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A08572 Summary:

BILL NO    A08572 

SAME AS    SAME AS S06543

SPONSOR    Sweeney (MS)

COSPNSR    Silver, Farrell, Lupardo, Glick, Kavanagh, Zebrowski, Cymbrowitz,
           Latimer, Jaffee, Titone, Schimel, Abinanti, Colton, Castelli,
           Gottfried, Lentol, Brennan, Englebright, Galef, Dinowitz, Millman,
           Magnarelli, Markey, Paulin, Cusick, Reilly, Benedetto, Rosenthal,
           Maisel, Bronson, Roberts, Castro, Rivera P, Quart

MLTSPNSR   Braunstein, Cahill, Hooper, Losquadro, McEneny, Murray, Nolan,
           Russell

Add Art 23 Title 29 Part 1 SS23-2901 - 23-2903, Part 2 SS23-2904 - 23-2910,
Part 3 SS23-2914 - 23-2928, Part 4 SS23-2931 - 23-2936, amd S23-1903, En Con L;
add S92-t, St Fin L

Establishes the natural gas production contamination response and compensation
program and creates the New York natural gas production contamination damage
recovery and remediation fund.
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A08572 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          8572
 
                               2011-2012 Regular Sessions
 
                   IN ASSEMBLY
 
                                   September 13, 2011
                                       ___________
 
        Introduced  by  M.  of  A.  SWEENEY,  SILVER,  FARRELL,  LUPARDO, GLICK,
          KAVANAGH, ZEBROWSKI, CYMBROWITZ,  LATIMER,  JAFFEE,  TITONE,  SCHIMEL,
          ABINANTI,  COLTON,  CASTELLI, GOTTFRIED, LENTOL, BRENNAN, ENGLEBRIGHT,
          GALEF, DINOWITZ, MILLMAN, MAGNARELLI, MARKEY, PAULIN, CUSICK,  REILLY,
          BENEDETTO,  ROSENTHAL,  MAISEL, BRONSON, ROBERTS -- Multi-Sponsored by

          -- M. of A. CAHILL, LOSQUADRO, McENENY, MURRAY, NOLAN, RUSSELL --  (at
          request  of  the  State  Comptroller) -- read once and referred to the
          Committee on Environmental Conservation
 
        AN ACT to amend the  environmental  conservation  law,  in  relation  to
          establishing  the  natural  gas  production contamination response and
          compensation program; and to amend the state finance law, in  relation
          to  creating  the New York natural gas production contamination damage
          recovery and remediation fund
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. Article 23 of the environmental conservation law is amended
     2  by adding a new title 29 to read as follows:
     3                                  TITLE 29

     4                NATURAL GAS PRODUCTION CONTAMINATION RESPONSE
     5                          AND COMPENSATION PROGRAM
     6  Part 1. General Provisions.
     7       2. Natural  gas  production  contamination  cleanup  and  decontam-
     8            ination.
     9       3. Liability; third party compensation.
    10       4. Miscellaneous.
    11                                   PART 1
    12                             GENERAL PROVISIONS
    13  Section 23-2901. Legislative intent.
    14          23-2902. Purposes.
    15          23-2903. Definitions.
    16  § 23-2901. Legislative intent.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

                                                                   LBD13305-04-1

        A. 8572                             2
 
     1    The legislature finds and declares that New York's  lands  and  waters
     2  constitute   a   unique  and  delicately  balanced  resource;  that  the
     3  protection and preservation of  these  lands  and  waters  promotes  the
     4  health,  safety  and welfare of the people of this state; that the state
     5  is  the  trustee,  for  the  benefit  of  its  citizens,  of all natural
     6  resources within its jurisdiction; and that contamination from incidents
     7  or accidents that result from natural gas production pose  a  threat  to
     8  the  economy  and  environment of this state. The legislature intends by

     9  the passage of this title to  exercise  the  powers  of  this  state  to
    10  provide  strict  liability  for  damage sustained within this state as a
    11  result of contamination caused by natural gas production, require prompt
    12  cleanup and decontamination of any affected real or  personal  property,
    13  and  establish  a  fund  for the payment of remediation costs of contam-
    14  ination and timely and adequate compensation to any persons  damaged  by
    15  such contamination.
    16  § 23-2902. Purposes.
    17    It  is  the  purpose  of  this title to ensure a clean environment and
    18  healthy economy for the state by providing for the  remediation  of  any
    19  contamination associated with natural gas production which may result in

    20  damage to lands, waters or natural resources of the state by authorizing
    21  the  department of environmental conservation to respond quickly to such
    22  contamination and effect prompt  cleanup  and  decontamination  of  such
    23  contamination,  giving  first  priority  to protecting public health and
    24  minimizing environmental damage, and by providing for  strict  liability
    25  for damage sustained within the state as a result of such contamination.
    26  § 23-2903. Definitions.
    27    For  the  purposes of this title, unless the context clearly indicates
    28  otherwise, the following terms shall have the following meanings:
    29    1. "Administrator" means the chief executive, within the department of
    30  audit and control, of the New York natural gas production  contamination

    31  damage recovery and remediation fund established in section ninety-two-t
    32  of the state finance law;
    33    2.  "Claim" means, for purposes of part three of this title, any claim
    34  of the fund or any claim by an injured person who is not responsible for
    35  the contamination seeking compensation for cleanup  and  decontamination
    36  costs  incurred  or  damages sustained as a result of contamination that
    37  results from natural gas production;
    38    3. "Cleanup and decontamination" means activities undertaken to perma-
    39  nently eliminate, remove, abate, control or monitor health and/or  envi-
    40  ronmental  hazards  or  potential hazards in connection with natural gas
    41  production;
    42    4. "Cleanup and decontamination costs" means all costs associated with

    43  the cleanup and decontamination of  contamination  including  relocation
    44  costs pursuant to section 23-2907 of this title incurred by the state or
    45  its  political  subdivisions or their agents or any person with approval
    46  of the department;
    47    5. "Contamination" means any damage to any property  or  the  environ-
    48  ment,  including,  but not limited to, a public or private water supply,
    49  any threat to public health, or any hazardous  condition  that  prevents
    50  the use of property or that requires relocation of people or property to
    51  prevent  harm  resulting  from natural gas production, or the release of
    52  any substance used in or associated with processes  related  to  natural
    53  gas  production,  including,  but  not  limited  to,  the development of

    54  natural gas wells; activities  associated  with  drilling,  stimulating,
    55  completing,  or operating a natural gas well; activities associated with
    56  the construction or operation of facilities for  the  collection  and/or

        A. 8572                             3
 
     1  processing  of  natural  gas or for the transmission of natural gas from
     2  gas wells to consumers of natural gas; and the transportation of materi-
     3  als associated with a natural gas well site or natural gas production;
     4    6.  "Environment"  means  any  water  including, but not limited to, a
     5  stream, pond, lake, river, water course, aquifer, wetland or  reservoir,
     6  any  land  including,  but not limited to, a land surface or subsurface,

     7  air, fish, wildlife, biota and all other natural resources;
     8    7. "Fund" means the New  York  natural  gas  production  contamination
     9  damage recovery and remediation fund established by section ninety-two-t
    10  of the state finance law;
    11    8.  "Natural  gas production" or "gas production" means all activities
    12  associated with the exploration and production of natural  gas,  includ-
    13  ing,  but  not  limited  to,  (a)  development of natural gas wells; (b)
    14  activities associated with drilling, stimulating, completing, or operat-
    15  ing a natural gas well; (c) activities associated with the  construction
    16  or  operation  of  facilities  for  the  collection  and transmission of
    17  natural gas from gas wells to consumers of  natural  gas;  and  (d)  the

    18  transportation  of  materials associated with a natural gas well site or
    19  natural gas production whether or not such gas is re-injected  into  the
    20  subsurface of the earth, from a geological formation and the transporta-
    21  tion of such natural gas to another location;
    22    9.  "Owner" or "operator" means with respect to natural gas production
    23  any person owning or operating by  lease,  contract  or  other  form  of
    24  agreement  any  natural  gas production sites, facilities, equipment, or
    25  development rights; with respect to abandoned or derelict sites, facili-
    26  ties, equipment, or development rights, the person who owned or operated
    27  such sites, facilities,  equipment  or  development  rights  immediately

    28  prior  to  such  abandonment,  or  the owner, or operator at the time of
    29  contamination;
    30    10. "Person" means public or private corporations, companies,  associ-
    31  ations,  societies, firms, partnerships, joint stock companies, individ-
    32  uals, the United States, the state of New York and any of its  political
    33  subdivisions or agents.
    34                                   PART 2
    35                    NATURAL GAS PRODUCTION CONTAMINATION
    36                         CLEANUP AND DECONTAMINATION
    37  Section 23-2904. Contamination  caused by natural gas production; prohi-
    38                     bition.
    39          23-2905. Cleanup and decontamination of contamination caused  by
    40                     natural gas production.

    41          23-2906. Notification by persons responsible for contamination.
    42          23-2907. Cleanup   and  decontamination  of  prohibited  contam-
    43                     inations.
    44          23-2908. Emergency natural gas production contamination  control
    45                     network  and emergency natural gas production contam-
    46                     ination relocation network.
    47          23-2909. Right to enter and inspect.
    48          23-2910. Registry of reports of contamination.
    49  § 23-2904. Contamination caused by natural gas production; prohibition.
    50    Contamination of the environment caused by natural gas  production  is
    51  prohibited.
    52  §  23-2905.  Cleanup  and  decontamination  of  contamination  caused by

    53               natural gas production.
    54    1. The commissioner shall promulgate regulations governing the cleanup
    55  and decontamination of any  contamination  resulting  from  natural  gas
    56  production.

        A. 8572                             4
 
     1    2.  No  person  shall  supervise, aid or participate in any cleanup or
     2  decontamination method which is inconsistent with any rule or regulation
     3  promulgated pursuant to this section.
     4  § 23-2906. Notification by persons responsible for contamination.
     5    Any  person  responsible  for  causing contamination shall immediately
     6  notify the department pursuant to rules and regulations  established  by
     7  the  department,  but  in no case later than two hours after the contam-

     8  ination. Failure to so notify shall make such person liable pursuant  to
     9  the penalty provisions of section 23-2932 of this title.
    10  § 23-2907. Cleanup and decontamination of prohibited contaminations.
    11    1.  Any  person causing contamination prohibited by section 23-2904 of
    12  this part shall immediately undertake  to  contain  such  contamination.
    13  Notwithstanding the above requirement, the department, pursuant to regu-
    14  lations  promulgated for such purpose, may undertake the decontamination
    15  of such contamination and may retain agents and  contractors  who  shall
    16  operate under the direction of such department for such purpose.
    17    2. (a) Upon the occurrence of contamination resulting from natural gas

    18  production,  pursuant  to  regulations promulgated for such purpose, the
    19  department shall respond promptly and proceed to cleanup and remove  the
    20  contamination in accordance with environmental priorities or may, at its
    21  discretion,  direct  the  person  responsible  for such contamination to
    22  promptly cleanup and remove the contamination. The department  shall  be
    23  responsible  for cleanup and decontamination or, as the case may be, for
    24  retaining agents and contractors who shall operate under  the  direction
    25  of  that  department  for such purposes.   Implementation of cleanup and
    26  decontamination procedures of each contamination shall be  conducted  in
    27  accordance  with  environmental priorities and procedures established by
    28  the department.

    29    (b) Section eight of the court of claims act or any other provision of
    30  law to the contrary notwithstanding, the  state  shall  be  immune  from
    31  liability  and  action  with  respect to any act or omission done in the
    32  discharge of the department's responsibility  pursuant  to  this  title;
    33  provided,  however,  that this subdivision shall not limit any liability
    34  which may otherwise exist for unlawful, willful  or  malicious  acts  or
    35  omissions  on  the part of the state, state agencies, or their officers,
    36  employees or agents or for contamination in violation of section 23-2904
    37  of this part.
    38    3. Any unexplained contamination  caused  by  natural  gas  production
    39  within  state  jurisdiction  or  contamination  caused  by  natural  gas

    40  production occurring beyond state jurisdiction that for any reason pene-
    41  trates within state jurisdiction shall be removed by or under the direc-
    42  tion of the department. Except for those expenses incurred by the  party
    43  causing such contamination, any expenses incurred in the decontamination
    44  of  contamination  shall  be paid promptly from the New York natural gas
    45  production contamination damage recovery and remediation  fund  pursuant
    46  to  section ninety-two-t of the state finance law and any reimbursements
    47  due such fund shall be collected in accordance with  the  provisions  of
    48  such section.
    49    4.  Cleanup  and decontamination of contamination and actions to mini-
    50  mize damage from such contamination shall be,  to  the  greatest  extent

    51  possible,  permanent  remedies  to the contamination, in accordance with
    52  applicable federal and state environmental laws, rules and regulations.
    53    5. The department, in consultation with the state comptroller and  the
    54  attorney general, shall develop a standard contract form to be used when
    55  contracting  services  for  the cleanup and decontamination of a contam-
    56  ination.

        A. 8572                             5
 
     1    6. Whenever the department acts to remove contamination  or  contracts
     2  to  secure  prospective  decontamination  services,  the  department  is
     3  authorized to draw upon the money available in the fund, paid out on the
     4  audit and warrant of the comptroller.  Such moneys shall be used to  pay

     5  promptly  for  all  cleanup  and  decontamination  costs incurred by the
     6  department.  Whenever the department acts  to  remove  contamination  or
     7  contracts  to  secure  prospective  decontamination  services to address
     8  contamination that is associated with an owner  or  operator,  it  shall
     9  first draw on the bond or other financial security required by paragraph
    10  (c)  of  subdivision  three of section 23-2915 of this title paid out on
    11  the audit and warrant of the comptroller.  If  such  bond  or  financial
    12  security  is insufficient to fully discharge cleanup and decontamination
    13  costs, the department is authorized to draw on money  available  in  the
    14  fund, paid out on the audit and warrant of the state comptroller.

    15    7.  (a)  Nothing  in  this section is intended to preclude cleanup and
    16  decontamination by any person threatened by such contamination, who,  as
    17  soon  as  is  reasonably  possible, coordinates and obtains approval for
    18  such actions with ongoing state or federal  operations  and  appropriate
    19  state  and  federal  authorities. Notwithstanding any other provision of
    20  law to the contrary, the liability of any contractor  for  such  person,
    21  where  such  person  obtains approval from appropriate state and federal
    22  authorities for such cleanup and decontamination, and the  liability  of
    23  any  person providing services related to the cleanup or decontamination
    24  of contamination, under contract with the department, for any injury  to

    25  a  person  or  property  caused  by or related to such services shall be
    26  limited to acts or omissions of the person during the course of perform-
    27  ing such services which are shown to have been the result of negligence,
    28  gross negligence or reckless, wanton or intentional misconduct. Notwith-
    29  standing any other provisions of law, when (i) a verdict or decision  in
    30  an  action  or  claim  for  injury  to a person or property caused by or
    31  related to such services is determined in favor  of  a  claimant  in  an
    32  action  involving a person performing such services and any other person
    33  or persons jointly liable, and (ii) the liability of the person perform-
    34  ing such services is found to be fifty percent  or  less  of  the  total

    35  liability assigned to all persons liable, and (iii) the liability of the
    36  person  performing  such  services is not based on a finding of reckless
    37  disregard for the safety of others, or intentional misconduct, then  the
    38  liability  of  the  person  performing such services to the claimant for
    39  loss relating to injury to property and for non-economic  loss  relating
    40  to injury to a person shall not exceed the equitable share of the person
    41  performing  such  services  determined  in  accordance with the relative
    42  culpability of each person causing or contributing to the total  liabil-
    43  ity for such losses; provided, however, that the culpable conduct of any
    44  person  not a party to the action shall not be considered in determining

    45  any equitable share herein if the claimant proves that  with  due  dili-
    46  gence the claimant was unable to obtain jurisdiction over such person in
    47  said  action.  As  used  in  this  section, the term "non-economic loss"
    48  includes, but is not limited to, pain  and  suffering,  mental  anguish,
    49  loss  of  consortium  or  other damages for non-economic loss.  However,
    50  nothing in this subdivision shall be deemed to alter, modify or abrogate
    51  the liability of any person performing such services for breach  of  any
    52  express warranty, limited or otherwise, or an express or implied warran-
    53  ty  under  the uniform commercial code, or to an employee of such person
    54  pursuant to the workers'  compensation  law,  or  to  relieve  from  any

    55  liability  any  person who is responsible for contamination in violation
    56  of section 23-2904 of this part.

        A. 8572                             6
 
     1    (b) No action taken by any person to contain or  remove  contamination
     2  shall  be construed as an admission of liability for such contamination.
     3  No person who gratuitously renders assistance in containing or  removing
     4  contamination  shall  be  liable  for any civil damages to third parties
     5  resulting solely from acts or omissions of such person in rendering such
     6  assistance  except  for acts or omissions of gross negligence or willful
     7  misconduct. In the course of  cleanup  and  decontamination,  no  person
     8  shall discharge any detergent or other substance into the waters of this

     9  state without prior authorization of the commissioner.
    10    (c)  A  person  may, without admission of responsibility for a contam-
    11  ination and with the consent of the commissioner, commence clean up  and
    12  decontamination  of the contamination and upon the recommendation of the
    13  commissioner of health and with the consent of the  fund  undertake  the
    14  relocation  of persons affected by contamination.  Upon determination by
    15  the fund that the person is not responsible for the  contamination,  the
    16  person  shall  be  reimbursed  by  the fund for the actual and necessary
    17  expenses incurred.
    18    8. Notwithstanding any other provision of law to the contrary, includ-
    19  ing but not limited to section 15-108 of the  general  obligations  law,

    20  every  person  providing  cleanup,  decontamination  of contamination or
    21  relocation of persons pursuant to this  section  shall  be  entitled  to
    22  contribution from any other responsible party.
    23  § 23-2908. Emergency   natural   gas  production  contamination  control
    24               network and emergency natural gas production  contamination
    25               relocation network.
    26    The  commissioner shall, by regulation, establish an emergency natural
    27  gas production contamination control network and  an  emergency  natural
    28  gas production contamination relocation network.
    29  § 23-2909. Right to enter and inspect.
    30    The  department is hereby authorized to enter and inspect any property

    31  or premises for the purpose of inspecting sites, facilities,  or  equip-
    32  ment  and  investigating  either  actual or suspected sources of contam-
    33  ination or violation of this title or any rule or regulation promulgated
    34  pursuant to this title. The department is further authorized to enter on
    35  property or premises in order to assist  in  the  cleanup  or  decontam-
    36  ination  of  the contamination. Any information relating to secret proc-
    37  esses or methods of manufacture shall be kept confidential.
    38  § 23-2910. Registry of reports of contamination.
    39    1. The department shall maintain and  post  on  a  publicly  available
    40  internet  website a registry of all reports of contamination pursuant to

    41  section 23-2906 of this part. Reports shall be added to the registry  on
    42  an  ongoing  basis  as soon as possible after the date on which they are
    43  reported, but no later than thirty days after such date.  Such  registry
    44  shall include, but not be limited to, the following items:
    45    (a) a general description of the site consisting of:
    46    (i) the name, if any, of the site and the address of the site, includ-
    47  ing the town and county;
    48    (ii)  the  contamination at the site, including, but not limited to, a
    49  description of the natural gas production activity resulting in  contam-
    50  ination,  the  date on which this activity occurred and all inspections,
    51  tests and other measures employed in assessing the contamination;

    52    (iii) the owner or operator of the natural gas production activity  at
    53  the time of contamination; and
    54    (iv) the name of the current owner of the site;
    55    (b) an assessment by the department of harm to the environment result-
    56  ing from contamination at the site;

        A. 8572                             7
 
     1    (c)  an  assessment  prepared  by  the  department of health of public
     2  health problems at the site resulting from contamination  at  the  site;
     3  and
     4    (d)  a  description of cleanup and contamination activities undertaken
     5  at the site.
     6    2. Periodically, but no  less  than  annually,  the  department  shall
     7  update the registry to reflect the status of cleanup and decontamination

     8  measures.
     9    3.  When  a  permanent  remedy of contamination has been achieved, the
    10  department may, at the request of the site owner, remove the name of the
    11  site owner and the site address information  except  for  the  town  and
    12  county  of  the  site from the registry. All other items shall remain as
    13  permanent records on the registry.
    14                                   PART 3
    15                     LIABILITY; THIRD PARTY COMPENSATION
    16  Section 23-2914. Administrator of the New York  natural  gas  production
    17                     damage recovery and remediation fund.
    18          23-2915. Liability.
    19          23-2916. Environmental lien.
    20          23-2917. Environmental lien notice; contents.

    21          23-2918. Filing  of  notice  of  environmental  lien;  filing of
    22                     release.
    23          23-2919. Enforcement of environmental lien.
    24          23-2920. Amounts received to satisfy lien.
    25          23-2921. Claims against the fund.
    26          23-2922. Settlements.
    27          23-2923. Settlements when source of contamination is unknown.
    28          23-2924. Hearings for persons on claims filed with the  adminis-
    29                     trator.
    30          23-2925. Subrogation of rights.
    31          23-2926. Awards exceeding current balance.
    32          23-2927. Claims against insurers.
    33          23-2928. Application of title.

    34  § 23-2914. Administrator  of  the New York natural gas production damage
    35               recovery and remediation fund.
    36    The state comptroller shall appoint and supervise an administrator  of
    37  the New York natural gas production damage recovery and remediation fund
    38  for the purposes of this part referred to as "the fund". The administra-
    39  tor  shall be the chief executive of the fund and shall have the follow-
    40  ing powers and duties:
    41    1. To represent the state in meetings with the alleged person  respon-
    42  sible  for  a  contamination  and claimants concerning liability for the
    43  contamination and amount of the claims;
    44    2. To determine if hearings are needed  to  settle  particular  claims
    45  filed by injured persons;

    46    3. To convene hearings;
    47    4. To certify the amount of claims and names of claimants to the state
    48  comptroller; and
    49    5.  To  disburse  moneys from the fund for cleanup and decontamination
    50  costs pursuant to a certification of claims by the commissioner.
    51  § 23-2915. Liability.
    52    1. Any person who has caused contamination shall be  strictly  liable,
    53  without  regard  to fault, for all cleanup and decontamination costs and
    54  all direct and indirect damages, no matter by whom sustained, as defined
    55  in this section. In addition to cleanup and  decontamination  costs  and
    56  damages,  any  such person who is notified of such contamination and who

        A. 8572                             8
 

     1  did not undertake relocation of persons residing  in  the  area  of  the
     2  contamination  in  accordance with paragraph (c) of subdivision seven of
     3  section 23-2907 of this title, shall be liable to the fund for an amount
     4  equal to two times the actual and necessary expense incurred by the fund
     5  for  such  relocation  pursuant  to  regulations  authorized  by section
     6  23-2908 of this title.
     7    2. The fund shall be strictly liable, without regard to fault, for all
     8  cleanup and decontamination costs and all direct and  indirect  damages,
     9  no matter by whom sustained, including, but not limited to:
    10    (a)  Cleanup  and  decontamination costs including, but not limited to
    11  the cost of restoring, repairing, or  replacing  any  real  or  personal

    12  property damaged or destroyed by contamination, any income lost from the
    13  time  such  property  is  damaged to the time such property is restored,
    14  repaired or replaced, any reduction in value of such property caused  by
    15  such contamination by comparison with its value prior thereto;
    16    (b)  The  cost  of restoration and replacement, where possible, of any
    17  natural resource damaged or destroyed by contamination;
    18    (c) Loss of income or impairment of earning capacity due to damage  to
    19  real  or  personal  property,  including  natural resources destroyed or
    20  damaged by contamination; provided that such loss or impairment  exceeds
    21  ten  percent  of the amount which claimant derives, based upon income or

    22  business records, exclusive of other sources of income, from  activities
    23  related to the particular real or personal property or natural resources
    24  damaged  or  destroyed  by  such contamination during the week, month or
    25  year for which the claim is filed;
    26    (d) Loss of tax revenue by the state or local governments for a period
    27  of one year due to damage  to  real  or  personal  property  proximately
    28  resulting from contamination; and
    29    (e)  Interest  on  loans  obtained  or other obligations incurred by a
    30  claimant for the purpose  of  ameliorating  the  adverse  effects  of  a
    31  contamination pending the payment of a claim in full as provided by this
    32  title.
    33    3.  (a)  The owner or operator which has caused contamination shall be

    34  strictly liable for the full amount of cleanup and decontamination costs
    35  and damages, without regard to fault, subject to the defenses enumerated
    36  in subdivision four of this section, for all cleanup and decontamination
    37  costs and all direct and indirect damages paid by the fund.
    38    (b) (i) The commissioner in consultation with  the  superintendent  of
    39  financial  services  shall promulgate regulations requiring the owner or
    40  operator of a drilling site to establish and maintain evidence of finan-
    41  cial responsibility.
    42    (ii) Financial responsibility under this paragraph may be  established
    43  by  any  one or a combination of the following methods acceptable to the
    44  commissioner  in  consultation  with  the  superintendent  of  financial

    45  services:  evidence  of  insurance,  surety  bonds, guarantee, letter of
    46  credit, qualification as a self-insurer, or other evidence of  financial
    47  responsibility.
    48    (iii) The liability of a third-party insurer providing proof of finan-
    49  cial  responsibility  on  behalf  of  a person required to establish and
    50  maintain evidence of financial  responsibility  under  this  section  is
    51  limited to the type of risk assumed and the amount of coverage specified
    52  in  the  proof  of financial responsibility furnished to and approved by
    53  the department. For the purposes of this section, the term  "third-party
    54  insurer" means a third-party insurer, surety, guarantor, person furnish-
    55  ing  a  letter  of  credit,  or other group or person providing proof of

    56  financial responsibility on  behalf  of  another  person;  it  does  not

        A. 8572                             9
 
     1  include  the  person required to establish and maintain evidence of such
     2  financial responsibility.
     3    (c)  Any owner or operator engaging in or seeking to engage in natural
     4  gas production shall provide a bond or other financial security accepta-
     5  ble to the department in an amount established by rule or regulation  in
     6  consultation  with the administrator of the fund conditioned on perform-
     7  ance of such owner's or operator's cleanup and decontamination responsi-
     8  bilities in the event of contamination as defined in this  section.  The
     9  bond shall be in an amount sufficient to fully discharge such owner's or

    10  operator's cleanup and decontamination responsibilities.  The failure of
    11  any  owner  or  operator  to  prevent  prohibited contamination shall be
    12  deemed a breach of the responsibilities of this title  and  entitle  the
    13  department to claim the proceeds of the bond or other financial security
    14  authorized  by  this  paragraph.    In  the event the department acts or
    15  remove contamination or contracts to secure prospective  decontamination
    16  services pursuant to subdivision six of section 23-2907 of this title to
    17  address  contamination that is associated with an owner or operator, the
    18  department shall draw on the bond or other financial security authorized
    19  by this paragraph to pay promptly for cleanup and decontamination  costs

    20  incurred by such department.
    21    4.  (a)  The  only defenses that may be raised by a person responsible
    22  for causing contamination are: (i) an act or omission caused  solely  by
    23  war,  sabotage, or governmental negligence or (ii) an act or omission of
    24  a third party other than an employee or agent of the person responsible,
    25  or a third party whose act or  omission  occurs  in  connection  with  a
    26  contractual  relationship  with  the  person  responsible, if the person
    27  responsible establishes by a preponderance  of  the  evidence  that  the
    28  person  responsible  exercised  due care with respect to the natural gas
    29  concerned, taking into consideration the characteristics of natural  gas
    30  and in light of all relevant facts and circumstances; and

    31    (b)  took  precautions against the acts or omissions of any such third
    32  party and the consequences of those acts or  omissions.  These  defenses
    33  shall  not  apply  to  a  person responsible who refuses or fails to (i)
    34  report the contamination, or (ii) provide all reasonable cooperation and
    35  assistance in  cleanup  and  decontamination  activities  undertaken  on
    36  behalf of the fund by the department. In any case where a person respon-
    37  sible  for  contamination establishes by a preponderance of the evidence
    38  that the contamination and the  resulting  cleanup  and  decontamination
    39  costs  were  caused  solely  by  an act or omission of one or more third
    40  parties as described in this paragraph, the third party or parties shall

    41  be treated as the person or persons  responsible  for  the  purposes  of
    42  determining liability under this title.
    43    (c) Nothing set forth in this subdivision shall be construed to hold a
    44  lender liable to the state as a person responsible for the contamination
    45  caused  by natural gas production at a site in the event: (i) such lend-
    46  er, without participating in the management of such site, holds  indicia
    47  of  ownership primarily to protect the lender's security interest in the
    48  site, or (ii) such lender did not participate in the management of  such
    49  site prior to a foreclosure, and such lender:
    50    (1) forecloses on such site; and
    51    (2)  after  foreclosure,  sells,  re-leases  (in  the  case of a lease

    52  finance transaction), or liquidates such site, maintains business activ-
    53  ities, winds up operations, or takes  any  other  measure  to  preserve,
    54  protect  or prepare such site for sale or disposition; provided however,
    55  that such lender shall take actions to sell, re-lease (in the case of  a
    56  lease  finance  transaction), or otherwise divest itself of such site at

        A. 8572                            10
 
     1  the earliest practicable, commercially reasonable time, on  commercially
     2  reasonable  terms,  taking  into account market conditions and legal and
     3  regulatory requirements.
     4    (d)  This  exemption  shall not apply to any lender that has caused or
     5  contributed to the contamination caused by natural gas  production  from

     6  or at the site.
     7    The  terms  "participating in management," "foreclosure," "lender" and
     8  "security interest" shall have the  same  meaning  as  those  terms  are
     9  defined  in  paragraph (c) of subdivision one of section 27-1323 of this
    10  chapter.
    11    5. Any claim by any injured person for the costs of cleanup and decon-
    12  tamination and direct and indirect damages based on the strict liability
    13  imposed by this section may be brought directly against the  person  who
    14  has caused contamination, provided, however, that damages recoverable by
    15  any  injured person in such a direct claim based on the strict liability
    16  imposed by this section shall be limited to the  damages  authorized  by
    17  this section.

    18  § 23-2916. Environmental lien.
    19    1.  The  fund shall have a lien for the costs incurred by the fund for
    20  the cleanup and decontamination of contamination and for the payment  of
    21  claims for direct and indirect damages as a result of contamination upon
    22  real property located within the state:
    23    (a)  owned by a person liable to the fund for such costs under section
    24  23-2915 of this part at the time  a  notice  of  environmental  lien  is
    25  filed; and
    26    (b) upon which the contamination occurred.
    27    2. An environmental lien shall attach when:
    28    (a) cleanup and decontamination costs and damage costs are incurred by
    29  the fund;
    30    (b) the person referred to in subdivision one of this section fails to

    31  pay such costs within ninety days after a written demand therefor by the
    32  administrator  is mailed by certified or registered mail, return receipt
    33  requested; and
    34    (c) a notice of environmental lien is filed  as  provided  in  section
    35  23-2918  of  this  part; provided, however, that a copy of the notice of
    36  environmental lien is served upon the owner of the real property subject
    37  to the environmental lien within thirty days of such filing  in  accord-
    38  ance with the provisions of section eleven of the lien law.
    39    3.  An  environmental  lien  shall  continue against the real property
    40  until:
    41    (a) the claim or judgment against the person referred to  in  subdivi-

    42  sion  one  of  this  section  for  cleanup and decontamination costs and
    43  damage costs is satisfied or becomes unenforceable;
    44    (b) the lien is released by the administrator pursuant to this  subdi-
    45  vision;
    46    (c) the lien is discharged by payment of moneys into court; or
    47    (d) the lien is otherwise vacated by court order.
    48    Upon  the occurrence of any of the foregoing, except where the lien is
    49  vacated by court order, the administrator shall execute the  release  of
    50  an  environmental  lien  and  file  the  release  as provided in section
    51  23-2918 of this part. The administrator  may  release  an  environmental
    52  lien where:
    53    (i)  a legally enforceable agreement satisfactory to the administrator

    54  has been executed relating to  cleanup  and  decontamination  costs  and
    55  damage  costs  or  reimbursing  the fund for cleanup and decontamination
    56  costs and damage costs; or

        A. 8572                            11
 
     1    (ii) the attachment or enforcement of the environmental lien is deter-
     2  mined by the administrator not to be in the public interest.
     3    4. An environmental lien is subject to the rights of any other person,
     4  including  an  owner, purchaser, holder of a mortgage or security inter-
     5  est, or judgment lien creditor, whose interest  is  perfected  before  a
     6  lien notice has been filed as provided in section 23-2918 of this part.
     7  § 23-2917. Environmental lien notice; contents.

     8    A notice of environmental lien must state:
     9    1.  That  the  lienor  is  the New York natural gas production contam-
    10  ination damage recovery and remediation fund;
    11    2. The name of the record owner of the  real  property  on  which  the
    12  environmental lien has attached;
    13    3.  The  real property subject to the lien, with a description thereof
    14  sufficient for identification;
    15    4. That the real property described in the notice is the property upon
    16  which contamination occurred and that cleanup and decontamination  costs
    17  and  damage  costs  have been incurred by the lienor as a result of such
    18  contamination;
    19    5. That the owner is potentially  liable  for  cleanup  and  decontam-

    20  ination costs and damage costs pursuant to section 23-2915 of this part;
    21  and
    22    6. That an environmental lien has attached to the described real prop-
    23  erty.
    24  § 23-2918. Filing of notice of environmental lien; filing of release.
    25    1. A notice of environmental lien shall be filed within six years from
    26  the  time  a  disbursement is made by the fund for cleanup and decontam-
    27  ination costs and damage costs incurred  by  the  fund  in  the  clerk's
    28  office of the county where the property is situated. If such property is
    29  situated in two or more counties, the notice of environmental lien shall
    30  be filed in the office of the clerk of each of such counties. The notice

    31  of  lien  shall  be  indexed  by the county clerk in accordance with the
    32  provisions of section ten of the lien law.
    33    2. A release of an environmental lien shall be filed  in  the  clerk's
    34  office  of  each county where the notice of environmental lien was filed
    35  and shall be indexed in the manner prescribed for indexing environmental
    36  liens.
    37  § 23-2919. Enforcement of environmental lien.
    38    An environmental lien may be enforced against the  property  specified
    39  in  the  notice  of environmental lien, and an environmental lien may be
    40  vacated or released, as prescribed in article three  of  the  lien  law;
    41  provided,  however,  that nothing in this article or in article three of

    42  the lien law shall affect the right of the fund to bring  an  action  to
    43  recover cleanup and decontamination costs and damage costs under section
    44  23-2915, 23-2926, 23-2927 or 23-2928 of this part.
    45  § 23-2920. Amounts received to satisfy lien.
    46    Amounts  received  by  the  administrator to satisfy all or part of an
    47  environmental lien shall be deposited in the state treasury and credited
    48  to the natural gas production damage recovery and remediation fund.
    49  § 23-2921. Claims against the fund.
    50    Claims shall be filed with the  administrator  not  later  than  three
    51  years  after  the  date  of discovery of damage nor later than ten years
    52  after the date of the incident which caused the damage. The  administra-

    53  tor  shall  prescribe  appropriate forms and procedures for such claims,
    54  which shall include a provision requiring the claimant to make  a  sworn
    55  verification  of  the claim to the best of his knowledge. Any person who
    56  knowingly gives or causes to be given any false information as a part of

        A. 8572                            12
 
     1  any such claim shall, in addition to any other penalties herein or else-
     2  where prescribed, be guilty of a misdemeanor punishable by a fine of  up
     3  to  one thousand dollars or up to one year imprisonment. Upon receipt of
     4  any  claim,  the  administrator  shall as soon as practicable inform all
     5  affected parties of the claim.
     6  § 23-2922. Settlements.

     7    The administrator shall attempt to promote and  arrange  a  settlement
     8  between  the  claimant and the person responsible for the contamination.
     9  If the source of the contamination can be determined  and  liability  is
    10  conceded,  the  claimant  and  the  alleged  person  responsible for the
    11  contamination may agree to a settlement which shall be final and binding
    12  upon the parties and which will waive all recourse against the fund.
    13  § 23-2923. Settlements when source of contamination is unknown.
    14    If the source of the contamination is unknown or cannot be determined,
    15  the claimant and the administrator shall attempt to arrange a settlement
    16  of any claim against the fund. The administrator is authorized to  enter

    17  and  certify payment of such settlement subject to such proof and proce-
    18  dures contained in regulations promulgated by the administrator.
    19  § 23-2924. Hearings for persons on claims filed with the administrator.
    20    1. The administrator shall grant a hearing when persons alleged to  be
    21  responsible  for  the  contamination  contest  the validity or amount of
    22  damage claims or claims for cleanup and decontamination costs  presented
    23  by  injured  persons to the fund for payment or when injured persons who
    24  have filed a claim against the fund contest the validity  or  amount  of
    25  the settlement proposed by the administrator.
    26    2. One hearing may be granted to hear and determine all claims arising
    27  from or related to a common contamination.

    28    3.  The  burden  of  proof  with  respect to the validity or amount of
    29  damage claims or claims for cleanup and decontamination costs  shall  be
    30  upon  the persons contesting such claims or the claimants contesting the
    31  settlement proposed by the administrator.
    32    4. At least twenty days notice of such hearing shall be given  by  the
    33  administrator to the claimants and, if known, the alleged person respon-
    34  sible for the contamination.
    35    5.  Upon  the  return  day of such notice the person so notified shall
    36  file with the administrator a statement setting forth  the  position  of
    37  the  person  so  notified. Pertinent and relevant testimony of witnesses
    38  shall be received in support of or opposition  to  such  statement.  The

    39  claimants  or  alleged  persons  responsible  for  the contamination may
    40  appear in person or by attorney, present witnesses, submit evidence  and
    41  be given full opportunity to be heard.
    42    6.  The  administrator  shall  have the power to order testimony under
    43  oath and may subpoena attendance and  testimony  of  witnesses  and  the
    44  production  of  such  documentary  materials  pertinent  to  the  issues
    45  presented at the hearing. Each person appearing at the  hearing  may  be
    46  represented by counsel.
    47    7. Within sixty calendar days from the close of such hearing and after
    48  due  consideration  of the written and oral statements and testimony and
    49  arguments filed pursuant to this section, or on default in appearance on

    50  said return day, the administrator shall make his final determination on
    51  the validity or amount of the damage claims or claims  for  cleanup  and
    52  decontamination  costs  filed  by the injured persons. The administrator
    53  shall notify the claimant and, if known, the alleged person  responsible
    54  for  the contamination thereof in writing by registered mail.
    55    8.  Determinations  made by the administrator after such hearing shall
    56  be final and conclusive. Any action for judicial review shall  be  filed

        A. 8572                            13
 
     1  pursuant  to  the provisions of article seventy-eight of the civil prac-
     2  tice law and rules.
     3    9.  Upon  a  determination  by  the administrator that provides for an

     4  award to the claimants, the administrator shall certify  the  amount  of
     5  the  award  and  the  name of the claimant to the state comptroller, who
     6  shall pay the award from the fund. In any case in which a person respon-
     7  sible for the contamination seeks judicial review, reasonable attorney's
     8  fees and costs shall be awarded to the claimant if the determination  of
     9  the administrator is affirmed.
    10  § 23-2925. Subrogation of rights.
    11    Payment  of  any  cleanup  costs or damages by the fund arising from a
    12  single incident shall be conditioned upon the administrator acquiring by
    13  subrogation all rights of the claimant to  recovery  of  such  costs  or
    14  damages  from  the  person  responsible  for  the contamination or other

    15  responsible party. The administrator shall then seek  satisfaction  from
    16  the  person responsible for the contamination or other responsible party
    17  in the supreme court if the person responsible for the contamination  or
    18  other  responsible  party does not reimburse the fund. In any such suit,
    19  except as provided by section 23-2915 of this  part,  the  administrator
    20  need  prove  only  that an unlawful contamination occurred which was the
    21  responsibility of the person responsible for the contamination or  other
    22  responsible party.  The administrator is hereby authorized and empowered
    23  to  compromise  and  settle the amount sought for costs and damages from
    24  the person responsible for the contamination or other responsible  party

    25  and any penalty arising under this title.
    26  § 23-2926. Awards exceeding current balance.
    27    In  the  event  that the total awards for a specific occurrence exceed
    28  the current balance of the fund, the immediate award shall be paid on  a
    29  prorated basis, and all claimants paid on a prorated basis shall be paid
    30  as  determined  by  the  administrator,  a  pro rata share of all moneys
    31  received by the fund until the total amount of  the  proven  damages  is
    32  paid  to  the  claimant or claimants. The administrator may also provide
    33  through regulation to fix the priority for the payment of  claims  based
    34  on extreme hardship.
    35  § 23-2927. Claims against insurers.

    36    Any  claims  for costs of cleanup and decontamination, civil penalties
    37  or damages by the state and any claim for damages by any injured person,
    38  may be brought directly against the bond,  the  insurer,  or  any  other
    39  person providing evidence of financial responsibility.
    40  § 23-2928. Application of title.
    41    For  purposes  of cleanup and decontamination of any public or private
    42  ground water supply system contaminated by any  contamination  occurring
    43  either  before  or  after the effective date of this title, all relevant
    44  provisions of this title shall apply.
    45                                   PART 4
    46                                MISCELLANEOUS
    47  Section 23-2931. Joint rules and regulations.

    48          23-2932. Enforcement of title; penalties.
    49          23-2933. Availability of additional remedies.
    50          23-2934. Construction.
    51          23-2935. Reports.
    52          23-2936. Effect of federal legislation.
    53  § 23-2931. Joint rules and regulations.
    54    The commissioner and the state comptroller are  authorized  to  adopt,
    55  amend,  repeal,  and  enforce such rules and regulations pursuant to the

        A. 8572                            14
 
     1  state administrative procedure act, as they may deem necessary to accom-
     2  plish the purposes of this title.
     3  § 23-2932. Enforcement of title; penalties.
     4    Any  person who knowingly gives or causes to be given any false infor-

     5  mation as a part of, or in response to, any claim made pursuant to  this
     6  title  for cleanup and decontamination costs, direct or indirect damages
     7  resulting from contamination, or  who  otherwise  violates  any  of  the
     8  provisions of this title or any rule promulgated thereunder or who fails
     9  to  comply  with  any  duty  created  by this title shall be liable to a
    10  penalty of not more than twenty-five thousand dollars for  each  offense
    11  in  a court of competent jurisdiction. If the violation is of a continu-
    12  ing nature each day during which it continues shall constitute an  addi-
    13  tional, separate and distinct offense.
    14  § 23-2933. Availability of additional remedies.
    15    Nothing  in  this title shall be deemed to preclude the pursuit of any

    16  other civil or injunctive remedy by any person. The remedies provided in
    17  this title are in addition to those provided by  existing  statutory  or
    18  common  law,  but  no  person  who  receives compensation for damages or
    19  cleanup and decontamination costs pursuant to any other state or federal
    20  law shall be permitted to receive compensation for the same  damages  or
    21  cleanup and decontamination costs under this title.
    22  § 23-2934. Construction.
    23    This title, being necessary for the general health, safety and welfare
    24  of  the people of this state, shall be liberally construed to affect its
    25  purposes.
    26  § 23-2935. Reports.
    27    The commissioner and the administrator shall make an annual report  to

    28  the  legislature  and the governor which shall describe the quantity and
    29  degree of contamination caused by natural gas production, the costs  and
    30  damages  paid  by and recovered for the fund, and the economic and envi-
    31  ronmental impact on the state as a result of the administration of  this
    32  title.
    33  § 23-2936. Effect of federal legislation.
    34    If  the  United  States  congress enacts legislation providing compen-
    35  sation in the event of contamination caused by natural  gas  production,
    36  the  commissioner  shall  determine  to  what  degree  such  legislation
    37  provides the needed protection for our citizens, businesses and environ-
    38  ment and shall make the appropriate recommendations to  the  legislature

    39  for amendments to this title.
    40    §  2. Section 23-1903 of the environmental conservation law is amended
    41  by adding a new subdivision 3 to read as follows:
    42    3. The commissioner is hereby  authorized  to  establish  a  surcharge
    43  pursuant  to  regulation  on the permit fees on gas wells, authorized by
    44  subdivision one of this section, to be credited to the New York  natural
    45  gas production contamination damage recovery and remediation fund estab-
    46  lished  in  section ninety-two-t of the state finance law. The surcharge
    47  shall be established to provide sufficient funds to meet the obligations
    48  of the fund.
    49    § 3. The state finance law is amended by adding a new section 92-t  to
    50  read as follows:

    51    §  92-t. New York natural gas production contamination damage recovery
    52  and remediation fund.   1. There is  hereby  established  in  the  joint
    53  custody  of  the  state comptroller and the commissioner of taxation and
    54  finance a special fund to be known as the  "the  New  York  natural  gas
    55  production contamination damage recovery and remediation fund".

        A. 8572                            15
 
     1    2.  The  fund shall consist of revenues collected by the department of
     2  environmental conservation pursuant to subdivision 3 of section 23-1903,
     3  section 23-2915, section 23-2920, and section 23-2932  of  the  environ-
     4  mental  conservation  law and all other moneys appropriated, credited or

     5  transferred thereto from any other fund or source pursuant to law.
     6    3.  Moneys  in the fund shall be kept separate and not commingled with
     7  any other moneys in the custody of  the  commissioner  of  taxation  and
     8  finance and the state comptroller.
     9    4. Moneys of the fund, following appropriation by the legislature, may
    10  be expended for the following purposes:
    11    (a) damages as defined in section 23-2915 of the environmental conser-
    12  vation law;
    13    (b)  research  on the prevention and the effects of contamination from
    14  natural gas production on the environment  and  on  the  development  of
    15  improved cleanup and decontamination operations; provided, however, that

    16  the  cost of such research shall not exceed the amount of interest which
    17  is credited to this fund;
    18    (c) general administration of the fund, equipment and personnel  costs
    19  of  the  department of environmental conservation, the state comptroller
    20  and any other state agency related to the enforcement of  title  twenty-
    21  nine of article twenty-three of the environmental conservation law;
    22    (d)  research  and  demonstration  programs  concerning the causes and
    23  abatement of contamination from natural gas production; provided, howev-
    24  er, that the cost of such research and demonstration programs shall  not
    25  exceed the amount of interest which is credited to this fund.
    26    5.  The comptroller may invest and reinvest any moneys in such fund in

    27  obligations in which the comptroller is authorized to invest pursuant to
    28  the provisions of section ninety-eight-a of the state finance  law.  Any
    29  income or interest derived from such investment shall be included in the
    30  fund.
    31    6.  Moneys, shall be payable from the fund on the audit and warrant of
    32  the comptroller on vouchers approved and certified  by  the  comptroller
    33  and the commissioner of environmental conservation.
    34    7. The administrator of the fund, as established in section 23-2914 of
    35  the  environmental  conservation  law,  shall recover to the fund moneys
    36  disbursed for the following purposes:
    37    a. costs incurred by the fund in the cleanup  and  decontamination  of

    38  contamination  when  the  person responsible for causing a contamination
    39  has failed to promptly clean up and  remove  the  contamination  to  the
    40  satisfaction of the department of environmental conservation;
    41    b.  costs incurred by the fund in the payment of claims for direct and
    42  indirect damages, as defined in section  23-2915  of  the  environmental
    43  conservation law; and
    44    c.  all  penalties  assessed  pursuant to title twenty-nine of article
    45  twenty-three of the environmental conservation law.
    46    § 4. Severability. If any clause, sentence, paragraph, section or part
    47  of this act shall be adjudged by any court of competent jurisdiction  to
    48  be  invalid,  the  judgment  shall not affect, impair, or invalidate the

    49  remainder thereof, but shall be confined in its operation to the clause,
    50  sentence, paragraph, section or part thereof directly  involved  in  the
    51  controversy in which the judgment shall have been rendered.
    52    § 5. This act shall take effect on the one hundred twentieth day after
    53  it shall have become a law; provided, however, that effective immediate-
    54  ly,  the  addition,  amendment  and/or  repeal of any rule or regulation
    55  necessary for the implementation of this act on its  effective  date  is
    56  authorized to be made and completed on or before such date.
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