Provides environmental liens shall have priority over other liens except certain mortgages and liens for taxes on real property in favor of an assessing unit

1 Co-sponsor

• Thomas K. Duane

Title of bill

An act to amend the navigation law, in relation to the lien priority of liens of the New York environmental protection and spill compensation fund

Purpose

To amend the Navigation Law to raise the lien priority of the New York Environmental Protection and Spill Compensation Fund above all other lien holders except certain mortgages, taxing authorities, the state of New York or a public benefit corporation thereof.

Summary of provisions

Section 1 amends subdivision 4 of section 181-a ("Environmental lien") of the Navigation Law to establish that the New York Environmental Protection and Spill Compensation Fund shall have lien priority above all other lien holders except mortgages whose interest is perfected before a lien notice has been filed and liens for taxes on the real property in favor of any assessing unit, school district, special district, county or other taxing unit.

Section 1 also adds a subdivision 5 to section 181-a ("Environmental lien") of the Navigation Law providing that if execution upon a judgment for the recovery of the expenses of any such cleanup and removal costs and damage costs incurred by the New York Environmental Protection and Spill Compensation Fund is returned wholly or partially unsatisfied, such judgment, if docketed in the place and manner required by law to make a judgment of a court of record a lien upon real property and a copy is delivered to the department of audit and control, shall be a lien upon such premises and shall have preference over any and all other liens and encumbrances except any: (a) prior recorded mortgage; and (b) other encumbrance for the benefit of the state of New York or a public benefit corporation thereof.

Section 2 provides for an effective date of immediately and establishes that this Act shall apply to liens perfected on and after such date.

Background and justification

The Environmental Protection and Spill Compensation Fund ("Fund") has been created in the custody of the State Comptroller. The Fund is administered by an Administrator appointed by the Comptroller. The Administrator's duties include disbursing monies from the Fund for cleanup and removal costs certified by the Commissioner of Environmental Conservation, representing the State in negotiations with alleged dischargers to recover costs incurred by the Fund to cleanup spills and satisfying claims for damages.

Under current law, the Fund is able to place an environmental lien on a parcel of property where an oil spill occurred if the owner of the property is a party liable to the Fund for costs of cleanup and claims for damages. Any such environmental lien placed on property remains until the claim or judgment is satisfied or becomes unenforceable, released by the Administrator, discharged by payment of amounts owed into court or otherwise vacated by court order. Currently, environmental liens are subordinate to the rights of other lien holders whose interests are perfected prior to the filing of the environmental lien. Upon sale of such property, liens are paid in the order of priority. Unfortunately, spill properties are often foreclosed and there are not sufficient funds from the sale to pay the Fund. This legislation would move up the priority of such liens and would help prevent the disposal of such property without satisfaction of the Fund's claims.