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LIPA Residential Time-of-Use Customers Beware – Your Efforts to Shift Usage to Off – Peak Hours Is Probably Costing You Money Compared to Regular Residential Rate Payers Who Are Billed the Same Rate Regardless of Time-of-Use.

Have you switched your residential LIPA billing rates from the standard 180 rates to 184 or 188 rates (the “Time of Use” rates, designed to encourage residential consumers to shift as much electrical usage from peak hours to off-peak)? Did you do so because you believed that doing so would save you money? If so, chances are, you are mistaken, and you have actually been paying more to LIPA than you would have had you remained in the standard 180 billing category. Put another way, all those dish washer runs and laundry loads you put off to nights and weekends could have been done during the day, and you would have saved money.

The purpose of having different billing rates for usage during peak hours versus off-peak hours is to drive usage into off-peak times. The peak charges for energy, particularly during the summer months, are significantly higher than the charges for energy during off-peak times. As explained by LIPA on its website, “These rates could work for you if you can shift a high percentage of your electric usage to ‘off-peak’ hours.” The benefit to LIPA is that the more customers shift usage to off-peak times, the easier it is for LIPA to meet Public Service Commission requirements that they have sufficient power available to meet anticipated peak usage available at all time.

Based on Fred’s analysis of his own LIPA bills, his household used 23,712 kWhs between April 2012 and March 2013, approximately 67% of which was during off-peak times. Surely, he was saving money, right? Wrong. All residential rate payers pay a daily Service Charge, regardless of amount of use, and these rates are not equal. Amazingly, 184 Time-of-Use rate payers, who strive to shift use to off-peak hours, which benefits LIPA, pay $1.65 per day, while standard 180 rate payers, who are changed the same amount for electricity regardless of when they use electricity, pay only $0.36 per day. Thus, 184 rate payers are billed $470.85 every year more than they would have been billed had they remained in the regular 180 rate category.

While the cost to 184 Time-of-Use ratepayers who shift a majority of their usage to off-peak hours is less than the charge to standard 180 rate payers for the same overall amount of electricity, the question is, do the reduced charges for electricity offset the greater daily charge imposed by LIPA? At least in Fred’s case, the answer is “no”. Based on his actual energy usage for the period April 2012 through March 2013, his family paid $225.00 more than they would have had they never switched to the 184 Time-of-Use billing rate.

Perhaps the problem is that his family’s usage is not appropriate for the 184 billing rate. LIPA’s summary of its residential rates, published in 2012, and available on LIPA’s website, states that “Time-of-Use rates require a special meter that records usage during peak and off-peak hours. These rates are available as an option to customers who use, or are expected to use: more than 39,000 kilowatt hours (kWh) annually or 12,600 kWh for the months of June through September.” When Fred first switched to the 184 billing rate twenty years ago (when LILCO provided our electricity), his family consumed 33,660 kWh during the year before he switched rates, of which more than 19,000 kWhs was used June through September (the summer months). Clearly, his household fell within the guidelines for who would be eligible for 184 billing rates.

Now, however, Fred’s annual usage has fallen to 23,712 kWh (by doing most of the things recommended to reduce electrical consumption), but 12,564 kWhs was consumed by his household from June to September. Thus, his summer usage was high enough so that the 184 rates should still have been appropriate. To make certain that the reason the 184 rates produced a greater total cost to Fred compared to what he would have been charged under standard180 rates was not due to his family’s overall usage being too low, we ran the 180 and 184 billing rates against a hypothetical usage of 39,000 kWhs for twelve months. Percentages based on Fred’s actual usage were applied to the 39,000 kWhs assumed usage to arrive at total kWhs during peak and off-peak times, and during summer months and the rest of the year. Again, after applying this hypothetical usage against LIPA’s published 184 rates, the result was that the Time-of-Use rate category would have cost Fred $134.21 more than what he would have been billed under the standard 180 rate.

Perhaps there is another Time-of-Use billing schedule that would be more appropriate. LIPA also offers Rate 188, which, it states in its 2012 summary of Residential Rates, is “An optional ‘off-peak pricing’ rate for customers whose usage does not qualify for Rate 184.” While the fixed daily Service Charge for Rate 188 is the same as for 180, $0.36 per day, a $0.10 meter charge per day is added on. Still, the total fixed daily charge of $0.46 is far less than the daily charge under Rate 184, $1.65 a day. However, the peak charge for electricity during the summer months under Rate 188 is even higher than that charged under the 184 rate ($0.2364 per kWh under 184, and $0.2735 per kWh under 188). Running Fred’s household’s actual usage through the Rate 188 schedule led to the conclusion that he would have paid even more under the 188 schedule than he was billed under the 184 rate, $273.80 more than what he would have been billed under the standard 180 rate schedule. Assuming he used 39,000 kWhs instead of what his family actually used only made things worse – they would have paid $461.74 more by being in the 188 Rate category than they would have had they been in the standard 180 category.

Fred brought all of this to the attention of everyone at LIPA who should care, from the COO down to the Director of Regulatory, Rates and Pricing, asking that they go to the LIPA Trustees to change the fixed daily charges and the billing rates in the Time-of-Use billing categories so there would be an actual financial incentive instead of a penalty for those customers who shifted to Time-Of-Use billing. Thus far, he has received no indication that LIPA is willing to change the rate structures.

On LIPA’s website, however, there is a report adopted by the LIPA Trustees on May 23, 2013 which describes a past experiment designed to encourage residential customers to shift usage to off-peak hours, and which enacts a new tariff for an experimental group to be applied over the next five years. The experiment was conducted between 2009 and 2011. A relatively small group of volunteers had the 188 billing rates applied to usage, but peak hour billing was applied to a significantly reduced period (peak hours were changed from 10 AM – 8 PM [a ten hour period] to 2 PM – 7 PM [a five hour period]). The shocking results were that, while 49% of customers in the program reduced their peak usage, 46% increased peak usage. To remedy this, on May 23, 2013, the LIPA Trustees adopted a new five year experiment which increases the summer peak rate from $0.2735 per kWh to $0.4072 per kWh. Because much of the increase in electrical usage during summer months is due to air conditioning, it will be interesting to see whether there is any escape for even diligent volunteers who shift as much usage as they can to off-peak hours from having higher rates in light of the very significant increase in rates for the shortened peak summer billing period.

There can be no excuse for the current situation, and current 184 and 188 Time-of-Use ratepayers should not continue to participate voluntarily in billing categories that are likely resulting in higher electrical costs, while LIPA conducts its five year experiment, and continues to reap the benefits of their customers’ efforts to shift usage to off-peak hours. Even if LIPA can make a case that there are higher administration costs to administer Time-of-Use billing than standard billing (and it is difficult to imagine such costs are significant in this age of computers), the financial benefit to LIPA of shifting usage to off-peak hours is clear and substantial. If LIPA wants customers to shift their usage, they must provide a proper incentive for them to do so.

One obvious way to do this is to eliminate the 188 Time-of-Use category, leaving the 184 category as the only billing schedule for people who believe they can shift use to off-peak hours. Further, the fixed daily Service Charge should be made uniform, with everyone in the 184 category paying what 180 ratepayers now pay, $0.36 per day. Finally, the $0.10 daily meter charge imposed on 188 rate payers (but not on 184 rate payers) should be eliminated.

The 180 rates and 184 rates then would be as follows:

Applying the proposed 184 rate schedule to Fred’s actual annual usage of 23,712 kWhs, instead of paying approximately $225 more per year as a 184 Time-of-Use ratepayer than he would have under the standard rates, he would have saved $245.85. This would seem an appropriate reward for shifting his usage so that 67% of his family’s usage occurs during off-peak times. On the other hand, if Fred consumed 23,712 kWh per year, but instead of using 67% of the annual electricity during off-peak hours as his family does now, he did not shift any use (i.e., 50% used during peak and 50% during off-peak times over the course of a year), running those numbers through the proposed table produces a higher payment to LIPA than the 180 rate would have, in the amount of $180. Since the purpose of 184 is to shift electrical use to non-peak times, this result too seems appropriate. We leave it to LIPA to devise a fairer rate schedule than now exists, but it can no longer sit back and ignore the unfair results caused by its Time-of-Use rate structure.

What is the bottom line? Buyer Beware. If you switched to the 184 or 188 billing categories, thinking you were saving money while helping reduce the amount of new power sources that will have to be constructed on Long Island, you will have to do your own analysis to determine if you are paying more for the privilege of helping LIPA out. If you analyze your own bills and conclude you are paying more by being a 184 or 188 ratepayer, or even if you are unsure, you may wish to write to LIPA and demand that you be terminated from 184 or 188 billing, and ask to be put back into the standard 180 billing category. Only then will LIPA be forced to review its residential billing rates, and come up with a true system of incentives to encourage customers to shift their usage to off-peak hours.

By Joe Campolo, Esq.

August 23, 2013

Few negotiators would argue the value of good listening skills. Listening skills can calm tensions, break stalemates, and help build creative deals. Most people overestimate their ability of this key skill, and lack an accurate understanding of the concept of active listening.

Active listening doesn’t mean sitting patiently whileyour counterpart talks or does it simply entail saying “I understand” and establishing good eye contact. Rather, active listening is a dynamic process and key in any negotiation. Here are some tips to become a skillful active listener.

1. Showing Your Interest: Prove you’re listening by using body language or brief verbal replies that show interest and concern. Simple phrases such as “yes,” “OK” or “I see” effectively show you are paying attention. This encourages the other person to continue talking and relinquish more control of the situation to the negotiator.
2. Paraphrasing: Tell the other person what you heard them say, either quoting them or summarizing what they said.
3. Emotion Labeling: This means attaching a tentative label to the feelings expressed or implied by other person’s words and actions. This shows you are paying attention to the emotional aspects of what other person is conveying. When used effectively, emotion labeling is one of the most powerful skills available to negotiators because it helps identify the issues and feelings driving the other person’s behavior.
4. Mirroring: Repeating the last words or main idea of other person’s message. This indicates interest and understanding. For example, a subject may say, “I’m sick and tired of being pushed around,” to which a negotiator can respond, “Feel pushed, huh?” Mirroring can be especially helpful in the early stages of a crisis, as negotiators attempt to establish a non confrontational presence, gain initial intelligence and build rapport.
5. Open-Ended Questions: Use open-ended questions instead of “why” questions, which could imply interrogation. If you do most of the talking, you decrease the opportunities to learn about other person. Effective open-ended questions include, “Can you tell me more about that?” “I didn’t understand what you just said; could you help me better understand by explaining that further?” and, “Could you tell me more about what happened to you today?”
6. “I” Messages: Negotiators have to avoid being provoking when they express how they feel about certain things the other person says or does. Using “I” statements lets you ostensibly shed the negotiator role and react to the subject as just another person.
7. Effective Pauses: Any good interviewer knows the power of the long, awkward silence. People tend to speak to fill spaces in a conversation. Therefore, you should, on occasion, consciously create a space or void that will encourage the other person to speak and, in the process, provide additional information.

Adapted from the article “Crisis Intervention: Using Active Listening Skills in Negotiations” by Gary W. Noesner and Mike Webster, published in the 1997 issue of the Law Enforcement Bulletin.

By Patrick McCormick

This article will address two recent appellate court rulings involving commercial leases and the tenant’s liability for certain damages incurred by the landlord. The first, from the Appellate Division, First Department, involves an action by a landlord against a tenant for damages resulting from a flood caused by a rusted gauge on tenant’s supplemental HVAC system. The second case is from the Appellate Division, Second Department and involves tenant’s liability for post-termination rent.

In 45 Broadway Owner, LLC v. NYSA-ILA Pension Trust Fund1, the tenant’s predecessor installed a supplemental HVAC system that connected to the building’s water risers. The lease provided that the parties’ respective insurance policies would each contain an endorsement by which their respective insurance companies would “waive subrogation or permit the insured, prior to any loss, to waive any claim it might have against the other.” The lease also provided that “each party releases the other with respect to any claim (including a claim for negligence) which it might otherwise have against the other party for loss, damage or destruction with respect to its property by fire or other casualty . . . occurring during the terms of this lease.” In April 2010, in connection with certain work to be performed, the landlord notified the tenants that they were required to shut down any supplemental HVAC systems. During the work, the lobby of the building flooded and it was determined that a rusted and corroded pressure gauge on defendant/tenant’s supplemental HVAC system burst, allowing water to flow out. The landlord suffered total damages (exclusive of attorney’s fees and costs) of $136,055.22. The landlord’s motion for summary judgment was granted and the tenant’s cross-motion for summary judgment was denied.

The Appellate Division, First Department noted that the release language contained in the lease “constitutes an enforceable reflection of the parties’ decision to allocate the risk of liability for these claims [resulting from negligence] to third parties through the device of insurance – a choice that contracting parties are permitted to make as long as their intent to do so is clear and unequivocal.” The Court then found that the concept of “casualty” as used in the parties’ lease included “the flood resulting from the rusted gauge . . .” The Court held that the lease “does not suggest that ‘casualty’ is an event resulting only from an ‘act of God.’” The Court confirmed that “‘casualty’ may be defined as an ‘accident’ or an ‘unfortunate occurrence.’”

In Patchogue Associates v. Sears, Roebuck and Co.2, plaintiff/landlord commenced an action to recover damages sustained by landlord after the termination of the landlord/tenant relationship which occurred before the end of the lease term. The trial court granted defendant/tenant’s to dismiss the first cause of action to the extent it sought post-termination damages under the lease and declaring that defendant/tenant had no liability to plaintiff/landlord for breach of contract, holding that “a landlord may not recover such claimed post-termination damages in the absence of a lease provision that specifically makes a tenant responsible for the payment of rent to the landlord after the landlord-tenant relationship ends.” In reversing, the Appellate Division held that the absence of a “survival-of-rent” or “acceleration” clause “does not foreclose a landlord from seeking, after mitigation, its actual contract damages resulting from the breach . . .” Thus, the Appellate Division concluded that “although the landlord has already recovered pre-termination rent from the tenant pursuant to a summary eviction proceeding, the terms of the lease did not limit the landlord to recovery only of pre-termination rent in the event it commenced a summary eviction in the District Court to regain possession of the subject premises.”

The lesson to be learned from these cases is that disputes involving liability for various types of damages may be avoided with carefully negotiated and specific lease clauses addressing damages.

1 107 A.D.3d 629, 2013 Slip Op. 04895 (1st Dep’t 2013)
2 108 A.D.3d 659, 2013 Slip Op. 05305 (2d Dep’t 2013)

United States Court of Appeals for the Second Circuit Affirms $104.69 Million Judgment in Favor of New York City Against Exxon Mobil for MTBE Contamination Based on Common Law Claims, Opening the Door to Future Litigation That Will Include Companies and Individuals That Likely Never Would Have Been Named in the Past.

Following an eleven week trial presided over by Judge Sheira Scheindlin in the Southern District of New York, the jury awarded New York City judgment in the amount of $104.69 million against Exxon Mobil for Exxon Mobil’s alleged contribution to the contamination of Station Six wells in Jamaica, Queens.  The trial proceeded in three phases.  In Phase I, the City established that it had good faith intent to begin construction of the Station Six facility within the next fifteen years and that it intends to use the Station Six wells within the next fifteen to twenty years as a back-up source of drinking water.  In Phase II, the jury found that MTBE would be in the “capture zone” of the wells when they began operating, and that the concentration of MTBE would peak at a concentration of 10 ppb by 2033.  In Phase III, the City proved by a fair preponderance of the credible evidence that a reasonable water provider in the City’s position would treat the water to reduce the levels or minimize the effect of the MTBE on the combined outflow of the wells in order to use the water as a back-up source of drinking water.   The jury found Exxon Mobil liable to the City based on State tort theories: negligence, trespass, public nuisance and failure to warn.  Finally, the jury found that the City’s total damages arising from the contamination of the Station Six facility was $250.5 million, that this must be reduced by $70 million, reflecting the anticipated cost of remediating pre-existing PCE contamination, and that 42 percent of the remainder of the injury to the City should be attributed to companies other than Exxon Mobil, leaving $104.6 million as Exxon Mobil’s share of the City’s damages.  The jury took into account testimony that, because of mixing of brands prior to distribution, the gasoline sold by every station in Queens likely contained some of Exxon’s gasoline, and that Exxon was responsible for approximately 25 percent of gasoline sold in Queens during the relevant period.  In addition, the jury found that leaks of gasoline occurred regularly at gas stations.

The United States Court of Appeals for the Second Circuit affirmed the verdict in a lengthy decision on July 26, 2013, which provides fodder for numerous law school final exam questions in Civil Procedure and Torts.  The decision, however, may go far beyond its pedagogical implications.  Without resort to strict liability statutes like the Navigation Law, and a damage claim that seemed speculative at best, the Second Circuit Court of Appeals has set out a road map for the State of New York and water purveyors to seek substantial damages against any company that has contributed to groundwater contamination within the area from which groundwater can be expected to eventually migrate to the wells, even if the contaminants are not expected to reach the wells in significant concentrations for many years.

The City purchased the Station Six Wells in 1996 with the goal of using the wells in the future as a back-up for the City’s water supply.  In April 2000, MTBE was first detected in Station Six Wells at readings between 0.73 ppb and 1.5 ppb.  By January, 2003, MTBE levels reached 350 ppb in one of the wells.  However, none of the wells had been used for the drinking water distribution system and construction of the planned treatment system had not yet begun.  In October 2003, the City sued Exxon and twenty-six other petroleum companies, complaining of injuries to the City’s water supply from gasoline containing MTBE.  All defendants settled except Exxon Mobil.

Exxon Mobil argued that the case was not “ripe” for adjudication, because it was speculative whether the City would ever use the Station Six Wells, but, if the City’s claims were ripe, they were barred by the applicable statute of limitations.   The Second Circuit held that the City’s claims were ripe because the City did not bring suit until testing showed the presence of MTBE in the wells, “and the question whether the injury was significant enough for the City to prevail on its claims under New York law was a question for the jury.”   That the City might not use the wells for fifteen years did not preclude the finding that the claims are ripe.  The Court further noted that New York’s statute of limitations applicable to toxic torts does not apply to the continuing wrong doctrine.  When an injury to person or property is from exposure to a toxic substance, the person injured must commence suit within three years of when he or she knew or should have known of the injury.  Thus even though the presence of MTBE in the groundwater is continuous, the statute of limitations runs from the first discovery of injury.  For this reason, the Court reasoned, dismissing the City’s claims on ripeness grounds would foreclose the possibility of relief because of the statute of limitations, creating “a hardship and inequity of the highest order.”

Certain holdings of the Second Circuit will be cited frequently in future litigation. For example, in its discussion of negligence, the Court found “Exxon’s timely knowledge of the particular dangers of MTBE, combined with evidence about remedial measures available as early as the 1980’s, was sufficient to allow the jury to determine that Exxon breached the standard of ordinary care.”  Remarkably, the Court then gave as an example of how Exxon could be found to have breached that standard by observing that “Exxon could have installed remediation systems at its stations, which would have permitted station operators to begin the clean-up process as soon [as] they detected a gasoline leak.”

With regard to trespass, the Court rejected Exxon’s argument that the City failed to establish an interference with its water rights because there was no proof that MTBE would exceed the Maximum Contaminant Level (“MCL”) established for MTBE.  Noting that New York courts “have held that a plaintiff may suffer injury from contamination at levels below an applicable regulatory threshold”, the Court agreed with the City that the jury could find that a reasonable water provider would have treated the MTBE contaminated water at Station Six.

In its discussion of public nuisance, the Second Circuit considered the holding in an MTBE case in Nassau County in which the trial court concluded that, to be liable for public nuisance, the defendant’s actions must have taken place on land that was “neighboring or contiguous.”  That standard was not met in the case before the Second Circuit, but it did not deter the Court from affirming the judgment.  The Second Circuit said that the Nassau County case had not been subjected to appellate review, and it believed that, upon further review, New York law will not be found to be so restrictive.  Although the Court said that, under the facts presented, the nuisance claim would be sustained even if the “neighboring or contiguous” standard applied because “Exxon’s extensive involvement in the Queens gasoline market belies any claim that its conduct was too geographically remote to sustain liability for public nuisance,” the possibility that the “neighboring or contiguous” requirement may not apply will encourage injured parties to stretch the reach of their nuisance claims.

Finally, the City appealed the lower court’s dismissal of the City’s claim for punitive damages, which “are awarded to punish a defendant for wanton and reckless or malicious acts and to protect society against similar acts.”  The Second Circuit agreed with the lower court that “the vast majority of the conduct that produced the City’s injury led to persistent levels of MTBE in the capture zone of Station Six that are well below the MCL in place at the time the conduct occurred.”  This fact was relevant because, although a reasonable jury could conclude that the City was injured by MTBE levels below the MCL, “punishing [Exxon] for its contribution to this injury would not advance a strong public policy of the State or protect against a severe risk to the public.”  Significantly, however, the Second Circuit said that it expressed no view on the applicability of punitive damages “in other MTBE cases before the District Court.”

Conclusion

It is safe to say that the Second Circuit’s decision provides ample incentive for the State and private water purveyors to expand the scope of cost recovery litigation throughout the State of New York.  Although the Second Circuit referred to the “capture zone” of the Station Six wells, because of its affirmance of the finding that some Exxon Mobil gasoline likely was in most of the gasoline delivered to stations within this capture zone, the outer limits of the capture zone or its significance for purposes of cost recovery litigation did not have to be explored.

Future litigation, however, can be expected to focus on the concept of a “capture zone”   by reference to studies done pursuant to the Source Water Assessment Program (“SWAP”). This program was mandated by 1996 amendments to the federal Safe Drinking Water Act.  The New York State Department of Health developed the New York State SWAP, and this resulted in the Long Island SWAP.  The Long Island SWAP was developed by an engineering firm, CDM, under contract with the New York State Department of Health, and the Suffolk and Nassau County Departments of Health Services.  Using computer modeling and geographic information systems, source water assessments were performed for all public water supplies in Nassau and Suffolk Counties.  The resulting source water assessments defined capture zones within which contaminants potentially would reach each Nassau and Suffolk County public supply well within two years, five years, twenty-five years, fifty years, seventy five years, and one hundred years.

The Summary Report for the Long Island Source Water Assessment Program makes clear that the studies are planning tools: “It is important to remember that the source water assessments only indicate the potential for contamination of a supply well, based upon the likelihood of the presence of contaminants above ground in the source water recharge area and upon the possibility that any contaminants present can migrate down through the aquifer to the depth at which water enters the well screen.  In most cases, the susceptibility, or potential, for contamination has not resulted in actual source water contamination.  If contamination of a well source is identified, water suppliers either provide treatment or withdraw the well from service, so that all potable water distributed to residents of Nassau and Suffolk Counties meets all applicable drinking water standards.”

As a result of the Second Circuit’s decision, zone of capture analysis, coupled with the discovery of contaminant concentrations in water below Maximum Contaminant Levels, may suffice to draw huge numbers of companies into litigation that likely never would have been named as defendants in the past.  This in turn will engender defenses based on ripeness and the statute of limitations.  If Company “A” has a record of discharging volatile organic chemicals (“VOCs”) and is in the portion of the capture zone of a public water supplier that suggests contaminants will be drawn into the public supply well within twenty-five years, when is a case against “A” “ripe”, and when does the statute of limitations begin to run?  If the public supply well already has VOCs present at concentrations sufficient to require either shut-down of the well, or treatment before potable water is released to the public, it is safe to say that treatment will continue for many years, in part, due to polluters within twenty-five year capture zones.

Future court decisions will address the level of proof required in order for a distant upgradient polluter that is within a SWAP defined capture zone of a public supply well to be found liable to the water supplier for damages to its supply wells.  Until such clarification is received, the State and public water suppliers may be tempted to add any polluter they can find to their cost recovery lawsuits who are within a Source Water Assessment Program capture zone, regardless of how far away, or the projected time it will take for contaminants to reach the supply well from that polluter’s site.  Given the high cost of defending such lawsuits, all or most such defendants may be expected to enter into settlements rather than incur the cost of a defense.

The ability to mount a vigorous defense in order to assure a reasonable settlement has been diminished by the Second Circuit’s ruling.  While the law is clear that the polluter should pay, the risk that innocent companies and individuals will be drawn into litigation that they cannot afford to defend against has risen dramatically.  We can only hope that the State and water purveyors will exercise their new-found powers judiciously.  If they do not, defendants can be expected to join together to share the cost of motions that will help to clarify the rules for including far away polluters in lawsuits seeking indemnification or contribution for environmental remediation costs.

By Michelle Centamore

Smithtown News

Patrick McCormick practices law during the day but he’s standing up to bullying around the clock as President of the Board of Directors of CAPS (Child Abuse Prevention Services). The Kings Park resident is a partner at Campolo, Middleton & McCormick, LLP in Bohemia.

Then there’s the 24-7 job he took on several years ago when he discovered that he could help keep his children and their peers safe.

“As a parent of three young girls, I wanted to become educated and involved. Once I was introduced to the [CAPS] volunteers and rally became aware of their mission and I realized how prevalent these issues were, it was almost easy to get involved because it was so worthwhile and so important,” said Mr. McCormick, now president.

Child Abuse Prevention Services is a Long Island nonprofit dedicated to the prevention of bullying, child abuse and neglect and the promotion of Internet safety. CAPS utilizes volunteers to work directly with children and youth in New York’s Nassau and Suffolk elementary, middle and high schools, providing prevention through education programs at no cost to schools or students. The organization also has a CAPSHELPLINE or CAPSBULLYHELPLINE where children, parents and caregivers, as well as educators may call for guidance and support. Through education, intervention and services, CAPS work to fulfill its mission: Working Together to Keep Every Child Safe from Harm.

Like most boards, the responsibility of CAPS’ board of directors is to help the organization grown fiscally and assist in managing the business end of it, for example, assuring that he budget and programs are properly funded and the people needed to facilitate its programs are in place. “It is a very hands-on bard, very active and very caring,” Mr. McCormick said.

As school and cyber-bullying are becoming more rampant, organizations such as CAPS are critical in providing not only support and intervention but prevention as well, according to Mr. McCormick. “Right now, bullying is most prevalent. Kids feel very alone when these things happen,” said Mr. McCormick. “It is very important to help them realize that they are not along and there is a place for them to get help.”

CAPS programs serve to educate students, families and educators on how to recognize bullying and make them aware of the detrimental effects it can have on individuals. CAPS offers preventative and reactive solutions to assist students, as well as educators, in putting a stop to bullying. There are different kinds of bullying, explained Mr. McCormick. There is the obvious, easier to recognize “face-to-face” bullying and then there is the bullying that is done on a more subtle, discreet level, often by girls, according to Mr. McCormick. And then ether is “cyber-bullying” or bullying done through the Internet or texting.

The ability of the Internet – Facebook, Youtube, Instagram, and group texts – to crush a child or teen is extremely powerful. “A quick video posted on Youtube can cause tremendous, almost instant harm,” said Mr. McCormick. “Everyone knows about it.”

“It is not always easy to get through to a child and education is by far the biggest part of the CAPS mission. The volunteers are able to spark and interactive conversation and keep students engaged. They are also able to get the teachers involved and leave a follow-up curriculum,” said McCormick.

To Mr. McCormick, being a CAPS volunteer is the ultimate in providing a special, much-needed service to the community’s youth. Utilizing his professional experience, he is able to help assure that CAPS continues to operate and comply with the various rules that apply to a nonprofit, he explained. He also
assists in organizing and chairing board meetings and acts as a voice for CAPS, helping to introduce new fundraising initiatives, such as the upcoming 5K run/walk on October 6 at Sunken Meadow Park that will serve to raise awareness and funds for CAPS programs.

The success of CAPS is dependent on the efforts of both volunteers and board members, Mr. McCormick said. All CAPS representative are very active – and passionate- about bringing their unique experiences to help CAPS continue to achieve success, all because they believe that while indeed there is the power to hurt through bullying, there is also – equally – the power to heal and prevent harm – through active participation in an organization such as CAPS. “Staff and volunteers of all ages are willing to give so much,” said Mr. McCormick. “It is awe-inspiring. I am amazed at the dedication and willingness to do what they do.. I am inspired to do it too… they tug on your heartstrings – these stories of bullying. It is not easy, but everyone pulls together. Everyone knows what the goal is and is always rolling in the same direction. No one ever loses sight of the goal, which is to help children.”

CAPS is currently seeking volunteers to assist in furthering its mission. The organization is located in Roslyn and is open Monday through Friday, 9am to 4pm. For more information, call 516-621-0552 or visit www.capsli.org.

If you own waterfront property and have a functional bulkhead that is at least 100’ long and has been in place since before August 1977, you have a very valuable asset. According to the regulations of the New York State Department of Environmental Conservation (“DEC”), anything landward of such a bulkhead is not subject to the DEC’s wetlands jurisdiction. In contrast, if the property is not bulkheaded or the bulkhead is less than 100’ long or was constructed after August 1977, then any construction in the area within 300 feet landward of the tidal wetland boundary is likely subject to tidal wetlands regulations, and will require a DEC tidal wetlands permit. All too often, people overlook the importance of their pre-August 1977 bulkhead being “functional”, and, through failure to apply routine maintenance, find that the DEC is claiming work done behind the bulkhead should have been done pursuant to a Tidal Wetlands permit. In such situations, it is not uncommon for DEC to require any structure built without a required permit to be removed and to impose substantial penalties on the offender.

What is a “functional bulkhead”? Essentially, it is a bulkhead that functions as designed and is maintained in working order. Factors considered by the DEC in the determination of functionality include: if more than 50% of the footprint of the structure is missing; if the structural integrity is compromised; if the tidal wetland boundary has moved landward of the bulkhead; and, if sections are missing. In practice, the DEC tends to err on the side of caution and often will declare even a slightly damaged bulkhead non-functional if it fails to operate as designed. For example, if the bulkhead does not prevent soil from eroding into the water or the wetlands from moving landward, it may be deemed non-functional and the DEC will assert jurisdiction landward of the bulkhead.

The DEC’s regulations allow ordinary maintenance and repair, not involving expansion or substantial restoration, reconstruction or modification, to be performed without a permit. While this should be done regardless of when the bulkhead was constructed to avoid having to obtain a tidal wetlands permit in order to make substantial repairs, for the reasons set out above, it is critically important that the property owner regularly perform routine maintenance if the bulkhead was built prior to August 1977.

New York’s Navigation Law deals with oil spills, who must clean them up, and who must pay for the damage. Despite the name, the law applies to discharges of petroleum on land that may adversely impact the “waters of the State,” which include groundwater. Some recent court decisions are of interest.

Benjamin v. Keyspan Corp., 104 A.D.3d 891 (2nd Dept. 2013).

The normal statute of limitations for a claim of damage to property from petroleum contamination is three years from when the property owner knew or should have known of the problem.  In this case, defendant Keyspan showed that the plaintiff had agreed to the installation of monitoring wells on his property, had participated in a survey regarding possible contamination in the area, and was notified of monitoring and testing results in the vicinity of the property at least eight years before the plaintiff filed suit.  Thus, the action was dismissed as time-barred.

This decision from the Appellate Division, which has jurisdiction over Nassau, Suffolk, Staten Island, Brooklyn, Queens, Westchester, Dutchess, Rockland, Orange and Putnam Counties, underscores the importance of timely action by a property owner who knows or reasonably suspects that his property has been contaminated.

State of New York v. Zurich American Insurance Co., 106 A.D.3d 1222 (3rd Dept., 2013).

The Navigation Law allows any injured party to recover damages, not only from the “discharger”, but also from that person’s insurance company, by suing the insurance company directly. In this case, New York State expended over $124,000 to clean up contamination at a gas station in Northport, SuffolkCounty.  It then tried to recover its costs by commencing an action against Zurich.  However, Zurich had already obtained a declaratory judgment against its insured, stating that the claim is not covered under the policy.  It argued that this decision meant that it could not be now sued by the State.

The Appellate Division disagreed.  It pointed out that the State had not been a party to the earlier lawsuit and was therefore not bound by that court’s decision.  The State must be given its own opportunity to convince the court that the policy covers the discharge.  Of course, if it cannot, the insurance company will be off the hook. Another possibility is that, to avoid litigation costs, Zurich will agree to pay some of the cleanup costs as part of a settlement agreement.

Thus, if there is a dispute over policy coverage of a petroleum spill, the insurance carrier should add as a party to any lawsuit the injured party who may have incurred costs as a result of the discharge.  That will create “collateral estoppel”, i.e. be binding on all the participating parties and deter subsequent litigation.  Of course, the downside of including the State in a declaratory judgment action is that doing so will guarantee that the State becomes aware of the potential insurance coverage.

State of New York v. C. J. Burth Services, Inc., 39 Misc. 3d 1221(A) (Sup. Ct. Albany Co. 2013).

Anyone who violated the Navigation Law may be subject to penalties of up to $25,000 per day, with each day of a continuing violation counting as a new offense.  In this case, the State asked the court to impose these penalties on the owners of a gas station, even though the latter claimed that they did not cause any spill and that the contamination had occurred years earlier before they had purchased the property. The State’s rationale was that, once they became aware of the contamination, “defendants failed to take all necessary actions to abate [it]”, by rejecting the Department of Environmental Conservation’s proposed stipulation about the work that had to be done and not doing any cleanup on their own. The court agreed that penalties could be imposed in this instance and set the matter for trial.

The important lesson to be learned from this case is that the net of Navigation Law liability can ensnare not only the person who causes a spill and his/her insurance company, but also a subsequent owner who discovers the contamination and does nothing to address it. To avoid heavy penalties, the innocent owner may consider applying to the Brownfields Program as a “volunteer”.  This status allows the owner to limit the cleanup to the boundaries of the property without requiring him or her to investigate and remediate the off-site contaminant plume.

Most employers know that the U.S. Department of Labor (DOL) oversees compliance with the Fair Labor Standards Act (FLSA) and other statutes that protect workers. What many employers may not be aware of, however, is that the DOL has the authority to conduct inspections of workplaces and bring enforcement actions against employers found to be in violation of the FLSA and related statutes
governing wage payments. Employers may be investigated, inspected, audited, or visited by the DOL Wage and Hour Division (“WHD”) without explanation. Most often, complaints prompt DOL visits, though the existence of a complaint is not always disclosed to the employer. It is critical for employers to prepare for and understand their rights during inspections, investigations and audits. The following highlights some key points to prepare you and your team for a U.S. Department of Labor investigation.

1. Pre-inspection preparation. Before a government investigation begins, there are preventive measures that employers should take.
   a) Check current and past 1099’s going back several years to review job duties to ensure proper classification of independent contractors vs. employees.
   b) Review timekeeping systems to ensure that non-exempt employees are being paid for all work performed (including overtime).
   c) Ensure that all required payroll records and written policies and procedures are current, accurate and complaint and updated regularly, keeping on top of applicable laws and regulations.
   d) Train managers with key concepts of Wage Hour Law (exempt vs. non exempt).
   e) Familiarize all employees with the basics of overtime and record keeping under the FLSA.
   f) Familiarize key employees with DOL inspection procedure and appoint an employee representative for WHD inspector interviews.
2. Opening Conference & Preliminary Inspection. The inspection begins with the arrival of the investigator who will likely identify him or herself. The investigator will either present their credentials or an employer may request them. The investigator will request to meet with the employer or representative. An opening conference is conducted, which is when the employer is informed of the purpose of the inspection and the investigation process is explained. Some tips:
   a) Clarify the scope of the investigation. Know exactly what they are looking for and don’t provide more than what is asked.
   b) Consider your option to demand a subpoena vs. consenting to an investigation.
   c) Know that the DOL must give the employer 72 hours to respond to demands and conduct the investigation during reasonable hours not to interrupt normal business operations.
   d) Expect the DOL to request and be prepared to provide copies of at least the previous three years of payroll records, and all written policies, practices and procedures (i.e. timekeeping requirements
   and procedures).
   e) It is not unreasonable to request additional time to prepare the requested documents, although not all investigators will comply with this request.
3. Document Production. The investigator may request records for examination. Records are
   examined to determine of the amount of business transactions, interstate commerce participation, government contracts, the layout of the facility, and payroll and time records.
   a) Label all documents produced with “Confidential and Proprietary,” and keep all trade secrets or confidential business information under cover sheets.
   b) Make and keep duplicates of every record produced to the DOL.
   c) Bates-stamp each produced document to better track and reference what was produced.
4. On-Site Inspections and Interviews. Investigators may conduct private employee interviews that may occur on the employee’s premises, at the employee’s home, by mail, or by telephone. Both former and present employees may be subject to investigation interviews.
   a) During the investigation have a manager escort the WHD representative at all times while on site (except during interviews).
   b) Track the activity of the WHD representative; subjects of his questions, written notes, etc.
   c) Employers do not have the right to participate in non-exempt employee interviews, but do have the right to attend all management interviews.
   d) Once DOL decides who they want to interview, schedule all interviews in advance and prepare employees.
   e) Remember that you must never retaliate against employees for agreeing to be interviewed or because of anything they say during an interview.
5. Closing Conference. A closing conference is conducted at the end of the investigation with the employer. The investigator will inform the employer of standards violated, corrections to be made, abatement dates, and citations may be issued. If the DOL finds any violations:                         a)Copies of the citation will be provided by mail and employers must post citations where affected employees can view them.
   b) Be prepared for follow up inspections to ensure corrections are made and citations are posted.
   c) Request time to provide supplemental information to correct any factual errors that form the basis of a proposed violation.
   d) In deciding wither to contest the DOL’s findings, consult counsel to review whether the alleged violations are accurate, if the penalties are excessive and if the finding exposes you to costly
   compliance measures.

During more in-depth investigations, compliance officers may conduct preliminary investigations including looking into whether or not a complaint is valid, and checking on prior or current investigations for the same employer. Additionally, they may collect copies of prior inspection reports, inspector’s notes, interviews, signed statements, and information on previous complaints. An employer may provide a written position statement and request time to consult legal counsel. Investigators may also subpoena documents and witnesses.

6. Remedies for Violations. Depending on the violation, type of investigation, and who performed the investigation, remedies will vary. Financially, employers may be subject to the payment of back wages, civil money penalties, employee suits for recovery, and Secretary of Labor lawsuits brought on behalf of employees. Legally, employers may be subject to court injunctions brought by the Secretary of Labor, criminal penalties, and court injunctions that prohibit further violations. Certain statutes subject employers to the withholding of funds, administrative hearings, court actions, loss of federal contracts, and the declaration of ineligibility for future contracts. Protection will be provided to the employees who file complaints or provide information for the investigation. Charges of retaliation, and potentially criminal sanctions, may occur if employees are affected after an investigation.

7. Conclusion. Employers should be proactive as opposed to reactive in this area. They should conduct self-audits at least yearly to make sure they are in compliance with applicable laws enforced by the United States Department of Labor. Employers should also train their employees what to do if when an investigator shows up at the facility. Early planning and knowing how to respond to an inspection could
potentially save an employer thousands of dollars and protect the employer from criminal prosecution.

Please join us on Thursday, July 21 for a complimentary CLE focusing on critical updates to the CPLR and court rules as well as recent case law that significantly impacts New York civil practice and discovery. Taught by two experienced litigators, CMM partners Scott Middleton and Patrick McCormick, the course will cover a wide variety of topics of interest to all who practice in New York State courts including deposition rules, subpoena standards, privilege issues, electronic evidence, and discovery hurdles facing every practitioner.

The application for New York accreditation of this course is currently pending.

A light dinner will be served.

 Thursday, July 21, 2016

5:00 p.m. – 7:00 p.m.

Campolo, Middleton & McCormick, LLP
4175 Veterans Memorial Highway, Suite 400
Ronkonkoma, NY 11779

This seminar is free but registration is required.  Please RSVP to Lauren Kanter-Lawrence, Esq., Director of Communications, at Lkanter@cmmllp.com or (631) 738-9100, extension 322.