Delaware County Elec. Co-op. Inc. v. Power Authority of State of N.Y.
| Decision Date | 04 November 1983 |
| Citation | 468 N.Y.S.2d 233,96 A.D.2d 154 |
| Court | New York Supreme Court — Appellate Division |
| Parties | DELAWARE COUNTY ELECTRIC COOPERATIVE, INC., Oneida Madison Electric Cooperative, Inc., Otsego Electric Cooperative, Inc., Steuben Rural Electric Cooperative, Inc., Respondents, v. POWER AUTHORITY OF the STATE OF NEW YORK, New York State Electric & Gas Corporation, Appellants. |
Stephen L. Baum, New York City (Gerald Goldstein, New York City, of counsel), for appellant Power Authority.
Huber, Lawrence & Abell, New York City (Frederic Lawrence, New York City, of counsel), for appellant NYS Elec. & Gas.
Hodgson, Russ, Andrews, Woods & Goodyear, Buffalo (Victor Fuzak, Buffalo, of counsel), for respondents.
Before HANCOCK, J.P., and CALLAHAN, DOERR, BOOMER and MOULE, JJ.
The principal question on this appeal concerns the interpretation of sections 1005 and 1009 of the Public Authorities Law.
Each of the four plaintiffs is a not-for-profit rural electric cooperative incorporated pursuant to the Rural Electric Cooperative Law for the purpose of supplying low cost electric service to sparsely populated regions of the state which are not served by a private utility company. Defendant Power Authority of the State of New York (Power Authority) is a public authority created by section 1002 of the Public Authorities Law for the purpose of developing the state's natural and man-made energy resources and insuring that all regions of the state are afforded sufficient and dependable power capacity (Public Authorities Law, § 1001). Defendant New York State Electric & Gas Corporation (NYSEGC) is a privately-owned utility company in the business of generating, transmitting, distributing and selling electrical power.
In 1959 and 1961 the Power Authority entered into contracts with the various plaintiffs for the sale of hydroelectric power generated by the Power Authority's Niagara and St. Lawrence power plants. Since the Power Authority lacked the transmission facilities to deliver this power to the plaintiffs, it contracted with NYSEGC to deliver the power. Pursuant to the contracts between the plaintiffs and the Power Authority, the plaintiffs were obligated to reimburse the Power Authority for these transmission costs.
The transmission agreements between the defendants provided that Power Authority generated electricity would only be transmitted over NYSEGC transmission facilities at those times when the facilities were operating at less than full capacity. In February 1981 the municipal and rural electric cooperative customers of the Power Authority filed a complaint with the Federal Energy Regulatory Commission (FERC) alleging that the Power Authority's agreements with the utility companies to provide transmission services only during periods of excess capacity failed to meet the Power Authority's statutory obligation to provide sufficient power to its preference customers. The complaint seeks to compel the Power Authority to provide the "firm transmission" of power to its customers. 1
Following negotiations between NYSEGC and the Power Authority, the letter agreement, which is the subject of this litigation, was approved and executed on February 23, 1982. The letter agreement provides that in consideration for substantial rate increases, 2 NYSEGC shall render "firm" transmission of Power Authority energy to Power Authority customers. Pursuant to the agreement, the Power Authority also agreed not to protest NYSEGC's filing with FERC for approval of the rate increase.
On March 30, NYSEGC filed the letter agreement with FERC pursuant to section 824e(a) of title 16 of the U.S.Code. FERC has exclusive jurisdiction to determine whether rates charged by public utilities for transmission services are "just and reasonable". On April 22, 1982 the plaintiffs, through their representative, the New York State Rural Electric Cooperative Association (NYSRECA), filed a protest with FERC concerning the letter agreement. Among other things, the protest alleged that the letter agreement was invalid for noncompliance with the hearing and approval requirements of section 1009 of the Public Authorities Law. NYSEGC and the Power Authority filed answers in opposition to the protest.
On June 4, 1982 FERC issued an order which established hearing procedures and directed that the new transmission rates go into effect July 2, 1982, subject to refunds. The order also stated with respect to the Public Authorities Law that "[i]nsofar as NYSRECA raises issues of state law * * * its appropriate avenue of relief is in a court of competent jurisdiction".
On June 23, 1982 the plaintiffs, through NYSRECA, filed an application for rehearing of FERC's June 4th order pursuant to section 825l (a) of title 16 of the U.S.Code. In part, the application contends that the letter agreement was subject to compliance with section 1009 of the Public Authorities Law and that FERC improperly declined to adjudicate this issue since it has the affirmative duty to determine the validity of the agreement under state law. The application for rehearing was denied as a result of FERC's failure to act thereon (U.S.Code, tit. 16, § 825l [a] ). The plaintiffs did not appeal to the United States Court of Appeals.
On July 21, 1982 plaintiffs commenced this action to void the letter agreement entered into by the defendants. The Power Authority and NYSEGC thereafter moved to dismiss the complaint, and plaintiffs cross-moved for partial summary judgment to declare the letter agreement void.
On February 24, 1983 Special Term, 118 Misc.2d 77, 460 N.Y.S.2d 430, decided that dismissal was not warranted due to lack of subject matter jurisdiction, nonjoinder of necessary parties, res judicata, or the running of the Statute of Limitations. The court further held that the letter agreement was invalid for noncompliance with the public hearing and gubernatorial approval requirements of section 1009 of the Public Authorities Law.
Defendants, the Power Authority and NYSEGC, appeal from Special Term's order denying their motion to dismiss plaintiffs' complaint and granting plaintiffs' cross-motion for summary judgment.
Four issues 3 are raised on appeal: (1) that the Supreme Court lacked subject matter jurisdiction over the action; (2) that the letter agreement between the defendants is not subject to the hearing and gubernatorial approval requirements of section 1009 of the Public Authorities Law; (3) that the action is barred by res judicata or collateral estoppel; and (4) that the action is untimely under section 217 of the CPLR.
The first issue to be addressed is whether Special Term possessed subject matter jurisdiction to adjudicate whether the letter agreement was subject to the requirements of section 1009 of the Public Authorities Law. Three arguments are advanced by defendants asserting that Special Term did not have subject matter jurisdiction: (a) that FERC and the federal courts have exclusive jurisdiction over matters concerning the validity of a rate contract; (b) that the court's order invalidating the letter agreement violated the "filed rate doctrine"; and (c) that the plaintiffs' proper remedy is an appeal to the Federal Court of Appeals.
Special Term held that FERC and the New York courts had concurrent jurisdiction to adjudicate the question whether the letter agreement was subject to the hearing requirements of section 1009 of the Public Authorities Law. Special Term properly noted that FERC has exclusive jurisdiction over rate determinations. It found the nub of this issue to be whether state courts have jurisdiction over state contract or statutory compliance issues which either were raised or could have been raised before FERC.
Defendants rely on City of Cleveland, Ohio v. Federal Power Commission, 525 F.2d 845 (D.C.Cir.1976) to support their position that FERC's exclusive jurisdiction preempts state court consideration of the questions presented. In City of Cleveland the municipality entered into a letter agreement with a public utility. The letter agreement was then accepted for filing by the Federal Power Commission (FERC's predecessor) as a rate schedule. When the City thereafter complained to the Commission that the utility unilaterally changed the agreement by inserting terms not agreed upon, the Commission rejected the City's complaint holding that any such violation was a "local matter between the City and its officials" (City of Cleveland, supra, 852). The United States Court of Appeals disagreed and held that the Commission should have exerted its authority to resolve the difficulty presented by the City's contention. The court characterized the claim that the letter agreement was violated as a "Matter warranting investigation". While City of Cleveland makes clear that FERC has jurisdiction to resolve state law questions and the obligation to insure such questions are resolved prior to approval of a final rate schedule, it does not hold that FERC is the only arbiter of state law which is relevant and incident to the rate filings.
The June 4, 1982 FERC order in this case refers the question of compliance with section 1009 of the New York Public Authorities Law to a "court of competent jurisdiction". Since our courts have a legitimate interest and, indeed, an obligation to interpret New York law, Special Term's exercise of jurisdiction was proper. Our interpretation of New York law should not be viewed as impinging on FERC's exclusive ratemaking jurisdiction since the impact of our decision, if any, on the final rate schedule ultimately depends on the results of the FERC-ordered hearing. As previously recognized by this court, though the Federal Power Act (U.S.Code, tit. 16, § 824 et seq.) grants exclusive jurisdiction to FERC concerning actions under that statute, it does not divest the New York courts of concurrent subject matter jurisdiction where the complaint asserts rights and seeks relief based upon state law...
To continue reading
Request your trial
-
Cleveland v. Cleveland Elec. Illum. Co., 69584
...61 FERC p 61,196; Pennzoil Co. v. Fed. Energy Regulatory Comm. (C.A.5 1981), 645 F.2d 360; Delaware Cty. Elec. Coop., Inc. v. Power Auth. of New York (1983), 96 A.D.2d 154, 468 N.Y.S.2d 233. Twenty years ago, after considering an identical issue in Cleveland Elec. Illum. Co. v. Cleveland (1......
-
Thomas v. N.Y.C. Dep't of Educ.
...Park Place Condominium v. Town of Ramapo, 247 A.D.2d 537, 537, 669 N.Y.S.2d 313 [1998];see Delaware County Elec. Coop. v. Power Auth. of State of N.Y., 96 A.D.2d 154, 163–164, 468 N.Y.S.2d 233 [1983],affd.62 N.Y.2d 877, 478 N.Y.S.2d 865, 467 N.E.2d 529 [1984] ). Contrary to the trial court'......
-
Sagal–Cotler v. Bd. of Educ. of City Sch. Dist. of the City of N.Y.
...Place Condominium v. Town of Ramapo, 247 A.D.2d 537, 537, 669 N.Y.S.2d 313 [1998];see Delaware County Elec. Coop. Inc. v. Power Auth. of State of N.Y., 96 A.D.2d 154, 163–164, 468 N.Y.S.2d 233 [1983],affd.62 N.Y.2d 877, 478 N.Y.S.2d 865, 467 N.E.2d 529 [1984] ).Education Law § 3028 is more ......
-
ILC Data Device Corp. v. County of Suffolk
...183, 427 N.Y.S.2d 96), nor should any construction serve to nullify either section (Delaware County Electric Cooperative, Inc., v. Power Authority of the State of New York 96 A.D.2d 154, 468 N.Y.S.2d 233, affd. 62 N.Y.2d 877, 478 N.Y.S.2d 865, 467 N.E.2d 529). The State Legislature will be ......