Periconi, LLC

The Most Effective Way To Amass Penalties For Violating Environmental Regulations (And How To Ensure It Does Not Happen To You)

Some incredible lapse of judgment (or reasonableness) must occur for an individual to accumulate $200 million dollars' (!) worth of potential environmental violations. And, of course, that is that happened with an auto repair facility in Northumberland Township.

On July 24, 2017, the New York State Department of Environmental Conservation (DEC) determined that Bissco Holding, Inc. and its CEO in his personal capacity, committed multiple violations of New York's Environmental Conservation Law (ECL) from operations at the company's auto repair shop. The DEC also determined that Bissco Holding and its CEO were jointly and severally liable (meaning each party could be responsible for fully responsible) for the ECL violations, which totaled $122,250. However, the maximum statutory penalty in this proceeding could have exceeded have $200 million dollars.

This could have been avoided. How did Bissco Holding, Inc. and its CEO get here?

In February 2014, DEC staff served and Bissco Holding and its CEO notice of hearing and administrative complaint detailing 16 different violations of environmental laws and regulations, and called for a hearing to be heard in September. Both the CEO and Bissco Holding failed to respond to the complaint and did not show up to the hearing on September 2014. As a result, they waived their rights to be heard on the various violations in front of an administrative law judge.

The violations included storing more than 1,000 waste tires on site without a permit, storing oil in noncompliant containers and tanks, disposal of lead acid batteries on site, discharging pollutants into groundwater through floor drains without a permit, and failure to properly handle hazardous wastes. Nearly half of the violations centered around petroleum bulk storage (PBS) tank facility violations including failing to register as a PBS facility, failing to close nine 275-gallon PBS, and improperly labeling the PBS tank.

DEC Staff requested a penalty of $122,250 for the above violations. In the July 2017 order, the DEC Commissioner emphasized, "[t]he record reflects that respondents operated the site essentially without concern for the environment, never sought permits that were required for their activities, and then simply abandoned the site." The contamination on the site was so extensive that the U.S. Environmental Protection Agency (EPA) began removal activities before DEC even sought penalties.

So, how can business owners ensure this does not happen to them? A few things to consider:

Follow the law: if your business generates or disposes of hazardous waste, get a permit, or learn how to properly dispose of the waste in a manner that complies with existing laws and regulations. If you are discharging liquids that might contaminate water, you probably need a permit to do so. If you are unsure what to do, seek legal advice.

Show up to hearings: There are few things that annoy enforcement agents and DEC attorneys more than individuals who ignore agency proceedings, which is exactly what happened in this case. Bissco Holding and its CEO not only failed to respond to the notice of hearing and complaint, they simply just did not appear at the actual hearing. Responding to a government agency that wants to hold you liable for a potential violation offers you the opportunity to make your case and to show why you shouldn't pay a $125,250 fine.

Remember... Bissco Holding's fines could have been much worse.

Business owner/operators beware of your liability: As CEOs and managers, you can be held personally liable for environmental violations if you have enough control of the site when the violations occur. In this case, Biscco's CEO controlled the entire company and managed site operations for nearly 15 years. This was enough evidence to establish that he could be held personally liable as a responsible corporate officer.

It is important to ensure your company is adheres to the formalities of corporate identity (e.g. hold regular shareholder and member meetings, officer should not comingle funds, stay updated on changes in the law that are relevant to your business). Otherwise, you could end up like Bissco's CEO if the government proves that you had sufficient control of day to day operations that facilitated the violations.

Click here to review In re Brisco Holding Inc., DEC Case No. R5-20120627-2006, 2017 N.Y. ENV LEXIS 47 (DEC July 24, 2017).

If you're concerned that you may have face an issue like that of Bissco Holding, please call the attorneys of Periconi, LLC at (212) 213-5500. Call if you or your company has been accused of violating NYS environmental laws or require legal counsel with issues concerning property contamination penalties.

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