February 3, 2010

Executive Committee
Watershed Protection and Partnership Council
2 John Walsh Boulevard
Suite 206
Peekskill, NY 10566

William C. Harding
Executive Director
Watershed Protection and Partnership Council
2 John Walsh Boulevard
Suite 206
Peekskill, NY 10566

Re: Memorandum of Agreement – Section 177 – Mediation of Future

Disputes

Dear Mr. Harding and WPPC Executive Committee:

This letter is being submitted on behalf of the Delaware County Board

of Supervisors as notification under Section 177 of the Memorandum of
Agreement (“MOA”) of a dispute between the signatories of the MOA. It
relates to a new regulatory program that was created by the Attorney
General Offices for the management of excess pharmaceuticals at health
care facilities and residential facilities in the New York City Watershed.

Background:

Delaware County supports the objective of eliminating excess

pharmaceuticals from the solid waste stream. Delaware County owns and
operates a solid waste landfill and the only municipal solid waste compost
facility in New York State. The solid waste facility is funded by sale tax and,
with some exceptions, does not charge a tipping fee for residential and
commercial waste generated within the county. Delaware County would
prefer that excess pharmaceuticals not be mixed with MSW and end up in
our compost facility. As a result, in cooperation with the DEC Region 4 Office,
Delaware County has hosted household hazardous waste collection days in
which the county will accept from local households and conditionally exempt
small quantity generators their excess pharmaceuticals. The excess
pharmaceuticals are provided to a licensed hauler and sent for incineration.
At the request of one of the health care facilities, Delaware County is
considering increasing the frequency of the collection days from once per
year to four times per year. We believe that four collection days will be
sufficient to meet the needs of the health care facilities within Delaware
County. Note that as explained below, the existing state and federal
regulations do not require offsite disposal of excess pharmaceuticals; and,
with respect to controlled substances, prohibit offsite disposal. While we may
agree that it is wise to arrange for the incineration of excess
pharmaceuticals; at the present time, neither the State nor the federal
government has the data to establish that the low levels of pharmaceuticals
coming from human waste poses sufficient risk to establish water quality
standards or drinking water standards for these constituents. The
incineration of all excess pharmaceuticals cannot legally or practically occur
until the federal and state agencies modify existing regulations to allow for
the safe and efficient transport of these materials to a legally permitted site.

With the above background, the actions of the Attorney General in

creating his own set of regulations for the management of excess
pharmaceuticals and forcing small poor rural health care facilities to
implement his program subject to fines, stipulated penalties, his attorney
fees, and without any opportunity to negotiate a practicable and legal
solution has destroyed the trust created by the MOA and destroyed any
sense of security that the upstate communities had that the MOA would
ensure that the State, EPA and the City would operate openly, in good faith
and in cooperation with their upstate partners in protecting the City Water
Supply. For the partnership and cooperation created by the MOA to continue,
the Office of the Attorney General must be stopped, the damage undone and
there must be a commitment, that as part of New York State government,
that the Office of the Attorney General is bound by Paragraph 12 of the MOA
“to act in good faith and to take all necessary and appropriate actions, in
cooperation with one another, to affect the purposes of” the MOA.”

1The Dispute

1. MOA Provision: The “parties [to the MOA] agreed to act in good faith
and to take all necessary and appropriate actions, in cooperation with
one another, to affect the purposes of” the MOA. (Paragraph 12) The
MOA also provides that “the parties [to the MOA] recognize that the
goals of drinking water protection and economic vitality within the
watershed communities are not inconsistent and it is the intention of
the parties to enter into a Partnership to cooperate in the
 development and implementation of the watershed protection
program that maintains and enhances the quality of the New
York City drinking water supply system and the economic
vitality and social character of the watershed communities.”
(Paragraph 6)

2. The Wrongful Action by the Office of the Attorney General: The State of
New York (through the Office of the Attorney General) has committed a
breach of the above-referenced provision of the MOA. The Attorney
General has mandated that health care facilities within the New York
City Watershed implement the Watershed Pharmaceutical Regulatory
Restrictions set forth below. The Attorney General approached 15
health care facilities within the New York City Watershed under the
pretense of conducting a survey on the management practices for
excess pharmaceuticals. After completing the survey, the Attorney
General served all 15 health care facilities with enforcement papers
demanding they implement his Watershed Pharmaceuticals Regulatory
Restrictions and pay a cash penalty. Under his Watershed Regulatory
Restriction Program, all excess pharmaceuticals (including those that
contain mercury and/or are controlled substances) must be incinerated
at either a fully permitted hazardous waste incinerator (if hazardous
waste) or a fully permitted solid waste incinerator. The Watershed
Pharmaceutical Regulatory Restriction Program also requires the
health care facilities to sponsor and manage a household
pharmaceutical take back program, extensive record keeping and
reporting requirements, personnel training requirements, and fund
oversight by the office of the Attorney General. Any action or
determination by the Attorney General as part of the Watershed
Pharmaceutical Regulatory Restriction Program is subject to judicial
review in Albany County and an arbitrary and capricious standard of
review. If not successful in a challenge to an Attorney General
determination, the facility must pay the Attorney General’s cost and
expenses (including attorney fees). In any enforcement of the
Watershed Pharmaceutical Regulatory Restriction Program, the health
care facility must pay the expenses of the Attorney General. Finally,
any violations of the Watershed Pharmaceutical Regulatory Restriction
Program are enforceable by daily stipulated penalties ranging from
$100 a day to $1,000 a day. The Attorney General makes the
determination whether to assess stipulated penalties.

3. The Attorney General Created a Regulatory Program Without

Compliance with SEQRA or SAPA: The Attorney General’s created and
adopted the Watershed Pharmaceutical Regulatory Restriction Program
without conducting any rulemaking under NYS Administrative
Procedure Act (“SAPA”) and without any statutory authority for such
program. The Attorney General did not comply with the State
 Environmental Quality Review Act (“SEQRA”); did not perform a
regulatory impact analysis; did not perform a rural impact analysis; did
not perform an impact analysis on the effect on small businesses. The
Attorney General did not consult with or coordinate its actions with the
New York State Department of Environmental Conservation nor the
New York State Department of Health or any of the parties to the MOA
(except, upon information and belief, he did consult with one or more
of the environmental parties).

4. The Attorney General Committed a Breach of the Duty of Good Faith:

The Attorney General announced the Watershed Pharmaceutical
Regulatory Restriction Program in a press conference in New York City
in which he invited the environmental parties, but not the Upstate
Communities. During that press conference and in his press release,
the Attorney General characterized the Upstate health care facilities as
polluters and violators of State and federal laws. The press conference
was a national press conference and the Attorney General obtained
press coverage in Oregon and Los Angeles. On the Department of
Law’s website, the Attorney General has listed his Watershed
Pharmaceutical Regulatory Restriction Program as one of his top 15
achievements. When requested to participate in a work shop
sponsored by the Catskill Watershed Corporation to assist local health
care facilities in the management of excess pharmaceuticals, the
Attorney General’s Office refused and threatened retribution if CWC
interfered with the Attorney General’s implementation of the
Watershed Pharmaceutical Regulatory Restriction Program.

5. The Attorney General’s Watershed Pharmaceutical Regulatory

Restriction Program is Inconsistent With State and Federal Law: The
Attorney General, in his defense, asserts that all of the facilities that he
inspected were in violation of the New York State Hazardous Waste
regulation promulgated by the New York State Department of
Environmental Conservation (“DEC”). The State Hazardous Waste
Program is modeled on hazardous waste regulation promulgated under
the Resource Conservation Recovery Act (“RCRA”) by the United States
Environmental Protection Agency (“EPA”). 2In developing the
Watershed Pharmaceutical Regulations Restriction Program, the
Attorney General ignored and contradicted the following laws:

A. The Bureau of Narcotics (under the authority of

the Federal Control Substance Act and the
regulations issued thereunder by the Drug
Enforcement Administration(“DEA”)) and under State
Law, the Bureau of Narcotics requires for many of
these health care facilities that any excess
 pharmaceuticals that are controlled substances be
disposed of on-site through flushing down the drain;

B. Ignored that these health care facilities are

conditionally exempt small quantity generators (i.e.,
they generate less than or equal to 220 lbs of
hazardous waste per month or less than or equal to
2.2 lbs of acute hazardous waste per month) and are
not subject to the hazardous waste regulations
provided they dispose of the material onsite, or at an
exempt facility or a facility permitted under the solid
waste regulation;

C. One or more of the facilities also has the option

of operating under the household hazardous waste
exclusion (i.e., control of the pharmaceutical remains
with the resident);

D. Under the hazardous waste regulations both

EPA and DEC provide exclusion from the definition of
“solid waste” for “any mixture of domestic sewage
and other waste that passes through a sewer system
to a publically-owned treatment works for
treatment.” (40 CFR 261.4(a)(1)(ii); 6 NYCRR
§371.1(e)(1)(i)(b)). This domestic sewage exclusion
allows pharmaceuticals that are hazardous wastes to
be discharged to a publically owned treatment works
via a general use sewer system. (See 6 NYCRR
§371.1(e)(1)(i)(b)).

E. Certain pharmaceutical waste containing

mercury cannot be incinerated and must be treated
prior to land disposal by retorting or roasting in a
thermal processing unit capable of volatizing
mercury and subsequently condensing it for recovery
(See 6 NYCRR §376.4(a)(1); §376.4(a)(4); §376.4(j)
and §376.4(a)(5) and the mandated LDR treatment
standards for U151).

6. The Attorney General’s Actions Was Not Fair and Appropriate

Enforcement or an Appropriate Use of Prosecutorial Discretion: 3In the
Federal Register dated December 2, 2008, EPA indicated that there are
“over 600,000 individual facilities in the United States, including
approximately 40,000 retail pharmacies, over 7,000 hospitals, and
more than 300,000 physician and dental offices that maybe generators
 of hazardous pharmaceutical waste.” (73 F.R. 73522 (Dec. 2, 2008).
EPA further stated as follows:

However, we do know that there are over 7,000

hospitals, and approximately 72,000 long-term-care
facilities, 27,000 veterinarian care facilities, 40,000
retail pharmacies and several hundred thousand
offices of doctors, dentists and other health care
service providers in the United States all of which
generate some volume of pharmaceutical waste and
many of which will generate some that are RCRA
hazardous. Yet, based on the 2005 Biennial Report,
only 94 hospitals and 19 pharmacies, for example,
reported themselves to the LQGs of hazardous waste
and no long-term-care or veterinary facilities did so.

73 F.R. 73526 (Dec. 2, 2008). In other words, .0002 (2 out of 10,000)

of health care facilities in the United States (including the large
municipal hospitals) have disposed of any pharmaceutical waste under
the hazardous waste regulations. None of the long term care facilities
or small hospitals in this country have sought coverage under the
hazardous waste regulations. Yet the Attorney General selectively
chose 15 small health care facilities (a few hospitals and long term
care facilities) in the New York City Watershed, and, through a
selective enforcement program with the threat of litigation and large
penalties, coerced seven of these facilities to pay penalties and
implement his Watershed Pharmaceutical Restriction Program. The
remaining 8 facilities were told to expect an enforcement action in the
Supreme Court for tens of thousands of dollars in penalties and
injunctive relief. The above statistics demonstrate the Attorney
General’s actions against these health care facilities was not fair and
appropriate enforcement or an appropriate use of prosecutorial
discretion.

7. The Attorney General Has Destroyed the Trust Created by the MOA: In
negotiating the MOA, the Upstate Communities were asked to accept
carefully negotiated additional regulatory restrictions necessary for
New York City to avoid its obligation under the Federal Safe Drinking
Water Act to install filtration. With respect to the West-of-Hudson
communities (where New York City was obtaining a Filtration
Avoidance Determination), the goal of the MOA was to allow the City to
adopt additional regulatory restrictions and to ensure that the local
communities were protected from the cost of those restrictions
through various partnership programs (i.e., Septic Rehabilitation
Program, Community Wastewater Management Program, Stormwater
Retrofit Program, Future Stormwater Program, etc.). The MOA included
 an agreement by all parties to work cooperatively, in good faith and to
work together to implement the water protection measures necessary
to sustain the filtration avoidance and to avoid the negative economic
impact on the communities. The Watershed Pharmaceutical Regulatory
Restriction Program was not a water quality measure included in the
MOA, nor was any mitigation for that program included in the MOA.
The purpose of the MOA was to formalize a partnership between the
State, the City, the Environmental Parties and the Upstate
communities to work cooperatively, in the open and in good faith to
implement the objectives of the MOA. The development and
implementation of a new regulatory program solely focused on the
Watershed without compliance with SAPA, SEQRA and any
transparency is a breach of the MOA and has destroyed the trust
created by the MOA.

Relief Requested: The parties are requesting that the Watershed

Pharmaceutical Regulatory Restriction Program be rescinded, that the
agreement implementing the Watershed Pharmaceutical Regulatory Program
be rescinded, that the penalties be returned, that the position of Watershed
Inspector General, within the Office of the Attorney General, be eliminated
and that the Office of the Attorney General, as part of the State of New York,
be compelled to comply with Paragraph 12 of the MOA.

Respectfully,

James E. Eisel, Chairman

Delaware County Board of Supervisors

cc: Dennis Lucas, Chairman, Coalition of Watershed Towns

Pete Grannis, Commissioner, NYSDEC
Richard F. Daines, M.D., Commissioner, NYSDOH
Caswell F. Holloway, Commissioner, NYCDEP
Andrew Cuomo, NYS Attorney General