Taicorp, Inc. and Sampson Chan - Decision and Order, August 8, 2002

Decision and Order, August 8, 2002

STATE OF NEW YORK: DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of Violations of Parts 612 and
613 of Title 6 of the Official Compilation of Codes,
Rules and Regulations of the State of New York, by

TAICORP INC. and SAMPSON CHAN,
Respondents.

DECISION AND ORDER

CASE NO. R8-19991105-82

WHEREAS:

1. Pursuant to Section 622.15 of Title 6 of the New York Compilation of Codes, Rules and Regulations ("6 NYCRR 622.15") Staff of the Region 8 office of the New York State Department of Environmental Conservation ("Department Staff") duly moved for default judgment against TAICORP INC. and SAMPSON CHAN on notice to the Respondents.
2. The application and supporting papers establish that Department Staff served the Respondents with a copy of an amended notice of hearing and amended complaint by certified mail on November 6, 2001. The amended notice of hearing included a statement that, pursuant to 6 NYCRR 622.12(b), a failure to file a response within twenty (20) days after receipt of the notice constituted a default.
3. The Respondents failed to answer the amended notice of hearing and amended complaint or otherwise appear within the time designated to do so.
4. Failure to answer a complaint is grounds for a default judgment pursuant to 6 NYCRR 622.15.
5. Respondents have not responded to the motion for a default judgment.

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

1. Pursuant to 6 NYCRR 622.15, Respondents are found to be in default and accordingly, Department Staff's allegations in its amended complaint against TAICORP INC. and SAMPSON CHAN are deemed to have been admitted by the Respondents; and
2. The Respondents violated 6 NYCRR 612.2, 613.5 and 613.9 respectively, for failing to register the PBS facility located at 428 Plank Road, town of Walworth, Wayne County, New York (the "PBS facility") upon expiration of the previous registration certificate, for failing to tightness test tank 002 at the PBS facility according to the schedule, terms and conditions therein specified and for failing to permanently close the out-of-service tanks at the PBS facility; and
3. The Respondents are directed to properly register the PBS facility in accordance with the requirements of 6 NYCRR 612.2, and pay the registration fee established by 6 NYCRR 612.3, within thirty (30) days of the effective date of the order; and
4. The Respondents are directed to permanently close all tanks at the PBS facility in accordance with 6 NYCRR 613.9(b), (c), (d) and (e), within thirty (30) days of the effective date of the order; and
5. The Respondents are directed, pursuant to 6 NYCRR 613.8, to report to the Department within two hours of discovery any spill, leak or discharge of petroleum detected when the tanks are closed; and
6. A civil penalty of TWENTY-FIVE THOUSAND DOLLARS ($25,000) is assessed against TAICORP INC. and SAMPSON CHAN, jointly and severally. TEN THOUSAND DOLLARS ($10,000) is due immediately and shall be paid within thirty (30) days of the service of a copy of this order upon the Respondents. The balance of the penalty in the sum of FIFTEEN THOUSAND DOLLARS ($15,000) shall be suspended and shall not be payable unless the Respondents fail to comply satisfactorily with the provisions of this order in a timely fashion.
7. All communication between the Respondents and Department Staff concerning this order shall be made to: Assistant Regional Attorney Leo J. Bracci, Department of Environmental Conservation, Region 8, 6274 East Avon-Lima Road, Avon, New York 14414.
8. The provisions, terms and conditions of this order shall bind the Respondents, their agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of the Respondents.

NEW YORK STATE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION
/s/
By: Erin M. Crotty, Commissioner

Albany, New York
August 8, 2002

TO: Sampson Chan
37 Foxhold Drive
Fairport, New York 14450

Taicorp Inc.
37 Foxhold Drive
Fairport, New York 14450

Leo J. Bracci, Esq.
New York State Department of Environmental Conservation
6274 East Avon-Lima Road
Avon, New York 14414

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of Violations of Part 612 and 613
of Title 6 of the Official Compilation of Codes,
Rules and Regulations of the State of New York,
by

TAICORP INC. and SAMPSON CHAN
Respondents.

DEFAULT SUMMARY REPORT

Case No. R8-19991105-82

Proceedings

By this motion for a default judgment, Staff of the Department of Environmental Conservation ("Department Staff") seek to enforce violations of 6 NYCRR Parts 612 and 613 related to a petroleum bulk storage ("PBS") facility located at 428 Plank Road in the Town of Walworth, Wayne County. The Respondents are charged with failing to register the PBS facility upon expiration of a previous registration certificate, failing to perform required tightness testing, and failing to permanently close out-of-service tanks.

Department Staff mailed a copy of a notice of hearing and complaint to each Respondent under separate cover on June 15, 2001. The papers were mailed to the address where the PBS facility is located. The United States Postal Service ("USPS") did not deliver the papers because the mail forwarding order on file for the address had expired.

Thereafter, Department Staff submitted a request to the USPS under the Freedom of Information Act seeking the forwarding information that had expired. In response, the USPS indicated that the Respondents' mail was forwarded to 37 Foxhold Drive, Fairport, New York, 14450, prior to the expiration of the forwarding order.

The notice of hearing and complaint were then mailed, certified mail return receipt requested, to each Respondent under separate cover at the Foxhold Drive address. The papers were received there on July 10, 2001, according to return receipt cards attached as Exhibit "A" to Department Staff's default motion.

An individual who identified himself as Sampson Chan contacted the Department's prosecutor, Leo J. Bracci, by telephone on July 13, 2001. He said that the business at the Plank Road location where the PBS facility is located had not been operated for approximately four years, the petroleum storage tanks at the facility were no longer in use, and he had no plans to reuse them. He also confirmed that 37 Foxhold Drive was his correct mailing address.

Based on the information provided by Mr. Chan, Department Staff amended the notice of hearing and complaint, and mailed the amended pleadings (a copy of which are attached as Exhibit "B" to Staff's default motion) to each Respondent under separate cover, certified mail return receipt requested, on October 29, 2001. The pleadings were mailed to the Foxhold Drive address, and received there on November 6, 2001, according to signed receipts attached as Exhibit "C" to Staff's default motion. The pleadings contained a statement informing the Respondents that they would be in default and would waive their rights to a hearing if they failed to answer or appear.

More than 20 days elapsed since the pleadings were served, and the Respondents did not serve an answer or otherwise make an appearance. As a result, Department Staff moved for a default judgment by papers dated January 10, 2002. The motion was made to Daniel Louis, the Department's chief administrative law judge, and then assigned to me for a ruling.

The Respondents have made no response to the motion, either to this office or to Mr. Bracci, the Department's prosecutor.

Findings of Fact

1. On October 29, 2001, the amended notice of hearing and complaint in this matter were mailed to each Respondent under separate cover, certified mail return receipt requested, at 37 Foxhold Drive, Fairport, New York, 14450. Each set of pleadings was received at that address on November 6, 2001, by a Johanna VanDeWall, according to the USPS return receipts.
2. The amended notice of hearing stated that the Respondents must serve a written answer to the amended complaint on Mr. Bracci, the Department prosecutor, within 20 days of receipt of the amended complaint. The notice also stated that if "any Respondent fails to answer or appear in this matter, such failure will result in a default and a waiver of that Respondent's right to a hearing; and an order may be issued (1) directing that Respondent to pay such penalties as may be provided by law; (2) directing that Respondent to undertake such actions as may be authorized by law; and (3) enjoining that Respondent from continuing any activity relating to the subject of this notice and the attached Amended Complaint which is proscribed by law."
3. The Respondents' time for serving an answer expired on November 26, 2001. No answer has ever been filed in this matter.

Discussion

According to DEC's hearing regulations, a Respondent's failure to file a timely answer constitutes a default and a waiver of the Respondent's right to a hearing. [See 6 NYCRR 622.15(a).] In such an event, Department Staff may move for a default judgement, such motion to contain:

1. proof of service upon the Respondent of the Notice of Hearing and Complaint or such other document which commenced the proceeding;
2. proof of the Respondent's failure to file a timely answer; and
3. a proposed order. [See 6 NYCRR 622.15(b).]

The certified mail return receipts attached as Exhibit "C" to Department Staff's motion, coupled with the application for default judgment signed by Mr. Bracci, adequately demonstrate service of the amended notice of hearing and complaint, as well as the failure of either Respondent to file a timely answer. Therefore, the motion for a default judgment should be granted, and the Commissioner should sign a decision and order conforming to that provided as Exhibit "D" to Department Staff's motion.

That order directs the Respondents to perform certain specified actions and assesses a Twenty-Five Thousand Dollar ($25,000) civil penalty against them jointly and severally. Ten Thousand Dollars ($10,000) is to be paid within 30 days of service of the order, and payment of the remaining Fifteen Thousand Dollars ($15,000) is suspended unless the Respondents fail to comply satisfactorily with the order's provisions in a timely fashion.

In his application for default judgment, Mr. Bracci writes that the penalty sought by Department Staff is within the range authorized by ECL Section 71-1929, which provides that violations of regulations promulgated pursuant to certain titles of ECL Article 17 may be addressed by penalties of up to $25,000 per day. He also writes that the penalty is consistent with the Department's Enforcement Guidance Memorandum No. 29 (issued December 12, 1997) and the Department's civil penalty policy dated June 20, 1990.

In relation to the civil penalty policy, Department Staff cites the following aggravating factors in its penalty assessment:

1. The Respondents have been out of compliance with tightness testing requirements for their tank No. 002 for nearly four years, and out of compliance with PBS facility registration requirements for more than six months.
2. The Respondents have neglected their obligation to permanently close the tanks at the PBS facility since they discontinued using them.
3. The Respondents have avoided compliance costs by not performing required tightness testing on tank No. 002 that was required in 1998 and by failing to permanently close out-of-service tanks since the business was discontinued.
4. The existence of untested underground storage tanks and unattended out-of-service petroleum storage tanks presents a potential threat to the environment and the health and safety of the public.
5. The Respondents have not cooperated with the Department in its efforts to obtain voluntary compliance and compliance by means of a consent order.
6. The Respondents have not responded to the pleadings, manifesting a disregard of their regulatory obligations.
7. In fairness to owners of facilities that comply with similar regulatory requirements, a penalty in the amount sought by Department Staff is appropriate.

Conclusion

The requirements of 6 NYCRR 622.15(b) for a motion for a default judgment have been adequately met. The Respondents have defaulted and waived their rights to a hearing in this matter.

Recommendation

The Commissioner should sign the attached order confirming the default and providing the relief requested by Department Staff in its complaint.

/s/
Edward Buhrmaster
Administrative Law Judge

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