author: Chief Judge Wachtler.

text:
    Staatsburg Water Company, Respondent, v Staatsburg Fire District, Appellant.
    Argued May 26, 1988;
    decided July 7, 1988

      POINTS OF COUNSEL

      Valentino T. Sammarco and Bernard Kessler for appellant.
    I. Defendant fire district should not be collaterally estopped, as a matter of law, by the order of the New York State Public Service Commission from litigating factual issues pertaining to the furnishing of defective fire protection service by plaintiff to defendant, in a pending New York State Supreme Court action which was commenced more than 13 months prior to the holding of a public hearing by the New York State Public Service Commission at which hearing defendant refused to voluntarily participate but rather set forth its position that all factual matters would be resolved in the pending Supreme Court action commenced by plaintiff where there would be due process of law, entitlement to a jury trial, application of rules of evidence and other constitutional safeguards. (Clemens v Apple, 65 NY2d 746; Ryan v New York Tel. Co., 62 NY2d 494.) II. The order of Justice Hillery properly denied the Water Company’s motion to further amend its complaint to reflect purported current late payment charges. III. There are issues of fact extant in the pending Supreme Court action which support the decision/order of Justice Hillery and Justice Gurahian to deny plaintiff summary judgment. (Dal Constr. Corp. v City of New York, 108 AD2d 892; Wiener v GaRo Die Cutting, 104 AD2d 331; Krupp v Aetna Life & Cas. Co., 103 AD2d 252; Smitas v Rickett, 102 AD2d 928.)

      Howard J. Read and Kevin R. Brocks for respondent.
    I. The Commission, in an adjudicatory proceeding affording due process to all parties, determined that the company was entitled to payment for service it provided. II. The fire district had an opportunity to review the Commission’s determination and may not collaterally attack the Commission’s findings. (New York Tel. Co. v State of New York, Div. of State Police, 58 NY2d 658; Matter of Leitner v New York Tel. Co., 277 NY 180, 278 NY 598; Freedom Fin. Co. v New York Tel. Co., 29 AD2d 545; Van Dussen-Storto Motor Inn v Rochester Tel. Corp., 42 AD2d 400, 34 NY2d 904; Ryan v New York Tel Co., 62 NY2d 494; Matter of Evans v Monaghan, 306 NY 312; Parklane Hosiery Co. v Shore, 439 US 322.) III. This court’s prior decisions support the decision below. (Clemens v Apple, 65 NY2d 746.) IV. The court below properly allowed the company to amend its complaint.

      Robert A. Simpson and Marilyn Mann Faulkner for New York State Public Service Commission, amicus curiae.

    I. The Public Service Commission has primary jurisdiction over the reasonableness of public utility rates. (United States v Western Pac. R. R. Co., 352 US 59; Tank Car Corp. v Terminal Co., 308 US 422; Flacke v Onondaga Landfill Sys., 69 NY2d 355; Nader v Allegheny Airlines, 426 US 290; United States v Philadelphia Natl. Bank, 374 US 321; Matter of Public Serv. Commn. v Norton, 304 NY 522; Columbia Gas v New York State Elec. & Gas Corp., 28 NY2d 117; Jamaica Water Supply Co. v City of New York, 279 NY 342; Van Dussen-Storto Motor Inn v Rochester Tel. Corp., 42 AD2d 400, 34 NY2d 904.) II. The court below correctly held that the Commission’s determination was conclusive and binding on the lower court in the action for recovery of the amount owed. (Ryan v New York Tel. Co., 62 NY2d 494; Schwartz v Public Adm’r, 24 NY2d 65; United States v Utah Constr. Co., 384 US 394; Plaine v McCabe, 790 F2d 742; Matter of Engel v Calgon Corp., 114 AD2d 108; Samhammer v Home Mut. Ins. Co., 120 AD2d 59; Dusovic v New Jersey Tr. Bus Operations, 124 AD2d 634, 70 NY2d 747; Zanghi v Incorporated Vil. of Old Brookville, 752 F2d 42; New York Tel. Co. v Public Serv. Commn., 36 AD2d 261, 29 NY2d 164; New York Tel. Co. v State of New York, Div. of State Police, 58 NY2d 658.) III. The Public Service Commission’s determination protects the ratepayers’ interest.
   OPINION OF THE COURT

Chief Judge Wachtler.

While this action was pending in Supreme Court, the Public Service Commission (PSC) conducted a public hearing and issued a determination purporting to resolve the underlying controversy in plaintiffs favor. The primary question presented by this appeal is whether, pursuant to principles of issue preclusion, the PSC’s determination is binding upon defendant in this action. We hold that under the circumstances presented here, unlike those in Allied Chem. v Niag ara Mohawk Power Corp. (72 NY2d 271 [decided today]), it is not, and modify the Appellate Division order accordingly.

Plaintiff Staatsburg Water Company is a public utility corporation which supplies water to customers in parts of Dutchess County, including the Village of Staatsburg. Its activities, including the rates charged, are regulated by the Public Service Commission, which appears in this appeal as amicus curiae. Among plaintiff’s customers is the defendant, Staatsburg Fire District, to whom the Water Company supplies water for public fire protection through a number of fire hydrants. Plaintiff charges for this service based on a fixed annual rate per hydrant.

Since January 1, 1982, defendant has refused to pay plaintiff for this service, complaining that the service was inadequate due to malfunctioning hydrants and insufficient water pressure. As a result, plaintiff experienced a revenue deficiency and, in November 1983, sought permission from the PSC to assess its other customers a surcharge to make up for defendant’s nonpayment. In an order issued July 31,1984, the PSC authorized a temporary increase but withheld a final determination regarding the proposed surcharge until plaintiff demonstrated that it had taken "all necessary and practicable steps, which may include the initiation of legal action, to secure payment from the Fire District.”

Accordingly, plaintiff commenced this action in Supreme Court, seeking to recover the unpaid public fire protection charges. Defendant answered with allegations that the service provided by plaintiff was inadequate, and plaintiff, in turn, moved for summary judgment on the ground that the PSC’s July 31 order had resolved the adequacy-of-service issue in plaintiff’s favor. Supreme Court denied the motion, noting that the PSC had not determined the merits of defendant’s claim.

Meanwhile, and on March 27, 1985, plaintiff again filed for approval of a surcharge to make up for the lost revenues resulting from defendant’s continued nonpayment. In light of Supreme Court’s decision, however, the PSC ordered that, before considering the surcharge proposal, it would initiate a formal investigation to determine whether plaintiff’s fire protection service was adequate and whether defendant was justified in withholding payment. A public hearing was scheduled and all interested parties, including defendant, were invited to participate. Defendant’s attorney appeared at the hearing, but protested at the outset that the PSC had no authority to rule on the dispute. Defendant contended that the appropriate forum for resolution of the issue was Supreme Court, where this action remained pending. Accordingly, defendant presented no witnesses at the hearing, although its attorney conducted cross-examination, introduced three exhibits and filed posthearing briefs.

Following the hearing, the PSC determined, in essence, that the service supplied by plaintiff was adequate and that defendant was not justified in withholding payment. The PSC again reserved decision on plaintiff’s request for a surcharge until after plaintiff sought recovery from defendant through litigation, a task which, the PSC opined, should be "facilitated” by its findings. Armed with this determination, plaintiff returned to Supreme Court, moved to amend the ad damnum clause in the complaint and renewed its motion for summary judgment, contending that the PSC’s finding was binding on the defendant. Supreme Court denied the motion to amend the complaint and, refusing to give collateral estoppel effect to the PSC’s determination, denied the motion for summary judgment.

The Appellate Division reversed and granted both the motion to amend the ad damnum clause and the motion for summary judgment. Relying primarily on Ryan v New York Tel. Co. (62 NY2d 494), the court ruled that the PSC’s determination was entitled to preclusive effect because the PSC was an appropriate body to determine the adequacy of plaintiff’s service, the hearing procedures were substantially similar to those utilized in a court of law, and the defendant was given an opportunity to present and cross-examine witnesses, present exhibits and submit briefs (131 AD2d 832).

This convoluted procedural background gives rise to a straightforward question: Should the PSC’s determination that plaintiff’s service to defendant was adequate be binding on defendant in this litigation? Plaintiff’s primary contention is that the doctrine of collateral estoppel precludes relitigation of the issue.

The relevant principles may be quickly restated. Collateral estoppel, or issue preclusion, may be invoked in a subsequent action or proceeding to prevent a party from relitigating an issue decided against that party in a prior adjudication (Ryan v New York Tel. Co., supra, at 500; Schwartz v Public Adm’r, 24 NY2d 65, 70). It is now familiar law that "the doctrines of res judicata and collateral estoppel are applicable to give conclusive effect to the quasi-judicial determinations of administrative agencies * * * when rendered pursuant to the adjudicatory authority of an agency to decide cases brought before its tribunal employing procedures substantially similar to those used in a court of law” (Ryan v New York Tel. Co., supra, at 499 [citations omitted]). Whether the prior adjudication occurred in the context of an administrative determination, an arbitration or a full-fledged judicial proceeding, issue preclusion is applicable only if there is "an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and [there was] a full and fair opportunity to contest the decision now said to be controlling” (Schwartz v Public Adm’r, supra, at 71).

In addition, we have consistently emphasized that these principles are not to be mechanically applied as a mere checklist. Collateral estoppel is an elastic doctrine and the enumeration of these elements is intended as a framework, rather than a substitute, for analysis. For example, the question whether a party had a full and fair opportunity to contest the prior decision is not answered simply by reference to the procedural benefits available in the first forum or by a conclusion that the requirements of due process were satisfied (see, Gilberg v Barbieri, 53 NY2d 285, 292). Instead, the analysis requires consideration of "the realities of litigation”, such as recognition that if the first proceeding involved trivial stakes, it may not have been litigated vigorously (see, id., at 292-293; Schwartz v Public Adm’r, supra, at 72).

In the end, the fundamental inquiry is whether relitigation should be permitted in a particular case in light of what are often competing policy considerations, including fairness to the parties, conservation of the resources of the court and the litigants, and the societal interests in consistent and accurate results. No rigid rules are possible, because even these factors may vary in relative importance depending on the nature of the proceedings (see, Gilberg v Barbieri, supra, at 291-292; People v Berkowitz, 50 NY2d 333, 344; Matter of Venes v Community School Bd., 43 NY2d 520, 524).

With these principles in mind, we conclude that the proceeding which led to the PSC’s determination suffers from a number of defects which, in combination, deprive it of preclusive effect. These defects all spring from the fact that the PSC’s finding was, in essence, an unsolicited advisory opinion made outside the context of any complaint pending before the agency and without any direct consequences for defendant.

As a result, defendant was not, in the true sense of the word, a party to the PSC proceeding — a basic prerequisite for application of the doctrine (see, Liss v Trans Auto Sys., 68 NY2d 15; Gilberg v Barbieri, supra, at 291). Significantly, defendant did not choose to litigate the parties’ dispute before the PSC (cf., Clemens v Apple, 65 NY2d 746; Ryan v New York Tel. Co., 62 NY2d 494, supra). Had defendant filed a complaint with the PSC concerning the adequacy of the fire protection service (see, Public Service Law §§ 89-i, 89-j; 16 NYCRR 12.1), and thereby submitted to the PSC’s jurisdiction over the matter, we might take a different view (cf., Allied Chem. v Niagara Mohawk Power Corp., 72 NY2d 271 [decided today], supra).

Here, however, the hearing was initiated on the PSC’s own motion. The PSC is, of course, authorized to initiate investigations into the "methods employed in furnishing [water] service” and, following such an investigation and a hearing, may order "such improvement in the supply or distribution of water, or in the methods employed * * * as will in its judgment be adequate, just and reasonable” (Public Service Law §§ 89-i, 89-j). But nothing in this grant of authority suggests that, at least in the absence of a complaint filed by a customer, the PSC has authority to adjudicate payment disputes between the utility and its customers, or to hale customers before its tribunals for that purpose. As the PSC itself recognized in both of its orders, it had no power to compel defendant to pay for the water service; plaintiff was, in effect, directed to Supreme Court for that relief. In these circumstances, because the outcome of the hearing had no direct consequences for defendant, it cannot be said that defendant was a party to the PSC proceeding. At most, it was an interested, albeit unwilling, participant in a public investigation of the Water Company’s practices.

Similarly, the lack of any direct stake in the outcome of the proceeding left defendant with little incentive to fully litigate the issue. Thus, although defendant was granted the opportunity to participate, this did not necessarily amount to a full and fair opportunity to contest the determination. It is urged, nonetheless, that sufficient incentive was supplied by the potential collateral estoppel effect of the PSC’s determination. We have recognized that the foreseeability of future litigation can provide incentive for avoiding an adverse determination which may later be given preclusive effect (see, Koch v Consolidated Edison Co., 62 NY2d 548, 557, cert denied 469 US 1210). However, it would be an unwarranted extension of that principle and fundamentally unfair to give preclusive effect to a determination where the only incentive to litigate stems from its potential collateral effects. Such a ruling would ill serve the litigation-limiting purposes of collateral estoppel; it would simply encourage overlitigation at an earlier stage. As one commentator has put it: "Instead of more litigation later, there will be more litigation now” (Rosenberg, Collateral Estoppel in New York, 44 St John’s L Rev 165, 177).

In addition, the absence of immediate consequences for defendant in the PSC proceeding calls into question whether the PSC determination was made in the context of an adjudicatory proceeding (see, Allied Chem. v Niagara Mohawk Power Corp., supra). The term "adjudicatory”, among other things, suggests at least that the proceeding will result in a "determination of the legal rights, duties, or privileges” of the parties (State Administrative Procedure Act § 102 [3]). Here, the PSC’s determination did not lead to any order, judgment, decree or other pronouncement fixing such rights, duties or obligations.

The point may be best illustrated by contrasting the cases in which we have given preclusive effect to nonjudicial determinations. For example, in Ryan v New York Tel. Co. (62 NY2d 494, supra), the administrative finding given preclusive effect — that the plaintiff had illegally removed company property — resulted in the denial of plaintiff’s claim for unemployment insurance benefits (see also, Clemens v Apple, 65 NY2d 746, supra [arbitration panel’s finding of no causal relationship between accident and injury resulted in denial of no-fault benefits]; Bernstein v Birch Wathen School, 71 AD2d 129, affd 51 NY2d 932 [unemployment insurance benefits denied based on finding that defendant had voluntarily left employment]). In each of these cases, the finding for which preclusive effect was sought was a necessary step in fixing the legal rights of a party to the proceeding, and was thus made in the context of an adjudication. The same cannot be said for the present case, because the PSC was not in a position to grant or deny defendant any relief.

Notwithstanding these defects, plaintiff and the PSC urge that preclusion is warranted because, under the doctrine of primary jurisdiction, the question whether plaintiffs service was adequate should be determined in the first instance by the PSC. We disagree. The doctrine of primary jurisdiction "applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views” (United States v Western Pac. R. R. Co., 352 US 59, 64; see, Flacke v Onondaga Landfill Sys., 69 NY2d 355, 362; Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11, 22; see generally, Jaffe, Primary Jurisdiction, 77 Harv L Rev 1037). It is apparent from this definition that the doctrine is not a license for an agency to interject itself into a pending court action, as the PSC attempted to do here. It is for the court to determine whether the doctrine is triggered by issues presented in a lawsuit and, if so, to refer such issues for the agency’s resolution (see, Nader v Allegheny Airlines, 426 US 290, 303-304; Capital Tel. Co. v Pattersonville Tel. Co., supra, at 22-23).

Notably, however, neither plaintiff nor defendant requested the court to refer any issues in this case to the PSC for resolution. Thus, this appeal does not require us to decide whether such an application should have been granted and we express no view on that question. Nor does the doctrine bolster plaintiffs collateral estoppel argument. Even assuming that the doctrine of primary jurisdiction is applicable because the PSC has special competence to decide the question, the barriers to application of issue preclusion remain. The competence or expertness of the tribunal does not neutralize the defects that we have identified and, in the absence of a reference of the issue to the agency by the court, the doctrine of primary jurisdiction does not provide an independent basis for giving the determination binding effect in this litigation.

For all of these reasons, we conclude that the PSC’s determination is not entitled to preclusive effect and that, therefore, plaintiff’s motion for summary judgment should not have been granted. However, the Appellate Division did not abuse its discretion in allowing plaintiff to amend the ad damnum clause of its complaint (see, Loomis v Civetta Corinno Constr. Corp., 54 NY2d 18).

Accordingly, the order of the Appellate Division should be modified by denying plaintiffs motion for summary judgment, and, as so modified, affirmed, with costs to appellant.

Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Order modified by denying plaintiffs motion for summary judgment and, as so modified, affirmed with costs to appellant.


source: Caselaw Access Project

author: Alexander, J.

license: Public Domain

text:
    In the Matter of Joseph Hawkins, Also Known as Joseph Davis, Appellant, v Thomas A Coughlin, III, as Commissioner of the New York State Department of Correctional Services, et al., Respondents.
    Decided July 12, 1988

      APPEARANCES OF COUNSEL

      Lynn W. L. Fahey and Philip L. Weinstein for appellant.

      Robert Abrams, Attorney-General (Burton Herman of counsel), for Thomas A. Coughlin, III, respondent.

      Peter L. Zimroth, Corporation Counsel (John Hogrogian of counsel), for Jacqueline McMickens, respondent.
   OPINION OF THE COURT

Alexander, J.

Petitioner, an inmate at a State correctional institution, was convicted of robbery, incarcerated for approximately 3 Vz years, and paroled. While on parole, he was arrested for a second offense. Subsequently, the robbery conviction was determined to have been unconstitutionally obtained, was reversed, and that indictment dismissed. Petitioner now seeks credit for the time he served on the invalid robbery conviction toward satisfaction of the sentence imposed upon the conviction for the second offense. We hold, however, that Penal Law § 70.30 (3) does not authorize a credit of jail time under such circumstances.

I.

Petitioner was convicted of robbery in the first degree after a bench trial in November 1975 and was sentenced to a period of incarceration of 5 to 15 years. The Appellate Division affirmed the conviction, but reduced the sentence to 2 Vz to IVz years (People v Hawkins, 63 AD2d 719, lv denied 45 NY2d 780). In 1978, petitioner was paroled after having served a total of 3 years, 6 months and 1 day (hereinafter referred to for convenience as 3 Vi years). Some two years later, in August 1980, while on parole from the 1975 robbery conviction, petitioner was arrested and charged with sodomy in the first degree. On October 19, 1981, he pleaded guilty to the sodomy charge and was sentenced as a second felony offender to 7 to 14 years — the 1975 robbery conviction being his only prior felony.

Meanwhile, in June 1981 — while the sodomy charge was still pending — petitioner sought a writ of habeas corpus in the United States District Court for the Eastern District, asserting that the 1975 robbery conviction was not supported by proof beyond a reasonable doubt, and that the trial court had violated his right against self-incrimination by drawing negative inferences from his postarrest silence. Ultimately — after petitioner had been sentenced on the sodomy conviction as a second felony offender — the United States Court of Appeals for the Second Circuit held that petitioner’s robbery conviction had been unconstitutionally obtained, and directed the District Court to issue the writ unless within 30 days the State moved to resentence petitioner on the sodomy conviction as a first felony offender (Hawkins v LeFevre, 758 F2d 866). The People so moved, and accordingly, Supreme Court vacated the robbery conviction and sentence, dismissed the indictment, and resentenced petitioner upon his conviction of sodomy in the first degree as a first felony offender to 4 to 12 years.

Thereafter, petitioner sought a credit against this 4-to-12-year sentence for the amount of time he had spent incarcerated — 3Vi years — on the unconstitutional robbery conviction pursuant to Penal Law § 70.30 (3). In general, the operative provision of that section enables those in "custody” on a pending charge that is ultimately dismissed to benefit from the time spent in detention pursuant to that charge. The request was denied, and petitioner instituted the instant CPLR article 78 proceeding seeking an order directing respondents — the New York State Department of Correctional Services and the New York City Department of Correction — to credit him with the time served on the invalid robbery conviction.

Supreme Court declined to interpret Penal Law § 70.30 (3) as authorizing the time credit and denied the petition. A majority of the Appellate Division affirmed. Overruling its prior decision in Henderson v Reid (79 AD2d 1019), the majority concluded that release on bail or parole does not constitute "custody” within the meaning of Penal Law § 70.30 (3) thus defeating petitioner’s contention that he is entitled to the credit. The dissent, however, found Henderson v Reid (supra) controlling and concluded that although petitioner was released on parole he was nonetheless within the custody of the law pursuant to the robbery conviction when he was arrested for and subsequently convicted of sodomy. Therefore, according to the dissent, Penal Law § 70.30 (3) requires that the petitioner receive the credit. The appeal is before us as of right, two Justices having dissented on a question of law (CPLR 5601 [a]). We now affirm.

II.

Penal Law § 70.30 (3) addresses various aspects of the calculation and credit of jail time. The last paragraph of subdivision (3) — the so-called "dismissal-acquittal paragraph” — provides that: "In any case where a person has been in custody due to a charge that culminated in a dismissal or an acquittal, the amount of time that would have been credited against a sentence for such charge, had one been imposed, shall be credited against any sentence that is based on a charge for which a warrant or commitment was lodged during the pendency of such custody” (emphasis added).

Petitioner argues that he was arrested for sodomy "during the pendency of custody”, i.e., during his release on parole, and that his robbery conviction "culminated in a dismissal” after a successful appeal. Thus, he contends that the word "dismissal” is to be construed to include the reversal of a conviction on appeal resulting in the dismissal of the indictment, and that the term "custody” is not to be accorded a narrow interpretation to mean only actual custody, but should be interpreted broadly to encompass parole supervision as well.

In support of this reading of the statute, petitioner directs us to instances where parole has been treated as "custody” in other contexts. For example, persons defined as being on parole have generally been considered to be in the legal or constructive custody of the Division of Parole (see, Executive Law § 259-i [2] [b]; People v Jackson, 46 NY2d 171, 174; Matter of Menechino v Division of Parole, 32 AD2d 761, 762, affd 26 NY2d 837; People v Santos, 31 AD2d 508, affd 25 NY2d 976; People ex rel. Natoli v Lewis, 287 NY 478; People ex rel. Newton v Twombly, 228 NY 33, 34). Moreover, petitioner maintains, if we construe the term custody to mean only "actual” custody, those who have already been released when the second arrest occurs, will be precluded from benefiting from the statutory credit and denied recompense for unjust confinement. Insisting that the statute’s obvious rationale is to be fair to those wrongly incarcerated for whatever reason, petitioner urges that the Legislature could not have intended to draw a distinction between those on parole when the second charge is lodged, and those actually confined awaiting disposition of the first charge when the second charge is lodged. If the Legislature had intended only actual custody, petitioner argues, it would have so indicated by employing more appropriate terminology such as "incarceration”, "confinement”, or "detention”.

The legislative history of Penal Law § 70.30, however, belies petitioner’s claim. That history establishes that the term "custody” was intended to mean "confinement” or "detention” under guard and not "constructive custody” such as release on parole or bail (see, People ex rel. Knox v Kelly, 126 AD2d 318, 320). Former Penal Law § 2193 (1) referred specifically to "confinement” and "time spent” in named institutions. The Commission Staff Notes on the Proposed New York Penal Law, indicating that only "minor changes” were contemplated, state: "The new provision eliminates the enumeration of institutions contained in the existing statute * * * and makes it clear that 'jail time’ includes time spent in 'custody’ no matter where the time was spent. This means that the defendant will get credit for time spent, under arrest, in a police station or state police barracks” (proposed Penal Law § 30.30 [3], renum and added as § 70.30 [3], by L 1965, ch 1030, Commission Staff Notes, at 297 [1964]; see also, People ex rel. Knox v Kelly, 126 AD2d 318, supra; Hechtman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law § 70.30, at 252 [1975]). The statute has been construed as including commitment to various facilities (see, e.g., People v Pugh, 51 AD2d 1047, 1048 [time spent in State hospital]; Matter of Lawson v Drug Abuse Control Commn., 50 AD2d 1019 [time spent in rehabilitation center]). It is apparent, however, that the Legislature intended the provision to apply only to time spent in some type of "actual” custody (see, e.g., People ex rel. Kornaker v Meloni, 134 Misc 2d 444, affd 134 AD2d 868, lv denied 70 NY2d 616 [home confinement as a condition of probation is not time "spent in custody” within meaning of § 70.30 (3)]; People ex rel. Dunne v Jones, 77 AD2d 729 [release on bail pending appeal not "custody” within meaning of statute]; see also, Matter of Witteck v Superintendent of Wallkill Correctional Facility, 65 AD2d 249, affd 48 NY2d 858 [construing Penal Law § 70.30 (2-a) to require actual not constructive custody]).

The Commission Staff Notes illustrate the precise circumstances addressed by the amendment: "The proposed statute * * * grants jail time credit in a * * * situation where it presently would not be allowed. This involves a ease where a defendant is arrested for crime A and while he is under detention for that crime a warrant or commitment is lodged for crime B. Under existing law, if the defendant is acquitted of crime A and then convicted of crime B he will get no jail time credit against the crime B sentence for any time spent in detention prior to the acquittal * * * If he is convicted and sentenced for crime B prior to the acquittal on crime A and was held in the same detention facility during all of that time he might get no jail time credit at all. * * * Under the proposed statute the jail time that would have been credited against the crime A sentence will be credited against the crime B sentence” (Commission Staff Notes, at 297-298 [emphasis added]).

Even if we were to accept petitioner’s contention that the second charge could be lodged during "constructive custody”— such as release on bail pending trial — we nevertheless would conclude from an interpretation of the second requirement in the statute that the Legislature never intended the jail time credit provision to apply to those on parole.

In addition to the requirement that the second charge be lodged against petitioner while he is in custody, the statute also requires that the first charge result in a dismissal or acquittal. Petitioner maintains that the Legislature intended thereby to include those dismissals that result from a successful appeal after entry of judgment of conviction. When read in the context of the entire subdivision (3) of Penal Law § 70.30, it is clear that the dismissal-acquittal paragraph was not intended to include the dismissal of an indictment that might occur as a result of a successful appeal from a judgment of conviction.

Subdivision (3) begins by expressly providing that a sentence "shall be credited with * * * the amount of time the person spent in custody prior to the commencement of such sentence as a result of the charge that culminated in the sentence” (emphasis added). The statute explains further that the credit to be provided "shall be calculated from the date custody under the charge commenced to the date the sentence commences” (emphasis added). It is apparent from this context that the dismissal referred to in the dismissal-acquittal paragraph contemplates the dismissal of a charge before a sentence for that charge has been imposed. Indeed, addressing the immediately preceding provision of subdivision (3) — one which sets forth the manner in which jail time is regulated among concurrent sentences — we have stated that the primary purpose of the jail time credit statute is "to give a person convicted of a crime, credit for the time he has spent in local custody awaiting disposition of the charge * * * As a general rule then a person who has been held in local custody, on a certain charge, prior to the formal commencement of his sentence on that charge is, entitled to credit the time previously spent in the local facility before and after sentence was pronounced” (Matter of Kalamis v Smith, 42 NY2d 191, 197 [emphasis added]). Construed in this context, the dismissal-acquittal paragraph clearly envisions that the "dismissal” of the first charge occur prior to the formal commencement of any sentence imposed on that charge, and thus does not encompass dismissals that result as a consequence of a successful appeal from a judgment of conviction (see, e.g., Matter of Jeffrey v Ward, 44 NY2d 812 [withdrawal of parole warrant not a dismissal or acquittal within meaning of statute]). The meaning of the term "custody”, therefore, cannot be said to include the status of parole.

Insofar as petitioner’s "dismissal” resulted from a successful appeal subsequent to conviction and imposition of sentence, and because the second charge — for sodomy — was lodged during his release on parole rather than while he was in actual custody on a pending charge, petitioner’s circumstances do not fall within those contemplated by the statute, and his request for jail time credit was properly denied.

Accordingly, the order of the Appellate Division should be affirmed.

Chief Judge Wachtler and Judges Simons, Kaye, Titone, Hancock, Jr., and Bellacosa concur.

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed, without costs.

      . Almost one year of that period of incarceration — 257 days — represented presentence incarceration credited to defendant pursuant to Penal Law § 70.30 (3).

      . Initially, District Court denied the writ for failure to exhaust State remedies, but the United States Court of Appeals for the Second Circuit reversed and remitted for a consideration of the merits (Hawkins v West, 706 F2d 437). The petition was again denied, and the Second Circuit again reversed and remitted, this time directing the District Court to issue the writ on the condition stated above.

      . Notably, petitioner does not seek credit for the time spent "on the street” between his 1978 release on parole and his 1980 arrest for sodomy.


author: Simons, J.

text:
    In the Matter of Moran Towing and Transportation Co., Inc., et al., Appellants, v New York State Tax Commission, Respondent.
    Argued May 25, 1988;
    decided July 12, 1988

      POINTS OF COUNSEL

      Gwynne H. Wales, Emanuel G. Demos and Robert S. Herbst for appellants.
    I. The legislative history demonstrates that the Legislature intended that tugboats engaged in the activities at issue in this case be exempt from the sales and use tax as vessels engaged in interstate or foreign commerce. (Niagara Junc. Ry. Co. v Creagh, 2 AD2d 299, 3 NY2d 831.) II. The four tugs are engaged in interstate and foreign commerce because they move vessels which are themselves engaged in interstate and foreign commerce. (Matter of Carter & Weekes Stevedoring Co. v McGoldrick, 294 NY 906, affd sub nom. Joseph v Carter & Weekes Co., 330 US 422; Matter of Seeth v Joseph, 276 App Div 188; Puget Sound Co. v Tax Commn., 302 US 90; The Daniel Ball, 10 Wall [77 US] 557; Moran v New Orleans, 112 US 69; Foster v Davenport, 22 How [63 US] 244.) III. The Callanan case is irrelevant to the case at bar. (Matter of Callanan Mar. Corp. v State Tax Commn., 98 AD2d 555, 62 NY2d 606.) IV. The narrow definition of interstate or foreign commerce used by the Tax Commission is invalid because it is not based on any special expertise of the Tax Commission and frustrates the legislative purpose behind the exemptions. (Servomation Corp. v State Tax Commn., 51 NY2d 608; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588; Matter of Building Contrs. Assn. v Tully, 87 AD2d 909.)

      Robert Abrams, Attorney-General (Peter G. Crary, O. Peter Sherwood and Peter H. Schiff of counsel), for respondent.
    The Tax Commission rationally concluded that tugboats which do not provide transportation between States and which operate solely in New York waters are not engaged in interstate commerce within the meaning of section 1115 (a) (8) and section 1105 (c) (3) of the Tax Law. (McGoldrick v Berwind-White Co., 309 US 33; Matter of Atlantic Gulf & Pac. Co. v

      Gerosa, 16 NY2d 1, 382 US 368; Matter of Callanan Mar. Corp. v State Tax Commn., 98 AD2d 555, 62 NY2d 606; Greyhound Lines v Mealey, 334 US 653; Cornell Steamboat Co. v United States, 321 US 634; Matter of Bronx Towing Line v State Tax Commn., 100 AD2d 711, 62 NY2d 606; Matter of Grace v New York State Tax Commn., 37 NY2d 193; Matter of Blue Spruce Farms v New York State Tax Commn., 99 AD2d 867, 64 NY2d 682; Great Lakes Dredge & Dock Co. v Department of Taxation & Fin., 39 NY2d 75, 429 US 832; Matter of Young v Bragalini, 3 NY2d 602.)

      William J. O’Brien and Ernesto V. Luzzatto for The Maritime Association of the Port of New York/New Jersey, amicus curiae.

    I. The Legislature considered tugboats and other harbor craft which serve interstate vessels to be engaged in interstate commerce and exempted them from the sales and use taxes for the express purpose of protecting New York ship repairers and suppliers. II. Imposition of the sales and use tax will destroy the New York ship repair and supply industries and end New York State’s economic involvement in the Port of New York/New Jersey.
   OPINION OF THE COURT

Simons, J.

The issue presented is whether tugboats which do not actually leave New York waters but service vessels traveling in interstate and foreign commerce are exempt from State sales tax pursuant to Tax Law § 1115 (a) (8); § 1105 (c) (3) (iv), and 20 NYCRR 528.9 (a) (5).

The parties have stipulated the facts. During the tax years at issue, petitioner Moran Towing & Transportation Co., Inc. was in the business of leasing tugboats and using them to provide towing services to larger vessels entering or leaving berths in the Port of New York. Petitioner Moran Shipyard Corporation operated a shipyard for the purposes of servicing and repairing Moran Towing’s tugboats. The third corporate petitioner, Morine Supply Company, sold ropes, linens and various sundry supplies for the use of the Moran Towing tugboats. Twenty-five tugboats were the subject of the Tax Commission’s audit. All provided service to vessels which were traveling between States or foreign countries, but the tugs towing the vessels to and from the main navigational channel did not physically leave the waters of New York and enter interstate or international waters on some trips because some vessels did not require it.

Moran claimed that the lease payments and payments for service on all of the boats were excluded from sales taxation pursuant to Tax Law § 1115 (a) (8) and §1105 (c) (3) (iv) whether they left New York waters or not because all the vessels they served engaged in interstate or international commerce. Section 1115 (a) (8) exempts from sales and use tax receipts derived from the retail sale of "Commercial vessels primarily engaged in interstate or foreign commerce and property used by or purchased for the use of such vessels for fuel, provisions, supplies, maintenance and repairs”. Tax Law § 1105 (c) (3) exempts from sales tax services rendered with respect to commercial vessels primarily engaged in interstate or foreign commerce from sales tax.

There is not, and never has been, any statutory definition of the statutory phrase "interstate or foreign commerce” but on June 1, 1977, during the audit period in this case, a regulation became effective which sought to define interstate or foreign commerce for State sales and use tax purposes as "the transportation of persons or property between states or countries” (20 NYCRR 528.9 [a] [5]). Applying that regulation, the Tax Commission took the position that taxpayers’ tugs, to be entitled to the exemption, must not only service vessels engaged in interstate or international commerce but must enter interstate or international waters in doing so. Originally, the Commission held that unless 75% of the receipts from the towing and docking services were generated on trips requiring the tugboats to actually enter interstate or international waters, the tugs were not, in the words of the statute, "primarily engaged” in interstate commerce. It later conceded that tax-exempt status should be afforded to all tugboats deriving 50% or more of their receipts from trips in which the tugs had an out-of-State destination or origin (see, Matter of Automatique, Inc. v Bouchard, 97 AD2d 183 ["primarily” as used in Tax Law § 1115 (a) (13) means more than 50%]).

Thus, the dispute narrowed to whether tax-exempt status should be afforded to four of Moran’s tugboats which serviced vessels having out-of-State or foreign destinations but which did not generate 50% or more of their receipts by making tows requiring them to travel in interstate or international waters. Citing its own regulation and Matter of Niagara Junc. Ry. Co. v Creagh (2 AD2d 299, affd no opn 3 NY2d 831), the Tax Commission rejected Moran’s claim to an exemption for the four tugs stating that "[w]hile the tugboats are related to the conduct of interstate or foreign commerce, their activities are in general a local event, separate and distinct from interstate commerce”.

Moran commenced this article 78 proceeding to annul the Commission’s determination, contending that the Commission’s interpretation of the applicable statutes and regulation was contrary to the universally accepted meaning of the phrase interstate commerce and was inconsistent with the legislative intent behind the exemption statutes as shown by the legislative history. Supreme Court granted their petition and annulled the determination, but the Appellate Division reversed and dismissed. Relying on Matter of Callanan Mar. Corp. v State Tax Commn. (98 AD2d 555, 557, lv denied 62 NY2d 606), it held that interstate commerce should not be defined for purposes of State tax law as the term is used in Federal constitutional cases but by the Commission’s regulation defining interstate commerce, "the transportation of persons or property between states or countries” (20 NYCRR 528.9 [a] [5]). Conceding that the Commission’s interpretation of the phrase "narrows the broad language of Tax Law § 1115 (a) (8)”, the court nevertheless held that it was well within the Commission’s authority to interpret and implement such a broadly phrased statute (131 AD2d 960, 963). We granted leave to appeal and now reverse.

The parties agree on several matters. Moran concedes that New York State has the constitutional power to levy sales and use taxes with respect to the four tugboats even if they are engaged in interstate commerce and that the Legislature can define the phrase "interstate or foreign commerce” for State tax purposes in any manner it so desires. The Tax Commission, on the other hand, agrees with Moran that for Federal purposes petitioner’s four tugs are engaged in interstate or foreign commerce even though they themselves do not travel between States or foreign countries. Finally, both parties agree that the purpose of the statutory exemption for commercial vessels was to preserve the ship repair industry in New York by insuring that New York businesses are not put at a competitive disadvantage vis-á-vis those of other States (see, 1966 NY Legis Ann, at 263a). Thus, we are confronted solely with a question of statutory interpretation: What did the Legislature mean when it exempted commercial vessels primarily engaged in interstate commerce?

Historically, interstate commerce has been defined by reference to the origin and destination of what is moved in commerce. That the taxpayer’s activities were conducted entirely within the waters of the State of New York does not affect the interstate character of those activities (see, e.g., Moran v New Orleans, 112 US 69; The Daniel Ball, 10 Wall [77 US] 557; Foster v Davenport, 22 How [63 US] 244). The focus is on what the actor does, not, where he does it. Indeed both this court and the United States Supreme Court have held that stevedoring, the business of loading and unloading ships, was part of interstate or foreign commerce provided that the goods loaded or unloaded were actually moving in foreign or interstate commerce (see, Carter & Weekes Stevedoring Co. v McGoldrick, 294 NY 906, affd sub nom. Joseph v Carter & Weekes Co., 330 US 422; Puget Sound Co. v Tax Commn., 302 US 90, both overruled on others grounds by Washington Revenue Dept. v Stevedoring Assn., 435 US 734). If stevedores are engaged in interstate commerce when they provide service to a vessel on an interstate or international voyage, there can be no doubt that Moran’s tugboats are engaged in interstate commerce when they propel or direct the interstate vessels into and out of New York harbor.

Nothing in the statutory language or legislative history suggests that the Legislature intended to depart from this long-standing and commonly accepted definition. To the contrary, the legislative history suggests that the purpose of the exemption will be furthered if the exemption applies to vessels that never leave New York waters. There is no dispute that these exceptions were designed primarily for the benefit of vessels using New York harbor. All commercial vessels have the ability to leave New York for repair purposes due to their mobile character, however, and they have every incentive to leave New York waters if they do not benefit from the exemption. According to the supporters of the legislation which became Tax Law § 1105 (c) (3) (iv), there were essentially two classes of commercial vessels using the harbor: ocean-going vessels and smaller craft, including "tugs, lighters, scows and other harbor craft serving interstate commerce. All of this floating equipment, i.e., the ocean going vessels, and the harbor craft, are completely mobile and capable of seeking all of their repairing needs outside the confines of New York City” (letter of Maritime Assn, dated Mar. 3, 1966, Bill Jacket, L 1966, ch 918, at 62; see also, Division of Budget, Budget Report on Bills, id., at 57). Even the “smaller craft in New York harbor need only go to shipyards across the river in New Jersey to avoid the tax” (Mem in support of Senate Print No. 44, id., at 9). Moran’s four tugs that did not actually make 50% of their trips into interstate waters when performing their towing and mooring services are in no different position than the tugs that did make such interstate trips for purposes of determining whether the vessels would have easy access to the competing repair facilities of New Jersey. Yet the Tax Commission’s interpretation of the statute grants the exemption to tugs leaving New York waters and denies it to the four that do not.

The Commission relies on several earlier decisions addressing the statute but we find them distinguishable. In Matter of Callanan Mar. Corp. v State Tax Commn. (98 AD2d 555, lv denied 62 NY2d 606, supra) and Matter of Bronx Towing Line v State Tax Commn. (100 AD2d 711, lv denied 62 NY2d 606), a case virtually identical to Callarían, vessels of the taxpayers claiming the exemption made only incidental traverses into out-of-State waters in what were indisputably intrastáte voyages. In Matter of Great Lakes Dredge & Dock Co. v Department of Taxation & Fin. (39 NY2d 75, cert denied 429 US 832), the tax was imposed on vessels used to dredge the waterways lying within New York. It has been recognized, however, that dredging an interstate waterway is different from the actual transporting of goods through such a waterway, from the standpoint of State taxation, because it is similar to the repair of an interstate roadway or rail line; so long as the work itself is done in one State the dredges are not engaged in interstate commerce (compare, Bean Dredging Corp. v Olsen, 742 SW2d 259 [Tenn], cert denied — US —, 108 S Ct 1594, with Herbert & Sons v Woods, 539 SW2d 28 [Tenn]). Finally, the Administrative Law Judge relied on Matter of Niagara Junc. Ry. Co. v Creagh (2 AD2d 299, supra), but the Tax Commission readily concedes there was no issue in Niagara Junc, as to whether petitioner’s activities were exempt from taxation pursuant to an exemption statute and that the decision has little bearing on the issues involved here.

The Tax Commission asks us to apply familiar rules of construction which hold that a statute creating a tax exemp-

tion must be construed against the taxpayer (Matter of Alamo Assocs. v Commissioner of Fin. of City of N. Y., 71 NY2d 340, 343; Matter of Grace v New York State Tax Commn., 37 NY2d 193, 195-196), that the taxpayer must establish that its interpretation of the statute is not only plausible, but also that it is the only reasonable construction (Matter of Blue Spruce Farms v New York State Tax Commn., 99 AD2d 867, affd for reasons stated below 64 NY2d 682), and that the taxpayer must show that the Tax Commission’s interpretation of the exemption’s scope is irrational or clearly erroneous (Matter of Great Lakes Dredge & Dock Co. v Department of Taxation & Fin., 39 NY2d 75, 79, cert denied 429 US 832, supra; Matter of Young v Bragalini, 3 NY2d 602, 605-606, rearg denied 4 NY2d 879).

Interpretation of a statute by the agency charged with its enforcement is, as a general matter, given great weight and judicial deference so long as the interpretation is neither irrational, unreasonable nor inconsistent with the governing statute (Matter of Trump-Equitable Fifth Ave. Co. v Gliedman (62 NY2d 539, 545). Ultimately, however, legal interpretation is the court’s responsibility; it cannot be delegated to the agency charged with the statute’s enforcement. Where as in the instant case "the question is one of pure statutory reading and analysis, dependent only on an accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency and its interpretive regulations are therefore to be accorded much less weight” (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459; accord, Servomation Corp. v State Tax Commn., 51 NY2d 608, 613). The contrary not appearing in the language of the surrounding statutes or the legislative history, we conclude that the Legislature when enacting the exemption for vessels engaged in interstate commerce intended that the phrase interstate commerce be given its "precise and well settled legal meaning in the jurisprudence of the state” (McKinney’s Cons Laws of NY, Book 1, Statutes § 233).

Accordingly, the order of the Appellate Division should be reversed, the petition granted and the judgment of Supreme Court, Albany County, reinstated.

Chief Judge Wachtler and Judges Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Order reversed, with costs, and the judgment of Supreme Court, Albany County, reinstated.

      . The central issue involved in this appeal is identical for all of the petitioners. Thus for sake of simplicity all petitioners shall be referred to as one legal entity under the name of Moran or taxpayer.

      . Tax Law § 1105 (c) (3) has been amended since the audit period at issue in this case but the change is nonsubstantive (see, L 1981, ch 103, § 38).


author: Kaye, J.

text:
    Board of Education of the Monroe-Woodbury Central School District, Respondent, v Abraham Wieder, Individually and as Parent and Natural Guardian of Hudes Wieder, and on Behalf of All Others Similarly Situated, et al., Appellants.
    Argued June 2, 1988;
    decided July 12, 1988

      POINTS OF COUNSEL

      Louis G. Adolfsen, Darrel M. Seife and Karen E. Heller for appellants.
    I. The law does not require that all handicapped children receive special education only in the regular classes of the public school. II. To accommodate the needs and religious beliefs of handicapped children, special education should be provided at a reasonably accessible neutral site. (Board of Educ. v Allen, 20 NY2d 109, 392 US 236; Matter of Greve v Board of Educ., 43 AD2d 851, 36 NY2d 673; Grand Rapids School Dist. v Ball, 473 US 373; Wolman v Walter, 433 US 229; Wilder v Bernstein, 645 F Supp 1292; Witters v Washington Dept. of Servs. for Blind, 474 US 481; Wheeler v Barrera, 417 US 402; Parents’ Assn. v Quinones, 803 F2d 1235; Meek v Pittenger, 421 US 349.) III. Defendants’ counterclaim for monetary damages should not have been dismissed. (Matter of Semel v Ambach, 118 AD2d 385; McKart v United States, 395 US 185; Matter of Punis v Perales, 112 AD2d 236; Matter of Caso v New York State Pub. High School Athletic Assn., 78
      AD2d 41; Matter of Dineen v Borghard, 100 AD2d 547; Matter of Cahill v Public Serv. Commn., 69 NY2d 265.)

      Lawrence W. Reich for respondent.
    I. The construction of the statute sought by plaintiff-respondent is essential to its constitutionality. (Levitt v Committee for Pub. Educ., 413 US 472; Committee for Pub. Educ. v Nyquist, 413 US 756; Board of Educ. v Allen, 392 US 236; Everson v Board of Educ., 330 US 1; Aguilar v Felton, 473 US 402; Grand Rapids School Dist. v Ball, 473 US 373; Wolman v Walter, 433 US 229; Bollenbach v Board of Educ., 659 F Supp 1450; Parents’ Assn. v Quinones, 803 F2d 1235; Bowen v Roy, 476 US 693.) II. Federal and State statutory and regulatory provisions should be construed in pari materia. (Sheridan Suzuki v Caruso Auto Sales, 110 Misc 2d 823; Matter of Bates v County of Steuben, 113 Misc 2d 68.) III. Plaintiff-respondent cannot constitutionally be compelled to accommodate to defendants-appellants’ religious beliefs. (Bowen v Roy, 476 US 693; Bollenbach v Board of Educ., 659 F Supp 1450.) IV. The order and judgment appealed from properly gives effect to the concept of the least restrictive educational environment. V. The counterclaims asserted by defendants-appellants were properly dismissed on the merits for legal insufficiency. (Smith v Robinson, 468 US 992; Riley v Ambach, 668 F2d 635; Bonar v Ambach, 771 F2d 14; Quackenbush v Johnson City School Dist., 716 F2d 141, 465 US 1071; Burlington School Comm. v Massachusetts Dept. of Educ., 471 US 359; Antokwiak v Ambach, 838 F2d 635.) VI. The court should reconsider its jurisdiction to hear the within appeal as of right. Matter of Haydorn v Carroll, 225 NY 84; Matter of Levy, 255 NY 223; People ex rel. Ryan v Lynch, 262 NY 1; Winters v Lavine, 574 F2d 46.)

      Norman H. Gross and Jay Worona for New York State School Boards Association, Inc., amicus curiae.

    The relief requested by defendants-appellants herein will force plaintiff-respondent to violate the State and Federal Constitutions and will have an adverse impact on public education in New York State. (Lemon v Kurtzman, 403 US 602; Wolman v Walter, 433 US 229; Grand Rapids School Dist. v Ball, 473 US 373; Parents’ Assn. v Quinones, 803 F2d 1235; Abington School Dist. v Schempp, 374 US 203; Bollenbach v Board of Educ., 659 F Supp 1450; Bowen v Roy, 476 US 693; Lyng v Northwest Indian Cemetery Protective Assn., 485 US —, 108 S Ct 1319; Mozert v Hawkins County Pub. Schools, 647 F Supp 1194.)

      Nathan Lewin and Dennis Rapps for National Jewish Commission on Law and Public Affairs, amicus curiae.

    I. Accommodation to a religious group, even if it results in governmentally sanctioned separation, does not violate the Establishment Clause. (Sherbert v Verner, 374 US 398; Thomas v Review Bd., 450 US 707; Hobbie v Unemployment Appeals Commn., 480 US 136; Wisconsin v Yoder, 406 US 205; Lynch v Donnelly, 465 US 668; Lyng v Northwest Indian Cemetery Protective Assn., 485 US —, 108 S Ct 1319.) II. Eight Justices of the Supreme Court squarely upheld therapeutic services off the premises of parochial schools. (Wolman v Walter, 433 US 229.) III. State and Federal law require the Board of Education to provide therapeutic services to all handicapped children, including those enrolled in nonpublic schools. IV. Religious considerations may not be given less weight than secular considerations in deciding where services for handicapped children should be provided. (Lynch v Donnelly, 465 US 668; Widmar v Vincent, 454 US 263; McCreary v Stone, 739 F2d 716, affd by an equally divided court sub nom. Board of Trustees v McCreary, 471 US 83; Larson v Valente, 456 US 228.)
   OPINION OF THE COURT

Kaye, J.

This appeal centers on a struggle between the Board of Education of the Monroe-Woodbury Central School District, and parents and handicapped children of Kiryas Joel, an incorporated village of Satmarer Hasidim located within the school district. No one disputes that State and Federal law require the Board of Education to make special services available to these handicapped children. The conflict arises over where the services are to be offered — whether in the public schools, or in the religiously affiliated private schools of Kiryas Joel, or elsewhere.

Despite past efforts at accommodation in the interests of meeting the unquestioned needs of these children, this is a litigation of "musts.” Both sides ask only what the law compels or requires, not what it permits. As the pleadings are framed, plaintiff Board of Education demands judgment declaring that the law compels it to furnish special education and related services of an instructional, remedial and therapeutic nature only in regular public school classes and programs, and declaring that it is without authority to provide such services separately. At the other extreme, defendants’ counterclaim demands a declaration that the Board must furnish these services in classes conducted on the premises of the school the children attend for their normal educational instruction. Both sides have modified their demands somewhat during the course of the litigation: plaintiff would now recognize certain exceptions, defendants would accept services at a neutral site. We conclude, however, that on this record neither party’s position is compelled by law.

Approximately 150 Satmarer children are the true subjects of this controversy, with handicaps such as mental retardation, deafness, speech and language impairments, emotional disorders, learning disabilities, Down’s syndrome, spina bifida and cerebral palsy. The record does not specify the precise services in issue, apparently encompassing occupational, physical and speech therapy, adaptive physical education, and education of the hearing-impaired and learning-disabled. Defendants urge that, apart from physical and mental handicaps, these children are further affected in their need to obtain special services by their language, and their social and cultural backgrounds, which are markedly different from the outside community.

Kiryas Joel is a community of Hasidic Jews. Apart from separation from the outside community, separation of the sexes is observed within the village. Yiddish is the principal language of Kiryas Joel; television, radio and English language publications are not in general use. The dress and appearance of the Hasidim are distinctive — the boys, for example, wear long side curls, head coverings and special garments, and both males and females follow a prescribed dress code. Education is also different: Satmarer children generally do not attend public schools, but attend their own religiously affiliated schools within Kiryas Joel. Boys are enrolled in the United Talmudic Academy (UTA) and girls in Bais Rochel, a UTA affiliate. With an apparent over-all goal that children should continue to live by the religious standards of their parents, "Satmarer want their school to serve primarily as a bastion against undesirable acculturation, as a training ground for Torah knowledge in the case of boys, and, in the case of girls, as a place to gather knowledge they wdll need as adult women.” (Rubin, Satmar: An Island in the City, at 140 [Quadrangle 1972].)

In the spring of 1984, the Board of Education met with representatives of Kiryas Joel to develop procedures for the classification and delivery of services to the handicapped children. After extensive negotiations, the Board agreed to furnish various services and programs, characterized as "health and welfare” services (see, Education Law § 912), at a "neutral site” within Kiryas Joel — actually an annex to Bais Rochel under the auspices of the UTA.

A year later, however, reacting to Aguilar v Felton (473 US 402) and Grand Rapids School Dist. v Ball (473 US 373), the Board terminated those arrangements. It concluded that it could furnish services to defendant children only in the public schools, and it proceeded to place them there based on individual evaluations by the Board’s Committee on the Handicapped. After several months, defendant parents refused to permit the children to continue attending the public schools; a few sought administrative review of the recommended placements.

In November 1985, the Board of Education commenced the present action for a declaration that it lacks statutory authority to provide the services except within regular public school classes. Plaintiff asserted that, pursuant to Education Law § 3602-c, a board is authorized to provide the services in issue to children attending nonpublic schools only in regular classes of the public school. Despite pending administrative review proceedings, defendants instead joined in the litigation, contending that the declaratory relief sought by the Board was inconsistent with its legal obligations, and demanding both an injunction directing plaintiff to furnish services in classes conducted on the premises of the school they attend for their normal educational instruction and damages equal to their own payments for substitute services. Except for private arrangements for a few of the children to continue receiving special services, apparently the other children have remained without them as the litigation has escalated.

Both sides sought summary judgment. Defendants in their submissions urged that the regular public schools were inappropriate not only because of the need of many of the children for one-on-one services but also because of the panic, fear and trauma they suffered in leaving their own community and being with people whose ways were so different from theirs. They described specific instances of the children’s anxiety and distress, contending that parents felt compelled to stop sending them because the emotional toll outweighed the benefits of programs offered at the public school. They further stated that they were themselves financially unable to furnish the costly services to which they as taxpayers and their children were by law entitled, and which they urgently need.

Plaintiff in its summary judgment submission disputed certain of defendant’s factual assertions, pointing to the progress made by Satmarer children who actually attended the public school programs. It detailed efforts to integrate the children and accommodate the parents (including Yiddish-speaking aides and bilingual reports), concluding that Satmarer Hasidic children could be appropriately educated in the public schools, and insisted that the Education Law § 3602-c (9) leaves no other option.

Supreme Court directed plaintiff to provide the services to defendants at a site not physically or educationally identified with but reasonably accessible to defendant children (134 Misc 2d 658, 663). The court avoided interpreting section 3602-c (9), whether for inapplicability or invalidity, simply holding that the statute could not deny the children’s right under the Constitution and statutory and decisional law to services outside the regular public school classroom. Defendants’ claim for damages was dismissed as premature, owing to a failure to exhaust administrative remedies.

The Appellate Division modified by granting plaintiff’s cross motion for summary judgment to the extent of dismissing defendants’ counterclaim and declaring that Education Law § 3602-c (9) requires that, to the maximum extent appropriate for the individualized educational needs of each child, plaintiff shall furnish special education and related services in the regular classes and programs of the public schools and not separately from public school students (132 AD2d 409, 417-418). In denying defendants’ counterclaim, the court concluded that the "neutral site” contemplated by Supreme Court’s order would in reality contravene the Establishment Clause of the First Amendment and would moreover usurp plaintiff’s authority under the Education Law to place the children according to their individual needs.

I.

We first consider plaintiff’s contention that this appeal, filed by defendants as of right on the ground that a substantial constitutional question is directly involved (NY Const, art VI, § 3; CPLR 5601 [b] [1]), must be dismissed for lack of jurisdiction.

To support an appeal as of right on this basis, appellants must demonstrate that the ground for appeal is " 'directly and primarily an issue determinable only by our construction of the Constitution of the state or of the United States.’ ” (Matter of Haydorn v Carroll, 225 NY 84, 88.) Even where a constitutional question may be otherwise involved, an appeal as of right does not lie if the decision appealed from was or could have been based upon some ground other than construction of the Constitution (see, Matter of Levy, 255 NY 223). These principles require dismissal of defendants’ appeal.

In addressing plaintiff’s request for declaratory relief, the Appellate Division declined to adopt the construction of Education Law § 3602-c (9) urged by either party. The court did, however, conclude that the statute — as interpreted — required that to the maximum extent appropriate, the special services at issue were to be offered in the public schools, not separately. The core of the Appellate Division decision was its construction of the pertinent statutes. While the court went on to find that Supreme Court’s order requiring plaintiff to provide services at a neutral site would contravene the Establishment Clause, the Appellate Division itself observed that "quite apart from the above discussion, the order and judgment must fall because it constitutes an improper usurpation of the plaintiff’s legislatively ordained authority pursuant to Education Law article 89 to evaluate and place handicapped children in special education programs according to their individual needs (see, Education Law § 4402).” (132 AD2d 409, 416-417, supra.) The constitutional discussion thus appears to have been incidental to the Appellate Division holding (see, Matter of Rueff, 273 NY 530; Cohen and Karger, Powers of the New York Court of Appeals § 56, at 256 [rev ed]).

Because appellants have failed to sustain their burden, the appeal filed as of right must be dismissed. However, there being novel and significant issues tendered for review, we grant the application for leave made during oral argument, and turn to a consideration of the merits of the appeal.

II.

Plaintiffs reading of Education Law § 3602-c is over-broad and must be rejected. That section does not mandate that a board can provide special services to private school handicapped children only in regular classes and programs of the public schools, and not elsewhere.

Upon request of a parent, guardian or custodian of a handicapped student, boards of education of all school districts must offer services to pupils who are residents of the State and who attend nonpublic schools in their districts (Education Law § 3602-c [2]). "Services” include "education for students with handicapping conditions, and counseling, psychological and social work services related to such instruction provided during the regular school year for pupils enrolled in a nonpublic school located in a school district, provided that such instruction is given to pupils enrolled in the public schools of such district.” (Education Law § 3602-c [1] [a].) "Education for students with handicapping conditions” is further defined to mean special programs designed to serve "persons who meet the definition of children with handicapping conditions set forth in subdivision one of section forty-four hundred one of this chapter.” (Education Law § 3602-c [1] [d].) No one disputes that defendant children, as well as the services in controversy, are within the sweep of section 3602-c. Subdivision (9) provides: "Pupils enrolled in nonpublic schools for whom services are provided pursuant to the provisions of this section shall receive such services in regular classes of the public school and shall not be provided such services separately from pupils regularly attending the public schools.” As the Appellate Division analysis recognizes (132 AD2d 409, 413-414, supra), this is not a statute that can be read without consideration of its history and context (see, e.g., Doctors Council v New York City Employees’ Retirement Sys., 71 NY2d 669, 675-676), because of its indefiniteness and facial inconsistency with other laws on the same subject.

While insisting in its complaint that section 3602-c (9) must be read literally as the exclusive vehicle for providing special services to handicapped private school students, plaintiff now embraces the Appellate Division’s modification of that proposition, urging that, to the maximum extent possible — and consistent with other laws mandating services at specific places, and with individual exceptions for hardship — section 3602-c compels, and authorizes, school districts to offer programs and services to private school handicapped students only in regular public school classes and programs, and not elsewhere. We disagree.

We conclude that section 3602-c authorizes services to private school handicapped children and affords them an option of dual enrollment in public schools, so that they may enjoy equal access to the full array of specialized public school programs; if they become part-time public school students, for the purpose of receiving the special services, the statute directs that they be integrated with other public school students, not isolated from them. The statute does not limit the right and responsibility of educational authorities in the first instance to make placements appropriate to the educational needs of each child, whether the child attends public or private school. Such placements may well be in regular public school classes and programs, in the interests of mainstreaming or otherwise (see, Education Law § 4401-a), but that is not a matter of statutory compulsion under section 3602-c.

Supreme Court described section 3602-c (9) as a "modest, if not obscure” law (134 Misc 2d 658, 661, supra). Indeed, since its enactment in 1974, Education Law § 3602-c has remained uncontroversial. It was adopted — as part of the Education Law article pertaining to apportionment of moneys — in the wake of Lemon v Kurtzman (403 US 602) and Committee for Pub. Educ. v Nyquist (413 US 756), which struck down New York laws providing financial assistance programs to nonpublic schools because they had the primary effect of advancing religion.

The statute was plainly designed to increase benefits afforded to handicapped children in private schools — not to limit them — by offering these students access to all of the special programs provided for public school students and by integrating them generally with public school students. As the Governor explained in his approval memorandum, "This bill * * * is designed to assure access for all high school students in this State to specialized vocational and occupational education programs and educational programs for students with handicapping conditions * * * Many public school districts have long been able to offer a variety of occupational and vocational education courses, and special education programs for pupils with handicapping conditions. Non-public schools, with smaller enrollments and more limited facilities and fiscal resources, have generally been unable to provide such specialized offerings, which frequently require small classes, special equipment, and highly specialized staffing. This bill will enable non-public school students to join with our public school students in sharing the benefits from such public programs.” (Governor’s Mem of Approval, 1974 McKinney’s Session Laws of NY, at 2102; see also, 1974 NY Legis Ann, at 109.) The Legislature’s efforts to accomplish these purposes were at the time both heralded as affording handicapped children greater educational opportunity and criticized as unduly costly for districts having a large concentration of nonpublic school students (see, Governor’s Bill Jacket, L 1974, ch 593). In the legislative history, there is no suggestion that the statute was intended to introduce into the regulatory scheme a compulsion that programs be concentrated solely in the public schools, and it was not offered as an economy or efficiency measure; indeed, the contrary concern was expressed — that the benefits being added by the new provision would be costly (see, e.g., letter from Mayor Abraham D. Beame, Governor’s Bill Jacket, L 1974, ch 593).

The view that the statute affords an added double-enrollment option — rather than dictating the sole or presumptive means for affording services — is in harmony with the scheme of State and Federal regulation pertaining to services for handicapped school children.

The Federal Education of the Handicapped Act (20 USC § 1400 et seq.) declares the congressional objective that each handicapped child is to have available a free appropriate public education, with special education and related services— including classroom instruction, instruction in physical education, home instruction and instruction in hospitals and institutions — available to meet a child’s unique needs (20 USC § 1401 [16]). To the extent consistent with the number and location of handicapped children within a State enrolled in private schools, "provision is [to be] made for [their] participation” in such services. (20 USC § 1413 [a] [4] [A].) The regulations of the United States Department of Education specify, in particular, that while the public agency is not required to pay for a child’s private school education, it is to make services available to the nonpublic school children; each local educational agency is to "provide special education and related services designed to meet the needs of private school handicapped children residing in the jurisdiction of the agency.” (34 CFR 300.452.)

To implement the goals declared by Federal law, New York has adopted an extensive statutory and regulatory scheme (see generally, Education Law art 89; 8 NYCRR part 200). Several pertinent points may be distilled from these laws. First, the paramount principle that guides State law is concern for a handicapped child’s educational needs, whether in public or private school. All handicapped children residing within a school district are to be afforded suitable educational opportunities according to their individual needs, in a manner that enables them to participate in regular education services when appropriate (see, e.g., Education Law §§ 4401-a, 4402 [2] [a]; 8 NYCRR §§ 200.1, 200.6). Second, the statutes and regulations vest in State educational authorities broad responsibility for tailoring programs to a child’s individual needs in the least restrictive environment, considering the appropriateness of the resources of the regular education program (see, e.g., Education Law §§ 4401-a, 4402, 4403). Third, to this end, the authorities have a wide choice of programs and services, including home instruction, itinerant teachers (Education Law § 4401 [2] [a]), and counseling and psychological services (Education Law §4401 [2] [k]). The Education Law permits contracts with private facilities, even out-of-State facilities, where such services are deemed necessary for a child’s appropriate education (Education Law § 4407). From the scope of services and programs, it is plain that not all services can even be furnished in "regular classes of the public school” (Education Law § 3602-c [9]).

While the Appellate Division reading of the Education Law § 3602-c would recognize limited exceptions from the general mandate for public school services to avoid inconsistency and individual hardship, we believe the better reading is that this provision in the first instance imposes no such mandate but leaves educational authorities to fashion an appropriate program for each child within statutory guidelines and constitutional constraints (see, e.g., NY Const, art XI, § 3; Lemon v Kurtzman, 403 US 602, supra).

Our reading of the statute also appears to be consonant with the State Education Department’s interpretation (see, Matter of Mutual Life Ins. Co. v State Tax Commn., 32 NY2d 348, 353-354). Several letters from counsel for the Department have been made part of this record, none of them opining that section 3602-c mandates public school placement. In response to a question put by plaintiffs counsel, counsel for the Department explained that section 3602-c governs the option of dual enrollment, that where it found compelling individual or group reasons for doing so a board of education otherwise might elect to provide services elsewhere to private school handicapped children. He wrote: "In such a case, the provisions of § 3602-c would not be invoked because there would have been no parental request for 'dual enrollment’ in a public school pursuant to that section. Rather, the board of education would be exercising its authority and discharging its responsibilities pursuant to 34 CFR § 300.452.” (Emphasis added.) Similarly, the Commissioner of Education has declined to construe the statute as the blanket mandate plaintiff suggests. In Matter of Board of Educ. (24 Ed Dept Rep 155 [Oct. 31, 1984]), the Commissioner concluded that "Section 3602-c relates solely to so-called 'dual enrollment’ in public schools for specified purposes by youngsters who otherwise attend nonpublic schools. Subdivision 9 of that section pertains solely to youngsters who are dually enrolled”. (Id., at 159-160; see also, Matter of Handicapped Child, 21 Ed Dept Rep 708 [June 16, 1982]; Matter of Handicapped Child, 19 Ed Dept Rep 463 [Mar. 7, 1980].)

We therefore conclude that plaintiffs contention should be rejected: it is neither compelled to make services available to private school handicapped children only in regular public school classes and programs, nor without authority to provide otherwise.

III.

That plaintiff may be free of the claimed restraint of Education Law § 3602-c (9) does not, however, establish defendants’ contention that the services must be provided within their own schools, or even at a neutral site.

Defendants’ contention that State and Federal statutes mandate provision of services to nonpublic school children on the premises of the schools they normally attend, requires little discussion. Without reaching any constitutional implications of the contention (see, e.g., 132 AD2d 409, 414-416, supra), there is no such statutory requirement. Indeed, as the foregoing discussion indicates, such a general compulsion would be inconsistent with the regulatory scheme, which contemplates that the placement of children in programs will be guided generally by their individual educational needs in the least restrictive environment. This statutory claim advanced by defendants is therefore without merit.

Similarly, on this record defendants have been denied no constitutional right by the children’s public school placements.

Considerable doubt has been voiced by the Appellate Division (132 AD2d 409, 416, supra), by plaintiff and by the New York State School Boards Association as amicus, that the alternate setting contemplated by defendants could ever be a genuinely neutral, public site, free of identification with defendants’ beliefs. The point is made that the fear and trauma of leaving the language, life-style and environment of Kiryas Joel and mixing with others — defendants’ stated grounds for refusing to attend the public schools — of necessity mean that any acceptable alternate site designated to address those concerns could never be truly neutral. We see an even more fundamental flaw in defendants’ position: on this record, defendants’ statutory entitlement to special services does not carry with it a constitutional right to dictate where they must be offered.

Defendants’ constitutional “right” to services in their own schools or at a neutral site, as asserted in this court, rests on their contention that the Board’s public school placements interfere with the free exercise of their sincere religious beliefs guaranteed by the State and Federal Constitutions (NY Const, art I, § 3; US Const 1st Amend), that compelling the children to attend regular public school classes and programs forces them to choose between following the precepts of their religion and foregoing benefits on the one hand, and accepting benefits while violating their religious beliefs on the other (see, e.g., Lyng v Northwest Indian Cemetery Protective Assn., 485 US —, 108 S Ct 1319 [Apr. 19, 1988]; Hobbie v Unemployment Appeals Commn., 480 US 136; Sherbert v Verner, 374 US 398).

But that is not the claim defendants asserted and supported below. Defendants in their submissions to the trial court insisted that, as a class, they should be exempted from public school placements only for nonreligious reasons — most particularly because of the emotional impact on the children of traveling out of Kiryas Joel. They made no showing that any sincere religious beliefs were threatened by requiring limited public school attendance, only for special services (see, e.g., Wisconsin v Yoder, 406 US 205, 209-210). Thus, there is no basis here for the constitutional right now asserted by defendants and found by the trial court. Whether a school board might, as a matter of choice, offer certain services to defendant children at a neutral site (as plaintiff allegedly is doing for services to other children) without running afoul of the Establishment Clause (US Const 1st Amend; see also, NY Const, art XI, § 3) is a question not presented by this case, because no such proposal is before us.

We therefore conclude that the Appellate Division correctly denied defendants’ motion for summary judgment and dismissed their counterclaim: they have demonstrated no right to the relief they request.

IV.

Accordingly, the order of the Appellate Division should be modified by declaring that plaintiff is not compelled by Education Law § 3602-c to offer all services available to defendant children only in the regular classes and programs of its public schools, and it is not without authority to provide otherwise; nor is plaintiff on this record compelled by law to offer defendants such services in the classes and programs of their nonpublic schools or at a neutral site. Except as so modified, the Appellate Division order should be affirmed, without costs.

Chief Judge Wachtler and Judges Simons, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Appeal taken as of right dismissed, without costs, upon the ground that no substantial constitutional question is directly involved. Oral application for leave to appeal granted. Order modified in accordance with the opinion herein and, as so modified, affirmed, without costs.

      . The Satmarer Hasidim have been involved in two recent disputes raising similar considerations in the Federal courts. In Parents’ Assn. v Quinones (803 F2d 1235), the Second Circuit preliminarily enjoined implementation of a plan by the Board of Education to provide federally funded remedial education for handicapped girls from Beth Rochel school by closing off nine classrooms of a public school, and dedicating them to the use of the Hasidic girls; the teachers were all to be female Yiddish-speaking public school teachers. The court found a substantial likelihood that parents of public school students would succeed in their challenge to the arrangement under the Establishment Clause of the First Amendment to the Federal Constitution. In Bollenbach v Board of Educ. (659 F Supp 1450), female bus drivers complained that the district had violated the Establishment Clause by accommodating the religious beliefs of United Talmudic Academy students when it removed senior female bus drivers from transportation runs involving male students. The District Court found that the deployment of only male drivers had the primary effect of advancing religious beliefs.

      . This treatise was submitted by plaintiff to the trial court, and the quoted language is found in the court’s opinion; defendants have neither affirmed nor disavowed its accuracy or currency. Indeed, in their submissions, they make no reference to their religious beliefs or practices, only their life-style and environment.

      . While the principle of separation of Church and State is deep-rooted, the actual wall of separation "is a blurred, indistinct, and variable barrier depending on all the circumstances of a particular relationship.” (Lemon v Kurtzman, 403 US 602, 614.) That there is no litmus test for determining which services may be rendered by a public body to parochial school students and which may not, is perhaps best illustrated by Wolman v Walter (433 US 229), a Supreme Court decision with so many categories and splintered votes that it can only be read with a scorecard.
      It may well be that certain of the services in controversy could be furnished to defendants at neutral sites if plaintiff determined to do so (see, Wolman v Walter, 433 US 229, supra). This declaratory judgment action poses only the abstract question whether services must be furnished in public schools (as plaintiff insists) or must be furnished separately (as defendants insist); the actual services involved are not even fully specified. We therefore have no occasion to — nor could we — determine where any particular services could be rendered in conformity with constitutional principles.