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Commercial Litigation | MONDAY, AUGUST 10, 2015 | S3
from thousands to millions of dollars. For private owners of land where petroleum dis- pensing systems are owned and/or operated by big corporate entities, the risk of liability can often exceed the value of the property. Thus, it may be time to amend the Law to clearly define the limits of who is a discharger, rather than to rely solely on a synthesis of evolving case law to assess who are the cul- pable parties.
The Legislative History
When the Law was first passed as the Oil Spill Prevention, Control and Compensation Act of 1977, the New York State Legislature aimed to remedy spills resulting from storage at major facilities (i.e., those with the capacity to hold more than 400,000 gallons of petro- leum1) and from vessels of transportation.2 Since the Legislature believed that the most significant environmental threat came from the transportation of petroleum, it first codi- fied the statute within the Navigation Law and vested enforcement authority with the New York State Department of Transporta- tion (the DOT).
The failure to define a liable discharger is most likely a remnant of the Legislature’s initial focus on transportation and major facili- ties. It was easy to identify the culpable party when the Exxon Valdez ruptured its hull and dumped crude oil over 1,300 miles of pristine coastline in Alaska’s Prince William Sound.3 It is more difficult to assess blameworthiness
among a multitude of oil refineries operat- ing unchecked for over a century along the already polluted Newtown Creek bordering Queens and Brooklyn.4 Both oil spills are parallel in damages—roughly 10-30 million gallons at each site—but the origin of slow seepage of petroleum over 55 acres under- ground in a congested city is more compli- cated to analyze than a spill over miles of open ocean.
The Legislature eventually recognized that the storage of oil caused more envi- ronmental risk than its transportation, and that smaller facilities—such as the ubiqui- tous neighborhood gas station—may also be a significant source of spills.5 Thus, in 1983, it enacted the Bulk Storage of Petro- leum Act to address liability for spills from the land storage of 1,100 gallons or more of petroleum by non-major facilities.6 This new Act was codified not in the Navigation Law, but within Article 17, Title 10 of the New York Environmental Conservation Law (the ECL).7 The Legislature consequently transferred enforcement authority from the DOT to the New York State Department of Environmental Conservation (the DEC).8 The DEC was then directed to promulgate corresponding regulations to provide for the prevention, containment, cleanup, and removal of discharges from facilities stor- ing greater than 1,100 gallons but less than 400,000 gallons of petroleum.9 Amidst these changes, the Legislature never amended the Navigation Law or the ECL to define the
parties liable for pollution at a non-major facility, nor did it ever cover the statutory gap by including references from Navigation Law to the ECL.
Subsequent amendments to the Law have similarly failed to provide any clarity as to dis- charger liability. For instance, in 1991, Naviga-
The Legislature eventually rec- ognized that the storage of oil caused more environmental risk than its transportation, and that smaller facilities—such as the ubiquitous neighborhood gas station—may also be a significant source of spills.
tion Law §181(5) was added to permit “[a]ny claim by any injured person for the costs of cleanup and removal and direct and indirect damages based on the strict liability imposed by this section ... against the person who has discharged the petroleum.” The same year, the Legislature defined “claim” for the pur- poses of Article 12 to expressly exclude those made by injured persons who are “respon- sible for the discharge.”10 This language has created a confusing dichotomy between the parties that are technically liable for cleanup
and those actually “responsible” for having caused or contributed to a spill.
Liability Imposed on Landowners
Navigation Law §181(1) provides that “[a]ny person who has discharged petro- leum shall be strictly liable, without regard to fault, for all cleanup and removal costs.” Section 172(8) defines a “discharge” as “any intentional or unintentional action or omis- sion resulting in the releasing, spilling, leak- ing, pumping, pouring, emitting, emptying or dumping of petroleum into the waters of the state or onto the lands from which it might flow or drain into said waters.” The statutory language notably does not require proof of fault or knowledge.
A court that interprets the Law broadly could theoretically link any landowner to a discharge on its property simply by virtue of its ownership. This benefits the state of New York, since a culpable landowner could not thereafter recover money from the Fund for cleaning up that landowner’s own spills.11 Furthermore, the Fund could easily recover its own cleanup costs from a landowner by filing an environmental lien on the property subject to the oil spill.12 An environmental lien ensures that the Fund will recover some, if not all, of the cleanup costs, because the affected property then becomes collateral.
By contrast, a court that narrowly inter- prets the Law could conceivably allow a landowner to avoid liability and » Page S10
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