Beware of Phantom Regulations

I recently worked on a matter in which we thought we had worked out an innovative solution to an environmental problem, only to be told by the agency’s project manager — regulations do not permit that.  The client’s consultants started to work on a different solution, but we pressed the issue of “what regulations?”   It took several weeks to find the right agency attorney to inform the project manager that he was mistaken about the regulations. This highlights the fact that technical staff at agencies and environmental consultants sometimes provide advice regarding environmental regulation, when their expertise is facts, not laws.  In this case, allowing the “fact” people to determine legality could have cost the client significant amounts of money.  It may even have been worse than permitting the lawyers to determine the facts. 

The problem of phantom regulations should be carefully distinguished from its equally dangerous cousin, an agency’s overbroad interpretation of the regulations.  In such cases, the project manager informs the consultant that the regulations require or prohibit something and the attorneys for the regulated party know the regulation at question and disagree.  In such cases, the attorney for the agency will not correct the mistake, because he or she believes that is the correct interpretation.  It is important to keep in mind that if the issue goes to court, the agency’s official policy, its standard interpretation if its regulation, is entitled to no deference by a courtLighthouse Pointe Property Associates, Inc. v. New York State Department of Environmental Conservation, 14 NY3d 161 (2010). 

The New York State Department of Environmental Conservation has layers of policy and guidance which it treats as law.  Whether referred to as Commissioners Policies (the CP series is published on the DEC website) or given an acronym such as TAGM (Technical and Administrative Guidance Memoranda) or STARS (Spill Technology and Remediation Series), these documents have generally not gone through the regulatory process required to become regulation and are therefore not the law.   Such documents are helpful in understanding what the State thinks the law is.  They are helpful in understanding what the State wants people to do.  They are not, however, legally binding on anyone. 

The point of this post is not to encourage the regulated community to disregard guidance from regulatory agencies that is not in a statute or regulation.  It is often wise to follow such guidance.  The point is that one needs to be able to distinguish between what the State thinks or says the regulations require from what the regulations require.  Sometimes that distinction affect millions of dollars of remedial or compliance costs.

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