Albany Eng'g Corp. v. Hudson River/Black River Regulating Dist.

• Decision Date: 17 October 2013
• Parties: ALBANY ENGINEERING CORPORATION, Respondent, v. HUDSON RIVER/Black River Regulating District, Appellant.
• Court: New York Supreme Court — Appellate Division

110 A.D.3d 1220
973 N.Y.S.2d 391
2013 N.Y. Slip Op. 06766

ALBANY ENGINEERING CORPORATION, Respondent,
v.
HUDSON RIVER/Black River Regulating District, Appellant.

Supreme Court, Appellate Division, Third Department, New York.

Oct. 17, 2013.

Recognized as Preempted

McKinney's ECL § 15-2121

[973 N.Y.S.2d 392]

Eric T. Schneiderman, Attorney General, Albany (Victor Paladino of counsel), for appellant.

Matthew C. Hug, Troy, for respondent.

Before: ROSE, J.P., SPAIN, GARRY and EGAN JR., JJ.

ROSE, J.P.

Appeals (1) from an order of the Supreme Court (Teresi, J.), entered April 13, 2012 in Albany County, which, among other things, granted plaintiff's motion for summary judgment, and (2) from the judgment entered thereon.

Plaintiff is the owner of a hydropower plant on the Hudson River, and defendant is a public benefit corporation that operates and maintains upstream dams and reservoirs for the purpose of regulating the river's flow. Pursuant to state law, defendant has, since the 1920s, levied annual assessments against plaintiff and its predecessors, among others, to recover its capital, maintenance and operating costs ( see e.g.ECL 15–2121). In 2002, defendant obtained a license from the Federal Energy Regulatory Commission (hereinafter FERC) for its Great Sacandaga Lake Storage Project, a major reservoir and dam impounding certain headwaters of the Hudson River. Despite becoming a licensee of FERC, defendant continued to employ the state assessment scheme to assess downstream entities such as plaintiff for its costs in connection with the Great Sacandaga Lake Storage Project. Claiming that the assessments imposed by defendant conflicted with the Federal Power Act, plaintiff initiated a proceeding before FERC in 2006. Ultimately, the United States Court of Appeals for the District of Columbia Circuit agreed with plaintiff that the Federal Power Act preempted state law and precluded defendant from recovering any of its costs that conflicted with the federal assessment scheme administered by FERC ( Albany Eng'g Corp. v. Federal Energy Regulatory Commn., 548 F.3d 1071, 1076–1079 [2008] ).

On remand from the Circuit Court, FERC concluded that it did not have authority to order defendant to refund the precluded assessments and ultimately ordered

[973 N.Y.S.2d 393]

a headwater benefits investigation to determine, among other things, the appropriate amount of assessments that defendant should have imposed for the years in question under the Federal Power Act. FERC also concluded that it would consider applying the improper assessments as a credit in determining the assessments owed by plaintiff in the future and indicated that, in the alternative, plaintiff was free to seek a refund in state court based on the Circuit Court's determination that the assessments were unauthorized.

Plaintiff then commenced this action for a full refund of the assessments it had paid to defendant pursuant to state law for 2003 through 2007, arguing that they had been judicially determined to be unauthorized and, therefore, defendant had been unjustly enriched. Following joinder of issue, plaintiff moved for summary judgment and defendant cross-moved, claiming that the action was unripe and premature given the ongoing administrative proceedings before FERC and the unresolved headwater benefits investigation. Supreme Court denied defendant's cross motion and granted plaintiff's motion, ordering that plaintiff was entitled to a judgment on the full amount requested of $516,655.62, plus interest. A judgment was entered and defendant appeals from the order and judgment.¹

On appeal, defendant makes none of the arguments raised in connection with the motions before Supreme Court. Instead, defendant now argues that plaintiff failed to state a cause of action for a refund by failing to allege that it paid the unauthorized assessments under protest. However, “[a]n...