Failure to Schedule Water-Meter Replacement Constitutes “Denial of Access” Under NYC Water Board Rate Schedule

Introduction

In Matter of 29-76 Realty Co., LLC v. New York City Water Board, 2025 NY Slip Op 05946 (2d Dept Oct. 29, 2025), the Appellate Division, Second Department, addressed a recurring regulatory and billing question arising from the New York City Department of Environmental Protection’s (DEP) efforts to replace malfunctioning water meters. The petitioner, owner of a Long Island City commercial building, challenged the New York City Water Board’s determination sustaining a denial-of-access account administration fee and “attributed consumption” billing imposed for years during which a replacement meter was not installed.

The central issue was whether a property owner’s failure to schedule a return visit with the DEP’s contractor—after an initial inspection during which a replacement could not be installed—constitutes a failure to provide “access” under the Water Board’s Water and Wastewater Rate Schedule (the Rate Schedule). A related procedural issue involved whether the Supreme Court properly transferred the CPLR article 78 proceeding to the Appellate Division absent an administrative hearing or a substantial-evidence question.

The Second Department held that the Water Board’s interpretation of “access” and its resulting charges were rational and entitled to deference, and further noted that the Supreme Court should not have transferred the proceeding. The court nevertheless retained jurisdiction and reached the merits in the interest of judicial economy.

Summary of the Opinion

The petitioner’s building had a water meter that “needed to be replaced due to its inability to fully record water consumption.” After a March 4, 2013 contractor inspection, a replacement meter was not installed. The DEP sent multiple notices (including meter replacement notices, a demand-for-access notice, and notices of denial of access) directing the petitioner to schedule a return visit.
Upon the petitioner’s failure to meet inspection deadlines and schedule a return visit, the DEP assessed a denial-of-access account administration fee and imposed attributed consumption charges beginning June 25, 2014.
A replacement meter was eventually installed by the petitioner’s own plumber; the DEP contractor inspected that installation on October 29, 2019, after petitioner made contact on October 25, 2019.
The Water Board affirmed the DEP’s decision in a September 28, 2020 letter, finding that petitioner failed to provide “access” by not scheduling a return visit after March 4, 2013, and that attributed consumption was properly imposed from June 25, 2014 until October 25, 2019.
On article 78 review, the Second Department concluded the determination was not arbitrary and capricious; it reflected a rational interpretation of the Rate Schedule entitled to judicial deference. The court confirmed the determination, denied the petition, and dismissed the proceeding on the merits with costs.
Procedurally, the court observed the Supreme Court should not have transferred the case because there was no administrative hearing and no substantial evidence question; however, the Appellate Division retained jurisdiction and decided the merits for judicial economy.

Analysis

Precedents Cited and Their Role

The court’s analysis rests on two cornerstone doctrines: the arbitrary-and-capricious standard under CPLR article 78 and judicial deference to an agency’s interpretation of its own regulations or rules.

Matter of Big Six Towers, Inc. v New York City Water Bd., 216 AD3d 948, 950: Cited for the proposition that courts may overturn Water Board determinations only if arbitrary and capricious—i.e., lacking a rational basis. This anchors the deferential lens through which the court evaluates the Water Board’s Rate Schedule interpretation.
Matter of Maimonides Med. Ctr. v New York City Water Dept., 164 AD3d 1342, 1343: Reinforces the same arbitrary-and-capricious standard in the water billing context, highlighting continuity in how New York courts treat DEP/Water Board determinations.
Matter of Sternberg v New York State Off. for People with Dev. Disabilities, 204 AD3d 680, 682–683: Supplies the canonical definition of “arbitrary and capricious” (“without sound basis in reason or regard to the facts”) and reiterates that courts must uphold rational determinations even where they might have reached a different outcome.
Matter of McCollum v City of New York, 184 AD3d 838, 839–840: Quoted for the principle that a court sustains an agency’s rational determination even if the court would have decided differently. This emphasizes the limited scope of review in article 78 proceedings.
Andryeyeva v New York Health Care, Inc., 33 NY3d 152, 174: Establishes that courts defer to an agency’s interpretation of its own rules, because the agency authored the text and exercises delegated authority. Here, it justifies deference to the Water Board’s reading of the Rate Schedule, especially where that reading accords with the text’s plain meaning.
Matter of Peckham v Calogero, 12 NY3d 424, 431–432: Reaffirms deference to agency interpretations that reasonably effectuate the regulatory text’s plain language and underscores the rational-basis threshold for sustaining agency decisions.
Matter of Davis v Roldan, 54 AD3d 944, 945, and Matter of Jan V. v State of N.Y. Off. of Children & Family Servs., 38 AD3d 912, 912: Address procedural posture, making clear that transfer to the Appellate Division is improper absent an administrative hearing or a substantial-evidence question. They support the court’s note that the Supreme Court should not have transferred this case under CPLR 7804(g).

Statutory authority appears in Public Authorities Law §§ 1045-g(4) and 1045-j(1), (4), which collectively empower the Water Board to set, administer, and collect water and wastewater charges. These provisions frame the Water Board’s authority to impose the denial-of-access fee and attributed consumption, contingent upon compliance with its Rate Schedule.

Legal Reasoning

The court applied traditional article 78 review, asking whether the Water Board’s determination “had a rational basis and was not arbitrary and capricious.” Two key facets of the Board’s reasoning were central:

Interpretation of “Access” in the Rate Schedule:
- The Board treated the property owner’s failure to schedule a return visit with the DEP’s contractor (after the March 4, 2013 inspection, when a replacement meter could not be installed) as a failure to provide “access.” The Appellate Division held this interpretation “gave effect to the plain language of the regulatory text and, therefore, was not unreasonable.”
- In short, access under the Rate Schedule is not limited to the physical act of opening a door when a contractor arrives. It includes the affirmative obligation to coordinate and schedule necessary return visits when notified, so that the meter can be replaced and water usage accurately measured.
Lawfulness of Charges Imposed:
- Given the failure to schedule and thus provide access, the Board concluded that a denial-of-access account administration fee and attributed consumption charges were authorized under the Rate Schedule and applicable law. The court found that conclusion rational.
- The Board specifically sustained attributed consumption charges “from June 25, 2014, until October 25, 2019,” the date on which the petitioner notified the DEP that the meter had been installed and facilitated access for an inspection. This end date is tethered to the moment the owner took steps restoring access and verifiable metering.

Importantly, the court emphasized that where the Water Board interprets its own Rate Schedule in a way that aligns with the text’s plain meaning, that interpretation merits deference. And once a rational basis is identified, the court must sustain the administrative outcome, “even if the court concludes that it would have reached a different result.”

Procedural Note: Improper Transfer Under CPLR 7804(g)

The court observed that the Supreme Court should not have transferred the matter because:

No administrative hearing occurred; and
The petition did not raise a CPLR 7803(4) “substantial evidence” question.

Nonetheless, consistent with Matter of Davis v Roldan and Matter of Jan V., the Appellate Division retained jurisdiction “in the interest of judicial economy” and decided the merits.

Impact and Practical Implications

This decision clarifies the operational meaning of “access” under the Water Board’s Rate Schedule in the context of meter replacement. Its practical reach is significant:

Scheduling is Access: Property owners must not only allow physical entry when a contractor arrives but must also promptly engage and schedule any necessary return visits identified by the DEP or its contractor. Inaction or delays can be treated as a denial of access.
Long-Running Attributed Consumption: The court validates the Board’s use of attributed consumption when meters cannot accurately record usage due to lack of access. Such charges may accrue for extended periods, stopping only when the owner both remedies the metering deficiency and affirmatively facilitates inspection/verification.
Evidentiary Disputes and FOIL: The petitioner’s argument—based on FOIL returns—that there was no recorded refusal of access did not change the outcome. The determinative point was the owner’s failure to undertake the required scheduling after notice. FOIL disputes about redactions did not undermine the rational basis for the Board’s decision.
Agency Deference: The decision deepens the body of law in which New York courts defer to an agency’s reasonable, text-grounded reading of its own rules—especially in technical administrative settings like municipal utilities billing and enforcement.
Article 78 Strategy and Procedure: Parties challenging DEP/Water Board billing decisions should anticipate arbitrary-and-capricious review; absent an evidentiary hearing or a substantial evidence issue, transfer to the Appellate Division is not proper, though appellate courts may still reach the merits for efficiency.

Complex Concepts Simplified

Arbitrary and Capricious: A highly deferential standard. A decision is arbitrary and capricious if made “without sound basis in reason or regard to the facts.” If an agency’s decision has a rational basis, courts will not substitute their judgment—even if they might prefer a different outcome.
Judicial Deference to Agency Interpretation: Courts generally defer to how an agency reads and applies its own regulations or rate schedules, particularly where the interpretation aligns with the regulatory text’s plain meaning and the agency has specialized expertise.
“Access” (as used in this context): Not merely opening the door; it encompasses the affirmative duty to cooperate with scheduling and to facilitate return visits necessary to repair or replace equipment (like water meters) used to measure consumption.
Denial-of-Access Account Administration Fee: A charge imposed when an owner fails to provide access under the Rate Schedule (including by failing to schedule a required visit), reflecting the administrative costs and consequences of non-cooperation.
Attributed Consumption Charges: Estimated or attributed charges used when actual consumption cannot be reliably measured due to an inoperative meter or lack of access, applied until accurate metering is restored and verified.
Public Authorities Law §§ 1045-g(4) and 1045-j(1), (4): These provisions vest the Water Board with authority to set, administer, and collect water and wastewater rates and charges, and to enforce compliance through its Rate Schedule.
CPLR 7803(3) vs. 7803(4) and CPLR 7804(g): Article 78 review typically asks whether an agency acted arbitrarily and capriciously (7803[3]). “Substantial evidence” review (7803[4]) applies after an evidentiary hearing. Transfer to the Appellate Division under 7804(g) is proper only when substantial-evidence review is required; absent that, the Supreme Court should decide the petition in the first instance.

Conclusion

The Second Department’s decision confirms and clarifies a pivotal operational rule in New York City water billing: a property owner’s failure to schedule a necessary return visit for meter replacement after an initial inspection is a failure to provide “access” under the Water Board’s Rate Schedule. That failure rationally triggers both the denial-of-access account administration fee and attributed consumption charges, which may persist until the owner not only installs or enables meter replacement but also facilitates the DEP’s verification of the installation.

Doctrinally, the opinion is anchored in two well-settled principles: deferential arbitrary-and-capricious review of administrative determinations and judicial deference to an agency’s reasonable interpretation of its own rules. Procedurally, the court highlights that transfer to the Appellate Division was improper absent a hearing or substantial-evidence claim, though it chose to retain and decide the matter to promote judicial economy.

For regulated entities and practitioners, the takeaway is practical and immediate: engage promptly with DEP’s contractors, schedule required return visits, and document all efforts. In the absence of such cooperation, the Water Board’s sanctions—including lengthy attributed consumption—are likely to be upheld as rational applications of the Rate Schedule.