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 gives local governments broad police power to enact local laws promoting health, safety, and welfare. The Court of Appeals has repeatedly recognized that grant as broad (citing People v Cook and New York State Club Association v City of New York). Excavation regulation, focused on protecting real property, watercourses, soils, and environmental health, fits squarely within that authority.

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)).

City of Buffalo v Stevenson is the classic case for the fee/tax distinction; Jewish Reconstructionist Synagogue v Roslyn Harbor is the cleanest modern articulation: "the amount charged must approximate the cost of the program." A program-related fee at cost is a lawful exercise of the regulatory power; a revenue-generating charge above cost is an unlawful tax.

So the town can do what it wants, with the fee structure tied to program cost recovery, not to a general budget contribution.

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 opinion uses "approximate" and "reasonably related." Courts have generally tolerated some buffer (a small surplus to fund startup costs or unexpected demand). A fee that doubles or triples program cost is a tax. A fee that recovers cost plus modest contingency is usually safe.

What counts as "program cost"?

Salaries of inspectors, equipment, training, plan review time, lab analysis of fill samples, enforcement actions, administrative overhead reasonably attributable to the program. General municipal overhead (mayor's salary, generic operations) is harder to defend as program cost.

Can the town include a fund for future enforcement expenses?

Yes, within reason. Reasonable reserves for known cyclical costs are generally allowed. A "reserve" that effectively subsidizes the general fund is not.

What happens if the fee structure later drifts above cost?

The legal status of the charge shifts. A challenger can sue claiming the fee has become an unauthorized tax. The remedy is typically refund of the over-collected portion plus injunctive relief against future overcollection. Towns should audit fee structures periodically.

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

Yes, the same fee-must-equal-cost analysis applies across municipal regulatory fees. Building permits, sewer connection fees, site plan review fees, and similar charges all face the same constraint.

Background and statutory framework

Municipal Home Rule Law § 10 is the statutory grant of local lawmaking authority that implements Article 9 of the State Constitution. Subdivision (1)(ii)(a)(12) is the broad police power provision; (9-a) covers fees; (9) covers the limited municipal taxation authority. The structure deliberately separates regulatory fees from taxes, and the AG's opinion reinforces that line.

The fee/tax distinction in New York has a long lineage. City of Buffalo v Stevenson (1913) established the principle. Jewish Reconstructionist Synagogue v Roslyn Harbor (1976) is the modern formulation. The Court of Appeals' continuing supervision of municipal fee schemes keeps the doctrine fresh.

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