| Matter of Luyster Cr., LLC v New York State Pub. Serv.Commn. |
| 2011 NY Slip Op 01772 [82 AD3d 1401] |
| March 10, 2011 |
| Appellate Division, Third Department |
| In the Matter of Luyster Creek, LLC, Appellant-Respondent, v NewYork State Public Service Commission, Respondent-Appellant, and Consolidated EdisonCompany of New York, Inc., Respondent. |
—[*1] Peter McGowan, New York State Public Service Commission, Albany (Jonathan D. Feinbergof counsel), for respondent-appellant. Stephen T. Brewi, Consolidated Edison Company of New York, Inc., New York City, forrespondent.
Peters, J.P. Cross appeals from a judgment of the Supreme Court (McGrath, J.), entered June3, [*2]2010 in Albany County, which, among other things,dismissed petitioner's application, in a proceeding pursuant to CPLR article 78, to review adetermination of respondent Public Service Commission confirming that the development ofcertain real property as an envelope manufacturing facility was an essential factor underlying thepublic interest finding in its prior order approving the transfer of the property.
Following an inquiry by the Queens Borough President as to whether respondentConsolidated Edison Company of New York, Inc. (hereinafter Con Ed) had any propertyavailable for development as an envelope manufacturing facility, petitioner and Con Ednegotiated the sale of a 21.3-acre parcel of Con Ed's property located in the Astoria section ofQueens. They subsequently submitted a joint petition to respondent Public Service Commission(hereinafter PSC) seeking approval of the transfer, as required by Public Service Law § 70.By order dated November 25, 2002, the PSC approved the transfer subject to certain conditions.In so doing, it found that, "[b]ased on [petitioner's] intended use for the [p]roperty, the fact thatCon [Ed] no longer needs the [p]roperty, the purchase price and resulting net gain, and the termsof the [purchase a]greement," the transfer satisfied the public interest requirement of PublicService Law § 70.
When Con Ed later discovered that petitioner no longer intended to develop the site as anenvelope manufacturing facility, it applied to the PSC for a declaratory ruling confirming itsunderstanding that the approval of the transfer was premised upon the development of theproperty in this manner. Petitioner opposed the application, arguing that the approval was notconditioned upon the property being used or developed in any particular manner. In an April2007 declaratory ruling, the PSC confirmed that development of the property as an envelopemanufacturing facility was an "essential factor" in its 2002 determination that the transfer was inthe public interest and, thus, its corresponding decision to grant approval of thetransfer.[FN1]
Petitioner thereafter commenced this CPLR article 78 proceeding seeking to annul the PSC'sdeclaratory ruling. Supreme Court dismissed the petition on the merits, finding that thedeclaratory ruling was not arbitrary and capricious. These cross appeals ensued.
Petitioner contends that the PSC exceeded its authority to determine whether the transfer wasin the public interest by considering and relying upon its impact on economic development ingeneral, rather than limiting its review to the effect of the transfer on utility service and rates.Initially, we reject the PSC's assertion in its cross appeal that petitioner's challenge in this regardis untimely. "A CPLR article 78 proceeding 'must be commenced within four months after thedetermination to be reviewed becomes final and binding upon the petitioner' " (Matter ofAmerican Tr. Ins. Co. v New York State Dept. of Motor Vehs., 305 AD2d 840, 841 [2003],quoting CPLR 217 [1]; see Matter ofFeldman v New York State Teachers' Retirement Sys., 14 AD3d 769, 770 [2005]),which occurs when such an administrative [*3]determination"definitively impacts and aggrieves" the party seeking review (Matter of Scott v City of Albany, 1AD3d 738, 739 [2003]; see Matter of Feldman v New York State Teachers' RetirementSys., 14 AD3d at 770). Here, petitioner was not aggrieved by the 2002 order. That orderapproved the joint petition to transfer the subject property and contained no express provisionconditioning the approval on use of the property as an envelope manufacturing facility(compare Matter of Public Serv. Commn. of State of N.Y. v Rochester Tel. Corp., 55NY2d 320, 324-325 [1982]). It was only upon issuance of the PSC's 2007 declaratory rulinginterpreting the 2002 order and confirming that the proposed use of the property was an essentialfactor in its approval that petitioner was definitively affected and aggrieved (see Matter ofAT&T Communications of N.Y. v Public Serv. Commn. of State of N.Y., 231 AD2d 155,158 [1997], lv denied 91 NY2d 803 [1997]). Accordingly, the four-month statute oflimitations began to run from the date of the declaratory ruling (see id.).
Turning to the merits of petitioner's argument, it is well settled that the PSC possesses notonly those powers expressly granted to it by the Legislature, but also those "incidental to itsexpressed powers, together with those required by necessary implication to enable the [PSC] tofulfill its statutory mandate" (Matter of Niagara Mohawk Power Corp. v Public Serv.Commn. of State of N.Y., 69 NY2d 365, 369 [1987]; see Public Service Law §4 [1]; Matter of New York Tel. Co. v Public Serv. Commn. of State of N.Y., 271 AD2d35, 39 [2000], lv denied 95 NY2d 762 [2000]). Public Service Law § 70 provides,in relevant part, that "[n]o gas corporation or electric corporation shall transfer or lease itsfranchise, works or system . . . to any other person or corporation . . .without the written consent of the [PSC]." The PSC may grant such approval where the transferis shown to be in the public interest (see 16 NYCRR 31.1; People ex rel. Iroquois GasCorp. v Public Serv. Commn., 264 NY 17, 20 [1934]).
Here, while the PSC is charged with the responsibility for ensuring that electric and utilitycorporations furnish services that are "safe and adequate" and charge rates that are "just andreasonable" (Public Service Law § 65 [1]; see Public Service Law § 66), andneither the Public Service Law nor the implementing regulations delineate the specific factors thePSC should consider in determining whether a utility's transfer of property is in the publicinterest, our "realistic appraisal" of this matter leads us to conclude that the PSC is entitled toconsider economic development benefits as part of its public interest analysis (Matter ofConsolidated Edison Co. of N.Y. v Public Serv. Commn. of State of N.Y., 47 NY2d 94, 102[1979]; accord Matter of New York State Elec. & Gas Corp. v Public Serv. Commn. of Stateof N.Y., 308 AD2d 108, 111 [2003]; Matter of New York Tel. Co. v Public Serv.Commn. of State of N.Y., 271 AD2d at 39). In 1983, the Legislature amended the PublicService Law to authorize the PSC to identify economic incentive areas and set incentive rates inan effort to encourage economic development in New York (L 1983, ch 626, § 2).Specifically, Public Service Law § 66 (12-b) (a) vests the PSC with the power "todesignate as economic incentive areas specific areas in which reduced economic activity,unemployment and underutilization of utility facilities justifies the approval of reduced incentiverates for utility services, . . . [to] authorize special economic incentive rates in suchareas . . . [and] to designate or form classes of customers as appropriate for specialrates or tariffs, in order to prevent loss of such customers, or to attract new customers [*4]where necessary to maintain economic use of utility facilities." ThePublic Service Law was amended again in 1986, this time authorizing the PSC to set economicdevelopment zone rates (see Public Service Law § 66 [12-c]). The legislativehistory reveals that this amendment was part of an economic development program enacted tospur economic development in areas of New York that "failed to participate fully in the economicresurgence and growth of our State" (Governor's Mem approving L 1986, ch 686, 1986McKinney's Session Laws of NY, at 3186-3187). These provisions of the Public Service Lawclearly evince the Legislature's decision to place matters of economic development and impactwithin the PSC's purview.[FN2]
Moreover, this Court has determined that the PSC is authorized to consider economicdevelopment benefits, including the potential for job loss and the economic well-being of theregion, in both the context of rate setting and the granting of certificates of public convenienceand necessity (see Matter of New York State Elec. & Gas Corp. v Public Serv. Commn. ofState of N.Y., supra; Matter of Niagara Mohawk Power Corp. v Public Serv. Commn. ofState of N.Y., 218 AD2d 421 [1996]). Indeed, in Matter of Niagara Mohawk PowerCorp. v Public Serv. Commn. of State of N.Y. (supra), we upheld the PSC's findingof "public need" based on its record-supported conclusion that the granting of a certificate ofnecessity "contributes to the addition of jobs and economic development in the region[,]enhances customer choice and competitive pricing terms, and precludes a potentially significantloss of a large user of electricity that employs approximately 800 people and contributessubstantially to the economic well-being of the region" (id. at 429). In so doing, we notedthat the PSC's "determination clearly fell within [its] area of expertise and involved both aninterpretation of relevant statutory and regulatory provisions and a weighing of the relevantevidence" (id.).
In our view, consideration by the PSC of the economic impacts of a utility's transfer of itsproperty in determining whether such a transfer serves the public interest reasonably promotesthe objectives of the Public Service Law (see Matter of New York State Elec. & Gas Corp. vPublic Serv. Commn. of State of N.Y., 308 AD2d at 114). Thus, in light of the foregoing, wefind that the PSC was empowered to consider economic development benefits, including job lossor creation, in determining whether the transfer is in the public interest.
Petitioner next argues that the PSC's 2007 declaratory ruling essentially rewrote its 2002transfer order and, therefore, was arbitrary and capricious. More specifically, petitioner contendsthat the PSC improperly interpreted the text of the 2002 transfer order and placed undue [*5]emphasis upon the type of development that was to be made of thesubject property, which was not a significant factor in the first instance.
Determinations of the PSC are to be accorded deference and " 'may not be set aside unlessthey are without [a] rational basis or without reasonable support in the record' " (Matter of Keyspan-Ravenswood, Inc. vPublic Serv. Commn. of State of N.Y., 7 AD3d 837, 838 [2004], quoting Matter ofRochester Tel. Corp. v Public Serv. Commn. of State of N.Y., 87 NY2d 17, 29 [1995];see Matter of Brooklyn Union Gas Co. v Public Serv. Commn. of State of N.Y., 34AD2d 71, 72 [1970]). Where such a rational basis exists, we "will not substitute [our] judgmentfor that of the [PSC] regarding the issue of public interest, the determination of which has beencommitted to the expertise of the [PSC]" (Matter of Brooklyn Union Gas Co. v Public Serv.Commn. of State of N.Y., 34 AD2d at 72). Here, we find both a rational basis and adequaterecord support for the PSC's conclusion that the development of the property as an envelopemanufacturing facility was an "essential factor" in its 2002 determination that the transfer was inthe public interest (see Matter of Indeck-Yerkes Energy Servs. v Public Serv. Commn. ofState of N.Y., 164 AD2d 618, 622-623 [1991]).
The PSC's transfer order identifies and discusses several factors upon which its publicinterest finding was based. Among these factors were petitioner's intended use of the property asan envelope manufacturing facility, the reasonableness of the purchase price and resulting netgain to Con Ed, the fact that Con Ed no longer needed the property, and the terms of the parties'purchase agreement. The impetus for this transaction was that the subject property would bedeveloped as an envelope manufacturing facility, and petitioner and Con Ed represented to thePSC (as well as the New York City Industrial Development Agency which was the lead agencyfor purposes of the State Environmental Quality Review Act) that the property would bedeveloped as such. Notably, in the joint petition, the parties urged the PSC to approve the transferas in the public interest based upon the fact that it would foster economic development in thearea and result in increased employment and related economic activity in Queens. Moreover, inits order, the PSC stressed that the intended envelope manufacturing facility would relocateapproximately 360 current employees to the facility and create 100 new jobs, and that "[t]hepetition contains a letter of support from the Queens Borough President, urging the [PSC] toapprove the transaction" based upon economic development benefits. Contrary to petitioner'scontention, the record supports the PSC's conclusion that the financial terms of the transactionalone were not adequate to support the public interest finding, and that it was only when thetransfer price and economic development benefits of the proposed envelope manufacturingfacility were collectively considered that it found the transaction to be in the public interest.Accordingly, a rational basis exists in the record for the PSC's declaratory ruling thatdevelopment of the property as an envelope manufacturing facility, with its concomitant jobgrowth and economic development attributes, was an essential factor in its determination that thetransfer was in the public interest and, as such, the determination will not be disturbed (seeMatter of Indeck-Yerkes Energy Servs. v Public Serv. Commn. of State of N.Y., 164 AD2dat 622-623).[*6]
Finally, despite petitioner's assertion to the contrary, wefind no error in the PSC's refusal to consider the affidavit of Angelo Acquista, petitioner'svice-president, regarding the new development plans for the subject property. The purpose of thePSC's declaratory ruling was to construe the prior 2002 transfer order, not to consider whether anew or different transaction should be approved. As noted by the PSC, the affidavit constitutedextraneous material outside of the record before the PSC at the time it issued the decision beingreviewed and, as such, was irrelevant to its interpretation of the prior order.[FN3]The parties' remaining contentions, to the extent not specifically addressed herein, have beenreviewed and found to be without merit.
Lahtinen, McCarthy and Garry, JJ., concur. Ordered that the judgment is affirmed, withoutcosts.
Footnote 1: The sale of the property wasnever consummated.
Footnote 2: Additionally, Public ServiceLaw § 5 (2) provides that "[t]he [PSC] shall encourage all persons and corporations subjectto its jurisdiction to formulate and carry out long-range programs, individually or cooperatively,for the performance of their public service responsibilities with economy, efficiency, and care forthe public safety, the preservation of environmental values and the conservation of naturalresources."
Footnote 3: Certainly, if petitioner and ConEd are able to reach a new agreement, upon reapplication for approval of the transfer the PSCmay consider Acquista's affidavit as well as any other evidence that petitioner wishes to submittending to support a finding that the transfer continues to be in the public interest.