Bath Petroleum Storage, Inc. v. Sovas

• Decision Date: 21 March 2001
• Docket Number: No. 98CV347LEKRWS.,98CV347LEKRWS.
• Citation: 136 F.Supp.2d 52
• Parties: BATH PETROLEUM STORAGE, INC. and E.I.L. Petroleum, Inc., Plaintiffs, v. Gregory H. SOVAS, individually and as Director of the Division of Mineral Resources, New York State Department of Environmental Conservation; Bradley J. Field, individually and as Acting Director of 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 Commissioner of the New York State Department of Environmental Conservation; New York State Department of Environmental Conservation; and The State of New York, Defendants.
• Court: U.S. District Court — Northern District of New York

136 F.Supp.2d 52

BATH PETROLEUM STORAGE, INC. and E.I.L. Petroleum, Inc., Plaintiffs, v. Gregory H. SOVAS, individually and as Director of the Division of Mineral Resources, New York State Department of Environmental Conservation; Bradley J. Field, individually and as Acting Director of 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 Commissioner of the New York State Department of Environmental Conservation; New York State Department of Environmental Conservation; and The State of New York, Defendants.

No. 98CV347LEKRWS.

United States District Court, N.D. New York.

March 21, 2001.

COPYRIGHT MATERIAL OMITTED

John J. Privitera, McNamee, Lochner Law Firm, Albany, NY, W. Michael Holm, Jerry William Boykin, Womble, Carlyle Law Firm, McLean, VA, for Plaintiffs.

Kathleen Liston Morrison, Office of Attorney General, Albany, NY, Joseph S. Koczaja, State of New York, Department of Law, Albany, NY, for Defendants.

MEMORANDUM—DECISION AND ORDER

KAHN, District Judge.

Presently before the Court is Plaintiffs' motion for reconsideration. For the following reasons, Plaintiffs' motion is GRANTED.

I. BACKGROUND

A. Factual History

Plaintiffs own and operate a liquid petroleum gas ("LPG") storage facility in Bath, New York. As discussed in this Court's prior decisions, Plaintiffs received permission from defendant New York State Department of Environmental Conservation ("NYDEC") to expand this facility in 1992. Four years later, Plaintiffs entered into a contract with CNG Transmissions Corporation ("CNG"). Under the terms of this contract CNG, was going to utilize Plaintiffs' facilities to store natural gas.

Because the storage facilities, as constructed, could not accommodate the needs of CNG, Plaintiffs submitted a permit modification application to defendant DEC requesting permission to alter their facilities. Defendant DEC refused to grant Plaintiffs' permit application, in part, because it felt that sonar testing was needed to ensure that the underlying caverns in which Plaintiffs' facilities were located were safe. Defendant DEC also refused to grant Plaintiffs their permit because they had not supplied it with a State Pollution Discharge Elimination System ("SPDES") permit application. Because of these regulatory delays, CNG ultimately backed out of its agreement with Plaintiffs and the natural gas project fell through.

B. Procedural History

In 1998, after Plaintiffs' deal with CNG collapsed, they commenced the instant suit asserting five federal causes of action and two pendent state law causes of action against Defendants. Counts one and two sought declaratory relief from this Court on the ground that the State's imposition of various construction modification requirements on Plaintiffs was preempted by 42 U.S.C. § 300(h)(b)(2) and 15 U.S.C. § 717, et seq. Plaintiffs' third claim sought injunctive relief against defendants Sovas and Field on the ground that they violated Plaintiffs' due process rights while their fourth and fifth claims sought damages from defendants Sovas, Field, and Pearson under 42 U.S.C. § 1983.

Plaintiffs' pendent state law claims alleged that Defendants violated New York State's Administrative Procedure Act ("NYSAPA") when they compelled Plaintiffs' to comply with their directives without, in part, first creating a regulatory impact statement. Plaintiffs' second pendent state law claim alleged that Defendants violated their state due process rights codified under Article 1, § 6 of the New York State Constitution. This Court dismissed all of Plaintiffs' claims on January 10, 2000 on the grounds that CNG's withdrawal from the natural gas project made the entire case unripe for judicial review. Plaintiffs' current motion seeks reconsideration of that decision.

II. DISCUSSION

A. Standard for Reconsideration

Motions for reconsideration proceed in the Northern District of New York under Local Rule 7.1(g), unless otherwise governed by Fed.R.Civ.P. 60. The "clearly erroneous" standard of review applies to motions for reconsideration. The moving party must "point to controlling decisions or data that the court overlooked — matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.1995).

Generally, the prevailing rule in the Northern District "recognizes only three possible grounds upon which motions for reconsideration may be granted; they are (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. P'ship, 182 B.R. 1, 3 (N.D.N.Y.1995). Defendants' basis for this motion is that this Court made a clear error of law or needs to correct a manifest injustice because of significant errors contained in the Court's earlier decision. Although this Court enjoys broad discretion when making a determination to reconsider on this ground, Von Ritter v. Heald, 876 F.Supp. 18, 19 (N.D.N.Y.1995), it will not disregard the law of the prior case unless "the Court has a `clear conviction of error' with respect to a point of law on which its previous decision was predicated." Fogel v. Chestnutt, 668 F.2d 100, 109 (2d Cir.1981).

B. Ripeness of Plaintiffs' Claims

Section 2201 of the Declaratory Judgment Act provides that "[i]n a case of actual controversy within its jurisdiction ..., any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201(a). The primary purpose of the Act is to allow courts to declare a party's rights that have not been already determined. See United States v. Doherty, 786 F.2d 491, 498 (2d Cir.1986). It is designed to allow a party who is challenged, threatened, or endangered in the employment of his rights, "to initiate proceedings against his tormentor and remove the cloud by an authoritative determination" of his legal rights. See id. at 498-99 (quoting Borchard, Declaratory Judgments 280 (2d ed.1940)).

Before a Court may make a declaratory judgment, however, a case must present an "actual controversy." See 28 U.S.C. § 2201(a); Fusco v. Rome Cable Corp., 859 F.Supp. 624, 629 (N.D.N.Y. 1994). The actual controversy requirement is the same as the "case and controversy" requirement of article III, § 2 of the United States Constitution. See Gilbert Segall and Young v. Bank of Montreal, 785 F.Supp. 453, 458 (S.D.N.Y.1992). Although the precise contours of the term "actual controversy" are difficult to discern, when "the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality," a declaratory judgment may issue. Olin Corp. v. Consol. Aluminum Corp., 5 F.3d 10, 17 (2d Cir.1993) (quoting Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941)). In this Circuit, "a court must entertain a declaratory judgment action if it would be useful in clarifying and settling legal relations in the case, or if it would terminate the uncertainty, insecurity, and controversy that brought about the proceeding." Albradco, Inc. v. Bevona, 982 F.2d 82, 87 (2d Cir. 1992) (emphasis added).

Defendants argue, and this Court initially concluded, that because CNG backed out of its contractual obligations with Plaintiffs, any harm to them regarding Defendants' sonar testing and SPDES requirements was speculative. See Bath Petroleum Storage, Inc. v. Sovas, 78 F.Supp.2d 67, 69 (N.D.N.Y.2000). In essence, the Court concluded that Plaintiffs had no intent to complete its conversion project after CNG backed out and that, until a replacement for CNG was found, Plaintiffs could not claim that they were suffering a "continuing, existing, and real injury." See id. The Court's basis for this conclusion was legally and factually erroneous.

Factually, Plaintiffs provided this Court with numerous letters and affidavits indicating that it intends to continue with the conversion project notwithstanding the fact that CNG does not wish to store natural gas in the converted facilities. Particularly, the Court notes that Plaintiffs, by letter dated April 10, 1998, explicitly rejected any pretense of abandoning the conversion project after CNG's withdrawal and have not abandoned their position during the course of this lengthy litigation. Thus, but for Defendants' imposition of allegedly unlawful sonar testing and SPDES requirements, Plaintiffs assert that they could proceed with their project. Legally, this is a continuing, existing, and real injury and the Court should not have deemed Plaintiffs' claims for declaratory and other relief unripe for judicial review. Accordingly, the Court reconsiders its earlier determination that Plaintiffs' claims were unripe for judicial review and turns to the merits of Defendants' original motion to dismiss.¹

C. Plaintiffs' Claims Against the State of New York and the New York Department of Environmental Conservation

The Eleventh Amendment to the United States Constitution declares that "[t]he judicial power of the United States shall not be construed to extend to any suit in law or equity commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI. It has been interpreted to prevent federal courts from exercising jurisdiction over suits brought by citizens of a state against the state or the state's agencies. See Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, 506 U.S. 139, 144, 113 S.Ct. 684,...