Department of Environmental Protection of City of New York v. Department of Environmental Conservation of State of N.Y.

• Decision Date: 08 September 1987
• Citation: 70 N.Y.2d 233,519 N.Y.S.2d 539
• Court: New York Court of Appeals Court of Appeals
• Parties: , 513 N.E.2d 706 In the Matter of the DEPARTMENT OF ENVIRONMENTAL PROTECTION OF the CITY OF NEW YORK, Respondent-Movant, and Environmental Defense Fund, Inc., Intervenor-Respondent, v. DEPARTMENT OF ENVIRONMENTAL CONSERVATION OF the STATE OF NEW YORK et al., Appellants, and Central Hudson Gas & Electric Corporation, Inc., et al., Intervenors- Appellants.

Page 539

519 N.Y.S.2d 539

70 N.Y.2d 233, 513 N.E.2d 706

In the Matter of the DEPARTMENT OF ENVIRONMENTAL PROTECTION OF the CITY OF NEW YORK, Respondent-Movant and Environmental Defense Fund, Inc., Intervenor-Respondent, v. DEPARTMENT OF ENVIRONMENTAL CONSERVATION OF the STATE OF NEW YORK et al., Appellants and Central Hudson Gas & Electric Corporation, Inc., et al Intervenors- Appellants.

Court of Appeals of New York.

Sept. 8, 1987.

David Simon, Gerald A. Novack and Carol D. Quackenbos, New York City, for Cent. Hudson Gas & Elec. Corp., Inc., intervenor-appellant.

Michael A. Wilcken, New Rochelle, for Consol. Edison Co., New York, Inc., intervenor-appellant.

Peter L. Zimroth, Corp. Counsel (Nicole A. Gordon, Leonard Koerner and Stephen J. McGrath, New York City, of counsel), for respondent-movant.

James T.B. Tripp and Michael Herz, New York City, for intervenor-respondent.

OPINION OF THE COURT

PER CURIAM.

The City of New York moved in this court to hold Central Hudson Gas and Electric Corporation and two of its officers in criminal and civil contempt for willful disobedience of a partial stay order issued by a Judge of this court in connection with a contemporaneously pending motion for leave to appeal. The motion is granted only to the extent of holding Central Hudson in criminal contempt.

Central Hudson owns and operates the Danskammer generating plant and, together with Consolidated Edison, owns and operates the Roseton generating facility. Both facilities are located in Orange County. In 1983, Central Hudson wished to convert Units 3 and 4 of its Danskammer facility from oil to coal firing. It filed an application and draft environmental impact statement with the State Department of Environmental Conservation (D.E.C.) seeking to modify its air quality certificate and to gain approval for the conversion plan. On June 19, 1985, the State Commissioner approved the conversion plan on condition that lower sulfur content oil be used at the nearby Roseton facility.

The Department of Environmental Protection of the City of New York (the City), whose water supply is affected by acid deposition from the Danskammer and Roseton facilities, started a proceeding to annul the State Commissioner's determination. The Environmental Defense Fund, Inc. (E.D.F.) intervened and joined the City, and Central Hudson and ConEd intervened and joined the State. On transfer to the Appellate Division, the State Commissioner's determination was unanimously annulled on November 13, 1986, 120 A.D.2d 166, 508 N.Y.S.2d 643.

Shortly after the Appellate Division's decision was made but before an order was entered, the parties engaged in settlement negotiations and the prevailing City and E.D.F. continued to forego submission of an order for entry by that court while settlement negotiations were pursued. In early April, the City learned that the State D.E.C. had, without notice to parties, issued a "Certificate of Operation" dated February 27, 1987 which authorized the burning of coal at Danskammer, and that Central Hudson had been burning coal pursuant to this certificate since March. By its own terms, this "Certificate to Operate" was predicated on the Commissioner's determination of June 19, 1985, despite the annulment of that determination by the Appellate Division, 120 A.D.2d 166, 508 N.Y.S.2d 643, supra.

The City then quickly proposed an order to effectuate the Appellate Division's decision. The order was entered by that court on April 7, 1987 and it formally nullified the express predicate for the February "Certificate of Operation". The Attorney-General on behalf of D.E.C. submitted an affidavit of intention to move for leave to appeal, triggering an automatic stay pursuant to CPLR 5519(a)(1), a provision designed for the benefit of State and municipal litigants, which also inured to the benefit of the private litigant Central Hudson.

On April 8, 1987, the City presented an order to show cause to a Judge of this court, seeking to vacate the automatic stay. On the same day Central Hudson, represented by the law firm of Whiteman, Osterman and Hanna, moved in opposition to the vacatur and presented its own order to show cause for an independent interim stay of enforcement of the Appellate Division order pursuant to CPLR 5519(c).

On April 9, 1987, the Judge to whom the proposed orders were presented convened a hearing, with counsel for all parties participating. On April 10, 1987, the Judge issued an order vacating the automatic stay; he simultaneously rejected the Central Hudson order to show cause and, instead, prepared and signed an order to show cause granting only partial stay relief to Central Hudson. This order contained the following provision: "ORDERED that, pending determination by this Court of the motions for said stay, for vacatur of CPLR 5519(a)(1) stay vacated by separate order to show cause signed simultaneously herewith, and for leave to appeal by respondents and intervenors-respondents, said intervenors-respondents are granted a stay of the Appellate Division order to the extent only that they may continue plant conversion constructi pursuant to the original license issued by the Department of Environmental Conservation, noting especially that this interim partial stay pending the disposition of all motions in this Court shall not authorize the actual burning of coal fuel pursuant to licenses or authorizations rendered subsequent to the Appellate Division's annulment of the determination affecting the original license " (emphasis added).

On April 14, 1987, Philip Gitlen, an attorney with the firm representing Central Hudson, informed the Assistant Attorney-General and the Assistant Corporation Counsel that he did not interpret the partial stay order as prohibiting the burning of coal at Danskammer, that he so informed his client, and that Central Hudson was continuing to burn coal. To support this interpretation, Mr. Gitlen alluded to and gave critical weight to questions and comments made during the in-chambers hearing of April 9, 1987. In a letter dated April 16, 1987, the Assistant Attorney-General, Central Hudson's own corespondent in this matter, advised Mr. Gitlen that he disagreed with Mr. Gitlen's interpretation since, in his view, the order by its own terms clearly prohibited the continued burning of coal at Danskammer. The Assistant Attorney-General urged Central Hudson, in writing, to cease burning coal immediately.

The City, in turn, responded to these events by making an additional motion seeking: (1) to hold Central Hudson and two of its officers in civil and criminal contempt of an order of this court; (2) the imposition of a fine of $1.6 million plus $1.6 million per month for each month Central Hudson failed to comply with the partial stay order; and (3) weekly verification that Central Hudson was not burning coal at the Danskammer plant.

On April 23, 1987, this court denied the predicate motions for leave to appeal and dismissed the stay motions as academic (69 N.Y.2d 921, 516 N.Y.S.2d 654, 509 N.E.2d 349), rendering the Appellate Division decision final. This court also concluded that the City's allegations of contemptuous conduct were sufficient to require independent factual inquiry and ordered the parties to present evidence at a hearing before the Honorable Joseph F. Gagliardi, Justice of the Supreme Court and Administrative Judge of the Ninth Judicial District.

Shortly after this facet of the matter was referred to Justice Gagliardi for hearing and report, the parties settled all remaining aspects of the underlying proceeding pertaining to the merits of the controversy. They also attempted to settle the contempt component by withdrawal of the motion and by termination of the reference. We directed that the reference be completed so that a full record could be developed as to whether withdrawal was warranted.

Justice Gagliardi's comprehensive report contained two findings and a comment on the fine to be imposed in the event that a finding of criminal contempt was made. The first finding was that Central Hudson, as represented by its attorneys, "was not acting upon a good faith interpretation of the partial stay order when it continued to burn coal at Danskammer Unit 4 from April 10 through April 26, 1987". The second finding was that "[t]he City did not suffer any damages as a result of the continued coal burning at Danskammer Unit 4 from April 10 through April 26, 1987". Finally, Justice Gagliardi appropriately left to this court the issue of the fine amount in the event we found Central Hudson's conduct to be a criminal contempt. We confirm the findings and conclude that Central Hudson willfully disobeyed a lawful order of this court. Consequently, it must be held in criminal contempt and the fine is fixed in the amount of $250, the maximum permitted by...