| Matter of Crucible Materials Corp. v New York Power Auth. |
| 2008 NY Slip Op 03366 [50 AD3d 1353] |
| April 17, 2008 |
| Appellate Division, Third Department |
| In the Matter of Crucible Materials Corporation et al., Appellants, vNew York Power Authority, Respondent. |
—[*1] Eileen P. Flynn, New York Power Authority, White Plains, for respondent.
Peters, J. Appeal from a judgment of the Supreme Court (Sackett, J.), entered May 14, 2007in Albany County, which dismissed petitioners' application, in a proceeding pursuant to CPLRarticle 78, to, among other things, compel respondent to comply with Economic DevelopmentLaw § 189 (a) (5).
The Power for Jobs (hereinafter PFJ) program was enacted in 1997 for the purpose ofproviding low cost power to businesses in an effort to maintain jobs and encourage decisions toretain, attract or expand businesses in New York (see L 1997, ch 316, § 1).Respondent was charged with administering the PFJ program, a function that included enteringinto contracts with recipients for the purchase of power, procuring such power and making itavailable to recipients through their local distributors (see Public Authorities Law§ 1005 [b], as added by L 1997, ch 316, § 2).
At the inception of the program, the supply of electricity was phased in over a three-yearperiod and successful applicants were granted three-year contracts (see EconomicDevelopment [*2]Law § 189, as added by L 1997, ch 316,§ 6).[FN1]In 2000 and 2002, the PFJ program was amended to add a fourth and fifth phase (see L2000, ch 63, part KK, § 4; L 2002, ch 226, § 5). The Legislature again amended thePFJ program in 2004, providing recipients with the option of either extending their contracts withrespondent through December 31, 2005 or, subsequent to the expiration of their contracts,selecting the "electricity savings reimbursements" option (hereinafter the rebate program)through December 31, 2005 (see L 2004, ch 59, part T, §§ 3, 4). Under therebate program, participants would purchase power from their local utility, and their "basicreimbursement" would consist of the difference in price between the rate they paid for powereach quarter and the average cost of power under their final year of their phase four or fivecontract (L 2004, ch 59, part T, § 3).[FN2] The PFJ program was again amended in 2005, extending it through December 31, 2006(see L 2005, ch 59, part P, § 2).
In August 2006, the PFJ program was amended, yet again, in an atmosphere in whichparticipants had been charged more for power in 2006 under the program than they would havepaid had they purchased power from their local utility (see L 2006, ch 645; Letter fromSenator James Wright, Bill Jacket, L 2006, ch 645). Thus, in addition to extending the programthrough June 30, 2007, the amendments provided relief to program participants through arestitution benefit and offered an opportunity for manufacturers to convert to the rebate program(see L 2006, ch 645, § 3). In response to these amendments, respondent wrote toprogram participants in October 2006, stating that they were eligible to apply for extensions oftheir program contracts until June 30, 2007. In November 2006, respondent further interpretedthe amendments, advising that manufacturers who chose to opt for the rebate program would beprecluded from receiving restitution for overpayments in 2006, that rebates for new enrollees inthe program would be calculated based on the participant's average monthly price during the 12months immediately prior to joining the program (which meant 2006 for most new participants)and that calculations and payment of restitution benefits for 2006 would be made at theconclusion of the program in June 2007 and likely paid in the fourth quarter of 2007.
Petitioners are manufacturing companies that began participating in the PFJ program in 1999pursuant to three-year contracts under phase two and subsequently extended their agreementsuntil December 31, 2005. After the 2005 PFJ program amendments, they chose to extend theircontracts with respondent until December 31, 2006 rather than participate in the rebate program.In reply to respondent's November 2006 letter interpreting the 2006 amendments, petitionerCrucible Materials Corporation protested respondent's interpretation of [*3]the statute but, nonetheless, elected to extend its contract in order toreceive the restitution benefit. Petitioner Syracuse Casting Sales Corporation likewise extendedits contract with respondent rather than selecting the rebate program.
In February 2007, petitioners commenced this proceeding to compel respondent to complywith Economic Development Law § 189 (a) (5) and sought an inquest to determine theamount of damages incurred by petitioners due to respondent's failure to comply with the law asamended. Supreme Court dismissed the petition and further held that petitioners had no standingto contest respondent's calculation of the rebate option. Petitioners now appeal.
Petitioners first contend that Supreme Court erred in upholding respondent's interpretationthat, under the 2006 PFJ amendments, a manufacturer's ability to receive the restitution benefitfor 2006 and participate in the rebate program prospectively were mutually exclusive. As thisissue involves a matter of pure statutory analysis, we need not defer to the agency's interpretation(see Matter of Astoria Gas TurbinePower, LLC v Tax Commn. of City of N.Y., 7 NY3d 451, 455 [2006]; Matter of Sbriglio v Novello, 44 AD3d1212, 1214 [2007]; Matter of Mutual Redevelopment Houses v Roth, 307 AD2d422, 424 [2003], lv denied 100 NY2d 516 [2003]). Rather, in interpreting the statute, weattempt to effectuate the legislative intent, giving clear effect to the plain meaning of the wordsemployed (see McKinney's Cons Laws of NY, Book 1, Statutes § 92;Patrolmen's Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205, 208[1976]; Matter of Sbriglio v Novello, 44 AD3d at 1214). In addition, we liberallyconstrue remedial statutes in favor of the intended beneficiaries and " 'consider the mischiefsought to be remedied and . . . favor the construction which will suppress the eviland advance the remedy' " (Matter of Burrows v Board of Assessors for Town ofChatham, 98 AD2d 250, 253 [1983], mod 64 NY2d 33 [1984], quoting Matter ofNew York Life Ins. Co. v State Tax Commn., 80 AD2d 675, 677 [1981], affd 55NY2d 758 [1981]; see McKinney's Cons Laws of NY, Book 1, Statutes §§124, 321; Matter of DaimlerChryslerCorp. v Spitzer, 26 AD3d 88, 89 [2005], affd 7 NY3d 653 [2006]).
The 2006 PFJ program amendment at issue provides, in pertinent part: "notwithstanding anyprovision of law to the contrary, for the period beginning January first, two thousand six, forrecipients who choose to elect a contract extension, and whose unit cost of electricity under suchcontract extension exceeds the unit cost of electricity of the electric corporation which holds afranchise for electric services in the location of the recipient's facility, [respondent] shallreimburse the recipient for all dollars paid in excess of the unit cost of electricity of the electriccorporation which holds a franchise for electricity services in the location of the recipient'sfacility. In addition, a recipient that is a manufacturer that elected a contract extension, maychoose to withdraw such election and instead may choose to elect an electricity savingsreimbursement upon notice to the [respondent]. Such electricity savings reimbursement shallbe calculated according to the formula for the basic reimbursement as explained in thisparagraph" (L 2006, ch 645, § 3 [emphasis added]). The dispute between the partiesconcerns whether the emphasized language confers a benefit on manufacturers that is in additionto the benefit conferred in the previous sentence or whether the two are mutually exclusive.Viewing first the plain meaning of the language, the words "in [*4]addition" imply that the Legislature intended that manufacturerscould avail themselves of both benefits. Likewise, where the amendment allows manufacturers to"choose to withdraw such election," we find that, without further definition, the reference mustapply to the election that the manufacturer chose pursuant to the sentence immediately precedingand, thus, allows manufacturers to both elect a contract extension in order to qualify for the 2006restitution benefit and, sometime thereafter, withdraw such election and participate in the rebateprogram prospectively. Significantly, this interpretation also effectuates the intent of theLegislature in its creation of the PFJ program, which was to "make available low cost power to. . . businesses" (L 1997, ch 316, § 1).[FN3][*5]
Nor are we persuaded that respondent correctlyinterpreted the formula to be used to calculate rebates under that program or that petitioners lackstanding to contest such calculation, because they did not select the rebate option when given theopportunity to do so pursuant to the 2006 PFJ program amendments. In order to establishstanding, a petitioner must demonstrate injury in fact and satisfy the "zone of interest" test; thatis, the petitioner must show that "the administrative action will in fact have a harmful effect on[it] and that the interest asserted is arguably within the zone of interest to be protected by thestatute" (Matter of Dairylea Coop. v Walkley, 38 NY2d 6, 9 [1975]; see Society ofPlastics Indus. v County of Suffolk, 77 NY2d 761, 773 [1991]; Matter of Saratoga Lake Protection &Improvement Dist. v Department of Pub. Works of City of Saratoga Springs, 46 AD3d979, 981 [2007], lv denied 10 NY3d 706 [2008]). Indeed, "[a] fundamental tenet ofour system of remedies is that when a government agency seeks to act in a manner adverselyaffecting a party, judicial review of that action may be had" (Matter of Dairylea Coop. vWalkley, 38 NY2d at 10).
Here, as manufacturers who participate in the PFJ program, petitioners were unquestionablywithin the zone of interest of the 2006 amendments and, inasmuch as we have found thatpetitioners were eligible to receive a benefit under the amendments—the right to obtain areimbursement and then elect to participate in the rebate program—but were deprived ofreceiving such pursuant to respondent's interpretation, we conclude that they have demonstratedinjury in fact. Thus, Supreme Court erred in denying petitioners standing. Since we havedetermined that petitioners have standing and this is once again a question of pure statutoryinterpretation, we now address the merits of the rebate calculation dispute.
As provided in the 2006 amendments, the rebate to which petitioners were entitled was to becalculated according to the formula for the basic reimbursement (see EconomicDevelopment Law § 189 [a] [5], as amended by L 2006, ch 645, § 3). Under thebasic reimbursement formula, the baseline amount against which a participant's current powercosts are measured is "the average unit cost of electricity such recipient paid during the final yearof the contract for power allocated under phase four or five of the [PFJ] program" (EconomicDevelopment Law § 189 [a] [5]). The statute also states unequivocally that delivery ofpower under both phase four and five of the PFJ program shall end no later than December 31,2005 (see Economic Development Law § 189 [e] [2], [3]).[FN4][*6]
Respondent's interpretation, that the rebate would bebased upon participants' "average monthly price during the 12 months prior to joining the[r]ebate program, which for most will be calendar year 2006," simply ignores the languageindicating that the final year representing the baseline must be for phase four or five powerallocations. We note that earlier in that same sentence, when discussing the quantity of power forwhich participants may be reimbursed, the Legislature refers only to the "final year of therecipient's contract," evincing an intent to distinguish the two time periods (EconomicDevelopment Law § 189 [a] [5]). Moreover, respondent's interpretation would once againdefeat the intent of the legislation. The fact that PFJ program participants were paying more forpower in 2006 than they would have paid through their local utilities led in part to thepromulgation of the 2006 amendments. To now find that such inflated prices should be used as abaseline for future rebates would be directly contrary to the Legislature's goal of providing lowcost power to businesses, inasmuch as it was entirely possible that the 2006 program priceswould remain higher than participants' actual costs from their local utilities in 2007. Indeed, inpromulgating the amendments, the Legislature allowed manufacturers to switch to the rebateprogram in order to "hold them harmless against rate fluctuations and . . . provide adiscounted rate" (Mem of Assembly, Bill Jacket, L 2006, ch 645). The logical conclusion is thatthe Legislature intended to extend to participants the program prices from 2005 or before, whenbuying directly from the program resulted in a "discounted rate" as compared to the market pricecharged by utilities. Thus, we find that Supreme Court erred in upholding respondent'sdetermination, and now hold that the baseline for calculating the rebate should be the final yearof the participant's contract under either phase four or five of the program, ending no later thanDecember 31, 2005.
Finally, petitioners contend that Supreme Court erred in deferring to respondent'sdetermination with regard to the time frame in which the restitution payments were to be made asauthorized under Economic Development Law § 189 (a) (5). Where interpretation of astatute involves knowledge of underlying operational practices or entails an evaluation of factualdata, courts regularly defer to the agency charged with administering the statute (see Kurcsicsv Merchants Mut. Ins. Co., 49 NY2d 451, 459 [1980]; Matter of Suffolk Regional Off-Track Betting Corp. v New York StateRacing & Wagering Bd., 47 AD3d 133, 136 [2007], lv granted 10 NY3d 706[2008]). Here, we find that the court properly deferred to respondent's interpretation, inasmuch asthe Legislature did not evince an intent as to when such payments were to be made, and thetimetable as promulgated by respondent did not contravene the intent of the statute.[FN5]
Mercure, J.P., Carpinello, Rose and Kavanagh, JJ., concur. Ordered that the judgment ismodified, on the law, without costs, by reversing so much thereof as dismissed petitioners'application in its entirety; application granted to the extent that respondent is compelled tocomply with Economic Development Law § 189 (a) (5) in a manner as interpreted by thisCourt's decision; and, as so modified, affirmed.
Footnote 1: The Legislature, in a lateramendment, termed the first year the "first phase," the second year the "second phase" and thethird year the "third phase" (L 2000, ch 63, part KK, § 4).
Footnote 2: Because participants werelimited in the quantity of power they were permitted to buy through the PFJ program, the rebateprogram limited reimbursement to that quantity of power that was purchased by the recipient inthe corresponding quarter of the final year of its contract under the program (see L 2004,ch 59, part T, § 3).
Footnote 3: Part of the impetus for the 2006amendments was that participants were actually paying more for energy under the program thanthey would have otherwise. In that light, an interpretation of the amendment that would causemanufacturing participants to forgo reimbursement for their 2006 overpayments in order toparticipate in the rebate program prospectively would contravene the very intent of the PFJprogram.
Notably, the summary of provisions in the Assembly's memorandum in support of thelegislation states that the bill "[r]equires [respondent] to allow PFJ manufacturers. . . to switch to a rebate form of the program, which would hold them harmlessagainst rate fluctuations and would provide a discounted rate; and, [r]equires[respondent] to make up the difference between the rates the businesses would have paid forenergy to their local utility as compared to the higher price [respondent] charged them under theircontract extensions, retroactive to January 1, 2006" (Mem of Assembly, Bill Jacket, L 2006, ch645 [emphasis added]). Other contemporaneous interpretations found in the legislative historylikewise support this conclusion (see e.g. Mem of Div of Budget, Bill Jacket, L 2006, ch645 [noting that the statute requires respondent to reimburse certain participants and, in addition,allows all manufacturers who chose the contract extension to switch to the rebate program uponnotice to respondent]), as does a letter to respondent from bill sponsor Assembly Member PaulTonko who, in response to respondent's interpretation, wrote that it appeared that respondent was"yet again, attempting to deny benefits to program participants which the State Legislature andthe Governor have agreed to provide."
Footnote 4: The Legislature apparentlycreated internal inconsistencies in the statute in 2005 and 2006 by amending EconomicDevelopment Law § 189 (f) to allow the "term of contracts for allocations under the fifthphase of the program" to extend past December 31, 2005 (L 2005, ch 59, part P, § 3;see L 2006, ch 645, § 4). Inasmuch as that provision directly contradicts thestatute's mandate that delivery under the phase five allocation shall end on or before December31, 2005 (see Economic Development Law § 189 [e] [3]) and the latter mandatewas in effect at the time the rebate program was instituted and the "basic reimbursement"formula was promulgated, we resolve any such inconsistency in favor of the legislative intent ofthe program as a whole, which is to provide low cost power to participants.
Footnote 5: However, we do note that inenacting a subsequent amendment to Economic Development Law § 183 (h) (4), theLegislature directed that respondent "shall expedite the awarding of [restitution] benefits" (L2007, ch 89, § 1).