Occidental Chemical Corp. v. Public Service Commission

114 A.D.2d 149, 499 N.Y.S.2d 214, 1986 N.Y. App. Div. LEXIS 49963
CourtAppellate Division of the Supreme Court of the State of New York
DecidedFebruary 20, 1986
StatusPublished
Cited by8 cases

This text of 114 A.D.2d 149 (Occidental Chemical Corp. v. Public Service Commission) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Occidental Chemical Corp. v. Public Service Commission, 114 A.D.2d 149, 499 N.Y.S.2d 214, 1986 N.Y. App. Div. LEXIS 49963 (N.Y. Ct. App. 1986).

Opinion

OPINION OF THE COURT

Levine, J.

Petitioner owns and operates a facility adjoining its chemical plant in Niagara Falls which produces both electric and steam power from the municipal waste materials of nearby towns and cities. In 1982, petitioner applied to respondent Public Service Commission (PSC) for a ruling that respondent Niagara Mohawk Power Corporation (Niagara Mohawk) was required to purchase petitioner’s energy production from that facility at the rate of 6 cents per kilowatt hour, as provided under Public Service Law § 66-c (1). That section was originally enacted into law on June 26, 1980 (L 1980, ch 553, § 7) as part of a legislative program expressly designed "to encourage the development of alternate energy production * * * [and] * * * co-generation facilities in order to conserve our finite and expensive energy resources and to provide for their most efficient utilization” (ibid.). Chapter 553 accomplished these purposes by (1) removing virtually all forms of State and local regulatory control (including fiscal and health and safety regulation by the PSC) over qualified cogeneration and alternate energy production facilities and transferring public health and safety regulation of such facilities to the State [151]*151Energy Office (L 1980, ch 553, § 1, adding Energy Law art 21), and (2) mandating that the PSC require public utility steam and electric corporations to "purchase or wheel electricity or useful thermal energy” from such alternate energy producing facilities and to provide supplemental or back-up power to such facilities, all at "just and reasonable rates” to be set by the PSC (Public Service Law § 66-c [1] [a], [b], added by L 1980, ch 553, § 7).

Chapter 553 (§§ 1, 3) statutorily defined the eligible cogeneration and alternate energy production facilities in terms of their having an electric generating capacity (up to 80 megawatts), their respective methods and types of energy production, and their not being otherwise engaged in the business of producing or selling electricity (Energy Law § 21-106 [1] [a], [b]; Public Service Law § 2 [2-a], [2-b]).

Extensions and modifications of the foregoing legislative program were enacted the succeeding year (L 1981, ch 843). First "small hydro” facilities, defined in terms of similar electric-generating capacity (Energy Law § 21-106 [1] [c]; Public Service Law § 2 [2-c]), were made eligible for the benefits conferred on cogeneration and alternate energy production facilities. Second, fiscal and health and safety regulatory authority over the facilities was restored to the PSC except that, for all such facilities "constructed and placed in operation on or after June twenty-sixth, nineteen hundred eighty” (the date of enactment of the original program), public health and safety regulation remained with the State Energy Office (L 1981, ch 843, § 1, amending Energy Law § 21-106 [4]). Finally, of direct pertinence to the instant case, for facilities "developed on or after June twenty-six, nineteen hundred eighty”, the PSC was directed to establish a minimum price of 6 cents per kilowatt hour for mandatory long-term contracts for the purchase of power from such facilities by electric and steam utilities (L 1981, ch 843, § 9, amending Public Service Law § 66-c [1] [a]).

The facts concérning the development of petitioner’s Niagara Falls energy-producing facility are not in dispute. Construction started in 1978 after petitioner entered into a contract to build the plant for a projected cost of some $65 million. At the time of the original enactment of Public Service Law § 66-c on June 26, 1980, some $70 to $80 million had been spent on what was ultimately to be a total cost of the project of some $100 million. The facility was not ready for testing until July 1980, after which additional work was [152]*152necessary before the plant was capable of producing electricity for sale to utilities on September 18, 1980. All parties concede that, as finally constructed, petitioner’s facility qualifies as both a cogeneration and an alternate energy production facility as those phrases are defined in the applicable sections of the Energy Law and the Public Service Law.

The dispositive issue before the PSC, as well as on appeal, is whether petitioner’s facility was "developed” on or after the June 26, 1980 date of enactment of the original alternate energy legislative program, in order to be entitled to receive the mandatory 6 cent per kilowatt hour price for selling energy to Niagara Mohawk. Niagara Mohawk contended before the PSC that, since construction of petitioner’s facility started before the critical date, it was not "developed” on or after June 26, 1980, and hence was not eligible for the minimum rate. Petitioner’s position was and continues to be that "developed” means capable of producing useful quantities of electricity, which did not occur with respect to its facility until September 1980 at the earliest. The PSC rejected each of these extremes and adopted a flexible, middle position. In its declaratory ruling, the PSC interpreted "developed” to mean "substantially designed and constructed”. Applying such factors as the relative share of total cost expended and relative state of completion of the project by the statutory cutoff date, the PSC concluded that petitioner’s facility was developed before June 26, 1980 and was thus not entitled to receive the minimum 6 cent rate.

Petitioner then brought this CPLR article 78 proceeding to review the PSC’s determination. Special Term annulled. Relying principally on the previously discussed reference to the manner and type of production of energy in the statutory definition of cogeneration facility, Special Term inferred that petitioner’s plant was not a "facility” until it actually produced electricity in September 1980, and hence was not developed before the June 26, 1980 cutoff date. Respondents appealed. Initially, this court withheld decision and remitted to Special Term for further consideration in light of Matter of Consolidated Edison Co. v Public Serv. Commn. (98 AD2d 377, mod 63 NY2d 424), wherein, inter alia, this court invalidated the 6 cent rate provision of section 66-c on the ground that it was preempted by the Federal Public Utility Regulatory Policies Act of 1978 (Pub L 95-617) (see, Matter of Occidental Chem. Corp. v Public Serv. Commn., 98 AD2d 945). When the Court of Appeals reversed that portion of our decision in [153]*153Matter of Consolidated Edison Co. v Public Serv. Commn. (63 NY2d 424, 438, supra), Special Term granted a renewal of its prior judgment in favor of petitioner. Both judgments are now before us on appeal.

Respondents essentially urge two grounds for reversal: (1) that Special Term erred in failing to give deference to the PSC’s administrative interpretation of the statute; and (2) that Special Term’s interpretation conflicts with the statutory purpose, as evidenced by the expressed legislative policy and the legislative history of the 1980 and 1981 enactments. Regarding the first of these points, both respondents invoke the familiar canon of administrative law which requires judicial deference to the construction of a statute by the governmental agency to whom the Legislature has delegated responsibility for the implementation and administration of the statute, when construction, enforcement or application of the law entails knowledge or experience in operational practices or the evaluation of factual data (citing Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459).

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Bluebook (online)
114 A.D.2d 149, 499 N.Y.S.2d 214, 1986 N.Y. App. Div. LEXIS 49963, Counsel Stack Legal Research, https://law.counselstack.com/opinion/occidental-chemical-corp-v-public-service-commission-nyappdiv-1986.