Morgan Oil Terminals Corp. - Order, October 17, 1994

Order, October 17, 1994

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the alleged violations of the Environmental Conservation Law ("ECL") Article 17 and Article 12 of the Navigation Law ("NL") and Title 6 and Title 7 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR & 7 NYCRR" respectively) 6 NYCRR Parts 610, 611, 613, 703 & 756 and 7 NYCRR Parts 30 & 32

by

MORGAN OIL TERMINALS CORP.;
CITIFUEL CORP.;
PREMIUM PIPELINE INC.;
SAMUEL FESTINGER;
HENRY FOSTER &
ALEXANDER WEISZ
Respondents

ORDER

DEC File Nos.
R2-3885-91-09
R2-3721-91-06

WHEREAS:

1. Pursuant to a Notice of Hearing and Complaint dated June 30, 1992 an administrative enforcement hearing was convened before Francis W. Serbent, Administrative Law Judge ("ALJ") on November 12, 1992, against the above named Respondents. The Department's Region 2 Staff ("Staff") appeared by David H. Keehn, Assistant Region 2 Attorney. Citifuel Corp. ("Citifuel"), Premium Pipeline Inc. ("Premium"), Alexander Weisz ("Weisz") and Samuel Festinger ("Festinger") were represented Gross and Feinberg (Hayim I. Gross, Esq. of Counsel), 767 Third Avenue 23rd Floor, New York, New York and 52 South Main Street, Spring Valley, New York 10977 on October 22, 1992, after which Mr. Festinger purported to represent himself and the two corporate Respondents, and Mr. Weisz appeared pro se until December 16, 1992 after which he no longer attended the proceedings.
2. Upon review of ALJ Serbent's Hearing Report, a copy of which is attached, I concur with its Findings of Fact, Conclusions and Recommendations except as noted below.
3. From March 25, 1991 to April 3, 1992 (376 days) Citifuel operated a Major Onshore Facility ("MOSF") without a license, in violation of NL 174(1) and 17 NYCRR 30. Citifuel violated 6 NYCRR 613.4(a)(1) and 613.4(c) from March 25, 1991 to April 3, 1992 by not maintaining daily inventory tank records for any of the seven tanks at the Facility (2632 violations) and by failing to keep and make available inventory monitor records for any of the seven tanks (2632 violations). Citifuel violated 6 NYCRR 613.3(d) on October 7, 1991 by not having equipment in good working order for tanks 3, 4 and 5. On March 12, 1992 Citifuel violated ECL 17-1743; NL 174, 175 and 176; 6 NYCRR 613.8; and 17 NYCRR 32.3 by discharging oil, failing to notify the Department of the spill within two hours, and failing to cleanup or contain the spill. Citifuel failed to submit monthly Discharge Monitoring Reports ("DMR") for sixteen months in violation of 6 NYCRR 756.
4. From April 3, 1992 to June 30, 1992 (89 days) Premium operated without a license, in violation of NL 174(1) and 17 NYCRR Part 30. Premium violated 6 NYCRR 613.4(a)(1) from April 3, 1992 to June 30, 1992 by not maintaining inventory tank records for any of the seven tanks (623 violations) and by failing to keep and make available inventory monitor records for any of the seven tanks at the Facility (623 violations). Premium failed for two months to submit the DMR due for April, 1991 and is found in violation of 6 NYCRR 756.
5. On April 16, 1993, Respondents Morgan Oil Terminals Corp. and Henry Foster signed a consent order in satisfaction of the Complaint. This Order does not address their liability.
6. In its post hearing brief, Staff dropped the charges against Alexander Weisz.
7. The offenses addressed above relate to actions taken by the corporate Respondents. Respondent Festinger may be held derivatively liable if it can be shown that, in his capacity as corporate officer, he had the authority and responsibility to prevent the violations (United States v. Park, 95 S.Ct. 1903 (1975); United States v. Dotterweich 64 S.Ct. 134 (1943)); United States v. Hodges X-Ray, Inc., 759 F.2d 557 (CA 6th Cir, 1985); In the Matter of Ernest J. Force, Order of the Commissioner, September 30, 1993; and In the Matter of Sheldon Galfunt and Hudson Chromium Company, Inc., Order of the Commissioner, May 5, 1993). The findings in the hearing report demonstrate that Mr. Festinger was President and otherwise had such authority and responsibility to prevent the violations committed by the corporate Respondents. He may, therefore, be held liable jointly and severally with both Citifuel and Premium.
8. I concur with the ALJ that the evidence offered was insufficient to establish a prima facie case regarding the allegations that Respondents failed to comply with reporting requirements for oil transfer (NL 174(5) and 17 NYCRR Part 30) and to pay a per barrel fee (NL 174(4)(a) and 174(7) and 17 NYCRR Part 30), that the March 12, 1992 discharge was to class GA waters (6 NYCRR 703.6), and that Respondents did not properly color code the fill ports (6 NYCRR 613.3(b)). Those charges must, therefore, be dismissed against all Respondents.
9. Absent any record of inspection of the Facility between April 3, 1992 and June 30, 1992, Premium cannot be found in violation of 6 NYCRR 613.3(d).
10. Although some of the allegations upon which Staff based its penalty calculations have been dismissed, the entire amount of civil penalties requested in Staff's closing brief is being granted because of the extremely serious nature of the proven violations and Respondents' willful behavior. Respondents were repeatedly warned by Staff that they needed a license to operate and, in addition, that they were required to have an approved Spill Prevention Control and Countermeasure Plan and Groundwater Contingency Plan. Their continued operation in contravention of applicable statutory and regulatory requirements, even after Staff's repeated warnings constitutes a significant exacerbating factor in assessing the penalty. As noted in the Hearing Report, the Respondents' evidence and arguments concerning the existence of any mitigating circumstances are unpersuasive. Additionally, it is emphasized that the penalty being assessed by this Order is only a small percentage of the total civil penalty to which Respondents have exposed themselves by their commission of the proven violations.

NOW, THEREFORE, having considered this matter and being duly advised it is ORDERED that:

1. For operating a Major Onshore Facility without a license, in violation of NL 174(1) and 17 NYCRR 30 Respondents Citifuel and Festinger are jointly and severally assessed a civil penalty in the amount of ONE HUNDRED AND SIXTEEN THOUSAND ($116,000) DOLLARS.
2. For operating a Major Onshore Facility without a license, in violation of NL 174(1) and 17 NYCRR 30 Respondents Premium and Festinger are jointly and severally assessed a civil penalty in the amount of THIRTY-FIVE THOUSAND NINE HUNDRED AND FIFTY ($35,950) DOLLARS.
3. For not maintaining daily inventory tank records and failing to keep and make available such inventory monitor records, all in violation of 6 NYCRR 613.4(a)(1) and 613.4(c), Respondents Citifuel and Festinger are jointly and severally assessed a civil penalty in the amount of ONE HUNDRED AND SIXTEEN THOUSAND ($116,000) DOLLARS.
4. For not maintaining daily inventory tank records and failing to keep and make available such inventory monitor records, all in violation of 6 NYCRR 613.4(a)(1) and 613.4(c), Respondents Premium and Festinger are jointly and severally assessed a civil penalty in the amount of THIRTY-FIVE THOUSAND NINE HUNDRED AND FIFTY ($35,950) DOLLARS.
5. For discharging oil, failing to notify the Department of the spill within two hours, and failing to cleanup or contain the spill in violation of ECL 17-1743; NL 174, 175 and 176; 6 NYCRR 613.8; and 17 NYCRR 32.3 Respondents Citifuel and Festinger are jointly and severally assessed a civil penalty in the amount of FIFTY THOUSAND ($50,000) DOLLARS.
6. For failing to submit monthly DMRs for sixteen months in violation of 6 NYCRR 756 Respondents Citifuel and Festinger are jointly and severally assessed a penalty in the amount of SIXTY-FIVE THOUSAND ($65,000) DOLLARS.
7. For failing to submit monthly DMRs for two months in violation of 6 NYCRR 756 Respondents Premium and Festinger are jointly and severally assessed a penalty in the amount of ONE THOUSAND ($1,000) DOLLARS.
8. The charges of violations of 6 NYCRR 613.3(b) and 703.6 are dismissed with respect to Citifuel.
9. The charges of violations of 6 NYCRR 613.3(b), 613.3(d) and 703.6 are dismissed with respect to Premium.
10. All assessed penalties shall be due and payable to the Department within 60 days from the date of the service of this Order upon the Respondents.
11. All communications between the Respondents and the Department concerning this Order shall be made to the Regional Director, Department of Environmental Conservation, Region 2, 47-41 21st Street, Long Island City, New York 11101.
12. The provisions, terms and conditions of this Order shall bind the Respondents, their officers, directors, agents, servants, employees, successors and assigns and persons, firms and corporations acting for or on behalf of the Respondents.

NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
/s/
LANGDON MARSH,
COMMISSIONER

Dated: Albany, New York
October 17, 1994

PROCEEDINGS

With a Notice of Hearing dated June 30, 1992, and a Complaint attached, the New York State Department of Environmental Conservation ("Department") Region 2 Staff started this civil administrative enforcement proceeding. The Department Staff's Complaint in cases #R2-3721-91-06 & #R2-3885-91-09 concerns the operation of an oil terminal facility at 200 Morgan Avenue, Brooklyn, New York (the "Facility") by:

The Staff alleges violations of the New York State Environmental Conservation Law ("ECL"), the Navigation Law ("NL"), the Official Compilation of Codes, Rules and Regulations of the State of New York Title 6 ("6 NYCRR") Conservation, and Title 17 ("17 NYCRR") Transportation. This hearing is according to the above and particularly:

Administrative Law Judge ("ALJ") Andrew Pearlstein scheduled the hearing for August 6, 1992, but granted an adjournment when the Department Staff's primary witness was injured accidentally. The rescheduled hearing began on October 22, 1992 before ALJ Francis W. Serbent at the Department's Region 2 Headquarters, 47-41 21st. Street, Long Island City, NY 11101. After adjournments, the hearing continued before ALJ Serbent on November 12 & 13 1992, December 16, 17, 1992 and ended on January 19, 1993. After receipt of Staff's post hearing submittals, the record closed on April 27, 1993. The Record includes a transcript of seven hundred thirty-three (733) pages and thirty-six (36) exhibits.

Appearances

MORGAN OIL: The Respondent Morgan Oil Terminals Corp., located at 200 Morgan Avenue, Brooklyn, N.Y. 11237, was represented by Shatzkin & Furman, PC (Scott E. Furman Esq., of Counsel) 99 Wall Street, 18th Floor, New York, New York 10005. Morgan Oil stipulated to a waiver of proof of service.

FOSTER: The Respondent Henry Foster was represented by Shatzkin & Furman, PC (Scott E. Furman Esq., of Counsel) 99 Wall Street, 18th Floor, New York, New York 10005. Mr. Furman claims his representation was for the limited purpose of contending there was no service of process. Additionally, Staff conceded that personal service did not reach Mr. Foster.

FESTINGER, PREMIUM PIPELINE, & CITIFUEL: The Respondents Citifuel Corp., Premium Pipeline Inc. and Samuel Festinger were represented by counsel only on October 22, 1992 by Gross and Feinberg (Hayim I. Gross, Esq. of Counsel), 767 Third Avenue 23rd Floor, New York, New York and 52 South Main Street, Spring Valley, New York 10977. After the October 22, 1992 hearing session, Samuel Festinger appeared representing himself and Respondents Premium Pipeline and Citifuel. Staff filed an affidavit of personal service upon Mr. Festinger. Testifying on behalf of Respondents Festinger, Citifuel and Premium Pipeline:

Mr. Samuel Festinger, Respondent and President of Citifuel and Premium Pipeline and

Dr. Chaim Yosef Mariategui-Levi, Ph.D., ("Dr. Levi") 870 51st. Street, Apt. B, Brooklyn NY 11220.

WEISZ: The Respondent Alexander Weisz was represented by counsel only on October 22, 1992 by Gross and Feinberg (Hayim I. Gross, Esq. of Counsel), 767 Third Avenue 23rd Floor, New York, New York and 52 South Main Street, Spring Valley, New York 10977. Staff filed an affidavit of personal service upon Mr. Weisz. He represented himself after the first day of hearing. Mr. Weisz attended the hearing sessions until December 16, 1992 when he announced he was no longer employed. Mr. Weisz left and was not seen again at this proceeding. Mail to Mr. Weisz at the above address was returned undelivered.

STAFF: Marc S. Gerstman Esq., General Counsel and Deputy Commissioner (David H. Keehn Esq. of Counsel) represented Department Staff. Testifying for the Department Staff:

Vichit Aramsombatdee, Staff environmental engineer with the State Pollutant Discharge Elimination System ("SPDES") permit program in Region 2 and

Anthony Sigona, Staff environmental engineer with the major on shore petroleum storage facilities program and the spill program in Region 2.

Proceedings - General

Before adjudication on the record, the Parties acknowledged opportunities to pursue settlement. Respondents Morgan Oil and Foster claimed to have had most points resolved before the hearing started. Also, at the opening of the hearing, the ALJ requested that all Parties be provided with enforcement guidance documents and the civil penalty policy statements. The Parties were then asked to develop a hearing record on the penalty, the size of the penalty sought, its development and derivation.

On October 22, 1992, Respondent Festinger's Attorney sought an adjournment so Mr. Festinger could be present to hear the direct testimony and "look the witness in the eye." The ALJ denied the motion and Staff began its direct case. The attorney for Festinger was not present at any following hearing session.

At the next hearing session on November 12, 1992, Dr. Chaim Yosef Mariategui-Levi announced that he represented the Respondents, specifically for negotiations with the Department Staff. He could not produce authorization to represent these Respondents at the hearing as required by 6 NYCRR 622.12(b)(2). Respondent Festinger denied Dr. Levi's representation as his agent for the hearing. Thereafter, the examination of Staff's witness continued by the Respondents without Dr. Levi. Respondent Festinger sought, without success, to reserve for his attorney, the right to cross examine the Staff's witness on the stand on this date. Mr. Festinger then examined the witness (No attorney appeared representing Respondent Festinger in any subsequent hearing session.). Mr. Festinger claimed (the claim is disputed by Staff) that the Parties had an agreement to negotiate, that he represented only himself and that he had no knowledge of a hearing for the date of November 12, 1992. Thereafter, Mr. Festinger represented Citifuel and Premium Pipeline as well as himself.

On November 13, 1992, Respondent Festinger wanted to examine Mr. Foster as a witness. Staff advised of incomplete service of initial process to Respondent Foster. From time to time in later sessions, the ALJ informed Respondent Festinger of his right to compel attendance of witnesses in his defense. Respondent Festinger did not request a subpoena.

On December 16, 1992, Respondent Festinger claimed Staff threatened his witness Dr. Levi with loss of good will if he appeared on this date. Staff denied making any threat. Dr. Levi appeared before noon.

On January 19, 1993, the Respondent Samuel Festinger concluded the defense on behalf of himself, Citifuel and Premium Pipeline. On the same date Respondents MORGAN OIL and FOSTER waived their right to a hearing in contemplation of a settlement. The Staff filed a Consent Order with Morgan Oil and Foster, #R2-3721-91-06 and #R2-3885-91-09 ("Owner's Consent Order"), dated April 27, 1993, in satisfaction of the Complaint.

The Staff filed written closing argument and a post hearing brief, as scheduled, on March 31, 1993. Respondents did not file any replies or post-hearing briefs. The record closed when the Owner's Consent Order was received on April 27, 1993.

Summary of Charges

The Complaint is attached as Appendix "A". The Department Staff alleges violations in five general subject areas.

1. Licensing violations for operating a major onshore oil storage facility without a yearly Major Onshore Facility ("MOSF") license, in violation of Navigation Law 174(1) and (9) and 17 NYCRR Part 30, without submitting certification of the quantities of product, e.g. oil, received and without paying the fees based on the quantity of oil received.
2. The Staff also charges violations of the license special conditions requiring the submission by May 30, 1990 of both a spill prevention control and contingency plan and a groundwater contingency plan, as violations of NL 174(2), 17 NYCRR 30.6(d) and 6 NYCRR Part 610.
3. The underground tanks lack color coding of the inlet ports in violation of 6 NYCRR 613.3(b). There is improper tank piping maintenance to prevent spills in violation of 6 NYCRR 613.3(d). There is a lack of tank content daily inventory for leak detection in violation of 6 NYCRR 613.4(c). There is a lack of record keeping, record maintenance, and lack of tank testing for tightness in violation of 6 NYCRR 613.5(a) [NOTE: Only Morgan Oil was charged with the failure to do tank testing for tightness, therefore the Owner's Consent Order of April 27, 1993 satisfied this charge.]
4. An unpermitted discharge (spill) occurred on March 12, 1992, which violated ECL 17-0501, NL 173 and 6 NYCRR 703.6; with improper containment and cleanup in violation of 6 NYCRR 611.3, NL 176(1), and 17 NYCRR 32.5; and failure to notify DEC of that discharge in violation of ECL 17-1743, NL 175, 17 NYCRR 32.3 and 6 NYCRR 613.8.
5. The State Pollutant Discharge Elimination System ("SPDES") permit requires monthly discharge monitoring reports from an oil separator on the storm water drainage system. Respondents failed to submit these reports, in violation of ECL Article 17, 6 NYCRR 754 and 756 and the terms of the SPDES permit.

Amended Complaint - Proposed Motion

The Staff verbally moved to amend the Complaint paragraphs 15 and 17 at the October 22, 1992 hearing session. With an objection to the verbal motion, Staff offered, with the consent of the ALJ to file it in written form. Since Staff did not subsequently submit the motion in writing they are deemed to have abandoned the issue.

Remedies, including Penalties

Originally, Staff sought an order that included the maximum penalties allowed, plus remedial work, Facility up-grades, an injunction requiring the Respondents to stop any operation not in compliance, and any other proper and necessary relief.

In its post hearing brief, however, Staff seeks a reduced civil penalty of four hundred and fifty thousand ($450,000.00) dollars jointly and severally against Respondents Citifuel, Premium Pipeline and Festinger. The Staff apportions the penalty into three (3) parts. The first part is forty-six thousand and one hundred ($46,100) dollars for the SPDES violations. The second part is two hundred and one thousand nine hundred and fifty ($201,950) dollars for ECL spill violations. The final part is two hundred and one thousand nine hundred and fifty ($201,950) dollars for NL spill violations. Staff does not further break down the requested penalty into specific amounts weighted against individual violations, and it is not possible to determine the severity Staff would ascribe to each. Since, in all cases, Respondent Weisz was shown to have been merely carrying out the directions of his employer, Respondent Festinger, Staff seeks no penalty against him in this proceeding (Staff asserts that Weisz continues to share joint and several liability with the other Respondents, for a $15,000 penalty previously agreed to under terms of an interim consent order, however, a determination of his liability for that is beyond the scope of the present hearing).

Answers

No Respondent filed an answer or made an opening statement.

Respondents Position

Throughout this proceeding, Respondents Morgan Oil and Foster had a settlement in principle with Staff except some small unidentified details. On April 27, 1993, they signed the Owner's Consent Order (as noted above) resolving the charges in the Complaint for this enforcement proceeding.

Respondent Festinger, appearing pro se and as representative of both Citifuel and Premium, did not present affirmative evidence to challenge the allegations, but merely presented evidence seeking to impeach the Staff's evidence. Staff's evidence portrayed a history of disregard for the statutes and regulations governing the Facility. Respondent Festinger feared the imposition of maximum penalties that amounted to over one hundred million ($100,000,000) dollars. He argued that Morgan Oil lured his company into leasing the Facility by a lucrative financial offer of an unspecified amount or detail. Only then did Morgan Oil hand him all of Morgan Oil and Foster's environmental woes. The poor state of the Facility at the time he entered the lease formed the basis for his argument. He intended to persuade the ALJ that Respondents Morgan Oil and Foster created the problems and therefore should bear the bulk of any penalty assessed as a result of the enforcement proceeding.

Stipulations

1. Morgan Oil is the owner of the property that is the subject of this proceeding, the Facility, except that it has duly relinquished possession, control and partial access henceforth from March 25, 1991 when it leased the property to Citifuel Corp.. (Note that on January 19, 1993, the Respondents Festinger, Citifuel and Premium Pipeline advise of a new address off site.)
2. Citifuel signed a lease for the Facility on March 25, 1991.

Official Notice

For calculating daily penalties, 1992 is a leap year.

FINDINGS OF FACT

(The Findings of Fact relate to one or more of the allegations of violations by Respondents CITIFUEL, PREMIUM PIPELINE, and/or FESTINGER.)

GENERAL:

1. Citifuel is a New York corporation with offices and a place of business at 1204 Avenue U, Brooklyn NY 11229.

2. Samuel Festinger is the President of Citifuel.

3. Citifuel leased the oil transfer and storage terminal facility located at 200 Morgan Avenue, Brooklyn NY 11237 (the "Facility") from Morgan and operated it between March 25, 1991 and April 3, 1992. Under the lease Morgan relinquished possession, control and partial access to the facility.

4. On April 3, 1992, application was made by Premium Pipeline as new operator/lessee at 200 Morgan Avenue, Brooklyn NY 11237 for the transfer of an existing State Pollutant Discharge Elimination System ("SPDES") wastewater discharge permit, #NY0032824, at the same address.

5. Premium Pipeline is a New York corporation with offices and a place of business at the facility at 200 Morgan Avenue.

6. Samuel Festinger is the President of Premium Pipeline.

7. Samuel Festinger set up Premium Pipeline exclusively to run the Facility as a subtenant to Citifuel.

8. Premium Pipeline operated the Facility since April 3, 1992.

9. The Facility has seven (7) underground tanks with a combined capacity of one million nine hundred and twenty-five thousand (1,925,000) gallons.

10. The Facility is next to a barge slip in waters known as the English Kills.

11. Alexander Weisz, an employee, first of Citifuel and then of Premium Pipeline, was the Facility operations manager on a day-to-day basis for each company.

12. The Staff engineer assigned to the major onshore petroleum facilities program and the spill program inspected the Facility at 200 Morgan Avenue on February 22, September 11, October 4 and 7, 1991, March 12 and October 16, 1992.

SPECIFIC:

The Staff alleges the following: (the numbered headings are the same, or essentially so, and in the same order as those in the Complaint and captions summarize the Complaint's allegations.)

I. LICENSING VIOLATIONS

a. In General (Respondents are accused of violating NL 174(1), (9) and 17 NYCRR 30.3 by operating a major facility without a MOSF license, and of violating 17 NYCRR 30.4(a)(3) by failing to submit an application for renewal of MOSF license #02-1500, 90 days prior to its expiration.)

13. On March 21, 1989, the Department issued Morgan Oil an annual MOSF (or "Major Facility") license, #02-1500 with special conditions.

14. The MOSF license expired on March 31, 1990.

15. Since March 31, 1990 no Respondent has applied for or held a MOSF license for the facility.

16. Staff advised Respondents Festinger and Weisz of Citifuel of the MOSF license requirement on September 11, 1991, on October 4 and 7, 1991 and again on March 12, 1992.

17. The Region 2 MOSF files contained no license applications from Respondents Citifuel, Premium Pipeline, Weisz or Festinger.

b. Failure to Report Monthly Quantities of Oil Transferred and Failure to Pay Fees.

18. Staff presented Exhibit 10 and supportive testimony in an attempt to establish a prima facie case in this matter. Upon review, however, Exhibit 10 and the testimony do not relate to the Morgan Avenue facility or Respondents Citifuel, Premium and Festinger. Witnesses did not indicate whether or not DEC records had otherwise been searched for records relating to Respondents.

II. VIOLATIONS OF SPECIAL CONDITIONS:

Respondents violated the MOSF license special conditions requiring the creation and filing of both a) a Spill Prevention Control and Countermeasure ("SPCC") Plan and b) a Groundwater Contingency Plan.

19. Morgan Oil's MOSF License #2-1500 contained special conditions requiring production of a Groundwater Petroleum Spill Contingency Plan and a SPCC Plan by June 30, 1990.

20. Respondents Festinger, Citifuel and Premium Pipeline did not file either a SPCC plan or a groundwater contingency plan with the Department at any time.

21. At some unspecified time, Respondent Festinger did file a plan (contents unknown) for spill control with the Coast Guard, but he did not file it with the Department.

III. UNDERGROUND TANK VIOLATIONS

a. Color Coding. The underground tanks lack color coding of the inlet ports in violation of 6 NYCRR 613.3(b).

22. 6 NYCRR 613.3(b) requires all fill ports to be permanently marked to identify the product inside the tank (red - for high gasoline, yellow - for diesel, brown - for kerosene, etc.).

23. 6 NYCRR 613.3(b) requires all markings must be consistent with the color and symbol code of the American Petroleum Institute (symbols are a circle for gasoline products and vapor recovery lines, a hexagon for other distillates, etc.).

24. Staff's evidence did not indicate whether or not the fill ports were marked with the correct color and symbol code at the time of the inspection of September 11, 1991.

25. Staff's inspection of September 11, 1991 noted only that Respondents did not mark the fill ports with tank identification numbers and did not designate product liquid level height.

b. Spill Prevention Equipment Maintenance. There is improper tank piping maintenance to prevent spills in violation of 6 NYCRR 613.3(d).

26. The Coast Guard capped the fill ports on tanks 3, 4, and 5 at some unknown time between the inspection of February 22, 1991 and the inspection of September 11, 1991.

27. The fill ports must be employed in filling the tanks or the tanks' spill prevention equipment would be circumvented.

28. Petroleum product was transferred into tanks 3, 4 and 5 sometime after the February 22, 1991 inspection and before the September 11, 1991 inspection.

29. Citifuel transferred petroleum product into tanks 3, 4 and 5 sometime after the February 22, 1991 inspection and before the September 11, 1991 inspection.

30. During the inspection on October 7, 1991 the level of petroleum product in the tanks 3, 4 and 5 was observed to be the same as it had been at the September 11, 1991 inspection.

c. Leak Detection by Monitoring Tank Inventory. Tank content daily inventory records for leak detection were not kept, in violation of 6 NYCRR 613.4(a)(1) and

d. Five Year Availability of Inventory Records. Respondents failed to comply with the record keeping and record maintenance requirements of 6 NYCRR 613.4(c).

31. Respondents Citifuel, Premium Pipeline and Festinger were the operators of the Facility who were responsible for inventory monitoring of underground storage facilities.

32. Respondents did not keep daily leak detection inventory records for any tanks at the Facility.

33. There were no records kept of tank contents, intended use of product in the tanks, product origin and facility operation.

IV. ILLEGAL PETROLEUM DISCHARGES

a. In General, the Spill of March 12, 1992. An unpermitted discharge (spill) occurred on March 12, 1992, which violated ECL 17-0501, NL 173 and 6 NYCRR 703.6.

34. During a Facility inspection on March 12, 1992, Staff noted a spill of oil on the earth covering tanks one (1) through five (5). The spill was along the wall and on the ground near the loading rack and onto adjacent property to the south of the terminal.

35. Mr. Weisz recorded and reported that a broken suction hose-fitting on a tank truck spilled an estimated fifty (50) gallons of #6 fuel oil at the Facility at nine thirty (9:30 AM) on the morning of March 12, 1992. The failed fitting allowed the fuel oil to discharge onto the ground over buried tanks one (1) through five (5) and along the north wall.

36. No oil sheen was seen on the English Kills.

37. The groundwater on site is tidal. At high tide the ground water flows inland from the English Kills. The English Kills is listed in the facility's SPDES permit (1987-1992) as class SD (saline) water.

b. Spill Containment and Cleanup was improper, in violation of 6 NYCRR 611.3, NL 176(1), and 17 NYCRR 32.5.

38. There were no containment or cleanup activities underway when Staff arrived at the Facility on March 12, 1992. After Staff's discussion with Mr. Weisz, cleanup of the spill began.

39. Staff's next Facility inspection following the March 12, 1992 spill occurred on October 16, 1992. The October 16 inspection report references tank inventories, but makes no reference to the status of the March 12, 1992 spill cleanup.

c. Spill Notification. Respondents failed to notify DEC of that discharge, in violation of ECL 17-1743, NL 175, 17 NYCRR 32.3 and 6 NYCRR 613.8.

40. During the March 12, 1992 Facility inspection, Staff advised Mr. Weisz to notify Albany by use of the Spill Hotline.

41. Alex Weisz called Albany at four thirty seven (4:37 PM) in the afternoon on March 12, 1992.

V. SPDES VIOLATIONS

42. Morgan Oil Company was issued SPDES permit, ID #NY 0032824, effective from July 30, 1987 to July 30, 1992. The SPDES permit authorized outfall #1 to discharge surface storm water from the facility's oil-water separator into the English Kills.

43. The SPDES permit Part I contains Special Conditions that require discharge monitoring reports ("DMR"). The permittee is required to summarize the DMR information and submit it by no later than the 28th of the following month to both the Regional Water Engineer and to the Water Division in Albany.

44. Citifuel did not file any DMRs. Staff, by certified letter dated January 2, 1992, informed the Respondents Festinger and Weisz of their failure to submit DMRs.

45. Staff, by certified letter dated April 1, 1992 to Festinger and Weisz again informed them of the failure to submit DMRs. Additionally, the letter stated that the failures were violations of the SPDES permit and subject to fines of up to twenty-five thousand ($25,000) dollars a day.

46. Samuel Festinger signed the application for Premium Pipeline on April 3, 1992, when Premium sought transfer of SPDES permit #NY0032824.

47. A DMR for May 1992 for permit #NY 0032824 identifies the Permittee not as Premium Pipeline but as On Spec Waste Oil Refining, 1605 56th Street, Brooklyn NY. However neither Premium Pipeline nor On Spec Waste Oil Refining signed the DMR. [The president of A.P.S., not known to be a principle executive officer of the Permittee, signed it. Neither On Spec Waste Oil Refining or A.P.S. were identified, and their relationship with Respondents, if any, is unknown.]

48. DMRs for June and July 1992 for permit #NY 0032824 indicate Premium Pipeline Inc., 200 Morgan Avenue Brooklyn NY 11237 as the Permittee. The DMRs are also signed by the president of A.P.S.

49. The SPDES permit Part II contains General Conditions specific to permit transfer. Section 7 provides:

"a. This permit is not transferable to any person except after notice to the Department. ..." and "d. The terms and conditions of this permit are binding on the successors or assigns in interest of the original permittee."

50. The SPDES permit Part II contains General Conditions specific to monitoring, recording and reporting. Section 10.2, Signatories and Certification, provides:

"a. All reports required by this permit shall be signed as follows:

1. For a corporation: by a principal executive officer of at least the level of vice-president ..."

CONCLUSIONS

COMPLAINT ALLEGATION I. LICENSING VIOLATIONS

a. General (failure to obtain required yearly operating MOSF license in violation of NL 174(1), (9) and 17 NYCRR 30.3, and failure to submit an application for renewal of MOSF license #02-1500 90 days prior to its expiration in violation of 17 NYCRR 30.4(a)(3)).

The Staff alleges, in Complaint allegation 12, violations by Citifuel of NL 174(9) & 17 NYCRR 30.4(a)(3) for a failure to submit an application to renew an operating license, for each day since January 1, 1992. In Complaint allegation 13 Staff claims Citifuel operated without a license from March 25, 1991 to April 3, 1992 and Premium Pipeline operated without a license from April 3, 1992 to June 30, 1992. These are alleged to be violations of NL 174(1), 17 NYCRR Part 30 and 6 NYCRR Part 610. These Respondents are each charged with separate daily violations.

Discussion

NL 174(1),(9) and 17 NYCRR 30.3 prohibit a person from operating a major facility (i.e., any storage terminal with a storage capacity of at least four hundred thousand (400,000) gallons, that is used or capable of being used to refine, produce, store, handle, transfer, process or transport petroleum) without the Department's annual license. 17 NYCRR 30.4(a)(3) requires:

"Applications for major facilities which will commence operation on or after August 1, 1978 and for renewals of licenses shall be submitted 90 days prior to the expected date of start-up ..."

Mr. Sigona, the Region 2 Major Onshore Facility ("MOSF") expert, testified that his files contained no applications or licenses for Respondents Citifuel, Premium Pipeline or Festinger. Absence of such records in the business files of the Department is prima facie evidence that Respondents Citifuel and Premium Pipeline did not have or apply for issuance or renewal of the required MOSF licenses.

The Respondents failed to produce any evidence of compliance with the licensing requirements of NL 174(1) & (9), 6 NYCRR Part 610 or 17 NYCRR 30.3. There is no other evidence that Citifuel or Premium held an operating license or submitted an application for a license. Since the Respondents offered no rebuttal evidence, Staff's prima facie case was sufficient to establish that the Respondents did not meet the statutory or regulatory requirements.

Conclusion 1. Citifuel did not submit a renewal application for a MOSF license and operated without a license, as charged in Complaint allegation 12, each day since January 1, 1992. [From January 1, 1992 to June 30, 1992 inclusive, there are one hundred and eighty two (182) days.]

Conclusion 2. Citifuel did not submit an application for a MOSF license and therefore violated NL 174(1) and 17 NYCRR Part 30 by operating without a license each day from March 25, 1991 to April 3, 1992 (Complaint allegation 13). [From March 25, 1991 to April 3, 1992 there are three hundred and seventy six (376) days.]

Conclusion 3. Premium Pipeline operated without an operating license, in violation of NL 174(1) and 17 NYCRR Part 30 each day from April 3, 1992 to June 30, 1992 (Complaint allegation 13). [From April 3, 1992 to June 30, 1992 inclusive, there are eighty nine (89) days.]

COMPLAINT ALLEGATION Ib. Failure to Report Monthly Quantities of Oil Transferred and Failure to Pay Fees.

Complaint allegation 15 charges Citifuel and Premium Pipeline with violations of NL 174(5) and 17 NYCRR Part 30 for not submitting monthly reports certifying the amount of petroleum transferred (Citifuel: from March 25, 1991 to April 3, 1992 and Premium Pipeline: from April 3, 1992 to June 30, 1992). In Complaint allegation 17, the Staff alleges violations of NL 174(4)(a) and 174(7), and 17 NYCRR Part 30 for failure to pay a per barrel fee. (Citifuel: from March, 1991 to April, 1992, and Premium Pipeline: from April 3, 1992 through June 1992.

Discussion

Staff's sole attempt to present proof in this matter was to offer Exhibit #10 and the testimony based on that exhibit. Although Staff's witness testified that the exhibit concerned the Morgan Ave. facility, the exhibit on its face contains only information and data concerning another MOSF facility, apparently also owned by Morgan Oil Terminals Corp., but located at 30 Main Street in Port Washington, NY 11050. The testimony, therefore, cannot be relied on to ascertain facts concerning the activities of Respondents Citifuel and Premium Pipeline at the Morgan Ave. facility. The contradictions make the testimony and documentary evidence unreliable and I am compelled to reject both.

The record contains no other evidence regarding Respondents' submission, or failure to submit, monthly certification reports of the quantities of oil transferred or of the monthly payment of related fees. There was no testimony that the Department's files had been examined for the presence of such records.

Conclusion 4. Complaint allegation 15 charges Citifuel with violating NL 174(5) and 17 NYCRR Part 30 for not submitting monthly reports for each month from March 1991 to April 1992. The record does not include evidence relevant to this cause of action. Staff has not met its burden of proof. Citifuel cannot be found guilty as charged.

Conclusion 5. Premium Pipeline is also charged with violating NL 174(5) and 17 NYCRR Part 30, for each month from April 1992 to June 1992. The record does not include evidence relevant to these allegations. The Staff has not met its burden of proof. Premium Pipeline cannot be found guilty as charged.

Conclusion 6. Staff failed to produce the necessary prima facie case in support of Complaint allegation 17. Respondents Citifuel and Premium Pipeline are not found guilty of violating NL 174(4)(a) and 174(7) and 17 NYCRR Part 30 by failing to pay a per barrel fee for petroleum transferred.

COMPLAINT ALLEGATION II. VIOLATIONS OF SPECIAL CONDITIONS

a. Spill Prevention Control and Countermeasure Plan.

b. Groundwater Contingency Plan.

The Staff alleges violations of NL 174(2) (Licenses, [General]), 17 NYCRR 30.6(d) (Issuance of license, [special conditions]) and 6 NYCRR Part 610 (Certification of Onshore Major Facilities) for failure to comply with special condition 4(a) of license #2-1500 (which requires a certified Spill Prevention Control and Countermeasure plan) by: Citifuel, for each day from March 25, 1991 to April 3, 1992 and Premium Pipeline, for each day from April 3, 1992 to June 30, 1992 (allegations 21 and 22 in the Complaint).

The Staff alleges violations of NL 174(2), 17 NYCRR 30.6(d) and 6 NYCRR Part 610 for failure to comply with special condition 4(b) of license #2-1500 (which requires a Groundwater Contingency plan) by: Citifuel, for each day from March 25, 1991 to April 3, 1992 and Premium Pipeline, for each day from April 3, 1992 to June 30, 1992 (allegations 25 and 26 in the Complaint).

Discussion

NL 174(2), 17 NYCRR 30.6(d) and 6 NYCRR Part 610 allows the Department to include special conditions in any MOSF license. Citifuel and Premium Pipeline as operators of a MOSF are required by the NL to have a license and to operate in compliance with the license.

Staff's inspection report of the Facility on February 22, 1992 reveals that no one developed either the groundwater contingency plan or SPCC plan, as required by 6 NYCRR Part 610. No one had an approved plan available as required.

Although Citifuel and Premium never applied for or held a license, Staff informed them of license requirements on September 11, 1991 and from time to time thereafter. Respondents knew or should have known of license requirements and that the license originally issued for the facility required the production of a SPCC plan and a Groundwater plan. Regardless of their license status, Respondents knew that, as operators of the MOSF, they were responsible for having a SPCC plan and a Groundwater plan in place according to 6 NYCRR Part 610. Respondents apparently did furnish a plan, but only to the Coast Guard. The contents of that plan are unknown.

Respondents introduced no evidence to contradict the Staff witness' inspection report or to show they made any effort to comply. Therefore, Staff needed only to establish a prima facie case that Respondents did not file a groundwater contingency plan or SPCC plan.

Conclusion 7. Citifuel violated 17 NYCRR 30.6(d) and 6 NYCRR Part 610 on each day from March 25, 1991 to April 3, 1992 since it did not have a SPCC plan for the Facility. [From March 25, 1991 to April 3, 1992 there are three hundred and seventy-six (376) days.]

Conclusion 8. Premium Pipeline violated 17 NYCRR 30.6(d) and 6 NYCRR Part 610 on each day from April 3, 1992 to June 30, 1992 since it did not have a SPCC plan for the Facility. [From April 3, 1992 to June 30, 1992 there are eighty-nine (89) days.]

Conclusion 9. Citifuel violated 17 NYCRR 30.6(d) and 6 NYCRR Part 610 on each day from March 25, 1991 to April 3, 1992 since it did not have a Groundwater Contingency plan.

Conclusion 10. Premium Pipeline violated 17 NYCRR 30.6(d) and 6 NYCRR Part 610 on each day from April 3, 1992 to June 30, 1992 since it did not have a Groundwater Contingency plan.

COMPLAINT ALLEGATION III. UNDERGROUND TANK VIOLATIONS

Discussion

Throughout the hearings, Respondents failed to produce any evidence to show compliance with underground tank requirements for (a) color coding, (b) maintenance for spill prevention, (c) daily tank inventory for leak detection, (d) record maintenance and (e) tank tightness testing.

a. Color Coding

The Staff alleges violations of 6 NYCRR 613.3(b) for failure to permanently mark all fill ports to identify the product inside the tank on each of seven (7) tanks. Staff charges Citifuel with the violation for each day between March 25, 1991 and April 3, 1992. Staff charges Premium Pipeline of the violations on each day since April 3, 1992 to June 30, 1992. (Complaint allegations 29 & 30)

Discussion

The Staff needed a prima facie case that the alleged violations occurred. Since the Respondents offered no rebuttal evidence, Staff only needed to show that the Respondents did not meet the requirements. For the color coding charge, Staff failed to meet this burden of proof.

Staff witness' testimony referenced only the absence of tank identification numbers and tank product height. This apparently was his understanding of the color coding requirements and the target of his inspection. 6 NYCRR 613.3(b) does not specify either. The requirements for fill ports mandate color coding by tank content (e.g. yellow for diesel, brown for kerosene, etc.) and symbol coding by shape and or borders (e.g. a circle for gasoline and vapor recovery, a hexagon for other distillates etc.). Staff made a conclusory allegation but presented no testimony or other evidence referencing the absence of the color coding or symbol coding to show any violation.

Conclusion 11. Staff failed to present a prima facie case supporting allegations 29 and 30 in the Complaint. Respondents cannot be found guilty of violating ECL 17-1001 and 6 NYCRR 613.3(b).

b. Spill Prevention Equipment Maintenance.

The Staff alleges violations of 6 NYCRR 613.3(d) for failing to keep spill prevention equipment, gauges, and valves in good working order by not providing for proper maintenance on each of the seven (7) tanks. Staff charges violations by Citifuel on each day between March 25, 1991 to April 3, 1992. Staff charges violations by Premium Pipeline on each day between April 3, 1992 and June 30, 1992. (Complaint allegations 33 and 34)

Discussion

The entire regulation allegedly violated simply advises "The owner or operator must keep all gauges, valves and other equipment for spill prevention in good working order." On October 7, 1991, the Staff found that the Coast Guard had capped the transfer piping at some unspecified time after the February 22, 1991 inspection and that the tanks, which had been empty during that inspection, now held petroleum products.

In order to be "in good working order" the spill prevention equipment must be capable of being used. The spill prevention equipment cannot be used if the ports are capped. The capped fill ports are proof that the equipment could not have been used to transfer petroleum products, could not operate and was, therefore, out of working order.

Although the precise date of the petroleum transfer is not known, it is reasonable to deduce from the fact that Morgan had ceased operations that transfer occurred after Citifuel began operation. There is, however, no evidence, either direct or circumstantial, which allows a conclusion regarding the temporal relationship between the capping of the transfer piping and the transfer of petroleum.

The Staff provided no evidence to show how long the transfer piping was capped before or after October 7, 1991. The number of days that Citifuel did not keep the transfer piping in good working order is indeterminate.

There is no record of any inspection of the spill prevention equipment from April 3, 1992 to June 30, 1992 when Premium Pipeline operated the Facility.

Conclusion 12. The fill ports are an integral part of the facility's spill prevention equipment. Citifuel violated 6 NYCRR 613.3(d) on October 7, 1991 by not having equipment in good working order for tanks 3, 4 and 5. [Three tanks each for one day of violation.]

Conclusion 13. Absent any record of inspection of the Facility between April 3, 1992 and June 30, 1992, Premium Pipeline cannot be found in violation of 6 NYCRR 613.3(d).

c. Leak Detection by Monitoring Tank Inventory.

The Staff alleges violation of 6 NYCRR 613.4(a)(1) for failure of the operator to keep daily inventory records of each of the seven (7) underground tanks. The Staff charges violations by Citifuel for each day between March 25, 1991 and April 3, 1992. The Staff charges Premium Pipeline for each day from April 3, 1992 to June 30, 1992. (Complaint allegations 37 and 38)

Conclusion 14. Citifuel, as operator of the Facility, violated 6 NYCRR 613.4(a)(1) as charged. Violations occurred on each day from March 25, 1991 to April 3, 1992 by not having any daily inventory tank records for any of the seven tanks at the Facility. [From March 25, 1991 to April 3, 1992 there are three hundred and seventy six (376) days and seven tanks for a total of two thousand six hundred and thirty two (2632) violations.]

Conclusion 15. Premium Pipeline, as operator of the Facility, violated 6 NYCRR 613.4(a)(1) on each day from April 3, 1992 to June 30, 1992 as charged by not having any inventory tank records for any of the seven tanks. [From April 3, 1992 to June 30, 1992 inclusive, there are eighty nine (89) days and seven tanks for a total of six hundred and twenty three (623) violations.]

d. Five Year Availability of Inventory records.

The Complaint allegations 41 and 42 charge violations of 6 NYCRR 613.4(c) for failure of the operator to keep and make available inventory monitor records for not less than five (5) years for each of the seven tanks. The Staff charges violations by Citifuel for each day between March 25, 1991 to April 3, 1992. The Staff charges violations by Premium Pipeline for each of their seven tanks, for each day since April 3, 1992 to June 30, 1992.

Conclusion 16. Citifuel, as operator of the Facility, violated 6 NYCRR 613.4(c) as charged. Violations occurred on each day from March 25, 1991 to April 3, 1992 as Citifuel did not make or maintain any daily inventory tank records for any of the seven (7) tanks at the Facility. [From March 25, 1991 to April 3, 1992 there are three hundred and seventy six (376) days and seven tanks for a total of two thousand six hundred and thirty two (2632) violations.]

Conclusion 17. Premium Pipeline, as operator of the Facility, violated 6 NYCRR 613.4(c) as charged. Violations occurred on each day from April 3, 1992 to June 30, 1992 as Premium Pipeline did not make or maintain any inventory tank records for any of the seven (7) tanks at the Facility. [From April 3, 1992 to June 30, 1992 inclusive, there are eighty nine (89) days and seven tanks for a total of six hundred and twenty three (623) violations.]

COMPLAINT ALLEGATION IV. ILLEGAL PETROLEUM DISCHARGES

a. In General, the Spill of March 12, 1992.

At Complaint allegation 47, Staff charges Citifuel with a violation of ECL 17-0501 (General prohibition against pollution), NL 173 (Discharge of petroleum; prohibition) and 6 NYCRR 703.6 (Groundwater effluent standards and limitations for discharges to class GA waters) by a discharge of petroleum on March 12, 1991.

Discussion

The Staff alleges that the discharge on March 12, 1992 violated NL 173, which states: "(1) The discharge of petroleum is prohibited....(3) This section shall not apply to discharges of petroleum pursuant to and in compliance with the conditions of a federal or state permit." NL 172 defines: "Discharge" to mean "any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of petroleum into the waters of the state or onto lands from which it might flow or drain into said waters, or into waters outside the jurisdiction of the state when damage may result to the lands, waters or natural resources within the jurisdiction of the state." This statute broadly prohibits all discharges of petroleum not permitted by either federal or state authorities.

Staff Witness' testimony about the spill of March 12, 1991, though inconclusive as to potential environmental harm, does provide a basis to conclude that the spill may eventually find its way into the ground water. Since NL 173 is an absolute prohibition against discharging petroleum where it might flow into waters of the state, the Staff established a prima facie case for violation of NL 173 by Citifuel on March 12, 1992.

In order to establish that a groundwater standard has been violated the applicable standard must first be established. Respondents are accused of violating the standards for Class GA waters. According to 6 NYCRR 701.15 "Class GA waters are fresh groundwaters."

Whether groundwater is classified as fresh or saline must be established by factual determination, since there has been no designation by rule as is the case in classification of streams or wetland areas. The evidence does not establish that the groundwater on site is classified as fresh groundwaters, but instead indicates that the groundwater is saline. Staff witness testified that the groundwater on site flows with the tides in the English Kills (English Kill borders the facility). The water in the English Kills is classified with a SD (saline) standard. The charge of violating 6 NYCRR 703.6, "Groundwater effluent standards and limitations for discharges to class GA waters." cannot be upheld.

Conclusion 18. Citifuel is guilty of violating NL 173 by discharging oil on March 12, 1991 as alleged.

Conclusion 19. The groundwater at the Facility is saline. Since Respondent is charged only with a violation of fresh groundwater classification, Citifuel is not guilty as charged at Complaint allegation 47 for violating 6 NYCRR 703.6.

b. Containment and Cleanup of Discharge.

Respondents Citifuel, and Premium Pipeline allegedly violated NL 176(1), 6 NYCRR 611.3 and 17 NYCRR 32.5 daily by failing to contain and clean up the discharge on March 12, 1992. (Complaint allegations 49 and 50)

Discussion

NL 176(1) requires any person discharging petroleum in violation of NL 173 to undertake steps to contain the discharge immediately. 6 NYCRR 611.3 states that quick clean-ups would reduce the costs of recovery, increase the recyclability of the recovered petroleum, and reduce the hazards that a spill could pose. Therefore, after the March 12, 1992 discharge, Citifuel should have started containment operations before the Staff inspector prompted them. There is no follow up information on the cleanup, its completion status or otherwise as there were no further inspections of Citifuel or Premium Pipeline.

Conclusion 20. Citifuel had no cleanup or containment procedures underway immediately after the spill. Citifuel is in violation as alleged on the day of Staff's inspection. The only basis in this record to determine the status of containment or cleanup operations is on the day of inspection. There were no other inspections.

Conclusion 21. Staff had not inspected the facility since Premium Pipeline began operating it on April 3, 1992. The need, status or completeness of cleanup and containment is not in evidence. Premium Pipeline cannot be found in violation as alleged.

c. Spill Notification

The Staff alleged that Respondents Citifuel and Premium Pipeline violated ECL 17-1743, NL 175, 17 NYCRR 32.3 and 6 NYCRR 613.8 by failing to notify the Department of the March 12, 1992 discharge at the Facility. (Complaint allegations 56 and 57)

Discussion

ECL 17-1743 regulates any person who is in control of more than one thousand one-hundred (1,100) gallons in bulk, of any liquid, including petroleum, which if released, discharged or spilled would or would be likely to pollute the lands or waters of the State. It requires that person to notify the Department as soon as he has knowledge of the release, discharge or spill. 6 NYCRR 613.8 requires, among other things, any person with knowledge of a leak, spill, or discharge of petroleum to report the incident to the Department within two hours.

NL 175 requires any person responsible for causing a discharge to notify the Department immediately and by two hours after a spill. 17 NYCRR 32.3 follows NL 175 as it requires notification immediately unless such person has been given adequate assurance that such notification has already been given.

We must focus on the spill of March 12th, as the complaint requires, and therefore turn to Exhibit 17. First, it shows that Citifuel caused a discharge of petroleum, identified as fifty gallons of no.6 fuel oil, to occur on March 12, 1992 at 0930 hours. Second, the NYSDEC Spill Response Form ("Form") shows that Weisz, an employee of Citifuel, notified the Department of this spill at 1637 hours. This business record of the Department, establishes a prima facie case that Citifuel caused and had knowledge of a spill likely to pollute the waters of the State on the date alleged, and failed to notify the Department within two hours. The Respondent offered no rebuttal testimony and therefore the Staff carried its burden to show that Citifuel violated ECL 17-1743, NL 175, 17 NYCRR 32.3 and 6 NYCRR 613.8 by failing to timely notify the Department of the March 12, 1992 spill.

Premium Pipeline did not operate the facility on the date the spill occurred or cause the discharge to occur. The party responsible for the discharge was Citifuel. The charges of violating NL 175 and 17 NYCRR 32.3 must be dismissed.

Conclusion 22. Citifuel violated ECL 17-1743, NL 175, 17 NYCRR 32.3 and 6 NYCRR 613.8 by failing to notify the Department of the March 12, 1992 spill within two-hours.

Conclusion 23. From the record, Premium Pipeline cannot be found in violation as alleged.

COMPLAINT ALLEGATION V. SPDES VIOLATIONS

The Staff alleges violations of ECL Article 17, 6 NYCRR 754 & 756, and the general conditions of the State Pollution Discharge Elimination System permit. The violations alleged are for failure to submit to the Department monthly discharge monitoring reports ("DMR") by Citifuel, as operator, for each month between March 1991 and April 1992 and by Premium Pipeline, as operator, for April, May and June 1992 (allegations 60 and 61 of the Complaint).

Discussion

No Respondent raised a defense to the allegations of failure to submit monthly discharge monitoring reports.

A SPDES permit includes the requirements of 6 NYCRR 754 and 756. 6 NYCRR 756 sets the requirements for monitoring, recording, reporting associated with SPDES permits. These regulations require the alleged violator to be a permittee as a precondition to liability. The SPDES permit submitted as exhibit 3, lists only Morgan Oil as the permittee.

However, this does not end the analysis concerning Citifuel and Premium Pipeline. The general condition of Morgan Oil's SPDES permit, under the heading of "7. Transfer of Permit" subdivision "d" binds "successors and assigns of the original permittee." Following the stipulated fact, Respondent Morgan Oil relinquished possession, control and partial access from March 25, 1991 henceforth to Citifuel. Citifuel in taking control and possession of the facility, became Morgan Oil's assign, and Premium Pipeline became Citifuel's assign on April 3, 1992, similarly, through a lease arrangement. Therefore, the conditions of the permit are binding upon Citifuel from March 25, 1991 through April 3, 1992 and Premium Pipeline from April 3, 1992 to June 30, 1992.

Although transfer requires DEC approval and none was ever granted, Respondents have not asserted this as a defense. However, even if they had, they could not effectively assert the defense because the approval is intended solely to protect the State's (i.e., public's) interests.

Additionally, Premium Pipeline notified the Department to transfer the SPDES permit #NY0032824 from Morgan Oil / Citifuel on April 3, 1992. (see Exhibit 4 in evidence) This application bears Respondent Festinger's signature for Premium Pipeline and provides evidence of his notice of transfer requirement according to the Morgan Oil's SPDES permit. This notification satisfies permit transfer condition 7(a) that requires notification to the Department of the transfer.

Condition of transfer 7(d) binds Premium Pipeline as assign as well, because Respondent Morgan Oil did not retake possession, control, or partial access of the Facility. As noted in general finding #3 above, Premium Pipeline became lessee on April 3, 1992, and thereafter was bound by the permit.

Having established that the conditions of the permit regulate Respondents Citifuel and Premium Pipeline, we must examine if they are guilty as charged of violating the permit. 6 NYCRR 754 allows the Department to specify in a SPDES permit effluent limitations and monitoring, recording and monthly reporting requirements (for specifications of Morgan Oil's SPDES permit see exhibit 3). Staff alleges that Citifuel and Premium Pipeline violated 6 NYCRR 756 by not submitting the required monthly discharge reports (DMRs) for March 25, 1991 to April 3, 1992, and from April 3, 1992 to the date of the complaint. However, in evidence as Exhibit 7 are DMRs for April, May and June 1992, the period of Premium Pipeline's alleged violation.

On Spec Waste Oil Refining (an unidentified entity), but not Premium Pipeline, submitted the DMR for April 1992. Premium Pipeline submitted DMR's for May and June 1992. Therefore, Premium Pipeline did not file a DMR for April 1992. Someone identified as the president of A.P.S. signed the DMRs. Neither the president of A.P.S. nor A.P.S. is identified as being in an executive capacity with Premium Pipeline. Since, an executive of at least the level of a vice-president of Premium Pipeline must sign any report, the submitted DMRs do not comply with permit requirements.

Conclusion 24. Citifuel did not contest the Staff's prima facie case. Citifuel, as operator, did not submit monthly DMRs for each month between March, 1991 and April, 1992.

Conclusion 25. Premium Pipeline did not file a DMR for April 1992. The April DMR was due in May and remained outstanding in June.

PENALTIES

Mitigating and Aggravating Circumstances

Permit and licensing violations are serious affronts to the regulatory process since they deny the Department an opportunity to regulate a facility to insure the protection of the health of the citizens of New York and the State's environment.

The Respondents' actions demonstrated a continuing pattern of abuse or disregard for the environment. Though specific incidents were not adjudicated Staff presented testimony on the current operation and recent spills allegedly occurring through the misuse of the oil separator in the Facility storm water collection system. Instead of denying that the spills had occurred Respondent Festinger merely argued that there were other causes for the problems, e.g., natural "maxing-out" of the oil separator or that Respondents found the facility unexpectedly in its present state. Respondent Festinger stated he felt he had been drawn in, to takeover Respondent Morgan Oil's environmental woes, by a lucrative financial leasing offer. He concedes, however, that this does not absolve him of responsibility for the violations at the Facility.

Since before moving in Mr. Festinger had access to the Facility to perform inspections. He relied on an environmental consultant, Dr. Levy, who investigated the site with him. He also had legal counsel to negotiate the lease with Morgan and consult with him on financial viability. These inferences that the problems were either unforeseen or beyond the Respondents' control is unpersuasive.

Respondent Festinger also stated that the small business he owned had never sold more than two to five million gallons of oil per year. However, on cross-examination, he admitted that he owns a corporation, D.P. Delek Petroleum Fuel Oil ("Delek") that sold at retail between ten and eleven million gallons per year. He tried to explain away the differences in quantities sold as the average and a high sales year. He also testified about many ventures in the oil distribution business, both wholesale and retail. He admitted to wholly owning several corporations in various aspects of the oil distribution business, e.g., Regional Petroleum Co. for retail distribution; O.I.L. Company that handled all accounts receivable for all of his companies; Best Tank Cleaning for tank cleaning; Heat Master Heating Co. for retail distribution; U.S.E. Corp, a holding company and, of course, he is a corporate official with Citifuel and Premium Pipeline. Mr. Festinger's attempt to demonstrate his inexperience was clearly and totally unsuccessful.

Respondent Festinger's representation by counsel and an environmental consultant before signing the lease, prevents characterizing him as Morgan Oil's solution to a difficult environmental problem. His business experience belies his innocence in dealing with Morgan Oil. The nature of Festinger's conflicting testimony as well as all of the above argues against any mitigation of penalty.

Total Violations for Which Penalties May be Assessed

Staff's post hearing brief significantly revises the requested penalties, and fails to attach a specific demand to each charged violation. Staff requests a total of two hundred and one thousand nine hundred and fifty ($201,950) collectively for all NL violations and the same amount collectively for all ECL spill violations. The number of specific violations are set forth below, and such penalty recommendations as can be made consistent with Staff's final demands are enumerated.

COMPLAINT ALLEGATION I, LICENSING VIOLATIONS

a. General (failure to obtain required yearly operating license).

Citifuel violated NL 174(1) for 376 days and NL 174(9) for 182 days. Premium Pipeline violated NL 174(1) for 89 days. In its post hearing brief Staff does not specify what portion of the total NL penalty is attributable to the proven violations as alleged in I.a.

b. Reporting Monthly Quantities of Oil Transferred and Payment of Fees.

No penalty since Respondents were not found in violation.

COMPLAINT ALLEGATION II, VIOLATIONS OF LICENSE SPECIAL CONDITIONS.

Although Staff proved Citifuel violated NL 174(2) for 376 days for failure to comply with each of the two special conditions and Premium Pipeline violated NL 174(2) for 89 days as alleged, Staff's post hearing brief does not specify what portion of the total penalty is for these violations.

COMPLAINT ALLEGATION III, UNDERGROUND TANK VIOLATIONS

In its post hearing brief, Staff seeks a $201,950 penalty collectively for all ECL spill violations rather than assessing an individual amount against each Respondent or for each individual charge.

a. Color Coding

No penalty since Respondents were not found in violation of 6 NYCRR 613.3(b).

b. Spill Equipment

Citifuel violated 6 NYCRR 613.3(d) at three tanks on one day. Premium Pipeline was not found to be in violation as alleged.

c. Tank Inventory

Citifuel violated 6 NYCRR 613.4(a)(1) at each of the seven tanks for 376 days for a total of 2632 violations. Premium Pipeline violated 6 NYCRR 613.4(a)(1) at each the seven tanks for 89 days for a total of 623 violations.

d. Records

Citifuel violated 6 NYCRR 613.4(c) for each of the seven tanks on 376 days for a total of 2632 violations. Premium Pipeline violated 6 NYCRR 613.4(c) for each of the seven tanks on 89 days for a total of 623 violations.

COMPLAINT ALLEGATION IV, ILLEGAL PETROLEUM DISCHARGES

a. The spill of March 12, 1992

Citifuel violated NL 173 as alleged on March 12, 1992, but was not found in violation of ECL 17-0501 or 6 NYCRR 703.6.

b. Containment and Cleanup of Discharge

Staff does not specify a penalty in either the Complaint or in its post hearing brief. Citifuel was found in violation of NL 176(1), 17 NYCRR 32.5 (Discharge response) and 6 NYCRR 611.3 (Containment) on one day. Premium Pipeline was not found in violation.

c. Spill notification

Citifuel violated NL 175, 17 NYCRR 32.3, ECL 17-1743 and 6 NYCRR 613.8 on March 12, 1992. Premium Pipeline was not found in violation on this record.

COMPLAINT ALLEGATION V, SPDES VIOLATIONS

The relief for a violation of 6 NYCRR 756 would be a penalty assessed for each report and for each month it was overdue.

Staff, in its post hearing brief, accepts the improper DMRs, but seeks a two hundred ($200) monthly penalty for improperly filed reports (neither the Complaint nor 756 mentions improperly filed reports).

In its post hearing brief Staff seeks a five hundred ($500.00) dollar monthly penalty for each DMR not filed. Premium Pipeline did not submit an April 1992 report and would be penalized one thousand ($1,000.00) dollars. Staff calculates Citifuel's penalty for the March 1991 DMR, as six thousand and fifty ($6,050.00) dollars, for the April 1991 DMR six thousand ($6,000.00) dollars, etc. Staff calculates the total Citifuel penalty as forty-five thousand five hundred ($45,500.00) dollars. However, the March 1991 DMR was actually sixteen months late when the Complaint was made. Citifuel's total penalty at five hundred dollars for each DMR for all the months involved totals sixty-five thousand ($65,000.00) dollars.

RECOMMENDATIONS

1. As a minimum the Commissioner should assess the maximum dollar value for the civil penalty that was requested by Staff in its final brief.
2. For the NL Spill violations, as referenced in this proceeding, Citifuel had one thousand three hundred and thirteen (1,313) violations. Premium Pipeline had two hundred and sixty-seven (267) violations. Festinger had the sum of both Citifuel's and Premium Pipeline's violations totaling one thousand five hundred and eighty (1,580) violations.
3. For the ECL Spill violations, as referenced in this proceeding, Citifuel had five thousand two hundred and sixty-seven (5,267) violations. Premium Pipeline had one thousand two hundred and forth-six (1,246) violations. Festinger had the sum of both Citifuel's and Premium Pipeline's violations totaling six thousand five hundred and thirteen (6,513) violations.
4. For the SPDES violations, it is recommended that the Commissioner assess a penalty jointly and severally against Respondents Citifuel and Festinger of $65,000.00.
5. For the SPDES violations, it is recommended that the Commissioner assess a penalty jointly and severally against Respondents Premium Pipeline and Festinger of $1,000.00.

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