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BERMAN ENTERPRISES v. JORLING

May 19, 1992

BERMAN ENTERPRISES, INC., GENERAL MARINE TRANSPORT CORP., STANDARD MARINE SERVICES, INC., JANE FRANK KRESCH, as Secretary of Berman Enterprises, EVELYN BERMAN FRANK, as Chief Executive Officer of General Marine Transport and as an officer of the other named corporations, and PETER M. FRANK, as President of General Marine Transport, Plaintiffs,
v.
THOMAS C. JORLING, Commissioner of the New York State Department of Environmental Conservation, and LANGDON MARSH, Executive Deputy Commissioner of the New York State Department of Environmental Conservation, Defendants.



The opinion of the court was delivered by: JACK B. WEINSTEIN

 Jack B. Weinstein, District Judge:

 By authority of New York's complex of environmental statutes and rules, plaintiffs, regarded by the state as persistent polluters, have been put out of the business of transporting petroleum and petroleum products on New York's waterways. Claiming violation of their federal rights, they seek damages and permission to restart their business. For the reasons indicated below, the case must be dismissed. Plaintiffs are left to pursue remedies in state court.

 I. FACTS

 Plaintiff Standard Marine Services, Inc. is a Delaware corporation whose principal place of business is New York. It is the corporate parent of plaintiffs Berman Enterprises, a New York corporation, and General Marine Transport Corp., a New Jersey corporation. The corporations own barges used for the transportation of oil. The remaining plaintiffs are or were officers of Berman and General Marine.

 On September 27, 1990, one of the plaintiffs' barges sank in the Arthur Kill, a waterway between New Jersey and Staten Island. An oil spill resulted. Pursuant to New York Environmental Conservation Law § 71-0301, defendant Jorling, the Commissioner of the Department of Environmental Conservation (DEC), issued a Summary Abatement Order on October 18, 1990. The order called for the plaintiffs to cease immediately the operation of vessels involved in petroleum transportation.

 Section 71-0301 grants the Commissioner broad power to act summarily to abate environmental hazards. It provides in part:

 
Notwithstanding any inconsistent provisions of law, whenever the commissioner finds, after investigation, that any person is causing, engaging in or maintaining a condition or activity which, in his judgment, [1] presents an imminent danger to the health or welfare of the people of the state or results in or is likely to result in irreversible or irreparable damage to natural resources, and [2] relates to the prevention and abatement powers of the commissioner and it therefore appears to be prejudicial to the interests of the people of the state to delay action until an opportunity for a hearing can be provided, the commissioner may, without prior hearing, order such person . . . to discontinue, abate or alleviate such condition or activity, and thereupon such person shall immediately discontinue, abate or alleviate such condition or activity.

 Id. (bracketed numbers added). Violators are subject to fines and may be enjoined from the violative activity. See 6 NYCRR § 620. Persons subject to a Summary Abatement Order must be granted a hearing as soon as possible within 15 days of the order at which they may offer proof that their activity is not threatening to the people or environment of the state.

 The Summary Abatement Order in this case suspended indefinitely the operation of 14 vessels owned by plaintiff Berman and used for the transportation and storage of oil. It also required plaintiffs to remove all oil from the vessels within seven days. The Commissioner claimed that the plaintiffs' past violations of New York Navigation Law indicated that the continued operation of the vessels would likely result in unreported discharges of oil, toxic waste water or sewage sludge that would cause irreparable harm to the environment and people of New York.

 The Summary Abatement Order also suspended licenses issued for the vessels under Article 12 of the New York Navigation Law and gave notice that, in light of plaintiffs' environmental record, the Commissioner intended to revoke the licenses altogether pursuant to powers provided in 17 NYCRR § 30.10(b).

 Article 12, entitled "Oil Spill Prevention, Control, and Compensation," codified at §§ 170-97, establishes a licensing system designed to assure prompt cleanup of oil spills through the creation of a cleanup fund. Section 174(1)-(4) prohibits the operation of any "major facility" without a state license. Major facilities are defined to include vessels that transfer petroleum to other vessels. See New York Navigation Law § 172(11). Licenses, which must be renewed each year, are issued upon submission by the licensee of a certificate providing information about a facility's operation and upon payment of licensing fees and surcharges indexed to the number of barrels of petroleum transferred to or from each major facility. The licensee's submissions must include a showing that it (1) is complying with, or taking steps to comply with, "state and federal plans and regulations for control of discharges of petroleum, and the containment and removal thereof" and (2) "can provide necessary equipment to prevent, contain and remove discharges of petroleum." Id. § 174(3) & (8). The DEC Commissioner is authorized to impose fines if the owner of a major facility fails to file a certificate or willfully falsifies information on a certificate. Id. § 174(7). Owners and operators of vessels that illegally discharge petroleum are liable for cleanup costs and damages. Id. § 181. In the event of a spill, either the state or affected individuals may conduct a cleanup and obtain compensation for the cost from a fund created by the collection of license fees, surcharges and fines. Id. §§ 176, 179.

 In addition to suspending the vessels' operation and giving notice of the proposed license revocation, the Summary Abatement Order also gave notice, as required by section 71-0301, of a hearing to be conducted starting on October 30, 1990 at offices of the DEC. The hearing before an administrative law judge lasted through November. Additional time for document submissions was granted, and the record was closed on January 22, 1991. The judge considered whether the plaintiffs had violated section 71-0301 and whether their section 174 licenses should be revoked. Testimony and court records indicated that plaintiffs' had repeatedly illegally dumped waste materials, operated unlicensed vessels, and withheld material information in obtaining operating licenses. Based on this record, the administrative law judge recommended upholding the Summary Abatement Order and license revocations. On March 25, 1991, defendant Executive Deputy Commissioner Marsh issued a Decision and Order to that effect.

 In October 1990, upon receiving the Commissioner's Summary Abatement Order, plaintiffs filed an action in the United States District Court for the Southern District of New York challenging the Order. Plaintiffs' motion for a preliminary injunction was denied by that court. By joint stipulation, the parties dismissed that case without prejudice on November 6, 1991.

 The current action was commenced in August of 1991. Plaintiffs' second amended complaint brings claims under 42 U.S.C. § 1983 for deprivation of liberty and property without due process of law. Relief obtainable in the state courts under Article 78 of the New York Civil Practice Law and Rules is sought under the court's supplemental jurisdiction. See 28 U.S.C. § 1367.

 The crux of the complaint is that the Commissioner and Executive Deputy Commissioner's decisions to shut down the plaintiffs' oil transport business were driven by malice and were made without factual foundation and with inadequate procedural safeguards. Plaintiffs seek a declaration annulling the Summary Abatement Order and the license revocation, damages against the Commissioner and the Executive Deputy Commissioner personally and attorney's fees.

 Defendants have moved to dismiss the complaint for lack of subject matter jurisdiction or for failure to state a claim. The motion is based on eleventh amendment immunity, official immunity and various theories of abstention. At oral argument on the motion, plaintiffs raised the additional claim that the Summary Abatement Order and license revocation should be annulled because the statutes under which the Commissioner acted -- Environmental Conservation Law § 71-0301 and Navigation Law § 174 -- are preempted by federal law. The court denied defendants' motion to dismiss with leave to renew to allow for additional submissions and argument on the preemption issue. The issues have been fully briefed and argued.

 II. LAW AND APPLICATION ...


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