NYC Oil Corp. and Carlos Valdez - Order, January 31, 2022

Order, January 31, 2022

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Alleged Violations of Article 27 of the
New York State Environmental Conservation Law (ECL) and
Title 6 of the Official Compilation of Codes, Rules and
Regulations of the State of New York (6 NYCRR),

-by-

NYC OIL CORP. and CARLOS VALDEZ,
Respondents.

ORDER

DEC File No. CO 3-20201019-118

This administrative enforcement proceeding concerns allegations by staff of the New York State Department of Environmental Conservation (Department or DEC) that respondents NYC Oil Corp. (NYC Oil) and Carlos Valdez (Valdez) violated the terms of solid waste management facility permit no. 3-5508-01161/00001 by failing to pay annual monitor fees for fiscal year 2020-2021 with respect to respondents' solid waste management facility located at 233 Washington Street, Mount Vernon, New York (facility).

Administrative Law Judge (ALJ) Lara Q. Olivieri of the Department's Office of Hearings and Mediation Services was assigned to this matter and prepared the attached default summary report, which I adopt as my decision in this matter, subject to my comments below.

Department staff served a complaint dated November 10, 2020 on respondents NYC Oil and Valdez. Respondents failed to file an answer to the complaint served by Department staff in this matter (see Default Summary Report at 4 [Finding of Fact No. 16]). By cover letter dated February 9, 2021, Department staff filed a motion for default judgment with supporting papers (see Default Summary Report at 1).

The ALJ recommends that Department staff's motion for a default judgment be granted pursuant to 6 NYCRR 622.15 (see Default Summary Report at 5, 7). The pleadings and the papers submitted with and in support of the motion provide sufficient facts to enable me to determine that staff has a viable claim that respondent NYC Oil violated its solid waste management permit by failing to submit the annual monitor fees to the Department for fiscal year 2020-2021 in the amount of thirty-seven thousand eight hundred dollars ($37,800).

As for respondent Valdez, he serves as the president and chief executive officer of respondent NYC Oil and manages NYC Oil's activities. It is well-settled law that officers of corporations may be held liable, without piercing the corporate veil, for environmental violations where their acts or omissions result in or otherwise contribute to those violations (see Affirmation of Anne Haas dated February 9, 2021 [Haas Affirmation], ¶ 24; Default Summary Report at 5-6). In this matter, respondent Valdez had direct responsibility for compliance with the monitor fee requirement established by special condition 27 of the solid waste management facility permit (see Default Summary Report at 3 [Finding of Fact No. 3]; Haas Affirmation, ¶ 25; Affidavit of David Pollock, sworn to February 3, 2021 [Pollock Affidavit], ¶ 10).

Department staff correctly points out that that the environmental monitor program is vital to the Department's solid waste program and protects public health and safety by ensuring compliance by high-risk solid waste management facilities with applicable laws, regulations and permit conditions. According to Department staff, the timely payment of environmental monitor fees ensures the successful operation of the solid waste program (see Pollock Affidavit, ¶ 11.)

Each respondent is responsible for compliance with special condition 27 regarding monitor and monitor fees. Accordingly, Valdez and NYC Oil are jointly and severally liable for any penalty that may arise from this noncompliance. However, although respondent Valdez is subject for any penalty that may arise from this noncompliance, respondent NYC Oil is responsible for payment of the monitor fee.

Department staff seeks a civil penalty in the amount of twenty-five thousand dollars ($25,000). ECL 71-2703(1)(a) provides that any person who violates any of the provisions of, or who fails to perform any duty imposed by title 3 or 7 of ECL article 27 or any rule or regulation thereunder, or any term or condition of a permit issued pursuant to title 3 or 7 of ECL article 27, shall be liable for a civil penalty not to exceed seven thousand five hundred dollars ($7,500) for each violation and an additional penalty of not more than one thousand five hundred dollars ($1,500) for each day during which such violation continues.

In support of its penalty request, Department staff considered the length of the violation, applicable Department enforcement and penalty policies, respondents' failure to cooperate and respondents' history of noncompliance (see Affidavit of Shawn Vitas sworn to January 28, 2021, ¶ 4; Haas Affirmation, ¶¶ 10-11, 17, 26-28). The civil penalty in the amount of twenty-five thousand dollars ($25,000) as requested by Department staff, is authorized and appropriate for the violations established on this motion, and I hereby assess this penalty, jointly and severally, upon respondents NYC Oil and Valdez.

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

I. Department staff's motion for default judgment pursuant to 6 NYCRR 622.15 is granted. By failing to answer the complaint, respondents NYC Oil Corp. and Carlos Valdez waived their right to be heard at hearing.

II. Based on the pleadings and papers submitted with and in support of Department staff's motion, respondents NYC Oil Corp. and Carlos Valdez are adjudged to have violated solid waste management facility permit no. 3-5508-01161/00001 by failing to submit required annual monitor fees to the Department for fiscal year 2020-2021.

III. Within thirty (30) days of service of this order upon respondent NYC Oil Corp., respondent NYC Oil Corp. shall submit to the Department the outstanding annual monitor fees for fiscal year 2020-2021 in the amount of thirty-seven thousand eight hundred dollars ($37,800) by certified check, cashier's check or money order made payable to the "New York State Department of Environmental Conservation."

IV. Respondents NYC Oil Corp. and Carlos Valdez are hereby jointly and severally assessed a civil penalty in the amount of twenty-five thousand dollars ($25,000). Within thirty (30) days of service of this order upon respondents NYC Oil Corp. and Carlos Valdez, respondents shall pay the civil penalty in the amount of twenty-five thousand dollars ($25,000) to the Department by certified check, cashier's check or money order made payable to the "New York State Department of Environmental Conservation."

V. Respondent NYC Oil Corp. shall submit payment of the monitor fees for fiscal year 2020-2021 referenced in paragraph III of this order and respondents NYC Oil Corp. and Carlos Valdez shall submit payment of the civil penalty referenced in paragraph IV of this order, to:

Anne Haas, Esq.
New York State Department of
Environmental Conservation
Office of General Counsel
625 Broadway, 14^th Floor
Albany, New York 12233-1500

VI. Any questions or other correspondence regarding this order shall also be directed to Anne Haas, Esq. at the address referenced in paragraph V of this order.

VII. The provisions, terms and conditions of this order shall bind respondents NYC Oil Corp. and Carlos Valdez, and their agents, successors and assigns, in any and all capacities.

For the New York State Department
of Environmental Conservation

By: /s/
Basil Seggos
Commissioner

Dated: January 31, 2022
Albany, New York

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Alleged Violations of Article 27 of the
New York State Environmental Conservation Law (ECL)
and Title 6 of the Official Compilation of Codes, Rules and
Regulations of the State of New York (6 NYCRR),

- by -

NYC OIL CORP. and CARLOS VALDEZ,
Respondents.

DEFAULT SUMMARY REPORT

DEC Case No.CO 3-20201019-118

Procedural History

Staff of the New York State Department of Environmental Conservation (Department) served respondent NYC Oil Corp. (respondent NYC Oil) and respondent Carlos Valdez (respondent Valdez) with a notice of hearing and complaint dated November 10, 2020, alleging violations ofECL article 27, 6 NYCRR 360.20(a) and citing the terms of solid waste management facility permit no. 3-5508-01161/00001 for failure to pay annual monitoring fees for fiscal year 2020-2021 regarding the solid waste management facility that respondent NYC Oil operates at 233 Washington Street, Mount Vernon, New York (facility).

The complaint seeks an order of the Commissioner (1) finding respondents in default pursuant to 6 NYCRR 622.15; (2) directing respondents to submit to the Department the outstanding annual monitor fees in the amount of thirty-seven thousand, eight hundred dollars ($37,800); (3) assessing a civil penalty in the amount of twenty-five thousand dollars ($25,000); and (4) granting such other relief as the Commissioner may deem appropriate.

Service of the notice of hearing and complaint was made by certified mail and was received by respondent NYC Oil at 233 Washington Street, Mount Vernon, New York on November 12, 2020; received by respondent Carlos Valdez at 4341 Woodtree Lane #3, Orlando, Florida on November 16, 2020; and respondents NYC Oil and Carlos Valdez at 138 South Columbus Avenue, Mount Vernon, New York on November 13, 2020 (see 6 NYCRR 622.3[a][3]). Respondents failed to answer the complaint as directed in the notice of hearing. By cover letter dated February 9, 2021, staff submitted a written motion for a default judgment with supporting papers (see Appendix A, attached hereto [listing documents submitted on motion]). Department staff served the motion and supporting papers on respondents by first class mail on February 9, 2021 (see Affidavit of Service of Melissa Evans, sworn to February 9, 2021). Respondents did not respond to the motion.

Applicable Regulatory Provisions

Section 2703(1)(a) of ECL article 71 states:

"Any person who violates any of the provisions of, or who fails to perform any duty imposed by title 3 or 7 of article 27 of this chapter or any rule or regulation promulgated pursuant thereto, or any term or condition of any certificate or permit issued pursuant thereto, or any final
determination or order of the commissioner made pursuant to this title shall be liable for a civil penalty not to exceed seven thousand five hundred dollars for each such violation and an additional penalty of not more than one thousand five hundred dollars for each day during which
such violation continues..."

Section 360.20(a) of 6 NYCRR states:

"Environmental monitoring services. (a) The department may require environmental monitoring services at any facility anytime during the construction, operation, closure, and post-closure of the facility to be paid for by the facility where: (1) environmental monitoring services are required by law; (2) the compliance history or past practices of the owner or operator over the past five years reveals an inability or unwillingness to comply with environmental laws and regulations or has included a conviction of an environmental crime or other criminal environmental violation, execution of an order on consent or consent decree, or the issuance of a commissioner's decision or judgment finding one or more violations; (3) the past or current practices at the facility have resulted in conditions which pose a significant threat to public health or the environment, or indicate that significant adverse environmental or health impacts are likely to occur; or (4) the department determines the regulated facility, site or regulated activity needs additional oversight due to exceptional circumstances related to its size, throughput, materials handled or location (such as proximity to human use or habitation, to drinking water supplies, to critical or sole source aquifers, to endangered species, to other sensitive receptors or to environmental justice areas) or relating to the nature of its operations."

Findings of Fact

The following facts are found based upon the pleadings and papers submitted with and in support of staff's motion for default judgment:

Discussion

A respondent upon whom a complaint has been served must serve an answer within 20 days of receiving a notice of hearing and complaint (see 6 NYCRR 622.4[a]). A respondent's failure to file a timely answer "constitutes a default and a waiver of respondent's right to a hearing" (6 NYCRR 622.15[a]). In addition, attendance by a respondent at a scheduled pre-hearing conference or hearing is mandatory, and failure to attend constitutes a default and a waiver of the opportunity for a hearing (see 6 NYCRR 622.8[c]; see also 6 NYCRR 622.15[a] ["A respondent's ... failure to appear at the hearing or the pre-hearing conference ... constitutes a default and waiver of respondent's right to a hearing"]).

Upon a respondent's failure to answer a complaint or failure to appear for a pre-hearing conference or hearing, Department staff may make a motion to an administrative law judge (ALJ) for a default judgment. Such motion must contain:

"(1) proof of service upon respondent of the notice of hearing and complaint or such other document which commenced the proceeding;
"(2) proof of respondent's failure to appear or failure to file a timely answer;
"(3) consistent with CPLR 3215(f), proof of the facts sufficient to support the violations alleged and enable the ALJ and commissioner to determine that staff has a viable claim;
"(4) a concise statement of the relief requested;
"(5) a statement of authority and support for any penalty or relief requested; and
"(6) proof of mailing the notice required by [6 NYCRR 622.15(d)], where applicable"
(see 6 NYCRR 622.15[b][1] - [6] [effective September 16, 2020]).

As the Commissioner has held, "a defaulting respondent is deemed to have admitted the factual allegations of the complaint and all reasonable inferences that flow from them" (Matter of Hunt, d/b/a Our Cleaners, Decision and Order of the Commissioner, July 25, 2006, at 6 [citations omitted]). In addition, in support of a motion for a default judgment, staff must "provide proof of the facts sufficient to support the claim[s]" alleged in the complaint (Matter of Queen City Recycle Center, Inc., Decision and Order of the Commissioner, December 12, 2013, at 3). Staff is required to support its motion for a default judgment with enough facts to enable the ALJ and the Commissioner to determine that staff has a viable claim (see Matter of Samber Holding Corp., Order of the Commissioner, March 12, 2018 [Samber], at 1 [citing Woodson v Mendon Leasing Corp., 100 NY2d 62, 70-71 (2003)]; see also 6 NYCRR 622.15[b][3], CPLR 3215[f]).

The record establishes that: (i) Department staff served the notice of hearing and complaint upon respondents (see affidavit of service of Melissa Evans, sworn to November 19, 2020; (ii) respondents failed to file an answer to the complaint, as directed in the cover letter and notice of hearing served with the complaint; (iii) Department staff's papers provide proof of the facts sufficient to support the violations alleged and enable me to determine that staff has a viable claim; (iv) Department staff's papers include a concise statement of the relief requested; (v) staff's motion includes a statement of authority and support for the penalty and relief requested; and (vi) Department staff provided proof of service of the motion papers on respondent (see Affidavit of Service of Melissa Evans, sworn to February 9, 2021). Respondents did not file or serve a response to staff's motion. Based upon the foregoing, the Department is entitled to a default judgment in this matter pursuant to the provisions of 6 NYCRR 622.15.

Department staff's submissions in support of the motion for a default judgment provide proof of facts sufficient to enable me to determine that staff has viable claims that respondent NYC Oil failed to pay annual monitoring fees to the Department for fiscal year 2020-2021, in violation of the terms of its solid waste management facility permit, specifically special condition 27 which discusses the monitor account, which is authorized by 6 NYCRR 360.20(a). Accordingly, NYC Oil remains liable for payment of the monitoring fee.

Department staff requests that both respondent NYC Oil and respondent Valdez be held jointly and severally liable for the requested penalty of twenty-five thousand dollars ($25,000). Respondent Valdez's liability for the civil penalty arises from the application of the doctrine of responsible corporate officer liability which is well established in Department enforcement proceedings. It is well-settled law that officers of corporations may be held liable, without piercing the corporate veil, for environmental violations where their acts or omissions result in or otherwise contribute to those violations (see Matter of 125 Broadway, LLC, Decision and Order of the Commissioner, December 15, 2006, at 4-5). A corporate officer need only have responsibility over the activities of the business that caused the violations (see Matter of Supreme Energy Corporation, Supreme Energy, LLC and Frederick Karam, Decision and Order of the Commissioner, April 11, 2014 at 25-26).

Department staff alleged that respondent Valdez exercised sole power and responsibility to comply with the annual monitoring fee requirement (see Motion for Default Judgment - Haas Affirmation, ¶ 28, page 7). Department staff further alleged that respondent Valdez managed NYC Oil Corp.'s business with the Department since at least 2014 by representing the corporation through its permitting process, attending compliance conferences, signing consent orders on behalf of the corporation, and being the point of contact for all correspondence regarding annual monitoring fees (see Motion for Default Judgment, Pollock Affidavit, ¶ 10).

The record demonstrates that the violations at this site concern regulations and laws enacted to protect public health, safety and welfare. The environmental monitor program helps to prevent adverse impacts to the public health and safety and environment by ensuring compliance by high-risk solid waste facilities (see Motion for Default Judgment, Pollock Affidavit, ¶ 11).

I conclude that on this record, respondent Valdez had direct responsibility for the operations that caused the violations and was further in a position to prevent the violations. Respondent Valdez is personally liable for the civil penalty as requested by Department staff in this case. Accordingly, in light of respondent NYC Oil's failure to pay the annual monitoring fee and respondent Valdez's failure to ensure that payment was made, respondents should be held jointly and severally liable for the civil penalty, as requested by Department staff.

Department staff seeks a civil penalty in the amount of twenty-five thousand dollars ($25,000). Staff's submissions on the motion for a default judgment elaborate on the requested civil penalty, discussing the Department's Civil Penalty Policy, DEE-1 and OGC 8: Solid Waste Penalty Policy (see Motion for Default Judgment, Exhibit A - Haas Affirmation, ¶¶ 21-28, pages 5-7). Department staff further asserts that the environmental monitoring program is vital to the Department's solid waste program and protects public health and safety by ensuring compliance by high-risk solid waste management facilities with applicable laws, regulations and permit conditions. According to Department staff, the timely payment of environmental monitoring fees ensures the successful operation of the solid waste program. (See Motion for Default Judgment, Pollock Affidavit, ¶ 11.)

ECL 71-2703(1)(a) provides that any person who violates any of the provisions of, or who fails to perform any duty imposed by title 3 or 7 of ECL article 27 or any rule or regulation thereunder, or any term or condition of a permit issued pursuant to title 3 or 7 of ECL article 27, shall be liable for a civil penalty not to exceed seven thousand five hundred dollars ($7,500) for each violation and an additional penalty of not more than one thousand five hundred dollars ($1,500) for each day during which such violation continues. The statutory maximum penalty for the violations, as computed by Department staff, exceeds four hundred thousand dollars. (See Motion for Default Judgment - Affirmation of Anne Haas, ¶ 23, page 6.)

Department staff discusses the history of late payments and points out that at the time of filing the motion, the payment of monitoring fees for fiscal year 2020-2021 was more than 300 days late (see Motion for Default Judgment - Affirmation of Anne Haas, ¶¶ 20, 23, pages 5 and 6).

I find that staff's request for a civil penalty in the amount of twenty-five thousand dollars ($25,000) is consistent with the Department's penalty policy as well as ECL 71-2703(1)(a) which allows for a civil penalty not to exceed seven thousand five hundred dollars for each such violation and an additional penalty of not more than one thousand five hundred dollars for each day during which such violation continues.

Conclusions of Law

1. Respondent NYC Oil Corp. violated its solid waste management facility permit by failing to submit required annual monitoring fees to the Department for fiscal year 2020-2021.

2. Respondent Carlos Valdez is liable under the responsible corporate officer doctrine for the failure of NYC Oil Corp. to pay the required monitoring fees.

Recommendation

Based upon the foregoing, I recommend that the Commissioner issue an order:

1. Granting Department staff's motion for default judgment;

2. Holding that respondent NYC Oil Corp. violated its solid waste management facility permit by failing to submit required annual monitoring fees to the Department for fiscal year 2020-2021;

3. Directing respondent NYC Oil Corp. to submit the outstanding annual monitoring fees in the amount of $37,800 within thirty (30) days of the service of the Commissioner's order upon respondent NYC Oil Corp.;

4. Assessing liability on respondents NYC Oil Corp. and Carlos Valdez, jointly and severally, to pay a civil penalty in the amount of twenty-five thousand dollars ($25,000) within thirty (30) days of the service of the Commissioner's order upon them; and

5. Directing such other and further relief as the Commissioner may deem just and appropriate.

/s/
Lara Q. Olivieri
Administrative Law Judge

Dated: Albany, New York
December 23, 2021

APPENDIX A

Matter of NYC Oil Corp. and Carlos Valdez
DEC Case No. CO 3-20201019-118
Motion for Default Judgment

1. Cover letter, dated February 9, 2021, from Anne Haas, Esq., filing and attaching staff's motion papers.

2. Notice of Motion and Motion for Default Judgment dated February 9, 2021, with Affirmation of Anne Haas, Esq. dated February 9, 2021, attaching the following exhibits:

A. New York State Department of State, Division of Corporations, entity information for NYC Oil Corp.;

B. DEC Solid Waste Management Facility Permit issued to NYC Oil Corp., permit ID 3-5508-01161/00001;

C. Order on Consent with "NYC Oil Corporation" as respondent, effective February 26, 2018;

D. Order on Consent with "NYC Oil Corporation" as respondent, effective November 6, 2014;

E. Letter dated February 20, 2020 from DEC Division of Management and Budget Services, to Carlos Valdez and NYC Oil regarding an invoice for environmental monitoring fees for the period April 1, 2020 through March 31, 2021, also attaching a work plan;

F. Notice of Violation dated June 30, 2020 from DEC to NYC Oil c/o Carlos Valdez;

G. USPS proof of delivery for tracking number 9214890117857200090139;

H. Cover letter, Notice of Hearing and Complaint dated November 10, 2020;

I. Affidavit of Service of Melissa Evans, sworn to November 19, 2020, attaching the following attachments:

a) USPS proof of delivery for tracking number 9214890117857200092737.
b) USPS proof of delivery for tracking number 9214890117857200092744.
c) USPS proof of delivery for tracking number 9214890117857200092751.
d) USPS proof of delivery for tracking number 9214890117857200092768.

J. Proposed Order, DEC case number CO 3-20201019-118, with "NYC Oil Corp. and Carlos Valdez" as respondents;

K. Affidavit of David Pollock, sworn to February 3, 2021, attaching the following exhibit:

a) Application for a Solid Waste Management Facility Permit dated April 21, 2014;

L. Affidavit of Wesley Salis, sworn to February 4, 2021;

M. Affidavit of Shawn Vitas, sworn to January 28, 2021; and

N. Affidavit of Service of Melissa Evans, sworn to February 9, 2021.

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