DEE-13: Environmental Regulatory Program Fees Enforcement Policy

Commissioner Policy

The DEC Policy System
Department ID: DEE - 13
Program ID: N/A
Issuing Authority: Henry G. Williams, Commissioner
Originating Unit: Environmental Enforcement, Compliance Assurance Bureau
Signature: Henry G. Williams
Date: 24 June 1986
Issuance Date: 24 June 1986
Latest Review Date (Office Use):

Consistent with the Civil Penalty Policy; Order on Consent Enforcement Policy; Record of Compliance; Natural Resource Damages and Small Business Self-Disclosure Policy:

  1. The policies and procedures set out in this document are intended solely for the use and guidance of DEC personnel. They are not intended to create any substantive or procedural rights, enforceable by any party in administrative and judicial litigation with the State of New York. DEC reserves the right to act at variance with these policies and procedures.
  2. Any penalty calculations undertaken hereunder by DEC in anticipation of litigation are exempt from disclosure under the Freedom of Information Law.
  3. Pursuant to §4547 of the Civil Practice Law and Rules of the State of New York, all evidence or conduct of negotiations or settlement are inadmissible as evidence as proof of liability for or invalidity of the claim which is disputed as to either validity or amount of damages.
  4. The penalty amounts calculated with the aid of this document in adjudicated cases must, on the average and consistent with consideration of fairness, be significantly higher than the penalty amounts which DEC accepts in consent orders which are entered into voluntarily by respondents.

I. Purpose

This document establishes the policies and procedures which the Department of Environmental Conservation ("Department" or DEC) will follow in ensuring compliance with the New York State law and regulations which provide for the payment of Environmental Regulatory program fees.

II. Background

The regulatory fee program has its statutory basis in Environmental Conservation Law (ECL) Article 72. In enacting this law, the legislature made the following declaration of policy:

  1. Comprehensive environmental regulatory management programs are essential to protect New York State's environmental resources and the public health and welfare.
  2. Those regulated entities which use or have an impact on the state's environmental resources, should bear the cost of the regulatory provisions which permit the use of these resources in a manner consistent with the environmental, economic and social needs of the state.
  3. Regulatory fees are an appropriate mechanism to pay a portion of the costs of the Department's regulatory function and programs. Such fees should be borne by the state's regulated entities in order to further strengthen the state's capabilities to achieve its environmental quality objectives.
  4. The Department's regulatory programs and corresponding costs vary according to certain relevant technical criteria which shall be considered in determining adjustments to fees.

All persons (1) who require a permit or approval pursuant to a State environmental regulatory program, or who are subject to regulation under a State environmental regulatory program, must submit an annual fee to the Department, as required by ECL Article 72. There are four environmental regulatory programs involved:

  • air quality control,
  • hazardous waste,
  • waste transporter, and
  • the State Pollutant Discharge Elimination System (water pollution control).

Each regulated source, such as a factory, a sewage treatment plant or an industrial waste transporter, will be charged an annual fee if it emits pollutants into the air, discharges wastewater to ground or surface waters, generates, treats, stores, or disposes of Hazardous wastes, or transports industrial, commercial or other wastes.

A brief review of the statutes and regulations clearly demonstrates an intent to promote prompt payment of at least the uncontested portion of a regulatory program fee.

Enforcement of fee liability, interest and penalties is necessary to give full effect to the incentives built into these provisions.

The statute (ECL §72-0201 (4)) states that payment of regulatory program fees is due within 30 days of billing by the Department. "Billing" is defined by the regulations to mean the invoice date 6 NYCRR §481.3). If a regulated person does not pay by this due date, he must pay interest on any amount finally determined to be due, beginning 30 days after the date prescribed for payment, until it is finally paid to the Department (ECL §72-0201(6); 6 NYCRR §481.6). He must also pay interest on any unpaid penalty (6 NYCRR §481.6). The regulatory Fee Determination Unit will calculate the interest and add accrued interest to the invoice.

If a regulated person fails to pay the fee within 45 days of the due date, a penalty must be imposed. ECL §72-0201(5). The penalty is equal to 5 percent of the unpaid fee per month, up to 25 percent. 6 NYCRR §481.5. the regulatory Fee Determination Unit will assess the penalty and add the penalty amount to the invoice. An invoice, or other notice of a Penalty assessment, will also contain a notice of a regulated person's appeal rights. Such appeal rights must be exercised within 30 days of the receipt of the Department's notice.

Regarding appeal of the fee itself, the statute (ECL §72-0201 (8)) and the regulations (6 NYCRR §481.9) provide for an administrative review process. This process must be invoked in 30 business days of the date on the fee invoice. 6 NYCRR §481.9(c).

In summary, the penalty and interest provisions of the environmental regulatory fee are unlike most enforcement provisions of the ECL, where penalties are assessed after a hearing. The fee statute emphasizes prompt payment by providing for the accrual of interest 30 days from the due date; providing for the automatic assessment of penalties 45 days from the due date; and establishing the penalty in a form which, like interest, is a percentage of the unpaid amount.

III. Objectives

The overall objective of the regulatory fee program is the prompt and fair assessment and collection of regulatory program fees to pay a portion of the costs of the Department's regulatory functions and programs, and thus to enhance New York State's capability to achieve its environmental quality goals.

Detailed Discussion of Policy Objectives

  • Objective 1: Demand and, when necessary, compel Through the enforcement process, payment of appropriate regulatory program fee.

In establishing the regulatory program fees, the Legislature declared that regulatory programs are essential to protect New York State's environmental resources and the public health and Welfare. It further declared that regulated entities which use or impact on these resources should pay a portion of the costs of this necessary regulatory effort.

Most regulated entities or persons pay the fees promptly and willingly. However, some do not. To be fair to those who do pay, to collect all possible revenues, and to ensure compliance with the law, an enforcement effort is essential. The law provides for interest and penalties for late payment; the Department will use these provisions as the law requires, to make timely payment more attractive and less expensive than late payment or failure to pay.

These penalty and interest provisions and the short time period for seeking review, discussed under the "Background" section of this Guidance Memorandum, act as incentives for prompt consideration and prompt payment of the environmental regulatory program fees. However, a consistent enforcement process is necessary to deal with the regulated persons who, for one reason or another, neglect or refuse to pay. The following discussion outlines this process.

  1. The program divisions (Air, Water, and Solid and Hazardous waste) provide appropriate data to the Regulatory Program Fee Unit, from which the Unit, or its contractor, can compute the regulatory program fees for regulated persons.
  2. The Regulatory Fee Determination Unit mails fee invoices to regulated persons. A form notice concerning the person's rights to administrative review of fee determinations (described in paragraph 4) is included in all invoices.
  3. Where the fee is not paid in a timely manner, and is not-challenged or the challenge is completed, the Regulatory Fee Determination Unit revises the invoice to add penalty and interest charges, as required by law, and mails a copy of the revised invoice to the regulated person.
  4. Regulatory program fee determinations may be challenged by following procedures in DEC regulations (6 NYCRR §§481.5 and 481.9) which allow for written recalculation requests to revise the initial determination, for petitions for declaratory rulings concerning the applicability to any person of ECL Article 72 or of DEC regulations on program fees (6 NYCRR Parts 480-485), for conferences with Departmental representatives, and for hearings to be conducted by the Department on disputed fees, pursuant to 6 NYCRR §481.10, and for redetermination of penalties, pursuant to 6 NYCRR §481.5.
  5. The following procedures apply to those persons who either fail to respond to their invoices, or who challenge the initial invoice for fees, as described above, and then fail to pay any fee which is still owed after the completion of administrative and/or judicial Review, or after the time for such review has passed. Following the passage of a reasonable period of time to allow for voluntary compliance (usually 60 days), and after verification that the fee is appropriate and accurate, the Department will take the actions described below.
    1. The Regulatory Program Fee Attorney will sign and send, return receipt requested, an attorney's demand letter. If there is no response to this letter within 30 days, the General Counsel will Refer the matter to the appropriate DEC attorney for the commencement of an administrative enforcement action pursuant to the Uniform Enforcement Hearing Procedures (6 NYCRR Part 622(2)). The minimum relief sought should be the payment of the fee, penalty and interest. Possible additional sanctions are based upon the following ECL provisions:
      • Any person who violates any of the provisions of Article 72 of this chapter or the regulations promulgated thereunder shall be liable for a civil penalty of up to one thousand dollars, in addition to any amount assessed as a penalty pursuant to subdivision five of section 72-0201 of this chapter. §71-4103.

        In the event that a person fails to pay any fee as finally determined, such determination to be final when all administrative and judicial appeals thereof, if any, have been completed, the Department may suspend, until the fee is paid, the permit, certificate, or approval for the activity which is subject to that fee.

    2. If there is still no payment after the administrative enforcement action, the Department's General Counsel will refer the matter to the Department of Law for further handling, including collection of the original fee, penalty, additional civil penalty under ECL §71-4103 (if assessed), and ensuring compliance with the suspension of the permit, certificate or approval involved (if so ordered).
  6. In the case of regulated persons who file petitions under the federal Bankruptcy Law, indicating that they have filed for bankruptcy, the Regulatory Program Fee Unit will either file claims for the fees in the bankruptcy courts or refer the matter to the Department of Law for such further action as is deemed appropriate to recover the fee.
  • Objective 2: Coordinate fee enforcement with other enforcement efforts, and with fee data base managers.

It is important to include fee liability in planning a comprehensive enforcement strategy regarding a regulated person, or a group of them. For example, a hearing or enforcement conference covering effluent limit violations of a SPDES permit, should also include consideration of current regulatory fee liability. Similarly, a hearing or enforcement conference convened to consider fee liability should also deal with minor SPDES violations.

Such enforcement efforts may result in explanations or justifications from regulated persons which in turn may point up inaccuracies or omissions in the data base of the Department. Coordination with the data base managers and transmittal of this information to them, will ensure that the data base is properly updated. This will, in turn, ensure more accurate invoices. It will also improve the accuracy of other statistical and reporting requirements of the Department.

  • Objective 3: Establish an enforcement presence in the minds of the regulated community so that noncompliance is deterred and so that the obligation to pay is perceived as fair and applicable to all.

It is not possible, with existing enforcement resources, to address every case of non-response or non-payment simultaneously. An order or priority of enforcement effort is required. Such order should give highest priority to compliance by the most significant violators, i.e., those who owe the Department the largest fees, for several reasons. First, such a priority should return the most fee revenue to the public purse for the least expenditure of staff time. Second, dealing with the most significant violators first, should create a maximum of awareness within the regulated community that the Department intends enforce the fee statute vigorously and thoroughly. Third, by initially addressing all significant violators over a given fee liability threshold, a consistent approach is taken across the State.

An appropriate initial threshold level for enforcement is a fee obligation of $500 or more to the Department. This obligation may have been fixed through a failure to respond to an invoice within the prescribed time period, or through the administrative review process. It is anticipated that the number of highest priority violators will be fewer than 100.

After enforcement of this priority, the Department will bring enforcement actions against all others with a fee liability under $500, proceeding against them as a group.

IV. Development of an Annual Enforcement Workplan

The Director of Fiscal Management, Supervisor of the Regulatory Program Fee Unit, Director, Division of Legal Affairs and the Regulatory Program Fee Attorney, shall review statistics concerning unpaid fees periodically. They shall develop a plan annually for enforcement of unpaid fees, taking into account past program experience, agency personnel available, other resource constraints, and estimates of future noncompliance.

V. Organization/Procedures

The following list is not all-inclusive of the many Department employees and officers whose assistance and expertise are important to the proper execution of this important enforcement program. However, the list attempts generally to outline and divide responsibilities for the proper functioning of the program.

  1. Director of Fiscal Management

    The Director of Fiscal Management is responsible for supervision of the Supervisor, Regulatory Fee Determination Unit, and is designated to evaluate and take action on requests to reduce or rescind assessed penalties except where the party has requested a hearing.

  2. Supervisor, Regulatory Fee Determination unit

    The Supervisor, Regulatory Fee Determination Unit is directly responsible for the day-to-day functioning of all aspects of this unit. This includes the assignment of all staff, the establishment of priorities, coordination with other Department units, and contact with other State agencies, corporations and businesses in the establishment of regulatory fees. The Supervisor is also responsible for drafting periodic and annual reports, coordinating the collection of revenues and directing the work of the Department's fee billing EDP consultant.

  3. General Counsel

    The General Counsel, as the agency's chief legal officer, is responsible for oversight and direction of all aspects of the Department's efforts to insure compliance with the Environmental Conservation Law and DEC regulations pertaining to environmental regulatory program fees.

  4. Program Division Directors

    Program Division Directors are responsible, through their staff designees, for providing fee liability and billing data to the regulatory Fee Determination Unit, for reviewing and acting on fee recalculation requests and challenges, and for providing testimony and documentation as to fee liability in connection with referrals for legal action to Regional Attorneys or the Department of law.

  5. Program Attorney, Environmental Regulatory Program fees

    The program attorney for environmental regulatory program fees is responsible for providing legal advice to personnel of the regulatory Fee Determination Unit, the Division of Fiscal management, DEC program attorneys, and program personnel in connection with generic regulatory fee issues, and coordination with program attorneys on program-specific issues, including those Arising in fee challenges and in disputes as to penalty assessments; for representing DEC regulatory fee staff at administrative hearings involving generic regulatory fee issues; for assisting in the development of the informal annual plan for ensuring compliance with the ECL and DEC regulations as to unpaid regulatory fees; and for coordinating the preparation and review of referrals for legal action by Regional Attorneys or the Department of Law.

  6. Director, Division of Legal Affairs

    The Director of the Division of Legal Affairs is responsible for Final review, and approval for referral for legal action of all regulatory program fee enforcement cases, for coordination with the Director of Environmental Enforcement when the enforcement effort will address violations of other articles of the ECL, and for review of the annual plan for ensuring compliance with the ECL with respect to unpaid regulatory fees.

  7. Program Attorneys and Regional Attorneys

    Program attorneys are responsible for providing advice to the Regulatory Program Fee Attorney and to the program divisions in connection with fee challenges involving program-specific issues; in appropriate cases, for representing program division staff in enforcement or fee challenge hearings involving issues which affect the program across the state, and involve technical interpretations of and policy positions on the program's statute and regulations; and, in consultation with the Regulatory Program Fee Attorney, for review of referrals for legal action to an Enforcement Attorney or the Department of Law.

    Enforcement Attorneys, including Regional Attorneys, are responsible for preparing and presenting administrative enforcement actions for violations of ECL Article 72 and DEC regulations pertaining to environmental regulatory program fees. Regional Attorneys will generally be assigned Enforcement hearings or fee challenge hearings involving local or site-specific issues and involving testimony from regional staff witnesses.

New York State Department of Environmental Conservation

Henry G. Williams
Commissioner

DATED: Albany, New York

June 24, 1986

1. "Person" is a term defined in 6 NYCRR §480.2(bb) to include both natural and artificial persons, including units of government.

2. All referrals to an enforcement attorney should include:

  1. a notice of hearing and notice of motion for summary order (alleging violations of the relevant sections of ECL Article 72 and 6 NYCRR Parts 480-485);
  2. appropriate affidavits of the basis of fee liability and of the billings and amount of fee liability with supporting documentation, including copies of invoices showing the billing history and demand for payment letters;
  3. review and approval by the program attorney for consistency with prior legal advice and with relevant statutes, regulations, declaratory rulings and judicial decisions.

The supporting documentation for the affidavit of the basis of fee liability must be supplied by the program division.

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