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Mudd's Vineyard Ltd. - Order 2, August 8, 1994

Order 2, August 8, 1994


In the Matter of the Alleged Violation of Articles 33 and 71 of the New York State Environmental Conservation Law, and 6 NYCRR Parts 320 through 326,




Case No. 1-2351



Pursuant to a Notice of Hearing and Complaint dated May 31, 1988 and duly served upon Respondents Mudd's Vineyard, Ltd. ("Mudd"), David Mudd and Stephen Mudd, an enforcement hearing was held before Administrative Law Judge ("ALJ") Samuel J. Kearing on July 27, 1988 and was continued on subsequent dates. After the retirement of ALJ Kearing this matter was continued before ALJ Francis W. Serbent on May 12, 1992. The record was closed on August 2, 1993, upon receipt of the post-hearing filings. The Department of Environmental Conservation Staff ("Staff") appeared initially by Richard Ostrov, Esq., Assistant Regional Attorney, and subsequently by Assistant Regional Attorneys Mary Carpentiere, Esq., John Byrne, Esq., Marianna Rubino, Esq., and, most recently, by Lisa Parrella, Esq. The Respondents appeared by Wickham, Wickham & Bressler, P.C., (Eric Bressler, Esq., of counsel).

Upon review of the ALJ's Hearing Report (copy attached) and the record of the proceeding, I adopt the ALJ's findings of fact, conclusions and recommendations, except as set forth below.

Providing Commercial Application of Pesticides

The central issue to be determined in order to resolve most allegations in the Complaint is whether Respondents' activities constituted the commercial application of pesticides. Commercial application is defined as "...any application of any pesticide except as defined in private or residential application of pesticides." [ECL 33-0101(11)].

Respondents' Defenses

Contractual Arrangement

The Respondents maintain that, at all relevant times, their activities constituted private application because the applications occurred on property they rented [see ECL 33-0101(38)]. The ALJ properly rejected this argument since the Mudd's arrangements were neither leases nor rental agreements, but were contracts for services with the property owner. There were no written leases or rental agreements, and the contracts gave Mudd no more dominion over its clients' property than was necessary to establish a vineyard and produce a crop. The corporation did not pay rent and was granted no proprietary rights in either the produce or real property.

The only aspect of Mudd's activities that resembled a lease arrangement was its physical occupation of their client's property. However, even in cases where the employee occupies the land instead of merely working it, the settled law that, if

the occupancy of the employer's premises is incidental to, and connected with the employee's services, or if the occupancy is required either expressly or impliedly by the employer for the necessary or better performance of the services to be rendered, then the occupancy is for the master's benefit, and the occupant is a servant or agent, and not a tenant. In such a situation there is no intent that the exclusive possession and control of the premises should pass to the employee during the term of service, which is the essential element of a lease (74 N.Y.Jur.2d Landlord and Tenant, Section 13).

It is the transfer of absolute control and possession of property at an agreed rental which differentiates a lease from other arrangements dealing with property rights. [Feder v. Caliguira, 8 N.Y.2d 400, 404 (1960)].

Therefore, it is concluded that the arrangement between Mudd and its clients was does not qualify any applications by Mudd as private.

Application without Compensation

As a further defense, the Respondents maintain that after issuance of the Stop-Use Order on July 28, 1987, Mudd provided pesticide services without compensation for the remainder of 1987. If true, this would constitute private application as defined by ECL 33-0101(38). Although Mudd's accounts for this time period do not show a charge for pesticide application, Staff raises the question of whether the charge was billed under the crop rotation account. This question can not be reliably resolved at this time because, due to the ALJ's rulings on the discoverability of information post-dating the issuance of the complaint, the Department was unable to obtain evidence concerning the treatment of these accounts at later periods of time. This evidence is highly relevant to determining whether the 1987 charges were actually made for crop rotation services. Therefore, this question needs to be remanded to admit this evidence and for further factfinding.

Application by Another Entity

Finally, Respondents maintain that they were not responsible for any pesticide application after 1987 based on the fact that all applications for their clients were performed by the Davey Tree Expert Company ("Davey Tree").

Although the pesticide applications in this period were not performed by employees of Mudd, Mudd arranged for the applications. Further, contrary to the conclusions of the ALJ, the record shows that Mudd was paid by its clients for pesticide applications during this time period, even though it passed those payments on to Davey Tree.

These actions by Mudd demonstrate that it was offering pesticide services to its clients. Contrary to the reasoning contained in the Hearing Report, the fact that Mudd did not apply the pesticides through the services of its own employees is not dispositive (see In the Matter of Joseph's Tree Service, Decision and Order of the Commissioner, November 18, 1986).

Substantive Charges

Through the entire time period covered by the complaint, Mudd was operating as though it were only subject to the private application requirements. Therefore, except as noted below, its operations were in violation of the following requirements which apply to commercial applicators for the periods in which its operations were commercial (i.e., prior to the issuance of the stop work order on July 28, 1987 and during the calendar year 1988). The number of occurrences in each category is set forth in Appendix E to the Hearing Report.

  1. registration as a pesticide business [ECL 33-0907(1), 33-1301(8-a), 6 NYCRR 325.17(b) and 325.23(a)];
  2. certification for commercial application [ECL 33-0905(1), 33-1301(8), 6 NYCRR 325.17(a) and 325.17(b)];
  3. maintenance of records [ECL 33-0905(4) and 6 NYCRR 325.25(a)];
  4. availability of records for inspection [ECL 33-0905(4) and 6 NYCRR 325.25(a)]; and
  5. submission of annual reports [6 NYCRR 325.25(b)].

I concur with the conclusions in the Hearing Report that in those instances where the records that were kept by Mudd and Stephen Mudd cumulatively satisfied the record keeping requirements for commercial applicators, no violation should be found. The law does not require that the records be kept on any particular form or in any particular way. Since Mudd made all records available to the Department, it would not be liable for violations of the record inspection requirements in those instances either.

In those instances where recordkeeping was shown to be inadequate, the Respondents are also in violation of the record inspection requirements. Although under different circumstances use of the separate basis for penalty assessment would be would be appropriate, no additional penalty will be assessed here since Respondents made all their records relating to pesticide applications available to the Department and were otherwise cooperative during the Department's inspections.


Although Mudd's operation during the period prior to the issuance of the July 28, 1987 Stop-Use Order required adherence to the rules for commercial applications, there are circumstances which mitigate Mudd's failure to comply with these rules. The record shows that David Mudd inquired of the Cornell County Cooperative Extension Agent regarding the corporation's obligations as a pesticide applicator and that the Agent, who knew the nature of Mudd's operation, advised that Mudd need only comply with the private applicator requirements.

I find that a certain degree of reliance on this opinion was justified because of the role of Cornell University in assisting the Department with public education of pesticide applicator requirements and because the County Extension had been delegated the responsibility for conducting the application certification testing for both private and commercial applicators. Both of these factors, which were known to the Respondents, made it reasonably likely that the advice was reliable.

I do not find, as does the hearing report, that this reliance mitigates all culpability on the Respondents' part. The Respondents were at least on constructive notice of the terms of the rules and the Lerner agreement, even though not executed, demonstrates that Respondents actually knew that there was at least a substantial question about the need to comply with commercial applicator requirements. Under these circumstances, Respondents reliance upon the opinion of the Cornell agent without confirmation by the Department itself was not prudent. The record contains no convincing evidence that the Respondents took serious steps to confirm this opinion with the Department.

For the reasons stated in the preceding paragraph, while the transactions with the Cornell agent do constitute mitigating circumstances for any violations that occurred prior to July 28, 1987, they do not warrant elimination of a civil penalty.

Corporate Officers' Liability

The offenses addressed above all relate to actions taken by the corporate Respondent, Mudd. The individual Respondents may be held derivatively liable if it can be shown that, in their capacity as corporate officers, they 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 both of the individual Respondents did have such authority and responsibility and therefore they may be held liable jointly and severally with Mudd.

It is also noted that, separate from the derivative liability discussed immediately above, Respondent Stephen Mudd is directly liable for those violations that arose out of pesticide applications in which he personally participated.

Application Contrary to Label Directions

The label direction for the pesticide penncap (methyl parathion) prohibits applications when weather conditions favor drift. Proof that this direction was violated would require either direct or indirect evidence concerning weather conditions during the application.

The fact that some drift occurred is not sufficient, in and of itself, to raise an inference or a presumption that the label direction was violated. A rational connection between facts proved directly and facts inferred from them requires assurance that the presumed fact is more likely than not to flow from the proved fact [Leary v. United States, 89 S.Ct. 1532 (1969)]. In order that there be a valid inference or presumption here, the record would also need to provide information on the amount of drift, if any, that could be expected when weather conditions do not favor drift. In the absence of such information or any direct evidence about weather conditions, no reliable conclusions can be drawn about whether the label direction was violated.

Appeals of ALJ's Discovery Rulings

Staff appealed the ALJ's ruling which restricted the production of subpoenaed documents to those dated prior to June 1988. The ALJ so restricted the subpoena in conformance with his ruling denying Staff's request to amend the complaint to include alleged violations after May 31, 1988. Staff also appealed the ALJ's failure to hold the Respondents in contempt for failure to produce documents that satisfy the subpoena.

The decision to grant a request to amend the complaint is a discretionary one that should involve consideration of administrative efficiency and the protection of the due process rights of the parties. The ALJ's decision to restrict the complaint was a rationale one in light of all the circumstances in this case. While the use of discovery beyond the allegations in the complaint as an investigative device may be acceptable in some circumstances (see In the Matter of MB Recycling Unlimited, Inc., Order of the Commissioner, August 2, 1993), at this stage of the proceedings, except as noted with respect to the remanded issue, it would be administratively efficient for such discovery to take place within the context of any subsequent action which the Staff may initiate.

Regarding Staff's other appeal, there is no showing that the Respondents failed to comply with the subpoena, as modified by the ALJ. Furthermore, there is no citation to any authority that would permit the ALJ to exercise contempt powers.


As stated above, there is a substantial mitigation factor related to the violations that occurred prior to the issuance of a stop use order on July 28, 1987. The civil penalty that is imposed below takes into account that factor.

Any violations that occurred in 1988 are exacerbated by the fact that the Respondents were on notice of the need to comply with commercial applicator requirements and were also on notice that the arrangement Mudd made with Davey Tree did not absolve it from compliance with those requirements. Assessment of the maximum fine is appropriate in those cases.

Mudd's actions in 1988, though illegal, were not totally irresponsible because it did employ a reliable certified operator to provide pesticide services. Therefore, I do not find it necessary to bar Mudd from the pesticide business so long as the Respondents comply with all regulatory requirements.

Recommendations three (3) and six (6) in the Hearing Report need not be addressed as part of this proceeding and are therefore not adopted.

NOW THEREFORE, having considered this matter, it is ORDERED that:

  1. The Respondents are found jointly and severally liable for the following violations:
    1. failure to register as a pesticide business during the period of time prior to July 28, 1987 and during 1988 [ECL 33-0907(1), 33-1301(8-a), 6 NYCRR 325.17(b) and 325.23(a)];
    2. commercial application of pesticides without commercial certification prior to July 28, 1987 [ECL 33-0905(1), 33-1301(8), 6 NYCRR 325.17(a) and 325.17(b)];
    3. failure to maintain commercial records for those incidents where the combination of Stephen Mudd's private applicator records and the corporation's billings do not contain all required commercial data prior to July 28, 1987 [ECL 33-0905(4) and 6 NYCRR 325.25(a)];
    4. failure to make commercial records available for inspection for those incidents where the combination of Stephen Mudd's private applicator records and the corporation's billings do not contain all required commercial data prior to July 28, 1987 [ECL 33-0905(4) and 6 NYCRR 325.25(a)]; and
    5. failure to submit annual reports prior to July 28, 1987 [6 NYCRR 325.25(b)].

    The number of violations in each category is set forth in Appendix E to the Hearing Report.

  2. A civil fine of TEN THOUSAND DOLLARS ($10,000) is assessed jointly and severally against the Respondents for all violations prior to July 28, 1987. The allocations of this civil fine is as follows:
    1. TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) for failure to register as a pesticide business, in violation of ECL 33-0907(1), 33-1301(8-a), 6 NYCRR 325.17(b) and 325.23(a);
    2. TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) for commercial application of pesticides without commercial certification, in violation of ECL 33-0905(1), 33-1301(8), 6 NYCRR 325.17(a) and 325.17(b);
    3. TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) for failure to maintain records, in violation of ECL 33-0905(4) and 6 NYCRR 325.25(a); and
    4. TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) for failure to submit annual reports, in violation of 6 NYCRR 325.25(b).
  3. The Respondents are jointly and severally assessed an additional civil fine of FIVE THOUSAND DOLLARS ($5,000) for failure to register as a pesticide business, in violation of the Stop-Use Order and ECL 33-0907(1), 33-1301(8-a), 6 NYCRR 325.17(b) and 325.23(a) during the months of April and May of 1988.
  4. The total civil penalty amount of FIFTEEN THOUSAND DOLLARS ($15,000) shall be due and payable sixty (60) days after the service of a conformed copy of this Decision and Order on the Respondents.
  5. The following charges are dismissed with prejudice:
    1. Failure to maintain commercial records for those instances where the combination of Stephen Mudd's private applicator records and the corporation's billings contain all required commercial data [ECL 33-0905(4) and 6 NYCRR 325.25(a)];
    2. Failure to make commercial records available for inspection for those instances where the combination of Stephen Mudd's private applicator records and the corporation's billings contain all required commercial data [ECL 33-0905(4) and 6 NYCRR 325.25(a)]; and
    3. Application of the pesticide Penncap (EPA Registration No. 4581-292) in a manner contrary to label directions [6 NYCRR 325.2(b)].
  6. This proceeding is remanded to the ALJ to permit discovery of Respondents' accounting records after May 31, 1988 and to receive additional evidence on the issue of whether Mudd was being paid for the pesticide application services that it provided during 1987 after the July 28, 1987.
  7. The terms, provisions and conditions of this Order shall bind the Respondents, their agents, servants, employees, successors and assigns and persons, firms and corporations acting for or on behalf of the Respondents.


Albany, New York
August 8, 1994

Wickham, Wickham & Bressler, P.C.
Main Road, PO Box 1424
Mattituck, NY 11952

David Mudd & Stephen Mudd
County Road 48
Southold, NY 11971

Lisa Parrella, Esq.
Assistant Regional Attorney
NYSDEC - Region 1
SUNY Campus, Building 40
Stony Brook, NY 11794

* [Note: The violations determined in this decision and order were resolved to the satisfaction of the Department of Environmental Conservation, and the respondent continues to maintain a pesticide certification which allows him to operate as a commercial pesticide applicator in good standing with this Department.]

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