The Court of Appeals, in a full-fledged opinion by Judge Fahey, over a two-judge dissent, reversing the appellate division, determined the rate hike imposed by the NYC Water Board was not arbitrary and capricious. The board imposed a 2.1% rate increase, a bill credit, and assistance programs and low-consumption rate freeze. Petitioners — various landlords not eligible for the bill credit and a landlords’ not-for-profit association — … assert that the Water Board’s determinations were irrational, arbitrary and capricious, and exceeded the Board’s authority:
Our case law holds that a utility has “unfettered discretion to fix [rates] as it will so long as invidious illicit discriminations are not practiced and differentials are not utterly arbitrary and unsupported by economic or public policy goals, as it reasonably conceives them”… . A petitioner’s task in demonstrating that the rate-setting agency’s determination is unreasonable is appropriately described as a “heavy burden” … .
It is clear from the governing statutes that water and sewer rates may be determined in accordance with public policy goals, and not only economic goals. The Water Board “may take into consideration the views and policies of any elected official or body, or other person” and ultimately “appl[ies] independent judgment in the best interest of the authority, its mission and the public” … . Moreover, the statutory scheme gives the Board leeway to charge more than the bare minimum necessary for revenue recovery, by stating that the rates are to generate “revenues which, together with other revenues available to the board, if any, shall be at least sufficient at all times so that such system or systems shall be placed on a self-sustaining basis” … . In short, New York City’s “Water Board is granted broad authority to set rates for water usage” … .
Here, we cannot say that respondents’ actions were “utterly arbitrary and unsupported by economic or public policy goals, as it reasonably conceives them” … . Matter of Prometheus Realty Corp. v New York City Water Bd., 2017 NY Slip Op 08801, CtApp 12-19-17
MUNICIPAL LAW (NYC WATER BOARD’S RATE HIKE AND BILL CREDIT WERE NOT IRRATIONAL, ARBITRARY OR CAPRICIOUS (CT APP))/ADMINISTRATIVE LAW (NYC WATER BOARD’S RATE HIKE AND BILL CREDIT WERE NOT IRRATIONAL, ARBITRARY OR CAPRICIOUS (CT APP))/WATER BOARD (NYC WATER BOARD’S RATE HIKE AND BILL CREDIT WERE NOT IRRATIONAL, ARBITRARY OR CAPRICIOUS (CT APP))