Long Lake Energy Corp. v. New York State Dept. of Environmental Conservation

• Decision Date: 06 December 1990
• Citation: 563 N.Y.S.2d 871,164 A.D.2d 396
• Parties: In the Matter of LONG LAKE ENERGY CORPORATION, Respondent, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 871

563 N.Y.S.2d 871

164 A.D.2d 396

In the Matter of LONG LAKE ENERGY CORPORATION, Respondent, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Appellant.

Supreme Court, Appellate Division Third Department.

Dec. 6, 1990.

[164 A.D.2d 397] Robert Abrams, Atty. Gen. (Kathleen Liston Morrison and Peter H. Schiff, of counsel), Albany, for appellant.

Donald B. Dillport and Sanford L. Hartman (Sean Mullany and David Spence, of Nixon, Hargrave, Devans & Doyle, Albany, of counsel), New York City, for respondent.

OPINION

Before WEISS, J.P., and MIKOLL, LEVINE, MERCURE and HARVEY, JJ.

WEISS, Justice Presiding.

It is now well established in this State that respondent, acting upon an application for State water quality certification of a hydroelectric project as a prerequisite to the issuance of a Federal license therefor under the Federal Water Pollution Control Act (see, 33 U.S.C. § 1251 et seq.), is solely limited to determining whether applicable water quality standards will be met in both the construction and operation of the project. Respondent is not empowered to base its decision on a balancing of the need for the project against the adverse environmental impact (Matter of Power Auth. of State of N.Y. v. Williams, 60 N.Y.2d 315, 320, 469 N.Y.S.2d 620, 457 N.E.2d 726). In the case before us, we are now called upon to revisit the several cases already decided on this subject, this time to identify components comprising the determination of water quality standards under 33 U.S.C. § 1341 (a)(1).

The facts in this lawsuit are as follows. In August and September 1987, petitioner applied for licensure of four hydroelectric projects by the Federal Energy Regulatory Commission (hereinafter FERC) to be constructed, operated and maintained (see, 18 CFR 4.38[b][3][c][2] at four different locations on the Oswego River in Oswego County. ¹ Pursuant to 33 U.S.C. § 1341(a)(1), petitioner was required to obtain certification from the proper State authority for each project. Petitioner submitted draft applications to respondent containing the information required to complete the initial stage of consultation under 18 CFR 4.38(c). ² Respondent answered in September 1987 by separate letters advising petitioner that the applications would be considered incomplete until the outstanding models that were necessary to evaluate the project's operational effect on navigation, flooding, water quality, fishery and other aquatic resources were provided to respondent for review. Respondent acknowledged that petitioner would require access to the project sites which were located on property owned by Niagara Mohawk Power Corporation in order to enable it to complete the site-specific requirements. Finally, respondent notified petitioner that it was necessary to submit the requested information within seven months to enable timely completion of the certification process and avoid automatic waiver resulting from its failure to certify or deny certification within one year of the application filings. Petitioner neither responded to the letters nor challenged the determination of incompleteness.

Commencing in December 1987, respondent answered each of the four applications in four lengthy letters covering all aspects of each proposed project pursuant to 18 CFR 4.38. In each letter respondent stated that, in general, it did not object to the projects, which would replace and upgrade existing generating facilities, provided the additional information requested was furnished. Each letter further stated that the operation of the projects without provision for continued spillage would not contravene applicable water quality standards, but each went on to state that respondent was concerned with site-specific water quality impacts, such as temperature and dissolved oxygen in the bypass section resulting from the construction and operation of the project. Respondent clearly stated that any license would require submission of plans for review before construction began. Still no response from petitioner was received.

On August 26, 1988, respondent issued denial letters for each application, without prejudice, based upon petitioner's failure to respond to any of its requests for the additional information required to enable evaluation of and determinations on each of the four applications for certification. Response from petitioner came, for the first time, in the form of this CPLR article 78 proceeding.

Supreme Court granted petitioner's request to annul the determinations as arbitrary and capricious and unlawful, upon the finding that respondent could not look beyond issues of water quality on applications for certifications under 33 U.S.C. § 1341. Holding that respondent had already found that the projects, when operational, would not adversely affect water quality, Supreme Court directed respondent to issue the certificates. This appeal by respondent ensued.

Initially, we reject respondent's threshold argument that Supreme Court lacked jurisdiction to review the four denials of water quality certificates because those denials were nonfinal and thus not ripe for judicial review (see, CPLR 7801[1]. Respondent's answer does not assert as a defense that the matter is not justiciable for failure to exhaust administrative remedies (see, Matter of Parent Teachers Assn. of P.S. 124M v. Board of Educ. of City School Dist. of City of N.Y., 138 A.D.2d 108, 111, 529 N.Y.S.2d 761) and such argument was not raised before or reviewed by Supreme Court. Nevertheless, we recognize the exception to the general rule prohibiting matters being raised for the first time on appeal when the challenge is made upon jurisdictional objections (4 N.Y.Jur.2d, Appellate Review, § 119, at 120; see, Matter of Woodin v. Lane, 119 A.D.2d 969, 501 N.Y.S.2d 495; Strina v. Troiano, 119 A.D.2d 566, 500 N.Y.S.2d 736). While here there were no administrative hearings, respondent's decision to deny the four applications, albeit without prejudice, had its impact upon petitioner at that point and was final and binding (see, Matter of Edmead v. McGuire, 67 N.Y.2d 714, 716, 499 N.Y.S.2d 934, 490 N.E.2d 853). Other than by reapplication de novo, there was no way for petitioner to prevent or significantly ameliorate the certainty and immediacy of harm by further administrative action (see, Matter of Parent Teachers Assn. of P.S. 124M v. Board of Educ. of City School Dist. of City of N.Y., supra, 138 A.D.2d at 112, 529 N.Y.S.2d 761).

Respondent's reliance upon Church of St. Paul and St. Andrew v. Barwick, 67 N.Y.2d 510, 505 N.Y.S.2d 24, 496 N.E.2d 183, cert. denied, 479 U.S. 985, 107 S.Ct. 574, 93 L.Ed.2d 578 is misplaced. That case was an action for declaratory judgment brought under CPLR 3001 seeking a declaration that the New York City Landmarks Preservation Law was unconstitutional as applied to the plaintiff, and for an injunction and damages. While in that case there had not been any administrative action, here respondent had already denied petitioner's applications.

Similarly, in Power Auth. of State of N.Y. v. Department of Envtl. Conservation of State of N.Y., 379 F.Supp. 243, cited by petitioner, the complaint sought a mandatory injunction and declaratory relief alleging that respondent was without authority to hold hearings on the question of whether it should issue a certificate for water discharge from a proposed power plant (see, 33 U.S.C. § 1341[a][1]. The plaintiff there had moved for a preliminary injunction to prevent the hearings on the ground that the issue itemized for hearings had been preempted under the Federal statute by the exclusive jurisdiction of the Federal Power Commission (predecessor to FERC). District Court granted a cross motion to dismiss made by respondent, the defendant in that case, holding that "a case or controversy [did] not presently exist and a declaratory judgment should not be issued because the 'challenged governmental activity' [was] only the right of a state administrative agency to hold hearings on matters it believes to be in its jurisdiction" (Power Auth. of State of N.Y. v. Department of Envtl. Conservation of State of N.Y., supra, at 248). Certification had neither been granted nor denied in that case, nor had any other action been taken that had any impact upon the pending license application made to the Federal Power Commission. Here, in contrast, respondent had actually denied the requests for the certificates, which would trigger FERC action, thereby placing petitioner's license applications at risk. Since an actual, concrete injury to petitioner was immediate (see, Williamson County Regional Planning Commn. v. Hamilton Bank, 473 U.S. 172, 193, 105 S.Ct. 3108, 3120, 87 L.Ed.2d 126), and for the reasons herein stated, we reject respondent's argument that Supreme Court lacked jurisdiction.

Turning to the merits, we first recognize that since a public hearing had not been held, the appropriate standard for judicial review is whether respondent's determinations were made in accordance with law, were arbitrary and capricious, or lacked a rational basis (see, Matter of Giles v. State Div. of Human Rights, 166 A.D.2d 779, 563 N.Y.S.2d 142, 143; see also, Matter of de Rham v. Diamond, 32 N.Y.2d 34, 40, 343 N.Y.S.2d 84, 295 N.E.2d 763).

Our analysis begins with review of the role that respondent plays in the licensing process. We note that 33 U.S.C. § 1341(a)(1) prohibits the issuance of a license by FERC to construct a hydroelectric power plant to a facility which would result in a "discharge into the navigable waters" unless, in this case, the State either issued a certificate that the facility would comply with its water quality standards (33 U.S.C. § 1313) or waived such certification (33 U.S.C. § 1341[a][1]. In its exercise of the certification process, a state which has water quality concerns about the licensing activities of Federal agencies, including FERC, possesses what has been likened to a veto power. ...