United States District Court, N.D. New York
March 19, 2004.
BATH PETROLEUM STORAGE, INC., and E.I.L. PETROLEUM Plaintiffs, -v- GREGORY H. SOVAS, individually as Director of the Division of Mineral Resources, New York State Department of Environmental Conservation; BRADLEY J. FIELD, individually and as Acting Director fo the Bureau of Oil and Gas Regulation, Division of Mineral Resources, New York State Department of Environmental Conservation; THOMAS W. PEARSON, individually and as Regional Water Engineer, Region 8, Division of Water, New York State Department of Environmental Conservation; JOHN CAHILL, individually and as Commisioner of the New York State Department of Environmental Conservation; NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION; and THE STATE OF NEW YORK, Defendants
The opinion of the court was delivered by: LAWRENCE KAHN, District Judge
MEMORANDUM-DECISION AND ORDER
Presently before the Court are a motion to reconsider and two
opposing summary judgment motions. The motion to reconsider is premised
upon a discovery ruling that denied Plaintiffs, Bath Petroleum Storage,
Inc., and its parent company E.I.L. Petroleum, Inc. (collectively
"Plaintiffs" or "Bath") access to documents of Defendants, New York's
Department of Environmental Conservation ("DEC"). At issue in the summary
judgment motions is whether DEC is preempted
by several federal statutes from regulating the Bath facility.
MOTION FOR RECONSIDERATION
The first motion before the Court is Plaintiffs' motion for
reconsideration in part of the Magistrate Judge's Order of April 25,
2002. (Dkt. No. 92). Specifically, Plaintiffs seek reconsideration of
their request that 10 documents at issue in that Order be released. For
the reasons provided below, Plaintiffs' request for reconsideration is
I. Motion for Reconsideration Standard
There are three possible grounds upon which a motion for
reconsideration may be granted: (1) an intervening change in controlling
law, (2) the availability of new evidence not previously available, or
(3) the need to correct a clear error of law or prevent manifest
injustice. In re C-TC 9th Ave. Partnership,
182 B.R. 1, 3 (N.D.N.Y. 1995). A district judge may reconsider any pretrial
matter determined by a magistrate judge under a "clearly erroneous or
contrary to law" standard of review. See
28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P.
72(a). A party seeking to overturn a ruling
under the clearly erroneous standard generally bears a "heavy burden."
See Corn-Tech Assoc., v. Computer Assoc., Int'l, Inc.,
753 F. Supp. 1078, 1099 (E.D.N.Y.1990), aff'd, 938 F.2d 1574 (2d
Cir. 1991). The Supreme Court has stated that "[a] finding is `clearly
erroneous' when although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and firm
conviction that a mistake has been committed." U.S. v. United States
Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)
(quoted in Derthick v. Bassett-Walker Inc., Nos. 90 Civ. 5427,
1992 WL 249951 at * 8 (S.D.N.Y. Sept. 23, 1992)). Pursuant to this highly
deferential standard of review, magistrate judges are afforded broad
discretion and reversal is only appropriate if there is an abuse of
discretion. See Derthick v. Bassett-Walker Inc., 1992 WL 249951
at * 8
(S.D.N.Y. Sept. 23, 1992). See, e.g., Nikkal Industries.
Ltd, v. Salton, Inc., 689 F. Supp. 187, 189 (S.D.N.Y. 1988)
(magistrate judge's decision on discovery dispute should be afforded
substantial deference and overturned only if found to be an abuse
As Bath makes no claim that there has been an intervening change in the
controlling law, nor that there is new evidence that was not previously
available, the Court reads its' motion as claiming that the Magistrate
Judge's decision involved a clear error. Therefore, the motion for
reconsideration will be granted only upon a finding that the Magistrate
Judge abused his discretion.
II. Magistrate Judge's Ruling
In the instant case, the Magistrate's Judge's order of April 25, 2002
was issued in response to an on-going dispute concerning the discovery of
98 documents. Therein, Judge Treece ordered the release of 20 of the
disputed documents. Judge Treece further ordered that the remaining
documents were privileged and granted Defendant a protective order,
precluding Plaintiffs' discovery of them. Bath now seeks reconsideration
of this order with respect to 10 documents held to be privileged by Judge
(a) Deliberative Process Privilege
The deliberative process privilege "rests on the obvious assertion that
officials will not communicate candidly among themselves if each remark
is a potential item of discovery and front page news, and its object is
to enhance the quality of agency decisions by protecting open and frank
discussion among those who make them within the Government." Dep't
of Interior v. Klamath
Water Users Protective Ass'n, 532 U.S. 1, 8-9 (2001)
(internal citations and quotations omitted). To qualify for this
privilege, the documents must be (1) predecisional, and (2) deliberative.
Grand Cent. P'ship, Inc. v. Cuomo, 166 F.3d 473, 482 (2d. Cir.
1999). "A document is predecisional when it is prepared in order to
assist an agency decisionmaker in arriving at his decision. . . . The
privilege protects recommendations, draft documents, and other subjective
documents which reflect the personal opinions of the writer rather than
the policy of the agency." Id. (internal citations and
quotations omitted). "A document is deliberative when it is actually
related to the process by which policies are formulated." Id.
Furthermore, the privilege does not generally extend to material which is
purely factual, and factual material once severed from the privileged
material in a document is discoverable. Id. (collecting cases).
(b) The Field affidavit
In assessing DEC's claims of privilege to the documents at issue, Judge
Treece relied on the April 5, 2002 affidavit of Bradley J. Field,
Director of Mineral Resources of DEC.*fn2 Mr. Field's affidavit was
filed and continues to be under seal. Plaintiffs acknowledge that the
affidavit's contents have not been revealed to them. (Dkt. No. 93 at 2).
Because they have not reviewed the document that provide the basis for
Judge Treece's decision, Plaintiffs recognize that they "cannot
substantively challenge Field's assertions in support of the claim of
privileges as to these particular documents at issue." (Dkt. No. 93 at
2). Rather, Plaintiffs go on to say that "they are confined to putting
forth, as best they can, reasons why the documents would appear, from the
made, to fall outside of the asserted privileges." (Dkt. No. 93 at
2). While Bath puts forth specific arguments for each document, Bath has
not seen the documents nor Mr. Field's detailed affidavit and its
arguments amount to conjecture. Such conjecture on the part of Plaintiffs
can hardly be sufficient to carry the "heavy burden" placed on them to
demonstrate that the Magistrate Judge abused his discretion. Plaintiffs
recognize that they "cannot knowledgeably evaluate whether [Mr. Field's
affidavit's] contents comply with the legal requirements necessary to
sustain the privileges asserted" and they "ask this Court to make that
independent analysis." (Dkt. No. 93 at 3). Such requests indicate that
rather than meeting their burden, Plaintiffs have redistributed it to the
Mr. Field's April 5, 2002 affidavit satisfies the requirement that the
affidavit specifically designate and describe the information that is
purportedly privileged for eight of the ten disputed documents.*fn3
Mobil Oil v. Dep't. of Energy, 520 F. Supp. 414, 416 (N.D.N.Y.
1981). Mr. Field's affidavit provides for each of these documents: (1) a
description, (2) the type of deliberation(s), and (3) the agency position
or decision to which it led. The descriptions of the documents in Mr.
Field's April 5, 2002 affidavit are often extensive and leave little
mystery as to the contents of the disputed material. Those descriptions
that are brief describe documents which themselves are short, or
otherwise, additional information describing the documents appear in the
column specifying the type of deliberation.
1. Documents must be deliberative
The government bears the burden of proving that the document is
Imogene Bassett Hosp. v. Sullivan, 136 F.R.D. 42, 44
(N.D.N.Y. 1991). Mr. Field's affidavit satisfies this requirement by
explaining for each document the "type of deliberation(s)". Mr. Field
provides an extensive explanation of such matters, noting whether the
document contains the writer's own analysis, viewpoint, or
recommendations. The deliberative process privilege is intended to
protect documents with such personal opinions from dissemination. The
sworn explanations of Mr. Field, in addition to a review of the
documents, provide sufficient evidence that the Magistrate did not abuse
his discretion in finding that the documents at issue were deliberative.
2. Documents must be pre-decisional
The government also bears the burden of proving the documents were
pre-decisional. Mary Imogene Bassett Hosp., 136 F.R.D. at 44.
The Magistrate did not abuse his discretion in holding that this
requirement was satisfied as to the contested documents. The DEC's policy
positions, or decision, that the documents fueled are explained by Mr.
Field in his affidavit. It is clear from such descriptions that the
documents were created prior to the DEC's final decision on the matters
contained in each. Hence, the Magistrate Judge did not abuse his
discretion in finding that these documents were pre-decisional, and the
documents therefore satisfied the requirements for the deliberative
3. No need for discovery outweighs the privilege
Plaintiff makes no convincing argument that the need for discovery of
these documents outweighs the privilege. See, e.g., Mary Imogene
Bassett Hosp., 136 F.R.D. at 44 (instructing that the deliberative
process privilege is a qualified one, and the court must conduct a
balancing test, considering (i) the relevance of the evidence sought to
be protected; (ii) the availability of other evidence; (iii) the
seriousness of the litigation and the issues involved; (iv) the role of
government in the litigation; and (v) the possibility of future
timidity by government employees who will be forced to recognize that
their secrets are voidable). While Plaintiffs argue that an in
camera inspection of the documents cannot substitute for a
comprehensive affidavit, (Dkt. No. 93 at 4), in the present case, the
inspection of the documents, coupled with the Field affidavit that
Plaintiffs have not seen, supply the Court with sufficient knowledge of
the documents' contents. See Grand Cent. P'ship, 166 F.3d at
483. The Magistrate did not abuse his discretion and there was no clear
error in finding that privilege attaches these eight documents.
4. Privilege question is moot with respect to the remaining
The Court now takes up consideration of the remaining document, namely
Document Bates No. 800101-800103.*fn4 As ordered by a subpoena served
upon the Governor's Office of Regulatory Reform on December 31, 2001,
Plaintiffs obtained an un-redacted copy of the 800101-800103 document.
(Dkt. No. 95 at 7). As this document is in Plaintiffs' possession, the
question of discovery is moot. The Court declines to decide whether the
Magistrate Judge abused his discretion in holding that the deliberative
process privilege was properly invoked as to this document.
SUMMARY JUDGMENT MOTIONS
Plaintiffs argue that New York is preempted from regulating its
facility by Congress' grant of authority to the Environmental Protection
Agency ("EPA") in the Safe Water Drinking Act ("SDWA"),
42 U.S.C. § 300f (2001), et seq. Specifically, Bath asks the Court
to hold that the state is preempted based on two permits that were issued
to Bath by the EPA under the SDWA's Underground Injection Control ("UIC")
program, 42 U.S.C. § 300h to 300h-8. Bath further argues
that the DEC is preempted because of the assertion of jurisdiction
by the Federal Energy Regulatory Commission ("FERC") under the Natural
Gas Act ("NGA"), 15 U.S.C. § 717, et seq., and Natural
Gas Pipeline Safety Act ("NGPSA"), 49 U.S.C. § 60101, et
Bath further seeks to preclude DEC action by claiming that the agency
has failed to enact regulations that would allow it to require sonar
surveys. Finally, Bath objects to the enforcement action that DEC is
pursuing against it.
(a) The Bath facility
Bath operates a facility in Steuben County, New York that stores
liquified petroleum gas ("LPG") in salt storage caverns which lie
approximately ½ mile below the surface of the earth. (Dkt. No.
116, ¶ 7).
Bath created these caverns by "solution-mining." In this process, a
well is first drilled from the surface of the earth until it reaches the
permeable salt layer. Fresh water is then pumped into the salt layer. The
water becomes saturated with salt, and the resulting mixture, brine, is
contained in the newly created cavern. When Bath receives LPG product, it
transfers brine from the underground caverns into holding ponds on the
surface to create storage space in the caverns. In response to delivery
requests, Bath pumps brine from the holding ponds into the caverns to
displace LPG that is stored there.
On March 8, 1996, Bath filed an application with the EPA for a Class
IID UIC Permit ("Class IID permit"). On May 21, 1996 Bath filed for a
Class III UIC Permit ("Class III permit").
(Dkt. No. 112, ¶ 15). Around August 1998, the EPA issued both
permits.*fn5 The scope of these permits is a source of contention
between the parties.
(b) Class IID UIC Permit
Bath and DEC agree that the Class IID permit allows Bath to dispose of
solution mined brine through a Class IID underground injection well,
Bath's Well No. 8. Bath argues that this permit gives it the authority to
operate that well as a brine disposal well, and the DEC is preempted from
further regulating Well No. 8 in any way that interferes with the rights
granted in that permit. DEC contends that to operate the well, a State
Pollutant Discharge Elimination System ("SPDES") permit, pursuant to New
York's Environmental Conservation Law ("ECL") Article 17, is also
required. DEC argues that in contrast to the UIC permit which seeks to
protect underground drinking water sources, this state permit seeks to
protect all state ground waters from the discharge of pollutants
such as brine.
(c) Class III UIC Permit
Second, a Class III permit has been issued by the EPA. DEC and Bath
agree that this permit allows Bath to expand the caverns to a diameter of
200 feet and use fresh water to solution the caverns. However, DEC argues
that under ECL 23-1301, it has the authority to require Bath to obtain a
permit for the subsequent underground storage of hydrocarbons, such as
LPG, in the modified caverns. As part of the application for this state
issued Article 23 permit, DEC has required sonar surveys. Bath argues
that DEC cannot impose sonar survey requirements because it is preempted
by EPA's decision during the Class III application process that sonar
surveys were not
required. Upon Bath's failure to submit sonar surveys, DEC denied
the ECL Article 23 permit.
This litigation does not mark the introduction of the parties. Rather,
they have been in several complex litigations concerning environmental
regulation of the facility. The pertinent facts will be set forth in the
discussion that follows.
(a) Summary Judgment Standard
Federal Rule of Civil Procedure 56 provides that summary judgment is
proper when "the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In applying
this standard, courts must "`resolve all ambiguities, and credit all
factual inferences that could rationally be drawn, in favor of the party
opposing summary judgment.'" Brown v. Henderson, 257 F.3d 246,
251 (2d Cir. 2001) (quoting Cifra v. Gen. Elec., Co.,
252 F.3d 205, 216 (2d Cir. 2001)).
Once the moving party meets its initial burden by demonstrating that no
material fact exists for trial, the nonmovant "must do more than simply
show that there is some metaphysical doubt as to the material facts."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986) (citations omitted). The nonmovant "must come
forth with evidence sufficient to allow a reasonable jury to find in her
favor." Brown, 257 F.3d at 251 (citation omitted). Bald assertions
or conjecture unsupported by evidence are insufficient to overcome a motion
for summary judgment. Carey v. Crescenzi, 923 F.2d 18, 21 (2d
Cir. 1991); W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118,
121 (2d Cir. 1990).
Preemption is a concept embedded in the United States Constitution. The
Supremacy Clause declares that "the Laws of the United States . . . shall
be the supreme Law of the Land; and the Judges in every State shall be
bound thereby, any Thing in the Constitution, or Laws of any State to the
Contrary notwithstanding." U.S. Const, art. VI, cl. 2.
Under this clause, federal law may supersede state laws or actions in
three ways. In what has been called "express preemption", Congress may
state in express terms that its law preempts state law. Hillsborough
County, Florida v. Automated Med. Labs., 471 U.S. 707, 712 (1985).
The second kind of preemption has been termed "field preemption". Field
preemption "may be inferred where the scheme of federal regulation is
sufficiently comprehensive to make reasonable the inference that Congress
left no room for supplementary state regulation." Cal. Fed. Sav. and
Loan Ass'n v. Guerra, 479 U.S. 272, 280-81 (1987) (internal
citations omitted). Third, state law is preempted to the extent that it
actually conflicts with federal law. Even "where Congress has not
completely displaced state regulation in an area, state regulation may
nonetheless be pre-empted to the extent that it actually conflicts with
federal law that is, to the extent that it `stands as an obstacle
to the accomplishment and execution of the full purposes and objectives
of Congress.'" Volt Info. Sciences. Inc. v. Bd. of Trustees of
Leland Stanford Junior Univ., 489 U.S. 468, 477 (1989) (quoting
Hines v. Davidowitz, 312 U.S. 52, 67 (1941)).
The parties do not contest that Congress did not expressly pre-empt
state law in enacting the SDWA. Therefore, the Court will only address
whether (1) Congress has pre-empted the field of underground injection
control regulation, or (2) there is an actual conflict between the DEC
actions and the legislation or promulgated regulations pursuant to the
1. Field pre-emption
The SDWA was enacted "to assure that water supply systems serving the
public meet minimum national standards for protection of public health."
City of Evansville, Inc. v. Ky. Liquid Recycling,
604 F.2d 1008, 1016 n. 25 (7th Cir. 1979) (quoting H.R.Rep. No.
93-1185, reprinted in  U.S. Code Cong. & Admin. News at 6454),
cert. denied, 444 U.S. 1025 (1980). The SWDA evinces
Congress' intent to occupy the field of public drinking water regulation.
Mattoon v. City of Pittsfield, 980 F.2d 1. 4 (1st Cir. 1992).
See also Arco. Oil and Gas Co. v. E.P.A., 14 F.3d 1431, 1436
(10th Cir. 1993). Therefore, in the field of public drinking water
regulation, state regulation is pre-empted by the federal statute.
(i) The UIC program preempts the field
The federal underground injection control ("UIC") program was
established in part C of the SDWA and was similarly enacted to protect
underground drinking water sources endangered by underground injection.
Leaf v. EPA, 118 F.3d 1467, 1475-76 (11th Cir. 1997) (quoting
the House Report, H.R.Rep. No. 93-1185 at 29, reprinted in
1974 U.S.C.C.A.N. 6454, 6481); 42 U.S.C. § 300h-1(a);
42 U.S.C. § 300h-1(b)(1). As the SDWA preempts the field, the UIC
program, a program authorized under the SDWA, similarly preempts the
field it occupies.
Under the SDWA's UIC program and corresponding regulations, a state may
seek "primacy", that is, obtain EPA approval for a UIC program and then
oversee the program in that state. 42 U.S.C. § 300h-1. Failure to
seek such primacy prohibits the state from regulating the UIC program,
and instead leaves it under the auspices of the EPA.
42 U.S.C. § 300h-1. Because New York has not sought primacy of the UIC
program, the state cannot regulate the UIC program, and the EPA
administers it in New York.
(ii) State regulation is permitted outside of the preempted
However, even though the field has been preempted, there is room for
state regulation over areas in which the SWDA and its UIC program don't
enter. DEC recognizes that by not seeking primacy, it has no authority to
regulate the UIC program, but it argues that "the UIC program leaves
ample room for DEC to regulate matters." (Dkt. No. 118 at 14). At least
one circuit has recognized that when field preemption is established, if
a federal agency nonetheless instructs an applicant to obtain the
relevant state permits, this demonstrates that "even within an occupied
field federal regulations may tolerate or authorize some exercise of
state authority." NE Hub Partners v. CNG Transmission Corp.,
239 F.3d 333, 346 n. 13 (3d Cir. 2001).
The EPA has repeatedly instructed that DEC regulates hydrocarbon
storage (Dkt. No. 112, Exhibit 6: EPA Class III Permit Responsiveness
Summary at 832384) and the surface discharge of brine (Dkt. No. 119,
Exhibit 4: EPA Class IID Permit Responsiveness Summary) and that Bath is
not excused from obtaining relevant state approval. See Dkt.
No. 112, Exhibit 4: Class IID permit at 3-4, Exhibit 5: Class III Permit
at 3-4, Exhibit 6: EPA Class III Permit Responsiveness Summary at 832385.
Such warnings indicate that within the occupied field, the federal
government authorizes the limited exercise of state regulation. Thus, the
EPA regulates underground injection for the protection of underground
drinking water, but the state still retains limited regulatory authority
over underground injection.
Both parties to this action discuss 42 U.S.C. § 300h-2(d), the
"savings clause", that appears in the UIC program's statute:
(d) State authority to adopt or enforce laws
or regulations respecting underground injection
Nothing in this subchapter shall diminish any
authority of a State or political
subdivision to adopt or enforce any law or
regulation respecting underground injection but no
such law or regulation shall relieve any person of
any requirement otherwise applicable under this
Plaintiffs interpret this "savings clause" to mean that a state retains
authority to fully act in the field of underground injection control only
if that state has submitted and received EPA approval for a UIC program.
(Dkt. No. 113 at 27). However, if that interpretation were correct, then
this clause would be redundant. 42 U.S.C. § 300h-1 clearly
establishes that a state can independently administer a UIC program only
if it obtains EPA approval. In light of this policy being established in
another section of the regulation, it is necessary to assign this savings
clause a different meaning. Union of Needle Trades v. U.S.
I.N.S., 202 F. Supp.2d 265, 271 (S.D.N.Y. 2002) ("Courts . . . are
obliged to give effect to every clause and word of a statute and to avoid
reading legislation in a way that renders some words altogether
redundant.") (internal citations omitted). See also U.S. v. Nordic
Vill., 503 U.S. 30, 35-36 (1992) (explaining that every word must be
given operative effect otherwise one paragraph in the statute would have
The Court interprets this savings clause to reinforce that Congress
intended that states retain authority respecting underground injection so
long as it does not impinge on the UIC program administered by the EPA.
See Int'l Paper Co. v. Ouellette, 479 U.S. 481, 492 (1987)
(Clean Water Act's savings clause made it clear "[a]lthough Congress
intended to dominate the field of pollution regulation, the savings
clause negates the inference that Congress `left no room' for state
causes of action.").
(iii) Sonar surveys and field preemption
By requiring sonar surveys for the state storage permit, DEC is not
acting within the field regulated by the federal UIC program.
The parties agree that the Class III permit allows Bath to expand its
caverns. Because DEC's request to require sonar surveys of the caverns
was considered in the Class III permit application process, Bath argues
that DEC is preempted from requiring sonar surveys. (Dkt. No. 113 at 23).
DEC asserts that sonar surveys have been requested pursuant to ECL
23-1301, as part of the state's regulation for caverns that store LPG.
(Dkt. No. 116, ¶¶ 19, 22; Dkt. No. 118, at 11).
The EPA Class III permit allows Bath to operate a well that injects for
the extraction of minerals such as salt to expand caverns and, to inject
fluids to displace gas stored in the caverns. See
40 C.F.R. § 144.6(c). The permit does not permit Bath to also store LPG
in those modified caverns. The EPA specifically stated that this permit
"is for the injection of water into a salt bed, not for the storage of
LPG or gas." (Dkt. No. 112, Exhibit 6: EPA Class III Permit Responsiveness
Summary at 832385).
DEC has the authority to regulate hydrocarbon storage, as recognized by
the EPA. See Dkt. No. 112, Exhibit 6: EPA Class III Permit
Responsiveness Summary at 832384 ("Storage of hydrocarbons in caverns is
also regulated by the Mineral Resources Division of the New York State
[DEC]."). In its regulation of underground storage pursuant to ECL
23-1301, DEC may require a permit to store LPG in a modified cavern.
In re Bath Petroleum Storage, Inc. v. DEC, 244 A.D.2d 624 (3rd
Dept. 1997). Even Bath acknowledged DEC's regulatory authority when it
stated that the "issue before this Court is not whether the DEC
has statutory authority to regulate the underground storage of [LPG] and
other hydrocarbons in New York. The issue is whether in exercising that
authority, it may do so in a way that undermines the federally
administered program." (Dkt. No. 124, at 3) (emphasis added). Such
statements demonstrate acquiescence that DEC has authority to regulate
LPG and is not preempted in that field.
(iv) Field preemption and the SPDES Permit
Additionally, DEC is not acting within the field regulated by the
federal UIC program by requiring an SPDES permit.
DEC asserts that it retains the authority to require that Bath obtain
an SPDES permit to discharge brine wastewater to the groundwaters of the
state. (Dkt. No. 118, at 9). Bath contests this requirement because it
argues that (1) the SDWA preempts this regulation, and (2) the permit is
not necessary because its expert notes that no significant groundwater
was ever encountered when drilling Well No. 8. (Dkt. No. 113, at 24).
The SPDES permitting program is codified in ECL Article 17, Title 8,
State Pollutant Discharge Ellimination System. Relevant to the
Court's analysis is the New York Legislature's stated purpose in enacting
§ 17-0801 Purpose
To create a state pollutant discharge elimination
system (SPDES) to insure that the State of New
York shall possess adequate authority to issue
permits regulating the discharge of
pollutants . . . into the waters of the state,
upon condition that such discharges will conform
to and meet all applicable requirements of the
Federal Water Pollution Control Act . . . and
rules, regulations, guidelines, criteria,
standards and limitations adopted pursuant thereto
relating to effluent limitations, water quality
related effluent limitations, new source
performance standards, toxic and pretreatment
effluent limitations, ocean discharge criteria,
and monitoring to participate in the nation
pollutant discharge elimination system (NPDES)
created by the [Federal Water Pollution Control]
Since 1973 when this state provision was enacted, the "Federal Water
Pollution Control Act" has been renamed the "Clean Water Act" ("CWA").
The CWA established the NPDES permitting system, but allows states to
administer the program once obtaining EPA approval. New York has obtained
such approval, and the legislation cited above codifies the approval in
the SPDES program.
The SPDES permitting program carries out the directives of the Clean
Water Act. The DEC and its SPDES permit program are preempted by the SDWA
then only if the CWA is preempted by the SDWA. Bath argues that the SPDES
program is preempted because the "perceived basis of this [SPDES program]
is to protect New York State's groundwater resources the very
goal of the EPA-administered UIC program." (Dkt. No. 122 at 11). Courts
have held that the SWDA does not preempt the CWA:
Clearly, the Safe Drinking Water Act does not
provide adequate justification for ignoring the
express and unambiguous directive of the
previously adopted Clean Water Act. The objective
of the Clean Water Act is to preserve the
environmental integrity of navigable waters, while
the objective of the Safe Drinking Water Act is to
prescribe minimum national standards concerning
the purity of drinking water for the protection of
the public health. Neither of these objectives are
Hudson River Fisherman's Ass'n v.
City of New York, 751 F. Supp. 1088, 1100
In Hudson River Fishermen's Association, the Southern
District held that DEC had no authority to exempt New York City from CWA
requirements merely because the City was attempting to obtain the
relevant permit in compliance with the SDWA. Specifically, the City
argued that "DEC, exercising its scientific expertise, has decided to
address all of the environmental issues posed by the Chelsea
Pumping Station within the context of granting or denying [a SDWA] water
supply permit". Id. at 1099. In rejecting this argument, the
court recognized that "where `two statutes are capable of coexistence, it
is the duty of the court, absent a clearly expressed congressional intent
to the contrary, to regard each as effective.'" Id. at 1100
(quoting Morton v. Mancari, 417 U.S. 535
, 551 (1974);
Ruckelshaus v. Monsanto Co., 467 U.S. 986
also Natural Resource Defense Council. Inc., et al v. E.P.A.,
824 F.2d 1258
(1st Cir. 1987) (holding that EPA's regulation under the
Nuclear Waste Policy Act was arbitrary and capricious where the
standards therein authorized underground injection that violated
A Class IID UIC permit does not excuse compliance with other applicable
state regulations. The EPA recognizes this:
The federally issued UIC permits in question will
regulate fluid injection wells. . . . Surface
disposal of fluids, such as into waterways, will
not be regulated by these permits. At the federal
level, discharges into surface waterways are
regulated pursuant to the Clean Water Act. That
program was delegated to New York State.
Therefore, surface discharges would come under the
jurisdiction of NYSDEC and surface discharges
would be regulated under [SPDES].
Dkt. No. 119, Exhibit 4: EPA Class IID Permit
The SPDES permit program is not preempted by
the SDWA, and DEC may order Bath to obtain this
Bath also argues that its expert demonstrated that an SPDES permit is
unnecessary based on the SPDES permit requirements and standards. The
Court will not answer the question of whether a state permit is actually
needed to comply with state regulation at the Bath facility.
2. Conflict Preemption
The next step is to determine whether there is a conflict between EPA
and DEC actions such that DEC is preempted under the rationale of
conflict preemption. "Even where Congress has not completely displaced
state regulation in a specific area, state law is nullified to the extent
that it actually conflicts with federal law." Hillsborough
County. Florida v. Automated Med. Labs., Inc., 471 U.S. 707, 712
(1985). Such a conflict necessarily arises where "`compliance with both
federal and state regulations is a physical impossibility.'"
Id. (quoting Florida Lime & Avocado Growers. Inc. v.
Paul, 373 U.S. 132, 142-43 (1963)). Moreover, an actual conflict
exists when a state law "`stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress,'" in enacting
federal legislation. Id. (quoting Hines v.
Davidowitz, 312 U.S. 52, 67
In areas where federal and state law are meant to be implemented
together, then that state law does not frustrate the effectiveness of
federal law. Enforcement of one cannot be said to impede the other. In
"an area of collaborative federal and state regulation, coincidence of
purpose actually militates against, rather than in favor of, preemption.
Where the Government has provided for collaboration the courts should not
find conflict." Chevron U.S.A., Inc. v. Hammond, 726 F.2d 483,
497 (9th Cir., 1984) (citations omitted) (finding no preemption because
the federal statute "which deals with a limited category of vessels and
pollutants, is of course only a small part of the overall federal marine
environmental protection scheme.").
(i) Conflict preemption and the sonar surveys
Before issuing the Class III UIC permit, the EPA held a public comment
period to solicit public feedback. DEC filed written comments that the
EPA should require sonar surveys. After considering the DEC's comments,
the EPA did not immediately require sonar surveys, but said that it may
eventually require such surveys. See Dkt. No. 112, Exhibit 6:
EPA Class III Permit Responsiveness Summary at 832370.
Bath argues that "[g]iven that the EPA included its right to require
the sonar surveys in the future as a condition of the UIC permit, the DEC
is precluded from insisting upon these tests to satisfy its own desires."
(Dkt. No. 113 at 23). However, DEC argues that conflict preemption does
not preclude its exercise of authority over the Bath facility because the
"UIC program does not set standards for . . . the storage of
hydrocarbons," and it is the storage of hydrocarbons that DEC is
attempting to regulate with the sonar survey requirement. (Dkt. No. 118
The first consideration is whether there is a direct conflict that
makes adherence to both
permits physically impossible. Although it acknowledged that it
may ask for sonar surveys in the future, EPA itself instructed
that "any sonar-survey requirement would be separate from the
monitoring plan called for [in the Class III permit]." (Dkt. No. 112,
Exhibit 6: EPA Class III Permit Responsiveness Summary at 832370)
(emphasis added). Therefore, because sonar surveys are not a part of the
UIC Class III permit, performing sonar surveys does not violate any terms
of that permit. It is possible for Bath to adhere to the EPA UIC Class
III permit terms, while at the same time conducting DEC's required sonar
surveys to comply with state permitting requirements. DEC's sonar survey
requirement does not create a direct conflict with federal law.
Second, the Court must consider whether conducting sonar surveys stands
as an obstacle to the objectives of federal law. In a recent Second
Circuit decision, Clean Air Markets Group v. Pataki,
338 F.3d 82, 84 (2d Cir. 2003), a Clean Air Act provision limited
SO2 emissions, but allowed efficient corporations to sell
emissions allowances to any other utility. A New York regulation
assessed a fee to in-state corporations that sold their allowances to
utilities in certain geographical locations, because the pollution from
those purchasers made its way into New York. Id. A conflict
existed because the state regulation effectively prevented the transfer
of allowances to "anyone" as the federal regulation encouraged.
Id. at 88. Additionally, Congress had considered and rejected
the idea of imposing geographical limitations on emissions allowance
transfers which the state now imposed. Id. Finally, "EPA
regulations expressly mandate that state programs . . . shall not
restrict or interfere with allowance trading." Id. The court
struck down the state law finding that it actually negated Congress'
objective of creating a nationwide trading system of
SO2 emissions allowances.
In the case at bar, however, the Article 23 permit requirements do not
impede the federal
objective of nationally protecting underground sources of drinking
water, nor do they interfere with the methods by which that goal is
obtained. Unlike in Clean Air Markets, where the EPA regulation
instructed that state regulation may not interfere with allowance
trading, the EPA has instructed Bath that state hydrocarbon storage
regulations are intended to work in unison to regulate an underground
injection facility that stores LPG.
In addressing DEC's request that Bath conduct sonar surveys prior to
issuance of the UIC permits, the EPA responded by assessing whether sonar
surveys were necessary to "ensure that no fluid can leave the injection
zone and migrate up toward underground sources of drinking water. . . ."
Dkt. No. 112, Exhibit 6: EPA Class III Permit Responsiveness Summary at
832370. EPA considered whether sonar surveys were necessary to protect
underground sources of drinking water in accordance with the SDWA
However, EPA defers to DEC to regulate hydrocarbon storage. The EPA
specifically recognizes DEC's authority in this area, and instructs
permit applicants to adhere to state regulatory requirements.
See Dkt. No. 112, Exhibit 6: EPA Class III Permit
Responsiveness Summary at 832384, 832385). The DEC requirement that sonar
surveys be conducted does not impact the method or objective of
protecting underground drinking water sources.
The sonar survey requirement stemming from the Article 23 permitting
process is not an obstacle to, nor does it impede, the full effectiveness
of the federal goal of protecting underground drinking water sources. EPA
recognizes DEC's independent authority to regulate LPG storage.
(ii) Conflict preemption and the SPDES Permit
Bath argues that the state is preempted from requiring an SPDES permit
because it stands as an obstacle to Bath's use of its EPA permit. Bath
argues that the state requirements are an obstacle
because the "direct effect of [the] State action is to render
useless Bath's federal Class IID UIC permit for Well No. 8." (Dkt. No.
122, at 24).
In the present case, the state statute that requires Bath to obtain a
SPDES permit does not frustrate the full effectiveness of federal law. As
explained above, the state SPDES permit program is authorized by the CWA.
The CWA and SDWA are in fact complementary and must be implemented
together. Hudson River Fisherman's Ass'n, 751 F. Supp. at 1100
(Explaining that the objectives of the SDWA and the CWA are not in
conflict, but rather are complementary, and because the two statutes are
capable of coexistence, it is the duty of the court to regard each as
effective). As noted above, the EPA even stated:
The federally issued UIC permits in question will
regulate fluid injection wells. . . . At the
federal level, discharges into surface waterways
are regulated pursuant to the Clean Water Act. That
program was delegated to New York State.
Therefore, surface discharges would come under the
jurisdiction of [DEC] and surface discharges would
be regulated under [SPDES].
Dkt. No. 119, Exhibit 4: EPA Class IID Permit
Responsiveness Summary. See also Dkt.
No. 112, Exhibit 6: EPA Class III Permit
Responsiveness Summary at 832385 ("Discharge of
brine into the Cohocton River is outside the
jurisdiction of EPA's Underground Injection
Control program and is covered by the [DEC].")
Hence, because these two statutes are intended to be implemented
concurrently, enforcement of one statute cannot be said to be an obstacle
to the other. NY State Dept. of Soc. Services v. Dublino,
413 U.S. 405
, 421 (1973) ("Where coordinate state and federal efforts exist
within a complementary administrative framework, and in the pursuit of
common purposes, the case for federal pre-emption becomes a less
persuasive one."). See also Exxon Corp. v. Governor of
Maryland, 437 U.S. 117
, 130 (1978). In light of this scheme of
regulatory authority, state law is not in conflict and not preempted.
(c) FERC regulation
Bath also contends that FERC has exerted jurisdiction over the
facility, therefore preempting DEC in its entirety. Specifically, because
FERC has asserted jurisdiction, the provisions of the NGA and NGPSA
govern regulation at the Bath facility. DEC argues that FERC does not
have jurisdiction in this matter, and even if it does, DEC is not
preempted by the NGA and NGPSA.
1. The CNG lease agreement for the storage of natural gas
In 1996, Bath entered into a lease agreement with CNG Transmission
Corporation ("CNG") to convert part of the facility into one for the
storage of natural gas. In May 1996, CNG applied to FERC for a
certificate of public necessity to operate a natural gas storage facility
on site. In a September 10, 1996 letter Kevin Madden, Director of FERC's
Office of Pipeline Regulation, informed the parties that the proposed
plan to convert the facility to store natural gas was subject to FERC
jurisdiction.*fn6 The CNG lease and conversion project was subsequently
cancelled. The parties dispute whether FERC has "continuing jurisdiction"
over the facility even though there are no current plans to convert it
into one for the storage of natural gas.*fn7 Bath argues that DEC is
preempted in its entirety because the FERC asserted jurisdiction over the
facility in 1996, and that jurisdiction never ceased because Bath intends
to convert the facility in the future. DEC argues that because there is
no on-going project, FERC no longer retains jurisdiction, making NGA and
NGPSA inapplicable to Bath's facility and unable preempt the state's
2. FERC jurisdiction over the facility
In its September 10, 1996 letter, the FERC explained that "the
construction of facilities which are ultimately intended for use in the
interstate storage or transportation of natural gas are subject to
jurisdiction of the Commission." For this proposition, the FERC relied on
the case of Petal Gas Storage Co., 64 FERC ¶ 61, 190
(1993), as Bath does now.
Petal Gas does not stand for the proposition that once FERC
asserts jurisdiction it may continue indefinitely. FERC's Petal
Gas decision notes that "Petal currently has no contract or lease in
place with Chevron to lease any storage capacity in the cavern. Petal
expects to enter into such a lease agreement if and when the Commission
issues Petal a certificate. . . ." Petal Gas, 64 FERC ¶ 61,
190, at 62, 570 (F.E.R.C. 1993). In contrast, Bath has no pending
certificate application before the FERC related to conversion of the
facility to one for natural gas storage. (Dkt. No. 122, ¶ 58). It has
no pending agreement with a third party to lease storage space; the CNG
project that contemplated the storage of natural gas at the Bath
facility, and which formed the basis for FERC's jurisdiction, has ceased.
Bath asserts that FERC retains jurisdiction because Bath "does intend,
as some future time, to pursue" conversion of the facility into one for
natural gas storage. (Dkt. No. 124, at 14). This position is flawed. If
such statements were credited, then Bath could essentially guard its
facility from state regulation by claiming forever that it has future
plans to convert the facility to one for natural gas storage, without
ever acting on those plans.
Cases holding FERC jurisdiction proper under NGA and NGPSA have
involved regulation of facilities that currently stored natural gas.
See, e.g., Public Serv. Comm'n of N.Y. v. Fed. Power
Comm'n, 543 F.2d 757 (D.C. Cir. 1974); Mobil Oil Exploration
& Producing Southeast, Inc. v.
United Distribution Companies, 498 U.S. 211, (1991)
(Explaining that § 7(b) of NGA prohibits a natural gas producer from
abandoning its contractual obligations without first obtaining FERC
permission to do so). FERC jurisdiction has been rejected where the
facility does not store natural gas. See, e.g., Public
Serv. Comm'n of N.Y. v. Fed. Power Comm'n, 543 F.2d 392 (D.C. Cir.
1976) (rejecting jurisdiction of Federal Power Commission [now FERC]
because company was storing only synthetic, and not natural, gas).
Without an application pending with the FERC evidencing a plan to store
natural gas, the FERC does not retain jurisdiction over the Bath facility
and the NGA and NGPSA are presently inapplicable.
(d) DEC's authority under the statute
Bath also argues that even if the state is not preempted, New York is
unlawfully enforcing its permit requirements as to Bath on an ad hoc
basis because there are no regulations relating to solution mining, nor
are there regulations that would authorize the DEC to require sonar
testing of salt caverns. (Dkt. No. 124, at 3-5; Dkt. No. 112, ¶¶
25-28). Bath states that the purpose of sonar testing is to
determine the size and shape of the caverns, (Dkt. No. 112, ¶ 22),
which determination Bath has argued falls solely within the purview of
the EPA. DEC relies on ECL 23-1301 for its authority:
Title 13-UNDERGROUND STORAGE OF GAS
§ 23-1301. Procedure for obtaining
underground storage permit No underground
storage reservoir shall be devoted to the storage
of . . .[LPG] unless the prospective operator of
such storage reservoir shall have received from
[DEC]. . . an underground storage permit. . . .
The application for said permit shall include the
(a) A map showing the location and boundaries of
the proposed underground storage reservoir.
(b) A report containing sufficient data to show
that the reservoir is adaptable for storage
. . .
(d) Such other information as the department may
DEC argues that sonar surveys provide information that Bath must
provide to comply with ECL 23-1301 which outlines the procedural
requirements for obtaining a permit to store LPG in modified caverns.
Specifically, the sonar surveys "provide information necessary for an
underground storage reservoir map and reservoir suitability report
required by ECL 23-1301(a) and (b). Such map and report demonstrate the
ability of caverns to safely store gas." (Dkt. No. 116, ¶ 22).
In reviewing state legislation, courts have acknowledged that "[w]hen
the purpose of the statute is specific, it is unnecessary for an agency
to promulgate formal rules or regulations as long as the intent of the
statute is effected." Ellis Ctr. for Long Term Care v. DeBuono,
261 A.D.2d 791, 795 (App. Div.3d Dept. 1999). See also O'Neil v.
Metropolitan Tr. Auth., 143 A.D.2d 739, 740 (App. Div.2d Dept.
1988), appeal dismissed. 74 N.Y.2d 909 (holding that statute
making it unlawful to smoke tobacco. on mass transportation required no
In Occidental Chemical Corporation v. New York State Environmental
Facilities Corporation, 113 A.D.2d 4 (3d Dept. 1985), leave
denied, 67 N.Y.2d 604, the State denied a corporation financing
related to chemical waste monitoring. The state statute gave the agency
authority to "deny any application `for any reason it deems appropriate
in the public interest'." Id. at 5-6. The corporation argued
that the agency acted arbitrarily and capriciously in denying the
application on this "public interest" ground, because it had no
guidelines to establish what that term meant. Id. at 6. In
explaining that no regulations were required, the court instructed:
[I]t is well established that if the criterion of
"public interest" is directly related to and
limited by the general purpose of the legislation
itself, that is a sufficient guide
for agency action. . . . The declared policy
of the Legislature in authorizing respondent to
extend credit to enterprises making the capital
outlay to comply with the State's environmental
laws is to control and prevent pollution of the
air, land and waters of the State. . . . As the
purpose of [the law] is thus quite specific, all
that is required of respondent to effect this
mandate in any particular instance is conformity
with the statutory language and policy. . . .
[T]here is no constitutional compulsion . . . to
translate the Legislature's standards into formal
and detailed rules of thumb prior to applying them
to [this] case.
Id. (internal citations omitted).
Occidental is instructive. In the present case, the statute's
purpose is clear: regulate LPG's underground storage to protect
landowners' rights and the general public. See ECL 23-0301.
With this specific directive, the discretion of the DEC is not unbridled.
As this Court has said:
Under New York State Environmental Conservation
Law, the [DEC] was entitled to ask Plaintiffs for
"such other information as the department may
require" when it ruled on their permit
application. See N.Y.Envtl.Conserv.Law
§ 23-1301(1)(d) (McKinney 1997). Whether the
Departments' request for sonar testing was within
its discretion under this or another section of
New York State's Environmental Conservation Law,
the Court does not hazard a guess. Suffice it to
say, it is at least arguable, if not highly
likely, that the Department of Environmental
Conservation acted within its discretion when
ordering Plaintiffs to provide it with this
information. Bath Petroleum Storage, Inc. v.
Sovas, 136 F. Supp.2d 52, *59-60 (N.D.N.Y.
2001) (rejecting Bath's allegation that DEC
officials violated Bath's due process rights when
they required sonar surveys for an Article 23
The legislature saw fit to give DEC authority to require any
information it may need in assessing an application for a LPG storage
permit. It is within the DEC's discretion under ECL 23-1301 to require
sonar surveys, and as DEC did not abuse its discretion, this Court will
not reconsider that decision.
(e) Enforcement Action
Finally, Bath objects to DEC's administrative enforcement action which
in Counts Nine through Fifteen alleges that Bath expanded six of its
caverns without the appropriate state permit.
The parties agree that the EPA Class III permit allows Bath to expand
the caverns to a
diameter of 200 feet and contemplates the use of fresh water to
solution the caverns. Therefore, Bath argues that this enforcement
action, which is premised on the enlargement of the caverns being
violative of state law, is preempted. DEC argues that the administrative
enforcement proceeding is "wholly independent of plaintiffs' UIC permits
and former gas conversion project" because it "concerns plaintiffs'
violations of the ECL and applicable regulations regarding their 1992 ECL
article 23 permit, a former SPDES permit, and expansion activities
without a permit." (Dkt. No. 118, at 23).
For the reasons explained above, DEC has authority to regulate the
SPDES program, and as such it is not preempted from bringing an
enforcement action pursuant to that authority.
Furthermore, as explained above, DEC may regulate the underground
storage of LPG pursuant to ECL Article 23. While DEC cannot regulate the
expansion of the caverns, regulation of the resulting modified structure,
i.e. the newly formed caverns, for the storage of LPG is within the
purview of DEC pursuant to Article 23. Additionally, modifications of
caverns that will be used to store LPG is within the jurisdiction of DEC.
Therefore, DEC is not precluded from bringing an enforcement action
pursuant to the authority.*fn8
For the reasons set forth above, it is hereby
ORDERED, that Plaintiffs' motion for reconsideration is
DENIED; and it is further
ORDERED, that Plaintiffs' motion for summary judgment is
DENIED; and it is further
ORDERED, that Defendant's motion for summary judgment is
GRANTED; and it is further
ORDERED, that the case is DISMISSED; and it is further
ORDERED, that the Clerk serve a copy of this order on all parties.
IT IS SO ORDERED.