Can a New York town pass a local law that regulates land excavation and charges applicants a fee to fund the inspection program?

Plain-English summary

The Town of Smithtown wanted to enact a local law regulating excavation and reclamation of land. The program would require plan review, soil testing of fill material, ongoing site inspection during construction, stop-work orders and summonses for noncompliance, and fees charged to applicants to fund the regulatory program. The town attorney asked the AG whether the town had authority to do this.

The AG said yes, with one important constraint on the fee.

Authority to regulate flows from Municipal Home Rule Law § 10(1)(ii)(a)(12), which the AG described as a broad grant of police power to protect the health, safety, and well-being of persons and property. The proposed excavation and reclamation rules would protect real property and the environment.

Authority to charge fees comes from Municipal Home Rule Law § 10(1)(ii)(a)(9-a), which authorizes local laws establishing rentals, charges, rates, or fees for town property and programs. Together with the police power authority, this gives Smithtown a clear path: enact the regulatory program AND fund it through fees on regulated parties.

The constraint is the fee-versus-tax distinction. A municipal fee must approximate the cost of the regulatory program it funds. If the fee far exceeds program cost, or if revenue is used for purposes unrelated to the program, the charge becomes a tax. New York municipalities cannot impose a tax without specific State legislative authorization (NY Const., art. XVI, § 1; Municipal Home Rule Law § 10(1)(ii)(a)(9)).

The AG cited City of Buffalo v Stevenson and Jewish Recon. Etc. v Inc. Village of Roslyn Harbor for the fee-versus-tax distinction: "The amount charged must approximate the cost of the program." It called a fee far exceeding program cost or used for unrelated general revenue an unlawful tax.

The AG concluded that Smithtown could establish fees reasonably related to the cost of its proposed regulatory program.

Currency note

This opinion was issued in 1999. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

How close to cost does the fee have to be?

The AG said the amount charged must approximate program cost and concluded Smithtown's fees must be reasonably related to that cost. It supplied no percentage, multiplier, or allowance for a surplus. It described a fee "far exceeding" cost as an unlawful tax.

What counts as "program cost"?

The proposed program included plan review, inspection and testing, supervision of ongoing projects, and enforcement. The opinion does not itemize which expenses a town may count in calculating its fees.

Can the town include a fund for future enforcement expenses?

The opinion does not address reserves for future expenses. It requires fees to approximate the regulatory program's cost and says money used for unrelated purposes as general revenue is an unlawful tax.

What happens if the fee structure later drifts above cost?

The AG did not address later changes to the fee structure or remedies. Its stated rule is that a fee far exceeding program cost, or used for unrelated general revenue, is an unlawful tax.

Does this rule apply to building permits and other inspection fees?

The opinion concerns Smithtown's proposed excavation and reclamation program. It says generally that a local government may impose a fee to pay the expense of a regulatory program, but does not analyze building permits or other specific fees.

Background and statutory framework

The AG cited Municipal Home Rule Law § 10(1)(ii)(a)(12) for local laws promoting health, safety, and well-being; § 10(1)(ii)(a)(9-a) for program fees; and § 10(1)(ii)(a)(9) in explaining that a tax requires specific legislative authorization.

The opinion cites City of Buffalo v Stevenson for the fee-versus-tax distinction and Jewish Recon. Etc. v Inc. Village of Roslyn Harbor for the requirement that the amount charged approximate program cost.

NY Const., art. XVI, § 1 is the constitutional source of the prohibition on unauthorized municipal taxation. Municipalities can tax only when the Legislature has specifically delegated the taxing power.

Citations

• NY Const., art. XVI, § 1 (no municipal tax without legislative delegation).
• Municipal Home Rule Law § 10(1)(ii)(a)(9) (limited municipal taxing power).
• Municipal Home Rule Law § 10(1)(ii)(a)(9-a) (authority to set rates, fees, charges for programs).
• Municipal Home Rule Law § 10(1)(ii)(a)(12) (broad police power for health, safety, welfare).
• New York State Club Association, Inc. v City of New York, 69 NY2d 211 (1987) (broad municipal police power).
• People v Cook, 34 NY2d 100 (1974) (police power scope).
• City of Buffalo v Stevenson, 207 NY 258 (1913) (foundational fee/tax distinction).
• Jewish Recon. Etc. v Inc. Village of Roslyn Harbor, 40 NY2d 158 (1976) (modern formulation; fee must approximate program cost).
• Op Atty Gen (Inf) No. 91-52 (municipal regulatory fee authority).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/I_99-43_pw.pdf

Original opinion text

Opn. No. 99-43
NY CONST, ART XVI, § 1; MUNICIPAL HOME RULE LAW § 10(1)(ii)(a)(9-a) and (12). A town may regulate the excavation and reclamation of land and establish fees that are reasonably related to the cost of a regulatory program. December 31, 1999 Richard M. Harris, Esq. Assistant Town Attorney Town of Smithtown P. O. Box 575 Smithtown, NY 11787

Informal Opinion
No. 99-43

Dear Mr. Harris:
You have asked whether a town may enact a local law regulating the excavation and reclamation of land and imposing a fee on applicants to fund the regulatory program. You have described the elements of the program as follows. The local law would require review of plans and inspection of sites where excavation or reclamation of land is proposed. Prior to use, fill material would be inspected and tested by the town's engineering department. Ongoing projects would be supervised to ensure compliance with town regulations. Stop-work orders and summonses could be issued to enforce the town's regulations. The local law would impose fees on persons subject to the regulations to fund the costs of regulation and enforcement. The proposed regulatory program is authorized. Local governments may enact local laws to promote the health, safety and well-being of persons and property within their boundaries. See Municipal Home Rule Law § 10(1)(ii)(a)(12). This is a broad grant of police power to local governments. New York State Club Association, Inc. v City of New York, 69 NY2d 211 (1987); People v Cook, 34 NY2d 100, 105 (1974). Local governments may enact local laws establishing rentals, charges, rates or fees for town property and programs. Id., § 10(1)(ii)(a)(9-a). The proposed regulations are an exercise of police power to protect real property and the environment. Establishment of fees payable by applicants to fund the program also is authorized. Therefore, the proposed local law falls within the town's grant of home rule power. As we concluded in Op Atty Gen (Inf) No. 91-52, a local government may impose a fee to pay the expense of a regulatory program. See City of Buffalo v Stevenson, 207 NY 258 (1913). The authority to impose fees, however, is not unlimited. The amount charged must approximate the cost of the program. Jewish Recon. Etc. v Inc. Village of Roslyn Harbor, 40 NY2d 158, 163 (1976). A fee far exceeding the cost of a regulatory program or that is used for purposes unrelated to a program as a general revenue-raising device is an unlawful tax. City of Buffalo v Stevenson, supra. It is well established that a local government may not impose a tax without a specific delegation of taxing power by the State Legislature. See NY Const, Art XVI, § 1; Municipal Home Rule Law § 10(1)(ii)(a)(9).

Therefore, your town may regulate the excavation and reclamation of land and establish fees that are reasonably related to the cost of the regulatory program. The Attorney General renders formal opinions only to officers and departments of State government. This perforce is an informal and unofficial expression of the views of this office. Very truly yours, JAMES D. COLE Assistant Solicitor General In Charge of Opinions