Opposition Brief — Berman Enterprises, Inc. v. Jorling

No. 93-826

IN THE

Supreme Court of the Unite

OCTOBER TERM, 1993

BERMAN ENTERPRISES, INC.; GENERAL MARINE TRANSPORT

CORPORATION; STANDARD MARINE SERVICES, INC.; JANE FRANK

KRESCH, as Secretary of Berman Enterprises; EVELYN BERMAN

FRANK, as Chief Executive Officer of General Marine Transport

Corporation and as Officer of the other named corporations; and PETER

M. FRANK, as President of General Marine Transport Corporation.

Petitioners,

against ae

THOMAS C. JORLING, in his individual capacity and in his official capacity

as Commissioner of the New York State Department of Environmental

Conservation; and Langdon Marsh, in his individual capacity and in his

official capacity as Executive Deputy Commissioner of the New York

State Department of Environmental Conservation.

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION

ROBERT ABRAMS

JERRY BOONE

Solicitor General

NANCY STEARNS*

GREGORY NOLAN -

Assistant Attorneys General

Of Counsel

* Counsel of Record

Attorney General of the

State of New York

Attorney for Respondents

120 Broadway

New York, New York 10271

(212) 416-8456

BEST AVAILABLE COPY jam

QUESTIONS PRESENTED

|. Whether the court below was correct in concluding that

federal law does not preempt New York State from taking

enforcement action under its statutes which are designed to

protect the environment against harms such as oil spills?

2. Whether the court below was correct in concluding that

abstention is appropriate under the Burford and Pullman doc-

trines, where the issues raised by petitioners turn on a com-

plex state regulatory scheme governing the prevention of

pollution in its waters which has never been reviewed by the

State courts?

3. Whether the court below correctly applied the test in

Harlow vy. Fitzgerald with respect to qualified immunity in

holding that respondents are protected from damage suits

relating to administrative orders issued or upheld by them

pursuant to state statutes and regulations which have never

received judicial interpretation and therefore are not clearly

established law?

Questions Presented

il

TABLE OF CONTENTS

Table OF AGtMOTHICS .... 4. ceik codices ens eee

Statement of the Case

Reasons for Denying the Writ

A.

B.

CONCLUSION

The Court Of Appeals Correctly Decided That

New York State Is Not Preempted From

Regulating Barges In The Waters Of The

The Court Of Appeals’ Decision Is Consistent

With This Court’s Decision in Harlow y.

Fitzgerald And Does Not Conflict With The

Decisions Of Other Courts of Appeals ......

The Court of Appeals Properly Applied Both

Burford and Pullman Abstention In Dismiss-

ine This CONE «x .iscs cays see

1. Burford Abstention...... Pee re er eee

i: Pullman Abstention

iil

TABLE OF AUTHORITIES

Cases PAGE

Burford v. Sun Oil ¢ 491 U.S. 315 (1943) ae ee

Cantor Spokane Sci Distri #S | 498 F.2d 8&4

Yth Cir. 1974 1S. 1¢

( hapmar \ ; QRY | rd su 4 | th ¢ if 1994 |

( rad R er Water ¢ nservar n D ; f /

424 U.S. 800 (1976)

{ ; e? Vf ; emu A7 j a ) 4 { trd ¢ l 1Y 4) —

Crawl Hamilton Cour Con $4 F.2d 28 (6th

(‘ir [YX4 1s

Cronen v.Texas Dept. of Human Services, 977 F.2d 934

Sth Cir. 1992 |

Fidelity Federal Savu ‘ l in A 4 De it. ue i

PAGE

McRedmond vy. Wilson, 533 F.2d 757 (2d Cir. 1976)... 13

Pacific Gas and Elec. v. State Energy Resource Conser-

vation and Dev. Com'n., 461 U.S. 190 (1938).... 6

Palmer v. Cotumbia Gas of Ohto, Inc., 479 F.2d 153

SEG BE voce tus cacy ieseleon cs Gs prodanceee wns 1S

Railroad Commission v. Pullman Co., 312 U.S. 496

Peed scncckschveses Pe rer rr rere me © ae | ab eT

Ray v. Atlantic Richfield Company, 435 U.S. 151

EON Coba ots vette toe pee waearatoetac warns 6,7

Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) 6

Walters v. Grossheim, 990 F 2d 381 (8th Cir. 1993)... 10

Winters v. Lavine, 574 F.2d 46 (2d Cir. 1978)........ 13

Wright v. McMann, 397 F.2d 519 (2d Cir. 1967)....... 15

Zwickler v. Koota, 389 U.S. 241 (1967) ............. 14

Statutes:

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ee PR PA ire ey er pete vr treat 9,12

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PAGE

ECL § 71-0301 3,12

Nav. L. § 173 12

Nav. L. § 174 ae

Nav. L. § 175 12

Regulations:

6 N.Y.C.R.R. § 622.14(a) 9

I7 N.Y¥.C.R.R. § 30.10 c;

17 N.Y.C.R.R. § 30.6(c) 12

IN THI

Supreme Court of the United States

OCTOBER TERM, 1993

No. 93-826

Rial

BERMAN ENTERPRISES, INC.; GENERAL MARINE TRANS

PORT CORPORATION; STANDARD MARINE SERVICES,

IN¢ JANE FRANK KRESCH, as Secretary of Berman

Enterprises; EVELYN BERMAN FRANK, as Chief Execu

live Olficer of General Marine Transport Corporation and

aS Officer of the other named corporations; and PETER M

FRANK, as President of General Marine Transport Cor

poration

Petitioners

apainst

THOMAS C. JORLING, in his individual capacity and in his

otficial capacity as Commissioner of the New York State

Department of Environmental Conservation; and LANG

DON MARSH, in his individual capacity and in his official

capacity as Executive Deputy Commissioner of the New

York State Department of Environmental Conservation

Re Sp ride rifts

IN PE TTTION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

>

BRIEF IN OPPOSITION

Respondents, Thomas C. Jorling, Commissioner of the New

York State Department of Environmental Conservation, and

Langdon Marsh, Executive Deputy Commissioner of the New

York State Department of Environmental Conservation,

respectfully submit this brief in opposition to the petition for

certiorari. The petition should be denied because the circuit

court correctly applied the decisions of this Court, the petition

does not present a conflict among the courts of appeals, and

does not raise an important federal question which should be

settled by this Court.

STATEMENT OF THE CASE

Prior to October 18, 1990, the petitioners, Berman Enter-

prises and several related- corporations and their officers,

operated oil tanker barges, sludge barges, and other vessels in

New York harbor. On September 27, 1990, one of their tanker

barges. the Sarah Frank, sank in the Arthur Kill, spilling oil

and sludge into New York waters. (Pet. App. A, p. 3a).' Even

before the sinking of the Sarah Frank, Berman Enterprises and

its related companies (hereinafter, “Berman”) had a long his-

tory of environmental violations in the New York Harbor area.

(Opp. App.’ A, p. lla-12a).*° On October 18, 1990, Thomas

Jorling, Commissioner of the New York State Department of

Environmental Conservation (“DEC”) issued a Summary

|

References to the Appendix to the Petition for Certiorari are

cited as (Pet. App. st a).

Petitioners failed to include either Commissioner Jorling’s Sum

mary Abatement Order or Deputy Commissioner Marsh's Decision and

Ordet in the Appendix to their Petition as required by Rule 14 of the

Rules of this Court. Respondents have therefore included those orders as

well as New York's Navigation Law (“Nav.L.”) Section 174 and 17 New

York Code of Rules and Regulations (“N.Y.C.R.R.”) Section 30.10, both

of which are relevant to this case. References to these documents are

cited as (Opp.App. __. p. ___a).

4 . .

The district court noted in its opinion dismissing petitioners

action, “[tlestimony and court records indicated that plaintiffs had repea -

edly illegally dumped waste materials, operated unlicensed vessels, and

withheld material information in obtaining operating licenses.” (Pet. App.

B, p.18a).

——————oOEeEeEeEeEeEeEeEe—

Abatement Order puisuant to Environmental Conservation

Law (“ECL”) § 71-0301 and Navigation Law (‘“Nav.L.”)

§ 174, which concluded that

. continued operation of this fleet in New York

waters is likely to result in additional unreported oil,

toxic wastewater, or sewage sludge discharges

which would irreversibly or irreparably damage the

natural resources of the marine district. These same facts

and circumstances are likely to cause other petroleum-

related explosions, constituting an imminent danger to

the health and welfare of vessel crews and others who

find themselves on the waters of the marine district, and

rendering additional environmental harm likely. (Opp.

App. A, p. 12).

The order 1) immediately suspended the petroleum facility

licenses for 14 of the Berman barges, 2) required Berman to

empty all cargo from its barges, and 3) ordered that the barges

remain docked and not operate in the New York marine dis-

trict. (Pet. App. A, p. 3a). Under the terms of the Summary

Abatement Order, an administrative hearing was scheduled

within 15 days as required by New York law to address the

merits of the Order. (Pet. App. A, p. 4a).

That same month, Berman commenced a civil action in the

United States District Court for the Southern District of New

York, seeking a temporary restraining order and preliminary

injunction, arguing that New York was preempted from issu-

ing its Summary Abatement Order. Berman y. Jorling, 90 Civ.

6848 (JES) (SDNY). After a full evidentiary hearing, the

court denied Berman’s motion, concluding that New York was

not preempted from enforcing its environmental laws and that

Berman had no likelihood of success on the merits. (Pet. App.

A, p. 44a).

The administrative hearing therefore proceeded and the

administrative law judge, in a 59 page opinion based on one

month of testimony, recommended that:

1) The 14 major-facility licenses that had been suspended

be revoked;

2) The summary abatement order issued by Jorling be con-

tinued without modification;

3) Modifications proposed by the staff to allow for limited

operation of the barges be rejected; and,

4) The summary abatement order not be broadened to

incorporate four other barges owned by Berman because those

barges were not named in the order, and the request to incor-

porate them was made after the evidentiary record was closed.

(Pet. App. A, p. Sa).

The report of the administrative law judge was reviewed by

Langdon Marsh, Executive Deputy Commissioner of DEC,"

who issued the final Decision and Order on March 25, 1991.

He found, inter alia, that over the previous eleven years the

fourteen Berman vessels that were subject of the Summary

Abatement Order had “*. . . compiled records of chronic

noncompliance with state and federal regulations which are

designed to protect the environment, public health and safety

. ” (Pet. App. A, p. 6a) and confirmed the recommenda-

tions of the administrative law judge. (Pet. App. A, p. 7a).

In August 1991, with the Southern District action still

pending, petitioners filed this case in the Eastern District of

New York, again claiming the Summary Abatement Order was

preempted by federal law, and challenging Marsh’s order as

well. The new case sought declaratory and injunctive relief

and damages against Commissioner Jorling and Executive

Deputy Commissioner Marsh for alleged substantive and pro-

cedural due process violations in connection with the Sum-

. As indicated in the opinion of the court below, the Commis-

sioner of DEC recused himself from further participation in the case,

(Pet. App. A., p. 5a), although contrary to petitioners’ assertion, (Pet.,

p. 3 ) there is no evidence in the record indicating the reason for the

Commissioner's withdrawal.

deed

mary Abatement Order and final Decision and Order. The

complaint also alleged that the orders violated the supremacy

clause and were arbitrary and capricious and not based upon

substantial evidence under state law. (Pet. App. A, p. 7a).

On November 6, 1991. the Southern District action was dis-

missed by stipulation of the parties.°

On May 19, 1992, United States District Judge Jack B.

Weinstein dismissed the Eastern District case. On August 24,

1993, the United States Court of Appeals for the Second Cir-

cult upheld Judge Weinstein’s decision in its entirety. With-

out further discussion, the Court of Appeals adopted the

District Court’s conclusion, which was based on a lengthy

examination of the preemption doctrine, that New York is not

preempted from regulating the Berman barges in New York

waters. (Pet. App. A, p. 3a). With respect to petitioners’ dam-

age Claims, the Court of Appeals agreed with the District

Court that insofar as the claims were really against the State

of New York, they were barred by the Eleventh Amendment,

(Pet. App. A, p. 8a-9a), and also agreed that even if the

claims were against the officials in their personal capacity, the

officials were entitled to qualified immunity. (Pet. App. A,

p.lla-12a). The Court further held that abstention was appro-

priate under the doctrines established in both Burford v. Sun

Oil Co., 319 U.S. 315 (1943) and Railroad Commission of

Texas v. Pullman Co., 312 U.S. 496 (1941) and that the

remaining questions involving state law could be pursued in

the state courts.

5

The Court of Appeals mistakenly stated that the Southern Dis-

trict action was discontinued seven days after the Southern District

(Sprizzo, J.) denied Berman’s motion for a preliminary injunction. (Pet.

App. A, p. 4a). In fact, petitioners continued that case for a full year after

Judge Sprizzo’s decision, and for approximately three months after they

filed this case in the Eastern District of New York. (Pet. App. B. p. 18a).

REASONS FOR DENYING THE WRIT

A. The Court Of Appeals Correctly Decided That New

York State Is Not Preempted From Regulating Barges

In The Waters Of The State.

This Court has held that “when a State’s exercise of its

police power is challenged under the Supremacy Clause, ‘we

Start with the assumption that the historic police powers of the

States were not to be superseded by the Federal Act unless

that was the clear and manifest purpose of Congress.’ ” Ray v.

Atlantic Richfield, 435 U.S. 151, 157 (1978) (citations omit-

ted). Federal law may, however, preempt state law in three

circumstances.

First, Congress may preempt state law by an express Sstate-

ment of preemption. Pacific Gas and Elec. v. State Energy

Resources Conservation and Dev. Com'n, 461 U.S. 190, 203

(1983). Second, even when not explicit, preemption can be

implied where there is “a scheme of federal regulation. . . so

pervasive as to make reasonable the inference that Congress

left no room for the state to supplement it,” because Congress

intended to dominate the field. Pacific Gas and Elec., 461

U.S. at 203 [quoting Fidelity Federal Savings & Loan Ass'n

v. de la Cuesta, 458 U.S. 141, 153 (1982)]; Rice v. Santa Fe

Elevator Corp., 331 U.S. 218, 230 (1947). Third, even where

Congress does not intend to displace the states, state law may

be preempted where compliance with both state and federal

law 1s “a physical impossibility,” Pacific Gas and Elec., 461

U.S. at 204 [quoting Florida Lime & Avocado Growers, Inc.

v. Paul, 373 U.S. 132, 142-43 (1963)], or where “state law

‘stands as an obstacle to the accomplishment and execution of

the full purposes and objectives of Congress.’ ” Pacific Gas

and Elec., 461 U.S. at 204 [quoting Hines v. Davidowitz, 312

U.S. 52 (1941)]. Here none of the prerequisites for preemp-

tion are met.

Petitioners have not cited any statute which explicitly pre-

empts New York from exercising its environmental authority

in New York waters, because there is none. Nor is there any

direct conflict between federal and state law with respect to

New York’s environmental authority. Therefore the only

potential remaining basis for preemption is that Congress

intended to occupy the-fteld. Relying on this Court’s opinion

in Ray, petitioners contend that Congress intended the Coast

Guard to be the sole agency regulating the Berman vessels.

Petitioners’ reliance on Ray is misplaced. In Ray, which dealt

with the constitutionality of Washington State laws governing

the design, size, and movement of oil tankers which operate

in Puget Sound, this Court distinguished between regulations

governing the design and construction of vessels, which are

controlled by the Coast Guard so that the Nation can “speak

with one voice with respect to tanker design standards,” 435

U.S. at 166, and state laws and regulations which protect the

State's environment, which are not preempted by federal law

As this Court stated in Ray,

We do not question in the slightest prior cases holding

that enrolled and registered vessels must conform to

“reasonable, nondiscriminatory conservation and envi-

ronmental protection measures . . .” imposed by a State.

Douglas v. Seacoast Products, Inc., 431 U.S. 265 (1977),

citing Smith v. Maryland, 18 How. 71 (1855); Manch-

ester v. Massachusetts, 139 U.S. 240 (1891); and Huron

Portland Cement Co. vy. Detroit, 362 U.S. 440 (1960).

Similarly, the mere fact that a vessel has been inspected

and found to comply with the Secretary's vessel safety

regulations does not prevent a State or city from enforc-

ing local laws having other purposes, such as a local

smoke abatement law. /bid.

435 U.S. at 164. Thus in Ray, although this Court found some

provisions of Washington law to be in direct conflict with fed-

eral law and invalidated them, it upheld other provisions of

State law that did not directly conflict with federal law.

Here, neither the Summary Abatement Order nor the final

Order purport to determine whether individual vessels meet

Coast Guard minimum design and construction standards.

Rather, both orders are concerned with the operation of the

vessels and their “adverse environmental impact in the New

York Harbor area.” (Opp. App. B, p. la). This is exactly the

area Congress has explicitly preserved to state authority—

regulation to prevent pollution of a state’s waterways. If

Congress had intended to preempt New York’s Navigation and

Environmental Conservation Laws it would most likely have

done so in the Clean Water Act, 33 U.S.C. §§ 1251 ef seq., or

the Oil Pollution Act of 1990 (“OPA”), 33 U.S.C. §§ 2701 et

seq. To the contrary, both statutes expressly reserve the rights

of the states to impose their own requirements and liabilities

with respect to the discharge of oil or other pollution within

the state. See, 33 U.S.C. § 1321(0)(2) and 33 U.S.C.

§ 2718(a)(1).

B. The Court Of Appeals’ Decision Is Consistent With

This Court’s Decision in Harlow vy. Fitzgerald And

Does Not Conflict With The Decisions Of Other

Courts Of Appeals.

In holding that both Commissioner Jorling and Executive

Deputy Commissioner Marsh are protected with respect to

their actions in issuing the Summary Abatement Order and

final Order, the Court of Appeals simply applied well-estab-

lished law. Harlow vy. Fitzgerald, 457 U.S. 800 (1982).° In

Harlow, this Court held that to penetrate the shield of immu-

nity which protects government officials performing discre-

tionary acts, aplaintiff must establish two things; first, that

the government official had violated clearly established law,

and second, that a reasonable person would have known that

the law had been violated. Harlow, 457 U.S. at 818-19. Peti-

tioners argue that the Court of Appeals applied Harlow incor-

rectly because it never discussed the reasonable person prong

Respondents argued below that they were entitled to absolute

immunity as well, since the functions for which they were sued were

quasi-judicial or judicial in nature. See, Harlow, 457 U.S. at 810-11. The

Court of Appeals did not reach the question of absolute immunity, since

it concluded that respondents’ acts were fully protected by qualified

immunity.

of the test. Under Harlow, however, qualified immunity is not

overcome unless both prongs of the test are satisfied. Having

concluded that the first prong had not been met, i.e.. the

issuance of the Summary Abatement Order and the final

Order did not violate any clearly established law, it was there-

fore not necessary for the court to reach the second prong.’

Commissioner Jorling, according to the Court of Appeals,

clearly had the authority under ECL § 71-0301 to issue a

Summary Abatement Order without a prior hearing.*® Execu-

tive Deputy Commissioner Marsh acted on the basis of a

lengthy administrative hearing record. Both orders, according

to the court, were at least Superticially authorized by Section

174 of the Navigation Law and by 17 N.Y.C.R.R. § 30.10 gov-

erning vessel licensing and revocation. (Pet. App. A, p. 10a).

Therefore, even if, as petitioners contend, Commissioner Jor-

ling and Executive Deputy Commissioner Marsh went too far

in the exercise of their authority, the Court of Appeals was

The Court of Appeals correctly concluded that the Summary

Abatement Order and the revocation of vessel licenses were authorized

pursuant to ECL §71-0301:6N.YCRR § 622.14(a): and Nav. L. § 174:

17 N.Y.C.R.R. § 30.10, respectively.

al

ECL 71-0301 provides in part

Notwithstanding any inconsistent provisions of law, whenever the

commissioner finds, after investigation, that any person is Causing,

engaging in Or Maintaining a condition or activity which, in his

judgement, presents an imminent danger to the health or welfare of

the people of the state or results in or is likely to result in irre

versible or irreparable damage to natura! resources, and relates to

the prevention and abatement power of the commissioner and it

therefore appears to be prejudicial to the interests of the people of

the state to delay action until an opportunity for a hearing can be

provided, the commissioner may without prior hearing, order such

person by notice, in writing where practicable or in such other form

as in the commissioner's judgment will reasonably notify such per-

son whose practices are intended to be proscribed, to discontinue,

abate or alleviate such condition or activity, and thereupon such

person shall immediately discontinue, abate or alleviate such con-

dition or activity. (emphasis supplied).

10

correct in concluding that “nothing the defendants did is

expressly prohibited under state law.” (Pet. App. A, p.10a).

Moreover, as the Court of Appeals noted, those claims regard-

ing respondents’ exercise of their authority raise “ ‘un-

resolved and difficult questions of state law’ of which ‘the

State courts have not had occasion to provide an authoritative

interpretation’ ”. (Pet. App. A., p.10a-I1la). Since no action of

either official violated “clearly established law,” it was not

necessary for the Court of Appeals to reach the second prong

of the Harlow test, and the court correctly concluded that

respondents were entitled to qualified immunity.”

s The application of Harlow by the Court of Appeals is com

pletely consistent with the cases petitioners cited in support of their claim

that this Court's immunity test was misapplied. Those circuits did not, as

petitioners claim, apply both prongs of the test in all circumstances. Only

where they found a violation of clearly established law, did the courts go

on to consider the question of reasonable knowledge. When the law

allegedly violated was not clear, the defendant officials retained the pro

tection of qualified immunity without any inquiry into their reasonable

knowledge. So, in Chapman v. Nichols, 989 F.2d 393 (10th Cir. 1993)

because the court found the law governing strip searches to be clearly

established, it went on to consider whether an objectively reasonable

officer could have believed his conduct to be legally acceptable. In

Walters v. Grossheim, 990 F.2d 381 (8th Cir. 1993) only the question

of reasonable knowledge was explored by the Court because the prison

officials being sued had directly violated an unstayed judgment of a state

court and therefore there was no question of whether the law was clearly

established. Under the circumstances, the only question considered

was wheiher a reasonably competent official should know that tt is

not lawful to disobey a final and nonappealable court order. 990 F.2d at

384. In contrast, in both Cronen y. Texas Dept. of Human Services,

977 F.2d 934 (Sth Cir. 1992) and Long v. Norris, 929 F.2d 1111 (6th

Cir. 1991), cert. denied, a . 112 S.Ct. 187 (1991), with

respect to those causes of action where the courts held that no clearly

established law had been violated, they did not consider the question

of reasonable knowledge. For example. in Cronen, having found that

denial of the plaintiff's claims for shelter cost deductions did not violate

clearly established rights, the court upheld the grant of qualified immu

nity, Stating “we express no opinion of the reasonableness of defendant's

interpretation but hold only that neither of these regulations, nor any

other authority, clearly establishes Cronen’s right to the shelter cost

C. The Court of Appeals Properly Applied Both Burford

and Pullman Abstention In Dismissing This Case.

1. Burford abstention

Under the doctrine established by this Court in Burford \

Sun Oil Co., 319 U.S. 315 (1943), federal courts will abstain

from interfering with specialized regulatory schemes, espe-

cially where the state law issues concern “problems of sub-

stantial public import whose importance transcends the result

in the case then at bar.” Colorado River Water Conservation

District v. U.S, 424 U.S. 800, 814 (1976). explaining Burford

abstention

The Court of Appeals was correct in concluding that Bur-

ford abstention requires the dismissal of this case. because as

the court noted, Congress has given the states “considerable

leeway in protecting the purity of their own waterway.” (Pet

App. A, p. 13a). See, Federal Water Pollution Control Act. 33

U.S.C. § 1321(0)(2); Oil Pollution Act of 1990. 33 Uo...

§ 2718(a)(1). The State of New York has so acted to protect

its waterways pursuant to its Navigation and Environmental

Conservation Laws

Petitioners argue, however, that Burford abstention is

nonetheless inappropriate, claiming that neither the Summary

Abatement Order nor the final Decision and Order alleged or

found violations of state law by the Berman companies. In

fact, both orders refer to specific violations of state law gov-

erning the discharge of oil. See, inter alia. Summary Abate-

ment Order: failure to report oil spills to DEC as required by

deductions.” 977 F.2d at 940. With respect to income averaging, however,

the court found a violation of a Clearly established right. so it went on to

consider reasonable knowledge. /bid. See also, Lone, where the Court of

Appeals held that prison officials were protected by qualified immunity

from the plaintiffs’ cause of action based on free association of prison

ers, without considering the question of reasonable knowledge. because

the court found no such clearly established associational! right. 929 F.2d

at 1118

1?

_

Nav.L. § 175'° (Opp. App. A., p. 3a); failure to report changes

in design, construction, operation or maintenance of their

barges as required by 17 N.Y.C.R.R. § 30.6(c) (Opp. App. A,

p.Sa); See also, inter alia, Decision and Order, chronic non-

compliance with state and federal regulations designed to pro-

tect the environment and public health and safety (Opp. App.

B, p. 18a); failure to report changes to the vessels’ design,

construction, Operation or maintenance which would materi-

ally affect the potential for a petroleum discharge in violation

of 17 N.Y.C.R.R. § 30.6(c)(3) (Opp. App. B, p. 23a); prob-

lems of compliance with state law after licenses were issued

to the Berman vessels (Opp. App. B, p. 23a).

Petitioners’ additional claim, that the Court below failed to

identify “. . . any comprehensive scheme or settled admin-

istrative procedures that are relevant to this case,” is equally

mistaken. (Pet., p. 9). Citing only ECL § 71-0301 and § 3-

0301, petitioners argue that these statutes are simple, and not

part of a complex regulatory scheme requiring abstention. As

the Court of Appeals recognized, however, the ECL provi-

sions cited by petitioners are only one part of the statutory

scheme established by the State Legislature to protect the

environmental quality of New York’s waterways. The Navi-

gation Law and regulations promulgated pursuant thereto con-

stitute the balance of the scheme." It is just such a state

Releasing oil in New York waters is itself a violation of state

law. Nav. L. § 173 and ECL § 17-0503.

li

Th

Petitioners have consistently and inexplicably ignored the Nav-

igation Law provisions and regulations governing oil spill prevention and

control pursuant to which the Summary Abatement Order and Decision

and Order were issued, and failed to include them in their appendix of

relevant statutes as required by Rule 14 of this Court. The Navigation

Law and regulations are, however, a significant part of the statutory

scheme which New York has developed to prevent pollution of its water-

ways.

13

regulatory scheme that Burford abstention was designed to

protect.”

2. Pullman abstention

Under principles articulated by this Court in Railroad Com-

mission of Texas y. Pullman Co., 312 U.S. 496 (i941), federal

courts will abstain

when difficult and unsettled questions of state law must

be resolved before a substantial federal constitutional -

question can be decided. By abstaining in such cases,

federal courts will avoid both unnecessary adjudication

of federal questions and “needless friction with state

policies. a

Hawaitt Housing Authority v. Midkiff, 467 U.S. 229, 236

(1984), queting Pullman, 312 U.S. at 500.

There are “three essential conditions” for invoking Pullman

abstention: “(1) that the state statute be unclear or the issues

Of state law be uncertain, (2) that resolution of the federal

issue depend upon the interpretation to be given to the state

law, and (3) that the state law be susceptible of an interpre -

tation that would avoid or modify the federal issue.” Winters

v. Lavine, 574 F.2d 46 (2d Cir. 1978), citing McRedmond vy.

Wilson, 533 F.2d 757, 761 (2d Cir. 1976).

The Court of Appeals noted in its discussion of the pre-

emption issue that New York state courts have not yet inter-

preted the provisions of the ECL and Navigation Law

pursuant to which the challenged orders were issued. (Pet.

App. A, p.10a-11a). Those provisions, according to the court,

are “a complex, even bewildering, system for regulating such

matters as oil and sewage pollution.” (Pet. App. B., p. 13a).

7 The District Court, in its discussion of Burford abstention, took

judicial notice of both the huge amount of oil and oi! related products

transported in New York’s waterways, and the many oil spills which

occur each year in those waterways, threatening health, safety, and the

environment. (Pet. App. B, p. 22a).

i4

Furthermore, decisive issues in the case turn on the inter-

pretation of those state laws and regulations, (/bid.) and deter-

mination of those issues could avoid the necessity of a federal

determination. (/d. at 12a). Therefore this case satisfies the

conditions for Pul/man abstention.

Nonetheless, petitioners contend that Pul/man abstention ts

not appropriate because they have alleged civil rights viola-

tions, citing numerous cases for the proposition that absten-

tion is disfavored in actions brought under 42 U.S.C. § 1983.

Mere claims of general civil rights violations are not, how-

ever, sufficient to justify rejection of Pullman abstention.

Moreover, petitioners have overstated the principle regarding

civil rights cases on which they rely to oppose abstention and

claimed differences among the circuits where none exist.

For example, petitioners cite Mayor of City of Philadelphia

v Educational Equality League, 415 U.S. 605 (1974) for the

proposition that abstention ts disfavored in all § 1983 cases.

This Court's statement that “. . . abstention is not favored in

an equal protection, civil rights case. . .,” 415 U.S. at 628

(emphasis supplied), was, however, considerably narrower

than the principle espoused by petitioners, and was made

where the central issue before the court was whether there had

been racial discrimination in violation of the Fourteenth

Amendment, and where the state issue was “insubstantial”

and had been abandoned by the parties. /d at 629. ''

Nor do the circuit court Cases cited by petitioners actually

demonstrate “differences” among the circuits in their appli-

'S Zwickler v. Koota, 389 U.S. 241 (1967), also relied on by peti

tioners, 1S inapposite. It involved the appropriateness of enjoining a State

criminal prosecution brought under a statute which was allegedly viola

tive of the First Amendment. Notably, this Court indicated in Zwickler

that Pullman abstention is appropriate where, as here, a state statute

which has been challenged is susceptible of a construction by state courts

which would avoid or modify the constitutional question

a

1S

cation of the principles of Pullman abstention."* In Conover

v. Montemuro, 477 F.2d 1073 (4rd Cir. 1973), the Third Cir-

cuit did not, as petitioners claim, state that abstention was not

warranted in § 1983 cases. (Pet., p. 11). Rather, the Conover

court stated that prior resort to state courts was “not required”

in an action brought under the Federal Civil Rights Act, that

is, there is no doctrine of exhaustion of state remedies where

federal court jurisdiction has been invoked pursuan* to 28

U.S.C. § 1343. 477 F.2d at 1079 (emphasis supplied). More

over, as the Third Circuit indicated, the district court in

Conover did not even consider Pullman abstention, perhaps

because no construction of state law would have avoided the

constitutional claim. /d.at 1081.

Similarly, application of the principles of Pullman absten-

tion in Palmer v. Columbia Gas of Ohio, Inc., 479 F.2d 153

(6th Cir. 1973) are consistent with holdings of this Court and

the ruling of the Second Circuit in this case. In Palmer, the

court indicated that where the state remedy available to the

plaintiffs was a purely discretionary one, it was not inap-

propriate for the district court to exercise its discretion to

reject the use of the abstention doctrine.'* 479 F.2d at 170. In

Canton v. Spokane School District #81, 498 F.2d 840 (9th Cir.

1974), although the court, quoting the Second Circuit case of

Wright v. McMann, 387 F.2d 519, 525 (2d Cir. 1967). stated

that “cases involving vital questions of civil rights are the

14 ee .*

Furthermore, mere “differences” in the application of a legal

principle to the facts of individual cases do not rise to the level of “con

flict” im the circuits under Rule 10 of this Court.

Ihe other two Sixth Circuit cases relied on by petitioners are

completely inapposite as no party even relied on the Pullman doctrine.

See, Hanna v. Toner, 630 F.2d 442, 446 (6th Cir. 1980), cert. denied. 450

U.S. 919 (1981), and Crawley v. Hamilton County Com’ rs, 744 F.2d 28

(6th Cir. 1984). Furthermore, in discussing cases which are particularly

appropriate for federal, rather than state treatment, the courts were not

discussing general civil rights cases as petitioners claim, but rather spoke

of cases dealing with conditions of confinement in adult and juvenile

detention facilities.

16

least likely candidates for abstention,” 498 F.2d at 846, and

rejected abstention, it did so only because there was no ™.

doubtful issue of state law which, if authoritatively resolved

by the state courts, would dispose of the constitutional claims

presented.” /bid. Here, by contrast, the orders challenged by

petitioners tum on matters of state law which have never been

addressed by the state courts. Thus, the ruling of the Second

Circuit is completely consistent with the approaches of the

Third, Sixth, and Ninth Circuits.

Petitioners’ additional claim, that the decision by the Court

of Appeals to dismiss this case based upon Pullman absten-

tion creates a conflict with the decisions of this Court and

those of other circuits, is also meritless. As the Court of

Appeals recognized, although dismissal is not normally

appropriate in the case of Pullman abstention, it was appro-

priate here because after the state courts act, no federal mat-

ters will remain to be heard by the federal courts. (Pet. App.

A, p. 12a). To the extent that petitioners are seeking damages

against Commissioner Jorling and Executive Deputy Com-

missioner Marsh, their claims are defeated by qualified immu-

nity. (/bid.). Petitioners’ claims for declaratory and injunctive

relief involve the authority of the commissioners to issue their

respective orders, which turns on the interpretation of state

law and regulations. If the state court determines that the

commissioners acted within their authority, petitioners’ con-

Stitutional claims would fail. If the state court holds that state

authority had been exceeded, then petitioners would be able

to obtain the declaratory and injunctive relief they seek in the

State forum. In either case, no issues would remain for the

federal courts. Therefore, dismissal was appropriate. (Pet.

App. A, p.12a-13a).

Nor does application of the abstention doctrine deprive

petitioners of their only avenue of redress as they claim in

their conclusion. (Pet. p. 22). Review of administrative

agency orders is available in state court pursuant to Article 78

of the Civil Practice Law and Rules (“CPLR”). Indeed, the

Second Circuit explicitly warned petitioners that if they are

17

to avail themselves of those state procedures they must move

promptly—*perhaps even before the mandate is issued from

ithe} Court.” (Pet. App. A, p. 13a). Failure of petitioners to

utilize available state court remedies does not, however. jus-

lity the rejection by the federal courts of the longstanding

principles of abstention

CONCLUSION

For all the foregoing reasons, the petition for a writ of cer-

tiorar! should be denied

Dated New York. New York

December 20, 1993

Respectfully submitted,

ROBERT ABRAMS

Attorney General of the

State of New York

Attorney for Respondents

120 Broadway

New York, New York 1027

(232) 416-8456

JERRY BOON!

Solicttor Generai

NANCY STEARNS*

GREGORY NOLAN

Assistant Attorneys General

f Counsel

Counsel of Record

APPENDICES

la

APPENDIX A

SUMMARY ARATEMENT ORDER

DEC Case No.

STATE OF NEW YORK

DEPARTMENT OF ENVIRONMENTAL CONSERVATION

—_—____ <<.»

In the Matter of the Alleged Violations of Article 17 of the

New York State Environmental Conservation Law (“ECL”),

Article 12 of the New York State Navigation Law (“NL"), and

Titles 6 and 17 of the New York Codes, Rules and

Regulations (“NYCRR”)

BY

Berman Enterprises, Inc.

555 Madison Avenue

New York, N.Y. 10022.

General Marine Transport Corporation

| Ingram Avenue

Bayonne, N.J. 07002,

Standard Marine Services, Inc

| Ingram Avenue

Bayonne, N.J. 07002,

Jane Frank Kresch, as Secretary of

Berman Enterprises,

Evelyn Berman Frank, as Chiet

Executive Officer of General Marine

Transport Corp. and an officer of the

other named corporations,

Peter Frank, as President of Genera!

Marine Transport Corporation,

Respondents.

INTRODUCTION*

On September 27, 1990, the Tank Barge “SARAH FRANK”

sank in shallow water at the First Marine Shipyard in the

Arthur Kili, Staten Island. Although the U.S. Coast Guard had

withdrawn the SARAH FRANK’s Certificate of Inspection on

August 8, 1989, rendering the vessel inoperable under New

York State and Federal laws, the SARAH FRANK continued

to haul petroleum products. Thus, when this vessel sank last

month it spilled roughly 50,000 gallons of Number 2 Heating

Oil into the fragile marine ecosystem of the Kill Van Kull.

The loss of the SARAH FRANK represents no isolated

incident in the operating history of its owners, the named cor-

porate respondents. Indeed, just this February, respondents

lost the motorized vessel TUG EVELYN, spilling 5,000 or

more gallons of diesel fuel upon the Staten Island shoreline.

Respondents never reported this spill to the Coast Guard or to

DEC.

Overall, these corporations, which own and/or operate at

least 19 tank barges in New York waters, have compiled an

unabated record of significant violations of federal and state

laws designed to preserve minimum standards of care. At pre-

sent, 8 of their 19 known tank barges lack Coast Guard cer-

tificates of inspection; 5 others have been cited by the Coast

Guard for failure to complete required midterm inspections.

Respondents unlawfully failed to list these shortcomings

when they applied to DEC for the petroleum-bearing vessel

licenses which are required pursuant to the State Navigation

Law. Additionally, respondents own/operate at least two

barges which carry petroleum products and lack the necessary

DEC iicenses.

The operation of such chronically-underinspected barges

has led to two separate fatal accidents due to petroleum

explosions since 1980, and two more similar accidents in

which fire seriously injured a member of the crew.

. Appendices to the Summary Abatement Order have not been

reprinted by respondents.

3a

In the past seven years, these barges have been involved in

three groundings, nine known oil spills, two collisions, and

twenty one separate enforcement cases in which the Coast

Guard assessed penalties for violations of federal regulations

designed to assure vessel safety. Respondents also did not

report the oil spills in question to DEC, as required by

Navigation Law (“NL”) Section 175.

Moreover, respondents have not only failed to maintain the

tank barges in question, they have consciously operated them

with the intent of violating applicable environmental laws and

degrading the marine environment in order to decrease oper-

ating costs.

Specifically, respondents Evelyn Berman Frank and

General Marine Transport Corporation recently offered crim-

inal pleas of guilty in New Jersey Superior Court, admitting

that they illegally directed several of the barges referred to

above to discharge sewage sludge in the waters off Brooklyn,

N.¥., and Newark, New Jersey. They then told the munici-

palities which had hired them to haul this noxious material

that they had taken it, as promised, to the authorized dumping

point 106 miles off the New York/New Jersey coast.

Sentencing of respondents Frank and General Marine for

these crimes is expected later this year.

Respondents also failed to pay civil penalties assessed by

the Coast Guard for numerous separate violations of federal

regulations in connection with their barge operations. This

refusal forced the U.S. Attorney to commence a recovery pro-

ceeding to collect over twenty separate unpaid administrative

judgments.

Finally, Standard Tank Cleaning Corporation, a related

company which services the tank barges referred to above,

was found liable in August 1990 for violating its New Jersey

State wastewater discharge permit by discharging illegal con-

centrations of various pollutants. Standard Tank was then

enjoined by the New Jersey Superior Court from continuing

such polluting discharges.

x* * * *

4a

Now, As Commissioner of the Department of

Environmental Conservation, having reviewed respondents’

unabated record of deliberately-illegal conduct and damage to

human health and the natural environment, I make the fol-

lowing findings of fact and conclusions regarding the further

operation of the barges listed on appendix | to this Order:

1. Respondent Berman Enterprises, Inc. (“Berman”) is the

owner of no fewer than 14 tank barges, which currently hold

DEC operating licenses as specified in Appendix A.

Respondent Jane Frank Kresch (“Kresch”) is Berman's cor-

porate Secretary. Upon information and belief, respondents

General Marine Transport Corporation (“General”) and

Standard Marine Services, Inc. (“Standard”) are corporate

alter egos of Berman. General and Standard also own and/or

Operate certain additional tank barges listed in Appendix A,

but not licensed by DEC. Respondents Evelyn Berman Frank

(“Evelyn Frank”) and Peter Frank are, respectively, Chiet

Executive Officer and President of General. Evelyn Frank is

also an officer of Berman and Standard.

The Renewal of Respondents’ Tank Barge Licenses

2. On or around December 13, 1989, Berman applied for

renewal of licenses required, pursuant to NL Section 174, for

the operation of all tank barges involved in the bulk storage

and transfer of petroleum. These applications covered 14 ves-

sels owned by Berman, which are listed by license number in

Appendix 1.

3. A copy of each renewal application, signed by respon-

dent Kresch on Berman's behalf, is annexed as collective

Appendix 2. Every one of these fourteen applications states

that the subject vessel has not been cited by the Coast Guard

for any uncorrected violations of federal law or regulation. /d.

4. Based on the representations made by Kresch and

Berman in the 14 applications in Appendix 2, DEC issued

one-year renewal licenses to each vessel on March 23, 1990.

A copy of each license is included in Appendix 3.

Sa

5. 17 NYCRR Section 30.6(c) states that, as a general con-

dition of all such licenses, the operator shall promptly notify

DEC of any changes in the “design, construction, operation or

maintenance” of the facility in question. DEC has not

received notice of any such change since the licenses were

issued in March 1990, despite the fact that significant changes

described in paragraphs 6 through 19 have occurred. In addi-

tion, respondents also Own/operate at least two petroleum

transfer barges without any valid DEC licenses (the BARGE

2010 and the LEO FRANK).

Federal Inspection Requirement Violations By Respondents

Vessels

6. Of the fourteen vessels licensed to respondents, and the

five others DEC is aware respondents operate in New York

waters, eight currently do not comply with federal law requir-

ing certificates of inspection (“COI”) (see 46 U.S.C. Section

3713(b)(3)). Five others have recently violated federal

requirements that the owner perform a midterm inspection of

the vessel, after it has been certified, to confirm its seawor-

thiness (see 46 U.S.C. 3308(1)).

7. Respondents turned in their COI for the JODIE K (DEC

License # 0-0448) in December 1989 after that vessel suffered

4 transverse structural failure of its main cargo deck due to

improper Cargo loading by an unauthorized bargeman. These

facts, and respondents’ stated intention not to recertify the

JODIE K, are attested to in the Coast Guard Inspection Report

attached as Appendix 4.

8. The SARAH FRANK (DEC Lic. # 0-0449) lost its COI

by expiration on August 8, 1989 (see Appendix 5), over one

year before it sank and spilled tens of thousands of gallons of

oil into the Kill Van Kull.

9. The LINDSEY FRANK II (DEC Lic. # 0-0658) lost its

COI by expiration on September 19, 1990 (see Appendix 6).

This vessel also suffered an explosion and fire on June &.

6a

1984, in which one crew member was burned to death. The

Coast Guard found that, at the time of the explosion, the ves-

sel was not properly ventilated (this was cited by the Coast

Guard as a possible cause of the explosion), and was inci-

dentally not properly manned and had missed a required dry-

dock inspection. See Inspection Report at Appendix 7.

10. The NATHAN BERMAN (DEC Lic. #0-0696) lost its

COI by expiration on January 15, 1989 (see Appendix 8&8),

although inspection at the time of the SARAH FRANK sink-

ing indicated it is still hauling petroleum products, despite

respondent's statement to the Coast Guard that the vessel was

product-free on May Il, 1990. see Inspection Report at

Appendix 9, pages 2, 3.

ll. The NEW ENGLAND 29 lost its COI by expiration on

October 11, 1989. see Appendix 10.

12. The NEW YORK 30 will lose its COI by expiration on

November 10, 1990 (see Appendix 11), and respondents have

failed to seek recertification at least 30 days prior to expira-

tion, as required by Coast Guard Regulation 46 C.F.R. Section

2.01-3. The Coast Guard also initiated an investigation

against the NEW YORK 30 after it ran aground in April 1990.

Id.

13. Upon information and belief, respondents also own

and/or operate in New York waters three other tank barges

that are neither licensed by DEC nor certified as seaworthy by

the Coast Guard. These are the BARGE 2010, the REBECCA

K., and the CYNTHIA M.

14. The BARGE 2010 lost its COI by expiration on April

19, 1990 (see Appendix 12). While the Inspection Report

attached as Appendix L indicates serious structural problems

were to be repaired before the BARGE 2010 was recertified,

recent inspections made in connection with the loss of the

SARAH FRANK indicate that the vessel is nevertheless cur-

rently loaded with petroleum, even though it was never recer-

tified. 4

Ta

15. The REBECCA K.., operated by Sludge Tank Cleaning

Corporation, a company related to respondents, upon infor-

mation and belief, by common management and Ownership,

lost its COI by expiration on December 6, 1986. See

Appendix 13. Although the vessel was to be deactivated after

its decertification (id.), upon operation and belief, it contin-

ues LO Operate.

16. The CYNTHIA M., owned by respondent General, lost

its COI by expiration on June 21, 1990. See Appendix 14.

Nonetheless, the New Jersey Attorney General’s office dis-

covered through surveillance that the CYNTHIA M. was still

operating in 1987 and 1988, and was illegally discharging

sewage sludge and acidic wastewater into New York and New

Jersey territorial waters. General offered a plea of guilty in

New Jersey Superior court to charges brought by the NJ

Attomey General in connection with the Cynthia M.'s actions.

17. At least five other vessels owned and/or operated by

respondents failed to satisfy Coast Guard requirements con-

cerning midterm inspections for certified vessels (see 46

U.S.C. 3308(1)). These vessels are the JANE FRANK (DEC

Lic. # 0-0451); the BUNKER NEW YORK (DEC Lic. # 0-

0731); the PRINCESS B. (DEC Lic. # 0-0747): the PETER

FRANK (DEC Lic. # 0-0749); and the ANNIE B. (DEC Lic.

# 0-0750). See collective Appendix 15.

18. None of the five vessels referred to in the preceding

paragraph has demonstrated to the Coast Guard that it has

performed the required midterm inspection. Therefore, the

current condition of these vessels is not documented accord-

ing to Coast Guard Standards, and the vessels are currently

violating federal requirements.

19. While no vessel can legally operate without a Coast

Guard midterm inspection, several of the vessels referred to

in the two preceding paragraphs have demonstrated a pattern

of operating violations requiring especially close attention to

inspection requirements. Most seriously, the PETER FRANK

a

experienced an accidental petroleum explosion in 1980, while

it was uncertified, causing loss of a crew member's life. See

collective Appendix 16. The BUNKER NEW YORK was

issued numerous Coast Guard notices of operational non-

compliance during 1987 and 1988 (id.); similarly, the Coast

Guard found in 1986 that the JANE FRANK had several sig-

nificant operating violations (/d.).

Respondents’ Disregard of DEC and Coast Guard Authority

20. While the Coast Guard has not yet had the time to pros-

ecute fully many of the recent violations cited above, it

assessed over $67,000 in penalties in twenty one separate

cases brought against respondents based on federal violations

occurring between 1984 and 1987.

21. Among these violations for which the Coast Guard

imposed penalties are illegal discharge of petroleum into nav-

igable waters by, among others, the ANNIE BERMAN

(September 2, 1984—Jamaica Bay, N.Y.); the RICHARD K.

(DEC Lic. # 0-0727) (February 26, 1985—Port Washington

Harbor}; the SARAH FRANK (July 23, 1986—Kill Van Kull)

the PRINCESS B. (October 10, 1986—Arthur Kill); and, the

JANE FRANK (November 28, 1986—Harlem River, and

December 22, 1986—Hudson River). Copies of the applicable

Coast Guard letters of assessment and Guard Commandant's

denial of appeals are annexed as Appendix 17.

22. Respondents never notified DEC as to the existence of

such spills, as they are required to do under NL Section 175

and 6 NYCRR Section 613.8. This failure is critical, as it

hampers DEC's spill response and may lead to delays at a key

Stage of cleanup efforts.

23. As an example. on February 16, 1990, the motorized

vessel TUG EVELYN sank at the First Marine Shipyard,

spilling approximately 5,000 gallons of diesel fuel, presaging

the larger spill to come in the case of the SARAH FRANK.

The TUG EVELYN spill was never reported to the Coast

Ya

Guard or DEC, and was only discovered when federal inves-

tigators happened to inspect the First Marine Shipyard prop-

erty in connection with an unrelated spill. This delay in

notification Caused a significant response delay, resulting in

irreparable damage to the marine environment.

24. DEC brought administrative proceedings against First

Marine Shipyard based on the illegal petroleum discharge and

notification failure referred to in the proceeding paragraph.

First Marine was later found by the Criminal Court of the City

of New York to have violated such notice requirements and

ordered to pay a $2,500 fine. See Appendix 18.

25. Returning to the pattern of Operating violations involv-

ing the subject vessels: the Coast Guard also assessed penal-

les against respondents and their related corporate entities for

more than twenty five different equipment failures, personne!

deficiencies, record keeping errors and other violations of

Operating requirements designed to maintain the necessary

Standard of care. A list of these violations is annexed as

Appendix 19

26. Not only have respondents and their related business

entities engaged in the long course of illegal conduct indi-

cated by these violations and penalties, they have also ille-

gally refused to pay the $67,000 in penalties involved. This

latter refusal has required the Coast Guard to seek judicial

intervention to collect these penaities. See U.S.A. y. Siandard

Marine Transport Services, Inc., et al. (U.S. District Court.

S.D.N.Y., Complaint filed on or about August 30, 1990).

Respondents’ Admitted Criminal Mishandling of Sewage &

Wastewater

27. In 1989, General, Berman, Standard and Ev elyn Frank,

among others, were named in a twenty four count indictment

(SGJ223-89-06(2)) handed down by the New Jersey State

Grand Jury. The charges stemmed from the New Jersey State

Attomey General's investigation of apparently illegal sewage

10a

and wastewater dumping in New York and New Jersey waters

by barges belonging to the corporate respondents in this pro-

ceeding.

28. Those named in the New Jersey indictment were said to

have contracted to haul wastewater and digested sewage

sludge generated in the bi-state area to treatment facilities or

legal ocean dumping grounds some 106 miles off shore.

Instead, General, Berman, Standard and Evelyn Frank

allegedly dumped such cargoes, as a matter of course, into

waters directly adjacent to land, such as the Kill Van Kull,

Newark Bay, New York Harbor, etc. In several cases, the

barge involved was alleged to have dumped its pollutant load

without even leaving the area where it was docked!

29. General and Evelyn Berman recently signed én agree-

ment (see Appendix 20) to plead guilty to the first and four-

teenth count of the indictment, respectively (those relevant

portions of the Indictment are annexed as Appendix 21).

Thus, General admitted committing at least eighteen acts of

illegal wastewater disposal in and around the New York Bight

during 1987 and 1988 alone, to the severe detriment of the

marine resources involved. Among the vessels from which

such wastes were discharged were the LEO FRANK, the

PRINCESS B, the CYNTHIA M. and the MORRIS J.

BERMAN.

30. Evelyn Frank, General's Chief Executive Officer,

pleaded guilty to one count of purposely and knowingly caus-

ing the unlawful discharge of hazardous wastes and toxic pol-

lutants into the waters of Newark Bay, on or about December

10, 1988. /d.

31. Asa final matter, the Civil Division of the New Jersey

Attorney General's office recently obtained an injunction

based on the illegal conduct of Standard Tank Cleaning

Corporation, a company affiliated with those named herein

through common ownership and control. Standard Tank

Cleaning Corporation’s business activities include cleaning

lla

the holds of the barges referred to in this order, and dis-

charging the wastewater byproduct of these operations into

the receiving waters of the Kill Van Kull.

32. In a bench decision rendered on August 1, 1990, the

New Jersey Superior Court found that Standard Tank’s

wastewater discharges violated the terms of its State dis-

charge permits on 137 different occasions between May 1988

and April 1990. The Court then enjoined the corporation from

committing such violations in the future. See State of New

Jersey Department of Environmental Protection v. Standard

Tank Cleaning Corporation, N.J. Super. Ct., Chancery

Division - Hudson County (Slip Opinion 8/1/90).

33. Given the unbroken chain of environmental harms

respondents have caused, their repeated oil spills and general

disregard for the marine environment in which they function,

the lack of adequate inspections for the vast majority of

respondents’ fleet, their failure to report oil spills to DEC at

critical times, and their unending stream of citations by the

Coast Guard for operating deficiencies, continued operation

of this fleet in New York waters is likely to result in addi-

tional unreported oil, toxic wastewater or sewage sludge dis-

charges such as those referred to above, which would

irreversibly or irreparably damage the natural resources of the

marine district.

34. These same facts and circumstances are likely to cause

other petroleum-related explosions, constituting an imminent

danger to the health and welfare of vessel crews and others

who find themselves on the waters of the marine district, and

rendering additional irreparable environmental harm likely

7 7 7 ”

CONCLUSIONS

|. Respondents’ barge hauling operations are tainted by a

pervasive and unabated pattern of illegal conduct, which

12a

extends to criminal mishandling of waste materials, wholesale

Operation of uncertified barges, disregard of Coast Guard

enforcement orders including refusal to pay penalties levied

therein, failure to license barges with DEC or report oil spills

at critical junctures, and knowing misrepresentations and con-

cealments of material facts in licensing proceedings before

DEC.

2. Due to Respondents’ disregard for environmental and

admiralty laws, their barge hauling activities have been

responsible for two petroleum explosions incidents involving

loss of life and one other involving serious injury. These

activities have also resulted in over ten recent oil spills—two

this year alone including the loss of roughly 50,000 gallons or

more from the SARAH FRANK, as well as the flagrant and

knowing discharge of millions of gallons of toxic sludge and

wastewater into the New York and New Jersey marine dis-

tricts.

3. Based on the foregoing, continued operation of this fleet

in New York waters is likely to result in additional unreported

Oil, toxic wastewater, or sewage sludge discharges such as

those referred to above, which would irreversibly or irrepara-

bly damage the natural resources of the marine district. These

same facts and circumstances are likely to cause other

petroleum-related explosions, constituting an imminent dan-

ger to the health and welfare of vessel crews and others who

find themselves on the waters of the marine district, and ren-

dering additional irreparable environmental harm likely.

* * *k *

Now, THEREFORE, IT IS ORDERED THAT:

I. The licenses issued by DEC to the barges listed by num-

ber in Appendix | are hereby suspended, and will be subject

to revocation if DEC staff meets its burden of proof, pursuant

to 6 NYCRR 621.14, at the hearing scheduled in paragrapn V,

below. This order shall constitute notice of intent to revoke,

pursuant to 17 NYCRR Section 30.10.

’ |

13a

II. Within seven days of the date this order is signed,

respondents shall, in a legal and authorized manner, remove,

store and/or dispose of all materials contained within any

cargo holds, tanks or storage areas aboard the barges listed in

Appendix A.

III. Once the barges listed in Appendix 1 have been emp-

tied of product, they shall remain docked and shall not be

operated in the New York Marine District.

IV. Respondents shall certify to DEC in writing that they

have complied with the requirements of this order within 14

days of its date.

V. Respondents shall have the opportunity to be heard, pur-

Ssuant to 6 NYCRR Section 620.3 and 17 NYCRR Section

30.10. Notice is hereby given that DEC will conduct a hear-

ing for this purpose at its Region II Office, 47-40 21st Street.

Long Island City, N.Y. 11101 on October 30, 1990, at 10 am.

VI. All communications to DEC pertaining to this Order

Shall be addressed to:

New York State Department of

Environmental Conservation

47-40 21st Street

Long Island City, N.Y. 11101

Att: Paul A. Gallay, Esq.

(tel. 718-482-4965)

Dated: Long Island City, N.Y.

October 18, 1990

Thomas C. Jorling

Commissioner, New York State

Department of Envir. Conserv.

To: Service list attached

l4a

APPENDIX B

DECISION AND ORDER

R2-3291-90-11

STATE OF NEW YORK: DEPARTMENT OF

ENVIRONMENTAL CONSERVATION

$<

In the Matter of the alleged Violations of Article 17 of the

New York State Department of Environmental Conservation

Law (“ECL”), Article 12 of the New York State Navigation

Law (“NL”), and Title 6 and 17 of the New York Codes,

Rules and Regulations (“NYCRR”) by:

Berman Enterprises, Inc.

555 Madison Avenue

New York, New York 10022

General Marine Transport Corporation

—and—

Standard Marine Services, Inc.

1 Ingham Avenue

Bayonne, New Jersey 07002

Jane Frank Kresch, as Secretary of

Berman Enterprises

Evelyn Berman Frank, as_ Chief ~

Executive Officer of General Marine

Transport Corp. and an officer of the

other named Corporations, and

Peter Frank, as President of General

Marine Transport Corporation

Respondents.

>_>

1Sa

The issue presented in this case with respect to the sum-

mary abatement relief is one that has not been previously

addressed. Simply stated, the question is whether the

summary abatement threshold is reached because of the

alleged problems with the management Respondents exercise

over the vessels that are the subject of this action as demon-

strated by the history of past compliance problems and other

incidents that have resulted in adverse environmental impacts

in the New York harbor area. It is worth noting however that

issues addressing the compliance history and suitability of

other persons subject to the Department's jurisdiction have

been addressed in prior Department proceeding albeit in dif-

ferent procedural contexts.

Review of the Applicable Law

The summary abatement statute (ECL § 71-0301) requires

a finding that there is a condition or activity which presents

an imminent danger to the health or welfare of the people of

the State or results in or is likely to result in irreversible or

irreparable damage to natural resources, and relates to the

prevention and abatement powers of the Commissioner. In

this instance, given the broad powers of the Commissioner to

prevent water pollution, and to protect wildlife and coastal

resources (see ECL Articles 3, 11, 13, 18, 17, 25, 34, 71)

there can be no doubt that the matters at issue relate to his

prevention and abatement. The only question therefore, is

whether the complained of condition or activity meets the

other requirements of the statute.

The summary abatement provision of the ECL is mandated

by the provisions of the Clean Air Act which require states to

include as part of any approvable state implementation plan,

authority comparable to 42 USC §-7603 (see 42 USC

§ 7410(a)(2)(F)(v) and McKinney's Consolidated Laws, ECL

§ 71-0301 Practice Commentaries). The Clean Air Act pro-

vision provides authority for, among other things, the use of

injunctive relief where sources of pollution are presenting

imminent and substantial endangerment to the health of per-

SS

l6a

sons (42 USC § 7603). Since the adoption of this provision in

the Clean Air Act, other federal environmental statutes that

have been adopted contain similar emergency provisions and

extend the availability of such relief beyond situations where

public health is involved to instances where the endangerment

is to the environment or public welfare (33 USC § 1364,

Federal Water Pollution Control Act; 42 USC § 6973,

Resource Conservation and Recovery Act; 42 USC § 9606,

Comprehensive Environmental Response and Compensation

Act). Furthermore, I note that the term “public welfare” has

been held to be exceptionally broad, encompassing health and

Safety, recreational, aesthetic environmental and economic

interests (City of El Paso v. Reynolds, 597 F. Supp. 691.700

(D.N.M. 1984)).

All of these emergency provisions have the common ele-

ment of requiring a showing of imminent and substantial

endangerment. While the summary abatement provision of the

ECL does not have a well developed body of case law asso-

ciated with it, the federal statute on which it is based and

other comparable federal statutes have developed such a body

of case law. This case law directly addresses the issue of what

is required for a showing of imminent and substantial endan-

germent and therefore is appropriately relied upon in this

Decision.

It is a well established principle that the use of the term

“endangerment” in the above referenced federal statutes (or

the comparable use of the term “danger” in ECL § 71-0301)

is not restricted to situations where an actual harm exists but

encompasses threatened or potential harms (Reserve Mining

Company v. Environmental Protection Agency, 514 F.2d 492,

528 (8th Cir. 1975)). Because endangerments entails only a

threat of harm, these provisions have been applied where

there is only a risk of harm, (United States v. Price, 688 F.2d

204, 211 (3d Cir. 1982)). It has also been held that it is not

necessary to quantify the harm or risk of harm (U.S. vy.

Conservation Chemical Co., 24 ERC 1008 (W.D. Mo. 1985)).

— |

17a

By way of examining the question of what constitutes

“imminence”, the Courts have opined that the danger need not

be immediate (United States v. Waste Industries, 734 F.2d

159, 165 (4th Cir. 1984); United States v. Reilly Tar and

Chemical Corp., 546 F. Supp. 1100 (D.Minn. 1982)). It has

been held that an endangerment is “imminent” if factors giv-

ing rise to it are present, even though the harm may not be

realized for years (U.S. v. Conservation Chemical Co., supra

at 1030).

Whenever the courts have interpreted these statutes, they

have acknowledged the need to factor into the decision both

the nature of the endangerment which may be presented and

its likelihood, recognizing that risk may be “assessed from

Suspected, but not completely substantiated relationships

between facts, from trends among facts, from theoretical pro-

jections, from imperfect data, or from probative preliminary

data not yet certifiable as fact’, (United States v. Vertac

Chemical Corp., 489 F. Supp. 870, 885 (E.D. Ark., W.D.

1980), citing Ethyl Chemical Corporation v. Environmental

Protection Agency, 541 F.2d 1 (D.C. Cir. 1976)). However, in

recognition of the intent of these statutes to protect human

health and the environment, the courts have recognized the

need to liberally construe them in order to accomplish and

maximize their benefits (U.S. v. Conservation Chemical Co..,

supra at 1029). And finally, the courts have emphasized the

need to err in favor of protecting the public health, welfare

and the environment when making any determination there-

under (/d. at 1031). To some extent this philosophy has been

codified into the regulations governing the summary abate-

ment provision which place the burden of proof on the

responding party to prove that the complained of condition or

activity does not come within the provisions of the statute (6

NYCRR 620.3(b)).

Review of the Facts

The record reveals that Respondents operate roughly thirty

vessels in the New York Harbor area. These vessels include

18a

oil barges, sludge barges and tugs. While there are a number

of corporations that are involved in the ownership and oper-

ation of these vessels, there is substantial evidence in the

record which demonstrates that the corporations are acting

under the common management of the Berman and Frank

families. In fact, Respondent's witness Sommers referred to

all of the vessels as being, “under the care of Berman indus-

tries.” Further Respondents have not sought to draw any dis-

tinctions between the management for any of the vessels that

are the subject of the Summary Abatement Order.

Over the past eleven years, these vessels have compiled

records of chronic non-compliance with state and federal reg-

ulations which are designed to protect the environment, pub-

lic health and safety. As discussed further in the Hearing

Report, while preclusionary effect has not been given to the

various citations from the Coast Guard, these citations have

been treated as relevant evidence concerning the circum-

stances of these events. It is the Respondents’ failure to pre-

sent any evidence which contradicts the citations concerning

these incidents that compels the finding that they are indeed

responsible for the offenses that were charged.

Many of the violations have been relatively minor and have

involved record keeping or administrative requirements.

Others have been more significant and have gone directly to

the ability of the vessel to operate safely. Some have been

accompanied by serious injury or loss of life or environmental

damage. In still other circumstances, there were incidents

documented which resulted in the pollution of New York har-

bor although no violation of law was cited.

Some of the violations and pollution incidents were shown

to be the direct result of a failure to properly manage the ves-

sels for which Respondent are directly responsible. The

Respondents also bear responsibility for incidents attributable

to the negligent acts of their employees on the well estab-

lished lega! doctrine of respondent superior. Under this doc-

trine the Respondents are responsible for the acts of their

employees regardless of whether those acts were negligent so

|

19a

long as the employee was acting the scope of his or her

employment (52 NY Jur. 2d, Employment Relations § 334).

While the record does not reflect a cause for all the alleged

violations or pollution incidents, | note that there are no inci-

dents that are fully explained by acts of God or other cir-

cumstances where the happening was affirmatively shown to

be beyond the reasonable control of the Respondents. The

sheer number of violations and pollution incidents and their

duration for over a period of eleven years is also itself note-

worthy.

Despite all of the problems that Respondents have had with

the operation of their vessels over the last eleven years, the

record contains no information on any efforts they undertook

to implement programs of preventive maintenance or inspec-

tions, improve management or otherwise address the cause of

these problems. Nor is there any explanation as to why the

Respondents experienced such difficulty in complying with

the Coast Guard's safety regulations, compliance with which

must be considered presumptively as reasonably achievable.

Based on this record, I can only conclude that the continued

operation of these vessels by the Respondents carries with it

a substantial risk that these and other incidents will reoccur.

The nature of the business Respondents are engaged in and a

simple survey of the incidents caused by the operation of their

vessels in the past demonstrate the potential for creating seri-

ous environmental and safety hazards. There is no confidence

that the continuation of the pattern of conduct exhibited by

Respondents will not result in the recurrence of prior prob-

lems and perhaps in even more serious incidents. While

Respondents indicate that they are prepared to improve the

performance of their operation by accepting the recommen-

dations of their consultant, the fact that their operation has not

improved, and, in fact, has worsened over the past eleven

years suggests that it would be imprudent to place any faith in

such a promise.

Respondents argue that we are required to ignore their prior

course of conduct in reaching conclusions on the likelihood of

20a

continued transgressions in the future. The authority they cite

for this proposition is flawed however. While there may be

limitations on the reliance on habitual conduct or a prior

course of conduct to prove the occurrence of a particular act,

the staff is not trying to prove particular acts but rather the

likelihood that Respondents’ conduct will create a threat to

the public health or welfare or the environment in the future.

For that purpose prior conduct is not merely an allowable

indicator, it is one of the best and even those cases cited by

Respondents acknowledge the appropriateness of the use of

such information for these purposes (Halloran v. Virginia

Chemicals, Inc., 41 N.Y. 2d 386 (1977)).

Respondents also argue that the State should defer to deter-—

minations of the Coast Guard which is the chief regulatory

agency involved in marine safety. The Respondents fail to

understand, however, that the Staff have not taken issue with

the Coast Guard determinations concerning the seaworthiness

of any of their vessels. Even seaworthy vessels represent an

unacceptable risk when those in charge of their operation fail

to follow regulations designed to protect health, safety and

the environment.

Conclusion on Summary Abatement Issue

Marshaling the facts in the context of the law demonstrates

that there is a sound basis for continuing the Order.

Respondent bear the burden of proof and they have not even

approached demonstrating that operation of their fleet of

barges would not constitute an imminent danger to public

welfare.

The evidence shows conclusively that the continued oper-

ation of the fleet of vessels by these Respondents carries with

it a serious risk of harm. That harm is imminent as the factors

given rise to the harm, /.e., the type of management afforded

by the Respondents, is now present. The harm itself is poten-

tially quite serious, witness prior incidents where crewmen

were killed and where the sinking of Respondents vessels

2la

caused substantial oil spills in the highly sensitive environ-

ment of New York harbor.

The forced retirement of Evelyn Berman does not alter

these. conclusions at all. While she may have been chiefly

responsible for the short dumping of sewage sludge, the prob-

lems that have plagued Respondents vessels go far beyond

that incident. As discussed above and in the Hearing Report,

this array of problems cannot be attributed to any one indi-

vidual or company but is a function of management of the

these [sic] Respondents and the Berman and Frank business

enterprise more generally.

Proposed Modification

Staff have agreed by letter to modify the original order in

order to allow certain of the sludge barges to operate. They

apparently are convinced that these barges are needed to sup-

port a disposal effort from several New Jersey communities

and that the consequences of the failure to operate the barges

exceeds the risk posed by their operation under current man-

agement. Additionally, Respondents argue that the continued

operation of their sludge barges is also justified since those

barges are under additional stringent regulatory controls

imposed by the Coast Guard.

It should be noted that, unless there is an specific delega-

tion, Staff has no authority to modify a summary abatement

order of the Commissioner (/n the Matter of Allegro Oil and

Gas, Decision and Order of the Commissioner, October 20,

1988). Inthe context of this proceeding, the action is there-

fore being treated as a request to modify the Order.

While the circumstances cited by the Staff might support a

public policy decision to allow the sludge barges to continue

to operate, the record would need to demonstrate that there

was no reasonable alternative to the use of Respondents

barges. This record does not make a sufficient showing on

this point. Respondents argument in support of the modifi-

cation is specifically rejected since any regulatory controls,

regardless of how foolproof they may appear, may be under-

ee eee

22a

mined through the type of management exhibited by the

Respondents.

While as a practical matter it is recognized that the time

period during which the barges were to be allowed to operate

has expired, should circumstances change, an application to

reinstitute the operating authority of the barges would be

reconsidered upon a showing that the disposal authorities in

New Jersey have no reasonable alternative.

I also note that another exception was made on the basis of

public need for the operation of the Jane Frank. I find, simi-

larly, that this record does not demonstrate that the use of this

barge was the only available alternative under these circum-

stances.

License Revocation

Given the determination to maintain the summary abate-

ment order in effect into the indefinite future, the issue of

whether to revoke Respondent Berman Enterprises, major

facility licenses may be rendered moot. However, for com-

pleteness’ sake the following discussion is included.

The regulations promulgated under the Navigation Law

contain limited grounds for revoking licenses (17 NYCRR

30.10(b)). The Staff requests revocation on the basis that the

Respondents have not complied with the terms of their

licenses. They further maintain that there are additional

grounds to revoke these licenses based upon the circum-

stances offered as justification for the summary abatement

order, i.e., that the prior history associated with the

Respondents demonstrates that they cannot reliably operate

the licensed vessels. This latter ground is not explicitly stated

in the Navigation Law and its implementing regulations.

The controversy surrounding the first ground relates to

whether the Respondents reported those changes to their ves-

sels design, construction, operation or maintenance which

would materially affect the potential for a petroleum dis-

charge (17 NYCRR 30.6(c)(3)).

23a

The failure to report as relates to certain vessels was ade-

quately established on the record. The general condition of

the license clearly requires the reporting of vessels that sink

(the Sarah Frank and the Princess B), suffer significant struc-

tural damage (the Jodie K) and have serious maintenance defi-

ciencies (tne Nathan B). I do not find, however, that the

general condition unambiguously requires reporting of any

order or citation of the Coast Guard per se. This is particu-

larly true where the order or citation arises out of the failure

to comply with an administrative requirement (e.g., failure to

have had an inspection) which is not associated with a change

in design, construction or operation and maintenance of the

vessel itself. a

The revocation of these licenses on the second and alter-

native ground cited by Staff is, however, adequately justified.

The Department has previously held that in issuing licenses

under the ECL, there is implicit authority to consider a per-

son's past compliance history and general fitness of the appli-

cant (/n the Matter of American Transfer Company, Interim

Decision of the Commissioner, February 4, 1991). We have

also held that there is no basis, either in law or public policy.

to distinguish between criteria used to grant a permit and cri-

teria used to revoke a permit (/d.). If, subsequent to the

issuance of a license, information unavailable at the time of

the license issuance demonstrates that the licensee no longer

meets the licensing criteria, there is authority to revoke the

license. Such is the case here.

Although there were Significant problems’ with

Respondents’ Operation prior to the issuance of the most

recent licenses, the compliance problems which Respondents

have had since then, as detailed in the Hearing Report,

demonstrate convincingly that their continued operation of the

barges represents a menace to the New York harbor environ-

ment. These problems when added to and taken in the context

of prior compliance problems are significant enough to now

warrant revisiting and revising the decision to issue their

major facility licenses

24a

NOW THEREFORE HAVING CONSIDERED

I. The Summary Abatement Order dated October 18, 1990

is hereby confirmed in whole and extended.

Il. No modification to such Order is granted.

Ill. The revocation of the major facility licenses granted to

Respondents set for [sic] in the Order of October 18, 1990 is

confirmed.

IV. Staff are delegated the authority to modify this order

upon the showing set forth above in this Decision.

V. All communications between Respondents and the

Department concerning this Order shall be made to the

Depariment’s Region 2 Director, 47-40 21st Street, Long

Island City, New York 11101.

VI. The provisions, terms and conditions of the Order shall

bind Respondents, their agents, servants, employees, suc-

cessors and assigns, and all persons, firms and corporations

acting for or on behalf of the Respondents.

NEW YORK STATE DEPARTMENT OF

ENVIRONMENTAL CONSERVATION

LANGDON MARSH, EXECUTIVE

DEPUTY COMMISSIONER

Dated: Albany, New York

March 25, 199]

To: Berman Enterprises, Inc

555 Madison Avenue

New York, New York 10022

General Marine Transport Corporation &

Standard Marine Services, Inc.

| Ingham Avenue

Bayonne, New Jersey 07002

2Sa

APPENDIX C

NAVIGATION LAW

§ 174. Licenses

1. No person shall operate or cause to be operated a major

facility as defined in this article without (a) a license issued

by the commissioner, (b) without paying a license fee if such

fee is required by the administrator, pursuant to the provisions

of paragraph (a) of subdivision four of this section, and (c)

without paying the surcharge established by paragraph (b) of

subdivision four of this section.

2. Licenses shall be issued on an annual basis and shall

expire on March thirty-first annually, subject to such terms

and conditions as the department may determine are necessary

to Carry out the purposes of this article.

3. As a condition precedent to the issuance or renewal of a

license the department shall require satisfactory evidence that

the applicant has implemented or is in the process of imple-

menting state and federal plans and regulations for control of

discharges of petroleum, and the containment and removal

thereof when a discharge occurs.

4. (a) The license fee shall be one cent per barrel trans-

ferred until the balance in such account established by para-

graph (a) of subdivision two of section one hundred

seventy-nine of this article equals or exceeds twenty-five mil-

lion dollars, provided, however, that the fee on any barrel,

including any products derived therefrom, subject to multiple

transfer, shall be imposed only once at the point of first trans-

fer. In each fiscal year following any year in which the bal-

ance of such account equals or exceeds twenty-five millon

dollars, no license fee shall be imposed unless (a) the current

balance in such account is less than twenty million dollars or

(b) pending claims against such account exceed fifty percent

of the existing balance of such account. The provisions of the

26a

foregoing notwithstanding, should claims paid from such

account not exceed five million dollars within three years

after the license fee is first imposed, the license fee shall be

one cent per barrel transferred until the balance in such

account equals or exceeds eighteen million dollars, and there-

after shall not be imposed unless: (1) the current balance in

such account is less than fifteen million dollars or (2) pend-

ing claims against such account exceed fifty percent of the

existing balance of such account. In the event of either such

occurrence and upon certification thereof by the state

comptroller, the administrator shall within ten days of the

date of such certification reimpose the license fee, which shall

take effect on the first day of the month following such

relevy. In the event of a major discharge or series of dis-

charges resulting in claims against such account exceeding the

existing balance of such account, the license fee shall be

imposed at the rate of four cents per barrel transferred until

the balance in such account equals pending claims against

such account; provided, however, that the rate may be set at

less than four cents per barrel transferred if the administrator

determines that the revenue produced by such lower rate shall

be sufficient to pay outstanding claims against such account

within one year of such imposition of the license fee. Should

such acconnt exceed eighteen million dollars or twenty-five

million dollars, as herein provided, as a result of interest, the

administrator and the commissioner of environmental con-

servation shall report to the legislature and the governor con-

cerning the options for the use of such interest.

(b) The surcharge on the license fee shall be two and one-

half cents per barrel for each barrel transferred on or after

June first, nineteen hundred eighty-five but before February

first, nineteen hundred eighty-eight. Such surcharge shall be

three and one-half cents per barrel for each barrel transferred

on or after February first, nineteen hundred eighty-eight, but

before February first, nineteen hundred ninety. Such sur-

charge shall be four and one-quarter cents per barrel for each

SS

27a

barrel transferred on or after February first, nineteen hundred

ninety.

(c) The surcharge established by paragraph (b) of this sub-

division shall continue to be paid despite the fact that the

license fee imposed pursuant to paragraph (a) of this subdi-

vision may, pursuant to said paragraph, no longer be imposed.

5. Every licensee shall on or before the twentieth day of

the month following the close of each license fee period cer-

tify to the commissioner on such forms as may be prescribed

by the commissioner the number of barrels of petroleum

transferred to the licensee’s major facility during the license

fee period and at the same time shall pay the full amount of

the license fee and surcharge due except that no licensee shall

be required to make such payment until the cumulative

amount due equals or exceeds one hundred dollars. Any

licensee whose cumulative license fee or surcharge does not

equal or exceed one hundred dollars annually shall pay the

total amount due on or before the twentieth day following the

expiration date of the license issued pursuant to this section.

6. If a certificate required by this section is not filed, or if

a certificate when filed is incorrect or insufficient in the opin-

ion of the commissioner, the amount of license fee or sur-

charge due shall be determined by the commissioner from

such information as may be available. Notice of such deter-

mination, and notice of licensee's right to appeal such deter-

mination, shall be given to the licensee liable for the payment

of the license fee or surcharge. Such determination shall

finally and irrevocably fix the fee or surcharge unless the per-

son against whom it is assessed, within thirty days after

receiving notice of such determination, shall apply to the

commissioner for a hearing, or unless the commissioner on

his own motion shall redetermine the same. After such hear-

ing the commissioner shall give notice of his determination to

the person to whom the license fee or surcharge is assessed.

28a

7. Any licensee failing to file a certificate, failing to pay a

license fee or surcharge, or filing or causing to be filed, a cer-

tificate which is willfully false, or failing to keep any records

required by this article or rules and regulations adopted here-

under, shall, in addition to any other penalties herein or oth-

erwise provided, be subject to a fine not to exceed two times

the annual license fee or surcharge, as determined by the com-

missioner.

8. Within three months of the effective date of this article

every Owner or operator of a major facility shall obtain a

license. The department shall issue a license upon the show-

ing that such registrant can provide necessary equipment to

prevent, contain and remove discharges of petroleum.

9. On or after a date to be determined by the commissioner,

but in no case later than ninety days after the effective date of

this article, no person shall operate or cause to be operated

any major facility without a major facility license issued by

the commissioner. No license shall be valid for more than one

year. Each applicant for a major facility license shall submit

information, in a form Satisfactory to the commissioner,

describing the following:

(a) The number of barrels or another measurement of the

storage capacity of the facility;

(b) Average daily throughput of the facility;

(c) A primary and contingency cleanup and removal

plan which includes, but is not limited to, an inventory of:

(i) The storage and transfer capacity of the facility;

(ii) The containment and removal equipment, including,

but not limited to, vehicles, vessels, pumps, skimmers,

booms, chemicals, and communication devices to which the

facility has access through direct ownership or by contract or

membership in a discharge cleanup organization recognized

29a

by the departments of environmental conservation and trans-

portation as well as the time lapse following a discharge

which precedes such access;

(iii) The trained personnel which are required and avail-

able to operate such containment and removal equipment and

the time lapse following a discharge which precedes such

availability;

(iv) All equipment and trained personnel used or

employed in a capacity at the facility to prevent discharges of

petroleum;

(v) The terms of agreement and operation plan of any

discharge cleanup organization to which the owner or oper-

ator of the facility belongs;

(vi) The type and amount of petroleum transferred,

refined, processed or stored at the facility;

(d) The steps taken to insure prevention of a discharge;

10. No portion of fees or surcharges assessed and collected

pursuant to this section shall be used for any purpose if such

use, under federal law, would preclude the collection of such

fee or surcharge.

11. Each owner or operator of a major facility or vessel

subject to the provisions of this article shall designate a per-

son in the state as his legal agent for service of process under

this section and such designation shall be filed with the sec-

retary of state. In the absence of such designation the secre-.

tary of state shall be the designated agent for purposes of

service of process under this section.

30a

APPENDIX D

17 N.Y.C.R.R. § 30.10

30.10 Fines and revocation of license. (a) Any licensee

which willfully refuses to file a monthly report, or to pay a

licensee fee and/or additional fee after a determination by the

commissioner, or files a monthly report which is willfully

false or willfully fails to keep the records required by this

Part, may be subject to a fine, not to exceed two times the

annual license fee, as determined by the commissioner.

(b) Any license to operate a major facility may be revoked

by the commissioner where the licensee has failed to comply

with the terms of the license or any special conditions or

requirements contained therein.

(c) The determination of whether a fine should be assessed

and the amount thereof, or whether a license should be

revoked, shall only be made by the commissioner after a hear-

ing before a hearing officer appointed by the commissioner

which is conducted in accordance with the provisions of the

State Administrative Procedure Act.