author: Kaye, J.

text:
    In the Matter of Jamie M. Yates County Department of Social Services, Appellant; Edgar M. et al., Respondents.
    Argued October 15, 1984;
    decided November 20, 1984

      POINTS OF COUNSEL

      Douglas G. Reynolds for appellant.
    I. The Yates County Department of Social Services, by clear and convincing evidence, has fulfilled its statutory duty to exercise diligent efforts to strengthen the parent-child relationship and to reunite the family. (Matter of Sheila G., 61 NY2d 368; Matter of Jamie Y., 92 AD2d 696; Matter of Roderick W., 96 AD2d 746; Matter of Candie Lee W., 91 AD2d 1106; Matter of Snyder, 88 AD2d 772; Matter of Janet AA., 88 AD2d 670; Matter of Lisa Ann U., 75 AD2d 944; Matter of Seith SS, 66 AD2d 914; Matter of William Michael A., 70 AD2d 1007.) II. The record reflects, by clear and convincing evidence, that the parents failed since the child was placed in foster care substantially and continuously or repeatedly to plan for the future of the child, although physically and financially able to do so. (Matter of Orlando F., 40 NY2d 103; Matter of Leon RR, 48 NY2d 117; Matter of La Verne TT., 78 AD2d 732; Matter of John W, 63 AD2d 750; Matter of Orzo, 84 Misc 2d 482.) III. Commitment of the guardianship and custody of this child to the agency for the purposes of adoption is in the best interests of the child.

      Anthony J. Geraci, Public Defender, for respondents.
    I. The Yates County Department of Social Services did not fulfill its statutory duty to exercise diligent efforts to reunite the family and strengthen the parent-child relationship. (Santosky v Kramer, 455 US 745; Matter of Snyder, 88 AD2d 772; Matter of Klug, 32 AD2d 915; Matter of Roxann Joyce M., 99 Misc 2d 390; Matter of Joyce Ann R, 82 Misc 2d 730; Matter of Anita “PP”, 65 AD2d 18; Matter of Sidney, 84 Misc 2d 932.) II. The record does not establish that the parents failed to plan for the future of the child or that they were physically and financially able to do so. (Matter of John W, 63 AD2d 750.) III. The record at the dispositional hearing was insufficient to continue custody in the agency with a view toward the adoption by the foster parents.
   OPINION OF THE COURT

Kaye, J.

Resolution of this proceeding to terminate parental rights for failure over the period of more than a year to plan for the future of a child hinges on whether the agency discharged its statutory obligation to exercise diligent efforts to encourage and strengthen the parental relationship, “a threshold consideration and a necessary prerequisite to any determination of permanent neglect.” (Matter of Sheila G., 61 NY2d 368, 386.) Because we agree with the Appellate Division that the record does not reflect diligent efforts on the part of the agency to aid the parents in remedying the very conditions now urged as the basis of their neglect, we affirm the order below dismissing the petition, with costs.

We note at the outset what is not involved in this proceeding. The child who is at the center of this dispute, Jamie M., has since birth suffered serious physical afflictions requiring extraordinary care. She has indisputably enjoyed a level of care with her foster family — her foster mother is a registered nurse — that her natural parents could not offer. However, no claim is made that, because of the demands of Jamie’s condition, efforts to strengthen parental ties would be detrimental to her best interests (Social Services Law, § 384-b, subd 7, par [a]). Similarly, while the agency complains of missed visits by the parents during the period in issue (Oct. 1978 to Jan. 1981), no claim is made that parental rights should be severed because of a failure to maintain contact (Social Services Law, § 384-b, subd 7, par [a]). Only the parents’ failure to plan for Jamie’s future is charged as the basis for termination.

Born prematurely in September 1977, Jamie has since birth required special care. She spent the initial months of her life in the hospital, where portions of her intestines were removed and a colostomy performed. In the care of her parents thereafter, Jamie had frequent illnesses, including skin rashes from poor hygiene. Five times between January and September 1978 she was hospitalized for pneumonia. In September 1978, at the suggestion of the pediatrician, Jamie’s parents voluntarily placed her in foster care because her health was in jeopardy and she needed to be readied for surgery to close the colostomy. In the time spent with her foster parents, Jamie made considerable gains, although at the time of the hearing on the petition in July 1981 she had minimal cerebral palsy and was still behind her peers in development; she remained highly susceptible to infections and rapid dehydration, requiring ready access to a doctor.

Jamie’s parents, as the Appellate Division observed, are people of “limited resources and abilities.” Between October 1979 and January 1981, they (with Jamie’s brother, approximately a year older) moved numerous times, among four counties, often residing with family or friends. They experienced extended periods of unemployment, inability to pay rent, lack of transportation, telephone, heat and other amenities. Mr. M.’s whereabouts in this period were sometimes unknown, sometimes with his teenage girlfriend. From the start of the placement, a program of visits was arranged by the agency, interrupted by the parents’ moving out of the county, and by their alleged inability to arrange transportation, illness and other excuses. Several scheduled visits were missed without prior notice.

Originally, the plan was for the child to return to her parents when the doctor said she was well enough. While from the beginning visits and family counseling sessions were arranged by the agency, the first discussion of an actual plan for Jamie’s return took place around September 1979, when the parents were told they would need a suitable home, the means to support the child, a way to get her to a doctor when needed, and family counseling. The agency further advised that if the parents failed to take appropriate steps, a permanent neglect proceeding to terminate their rights would eventually be brought. Absent any input from the parents, who failed to keep an appointment to discuss a plan, this four-part plan was later put forth by the agency in a writing, and became part of an order of disposition entered in June 1980. The plan provided for reference by the agency to the State employment service and “any employment we may hear about”, and reference to the Keuka Housing Council and “advising them of vacancies we have heard of and by encouraging them in their pursuit of housing.” This was the usual agency plan.

The parents fulfilled none of the four components of the agency’s plan. They established no suitable home for any meaningful period of time, no means of support, no way to get the child quickly to a doctor when needed, and their cooperation in family counseling was sporadic at best. On the subject of housing, the senior case worker testified that she was informed that the parents couldn’t find housing because of a lack of funds, that she and Mrs. M. had discussed places where Mrs. M. might look for an apartment, and she had offered the use of her telephone. On the subject of employment, the record reflects no consultations or references, and contains only the parents’ testimony that no steps were taken to help them find employment. No attempts by the agency to assist the parents in budgeting or securing public assistance are recorded.

In the view of the Family Court, which granted the petition and terminated parental rights on a “fair preponderance” standard both sides acknowledge now to be inapplicable (Santosky v Kramer, 455 US 745), the parents were not cooperative with the officials who attempted to plan with them and aid them in carrying out a plan for the return of their child. The court found that reasonable attempts had been made by the agency to assist in developing and encouraging a meaningful relationship between the parents and child. The Appellate Division, one Justice dissenting, disagreed, concluding that the record did not establish diligent agency efforts to remedy the conditions relied on in support of the termination proceedings, and that any plan must be evaluated in the context of the capabilities of the parents. In our view, the weight of the evidence more nearly comports with the findings of the Appellate Division.

In the statutory scheme for termination of parental rights, failure to cooperate with an agency is hardly without legal significance. The Social Services Law contemplates only reasonable attempts by an agency to foster the parent-child relationship, and a diligent undertaking serves to fulfill this requirement. The agency is “not charged with a guarantee that the parent succeed in overcoming his or her predicaments. Indeed, an agency that has embarked on a diligent course but faces an utterly unco-operative or indifferent parent should nevertheless be deemed to have fulfilled its duty.” (Matter of Sheila G., 61 NY2d 368, 385, supra.) Nor do diligent efforts require — in the words of the agency’s counsel — that the Department of Social Services be “a 24-hour babysitter and constant hand holder.” Parents must themselves assume a measure of initiative and responsibility; they have a duty to plan for the future of their child, and a failure to utilize medical, psychiatric, psychological and other social and rehabilitative services and material resources will be taken into account in determining whether parents have in fact met their statutory responsibility (Social Services Law, § 384-b, subd 7, par [c]).

But to fault parents for a lack of cooperation presupposes that the agency has fulfilled, or been utterly frustrated in its efforts to fulfill, its own statutory obligations to strengthen the parental relationship, including specifically a duty to provide “services and other assistance to the parents so that problems preventing the discharge of the child from care may be resolved or ameliorated” (Social Services Law, § 384-b, subd 7, par [f], cl [3]). What is missing from this record, and what compels us to the conclusion that the petition must be dismissed, is any indication of agency efforts to address one of the underlying problems that beset these parents and kept them from regaining their child: essentially unemployment and financial instability, which stood in the way of their securing a decent place to live. Given the dominant position and resources of the agency, the legislative command that “the state’s first obligation is to help the family with services * * * to reunite it” (Social Services Law, § 384-b, subd 1, par [a], cl [iii]; see, also, Matter of Leon RR, 48 NY2d 117, 126) and the explicit requirements of the statute, such a void in the record forecloses a finding of permanent neglect. (See Matter of Sheila G., 61 NY2d 368, 381-382, supra; Matter of Star Leslie W., 63 NY2d 136.) An agency assuredly need not guarantee that parents will no longer be poor or unemployed, but neither can it, without more, simply impose on impoverished parents the usual plan, including the requirement, for return of their child, that they have a means of support and suitable home.

The Legislature has placed primacy on the right of parents to raise their children and the desirability of children to be with their natural parents. Though others may offer more comfort and be better able to provide for a child than its own parents, and though it may be argued that freeing a child for adoption by a foster family in a given situation serves the best interests of the child, still the drastic step of severing parental rights for neglect can only be taken when there has been compliance with the statute. Indeed, a consideration of the best interests of a child is not even reached unless it would be actually detrimental to encourage and strengthen the parental relationship. In this statutory scheme, the onus is on the agency, before parental rights can be terminated, to make some attempt to assist parents, with counseling, planning, visitation and the procurement of housing and employment where that is necessary in order to help them overcome the problems that separate them from their children. (Matter of Sheila G., 61 NY2d 368, 384, supra.) There is no record of diligent agency efforts here.

Dismissal of the petition of course leaves open the question of custody, as well as any other issues that may have arisen in the nearly four-year life of this proceeding. While the parents argue before us that the record at the dispositional hearing was insufficient to continue custody in the agency, that ruling rested on the Family Court’s perception of the high level of skill and supervision required by the child’s health, an issue we have not considered on this appeal.

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

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer and Simons concur.

Order affirmed, with costs.


source: Caselaw Access Project

author: Chief Judge Cooke.

license: Public Domain

text:
    Two Guys from Harrison-N.Y., Inc., Appellant, v S.F.R. Realty Associates et al., Respondents. Grace Retail Corporation, Additional Defendant on Counter-claims, and Vornado, Inc., Additional Appellant on Counterclaims.
    Argued October 9, 1984;
    decided November 20, 1984

      POINTS OF COUNSEL

      Donald S. Snider and Gerald M. Levine for appellants.
    I. Two Guys satisfied each of the factual requirements in RPAPL 803. (Brokaw v Fairchild, 135 Misc 70, 231 App Div 704, 256 NY 670.) II. A landlord who denies tenant the right to make alterations permitted by statute must point out specific lease provision which expressly restricts such right. (Premium Point Park Assn, v Polar Bar, 306 NY 507; Dolman v United States Trust Co., 2 NY2d 110; Rowe v Great Atlantic & Pacific Tea Co., 46 NY2d 62; Presby v Benjamin, 169 NY 377.) III. Expressio unius est exclusio alterius is not an ironbound rule but merely an aid to interpretation which should not be applied to defeat the parties’ clear intentions or a statute’s- principal purpose. (Matter of John P. v Whalen, 54 NY2d 89; Matter of Auburn Police Local 195 v Helsby, 62 AD2d 12, 46 NY2d 1034; Matter of Dening v Cooke, 162 Misc 723; Goldstein v City of Long Beach, 28 AD2d 558; Rodolitz v Neptune Paper Prods., 22 NY2d 383; Matter of Loew’s Buffalo Theatres, 233 NY 495; Bregoff v Rubien, 12 AD2d 92,10 NY2d 763.) IV. Independent of RPAPL 803, Two Guys is entitled to make the proposed alterations as an incident to its contractual right to sublease and subdivide the demised premises. (Rumiche Corp. v Eisenreich, 40 NY2d 174; Andrews v Day Button Co., 132 NY 348; Klein’s Rapid Shoe Repair Co. v Sheppardel Realty Co., 136 Misc 332, affd sub nom. Klein’s Rapid Shoe Repair Co. v 120-122 East 14th St. Corp., 228 App Div 688; Pross v Excelsior Cleaning & Dyeing Co., 110 Misc 195; Williams v Ron-Jay Enterprises, 65 AD2d 213; Wayne Motors v Somers, 81 AD2d 964; Refrigeration for

      Science v Deacon Realty Corp., 70 Misc 2d 500.) V. The addition of new front “ingress/egress” doors and a rear loading door were in any event expressly allowed under the last sentence of Paragraph 6(a) of the parties’ lease — permitting removal of any wall “to afford entrance to or connection with improvements,” which includes pavement, sidewalks and driveways as well as buildings. (Rametta v Kazlo, 68 AD2d 579; W.L. Dev. Corp. v Trifort Realty, 58 AD2d 377, 44 NY2d 489; Matter of MacLean v Barclay, 48 AD2d 926, 40 NY2d 1041; Matter of Little Pond Hill v Mendel, 74 Misc 2d 989; Nature Conservancy v State of New York, 67 Misc 2d 1014, 41 AD2d 782.) VI. The parties have shown by their prior conduct that Two Guys may permissibly make the proposed alterations without the consent or permission of S.F.R. (Woolsey v Funke, 121 NY 87; Halperin v McCrory Stores Corp., 207 App Div 448, 239 NY 547 .)

      M. William Scherer for respondents.
    I. The proposed alterations violate agreements or instruments regulating use of land. (Woodmere Academy v Steinberg, 41 NY2d 746; Matter of Friday, 148 Misc 899; Matter of Cheney, 85 Misc 2d 66; Matter of Keyworth, 13 Misc 2d 502, 19 AD2d 688.) II. RPAPL 803 does not authorize Two Guys to make the enumerated structural and exterior alterations. III. No alternative grounds exist for reversal. (Wall Nut Prods, v Radar Cent. Corp., 20 AD2d 125; Regan v Luthy, 16 Daly 413; Wayne Motors v Somers, 81 AD2d 964; Refrigeration for Science v Deacon Realty Corp., 70 Misc 2d 500, 42 AD2d 691.) IV. The consequences of a reversal go far beyond the present dispute. V. The jury should not have been discharged. (Independent Church of Realization of Word of God v Board of Assessors, 72 AD2d 554; Eysaman v Small, 61 Hun 618.)
   OPINION OF THE COURT

Chief Judge Cooke.

The question presented on this appeal is whether a tenant has the right to make substantial changes to the demised premises. Such a right may arise from statute or contract. When, however, the instrument governing the tenancy prohibits such alterations, the tenant may not proceed under either authority.

The individual respondents are the holders of a reversionary interest in property located in New Hyde Park which is under a long-term land lease that was originally executed by the predecessor in interest to respondent S.F.R. Realty Associates. Initially, an “anchor building” of 100,000 square feet in a shopping center was leased to W.T. Grant Company, which subsequently sold its interest to petitioner in 1976.

At the end of 1981, petitioner exercised an option to close its store. It vacated the premises in early 1982 and began looking for a suitable subtenant for all or part of the building. It eventually reached an agreement with Grace Realty Corporation, which was to sublease approximately 51% of the floor area for use as a “Channel Home Center” store. To accommodate the sublessee, petitioner made substantial nonstructural changes inside and proposed four exterior changes: (1) extending an existing sign canopy, which would require piercing the roof’s waterproofing membrane; (2) adding decorative brick fascia to the I-beams that would support the canopy extension; (3) installing a new ingress/egress door and a related glass front; and (4) adding a loading door at the rear of the building. It is obvious that these constituted substantial structural modifications. When petitioner gave notice of its intent to make these alterations, however, S.F.R. Realty objected and declared that they would violate the terms of the lease. Petitioner commenced this special proceeding, claiming that it had both a statutory and contractual right to make the proposed changes.

The essence of this controversy has its genesis in the law against waste. At common law, a tenant’s only right was to make use of property; a right to alter the property did not arise unless the landlord expressly permitted it (see Agate v Lowenbein, 57 NY 604, 607-608). This principle was applied even when the tenant could not economically maintain the property without the change and the alteration would have increased the property’s value (see Brokaw v Fairchild, 135 Misc 70, affd no opn 231 App Div 704, affd no opn 256 NY 670). The Legislature long ago acted to ameliorate the harsh effects of this doctrine (L 1937, ch 165), which effort is now codified in RPAPL 803. That statute sets forth certain conditions under which a tenant for life or for years may alter the property over the objections of any owner of a future interest. In brief, the tenant must establish that a prudent owner would make the same change, which will not reduce the market value of the future interests and does not violate any contract regulating the tenant’s conduct. In addition, the tenancy must be expected to continue for more than five years, and written notice of the intention to make the alteration must be given. Finally, the owner of a future interest may obtain security that the proposed alteration will be completed.

Petitioner asserted two grounds for its right to make the proposed changes to the building. First, it contended that the lease either expressly permitted the changes or was silent on the issue. Paragraph 6(a) authorized petitioner to “make any interior non-structural alterations, additions and improvements * * * which it may deem necessary or desirable provided Tenant does not thereby weaken the structure of the building” and “provided it does not interfere with the quiet enjoyment of other tenants, [to] remove all or any part of any wall of any building * * * to afford entrance to or connection with improvements on adjoining premises * * *”. Petitioner secondly argued that, as a concomitant of its contractual right under Paragraph 12 to sublet or subdivide the premises, it was empowered to make exterior, structural changes.

Neither of the lower courts expressly addressed petitioner’s second contention. The trial court concluded that petitioner satisfied the conditions of RPAPL 803 (subd 1) and was entitled to make the proposed exterior alterations. In reaching its determination, the court found the lease to be “silent and nonprohibitive” with respect to the proposed exterior alterations. The Appellate Division unanimously reversed on the reasoning that the express permission to undertake certain alterations granted in Paragraph 6(a) must be interpreted to implicitly prohibit all other alterations. This court now affirms.

Much of petitioner’s argument before this court relies on the breadth that it proposes should be accorded to the Legislature’s liberalization of the law of waste. This question would be especially pertinent if the controversy were focused on paragraphs a or b of RPAPL 803 (subd 1). Inasmuch as this statutory issue can be reáolved on the basis that the lease prohibited the proposed alterations so as to preclude satisfying paragraph c, it is unnecessary to decide the scope of the Legislature’s amendment of the common law.

RPAPL 803 (subd 1, par c) permits a “proposed alteration or replacement [that] is not in violation of the terms of any agreement or other instrument regulating the conduct of the owner of the estate for life or for years or restricting the land in question”. Applying this provision obviously calls for an interpretation of petitioner’s contract. Under the present circumstances, this presents a question of law which this court may consider free of the lower courts’ determinations (see West, Weir & Bartel u Mary Carter Paint Co., 25 NY2d 535). In construing a contract, one of a court’s goals is to avoid an interpretation that would leave contractual clauses meaningless (see Corhill Corp. v S. D. Plants, Inc., 9 NY2d 595, 599; Muzak Corp. v Hotel Taft Corp., 1 NY2d 42, 46).

Paragraph 6(a) of the lease was the only provision of that contract discussing alterations to the building. Its title — “alterations, walls, Etc.” — indicates that it was intended to be a comprehensive treatment of that subject. Having been prepared by petitioner’s predecessor in interest, it is construed against the tenant (see 151 West Assoc, u Printsiples Fabric Corp., 61 NY2d 732, 734). Critically, Paragraph 6(a) omitted any reference to exterior structural alterations. The section expressly authorized two types of modifications: interior, nonstructural alterations, and removing walls to permit access to improvements on adjoining premises. In neither case did these authorize making structural changes to afford access between petitioner’s premises and the parking lot. The first clearly did not apply to the exterior structural changes at issue here. The latter provision, viewed in context, must be read as concerning alterations to provide direct access from petitioner’s building to the portions of the shopping center occupied by other tenants, not to the parking lot.

Thus, it must be determined whether the lease, prepared by the tenant, prohibited the changes proposed by petitioner. In considering this problem, guidance is provided by the doctrine of “inclusio unius est exclusio alterius,” an applicable maxim when interpreting contracts (see Woodmere Academy v Steinberg, 41 NY2d 746, 750). Under all the circumstances here, the specification of certain permitted activities in Paragraph 6(a) should be read as implicitly prohibiting other alterations.

Petitioner also posits that it was empowered to make external structural changes as a concomitant to its contractual right to sublet or subdivide granted in Paragraph 12 of the lease, relying on a single New York case (Klein’s Rapid Shoe Repair Co. v Sheppardel Realty Co., 136 Misc 332, affd no opn 228 App Div 688) and a number of out-of-State decisions (Sherwood Med. Inds. v Building Leasing Corp., 527 SW2d 407 [Mo App]; Fair West Bldg. Corp. v Trice Floor Coverings, 394 SW2d 707 [Tex Civ App]; Turman v Safeway Stores, 132 Mont 273; Sparkman v Hardy, 223 Miss 452; Spring St. Realty Co. v Trask, 126 Cal App 765; Mayer v Texas Tire & Rubber Co., 223 SW 874 [Tex Civ App]; Kresge v Maryland Cas. Co., 154 Wis 627). These decisions support petitioner’s argument only in the general sense that they recognize a power to make alterations as inherent in the right to sublet and subdivide. Only two, however, involved situations where the tenant was attempting to make structural or permanent changes, especially to an exterior wall (see Turman v Safeway Stores, supra; Spring St. Realty Co. v Trask, supra). In each instance, the courts relied on other lease provisions concerning alterations to justify a right in the tenant to make the challenged substantial modifications.

The sounder approach is to accept petitioner’s basic premise — that a right to sublet or subdivide implicitly includes a power to make alterations — but recognize that Paragraph 6(a) was intended to describe the nature and scope of changes that could be made. The foremost feature recommending this analysis is that it would avoid rendering Paragraph 6(a) meaningless. Under petitioner’s interpretation, Paragraph 12 gave it a broad power to alter the premises as it deemed necessary for subletting. As a prohibitive clause, however, Paragraph 6(a) would be meaningless if not given effect here because all the conduct it restricts could be freely pursued under Paragraph 12.

This court has previously recognized that, generally, a contract which expressly permits an activity will not be construed to prohibit other conduct necessary to carrying out that activity. “[Sjince the covenant permits the conduct of the business itself, the conclusion is almost inescapable that it permits whatever is customarily and necessarily incidental thereto. We may not construe the covenant as prohibiting in one subdivision that which it expressly sanctions in another” (Premium Point Park Assn. v Polar Bar, 306 NY 507, 511). In Polar Bar, a refreshment stand was held to have an incidental right to maintain a parking lot, notwithstanding a restrictive covenant to the contrary, when the stand was located in an area not readily available to pedestrian traffic and 90% of the customers (which could reach 1,000 per day) arrived by car. In contrast, the record here does not demonstrate that petitioner’s power to sublet or subdivide 100,000 square feet will be practically defeated if it is not allowed to make structural changes to the exterior wall, as opposed to being limited to erecting partitions and making other interior, nonstructural changes.

Petitioner has failed to establish either that the lease did not prohibit the proposed alterations or that it permitted them. As such, it has no right to make these modifications under RPAPL 803 or the contract.

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

Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur.

Order affirmed, with costs.

      . In its entirety, the statute provides:
      “§ 803. Alterations or replacements of structures by person having estate for life or years.
      “1. When a person having an estate for life or for years in land proposes to make an alteration in, or a replacement of a structure or structures located thereon, then the owner of a future interest in such land can neither recover damages for, nor enjoin the alteration or replacement, if the person proposing to make such alteration or replacement complies with the requirements hereinafter stated as to the giving of security and establishes the following facts:
      “a. That the proposed alteration or replacement is one which a prudent owner of an estate in fee simple absolute in the affected land would be likely to make in view of the conditions existing on or in the neighborhood of the affected land; and “b. That the proposed alteration or replacement, when completed, will not reduce the market value of the interests in such land subsequent to the estate for life or for years; and
      “c. That the proposed alteration or replacement is not in violation of the terms of any agreement or other instrument regulating the conduct of the owner of the estate for life or for years or restricting the land in question; and “d. That the life expectancy of the owner of the estate for life or the unexpired term of the estate for years is not less than five years; and “e. That the person proposing to make such alteration or replacement, not less than thirty days prior to commencement thereof, served upon each owner of a future interest, who is in being and ascertained, a written notice of his intention to make such alteration or replacement, specifying the nature thereof, which notice was served personally or by registered mail sent to the last known address of each such owner of a future interest.
      “2. When the owner of a future interest in the affected land demands security that the proposed alteration or replacement, if begun, will be completed and that he be protected against responsibility for expenditures incident to the making of the proposed alteration or replacement, the court in which the action to recover damages or to enjoin the alteration or replacement is pending, or if no such action is pending, the supreme court, on application thereto, on such notice to the interested parties as the court may direct, shall fix the amount and terms of the security reasonably necessary to satisfy such demand. The furnishing of the security so fixed shall be a condition precedent to the making of the proposed alteration or replacement.
      “3. This section applies only to estates for life or for years created on or after September 1, 1937.”

      . The complete text of Paragraph 6(a) provided: “The Tenant at its own expense may from time to time during the term of the lease make any interior non-structural alterations, additions and improvements in, on and to Parcel No. 1 of the demised premises which it may deem necessary or desirable provided Tenant does not thereby weaken the structure of the building on the demised premises but it shall make them in a good and workmanlike manner and in accordance with all valid municipal and State' requirements applicable thereto. The Tenant may, provided it does not interfere with the quiet enjoyment of other tenants, remove all or any part of any wall of any building standing on the demised premises to afford entrance to or connection with improvements on adjoining premises, and in the event of such removal of walls then, if requested in writing by the Landlord at least ninety (90) days before the expiration of the term, or of any extension thereof should the term be extended, the Tenant at its expense shall restore said wall so far as practicable to its former condition. All salvage from such work shall belong to the Tenant but all permanent improvements (except as otherwise herein provided) shall belong to the Landlord and become part of the premises subject to the lease.”

      . Petitioner’s argument that “interior non-structural alterations, additions and improvements” — refers to two different activities — “interior non-structural alterations” and “additions and improvements” is unsound and can be summarily dismissed.


author: Jasen, J.

text:
    In the Matter of Sil-Tone Collision, Inc., Respondent, v Leslie G. Foschio, as Commissioner of the New York State Department of Motor Vehicles, Appellant.
    Argued October 12, 1984;
    decided November 27, 1984

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General {Richard G. Liskov, Peter H. Schiff and John M. Farrar of counsel), for appellant.
    Appellant properly increased the penalty for respondent’s admittedly fraudulent and deceptive practice, from suspension to revocation of respondent’s repair shop license. (Matter of Richmond Hill Serv. Sta. v New York State Dept. of Motor Vehicles, 92 AD2d 688; Matter of La Fontaine Props. v McGoldrick, 200 Misc 518; Matter of Giambra v Commissioner of Motor Vehicles, 46 NY2d 743; Matter of Boardwalk & Seashore Corp. v Murdock, 286 NY 494; Bradford v County of Suffolk, 257 App Div 777; Matter of Slewett & Farber v Board of Assessors, 54 NY2d 547; Matter of Rosenthal v Hartnett, 36 NY2d 269; Matter of Albert Simon, Inc. v Myerson, 36 NY2d 300; McSweeney v Bazinet, 269 App Div 213; Matter of Gristmacher v Felicetta, 57 AD2d 444.)

      George Switnicki and Salvatore Aspromonte for respondent.
    I. The decision of the court below is correct in holding that appellant is not empowered to increase a penalty on appeal. (Edelstein & Co. v Ambassador Ins. Co., 86 AD2d 83; Matter of Simpson v Wolansky, 38 NY2d 391; Matter of Cassell v Allen, 27 AD2d 597,19 NY2d 583; Matter of Waite v Connelie, 70 AD2d 964; Matter of Meltzer v Arnbach, 78 AD2d 733.) II. The Commissioner abused his discretion in modifying the $100 fine and seven-day suspension to a full revocation of Sil-Tone’s certificate of registration. (Matter of Terino v Levitt, 44 AD2d 167; Matter of Cortland-Clinton, Inc. v New York State Dept. of Health, 59 AD2d 228; Matter of Richmond Hill Serv. Sta. v New York State Dept. of Motor Vehicles, 92 AD2d 688; Matter of Shilling, 51 NY2d 397.) III. The revocation of Sil-Tone’s certificate of registration is so disproportionate to the offense charged as to be shocking to one’s sense of fairness. (Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Stolz v Board of Regents, 4 AD2d 361; Kostika v Cuomo, 41 NY2d 673; Matter of Safe-T Brake & Wheel Alignment Corp. v Melton, 81 AD2d 673; Matter of 21 Auto Repair v Melton, 86 AD2d 894; Matter of Four Bros. Auto Serv. Corp. v Commissioner of Motor Vehicles, 87 AD2d 767; Government Employees Ins. Co. v Commissioner of Motor Vehicles, 94 AD2d 695; Crystal Oldsmobile v Foschio, 99 AD2d 462.)
   OPINION OF THE COURT

Jasen, J.

In this CPLR article 78 proceeding to review a determination of the Commissioner of the Department of Motor Vehicles, we are asked to decide whether, on petitioner’s administrative appeal, the Commissioner, in approving the recommendation of the Repair Shop Review Board, has the power to increase the penalty imposed upon petitioner by the Administrative Law Judge for fraudulent and deceptive practice.

In 1981, petitioner, the Sil-Tone Collision automotive repair shop (Sil-Tone), was charged by the Department of Motor Vehicles with, inter alia, commission of a fraud or deceptive practice in violation of section 398-e (subd 1, par [g]) of the Vehicle and Traffic Law. The violation occurred in connection with the receipt of payments for repairs never performed. A 1978 Chevrolet Impala was entrusted to Sil-Tone for repair of damage resulting from an accident. At this time, an estimate of the cost of repairs was completed by an insurance adjuster, and it was determined that the cost of repairs would total $1,849.23. Within two weeks of the delivery of the car to petitioner, the shop and a number of automobiles, including the Chevrolet Impala, were destroyed by fire. Shortly after the fire, the owner of the Chevrolet Impala sought return of the automobile’s registration plates. However, Sil-Tone refused to surrender such plates unless the repair bill was paid. A check was then issued to and received by Sil-Tone. Subsequently, the insurance adjuster who had previously assessed the estimated cost of repairs inspected the automobile and discovered that no repairs had been completed, a finding which was confirmed by an official departmental investigator.

A hearing was conducted before an Administrative Law Judge who found that by accepting payment for services never rendered, Sil-Tone had committed a fraud or deceptive practice in violation of section 398-e (subd 1, par [g]) of the Vehicle and Traffic Law. Accordingly, the Administrative Law Judge suspended Sil-Tone’s certificate of registration for seven days and imposed a civil penalty in the sum of $100.

Upon administrative appeal taken by Sil-Tone to the Repair Shop Review Board, the Board recommended that the finding that a fraud or deceptive practice had been committed by Sil-Tone be affirmed, but that the sanction which had been imposed be modified by increasing it to a revocation of Sil-Tone’s certificate of registration to operate a motor vehicle repair shop facility. This recommendation of the Repair Shop Review Board was approved by the Commissioner of the Department of Motor Vehicles.

Sil-Tone commenced an article 78 proceeding based upon the contention that the Commissioner could not, on an appeal by the petitioner, modify the determination of the Administrative Law Judge by increasing the penalty imposed. Special Term dismissed the petition on the merits. The Appellate Division unanimously reversed the judgment of Special Term and granted the petition to the extent of annulling so much of the Commissioner’s determination as imposed a penalty upon Sil-Tone in excess of that recommended by the Administrative Law Judge. For the following reasons, we reverse and reinstate the determination of the Commissioner.

Section 398-e (subd 1, par [g]) of the Vehicle and Traffic Law authorizes the Commissioner, or any person deputized by him, such as the Administrative Law Judge, to revoke or suspend the registration of any motor vehicle repair shop upon a determination that the registrant has been guilty of fraud or fraudulent or deceptive practices. Upon revocation or suspension of a motor vehicle repair shop registration by an Administrative Law Judge or other authorized hearing officer, an appeal may be taken to the Repair Shop Review Board. (Vehicle and Traffic Law, § 398-f, subd 2.) The scope of review of the Review Board upon appeal is defined by section 398-f (subd 3, par [a]), which provides: “The review board will review all appeals filed pursuant to this article and will make recommendations to the commissioner as to the disposition of such appeals. Such recommendation may be to affirm, reverse or modify the initial determination of the hearing officer, or to remand the case for a further hearing to determine additional facts. Any review by such board shall be based solely on the record upon which the initial determination is made and upon any written brief which may be submitted by or on behalf of the applicant or registrant.” (Emphasis added.)

In modifying the sanction to be imposed for commission of fraud or a deceptive act upon administrative appeal taken by petitioner, the Commissioner, acting upon the recommendation of the Repair Shop Review Board, did not act in excess of his statutory jurisdiction. The Administrative Law Judge and members of the Repair Shop Review Board are subordinates of the Commissioner and the preliminary findings of those officers at earlier stages of the administrative proceeding are merely advisory in nature and always subject to de novo review by administrative appeal to the Commissioner. On appeal from the initial decision by the Administrative Law Judge or on the Commissioner’s own initiative, the Commissioner has all the powers which the Administrative Law Judge had in making the decision in the first instance. The provision of section 398-f (subd 3, par [a]), authorizing the Review Board to recommend that the Commissioner “affirm, reverse or modify” a determination of the Administrative Law Judge, simply reflects the power of plenary, de novo review which rests with the Commissioner, and is unfettered by the authorization of the Review Panel and the Administrative Law Judge to make a tentative “recommendation”. (Matter of Richmond Hill Serv. Sta. v New York State Dept, of Motor Vehicles, 92 AD2d 688; Greater Boston Tel. Corp. v Federal Communication Comm., 444 F2d 841, 853, cert den 403 US 923.)

Accordingly, the order of the Appellate Division should be reversed, with costs, and the determination of the Commissioner of the Department of Motor Vehicles reinstated.

Chief Judge Cooke and Judges Jones, Wachtler, Meyer, Simons and Kaye concur.

Order reversed, etc.


text:
    Bernice M. Burlew et al., Appellants, v American Mutual Insurance Company, Respondent.
    Argued October 11, 1984;
    decided November 27, 1984

      POINTS OF COUNSEL

      Stephen D. Aronson for appellants.
    There should be no legal impediment preventing an employee from recovering damages against the employer’s workers’ compensation insurer based on a claim that the insurer acted negligently and in bad faith. (DeMarco v Federal Ins. Co., 99 AD2d 114; Cline v Avery Abrasives, 96 Misc 2d 258.)

      James C. Moore for. respondent.
    I. The facts alleged in plaintiffs’ pleadings do not support the claims set forth in plaintiffs’ second cause of action. (Penn v Standard Acc. Ins. Co., 4 AD2d 796; DeMarco v Federal Ins. Co., 99 AD2d 114; Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931; Fischer v Maloney, 43 NY2d 553.) II. Tort actions by an employee against a workers’ compensation insurer should be permitted, if at all, only under limited circumstances; the facts alleged by plaintiffs in this case do not justify such an action. (Penn v Standard Acc. Ins. Co., 4 AD2d 796; Matter of James v New York State, 90 AD2d 342, 60 NY2d 737; Cline v Avery Abrasives, 96 Misc 2d 258, 100 AD2d 741; DeMarco v Federal Ins. Co., 99 AD2d 114; Matter of Bellucci v Tip Top Farms, 24 NY2d 416.) III. For reasons of policy, actions against workers’ compensation insurance carriers should be permitted only infrequently.
   OPINION OF THE COURT

Chief Judge Cooke.

In addition to providing relief for work-related injuries, the Workers’ Compensation Law also regulates the processing of claims. Injuries allegedly occurring as a result of an employer’s delay in authorizing surgery are subject to the exclusive remedies provided in that legislative plan. To the extent that an insurance carrier is merely acting in the employer’s stead in processing claims, it, too, may assert the exclusivity of the statutory remedies in defense to a negligence action asserted by an injured worker.

Plaintiff Bernice Burlew was injured on July 30, 1979, when she inhaled fumes at her workplace with Voplex Corporation. She began receiving workers’ compensation benefits from defendant, the employer’s insurance carrier. Sometime before the end of 1979, plaintiff’s physician determined that surgery was necessary to correct a condition that was causally related to her industrial illness. The doctor sought an authorization from defendant, but four or five months passed before defendant granted the request in the spring of 1980.

In January 1983, this suit was commenced to recover compensatory and punitive damages on two theories. The first cause of action posited that defendant was negligent in that it breached a special duty owed to plaintiff to use reasonable care in timely deciding requests for authorizations. Plaintiff’s second cause of action described defendant’s conduct as “wilful, malicious, wanton and otherwise grossly negligent” so as to constitute an act of bad faith. When defendant moved to dismiss the complaint for failure to state a cause of action, plaintiff supplemented her pleadings with an affidavit. To indicate defendant’s bad faith, plaintiff adverted to two matters: once, one of defendant’s agents came to her home while she was awaiting the authorization and, in the course of the interview, yelled “in words or substance: ‘You’re crazy if you think we’re going to support you for the rest of your life’”; on another occasion, defendant procured an affidavit from an individual in Voplex Corporation’s personnel department that purported to give an expert opinion that plaintiff’s condition was due to a pre-existing injury.

Special Term granted the motion to dismiss only as to the first cause of action. The Appellate Division modified by dismissing the remainder of the complaint. For the reasons that follow, this court agrees that plaintiff has failed to state any cause of action.

Analysis starts with the fundamental observation that workers’ compensation is intended to be the exclusive remedy for work-related injuries (Workers’ Compensation Law, § 11). Consequently, when a defense based on the exclusivity of the statutory remedy is interposed, no suit against an employer may be maintained for an accidental injury that may be fairly described as “arising out of and in the course of the employment” (Workers’ Compensation Law, § 10; see Shine v Duncan Petroleum Transp., 60 NY2d 22; Murray v City of New York, 43 NY2d 400; O’Rourke v Long, 41 NY2d 219).

The legislative scheme for workers’ compensation benefits is far-reaching. It concerns itself not only with the simple fact of a work-related injury, but it provides a thorough system of regulation, administration, and, where the Legislature has deemed them appropriate, sanctions (see, e.g., Workers’ Compensation Law, §§ 25, 52,120,220). Consequently, all employer conduct that is regulated by the Workers’ Compensation Law is subject to the protection of that law’s exclusivity; if the employer violates any provision of the code, an employee’s remedies cannot exceed those granted in the statutes.

Subdivision (5) of section 13-a of the Workers’ Compensation Law prohibits an employee from enforcing a claim for a surgical operation “unless [it] shall have been authorized by the employer or by the board, or unless such authorization shall have been unreasonably withheld”. The Workers’ Compensation Board has directed that the employee “request and secure authorization from the employer or insurance carrier or the chairman” (12 NYCRR 325-1.4 [a] [1]). By referring to the insurance carrier, the agency’s regulation apparently goes beyond the scope of subdivision (5) of section 13-a. This must be accepted as proper under the circumstances, for it merely reflects the reality that it is the insurance company that processes such claims. Nothing prohibits the employer from appointing an agent to process compensation claims, and, indeed, the law makes employer and insurer virtually indistinguishable for that purpose (see Workers’ Compensation Law, § 54).

The regulations also provide a method for an employee to obtain an authorization when the employer or carrier is dilatory. A response to the employee’s request is required within four working days if the employee is hospitalized and within 21 calendar days if he or she is not hospitalized (12 NYCRR 325-1.4 [a] [7]). If none is given, the chairman may investigate and grant the authorization upon the ground that it was unreasonably withheld (id.).

Thus, plaintiff here was not required to wait a number of months for authorization. Her recourse, after three weeks had passed, was to place her request before the Board for its approval. The statutes do not provide that a separate lawsuit may be instituted to recover damages for the emotional distress triggered by an employer’s delay. Insofar as the insurer is simply acting for the employer, it, too, is protected by the exclusivity of the statutory remedy.

Although this resolves the question as to the invalidity of plaintiff’s first cause of action for negligence, the second presents an additional complicating factor in its assertion that defendant intentionally wronged plaintiff by acting in bad faith. Intentional injuries are not covered by the Workers’ Compensation Law, and an employee may bring a tort action for such wrongs against the offending employer or insurer (see Jones v State of New York, 33 NY2d 275; see, also, Werner v State of New York, 53 NY2d 346; Workers’ Compensation Law, § 2, subd 7; 2A Larson, Workmen’s Compensation Law, § 68.00 et seq.).

Accepting that plaintiff is not barred from bringing an action for intentional infliction of mental distress, her complaint, even when supplemented by her affidavit, does not describe any conduct remotely approaching the standard of behavior necessary to establish such a claim. Neither the agent’s statement that plaintiff could not expect to be supported by the insurer forever nor the carrier’s attempt to disprove plaintiff’s claim was so extreme and outrageous as to exceed all bounds of decency or to be utterly intolerable in civilized society (see Fischer v Malo ney, 43 NY2d 553, 557; see, also, 2A Larson, op. cit., § 68.34 [c]). Moreover, inasmuch as this conduct cannot even be said to amount to “bad faith,” it is unnecessary to decide whether plaintiff may recover as a third-party beneficiary of the insurance contract. Consequently, the second cause of action must also be dismissed.

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

Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur.

Order affirmed, with costs.

       The other plaintiff is Bernice Burlew’s husband, who alleges a cause of action derivative of his wife’s claim. For ease of reference, the term “plaintiff” will be used to refer to Mrs. Burlew alone.


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v Leonard Brewster and Felix Alfonso, Appellants.
    Argued October 18, 1984;
    decided November 29, 1984

      POINTS OF COUNSEL

      Joseph F. De Felice and John F. Clennan for appellants.
    I. The introduction of evidence of an identification from a photographic array without disclosing to the Grand Jury the means of identification or advising the grand jurors of the inherent dangers of error in such a process render all proceedings before the Grand Jury a nullity. (People v Filis, 87 Misc 2d 1067; People v Waters, 27 NY2d 553; People v Groh, 57 AD2d 389; People v Rao, 53 AD2d 904; People v Zimmer, 51 NY2d 390; People v Paperno, 77 AD2d 137, 54 NY2d 294, 90 AD2d 168; People u Di Falco, 44 NY2d 482; People v Root, 87 Misc 2d 482; People v Dykes, 86 AD2d 191.) II. The evidence submitted to the Grand Jury violated appellants’ constitutional rights under section 6 of article I of the State Constitution. (People v Glen, 173 NY 395; People v Nitzberg, 289 NY 523; People v Jackson, 18 NY2d 516.)

      John J. Santucci, District Attorney (.David M. Berck of counsel), for respondent.
    Evidence of identity derived from a photographic identification is competent and admissible for the purpose of supporting an indictment; furthermore, the prosecutor complied with CPL article 190 when he presented witnesses who testified that they had identified defendants as persons who had committed the crimes without informing them of the nature of the identification. (People v Griffin, 29 NY2d 91; People v Wright, 21 NY2d 1011; People v Casería, 19 NY2d 18; People v Jung Hing, 212 NY 393; People v Baker, 23 NY2d 307; People v Coffey, 11 NY2d 142; People v Spinello, 303 NY 193; People v Hagedorny, 272 App Div 830; People v Cioffi, 1 NY2d 70.)
   OPINION OF THE COURT

Per Curiam.

An indictment obtained on the complaining witness’s testimony before the Grand Jury that she identified defendant, without informing that body that her identification had been made from photographs, is not dismissable under CPL 210.35 (subd 5). The order of the Appellate Division should, therefore, be affirmed.

Defendants Brewster and Alfonso were indicted with two others for first and second degree robbery, first degree burglary and criminal use of a firearm in the first and second degrees. Before the Grand Jury one of the complaining witnesses testified that she had made an identification of defendant Brewster and another complaining witness testified that she had made an identification of defendant Alfonso. The Grand Jury was not informed of the basis of either identification, both of which had in fact been made from photographs.

Pursuant to CPL 710.30 (subd 1) the People served notice of intention to offer at trial testimony of a witness who had previously made an identification of defendants from photographs. An omnibus motion thereafter made on behalf of defendants sought, among other things, dismissal of the indictment for insufficiency of the evidence before, and defects in the proceedings of, the Grand Jury (CPL 210.20, subd 1, pars [b], [c]), and a Wade hearing. Dismissal of the indictment was denied but a Wade hearing was ordered. During the Wade hearing defendants’ attorneys were granted permission to file a supplementary motion seeking dismissal of the indictment pursuant to CPL 210.35 (subd 5). The testimony of the two complaining witnesses during that hearing made clear that the identification each testified to before the Grand Jury was made from photographs and identified the photograph from which the identification had been made. Each also made a corporeal identification of the defendant whose identity she had testified about before the Grand Jury by pointing him out during the hearing. The hearing Judge granted the motion to dismiss the indictment, holding that the testimony before him concerning the photographic identification of the defendants revealed that the indictment was based upon incompetent evidence, but ruled that there was a sufficient independent and untainted source to permit in-court identification by the complaining witness, each having had ample time during the course of the robbery to observe the defendant she identified (115 Misc 2d 26). The Appellate Division reversed and reinstated the indictment (two Justices dissenting), holding it not “appropriate” within the meaning of CPL 190.30 (subd 1) to apply to Grand Jury proceedings the provisions of CPL 60.30 which, as construed, prohibit the introduction of evidence of a prior photographic identification. We affirm although on somewhat different reasoning.

A Grand Jury proceeding is not intended to be an adversary proceeding, except to the limited extent that CPL 190.50 (subds 5, 6) gives a defendant or person about to be charged the right to testify and to request that persons designated by him or her be called to testify. The proper purpose of an indictment is to bring a defendant to trial upon a prima facie case which, if unexplained, would warrant a conviction (People v Oakley, 28 NY2d 309, 312), and here, as we held in Oakley, “The identification testimony before the Grand Jury satisfied that purpose” (id.).

Indeed, the identification testimony before the Grand Jury was not hearsay, for the Grand Jury which indicted defendants heard no evidence concerning how or when the identification was made. There was, therefore, no infringement of CPL 60.30. The Grand Jury was told only that each complaining witness had identified a defendant as her assailant. That was a present statement of the fact that she recalled that the person who assaulted her was the particular defendant. That the Grand Jury was not also told how she learned the name of the person she identified involved no misconduct on the part of the prosecutor. To the contrary, as the Appellate Division noted (100 AD2d, at p 139), the process followed avoided any unfairness to either defendant arising from the probability that the Grand Jury might infer that because the police had a photograph of him defendant had a prior arrest record.

Because the evidence before the Grand Jury was not legally insufficient, the order of the Appellate Division should be affirmed.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur in Per Curiam opinion.

Order affirmed.

      . Though based upon section 251 of the Code of Criminal Procedure, which differs markedly in language from its CPL counterpart, section 190.65, the reasoning of People v Oakley applies for the present provision was “not intended to introduce a new standard, but only to clarify the existing one” and “adopts as the standard for indictment much the same principles as were enunciated” by this court in People v Peetz (7 NY2d 147, 149) (NY Temporary Comm on Rev of Penal Law and Criminal Code, Proposed New York Criminal Procedure Law [1967], Staff Comment, pp 163-164).

      . Identification of a defendant to a Grand Jury by having the complaining witness identify the person depicted in a photograph as the perpetrator and having the custodian of police photographic records testify to the name of the person portrayed in the photograph is permissible (People v Ball, 89 AD2d 353; cf. People v Logan, 25 NY2d 184, 195, cert den 396 US 1020; People v Spinello, 303 NY 193, 201; see People v Byrnes, 33 NY2d 343, 347; People v Webster, 139 NY 73, 83; Richardson, Evidence [Prince, 10th ed], § 137).


text:
    In the Matter of Consolidated Edison Company of New York, Inc., Respondent, v Public Service Commission of State of New York, Appellant; Occidental Chemical Corporation, Intervener; and Brooklyn Union Gas Company, Intervenor-Respondent.
    Argued September 12, 1984;
    decided October 25, 1984

      POINTS OF COUNSEL

      Timothy P. Sheehan and David E. Blabey for appellant.
    I. Section 210 of PURPA does not preempt the States from separately encouraging on-site generation by establishing a State purchase rate in excess of the Federal rate. (Zenith Radio Corp. v United States, 437 US 443; Udall v Tallman, 380 US 1; Train v Natural Resources Defense Council, 421 US 60; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; American Paper Inst. v American Elec. Power Serv., 461 US 402; Maryland v Louisiana, 451 US 725; Chicago & North Western Transp. Co. v Kalo Brick & Tile Co., 450 US 311; Rice v Santa Fe Elevator Corp., 331 US 218; Jones v Rath Packing Co., 430 US 519; FERC v Mississippi, 456 US 742.) II. New York’s requirement that utilities offer to purchase power from facilities which do not qualify under section 210 of PURPA is not preempted by the Federal Power Act. (Matter of National Fuel Gas Distr. Corp. v Public Serv. Comm., 86 AD2d 901; Matter of General Tel. Co. v Lundy, 17 NY2d 373; New England Power Co. v New Hampshire, 455 US 331; FPC v Florida Power & Light Co., 404 US 453; Rice v Santa Fe Elevator Corp., 331 US 218; Seagram & Sons v Hostetter, 384 US 35; Exxon Corp. v Governor of Md., 437 US 117.)

      Bernard L. Sanoff, Joy Tannian, Peter Garam, John D. McMahon and Celeste A. Contrucci for respondent.
    I. The court below correctly held that PURPA preempts the States from requiring electric utilities to pay Federal qualifying facilities more for electricity than it would cost them to generate the electricity themselves or to purchase it from other sources. (Jones v Rath Packing Co., 430 US 519; Florida Avocado Growers v Paul, 373 US 132, 374 US 858; Townsend v Swank, 404 US 282; Case v Bowles, 327 US 92; Fry v United States, 421 US 542; Federal Power Comm. v Corporation Comm., 362 F Supp 522, 415 US 961; American Paper Inst. v American Elec. Power Serv., 461 US 402; Edgar v MITE Corp., 457 US 624; Arkansas La. Gas Co. v Hall, 453 US 571; Maryland v Louisiana, 451 US 725.) II. With respect to utility purchases of electricity for resale in interstate commerce, the court below correctly held that State regulation of such purchases from on-site generation facilities qualifying solely under State law is preempted by the Federal Power Act. (New England Power Co. v New Hampshire, 455 US 331; F. P. C. v Southern Cal. Edison Co., 376 US 205, 377 US 913; FPC v Florida Power & Light Co., 404 US 453, 405 US 948; United States v Public Utilities Comm., 345 US 295, 961; Connecticut Co. v Power Comm., 324 US 515; Jersey Cent. Co. v Power Comm., 319 US 61; Northern Gas Co. v Kansas Comm., 372 US 84; Jones v Rath Packing Co., 430 US 519; Hines v Davidowitz, 312 US 52; FPC v Florida Power & Light Co., 404 US 453.)

      Earle H. O’Donnell, Michael Whiteman, Edward J. Grenier, Jr., John D. Sharer and Michael L. Denger for intervenor.
    I. The court below’s holding contravenes the language and legislative history of section 210 of PURPA. (Hines v Davidowitz, 312 US 52; Perez v Campbell, 402 US 637; Florida Avocado Growers v Paul, 373 US 132, 374 US 858; Chicago & North Western Transp. Co. v Kalo Brick & Tile Co., 450 US 311; Maryland v Louisiana, 451 US 725; Rice v Santa Fe Elevator Corp., 331 US 218; New York State Dept, of Social Servs. v Dublino, 413 US 405; Jones v Rath Packing Co., 430 US 519, 431 US 925; New England Power Co. v New Hampshire, 455 US 331.) II. The court below erred in failing to analyze and afford constitutional deference to section 66-c in the over-all context of State utility regulation. (Matter of National Fuel Gas Distr. Corp. v Public Serv. Comm., 86 AD2d 901.) III. The conclusion of the court below that the minimum 6 cent rate conflicted with the avoided cost standard of PURPA was inappropriate. (Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340.)

      Robert Abrams, Attorney-General {Peter H. Schiff, Stanley B. Klimberg and Howard A. Fromer of counsel), for New York State Energy Office, amicus curiae.

    I. In enacting section 210 of PURPA, Congress did not intend to prohibit the States from establishing separate State programs which provide even greater encouragement to on-site generation than required to be provided by the States under PURPA. Accordingly, New York’s statutory purchase rate, which at times exceeds the Federal rate, is not preempted by PURPA. (Arkansas Elec. Coop. v Arkansas Public Serv. Comm., 461 US 375; FERC v Mississippi, 456 US 742; Rice v Santa Fe Elevator Corp., 331 US 218; Jones v Rath Packing Co., 430 US 519; New York Dept. of Social Servs. v Dublino, 413 US 405; Florida Avocado Growers v Paul, 373 US 132; American Paper Inst. v American Elec. Power Serv., 461 US 402.) II. New York’s requirement that utilities offer to purchase power from facilities which do not qualify under section 210 of PURPA is not preempted by the Federal Power Act. (Arkansas Elec. Coop. v Arkansas Public Serv. Comm., 461 US 375; Exxon Corp. v Governor of Md., 437 US 117; Seagram & Sons v Hostetter, 384 US 35.)

      Zachary Shimer, John B. O’Sullivan, Rigdon H. Boykin, Bernays T. Barclay, Robert S. Shapiro, Robert McK. Hunziker, John T. Ferguson, II, JohnE. Murray and Stephen J. Wing for International Paper Company and others, amici curiae.

    Opinion No. 82-10 properly implemented both Federal and State law and policy and was a legitimate exercise of State authority. (Jones v Rath Packing Co., 430 US 519; Fidelity Fed. Sav. & Loan Assn. v De La Cuesta, 458 US 141; American Paper Inst. v American Elec. Power Serv., 461 US 402; New York Dept. of Social Servs. v Dublino, 413 US 405; De Canas v Bica, 424 US 351; Lascaris v Wyman, 31 NY2d 386, cert den sub nom. Chamber of Commerce of U. S. v Lavine, 414 US 832; Central Hudson Gas & Elec. v Public Serv. Comm., 447 US 557; FERC v Mississippi, 456 US 742; New York v Transamerican Frgt. Lines, 24 NY2d 727, 396 US 939; Udall v Tollman, 380 US 1.)

      Peter W. Brown for the New York Alliance for Hydroelectric Energy, amicus curiae.

    I. The provisions of the Federal Power Act that were enacted in 1935 do not preempt State minimum rate regulation of sales of electricity by a local on-site generator to a State-franchised electric utility. (Arkansas Elec. Coop. v Arkansas Public Serv. Comm., 461 US 375; Maryland v Louisiana, 451 US 725; Rice v Santa Fe Elevator Corp., 331 US 218; Jones v Rath Packing Co., 430 US 519, 431 US 925; Public Utilities Comm. v Attleboro Co., 273 US 83; FPC v Florida Power & Light Co., 404 US 453; Jersey Cent. Co. v Power Comm., 319 US 61; Connecticut Co. v Power Comm., 324 US 515; F. P. C. v Southern Cal. Edison Co., 376 US 205, 377 US 913; Salt Riv. Project Agric. Improvement & Power Dist. v Federal Power Comm., 391 F2d 470, cert den sub nom. Arkansas Val. G & T v Federal Power Comm., 393 US 857.) II. The New York law prescribing a minimum rate for purchases of power from local on-site generators that qualify under both PUEPA and section 66-c of the Public Service Law is not preempted by PUEPA. (Rice v Santa Fe Elevator Corp., 331 US 218; Jones v Rath Packing Co., 430 US 519; Arkansas Elec. Coop. v Arkansas Public Serv. Comm., 461 US 375; Connecticut Co. v Power Comm., 324 US 515; Salt Riv. Agrie. Improvement & Power Dist. v Federal Power Comm., 391 F2d 470; Federal Power Comm. v Arizona Edison Co., 194 F2d 679.)

      Herman B. Noll for Niagara Mohawk Power Corporation, amicus curiae.

    I. Niagara Mohawk’s avoided cost is substantially below the 6 cent per kilowatt hour rate mandated by section 66-c of the Public Service Law. II. The unique characteristics of Niagara Mohawk’s service territory assures that development of State qualifying facilities will continue.
   OPINION OF THE COURT

Chief Judge Cooke.

The Public Utility Eegulatory Policies Act of 1978 (PURPA) (Pub L 95-617) does not preempt this State from requiring electric utilities to offer to buy energy from those alternate energy producers, that qualify under both Federal and State law, at a rate in excess of the maximum rate under PUEPA. However, the State is preempted by provisions of the Federal Power Act (FPA) from requiring electric utilities to offer to purchase power from purely State qualifying alternate energy facilities.

Responding to the nationwide energy crisis, Congress enacted PURPA in 1978 for the purpose of encouraging the development of alternate energy sources, in order to reduce this country’s dependence on traditional fossil fuels (see FERC v Mississippi, 456 US 742, 750). Accordingly, section 210 of PURPA (16 USC § 824a-3 [a]) mandates the Federal Energy Regulatory Commission (FERC) to prescribe rules that will foster development of qualifying cogeneration facilities and qualifying small power production facilities. By further directing FERC to promulgate rules requiring electric utilities to offer to sell and purchase electric energy to and from such Federal qualifying facilities, Congress hoped to eliminate one of the central problems that had hindered the development of alternate energy sources: traditional electric utilities were reluctant to buy power from, or sell power to the alternate power producers (see FERC v Mississippi, supra, at p 750, and n 12).

With respect to the regulatory rates established by. FERC for purchases by electric utilities, PURPA directs that they be (1) just and reasonable to the electric consumers of the utility, (2) in the public interest, and (3) not discriminatory against qualifying cogenerators or small power producers (see 16 USC § 824a-3 [b]). PURPA further limits the purchase rate by providing that FERC may not establish a rate that exceeds the purchasing utility’s “avoided cost” (see id.).

A second barrier to alternate energy producers was the applicability of voluminous Federal and State utility regulations, involving tremendous amounts of paperwork. To avoid financially and administratively overburdening qualifying facilities, section 210 of PURPA authorizes FERC to exempt many Federal qualifying facilities from certain Federal and State laws, including the Federal Power Act (FPA) (see 16 USC § 824a-3 [e] [1]; 18 CFR 292.601), when deemed necessary in order to encourage alternate power producers to enter the field (see FERC v Mississippi, 456 US 742, 750-751, supra; 1978 US Code Cong & Admin News, p 7832).

After the enactment of PURPA, New York State passed a similar law in 1980 (L 1980, ch 553, § 7, as amd by L 1981, ch 843, § 9, Public Service Law, § 66-c). Its purpose is to promote State energy goals of development of alternate energy production facilities, cogeneration facilities, and small hydro facilities (see Public Service Law, § 66-c; State Energy Master Plan, Final Report, vol I, pp 5-10, 29-30 [3/82]). To encourage this development, the law requires electric utilities to both sell and purchase power produced by State qualifying facilities (see Public Service Law, § 66-c, subd 1). Generally, those facilities that qualify under PURPA in this State also qualify under the State law (see Public Service Law, § 2, subds 2-a, 2-b, 2-c).

Like PURPA, section 66-c of the Public Service Law requires that the purchasing rates by a utility from a State qualifying facility be just, nondiscriminatory, and in furtherance of the public policy behind the legislation. The State statute differs from PURPA, however, in that it prescribes a uniform minimum purchase price of 6 cents per kilowatt hour for electricity purchased by a utility from a State qualifying facility, rather than PURPA’s variable avoided-cost purchase rate. This State’s minimum purchase rate may at times exceed a utility’s avoided cost, the maximum purchase rate for energy from a Federal qualifying facility that can be required by FERC under PURPA (see 16 USC § 824a-3 [a]; 18 CFR 292.304 [a] [2]).

After conducting hearings to implement the Federal and State legislation and regulations, respondent Public Service Commission (PSC) determined, among other things, that petitioner Consolidated Edison must offer to purchase electric energy from on-site generation facilities that qualify under either Federal or State law, or both. It also required petitioner, under State law, to offer to purchase at a rate of at least 6 cents per kilowatt hour from State qualifying facilities and at a rate of at least avoided cost from any purely Federal qualifying facility under PURPA.

On September 9,1982, petitioner commenced this article 78 proceeding challenging, on Federal preemption grounds, these two aspects of the PSC’s determination.

The Appellate Division granted the petition, in part, holding that the FPA and PURPA preempted the area and, therefore, that FERC had exclusive jurisdiction to determine rates for sales of electricity at wholesale by on-site generators. The court modified the determination of the PSC by declaring that the State could only require petitioner to offer to purchase electricity from on-site generators that were Federal qualifying facilities. The required purchase of electricity from purely State qualifying facilities, however, was deemed to be under the preemptive blanket of the FPA. Further, the State requirement of a 6 cents per kilowatt hour minimum purchase rate was held invalid to the extent it conflicted with the Federally mandated maximum rate of avoided costs.

I

The first issue is whether PURPA preempts State regulation requiring electric utilities to purchase power from Federal qualifying facilities at a rate in excess of the avoided cost purchase rate required under PURPA. This court holds that PURPA has no such effect.

Based upon the Supremacy Clause of the United States Constitution (see US Const, art VI, cl 2), Federal law will prohibit the enforcement of State regulation in several circumstances. Preemption will arise if the Federal statute contains express language indicating Congressional intent to preempt the field sought to be regulated by State law (see Jones v Rath Packing Co., 430 US 519, 525). In the absence of express preemption, such may be implied from the comprehensive and pervasive nature of the Federal legislation that indicates an intention by Congress to leave “no room for the States to supplement” Federal law, or if the Federal law concerns a dominant Federal interest (see Rice v Santa Fe Elevator Corp., 331 US 218, 230). Preemption may also be found when compliance with both Federal and State law is an impossibility (see Florida Avocado Growers v Paul, 373 US 132, 142-143). Indeed, if the State law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress”, as expressed in the conflicting Federal statute, it must fall (Hines v Davidowitz, 312 US 52, 67; see, also, Capital Cities Cable v Crisp, 467 US _, _, 104 S Ct 2694, 2700).

Analysis under the supremacy clause, however, begins with the assumption that Congress did not intend to prohibit State action (see Maryland v Louisiana, 451 US 725, 746; Chicago & North Western Transp. Co. v Kalo Brick & Tile Co., 450 US 311, 317). This is especially so when the Federal enactment would displace a State statute governing an area historically regulated under the State’s police power (see Rice v Santa Fe Elevator Corp., 331 US 218,230, supra). The regulation of local electric utilities has been recognized as ordinarily arising under a State’s police power (see Arkansas Elec. Coop. v Arkansas Public Serv. Comm., 461 US 375, 387-388).

On its appeal, the PSC maintains that section 210 of PURPA does not expressly, or impliedly by reason of a pervasive scheme of Federal regulation, preempt the minimum rate provision of section 66-c of the Public Service Law. Petitioner does not contest this but, instead, asserts preemption on two other grounds: first, on the basis that there is a direct conflict between PURPA’s maximum avoided-cost purchase rate and the 6 cents per kilowatt hour purchase rate set by the Public Service Law; second, on the ground that the State’s 6 cents per kilowatt hour rate thwarts accomplishment of the Congressional objective that consumer rate payers not be required to subsidize the development of alternate energy producers. Subsidies allegedly would occur because the utilities would pass their increased costs of purchasing power from the alternate producers through to the ultimate consumer in the form of increased rates.

The flaw in petitioner’s direct conflict argument is that it is based upon the faulty assumption that the Federal maximum purchase rate of avoided costs was intended to be the absolute ceiling on the price that could be set by either the Federal or State regulatory authorities. This analysis begs the question of whether Congress intended only to establish a maximum rate that could be imposed by Federal regulations and to leave room for the States to separately encourage alternate power production by imposing higher rates for utility purchases of power from Federal qualifying facilities.

This court holds that there is no direct conflict between PURPA’s maximum purchase rate and the Public Service Law’s higher minimum purchase rate. The language of PURPA and its legislative history indicate that the PURPA avoided-cost rate is only the maximum in the context of the Federal Government’s role in encouraging alternate power production (see 16 USC § 824a-3 [b] [it is only a “rule prescribed (by FERC) under subsection (a)” that may not require purchase rate higher than avoided cost to utility]; Joint Explanatory Statement of Committee of Conference on PURPA, 1978 US Code Cong & Admin News, pp 7831-7832 [FERC regulation making full avoided costs the purchase rate was “meant to act as an upper limit on the price at which utilities can be required under this section to purchase electric energy”, implies leaving room for requirements imposed outside this section under State law (emphasis added)]).

Moreover, FERC determined that independent, complimentary State regulation in the field was not supplanted by PURPA but could be used to expand the Federal PURPA-based incentives. As the administrative agency charged by Congress with implementation of PURPA (see 16 USC § 824a-3 [a], [h]), FERC’s interpretation should ordinarily be deferred to (see Zenith Radio Corp. v United States, 437 US 443,450; Train v Natural Resources Defense Council, 421 US 60, 87), unless it is arbitrary, capricious or an abuse of discretion (see American Paper Inst. v American Elec. Power, 461 US 402, 411-414, and n 7).

Neither does adherence to the Public Service Law thwart the objectives of PURPA. The purposes of both the State and Federal statutes are identical; they seek to encourage the development of alternate energy production (see Public Service Law, § 66-c, subd 1). The State statute does not hinder the Federal objective; it furthers it, by enhancing the bargaining position of the alternate energy developer through a predictable, guaranteed rate of 6 cents per kilowatt hour. The Federal avoided-cost standard requires complicated calculations and may fluctuate greatly depending on, for example, the availability of inexpensive hydroelectric power, which will likely reduce the utility’s avoided costs. The stability provided by the Public Service Law to the alternate energy producers reduces the perceived risk of a project, encourages investment, and facilitates financing.

Petitioner asserts, however, that there is an equally strong objective of PURPA — to avoid consumer-ratepayer subsidies of the alternate energy producer. Arguably, allowing the State to impose a higher rate than avoided cost will conflict with this objective by inevitably leading to subsidies, as the utilities will pass their increased costs of purchasing power along to the consumer.

Petitioner misconstrues the importance of this objective to the over-all purpose of PURPA. The impact of the utilities’ mandated purchase rate on the cost to consumer ratepayers was but one factor that FERC was obliged to consider when it established avoided costs as the maximum rate to be imposed by Federal authorities (see American Paper Inst. v American Elec. Power, 461 US 402, 413-416, and n 9, supra). The Supreme Court has noted that the PURPA requirement that FERC establish purchase rates “just and reasonable to the electric consumers”, did not mandate adoption of the lowest possible reasonable rate (see id., at p 413, supra). The full-avoided-cost regulation was upheld because FERC was found to have met its obligation to consider the consumer’s interest even though the adopted rate would not provide any ratesavings. FERC’s explanation, that it was more important that the rate “provide a significant incentive for a higher growth rate” (see 45 Fed Reg 12222) and that the resulting decreased reliance on fossil fuel and increased energy efficiency would benefit the ratepayers and the Nation as a whole (see id.), was accepted by the court as reasonable and, therefore, was upheld (see American Paper Inst. v American Elec. Power, 461 US 402, 414-416, supra). Thus, failure to achieve consumer ratesavings is not necessarily abhorrent to the primary purpose of PURPA, which is to encourage development of cogeneration and small power facilities (see id., at pp 404-406, supra).

Similarly, while it is recognized that ratesavings may not be achieved for consumers under section 66-c of the Public Service Law because the 6 cents per kilowatt hour rate may at times exceed current avoided costs, at least in the short run (see Governor’s Bill Jacket, L 1981, ch 843; Governor’s Memorandum on approval of L 1981, ch 843, 1981, McKinney’s Session Laws of NY, pp 2627-2628), the rate does nevertheless further PURPA’s objective because it encourages alternate energy production, and in a manner suited to the needs of this State.

In sum, as none of the criteria for preemption are present, the PSC has the authority to require utilities to offer to purchase power from Federal qualifying facilities (including those which qualify under both PURPA and the Public Service Law). The PSC may also require a utility to offer to purchase power from Federal qualifying facilities at a minimum rate of 6 cents per kilowatt hour in accordance with section 66-c of the Public Service Law.

II

The second issue is whether part II of the Federal Power Act (FPA) (see 16 USC § 824 et seq.) preempts the PSC from compelling utilities to offer to purchase power from facilities that qualify only under the Public Service Law.

This court holds that it does. The FPA would also preempt State regulation of the Federal qualifying facilities in New York except that they are exempted from the FPA under subdivision (e) of section 210 of PURPA (see 16 USC § 824a-3 [e]; 18 CFR 292.602). The purely State qualifying facilities, however, are not eligible for this Federally authorized exemption because they are not covered by PURPA.

Part II of the FPA applies “to the sale of electric energy at wholesale in interstate commerce” (16 USC § 824 [b]). Such a sale is in “interstate commerce” if the electric energy is “transmitted from a State and consumed at any point outside thereof” (16 USC § 824 [c]). The FPA was enacted to “fill the gap” left by the Supreme Court’s decision in Public Utilities Comm. v Attleboro Co. (273 US 83), which held that the States lacked power to regulate interstate sales of electricity at wholesale. Exclusive regulatory authority was delegated to FERC under the FPA (see New England Power Co. v New Hampshire, 455 US 331, 340).

There is no dispute that if transactions between petitioner and purely State qualifying facilities for the purchase of electricity are sales at wholesale in interstate commerce, the FPA preempts any State regulation in the area (see New England Power Co. v New Hampshire, supra, at pp 340-341; F. P. C. v Southern Cal. Edison Co., 376 US 205, 210).

The PSC asserts two arguments refuting FERC’s exclusive jurisdiction over purely State qualifying facilities. One is that the FPA only concerns regulations of “sales” and therefore, only the “seller”. Thus, it is reasoned that the PSC’s attempt to regulate a utility’s purchase rate is merely a permissible regulation of the “purchaser”, which Congress intended to leave to the States. The second is that the energy produced by a local State qualifying facility and purchased by a State utility is admittedly a sale for resale to the utility’s New York State consumers but it is not in interstate commerce because the energy originates and remains within the State.

As to the permissible-“purchaser”-regulation argument, there is no doubt that this State has long regulated utilities (see Public Service Law, § 110, subd 4; § 66, subd 12) and that such regulation is “one of the most important of the functions traditionally associated with the police power of the States.” (see Arkansas Elec. Coop. v Arkansas Public Serv. Comm., 461 US 375, 377, supra.) Equally clear is the fact that the FPA did leave much regulation of utilities to the States and that Congress did not want to interfere with States’ rights in this area (see 16 USC § 824 [a] [“such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States.”]; § 824 [b] [FPA “shall not apply to any other sale of electric energy”]). While facially appealing, the argument distinguishing the admittedly preempted regulation of sellers of wholesale electricity (on-site generators) from purchasers in the same transactions (the utilities) is, upon closer examination, untenable. Such a distinction would simply achieve indirectly that which is not permitted directly (see Northern Gas Co. v Kansas Comm., 372 US 84, 91-93). In Northern Gas Co., a State’s attempt to require interstate pipeline companies to purchase gas ratably from local, State wells was rejected as an indirect attempt to impermissibly regulate wholesale prices of natural gas in interstate commerce, which could “seriously impair” FERC’s ability to regulate in the field.

The PSC’s second argument is readily disposed of. An analysis under the FPA of whether a wholesale sale of electricity from an on-site generator to a utility is purely intrastate turns on scientific evidence regarding whether any of the electricity involved originates or is consumed outside the State (see FPC v Florida Power & Light Co., 404 US 453, 454-455 [FERC jurisdiction upheld on basis of scientific and technical evidence that was used to determine that electrons from a Florida utility eventually flowed into Georgia because of “commingling” of electrons at the point of interconnection with Georgia utility lines]).

It may be, as the PSC contends, that sales by the purely State qualifying facilities to petitioner remain intrastate; indeed, petitioner ^admits that some may be. However, this basis for State regulation, which requires scientific evidence regarding the flow of electricity, was not relied upon by the PSC in its decision. “A fundamental principle of administrative law long accepted by this court limits judicial review of an administrative determination solely to the grounds invoked by the agency, and if those grounds are insufficient or improper, the court is powerless to sanction the determination by substituting what it deems a more appropriate or proper basis” (Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588, 593 [citations omitted]). The sole ground relied upon by the PSC, permissible regulation of purchases of wholesale electricity in interstate commerce, is erroneous, and thus, the PSC’s assertion of jurisdiction over purely State qualifying facilities is preempted by the FPA.

Accordingly, the judgment of the Appellate Division should be modified by reinstating the determination of the Public Service Commission insofar as it permits imposition on utilities of a minimum purchase rate of 6 cents per kilowatt hour for electricity generated by Federal qualifying facilities which also qualify under the Public Service Law and, as so modified, affirmed.

Judges Jones, Wachtler, Meyer, Simons and Kaye concur; Judge Jasen taking no part.

Judgment modified, with costs, to appellant, in accordance with the opinion herein and, as so modified, affirmed.

      . A “cogeneration facility” is one that produces both electric energy and steam or some other form of useful energy, such as heat (see 16 USC § 796 [18] [A]).
      A “small power production facility” is one that produces electric power from biomass, waste, renewable resources such as wind, water or solar energy, or geothermal resources and has a production capacity of not more than 80 megawatts (see 16 USC § 796 [17] [A]).
      Each cogeneration or small power production facility will be a “qualifying” one if it satisfies the requirements regarding ownership, size, fuel use, efficiency, and reliability under PURPA (see 16 USC § 796 [17] [C]; [18] [B]).

      . A utility’s “avoided cost” is the amount that it would have cost the utility to generate the same energy that it bought from the qualifying cogeneration or small power production facility, had that purchase not been made (see 16 USC § 824a-3 [d]). This is referred to in the statute as the utility’s “incremental cost of alternative electric energy.”
      The purchase rate actually selected by FERC in its regulations is generally equal to avoided purchase costs and although it may be lower (see 18 CFR 292.304 [b] [2]-[3]), FERC may not require it to be higher (see 18 CFR 292.304 [a] [2]).

      . Unless otherwise indicated, when the term “Federal qualifying facility” is used in this opinion, it will include facilities that are also State qualifying facilities. A “State qualifying facility” will refer to any facility qualifying under the Public Service Law, regardless of whether it is also a Federal qualifying facility. Some facilities, however, will qualify under one law and not the other (compare 16 USC § 796 [17] [18]; and 18 CFR 292.201-292.206, with Public Service Law, § 2, subds 2-a, 2-b, 2-c) and will be referred to as a “purely” State or “purely” Federal qualifying facility.

      . On-site generation facilities refer, in this opinion, to all alternate energy producers regardless of whether they qualify under Federal and/or State law.

      . Traditionally, the word “preemption” has referred to preclusion of State law based upon express or implied Congressional intent to do so as expressed in comprehensive Federal legislation. This type of “preemption” has been distinguished from the other manner of preclusion which occurs because there is a direct conflict or inconsistency between State and Federal law (cf. Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99, 104-105). Both situations, however, result in the supremacy of Federal over State law and the term “preemption” has been used to refer to both (see Capital Cities Cable v Crisp, 467 US_,_, 104 S Ct 2694, 2700; Free v Bland, 369 US 663, 664); for the purposes of this opinion, it is so used.

      . Petitioner reasons that when a utility offers to purchase wholesale electricity from Federal qualifying facilities at 6 cents per kilowatt hour according to the State law, it will violate the Federal mandate, under PURPA, that the maximum purchase rate be avoided costs, which here, the PSC found to be 4.17 cents per kilowatt hour at certain off-peak times.

      . While not conclusive on this issue, there are numerous references in the Congressional debates and legislative history indicating Congress’s recognition of the traditional role of the States in electric utility regulation and a desire not to infringe upon or impair the State role (see 124 Cong Rec 34558 [Senator Jackson, “(T)he essential feature of the conference agreement is the limited nature of the authority granted to the FERC”]; 123 Cong Rec 32403 [Senator Durkin, “(I) do not want to abrogate State law with respect to the regulation of utilities”]; House Conference Rep No. 95-1750, 95th Cong 2nd Sess, reprinted in 1978 US Code Cong & Admin News, p 7831 [the limitation in section 210 of PURPA of sales by qualifying facilities at wholesale was not intended to “limit the States from allowing such sales to take place”]). PURPA has been characterized as a “limited federal regulation * * * of relationships between cogenerators and electric utilities” CFERC v Mississippi, 456 US 742, 758). In addition, PURPA reserved to the States a large role in implementing, enforcing, and administering the program after FERC promulgated its regulations (see 16 USC 8 824a-3 [a], [e]-[g]).

      . In the Preamble to FERC’s regulations (45 Fed Reg 12221-12222, 8 292.304 Rates for Purchases-Relation to State Programs), FERC left the States free to utilize their own means of encouraging alternate energy production, stating:
      “The Commission has become aware that several States have enacted legislation requiring electric utilities in that State to purchase the electrical output of facilities * * * at rates which may differ from the rates required under the Commission’s rules implementing section 210 of PURPA.
      “This Commission has set the rate for purchases at a level which it believes appropriate to encourage cogeneration and small power production, as required by section 210 of PURPA. While the rules prescribed under section 210 of PURPA are subject to the statutory parameters, the States are free, under their own authority, to enact laws or regulations providing for rates which would result in even greater encouragement of these technologies. However, State laws or regulations which would provide rates lower than the federal standards would fail to provide the requisite encouragement to these technologies, and must yield to federal Law.
      “If a State program were to provide that electric utilities must purchase power from certain types of facilities, among which are included ‘qualifying facilities,’ at a rate higher than that provided by these rules, a qualifying facility might seek to obtain the benefits of that State program. In such a case, however, the higher rates would be based on State authority to establish such rates, and not on the Commission rules. * * *
      “The Commission finds no inconsistency in a facility’s taking advantage of section 210 in order to obtain one of its benefits, while relying on other authority under which to buy from or sell to a utility.” (Preamble to FERC Rules, 45 Fed Reg 12214, 12221-12222.)

      . If the price of fuels such as oil and gas goes up along with other costs of producing energy, the utilities “avoided cost” will be higher and may grow to exceed the rate of 6 cents per kilowatt hour.

      . Of course, if the utility’s avoided costs become higher than 6 cents per kilowatt hour, Federal law would then require that the avoided-cost rate be used (see FERC Preamble, 45 Fed Reg 12221).

      . It is assumed that the purely State qualifying facilities discussed here are not exempt from the FPA for another reason (see 16 USC § 824 [f]), in which case they would be subject to the State Public Service Law.

      . A “sale of electric energy at wholesale” is defined as “a sale of electric energy to any person for resale” (16 USC § 824 [d] [emphasis added]), which would imply regulation of only the seller, who sells to another, not the buyer who purchases from another.

      . While Northern Gas Co. was decided under the Natural Gas Act (15 USC §§ 717-717w), the distribution of regulatory power between the Federal and State governments is the same under the FPA (see F. P. C. v Southern Cal. Edison Co., 376 US 205, 211-212).

      . Even if some electrons ultimately flow out of State, this State regulation may have only an incidental effect on interstate commerce while furthering legitimate local public interests and, thus, would not offend the commerce clause (see Arkansas Elec. Coop. v Arkansas Public Serv. Comm.., 461 US 375, 389-395). Arguably, if the commerce clause is not violated, the State qualifying facility may not be subject to FERC’s jurisdiction under the FPA (see id.).