Leaking oil tanks: Legal and practical considerations under N.Y. Navigation Law Article 12

Oil spills from leaking underground tanks at gas stations and commercial or residential buildings are a common occurrence throughout New York state. The investigation and remediation of oil spills is addressed under the New York Navigation Law Article 12. This statutory requirement was enacted in 1977 in response to concerns regarding oil spills on rivers, lakes and other surface water bodies. Over the years, as soil and groundwater became an increasing concern, Article 12 has been applied as the primary enforcement mechanism to remediate subsurface petroleum contamination. Under Article 12, "[a]ny person who has discharged petroleum," has liability for the cleanup. This statutory language has been broadly interpreted by the courts to apply to various parties, including current owners of real estate where petroleum contamination has been identified, as discussed in more detail below. Article 12 applies to petroleum. The spill group at the New York State Department of Environmental Conservation (DEC) generally deals with petroleum contamination under Article 12 but will sometimes address subsurface concerns involving hazardous substances in reaction to a recent spill. Typically, hazardous substances are handled under other DEC or agency programs. If a petroleum contamination problem is identified in either soil or groundwater by a private party, immediately consideration must be given to the applicability of the reporting obligations. The identification of a soil or groundwater petroleum problem will usually trigger a requirement to report the matter to the DEC spill hotline which would result in the issuance of a spill number for the property. After a spill is reported, the private party can expect to be contacted by DEC and, if it is a substantial problem, asked to execute a stipulation with the department. A stipulation is a brief document executed by the private party essentially agreeing to investigate and remediate the problem to DEC's satisfaction. Typically, there is a compliance schedule attached to the one-page stipulation laying out time frames for submission of documentation to the department. If the private party does not proceed with an investigation and a cleanup, the department may decide to proceed with the work and possibly commence a future lawsuit against a liable party for cost recovery. The investigation and cleanup of a petroleum spill can potentially be costly and time consuming. At a gas station site where contamination has been identified, the investigatory costs will typically be in the range of $25,000 to $75,000. Average cleanup costs at a gas station site are approximately $250,000 with a range perhaps starting at $25,000 to potentially exceeding $1 million. The time frame for the investigation and cleanup is usually measured in years if there is groundwater contamination, but potentially less than one year if only soil is affected. Due to the potential for significant costs, a petroleum contamination problem can cause a significant stigma for the property. Furthermore, the contamination issues can have a negative impact on a transaction involving the sale or mortgage of the property. The parties involved in the transaction will want to define the extent of contamination and develop a cleanup work plan, if not the complete cleanup, to avoid transactional delays and problems. In addition to the possibility of commencing a cost recovery lawsuit, the state may file a lien against the property pursuant to Navigation Law Section 181-a. As noted previously, the Navigation Law, Section 181(1), provides that any person who has discharged petroleum shall be strictly liable for cleanup costs but does not otherwise define who is liable. The courts have broadly interpreted the spill law to apply to the operator of a facility where the soil or groundwater contamination is located. Although the spill law does not explicitly state that a landowner is liable, the courts have determined also that owners are liable under the spill law based on the landowner's control over the property. James Rigano is an attorney and a partner with Certilman Balin, Hauppauge, N.Y.