TO: Batchellerville Bridge Action Committee Members
FROM: Peter VanAvery
DATE: January 28, 2009

On January 7, National Grid filed a lawsuit against the Hudson River-Black River Regulating District that could result in the elimination of the permit system that allows front-lot and back-lot property owners access to Great Sacandaga Lake.

Also named in the lawsuit is the NYS Department of Environmental Conservation, which is currently reviewing the District's proposed new rules for the lake's permit holders.

"The litigation came as a surprise," according to District Executive Director Glenn LaFave. "Without revealing our strategy, I can assure the area's municipalities and access permit holders that the District will oppose this lawsuit," he said.

If the court rules that the access permit system is illegal, consequences for the lake's 4,800 permit holders could be disastrous. One possibility: The state-owned buffer zone around the lake could be thrown open to the public, causing the value of lake houses and cabins -- some of which sell for $1 million or more -- to plummet. Until this lawsuit is resolved, which could take years, people may not be very enthusiastic about purchasing property at Great Sacandaga.

Established in 1922, the Hudson River Regulating District created the 29-mile-long Sacandaga Reservoir by damming the Sacandaga River at Conklingville. The project was paid for by a group of 42 hydroelectric firms, industrial companies, and municipalities that owned property along the shores of the Sacandaga and Hudson rivers and would benefit from regulation of the flow. The group included Niagara Mohawk (now National Grid).

These downstream beneficiaries also agreed to pay for the reservoir's operation and maintenance in perpetuity. Ever since, the District has charged them an annual assessment. In 1999, National Grid exited the power generation business, selling off all of its hydro plants. (They are currently owned by Brookfield Renewable Power.) Although National Grid still owns some land along the river, it is vacant.

National Grid's lawsuit lists a hodgepodge of claims. Here are some samples:

Item: The company argues that since it has sold its hydro plants, it no longer benefits from a regulated flow of the Hudson River. Therefore, it says, it should be treated the same way as thousands of other property owners along the river who pay no assessment.

Item: According to the company, Environmental Conservation Law states that the only way for the District to fund its operations is by means of assessments on all public corporations and real estate that benefit from the existence of the reservoir. Thus, argues the company, the District has no legal authority to create or implement a permit system or a set of rules governing such a system. The firm asks the court to order the District to discontinue the system.

Item: The company urges that "lakeshore owners and back-lot owners of parcels in and about the Great Sacandaga Lake be declared benefited owners" and required to pay an annual assessment. But front-lotters are not "lakeshore owners." They are separated from the lake, in some instances by up to a half-mile, by the state-owned buffer zone. Also, if the permit system is discontinued, as National Grid wants, and the buffer zone is opened to the public, front-lotters are going to see property values fall through the floor. This is hardly a benefit.

Item: National Grid argues that although the access permit system is supposed to pay for itself, its fees have historically not offset all the costs. The company claims that downstream beneficiaries have paid the difference and that this subsidy is unjust, unconstitutional, and illegal. Further, the company claims that "permit holders pay only about 50 percent of the total cost to administer the permit system." That's questionable. In my opinion, nobody -- least of all the District -- knows what the permit system costs (see below).

The access permit system at Great Sacandaga Lake is supposed to be self-supporting. But can the Regulating District prove that the permit system pays for itself? Nope! Access permit fees have been frozen since 2000 while the District has repeatedly tried to figure out what the system costs to operate. This nine-year struggle has been a joke.

We're not talking rocket science here. As state authorities go, the District is small stuff. It has only 30 full-time employees, some of whom have absolutely nothing to do with the permit system. Its annual budget is only about $7 million. The head of a private business with the same head count and earnings would need no more than a couple of weeks to put in place a way to track how much time each employee spent on a particular project, plus material and other costs. At the end of one year, he or she would have a pretty accurate cost figure.

In 2005, the District hired a consulting firm to help pin down that elusive cost figure. But after examining the District's books, the firm threw up its hands and gave up. It said it could find "no adequate methodology." Now, working with a second consultant, the District claims that it has installed a tracking system that'll reveal the total cost of the access permit system by year-end. Theoretically, new permit fees will go into effect on January 1, 2010. I don't know about you, but I'm not holding my breath.

This National Grid lawsuit may go nowhere, or the company may win some or all of its claims. Worst case, if the access permit system is eliminated, you and I could experience serious damage to our property values and quality of life.

Meanwhile, don't assume that front-lot and back-lot property owners are the only entities that could be potentially classified as upstream beneficiaries. We have plenty of company.

For example, if the lake didn't exist and local towns and villages didn't benefit from high taxes on front-lot and back-lot properties, would the Town of Edinburg be able to afford its Edinburg Common School? Without the presence of customers attracted to the area by the lake, would the Village of Northville have a grocery store and a drug store? Without the construction of new lake dwellings and the expansion of existing ones, how many contractors, carpenters, plumbers, roofers, electricians, painters -- and the businesses that supply them -- would exist in the area? All could be considered beneficiaries of the lake.

You should be alert to the fact that this National Grid lawsuit is the type of litigation that begets other lawsuits. Some people are not happy with the fact that Great Sacandaga's access permit holders hold a seeming monopoly on a slice of the state-owned buffer zone around the lake. This would be a propitious time for those critics to launch a legal attack on the access permit system that would open the buffer zone to the public.

Also, it is conceivable that the lake's property owners -- fed up with the District's never-ending incompetence -- will fund a class-action lawsuit designed to free us from the oversight of this bumbling state authority.

On November 20, 2008, the NYS Department of Transportation opened bids from two construction firms interested in taking on the Batchellerville Bridge Replacement Project. DOT then had 45 days to decide what to do. Well, that grace period has elapsed, and DOT has not made a decision. The two bidders now have the right to withdraw their bids, which has not yet happened. Meanwhile, the project is stalled. The two bidders are Chemung Contracting Company of Elmira ($64.1 million) and Kubricky Construction of Queensbury ($66.4 million). DOT has budgeted $38.9 million for the project.

The Regulating District's board does not plan to meet in either February or August. Its next regularly scheduled meeting will be held at 10:00 a.m. on Tuesday, March 10, 2009 at Utica State Office Building, 207 Genesee Street, Utica.

The lake's level is currently at 751.75 feet above sea level -- about 1 foot above target.