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NEW YORK v. ALLIED-SIGNAL INC.

December 18, 1997

STATE OF NEW YORK and THOMAS C. JORLING as Trustee of the Natural Resources, Plaintiffs, against ALLIED-SIGNAL INC., Defendant.


The opinion of the court was delivered by: MCAVOY

 I. BACKGROUND

 On March 16, 1992, plaintiff the State of New York and defendant Allied-Signal Inc. ("Allied") entered into a Consent decree. In the Consent Decree, Allied, without admission of liability, agreed to finance the development and implementation of a Remedial Investigation and Feasibility Study ("RI/FS") addressing contamination of the Onondaga Lake System. (the "Site"). Allied also agreed, pursuant to the Consent Decree, to prepare and submit to the State, for its approval, various interim written reports concerning contamination of the Site, including a Mercury Modeling Report (the "Mercury Report"). *fn1"

 Allied timely submitted the first version of the Mercury Report to the State in October 1994. According to the State, Allied agreed to obtain independent experts to aid the State in its review of Allied's Mercury Report and to assist Allied in its development of the Mercury Report. These independent experts completed their work and submitted their conclusions concerning the Mercury Report between March and May of 1995. In May 1995, Allied received initial comments regarding the Mercury Report. In June 1995, the State Department of Environmental Conservation ("DEC") met with two retained consultants to further review the Mercury Report. In August 1995, the State informed Allied that there were 51 "fundamental" problems in the Mercury Report's "transport and kinetics submodel." From August 1995 to May 1996, Allied responded to the State's comments regarding the transport and kinetics submodel.

 In May 1996, the State requested that Allied correct other problems in the Mercury Report relating to the fish bioenergetics submodel. Specifically, the State asked Allied to perform a sensitivity analysis to ensure that the data Allied used did not undermine the submodel's results. According to the State, it had alerted Allied to the potential risks of using such data back in August of 1993. The State also contends that Allied had proposed to perform a sensitivity analysis at the beginning of the modeling process in September of 1992. Further, according to the State, its comments regarding the fish bioenergetics submodel were provided to Allied in May 1996 because it "deemed it prudent for Allied to address revisions to the [transport and kinetics submodel] before turning its attention to [the fish bioenergetics] submodel."

 Allied also submitted to the State, in May 1996, a written schedule stating that it intended to submit the revised Mercury Report in April 1997. In a telephone conversation between the State and Allied, the State orally agreed to Allied's proposed schedule. The State requested, however, that a meeting be held in January 1997, during which the parties would discuss Allied's progress on the Mercury Report and decide on an exact date in April when the Mercury Report would be due. In August 1996, Allied confirmed by letter to the State that it would be submitting the revised Mercury Report in April 1997.

 In January 1997, the State wrote a letter to Allied, iterating the importance of a January meeting to ensure that the Mercury Report would be approved when submitted by Allied in April 1997. The January meeting, however, never took place. According to the State, just days before the meeting was to occur, Allied informed the State that it would not participate in the face-to-face meeting because it desired to minimize costs. Instead, Allied proposed that a conference call be held. The State informed Allied that a conference call was not acceptable because of the logistical limitations of twenty people attempting to discuss complex and technical issues over the telephone. As a result of the disagreement between the sides, neither a meeting nor a conference call resulted.

 On January 31, 1997, the State wrote to Allied, proposing April 15, 1997 as the exact submission deadline for the Mercury Report. The letter also invited Allied to respond with any comments. Almost two months later, Allied telephoned the State, questioning whether April 15, 1997 was a "hard date" for submission of the Mercury Report. The State informed Allied that the submission date was April 15, 1997. The State confirmed that date in a letter to Allied on March 25, 1997. On March 28, 1997, Allied wrote to the State requesting an extension of time to submit the Mercury Report. The State responded by letter dated April 4, 1997, directing that Allied provide the State with its reasons why an extension was necessary. On April 9, 1997, Allied wrote back that it had encountered delays regarding both the sensitivity analysis for the fish bioenergetics submodel and in obtaining data to be used in the transport and kinetics submodel. On April 15, 1997--the due date of the revised Mercury Report--Allied informed the State that it could not submit the Report because of a "computer bug." According to the State, it rejected Allied's requests for an extension of time because these delays concerned problems that were foreseeable and avoidable.

 Allied did not submit the revised Mercury Report until June 12, 1997. Pursuant to the Consent Decree, the State contends that it is entitled to stipulated penalties because of the untimely filing of the revised Mercury Report.

 Now before the Court is Allied's petition to set aside a determination by the State directing Allied to pay stipulated penalties for the alleged untimely submittal of the revised Mercury Report. The State, in turn, has cross-moved for an order directing Allied to pay stipulated penalties in the amount of $ 191,000.

 II. DISCUSSION

 A. Allied's Petition Is Not Time-Barred

 As an initial matter, the State argues that Allied's petition is time-barred.

 Two paragraphs of the Consent Decree govern dispute resolution. First, paragraph 41 provides that: "in the event that the parties cannot resolve their dispute by negotiations, after reasonable efforts, the State may make a determination with respect to the subject of the dispute which determination shall be in writing and shall reference this provision of the Consent Decree." Second, paragraph 42 states that: "all determinations by the State . . . shall be final and binding upon Allied unless within thirty days of receipt of the State's determination by the attorney of record for Allied, Allied petitions this Court for review."

 In the present case, Allied's petition challenges two basic determinations of the State: (1) the setting of the April 15, 1997 submission deadline for the Mercury Report; and (2) the State's finding that Allied did not comply with that deadline. Turning first to Allied's challenge to the April 15, 1997 deadline for the Mercury Report, the State argues that this challenge is time-barred because the thirty-day limitations period for a petition by Allied to review this decision began running on March 25, 1997--the date when the State sent a letter to Allied (with copies to Allied's counsel) stating that the submission deadline for the Mercury Report was April 15, 1997--and expired at the end of April. Because Allied did not file its petition until September 29, 1997, the State argues that Allied's petition is time-barred.

 The problem with this argument is plain; namely, that the State's March 25, 1997 letter does not reference paragraph 41 of the Consent Decree to qualify as a "determination" by the State regarding a dispute. Accordingly, because there has not been a "determination" by the State in accordance with paragraph 41 regarding the April 15, 1997 deadline, the State's letter of March 25, 1997 did not trigger the thirty-day limitations in paragraph 42. Further, because the State has failed to identify to the Court any other writings in which the State has made a "determination" in accordance with the requirements of paragraph ...


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