guilty to federal racketeering charges. Mr. Washuta's plea prompted the Department to modify Modern Landfill's permit pursuant to an order on consent (Exhibit No. 63, later amended in 1997 as Exhibit No. 66) and trust agreement (Exhibit No. 64, later amended and restated as Exhibit No. 65). The consent order required Mr. Washuta to transfer all his stock interest in Modern Landfill to a family member, Sonia Washuta, who then put it in a trust overseen by other family members.

According to the Applicant, the Department's acceptance of the Modern Landfill trust arrangement establishes a precedent for accepting the one it has proposed here. However, from a comparison of the relevant documents, there is one apparent difference between what was done for Modern Landfill and what Al Turi proposes for its facility.

In the Modern Landfill arrangement, Mr. Washuta, whose compliance record was at issue, is not the grantor of the trust; his ownership interest was transferred to Sonia Washuta, and she created the trust. In the Al Turi proposal, Nicholas and Thomas Milo create their trusts directly, and do not surrender ownership to a third party. Following from that, the Milos receive the income from their trusts, unlike in the Modern Landfill arrangement, where the income goes to Sonia Washuta.

These distinctions between the Modern Landfill arrangement and the Al Turi proposal may not, as a practical matter, be significant or meaningful given the family relationship between Steve and Sonia Washuta, but are worth noting since, in the Modern Landfill case, Steve Washuta surrendered his interests entirely, according to the terms of the agreement.

According to Al Turi's proposal, Nicholas and Thomas Milo's economic, ownership, stock, investment and equipment ownership interests in the landfill would be transferred directly to voting trusts, one for each of them, pursuant to an agreement requiring DEC's approval. The agreement would remain in place as long as the Department required, or until the Milos' death or the capping and closing of the landfill. The Milos would forfeit involvement in and control over the landfill's operation and management, but would retain their right to receive dividends or other disbursements representing their percentage of Al Turi's profits. Each of them would nominate a trustee who would be subject to DEC approval. The trustees, each independent of the other, would manage the shares of their respective grantors, though not, apparently, with the same broad authority of the trustees in the Modern Landfill arrangement, because for certain actions the Modern Landfill trustees can take on their own, the Milos' trustees would require the consent of their grantors. [Compare Exhibit No. 60, Al Turi trust agreement, Section 4, Powers of the Trustee, subsections (a), (c) and (e), on page 5, with comparable sections in the Modern Landfill agreement on page 4 of Exhibit No. 65.]

Like in the Modern Landfill arrangement, a trustee for one of the Milos would need the grantor's consent before selling or otherwise transferring any of the trust corpus, before approving important amendments to the certificate of incorporation, or before approving or voting in favor of any merger or consolidation of Al Turi with another entity, or the acquisition by Al Turi of another business. The merger or consolidation of Al Turi with another entity in which either of the Milos has an ownership interest of 5 percent or more would require the prior consent of DEC, and a trustee would be prohibited from voting for or electing Thomas or Nicholas Milo as an officer or director of Al Turi.

Louis Corso, the other one-third owner, would continue as Al Turi's managing director, a post he has held since 1990, and the current president, Joseph Gambino, and the existing employees would all remain in place. If at any time the Department became dissatisfied with the performance of an appointed trustee, it would have the authority to require his or her replacement.

The proposal is intended to erase fitness concerns by making irrelevant the compliance histories of Thomas and Nicholas Milo and the companies they control, thereby sharpening the focus on Louis Corso's record. According to the Applicant, Mr. Corso did not have an ownership interest in, and did not otherwise have any operational or management control over, Al Turi, during the period of time in which the events that led to Al Turi's plea and conviction took place. Furthermore, the Applicant contends that it has been rehabilitated since Mr. Corso took charge in 1990.

Evaluation of Trust Proposal

The hearing considered whether the trust arrangement proposed by the Applicant would effectively prevent Nicholas and Thomas Milo from exerting influence over Al Turi's day-to-day management and operation, and whether the Department should enter into it as a matter of policy, since it is not obliged to do so. I recommend that the Department reject the arrangement on what is basically a cost-benefit rationale: The costs to the Department of policing the arrangement would outweigh the public benefit of accepting it as a basis for the landfill expansion to proceed.

The trus arrangement anticipates that the Department would have a significant role in its implementation. DEC would have to approve the individuals named as trustees for Nicholas and Thomas Milo, as well as their replacements, if any. DEC would have to review petitions by the Milos to change their trustees, to amend the trust agreement, and to use Al Turi's services.

The Department could decide for itself how vigorously it would monitor compliance with the trust agreement. However, if the agreement is the basis for allowing the expansion to proceed, the Department would risk taking blame upon itself for problems at the landfill that might be attributed to the Department's lack of oversight.

As Orange Environment argues in its closing brief, the proposed trust arrangement would involve the Department in extensive monitoring roles that it does not normally undertake. Apart from screening and approving trustees, the Department would have to examine properties moving in and out of the trust corpus, monitor negotiations between Al Turi and its associated companies who wish to do business with it, and, most importantly, carefully monitor the communications between the trustees and the Milos to ensure that the Milos do not exercise improper influence over corporate affairs.

Department Staff argues that, to even approach assurance of compliance with the trust arrangement, it would need a full-time monitor in the Al Turi offices to assure that no prohibited contacts take place between Al Turi's principals and employees. Even that, Staff adds, would only be effective during normal business hours, there being no way to monitor contacts that occur at other times.

The Applicant intends to facilitate monitoring by requiring that all orders, requests and instructions by the Milos to their trustees be in writing, signed by the grantor or such other designee as the grantor may choose, and available for Department inspection, except to the extent they contain proprietary information. However, it would be easy to circumvent this requirement, there being no practical means by which the Department can assure that unauthorized verbal communications do not take place.

The extensive role the Department would have to play to, in any meaningful sense, assure that the Milos comply with the trust arrangement would be taxing on Staff resources. Also, the Department's powers over the appointment and replacement of trustees would tend to entangle the agency in the landfill's operation, blurring the line between regulator and regulatee, at least in the eye of the general public.

Public Need for Landfill Expansion

According to the Applicant, the trust arrangement should be adopted because of an alleged need for the disposal capacity that would be afforded by the landfill expansion.

As my findings show, New York's objective is that its waste be disposed of within the state. However, this objective is not being met either statewide or in DEC's Region 3, Al Turi's main service area. Increasingly large amounts of New York waste are going to Pennsylvania and Virginia, whose state officials are trying to put up barriers to its receipt. There are concerns that, on the federal level, Congress may soon pass legislation that would allow states to ban, restrict or tax waste imports.

While the expansion of the Al Turi landfill, by itself, would not prevent an eventual waste disposal crisis in New York, it would help the state meet its goal of self-sufficiency. In that respect, there would at least be some utility or public benefit in approving the expansion, thereby opening up an additional 4 million cubic yards of operational airspace at the landfill.

On the other hand, DEC must also consider its policy, as articulated in the EGM, that persons who are unsuitable to carry out responsibilities under DEC permits are not authorized to do so. If there is no environmental impediment to the expansion project itself - - an issue that remains undecided, since the merits of the application itself have not been fully adjudicated - - the best interests of the public might be served by letting it go ahead, but not in the hands of the Applicant or any of its three principals.

That would depend on the sale of the facility to a permittee with a satisfactory record of compliance. The Department cannot assure itself that such a sale would happen, and it may be that the facility simply closes upon reaching its currently permitted capacity. However, as Staff argues, if there is a true need for this facility, and if the Applicant and its principals are debarred from having a permit, the forces of the marketplace may produce new owners, with clean records, to step into the breach.

The hearing considered both the short-term and long-term need for the Al Turi landfill. In the short term, the facility is not needed because waste that had been going there up until recently is moving, without impediments, to Pennsylvania. Action by Congress or other states' legislatures may make the continued exportation of waste more difficult or, for that matter, impossible, but it is difficult to predict what action will be taken, and when.

To preserve permitted air space and maintain some level of operations while its application is pending, the Applicant over the last few years has curbed the amount and types of waste it accepts, as noted in my findings of fact. Because so little waste is coming into the landfill, its shutdown now would be of less consequence than if it were receiving 8,400 tons of waste per week, the maximum allowed by its permit.

Denial of the expansion permit and the subsequent closing of the landfill would appear to have the greatest short-term impact in Orange County, where the landfill is located and where, historically, most of its waste has been generated, and in Columbia County, whose officials have a contract with Al Turi for waste disposal.

However, as Orange County officials confirmed during the issues conference, the expansion of the Al Turi landfill is not a component of that county's solid waste management plan, which is premised instead on the continued contractually privatized, out-of-state disposal of residual waste received at its transfer stations.

The Al Turi landfill is preferred by Columbia County for the disposal of its municipal solid waste and, if the expansion is approved, its C&D debris. However, if the expansion is denied, Columbia County would have other disposal options, though they could involve higher costs or processes like incineration which are less palatable to county officials.

At any rate, DEC Staff witness Thomas Lynch offered assurances that the closure of the Al Turi landfill would not produce an emergency situation where waste that otherwise would have gone there would have nowhere else to go. As he explained, the small amount of waste now going to Al Turi would essentially dissipate into the disposal market, be it in or out of New York State.

Kelly Lease, a witness for Orange Environment, showed that there is disposal capacity at landfills and incinerators within a reasonable driving distance of the Al Turi landfill.

The costs of waste disposal are affected by transportation costs and tipping fees at receiving facilities. While costs might increase for some of Al Turi's customers, there was no indication that such increases would be exorbitant. For instance, Mr. Lynch indicated that the additional expense of transporting waste from the lower Hudson Valley to western New York would, to some extent, be offset by lower tipping fees there.

Over the long term, the state has a need, in meeting its self-sufficiency objective, for the 8,400 tons per week of capacity that would be afforded by the Al Turi landfill expansion. However, as Mr. Lynch emphasized, there is a need for any disposal facility that can comply with Part 360, so there is no special need for the Al Turi landfill in particular.

Also, as Orange Environment points out, landfilling is at the bottom of the state's hierarchy of solid waste management priorities [ECL Section 27-0106(1)], below waste-to-energy options like incineration or the proposed Pencor-Masada facility in Middletown, which would produce ethanol from organic waste. These options reduce the amount of waste that ultimately must be landfilled, so they also help meet the state's self-sufficiency goal.

Weighing the burdens it would impose against the benefits it might provide as a basis for allowing the landfill expansion, I conclude that the Department should reject the Applicant's trust arrangement. Rather than adopt the arrangement, the Commissioner should reject the application on the basis of poor Applicant fitness.

Disputed Terms of the Trust Proposal

As noted above, the trust arrangement is set up so that the Milos continue to profit from the landfill's operation. The Milos' continued beneficial ownership of the landfill, which allows them to reap its profits, is one of Staff's principal objections to the proposal. As Staff argues in its brief:

"What effective deterrent can the ROC be if admitted felons can continue to rake in the cash, even if it first has to be laundered through a trust? What is the inducement to stay honest if the profits continue to come, even after sentencing and incarceration?"

Should the Commissioner want to accept some kind of trust arrangement here, I agree with Department Staff and Orange Environment that a trust should also be established for Louis Corso's interest, so that all three of the principals are removed from the landfill's day-to-day operation and management. The Applicant contends that Mr. Corso's continued involvement poses no threat to Al Turi's ability to comply with Part 360. However, the nature of his crime is no different from the Milos', and it raises the same issues of fitness, even if one accepts, as the sentencing judge apparently did, that Mr. Corso was more "peripheral" than other defendants in the federal prosecution.

The Applicant claims that, as managing principal, Mr. Corso has been integral to the rehabilitation of Al Turi since 1990. However, one should not conclude from the relative dearth of enforcement action that the facility has been operating smoothly. As confirmed by DEC's monitors, the facility has had recurrent problems with odors, and its general maintenance has not always been up to Part 360 standards. If Mr. Corso deserves some credit for the facility's achievements over the last nine years, he must also shoulder some blame for the violations which are recorded in the monitors' reports.

In my issues ruling I questioned what would happen if the trustees proposed by the Milos were not deemed approvable by the Department, or if the Department, dissatisfied with a trustee's performance, could not agree with the grantor on a replacement. In its written explanation of the trust arrangement (Exhibit No. 62), the Applicant answers these concerns by accepting that Al Turi's expansion permit would not be issued until trustees are approved and have signed the trust agreement. If a trustee is removed by the Department, the Applicant argues that it is not in the grantor's interest to delay the approval of a successor because his ownership interests would not be represented during the vacancy. Also, the Applicant says that one vacancy would not affect the integrity of the trust arrangement or the management and operation of the landfill, because two-thirds of the shareholder voting authority would still be represented.

Department Staff disagrees with the Applicant about whether trustees should be bonded and immunized from personal liability for acts or omissions, made in good faith, in the performance of their duties. Staff says bonding the trustees is important to assure compliance with the terms of the trust; however, the Applicant claims that it would be redundant, since the facility itself is bonded. Also, Staff says that immunizing the trustees from prosecution for environmental violations would set a dangerous precedent. However, the Applicant contends that the grantors would remain on the hook, and it could not find trustees to serve if personal liability would attach to them.

Orange Environment objects to provisions in the draft trust agreement that would allow a trustee to act as a director, officer, employee of, or consultant to Al Turi, and allow a trustee or any firm in which the trustee may be a member to contract with Al Turi. Orange Environment sees no need for such allowances, especially if Louis Corso's interests are not also put in trust. However, the Applicant wants the Milos to be able to consider a wide range of trustee candidates, including members of consulting firms it already retains.

Finally, Staff argues that putting shareholders' interests in trust does not protect the public from possible adverse influence on the running of the landfill, since shareholders merely elect the directors who, in turn, appoint the officers of the corporation. Staff suggests that the real responsibilities of a corporation belong to the directors, who set corporate policy, and the officers, who carry out the policy and run the business on a day-to-day basis.

While I understand Staff's point, one should note that the trust arrangement would basically separate Nicholas and Thomas Milo from the day-to-day operation and management of Al Turi, and their trustees would be prohibited from approving, or voting for, either of them as an officer or director. (Presumably Thomas Milo would be replaced as treasurer.)

Monitoring of Applicant's Operations

Whether or not the Department accepts the Applicant's trust arrangement, one must also consider how monitoring might address fitness concerns.

Al Turi Landfill now undergoes two types of external monitoring: one, of the corporation itself, by a monitor appointed by the federal court as a result of the Gigante proceeding, and two, of the landfill's operations, by environmental monitors funded by the Applicant but employed by the Department. The federal court monitor performs his functions pursuant to a stipulated monitoring agreement (Exhibit No. 15), and the environmental monitors work pursuant to an arrangement embodied by special conditions No. 45 - 47 of the current facility permit (Exhibit No. 145), for which there are comparable provisions (special condition Nos. 57 - 59) in Staff's draft expansion permit.

Both the federal court monitor, Mr. Mack, and the DEC environmental monitors, Mr. Cogon and Mr. Meyers, testified during the adjudicatory hearing.

Federal Court Monitor

As noted in my findings of fact, the federal court monitor, Mr. Mack, has a five-year term which began with the sentencing of Al Turi Landfill, Inc., on March 30, 1998. According to the agreement establishing his authority, the job of the federal court monitor is to oversee the operations of Al Turi and other corporate defendants in the Gigante proceeding "to ensure that (a) the corporate defendants comply with all federal, state and local laws, and the terms of the sentences imposed by the Court on the corporate defendants; and (b) the assets of the corporate defendants are not improperly transferred, sold, dissipated or wasted." (Exhibit No. 15, p.7).

In connection with his work, the federal court monitor is authorized and empowered to impose such controls over the operation of the corporate defendants, to obtain such documents or other information from them or third parties, and to take such actions as the monitor, in his discretion, deems necessary or appropriate to ensure that they operate their businesses "legitimately and in the ordinary course," that their assets are handled properly, and that no legal requirement or obligation is violated by the corporate defendants or their officers, agents or employees. (See Exhibit No. 15, p.8.) The monitor has powers to review corporate records, premises and operations, and the corporate defendants pay his costs as well as the costs of agents he retains for business, legal, accounting and investigative services.

The Applicant contends that oversight by the federal court monitor, coupled with oversight by DEC's environmental monitors, would ensure that Al Turi complies with Part 360 and the requirements of its trust agreement. However, the federal court monitor has no explicit authority with regard to the trust agreement, which at any rate is merely a proposal at this point, and DEC's monitors are equipped to police only environmental compliance, not the inner corporate workings of the Al Turi corporation.

As for Part 360 compliance, the federal court monitor could offer some benefit since he is charged to provide oversight designed to ensure compliance with all laws, which would include environmental statutes and regulations. As Mr. Mack explained at the hearing, he has retained Michael Gerard, a well-regarded environmental lawyer, for environmental compliance issues, and Mr. Mack has asked that Al Turi provide him with any Notice of Violation that DEC might issue.

While the federal court monitorship might well provide some fitness-related safeguards, it does not fully address concerns about the Applicant's suitability to hold a DEC permit. First, as Department Staff and Orange Environment both emphasize, the term of the monitor expires in 2003, before the end of the expansion, which is expected to last from 7 to 11 years, depending on the rate of waste receipt. Since the expansion is still far from approval, even if the fitness hurdle is passed, there would be a significant period during which Al Turi's operations would not be under the federal court monitor's scrutiny.

Second, it does not appear that environmental compliance is the federal court monitor's principal concern, or that the monitor is pro-active on environmental issues. As Staff argues, the monitor acts primarily as a financial watchdog protecting the monetary interests of the United States, and adherence to the ECL and its supporting regulations is tangential to his role. Mr. Mack himself has no environmental expertise, and would use Mr. Gerard only to react to issues that might arise in the course of DEC enforcement. Up until the time Mr. Mack testified at this hearing last fall, Mr. Gerard had not been called in on any matter, the monitor had no other agents addressing environmental compliance, and Mr. Mack himself had been to the landfill only "maybe four times" in the prior year, by his own recollection.

If DEC deemed it necessary, Mr. Mack said he construed his authority to ensure legal compliance as broad enough that he could hire people to patrol the landfill regularly for violations. In the absence of a demand from DEC, however, he would have no apparent incentive to do so.

At the time of his testimony, Mr. Mack's reports to the federal court were not available for the parties' review. After his testimony, at the request of Orange Environment, Mr. Mack secured the reports' release from the federal judge to whom he is responsible. At the request of Orange Environment and Department Staff, the record was reopened to receive the reports (Exhibits No. 172 - 175) and the parties were allowed to comment on them.

According to Orange Environment, the reports of the federal court monitor further illustrate the Applicant's lack of fitness because they document the corporate defendants' "stonewalling" of the monitor's attempts to discover their internal operations. Department Staff agrees that the reports show a persistent pattern of procrastination by Al Turi and its principals in complying with the monitor's requests and directives, which "leads to the disturbing specter of Turi continuing to drag its feet, not only in cooperating with the Federal Monitor but with complying with the dictates of the Environmental Conservation Law and its supporting regulations."

In fact, the first three monitor's reports do document what Mr. Mack, in his third report, refers to as "compliance failures and sluggishness in the production of documents." However, that third report, dated May 1, 1998 (Exhibit No. 174, p.1) also indicates "a marked improvement in compliance and cooperation" since the first two reports, dated May 28 and September 25, 1997. (The federal court monitorship actually began in 1996 by agreement of the U.S. government and Gigante defendants including Al Turi Landfill, Inc., to ensure that assets were not dissipated while that action remained unresolved.)

I am not willing to impugn the Applicant's fitness based on statements in the reports, since the criminal convictions speak much more loudly on that point, and there may have been legitimate reasons for the delays in document production, as the Applicant argues. However, the reports do tend to underscore how difficult and involving it is to monitor internal corporate activities, as the Department would have to in policing compliance with Al Turi's proposed trust arrangement.

DEC's Environmental Monitors

Because DEC's monitors work specifically to address Part 360 compliance issues, they are in a better position than the federal court monitor to ensure environmental protection. However, it is not the monitors' job to ensure compliance in the first instance. That duty is entrusted to the landfill operator. The DEC monitor merely inspects the operation, pointing out and documenting matters bearing on compliance with Part 360.

Pursuant to Staff's draft permit, DEC's monitors would be charged with inspecting "all activities relating to the current as well as expansion Part 360 facilities, along with any other facility owned and operated by Al Turi Landfill, Inc., and any solid waste management facility using Al Turi Landfill Inc. as a disposal site." (Exhibit No. 162, special condition No. 57.) The monitors would be present during all aspects of facility construction and operation at times designated by the Department. Al Turi would maintain a minimum balance of $200,000 with the Department for funding of environmental compliance activities related to the operation of the landfill. (Exhibit No. 162, special condition No. 58.)

The inspections of DEC's monitors, coupled with their written and oral reports to facility management, would help ensure compliance with Part 360, especially to the extent that management responds effectively to their concerns. However, the monitors do not, by their actions, ensure compliance, since they do not run the landfill themselves. This is evidenced by the last five years of operations, during which the monitors documented recurrent odor problems that repeatedly had been called to the attention of facility management.

Another reason that the monitors cannot ensure compliance is that they are not a constant presence at the facility. While they can be there for any aspect of operations, their presence is limited by other work obligations. Also, as a practical matter, the monitors do not inspect all parts of a facility each time they visit. During their testimony, for instance, they indicated that they patrol the bank of the Wallkill River on an infrequent basis, which explains why they were not aware of the leachate discharge discussed in my findings of fact until Orange Environment presented the Department with photographs of the orange iron staining.

The monitors are also untrained and, by virtue of their limited job function, unable to effectively monitor compliance with the trust arrangement proposed by the Applicant.

For these reasons, I disagree with the Applicant's assertion that DEC's and the federal court's monitoring would ensure that Al Turi complies with Part 360 and the requirements of the trust agreement.

Environmental Compliance Record

In addition to criminal matters, the hearing considered the environmental compliance history of the Applicant and companies affiliated with it principals. This history includes alleged violations for which the Applicant or its affiliates were cited and paid penalties, landfill odor problems detected by DEC's environmental monitors, a recent breakout of leachate into the Wallkill River, and Connecticut's 1997 fitness-related denial of a transfer station permit to a corporation, Champion Recycling Industries, for which Thomas Milo has been an officer and director.

The Applicant continues to challenge the inclusion of its environmental compliance record as part of the fitness issue. However, its points were previously raised in an appeal of my issues ruling, and they were rejected by the Commissioner in his September 14, 1998, interim decision. As I said in my issues ruling:

"The Applicant's environmental compliance record is relevant to its fitness because it may reflect on its ability or competence to meet the requirements of Part 360 and any expansion permit that is issued. Past non-compliance with Part 360 could suggest that measures in place at the landfill are insufficient to address certain environmental hazards. On the other hand, it could suggest that those measures have not been consistently implemented, which is a fitness matter. Even if violations have not recurred on consecutive inspections, their recurrence on a periodic basis, or on a certain number of visits over a period of years, may still suggest a problem that requires our attention in this proceeding. Apart from permit denial, consideration of this issue could result in modifications of permit conditions or recommendations for more vigorous Department enforcement." [ALJ's Rulings on Party Status and Issues, June 19, 1998, p. 17.]

The Applicant's environmental compliance record was emphasized by Orange Environment but not by Department Staff, which fails to even mention it in its closing brief. I have reserved discussion of the environmental compliance record for last since I do not think that it, standing alone, warrants denial of the landfill expansion permit. However, I consider it an aggravating factor when combined with the felonious acts emphasized by Department Staff as a basis for permit denial.

The record indicates that, at the time of the hearing, the landfill was experiencing compliance problems related to the control of odors and the prevention of leachate from entering surface waters. In fact, odor problems have existed on and off since at least 1993, according to a review of DEC's inspection reports. In relation to environmental compliance, these problems are my principal concern, even though they have not triggered Department enforcement action. The Applicant has tended to dismiss them as mere "housekeeping" concerns, but a lot of the operating standards in Part 360 are just that: good housekeeping requirements.

Odor Problems

In preparation for testimony, Zachary Cogon, the Department's primary monitor of the Al Turi landfill, reviewed inspection reports for the years 1993 to 1998. The inspection reports provide a checklist of Part 360 requirements and boxes where the inspector can indicate whether a particular requirement is being met. If a monitor notes that a requirement is being violated, he checks the column headed "V" and records the facts of the violation on a separate sheet of paper. The facility operator is notified of violations during the inspection visit so that corrective action can occur immediately.

Staff's review of inspection reports going back to 1993 was summarized in a compilation of data received as Exhibit No. 138. The compilation and the subsequent testimony of the monitors revealed that odor issues are the most important Part 360 compliance problem at the landfill. For most of the years in question, odor violations (i.e., failure to meet the requirement that odors be effectively controlled so that they do not constitute an off-site nuisance) were noted in roughly a third of the inspector's reports, more than any other violation. Even in 1998, despite efforts to stem the odor problem and the receipt of less waste, the violation was noted in two of 12 reports for the period between January 1 and October 2, and again on October 26 and 27, at the time of the adjudicatory hearing.

The odor problem appears to be concentrated along the heavily traveled Route 17-M corridor, but it extends to nearby residences as well. In the opinion of Mr. Cogon, the problem is due to a combination of factors including inadequate control measures and failure to implement those measures on a consistent basis. Failures of technique might be corrected by other, more effective techniques, such as the proposed installation of horizontal gas collection trenches in the expansion area. However, failures to regularly implement measures now in place might be addressed by Department enforcement action, which, in the area of odor control, has been conspicuously absent.

The inspectors described situations where they arrived on site to find that odor-controlling sprays and powders had not been applied, or where general maintenance problems remained uncorrected because correction would require a large expenditure of manpower and equipment. If these situations were addressed by enforcement action, rather than simply by notations in inspection reports, the landfill operators would have a greater incentive to maintain compliance with Part 360.

At the issues conference, Region 3 Staff explained that violations are not referred for enforcement unless they reflect ongoing problems or a major problem on a specific day. This makes the lack of enforcement surprising, since a recurrent odor nuisance could fit either category.

The geographic extent of the problem is difficult to discern precisely since the landfill is ringed by other operations which themselves can spread odors off-site. During the hearing witnesses for the Applicant sought to shift blame for odors away from its facility. However, I find the Department's monitors generally convincing in their explanations of how they distinguish Al Turi's odors from those of its neighbors.

The Applicant also explained that it established an odor complaint hotline for use by the general public. However, the hotline does not appear to have been well publicized, and I understand the public's preference for registering complaints with DEC.

Even though I recognize the problem odors create for people living near or driving past the landfill, I do not think that they warrant denial of the expansion permit. As even Staff's inspectors acknowledge, landfill odors can never be completely eliminated, though they might be adequately controlled by techniques like the trenching proposed for the expansion area, and the extension into that area of the existing gas recovery and conversion system. The Applicant would also have a greater incentive to control odors if they resulted in enforcement action and the imposition of civil penalties.

First exploring these alternatives - - new control techniques and vigorous enforcement of Part 360 - - is preferable to denying the permit on the basis of past odor control failures. However, I recognize such failures as, to some extent, fitness-related, since they call into question the Applicant's capacity to maintain environmental standards. In that respect, I consider them an aggravating factor in the overall fitness picture.

Landfill Leachate Breakout

At the time of the adjudicatory hearing, the landfill was experiencing a breakout of leachate into the Wallkill River, as evidenced by an orangish discoloration of the river shoreline. Extensive testimony on this was received from environmental monitor Cogon and from Steven Parisio, a DEC engineering geologist who has been advising the Applicant on corrective measures.

It is unclear to what extent the breakout has affected the river's water quality or any of the organisms that live in the river. The breakout appears to manifest a long-standing groundwater contamination problem due to a substandard soil liner under portions of the landfill, rather than a concentrated seep from the facility's leachate lagoons or collection system, which would be a more serious environmental hazard. The liner problem does not relate to the Applicant's fitness, since the liner apparently met relevant standards when it was installed, though today it would be considered inadequate. Also, it appeared that after some initial disagreement with the Department about the nature of the problem, the Applicant was cooperating with the Department in addressing it, at least when the hearing concluded in November, 1998.

Although I do not consider the leachate breakout significant as a fitness indicator, it bears emphasis that it was first documented by Orange Environment's president, Dr. Edelstein, rather than DEC's monitors or Al Turi staff, and may have been going on for months before it was noticed. This suggests that the policing of the facility may not be adequate to ensure the timely detection and correction of all environmental hazards, and should not be relied on too heavily in any decision to grant a new permit.

Ticketed Violations of ECL

As noted in my findings of fact, the Applicant's compliance record includes three ticketed violations of DEC law or regulation which were resolved in local justice courts. They involve relatively minor, isolated instances of compliance failure, rather than a pattern of non-compliance. Two of the violations - - one on January 22, 1993, involving the runoff of clay sediments into a wetland, and another on December 27, 1995, involving the use of contaminated fill for driveway construction - - were corrected promptly once they were called to the Applicant's attention. The third (on May 16, 1995, involving the recirculation of leachate) may actually be excusable, since it was committed to contain leaking stormwater that otherwise would have drained over an unlined driveway.

Companies in which the principals of Al Turi are involved have also had environmental violations, as noted in my findings. The most serious violations involve waste-hauling companies associated with Thomas Milo: Suburban Carting Corp., for which he is the sole owner, and F&H Sanitation, for which he is secretary.

Suburban paid a $3,000 penalty for a 1989 violation of Part 364 based on its transporting regulated medical waste to a nonpermitted facility. F&H Sanitation paid a $2,500 penalty for a 1991 Part 360 violation of operating a solid waste transfer station without a permit.

These and other violations are noted in my report, since they were recorded in the Applicant's record of compliance form. However, because they do not establish a pattern of non-compliance, they are not significant to my conclusions and recommendation on the fitness issue.

Denial of Permit to Champion Recycling Industries

In 1997, the Connecticut Department of Environmental Protection denied Champion Recycling Industries a permit to construct and operate a solid waste transfer station, based in part on Suburban Carting's compliance history. At the time of its application, Thomas Milo had a minority ownership interest in Champion, and was also one of its officers and directors.

Because operating a transfer station is "substantially similar" to operating a landfill, Connecticut's decision denying the permit warrants the Commissioner's attention pursuant to the Record of Compliance EGM (page 5, section IV.3.c.). The EGM allows consideration of permit denials by other states, but not apparently by localities in New York, which is why I have not discussed permitting decisions by the Town of Clarkstown (in Rockland County) and New York City's Trade Waste Commission, which Orange Environment brought to my attention.

CONCLUSIONS

Al Turi Landfill, Inc. is unfit to receive a permit to expand its facility in Goshen, New York. This lack of fitness is demonstrated by the criminal record of the corporation, its three principals, and their affiliates. There is a direct relationship between the criminal offenses outlined in this report and the fitness of the Applicant to operate a solid waste management facility. Also, the issuance of the expansion permit would involve an unreasonable risk to the welfare of the general public.

The Department should reject the Applicant's trust proposal because the costs to the Department of policing the arrangement would outweigh the public benefit of accepting it as a basis for the landfill expansion to proceed. While the landfill's expansion would over the long term help New York meet its objective of self-sufficiency in solid waste disposal, its closure would not create a short-term disposal crisis, since the small amount of waste now going to Al Turi would dissipate into the existing market. Should the trust arrangement be accepted, it should include all three of the Applicant's principals, and the parties' other disputes concerning its terms must be resolved.

Oversight of the Applicant by the federal court monitor and DEC's environmental monitors cannot ensure that Al Turi complies with Part 360 and the requirements of any trust arrangement allowed by the Department.

The Applicant's environmental compliance record, standing alone, does not warrant denial of the landfill expansion permit, but is an aggravating factor when combined with the felonious acts described in this report. The recurrence of nuisance odors is the main environmental compliance issue at this facility. While a serious concern, it might adequately be addressed by improved control mechanisms and DEC enforcement action that provides a compliance incentive.

RECOMMENDATION

Because the Applicant is not suitably fit, the permit to expand the Al Turi landfill should be denied.

1. It bears noting that the Applicant does not challenge the authority of the Department to consider the fitness of a permit applicant. (Issues Conference Transcript, p.166).

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