ELR Citation: ELR 21405
No(s). s. 89-CV-194 et al (N.D.N.Y. Apr 26, 1994)

The court holds that regulatory fees assessed by the New York State Department of Environmental Conservation (NYDEC) against the U.S. Department of Energy (DOE) as a generator and transporter of hazardous waste and as a wastewater discharger do not constitute an impermissible state tax on the federal government. The amount of the fees varies in relation to the size of the facility or the amount of waste at issue, rather than on the particular services the NYDEC renders to DOE's facilities. In an earlier decision, the court had held that the charges were not unreasonable in light of the services rendered and that they satisfied two of the three prongs of the U.S. Supreme Court's test in Massachusetts v. United States, 435 U.S. 444 (1978), for determining that state fees are not impermissible taxes. The court had held that the fees did not discriminate against federal functions and were structured to produce revenues that will not exceed the state's total costs of supplying the benefits conferred on the facilities.

Addressing the final prong of the Massachusetts test, whether the charges are based on a fair approximation of the use of the regulatory system, the court first holds that a comparison of the cost of the services rendered to the fees assessed is not dispositive. The fact that the cost of the specific services actually rendered to the facilities is less than the fees the state charges them does not make the charges unreasonable, because the facilities also benefit in the sense that additional specific services are available for the facilities' use should they be needed. The court next holds that affidavits explaining why similarly classified entities are required to pay fees based on the relative size of their waste or water-related operations are sufficient to withstand DOE's motion for summary judgment. The affidavits are not mere generalizations and conclusory allegations, but provide explanation for the reasons the larger entities require more of the NYDEC's services and are thus charged higher fees. The court holds that Massachusetts does not require an exact correlation between the costs of the overall services provided and the fees assessed, nor that there be a 1:1 relationship between a particular entity's actual use of the services and the cost of providing services to that entity. The test for fair approximation of use requires only a rational relationship between the method used to calculate the fees and the benefits available to those who pay them. The court holds that the regulatory charges meet all three prongs of the Massachusetts test and constitute reasonable fees, not tax-like exactions. Thus, the United States waived its immunity under the Federal Water Pollution Control Act and the Resource Conservation and Recovery Act from imposition of the fees and is liable for payment.

Counsel for Plaintiffs
G. Oliver Koppell, Ass't Attorney General
Attorney General's Office
New York State Department of Law
The Capitol, Albany NY 12224
(518) 474-7124

Counsel for Defendants
David M. Thompson
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000