Tanks & Petroleum: Liabilities, Cleanups & Cost Recovery
Craig A. Slater, ESQ.
The New York State Navigation Law – Petroleum Spill Liability – General Concept
• Broad remedial purpose
• Strict liability
• Joint & several liability
• Few statutory defenses
• Liability imposed for all “direct and indirect damages, no matter by whom sustained.”
Navigation Law §181(1) : Spill Liability: “Any [person] who has [discharged] [petroleum] shall be strictly liable, without regard to fault, for all cleanup and removal costs and all direct and indirect damages, no matter by whom sustained.”
“Person” means public or private corporations, associations, societies, partnerships, the state, the U. S., and individuals. Navigation Law §172(14).
“Discharge” means any intentional or unintentional action or omission resulting in releasing, spilling, leaking, emptying, emitting or dumping petroleum into the waters of the state or onto lands from which it might flow or drain into said waters. Navigation Law §172(8).
“Waters” means oceans, springs, lakes, streams and bodies of surface or groundwater within boundaries of this state. Navigation Law §172(8).
“Petroleum” means oil or petroleum of any kind. Navigation Law §172(15). This definition includes “hydro carbons” commonly associated with petroleum waste. Henning v. Rando Mach. Corp., 207 A.D.2d 106 (4th Dept. 1994). Navigation Law §181(1) specifically states liability is “strict” and without regard to fault.
Retroactive Liability: Navigation Law liability applies to spills which occurred before the statute was enacted. Navigation Law §190-9; Leone v. Leewood Service Station, 212 A.D.2d 669, 624 N.Y.2d 610, lv. denied, 86 N.Y.2d 709 (2d Dept. 1995).
Navigation Law §173(1): Prohibition: The discharge of petroleum is prohibited.
Navigation Law §176(8): Contribution: “Notwithstanding any other provisions to the contrary, . . . every person providing cleanup, removal of discharge of petroleum . . . pursuant to this section shall be entitled to contribution from any other responsible party.”
Navigation Law §181(5): Indemnification: “Any claim by an injured person for the costs of cleanup and removal and direct and indirect damages based on strict liability imposed by this section, may be brought against the person who has discharged the petroleum . . .”
Common Law Causes of Action
Nuisance: A nuisance can be either private (involving injury to particular persons) or public (involving injury to the public at large) and is defined as “tortuous conduct that produces unreasonable interference with the use and enjoyment of another’s land.” Some examples of situations in which parties have alleged nuisance include actions to abate or recover damages for odors, actions for contamination of neighboring or community groundwater, and actions for pollution of neighboring landowners’ soil.
Trespass: A trespass is an invasion of the exclusive possession of another’s land. A claim in trespass frequently involves the same conduct as that which prompts a nuisance claim.
Negligence: Negligence is the breach of a legal duty owed to another that causes damages, can give rise to environmental liability where a party demonstrates that another party failed to exercise reasonable care while performing activities that are potentially harmful to the environment, or that a party failed to exercise reasonable care to comply with permit requirements.
Strict Liability: Under the theory of strict liability, liability may be imposed on a party without regard to fault. Specifically, strict liability can be imposed when conduct considered “abnormally dangerous” causes injury. Facility owners or operators may be found strictly liable for contamination where, for example, leaking underground storage tanks have contaminated groundwater.
Damages: Actions brought under common law theories of liability may result in assessment of punitive as well as compensatory damages, particularly when a party demonstrates that the conduct complained of was willful or grossly negligent.
Landowners: Any owner, without regard to fault, who owns the property at the time of discharge, is strictly liable under the Navigation Law if (1) the landowners could have reasonably “expected” petroleum was being used at the property; and (2) the landowner was “ . . . in a position to control the site and source of the discharge (‘the ability to control potential sources of contamination’).” State v. Green, 96 N.Y.2d 403, 729 N.Y.S.2d 420 (2001).
UST System Owners
State v. Speonk: Liability imposed solely on tank owners for spill at gas station where tanks were owned by one party and the land by another (where tanks removed before owner purchased).
State v. Green: Liability is properly imposed on the system owner. Leone v. Leewood Service Station, 212 A.D.2d 669, 624 N.Y.S.2d 610, lv. denied, 86 N.Y.2d 709 (2d Dept. 1995).
Non-Owners’ or Operators’ Liability: Under the theory that a person has “caused” a discharge or who has “set in motion the events which resulted in a discharge,” a wide variety of parties have been liable under the Navigation Law for remediation costs. To impose such liability “no proof is required if a specific wrongful act or omission directly caused the spill.” Domermuth Petroleum v. Herzog, 111 A.D.2d 957, 490 N.Y.S.2d 54, 56 (3d Dept. 1985) and State v. Green, supra.
Cases have held tenants, subtenants, tank installers, tank removal companies, delivery companies, third party brokers, and others liable.
Not liable if “mere delivery”
Special mention of insurance carriers.
Proving a Navigation Law Case
Representations and Warranties
Abstract of Title
Public Documents (FOIL)
RCRA Permit Records
DEC Tank Registration Records
DEC Enforcement File
SARA Title III Records
Fire Department Records
Town UST/Removal Permits
Historic Society Records
Public Documents (Databases and Services)
Aerial Photos (County, USGS)
Sanborn (Insurance) Maps
LUSTS/CERCLIS/RCRA (Phase I Databases)
Abstract of Title
Petroleum Science and Forensics
The Presence of MTBE
The Presence of lead
The Presence of TAME
Petroleum Forensic Testing
Use of Private Investigators
New Third Party Defense
The old subdivision 4 of Section 181 of the Navigation Law has now been repealed and a new subdivision 4 to that section has been added providing innocent parties with a third party defense to liability.
“The only defenses that may be raised by a person responsible for a discharge of petroleum are: an act or omission caused solely by (i) war, sabotage, and governmental negligence or (ii) a third party other than a contractual relationship resulting from a loan, mortgage or conduit financing from the person responsible if the person responsible establishes by a preponderance of evidence the person responsible by a preponderance of evidence that the person responsible (A) exercised due care with respect to the petroleum concerned, taking into consideration the characteristics of petroleum and in light of all relevant facts and circumstances; and (B) took precautions against the acts or omissions of any such third party and the consequences of those acts or omissions. … In any case where a person responsible for a discharge establishes by a preponderance of the evidence that a discharge and the resulting cleanup or removal costs are caused solely by an act or omission of one or more third parties as described above, the third party or parties shall be treated as the person or persons responsible for the purposes of determining liability under this article.”
Statute of Limitations
Prior owner dilemmas
Oil Spill Compensation Fund
Use of Motions for Summary Judgment
Leveraging during a buy/sell
Releases/Indemnifications during a buy/sell
Difference in DEC closure letters
Leveraging the new Brownfields Cleanup Program Tax Credits
The Navigation Law is a powerful tool and one that lends help to those with knowledge and guts. There is little help in escaping liability to those caught in the web of liability, but it can be strong medicine in making or breaking a deal or softening the hurt of remediation. Know what it can and can’t do – some silver bullets are not what they seem – and you will be able to skillfully manage expectations and your money.