author: Jones, J.

text:
    In the Matter of the Power Authority of the State of New York, Respondent, v Henry Williams, as Commissioner of the New York State Department of Environmental Conservation, et al., Respondents, and Catskill Center for Conservation and Development, Inc., et al., Intervenors-Appellants.
    Argued October 19, 1983;
    decided November 29, 1983

      POINTS OF COUNSEL

      Robert C. Stover and Stanley Bryer for intervenors-appellants.
    I. The Energy Law of New York State does not require or authorize that determinations of energy project compliance with State water quality standards balance water quality impacts against need for projects included in the State energy master plan. (Town of Waterford v Water Pollution Control Bd., 4 AD2d 415.) II. Federal law precludes section 401 determinations balancing noncompliance with applicable water quality standards against need for projects. (First Iowa Coop. v Power Comm., 328 US 152; Town of Springfield v McCarren, 549 F Supp 1134; Matter of de Rham v Diamond, 32 NY2d 34; Power Auth. v Department of Environmental Conservation, 379 F Supp 243; Udall v Federal Power Comm., 387 US 428; Niagara Mohawk Power Corp. v Federal Power Comm., 379 F2d 153.) III. The court below erred in denying respondent Department of Environmental Conservation’s motion to strike from the appendix on appeal a nonfinal decision of a Federal administrative law judge which postdated the commissioner’s decision and then, in reviewing for substantial evidence under CPLR 7803 (subd 4), in making a choice between conflicting evidence by relying on this nonfinal decision. (Matter of Flynn v Flacke, 87 AD2d 930; 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176.) IV. The commissioner did not exceed his jurisdiction under section 401 of the Federal Water Pollution Control Act (US Code, tit 33, § 1251 et seq.) and State water quality standards were applicable to the Prattsville Project. (Citizens to Preserve Overton Park v Volpe, 401 US 402; Matter of Tri Cities Ind. Park v Commissioner of Dept. of Environmental Conservation, 76 AD2d 232; National

      Wildlife Federation v Gorsuch, 693 F2d 156; Power Auth. v Department of Environmental Conservation, 379 F Supp 243; Matter of de Rham v Diamond, 32 NY2d 34; Roosevelt Campobello Int. Park Comm. v United States Environmental Protection Agency, 664 F2d 1041; Lake Erie Alliance v U. S. Army Corps. 526 F Supp 1063; Environmental Defense Fund v Alexander, 501 F Supp 742; Mobil Oil Corp. v Kelley, 426 F Supp 230; Power Auth. v Department of Environmental Conservation, 379 F Supp 243.) V. The New York State Department of Environmental Conservation decision is supported by substantial evidence. (Matter of County of Orange v Public Serv. Comm., 37 NY2d 762; Matter of Flynn v Flacke, 87 AD2d 930; 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176; Matter of Acosta v Wollett, 55 NY2d 761; Matter of Lovett v Flacke, 83 AD2d 718; Matter of Rella v Berle, 59 AD2d 56; Matter of Canandaigua Lake Pure Waters Assn. v Department of Environmental Conservation, 70 Misc 2d 265.) VI. In remitting a matter to an administrative agency for further consideration, including consideration of factors as to which the agency had not developed a record, the reviewing court may not substitute its judgment for that of the agency as to the sufficiency of the existing record by declaring further agency proceedings unnecessary.

      Charles M. Pratt, Stephen L. Baum, Peter A. Giuntini and James P. Rigano for Power Authority of the State of New York, respondent.
    I. The court below properly annulled the New York State Department of Environmental Conservation decision and ordered that it be reconsidered. (Matter of de Rham v Diamond, 32 NY2d 34; Democrat Print. Co. v Federal Communications Comm., 202 F2d 298; Michigan Cons. Gas Co. v Federal Power Comm., 283 F2d 204; Scenic Hudson Preservation Conference v Federal Power Comm., 354 F2d 608; First Iowa Coop. v Power Comm., 328 US 152; Koch v Dyson, 85 AD2d 346; Matter of Howard v Wyman, 28 NY2d 434; Matter of Tiffany, 179 NY 455.) II. Interveners seek to overturn the order of the court below on the basis of issues not determined by that court. (Matter of Power Auth. v Flacke, 94 AD2d 69; Appalachian Power Co. v Train, 545 F2d 1351; New York State Bankers Assn. v Albright, 38 NY2d 430, 953; Environmental Protection Agency v State Water Resources Control Bd., 426 US 200; National Wildlife Federation v Gorsuch, 693 F2d 156; Matter of de Rham v Diamond, 32 NY2d 34; Matter of County of Orange v Public Serv. Comm., 37 NY2d 762.) III. Intervenors’ assertions about the comments of the court below on the state of the record on appeal are without merit. (Matter of Power Auth. v Flacke, 94 AD2d 69.) IV. The court should reconsider its decision to grant leave to appeal. (Matter of New York State Assn. of Plumbing-Heating-Cooling Contrs. v Eagan, 56 NY2d 1030; Matter of Building Contrs. Assn. v Tully, 47 NY2d 903; Matter of F. J. Zeronda, Inc. v Town Bd., 37 NY2d 198; Matter of Town of Bedford v Village of Mount Kisco, 27 NY2d 725; Matter of Incorporated Vil. of Hewlett Bay Park, 19 NY2d 747; Matter of Incorporated Vil. of Hempstead, 304 NY 870.)

      Robert Abrams, Attorney-General (Marcia J. Cleveland, R. Scott Greathead, James A. Sevinsky and Lawrence A. Rappoport of counsel), for Henry G. Williams, respondent.
    I. The commissioner’s review properly ended once he determined that the facility would violate water quality standards and that its adverse impacts could not be mitigated. (First Iowa Coop. v Power Comm., 328 US 152; Matter of de Rham v Diamond, 32 NY2d 34.) II. The commissioner’s denial of section 401 certification of the Federal Water Pollution Control Act (US Code, tit 33, § 1341) is consistent with his affirmative duties to prevent water pollution and with the energy master plan. (Matter of City of Utica v Water Pollution Control Bd., 5 NY2d 164; Matter of Town of Waterford v Water Pollution Control Bd., 5 NY2d 171; Flacke v Bio-Tech Mills, 95 AD2d 916; Matter of La Valle v Berle, 68 AD2d 235; Matter of City of New York v New York State Dept. of Environmental Conservation, 89 AD2d 274; Koch v Dyson, 85 AD2d 346.) III. The court below should have applied the well-established substantial evidence test in reviewing the commissioner’s decision and should not have instead substituted the opinions of a Federal agency. (300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176; Matter of Acosta v Wollett, 55 NY2d 761; Matter of Flynn v Flacke, 87 AD2d 930; Matter of Lovett v Flacke, 83 AD2d 718; Roosevelt Campobello Int. Park Comm. v United States Environmental Protection Agency,
      684 F2d 1041; Matter of County of Orange v Public Serv. Comm., 37 NY2d 762.)

      Philip H. Gitlen for Natural Resources Defense Council, Inc., and others, amici curiae.

    The commissioner’s denial of water quality certification and State pollutant discharge elimination system permit should be affirmed. (Matter of Town of Waterford v Water Pollution Control Bd., 5 NY2d 171; Matter of de Rham v Diamond, 32 NY2d 34; Power Auth. v Department of Environmental Conservation, 379 F Supp 243; Calvert Cliffs’ Coordinating Committee v United States Atomic Energy Comm., 449 F2d 1109.)
   OPINION OF THE COURT

Jones, J.

In acting on an application for State section 401 certification of a hydroelectric project as a prerequisite to the issuance of a Federal license therefor, the Commissioner of Environmental Conservation is limited to determining whether applicable water quality standards will be met and is not empowered to base his decision on a balancing of need for the project against adverse environmental impact.

This case arises out of the decision by the Power Authority of the State of New York (PASNY) to construct a pumped storage power facility in the Catskill Mountains about 40 miles southwest of Albany, near Prattsville, New York (the Prattsville Project). The project involves the pumping of water from the Schoharie Reservoir to a reservoir to be constructed at an elevation some 1,000 feet higher, there to be retained until periods of peak power demand, when the water would be returned to generate power through the authority’s turbines, then to flow by way of a tailrace back to Schoharie Reservoir, which feeds water into Esopus Creek a heavily fished, nationally known trout stream. There are conservationists (including the intervenors in the present action) who are apprehensive about the effect the project may have on the quality of water of the reservoir and the creek and on their fish population.

Because a license for such a facility was required by the Federal Power Act (US Code, tit 16, §§ 791a-828c), on May 26, 1977 PASNY filed an application with the Federal agency authorized to issue such licenses (the Federal Power Commission, subsequently succeeded by the Federal Energy Regulatory Commission [FERC]) for issuance of the necessary license. Inasmuch as an amendment to the Federal Water Pollution Control Act (US Code, tit 33, § 1251 et seq. [FWPCA]), effected by the enactment of section 401 (subd [a], par [1]) of the Federal Clean Water Act (US Code, tit 33, § 1341, subd [a], par [1]), prohibited the issuance of such a license for a facility which would result in a “discharge into the navigable waters” unless the State of New York either issued a certificate that the facility would comply with water quality standards adopted by the State in compliance with section 303 of FWPCA (US Code, tit 33, § 1313) or waived such certification (US Code, tit 33, § 1341, subd [a], par [1]), PASNY also applied to the State Department of Environmental Conservation (DEC, the appropriate State agency [ECL 3-0301, subd 2, par j]) for what has become known as section 401 certification. By agreement between PASNY and DEC, consideration of the State application was postponed until conclusion of hearings on the Federal, FERC application so that the record produced at those hearings would be available to DEC.

After the conclusion of extensive FERC hearings in October, 1981, hearings on PASNY’s application to DEC for section 401 certification were conducted in February and March, 1982. Introduced in evidence were portions of the FERC record together with additional direct testimony and exhibits. On April 9,1982 respondent Commissioner of Environmental Conservation denied the power authority’s application on the ground that it had failed to demonstrate that the relevant water quality standards would be met. It was evident from the decision that the result was predicated solely on the finding of noncompliance with water quality standards, and that no balancing of other factors, such as general environmental impact and the policy reflected in the State’s Energy Law, had been considered.

On July 6, 1982 the administrative law judge who had presided at the FERC hearings issued his initial decision which granted the FERC license for the Prattsville Project, subject to PASNY’s securing section 401 certification from DEC. The power authority then commenced the present CPLR article 78 proceeding to challenge the commissioner’s April 9, 1982 denial of such certification, in which the Catskill Center for Conservation and Development and other environmental groups, which had participated in the FERC proceedings, were permitted to intervene.

The proceeding was transferred to the Appellate Division, Third Department, which, by the order now before us, annulled the determination of the commissioner and remitted the matter to the commissioner and the department for further proceedings. In its decision the court observed that, although FERC (in compliance with what the court found was a mandate of the Federal Power Act) had engaged in a meticulous balancing of all relevant factors (including future power demand and supply, alternate sources of power, and the public interest in preserving rivers, fish and wilderness for recreational purposes) in determining to issue a license for the Prattsville Project, the State commissioner in denying section 401 certification had undertaken no similar balancing of the need for the project in order to meet State energy requirements against its environmental impact.

The court acknowledged the commissioner’s position that the only issue to be considered by him in passing on an application for section 401 certification was whether the proposed facility would comply with applicable water quality standards, but rejected that position in reliance on the requirement, which it found in the State Energy Law, that all State agencies conduct their affairs “so as to conform to the state energy policy expressed in this chapter” (Energy Law, § 3-103) and on its conclusion that the Prattsville Project is the only project that can meet needs described in the State energy master plan adopted on March 25, 1982 pursuant to authority conferred by the Energy Law (§ 3-101, subds 1, 7). Stating that “a careful weighing of the environmental impact in light of the over-all public interest in the matter [i.e., ‘the public interest with respect to any energy project that meets the requirements of the State’s long-range plan’]” was a necessary component of action on PASNY’s certification application, and remarking that “[s]uch considerations were exhaustively reviewed by the presiding administrative law judge for the FERC”, the Appellate Division remitted the matter to the commissioner and the department, with the observation that the court perceived “no need for further proceedings under ECL article 8 in view of the proceedings before FERC and the contents and findings of its order and decision of July 6, 1982”. (Matter of Power Auth. v Flacke, 94 AD2d 69, 78.)

An appeal from the order of the Appellate Division has been taken to our court by the intervenors pursuant to leave granted by us under CPLR 5602 (subd [a], par 2). That section authorizes our court to grant leave to appeal from a nonfinal order of the Appellate Division in a proceeding instituted by or against one or more public officers or a board, commission or other body of public officers when, following remittal by that order to the public officer or body, the officer or body will be called on to act in an adjudicatory capacity and will thus be unable, for lack of aggrievement by its own action, to take an appeal from its determination on remittal for the purpose of obtaining a review of the prior nonfinal order of the Appellate Division (Matter of F. J. Zeronda, Inc. v Town Bd., 37 NY2d 198). As we noted in Zeronda, the statute accords its benefit to every party to the proceeding if any one party comes within its ambit (37 NY2d 198, 201, n; cf. Matter of Queens Farms v Gerace, 60 NY2d 555). So here, the inability of respondent commissioner, after disposition on remittal by the Appellate Division of PASNY’s application for section 401 certification, to obtain a review of the Appellate Division’s order returning the matter to him by means of an appeal from his subsequent determination activates our power to grant leave at the request of the intervenors. That power was not diminished by the fact that the intervenors — although not the commissioner — would be able to appeal from the commissioner’s disposition after remittal and thus obtain a review of the intermediate order. Although the intervenors might have chosen to pursue such an appeal, they would be under no obligation to do so. We also observe that, the appeal having been taken by the intervenors with our permission, the commissioner and the Department of Environmental Conservation now join the intervenors in urging reversal of the determination at the Appellate Division.

We reverse the order of the Appellate Division and remit the case to it for consideration of issues raised by PASNY in this proceeding, other than its contention that the commissioner erred in not considering energy and general environmental factors as well as conformity to water quality standards in making his decision on PAS-NY’s application. Unless the resolution of another issue posed becomes dispositive, such consideration will include address to the question whether the commissioner’s determination of nonconformity to applicable water quality standards is supported by substantial evidence — the question normally posed by a challenge on the merits to an administrative determination made after an evidentiary hearing (CPLR 7803, subd 4).

In reaching the result we do we have no need to determine whether, as the intervenors assert, the Appellate Division was effectively mandating the commissioner to accept the conclusion of the FERC administrative law judge that a balancing of interests established that the project should be approved and thereby left nothing open to the commissioner on remittal, or whether, as PASNY asserts, the court did no more than require a balancing, allowing a broad exercise of discretion by the commissioner in determining how and to what extent to take into consideration the various factors and interests.

The outcome of this appeal has been preordained by our decision in Matter of de Rham v Diamond (32 NY2d 34), a case which involved the very issue on which the Appellate Division annulled the commissioner’s action in the present case — i.e., the scope and breadth of the commissioner’s inquiry in passing on an application for the water quality certification required by FWPCA as a prerequisite to Federal licensing of certain hydroelectric power projects. The language of Chief Judge Fuld, speaking of the extent of the authority of the commissioner in determining whether to issue the certification of reasonable assurance that a proposed project would not violate applicable water quality standards, required by then subdivision (b) of section 21 of FWPCA (predecessor to present § 401), is conclusive:

“Congress, by the Federal Power Act (U.S. Code, tit. 16, § 792 et seq.), has vested the Federal Power Commission with broad responsibility for the development of national policies in the area of electric power, granting it sweeping powers and a specific planning responsibility with respect to the regulation and licensing of hydroelectric facilities affecting the navigable waters of the United States. The Commission’s jurisdiction with respect to such projects preempts all State licensing and permit functions. [Footnote and authorities omitted.]

“Section 21 (subd. [b]) of the Federal Water Pollution Control Act relinquishes only one element of the otherwise exclusive jurisdiction granted the Power Commission by the Federal Power Act. It authorizes States to determine and certify only the narrow question whether there is ‘reasonable assurance’ that the construction and operation of a proposed project ‘will not violate applicable water quality standards’ of the State. That is all that section 21 (subd. [b]) did, and all that it was designed to do. Congress did not empower the States to reconsider matters, unrelated to their water quality standards, which the Power Commission has within its exclusive jurisdiction under the Federal Power Act.

“With this in mind, it is clear that the State Commissioner was required only to consider water quality standards which may be affected by discharges from Con Ed’s project into the Hudson River — in other words, to ascertain whether the project would offend against the applicable regulations (6 NYCRR 701.3) governing ‘Class B’ waters, the classification of the River at Cornwall (6 NYCRR 858.4). It is equally clear that the Commissioner has neither the authority nor the duty to delve into the many other issues — which had been investigated and decided by the Federal Power Commission in the course of the extensive proceedings it had conducted”. (32 NY2d 34, 44-45.)

PASNY asserts however that the de Rahm decision does not take into account the Energy Law and the State’s energy planning process, which did not exist in their present form when fhat case was decided. It contends that as a State officer the commissioner is now bound, particularly by the mandate in section 3-103 of the statute that State agencies conduct their affairs “so as to conform to the state energy policy”, to take into account the prevalent energy program — specifically the current State energy master plan, which it is said would be advanced by construction of the Prattsville Project.

Although professing to acknowledge “the preemptive nature of the FERC’s jurisdiction over hydroelectric projects under the Federal Power Act”, which pre-emptive nature PASNY describes as “clear and strong”, it nevertheless tenders an imaginative, but unpersuasive, argument that, in determining whether to issue section 401 certification as to compliance with water quality standards, the commissioner must use as a component of his considerations the State’s energy needs as manifested in the energy master plan.

The argument of course runs counter to the acknowledgment of Federal pre-emption, overlooks the fact that preemption could not have been overcome by the énactment of the State Energy Law, and disregards the very limited nature of the activity left by FWPCA to State action in section 401 certification. The certification referred to in the Federal Clean Water Act, insofar as relevant to the Prattsville Project, is simply of compliance with section 303 of the Federal statute (US Code, tit 33, § 1313), which provides for either State-adopted, Federally approved water quality standards or the promulgation of standards by the Federal Environmental Protection Agency. In the case of New York State, the standards adopted by DEC and Federally approved establish use classifications of waters within the State with specific, individual standards, relating to such things as turbidity and temperature change, assigned to the various classifications (e.g., 6 NYCRR 701.4, 704.2 [b]). The section 401 certification process is accomplished by a determination that a proposed project will meet the particular water quality standards for the applicable classification. To extend that process, as the order of the Appellate Division would do, to consideration of countervailing energy and environmental interests with the possibility of issuance of section 401 certification despite noncompliance with water quality standards on the basis of overriding energy needs would be to countenance both a failure by the commissioner to perform the function reserved to him under FWPCA and an intrusion by him in the area of responsibility pre-empted for the Federal agency.

The Appellate Division erred in remitting PASNY’s application for section 401 certification to respondent commissioner who had neither authority nor responsibility to engage in balancing economic, energy, environmental or other factors or to reflect public interest other than as it is set forth in the State water quality standards. It also erred in denying intervenors’ motion to strike from the appendix on appeal the initial decision of the FERC administrative law judge issued July 6, 1982, which was issued subsequent to the commissioner’s denial of section 401 certification on April 9, 1982 and which was irrelevant to the propriety of that denial.

Because there remain other objections in point of law to the commissioner’s action raised by PASNY in this proceeding as well as its challenge to his decision as unsupported by substantial evidence, none of which has been passed on by the Appellate Division, we remit the matter to that court for its further consideration, rejecting the request by the intervenors that we finally rule on each of the remaining objections. It is not appropriate for this court to undertake the initial judicial review of the determination of respondent commissioner.

The order of the Appellate Division should be reversed, with costs to the intervenors, and the case remitted to that court for further consideration in conformity with this opinion.

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

Order reversed, with costs, and matter remitted to the Appellate Division, Third Department, for further proceedings in accordance with the opinion herein.

      . The denial extended also to an alternative request by PASNY for modification of the water quality standards found applicable and to a request for a State pollutant discharge elimination system permit sought in connection with the section 401 certification.

      . Related litigation, involving the power of DEC to have issued a declaratory ruling concerning the Prattsville Project, was previously before us (Matter of Power Auth. v New York State Dept. of Environmental Conservation, 58 NY2d 427).

      . It does not follow, however, from the inability of the commissioner to consider more than compliance with water quality standards in acting on an application for section 401 certification that all other factors are necessarily disregarded or beyond reach at the State level. To the contrary, public interests of broad scope are implicated both in the classification of State waters, which is required to be done “in accordance with considerations of best usage in the interest of the public” (ECL 17-0301, subd 2), and in the fixing of standards of purity within classifications, which are to be established consistent with a variety of interests — “public health and public enjoyment thereof, the propagation and protection of fish and wild life, including birds, mammals and other terrestrial and aquatic life, and the industrial development of the state” (ECL 17-0101). Indeed, under section 303 (subd [c], par [2]) of the FWPCA the use and value of State waters for industrial purposes is one of the factors which must be taken into consideration in the adoption of State water quality standards if they are to receive Federal approval (US Code, tit 33, § 1313, subd [c], par [2]).


source: Caselaw Access Project

license: Public Domain

text:
    In the Matter of the Guardianship and Custody of Alexander L., an Infant; Bienvenida L., Appellant; Cardinal McCloskey Children and Family Services et al., Respondents.
    Argued October 24, 1983;
    decided November 29, 1983

      Carolyn A. Kubitschek and Norman Siegel for appellant.
    I. Respondent-appellant had a right to have her attorney present while being examined by the court-appointed psychiatrist. (Matter of Lee v County Ct., 27 NY2d 432,404 US 823; United States v Wade, 388 US 218; Matter of Ella B., 30 NY2d 352; Matter of Shalom S., 88 AD2d 936; Santosky v Kramer, 455 US 745; Davis v Page, 618 F2d 374; Lassiter v Department of Social Servs., 452 US 18; Matter of Malpica-Orsini, 36 NY2d 568, cert den sub nom. Orsini v Blasi, 423 US 1042; Parker v Hoefer, 2 NY2d 612; Golden v Koch, 49 NY2d 690.) II. Respondent-appellant’s parental rights may not be terminated because petitioner failed to prove that the child would be neglected if he were returned to his mother. (Matter of Rodriguez v Dumpson, 52 AD2d 299; Matter of Ricky Ralph M., 56 NY2d 77; Matter of Karr, 66 Misc 2d 912; Prince v Massachusetts, 321 US 158; Meyer v Nebraska, 262 US 390; Pierce v Society of Sisters, 268 US 510; Matter of Spence-Chapin Adoption Servs. v Polk, 29 NY2d 196; Milli v Morreale, 83 AD2d 173; Matter of Dickson v Lascaris, 53 NY2d 204; Matter of Sanjivini K., 47 NY2d 374.)

      David H. Berman and Gerald E. Bodell, P. C., for Cardinal McCloskey Children and Family Services, respondent.
    I. Respondent agency proved by clear and convincing evidence that the natural mother is mentally ill within the purview of the statute. (Matter of Vera T., 80 AD2d 511, 55 NY2d 1028; Matter of Hime Y., 73 AD2d 154; Matter of Jason YY., 89 AD2d 930; Matter of Rodriguez v Dumpson, 52 AD2d 299; Matter of Ricky Ralph M., 56 NY2d 77.) II. Appellant did not have the right to have her attorney present in her mental health examination; her conduct in refusing to proceed in such examination without such attorney and failing to make a motion to have him present constituted a waiver. (Matter of Patricia P., 117 Misc 2d 826; Lassiter v Department of Social Servs., 452 US 18; Matter of Maureen G., 103 Misc 2d 109; Schmerber v California, 384 US 757.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Marvin R. Kwartler and Stephen J. McGrath of counsel), for Commissioner of the New York City Department of Social Services, respondent. The presence of attorneys or others at the psychiatric examination is not in accord with precedent or sound psychiatric practice, entails an unacceptable risk of invalidating the examination and is not justified by countervailing policy considerations.

      Wendy Sue Lauring and Lenore Gittis, Law Guardian for Alexander L.
    I. Receipt of the court-appointed psychiatrist’s testimony was not reversible error because there was no objection below and because its receipt did not violate appellant’s right to due process of law. (Matter of Gonzalez v State Liq. Auth., 30 NY2d 108; Isaacson v Karpe, 84 AD2d 868; Hollis v Smith, 571 F2d 685; United States v Bohle, 445 F2d 54; Neumerski v Califano, 513 F Supp 1011.) II. Where clear and convincing evidence had established that a child in appellant’s custody would be in danger of neglect due to appellant’s chronic mental illness, the Family Court correctly made a disposition based solely on the child’s best interests. (Matter of Rodriguez v Dumpson, 52 AD2d 299; Matter of Bennett v Jeffreys, 40 NY2d 543; Matter of Grace V., 78 Misc 2d 77; Matter of Perez, 69 Misc 2d 538.)
   OPINION OF THE COURT

Jones, J.

A parent who is to be examined by a court-appointed psychiatrist in a proceeding to terminate the parental relationship on account of mental illness of the parent is entitled to have his or her attorney present during the examination if the parent so desires, in the absence of a demonstration as to how such presence would impair the validity and effectiveness of the particular examination.

In July, 1980 respondent Cardinal McCloskey Children and Family Services filed a petition with Family Court, New York County, pursuant to section 384-b of the Social Services Law, for termination of appellant mother’s parental rights and for designation of the agency as guardian with authorization to consent to the adoption of her son, Alexander, who had been born out of wedlock on August 26, 1978 and voluntarily placed by his mother in foster care a few days thereafter. The agency, in whose care the child had been since July 1, 1979, alleged in its petition that by reason of mental illness the mother was unable presently and for the foreseeable future to provide proper and adequate care for her son, one of the grounds set out in paragraph (c) of subdivision 4 of the statutory section under which the agency was proceeding for the relief sought by it. The mother appeared by counsel on August 22, 1980.

Because subdivision 6 of the same section mandates that in every such proceeding predicated on mental illness of the parent testimony must be taken of a psychiatrist appointed by the court and that an examination of the parent by such psychiatrist must be ordered, the agency’s request for such an order was granted by Family Court, and Dr. Samuel Sheinkman, affiliated with the New York City Bureau of Mental Health Services, was designated as examining psychiatrist. The mother appeared at Dr. Sheinkman’s office at the time for which the examination was scheduled (Oct. 24, 1980), accompanied by her attorney. The psychiatrist summarily refused to conduct the examination with counsel present, and the mother declined to be examined without him present.

At the fact-finding hearing on the issue of the mother’s mental capacity subsequently held, Family Court received in evidence a written report and testimony by Dr. Sheinkman concerning the mother’s condition, both of which were predicated on his limited observation of her when she was at his office on October 24 and on a review by him of various hospital records of the mother which review had been authorized by the court after the scheduled office examination had not taken place. The psychiatrist, who was the only expert witness to testify, described in detail a chronic, undifferentiated schizophrenia suffered by the mother and expressed his opinion that as a result of that condition she could not presently or in the foreseeable future care for her son. In relating what had occurred when the mother had appeared for examination by him on October 24 he stated that it was the policy of the Bureau of Mental Health Services to conduct interviews with patients in private, giving as the reason for such practice the fact that such an interview was “an extremely private one and an intimate one” and that “the presence of another person or even extraneous noises and the presence of a person in the second room would be very disturbing and certainly would hinder an open evaluation, and an honest and open statement or statements on the part of the patient”.

Following the conclusion of the psychiatrist’s testimony, the court referred to the fact of the mother’s refusal to submit to an examination by the expert out of the presence of her attorney, and stated that he was extending to her “one more opportunity” to appear for a mental health examination by Dr. Sheinkman, but that her counsel could not be present. When the offer was not immediately accepted, the court peremptorily cut off any statement by counsel and directed that the trial continue on an adjourned date.

An order was thereafter granted in which it was found that the doctor’s testimony and the records described by him had established by clear and convincing evidence the mother’s mental illness and resulting inability to care for her child, and that she had effectively waived an interview with the court-appointed psychiatrist when she refused to be examined unless accompanied by her attorney.

A dispositional hearing which followed resulted in an order terminating the mother’s parental relationship with Alexander, transferring his guardianship to the agency and authorizing its consent to the child’s adoption, with preference in any adoption proceeding to be given to the foster parents with whom the child had resided since his surrender shortly after his birth. From the Appellate Division’s unanimous affirmance of Family Court’s disposition, the mother appeals by our leave, asserting that it was error to have required that she forego the presence of counsel at the examination directed to be conducted by Dr. Sheinkman or forfeit the opportunity such an examination might have afforded her, in a face-to-face evaluation, to satisfy the psychiatrist of her competency to care for her child.

In concluding, as we do, that the mother’s contention is correct we do not reach her claim that she was deprived of a constitutionally protected right to counsel by Family Court’s ruling. It is sufficient to observe that there was withheld from her the right, expressly conferred by the Legislature in its adoption of section 262 (subd [a], par [iv]) of the Family Court Act in 1975 (L 1975, ch 682, § 2), to have her counsel present from the time of her appearance in the termination of parental rights proceeding.

That the mother enjoyed an initial right to the presence of counsel during Dr. Sheinkman’s examination — the results of which would bear so heavily in the pending Family Court proceeding — is beyond question in light of the foregoing legislative action. Notable is the absence from the briefs submitted by respondents agency and Commissioner of Social Services of any reference whatsoever to the statute. On oral argument these parties asserted, however, that her opportunity to invoke the statutory right was not preserved, either because the mother had never moved to amend the original order directing Dr. Sheinkman’s examination to provide that counsel be permitted to be present during the examination or because she had failed to ask for an opportunity to demonstrate to Family Court that counsel’s presence would not adversely affect the ordered examination.

These assertions assume the existence of obligations .resting on the mother which are nonexistent.

As to the first claim, of particular significance is the fact that there does not appear to have been any reference to, or prohibition against, counsel’s presence in the order that originally designated Dr. Sheinkman and directed the mother’s examination. In light of the pre-eminent importance of the psychiatrist’s evaluation, and the explicit statutory assurance of the assistance of counsel throughout the Family Court proceeding, with the concomitant advantages for trial purposes that would be expected to attend the attorney’s presence during this critical phase of the litigation, the mother was under no obligation to move to amend the order for the purpose of including a provision assuring her a right which the statute already conferred.

With respect to the contention that the mother failed to tender a showing that counsel’s presence would not impair Dr. Sheinkman’s examination, the contention cannot be validated on the present record in light of the court’s summary interruption of counsel’s attempted response to the in-court statement that a further opportunity for an examination — again without the mother’s attorney present — was being accorded.

In any event, there is no predicate for the position that the mother was duty bound to establish that her attorney’s presence would not impair the effectiveness of Dr. Sheinkman’s examination. Conceivably, in a particular instance there might be cause to conclude that the validity of a psychiatrist’s examination might be compromised by the presence or intrusive conduct of a third person — as, perhaps, the parent’s counsel. In such a circumstance, bearing in mind the regard in which the right to the assistance of counsel is held, the court might nevertheless properly restrict the attorney’s presence despite the parent’s willingness and desire to the contrary. The predicate for such a restriction however may not be the failure of the parent to demonstrate a negative — i.e., the absence of the prospect of impairment — but must be a positive showing, usually by the examining expert on the initiative of the petitioner or the court, that there is justification in a particular case for exclusion of the third person or restrictions on his or her conduct during the examination. More is required than what was presented here, which was only a statement of the blanket policy of the Bureau of Mental Health Services.

Because Family Court erred in requiring that the mother submit to an examination by the court-appointed psychiatrist without the presence of her attorney, the Appellate Division’s order of affirmance should be reversed and the matter remitted to Family Court for further proceedings in accordance with this opinion.

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

Order reversed, with costs, and matter remitted to Family Court, New York County, for further proceedings in accordance with the opinion herein.

      . The father of the child has never been identified, and the mother has declared her inability to do so. Family Court found that his identity could not be ascertained with reasonable diligence and that no one has expressed an intention to claim paternal rights to Alexander.

      . Section 384-b (subd 4, par [c]) provides in relevant part:
      “4. An order committing the guardianship and custody of a child pursuant to this section shall be granted only upon one or more of the following grounds:
      * * *
      “(c) The parent or parents, whose consent to the adoption of the child would otherwise be required in accordance with section one hundred eleven of the domestic relations law, are presently and for the foreseeable future unable, by reason of mental illness or mental retardation, to provide proper and adequate care for a child who has been in the care of an authorized agency for the period of one year immediately prior to the date on which the petition is filed in the court”.

      . Subdivision 6 of section 384-b provides in relevant part:
      “6. * * *
      “(c) The legal sufficiency of the proof in a proceeding upon the ground set forth in paragraph (c) of subdivision four of this section shall not be determined until the judge has taken the testimony of a physician and psychologist, or psychiatrist, in accordance with paragraph (e) of this subdivision.
      “(e) In every proceeding upon a ground set forth in paragraph (c) of subdivision four the judge shall order the parent to be examined by, and shall take the testimony of, a physician and a certified psychologist, in the case of a parent alleged to be mentally retarded, or of a psychiatrist, in the case of a parent alleged to be mentally ill, such physician, psychologist or psychiatrist to be appointed by the court pursuant to section thirty-five of the judiciary law. The parent and the authorized agency shall have the right to submit other psychiatric, psychological or medical evidence. If the parent refuses to submit to such court-ordered examination, or if the parent renders himself unavailable therefor whether before or after the initiation of a proceeding under this section, by departing from the state or by concealing himself therein, the appointed physician, psychologist or psychiatrist, upon the basis of other available information, including, but not limited to, agency, hospital or clinic records, may testify without an examination of such parent, provided that such other information affords a reasonable basis for his opinion.”

      . Section 262 provides in relevant part:
      “(a) Each of the persons described below in this subdivision has the right to the assistance of counsel. When such person first appears in court, the judge shall advise such person before proceeding that he has the right to be represented by counsel of his own choosing ** * * and of his right to have counsel assigned by the court in any case where he is financially unable to obtain the same:
      * * *
      “(iv) the parent, foster parent, or other person having physical or legal custody of the child in any proceeding under section three hundred fifty-eight-a, three hundred eighty-four, three hundred eighty-four-b, or three hundred ninety-two of the social services law”.


author: Jasen, J.

text:
    In the Matter of Aurora Corporation of Illinois, Appellant, v James H. Tully, Jr., et al., Constituting the State Tax Commission, Respondents.
    Argued October 25, 1983;
    decided November 29, 1983

      POINTS OF COUNSEL

      George F. Carpinello for appellant.
    I. New York’s license tax discriminates against foreign corporations in violation of the equal protection clauses of the United States and New York Constitutions. (New York v Latrobe, 279 US 421; People ex rel. Elliott-Fisher Co. v Sohmer, 148 App Div 514, 206 NY 634; Matter of Gordon, 48 NY2d 266; Austin v New Hampshire, 420 US 656; Allied Stores of Ohio v Bowers, 358 US 522; WHYY v Glassboro, 393 US 117; Wheeling Steel Corp. v Glander, 337 US 562; Hanover Ins. Co. v Harding, 272 US 494; Southern Ry. Co. v Greene, 216 US 400; Austin v New Hampshire, 420 US 656.) II. New York’s license tax violates the commerce clause of the United States Constitution. (Boston Stock Exch. v State Tax Comm., 429 US 318; Halliburton Oil Well Co. v Reily, 373 US 64.)

      Robert Abrams, Attorney-General (Wayne L. Benjamin and Peter H. Schiff of counsel), for respondents.
    Section 181 of the Tax Law violates neither the equal protection nor the commerce clauses of the Federal or State Constitutions since there exists a legitimate State purpose which it was reasonable for the Legislature to believe would be promoted by the provision. (Matter of Long Is. Light. Co. v State Tax Comm., 45 NY2d 529; Shapiro v City of New York, 32 NY2d 96, 414 US 804; Allied Stores of Ohio v Bowers, 358 US 522; Matter of Davis, 57 NY2d 382; Matter of 436 West 34th St. Corp. v McGoldrick, 288 NY 346;
      Baldwin v Montana Fish & Game Comm., 436 US 371; Mullaney v Anderson, 342 US 415; Borden’s Co. v Baldwin, 293 US 194; Tigner v Texas, 310 US 141.)
   OPINION OF THE COURT

Jasen, J.

We are asked to decide on this appeal whether section 181 of the Tax Law impermissibly discriminates against foreign corporations in violation of the commerce clause of the United States Constitution. We hold that it does and, therefore, do not address petitioner’s equal protection claims.

Petitioner is a foreign corporation incorporated in Illinois which has been licensed to do business in New York since October 1, 1959. In 1973, the New York State Tax Commission (Commission) issued a notice of deficiency to petitioner in the amount of $124,308.51, plus interest, for taxes not paid in 1971. The basis of this notice was the Commission’s contention that petitioner owed an additional license fee for that year which was assessed upon a change in petitioner’s capital structure. Said change converted petitioner’s capital structure from 962,371 shares of $1 par value stock to 12,029,638 shares of stock without par value, having a stated value of $1,402,371.

Petitioner requested a redetermination and a hearing was held. Thereupon, respondents denied the petition and sustained the notice of deficiency. Petitioner then commenced this article 78 proceeding to review the Commission’s determination. Special Term dismissed the petition and the Appellate Division affirmed, holding that section 181 of the Tax Law does not violate either the equal protection clauses of the United States or the New York Constitutions or the commerce clause of the United States Constitution. Petitioner appealed to this court on constitutional grounds.

Section 180 of the Tax Law imposes an organization tax on domestic corporations. The fee assessed is equal to 1/20 of 1% of the amount of the par value of the corporation’s authorized par value stock and 5 cents per share of its authorized stock without par value. By sharp contrast, section 181 of the Tax Law, the complement of section 180, imposes upon foreign corporations wishing to do business in New York a fee of Vs of 1% per share oh its issued par value stock employed within New York and 6 cents per share on each share of its capital stock having no par value which is employed in this State. It is this disparity of treatment which petitioner claims is violative of equal protection and the commerce clause.

Inasmuch as we hold that the challenged legislation imposes an unlawful burden on interstate commerce and therefore violates the commerce clause of the United States Constitution (US Const, art I, § 8, cl 3), it is not necessary to, and we do not, address petitioner’s equal protection claims.

The commerce clause is intended quite simply “to create an area of free trade among the several States” (McLeod v Dilworth Co., 322 US 327, 330). While there has been much debate and some confusion as to how this important Federal interest is to be balanced against a State’s indispensable power of taxation (see Northwestern Cement Co. v Minnesota, 358 US 450, 457; Miller Bros. Co. v Maryland, 347 US 340, 344), three related principles have emerged with unusual clarity. First, it is well settled that no State may “impose a tax which discriminates against interstate commerce * * * by providing a direct commercial advantage to local business”. (Northwestern Cement Co. v Minnesota, supra, at p 458; Boston Stock Exch. v State Tax Comm., 429 US 318, 329; see, also, Memphis Steam Laundry v Stone, 342 US 389.) Furthermore, a State may not impose taxes on foreign goods for the purpose of “ ‘neutralizing] advantages belonging to the place of origin.’ ” (Halliburton Oil Well Co. v Reily, 373 US 64, 72, quoting Baldwin v G.A.F. Seelig, 294 US 511, 527 [Cardozo, J.].) Nor may a State discriminate in favor of a local business for the purpose of inducing foreign enterprises to become residents so that they may compete on an equal footing. (See Halliburton Oil Well Co. v Reily, 373 US 64, 72, supra; see, also, Nippert v City of Richmond, 327 US 416; Best & Co. v Maxwell, 311 US 454.)

Turning then to the facts of the case before us, a brief review of the legislative intent behind the enactment of section 181 makes clear that the statute suffers from all of these afflictions.

The New York Legislature first imposed a license tax of Vs of 1% on the capital stock of foreign corporations employed within the State in 1895 (L 1895, ch 240), the purpose of this legislation being to insure that foreign corporations paid a tax comparable to the organization tax paid by Ñew York corporations. (People ex rel. Elliott-Fisher Co. v Sohmer, 148 App Div 514, 516, affd 206 NY 634.) While this tax was somewhat effective in preventing businesses from avoiding the New York organization tax by incorporating in New Jersey while continuing to do business in New York, the existing differential in organizational tax rates between the two States provided a continued incentive for a number of corporations doing business in New York to organize in New Jersey. (Annual Reports of Comptroller, NY Assembly Doc No. 3, 122nd Legis Session, 1899, vol 1, pp xxi-xxii; ÑY Assembly Doc No. 7, 123rd Legis Session, 1900, vol 1, pp xxv-xxvi.) In hopes of exerting further pressure on foreign corporations to incorporate in New York, the Legislature reduced the State organization tax to v20 of 1% per share of par value capital stock (L 1901, ch 448), while the license fee on foreign enterprises remained at Vs of 1%.

The disparate tax treatment afforded foreign corporations as a result of this legislation was successful in fulfilling the lawmakers’ goal of forcing many corporations to incorporate in New York, thus providing access by the State to this newfound corporate wealth. (Annual Report of Comptroller, NY Assembly Doc No. 4,125th Legis Session, 1902, vol 1, p xvi.)

This legislative scheme, as it existed at the turn of the century, has remained substantially unchanged, except that in 1921 the domestic organization fee for nonpar value stock was set at 5 cents per share while a tax of 6 cents per share was imposed on similar stock employed in New York by foreign corporations. (L 1921, ch 705, §§ 2, 3.) Thus, the disparity continues, as intended.

The fundamental defect in section 181 is not that it seeks to attract foreign corporations to locate in New York, for that is certainly a permissible goal, but, rather, that it attempts to accomplish this goal by imposing discriminatory and excessive burdens on those foreign corporations in hopes of neutralizing advantages conferred by their home States and thereby inducing them to abandon their present domiciles and incorporate in New York to avoid those excessive burdens. These are the very practices condemned in Boston Stock Exch. v State Tax Comm. (429 US 318, supra) and Halliburton Oil Well Co. v Reily (373 US 64, supra).

Boston Stock Exch. v State Tax Comm. (supra) involved a transfer tax assessed by New York on all sales and transfers of stock where one of five taxable events occurred in New York. (Tax Law, § 270.) A 1968 amendment to that statute altered the imposition of the tax in two ways: (1) only nonresidents who sold stock in New York State were afforded a 50% transfer tax reduction; and (2) any taxpayer, resident or nonresident, who sold stock within New York was entitled to a $350 limit on his or her transfer tax liability. (Tax Law, § 270-a.) Finding the intent of the legislative scheme to be the protection of the New York Stock Exchange, at the expense of foreign exchanges, the court struck down the statute as violative of the commerce clause. In so doing, it reasoned that inducing nonresidents to sell on the New York Stock Exchange by providing favorable tax treatment only to those who traded on the local exchange would trigger the creation of a multitude of preferential trade areas destructive of free trade which the commerce clause is designed to protect. (Boston Stock Exch. v State Tax Comm., 429 US 318, 329, supra, citing Dean Milk Co. v Madison, 340 US 349, 356.)

Along the same vein, in Halliburton Oil Well Co. v Reily (supra), a Louisiana statute which sought to impose a higher use tax on goods acquired outside the State and used in Louisiana than on goods acquired in-State, was declared unconstitutional as violative of the commerce clause. It was recognized there that: “If Louisiana were the only State to impose an additional tax burden for such out-of-state operations, the disparate treatment would be an incentive to locate within Louisiana; it would tend To neutralize advantages belonging to the place of origin.’ Baldwin v. Seelig, Inc., 294 U. S. 511, 527. Disapproval of such a result is implicit in all cases dealing with tax discrimination, since a tax which is ‘discriminatory in favor of the local merchant,’ Nippert v. Richmond, supra, also encourages an out-of-state operator to become a resident in order to compete on equal terms. [Footnote omitted.] If similar unequal tax structures were adopted in other States, a not unlikely result of affirming here, the effects would be more widespread. The economic advantages of a single assembly plant for the appellant’s multistate activities would be decreased for units sent to every State other than the State of residence. At best, this would encourage the appellant to locate his assembly operations in the State of largest use for the units. At worst, it would encourage their actual fractionalization or discontinuance.” {Id., at p 72.)

Similarly, in the case before us, the legislative intent behind section 181 was to make it more profitable for foreign corporations doing business in New York to incorporate in this State. This was accomplished by imposing a higher license fee on businesses incorporated outside New York than the organization tax imposed on domestic enterprises. As such, the New York lawmakers hoped to induce businesses to abandon their current domiciles to come to New York. While there is certainly nothing wrong with a State attempting to attract foreign businesses to it, the commerce clause does not permit this to be done by enacting laws that favor local enterprises at the expense of foreign ones. (Boston Stock Exch. v State Tax Comm., supra; Halliburton Oil Well Co. v Reily, supra; Northwestern Cement Co. v Minnesota, supra; Memphis Steam Laundry v Stone, supra.)

It is clear, therefore, that section 181 does impose an actual burden on interstate commerce. As the reasoning in Halliburton Oil Well Co. v. Reily and Boston Stock Exch. v State Tax Comm. indicates, if a tax scheme such as this were approved, similar ones would be enacted in other States and there would follow a proliferation of insular trade areas providing economic advantages to domestic businesses and not to others. The resulting and continuing need for corporations to relocate, fractionalize or cease operations would substantially and impermissibly burden interstate commerce. Indeed, as far back as the turn of the century, New York’s legislative plan was effective in forcing foreign corporations to relocate in New York and thereby fulfilling the lawmakers’ goal of increasing State revenues. (Annual Report of Comptroller, NY Assembly Doc No. 4, 125th Legis Session, 1902, vol 1, p xvi.) Consequently, where, as here, a statute creates an advantage for New York businesses while imposing a burden on foreign corporations, tax-neutral decisions as to where to incorporate or do business are foreclosed and the resulting discriminatory burden on interstate commerce requires that the statute be declared invalid. (Boston Stock Exch. v State Tax Comm., 429 US 318, 331, supra.)

Respondents’ attempt to justify the discriminatory tax treatment on grounds that such disparity is required to offset the increased administrative costs involved in taxing foreign as opposed to domestic corporations is unavailing. Nowhere do respondents attempt to substantiate this claim with other than conclusory allegations unsupported by the record.

Nor are we persuaded by respondents’ claim that the discrimination here is justified because domestic corporations are subject to New York’s organization tax on all of their authorized shares while foreign corporations are taxed by New York only on issued shares employed in New York. This argument is flawed because petitioner must also pay organization taxes to its home State on all its authorized stock. Thus, any attempt by New York to “compensate” for lower organizational taxes in other States by imposing an excessive license fee on foreign corporations is really nothing more than an unlawful attempt to tax that portion of petitioner’s stock which has no nexus to New York. Such actions are clearly unconstitutional. (See American Ins. Assn. v Lewis, 50 NY2d 617, 623; see, also, Cudahy Co. v Hinkle, 278 US 460; International Paper Co. v Massachusetts, 246 US 135.)

Finally, we do not believe that the holdings in New York v Latrobe (279 US 421) or People ex rel. Griffith, Inc. v Loughman (249 NY 369) require a different result. In Latrobe (supra, at p 425), the court specifically noted that the case did not involve a complaint of discrimination between foreign and domestic corporations. Similarly, the dispute in Loughman centered upon the disparate treatment of par value as opposed to no-par stock, a question not at issue here.

For all these reasons, the order of the Appellate Division should be reversed, with costs, section 181 of the Tax Law declared unconstitutional and the petition granted.

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

Order reversed, etc.

       We note parenthetically that years ago a State was allowed to subject foreign corporations to discriminatory and excessive taxes in the form of an entrance fee as the price for being permitted to do business in that State regardless of whether or not there was a rational basis for doing so. (Lincoln Life Ins. Co. v Read, 325 US 673; Paul v Virginia, 8 Wall [75 US] 168; cf. People ex rel. Griffith, Inc. v Loughman, 249 NY 369, 374.) This freedom to discriminate as to entrance or license fees without regard to equal protection concerns was viewed as a logical extension of a State’s power to exclude entirely a foreign corporation from doing business within its borders. (Paul v Virginia, supra, at p 181.) However, the continuing validity of that rule, and consequently its application to challenges under either the equal protection or commerce clauses, was conclusively put to rest by the Supreme Court in Western & Southern Life Ins. Co. v Board of Equalization (451 US 648, 667-668), wherein the court declared Lincoln Life

        Ins. Co. v Read (supra) to be an anachronism and went on to state that “[wle consider it now established that, whatever the extent of a State’s authority to exclude foreign corporations from doing business within its boundaries, that authority does not justify imposition of more onerous taxes or other burdens on foreign corporations than those imposed on domestic corporations, unless the discrimination between foreign and domestic corporations bears a rational relation to a legitimate state purpose.”


text:
    In the Matter of Edward Canfora, Appellant, v Board of Trustees of the Police Pension Fund of the Police Department of the City of New York, Article II, Respondent.
    Argued October 26, 1983;
    decided November 29, 1983

      POINTS OF COUNSEL

      William J. Stutman for appellant.
    The court below erred, as a matter of law and fact, in. reversing Special Term and finding that the determination of respondent trustees was neither arbitrary nor capricious and based upon credible evidence. (Matter of Manza v Malcolm, 44 AD2d 794; Matter of Farrell v Police Dept., 44 AD2d 782; McCabe v

      Hoberman, 33 AD2d 547; Duquin v Colucci, 55 AD2d 832; Matter of Nilsson v La Guardia, 259 App Div 145; Matter of Meier v New York City Employees’ Retirement System, 79 AD2d 919; Matter of City of New York v Schoeck, 294 NY 559; Matter of Drayson v Board of Trustees, 37 AD2d 378, 32 NY2d 852; Matter of Meschino v Lowery, 34 AD2d 255; Matter of Sheehan v Board of Educ., 64 AD2d 901.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Miriam Skolnik and Francis F. Caputo of counsel), for respondent.
    There was ample credible evidence before the board of trustees to support its determination to deny petitioner accident disability retirement. (Matter of Fiore v Board of Educ., 48 AD2d 850, 39 NY2d 1016; Matter of City of New York v Schoeck, 294 NY 559; Matter of Meschino v Lowery, 34 AD2d 255; Matter of Bennett v Board of Trustees, 20 AD2d 522, 16 NY2d 562; Matter of Drayson v Board of Trustees, 37 AD2d 378, 32 NY2d 852; Matter of Walsh v Codd, 68 AD2d 805; Matter of Manza v Malcolm, 44 AD2d 794; Matter of Alexander v New York City Employees’ Retirement System, 43 AD2d 826, 36 NY2d 671.)
   OPINION OF THE COURT

Jasen, J.

In this CPLR article 78 proceeding, petitioner seeks annulment of respondent’s determination denying petitioner accidental disability retirement benefits. The issue presented is whether the police board of trustees acted properly in refusing to accept the medical board’s recommendation that petitioner was entitled to an accidental disability pension and, instead, granting .him only an ordinary disability pension.

Petitioner, a member of the New York City Police Department since 1963, was involved in a collision on December 7, 1971, while a passenger in a police car. He was treated at Coney Island Hospital for contusions of the upper back and released. He remained on sick report until December 18, 1971, after which he returned to full duty. On April 10,1979, petitioner applied for accidental disability retirement as a result of the 1971 accident. In May, 1979, the police medical board recommended a complete denial of petitioner’s request. The medical board concluded that “[t]he degenerative changes noted in the films are apparently due to progressive wear and tear as is frequently seen even without accident.” In reconsideration, the medical board altered its position, and in October, 1979 recommended that petitioner be granted a non-line-of-duty disability retirement pension. However, the board of trustees remitted the matter to the medical board to consider the fact that, before petitioner’s accident, in May, 1971, petitioner claimed that he was suffering from pains in his neck. In May, 1980, the medical board recommended that accidental disability benefits be awarded.

The board of trustees rejected the last recommendation and, instead, made a determination that petitioner was only entitled to ordinary disability retirement benefits. In making this determination, the board of trustees considered petitioner’s past medical history, as well as the opinion of the chief surgeon of the police department, Dr. Clarence Robinson, who is also its medical advisor. The chief surgeon reviewed petitioner’s application and noted that petitioner’s accident could not have been serious since he was not hospitalized thereafter; that, after the accident, he remained on sick report for 11 days; and thereafter worked his full assignment for the next five years, except for short periods of illness unrelated to the accident. The chief surgeon was of the opinion that the petitioner’s present complaints and symptoms were not related to the accident which occurred in 1971 and concluded that the findings of the medical board of a narrowing of petitioner’s cervical spine since 1973 was more consistent with arthritis than the accident.

Following the board of trustees’ determination, this article 78 proceeding was commenced. Special Term vacated the board of trustees’ determination and directed the board to grant the petitioner accidental disability retirement, holding that there was no rational basis for its determination.

The Appellate Division unanimously reversed, on the law and the facts, vacated the judgment, denied petitioner’s application, dismissed the petition and reinstated respondent’s determination, stating, inter alia, that the determination was not arbitrary and capricious and is based on credible evidence. The court held that a clear difference of medical opinion existed as to the cause of petitioner’s disability and that there could really be no doubt that the trustees’ determination was based on credible evidence, as shown by petitioner’s work history, the opinions of the medical experts employed by the city and by the analyses performed by both the medical board and the trustees. The court then reiterated the rule that “the court cannot direct * * * trustees to accept * * * [the medical board’s] finding [of causation] unless that finding is uncontestably correct and there is no room for reasonable difference of opinion” (Matter of City of New York v Schoeck, 294 NY 559, 569) and reinstated the determination of the board of trustees. We agree.

Administration of the New York City police pension fund is regulated by chapter 18 of the Administrative Code of the City of New York. The code requires the board of trustees to retire any applicant found by the medical board to be physically or mentally incapacitated for the performance of city service as a natural and proximate result of a service-related accident. (Administrative Code, § B1843.0.) While the board is, therefore, bound by the medical board’s determination of disability, it is not bound by the medical board’s determination that said disability resulted from a service-related accident. The function and duty of determining the “circumstances” of the disqualification and of determining the amount of the allowance as provided by the code is conferred upon the board of trustees. (See Matter of City of New York v Schoeck, supra, at pp 566, 567-568; Matter of Bennett v Board of Trustees, 20 AD2d 522, affd 16 NY2d 562.) Ordinarily, the decision of the board of trustees as to the cause of an officer’s disability will not be disturbed unless its factual findings are not supported by substantial evidence or its final determination and ruling is arbitrary and capricious. (See Matter of Fiore v Board of Educ., 48 AD2d 850, affd 39 NY2d 1016; Matter of Drayson v Board of Trustees, 37 AD2d 378, 380, affd 32 NY2d 852.)

Where, as in the present instance, however, the decision of the board of trustees to deny accidental disability benefits but to grant ordinary disability benefits is reached in consequence of 6 to 6 tie votes, the standard of judicial review is necessarily different. There has been no factual determination by the board to be subjected to review under the normal substantial evidence standard. Rather, the disposition has been based on a procedural practice, first condoned in Matter of City of New York v Schoeck (294 NY 559, supra) and since 1945 observed, if not honored, by continuous use and general acceptance.

Inasmuch as the fact of disability is not in dispute (the finding of disability by the medical board being binding on the board of trustees [Administrative Code, §§ B18-42.0, B 18-43.0]), the retired member is entitled at least to ordinary retirement benefits. (Matter of City of New York v Schoeck, 294 NY 559, supra.) The denial of accidental disability benefits in consequence of the tie vote can be set aside on judicial review only if the courts conclude that the retiree is entitled to the greater benefits as a matter of law. Unless it can be determined as a matter of law on the record that the disability was the natural and proximate result of a service-related accident, the decision of the board of trustees denying accidental disability benefits as a consequence of a tie vote must stand.

On examination of the record in this case, it cannot be concluded that petitioner was entitled to accidental disability benefits as a matter of law.

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

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

Order affirmed, with costs.


author: Wachtler, J.

text:
    In the Matter of George A. Wootan, Appellant, v David Axelrod, as Commissioner of Health of the State of New York, et al., Respondents.
    Argued October 19, 1983;
    decided November 29, 1983

      POINTS OF COUNSEL

      Richard Greenblatt and Martha M. Roberge for appellant.
    I. Subdivision 12 of section 230 of the Public Health Law does not empower the Commissioner to suspend a physician from the practice of medicine in any form. (Matter of Wootan v Axelrod, 111 Misc 2d 688, 87 AD2d 913; Bell v Burson, 402 US 535; Willner v Committee on Character, 373 US 96; Greene v McElroy, 360 US 474; Schware v Board of Bar Examiners, 353 US 232; Meyer v Nebraska, 262 US 390.) II. Subdivision 12 of section 230 of the Public Health Law, insofar as it permits the Commissioner to fully suspend a physician from the practice of medicine for successive 60-day periods pending determination of disciplinary proceedings, unconstitutionally deprives appellant of due process of law. (Barry v Barchi, 443 US 55; Matter of Pelaez v Waterfront Comm., 77 AD2d 947; British Airways Bd. v Port Auth., 564 F2d 1002; Securities & Exch. Comm. v Sloan, 436 US 103.) III. The Commissioner’s seriatim suspensions of appellant’s medical privileges have effectively regulated parental choice of a birth setting in violation of the New York and United States Constitutions. (Skinner v Oklahoma, 316 US 535; Griswold v Connecticut, 381 US 479; Eisenstadt v Baird, 405 US 438; Roe v Wade, 410 US 113; Prince v Massachusetts, 321 US 158; Matter of Eichner [Fox], 73 AD2d 431; Matter of Hofbauer, 47 NY2d 648; Silvian v Shang, 70 AD2d 704; Matter of Neptusky v State Bd. of Regents, 95 Misc 2d 763; While You Wait Photo Corp. v Department of Consumer Affairs, 87 AD2d 46.)

      Robert Abrams, Attorney-General (Alan W. Rubenstein and Peter H. Schiff of counsel), for respondents.
    I. The State Commissioner’s order of March 19, 1982 directing petitioner to discontinue the practice of medicine in the State of New York in any form for a period of 60 days was properly made. (Matter of Di Marsico v Ambach, 48 NY2d 576; Matter of Ross v Ambach, 78 AD2d 472; Matter of New York State Bd. of Pharmacy v Drug Purchase, 57 AD2d 569, 46 NY2d 741; Matter of City of Rome v New York State

      Health Dept., 65 AD2d 220, 46 NY2d 713; Matter of Neptusky v State Bd. of Regents, 95 Misc 2d 763; Matter of Howard v Wyman, 28 NY2d 434; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451.) II. Petitioner’s constitutional arguments should be rejected because (1) they are made here for the first time, and (2) they lack merit; furthermore petitioner lacks standing to assert the claim that respondents are attempting to regulate parental choice of a birth setting. (Securities & Exch. Comm. v Sloan, 436 US 103; Matter of Camperlengo v Blum, 56 NY2d 251; Barry v Barchi, 443 US 55; Matter of Pelaez v Waterfront Comm., 77 AD2d 947; Morrissey v Brewer, 408 US 471; Mathews v Eldridge, 424 US 319; Cafeteria Workers v McElroy, 367 US 886; Arnett v Kennedy, 416 US 134; United States v Raines, 362 US 17; McGowan v Maryland, 366 US 420.)
   OPINION OF THE COURT

Wachtler, J.

We are called upon in this case to consider the extent of the limitations upon the power of the Commissioner of Health of the State of New York (Commissioner) to suspend summarily a physician’s license to practice medicine pending disciplinary hearings. We hold that, pursuant to subdivision 12 of section 230 of the Public Health Law, the Commissioner has the power, in appropriate circumstances, to order a physician to discontinue the practice of medicine in any form. The statute does not, however, permit the Commissioner to continue such a suspension in the usual case beyond the 60-day period provided in the statute.

Petitioner was a physician licensed to practice medicine in the State of New York and engaged in that practice in Kingston, New York. On April 23, 1981 proceedings were commenced by the State Board for Professional Medical Conduct against petitioner by service of a statement of charges. The statement sets forth several specifications of professional misconduct (as defined by Education Law, § 6509), for the most part charging petitioner with gross negligence and/or gross incompetence in the care and treatment of pregnant women and newborns in connection with petitioner’s controversial home birthing practice. Hearings were held on July 7 and August 10, 1981, at which evidence in support of these charges was presented. On October 15, the statement of charges was amended to include several additional instances of alleged professional misconduct arising from the home delivery practice. After further hearing on November 10, the hearing panel filed a recommendation with the Commissioner that he take summary action against petitioner.

On November 18, the Commissioner determined that the deficiencies in the medical practice of petitioner had given rise to an imminent danger to the health of the people of New York State and therefore directed petitioner to discontinue the practice of medicine in any form for a period of 60 days. Petitioner’s challenge to this order by way of a CPLR article 78 proceeding was successful (Matter of Wootan v Axelrod, 111 Misc 2d 688, affd 87 AD2d 913). The Appellate Division held, in affirming Supreme Court’s judgment annulling the suspension order, that the Commissioner had exceeded his statutory authority in prohibiting petitioner from all practice of medicine, when the charges and specifications concerned petitioner’s home birthing practices only (87 AD2d, at p 914).

While the article 78 proceeding was in progress, the hearing panel had continued its activities, holding three days of hearings in December of 1981, two days in January of 1982, and one day in each of the months of February and March. On January 14, the statement of charges was amended a second time to include additional allegations concerning petitioner’s care and treatment of his home birthing patients. On February 9, the statement was again amended, to charge petitioner for the first time with professional misconduct in his general nonobstetric practice. This charge was that petitioner had practiced his profession with gross incompetence and/or gross negligence in that he had failed to treat a patient properly for ingestion of a toxic substance.

The Commissioner, for his part, had continued the effectiveness of the 60-day suspension order by issuing a second order dated January 19, 1982 and a third order dated March 19, 1982, each continuing the suspension for an additional 60-day period. Following the Appellate Division’s decision, which was rendered April 1, 1982, petitioner requested the Commissioner to substitute a proper order for the March 19 order then in effect. The Commissioner refused to revoke or limit that order, asserting that it was based upon different facts, including those set forth in the final amendment to the statement of charges, which concerns conduct unrelated to petitioner’s home birthing practice. Thus, the Commissioner apparently believed that the Appellate Division’s determination was not applicable to the state of facts and proceedings as they existed when his last order suspending petitioner was issued.

Petitioner then commenced a second article 78 proceeding, this time to have the March 19 suspension order annulled. In response to the petition, the Commissioner asserted that the order was based upon petitioner’s failure to give proper care to the patient who had ingested a toxic substance, as well as the deficiencies in his care of pregnant women and newborns. On the basis of the charges and the medical testimony that had been given concerning them, the Commissioner had found a “general lack of competence and disregard for basic tenets of accepted medical standards so as to necessitate the suspension of petitioner from all aspects of his medical practice”. In the Commissioner’s view, the nonobstetric incident had demonstrated that it was incorrect to assume that petitioner’s professional misconduct existed in only one area of his practice.

Special Term disagreed and again granted the petition to annul the Commissioner’s determination. The Appellate Division reversed, essentially adopting the Commissioner’s argument that the allegations concerning the nonobstetric incident had “raised serious questions concerning petitioner’s over-all competence and compliance with the basic tenets of acceptable medical standards” (91 AD2d 766). Although we agree with the Appellate Division that, given the allegations and medical testimony, an order suspending petitioner from all aspects of medical practice might properly have been issued, we nevertheless reverse that court’s order because the statute limits the effectiveness of a suspension order to 60 days except in narrowly defined circumstances. Those circumstances not existing to justify the further orders of the Commissioner, he was not authorized to issue successive 60-day orders continuing the initial suspension in effect. Thus, petitioner’s application to annul the March 19 order should have been granted.

Subdivision 12 of section 230 of the Public Health Law, permitting summary action to be taken against a physician, was enacted to fill a perceived void in the Commissioner’s ability to protect the health of the public during the pendency of disciplinary hearings against a physician (Memorandum of Sponsor, NY Legis Ann, 1977, pp 256, 257). The statute provides, in pertinent part: “Whenever the commissioner, after investigation and recommendation by a committee on professional conduct of the state board for professional medical conduct, is of the opinion that a physician is causing, engaging in or maintaining a condition or activity which in the commissioner’s opinion constitutes an imminent danger to the health of the people, and that it therefore appears to be prejudicial to the interests of the people to delay action until an opportunity for a hearing can be provided in accordance with the prehearing and hearing provisions of this section, the commissioner may order the physician, by written notice, to discontinue such dangerous condition or activity or take certain action immediately and for a period of sixty days from the date of service of the order” (emphasis added). It is petitioner’s contention that, given appropriate circumstances for the exercise of the power granted by the statute, the Commissioner is authorized only to prohibit a “dangerous condition or activity” and that this language cannot be read so broadly as to empower the Commissioner to direct a physician to discontinue the practice of medicine in any form.

Viewing the statute from the standpoint of its purpose — the protection of the health of the public from imminent danger caused by the activities of a physician against whom disciplinary proceedings have been or are about to be commenced, its language must be read as granting the Commissioner authority to direct a physician to discontinue the practice of medicine entirely. It is certainly possible that the very practice of his profession by a given physician may so threaten the public health as to itself constitute the “dangerous condition or activity” contemplated by the Legislature. Indeed, the allegations and evidence of professional misconduct may involve negligence and/or incompetence so pervasive as to render it impossible to identify the specific activities or conditions creating the danger. It is unlikely that the Legislature intended the Commissioner to be without power to act in the interest of the public health in such a case. Thus, the authority to direct a suspension of all medical practice must, if warranted by the circumstances presented, be deemed to fall within the broad grant of power expressed in the statute.

Of course, the propriety of such an order in a given case depends upon the circumstances presented, and its breadth must be limited by the nature of the perceived danger. In this case, it appears that at the time the challenged order was issued, the Commissioner was justified in concluding that the practice of medicine by petitioner posed a threat to the health of the public. The Commissioner based his determination upon the extensive charges and medical testimony related to petitioner’s alleged gross incompetence in connection with his home birthing practice. Although this circumstance alone may not have been sufficient to support petitioner’s suspension from all medical practice, an issue not now before us, the broad suspension was nevertheless justified once the allegations and medical evidence went beyond petitioner’s obstetric practice to raise serious questions concerning his competence in general practice as well.

Although the Commissioner’s determination that petitioner’s medical practice presented a danger was rationally based, he nevertheless exceeded his authority under the statute in issuing the March 19 order. The statute clearly provides that the duration of any order issued pursuant to it is limited to 60 days. The statute may not be read, as the Commissioner apparently would, to permit successive 60-day orders continuing the suspension’s effectiveness indefinitely. The Legislature’s intent to limit strictly the time period which an order of suspension may cover is reflected in the remainder of the statute. Thus, the Legislature has provided that within 10 days of service of the Commissioner’s order, hearings on the professional misconduct proceedings must commence, and the State Board for Professional Medical Conduct is directed to “make every reasonable effort to avoid any delay in completing and determining such proceedings” (Public Health Law, § 230, subd 12). In addition to the concern expressed that the hearing be concluded expeditiously where a suspension is in effect, the statute specifically sets, forth the circumstances under which the Legislature contemplated that the effectiveness of such an order should be continued beyond the 60-day period. Thus, if the hearing panel finds the physician guilty of the charges, the Commissioner’s order is to remain in effect until a final decision has been rendered by the Board of Regents. Further, if the physician is responsible for delay in completing the hearing, the order is continued until the panel makes its recommendation to the Commissioner. Clearly, the statutory 60-day period was meant to be the maximum time period a physician may be directed to discontinue all or part of his medical practice, except in the situations expressly provided for. Inasmuch as petitioner had already been suspended for a period in excess.of 60 days, the Commissioner could not validly issue additional orders of suspension.

This legislative sensitivity to the duration of the Commissioner’s order is, no doubt, a reflection of the importance of the physician’s substantial interest in his ability to pursue his occupation. The State has a significant interest in protecting the health of the public, but the physician’s interest in his profession is also deserving of protection, particularly at a point in the proceedings against him at which no affirmative finding of misconduct has been made. The procedural protections afforded the physician take on added significance in this context of a suspension pending the conclusion of disciplinary hearings. The Commissioner’s several successive orders have operated to extend the suspension to a period greater than one year. Surely, this is not the prompt hearing and determination of the issues to which the suspended licensee is constitutionally entitled (Barry v Barchi, 443 US 55; see Ampuero v Department of Professional Regulation, 410 So 2d 213 [Fla]), and we cannot read the statute to permit an unlimited suspension of this nature. Nor can the successive orders be justified on the basis that new facts had been uncovered to support them. It is incumbent upon the board to present the charges and evidence against a physician in a manner which will allow for the expeditious resolution of the proceedings. This is particularly so when allowing the physician to continue to practice is perceived as a threat to the public health. When that is the case, completion of the proceeding within 60 days of the order insures that the danger may be properly guarded against without undue encroachment upon the physician’s interests.

Finally, we note that it is no answer to the limitations on the Commissioner’s authority expressed in the Public Health Law that the hearing panel was not guilty of “foot-dragging” and did its best to schedule hearing dates. Once the drastic remedy of suspension is imposed, the physician’s interest in expediting the proceeding becomes paramount; at that point, the State has little or no cognizable interest in delaying the conclusion of the proceeding (see Barry v Barchi, 443 US 55, supra).

Accordingly, the order of the Appellate Division should be reversed, with costs, and the judgment of Supreme Court, Albany County, granting the petition to annul the Commissioner’s order should be reinstated.

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

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

       We are informed that, subsequent to Special Term’s judgment the Commissioner acted to suspend petitioner only from the further practice of obstetrics and related infant care. This limited suspension was continued in effect by a subsequent order. In September of 1982, the suspension was continued indefinitely, due to petitioner’s having caused a delay in completing the hearing. Upon the Appellate Division’s reversal, the Commissioner again directed petitioner to discontinue the practice of medicine in any form pending the determination of the hearing panel and review by the Board of Regents. Petitioner remained suspended from practice through the date of argument of this appeal. We are further informed that, following argument of the appeal, the Board of Regents acted to revoke petitioner’s license to practice medicine in this State.