Cnty. of Albany v.Hudson River–Black River Regulating Dist.

• Decision Date: 10 May 2012
• Citation: 944 N.Y.S.2d 369,2012 N.Y. Slip Op. 03698,97 A.D.3d 61
• Parties: In the Matter of COUNTY OF ALBANY et al., Appellants, v. HUDSON RIVER–BLACK RIVER REGULATING DISTRICT et al., Respondents.
• Court: New York Supreme Court — Appellate Division

97 A.D.3d 61

944 N.Y.S.2d 369

2012 N.Y. Slip Op. 03698

In the Matter of COUNTY OF ALBANY et al., Appellants,

v.HUDSON RIVER–BLACK RIVER REGULATING DISTRICT et al., Respondents.

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

May 10, 2012.

Miller, Mannix, Schachner & Hafner, L.L.C., Glens Falls (Mark J. Schachner of counsel), for appellants.

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

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

MERCURE, J.P.

Appeal from a judgment of the Supreme Court (Ferradino, J.), entered April 12, 2011 in Saratoga County, which, among other things, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, granted respondents' motion for summary judgment dismissing the petition/complaint and denied petitioners' request for judgment invalidating the apportionment and declaring it unenforceable and void.

Petitioners commenced this combined proceeding and action to challenge an apportionment of operation and maintenance costs adopted by respondent Hudson River–Black River Regulating District (hereinafter the District) and approved by respondent Department of Environmental Conservation (hereinafter DEC). The District is a public benefit corporation that maintains and operates dams, reservoirs and appurtenant facilities for the purpose of regulating the flow of the upper Hudson River and the Black River ( seeECL 15–2103). The District operates two river regulating reservoirs in the Hudson River area ¹—THE GREAT SACANDAGA lake, locatEd in fultOn, hamilton and Saratoga Counties, and the Indian Lake Reservoir, located in Hamilton County. The most significant of the District's operations is the Conklingville Dam, which controls the flow of water from the Great Sacandaga Lake to reduce flooding and stabilize the flow of the Sacandaga River and the Hudson River for hydroelectric power generation.

The District is required to apportion its capital, operation and maintenance costs “less the amount which may be chargeable to the state, among the public corporations and parcels of real estate benefited, in proportion to the amount of benefit which will inure to each such public corporation and parcel of real estate by reason of such reservoir” (ECL 15–2121[2] ). For approximately 80 years beginning in the 1920s, the assessed costs of the District and its predecessors were primarily apportioned among downstream hydropower companies that derived “headwater benefits” from the operation of the reservoirs ( see Board of Hudson Riv. Regulating Dist. v. Fonda, Johnstown & Gloversville R.R. Co., 249 N.Y. 445, 452–453, 164 N.E. 541 [1928];Matter of Niagara Mohawk Power Corp. v. State of New York, 300 A.D.2d 949, 950, 753 N.Y.S.2d 541 [2002] ). A small portion of the cost was allocated to five downstream municipalities. In connection with the relicensure of a power plant located adjacent to the Conklingville Dam, the Federal Energy Regulatory Commission (hereinafter FERC) determined that the District was required to obtain a license for both the Conklingville Dam and the Great Sacandaga Lake ( see Niagara Mohawk Power Corp. v. Hudson Riv.-Black Riv. Regulating Dist., 673 F.3d 84, 88–89 [2012] ). The District obtained a license in 2002 and, thereafter, the operator of a downstream hydroelectric plant challenged the District's apportionment of its costs among hydroelectric energy producers as contrary to the Federal Power Act. In 2008, the United States Court of Appeals for the District of Columbia Circuit concluded both that the Federal Power Act ( see16 USC § 803[f] ) preempted state law regarding the assessment on headwater benefits to hydropower projects and that the District, as a FERC licensee, is precluded from apportioning its operational costs—which constitute the majority of its expenses—among downstream hydropower companies ( Albany Eng'g Corp. v. Federal Energy Regulatory Commn., 548 F.3d 1071, 1076–1079 [2008] ).

Following invalidation of its prior apportionment mechanism, the District concluded that flood protection of communities downstream from the Conklingville Dam constituted the most direct and clearly defined benefit—apart from headwater benefits—resulting from its operations ( see generally Board of Hudson Riv. Regulating Dist. v. Fonda, Johnstown & Gloversville R.R. Co., 249 N.Y. at 452–453, 164 N.E. 541;Board of Black Riv. Regulating Dist. v. Ogsbury, 203 App.Div. 43, 44–45, 196 N.Y.S. 281 [1922],affd. no op.235 N.Y. 600, 139 N.E. 751 [1923] ). In 2010, the District therefore adopted a schedule apportioning approximately $4.5 million in operating and maintenance costs among petitioners, the five counties within its jurisdiction that are located downstream from the Conklingville Dam.² DEC approved the apportionment, prompting this combined CPLR article 78 proceeding and declaratory judgment action alleging that, among other things, the methods employed in adopting the apportionment fall short of the relevant statutory requirements. Following joinder of issue, Supreme Court denied petitioners' request for a judgment invalidating the apportionment and declaring it unenforceable and void, and granted respondents' motion for summary judgment dismissing the petition/complaint. Petitioners appeal, and we now modify and remit.

As noted above, the District is statutorily required to apportion the cost of a reservoir, less the amount “chargeable to the state,” among public corporations—such as petitioners—and parcels of real estate “in proportion to the amount of benefit which will inure to each such public corporation and parcel of real estate by reason of such reservoir” (ECL 15–2121[2]; accord Board of Hudson Riv. Regulating Dist. v. Fonda, Johnstown & Gloversville R.R. Co., 249 N.Y. at 453, 164 N.E. 541). With respect to the latter requirement that public corporations and owners of individual parcels be charged in proportion to the benefit received, the parties advance competing interpretations of the statute regarding both the nature of the “benefit” contemplated and which public corporations and parcels are to be held responsible for the District's costs. We conclude that the District's interpretation in this regard is reasonable and entitled to deference, and it should thus be upheld. In addition, the methodology employed by the District in performing the detailed apportionment calculation was neither irrational nor inconsistent with the statute. We agree with petitioners, however, that the apportionment cannot be sustained because the District failed to comply with the express statutory requirement that the amount “chargeable to the state” be deducted from the District's costs prior to apportioning and charging other benefited parties with the remaining costs. Inasmuch as the parties are in agreement that the statute requires the benefit to the state to be deducted prior to apportionment and the record evinces that the District failed to do so, we remit for that purpose, as explained below.

In providing for apportionment after deducting the amount chargeable to the state, the statute requires that the District's board, or a majority of its members, “shall view the premises and public corporations benefited” (ECL 15–2121[4] ). The apportionment must be in writing and include, in addition to the name of each public corporation, a brief description of each parcel of real estate benefited, the name of its owner if ascertainable, and the proportion of the cost chargeable to each parcel and public corporation ( seeECL 15–2121 [2] ). After certification to and approval by DEC, the District is to file a copy of the apportionment with the county clerk of each county in which such premises or corporations are located, and provide notice of a public hearing wherein the District will meet with all parties that are interested or aggrieved by the apportionment ( seeECL 15–2121[4], [5] ).

Petitioners argue that the 2010 apportionment is inconsistent with ECL 15–2121 because the District failed to (1) apportion its costs among private owners of benefited parcels in addition to public corporations, (2) physically view the benefited parcels, (3) describe and identify each benefited parcel for the purpose of levying and assessing the apportionment, and (4) deduct the portion of the costs chargeable to the state. Apart from their argument regarding the failure to account for the portion of the costs that is chargeable to the state, the crux of petitioners' challenge is that the District's apportionment contravenes the statutory language in section 15–2121 regarding privately held parcels of real estate benefited by the reservoirs. With respect to this aspect of petitioners' challenge, we agree with Supreme Court that the District's interpretation of this “cumbersome and less than clear legislation” is neither irrational nor unreasonable.

Historically, the District has interpreted ECL 15–2121 as permitting it to apportion costs among those public corporations and privately held parcels that receive the most significant, ascertainable benefits.³In contrast, petitioners would read the statute as requiring apportionment among all public corporations and privately held parcels of real estate that receive a benefit. Petitioners argue that the District's interpretation is not entitled to deference because, they maintain, the statute is clear and unambiguous, presenting a question of pure statutory reading and analysis.

As petitioners assert, past failures to comply with unambiguous statutory directives cannot excuse current statutory violations or misinterpretations. Nonetheless, when a statute may be read as susceptible to more than one reasonable interpretation, “judicial deference should be accorded an agency's interpretation of a statute ... [if] the agency's interpretation has been long standing and unchallenged, inducing reliance thereon” (Matter of Judd v. Constantine, 153 A.D.2d...