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Bath Petroleum Storage, Inc. and EIL Petroleum, Inc. - Ruling 2, September 11, 2003

Ruling 2, September 11, 2003


In the matter of the alleged violation(s) of the New York State Environmental
Conservation Law (ECL) Articles 3, 17 and 23, Title 6 of the Official Compilation
of Codes, Rules, and Regulations of the State of New York (NYCRR), and permits
issued pursuant to Environmental Conservation Law Article 17, Title 8 and
Article 23, Title 13; and the application for ECL Article 23 modification
permit; by



DEC Case No: R8-1088-97-01
ECL Article 23-1301 Permit Hearing


On August 19, 2003, Bath Petroleum Storage, Inc. and E.I.L. Petroleum, Inc. (collectively referred to as "BPSI") moved to sever the above-captioned enforcement and permit proceedings, which were joined in a July 26, 2002 ruling on Department Staff's motion to consolidate (the "Ruling"). In an Interim Decision dated June 17, 2003, Commissioner Erin M. Crotty dismissed BPSI's appeal of the Ruling, as well as a cross appeal by Department Staff. Department Staff opposes the motion to sever. These matters concern BPSI's liquified petroleum gas storage facility (the "Facility") located in the Town of Bath, in Steuben County.

For the reasons set forth below, the motion is denied. Pursuant to the scheduling order incorporated as part of this ruling, Department Staff is directed to serve the Amended Complaint. Following BPSI's Answer to the Amended Complaint, discovery will take place with respect to all of Department Staff's allegations and any affirmative defenses asserted by BPSI. Upon a showing by the parties of necessity, additional time for discovery following the identification of issues at the issues conference will be allowed.


In its motion, BPSI takes issue with the Ruling's determination, which BPSI asserts was affirmed by the Interim Decision, that Department Staff will have the opportunity to demonstrate that BPSI's record of compliance ("ROC") should be heard as part of the Article 23 permit modification proceeding. BPSI contends that its record of compliance does not meet the standards for adjudication set forth at 6 NYCRR Section 624.4(c)(i), because Department Staff never issued a draft modification permit. Therefore, the Facility's ROC does not relate to a dispute between Department Staff and BPSI.

Moreover, BPSI points out that subsection (ii) of the regulation is inapplicable, because Department Staff never raised the issue of the Facility's record of compliance in its June 9, 1998 denial letter, which preceded the September 1998 amendment of the complaint in the enforcement action, adding causes of action related to violations of Article 23. Finally, BPSI notes that no potential party raised BPSI's ROC as an issue. Thus, subsection (iii) does not apply. BPSI maintains that as a matter of law, the enforcement and permit proceedings must be severed, and that there is no other basis to adjudicate record of compliance.

According to BPSI, the cases cited in the Ruling are inapposite, because none of the cases stand for the proposition that an applicant's record of compliance may be identified as an issue where that record does not appear in the administrative record of Department Staff's denial. BPSI argues further that the Department's Record of Compliance Enforcement Guidance Memorandum ("ROC/EGM") applies to applications for new permits and renewal applications, not to a modification application such as this one. Finally, BPSI renews its argument, made on the prior appeal, that neither the Department's regulations nor prior cases where permit and enforcement actions were consolidated provide a basis to join the permit and enforcement actions here.

Department Staff's papers in opposition point out that BPSI's arguments are identical to its arguments on appeal of the Ruling, and maintain that the Interim Decision's remand for further proceedings is the law of the case. In its opposition, Department Staff contends that BPSI's motion does not present any new law or facts since the time that Department Staff's motion to consolidate and the ALJ's Ruling were under consideration by the Commissioner.

The Commissioner's Interim Decision directed that a conference take place, which was held on August 25, 2003. At the conference, BPSI's counsel provided a status update with respect to the action pending in the United States District Court for the Northern District of New York. Discovery in that action is complete, and the parties are awaiting a decision on motions for summary judgment.

Department Staff stated that the Amended Complaint in the enforcement action has not yet been served, but that Department Staff is prepared to do so by the end of September. BPSI took the position that the allegations in the Amended Complaint with respect to violations of the facility's State Pollutant Discharge Elimination System ("SPDES") permit should be considered first, and that discovery should be limited to those allegations, because of the pendency of the federal action which relates to the facility's approvals pursuant to Article 23. BPSI argued that the decision in the federal case would have implications for both the enforcement and permitting actions.

According to BPSI, the discovery that has taken place in connection with the federal case related to BPSI's constitutional preemption claims and allegations that the Department violated the State Administrative Procedure Act ("SAPA"). BPSI took the position that this discovery was not duplicative of the discovery yet to occur in these administrative proceedings, and that only limited discovery in both the enforcement and permit proceedings had taken place to date. Department Staff argued that discovery on all of the allegations in the enforcement action should take place simultaneously, but maintained that the issues conference should be held before the enforcement matter is considered, to avoid repetitive discovery efforts.

BPSI also requested guidance with respect to the issues conference, noting that issues conferences in recent permit proceedings have resembled a "mini-trial," and expressing concern that BPSI be afforded an opportunity to fully prepare and raise any issues it deems appropriate.


BPSI's motion to sever renews the arguments it raised in opposition to Department Staff's motion to consolidate. BPSI's motion is in the nature of reargument, and BPSI has not demonstrated that any law or facts were misapprehended in the Ruling, nor raised any evidence that would entitle BPSI to the relief sought. Accordingly, the motion is denied, and the permit and enforcement proceedings remain consolidated.

Both the enforcement action and the permit proceeding have been pending for some time, and further delay may prejudice the parties if discovery may not be had due to the unavailability of witnesses or documents. In addition, circumscribed discovery along the lines suggested by BPSI is unlikely to assist BPSI in its attempts to prepare fully for the issues conference in the Article 23 matter. BPSI's argument that it would be inefficient to engage in discovery on the Article 23 allegations, given the pendency of the federal action, is not persuasive. There has been no indication as to when a decision is expected in that action, and the administrative proceedings should not be deferred any longer.

Accordingly, Department Staff will serve the Amended Complaint in the enforcement action, BPSI will serve an Answer, and discovery will take place with respect to the allegations in the Amended Complaint, and any affirmative defenses asserted in the Answer. The issues conference will be scheduled when discovery is complete. Any determinations as to prefiled testimony or the scope of the issues conference will be addressed then. If necessary, additional discovery will be permitted following the Commissioner's review of the issues ruling.


1. Department Staff will serve the Amended Complaint on September 30, 2003.

2. Deadline for completion of discovery on the allegations in the enforcement action is January 9, 2004. On that same date, the parties will serve a list of the witnesses each party intends to call, as well as a statement of the witnesses' qualifications.

A revised service list is attached. The parties are requested to review the service list for accuracy and advise as to any corrections. As discussed during the August 25, 2003 conference, service by electronic mail is authorized, with hard copy to follow. Both Ms. Schwartz and Mr. Sherman are to be provided with hard copies of any submissions; if necessary, Mr. Sherman will arrange for a copy to be provided to Ms. Lotters.

Ms. Schwartz will provide a copy of the amended USGS figures, proposed as an attachment to the Amended Complaint, to BPSI by Friday, September 19, 2003. If BPSI does not consent to the revised attachment, Department Staff's application will be considered a motion to amend the complaint, and BPSI will be afforded the opportunity to file an objection. BPSI is to notify the ALJ and Department Staff by Friday, September 26, 2003 if consent is not forthcoming, and service of the complaint will be deferred pending a ruling on the motion to amend.

Department Staff will pay the costs of the transcript in connection with the enforcement portion of the hearing. The Applicant will furnish the required original plus two copies of the transcript of the August 25, 2003 conference, the issues conference and any subsequent adjudication in the Article 23 permit proceeding to the administrative law judge, who will provide Department Staff with a copy. To the extent that additional copies are required, Department Staff will make arrangements with the court reporter.

Further proceedings will be held either in Albany or in the Department's Bath sub-office, depending upon the location of witnesses. A telephone conference will be scheduled during the week of January 12th , 2004. The parties are asked to advise the undersigned as to their availability during that week.

Maria E. Villa
Administrative Law Judge

Dated: September 11, 2003
Albany, New York

TO: Service List

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