Matter of FMC Corporation v. New York State Department of Environmental Conservation , 40 N.Y.S.3d 220 ( 2016 )

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: October 20, 2016 522187
________________________________
In the Matter of FMC
CORPORATION,
Appellant,
v
MEMORANDUM AND ORDER
NEW YORK STATE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION,
Respondent.
________________________________
Calendar Date: September 12, 2016
Before: Egan Jr., J.P., Lynch, Devine, Clark and Mulvey, JJ.
__________
Hodgson Russ, LLP, Buffalo (David G. Mandelbaum of
Greenberg Traurig, LLP, Philadelphia, Pennsylvania, admitted
pro hac vice), for appellant.
Eric T. Schneiderman, Attorney General, Albany (Maureen F.
Leary of counsel), for respondent.
__________
Lynch, J.
Appeal from a judgment of the Supreme Court (Elliot III,
J.), entered August 24, 2015 in Albany County, which, in a
proceeding pursuant to CPLR article 78, granted respondent's
motion to dismiss the petition.
Petitioner is the owner and operator of a 103-acre facility
that produced organic and inorganic pesticides, fungicides,
herbicides and insecticides for more than 60 years in the Village
of Middleport, Niagara County. Due to the manufacturing process
and because petitioner dumped and stored chemical waste on its
property, the soil, groundwater and surface water on and near the
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facility became contaminated with myriad chemicals, including
arsenic and lead. In 1980, petitioner submitted a hazardous
waste permit application to the Environmental Protection Agency
(hereinafter EPA) pursuant to the federal Resource Conservation
and Recovery Act (see 42 USC § 6901 et seq. [hereinafter RCRA]).
That same year, petitioner's facility was added to New York's
registry of hazardous waste disposal sites (see ECL 27-1305 [1]).
In 1985, the facility shifted from manufacturing to only
formulating pesticides (i.e., mixing and packaging) and continues
to operate in that capacity. After a revised permit application
was submitted to the EPA and respondent, respondent classified a
portion of the facility as having a "[s]ignificant threat to the
public health or environment" (ECL 27-1305 [2] [b] [2]; see 6
NYCRR former 375-1.4 [c]; 6 NYCRR 375-2.7 [a] [4]). In 1987 and
1990, petitioner and respondent executed separate administrative
orders on consent requiring certain remedial and investigative
action under the State Superfund program (see ECL art 27, tit
13).
In 1991, petitioner, respondent and the EPA executed an
administrative order on consent (hereinafter the consent order)
that required petitioner to complete an RCRA facility
investigation to determine the nature and extent of the
contamination. During the investigative process, respondent and
the EPA divided the affected on and off-site property into 11
separate operable units (hereinafter OUs) and directed petitioner
to complete certain interim corrective and remedial measures to
address contamination in areas requiring more immediate
attention. This proceeding involves OUs 2, 4 and 5 comprising
some 500 acres of off-site residential, commercial and school
properties. In 2009, respondent and the EPA approved
petitioner’s draft investigation report in accordance with the
consent order, and directed petitioner to perform a corrective
measure study (hereinafter CMS) to develop and recommend ways to
remediate the contamination. In June 2010, petitioner submitted
its draft CMS report, which proposed eight remedial plans, known
as corrective measure alternatives (hereinafter CMAs).
In June 2012, respondent issued a draft statement of basis
designed "to inform the public and seek its participation in the
selection of a remedy" to address the contamination in OUs 2, 4
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and 5. Therein, respondent proposed CMA 9, a remedy that
incorporated elements of two of petitioner's CMAs, but exceeded
same by mandating that the arsenic level in the soil in each
affected property not exceed 20 parts per million. In August
2012, petitioner submitted its written response challenging the
selection of CMA 9. By letter dated October 19, 2012, respondent
and the EPA advised petitioner that its CMS report with regard to
OUs 2, 4 and 5 was accepted as final and that the consent order
was "deemed by the [a]gencies to be closed." By correspondence
dated October 25, 2012, petitioner responded that the consent
order could not be "closed" because a final CMA had not been
selected by the EPA. After a public comment period, respondent
issued the final statement of basis wherein it formally selected
CMA 9 on May 28, 2013. The parties entered into a series of
tolling agreements extending the time in which to challenge this
selection through April 30, 2014. On May 1, 2014, petitioner
submitted a "Notice of Dispute and Request for Resolution"
pursuant to the consent order.1 By correspondence dated May 7,
2014, respondent, through counsel, advised that, in light of
petitioner's "refusal" to implement CMA 9, respondent planned to
complete the work at petitioner's expense.
Petitioner commenced this CPLR article 78 proceeding on May
30, 2014, asserting four causes of action. In the first three
causes of action, petitioner alleges that respondent issued the
statement of basis and proceeded with remedial work in excess of
its authority under the Environmental Conservation Law,
respondent's regulations and the consent order, in contravention
of the EPA's authority under the RCRA and the consent order. By
the fourth cause of action, petitioner alleges that respondent's
selection of CMA 9 was affected by an error of law, was arbitrary
and capricious and an abuse of discretion because it was made in
violation of the consent order and the Environmental Conservation
Law. Respondent moved to dismiss the petition as time-barred and
1
By correspondence dated May 22, 2014, the EPA rejected
petitioner's attempt to challenge the statement of basis pursuant
to the dispute resolution procedures set forth in the consent
order, contending, at least in part, that the consent order had
been "closed" in October 2012.
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then answered. Supreme Court dismissed the petition as time-
barred after finding that petitioner's claims accrued in October
2012. Petitioner now appeals.
A proceeding pursuant to CPLR article 78 must be commenced
"within four months after the determination to be reviewed
becomes final and binding upon the petitioner" (CPLR 217 [1]; see
Matter of Best Payphones, Inc. v Department of Info. Tech. &
Telecom. of City of N.Y., 5 NY3d 30, 34 [2005]). A determination
is "final and binding" where, after a "pragmatic evaluation" of
the context (Matter of Essex County v Zagata, 91 NY2d 447, 453
[1998] [internal quotation marks and citation omitted]), it can
be said that the agency "reached a definitive position on the
issue that inflicts actual, concrete injury and . . . the injury
inflicted may not be prevented or significantly ameliorated by
further administrative action or by steps available to the
complaining party" (Matter of Best Payphones, Inc. v Department
of Info. Tech. & Telecom. of City of N.Y., 5 NY3d at 34; Stop-
The-Barge v Cahill, 1 NY3d 218, 223 [2003]; see Matter of Essex
County v Zagata, 91 NY2d at 453). "That a particular agency
action is merely a step in the agency's decision-making process
does not render that action nonfinal for purposes of review under
CPLR article 78" (Matter of Riverkeeper, Inc. v Crotty, 28 AD3d
957, 960 [2006]; see Matter of Demers v New York State Dept. of
Envtl. Conservation, 3 AD3d 744, 746 [2004]).
This dispute centers on respondent's selection of CMA 9 as
the appropriate remedy to remediate the site and its
determination to implement that remedy at petitioner's expense.
As a threshold matter, we conclude that Supreme Court erred in
dismissing the proceeding as untimely. In doing so, the court
erroneously focused on the October 19, 2012 correspondence from
the EPA and respondent advising petitioner that the consent order
was closed. The court treated this letter as a final
determination for purposes of triggering the statute of
limitations. The flaw in that analysis is that both the EPA and
respondent maintained that remedy selection and implementation
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were not included in the consent order.2 In other words,
respondent contends that the consent order delineated only
petitioner's obligation to complete both the facility
investigation and CMS – which the October 19 letter confirmed
that petitioner had completed to the satisfaction of both
agencies. That being the case, respondent maintains that the
dispute resolution procedures set forth in the consent order no
longer applied and, thus, petitioner was required to actually
commence a CPLR article 78 proceeding within four months, i.e.,
by February 19, 2013.
Respondent's argument overlooks the fact that an actual
remedy had yet to be selected by October 19, 2012. By its terms,
the October 19 letter makes no reference to the selection of a
remedy, notwithstanding the fact that the draft statement of
basis selecting CMA 9 had been issued in June 2012. The actual
selection of a remedy did not occur until respondent issued its
final statement of basis in May 2013. At that point, there is no
2
We are mindful that the consent order provides for the
performance of the CMS in accord with attachment II, incorporated
by reference into the consent order. By its terms, task X in
attachment II specifies that, after petitioner recommends a CMA,
the "EPA will select the [CMA] or [CMAs] to be implemented" and
defines the criteria to be utlized in making the selection.
Petitioner relies upon this language to sustain its position that
remedy selection was embraced in the consent order and that it
was entitled to follow the dispute resolution procedures in the
consent order to challenge respondent's selection of CMA 9. In
contrast, the EPA and respondent maintain that the quoted phrase
was "merely descriptive of the remedial process" beyond the
consent order, such that the consent order's dispute resolution
procedures do not apply to the remedy selection. If that were
the case, then it is incongruent for respondent to maintain that
the October 19, 2012 letter closing the consent order triggered
the statute of limitations to challenge the selection of CMA 9.
We need not resolve this impasse between the parties, for even
accepting respondent's premise that remedy selection was not part
of the consent order, the selection did not occur until the final
statement of basis was issued in May 2013.
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dispute that the parties entered into the tolling agreements in
an effort to negotiate a resolution. As petitioner initiated
this proceeding on May 30, 2014, the proceeding is timely.
Because issue has been joined and the record is fully developed,
we exercise our discretion to consider the substantive claims in
the petition in the interest of judicial economy (see Matter of
Williams v Travis, 20 AD3d 622, 623 [2005]).
This proceeding involves federal and state statutes and
regulations governing hazardous waste treatment, storage and
disposal. The RCRA, administered by the EPA, primarily governs
the treatment, storage and disposal of hazardous waste "so as to
minimize the present and future threat to human health and the
environment" (42 USC § 6902 [b]; see Meghrig v KFC Western, Inc.,
516 US 479, 483 [1996]); Matter of Thompson Corners, LLC v New
York State Dept. of Envtl. Conservation, 119 AD3d 81, 84 [2014],
lv denied 24 NY3d 910 [2014]). In 1986, the EPA authorized New
York to implement its own hazardous waste program pursuant to the
RCRA (see 42 USC § 6926 [b]; ECL 27-0900 et seq.), thus allowing
the state to "operate in lieu of the Federal [hazardous waste]
program" (51 Fed Reg 17739 [1986]; see Matter of Thompson
Corners, LLC v New York State Dept. of Envtl. Conservation, 119
AD3d at 85). New York's waste management program is set forth in
ECL article 27, title 9 and is "consistent with [RCRA] standards"
(ECL 27-0911 [1]; see Matter of Thompson Corners, LLC v New York
State Dept. of Envtl. Conservation, 119 AD3d at 85). ECL article
27, title 13, which governs cleanup of inactive hazardous waste
disposal sites (see ECL 27-1301 et seq.), obligates respondent to
"implement[ ] a remedial program in the event the responsible
party was unknown, unable or unwilling to ameliorate the
situation" (Matter of New York State Superfund Coalition, Inc. v
New York State Dept. of Envtl. Conservation, 18 NY3d 289, 292-293
[2011]). The consent order was negotiated and issued after the
EPA issued a unilateral "Initial Administrative Order" pursuant
to the RCRA and the New York statute authorizing respondent to
enforce ECL article 27 (see ECL 71-2727 [3]; Matter of New York
Pub. Interest Research Group v Town of Islip, 71 NY2d 292, 306
[1988]).
Petitioner now alleges that respondent was without
authority to issue the final statement of basis in May 2013 and
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further challenges respondent's May 7, 2014 determination to
implement CMA 9 at petitioner's expense, while rescinding its
"interim decisions" with regard to corrective work performed on
school district property. The gravamen of petitioner's claims is
that respondent's unilateral selection of CMA 9 as the remedial
plan and decision to use the hazardous waste remedial fund to pay
for the remediation was arbitrary and capricious.
Initially, we find that petitioner was properly subjected
to the provisions of ECL article 27, titles 9 and 13. Title 13
became applicable when petitioner's property was added to the
registry of inactive hazardous waste disposal sites in 1980 due
to its storage of certain hazardous byproducts from the
manufacturing process on the premises (see ECL 27-1303). In
1986, the property was reclassified as a "[s]ignificant threat to
the public health or environment – action required" (ECL 27-1305
[2] [b] [2]). At the same time, due to its status as an operator
and generator of hazardous waste (see 6 NYCRR 370.2; 40 CFR
260.10), petitioner submitted a hazardous waste permit in
accordance with the state's equivalent of the RCRA statute (see
ECL 27-0913). Consequently, we find that respondent was
authorized to assert its authority pursuant to titles 9 and 13
and to issue the statement of basis as part of the permitting
process (see Matter of Occidental Chem. Corp. v New York State
Dept. of Envtl. Conservation, 114 AD2d 233, 238 [1986]). By its
terms, the statement of basis document (see 6 NYCRR 373-1.4 [e])
was the "the final corrective measure for [OUs 2, 4 and 5]"
pursuant to the state's equivalent of the RCRA permitting
statutes and regulations and also the "Record of Decision" for
purposes of selecting a remedial plan for these OUs under title
13 (see ECL 27-0913 [1] [a]; 6 NYCRR 373-1.4 [e]; 375-2.8 [e]).
The document described CMA 9 to include the excavation and
removal of soil within the affected area to achieve the "arsenic
remedial goal of 20 parts per million with some flexibility to be
employed by [respondent] on a case-specific basis," in part, "to
accommodate property owner concerns."
Petitioner also contends that respondent did not have any
authority to choose CMA 9 under either the state's equivalent to
the RCRA provisions or the provisions applicable to inactive
hazardous waste sites. As explained within the document, the
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statement of basis was "a hybrid administrative decision under
two complementary [s]tate statutory programs." Under both of the
statutory programs, respondent has the authority to undertake
remedial work. For example, respondent may "clean up or return
to its original state any area where hazardous wastes were
disposed, possessed or dealt in unlawfully" (ECL 27-0916) and
such remedial work is paid from the hazardous waste remedial fund
(see ECL 27-0916 [5]; State Finance Law § 97-b). Respondent may
also direct certain corrective action as a condition of a permit
(see ECL 27-0911; Matter of Thompson Corners, LLC v New York
State Dept. of Envtl. Conservation, 119 AD3d at 87-88). Further,
respondent may require remediation of an inactive hazardous waste
site, where, as here, the site is deemed to be a "significant
threat to the environment" (ECL 27-1313 [3] [a]).
While conceding that petitioner's facility is regulated
under both title 9 and title 13 of ECL article 27, respondent
maintains that it was authorized to select CMA 9 and proceed with
the remedial work pursuant to ECL 27-0916 (1) on the premise that
petitioner "unlawfully" dealt with hazardous waste. Under that
provision, respondent's authority to act exists where the
hazardous waste is managed "unlawfully in violation of [ECL] 27-
0914," i.e., without authorization (ECL 27-0916 [1]; see ECL
27-0914). But here, respondent explained in the statement of
basis that petitioner "does not presently have an operating
permit but is subject to what are called 'iterim status'
requirements." Thus, it appears that, at all relevant times,
petitioner was operating lawfully pursuant to its "interim
status" (6 NYCRR 373-1.3).
Given the hybrid nature of the statement of basis, and the
fact that petitioner was operating on an "interim status" basis,
we conclude that the procedural framework set forth in ECL 27-
1313 applies (see Matter of New York State Superfund Coalition,
Inc. v New York State Dept. of Envtl. Conservation, 18 NY3d at
296-297). Where, as here, respondent has determined that a site
poses a "significant threat to the environment," the agency may
order an owner "(i) to develop an inactive hazardous waste
disposal site remedial program, subject to the approval of
[respondent], at such site, and (ii) to implement such program
within reasonable time limits specified in the order" (ECL 27-
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1313 [3] [a]). Prior to issuing such an order, the owner is
entitled to "notice and the opportunity for a hearing" (ECL 27-
1313 [4]). Where a responsible party "has failed" to comply with
a remedial order, either because it is unable or unwilling to do
so, respondent may implement the remedial program itself (ECL 27-
1313 [5] [a], [b], [c]).
Here, under the consent order, petitioner developed the CMA
report. The focus in this proceeding turns to remedy selection
and implementation. Under this statutory framework, petitioner
was entitled to both notice (which was provided through the
statement of basis process) and an opportunity for a hearing
prior to the issuance of an order directing petitioner to
implement CMA 9. As it turns out, petitioner was not accorded an
opportunity for a hearing to assert its challenge to CMA 9 and no
implementation order was issued. Absent such an order, we must
agree with petitioner that respondent's determination that it was
authorized to proceed with the remedial work based on
petitioner's "refusal" to perform the work was arbitrary and
capricious. In light of our determination, it is not necessary
to consider petitioner's remaining contentions.
Egan Jr., J.P., Devine, Clark and Mulvey, JJ., concur.
ORDERED that the judgment is reversed, on the law, without
costs, motion denied, petition granted and matter remitted to
respondent for further proceedings not inconsistent with this
Court's decision.
ENTER:
Robert D. Mayberger
Clerk of the Court