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February 20, 2019 DEPARTMENT OF STATE
Vol. XLI Division of Administrative Rules
Issue 8
NEW YORK STATE
REGISTER
INSIDE THIS ISSUE:
D Assessment of Entities Regulated by the Banking Division of the Department of Financial
Services
D Medical Use of Marihuana
D Life Sciences Initiative Program
Notice of Availability of State and Federal Funds
State agencies must specify in each notice which proposes a rule the last date on which they will accept public
comment. Agencies must always accept public comment: for a minimum of 60 days following publication in the
Register of a Notice of Proposed Rule Making, or a Notice of Emergency Adoption and Proposed Rule Making; and
for 45 days after publication of a Notice of Revised Rule Making, or a Notice of Emergency Adoption and Revised
Rule Making in the Register. When a public hearing is required by statute, the hearing cannot be held until 60 days
after publication of the notice, and comments must be accepted for at least 5 days after the last required hearing.
When the public comment period ends on a Saturday, Sunday or legal holiday, agencies must accept comment through
the close of business on the next succeeding workday.
For notices published in this issue:
– the 60-day period expires on April 21, 2019
– the 45-day period expires on April 6, 2019
– the 30-day period expires on March 22, 2019ANDREW M. CUOMO
GOVERNOR
ROSSANA ROSADO
SECRETARY OF STATE
NEW YORK STATE DEPARTMENT OF STATE
For press and media inquiries call:
(518) 474-0050
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POSTMASTER: Send address changes to NY STATE REGISTER, the Department of State, Division of
Administrative Rules, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231-0001
printed on recycled paperNEW YORK STATE
REGISTER
Be a part of the rule making process!
The public is encouraged to comment on any of the proposed rules appearing in this issue. Comments
must be made in writing and must be submitted to the agency that is proposing the rule. Address your com-
ments to the agency representative whose name and address are printed in the notice of rule making. No
special form is required; a handwritten letter will do. Individuals who access the online Register
(www.dos.ny.gov) may send public comment via electronic mail to those recipients who provide an e-mail ad-
dress in Notices of Proposed Rule Making. This includes Proposed, Emergency Proposed, Revised Proposed
and Emergency Revised Proposed rule makings.
To be considered, comments should reach the agency before expiration of the public comment period.
The law provides for a minimum 60-day public comment period after publication in the Register of every No-
tice of Proposed Rule Making, and a 45-day public comment period for every Notice of Revised Rule Making.
If a public hearing is required by statute, public comments are accepted for at least five days after the last such
hearing. Agencies are also required to specify in each notice the last date on which they will accept public
comment.
When a time frame calculation ends on a Saturday or Sunday, the agency accepts public comment
through the following Monday; when calculation ends on a holiday, public comment will be accepted through
the following workday. Agencies cannot take action to adopt until the day after expiration of the public com-
ment period.
The Administrative Regulations Review Commission (ARRC) reviews newly proposed regulations to
examine issues of compliance with legislative intent, impact on the economy, and impact on affected parties.
In addition to sending comments or recommendations to the agency, please do not hesitate to transmit your
views to ARRC:
Administrative Regulations Review Commission
State Capitol
Albany, NY 12247
Telephone: (518) 455-5091 or 455-2731
---------------------------------------------------------------------------------------------------------
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Telephone: (518) 474-6957New York State Register February 20, 2019/Volume XLI, Issue 8
KEY: (P) Proposal; (RP) Revised Proposal; (E) Emergency; (EP) Emergency and Proposal; (A) Adoption; (AA) Amended Adoption; (W)
Withdrawal
Individuals may send public comment via electronic mail to those recipients who provided an e-mail address in Notices
of Proposed Rule Making. This includes Proposed, Emergency Proposed, Revised Proposed and Emergency Revised
Proposed rule makings. Choose pertinent issue of the Register and follow the procedures on the website
(www.dos.ny.gov)
Rule Making Activities
Environmental Conservation, Department of
1 / Governor Mario M. Cuomo Bridge (P)
Financial Services, Department of
2 / Assessment of Entities Regulated by the Banking Division of the Department of Financial Services
(E)
5 / Charges for Professional Health Services (W)
5 / Charges for Professional Health Services (P)
Health, Department of
7 / Medical Use of Marihuana (E)
9 / Voluntary Foster Care Agency Health Facility Licensure (A)
Judicial Conduct, State Commission on
9 / Counsel for Witnesses at Hearings (P)
Mental Health, Office of
10 / Establish Standards for Providers Who Wish to Become Licensed Children’s Mental Health Rehabil-
itation Programs (P)
Power Authority of the State of New York
11 / Rates for the Sale of Power and Energy (A)
Public Service Commission
11 / Disposition of Property Tax Refunds (P)
11 / Sale of Street Lighting Facilities to the Town of Rosendale (P)
Taxation and Finance, Department of
12 / Fuel Use Tax on Motor Fuel and Diesel Motor Fuel and the Art. 13-A Carrier Tax Jointly
Administered Therewith (A)
12 / Fuel Use Tax on Motor Fuel and Diesel Motor Fuel and the Art. 13-A Carrier Tax Jointly
Administered Therewith (P)
Transportation, Department of
12 / Regulation of Transportation of Hazardous Materials by Commercial Motor Carriers in New York
State (A)
Urban Development Corporation
13 / Life Sciences Initiative Program (E)
Hearings Scheduled for Proposed Rule Makings / 15
Action Pending Index / 17
Securities Offerings
63 / State Notices
Advertisements for Bidders/Contractors
65 / Sealed Bids
Notice of Availability of State and Federal Funds
75 / Housing Trust Fund CorporationMiscellaneous Notices/Hearings 77 / Notice of Abandoned Property Received by the State Comptroller 77 / Public Notice
RULE MAKING
ACTIVITIES
Each rule making is identified by an I.D. No., which consists I-287, then continuing west on I-287 across the [Tappan Zee] Governor
of 13 characters. For example, the I.D. No. AAM-01-96- Mario M. Cuomo Bridge to I-87 North, then continuing north on I-87 to
where State Route 9W crosses I-87 in Greene County, then continuing
00001-E indicates the following: north on State Route 9W to where State Route 9W crosses I-87 in Albany
County, then continuing north on I-87 to its intersection with State Route
AAM -the abbreviation to identify the adopting agency 7, and then continuing east on State Route 7 to its intersection with I-787,
01 -the State Register issue number and then continuing north on I-787 to its intersection with Tibbets Avenue,
96 -the year and then continuing east on Tibbets Avenue to its intersection with Dela-
ware Avenue, then proceeding in a straight line to the west edge of the
00001 -the Department of State number, assigned upon Troy Dam.
receipt of notice. Clause 10.10(c)(4)(ii) is amended to read as follows:
(ii) The operator of a party or charter boat operating above the
E -Emergency Rule Making—permanent action Governor [Malcolm Wilson Tappan Zee] Mario M. Cuomo Bridge on the
not intended (This character could also be: A Hudson River may possess anadromous river herring in excess of the indi-
for Adoption; P for Proposed Rule Making; RP vidual recreational possession limit, as specified in subparagraph (i) of
this paragraph, prior to the commencement of a fishing charter.
for Revised Rule Making; EP for a combined 6 NYCRR Part 11 is amended to read as follows:
Emergency and Proposed Rule Making; EA for Clause 11.2(b)(4) is amended to read as follows:
an Emergency Rule Making that is permanent (4) take or possess American shad in the Hudson River and its tribu-
tary waters upstream from the river to the first falls or barrier impassable
and does not expire 90 days after filing.) by fish, from the Federal Dam at Troy south to the Governor [Malcolm
Wilson Tappan Zee] Mario M. Cuomo Bridge, and the Marine and Coastal
Italics contained in text denote new material. Brackets District at any time.
indicate material to be deleted. Clause 11.2(e) is amended to read as follows:
(e) Possession and sale of American shad in the Hudson River, and its
tributary waters upstream from the river to the first falls or barrier impass-
able by fish, from the Federal Dam at Troy south to the Governor [Malcolm
Wilson Tappan Zee] Mario M. Cuomo Bridge, and the Marine and Coastal
Department of Environmental District.
Clause 11.2(e)(1) is amended to read as follows:
Conservation (1) Any American shad inadvertently taken in the Hudson River, and
its tributary waters upstream from the river to the first falls or barrier
impassable by fish, from the Federal Dam at Troy south to the Governor
[Malcolm Wilson Tappan Zee] Mario M. Cuomo Bridge, and the Marine
PROPOSED RULE MAKING and Coastal District must be returned to the water immediately without
NO HEARING(S) SCHEDULED unnecessary injury.
6 NYCRR Part 35 is amended to read as follows:
Clause 35.1(c) is amended to read as follows:
Governor Mario M. Cuomo Bridge (c) Persons taking and landing fish for commercial purposes in the
I.D. No. ENV-08-19-00004-P Hudson River downstream from the [Tappan Zee] Governor Mario M.
Cuomo Bridge must possess a resident or a nonresident marine commercial
food fishing license as required by Environmental Conservation Law
PURSUANT TO THE PROVISIONS OF THE State Administrative Pro- (ECL), section 13-0335 and a Hudson River commercial gear license as
cedure Act, NOTICE is hereby given of the following proposed rule: required by section 36.1 of this Title.
Proposed Action: This is a consensus rule making to amend Parts 10, 11, Clause 35.1(d) is amended to read as follows:
35, 42, 43, 45, 47, 576 and 591 of Title 6 NYCRR. (d) Fees paid for a resident or nonresident marine commercial food
Statutory authority: Environmental Conservation Law, sections 13-0103 fishing license to take and land fish for commercial purposes pursuant to
and 13-0307 Environmental Conservation Law section 13-0335 from the marine and
coastal district, which includes the Hudson River downstream from the
Subject: Governor Mario M. Cuomo Bridge. [Tappan Zee] Governor Mario M. Cuomo Bridge, may be credited toward
Purpose: Replacing references to the Governor Malcolm Wilson Tappan the purchase of the Hudson River commercial gear license. Fees for the
Zee Bridge with references to the Governor Mario M. Cuomo Bridge. Hudson River commercial gear license will be paid only to the extent that
Text of proposed rule: 6 NYCRR Part 10 is amended to read as follows: the fee for such license exceeds the $100 resident fee or the $1,000 non-
Clause 10.1(f)(3)(iii)(c) is amended to read as follows: resident fee for the marine commercial food fishing license, whichever is
(c) Hudson River Overland Transportation Corridor shall mean the applicable.
geographical area associated with the water body as defined in subpara- Clause 35.3(c)(1) is amended to read as follows:
graph (7)(x) of this subdivision starting at the eastern shore of the Hudson (1) bait fish taken in the Hudson River upstream of the [Tappan Zee]
River at the Federal Dam in Troy, continuing east on W. Glenn Avenue in Governor Mario M. Cuomo Bridge and below the Federal Dam at Troy,
Troy to its intersection with State Route 4, then continuing south on State including all tributaries up to the first barrier impassable by fish, may also
Route 4 to its intersection with State Routes 9 and 20, then continuing be possessed, sold, offered for sale, bartered, or transferred for use in the
easterly to its intersection with State Route 9, then continuing east on marine and coastal district defined in Environmental Conservation Law,
State Route 82, then continuing east on State Route 82 to its intersection section 13-0103; or
with the Taconic State Parkway, then continuing south on the Taconic 6 NYCRR Part 42 is amended to read as follows:
State Parkway to its intersection with the Sprain Brook Parkway, then Clause 42.2(w) is amended to read as follows:
continuing south on the Sprain Brook Parkway to its intersection with (w) Marine district means the waters of the Atlantic Ocean within three
1Rule Making Activities NYS Register/February 20, 2019
nautical miles of the coastline of the State and all tidal waters within the This rule was not under consideration at the time this agency submitted
State including the Hudson River up to the [Tappan Zee bridge] Governor its Regulatory Agenda for publication in the Register.
Mario M. Cuomo Bridge. Consensus Rule Making Determination
6 NYCRR Part 43 is amended to read as follows: The Department of Environmental Conservation (“Department”) is
Clause 43-1.1 is amended to read as follows: proposing to amend 6 NYCRR Sections 10.1, 10.10, 11.2, 35.1, 35.3, 42.2,
The purpose of this Subpart is to promote and support the maintenance 43-1.1, 43-2.1, 45.1, 47.1, 576.2, and 591.3. These sections reference the
of viable surf clam and ocean quahog populations in select areas of the Governor Malcom Wilson Tappan Zee Bridge (“Tappan Zee Bridge”),
Marine and Coastal District. The Marine and Coastal District includes the which is currently being dismantled. Effective June 29, 2017, the
Legislature amended the Environmental Conservation Law (“ECL”) to
waters of the Atlantic Ocean within three nautical miles from the coastline replace all references to the Tappan Zee Bridge with the name of the new
and all other tidal waters within the State, including the Hudson River up bridge -- the Governor Mario M. Cuomo Bridge (“Cuomo Bridge”). The
to the [Tappan Zee] Governor Mario M. Cuomo Bridge. The provisions of Department proposes to amend the regulations to conform with the ECL
this Subpart are designed to limit mechanical surf clam and ocean quahog by replacing all references to the Tappan Zee Bridge with references to the
harvesting activities to specifically defined areas of the Marine and Coastal Cuomo Bridge.
District, to require a special surf clam/ocean quahog mechanical harvest- The provisions of this proposed rulemaking do not involve any discre-
ing permit, to provide specific controls over the design of mechanical tion by the Department. The proposed changes are necessary to maintain
harvesting gear, weekly and annual harvest quotas, open and closed the accuracy of the Department’s regulations, to maintain consistency
seasons, and to require recordkeeping and reporting. Such requirements with the ECL, and to avoid confusing the public with outdated references.
and controls are intended to support the continuation of a limited capacity For these reasons, the Department has determined that no person is likely
fishery in the involved waters of the Marine and Coastal District so that to object to this rulemaking.
the fishery continues to operate in basic balance with available surf clam
and ocean quahog stocks and to aid in the management of a complex Job Impact Statement
system of shellfish resources in adjoining waters. A Job Impact Statement is not required for this rule making because the
Clause 43-2.1 is amended to read as follows: proposed rule will not have a substantial adverse impact on jobs and
The purpose of this Subpart is to promote and support the maintenance employment opportunities. The purpose of this rule is to recognize in 6
of viable surfclam and ocean quahog populations in the Atlantic Ocean NYCRR the new Governor Mario M. Cuomo Bridge due to an amend-
portion of the Marine and Coastal District. The Marine and Coastal District ment to the Environmental Conservation Law (“ECL”).
includes the waters of the Atlantic Ocean within three nautical miles from This rule would amend 6 NYCRR Sections 10.1, 10.10, 11.2, 35.1,
the coastline and all other tidal waters within the State, including the 35.3, 42.2, 43-1.1, 43-2.1, 45.1, 47.1, 576.2, and 591.3. These sections ref-
Hudson River up to the [Tappan Zee] Governor Mario M. Cuomo Bridge. erence the Governor Malcom Wilson Tappan Zee Bridge (“Tappan Zee
The provisions of this Subpart require surfclam and ocean quahog Bridge”), which is currently being dismantled. Effective June 29, 2017,
mechanical harvesting permits, establish specific controls over the posses- the Legislature amended the ECL to replace all references to the Tappan
sion and design of mechanical harvesting gear, set daily vessel harvest Zee Bridge with the name of the new bridge -- the Governor Mario M.
limits and annual harvest limits, establish an Individual Fishing Quota Cuomo Bridge (“Cuomo Bridge”). The Department proposes to amend the
system for each eligible surfclam vessel, establish container and cage tag- regulations to conform with the ECL by replacing all references to the
ging requirements and require recordkeeping and reporting, implement Tappan Zee Bridge with references to the Cuomo Bridge.
mandatory Vessel Monitoring System requirements and establish rules for This rulemaking will not result in the loss of any jobs in New York
confidentiality of fisheries data. Such requirements are intended to support State. Therefore, the Department has determined that a Job Impact State-
the continuation of a viable fishery in the involved waters of the Atlantic ment is not required.
Ocean so that the fishery continues to operate in balance with available
surfclam and ocean quahog stocks.
6 NYCRR Part 45 is amended to read as follows:
Clause 45.1(g) is amended to read as follows: Department of Financial Services
(g) Marine district means the waters of the Atlantic Ocean within three
nautical miles of the coastline of the State and all tidal waters within the
State including the Hudson River up to the [Tappan Zee] Governor Mario EMERGENCY
M. Cuomo Bridge.
6 NYCRR Part 47 is amended to read as follows: RULE MAKING
Clause 47.1(i) is amended to read as follows:
(i) Marine district means the waters of the Atlantic Ocean within three Assessment of Entities Regulated by the Banking Division of the
nautical miles of the coastline of the State, and all tidal waters within the Department of Financial Services
State, including the Hudson River up to the [Tappan Zee] Governor Mario
M. Cuomo Bridge. I.D. No. DFS-08-19-00002-E
6 NYCRR Part 576 is amended to read as follows: Filing No. 74
Clause 576.2(h) is amended to read as follows: Filing Date: 2019-01-31
(h) Marine and coastal district waters means the waters of the Atlantic Effective Date: 2019-01-31
Ocean within three nautical miles from the coast line and all other tidal
waters within the state, including the Hudson River up to the Governor
[Malcolm Wilson Tappan Zee] Mario M. Cuomo Bridge. PURSUANT TO THE PROVISIONS OF THE State Administrative Pro-
6 NYCRR Part 591 is amended to read as follows: cedure Act, NOTICE is hereby given of the following action:
Clause 591.3(l)(2)(i) is amended to read as follows: Action taken: Addition of Part 501 to Title 3 NYCRR.
(i) the proposed project is a tidal wetland, with or without associ-
ated upland buffer, as defined in article 25 of the Environmental Conser- Statutory authority: Banking Law, section 17; Financial Services Law,
vation Law, located either in the marine and coastal district as defined in section 206
section 13-0103 of the Environmental Conservation Law or in the Hudson Finding of necessity for emergency rule: Preservation of general welfare.
River Valley between the [Tappan Zee] Governor Mario M. Cuomo Bridge Specific reasons underlying the finding of necessity: Pursuant to the
and the Federal Dam at Troy; or Financial Services Law (“FSL”), the New York State Banking Department
Text of proposed rule and any required statements and analyses may be (“Banking Department”) and the New York State Insurance Department
obtained from: Tyler Hepner, NYS Department of Environmental Conser- were consolidated, effective October 3, 2011, into the Department of
vation, NYSDEC, Office of General Counsel, 625 Broadway, Albany, NY Financial Services (“Department”).
12233, (518) 402-9530, email: tyler.hepner@dec.ny.gov Prior to the consolidation, assessments of institutions subject to the
Data, views or arguments may be submitted to: Same as above. Banking Law (“BL”) were governed by Section 17 of the BL; effective on
October 3, 2011, assessments are governed by Section 206 of the Financial
Public comment will be received until: 60 days after publication of this Services Law, provided that Section 17 continues to apply to assessments
notice. for the fiscal year which commenced April 1, 2011.
Additional matter required by statute: Pursuant to Article 8 of the Both Section 17 of the Banking Law and Section 206 of the Financial
Environmental Conservation Law, the State Environmental Quality Services Law provide that all expenses (compensation, lease costs and
Review Act and 6 NYCRR 617.5(c) (25) and (33) the Department has other overhead) of the Department in connection with the regulation and
determined that this rulemaking is a Type II action and no further review supervision (including examination) of any person or entity licensed,
is required. registered, incorporated or otherwise formed pursuant to the BL are to be
2NYS Register/February 20, 2019 Rule Making Activities
charged to, and paid by, the regulated institutions subject to the supervi- (b) “Industry Group“ means the grouping to which a business entity
sion of in the Banking Division of the Department (the “Banking regulated by the Banking Division is assigned. There are three
Division”). Under both statutes, the Superintendent is authorized to assess Industry Groups in the Banking Division:
regulated institutions in the Banking Division in such proportions as the
Superintendent shall deem just and reasonable. (1) The Depository Institutions Group, which consists of all bank-
Litigation commenced in June, 2011 challenged the methodology used ing organizations and foreign banking corporations licensed by the
by the Banking Department to assess mortgage bankers. On May 3, 2012, Department to maintain a branch, agency or representative office in
the Appellate Division invalidated this methodology for the 2010 State this state;
Fiscal Year, finding that the former Banking Department had not followed (2) The Mortgage-Related Entities Group, which consists of all
the requirements of the State Administrative Procedures Act.
In response to this ruling, the Department has determined to adopt this mortgage brokers, mortgage bankers and mortgage loan servicers;
new rule setting forth the assessment methodology applicable to all enti- and
ties regulated by the Banking Division for fiscal years beginning with fis- (3) The Licensed Financial Services Providers Group, which
cal year 2011. consists of all check cashers, budget planners, licensed lenders, sales
The emergency adoption of this regulation is necessary to implement
the requirements of Section 17 of the Banking Law and Section 206 of the finance companies, premium finance companies and money
Financial Services Law in light of the determination of the Court and the transmitters.
ongoing need to fund the operations of the Department without (c) “Industry Group Operating Cost” means the amount of the Total
interruption. Accordingly, it is imperative that Part 501 of the Superinte- Operating Cost to be assessed to a particular Industry Group. The
ndent’s Regulations be promulgated on an emergency basis for the pub-
lic’s general welfare. amount is derived from the percentage of the total expenses for
Subject: Assessment of entities regulated by the Banking Division of the salaries and fringe benefits for the examining, specialist and related
Department of Financial Services. personnel represented by such costs for the particular Industry Group.
Purpose: New Part 501 implements Section 17 of the Banking Law and (d) “Industry Group Supervisory Component” means the total of
Section 206 of the Financial Services Law and sets forth the basis for al- the Supervisory Components for all institutions in that Industry Group.
locating all costs and expenses attributable to the operation of the Banking (e) “Supervisory Component” for an individual institution means
Division of the Department of Financial Services among and between any
person or entity licensed, registered, incorporated or otherwise formed the product of the average number of hours attributed to supervisory
pursuant the Banking Law. oversight by examiners and specialists of all institutions of a similar
Text of emergency rule: Part 501 size and type, as determined by the Superintendent, in the applicable
BANKING DIVISION ASSESSMENTS
Industry Group, or the applicable sub-group, and the average hourly
cost of the examiners and specialists assigned to the applicable
§ 501.1 Background. Industry Group or sub-group.
Pursuant to the Financial Services Law (“FSL”), the New York (f) “Industry Group Regulatory Component” means the Industry
State Banking Department (“Banking Department”) and the New York Group Operating Cost for that group minus the Industry Group
State Insurance Department were consolidated on October 3, 2011 Supervisory Component and certain miscellaneous fees such as ap-
into the Department of Financial Services (“Department”). plication fees.
Prior to the consolidation, assessments of institutions subject to the (g) “Industry Financial Basis” means the measurement tool used to
Banking Law (“BL”) were governed by Section 17 of the BL. Effective distribute the Industry Group Regulatory Component among individ-
October 3, 2011, assessments are governed by Section 206 of the FSL, ual institutions in an Industry Group.
provided that Section 17 of the BL continues to apply to assessments
for the fiscal year commencing on April 1, 2011. The Industry Financial Basis used for each Industry Group is as
follows:
Both Section 17 of the BL and Section 206 of the FSL provide that
all expenses (including, but not limited to, compensation, lease costs (1) For the Depository Institutions Group: total assets of all
and other overhead costs) of the Department attributable to institu- institutions in the group;
tions subject to the BL are to be charged to, and paid by, such (2) For the Mortgage-Related Entities Group: total gross rev-
regulated institutions. These institutions (“Regulated Entities”) are enues from New York State operations, including servicing and sec-
now regulated by the Banking Division of the Department. Under both ondary market revenues, for all institutions in the group; and
Section 17 of the BL and Section 206 of the FSL, the Superintendent is (3) For the Licensed Financial Services Providers Group: (i) for
authorized to assess Regulated Entities for its total costs in such budget planners, the number of New York customers; (ii) for licensed
proportions as the Superintendent shall deem just and reasonable. lenders, the dollar amount of New York assets; (iii) for check cashers,
The Banking Department has historically funded itself entirely from the dollar amount of checks cashed in New York; (iv) for money
industry assessments of Regulated Entities. These assessments have transmitters, the dollar value of all New York transactions; (v) for
covered all direct and indirect expenses of the Banking Department, premium finance companies, the dollar value of loans originated in
which are activities that relate to the conduct of banking business and New York; and (vi) for sales finance companies, the dollar value of
the regulatory concerns of the Department, including all salary ex- credit extensions in New York.
penses, fringe benefits, rental and other office expenses and all miscel- (h) “Financial Basis” for an individual institution is that institu-
laneous and overhead costs such as human resource operations, legal tion’s portion of the measurement tool used in Section 501.2(g) to
and technology costs. develop the Industry Financial Basis. (For example, in the case of the
This regulation sets forth the basis for allocating such expenses Depository Institutions Group, an entity’s Financial Basis would be its
among Regulated Entities and the process for making such total assets.)
assessments. (i) “Industry Group Regulatory Rate” means the result of dividing
§ 501.2 Definitions. the Industry Group Regulatory Component by the Industry Financial
The following definitions apply in this Part: Basis.
(a) “Total Operating Cost” means for the fiscal year beginning on (j) “Regulatory Component” for an individual institution is the
April 1, 2011, the total direct and indirect costs of operating the Bank- product of the Financial Basis for the individual institution multiplied
ing Division. For fiscal years beginning on April 1, 2012, “Total by the Industry Group Regulatory Rate for that institution.
Operating Cost” means: (1) the sum of the total operating expenses of § 501.3 Billing and Assessment Process.
the Department that are solely attributable to regulated persons under The New York State fiscal year begins April 1 and ends March 31 of
the Banking Law; and (2) the proportion deemed just and reasonable the following calendar year. Each institution subject to assessment
by the Superintendent of the other operating expenses of the Depart- pursuant to this Part is billed five times for a fiscal year: four quarterly
ment which under Section 206(a) of the Financial Services Law may assessments (each approximately 25% of the anticipated annual
be assessed against persons regulated under the Banking Law and amount) based on the Banking Division’s estimated annual budget at
other persons regulated by the Department. the time of the billing, and a final assessment (or “true-up”), based on
3Rule Making Activities NYS Register/February 20, 2019
the Banking Division’s actual expenses for the fiscal year. Any institu- determined that it is necessary to adopt the rule on an emergency basis so
tion that is a Regulated Entity for any part of a quarter shall be as- as to avoid any possibility of disrupting the funding of its operations.
sessed for the full quarter. 3. Needs and Benefits
The Banking Division regulates more than 250 state chartered banks
§ 501.4 Computation of Assessment. and licensed foreign bank branches and agencies in New York with total
The total annual assessment for an institution shall be the sum of its assets of over $2 trillion. In addition, it regulates a variety of other entities
Supervisory Component and its Regulatory Component. engaged in delivering financial services to the residents of New York State.
These entities include: licensed check cashers; licensed money transmit-
§ 501.5 Penalties/Enforcement Actions. ters; sales finance companies; licensed lenders; premium finance compa-
All Regulated Entities shall be subject to all applicable penalties, nies; budget planners; mortgage bankers and brokers; mortgage loan
including late fees and interest, provided for by the BL, the FSL, the servicers; and mortgage loan originators.
State Finance law or other applicable laws. Enforcement actions for Collectively, the regulated entities represent a spectrum, from some of
the largest financial institutions in the country to the smallest,
nonpayment could include suspension, revocation, termination or neighborhood-based financial services providers. Their services are vital
other actions. to the economic health of New York, and their supervision is critical to
§ 501.6 Effective Date. ensuring that these services are provided in a fair, economical and safe
This Part shall be effective immediately. It shall apply to all State manner.
Fiscal Years beginning with the Fiscal Year starting on April 1, 2011. This supervision requires that the Banking Division maintain a core of
trained examiners, plus facilities and systems. As noted above, these costs
This notice is intended to serve only as a notice of emergency adoption. are by statute to be paid by all regulated entities in the proportions deemed
This agency intends to adopt this emergency rule as a permanent rule and just and reasonable by the Superintendent. The new regulation is intended
will publish a notice of proposed rule making in the State Register at some to formally set forth the methodology utilized by the Banking Division for
future date. The emergency rule will expire April 30, 2019. allocating these costs.
Text of rule and any required statements and analyses may be obtained 4. Costs
from: George Bogdan, Esq., Department of Financial Services, One State The new regulation does not increase the total costs assessed to the
Street, New York, New York 10004, (212) 480-4758, email: regulated industries or alter the allocation of regulatory costs between the
george.bogdan@dfs.ny.gov various industries regulated by the Banking Division. Indeed, the only
Regulatory Impact Statement change from the allocation methodology used by the Banking Department
1. Statutory Authority in the previous state fiscal years is that the regulatory costs assessed to the
Pursuant to the Financial Services Law (“FSL”), the New York State mortgage banking industry will be divided among the entities in that group
Banking Department (the “Banking Department”) and the New York State on a basis which includes income derived from secondary market and
Insurance Department were consolidated, effective October 3, 2011, into servicing activities. The Department believes that this is a more appropri-
the Department of Financial Services (the “Department”). ate basis for allocating the costs associated with supervising mortgage
Prior to the consolidation, assessments of institutions subject to the banking entities.
Banking Law (“BL”) were governed by Section 17 of the BL; effective on 5. Local Government Mandates
October 3, 2011, assessments are governed by Section 206 of the Financial None.
Services Law, provided that Section 17 continues to apply to assessments 6. Paperwork
for the fiscal year which commenced April 1, 2011. The regulation does not change the process utilized by the Banking
Both Section 17 of the BL and Section 206 of the FSL provide that all Division to determine and collect assessments.
expenses (compensation, lease costs and other overhead) of the Depart- 7. Duplication
ment in connection with the regulation and supervision of any person or The regulation does not duplicate, overlap or conflict with any other
entity licensed, registered, incorporated or otherwise formed pursuant to regulations.
the BL are to be charged to, and paid by, the regulated institutions subject 8. Alternatives
to the supervision of the Banking Division of the Department (the “Bank- The purpose of the regulation is to formally set forth the process
ing Division”). Under both statutes, the Superintendent is authorized to as- employed by the Department to carry out the statutory mandate to assess
sess regulated institutions in the Banking Division in such proportions as and collect the operating costs of the Banking Division from regulated
the Superintendent shall deem just and reasonable. entities. In light of Homestead, the Department believes that promulgating
In response to a court ruling, In the Matter of Homestead Funding this formal regulation is necessary in order to allow it to continue to assess
Corporation v. State of New York Banking Department et al., 944 N.Y.S. all of its regulated institutions in the manner deemed most appropriate by
2d 649 (2012) (“Homestead”), that held that the Department should adopt the Superintendent. Failing to formalize the Banking Division’s allocation
changes to its assessment methodology for mortgage bankers through a methodology would potentially leave the assessment process open to fur-
formal assessment rule pursuant to the requirements of the State Adminis- ther judicial challenges.
trative Procedures Act (“SAPA”), the Department has determined to adopt 9. Federal Standards
this new regulation setting forth the assessment methodology applicable to Not applicable.
all entities regulated by the Banking Division for fiscal years beginning 10. Compliance Schedule
with fiscal year 2011. The emergency regulations are effective immediately. Regulated institu-
2. Legislative Objectives tions will be expected to comply with the regulation for the fiscal year
The BL and the FSL make the industries regulated by the former Bank- beginning on April 1, 2011 and thereafter.
ing Department (and now by the Banking Division of the new Depart- Regulatory Flexibility Analysis
ment) responsible for all the costs and expenses of their regulation by the 1. Effect of Rule:
State. The assessments have covered all direct and indirect expenses of the The regulation does not have any impact on local governments.
Banking Department, which are activities that relate to the conduct of The regulation simply codifies the methodology used by the Banking
banking business and the regulatory concerns of the Department, includ- Division of the Department of Financial Services (the “Department”) to
ing all salary expenses, fringe benefits, rental and other office expenses assess all entities regulated by it, including those which are small
and all miscellaneous and overhead costs such as human resource opera- businesses. The regulation does not increase the total costs assessed to the
tions, legal and technology costs. regulated industries or alter the allocation of regulatory costs between the
This reflects a long-standing State policy that the regulated industries various industries regulated by the Banking Division.
are the appropriate parties to pay for their supervision in light of the Indeed, the only change from the allocation methodology used by the
financial benefits it provides to them to engage in banking and other Banking Department in the previous state fiscal years is that the regulatory
regulated businesses in New York. The statute specifically provides that costs assessed to the mortgage banking industry will be divided among the
these costs are to be allocated among such institutions in the proportions entities in that group on a basis which includes income derived from sec-
deemed just and reasonable by the Superintendent. ondary market and servicing activities. The Department believes that this
While this type of allocation had been the practice of the former Bank- is a more appropriate basis for allocating the costs associated with
ing Department for many decades, Homestead found that a change to the supervising mortgage banking entities. It is expected that the effect of this
methodology for mortgage bankers to include secondary market and change will be that larger members of the mortgage banking industry will
servicing income should be accomplished through formal regulations pay an increased proportion of the total cost of regulating that industry,
subject to the SAPA process. Given the nature of the Banking Division’s while the relative assessments paid by smaller industry members will be
assessment methodology - - the calculation and payment of the assessment reduced.
is ongoing throughout the year and any period of uncertainty as to the ap- 2. Compliance Requirements:
plicable rule would be extremely disruptive - - the Department has The regulation does not change existing compliance requirements. Both
4NYS Register/February 20, 2019 Rule Making Activities
Section 17 of the Banking Law and Section 206 of the Financial Services able proportion of the Department’s costs to be charged to and paid by
Law provide that all expenses (compensation, lease costs and other each regulated institution, including regulated institutions located in rural
overhead) of the Department in connection with the regulation and areas. The overall methodology was adopted in 2005 after extensive
supervision of any person or entity licensed, registered, incorporated or discussion with regulated entities and industry associations representing
otherwise formed pursuant to the Banking Law are to be charged to, and groups of regulated institutions, including those located in rural areas. It
paid by, the regulated institutions subject to the supervision of the Bank- followed the loss of several major banking institutions that had paid sig-
ing Division. Under both statutes, the Superintendent is authorized to as- nificant portions of the former Banking Department’s assessments.
sess regulated institutions in the Banking Division in such proportions as Thereafter, the Department applied assessments against all entities
the Superintendent shall deem just and reasonable. subject to its regulation. In addition, for fiscal 2010, the Department
3. Professional Services: changed this overall methodology slightly with respect to assessments
None. against the mortgage banking industry to include income derived from
4. Compliance Costs: secondary market income and servicing income. This latter change was
All regulated institutions are currently subject to assessment by the challenged by a mortgage banker, and in early May, the Appellate Divi-
Banking Division. The regulation simply formalizes the Banking Divi- sion determined that the latter change should have been made in confor-
sion’s assessment methodology. It makes only one change from the alloca- mity with the State Administrative Procedures Act. The challenged part of
tion methodology used by the Banking Department in the previous state the methodology had the effect of increasing the proportion of assess-
fiscal years. That change affects only one of the industry groups regulated ments against the mortgage banking industry paid by its larger members,
by the Banking Division. Regulatory costs assessed to the mortgage bank- while reducing the assessments paid by smaller participants.
ing industry are now divided among the entities in that group on a basis Job Impact Statement
which includes income derived from secondary market and servicing The regulation is not expected to have an adverse effect on employment.
activities. Even within the one industry group affected by the change, ad- All institutions regulated by the Banking Division (the “Banking Divi-
ditional compliance costs, if any, are expected to be minimal. sion”) of the Department of Financial Services are currently subject to as-
5. Economic and Technological Feasibility: sessment by the Department. The regulation simply formalizes the assess-
All regulated institutions are currently subject to the Banking Division’s ment methodology used by the Banking Division. It makes only one
assessment requirements. The formalization of the Banking Division’s as- change from the allocation methodology used by the former Banking
Department in the previous state fiscal years.
sessment methodology in a regulation will not impose any additional eco- That change affects only one of the industry groups regulated by the
nomic or technological burden on regulated entities which are small Banking Division. It somewhat alters the way in which the Banking
businesses. Division’s costs of regulating mortgage banking industry are allocated
6. Minimizing Adverse Impact: among entities within that industry. In any case, the total amount assessed
Even within the mortgage banking industry, which is the one industry against regulated entities within that industry will remain the same.
group affected by the change in assessment methodology, the change will
not affect the total amount of the assessment. Indeed, it is anticipated that NOTICE OF WITHDRAWAL
this change may slightly reduce the proportion of mortgage banking
industry assessments that is paid by entities that are small businesses. Charges for Professional Health Services
7. Small Business and Local Government Participation:
This regulation does not impact local governments. I.D. No. DFS-26-18-00002-W
This regulation simply codifies the methodology which the Banking
Division uses for determining the just and reasonable proportion of the
Banking Division’s costs to be charged to and paid by each regulated PURSUANT TO THE PROVISIONS OF THE State Administrative Pro-
institution, including regulated institutions which are small businesses. cedure Act, NOTICE is hereby given of the following action:
The overall methodology was adopted in 2005 after extensive discussion Action taken: Notice of proposed rule making, I.D. No. DFS-26-18-
with regulated entities and industry associations representing groups of 00002-EP, has been withdrawn from consideration. The notice of proposed
regulated institutions, including those that are small businesses. rule making was published in the State Register on June 27, 2018.
Thereafter, the Banking Department applied assessments against all Subject: Charges for Professional Health Services.
entities subject to its regulation. In addition, for fiscal 2010, the Banking Reason(s) for withdrawal of the proposed rule: The Department intends
Department changed its overall methodology slightly with respect to as- to submit a new proposed rule because of dramatic changes made to the
sessments against the mortgage banking industry to include income current proposed rule.
derived from secondary market and servicing activities. Litigation was
commenced challenging this latter change, and in a recent decision, In the PROPOSED RULE MAKING
Matter of Homestead Funding Corporation v. State of New York Banking
Department et al., 944 N.Y.S. 2d 649 (2012), the court determined that the NO HEARING(S) SCHEDULED
Department should adopt a change to its assessment methodology for
mortgage bankers through a formal assessment rule promulgated pursuant Charges for Professional Health Services
to the requirements of the State Administrative Procedures Act. The chal-
lenged change in methodology had the effect of increasing the proportion I.D. No. DFS-08-19-00003-P
of assessments against the mortgage banking industry paid by its larger
members, while reducing the assessments paid by smaller participants, PURSUANT TO THE PROVISIONS OF THE State Administrative Pro-
including those which are small businesses. cedure Act, NOTICE is hereby given of the following proposed rule:
Rural Area Flexibility Analysis Proposed Action: Amendment of Part 68 (Regulation 83) of Title 11
Types and Estimated Numbers of Rural Areas: There are entities NYCRR.
regulated by the New York State Department of Financial Services Statutory authority: Financial Services Law, sections 202, 302; Insurance
(formerly the Banking Department) located in all areas of the State, includ- Law, sections 301, 2601, 5221 and art. 51
ing rural areas. However, this rule simply codifies the methodology cur-
rently used by the Department to assess all entities regulated by it. The Subject: Charges for Professional Health Services.
regulation does not alter that methodology, and thus it does not change the Purpose: To delay the effective date of the Workers’ Compensation fee
cost of assessments on regulated entities, including regulated entities lo- schedule increases for no-fault reimbursement.
cated in rural areas. Text of proposed rule: Section 68.1 is amended to read as follows:
Reporting, Recordkeeping and Other Complaince Requirements; and § 68.1 Adoption of certain workers’ compensation schedules
Professional Services: The regulation would not change the current (a)(1) The existing fee schedules prepared and established by the
compliance requirements associated with the assessment process. [chairman] chair of the Workers’ Compensation Board for industrial ac-
Costs: While the regulation formalizes the assessment process, it does cidents are hereby adopted by the Superintendent of Financial Services
not change the amounts assessed to regulated entities, including those lo- with appropriate modification so as to adapt such schedules for use pursu-
cated in rural areas. ant to the provisions of [section 5108 of the] Insurance Law section 5108.
Minimizing Adverse Impacts: The regulation does not increase the total (2)(i) Notwithstanding paragraph (1) of this subdivision, and
amount assessed to regulated entities by the Department. It simply codi- except as provided in subparagraph (ii) of this paragraph, the amend-
fies the methodology which the Superintendent has chosen for determin- ments to the fee schedules set forth in Parts 329, 333, 343, and 348 of 12
ing the just and reasonable proportion of the Department’s costs to be NYCRR that were promulgated by the chair of the Workers’ Compensation
charged to and paid by each regulated institution. Board on December 11, 2018, shall take effect for purposes of Insurance
Rural Area Participation: This rule simply codifies the methodology Law section 5108 on October 1, 2020, and shall only apply to all charges
which the Department currently uses for determining the just and reason- for health services performed on or after October 1, 2020.
5Rule Making Activities NYS Register/February 20, 2019
(ii) The following ground rules in the amendments to the fee 83. However, in 2002, the Superintendent promulgated an amendment to
schedules set forth in Parts 329, 333, 343, and 348 of 12 NYCRR that were Insurance Regulation 83, which prescribed that any changes the Chair
promulgated by the chair of the Workers’ Compensation Board on made to the workers’ compensation fee schedules automatically would ap-
December 11, 2018, shall take effect for purposes of Insurance Law sec- ply to no-fault, and therefore, no longer necessitated adoption of the work-
tion 5108 on April 1, 2019, and shall apply to all charges for health ser- ers’ compensation fee schedules as changes were made to them.
vices performed on or after April 1, 2019: 3. Needs and benefits: In December 2018, The Chair adopted expansive
(a) General Ground Rule 10 in the Workers’ Compensation Chi- amendments to its fee schedules for medical, chiropractic, behavioral
ropractic Fee Schedule set forth in 12 NYCRR 348; health (otherwise known as the psychological fee schedule), and podiatric
(b) General Ground Rule 19 in the Workers’ Compensation services (collectively the “medical fee schedules”) to take effect on April
Medical Fee Schedule set forth in 12 NYCRR 329; 1, 2019. The Chair contended, in its Regulatory Impact Statement in the
(c) General Ground Rule 13 in the Workers’ Compensation December 26, 2018 issue of the New York State Register, that such
Behavioral Health Fee Schedule (formerly the Psychology Fee Schedule) changes were necessary to ensure that treating providers are paid a reason-
set forth in 12 NYCRR 333, and; able fee for their services so that injured workers may receive high quality
(d) General Ground Rule 16 in the Workers’ Compensation medical care in the workers’ compensation system.
Podiatry Fee Schedule set forth in 12 NYCRR 343. Although the expansive changes to the fee schedules may be necessary
(b)(1) The charges for services specified in [paragraph one of subsec- to maintain quality health services for the workers’ compensation system,
tion (a) of section 5102 of the] Insurance Law section 5102(a)(1) and any the automatic adoption of such sweeping changes for use in the no-fault
further health service charges [which] that are incurred as a result of the system within a relatively short period (April 1, 2019) would have a sig-
injury and [which] that are in excess of basic economic loss, shall not nificant adverse impact on insurers’ ability to absorb the health-service-
exceed the charges permissible under the schedules prepared and estab- related costs resulting from those changes within that timeframe. Those
lished by the chair of the Workers’ Compensation Board for industrial ac- changes will result in a substantial overall increase (at least a 10% increase
cidents that are in effect for purposes of no-fault at the time the charges has been reported) in total loss payments for no-fault-related health ser-
are incurred. However, references to workers’ compensation reporting vices, which insurers could not have anticipated. Because health service
and procedural requirements in such schedules do not apply to no-fault, payments account for more than 90% of the total loss costs in no-fault,
e.g., requirements that provide for authorization to perform surgical insurers will need time to carefully study the impact of the changes in the
procedures[, is not applicable to no-fault]. The general instructions and medical fee schedules on no-fault to appropriately adjust no-fault premium
ground rules in the workers’ compensation fee schedules apply, but those rates to absorb the noticeable increase in no-fault claims costs.
rules [which] that refer to workers’ compensation claim forms, pre- Furthermore, pursuant to Insurance Law Sections 3425 and 3426, there
authorization approval, time limitations within which health services must is a one-year “required policy period” for automobile policies, which may
be performed, enhanced reimbursement for providers of certain designated not be canceled during that period unless as prescribed in the statutes;
services, and dispute resolution guidelines do not apply, unless specified therefore, policies that are already in effect could not be altered to reflect
in this Part. the sudden increase in loss costs. The Superintendent therefore, deems it
Text of proposed rule and any required statements and analyses may be necessary to delay for 18 months the adoption of the medical fee schedules
obtained from: Camielle Barclay, New York State Department of Financial that the Chair has prepared and established to take effect on April 1, 2019,
Services, One State Street, New York, NY 10004, (212) 480-5299, email: and so those fee schedules will take effect on October 1, 2020 for use in
Camielle.Barclay@dfs.ny.gov no-fault pursuant to Insurance Law 5108.
Data, views or arguments may be submitted to: Same as above. However, this amendment to Insurance Regulation 83 will exclude
certain workers’ compensation ground rules from the 18-month delay, to
Public comment will be received until: 60 days after publication of this wit: General Ground Rule 10 in the Workers’ Compensation Chiropractic
notice. Fee Schedule, General Ground Rule 13 in the Workers’ Compensation
This rule was not under consideration at the time this agency submitted Behavioral Health Fee Schedule, and General Ground Rule 16 in the
its Regulatory Agenda for publication in the Register. Workers’ Compensation Podiatry Fee Schedule, which prohibit providers
Regulatory Impact Statement to whom these fee schedules apply from billing under current procedural
1. Statutory authority: Financial Services Law Sections 202 and 302, terminology (“CPT”) codes not listed in their respective fee schedules;
and Insurance Law Sections 301, 2601, 5221, and Article 51. and General Ground Rule 19 in the Workers’ Compensation Medical Fee
Insurance Law Section 301 and Financial Services Law Sections 202 Schedule, which prohibits any chiropractor, podiatrist or provider of
and 302 authorize the Superintendent of Financial Services (the “Superin- behavioral health services from billing under CPT codes in the medical
tendent”) to prescribe regulations interpreting the provisions of the Insur- fee schedule. Per the Chair, these rules are not new but clarification of
ance Law, and effectuate any power granted to the Superintendent under existing rules; therefore, the Superintendent determined it was not neces-
the Insurance Law. sary to delay their implementation.
Insurance Law Section 2601 prohibits insurers from engaging in unfair Insurance Regulation 83 also is being amended to provide that any ref-
claim settlement practices and requires insurers to adopt and implement erences in any workers’ compensation ground rules regarding time limita-
reasonable standards for the prompt investigation of claims arising under tions within which health services must be performed, as well as any
insurance policies. enhanced reimbursement for providers of certain designated services, are
Insurance Law Section 5221 specifies the duties and obligations of the inapplicable to no-fault. Insurance Law Section 5102(a) specifically
Motor Vehicle Accident Indemnification Corporation with respect to the prescribes any time limitations on receiving necessary health-related
payment of no-fault benefits to qualified persons. services. With respect to enhanced reimbursement for providers (20% in
Article 51 of the Insurance Law contains the provisions authorizing the addition the fee schedule rate), the Chair, in General Ground Rule 17 of
establishment of a no-fault reparations system for persons injured in motor the Workers’ Compensation Medical Fee Schedule, stated that this
vehicle accidents. Section 5108(b) specifically authorizes the Superinten- enhancement was necessary to increase the number of Board-authorized
dent to adopt the fee schedules prepared and established by the Chairman providers in the general medicine specialties. There is no requirement that
of the Workers’ Compensation Board (the “Chair”) or to promulgate fee providers be authorized by the Department to treat no-fault patients, nor is
schedules for health care benefits payable under the no-fault system for there a shortage of no-fault treating providers in general medicine
any services for which the Chair has not prepared and established; and specialties. Therefore, the Superintendent determined an additional 20%
subsection (c) prohibits a provider of health services, as defined in Article reimbursement increase solely for general medicine specialty providers of
51, in addition to the amount authorized pursuant to Insurance Law Sec- no-fault-related health services is unwarranted, and will not be adopted for
tion 5108. use pursuant to Insurance Law Section 5108.
2. Legislative objectives: Chapter 892 of the Laws of 1977 recognized 4. Costs: This amendment should have no compliance cost impact on
the necessity of establishing schedules of maximum permissible charges applicants for no-fault benefits, insurers, self-insurers, or state and local
for professional health services payable as no-fault insurance benefits to governments. With respect to any cost impact to health service providers
contain the costs of no-fault insurance. To that end, and pursuant to Insur- not regulated by the Department, participation in the no-fault system is
ance Law Section 5108(b), the Superintendent adopted those fee schedules optional, and the Department has imposed no preauthorization or report-
promulgated by the Chair. In addition, the Superintendent, after consulting ing requirements on these applicants for no-fault benefits. Notwithstand-
with the Chair and the Commissioner of Health, established fee schedules ing, this rule only delays the adoption of changes that the Chair has made
for those services for which the Chair has not prepared and established fee to the workers’ compensation fee schedules, which the Department is
schedules. required to adopt pursuant to Insurance Law Section 5108.
Since 1977, the workers’ compensation fee schedules underwent annual 5. Local government mandates: This rule does not impose any require-
revisions until the mid-1990s to reflect inflationary increases and to ment upon a city, town, village, school district, or fire district.
incorporate other necessary enhancements. In turn, the Superintendent 6. Paperwork: This rule does not impose any additional paperwork on
adopted those fee schedules through amendments to Insurance Regulation any persons affected by the rule.
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