Matter of National Fuel Gas Distrib. Corp. v New York State Dept. of Envtl. Conservation (2008 NY Slip Op 50232(U))

Matter of National Fuel Gas Distrib. Corp. v New York State Dept. of Envtl. Conservation

2008 NY Slip Op 50232(U) [18 Misc 3d 1129(A)]

Decided on January 14, 2008

Supreme Court, Albany County

Zwack, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

In this CPLR Article 78 proceeding, petitioner asserts that respondents improperly selected a remedial program and also challenges two of the six components of the remedial program. Respondents oppose the petition, asserting that the petition fails to state a claim and also that petitioner failed to exhaust administrative remedies by failing to previously raise certain issues during the administrative proceeding.

Oral argument was held on January 8, 2008 and at that time the Court rejected a Reply Memorandum of Law from petitioner, filed on December 31, 2007 and denied a motion by respondents to file sur-reply papers. The return date of this proceeding was November 30, 2007 and although the oral argument was held subsequent to the return date, this did not change the return date.

At issue in this proceeding is the remedial program related to the former Gastown manufactured gas plant (MGP) site ("site") in the Town of Tonawanda, in Erie County. The site consists of approximately 3.5 acres and is located in a small industrial area. The site is bordered by the Tonawanda Creek to the north, an active railroad line to the west and south, and the Gastown Sportsman's Club ("Club") to the east. Residential property is located west of the railroad and east of the Club. Gas manufacturing activities were conducted at the site commencing in approximately 1884 and continued, at least periodically, through 1921. Coal tar, which is reportedly associated with gas manufacturing activities, is the principal contaminant at the site. It is noted in the record that coal tar from manufactured gas plants such as the one at issue is fluid and has the consistency of vegetable oil, facilitating migration of the coal tar from its original location. The coal tar is also referred to as a non-aqueous phase liquid (NAPL).

The Tonawanda Gas Light Company initially operated the plant at the site, and then the plant was operated by Niagara Light, Heat and Power Company in 1900, and then by Republic Light, Heat and Power Company in 1919. In the Record of Decision (ROD), dated March 2007, respondents identify petitioner as a potentially responsible party, as the corporate successor to Tonawanda Gas Light Company. Petitioner notes in the petition that it does not concede that it succeeded to the liabilities of Tonawanda Gas Light Company.

In March 1993, coal tar entered a basement sump at Gastown Sportsman's Club, a private club located east of the site. Respondent New York State Department of Environmental Conservation (DEC)'s spill response unit conducted an investigation and performed remedial actions from 1993 through 1996 in the vicinity of the Club.

In 1998, the site was referred to DEC's Hazardous Waste Remediation Unit after benzene was found in a sample from the Club's basement sump.

In January 2001, DEC issued a Site Investigation Report (SI Report) for the site, which found that a remedial investigation/feasibility study ("RI/FS") was required in order to "fully delineate the nature and extent of the contamination" and to "select a long term remedial action." DEC retained Earth Tech Northeast, Inc. ("Earth Tech") to conduct an RI and FS. [*2]

In December 2004, Earth Tech submitted its RI report to DEC. This report detailed the contamination at the site and concluded that there were potential hazards and dangers to human health, as well as to fish and wildlife, due to the coal tar contamination at the site. The coal tar was noted to contain BTEX (benzene, toluene, ethybenzene and xylene) and PAH (polycyclic aromatic hydrocarbon) compounds. Some of these compounds are carcinogenic or can cause other adverse health effects.

In February 2005, Earth Tech submitted its FS report to DEC. The FS report outlined eight different remedial plans, in order from least disturbance to the site (no remedial action), to most disturbance to the site (full removal of buildings and soil). The alternative remedial plans were listed as follows in the FS Report:

In February 2007, DEC set forth a Proposed Remedial Action Plan (PRAP) for public comment. The PRAP did not chose one of the remedial plans as set forth in the FS Report, but rather set forth six remedial plans, and then chose alternative number 3 as the remedial plan to be used at the site. Therefore, the PRAP's choice of alternative plan number 3 does not represent the same remedial plan as remedial plan number 3 in the FS report, or any other remedial plan as set forth in the FS report. The alternative remedial plans were listed as follows in the PRAP:

In March 2007, DEC issued the Record of Decision (ROD) for the site. The proposed remedy set forth in the ROD, alternative 3, is the same as the remedial plan selected in the PRAP. This proposed remedy is comprised of the following elements: excavation of contaminated soil; demolition of three on-site buildings; construction of underground collection trenches; contaminated sediment removal from Tonawanda Creek; sub-slab depressurization systems for five residences; removal of underground storage tank containing coal tar; a site management plan for future monitoring; and imposition of an environmental easement. The estimated present worth cost to implement [*3]the proposed remedy is $8,942,000.

In the instant proceeding, petitioner sets forth two causes of action. First, petitioner alleges that respondents violated required procedure in selecting the remedial plan set forth in the ROD. Second, petitioner contends that two components of the remedial plan are arbitrary and capricious as follows: 1) the soil removal component of the plan is alleged to be based upon a materially incorrect unit cost price and a grossly incorrect contamination estimate; and 2) the collection trenches component of the plan is alleged to have been based upon rejection of an alternative remedial technology that was based on facts contrary to the record and inconsistent with DEC's past practice.

It is well established that when a court is reviewing an administrative determination, it "may not substitute its judgment for that of the agency making the determination but must determine whether the agency's decision has a rational basis and is not arbitrary and capricious" (Plante v New York State Dept. of Environmental Conservation, 277 AD2d 639, 641 [3d Dept 2000]; see also Arrocha v Bd. of Educ., 93 NY2d 361, 363-64 [1999]; Pell v Bd. of Educ., 34 NY2d 222 [1974]). "An administrative action is arbitrary and capricious when it is without a sound basis in reason and without regard to the facts" (Clausen v New York State Dept. of Health, 232 AD2d 917, 918 [3d Dept 1996] [citing Pell]). "Rationality is what is reviewed under both the substantial evidence rule and the arbitrary and capricious standard" (Pell, 34 NY2d at 231).

When the judgment of the agency involves factual evaluations in the area of the agency's expertise and is supported by the record, such judgment must be accorded great weight and judicial deference.

(Flacke v Onondaga Landfill Systems, Inc., 69 NY2d 355, 363 [1987]; see also City of Rensselaer v Duncan, 266 AD2d 657, 659 [3d Dept 1999]; Regional Action Group for Environment, Inc. v Zagata, 245 AD2d 798, 800 [3d Dept 1997]). The court is required to defer to the agency regarding the construction of statutes and regulations that the agency administers, as long as that construction is not irrational or unreasonable (Metropolitan Associates, Ltd. Partnership v New York State Div. of Housing & Community Renewal, 206 AD2d 251 [1st Dept 1994]).

Regarding petitioner's first cause of action, petitioner contends that the remedy selection process used by DEC violated 6 NYCRR § 375 in multiple ways. Specifically, petitioner contends that DEC committed violations as follows:

1)DEC ignored the eight remedial alternatives in the FS report when it created six new remedial alternatives in the PRAP and selected the proposed remedy;

2)DEC failed to summarize its reasons for selecting the proposed remedy over the eight alternatives in the FS report when it published its proposed remedy for public review and comment;

3)DEC failed to discuss why it had discarded the eight remedial alternatives [*4]in the FS report when documenting the process used to select the remedy in the ROD;

4)the Administrative Record annexed to the ROD fails to list any document that reflects DEC's decision to discard the eight remedial alternatives from the FS report and generate six new remedial alternatives in the PRAP.

Respondents assert that, contrary to petitioner's claims, DEC followed all required procedures and properly considered remedial alternatives. Respondents argue that they are not required to adopt one of the remedial alternatives listed in the FS report, and notes that petitioner cites no legal requirement for this proposition. Respondents assert that DEC properly exercised its best professional judgment in selecting a remedial plan that incorporated components of the remedial options evaluated in the FS report. Respondents contend that petitioner merely disagrees with DEC's decision.

DEC is the agency responsible for inactive hazardous waste site remedial programs (ECL § 27-1313[1]). DEC regulations provide that it shall consider certain express factors when selecting a remedial program for an inactive hazardous waste site (6 NYCRR § 375-1.8[f] [effective December 14, 2006] [formerly 6 NYCRR § 375-1.10[c][1]-[7]]). The regulation applicable to this requirement was amended and renumbered effective December 14, 2006. Pursuant to 6 NYCRR 375-1.10[c], the following factors, in brief summary below, shall be considered in selecting a remedy:

DEC was required to conduct a feasibility study "that develops and evaluates, using the factors in section 375-1.8(f) [formerly 6 NYCRR 375-1.10[c]) of this Part, alternatives for all contaminated media identified by the remedial investigation of the site" (6 NYCRR 375-2.8[c][1]). Next, DEC "shall select the remedy for the site from among the feasible alternatives: (i) developed and evaluated by the feasibility study; or (ii) developed by the department in addition to those presented by the feasibility study" (6 NYCRR 375-2.8[c][4]). Additionally, DEC's process of selecting a remedy "shall be documented in a record of decision," which must include the following information:

6)a description and evaluation of the remedial alternatives considered, except in the case of no further action remedies;

Petitioner asserts that DEC violated regulations when it failed to recommend one of the eight remedial alternatives in the FS report, when it created six new remedial alternatives in the PRAP, and when it failed to detail the remedy selection process in the ROD. Petitioner contends that DEC, without explanation, discarded the alternatives in the FS report, which were not considered in selecting the final remedy, as required by regulations. Petitioner argues that DEC created six new alternatives subsequent to receiving the FS report's eight alternatives. Regarding 6 NYCRR 375-2.8(d)(4), which provides that DEC may select from alternatives in the FS or from alternatives developed by DEC, petitioner argues that this regulation is intended to address a situation in which DEC disagrees with all of the alternatives in a FS report prepared by a private party, as opposed to prepared by DEC's hired contractor as in the present case. Petitioner does not provide legal authority for this limitation on the regulation however. Lastly, petitioner argues that the ROD was required to detail DEC's reasons for selecting the proposed remedy over the other alternatives, namely those contained in the FS report.

In opposition, respondents assert that DEC is not required to choose only from among the remedial alternatives in the FS report. Indeed, the Court notes that the express wording of the applicable regulation supports this argument (6 NYCRR 375-2.8[d][4]). There is no limitation, as suggested by petitioner, that only allows DEC to develop an alternative remedy when the feasibility study was prepared by a private party. Therefore, the Court finds that this argument lacks merit.

Regarding petitioner's claim that entirely new alternative remedies were constructed by DEC, respondents assert that in fact this was not the case because the components of the alternatives in the FS report were used in the new alternative plans set forth in the PRAP. Therefore, while the alternatives were not identical, the alternatives were constituted of the same components as those alternatives listed in the FS report. Respondents contend that four of the alternatives in the FS report were adopted directly (FS Alternatives 1, 6, 7, and 8), three were reassembled (FS Alternatives 3, 5, and 7) and two were rejected as unacceptable for the site (FS Alternatives 2 and 4). The Court has reviewed the FS report and the PRAP and finds that the same components constitute the alternative remedial plans in each. Additionally, as noted above, the Court does not find that DEC was limited to choosing among alternatives in the FS Report in any event.

Regarding petitioner's claim that the ROD fails to discuss DEC's decision to decline to use the alternatives in the FS Report and to create new alternative remedies, [*6]respondents argue that the ROD was sufficiently detailed as to the reasons for the remedy selected. As noted above, the Court notes that the components of the remedial plans in the FS Report were not discarded, as petitioner seems to suggest. DEC essentially modified some of the alternatives in the FS report by modifying the components of certain remedial plans. However, there was not a wholesale disposal of all elements of every plan in the FS report. The elements were put together differently in some cases however. The Court finds that the ROD details the reasons for choosing certain elements of the remedial plan over others, and sufficiently details the reasons for choosing the remedial plan that was proposed in the PRAP, as well as distinguishing it from the other alternatives. There is simply no legal mandate that precluded DEC from combining the remedial alternatives in the FS Report in a different manner and the Court finds that DEC sufficiently detailed their reasoning for choosing the proposed remedy in the ROD. For the foregoing reasons, the Court finds that the first cause of action in the petition must be dismissed because it appears from the record that respondents followed all regulatory requirements in the remedy selection process.

Regarding petitioner's second cause of action, petitioner contends that two components of the remedial plan are arbitrary and capricious. Specifically, petitioner argues that the soil removal component of the plan is arbitrary and capricious because it is based upon respondents' gross overestimate of the scope of tar contamination in the soil and respondents' gross underestimation of the costs of soil removal. Additionally, petitioner argues that the collection trenches component of the plan is arbitrary and capricious because it is based upon respondents' improper rejection of permeable reactive barriers (PRBs) as an alternative remedial technology, and therefore the selection of collection trenches was not based upon consideration of all eligible alternative remedial technologies. Petitioner argues that PRBs were rejected by respondents as inconsistent with DEC's past practice, however petitioner asserts that PRBs are not inconsistent with DEC's past practice.

Regarding petitioner's claims that the soil contamination has been overestimated by DEC, petitioner contends that soil boring logs establish that the contamination is not as correctly depicted on DEC's "NAPL Thickness Contour Map." Petitioner argues that the lateral extent, depth and thickness of the coal tar contamination is not correctly depicted on the map, based upon the information contained in the soil boring logs.

In opposition, respondents point out that the outline of contamination as represented on the NAPL Thickness Contour Map is not disputed by petitioner and that the exact degree of contamination within the outlined area cannot be established with certainty until the remediation commences. DEC argues that soil borings with any amount of coal tar can indicate significant coal tar nearby, and that even borings with no visible coal tar may have PAH contamination requiring remedial action. DEC argues that the extent of the remediation required will be limited to the amount of actual contamination discovered once the remediation commences. DEC notes that one of the [*7]regulatory factors is to attempt to address all contamination source areas and to restore the site to pre-disposal conditions, to the extent feasible. DEC argues that "the outline of the contamination is reasonable even though the precise degree of tar saturation within the outline cannot be precisely known."

The Court notes that petitioner does not dispute the presence of contamination, but points out what is perceived as a discrepancy among the record documents regarding the degree of contamination. DEC does not dispute that the degree of contamination may vary across the site and asserts that soil excavation will be conducted consistent with the degree of contamination discovered during the remediation process. The Court notes that the selected remedy does not provide for a specific amount of soil excavation but references that "soils containing visible evidence of MGP tar and/or containing total PAHs greater than 500 ppm will be removed . . ." Considering the evidence in the record, the Court does not find that respondents' estimates of contamination were arbitrary, capricious or irrational.

Regarding petitioner's assertion that respondents have underestimated the costs of the proposed remedial plan, petitioner contends specifically that respondents have underestimated the costs of the plan by $3,749,000 and that the costs in the FS Report and the PRAP do not match.

In opposition, DEC concedes that the actual costs of the remedial plan may be higher than the estimated costs, but argues that this is not a valid basis for challenging the plan. DEC contends that the purpose of the cost estimates in the FS Report and the PRAP is to compare the different alternatives and to comply with the regulatory requirement for DEC to consider cost-effectiveness and feasibility of different alternatives, but not to constitute notice to petitioner or the public of actual costs. DEC also notes that the FS Report was completed two years prior to the PRAP and therefore costs have risen since the costs estimates were prepared in the FS Report. DEC argues that the DEC cost estimates are within EPA guidelines for cost estimates, which allow 30 to 50 percent fluctuation, noting that petitioner's cost estimate is 42 percent higher than the DEC cost estimate.

The Court notes that differences of opinion between experts regarding the costs of remediation does not have the effect of rendering the ROD arbitrary, capricious or irrational (see generally Ellis v Marsh, 164 Misc 2d 135, 142 [Sup Ct Albany County 1995]). The costs estimated by DEC are supported in the record and the fact that the FS Report's costs do not match the PRAP's cost estimates is adequately explained by the passage of time. The difference between the cost estimates of petitioner and respondent is insufficient to warrant a finding that the ROD is without reasonable basis based upon the record in this proceeding. The Court finds that petitioner has failed to establish that the cost estimates render the ROD arbitrary, capricious or irrational.

Lastly, petitioner's second cause of action asserts that the collection trenches component of the plan is arbitrary and capricious because it is based upon respondents' [*8]improper rejection of PRBs as an alternative remedial technology, and therefore the selection of collection trenches was not based upon consideration of all eligible alternative remedial technologies. Petitioner argues that PRBs were rejected by respondents as inconsistent with DEC's past practice, however petitioner asserts that PRBs are not inconsistent with DEC's past practice because they have been used at other sites with coal tar contamination. Petitioner asserts that PRBs are effective with BTEX contamination, which petitioner asserts is the primary contamination at the site, and that therefore DEC should have recommended PRBs.

In opposition, DEC argues that each site must be considered individually and therefore remedial measures at a different site are not controlling on the site in the present proceeding. The FS report specifically considered PRBs, and DEC notes that they were found to require intensive long-term operation and maintenance. Additionally, DEC notes that the effectiveness and feasibility of the PRB at another contamination site are being questioned.

The Court notes that PRBs were expressly considered in the FS Report and ruled out for the remedial plan at this site. The Court finds that this area of disagreement is on a technical issue within the expertise of DEC and therefore defers to the findings of DEC. The Court notes that BTEX contamination was expressly referenced prior to DEC's determination to rule out PRBs as a remedy. The Court finds that respondents' determination to rule out PRBs as a component of the remedial plan for the site at issue has a sound basis in the record and was based upon the nature of the contamination at this site.

For all the foregoing reasons, the Court finds that the remedy selected in the Record of Decision dated March 30, 2007 is not arbitrary, capricious or an abuse of discretion and the petition must be dismissed.

ORDERED and ADJUDGED, that the petition is dismissed.

This constitutes the Decision, Judgment and Order of the Court. All papers including this Decision, Judgment and Order are returned to the attorney for the respondents. The signing of this Decision, Judgment and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of this rule with regard to filing, entry and Notice of Entry.

Dated:January 14, 2008