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Key Limits Imposed on State Authority to Order RCRA Corrective Action Under a Treatment, Storage or Disposal Facility Permit

Can a party who is not the holder of a certain environmental permit be required to perform the obligations set out in that permit? The New York State Department of Environmental Conservation thought so, and argued as much in the case of a property owner who had purchased land where a hazardous waste storage facility had operated years earlier. The purchaser, Thompson Corners, LLC, had never held a permit to operate the facility, which had closed years before the purchase, and was never required to obtain one. 

The hazardous waste storage facility at issue in the Matter of Thompson Corners, LLC v. New York State Dept. of Envtl. Conservation, 2014 NY Slip Op 3556 (App. Div. 3rd Dept. May 15, 2014) first received a hazardous waste storage permit from the DEC in 1987, when it was owned by Roth Brothers Smelting Corporation. This type of permit is known as a treatment, storage or disposal ("TSD") permit, and is issued by the DEC as the agency responsible for implementing the federal Resource Conservation and Recovery Act in New York State.

Key to a TSD permit is the requirement for "corrective action," meaning that the holder of a TSD permit must clean up soil and groundwater contamination at its facility. When the Roth Brothers TSD permit expired in 1992, the DEC issued Roth Brothers an order to take corrective action. The corrective action included treating and storing contaminated soil, providing certain financial assurances to the state, and recording a declaration of covenants and restrictions that notified prospective purchasers of the corrective action requirements.

In 1999, Roth Brothers sold the property to Wabash Aluminum Alloys, LLC, who sold it to Thompson Corners, LLC in 2005. Thompson Corners in turn sold part of the property to Metalico Syracuse Realty, Inc., who took over certain obligations related to environmental monitoring and oversight on the property. In 2007, the DEC began an enforcement action against Thompson Corners, Metalico and Wabash, alleging that they were responsible for certain violations of hazardous waste regulations, and that they were required to provide financial assurance for further corrective action at the site.

Wabash signed a consent order with the DEC, and the DEC Commissioner later adopted an Administrative Law Judge's report that Thompson Corners was jointly and severally liable for financial assurance requirements as a current owner of a hazardous waste facility. Thompson Corners challenged the determination with an Article 78 proceeding, which made its way to the Appellate Division, Third Department.

In a May 2014 decision, the Appellate Division held that Thompson Corners couldn't be required to provide financial assurance for corrective action because it never held the TSD permit for the hazardous waste facility. According to the court,

there is nothing in the plain language of RCRA, the [Environmental Conservation Law], or DEC's enabling regulations that imposes the financial assurance requirement on subsequent owners of a former TSD facility that never had, or were required to have, a TSD permit or were parties to a corrective action order on the property in question.

To require otherwise would be to subject all subsequent owners of former TSD facilities to strict liability for financial assurance requirements, and the legislature simply hadn't written that into the statute. The court contrasted the RCRA provisions with New York's State Superfund Law, its Oil Spill Act, and its Scaffold Law, which all contain strict liability language.

While the outcome of Thompson Corners, LLC was a victory for the landowner, owners of former hazardous waste treatment, storage or disposal facilities shouldn't be too quick to celebrate. Even though the landowner prevailed against DEC on the issue of RCRA corrective action, the court was careful to point out that the State Superfund program still provides DEC a tool to require remediation when a property poses a significant threat to public health or the environment.

If you are facing an administrative enforcement action, the experienced environmental attorneys at Periconi, LLC stand ready to assist you.

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