NYS ELEC. & GAS CORP. v. PSC

• Decision Date: 09 December 2002
• Citation: 194 Misc.2d 467,753 N.Y.S.2d 332
• Parties: In the Matter of NEW YORK STATE ELECTRIC & GAS CORPORATION, Petitioner,<BR>v.<BR>PUBLIC SERVICE COMMISSION OF THE STATE OF NEW YORK et al., Respondents.
• Court: New York Supreme Court

194 Misc.2d 467

753 N.Y.S.2d 332

In the Matter of NEW YORK STATE ELECTRIC & GAS CORPORATION, Petitioner,

v.PUBLIC SERVICE COMMISSION OF THE STATE OF NEW YORK et al., Respondents.

December 9, 2002.

Huber Lawrence & Abell, New York City (John D. Draghi and Katherine W. Constan of counsel), and Davis, Polk & Wardwell, New York City (Guy Miller Struve and James D. Liss of counsel), for petitioner.

Lawrence G. Malone, Albany, for Public Service Commission of the State of New York, respondent.

Couch White, LLP, Albany (Robert M. Loughney of counsel), for Corning Incorporated, respondent.

Brickfield Burchette Ritts & Stone, P.C., Washington, D.C. (James W. Brew of counsel), for Nucor Steel Auburn, Inc., respondent.

OPINION OF THE COURT

GEORGE B. CERESIA, JR., J.

Petitioner New York State Electric & Gas Corporation (NYSEG) seeks a judgment pursuant to article 78 of the Civil Practice Law and Rules annulling and setting aside four orders of the Public Service Commission of the State of New York (the Commission or PSC) and declaring that two flex rate contracts NYSEG has been directed to execute pursuant to the foregoing orders are null and void ab initio. The four orders at issue include an order directing entry into a flex rate contract between NYSEG and respondent Nucor Steel Auburn, Inc. (Nucor) issued by a single commissioner of the PSC on March 25, 2002 (March 25 Order) and adopted in full by the Commission on April 17, 2002; an order directing entry into a flex rate contract between NYSEG and respondent Corning Incorporated (Corning) issued by a single commissioner of the PSC on April 2, 2002 (April 2 Order) and adopted in full by the Commission on April 17, 2002; an order denying rehearing and stay and authorizing an enforcement proceeding related to the March 25 Order issued by the Commission on May 23, 2002; and an order denying rehearing and stay and authorizing an enforcement proceeding related to the April 2 Order issued by the Commission on May 23, 2002. The March 25 Order directed NYSEG, inter alia, to execute an electric service agreement (ESA) with Nucor, and the April 2 Order likewise directed NYSEG, inter alia, to execute an ESA with Corning.

Petitioner challenges the above orders and contends that they are in excess of the jurisdiction of the Commission, affected by an error of law and arbitrary and capricious. More specifically, petitioner claims that (1) the Commission violated the antidiscrimination provisions of the Public Service Law, including Public Service Law § 66 (12) (d), by ordering NYSEG to grant special, preferential contracts to two specially favored customers, containing provisions not available under the tariffs available to other similarly situated customers; (2) the Commission did not have the authority to order NYSEG to enter into ESAs with Corning and Nucor as Public Service Law § 66 (12-b) (a) does not empower the Commission to compel utilities to enter into flex rate contracts; and (3) the Commission failed to include a floor price provision for service to Nucor's entire existing load or for any service to Corning during the first seven years of its contract pursuant to Public Service Law § 66 (12-b) (a).

CPLR 7803 restricts the court's review to certain delineated questions. At issue in the present matter are those questions posed by CPLR 7803 (2) and 7803 (3). CPLR 7803 (2) permits the court to consider "whether the body or officer proceeded, is proceeding or is about to proceed without or in excess of jurisdiction." CPLR 7803 (3) permits the court to consider "whether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion, including abuse of discretion as to the measure or mode of penalty or discipline imposed." A court must be mindful of the appropriate standard of review in an article 78 proceeding by determining whether the proceeding is in the nature of mandamus to review, certiorari or mandamus to compel (see, CPLR 7803; Matter of Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753, 757 [1991]).

A petitioner seeking mandamus to compel "must have a clear legal right to the relief demanded and there must exist a corresponding nondiscretionary duty on the part of the administrative agency to grant that relief" (Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753, 757 [1991], citing CPLR 7803 [1]; Matter of Crain Communications v Hughes, 74 NY2d 626; Matter of Kupersmith v Public Health Council, 63 NY2d 904; Matter of City of Newburgh v Public Empl. Relations Bd., 63 NY2d 793; Matter of De Milio v Borghard, 55 NY2d 216; Matter of Legal Aid Socy. v Scheinman, 53 NY2d 12; Matter of Police Conference v Municipal Police Training Council, 51 NY2d 810; see also, McLaughlin, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C7801:4, at 31 [1981]).

"In a proceeding in the nature of mandamus to review, however, a court examines an administrative action involving the exercise of discretion. Mandamus to review resembles certiorari, except that in a certiorari proceeding a quasi-judicial hearing normally is required and the reviewing court has the benefit of a full record. * * * In a mandamus to review proceeding, however, no quasi-judicial hearing is required; the petitioner need only be given an opportunity `to be heard' and to submit whatever evidence he or she chooses and the agency may consider whatever evidence is at hand, whether obtained through a hearing or otherwise. The standard of review in such a proceeding is whether the agency determination was arbitrary and capricious or affected by an error of law." (Id. at 757-758, citing CPLR 7803 [3]; Siegel, NY Prac § 558, at 874-875 [2d ed]; see also, Matter of 125 Bar Corp. v State Liq. Auth., 24 NY2d 174; Matter of Colton v Berman, 21 NY2d 322; Matter of Ayers v Coughlin, 137 AD2d 300, 306, mod 72 NY2d 346; Carrion v Webb, 131 AD2d 806; Matter of Harlem Val. United Coalition v Hall, 80 AD2d 851, affd 54 NY2d 977; Graca v State Liq. Auth., 32 AD2d 879; Rochester Colony v Hostetter, 19 AD2d 250; see generally, 5 NY Jur 2d, Article 78 and Related Proceedings § 78.)

Furthermore, "an administrative agency's interpretation of the statute it is charged with implementing is entitled to varying degrees of judicial deference depending upon the extent to which the interpretation relies upon the special competence the agency is presumed to have developed in its administration of the statute" (Matter of Lippman v Public Empl. Relations Bd., 263 AD2d 891, 892 [3d Dept 1999], citing Matter of Rosen v Public Empl. Relations Bd., 72 NY2d 42, 47; see, Matter of Gruber [New York City Dept. of Personnel—Sweeney], 89 NY2d 225, 231). Great deference is accorded to an agency's judgment where its interpretation "involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom" (id., citing Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459; see, Matter of Rosen v Public Empl. Relations Bd., supra at 47). However, it has been repeatedly stated that "where * * * the question is one of pure statutory construction `dependent only on accurate apprehension of legislative intent [with] little basis to rely on any special competence' * * * judicial review is less restricted as `statutory construction is the function of the courts'" (id., citing Matter of Rosen v Public Empl. Relations Bd., supra at 47-48 [citation omitted], quoting Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459; see, Matter of Gruber [New York City Dept. of Personnel—Sweeney], supra; Matter of Town of Mamaroneck PBA v New York State Pub. Empl. Relations Bd., 66 NY2d 722, 724).

Public Service Law § 66 (12) (d)

NYSEG claims that the Commission acted in excess of its jurisdiction and in an arbitrary and capricious manner as its March 25 and April 2 determinations were contrary to the antidiscrimination provisions of the Public Service Law, and in particular section 66 (12) (d), when it ordered NYSEG to furnish special contract terms to respondents Corning and Nucor that are not available to NYSEG's other customers and inconsistent with NYSEG's tariffs applicable to other customers, the latter consisting of schedules required by law to be filed with the Commission which set forth the general terms of NYSEG's flex rate contracts. As an example, NYSEG contends that "the Nucor and Corning contracts have longer terms than other NYSEG flex rate contracts, and longer than is authorized by NYSEG's flex rate tariffs." NYSEG also points to the absence of price floors, "as opposed to the marginal-cost-plus-one-cent floor price which is incorporated in all other NYSEG flex rate contracts and in its flex rate tariffs, and which, indeed, was established as a guideline for all utilities' flex rate contracts in the PSC's Opinion No. 94-15." NYSEG not only contends that the subject orders are contrary to Public Service Law § 66 (12) (d), but also that Public Service Law § 66 (12-b) (a) does not authorize the Commission to approve flex rate contracts for single customers, therefore the Commission acted in excess of its jurisdiction. More specifically, NYSEG argues that Public Service Law § 66 (12-b) (a) only authorizes the Commission to approve flex rate contracts for "classes" of similarly situated customers.

Public Service Law § 66 (12) (d) provides that

"No utility shall charge, demand, collect or receive a greater or less or different compensation for any service rendered or to be rendered than the rates and charges specified in its schedule filed and in effect; nor shall any utility refund or remit in any manner or by any device any portion of the rates or charges so specified, nor extend to any person any form of contract or agreement, or any rule or regulation, or any privilege or facility, except such as are regularly and uniformly extended to all

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