Matter of County Oil Co. Inc. v New York City Dept. of Envtl. Protection

[*1] Matter of County Oil Co. Inc. v New York City Dept. of Envtl. Protection 2012 NY Slip Op 50322(U) Decided on February 6, 2012 Supreme Court, Queens County Grays, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 6, 2012
Supreme Court, Queens County

In the Matter of the Application of County Oil Company, Inc., PRIME FUEL OIL CO. INC., STATEWIDE OIL & HEATING CO., INC., HOME FUEL OIL LLC, and APPROVED OIL CO. OF BROOKLYN, INC., Petitioners, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules

against

New York City Department of Environmental Protection, and CARTER H. STRICKLAND, as Commissioner of New York City Department of Environmental Protection., Respondent(s)



21750/2011

Marguerite A. Grays, J.

In this Article 78 proceeding, petitioners County Oil Company Inc., Prime Fuel Oil Co. Inc., Statewide Oil & Heating Co,. Inc., Home Fuel Oil, LLC, and Approved Oil Co. of Brooklyn, Inc. seek a judgment (1) annulling and setting aside the promulgation of the amendments to Chapter 2 of Title 15 of the Rules of the City of New York (RCNY) pertaining to emissions from the use of grade numbers 4 and 6 fuel oil in heat and hot water boilers and burners by respondent New York City Department of Environmental Protection (DEP), on the grounds that it is arbitrary and capricious and affected by errors of law; and (2) awarding petitioners costs, disbursements and attorney's fees.

Petitioners County Oil Company Inc., Prime Fuel Oil Co. Inc., Statewide Oil & [*2]Heating Co,. Inc., Home Fuel Oil, LLC, and Approved Oil Co. of Brooklyn, Inc. allege in their petition that they are sellers, processors or distributors of fuel oil or recycled fuel oil products, and that they will be significantly impacted by the Fuel Oil Rules promulgated by the DEP on April 21, 2011, which became effective on May 21, 2011.

In July 2010, the State Legislature amended the Environmental Conservation Law to reduce the maximum allowable sulfur content of No. 2 oil from 2,000 parts per million to 15 parts per million (ECL §19-0325). In August 2010 the City Council passed Local Law 43, which among other things, incorporated the State's reduction of the maximum sulfur content of No. 2 fuel oil, and lowered the sulfur content of No. 4 fuel oil from 3,000 ppm to 1,500 ppm.

In April 2011, the City of New York promulgated the Fuel Oil Rules, which provide for the phase-out of the use of No. 6 and No. 4 fuel oils in hot water boilers and burners in New York City. No. 6 fuel oil and No.4 fuel oil are considered to be the "dirtiest" of fuel oils, in that they produce significant more air pollution when burned than "cleaner" fuels such as No. 2 fuel. In New York City, there are approximately 10,000 commercial and residential buildings with furnaces that burn No. 4 and No. 6 fuel oil. These buildings comprise only 1% of all buildings in New York City, but are responsible for 90% of the city's particulate matter emissions. The burning of No. 4 and No. 6 fuel oils also releases chemical pollutants which degrade the air quality.

Prior to promulgating the Fuel Oil Rules, the DEP, in conformity with the City Administrative Review Act (CAPA) (City Charter §§1041-1047), engaged in a public review process. The DEP and the Mayor's Office of Sustainability and Long Term Planning conducted extensive outreach with various interested entities and individuals including representatives of the oil heating industry, energy providers, the real estate industry, environmental groups, public health groups, community boards, and elected officials. Over the course of approximately two years, the City held multiple meetings, and received extensive comments and feedback on the proposed new rules. The proposed Fuel Oil Rules were also publically discussed as part of PlaNYC. PlaNYC describes a comprehensive list of initiatives the City government will undertake to create a greener, greater New York over the next 20 years.

The DEP, pursuant to CAPA, published a notice in the City Record and formally notified the Community Boards and City Council of the proposed Fuel Oil Rule on January 27, 2011. The notice of said rulemaking stated that said rule was not included in the DEP's regulatory agenda, as the DEP did not publish a regulatory agenda that year.

A public hearing, noticed in the City Record on January 27, 2011, was held on February 28, 2011, which allowed for public comments in favor of, and against, the rules. The DEP also accepted written public comments that had been submitted to its website. One of the commentators was NORA, an Association of Responsible Recyclers (NORA), a national trade association. Respondents state that petitioners are members of NORA. [*3]

On March 28, 2011, the DEP declared it's the lead agency with respect to the State Environmental Quality Review Act (SEQRA) and City Environmental Review Act (CEQR) reviews of the proposed Fuel Oil Rules. The DEP classified the adoption of the Fuel Oil Rules as an Unlisted Action, and completed an Environmental Assessment Review (EAS). On April 20, 2011, the DEP issued a negative declaration of environmental impact pursuant to CEQR.

On April 21, 2011, the DEP promulgated the Fuel Oil Rules and published a notice of their promulgation in the City Register. The Fuel Oil Rules became effective 30 days later on May 21, 2011.

The Fuel Oil Rules govern the issuance and renewal of permits and certificates of operation for hot water boilers and burners that burn No. 4 and No. 6 fuel oil. Starting in July 2012, owners have at most three years to convert from No. 6 fuel oil to No. 4 or No. 2 fuel oils(or their emission equivalent), or to natural gas. The rules allow for the more expensive conversion from No. 4 fuel oil to either No. 2 fuel oil (or its emission equivalent) or natural gas to be completed by 2030. The rules also permit all applicants to enter into a compliance agreement with the DEP Commissioner to extend the time to convert from No. 6 to No. 4 fuels to 2015, and an owner of fifty buildings or more may enter into a compliance agreement with the DEP Commissioner to extend the time to convert to No. 2 fuel oil or natural gas by 2030, upon a showing of, among other factors, financial hardship (15 RCNY §2-15[e]).

Petitioners commenced the within Article 78 proceeding on September 19, 2011 and allege that the DEP's promulgation of the Fuel Oil Rules is arbitrary and capricious, and affected by an error of law. Petitioners allege that during the period of public comment, NORA specifically "commented that the Fuel Oil Amendment would negatively impact the used oil recycling industry and would effectively change used oil from a valuable commodity to the equivalent of hazardous waste. If the Fuel Oil Rules were adopted, NORA noted, the price for disposal of used fuel oil would rise significantly, potentially causing the needless disposal of such oils in covert and illegal manners to avoid paying the increase costs." NORA also made comments regarding nitrogen oxide levels under the current fuel oil recycling system and the financial hardships placed on owners of boilers who could not easily convert their heating systems to use other fuels.

Petitioners, in their first cause of action, allege that the promulgation of the Fuel Oil Rules will have a significant adverse impact on the fuel oil and used oil recycling industries, and that the DEP's failure to consider these potential adverse impacts, was arbitrary and capricious. It is alleged that the DEP failed to respond to, or otherwise address the many public comments submitted with respect to the promulgation of the Fuel Oil Rules, including those submitted by NORA which identified numerous potential negative environmental impacts posed by the new rules. It is further alleged that the DEP failed to identify all areas of significant environmental impact posed by the Fuel Oil [*4]Rules, and take a "hard look" at those areas. Petitioners therefore assert that the DEP's promulgation of the Fuel Oil Rules was arbitrary and capricious.

Petitioners, in their second cause of action, allege that SEQRA and CEQR require that the DEP identify all potential areas of significant environmental impact, take a "hard look" at those areas and make a reasoned elaboration of the basis for issuing a negative declaration. It is alleged that the negative declaration issued by the DEP, which stated that no adverse environmental impacts are anticipated as a result of the promulgation of the Fuel Oil Rules, is insufficient to satisfy the requirement that the DEP provide a reasoned elaboration of its determination, and therefore, the promulgation of the Fuel Oil Rules are arbitrary and capricious.

The third cause of action alleges that the Fuel Oil Rules were not included in the DEP's 2010 Regulatory Agenda, and that the notice of proposed rule making did not include any reason why the rule was not anticipated prior to the publication of the 2010 Regulatory Agenda. Petitioners' further allege that this omission was not inadvertent and was intended to restrict notice of the proposed Fuel Oil Rules. Petitioners allege that said omission violated City Charter §1042(a), and therefore should be annulled and set aside.

Respondents DEP and Carter H. Strickland, Commissioner of the DEP, have served an answer and interposed the affirmative defenses of lack of standing and failure to state a cause of action.

The standing of a party to seek judicial review of a claim or controversy is a threshold matter which must be resolved by the court before the merits of the application may be considered. (see New York State Assn. of Nurse Anesthetists v Novello, 2 NY3d 207, 211 [2004]; Society of Plastics Industries v County of Suffolk, 77 NY2d 761 [1991]). Whether a person seeking relief from a court is a proper party to request an adjudication "is an aspect of justiciability which must be considered at the outset of any litigation." (Roberts v Health and Hospitals Corporation, 87 AD3d 311, 318 [2011], citing Matter of Dairylea Coop. Inc. v Walkley, 38 NY2d 6, 9 [1975]). Standing is thus a threshold determination that allows a litigant access to the courts to adjudicate the merits of a particular dispute that otherwise satisfies other justiciability criteria. (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 812 [2003]). Standing is critical because a court "has no inherent power to right a wrong unless thereby the civil, property or personal right of the plaintiff in the action or the petitioner in the proceeding is affected." Society of the Plastics Indus., Inc. v County of Suffolk, supra at 772 [internal quotation marks omitted]).

New York has adopted a two-part inquiry for determining whether a party has standing to challenge a governmental action. (see New York State Assn. of Nurse Anesthetists v Novello, supra; Roberts v Health & Hosps. Corp., supra; 2 NY3d at 211.) The petitioner must show (1) an "injury-in-fact" and (2) that the alleged injury falls within "the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the agency has acted.'". (Roberts v Health & Hosps. [*5]Corp., supra at 5, quoting New York State Assn. of Nurse Anesthetists, 2 NY3d at 211; see also Matter of Colella v Board of Assessors, 95 NY2d 401, 409-410 [2000].)

To have suffered an "injury-in-fact," the petitioner must show that it will actually be harmed by the challenged administrative action, that is, that the injury is more than conjectural. (New York State Assn. of Nurse Anesthetists, at 211; Society of the Plastics Indus. v County of Suffolk, 77 NY2d at 773.) It is "special damage, different in kind and degree from the community generally." ( Matter of Sun-Brite Car Wash, Inc. v Board of Zoning & Appeals of the Town of N. Hempstead, 69 NY2d 406, 413 [1987]; see also Matter of Colella v Board of Assessors of County of Nassau, supra at 410; Society of the Plastics Indus., supra at 775.) Thus, the alleged injury must be "personal to the party." (Roberts v Health & Hosps. Corp., supra at 5.)

Generally, standing to challenge compliance with SEQRA turns on a showing by the challenger that it has sustained an injury-in-fact different from that of the public at large and one that falls within the zone of interest protected by SEQRA (see Society of Plastics Indus. v County of Suffolk, supra). With respect to SEQRA claims in particular, a challenger "must demonstrate that it will suffer an injury that is environmental and not solely economic in nature". (Matter of Mobil Oil Corp. v Syracuse Indus. Dev. Agency, 76 NY2d 428, 433 [1990]; see also Society of Plastics Industries, Inc. v County of Suffolk, supra.)

Petitioners have failed to make any showing that they would indeed suffer a specific or direct environmental harm as a result of the promulgation of the Fuel Oil Rules (see Matter of Mobil Oil Corp. v Syracuse Indus. Dev. Agency, 76 NY2d at 433-434). Taken as a whole, petitioners' claims assert only potential, not actual, environmental harm. They essentially claim that the Fuel Oil Rules may create unfavorable economic conditions, which in turn may result in the illegal disposal of used fuel oil at some unspecified future time. This is far too speculative and hypothetical to even approach the "injury-in-fact" requirement (see New York State Assn. of Nurse Anesthetists v Novello, 2 NY3d at 214-215; see also Rudder v Pataki, 93 NY2d 273, 279 [1999] ["tenuous" and "ephemeral" harm is "insufficient to trigger judicial intervention"]). Furthermore, petitioners do not allege that they will suffer environmental harm that is different from that of the public at large.

Since economic injury alone does not confer standing to sue under SEQRA or CEQR, petitioners lack standing to challenge the adequacy of the SEQRA process and CEQR concerning the promulgation of the Fuel Oil Rules (Matter of Nature's Trees v County of Suffolk, 293 AD2d 543, 544 [2002], lv denied 98 NY2d 608 [2002]; Matter of Blue Lawn v County of Westchester, 293 AD2d 532, 533, 740 NYS2d 404 [2002], lv denied 98 NY2d 607 [2002]; Matter of Bridon Realty Co. v Town Bd. of Town of Clarkstown, 250 AD2d 677, 677-678 [1998], lv denied 92 NY2d 813 [1998]; Matter of Valhalla Union Free School Dist. v Board of Legislators of County of Westchester, 183 AD2d 771, 772-773 [1992], lv denied 80 NY2d 758 [1992]). Petitioners' first and second [*6]causes of action, therefore, are dismissed.

Turning now to petitioners' third cause of action, it is well settled that " [i]n considering a motion to dismiss for failure to state a cause of action (see CPLR 3211[a][7]), the pleadings must be liberally construed (see CPLR 3026). The sole criterion is whether [from the complaint's] four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law (Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; Rochdale Vil. v Zimmerman, 2 AD3d 827 [2003]; see also Bovino v Village of Wappingers Falls, 215 AD2d 619 [1995]). The facts pleaded are to be presumed to be true and are to be accorded every favorable inference, although bare legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration (see Morone v Morone, 50 NY2d 481 [1980]; Gertler v Goodgold, 107 AD2d 481 [1985], affirmed 66 NY2d 946 [1985]).

Here, petitioners' do not have a cause of action based upon an alleged violation of City Charter §1042(a). City Charter §1042 provides as follows:

"a. Each agency shall publish by the first day of May annually, a regulatory agenda which shall contain: "1. a brief description of the subject areas in which it is anticipated that rules may be promulgated during the next fiscal year, including a description of the reasons why action by the agency is being considered;

"2. a summary, to the extent known, of the anticipated contents of each such proposed rule, its objectives and legal basis; "3. a description of the types of individuals and entities likely to be subject to the rule; "4. an identification, to the extent practicable, of all relevant federal, state, and local laws and rules, including those which may duplicate, overlap or conflict with the proposed rule; and "5. an approximate schedule for adopting the proposed rule, and the name and telephone number of an agency official knowledgeable about each subject area involved."

Section 1042(a) is clearly precatory in nature, as subdivision (c) provides that:

"Failure to include an item in a regulatory agenda shall not preclude action thereon. If rulemaking is undertaken on a matter not included in the regulatory agenda the agency shall include in the notice of proposed rulemaking the reason the rule was not anticipated. The inadvertent failure to provide the reason such rule was not included in the regulatory agenda shall not serve to invalidate the rule."

Petitioners' bare allegation that the DEP's failure to provide the reason the Fuel Oil Rules were not included in the regulatory agenda was not inadvertent and was intended to restrict notice of the Fuel Oil Rules, is insufficient to state a cause of action. Notably petitioners do not allege that they did not receive adequate notice of the proposed rule, or that they were not provided sufficient time in which to prepare and submit comments. (see generally, Matter of Niagara County v Power Auth. of State of New York, 82 AD3d [*7]1597 [2011], leave to appeal denied, 17 NY3d 838 [2011].) Petitioners' third cause of action, therefore, is dismissed.

Accordingly, petitioners' request to vacate the Fuel Oil Rules is denied, and the petition is dismissed in its entirety. Petitioners' request for attorneys fees and costs is also denied.

Settle judgment.

J.S.C.