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Independent Cement Corp. - Summary Report, February 14, 1997

Summary Report, February 14, 1997

50 Wolf Road
Albany, New York 12233-1550

In the Matter

- of -

Regulatory Program Fee Dispute

- by -

Route 9W
P.O. Box 31
New York 12414

Invoice #18239

DARID #1926000026 A



Robert P. O'Connor
Administrative Law Judge

February 14, 1997


Environmental Regulatory Program Fees for air contamination sources are assessed pursuant to Environmental Conservation Law ("ECL") Article 72, Title 3 (Air Quality Control Program Fee) and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") Part 481 (Program Fees: In General) and Part 482-2 (Operating Permit Program Fee).

Independent Cement Corporation ("ICC"), Route 9W, P.O. Box 31, Catskill, New York 12414 is disputing the Regulatory Program Fee assessed by the New York State Department of Environmental Conservation (the "Department") for the air quality Operating Permit Program for the 1994 billing period.

This dispute was referred to the Department's Office of Hearings and Mediation Services on April 17, 1996. Following attempts to contact ICC's designated representative, Charles Klotz, Environmental Manager at ICC's Catskill facility, by phone, Administrative Law Judge ("ALJ") Robert P. O'Connor, on April 23, 1996, wrote to Mr. Klotz seeking to schedule a pre-hearing conference, as provided in 6 NYCRR 481.10(f)(1). Mr. Klotz responded by phone on May 2, 1996, and a pre-hearing conference was scheduled for 10 A.M. on May 9, 1996 in the Department's offices at 50 Wolf Road, Albany (Colonie), New York.

At the pre-hearing conference on May 9, 1996, the participants were ALJ O'Connor; Mr. Klotz; Christopher C. McGrath, President and Principal Lobbyist in the firm, New York Capital Consultants, Inc., also appearing on behalf of ICC; Ann Hill DeBarbieri, Esq., Associate Attorney for the Department Staff, i.e. - the Department's Regulatory Fee Determination Unit; and David Finlayson, a representative from the Department's Division of Air Resources.

At the conclusion of the pre-hearing conference, the participants agreed that ICC would submit a written summary report concerning its regulatory fee dispute by June 9, 1996, and the Department Staff would then have two weeks in which to submit a reply. In the absence of such a summary report, on August 29, 1996, the ALJ wrote ICC requesting the report not later than September 9, 1996 or the matter would be dismissed. ICC requested and was granted until September 11, 1996 to submit the report, and in fact, a two-page letter "summary report" was received that date. The Department Staff's brief in response was received on February 11, 1997, in a letter from Richard Ostrov, Assistant Regional Attorney in the Department's Region 4 Office advising that the case had been transferred from Ms. DeBarbieri to him. On the afternoon of February 11, 1997, in a conference telephone call among the ALJ, Mr. Ostrov and Mr. McGrath, ICC requested and was granted until February 28, 1997 to respond to the Staff's letter, following which it was agreed that the Staff would have an opportunity to respond as necessary.

After granting ICC's request to respond, however, the ALJ had further opportunity to review the Staff's February 11, 1997 submittal, ICC's "summary report", the previously filed materials and the relevant facts as had been stated by both parties at the pre-hearing conference. On February 13, 1997, the ALJ determined there was no dispute regarding the material facts pertaining to this case. Rather, there is a dispute as to what the Federal Clean Air Act Amendments ("CAAA") and the ECL require and an interpretation of how the law should be applied to the facts of the instant case. Therefore, this matter is beyond the scope of an administrative adjudicatory proceeding as provided in 6 NYCRR 481.10.

There being no material facts in dispute, this matter is hereby referred to the Department's General Counsel for a declaratory ruling pursuant to 6 NYCRR 481.10(f)(4). This Report summarizes the material facts and the nature of the dispute, and is intended to constitute a petition for a declaratory ruling.

Summary Positions of the Parties

The Petitioner

In its September 11, 1996 "summary report" letter, ICC stated, "It is the position of ICC that the 1994 fees were not used for the purpose for which they were intended, namely: to meet costs of developing, implementing and maintaining the operating permit program (Title V) required by CAAA." ICC contends that New York State did not implement the permit program in 1994 as authorized by the CAAA, and therefore, the fee monies collected in 1994 were not required for implementation of a non-existent program. ICC seeks a full refund or full credit in the amount of $178,158.10 for the Title V fees which it paid in 1994.

Furthermore, ICC alleges that the reports required to monitor the program costs, revenues and progress were not prepared and filed in a timely fashion.

Additionally, since "more than $10 million dollars (sic) were collected by NYS DEC from a broad range of entities, at the appropriate time and in the appropriate forum, the Petitioner intends to apply for class action status."

The Department Staff

The Staff's position is that ICC has raised no questions of material fact in its filing, but "rather questions the Department's authority to collect and utilize Operating Permit Program fees for 1994 as authorized under the enabling statute and regulations as set forth in Section 22 of the New York State Clean Air Compliance Act (ECL 72-0303), and 6 NYCRR 482-2, respectively, for 1994." Thus, the absence of a dispute regarding questions of material fact does not justify proceeding to an adjudicatory hearing in this matter.

Moreover, the Staff maintains that a regulatory fee dispute proceeding is not the proper forum in which to challenge the Department's authority and interpretation or application of a regulation or the law. The Staff has suggested that ICC must initiate a civil action in order to pursue its claims.

The Staff has cited the provisions of 6 NYCRR 481.10(f)(4) to request the ALJ to refer this matter to the Department's General Counsel for a Declaratory Ruling in accordance with 6 NYCRR Part 619. In the alternative, the Staff has filed a Motion for Summary Judgement seeking dismissal of this matter as not being within the jurisdiction of the Department's administrative adjudication process.

Summary of Material Facts

  1. Independent Cement Corporation operates a facility on Route 9W in Catskill, Green County, New York which produces emissions of regulated air contaminants at a level exceeding the regulatory thresholds for a major source.
  2. The facility is permitted under DARID No. 1926000026, and is subject to the requirements of Title V of the Federal Clean Air Act Amendments of 1990 and Environmental Conservation Law Section 72-0303, as established by the New York State Clean Air Compliance Act of 1993 (Laws of 1993, chapter 608, section 22, effective August 4, 1993).
  3. ECL 72-0303 established the Operating Permit Program Fee commencing January 1, 1994 and every year thereafter. The law provides that the fee and method of calculation shall be established as a rule by publication in the Environmental Notice Bulletin ("ENB") no later than July first of the year such fee will be effective. The Department published "Notice of Adoption of Rule" in the June 29, 1994 issue of the ENB, with the regulations in 6 NYCRR Part 482-2 becoming effective on July 1, 1994. For 1994, the Operating Permit Program Fee required of entities subject to this regulation was published to be twenty-five dollars and sixty-nine cents ($25.69) per ton up to six thousand tons annually for each regulated air contaminant.
  4. ICC provided its 1993 fuel use/emissions information to the Department. This information was utilized by the Department Staff as the basis for determining the total tonnage of each regulated air contaminant that was subject to the 1994 Operating Permit Program Fee.
  5. On August 14, 1994, the Department issued an invoice in the amount of $178,158.10 for the Operating Permit Program Fee for billing year 1994. The invoice was based on the facility's actual emissions of regulated air contaminants as required by ECL 72-0303(2). The invoice itemized the facility's regulated air contaminants and multiplied the reported tonnage of each by the 1994 fee of $25.69 per ton as follows:
    Air Contaminants Tonnage Dollar Amount
    Particulates 451.93 tons $ 11,610.08
    Sulfur dioxide 1,904.95 tons $ 48,938.17
    Nitrogen oxides 4,578.04 tons $ 117,609.85

    1994 Total Air Quality Control Program Fee: $178,158.10

  6. In September 1994, the Department received payment from ICC in the amount of $178,158.10 for the 1994 Operating Permit Program Fee.
  7. On September 14, 1994, ICC submitted a fee recalculation request to the Department, disputing the entire 1994 fee billed and requesting a refund. On March 9, 1995, after conducting a review, Department Staff notified ICC that the original invoice was correct.
  8. On March 22, 1995, ICC notified the Department of its "Continued Disagreement" with the Department's Operating Permit Program Fee determination relating to ICC's Catskill facility.
  9. On June 23, 1995, ICC submitted to the Department another "Continued Disagreement" form and requested a conference to dispute the matter. The Department Staff did not schedule a conference to consider the dispute.
  10. On April 17, 1996, the Department's Office of Hearings and Mediation Services received the request from the Regulatory Fee Determination Unit to conduct a hearing in this matter.
  11. As noted above in the Proceedings section of this Report, a pre-hearing conference to consider this matter was held on May 9, 1996.


Under the facts set forth above, does the Environmental Conservation Law require payment by Independent Cement Corporation of an Operating Permit Program Fee for 1994?

Order of Disposition

This matter is hereby referred to the Department's General Counsel for a declaratory ruling on the issue identified above. The declaratory ruling should address the liability of the permittee to pay the Operating Permit Program Fee for 1994 in the context of ECL 72-0303 and the Department's implementing regulations in 6 NYCRR Part 482-2.

A Service List accompanies this Report on the following page.

Service List

Independent Cement Corporation

Regulatory Fee Dispute

Invoice #18239 DARID #1926000026

February 14, 1997

Robert P. O'Connor
Administrative Law Judge
Office of Hearings and
Mediation Services
New York State Department of
Environmental Conservation
50 Wolf Road, Room 423
Albany, NY 12233-1550

Richard Ostrov, Esq.
Assistant Regional Attorney
Region 4 Headquarters
New York State Department of
Environmental Conservation
1150 North Westcott Road
Schenectady, NY 12306

Charles Klotz
Environmental Manager
Independent Cement Corporation
P.O. Box 31, Route 9W
Catskill, New York 12414

Christopher C. McGrath, President
New York Capital Consultants, Inc.
120 Washington Avenue
Albany, New York 12210

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