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Scarsdale (Village of) - Motion to Renew or Reargue, November 27, 2018

Motion to Renew or Reargue, November 27, 2018

NEW YORK STATE
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of a Joint Petition to Fix the Water Rates Charged to Upstate
Communities for the Fiscal Years 2015, 2016 and 2017 by the New York City
Water Board, pursuant to Section 24-360 of the Administrative Code of the
City of New York, Article 15 of the Environmental Conservation Law of the
State of New York, and Title 6 of the Official Compilation of Codes, Rules
and Regulations of the State of New York part 603, by

Village of Scarsdale, Suez Water Westchester, Inc., Westchester Joint
Water Works, City of White Plains, City of Yonkers, and Town of
Greenburgh, Petitioners.

Water Board's March 30, 2018
Motion to Renew or Reargue

November 27, 2018

(Village of Scarsdale 2016 Petition, OHMS Case No.: 201671203)

Proceedings

The Village of Scarsdale, Suez Water Westchester, Inc., Westchester Joint Water Works, the City of White Plains, the City of Yonkers, and the Town of Greenburgh (Petitioners) filed a joint petition dated August 18, 2016 (Joint Petition) requesting a review of the rates charged by the New York City Water Board (the Water Board) to upstate customers for entitlement water and excess water for Fiscal Years (FYs) 2015, 2016, and 2017. In rulings dated April 26, 2017 and February 9, 2018, I determined that the Commissioner has the authority to adjudicate disputes about the rate for entitlement water pursuant to Administrative Code § 24-360(b), as well as the authority to review the rates charged for excess water. These rulings were not appealed.

By email dated March 2, 2017, I authorized the parties to commence discovery, as provided by title 6 of the Official Compilation of Codes, Rules, and Regulations (6 NYCRR) § 624.7, with respect to entitlement rates. In addition, I authorized the use of interrogatories (see CPLR 3102), as provided by 6 NYCRR 624.7(c)(2).

Subsequently, Petitioners served the Water Board with the following discovery requests. First, by email dated March 7, 2017, Petitioners served Upstate Water Users' Coalition's First Set of Interrogatories and Requests for Production of Documents. The first set of discovery demands is numbered 1 to 68. Second, by email dated March 15, 2017, Petitioners served Supplemental First Set of Interrogatories and Requests for Production of Documents. The supplemental interrogatories are numbered 1 and 2. Then, by email dated July 24, 2017, Petitioners served Upstate Water Users' Coalition's Second Set of Interrogatories and Requests for Production of Documents. The second set of discovery demands is numbered 69 to 105. (See Exhibit A to Water Board's February 1, 2018 letter.) The Water Board stated that it responded to all of Petitioners' discovery demands served to date without objection (see Water Board's February 1, 2018 letter at 1; Water Board's March 30, 2018 letter at 3).

On May 23, 2017, the Water Board served Petitioners with its first set of interrogatories and document requests (May 23, 2017 Discovery Demands). The May 23, 2017 Discovery Demands are numbered 1 to 25 (see Exhibit B to Water Board's February 1, 2018 letter). A copy of the May 23, 2017 Discovery Demands is attached as Appendix A.

With a letter from Ms. Ash dated February 1, 2018, the Water Board moved for an order to compel disclosure of its May 23, 2017 Discovery Demands. The Board acknowledged that it received responses from the Village of Scarsdale and the City of Yonkers, and enclosed copies of them with the March 30, 2018 motion (see Exhibit A [Village of Scarsdale] and Exhibit B [City of Yonkers] to Water Board's February 1, 2018 letter). In addition, the Board noted that in January 2018, Suez Water Westchester Inc. provided a compact disk (CD) that included the prefiled testimony and exhibits that Suez Water Westchester Inc. had presented in a rate case before the New York State Public Service Commission. The Water Board argued, however, that the information on the CD is not responsive to the May 23, 2017 Discovery Demands. (See Water Board's March 30, 2018 letter at 1, n 1.) As of February 1, 2018 (id. at 2), the Water Board said that it had not received responses from the other Petitioners.

With a letter from Mr. Dichter dated March 5, 2018, Petitioners responded to the Board's February 1, 2018 motion, and asserted that the Board's May 23, 2017 Discovery Demands seek information that is not relevant to the review of the entitlement water rates. Petitioners explained further that the Village of Scarsdale and the City of Yonkers responded to the May 23, 2017 Discovery Demands, to the extent the information was available. Petitioners refuted the Board's argument that the information on the CD from Suez Water Westchester, Inc. was not responsive to the Board's May 23, 2017 Discovery Demands. (See Petitioners' March 5, 2018 letter at 1-2.)

In a ruling dated March 7, 2018, I granted the Water Board's motion, in part, and denied the motion, in part. The March 7, 2018 ruling provided a schedule for Petitioners to respond to the Water Board's May 23, 2017 Discovery Demands Nos. 1, 2, 5, 6, and 22. A copy of the March 7, 2018 ruling is attached as Appendix B.

With a letter from Ms. Ash dated March 8, 2018, the Board objected that I did not provide the Board with the opportunity to reply to Petitioners' March 5, 2018 response before issuing the March 7, 2018 ruling. The Board requested leave to file either a reply or a motion for reconsideration.

By letter dated March 16, 2018, I denied the Board's request to file a reply.[1]Citing 6 NYCRR 624.6(c), I noted that parties may file motions at any time during the proceeding without leave from the ALJ.

Subsequently with a letter dated March 30, 2018 from Ms. Ash, the Water Board filed a motion requesting me to reconsider the March 7, 2018 ruling. In a letter dated April 6, 2018, I set April 20, 2018 as the return date for responses from Petitioners and Department staff, and April 25, 2018 as the date to file requests for leave to reply. In addition, I suspended the schedule outlined in the March 7, 2018 ruling that required Petitioners to respond, in part, to the Water Board's discovery demands.

On behalf of Petitioners, I received a response from Mr. Dichter dated April 19, 2018. Department staff responded with a letter from Mr. London dated April 20, 2018.[2]

In a letter from Ms. Ash dated April 20, 2018, the Water Board requested leave to reply. I granted this request in a letter dated April 26, 2018, and set May 18, 2018 as the return date for the Water Board's reply. With a letter from Ms. Ash dated May 15, 2018, the Water Board replied.

Discussion and Rulings

I. Scope of Discovery prior to the Issues Conference

Discovery is authorized pursuant to 6 NYCRR 624.7. Prior to the issues conference, discovery is limited to what is afforded under 6 NYCRR part 616 (Access to Records). The administrative law judge, however, may grant petitions for further discovery prior to the issues conference under certain circumstances. (See 6 NYCRR 624.7[a].)

Prior to the issues conference, the disputed factual issues that will be considered during the adjudicatory phase of the public hearing have yet to be identified. The rule limiting discovery prior to the issues conference contemplates this circumstance. Subsequent to the issues conference, the ALJ will specify the issues for adjudication in a ruling (see 6 NYCRR 624.4[b][5]). After considering any duly filed appeals from the ALJ's issues ruling, the Commissioner will designate the issues for adjudication, and the parties then have the right to serve discovery demands upon the other parties (see 6 NYCRR 624.7[b]).

Given the 2011 amendments to Environmental Conservation Law (ECL) article 15, title 15,[3] the April 26, 2017 ruling resolved the legal question about whether the Commissioner had retained the authority to review the rates for entitlement water and, if necessary, fix fair and reasonable rates for entitlement water after a hearing. At this point in the proceeding, the factual disputes about what the Board considered when it calculated the three entitlement rates under consideration here (i.e., FYs 2015, 2016 and 2017) have yet to be determined.

Nevertheless, I authorized discovery to commence with respect to the entitlement rate based on Petitioners' request. In an email from Mr. Dichter dated February 21, 2017, Petitioners stated, in pertinent part that:

there is no dispute as to the jurisdiction of the Commission [sic] as to entitlement water rates....

Petitioners accordingly sought leave to prepare initial data requests and interrogatories as provided by 6 NYCRR 624.7(c). After noting that I had not received any objections from either the Board or Department staff, I authorized discovery to commence in an email dated March 2, 2017. Given Petitioners' request, the authorization was limited to discovery concerning the entitlement water rates.

After the disputed factual issues for adjudication are identified and finalized, a more in-depth level of discovery is authorized pursuant to 6 NYCRR 624.7(b), and its scope is broad (see CPLR 3101; West v Aetna Cas. and Sur. Co., 49 Misc 2d 28, 29 [1965], mod 28 AD2d 745 [1967]; Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968]). The rules for discovery provide further that a party against whom discovery is demanded may move for a protective order in general conformance with CPLR 3103 (see 6 NYCRR 624.7[d][1]). In addition, when a party fails to comply with a discovery demand without making a timely objection, the proponent of the discovery demand may request an order to compel disclosure from the ALJ (see 6 NYCRR 624.7[d][2]). The ALJ may preclude the material demanded from the hearing record when any party does not comply with discovery after being directed to do so by the ALJ. In addition, the ALJ or the Commissioner may draw the inference that the material demanded is unfavorable to the non-complying party's position. (See 6 NYCRR 624.7[d][2].)

Contrary to the Board's claim (see Board's May 15, 2018 reply at 1-2), no party must demonstrate a right to discovery. The burden of proof is immaterial to a party's right to discovery. As provided for by 6 NYCRR 624.7(b), any party has the right to serve discovery demands (see also CPLR 3101[a]). Petitioners' decision not to move for a protective order is not a waiver of their rights to respond to the Board's motion to compel. The circumstances here are distinguishable from those in Matter of William Wolf (Chief ALJ's Ruling on Amended Motion to Compel Disclosure, April 28, 2011, at 3), where respondent did not respond to Department staff's notice of discovery and, subsequently, Mr. Wolf neither raised a timely objection to staff's discovery demands nor responded to staff's motion to compel.

II. Motions to Reargue or Renew

In the March 30, 2018 motion, the Board requested reconsideration of the March 7, 2018 ruling concerning the Board's February 1, 2018 motion to compel Suez Water Westchester, Inc., Westchester Joint Water Works, the City of White Plains, and the Town of Greenburgh to respond to its May 23, 2017 Discovery Demands. The Water Board explained that it drafted the May 23, 2017 Discovery Demands to address issues related to the rates charged for both entitlement and excess water. According to the Board, Nos. 17-21, and 23-25 from the May 23, 2017 Discovery Demands relate to excess water rates. The Water Board explained further that the parties had agreed not to respond to the discovery demands related to excess water rates until after the jurisdictional issue was resolved. The Board intends to re-serve the demands related to excess water rates upon Petitioners after discovery concerning excess water rates is authorized. (See Water Board's March 30, 2018 letter at 2.)

Petitioners denied the Board's claim that the parties had agreed to, first, serve discovery demands related to both entitlement and excess water rates and, then, hold in abeyance those responses related to excess water rates pending a ruling about the scope of jurisdiction. Petitioners noted that, when initially served, the Board had not distinguished which of the May 23, 2017 Discovery Demands relate to entitlement water rates, which relate to excess water rates, and which relate to both entitlement and excess water rates. Petitioners stated that the Board has not yet responded to their demands, which in the Board's view, relate to excess water rates. Since issuance of the February 9, 2018 ruling concerning the Commissioner's jurisdiction over excess water rates, Petitioners have asked the Board to respond to the demands. According to Petitioners, the Board is considering their request to respond. If responses are not forthcoming, Petitioners asked me to direct the Board to respond. (See Petitioners' April 19, 2018 letter at 1.)

With respect to its May 23, 2017 Discovery Demands Nos. 1-16, inclusive, the Water Board offered the following. The Board argued that inquiries such as, what rates are charged by Petitioners to their customers, and how the Petitioners determine those rates are relevant to this proceeding. According to the Water Board, No. 3 seeks more specific information about how Petitioners set rates, and No. 4 seeks information about whether Petitioners' customers have challenged rates and, if so, the bases for any such challenges. (See Water Board's March 30, 2018 letter at 2.)

According to the Board, Nos. 7-9 seek information about whether Petitioners purchase water from wholesalers other than the Water Board, whether Petitioners sell water to other customers and, if so, what are the rates associated with the wholesale purchases and sales. The Water Board stated that No. 10 inquires whether Petitioners rely on tiered rates to recover costs related to the distribution of entitlement water and excess water within their respective service areas. (See Water Board's March 30, 2018 letter at 2-3.)

The Board contended that Nos. 8-10 relate to both entitlement rates and excess rates. The Board requested an order compelling disclosure from Petitioners with respect to the entitlement water rates. However, the Board requested leave to re-serve these demands with respect to excess water rates. (See Water Board's March 30, 2018 letter at 2, n 2.)

With respect to its May 23, 2017 Discovery Demands Nos. 11-16, the Board contended that it seeks information about how upstate communities treat property taxes and capital costs in their respective rate calculations. The Board observed that Petitioners' discovery demands included inquiries about the capital costs associated with the New York City water supply system. The Board contended, however, that the focus of Nos. 11-16 is comparatively more narrow. (See Water Board's March 30, 2018 letter at 3.)

To further support its motion, the Water Board referenced the responses provided by the Village of Scarsdale to the May 23, 2017 Discovery Demands Nos. 13-15. According to the responses, the Village of Scarsdale has defeased bonds, refunded bonds, and used cash to finance construction, the costs of which the Village passed on to its customers through the water rates. (See Water Board's March 30, 2018 letter at 3, n 3, and Exhibit A.)

In addition to the May 23, 2017 Discovery Demands Nos. 1, 2, 5, 6, and 22 already identified in the March 7, 2018 ruling, the Boards requested that I direct Suez Water Westchester, Inc., Westchester Joint Water Works, the City of White Plains, and the Town of Greenburgh to respond to Nos. 3, 4, and 7-16, which are relevant to the entitlement rate. With respect to its May 23, 2017 Discovery Demands Nos. 17-21, and 23-25, the Board contended that these demands relate to excess water rates. The Board requested that I exclude these discovery demands from this motion. The Board intends to re-serve these demands after I authorize discovery with respect to excess water rates. The Board noted that its May 23, 2017 Discovery Demands Nos. 8-10 relate to both entitlement water rates and excess water rates. (See Water Board's March 30, 2018 letter at 2-3; Water Board's May 15, 2018 reply at 3-4.)

Petitioners oppose the Board's March 30, 2018 motion to reconsider the March 7, 2018 ruling. According to Petitioners, the arguments outlined in the Board's March 30, 2018 motion are essentially the same as those presented in the February 1, 2018 motion. Petitioners noted that the Board did not cite any statutory authority or case law to support its arguments to compel disclosure. According to Petitioners, most of the Board's May 23, 2017 Discovery Demands are irrelevant to the proceeding. Therefore, Petitioners contended that preparing responses to them would be burdensome. (See Petitioners' April 19, 2018 letter at 1.)

Petitioners concluded that the March 7, 2018 ruling properly balances the interests of the Water Board to conduct discovery without overburdening upstate communities to provide irrelevant data. Petitioners argued that I should deny the Board's March 30, 2018 motion to reconsider. Finally, Petitioners noted that the City of White Plains and Westchester Joint Water Works have prepared responses consistent with the March 7, 2018 ruling, and are prepared to deliver them to the Board. (See Petitioners' April 19, 2018 letter at 3.)

Part 624 of 6 NYCRR is silent about the procedures for the reconsideration of an ALJ's ruling. Reconsideration may be appropriate, however, when the ALJ overlooked or misapprehended the facts or law, or for some other reason mistakenly arrived at a decision. (See Matter of Charles Pierce, Sr., Ruling of the Commissioner on Motion for Reconsideration, June 9, 1995, at 1, citing Mayer v National Arts Club, 192 AD2d 863 [1993].) In Mayer (192 AD2d 865), the court referenced Civil Practice Law and Rules (CPLR) § 2221, which provides for motions for leave to reargue (see CPLR 2221[d]) or to renew (see CPLR 2221[e]). In the absence of an express rule for reconsideration in 6 NYCRR part 624, I will refer to CPLR 2221 as guidance here, based on the Commissioner's determination in Pierce (Ruling at 1).

A motion to reargue must be based on matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion. The motion may not include any matters of fact not offered on the previous motion. (See CPLR 2221[d][2].)

In the March 30, 2018 motion, the Board did not identify any matters of fact or law that I overlooked or misapprehended in considering whether the May 23, 2017 Discovery Demands were relevant to, or would lead to relevant information about, determining the rates for entitlement water as set forth in Administrative Code § 24-360(c). As noted above, the March 7, 2018 ruling was made prior to the final designation of the disputed factual issues (see 6 NYCRR 624.7[b]). In addition, the Board offered new arguments, not initially presented in the February 1, 2018 motion. For example, the Board advised in the March 30, 2018 motion that a portion of the May 23, 2017 Discovery Demands related to excess water rates. Accordingly, I deny any motion to reargue.

A motion to renew must be based on either new facts not previously offered that would change the initial ruling, or a change in the law that would change the previous ruling. In addition, the movant must provide a reasonable justification for not presenting the facts in the prior motion. (See CPLR 2221[e][2 and 3].)

The arguments presented in the Board's March 30, 2018 motion do not meet the standards for a motion to renew. The formula in Administrative Code § 24-360(c) for determining the entitlement water rate has not changed subsequent to the March 7, 2018 ruling. In addition, the rules with respect to discovery in the Department's hearing regulations (see 6 NYCRR 624.7) have not changed. The Board offered new information that some of the May 23, 2017 Discovery Demands related to entitlement water rates (Nos. 1-7, and 11-16), excess water rates (Nos. 17-21, and 23-25), and both entitlement and excess water rates (Nos. 8-10). The Board also stated that the March 30, 2018 motion excluded discovery demands related to excess water rates. The Board did not explain why it offered the distinctions among the discovery demands in the March 30, 2018 motion and not in the initial motion dated February 1, 2018. Accordingly, I deny any motion to renew.

Order

I. Entitlement Water Rates

Petitioners' advised in their April 19, 2018 letter (at 3) that the City of White Plains and Westchester Joint Water Works have prepared responses consistent with the March 7, 2018 ruling, and are prepared to deliver them to the Board. Therefore, I direct that that the City of White Plains and Westchester Joint Water Works to deliver their responses to the Board within 10 business days from receipt of this ruling.

It appears that the information on the CD provided to the Board by Suez Water Westchester, Inc., may not be responsive to the Board's May 23, 2017 Discover Demands Nos. 1, 2, 5, and 6. In addition, I found nothing in the papers about the status of responses from the Town of Greenburgh. Accordingly, I direct Suez Water Westchester, Inc. and the Town of Greenburgh to respond to the Board's May 23, 2017 Discover Demands Nos. 1, 2, 5, and 6 within 60 business days from receipt of this ruling.

I deny the Water Board's request for an order to compel disclosure with respect to the May 23, 2017 Discovery Demands Nos. 3, 4, 7, 8-10 (as they relate to the entitlement water rates), and 11-16.

II. Excess Water Rates

The Board stated that the May 23, 2017 Discovery Demands Nos. 8-10, 17-21, 23 and 24 relate to excess water rates. The Board advised that it intends to re-serve these discovery demands upon Petitioners after I authorize discovery with respect to excess water rates. (See Water Board's March 30, 2018 letter at 2.)

In addition, Petitioners advised that the Board has withheld responses to a portion of their demands, which the Board considers relevant to excess water rates. Subsequent to the February 9, 2018 ruling concerning the Commissioner's jurisdiction over excess water rates, Petitioners stated that they have requested the responses, but the Board has not delivered the responses to Petitioners. (See Petitioners' April 19, 2018 letter at 1.) In an email from Mr. Dichter dated November 6, 2018, Petitioners requested leave to commence discovery with respect to excess water rates.[4]

As noted above, discovery is limited prior to the issues conference (see 6 NYCRR 624.7[a]). Given the unique nature of these water rate cases, I had authorized discovery about entitlement water rates prior to the issues conference. However, I would prefer to convene the issues conference to determine whether any additional upstate communities want to participate in these proceedings before authorizing any additional discovery concerning entitlement water rates, as well as any discovery related to excess water rates. Therefore, I deny the requests to commence discovery about excess water rates until after the issues conference is convened.

III. Issues Conference

I am available to convene the issues conference. Prior to convening the issues conference, a notice of issues conference will be published in the Department's Environmental Notice Bulletin and in a newspaper having general circulation in the upstate counties served by the New York City water supply system. Publication of the notice must be at least 21 days prior to the date of the issues conference. (See 6 NYCRR 624.3[a].)

To prepare the notice of issues conference, I will need the following information. I request that the Water Board provide me with a list of its upstate customers and their contact information. After the notice of issues conference is prepared, my office will send copies of the notice of issues conference to the upstate customers by regular mail.

In the meantime, I request that Petitioners reserve a date and location for the issues conference. I am available for the issues conference during the weeks of January 14 and 28, 2019. Except for the week of February 18, 2019, I am available in February 2019. I anticipate that we will need one day for the issues conference. In determining the hearing date, Petitioners' counsel shall confer with the Board's counsel. Petitioners are advised that they are responsible for the costs associated with the hearing (see Administrative Code § 24-360[b]; ECL 70-0119[3], 6 NYCRR 603.9, 624.2[d], and 624.11).

I am available in December 2018 to convene a telephone conference call with representatives from the Petitioners and the Water Board to work out the details for the hearing notice.

Subsequent to the issues conference and the identification of the factual issues for adjudication with respect to the entitlement and excess water rates, discovery may commence consistent with 6 NYCRR 624.7(b and c).

/s/
Daniel P. O'Connell
Administrative Law Judge

Dated: November 27, 2018
Albany, New York

Appendix A - The Board's May 23, 2017 Discovery Demands

Appendix B - Ruling dated March 7, 2018

[1] See 6 NYCRR 624.6(c)(3).

[2] Department staff support the Board's March 30, 2018 motion. According to staff, I should direct Suez Water Westchester, Inc., Westchester Joint Water Works, the City of White Plains, and the Town of Greenburgh to respond to the Water Board's May 23, 2017 Discovery Demands. In addition, Department staff supported the Water Board's request to re-serve Nos. 17-21, 23-25 upon Petitioners after discovery about excess water rates is authorized.

[3] See L 2011, ch 401, effective February 15, 2012.

[4] On November 19, 2018, Petitioners' re-sent the November 6, 2018 email.

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