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April 22, 1994

NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION and THOMAS C. JORLING, as Commissioner of the New York State Department of Environmental Conservation, Plaintiffs,
UNITED STATES DEPARTMENT OF ENERGY and JOHN S. HERRINGTON, as Secretary of the United States Department of Energy; UNITED STATES DEPARTMENT OF TRANSPORTATION, UNITED STATES COAST GUARD, JAMES BURNLEY IV, as Secretary of the United States Department of Transportation, and ADMIRAL PAUL A. YOST, as Commandant of the United States Coast Guard; UNITED STATES DEPARTMENT OF THE ARMY and JOHN O. MARSH, JR., as Secretary of the United States Department of the Army; and UNITED STATES DEPARTMENT OF THE AIR FORCE and EDWARD C. ALDRIDGE, JR., as Secretary of the United States Department of the Air Force, Defendants.


The opinion of the court was delivered by: NEAL P. MCCURN



 In January 1989, the New York State Department of Environmental Conservation ("NYDEC") commenced these four consolidated actions in New York State Supreme Court against the United States Department of Energy ("United States") as representative of ten federal facilities located in New York State which have been underpaying certain regulatory charges assessed against them by NYDEC. *fn1" On February 17, 1989, the United States filed a notice of removal of these actions to this court. In its original complaint, NYDEC sought a judgment declaring that the United States is required to pay NYDEC certain past due fees totalling approximately $ 1,000,000 as well as accrued interest on this sum. Additionally, NYDEC sought a declaration that the United States may no longer withhold payment of such charges to NYDEC. In its answer, the United States asserted a counterclaim against NYDEC which sought a refund of approximately $ 400,000 plus interest for payments made by the United States to NYDEC regarding the regulatory fees charged by NYDEC.

 On April 10, 1991, the parties filed cross-motions for summary judgment. In a decision dated August 13, 1991, this court granted in part and denied in part both motions. See New York State Dep't of Envtl. Conservation v. United States Dep't of Energy, 772 F. Supp. 91 (N.D.N.Y. 1991) ("NYDEC") (McCurn, C.J.). On May 6, 1992, the court held a status conference. At that conference, the court gave NYDEC approximately three months to serve new affidavits and gave the United States approximately three months after that to depose the affiants. After some delay, NYDEC served the new affidavits in late January 1993 and depositions were conducted in early May 1993. The court held another status conference on December 29, 1993. At that conference, both parties stated that they believed this matter could be disposed of as a matter of law. Therefore, the court directed the parties, to bring cross-motions for summary judgment addressing the remaining issues in this case. The court heard oral argument on these motions on March 29, 1994. The following constitutes the court's findings of fact and conclusions of law with respect to the issues raised.


 In order to place the issue presented by these motions in the proper context, it is necessary to review, in some detail, the parties' claims and the court's previous decision in this matter. Pursuant to New York Environmental Conservation Law ("NYECL"), hazardous waste generators and the operators of such facilities, subject to Titles 3, 7, 9 or 11 of NYECL Article 27, are required to pay the fees set forth in NYECL § 72-0402. Likewise, waste transporters, subject to the permit requirements detailed in Title 3 of NYECL, Article 27, are required to pay the annual charges set out in NYECL § 72-0502 (hereinafter these two fees will be referred to collectively as "waste regulatory charges"). Finally, operators of waste water facilities, subject to regulation under Titles 7 or 8 of NYECL, Article 17, are required to pay the annual fees detailed in NYECL § 72-0602 ("water regulatory charges"). All of these regulations became effective on April 1, 1983.

 The amount of these regulatory charges varies in relation to the particular size or quantity of the facilities' operations (e.g., gallons, pounds, vehicles) rather than upon the particular services rendered to such facilities by NYDEC. Over the past several years, these fees have increased in amount, and the State has placed the amounts collected from these regulatory charges in various funds.

 Beginning in 1985, the rates for waste regulatory charges were statutorily doubled from the 1983 and 1984 levels. In 1983 and 1984, the State deposited all waste regulatory charges received into New York's general revenue fund. From 1985 through 1988, half of the receipts collected by these fees were placed in the State's general revenue fund and the other half were deposited into a special hazardous waste remedial fund -- New York's environmental superfund. Since 1989, half of these funds have been deposited in New York's environmental superfund and the other half have been deposited into the State's special enforcement fund.

 In 1989, the water regulatory charges were more than doubled from the 1983 through 1988 levels. From 1983 until 1989, the State deposited the moneys received from its water regulatory charges into its general revenue fund. Since that time, however, the State has deposited these assessments into a special environmental enforcement fund.

 In support of its original summary judgment motion, the United States argued that the charges sought by NYDEC constituted a constitutionally impermissible tax for which it was not liable pursuant to the doctrine of sovereign immunity. Alternatively, the United States claimed that the charges were unreasonable in light of the services rendered to the federal facilities. NYDEC countered with the assertion that the Clean Water Act ("CWA"), 33 U.S.C. § 1323, and the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6961, constituted blanket waivers of the United States' sovereign immunity with respect to these regulatory fees because such fees constituted requirements with which the United States must comply pursuant to these statutes. *fn3"

the court must determine whether (i) the federal statutes at issue constitute a waiver of the United States' sovereign immunity from State-assessed taxes and if not, whether the regulatory charges sought by the NYDEC are (ii) impermissible taxes assessed against the United States or (iii) unreasonable regulatory charges for which the defendant is not liable.

 NYDEC, 772 F. Supp. at 96.

 With respect to the first issue, the court stated that

"waivers of immunity must be 'construed strictly in favor of the sovereign,' . . . and not 'enlarged . . . beyond what the language requires.'" Ruckelshaus v. Sierra Club, 463 U.S. 680, 685, 103 S. Ct. 3274, 3278, 77 L. Ed. 2d 938 (1983) (citations omitted). Moreover, "[a] waiver of sovereign immunity 'cannot be implied but must be unequivocally expressed.'" Mitchell, 445 U.S. 535, 538, 100 S. Ct. at 1351, 63 L. Ed. 2d 607 (quoting United States v. King, 395 U.S. 1, 4, 89 S. Ct. 1501, 1503, 23 L. Ed. 2d 52 (1969)).

 772 F. Supp. at 97.

 After carefully reviewing the decisions of other courts that had considered the scope and breadth of the waivers contained in the CWA and the RCRA, this court held that

both of these statutes direct the United States to comply with all state requirements relating to the acquisition of environmental permits, emission standards imposed on facilities, and other related state pollution regulations. However, these statutes are not blanket waivers of the United States' sovereign immunity from the imposition and assessment of taxes by a State. Indeed, the pertinent portions of these statutes never even mention the word "taxes" when referring to the obligations of the United States. Congress has specifically subjected the federal government to the payment of the state taxes in prior statutes, including one environmental statute. It has not done so here.

 Id. at 98 (emphasis added).

 Based upon this conclusion, the court rejected NYDEC's argument that the CWA and the RCRA constituted unlimited waivers of the United States' sovereign immunity from taxes and other assessments. NYDEC, 772 F. Supp. at 98; see also State of Maine v. Department of Navy, 973 F.2d 1007, 1012 (1st Cir. 1992) (United States' waiver of sovereign immunity under the RCRA extends only to reasonable fees).

 The court then went on to discuss the second issue -- whether these regulatory charges constituted impermissible taxes from which the United States was immune or reasonable regulatory charges for which the United States was liable. Id. at 98-99. In making this determination, the parties and the court agreed that the proper test was the one set forth in Massachusetts v. United States, 435 U.S. 444, 98 S. Ct. 1153, 55 L. Ed. 2d 403 (1978). Paraphrasing the Massachusetts court, this court stated that

[The Federal Government] can have no constitutional objection to a revenue measure that satisfies the three-prong test of Evansville-Vanderburgh Airport Authority v. Delta Airlines, Inc., [405 U.S. 707, 92 S. Ct. 1349, 31 L. Ed. 2d 620 (1972)]. . . . So long as [(1)] the charges do not discriminate against [Federal] functions, [(2)] are based on a fair approximation of use of the system, and [(3)] are structured to produce revenues that will not exceed the total cost to the [State] Government of the benefits to be supplied, there can be no substantial basis for a claim that the [State] Government will be using its taxing powers to control, unduly interfere with, or destroy [the United States'] ability to perform essential services.

 Id. at 99 (quoting Massachusetts, 435 U.S. at 466-67, 98 S. Ct. at 1167, 55 L. Ed. 2d 403).

 With respect to the second prong of the test; i.e., that the fees are based upon a fair approximation of the use of the system, the United States argued that because NYDEC's method of assessing the fees was based upon the size or quantity of a facility's operations and not upon the services afforded to that facility by NYDEC, the charges were presumptively invalid. See NYDEC, 772 F. Supp. at 99. To the contrary, NYDEC asserted, and the court agreed, that the United States' argument was based upon a misinterpretation and incorrect application of the second prong of the test. See id. In this regard, the court stated that

the Massachusetts Court made clear that the relevant inquiry regarding the second prong is not whether the charges assessed by a State exceed the specific services rendered to a facility by the government. Rather, this prong relates to the overall benefits a facility receives from the government's services. In fact, the Supreme Court noted that this portion of the test is not ...

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