Upon the foregoing papers, petitioner Lynette Bourne seeks a declaratory judgment and a judgment, pursuant to CPLR Article 78, reversing the decision of the Acting Director of the New York City Water Board dated June 26, 2006 that imposed surcharge penalties totalling $25,010.18, plus interest at 9% per annum, upon real property located at 852 Linden Boulevard, Brooklyn, for failure to install or request the Department of Environmental Protection (DEP) install a water meter by June 30, 2000.

The subject property, consisting of a residential building with six apartments, was acquired by petitioner on September 6, 2001. The building receives water and sewer service from the City of New York and was billed on a frontage basis. As of July 1, 2000, respondent began imposing a surcharge penalty in the amount of 100% of the current water bill, based upon petitioner's and/or petitioner's predecessor's failure to install or to request the installation of a water meter by that date.

By letter dated July 21, 2004, DEP responded to petitioner's letter dated June 29, 2004 advising petitioner that there was no record of a request for the installation of a water meter at the subject premises. By letter dated September 1, 2004, petitioner requested that the surcharge be cancelled, arguing that no notice that a penalty would be imposed had been received. Therein, petitioner requested that the surcharge be cancelled on various grounds including that: (1) the rate schedule for fiscal year 2001 and 2002 provided only for surcharging water rates, and not sewer rates; (2) the surcharge is an excessive fine under the 8th amendment of the United States Constitution; (3) the surcharge is an arbitrary and capricious fine because it does not promote conservation, nor does it affect the ultimate billing of the property, since the property is billed on the basis of its street frontage; (4) the requirement that petitioner request the installation of a water meter serves no legitimate purpose, because DEP already knows which properties require the installation of a meter; (5) the ultimate responsibility to install water meters rests with DEP, who increased rates by 9% to cover the cost in 1988. It is unreasonable for DEP to now surcharge any of its customers who did not install water meters because the customers [*2]already paid for installation; (6) the system employed by DEP to record customer requests to install water meters did not always result in the request being recorded. Certain properties were surcharged even though the owner requested installation; and (7) The rate schedule for 2001 is ambiguous as it pertains to surcharging properties. Historically, a surcharge was only charged when a customer refused the installation of a water meter.

By letter dated November 18, 2005, DEP advised petitioner that its records revealed that warning notices were issued for the subject account on October 21, 1999 and March 6, 2000, informing the prior owner that a meter had to be installed prior to July 1, 2000 in order to avoid being surcharged. By letter dated December 9, 2005, petitioner sought to appeal this determination, arguing that in denying the request to cancel the surcharge, respondent stated only that the property was surcharged because petitioner did not install a water meter by July 1, 2000, but failed to address the other issues raised.

By letter dated March 20, 2006, DEP advised petitioner that the mandatory metering policy was widely publicized in the months leading up to June 30, 2000 and that property owners were notified of the policy in writing in October 1999 and March 2000. The letter also specifically addressed and rejected each of the other objections raised by petitioner.

By letter dated April 4, 2006, petitioner sought to appeal the March 20, 2006 determination. The letter further advised DEP that petitioner learned, in response to a request for information pursuant to the Freedom of Information Law (FOIL), that DEP had issued an order to install a water meter in 1997, but no meter was installed at that time.

By letter dated June 26, 2006, the Water Board affirmed the March 20, 2006 determination. The letter further advised petitioner that the surcharge had been cancelled as of March 16, 2006, the date that a meter was installed. The Water Board further concluded that since its regulations require that a customer file a written complaint of a disputed water and wastewater bill with DEP within four years, DEP should have denied that branch of the complaint that fell outside the four-year period.

In the context of a CPLR Article 78 proceeding, it is well settled that judicial review is limited to a determination of whether the administrative action was arbitrary and capricious or lacked a rational basis (see e.g. Arif v New York City Taxi & Limousine Comm., 3 AD3d 345, 346 [2004], lv granted 2 NY3d 705 [2004], appeal withdrawn 3 NY3d 669 [2004], citing Matter of Mut. Redevelopment Houses v New York City Water Bd., 279 AD2d 300 [2001]; Matter of Chelrae Estates v State Div. of Hous. & Community Renewal (DHCR), 225 AD2d 387 [1996]; Matter of Rudin Mgt. Co. v DHCR, 215 AD2d 243 [1995]). Accordingly, "the court's scope of review is limited to an assessment of whether there is a rational basis for the administrative determination without disturbing underlying factual determinations" (Heintz v Brown, 80 NY2d 998, 1001 [1992], citing Matter of Pell v Board of Educ., 34 NY2d 222, 230-231 [1974]).

As is also relevant to the instant dispute, "[p]ursuant to Public Authorities Law § 1045-f, the Water Board has the sole authority to set rates for water usage by New York City residents" (Westmoreland Apt. v New York City Water Bd., 294 AD2d 587, 588 [2002], citing Matter of Village of Scarsdale v Jorling, 91 NY2d 507 [1998]; Perry Thompson Third Co. v City of New York, 279 AD2d 108 [2000]). Pursuant to a consent decree entered into in an administrative proceeding brought by the New York State Department of Environmental Conservation against the New York City Department of Environmental Conservation, the City agreed to require all [*3]owners of buildings with six or more apartments to install water meters by June 30, 2000 (see generally Tip Top Mgt. v New York City Water Bd., New York County Sup Ct, Index No 102767/06, 11/28/06 [Gische, J.]). To effectuate this obligation, the Water Board promulgated regulations that provided that all such owners either install water meters by June 30, 2000 or request that the City do and that, for any period after this date that the owner failed to comply, an "annual surcharge will be imposed equal in amount to 100% of the last annual unmetered water charge" (Water Board Rules and Regulations, Part II, § 3).

Timeliness of Petitioner's Complaint

As a threshold issue, DEP contends that petitioner's initial complaint dated September 1, 2004 is not timely, because the Water Board Rules and Regulations require that a customer file a written complaint with regard to a contested water and wastewater bill within four years of date of the bill (see 2001 Rate Schedule, Part IX).

The court rejects respondent's contention. DEP provides no evidentiary support that would allow the court to conclude that a bill containing the first surcharge was dated and mailed to petitioner on or before September 1, 2000, nor could it be expected that a surcharge would be billed within months of the effective date of the penalty. Morever, the letter dated July 21, 2004 from DEP and annexed to petitioner's moving papers refers to a letter from petitioner dated June 29, 2000 inquiring into the surcharge, so that petitioner's first complaint was made within the four-year period. Hence, petitioner's complaint is held to be timely with regard to all surcharges challenged.

Notice to PetitionerAs a general rule, "[w]here the names and addresses of interested parties are known, due process requires notice reasonably calculated, under all the circumstances, to apprise' that party of the [subject] action, so that the party may have an opportunity to appear and be heard" (Kennedy v Mossafa, 100 NY2d 1, 9 [2003], quoting Mullane v Central Hanover Bank & Trust Co., 339 US 306, 314 [1950]).

As is also relevant herein, in establishing the requirement that water meters be installed:

"DEP announced certain guidelines to enable customers without water meters to avoid the imposition of a surcharge for their failure to have one installed (see Matter of 77 Realty, LLC v New York City Water Bd., 16 AD3d 247), by exercising one of two options by June 30, 2000. The first option required notifying the DEP by June 30, 2000, that the customer wanted the DEP to install a water meter. The second option was to utilize a private plumber to install the water meter by June 30, 2000."

(770 Owners/Allstate Realty Assocs. v City of New York, 20 AD3d 572, 573 [2005]).

Herein, DEP alleges that notification of the intent to surcharge properties was sent to

the prior owners of the premises on October 21, 1999 and March 6, 2000. In this regard, it is significant to note that even if the notices were returned unclaimed, notice would not be deficient (Temple Bnai Shalom v Village of Great Neck Estates, 32 AD3d 391, 392 [2006], citing Matter of Harner v County of Tioga, 5 NY3d 136, 138 [2005]). Since petitioner did not acquire title to the premises until September 6, 2001, it is unreasonable to argue that petitioner should have been given notice of the requirement to install a water meter prior to June 30, 2000. Moreover, petitioner does not refute that such notices were sent to the prior owner. DEP further avers that it made additional efforts to notify its customers about the requirements and surcharge, pointing [*4]to articles that appeared in newspapers of general circulation. Petitioner similarly fails to deny this allegation.

Further, respondent's records indicate that when petitioner acquired title to the property, a Flat-Rate Account Reconciliation was not requested. Such a statement would have provided a means by which to review the accuracy of the bill. In addition, $16,551.58 was paid on the subject account on September 21, 2001, which satisfied all outstanding charges. No payments were made thereafter until October 8, 2004. In this regard, petitioner does not claim that no water bills were received during this period, which bills unequivocally put petitioner on notice of the surcharge. Finally, petitioner's assertion that requests to install meters at other properties may not have been recorded is specious, inasmuch as there is no allegation made herein that such a request was made.

Accordingly, the court finds that the means selected for providing notice was reasonably calculated, under all the circumstances, to apprise the interested parties of the surcharge. The notice provided complies with due process requirements (see generally Temple Bnai Shalom, 32 AD3d at 392, citing Matter of Beckman v Greentree Sec., 87 NY2d 566, 570 [1996], quoting Mullane, 339 US at 314). From this it follows that inasmuch as petitioner exercised neither of the options that would prevent the imposition of a penalty, the account for the subject property was properly surcharged.

DEP Work Order

The work order for the installation of a water meter that was generated on January 15, 1997 was created by DEP as a system generated "batch" work order when DEP attempted to install meters free of charge prior to the imposition of the surcharge. In its letter dated July 21, 2004, DEP explained that when the batch work order was created, Varsity Plumbing was retained to do the work, but returned the work order, reporting that the property was vacant at the time. DEP did not install meters at vacant properties. Petitioner's reliance upon this system generated work order is misplaced.

Petitioner was not aware that this work order existed until DEP responded to the FOIL request made in 2004, and thus petitioner could not have relied upon its existence to satisfy the obligation to install or request the installation of a water meter by June 30, 2000. Moreover, neither the Water Board nor DEP's regulations provide that an existing work order satisfies a property owner's responsibility to install or request the installation of a meter (see generally Tip Top Mgt., New York County Sup Ct, Index No 102767/06; Pistilli Assocs. v New York City Water Bd., Queens County Sup Ct, Index No 21254/05, 3/10/06 [Taylor, J.]). In so holding, it is also significant to note that the work order had been cancelled prior to the installation deadline. The case of Mutual Redevelopment Houses, Inc. v New York City Water Board (279 AD2d 300 [2001]), which addresses the issue of the application of the two-year back-billing limitation regulation, and not the issue raised herein, does not compel a contrary conclusion.

Application of the Surcharge to Water and Wastewater Charges in 2000 and 2001

Petitioner's contention that the surcharge should apply only to water charges, and not to wastewater charges for 2000 and 2001, is based upon the contention that the applicable regulations stated that the surcharge would only be imposed upon water charges.

In opposition, DEP submits the affidavit of William Kusterbeck, the long time treasurer of the Water Board, who alleges that the legislative history establishes that the disputed surcharge provision applies to both water and wastewater charges, since both are components of [*5]a water bill.^[FN1] Moreover, since 1988, when the surcharge was first adopted, it has always been so applied. In 1993, when the surcharge was increased to 100%, the Rate Schedule effective July 1, 1993 similarly provided that the surcharge applied to both water and wastewater (see Rate Schedule, July 1, 1993, Part III, § 2).

Where the interpretation of a statute or regulation involves specialized knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom, the courts should defer to the administrative agency's interpretation unless irrational or unreasonable (see e.g. KSLM-Columbus Apts. v DHCR, 5 NY3d 303, 312 [2005] citing Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459 [1980]). Hence, "deference is appropriate where the question is one of specific application of a broad statutory term'" (Matter of O'Brien v Spitzer, 7 NY3d 239, 242 [2006], quoting Matter of American Tel. & Tel. Co. v State Tax Comm., 61 NY2d 393, 400 [1984], quoting National Labor Relations Bd. v Hearst Publ., 322 US 111, 131 [1944]). That an agency's "interpretation might not be the most natural reading of the regulation, or that the regulation could be interpreted in another way, does not make the interpretation irrational" (Blossom View Nursing Home v Novello, 4 NY3d 581, 595 [2005]).

While there is no controlling authority on this issue, there are several lower court decisions that hold that there is no legal infirmity to imposing a surcharge based upon a property owner's wastewater bill during 2000 and 2001 for the reasons advanced by respondent (see e.g. Mohegan Realty v New York City Water Bd., Bronx County Sup Ct, Index No 15955/06, 11/28/06 [Barone, J.]; Tip Top Mgt., New York County Sup Ct, Index No 102767/06; 1985-1995 Creston Ave. Hous. Dev. Fund v New York City Water Bd., Bronx County Sup Ct, Index No 15334/05, 8/14/06 [McKeon, J.]; Haav 575 Realty v New York City Water Bd., New York County Sup Ct, Index No 113342/05, 4/19/06 [Feinman, J.]). This court agrees.

Petitioner's Remaining Contentions

Petitioner's remaining claims that the imposition of a surcharge is irrational and arbitrary on various other grounds are rejected as lacking in merit. In rejecting similar claims, it has been held that:

"We reject petitioners' argument that the surcharge does not further the stated purpose of water conservation. The surcharge was imposed because petitioners'' neither installed water meters in their buildings nor requested the City to do so by the deadline contained in the applicable rate schedule. While it is true that the mere installation of a water meter at a particular building will not save water as long as the owner of that building can elect to be billed on a frontage rather than metered basis, it also appears that the installation of meters in all New York City buildings is a necessary first step to the conversion to all-metered billing, which will save water. If, as respondents assert without challenge, metered billing results in significantly higher bills than frontage billing, and if metered billing cannot be implemented until all buildings have meters, then the imposition of a surcharge for failing to install a meter by a stated deadline rationally serves the purpose of conservation. The amount of the surcharge — 100% of the last annual frontage charge prorated over the period that the property remains without a [*6]meter after the deadline — does not shock our sense of fairness, and there is no merit to petitioners''' argument that the surcharge is an unconstitutionally excessive fine (see Matter of Seril v New York State Div. of Hous. & Community Renewal, 205 AD2d 347 [1994], lv denied 84 NY2d 904 [1994])."

(77 Realty v New York City Water Bd., 16 AD3d 247 [2005], appeal denied 5 NY3d 715 [2005]). The above decision disposes of petitioner's contentions that the regulation, and the resulting surcharge, is unreasonable, arbitrary, capricious, excessive or constitutionally unfirm.

As the record clearly demonstrates that petitioner, owned an apartment building which did not have a water meter and failed to comply with the guidelines requiring installation by June 30, 2000, respondent's determination denying the application to cancel the surcharge was not arbitrary and capricious. This proceeding is accordingly dismissed.

The foregoing constitutes the decision and judgment of this court.

Enter,

J. S. C.