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ExxonMobil Corporation (New Windsor) - Ruling, September 27, 2002

Ruling, September 27, 2002


In the Matter of

Alleged Violations of Article 17 of the Environmental Conservation Law and
Article 12 of the Navigation Law

- by -

(New Windsor)


Staffs Motion to Dismiss/Clarify Affirmative Defenses

Case No. 3-1480


Department of Environmental Conservation (DEC or Department) staff issued a notice of hearing and complaint to the respondent, ExxonMobil Oil Corporation (ExxonMobil), dated June 21, 2002. In this pleading, staff alleges that the respondent violated the Environmental Conservation Law (ECL) §17-0105 and §17-1743 and the Navigation Law (NL) §173, §175, §176 by discharging petroleum into the waters of the State, failing to immediately undertake action to contain the petroleum discharge, and failing to timely report the petroleum discharge in accordance with § 613.8 of Title 6 of the New York Compilation of Codes, Rules and Regulations (6 NYCRR). This enforcement matter involves a major oil storage facility in New Windsor, New York owned by the respondent. On or about May 19, 2000 and March 20, 2002, the respondent ExxonMobil reported to DEC that petroleum discharges had occurred at this facility. Staff offered to allow ExxonMobil to sign a consent order to investigate and/or remediate the sites, while reserving ExxonMobil rights in relation to penalties. Failure to come to an agreement on the consent order has resulted in staff's motion for dismissal/clarification of affirmative defenses (September 3, 2002).

In these proceedings, staff is represented by Benjamin A. Conlon, Associate Attorney; and ExxonMobil is represented by Joseph T. Walsh, III, Esq. of McCusker, Anselmi, Rosen, Carelli &Walsh, P.C.

I have reviewed the following submissions to make these rulings:

Staff's notice of hearing and complaint dated June 21, 2002.

ExonMobil's answer and affirmative defenses dated August 15, 2002.

ExxonMobil's first request for production of documents dated August 16, 2002.

Staff's motion for dismissal of or clarification of affirmative defenses dated September 3, 2002.

ExxonMobil's opposition to motion for dismissal or clarification of affirmative defenses dated September 18, 2002.

Affidavit of Joseph T. Walsh, III in opposition to staff's motion for dismissal or clarification of affirmative defenses dated September 18, 2002.


Affirmative Defenses

Staff has moved to dismiss or obtain clarification of ExxonMobil's affirmative defenses (1-10).

An affirmative defense is a matter that is the respondent's burden to plead and prove and includes such defenses as collateral estoppel, statute of limitations, and release. See, CPLR 3018(b). As explained by Professor Siegel, an affirmative defense raises a matter that is not plain from the face of the complaint. See, New York Practice, 2d Ed., Siegel (1991) at 393-394. CPLR 3211(b) allows a party to move to dismiss a defense if it "is not stated or has no merit." The obvious reason is to avoid addressing matters at trial that have no relevancy to the claims. In ruling on a motion to dismiss a defense, the courts apply the standards used to evaluate a motion to dismiss a complaint for failure to state a cause of action. The truth of the factual allegations of the defense is assumed but whether there are grounds for the defense is the question. Rule 3211(a)(7) of the CPLR.

Section 622.4(c) of 6 NYCRR reiterates the CPLR's requirements in stating that "[t]he respondent's answer must explicitly assert any affirmative defenses together with a statement of the facts which constitute the grounds of each affirmative defense asserted."

ExxonMobil's Affirmative Defenses

In general, staff argues that ExxonMobil's affirmative defenses are general, vague and lacking in any detail - legal or factual - that would meet the requirements of 6 NYCRR § 622.4(c). ExxonMobil argues that the penalties staff is seeking to obtain in this matter are exorbitant and the company is at a loss for the rationale for such fines. Accordingly, it is seeking information from staff but in the meanwhile wishes to reserve any potential rights it has to defend. The company maintains that staff's motion is premature because ExxonMobil has insufficient information at this stage to provide more detail in its answer.

In its first affirmative defense, the respondent provides that the complaint fails to state a claim against ExxonMobil upon which relief may be granted. Essentially, this is a motion to dismiss the staff's complaint without any specification as to the basis of this motion. Section 622.3(a) of 6 NYCRR provides the requirements for a complaint as follows: (i) a statement of the legal authority and jurisdiction under which the proceeding is to be held; (2) a reference to the particular sections of the statutes, rules and regulations involved; and (iii) a concise statement of the matters asserted. The staff's complaint meets these requirements as it sets forth the basic facts asserted in ¶¶ 1-2, and ¶¶ 9-11, in addition to the background information, definitions from the applicable statutes and regulations provided in ¶¶ 3-8 and 12-13, and the statutory and regulatory bases for the violations alleged in ¶¶ 9-11. In essence, the staff alleges that the respondent discharged petroleum into the waters of the State, failed to immediately undertake action to contain the petroleum discharge, and failed to timely report the petroleum discharge. While this recitation is not lengthy or greatly detailed, the regulations do not require such specificity. However, the respondent has failed to meet the requirements of 6 NYCRR § 622.4(c) by not providing any grounds for this defense.1 Because the respondent has failed to identify the grounds for the defense, I grant the staff's motion for clarification with respect to this affirmative defense.

In its second affirmative defense, the respondent states that "[a]ny damages alleged in the [c]omplaint, if any, were the results of actions of third parties . . ." Here again, the respondent has failed to state the facts that form the basis for this allegation by not identifying any third party or the legal grounds for avoidance of liability. Assuming that there is a third party involved, if ExxonMobil had knowledge of either or both of the two petroleum discharges, it appears it would be liable even if there was an intervening actor. 6 NYCRR § 613.8. It may be that such information could be relevant to mitigation of penalties. But without more information, the defense lacks the detail necessary for staff to respond and I grant staff's motion for clarification.

I am dismissing respondent's third affirmative defense that merely invokes, without any factual or legal grounds, all possible defenses. This claim defeats the purpose of 6 NYCRR § 622.4(c) because it leaves wide open the potential defenses the respondent is seeking to assert. That is not the purpose of an answer or affirmative defense. The purpose of this responsive pleading is to put the parties and court on notice as to specifically what defenses the respondent is asserting and will eventually seek to prove. As stated above, in its complaint, staff presented the specific allegations of this case. Thus, there is no reason that the respondent does not have sufficient understanding to assert its defenses in terms that are understandable. To the degree that it found the complaint wanting in clarity, the respondent had an opportunity within ten days of service of the complaint to move for a more definite statement. 6 NYCRR § 622.4(e). In the event that ExxonMobil does learn more about its defense, it can move to amend its answer pursuant to 6 NYCRR § 622.5(b).

In its fourth affirmative defense, ExxonMobil provides a laundry list of equitable defenses without any elaboration as to the bases for these claims. These are release, waiver, merger, estoppel, and accord and satisfaction. Estoppel is rarely recognized against the State. See, Wedinger v. Goldberger, 71 NY2d 428, 441 (1988). In the event that this case is one of those rare instances, ExxonMobil is directed to clarify this defense. Waiver is never a valid defense against the State because public officials cannot waive law enforcement on behalf of the public. See, Town of Southold (ALJ Rulings, 3/17/93). Therefore, I am dismissing this defense. Regarding defenses of release, merger, accord and satisfaction, because these pertain to contract matters that have no relevancy in these proceedings, I am dismissing them.

In its fifth affirmative defense, the respondent claims without providing any detail that "the Department has failed to comply with the Commissioner's Civil Penalty Policy." I am directing that the respondent clarify this defense by providing information as to how staff has failed to meet the policy's directives. In this affirmative defense to staff's motion, ExxonMobil provides that staff acted in contradiction to the 1990 civil penalty policy in establishing its demand for relief of $750,000. ExxonMobil offers no facts or explanation of this affirmative defense.

In the complaint, staff does not provide a detailed account of how it arrived at the $750,000 civil penalty. Staff did, however, cite several sections of the ECL and the NL that express authority for assessing penalties for the particular violations alleged. Section 71-1941 of the ECL, provides "a penalty of not more than two thousand five hundred dollars for an initial incident resulting in or contributing to such a contravention and for an additional penalty not to exceed five hundred dollars for each day during which such contravention or contribution thereto continues." Staff also cites NL § 192 which states that "any person...who fails to comply with any duty created by this article shall be liable to a penalty of not more than twenty-five thousand dollars for each offense in a court of competent jurisdiction. If the violation is of a continuing nature each day during which it continues shall constitute an additional, separate and distinct offense."

Additionally, ECL § 71-1941 states that the facility owner shall be liable for "the actual costs incurred by or on behalf of the people of the state for the removal or neutralization of such liquid and for any and all reasonable measures taken or attempted to reduce, limit or diminish the extent or effect of such contravention." It is important to note that on the list of requests for relief in staff's complaint, the costs for remediation of the site are listed separately from the $750,000 civil penalty. In any case, these matters are relevant but the defense should be apparent from the answer. Therefore, I am directing ExxonMobil to clarify this defense in an amended answer.

In the sixth affirmative defense, ExxonMobil maintains that the violations alleged in the complaint did not result in damage to any person(s), property, or the environment. I find that given the facts alleged in the complaint, this defense is sufficiently stated. While damage to person(s), property, or the environment are not elements of the requirements set forth in 6 NYCRR § 613.8, such defense is relevant to the issue of appropriate penalties. Thus, I am denying staff's motion to dismiss and/or clarify this affirmative defense.

ExxonMobil's seventh affirmative defense alleges that staff's claims are barred by the statute of limitations. The two petroleum discharges, at issue, occurred on May 5, 2000 and March 19, 2002, respectively. Staff's notice of hearing and complaint was filed on June 21, 2002. Furthermore, a hearing date will be set by the Office of Hearings once staff has filed a statement of readiness pursuant to 6 NYCRR § 622.9. Section 301(1) of the State Administrative Procedures Act (SAPA) sets a reasonable time standard for all parties in an administrative hearing to be given the opportunity for a hearing. "In determining if a period of delay is reasonable within the meaning of the (SAPA) §301(1), an administrative body... must weigh certain factors including: (1) the nature of the private interests allegedly comprised by the delay, (2) the actual prejudice to the party, (3) the causal connection between the conduct of the parties and the delay, and (4) the underlying public policy advanced by government regulation." Cortlandt Nursing Home v. Axelrod, 66 N.Y.2d 169, 178 (1985).

Thus the statute of limitations provided in the CPLR is not an appropriate defense in an administrative proceeding. If ExxonMobil experienced an unreasonable delay in being afforded its opportunity for a hearing it must assert those facts in its answer and any such finding would necessarily be based upon facts establishing the four Cortlandt factors, set out above. I am granting staff's motion for clarification of this seventh affirmative defense, because the defense lacks the necessary detail. Pursuant to 6 NYCRR § 622.5(b), I am allowing ExxonMobil to amend its pleading.

In its eighth affirmative defense, the respondent claims that it has acted in good faith in addressing site conditions. ExxonMobil's actions, or lack thereof, regarding the petroleum discharges, are relevant to this case and to the determination of appropriate penalties. Without sufficient supporting statements, however, it is not clear, if there is any factual basis for this affirmative defense. The respondent has failed to meet the requirements of 6 NYCRR § 622.4(c) by not providing any grounds for this defense.

Section 622.5(b) of 6 NYCRR states that "a party may amend its pleading at any time prior to the final decision of the commissioner by permission of the ALJ or the commissioner and absent prejudice to the ability of any other party to respond." Barring any substantial prejudice to the rights of a party, amendments of pleadings are generally allowed. Karras v. County of Westchester, 71 A.D.2d 878, (2d Dept. 1979). I agree with ExxonMobil statement in its memo of opposition to staff's motion as "there appears to be no risk of prejudice to (staff) because this proceeding is in the very earliest stages of discovery, and no documents have yet been produced nor any testimony taken yet." ExxonMobil's Opp., p. 5 I am granting the staff's motion for clarification with respect to the eighth affirmative defense, based on respondent's failure to identify the grounds for the defense.

In its ninth affirmative defense, ExxonMobil alleges that staff cannot establish a prima facie case. This is a motion to dismiss the staff's complaint without any specification as to the basis of this motion. As I ruled to clarify ExxonMobil's first affirmative defense, the respondent in its ninth affirmative defense, has failed to meet the requirements of 6 NYCRR § 622.4(c) by not providing any grounds for this defense. The staff's complaint meets the requirements of 6 NYCRR § 622.3(a). I grant the staff's motion for clarification with respect to this affirmative defense, because the respondent has failed to identify the grounds for the defense.

In its tenth affirmative defense, the respondent maintains that, at all times in conducting its activities, it has acted with the knowledge and acquiescence of staff. The language used in this affirmative defense does not clearly explicate the intentions of the respondent. Taken in its broadest sense, respondent's contention may mean that staff should be put on notice of all ExxonMobil's activities, because staff had some other relationship with ExxonMobil (i.e. a permit for the facility). As stated with respect to the respondent's fourth affirmative defense, the state is rarely estopped from carrying out its statutory duties. To the extent that the respondent has information to establish that these circumstances are exceptional, I grant staff's motion for clarification of this affirmative defense, because the defense lacks the detail necessary for staff to respond and prepare for hearing.


I grant staff's motion to dismiss ExxonMobil's 3rd and 4th (in part) affirmative defenses. I grant staff's motion to clarify ExxonMobil's affirmative defenses 1, 2, 4 in part (re: estoppel), 5, 7, 8, 9, and 10. I deny staff's motion to dismiss or clarify ExxonMobil's 6th affirmative defense.

I am denying any requests by any party for costs, attorney's fees or sanctions. There is no authority in Part 622 for making such awards.

The respondents are to serve amended answers that clarify the affirmative defenses noted above by October 25, 2002.

Helene G. Goldberger
Administrative Law Judge

Dated: Albany, New York
September 27, 2002

TO: Benjamin A. Conlon,
Associate Attorney
625 Broadway - 14th Floor
Albany, New York 12233-5550

Joseph T. Walsh, III, Esq.
McCusker, Anselmi, Rosen, Carvelli & Walsh
127 Main Street
Chatham, New Jersey 07928

1 The inclusion of this affirmative defense is not prejudicial, without further information it does not conform with the requirements in 6 NYCRR § 622.4(c).

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