By: Alan J. Knauf, Esq.

1. Non-owners as Dischargers: The Net of Liability Net Broadens.

Steuben Contracting, Inc. v. Griffith Oil Co., Inc., 283 A.D.2d 1008, 726 N.Y.S.2d 308 (4^th Dep't 2001). Owner of an oil terminal served by a pipeline that leaked off-site held to be a discharger. Oil company that failed to provide corrosion protection when a pipeline was installed may be liable. 

State v. Avery-Hall Corp. 279 A.D.2d 199, 719 N.Y.S.2d 735 (3d Dep't 2001); State v. Cronin, 186 Misc.2d 809, 717 N.Y.S.2d 828 (Sup. Ct. Albany Co. 2000). An oil company will not be liable for discharges unless the discharge "occurred during delivery or... was in a position to 'halt [the] discharge, to effect an immediate cleanup or to prevent the discharge in the first place.'"

State v. Markowitz, 273 A.D.2d 636, 710 N.Y.S.2d 407, 412 (3^rd Dep't 2000), lv. den'd 95 N.Y.2d 770, 722 N.Y.S.2d 473 (2000). The Third Department adopted a rule for individual liability of corporate officers, shareholders and employees:

Consistent with the relevant Federal and State statutes and developing case law, we hold that in order to hold a corporate stockholder, officer or employee personally liable under the Navigation Law for a discharge occurring at a site owned or operated by the corporation, that individual must, at a minimum, have been directly, actively and knowingly involved in the culpable activities or inaction which led to a spill or which allowed a spill to continue unabated.

Irmer v. Dewolff Partnership Architects, Index No. 1996/1344 (Sup. Ct. Monroe Co. 2002, Frazee, J.). An architect who designed and supervised installation of a waste oil system. might be a discharger.

2. Owners as Dischargers: the Court of Appeals Finally Speaks.

State v. Green, 272 A.D.2d 214, 707 N.Y.S.2d 704 (3d Dept 2000), rev. 96 N.Y.2d 403, 729 N.Y.S.2d 420 (2001); State v. Markowitz, 273 A.D.2d 636, 710 N.Y.S.2d 407 (3^rd Dep't 2000); Four Star Oil & Gas Company v. Kalish, 272 A.D.2d 292; 707 N.Y.S.2d 189 (2^nd Dep't. 2000); 310 South Broadway Corp. v. McCall, 275 A.D.2d 549, 712 N.Y.S.2d 206 (2d Dep't 2000), lv. den'd 96 N.Y.2d 701, 722 N.Y.S.2d 793 (2001). Two other Appellate Divisions agreed with the Fourth Department in Drouin v. Ridge Lumber, Inc., 209 A.D.2d 957, 619 N.Y.S.2d 433 (4th Dep't 1994), holding that "the owner of the system" that caused the discharges is liable, and where there is no "unity of ownership," so that the tanks or other petroleum system were owned by a tenant, the landowner was not automatically liable. 

State v. Green, 96 N.Y.2d 403, 729 N.Y.S.2d 420 (2001). After repeatedly ducking the issue, seeArt-Tex Petroleum, Inc. v. New York State Department of Audit and Control, 93 N.Y.2d 830, 687 N.Y.S.2d 61 (1999); White v. Long, 85 N.Y.2d 564, 626 N.Y.S.2d 989 (1995), the Court of Appeals reversed the Third Department, and held that the statutory "language is sufficiently broad to include landowners, like Lakeside, who have both control over activities occurring on their property and reason to believe that their tenants will be using petroleum products." 96 N.Y.2d at 407, 729 N.Y.S.2d at 423. Thus, defendant Lakeside, the owner of a trailer park was held to be liable as a discharger, since it "had the ability to control potential sources of contamination on its property, including Green's maintenance of a 275-gallon kerosene tank." Id. Its "failure, unintentional or otherwise, to take any action in controlling the events that led to the spill or to effect an immediate cleanup renders it liable as a discharger." Id. However, the Court held that not all landowners will be liable:

By predicating liability on a landowner's control over the contaminated premises, we ensure that landowners are not in all instances liable for spills occurring on their property. A landowner, for example, who falls victim to a "midnight dumper," or an errant oil truck that spills fuel, would not be liable as a "discharger" because, in those cases, the landowner could not control the events resulting in the discharge. Here, however, Lakeside, as owner of the property, was in a position to control the site and source of the discharge. As Green's lessor, moreover, Lakeside could have reasonably expected Green to use fuel to heat her home; and it received the benefit of the lease as well as the cleanup. In these circumstances, Lakeside is liable for the discharge.

Roosa v. Campbell, ___ A.D.2d ___, 737 N.Y.S.2d 461 (4^th Dep't 2002). Following Green, a landowner who leased property to a service station was liable. 

Hilltop Nyack Corp. v. TRMI Holdings, Inc., 272 A.D.2d 521, 708 N.Y.S.2d 138 (2d Dep't 2000). Where a defendant only owned the property in question prior to the discharges, it was not liable. 

3. Rights of Dischargers to Sue Other Dischargers for Damages: Continued Confusion?

State v. Green, 96 N.Y.2d 403, 729 N.Y.S.2d 420 (2001). Court of Appeals reaffirmed White v. Long, 85 N.Y.2d 564, 626 N.Y.S.2d 989 (1995), noting that where a landowner who had the ability to control a tenant's activities was liable as a discharger, it was "not, however, without redress," and might "seek contribution from the actual discharger" under Navigation Law §181(5). Presumably, the landowner has a claim for damages, and not just contribution.

Calabro v. Sun Oil Co., 276 A.D.2d 858, 714 N.Y.S.2d 781 (3^rd Dep't 2000). Under White v. Long, 85 N.Y.2d 564, 626 N.Y.S.2d 989 (1995), "status" of plaintiff service station operator "as a person responsible for the discharge" precludes claim under Navigation Law §181(5).

Hjerpe v. Globerman, 280 A.D.2d 367, 721 N.Y.S.2d 367 (2d Dep't 2001). Plaintiff landowner contributed to the spill, and is a discharger who cannot seek "indemnification" under Navigation Law §181(5).

Umbra U.S.A., Inc. v. Niagara Frontier Transportation Authority, 262 A.D.2d 980, 981, 693 N.Y.S.2d 371, 372 (4^th Dep't 1999); Rugaber v. Vella, Index No. 88869 (Sup. Ct. Ontario Co. 2001, Henry, J.). The "as is" cause does not bar a claim under the Oil Spill Law. 

4. Contribution: A Clear Right to Sue.

Volunteers of America of Western New York v. Heinrich, 90 F.Supp.2d 252 (W.D.N.Y. 2000). Whether based directly upon Navigation Law §176(8) provides that "every person providing cleanup, removal of discharge of petroleum or relocation of persons," or under common law contribution, a discharger who conducts a cleanup or other response activities may have a cause of action for some or all of its response costs under the Oil Spill Law under an indemnification or contribution theory.

Irmer v. Dewolff Partnership Architects, Index No. 1996/1344 (Sup. Ct. Monroe Co. 2002, Frazee, J.). While claims under Navigation Law §181(5) are barred because plaintiff is also a discharger, contribution may be sought under Navigation Law §176(8).

5. Statute of Limitations: Some Clarity.

State of New York v. Speonk Fuel, Inc., 273 A.D.2d 681, 710 N.Y.S.2d 652 (3d Dep't 2000). Third Department held that if an action was commenced within six years of completion of the cleanup, it was timely as to all of the plaintiff's expenditures, even if some were more than six years old. 

State of New York v. Ackley, ___ A.D.2d ___, 734 N.Y.S.2d 722 (3d Dep't 2001). Third Department reversed itself, and held that the six-year statute ran from each actual disbursement of funds sought to be recovered. Thus, claims for disbursements made within six years of commencement of an indemnification or contribution action will be timely, and earlier expenditures for the same cleanup will not be.

Irmer v. Dewolff Partnership Architects, Index No. 1996/1344 (Sup. Ct. Monroe Co. 2002, Frazee, J.). While claims under Navigation Law §181(5) are untimely as to architect's work done in the 1970s, contribution action is timely under Navigation Law §176(8), since expenditures were incurred within six years of filing action.

Z & H Realty, Inc. v. Office of State Comptroller, 259 A.D.2d 928, 686 N.Y.S.2d 900 (3d Dep't 1999). Claims with the Oil Spill Fund must be filed "not later than three years after the date of discovery of damage" and "not later than ten years after the date of the incident which caused the damage," under Navigation Law §182.

6. Penalties: They Can Be Big!

State v. Markowitz, 273 A.D.2d 636, 710 N.Y.S.2d 407, 412 (3^rd Dep't 2000). Lower court assessed $2.25 million penalties.

Oil Co., Inc. v. NYSDEC, 277 A.D.2d 241, 716 N.Y.S.2d 398 (2d Dep't 2000), lv. den'd 96 N.Y.2d 708, 725 N.Y.S.2d 638 (2001). Court upheld a fine of $3.5 million for over 18,000 violations of environmental statutes, including violation of the Oil Spill Law by operating a major facility for 10 years without a permit. 

Howard v. Cahill, ___ A.D.2d ___, 736 N.Y.S.2d 470 (3d Dep't 2002). Discharges in violation of Navigation Law §172, failure to complete a timely cleanup in violation of Navigation Law §176, and exceeding groundwater standards under 6 N.Y.C.R.R. Part 703 resulted in a $50,000 fine.

7. Remedies and Claims: As Broad As Liability.

Rizzuto v Getty Petroleum Corp., ___ A.D.2d ___, 736 N.Y.S.2d 233 (2d Dep't 2001). Jury verdict of $509,000 in diminution of property value was upheld arising out of contamination from neighboring property.

Gettner v. Getty Oil Co., 266 A.D.2d 342, 701 N.Y.S.2d 64 (2d Dep't 1999), lv. den'd 95 N.Y.2d 860, 714 N.Y.S.2d 704 (2000). Plaintiff allowed to recover lost rent, but only for the period in which the cleanup should have been completed, engineering fees, and cost of fencing. Plaintiff also entitled to recover attorneys' fees, at least in connection with cleanup, as "indirect damage."

Bologna v. Kerr-McGee Corp., 95 F.Supp.2d 197 (S.D.N.Y. 2000). Oil Spill Law applies to spills which occurred before the statute was enacted. To the extent DEC approval may be required for cleanup activities, informal approval may suffice.

Calabro v. Sun Oil Co., 276 A.D.2d 858, 714 N.Y.S.2d 781 (3^rd Dep't 2000). Oil Spill Law does not preclude the right to sue under common law theories.

Art-Tex Petroleum, Inc. v. New York State Department of Audit and Control, 93 N.Y.2d 830, 687 N.Y.S.2d 61 (1999). Action to vacate environmental lien governed by Lien Law §59, not Article 78.