Village of Scarsdale v. Jorling, 91 N.Y.2d 507 (1998)

The New York City Water Board has the authority to initially set water rates for non-city users, but the Department of Environmental Conservation (DEC) retains the power to set the final rates for both entitlement and excess water consumption.

Summary

This case addresses a dispute over which entity, the New York City Water Board or the New York State Department of Environmental Conservation (DEC), has the authority to determine water consumption methodology and set rates for non-city municipalities using New York City’s water supply. The Court of Appeals held that while the Water Board can initially set rates for non-city users, the DEC has the ultimate authority to set the final rates for both entitlement and excess water consumption, ensuring alignment with state water resource policies. The Water Board, however, retains the authority to calculate water usage, subject to judicial review.

Facts

Since 1905, New York City has been statutorily required to supply water to municipalities and water districts north of the city. In 1991, the Water Board sought the DEC’s intervention to set water rates for non-city users due to rising costs. The DEC declined, asserting the Water Board’s responsibility for setting rates, subject to DEC review. The Water Board subsequently increased water rates, leading the Village of Scarsdale and Westchester County to petition the DEC to fix fair rates, arguing the Water Board’s unilateral increase was unlawful.

Procedural History

The Village commenced an Article 78 proceeding in Supreme Court, Westchester County, challenging the Water Board’s rate increase. The County intervened. Supreme Court initially ruled in favor of the Village, declaring the DEC as the proper party to fix rates. On appeal, the Appellate Division modified the judgment, declaring the Water Board’s rate imposition lawful, subject to DEC review, and asserting the Water Board’s authority to calculate water consumption. The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s order.

Issue(s)

1. Whether the Water Board can unilaterally set and implement water rate increases for non-City users prior to review by the DEC?

2. Whether the DEC has oversight powers over excess water consumption rates?

3. Whether the DEC has authority to determine the proper methodology for calculating water usage by non-City users?

Holding

1. Yes, because the Water Board has the authority to set rates initially, subject to review by the DEC.

2. Yes, because the DEC has authority over excess consumption rates derived from its power to control and regulate the State’s water resources.

3. No, because there is no statutory authority for the DEC to calculate water usage; the Water Board’s calculation is subject to review by Supreme Court in an Article 78 proceeding.

Court’s Reasoning

The Court reasoned that Public Authorities Law § 1045-j (1) and § 1045-g (4) grant the Water Board broad authority to set rates for all withdrawals from the City water supply system. However, Administrative Code § 24-360 preserves the DEC’s role as the final arbiter of rates for non-city users. This interpretation harmonizes both statutes, giving the Water Board the power to set rates while retaining the DEC’s authority to set final rates, consistent with the legislative purpose of the Public Authorities Law. The Court also emphasized the DEC’s authority over excess consumption rates stems from its power to control and preserve the state’s water resources under the Environmental Conservation Law (ECL). Regarding water usage calculation, the Court found no statutory authority for the DEC to calculate usage, deferring to the Water Board, which maintains the equipment and records to determine per capita usage. The court noted, “the practical construction of the statute by the agency charged with implementing it, if not unreasonable, is entitled to deference by the courts”.