Lederle Laboratories - Ruling, November 9, 1993
Ruling, November 9, 1993
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
In the Matter of the Applications of
LEDERLE LABORATORIES A Division of American Cyanamid Co. 401 North Middletown Road Pearl River, New York 10965 for reconsideration of the Department's Region 3 Staff determination to impose certain conditions on the modification of a Solid Waste Management Permit held by Lederle pursuant to the Environmental Conservation Law ("ECL") Article 27, Title 7 and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") Part 360
PRELIMINARY RULINGS OF THE ADMINISTRATIVE LAW JUDGE
DEC Project No. 3-3924-00025/00400-0
Lederle Laboratories, a division of American Cyanamid Company ("Lederle" or "Applicant"), applied to the New York State Department of Environmental Conservation ("Department" or "DEC") for a modification of a previously approved (1982) Solid Waste Management Permit for its existing Stage 3A landfill area at the Lederle site at 401 North Middletown Road, Pearl River, Town of Orangetown, Rockland County, New York. On June 10, 1993, the Department's Region 3 Staff issued Lederle a Solid Waste Management Permit to construct landfill Stage 3B, approximately four acres in size and adjacent to landfill Stage 3A, for the disposal of on-site generated waste.
Lederle contends the Department Staff imposed certain substantive conditions in the June 10, 1993 permit. Pursuant to 6 NYCRR 621.13(d), on July 8, 1993, Lederle requested a hearing to contest such permit conditions.
Representing Lederle in this matter is the law firm of Dewey Ballantine, 1301 Avenue of the Americas, New York 10019-6092 (Donald W. Stever, Esq., of Counsel).
The Department Staff is represented by Carol Backman Krebs, Esq., Assistant Regional Attorney in the Department's Region 3 Office, 21 South Putt Corners Road, New Paltz, New York 12561-1696.
The Issues Proposed for Adjudication
Among the permit conditions contested by Lederle were a series of deadlines within which Lederle was to submit certain plans, reports and test results to the Department for review and approval. Lederle stated it had no objection to the submission of any of the required information to the Staff, but found the deadlines imposed in the permit conditions to be unreasonably short.
On July 12, 1993, I initiated a conference telephone call with Ms. Krebs and Mr. Stever, during which we discussed the July 8, 1993 letter which Mr. Stever had written on behalf of Lederle. I then summarized the phone discussions in a letter to both parties.
In my July 12, 1993 letter, I noted that the deadlines which had been imposed as permit conditions would be the subject of discussions between the Department Staff and the Applicant and that resolution of this issue should be accomplished through such discussions, not in the hearing forum. On August 2, 1993, the Department Staff wrote me that Lederle would be proposing a schedule for submission of the required documents. On October 5, 1993, the Applicant submitted its proposal for consideration by the Department Staff. I was advised by the Staff on October 13, 1993 that Lederle's proposal for report submissions had been found acceptable. While this matter, then, is satisfactorily resolved, I reiterate that the deadlines imposed in the permit conditions were not issues which warranted adjudication.
The only remaining permit condition contested by Lederle relates to the Staff's requirement for a part-time Applicant-funded environmental monitor at the landfill site. Lederle noted in its July 8, 1993 request for a hearing that it:
"has no objection to granting Department personnel free access to the Stage 3A and Stage 3B Landfill areas during construction and operation of the Landfills. However, Lederle believes that the Department lacks the legal authority to require Lederle to fund all or any part of the costs associated with the environmental monitor's activities at the Lederle property. . . Lederle also believes that, even if the Department does have the legal authority to require Lederle to fund some portion of the costs associated with the environmental monitor, the nature and amount of the costs which the Department has required to be paid by Lederle, and the requirement that these costs be funded in advance, are excessive and unreasonable and otherwise arbitrary and capricious."
In my July 12, 1993 letter to the parties, I allowed both the Applicant and the Department Staff to submit written briefs solely on the issue of the "Department's legal authority to require the Applicant to fund all or any part of the costs associated with the environmental monitor's activities at the Lederle property."
Following the submission of initial briefs on August 10, 1993, as previously agreed upon, Lederle requested an opportunity to submit a reply brief. The Department Staff concurred in this request, and I allowed both parties to submit reply briefs not later than September 3, 1993.
Positions of the Parties
Lederle first contends that the State Legislature has not granted DEC the authority to require the holder of a permit for a non-hazardous solid waste management facility to pay the costs of an on-site monitor.
Second, assuming DEC did have statutory authority to recoup on-site environmental monitoring costs directly from the facility permittee, the Department cannot do so without first having gone through the established rule-making process to amend 6 NYCRR Part 360. Lederle claims the rule-making process required by the State Administrative Procedures Act (202) and the New York State Constitution (Article IV, 8) prohibits the promulgation and implementation of the Department's Organization and Delegation Memorandum ("O&D Memo") #92-10, entitled "Policy: On-Site Environmental Monitors," from which DEC seeks to derive its authority to require such payments.
Third, even if O&D Memo #92-10 is a legally effective pronouncement, Lederle asserts it violates due process because it fails to articulate objective standards against which the Department's determinations can be measured in order to protect the regulated community from arbitrary administrative action and to provide a meaningful standard for judicial review.
Lastly, New York courts have held that even where an administrative agency may seek to recover the costs of fulfilling a statutory mandate, the fees imposed must not exceed what is reasonably necessary for accomplishing the relevant statutory duty. See Jewish Reconstructionist Synagogue of North Shore v. Incorporated Village of Roslyn Harbor, 40 N.Y.2d 158, 163, 352 N.E.2d 115, 118, 386 N.Y.S.2d 198,201 (1976). Neither the O&D Memo nor Lederle's permit articulates limiting standards for the on-site monitoring fees. Therefore, Lederle claims the Department has failed to establish that the fees are reasonably necessary for the Department to fulfill its statutory duty.
Lederle claims that although the Department will probably rely on C.I.D. Landfill, Inc. v. New York State Department of Environmental Conservation, 167 A.D.2d 827, 561 N.Y.S.2d 936 (4th Dept. 1990), motion for leave to appeal denied, 77 N.Y.2d 809 (1991), as a citation for its authority, reliance on the C.I.D. Landfill case is misplaced. Lederle contends the factors upon which the Court relied in C.I.D. Landfill are not present in its own situation.
In its September 2, 1993 Reply Brief, Lederle refuses to concede that the Department even has the authority to require an on-site environmental monitor as a permit condition in the instant matter.
DEC Staff Position
The Department Staff relies on the broad authority granted to DEC in ECL 1-0101 and 3-0301 as a basis for imposing permit conditions in general and on-site monitoring requirements in particular as a means of carrying out the environmental policy of the State to conserve, improve and protect its natural resources and environment, and to control water, land and air pollution, in order to enhance the health, safety and welfare of the people of the State and their overall economic and social well-being. Further, the Staff states that O&D Memo #92-10 and Declaratory Ruling #19-07 both set forth the authority for DEC to require an on-site environmental monitor. Additionally, the Staff claims its authority was upheld and is now case law as the result of the Appellate Division decision in the matter of C.I.D. Landfill. The Department Staff also makes reference to fund appropriations in the State budget for administration of the on-site environmental monitor program as justification and authority for its actions.
The Department Staff believes an on-site environmental monitor is required at the Lederle site, at least on a part-time basis, in order to monitor actions of the Applicant which could pose a threat to the environment. Therefore, the Staff believes the contested permit condition is rationally related to protection of the environment.
The Staff also cite C.I.D. Landfill and Declaratory Ruling #19-07 as supporting its authority to impose upon a permit holder the payment of oversight costs required to cover specific costs of services rendered to the permittee.
The Department's use of on-site environmental monitors is founded in ECL 27-0917(4)(a) and (8). These sections define the Department's responsibilities related to industrial hazardous waste management.
In pertinent part ECL 27-0917(4), effective July 27, 1982, states that "permits for the construction and operation of certain categories of hazardous waste facilities . . . may, if the commissioner determines that adequate protection of the public so requires, include conditions related to . . . including responsibility for the costs thereof: (a) On-site environmental monitors whose function shall be to monitor compliance with permit conditions."
Section 27-0917(8), added to the ECL effective August 2, 1986, requires on-site environmental monitors as a permit condition in any permits issued for the construction and operation of commercial hazardous waste facilities which utilize secure landburial facilities as a primary disposal technique.
Although the on-site environmental monitor requirement is not expressly authorized by statute, except as noted above, the State Supreme Court, Appellate Division, Fourth Department, in C.I.D. Landfill, held that the broad grant of power in ECL 3-0301 is justification for DEC permit conditions requiring a landfill operator to help pay for an on-site environmental monitor needed to reduce the landfill's potential risk of environmental harm. The court determined that the Department's requirement for an on-site environmental monitor at the C.I.D. Landfill in Erie County was rational and based on nondiscriminatory application of established criteria, see C.I.D. Landfill, supra. The Appellate Division did not restrict the applicability of this requirement to any specific type of landfill or solid waste management facility.
Moreover, the decision stated the imposition on the landfill operator of a portion of the costs for the on-site environmental monitor did not constitute an illegal tax because the permit condition was not imposed to generate revenue or to offset the cost of government functions generally. The costs were assessed against the landfill operator as a fee to cover the specific costs of services rendered to the landfill operator, i.e. - to ensure the landfill complied with all applicable statutory and regulatory criteria.
The Department has, in recent years, extended the requirement for applicant funded on-site environmental monitors to various types of facilities besides hazardous waste facilities, primarily solid waste management facilities. When revisions to the rules and regulations for solid waste management facilities, 6 NYCRR Part 360, were promulgated in 1988, 360-1.11(a)(1) included the provision that the Department could impose monitoring conditions on a solid waste management facility permit, including the imposition of on-site environmental monitors.
6 NYCRR 360-1.11(a)(1) provides a range of conditions which may be imposed on an applicant by the Department to ensure that solid waste management facilities "will pose no significant adverse impact on public health, safety or welfare, the environment or natural resources" and to ensure compliance with all applicable laws and regulations. Although the range of options available to the Department includes the imposition of on-site environmental monitors, typically this option is only exercised when the Department Staff believes the potential risks involved with a project require additional oversight beyond the normal inspection, sampling, monitoring and reporting activities which are generally part of every permit issued by the Department.
The most recent revision to 6 NYCRR Part 360, effective October 9, 1993, provides detailed regulations for the funding of on-site environmental monitors in 360-1.11(a)(2), a photocopy of which is attached as Appendix "A". In at least May 1993, if not earlier, a draft of this section of the regulations was available for public review and comment. The May 1993 Final Environmental Impact Statement prepared for the Part 360 revisions/enhancements does not indicate that any substantive comments were received on this section of the regulations, and the final version of this section is unchanged from the draft.
The effect of the enhanced 6 NYCRR 360-1.11(a)(2) is to codify the policy and procedures which the Department had previously been using with regard to the funding of on-site environmental monitors. There is nothing new or surprising set forth in 6 NYCRR 360-1.11(a)(2). However, through the prescribed rule-making process, the Department has now formalized the funding requirements for on-site environmental monitors at solid waste management facilities.
The Department Policy Guidance
On February 20, 1992, the Commissioner of Environmental Conservation issued Organization and Delegation Memorandum #92-10, entitled "Policy: On-Site Environmental Monitors." This document superseded O&D Memo #89-31, dated September 21, 1989.
The purpose of O&D Memo #92-10 "is to revise and promulgate the department policy regarding on-site environmental monitors at facilities, sites or other regulated activities, which have a potential for causing damage to the environment and/or public health." This O&D Memo gives guidelines for utilization of on-site monitors and provides specific criteria which "should be considered when determining if a facility, site or regulated activity will be required to fund an on-site environmental monitor."
On March 5, 1993, the Commissioner of Environmental Conservation issued a Record of Compliance Enforcement Guidance Memorandum ("ROCEGM"), superseding a similar EGM dated August 8, 1991. The ROCEGM establishes the policy and procedures by which the Department "is to ensure that persons who are unsuitable to carry out responsibilities under Department permits, certificates, licenses or grants, are not authorized to do so. Compliance with the ECL and enforcement against those who violate the ECL can be advanced by ensuring that the permit review procedures incorporate such consideration at the earliest possible stage in the review process."
The ROCEGM requires consideration of an applicant's compliance record on a case by case basis in determining the appropriate actions, e.g. - imposition of certain permit conditions, to be taken by the Department Staff in order to safeguard the State's environment. The ROCEGM notes, "If a permit is issued to a prior violator, it may be appropriate to impose strict reporting or monitoring conditions within such permits or to require an environmental monitor." (emphasis added)
The policies promulgated by the Department do not have the force and effect of statutes or regulations and are not treated as rules. The purpose of issuing these Memoranda is to: a) clarify various programmatic and procedural issues, b) prioritize the efforts of the Department Staff so limited resources are directed where they will provide the greatest benefits, and c) provide guidance to the Department Staff and the regulated community in interpreting and applying regulations or statutes so statewide program uniformity is attained.
The considerations set forth in the Organization and Delegation Memoranda and the Enforcement Guidance Memoranda do not establish a strict code of procedures or standards and are not binding on the parties regulated by the Department. Rather, the procedures and guidelines for review must be applied on a case by case basis to determine the appropriate Department response to any given permit application.
In the instant case, the guidelines cited above provide a rational approach to addressing solid waste management strategies in a consistent way. However, these guidelines do not preclude consideration of other approaches that may be proffered by applicants to guarantee compliance of their solid waste management operations with all applicable standards.
Summary and Ruling on the Issue
The Department has the obligation to ensure compliance with the Environmental Conservation Law, the applicable regulations and whatever other environmental standards are involved when it issues a permit for any project which has the potential for causing harm to the environment and public health. The Department has determined that solid waste management facilities comprise a category of projects which may require oversight above and beyond the self-monitoring and reporting requirements typically present in the permit conditions imposed on an applicant. In certain instances, the Department has found it necessary to impose requirements that an applicant fund an on-site environmental monitor in order to provide reasonable assurances that all the applicable standards will be met.
Lederle's question is whether the Department has the legal authority to require Lederle to fund all or any part of the costs associated with the activities of an on-site environmental monitor for its proposed landfill at its Pearl River, New York facility.
It is clear from the above discussion that the Environmental Conservation Law, particularly 3-0301, as further articulated by the Appellate Division of State Supreme Court, and the recently revised and enhanced solid waste management facility regulations in 6 NYCRR Part 360 provide the authority for the Department to condition its approval of certain solid waste management projects on the utilization of on-site environmental monitors in appropriate circumstances. Additionally, the ECL and its implementing regulations, in 6 NYCRR 360-1.11(a)(2), authorize the Department to require the project sponsors or applicants in these instances to partially fund the costs for such monitors, where the costs are a reimbursement for specific Department services rendered to the applicants.
Thus, to expressly address Lederle's first and second contentions, the Department has the authority, in the ECL, to not only require an on-site environmental monitor, but to require the holder of a permit for a non-hazardous solid waste management facility to pay the costs of an on-site environmental monitor, when there is a need for additional oversight to reduce a facility's potential risk of environmental harm. Further, the Department amended 6 NYCRR Part 360 via the established rule-making process required by the State Administrative Procedures Act (202) and the New York State Constitution (Article IV, 8) to implement regulations which are now effective and which govern the financing of on-site environmental monitors by permit holders at non-hazardous solid waste management facilities.
To address Lederle's third contention, the Department Staff may not rely on O&D Memorandum #92-10 for authority to require an applicant to fund an on-site environmental monitor. The Staff may, however, use O&D Memorandum #92-10 as guidance on when it may be appropriate to require an on-site environmental monitor. Even with the standards in 6 NYCRR Part 360, there is still a degree of discretion involved in a Department Staff determination to require an applicant to fund an on-site environmental monitor. The O&D Memo provides guidance for exercising this discretion. Whether in this instance the Department Staff properly exercised its discretion to require an on-site environmental monitor at the Lederle facility is a matter to be determined following a hearing.
With respect to Lederle's fourth contention, the Department may not impose any fees which exceed the amount reasonably necessary for accomplishing the relevant statutory duty. Whether the Department Staff's permit condition requiring funding from Lederle for a one-quarter time on-site environmental monitor is justified and reasonably necessary and whether the amount sought is excessive are matters to be determined following a hearing.
I am therefore remanding this matter for a hearing. Where there is an unresolvable dispute between an applicant and the Department Staff, the Department's rules and regulations do not provide any way of resolving the dispute other through the public hearing process. Consequently, the Department's Permit Hearing Procedures in 6 NYCRR Part 624 will govern the conduct of the hearing. Pursuant to 6 NYCRR 624.3, the Applicant will be required to publish a hearing notice inviting participation in the proceeding by parties other than Lederle and the Department Staff.
Since, this matter will now be handled as a routine permit application and hearing, I request the Department Staff to transmit to me, at an early opportunity, the project file, along with all the information which would normally be contained on a Hearing Request form. As soon as I have had the opportunity to review the file, I will initiate a conference telephone call with the Department Staff and the Applicant to discuss the procedures regarding the conduct of a hearing in this matter, including the requirements for public notice, hearing location (in a public facility in Pearl River or within the Town of Orangetown) and time and date of the hearing. Following that discussion I will issue the requisite Hearing Notice.
Since this ruling is only preliminary in nature, it is not appealable pursuant the provisions of 6 NYCRR 64.4(f) and 624.6(d). As part of the hearing process a formal issues conference will be conducted. Additional rulings will result from the issues conference. Following receipt of the post-issues conference rulings, the Applicant, the Department Staff and any other persons, governmental entities and/or organizations granted party status at that time will have the opportunity to appeal those rulings and this preliminary ruling.
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
ROBERT P. O'CONNOR
ADMINISTRATIVE LAW JUDGE
Dated: Albany, New York
November 9, 1993