Opinion
August 2, 1985
Harris, Beach, Wilcox, Rubin Levey ( Alan J. Knauf of counsel), for petitioner.
Robert Abrams, Attorney-General ( Betsy Broder of counsel), for respondents.
These are two motions by the petitioner which will be considered in one opinion by this court. The first motion is for an order granting leave to petitioner to serve its proposed second amended petition pursuant to CPLR 3025 (b).
The proposed amendments involve no surprise and the respondents are not prejudiced by allowing the proposed amendments. Leave to amend should be freely given especially where there is no prejudice to the opposing party.
The motion for leave to serve a second amended petition is granted.
The petitioner's second motion is for a judgment pursuant to CPLR article 78: (1) reversing the determination of the New York State Department of Taxation and Finance, dated November 28, 1984, and the determination of the New York State Department of Environmental Conservation (DEC), dated March 15, 1985, denying petitioner's requests for refunds of special assessments paid on its alleged generation, treatment or disposal of hazardous waste; (2) directing respondents to pay those refunds in the amount of $77,404.22; (3) directing respondents to cancel assessments of additional hazardous waste taxes of $20,524.34 and not to assess petitioner with any further hazardous waste taxes for "lime stabilized waste pickle liquor sludge" (LSWPLS); and (4) granting a declaratory judgment determining that LSWPLS never was a hazardous waste.
Petitioner operates specialty steel plants in Dunkirk and Watervliet, New York. As part of its steel finishing process, it produces a waste known as "spent pickle liquor" which has been listed as a hazardous waste from a specific source by the United States Environmental Protection Agency (EPA). The spent pickle liquor is neutralized in a treatment facility, producing two end products — waste water and LSWPLS.
EPA regulations also formerly listed LSWPLS as a hazardous waste from a specific source. However, on November 12, 1980, EPA removed LSWPLS from the list of hazardous wastes in the Federal regulations but, because LSWPLS is the sludge from a hazardous waste (spent pickle liquor), it was technically classified as a hazardous waste under the Federal regulations even if it is not specifically listed as hazardous.
Petitioner filed petitions with EPA in the spring of 1981 to delist the LSWPLS it produces at each plant from being classified as a hazardous waste pursuant to the delisting procedures set forth in the Federal regulations. On June 5, 1984, EPA adopted a final regulation, effective December 5, 1984, which specifically excluded LSWPLS generated by the iron and steel industry from being defined as a hazardous waste.
The DEC also adopted regulations identifying hazardous wastes. The State regulations, like the Federal, provide that the sludge from a hazardous waste is hazardous. Therefore, DEC formerly considered LSWPLS a hazardous waste under its regulations. Following the June 1984 EPA delisting, DEC changed its position and no longer considered LSWPLS hazardous after December 4, 1984.
As DEC classified LSWPLS as hazardous when the hazardous waste tax went into effect on September 1, 1982, the petitioner paid the tax on its generation and disposal of LSWPLS for each quarter from September 1, 1982 to August 31, 1984, and attached a statement that it was paying the tax under protest.
Petitioner did not include the LSWPLS it generated after June 5, 1984 in the total of hazardous wastes it reported on its tax forms it filed for the second, third and fourth quarters of 1984. In September of 1984, it filed an amended tax form for each of its plants for each quarter from September 1, 1982 to August 31, 1984. In those amended forms, the petitioner deleted all quantities of LSWPLS which it disposed of or generated and requested refunds of taxes paid in the amounts of $4,392 for the Watervliet plant and $73,122.22 for the Dunkirk plant.
The State Tax Department denied those requests for refunds and assessed additional taxes for the Dunkirk plant. The instant article 78 proceeding was then instituted by petitioner.
The petitioner contends that the hazardous waste tax does not apply to LSWPLS because it never was a hazardous waste, and further, that DEC has failed to ever promulgate a valid list of hazardous wastes as part of its regulations and, therefore, if spent pickle liquor was never listed as a hazardous waste in New York, LSWPLS, which is the sludge from spent pickle liquor, never was a hazardous waste and no tax was ever due for its generation.
This court must agree with the contentions of the petitioner. The New York State list of hazardous wastes was invalidly promulgated at least until February 1, 1984. In People v Harris Corp. ( 104 App. Div. 130, 133), the Appellate Division, Third Department, held that the original incorporation by reference of the Federal lists of hazardous wastes in the January 8, 1982 State regulations "not only defies the plain language of section 8 of article IV of the State Constitution, but its purpose as well, which, as the Court of Appeals observed in Matter of New York State Coalition [ 60 N.Y.2d 789] is 'to insure the existence of a common and definite place where the exact content of rules and regulations, including any changes, might be found.'" Furthermore, the Harris case ( supra) held that the subsequent filing of the Federal list of hazardous wastes on December 23, 1982 violated the State Administrative Procedure Act since the inadequate notice of the exact contents of the regulations, which was what occasioned its effectiveness, also invalidated its promulgation.
DEC's latest effort to promulgate the list of hazardous wastes on February 1, 1984 was also defective. A hearing was never held on this new regulation as is required by the ECL 70-0107 (1).
DEC has never successfully promulgated a list of hazardous wastes in New York State and, as LSWPLS does not have the characteristics of a hazardous waste; is not listed as a hazardous waste; and is not the sludge from a listed waste, it is not a hazardous waste and the hazardous waste tax has never applied to the sludge.
The petition is in all respects granted.