Frontier Chemical Waste Process, Inc. - Ruling, June 10, 1993
Ruling, June 10, 1993
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
In the Matter of
the Regulatory Fee Dispute of FRONTIER CHEMICAL WASTE PROCESS, INC.,
pursuant to Title 6 of the Official Compilation of Codes, Rules and Regulations
of the State of New York, Parts 481 and 483
This matter was received by the Office of Hearings on May 25, 1990, and was initially assigned to Administrative Law Judge (ALJ) Judith K. Bentley. Judge Bentley is no longer with the Office of Hearings, and the matter was subsequently assigned to ALJ Kevin J. Casutto.
Permittee is represented by the law firm of Hancock & Estabrook, 1500 MONY Tower I, P.O. Box 4976, Syracuse, New York 13221-4976, Neil M. Gingold, Esq., of Counsel (Permittee was initially represented by the firm of Pinsky & Skandalis, Syracuse, New York).
The Department Staff ("Staff") is represented by the Office of General Counsel(OGC), New York State Department of Environmental Conservation ("NYSDEC"), 50 Wolf Road, Albany, New York 12233-5500, Gene Kelly, Esq., of Counsel (prior to Mr. Kelly, two other OGC attorneys, Ann Lapinski and Mary Nyiri were successively responsible for representation of Staff in this matter).
By letter dated July 25, 1990 (N. Gingold to B. Barrell), Frontier Chemical Waste Process, Inc. (the "Permittee" or "Frontier") requested a hearing to dispute Staff's assessment of hazardous waste generator fees upon the Permittee since 1986 The official file in this matter includes the hearing referral packet which Staff forwarded to this Office, correspondence received by this Office from the parties (or sent by this Office to the parties), Permittee's Motion for Consolidation and Discovery Notice and Staff's Reply thereto, the parties' letter-memoranda and the transcript of the pre-hearing conference. Environmental Conservation Law (ECL) 72-0402(1)(d) requires that all generators shall submit annually to the Department a fee in the amount of $40,000 for generators of greater than 1000 tons per year of hazardous waste ("generator" and "hazardous waste" are defined at ECL 72-0401 and , respectively). Enclosed with that letter was Staff's letter of July 11, 1990 (B. Barrell to N. Gingold), which Permittee signed and returned, confirming Staff's determination that Permittee is a generator of hazardous waste and indicating Permittee's disagreement with Staff's determination. Staff summarized its position in the July 11, 1990 letter as follows; "It is the policy of the Department to consider a TSD [treatment, storage or disposal] facility to be a generator of hazardous waste whenever an on-site treatment process produces hazardous waste streams or residuals that are chemically or physically different from the waste received."
By letter dated August 31, 1990, ALJ Bentley instructed the parties to attempt to reach a stipulation of facts, in lieu of a pre-hearing conference, which could then be referred to the General Counsel for a declaratory ruling, pursuant to Title 6 of the Official Code of Rules and Regulations of the State of New York (6 NYCRR), Sub-Part 481.10(f)(4). The parties consented and have exchanged a number of proposed stipulations, but have been unsuccessful in reaching a set of stipulated facts. The parties agree that the fees contested are for six fee years, although there is some discrepancy in the record as to whether the period is properly described as "1985 through 1991", or "1986 through 1991".
On April 8, 1993 at 10:00 a.m., a pre-hearing conference was held pursuant to 6 NYCRR 481.10(f), before ALJ Casutto at the offices of the Department of Environmental Conservation, located in the State Office Building, Utica, New York. Prior to the pre-hearing conference, Permittee filed a Notice of Motion of Consolidation and supporting Affidavit (both dated April 1, 1993), and a Notice for Discovery and Inspection (undated). These documents were received by the Office of Hearings on April 5, 1993, and were discussed at the pre-hearing conference. These documents are addressed more fully below.
Essentially, Staff's position is that no factual issues exist. Staff asserts that the only issue presented by Permittee is an issue of law: whether a TSDF is a generator of hazardous waste, if its on-site treatment process produces hazardous waste streams or residuals that are chemically or physically different from the waste received. Staff, therefore, asserts that this matter should be resolved by referral to the General Counsel for declaratory ruling, pursuant to 6 NYCRR 481..10(f)(4). Conversely, Permittee asserts that issues of fact exist, and these issues of fact should be resolved by the hearing process described in Part 481.
On the morning of the pre-hearing conference, Staff filed a response to Permittee's application for consolidation, and Permittee requested an opportunity to respond by memorandum. Staff stated that because it had only received the discovery notice three days before the conference, it would require additional time to respond to that notice. Both parties requested additional time to identify and submit their most recent proposed stipulation of facts. Therefore, the ALJ set a schedule for further filings, including a copy of each party's most recent proposed stipulation, and Permittee's description of proposed issues for adjudication. Those filings and related correspondence were received by the Office of Hearings, on or before May 14, 1993.
Permittee's letter-memorandum of April 14, 1993 [Gingold to Casutto] primarily addressed its Motion for Consolidation and its Discovery Notice, and contained only a vague statement of proposed issues for adjudication. The one paragraph which does address the issues, identifies only a legal issue, framed in the context of Permittee's Motion for Consolidation; ". . . whether or not the activities of the three regulated companies as well as possibly others that are similarly situated, falls within the type of conduct that should in fact be considered as a "generator" of hazardous waste activities." [April 14, 1993 Letter-Memorandum, page 5, Gingold to Casutto]. Therefore, in identifying legal issues raised by Permittee, the ALJ has relied not only upon Permittee's recent filings, but also upon its initial filings in requesting review by this Office.
Discovery and Inspection
Regarding Permittee's Notice for Discovery and Inspection (the "Notice"), during the conference Permittee argued that it had made earlier requests for discovery to Staff. However, Permittee later conceded that its Notice (filed with this Office on April 5, 1993), was its first request for discovery in this matter (In correspondence to this Office following the conference, Permittee characterized its earlier requests for information, as having been made under authority of the state's Freedom of Information Law (FOIL), Public Officers Law 84 through 90 [Gingold letter of May 12, 1993]).
By letter dated April 14, 1993 Staff requested an Order denying Permittee's Notice because it is vague and requests materials which are irrelevant or are protected from disclosure. In response, by letter dated April 15, 1993 the ALJ stayed discovery proceedings in this matter, pending this issues ruling - - i.e., if no factual issues were in dispute, then further discovery is not necessary.
The Motion for Consolidation
The Permittee's Motion for Consolidation seeks to consolidate two other matters with the present matter, the regulatory fee dispute of BDT, Inc. ("BDT"), and the regulatory fee dispute of Republic Environmental Systems, Inc. (Republic). Briefly, the affidavit of Permittee's attorney in support of the motion, states that the BDT facility is located in Erie County and the Republic facility is located in Farmingdale, New York; that Staff has imposed "generator" fees upon both BDT and Republic; that those entities have annually protested those fees, as has the Permittee in the present matter; that the actions are now pending "before the DEC"; and that the "actions involve common questions of law and fact, in that the Resource Conservation and Recovery Act and the Environmental Conservation Law, and the applicable regulations thereto, by definition and intent, do not consider TSDF's to also be generators...". (Affidavit of Neil M. Gingold, April 1, 1993). Permittee thereby raises an issue of law, purportedly applicable to the two other entities' appeals, which Permittee seeks to consolidate with the present matter.
Although the Republic matter has been referred to the Office of Hearings for processing, the BDT matter has not been referred to this Office, and therefore, this Office has no authority over that matter. The provisions of 6 NYCRR Part 481 do not specifically address consolidation of actions. Part 481 does refer generally to CPLR procedures, but only with respect to discovery [481.10(e)(6)]. However, under 481.10(e)(1), the ALJ has authority to rule upon all motions and requests, and under 481.10(e)(9), the ALJ has broad authority to take any measures necessary to maintain order and efficiency in the conduct of the hearing. Therefore, the motion can be considered by the ALJ.
Under CPLR, which is not binding upon the agency but provides useful guidance, consolidation is discretionary with the judge, where common questions of law or fact are pending before the court. CPLR Rule 602(a). Permittee also cites as guidance, 6 NYCRR 622.12(c), which provides that an ALJ, upon the ALJ's own initiative or upon motion of any party, may order a consolidation of actions or a joint hearing of any or all issues, to avoid unnecessary delay and cost. Permittee has not identified any common question of fact that exists with respect to the cases, but instead asserts that a common question of law exists. That issue of law is, whether the activities of the regulated entities are within the meaning of "generator" of hazardous waste. Further, Permittee admits that issues of fact exist between Permittee and the other two proposed parties, as to the specifics of the operations of each entity. Therefore, Permittee has failed to demonstrate that the actual technologies or processes employed by the disputants are the same, or similar enough that the disputes could be simultaneously adjudicated without causing delay or confusion. For these reasons, in the interests of administrative efficiency, the motion for consolidation is denied.
Permittee asserts that the issue to be determined is whether its activities are within the meaning of "generator" of hazardous waste, and that a generator fee should not be imposed upon it, because it operates a treatment, storage and disposal facility (TSDF). Permittee claims it merely processed or "blended" wastes received from its customers, already categorized as hazardous wastes by those customers, and did not generate any waste stream of its own. Permittee concedes it is a TSDF, under ECL Article 72, Title 4, and does not dispute any of the TSDF base facility fees. It asserts that questions of law and fact exist, in that the Resource Conservation and Recovery Act and the Environmental Conservation Law, and the applicable regulations thereto, by definition and intent, do not consider TSDF's to also be generators. Permittee thereby raises an issue of law, not a factual issue.
As stated above, the parties have attempted to arrive at a stipulation of facts in this matter, and the record includes Permittee's most recent proposed stipulation of facts (under cover of letter dated July 23, 1992) and Staff's most recent proposed stipulation of facts (under cover of letter dated March 5, 1993) (copies attached as Exhibits A and B, respectively). It is reasonable to assume that the parties' proffered stipulations represent their respective factual recitations related to this dispute. Further, the Permittee has provided no other explanation of the underlying facts, although given the opportunity to do so, both during the pre-hearing conference and on papers following that conference. The two stipulations differ only slightly, grammatically, and contain no significant difference in meaning. The findings of fact section, below, is based primarily upon the two proposed stipulations and also upon other documentation in the file.
Lastly, Permittee raises as an issue that Staff has unlawfully selectively assessed generator fees upon the Permittee, and not upon other similarly situated permittees. This argument is understood to be an equal protection argument, with Permittee asserting that its rights under the 14th Amendment of the U.S. Constitution have been violated. It has been established that such constitutional issues are not within the province of the administrative hearing process, and must be submitted to a court. [See, generally, Matter of 303 West 42nd Street v. Klein, 46 NY2d 686, 693 n.5 (1979), citing, Matter of DiMaggio v. Brown, 19 NY2d 283, 291-292 (1967)].
Findings of Fact
- During the years 1985 through 1991, Frontier Chemical Waste Process, Inc. ("Permittee") was located at 4626 Royal Avenue, Niagara Falls, New York 14303.
- During that time, Permittee was an interim status treatment, storage or disposal facility which had the capability to process hazardous waste streams.
- During that time, Permittee was a facility that oxidized cyanide bearing aqueous streams, performed reduction of chromium +6 bearing streams, performed acid/base neutralizations, performed activated carbon polishing of aqueous streams and plate and frame filter press volume reduction of sludge.
- During that time, Permittee was a facility that blended hazardous organic substances which contain British Thermal Units to produce synthetic fuels.
- Permittee received hazardous organic substances from various generators, which it blended by physical and chemical treatment to create the synthetic fuels. Following processing at its plant, Permittee sent the processed waste streams (synthetic fuel), with hazardous waste manifest form, to cement kiln facilities, to be used as fuel by such facilities.
- Permittee did not alter or change the applicable waste codes assigned to these wastes by the facility that shipped the organic substances to Permittee, except as may be authorized pursuant regulations promulgated under authority of the federal Resource Conservation and Recovery Act and the New York State Environmental Conservation Law ("ECL").
- Permittee does not dispute that the processes described in Paragraphs 3, 4 and 5, above, resulted in production of more than 1,000 tons of fuel per year, from 1985 through 1991.
- Permittee concedes that its activities rendered it a "treatment, storage or disposal facility" pursuant to Article 72, Title 4 of the ECL. Consequently, Permittee does not dispute any of the assessed TSDF base facility fees.
- Pursuant to ECL 72-0402(1)(d), all generators of hazardous waste shall submit annually to the New York State Department of Environmental Conservation (the "Department"), $40,000 if they generate greater than 1,000 tons of hazardous waste per year.
- Pursuant to ECL 72-0401(5), a generator is any person whose act or process produces hazardous waste or whose act first causes a hazardous waste to become subject to regulation.
- Pursuant to 6 NYCRR 483.1(c), depending upon the activities engaged in, a person may be liable for both generator fees and treatment, storage and disposal facility fees.
- The Department assessed a hazardous waste generator fee upon each of the facilities that ship the hazardous organic waste to Permittee.
- Based upon the blending processes described in Paragraphs 3, 4 and 5, above, the Department assessed a hazardous waste generator fee of $40,000 per year upon Permittee for the years 1985 through 1991 (six fee years); a total fee of $240,000.
- Permittee challenges Staff's assessment of the generator fees specified in the preceding paragraph, and therefore has not paid those fees.
1) Permittee's Motion for Consolidation is denied.
2) Permittee has not raised any factual issue, but instead has raised only legal issues regarding Staff's assessment of generator fees upon Permittee from 1985 through 1991.
3) The legal issues raised by Permittee are:
a) Is Permittee a generator, subject to generator fees, as a result of its blending processes?
Permittee's facility blended hazardous organic substances which contain British Thermal Units to produce synthetic fuels. Permittee received hazardous organic substances from various generators, which it blended by physical and chemical treatment to create the synthetic fuels. Following processing at its plant, Permittee sent the processed waste streams (synthetic fuel), with hazardous waste manifest form, to cement kiln facilities, to be used as fuel by such facilities. Permittee did not alter or change the applicable waste codes assigned to these wastes by the facility that shipped the organic substances to Permittee, except as may be authorized pursuant regulations promulgated under authority of the federal Resource Conservation and Recovery Act and the New York State Environmental Conservation Law ("ECL").
b) Is Permittee correct in asserting that, ". . . the Resource Conservation and Recovery Act and the Environmental Conservation Law, and the applicable regulations thereto, by definition and intent, do not consider TSDF's to also be generators, as there are distinct definitional differences between the two categories which would preclude [regulated entities] from being considered generators of waste, where such waste was in fact generated by some third party customers of [the regulated entities]." (Affidavit of Neil M. Gingold [April 1, 1993], Paragraph 9).
4) Pursuant to the provisions of 6 NYCRR 481.10(f), this matter is referred to the General Counsel for issuance of a declaratory ruling.
The ALJ recommends that, pursuant to 6 NYCRR 481.10(f)(4), the General Counsel direct the parties to file briefs on the legal issues identified in this issues ruling.
Kevin J. Casutto
Administrative Law Judge
Dated: June 10, 1993
Albany, New York
TO: Neil M. Gingold, Esq.
Hancock & Estabrook
Attorneys at Law
1500 Mony Tower I
P.O. Box 4976
Syracuse, New York 13221-4976
Gene Kelly, Esq.
Division of Legal Affairs
Office of General Counsel
50 Wolf Road
Albany, New York 12233-5500