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Declaratory Ruling 19-15: Eastman Kodak Company

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Petition of

Eastman Kodak Company

for a Declaratory Ruling Pursuant to Section
204 of the State Administrative Procedure Act
and Part 619 of Title 6 of the Official Compilation
of Codes, Rules and Regulations of the State of
New York

Introduction

By letter dated June 24, 2005 this matter was referred to the New York State Department of Environmental Conservation's ("Department") Office of General Counsel by Administrative Law Judge P. Nicholas Garlick pursuant to 6 NYCRR §481.10(f)(4) for the issuance of a declaratory ruling pursuant to State Administrative Procedure Act §204 and 6 NYCRR Part 619. The matter was referred to this office with the agreement of the parties, Eastman Kodak Company ("Kodak") and the Department staff, respectively. The petition for the declaratory ruling is complete for purposes of review. Kodak is disputing portions of its 1994 operating permit program fees for its Eastern Kodak Park Division and Elmgrove Plant - Apparatus Division that are attributable to emissions of chlorine and methylene chloride. Kodak paid the disputed amounts and now seeks reimbursement. The issue to be decided is whether the Department correctly assessed operating permit program fees for calendar year 1994 for chlorine and methylene chloride, based upon 1993 emissions of these pollutants.

Declaratory Ruling

Kodak is liable for payment of the portions of the operating permit program fees that it has disputed and is not entitled to any reimbursement. Chlorine and methylene chloride were regulated air contaminants during 1994 that were emitted by Kodak the previous year. The Department appropriately assessed Kodak for calendar year 1994 for chlorine and methylene chloride based upon the quantity of these regulated air contaminants that were emitted in 1993. It was not necessary for chlorine and methylene chloride to be regulated air contaminants as of January 1, 1994 in order for the Department to assess Kodak for them for calendar year 1994. All that was required in order to assess Kodak for these contaminants for calendar year 1994 was for these contaminants to be regulated air contaminants during 1994 and for there to have been emissions of these contaminants the previous year.

Statement of Facts

The parties have stipulated to the following facts:

    1. ECL §72-0303 established an air operating permit program fee commencing January 1, 1994 and every year thereafter, to be collected from all sources of regulated air contaminants that are subject to the Department's operating permit program.
    2. The law provides that the fee and the method of calculation shall be established as a rule by publication in the Environmental Notice Bulletin (the "ENB") no later than July first of the year such fee will be effective. The Department published the "Notice of Adoption of Rule" in the June 29, 1994 issue of the ENB, with the regulations in 6 NYCRR Subpart 482-2 becoming effective July 1, 1994. For 1994, the fee required of entities subject to this regulation was set at $25.69 per ton, up to 6,000 tons annually for each regulated air contaminant.
    1. Among others, in 1994, Kodak operated two facilities in the Rochester, New York area, one being Eastern Kodak Park Division, the address of which is 1669 Lake Avenue, Rochester, New York 14650; and the other being the Kodak Elmgrove Plant - Apparatus Division, the address of which is 901 Elmgrove Road, Rochester, New York 14650.
    2. Kodak's Kodak Park and Elmgrove plants were major sources and are subject to the Department's operating permit program.
      1. In 1993 and 1994, Eastern Kodak Park was permitted as a major source and was subject to the requirements of Title V of the federal Clean Air Act Amendments of 1990 and ECL §72-0303.
      2. In 1993 and 1994, Eastern Kodak Park produced emissions of regulated air contaminants in each of those years at a level exceeding the regulatory thresholds for a major source.
      3. In 1993 and 1994, Eastern Kodak Park's Division of Air Resources permit number was 2614000258.
      1. In 1993 and 1994, Kodak Elmgrove Plant - Apparatus Division was permitted as a major source and was subject to the requirements of Title V of the federal Clean Air Act Amendments of 1990 and ECL §72-0303.
      2. In 1993 and 1994, Kodak Elmgrove Plant - Apparatus Division produced emissions of regulated air contaminants in each of those years at a level exceeding the regulatory thresholds for a major source.
      3. In 1993 and 1994, Kodak Elmgrove Plant - Apparatus Division's Division of Air Resources permit number was 2626001003.
  1. 6 NYCRR §482-2, the Department regulation that established fees to be paid by sources subject to the operating permit program for 1994, was adopted on June 29, 1994.
    1. Under 6 NYCRR §482-2.3(h)(6), the definition of "regulated air contaminant" includes a "contaminant as set forth in section 19-0107(22) of the ECL."
    2. ECL §19-0107(22) includes "any air contaminant that is regulated under section 7411 or 7412 (b) and (c) of the [Clean Air] Act and for which the commissioner has adopted regulations."
    3. Methylene chloride (CAS #75-09-2) and chlorine (CAS #7782-50-5) have been statutorily defined as federal hazardous air pollutants under Clean Air Act section 7412(b) effective November 15, 1990. See 42 USC 7412(b).
    4. Methylene chloride and chlorine first appeared in federal NESHAP regulation as defined federal hazardous air pollutants in March 16, 1994. See 59 F. Reg. 12430, 40 CFR 63.1(b)(1)(i). Chlorine next was identified as a federal hazardous air pollutant for NESHAP regulatory purposes on April 22, 1994 [see 59 F. Reg. 19402, 40 CFR 63.111 definition of "halogens and hydrogen halides"]; and methylene chloride next was identified as a federal hazardous air pollutant for NESHAP regulatory purposes on September 20, 1994 [see 59 F. Reg. 48175, 40 CFR 63.190(b)(5)].
    5. Through finalization of 6 NYCRR §202-2.6, methylene chloride (CAS #75-09-2) and chlorine (CAS #7782-50-5) became defined as hazardous air pollutants on August 14, 1994.
    6. 6 NYCRR Part 212 has been in effect since 1972.
  2. Kodak provided its 1993 emissions information to the Department, which then used that information as the basis for calculating the total tonnage of each regulated air contaminant that was subject to the fee.
  3. The Department issued a fee invoice for calendar year 1994 based upon the facility's actual emissions of regulated air contaminants in 1993.
  4. Kodak timely paid the fee in full under protest and timely challenged the assessment through all steps leading to hearing.
  5. Kodak challenges Department staff's assessment of regulatory program fees under section 72-0303 of the Environmental Conservation Law for the year 1994 based upon Kodak's emission of the following air contaminants in the following quantities from the following of Kodak's plants in 1993:

    Quantity of Air Contaminant at Kodak Plants
    Plant name and address air contaminant quantity of that air
    Kodak Park methylene chloride
    chlorine
    3,310,000 pounds
    19,000 pounds
    Elmgrove methylene chloride
    chlorine
    7,120 pounds
    315 pounds

Discussion

ECL §72-0303(1) states, in pertinent part, that:

Commencing January first, nineteen hundred ninety-four and every year thereafter, all sources of regulated air contaminants identified pursuant to subdivision one of section 19-0311 of this chapter shall submit to the department a fee not to exceed twenty- five dollars per ton up to six thousand tons annually of each regulated air contaminant.

During 1993 and 1994 Kodak's Eastern Kodak Park Division and its Elmgrove Plant - Apparatus Division were both "sources" identified in subdivision one of ECL §19-0311. Specifically, the parties have stipulated that in 1993 and 1994, both of these facilities were permitted as major sources that were subject to the requirements of Title V of the federal Clean Air Act Amendments of 1990 and ECL §72-0303.

Kodak argues, however, that ECL §72-0303(1) should be read to mean that in order for the Department to assess Kodak for chlorine and methylene chloride for calendar year 1994 based upon previous emissions in 1993, it was necessary for chlorine and methylene chloride to be regulated air contaminants for which a fee was authorized as of January 1, 1994. (Emphasis in original). Kodak asserts that since chlorine and methylene chloride were not regulated air contaminants as of January 1, 1994, the Department should not have assessed them for these contaminants for calendar year 1994.

The Department staff contend that ECL §72-0303(1) should be interpreted to mean that the Department was authorized to assess Kodak for chlorine and methylene chloride for calendar year 1994 based upon emissions the previous year if these chemicals were regulated air contaminants at any time during the 1994 billing year. (Emphasis added). Therefore, the Department staff assert that because chlorine and methylene chloride became regulated air contaminants during 1994 (even though this occurred after January 1, 1994) it was appropriate to assess Kodak for these contaminants based upon the previous year's emissions.

The Department staff have rationally interpreted ECL §72-0303(1). The reference to January 1, 1994 in ECL §72-0303(1) is intended to establish that there is a calendar year billing cycle and that January 1, 1994 marks the beginning of the calendar year for the first year of billing. Any "source" of an air contaminant that meets the definition of a "regulated air contaminant" during 1994 is required to pay an operating permit program fee to the Department for calendar year 1994 based upon the previous year's emission of that regulated air contaminant. See ECL §72-0303(2).(1)

Chlorine and methylene chloride became "regulated air contaminants" during 1994. 6 NYCRR §482-2, the Department regulation that established fees to be paid by sources subject to the operating permit program for 1994, went into effect on July 1, 1994. 6 NYCRR §482-2.3(h)(6) defines a "regulated air contaminant" as a "contaminant set forth in section 19-0107(22) of the Environmental Conservation Law". ECL §19-0107(22)(h) defines the term "regulated air contaminant" to include: "any air contaminant that is regulated under section 7411 or 7412 (b) and (c) of the [Clean Air] Act and for which the commissioner has adopted regulations."

Chlorine and methylene chloride were statutorily defined as federal hazardous air pollutants under section 7412(b) of the Clean Air Act effective November 15, 1990. Chlorine and methylene chloride first appeared in federal NESHAP regulation as defined federal hazardous air pollutants on March 16, 1994. See 40 CFR 63.1(b)(1)(i). Chlorine was identified as a federal hazardous air pollutant for NESHAP regulatory purposes on April 22, 1994. See 40 CFR 63.111. Methylene chloride next was identified as a federal hazardous air pollutant for NESHAP regulatory purposes on September 20, 1994. See 40 CFR 63.190(b)(5). Through finalization of 6 NYCRR §202-2.6, chlorine (CAS #7782-50-5) and methylene chloride (CAS #75-09-2) became defined as hazardous air pollutants in New York regulations on August 14, 1994. Thus, chlorine and methylene chloride became "regulated air contaminants" under section 7412(b) and (c) of the Clean Air Act and were defined as hazardous air pollutants in New York regulations during 1994.

New York has adopted regulations for hazardous air pollutants, including chlorine and methylene chloride, that were in effect during 1994. Specifically, New York has adopted the regulations contained within 6 NYCRR Part 212, which regulate emissions of hazardous air pollutants from general process emission sources. The regulations contained within 6 NYCRR Part 212 have been in effect since 1972, have continued in effect through 1994 when chlorine and methylene chloride became defined as hazardous air pollutants subject to regulation, and remain in effect at the present time. Furthermore, New York has adopted the regulations set forth within 6 NYCRR Subpart 202-2. These regulations, which went into effect on August 14, 1994, require owners and operators of facilities that have the potential to emit 10 tons per year of a hazardous air pollutant (such as chlorine or methylene chloride) or 25 tons per year of a combination of hazardous air pollutants to submit an annual emission statement to the Department.

In conclusion, Department staff properly assessed operating permit program fees to Kodak for calendar year 1994 for chlorine and methylene chloride at Kodak's Kodak Park Division and Elmgrove Plant - Apparatus Division, based upon 1993 emissions of these pollutants. Department staff's construction of the relevant statutes was not unreasonable. See Village of Scarsdale v. Jorling, 91 NY2d 507, 516 (1998); Astoria Generating Company v. General Counsel of the New York State Department of Environmental Conservation, 299 AD 2d 706, 707 (3d. Dept. 2002). Accordingly, Kodak is not entitled to reimbursement of its payment of the operating permit program fees at issue.

Dated: June 7, 2006
Albany, New York

James H. Ferreira
James H. Ferreira
Deputy Commissioner and General Counsel

1. ECL §72-0303(2) provides, in pertinent part, that: "[b]ills issued for the fee shall be based on actual emissions for the prior calendar year as demonstrated to the department's satisfaction, or in the absence of such demonstration, on permitted emissions, or, where there is no permit, on potential to emit."

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