FMC Corp. v. N.Y.S. Dep't of Envtl. Conservation

• Decision Date: 01 May 2018
• Docket Number: No. 41,41
• Citation: 101 N.E.3d 379,31 N.Y.3d 332,76 N.Y.S.3d 911
• Parties: In the Matter of FMC CORPORATION, Respondent, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Appellant.
• Court: New York Court of Appeals Court of Appeals

31 N.Y.3d 332

101 N.E.3d 379

76 N.Y.S.3d 911

In the Matter of FMC CORPORATION, Respondent,

v.NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Appellant.

No. 41

Court of Appeals of New York.

May 1, 2018

Eric T. Schneiderman, Attorney General, Albany (Frederick A. Brodie, Barbara D. Underwood, Andrea Oser and Maureen F. Leary of counsel), for appellant.

Greenberg Traurig, LLP, Philadelphia, Pennsylvania (David G. Mandelbaum, of the Pennsylvania bar, admitted pro hac vice, and Caleb J. Holmes of counsel), and Hodgson Russ, LLP, Buffalo (Julia M. Hilliker and Rick W. Kennedy of counsel), for respondent.

OPINION OF THE COURT

WILSON, J.

The Appellate Division held that neither title 9 nor title 13 of article 27 of the Environmental Conservation Law authorized respondent Department of Environmental Conservation (DEC) to unilaterally remediate the significant threat posed by hazardous wastes petitioner FMC Corporation (FMC) had released onto neighboring properties. We conclude that the Appellate Division erred in foreclosing the possibility that title 9 authorized DEC's unilateral action and that the interpretation of title 13 adopted by both parties authorized DEC's unilateral remediation effort. We therefore reverse the Appellate Division's order and dismiss FMC's CPLR article 78 petition.

I. Background

FMC owns and operates a 103–acre pesticide production facility in Niagara County. Over nearly a century of operation, that facility has released significant quantities of hazardous wastes including arsenic, lead, cyanide, acetone, DDT, and carbofuran. Many of those wastes have migrated onto adjacent properties including a school, recreational watercourses, croplands, and several hundred residences. FMC continues to store hazardous wastes and to formulate pesticides on the site.

DEC's substantial involvement with the facility dates back to 1980 and proceeds under two separate titles of article 27 of the Environmental Conservation Law. In that year, FMC initiated a permit application process with DEC and the U.S. Environmental Protection Agency (EPA) under title 9, which regulates the active generation, storage, and disposal of hazardous wastes and under its federal counterpart, the Resource Conservation and Recovery Act ( 42 USC § 6901 et seq. [RCRA] ). Thirty-eight years later, that process has not yet resulted in a permit; instead, the facility has operated all that time on interim status. Also in 1980, DEC listed a portion of the facility on the New York Registry of inactive hazardous waste sites under title 13, which regulates those inactive sites. DEC later substantially expanded the boundaries of the Registry listing and classified the facility as one posing a "[s]ignificant threat to the public health or environment—action required" ( ECL § 27–1305[2][b][2] ).

The title 9 permitting process requires applicants to undertake corrective actions for all releases of hazardous waste ( ECL § 27–0913 ). As part of that process, FMC entered into a 1991 consent order with DEC and the EPA that required it to undertake a variety of obligations, including the preparation of a corrective measures study. The 1991 order did not require FMC to undertake a particular corrective measure. Instead, it contemplated that the EPA, which later delegated its authority to DEC, would use the study prepared by FMC to help inform its selection of a final corrective measure. In 2013, DEC adopted a final corrective measure— CMA 9 —in a lengthy Final Statement of Basis laying out the reasons for its decision. CMA 9 applies to three parcels of properties adjacent to the FMC facility: a schoolyard, a culvert, and a residential neighborhood. FMC, in its corrective measures study, proposed eight different options for remediation, labelled CMAs 1 through 8. DEC found that none of FMC's proposals sufficiently ameliorated the threat posed by FMC's releases of hazardous wastes, and created CMA 9 by combining CMAs 2 and 8. For the following year, DEC attempted to negotiate a new consent order obligating FMC to implement CMA 9. When those negotiations failed, DEC announced it would undertake the corrective measure itself and seek to recover its associated expenses from FMC after the fact. FMC filed this article 78 petition contesting DEC's decision.

In its petition, FMC asserted four causes of action. The first two, which the Appellate Division rejected, made essentially procedural objections to DEC's Statement of Basis, claiming it should have been promulgated pursuant to the federal Resource Conservation and Recovery Act instead of the New York Environmental Conservation Law and that DEC had denied FMC recourse to the dispute resolution mechanisms contained in the 1991 order. The fourth, which the Appellate Division did not reach, alleged that DEC's selection of CMA 9 instead of any of the eight alternatives FMC had suggested was arbitrary and capricious. FMC does not pursue any of those causes of action here.

FMC's arguments are limited to its third cause of action, which alleges that that DEC's decision to implement CMA 9 unilaterally, rather than through FMC, was arbitrary and capricious. The Appellate Division, after reversing Supreme Court's order dismissing the petition as untimely, held that DEC's decision to implement CMA 9 itself was arbitrary and capricious, and granted FMC's petition on that basis ( Matter of FMC Corp. v. NYS DEC, 143 A.D.3d 1128, 1135, 40 N.Y.S.3d 220 [3rd Dept. 2016] ). It later granted DEC's motion for permission to appeal to this Court ( Matter of FMC Corp. v. NYS DEC, 2017 WL 509845 [3d Dept. 2017] ).

II. Discussion

The parties agree that DEC had several options through which it could have sought an order requiring FMC to undertake CMA 9 (see e.g. ECL § 27–1313[3][a] ; id. § 71–2727). They also agree that those options would have provided FMC with the opportunity for a hearing prior to the implementation of that corrective measure, whereas DEC's decision to conduct the remediation itself left FMC with only two avenues for challenging DEC's decision: this CPLR article 78 proceeding and any cost recovery action DEC may bring under our Environmental Conservation Law or the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (see ECL §§ 71–2705 et seq. ; id. § 71–2723; 42 U.S.C. § 9607 [a][4][A] ). Finally, they agree that there are circumstances under which titles 9 and 13 authorize DEC to undertake the corrective measure itself, without first providing FMC—which is not being ordered to take any action or to suffer any activity on its property—with the opportunity for a hearing. This case turns on whether either of those circumstances is present.

A. Title 9

Title 9 regulates hazardous wastes "now being generated and sites now being used for disposal of such wastes" (L 1979 c 282 § 1). It requires any person generating, transporting, treating, storing, or disposing of hazardous wastes to obtain a permit to do so ( ECL § 27–0913[1][a] ). Although new facilities are required to obtain permits before commencing operation, certain legacy operators doing business at the time of the title's effective date can continue operating during a period of interim status pending the final disposition of their permit applications ( id. § 27–0913[1][b] ; 6 NYCRR 373–1.3 ). Interim status "is a temporary measure designed to phase existing facilities into compliance with permit requirements'' ( 6 NYCRR 373-1.3 [a] ). As such, it is "conditioned upon compliance with performance standards" set forth at length in 6 NYCRR 373–3.1 through 3.31 and may be "modified, suspended or revoked in a manner similar to a permit" (id. ). However, it "shall not be deemed to be a permit" ( ECL § 27–0913 [1 ][b] ). Permittees and prospective permittees, including those operating under interim status, may be ordered to undertake "corrective action, including corrective action beyond the facility boundary where necessary to protect human health and the environment, for all releases of hazardous waste" ( id. § 27–0913 [1 ]; see id. § 71–2727 [3] ).

The permitting scheme is augmented by DEC's authority to seek substantial civil and criminal penalties against violators and by its having the funds and flexibility required to clean up violations. Section 27–0914 prohibits "possess[ing] ... dispos[ing] of ... [or] deal[ing] in hazardous wastes without authorization." Title 71 contains the penalties for doing so, which can include fines and damages payable to the state superfund (id. § 71–2705; id. § 71–2723). Section 27–0916 authorizes DEC to use that superfund "to clean up or return to its original state any area where hazardous wastes were disposed, possessed or dealt in unlawfully in violation of section 27–0914." Nothing in the Environmental Conservation Law or the superfund statute requires DEC to defer its own use of superfund money to clean up a hazardous waste site until it has first ordered a violator of title 9 to take corrective action or provided that violator with a hearing. All DEC must do to unilaterally remediate a site, and to use superfund monies to do so, is determine that section 27–0914's terms were violated.

Here, DEC maintains that it was authorized to undertake CMA 9 because FMC had unlawfully disposed of hazardous waste, including through a number of releases between 1980 and the present. The Appellate Division disagreed. Instead, it held, FMC was "operating lawfully pursuant to its 'interim status' " "at all relevant times" ( FMC Corp., 143 A.D.3d at 1134, 40 N.Y.S.3d 220 ).

The conclusion that an entity with a permit or permission to operate under interim status cannot, as a matter of law, violate section 27–0914 was error. That section prohibits possessing, disposing of, or dealing in hazardous wastes "without authorization." "Authorization" means "the possession... of a valid license, permit or certificate ... or an order issued by the commissioner ... regarding the possession or release of hazardous......