Insurance Agency Sued by New York AG over Old Oil Spill on its Land

June 30, 2009

Donald Forsythe and Fred Wilder, founders of Wilder-Forsythe Inc. insurance agency, picked an awful location to sell insurance.

The small office building they bought in 1974 in the far-northern New York city of Ogdensburg sits on land, formerly a gas station that’s contaminated by spilled oil.

State Attorney General Andrew Cuomo is suing the two retirees and their neighbor over a $374,000 mess the trio claims they did not create. Cuomo’s office, which is suing on behalf of the state comptroller’s office, says it has an obligation to recover money spent by the state. The three landowners — each in their 80s — say it’s unfair to hold them liable while not pursuing the polluters.

“I had nothing to do with any of this,” said Forsythe. “Why Fred and I are held responsible is beyond us.”

The lawsuit, which could go to trial next year, sheds light on a sometimes contentious question about New York’s underfunded oil spill cleanup system: When old spills are discovered, who should pay for the cleanup?

There are typically 14,000 or more oil spills created or discovered each year in New York, many of them from leaky storage tanks at old gas stations or industrial sites. Spillers clean up their messes about 97 percent of the time. When there’s a problem, New York can pay for a cleanup from its Oil Spill Fund, which is paid for through fees on storage tank registration and oil importation to New York.

Though the fund is maintained by the state comptroller, the state Department of Environmental Conservation investigates polluted sites and the attorney general is charged with collecting reimbursements.

Forsythe and Wilder knew the office was the site of an old Gulf station when they bought it 35 years ago, but say they knew nothing about tanks left in the ground. They say they were surprised when a right-of-way excavation dug up oil contamination from an underground tank in 1988. Forsythe said they paid about $20,000 to remove the well and thought they were done with it.

Far from it.

More contamination was discovered a few years later during drilling for a telephone pole, according to the state DEC. In 2000, investigators found a number of buried 55-gallon drums thought to be straddling the insurance property and that of the adjacent property where Thomas and Laurel Roethel ran a Kawasaki dealership. A year later, two more tanks were found on the Roethel property.

Defendants’ lawyers say the tanks may have been installed by a car dealer that used to operate on the Roethel property. It’s not clear who buried the drums. Gary Bowitch, the lawyer for Forsythe and Wilder, says it could come from a World War I-era munitions plant.

The DEC arranged for a cleanup of the spill. In 2006, then-Attorney General Eliot Spitzer sued Forsythe, Wilder and the Roethels for $374,153.90. The complaint claims the defendants didn’t immediately notify the state, a claim Bowitch disputes.

The defendants’ lawyers say their clients are of limited means. Laurel Roethel is a widow. Wilder receives disability payments from battle injuries in France during World War II and he has Parkinson’s disease. Forsythe said, “I was financially OK until I got this notice.”

Cuomo’s chief counsel, Steve Cohen, said neither Forsythe nor Wilder have provided details about their finances, as requested by the attorney general’s office several months ago. Bowitch said settlement talks should not center on his clients’ financial position but on whether they were the polluters.

Current owners often are held liable for cleaning up past pollution on their property in New York, though the law also protects landowners who had no knowledge of contamination, like victims of secretive “midnight dumpers.”

Cuomo recently lost a case similar to this one in trial court. A judge in Albany dismissed a liability claims against a Utica car repair shop where oil contamination was found. The owner said he did not know there was a gas station at the site. The state intends to appeal.

But Bowitch asks why Cuomo is not also pursuing the oil company that ran the Gulf station. Bowitch provided a 1996 letter from the attorney general’s office to Chevron _ which was formed from Gulf and Standard Oil in 1984_ indicating the AG’s office then thought Chevron held responsibility.

The question is especially pointed because the Oil Spill Fund has paid out more money than it has taken in recent years. Bowitch notes that there are “clearly financially viable parties” who are better able to reimburse the state.

Cuomo spokesman John Milgram said “we brought this action against all appropriate defendants in light of legal burdens and all available evidence.” Milgram declined further comment on the liability.

A state official familiar with case, speaking on the condition of anonymity because the litigation is pending, said an exhaustive investigation failed to link the spill to the oil company’s long-ago possession of the property.

That leaves the current owners on the hook for the total bill. A settlement offer of $170,000 was rejected.

Barring a settlement, the case could be heard next year. Forsythe says he looks forward to asking a jury if the law is fair.

“Maybe that will give me something to live for,” he said.

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