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Saratoga County Water Authority - Decision, April 4, 1996

Decision, April 4, 1996

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter
- of -
the Application of the SARATOGA COUNTY WATER AUTHORITY for a Water Supply Permit pursuant to Environmental Conservation Law (ECL) Article 15, Title 15, and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York (6 NYCRR) Part 601

File No. 5-4100-22-1

Water Supply Application No. 8858

DECISION

April 4, 1996

DECISION OF THE COMMISSIONER

This is the final decision of the Commissioner in this matter. Based on the attached Report of the Administrative Law Judge and the entire record of this proceeding, I am remanding this matter to Staff for issuance of the requested permit. In doing so, I am not accepting certain of the recommended findings of fact and conclusions of law in the attached Report for the reasons given below.

Background

Saratoga County Water Authority ("SWCA") seeks a water supply permit pursuant to 15-1503.2 of the Environmental Conservation Law ("ECL"). SWCA seeks the permit in order to implement plans to acquire the wells, mains, and related facilities of Saratoga Water Services, Inc. ("SWS") in the Town of Malta. Acquisition of the SWS facilities is part of the initial phase (Phase 1A) of SWCA's master plan for a County water supply system.

SWCA's predecessor commenced long-range water supply planning studies for Saratoga County in 1989 (Exhibits A-1, A-2). SWCA was created by the Legislature in 1990. Public Authorities Law, Article 5, Title 8-F. SWCA is now in the process of implementing its Updated Master Plan ("UMP" or "master plan"), to improve the quality and reliability of its water supplies, including (as relevant here) the southern part of the County.

SWCA maintains that acquisition of SWS's existing groundwater supplies, wells and distribution facilities is an essential initial step in implementation of its plan for a county-wide water supply and distribution system. Following acquisition of the SWS facilities, SWCA intends to continue implementing its regionalization plan by interconnecting the SWS groundwater sources and service area with neighboring systems. First, SWCA intends to interconnect with the nearby Saratoga/ Glen Hollow Water Supply Corporation ("SGH"). Then it plans to interconnect with Malta Water Supply District No. 1 and Clifton Park Water Authority, and then with the Village of Round Lake. It also plans to provide water service to an area in the vicinity of Exit 12 from Route I-87, and to construct additional storage capacity (for improved fire protection). These interconnections are designated Phase IA. (See UMP, Ex. A-3, Tab 1, p. 12).

SWS opposes SWCA's plan to takeover its facilities. SWS contends that the SWCA has failed to demonstrate that the acquisition is justified by the "public necessity" standard of ECL 15-1503.2, which has been determined to be the standard applicable in this adjudicatory proceeding. In essence, SWS's position is that the groundwater supplies currently used by SWS to supply its service area are needed to meet present and future demands within its service area, and that other service areas can and do obtain adequate supplies elsewhere. Simply put, SWS argues that its water service area should not be obliged to share the relatively plentiful groundwater available to its service area with others, a result which (not coincidentally) would defeat the SWCA's plan to acquire SWS by eminent domain. The issue of "public benefit" under the Eminent Domain Procedure Law is not involved in this decision. The Department's function here is limited to whether there is a "public necessity" for SWCA's proposed use of water resources under ECL 15-1503.2. Moreover, SWS contends that the acknowledged general benefits derived from regionalization of water supplies cannot, of themselves, be applied in this case to fulfill the "public necessity" standard under the ECL.

Public Necessity

My Ruling of September 11, 1995 in this matter denied what was essentially a summary judgment motion by SWCA, which urged me to issue the requested permit without adjudication. That motion was based on the ground that SWCA's updated master plan, prima facie, satisfied the "public necessity" threshold. My basis for denial at that time was SWS's assertion that there were disputed factual issues. Accordingly, the matter was remanded to ALJ Frank Montecalvo for a hearing on the issue of whether SWCA had demonstrated that its planned acquisition of SWS is justified by the "public necessity."

My September 11, 1995 Ruling stated that:

"The question of 'public necessity' under 15-1503.2 of the ECL is intended to take into account the proposed use of the water supply resource. Here, the question of 'public necessity' should evaluate the use of the resources currently used by the Companies, for the Authority's proposed utilization, including incorporation of the resource into the Authority's plans. The Companies assert, among other things, that reliability of supply to its existing customers will be adversely affected. To this extent, for example, an issue for hearing on the issue of "public necessity" remains open."

Precedent indicates that the term "public necessity" in 15-1503.2 of the ECL is "meant to afford some measure of the public's need for the particular water supply proposed" (Matter of Ton-Da-Lay v. Diamond, 44 AD 2d 430 3d Dept., 1974). Clearly the existing residents and other water users within the SWS service area require a reliable water supply of good quality and reasonable cost. Indeed SWS's existing water supply permits were issued to it for that reason. The same applies to the residents and other water users in other nearby service areas. The "public necessity" standard as applied in this case, therefore, inquires whether acquisition of SWS as an initial step in implementing SWCA's regional plan is reasonably likely to assure that a reliable, good quality supply of water is both needed and can be provided to the combined service areas proposed by SWCA. This inquiry includes whether there would be unreasonable detriment to the quality of service to the water consumers in the existing SWS service area.

The Record

Following my September 11, 1995 Ruling, the adjudicatory hearing on "public necessity" was held. SWCA, Department Staff, and SWS participated. The ALJ's Hearing Report was prepared following the hearing. On February 27, 1996, the Report was submitted to the parties for exceptions and comments. This Decision takes those exceptions into account, as well as the ALJ's Report and the record of the hearing and prior proceedings.

SWCA contended at the hearing that the SWS well system can provide at least 139 gpm of capacity to other systems, while continuing to reliably supply existing demand within its service area. Moreover, SWCA concludes that combining SWS with the nearby Saratoga/Glen Hollow system would provide at least 200 gpm of excess capacity to provide water for distribution to other service areas. SWCA contends essentially that there is a public necessity to use excess groundwater capacity available in a combined SWS and SGH system to supply other needy service areas in nearby parts of the County. Doing so, moreover, is a key element of its overall master plan for an integrated water supply network within the County that will allow for future development.

However, ALJ Montecalvo disagreed. First, he concluded that the SWS system should not be regarded as having any excess capacity available for redistribution. (Finding of Fact #17). This finding is based on his prior finding as to potential future demands in the SWS service area. (Finding of Fact #16).

In Finding 16, the ALJ states that in 1978 and again in 1992, SWS stated that its future needs could grow to as much as 365 gpm, as compared to the 203 gpm of adjusted average day demand for 1991-1994. This finding also states that SWCA has estimated that the SWS service area will need up to 262 gpm by the year 2013. It further states that based on 1991 demand only, the adjusted average day demand for the service area is 219 gpm. Based on these figures, the ALJ concluded that "prudence dictates" a conclusion that there is no excess capacity available on the SWS system.

The ALJ's findings #16 and #17 presume that a regionalized system of water supply by SWCA would not adequately provide for future needs within the existing service areas of SWS. The record contradicts such a presumption and I reject it, as I do the conclusions of Finding #17. (Ex. A-3, Tab 1, p. 14; Holt, Tr. 1265, 1268-1289). I conclude that the record shows that there is excess capacity available in the SWS system of at least 139 gpm, and that the County's master plan provides a basis upon which to assure that future needs within and without the SWS service area can and will be satisfactorily met. Essentially, the interconnection of facilities and supplies allows the existing supplies to be employed for the benefit of a larger area with improved reliability while reducing the unit cost of appropriate redundancy. It should also be kept in mind that SWS's existing water supply authorizations are limited, and that even in the absence of its acquisition by SWCA, SWS would need to obtain authorization from the Department to increase its service area to accommodate further expansion. The permitting process under 15-1503 seeks to use the groundwater resources prudently for the good of the "public." Under the facts here, the "public" is more than SWS or its existing service area. The "public" incorporates a larger area of the southern portion of Saratoga County.

The ALJ's findings of fact No. 22 and 23 question the validity of SWCA's conclusion that there are at least 350 gpm of source capacity at the Glen Hollow wells. Finding 23 concludes that it has not been established that the 350 gpm figures can be depended upon. The 350 gpm figure is based on a report of an engineer, Mr. Hanson, made for the owner of SGH, and later relied upon by SCWA. DEC Staff concluded that the 350 gpm estimate was "conservative," and that the safe yield may actually be considerably higher. On the other hand, there are two other wells in the immediate vicinity, including SWS's 471 gpm well P-7. The ALJ's finding is, essentially, that a further pump test would be needed to support SWCA's proposed use of the SGH well in common ownership with the SCS well, and without such a test, the SWCA has not satisfied its burden. I disagree.

Based on the testimony of Mr. Holt (Tr. 1239-1244) I reject the conclusion that the test is necessary, and accept Mr. Holt's conclusion that the 350 gpm figure can be depended upon. On the other hand, as Mr. Holt testified, a test should be conducted if SWCA should seek to withdraw amounts in excess of a 350 gpm rate. (Holt, 1248-1249).

Based on the foregoing, I believe, contrary to the ALJ's summary finding #31, that SWCA has shown that the groundwater supplies available to SWS are capable of supplying other service areas in addition to the SWS service area which it currently serves.

The above discussion, as well as the ALJ's Findings of Fact No. 24 through 28, also supports the conclusion that the SWCA's master plan is rational and prudent. This conclusion is expressly supported by testimony of Staff witness Holt, who testified that there is capacity available from the groundwater supplies of SWS and SGH, and that Phase 1A of the UMP is a rational and prudent plan for supplying potable water to a significant portion of Saratoga County. (Ex. DEC-1, p. 9). Mr. Holt adds that the Department supports a regionalized approach to water supply resource use, as opposed to smaller individual systems, and I agree. However, this decision should not be interpreted as expressing a Departmental preference for or against public ownership of water service facilities. The preference expressed here is for larger interconnected systems as compared to smaller systems. (Id.).

I cannot accept the ALJ's summary finding No. 32 that states that "Applicant has not shown that the water supplies currently available to [water service areas outside of SWS's and SGH's] cannot meet the demands of these areas." SWCA is not required to negatively establish the absence of any alternative supplies. The issue is whether SWCA has shown whether the service areas beyond SWS' and SGH's have a need for additional supplies, and whether SWCA's master plan offers a prudent and rational means of fulfilling that need. I find that the SWCA has made that showing on this record. For example, the Village of Round Lake is currently using a non-conforming surface supply pursuant to a variance. The Exit 12 area needs an additional supply. Water quality problems affect homes in the Saratoga Lake area.

The SWCA's master plan seeks to address these and many other similar problems through long-range planning and development of a unified integrated system, instead of a local patchwork of small systems. SWCA's master plan states that the additional water source capacity derived from the SWS-SGH combination will provide a better balancing of water supply needs within the County, including (Ex. A-3, Tab 1, pp. 14-16):

"...Existing Water System Users. If needed, additional source capacity would be available to the existing users of Saratoga Water Services and Saratoga Glen Hollow's water systems.

Village of Round Lake. As described in the Background section of this report, the Village of Round Lake's water source does not meet the NYSDOH's standards. Based on a recently completed Engineering Report prepared for the Village, the interconnection of the Village's water system to the Saratoga County Water Authority's proposed water system is one of the Village's most cost effective options to comply with the NYSDOH's requirements. The Village's existing average daily demands are approximately 125,000 gpd. Upon completion of the Phase 1A improvements, the Saratoga County Water Authority would have more than adequate source capacity to provide this quantity of water to the Village.

Exit 12/Route 9 Users. A significant amount of development has occurred and is planning to occur within this area of the Town of Malta. Upon completion of the Phase 1A improvements, the Saratoga County Water Authority would have more than adequate source and storage capacity to provide the much needed water to this area of the Town.

Malta Water Supply Water District No. 1/Clifton Park Water Authority. The CPWA has expressed to the Saratoga County Water Authority its interest for the Authority to serve water systems in the Town of Clifton Park. It is estimated that the CPWA currently provides an average of approximately 192,000 gpd of water to the Malta Water Supply District No. 1. Upon completion of the Phase 1A improvements, the Saratoga County Water Authority would have more than adequate source capacity to see this amount of water to the CPWA. The CPWA would then have additional water source capacity to serve other users within the Town of Clifton Park.

Other developments and communities within Saratoga County as needed. For example, there are a number of existing and proposed developments around Saratoga Lake which need water. Representatives of the Long-Range Planning Committee for the Saratoga Lake Association and the Saratoga Lake Protection and Improvement District have requested that the Saratoga County Water Authority provide a public water supply to the Saratoga Lake area. Most of the existing residences (approximately 1,500 units) around the Lake have water quality problems including high levels of iron, sulfur, and methane. Many residences currently rely on bottled water or individual home water treatment systems.

b) The proposed water system improvements would result in increased water system reliability and redundancy.

c) The proposed improvements would provide improved operational flexibility. For example, if for any reason, a well in the existing Saratoga Glen Hollow Water Supply Corporation's system had to be taken off-line, then the wells from Saratoga Water Services' existing system could supply this system, and vice-versa.

d) The proposed improvements would provide improved control over the aquifer. The ownership, operation, and maintenance of the groundwater supplies by one entity, versus competing entities, would provide greater, long-term aquifer control.

e) The proposed improvements would result in greater water rate stability, due to the economies of scale of owning, operating, and maintaining one larger system as opposed to several smaller, individual systems. The standardization of water system parts by one entity will allow the Authority to provide a more cost effective, efficient operation.

f) Additional benefits related specifically to the existing users of the Saratoga Water Services' water system [detailed in Tab 2 of the UMP are rate stability and improved service]."

The ALJ's Summary Finding No. 32 would require SWCA to prove to a certainty that no other supply alternatives exist for each of these localities. I do not agree that 15-1503.2 imposes such a rigorous standard. The County's planning process examined alternatives (See Exhibits A-1, A-2, and A-3, Tab 1). I find that the County's master plan is rational and prudent. I further conclude that SWCA has adequately shown that its proposed acquisition is justified by the public necessity under ECL 15-1503.2. I add that this conclusion is based upon more than the "generalized benefits" of a regional system. (Compare ALJ's Report at p. 18). It is based on the showing in the record that the relatively abundant groundwater supplies currently used to supply consumers in the SWS service area only can be combined and shared with neighboring service areas, and that this will benefit the consumers in the combined area, and help to assure that the existing water resources will be used optimally to serve the public of Saratoga County at the present time and into the next century.

Accordingly, I cannot agree with the ALJ's conclusions of law Nos. 2, 3 and 4, and they are rejected.

Conclusion

Based on the above analysis, I conclude that the record shows that the County Authority's master plan is rational and prudent, and that issuance of the requested permit is justified by the public necessity. I remand this matter to Department Staff for issuance of the requested permit to SWCA.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: By: Michael D. Zagata, Commissioner
Albany, New York

Dated: April 4, 1996

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter
- of -
the Application of the SARATOGA COUNTY WATER AUTHORITY for a Water Supply Permit pursuant to Environmental Conservation Law (ECL) Article 15, Title 15, and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York (6 NYCRR) Part 601

File No. 5-4100-22-1

Water Supply Application No. 8858

HEARING REPORT

THE PROPOSED PROJECT and PERMIT SOUGHT

The SARATOGA COUNTY WATER AUTHORITY (the "Applicant") seeks an ECL Article 15, Title 15 Water Supply Permit from the New York State Department of Environmental Conservation (the "Department" or "NYSDEC"). Statutory and regulatory provisions applicable to processing this type of application are: Environmental Conservation Law ("ECL") Article 3, Title 3 (General Functions); Article 70 (Uniform Procedures); Article 15, Title 15 (Water Supply) ; and Article 8 (Environmental Quality Review). Also, Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") Part 621 (Uniform Procedures); Part 624 (Permit Hearing Procedures); Part 601 (Water Supply); and Part 617 (SEQR).

The Applicant proposes to acquire and operate the existing water supply and distribution system of Saratoga Water Services, Inc., consisting of the Knapp Road wells, a 150,000 gallon storage tank, a 130,000 gallon storage tank, a pump house and approximately 65,700 linear feet of water mains located in the Town of Malta. The Applicant also proposes to acquire the Cold Spring Road well (well PW-7) along with approximately 4 acres of land surrounding the well which are located in the Town of Stillwater from the Luther Forest Corporation, and to construct a 50,000 gallon storage tank.

PROCEEDINGS

The Applicant, as lead agency, issued a Negative Declaration pursuant to the State Environmental Quality Review Act on June 18, 1992. The application was filed with the Department on July 3, 1992 and was determined to be complete on July 23, 1992. On December 7, 1993, the Department advised Applicant that a public hearing would be held on the application. The application was referred for hearing by the Department's Region 5 Staff (Staff) on August 12, 1994 and received in the NYSDEC Office of Hearings on August 15, 1994.

The Notice of Public Hearing (the "Notice") was issued August 29, 1994, and was published September 7, 1994 in NYSDEC's Environmental Notice Bulletin, and September 7, 8, and 9, 1994 in the Saratogian and the Gazette. The Notice was also directly mailed to the clerks of the Town of Malta and Saratoga County, as well as to other persons deemed interested in this proceeding. The Notice scheduled legislative public hearings and an Issues Conference, and required that petitions to intervene be filed by September 30, 1994. A request to intervene was received from Saratoga Water Services, Inc. (SWS) and Luther Forest Corporation (collectively, "the Companies") which control the water supply system Applicant proposes to acquire.

Pursuant to the Notice, ALJ William J. Dickerson convened the public hearing in two sessions at 2:00 and 7:00 PM on October 4, 1994, at the Town of Malta Town Hall, 2540 Route 9, Malta, New York to take comments on the proposed project. Staff was represented at by Paul Van Cott, Esq., Assistant Regional Attorney. The Applicant was represented by Tabner, Laudato and Ryan; John W. Tabner, Esq., of counsel. Seventeen persons presented oral comments. A number of speakers expressed dissatisfaction over the current water system owner's water rates, quality of customer service, and quality of water delivered to the tap, and supported the application to resolve these problems.

The Issues Conference was convened at 9:00 the following morning at the same location. Staff and the Applicant appeared through their aforementioned representatives. The Companies appeared by Roland, Fogel, Koblenz and Carr, LLP; Usher Fogel, Esq. of counsel.

At the Issues Conference, the Companies, inter alia, claimed that the Applicant had failed to consider alternative water supply sources, failed to demonstrate that the acquisition was justified by public necessity, and failed to provide for the proper protection of the supply and the watershed; that the project was not just and equitable to all affected municipalities and their inhabitants; and that the Applicant had not made adequate provision for fair and equitable determination of and payments for any legal damages resulting from the proposed project. See ECL 15-1503 where these requirements may be found. The Companies also sought dismissal of the application, contending that the Applicant lacked the requisite legal authority. The Department Staff supported the Companies' request for Party Status, but claimed that the only issue to be adjudicated was whether the proposed project was justified by public necessity.

On December 5, 1994, ALJ Dickerson granted Party Status to the Companies. ALJ Dickerson ruled that alternative sources of supply and public necessity were issues to be adjudicated. He also ruled that watershed management and provision for legal damages might require adjudication depending upon future submittals he directed to be made, including submission of a draft permit. Other proposed issues were denied.

Staff submitted a Draft Permit on January 23, 1995, and modified it on February 15, 1995 (Exhibits 3A and 3B in the hearing record).

Applicant appealed the Rulings that alternative water supply sources and public necessity required adjudication, and also appealed the ALJ's requirement of further submissions with respect to legal damages and watershed protection (ECL 15-1503[2]). The Companies appealed ALJ Dickerson's holding that whether the Authority is legally constituted is a question that should be decided by the courts and not by the Department.

By Interim Decision dated February 23, 1995, the NYSDEC Commissioner upheld ALJ Dickerson's rulings except with respect to alternative water supply sources and watershed protection, determining there was no need to examine those issues further. The parties engaged in discovery following the Interim Decision.

On April 18, 1995, this matter was transferred to ALJ Frank Montecalvo (the ALJ), from ALJ Dickerson who retired from state service.

On April 28, 1995, the Companies moved to preclude the testimony of certain persons that Applicant identified during discovery as its witnesses, arguing that their testimony related to regionalization of the water system, which the Companies contended was beyond the gambit of this proceeding. Applicant opposed the motion and Staff took no position. On May 11, 1995, the ALJ denied the motion because it was premature to rule before the testimony was offered. The ALJ noted, however, that the relevancy of some of the testimony mentioned (such as the needs of nearby areas) was not clear because the Applicant did not apply to provide service outside of SWS' existing service area.

On May 1, 1995, the Companies requested that the ALJ direct that all expert testimony be prefiled. Applicant opposed the motion and Staff took no position. On May 11, 1995, the ALJ denied the request because the benefit of requiring it was not demonstrated.

On May 2, 1995, the Companies moved for a ruling that the Applicant's ability to provide for fair and equitable damages to persons or property resulting from the acquisition of the Companies' property is a substantive and significant issue for adjudication. Applicant opposed the motion and Staff took no position. On May 17, 1995, the ALJ ruled that such had already been determined to be a hearing issue, and that it would be adjudicated unless it could be resolved by other means. The ALJ indicated that a conference would be scheduled to attempt a resolution of the issue.

On May 3, 1995, the Companies moved for various relief regarding the admissibility of testimony on valuation of the Companies' assets. Applicant opposed and Staff took no position on the motion. On May 19, 1995, the Companies' motion was granted to the extent that an on-record conference would be convened to discuss the matter.

On May 8, 1995, the Companies moved for partial summary judgment in the form of a finding that the Applicant would not make any material changes or improvements to the existing water system; or in the alternative, a ruling that whether the Applicant had properly considered alternative sources of supply would be an issue for adjudication. Staff and Applicant opposed this motion. On May 23, 1995, the ALJ denied the motion because granting it would have the effect of either changing the application or overruling the Interim Decision. The ALJ also determined that an on-record conference was necessary because, due to statements that had been made by the parties, it was unclear that the Applicant proposed a mere takeover of an existing system.

On May 31, 1995, in a conference call, the parties agreed that the on-record conference on the above-mentioned matters would take place June 14, 1995.

On June 5, 1995, the Applicant filed a motion with the NYSDEC Commissioner for leave to appeal the December 5, 1994 Rulings of ALJ Dickerson and for review of the February 23, 1995 Interim Decision which held that an adjudicatory hearing was needed on the issue of public necessity and that further inquiry was needed on the ability of the Applicant to provide payment of legal damages. Among its motion papers, Applicant submitted an Updated Master Plan (the "UMP"), which it indicated was in support of both its application and its appeal. Applicant requested that the hearing be cancelled and that it be issued the permit drafted by Staff. On June 7, 1995, Chief Administrative Law Judge Daniel Louis advised that the Commissioner would entertain the appeal, and that the previously scheduled conference would take place.

On June 7, 1995, the Applicant moved for an order pursuant to CPLR 2304 quashing subpoenas duces tecum served by the Companies on certain officials, claiming they were improper under CPLR 2307 and that they were overbroad. The Companies opposed and Staff took no position on the motion. On June 22, 1995, the ALJ denied the motion finding that Applicant had no standing to challenge the subpoenas since no right of Applicant was affected, that CPLR 2307 did not apply, and that Applicant's prior statements and compliance with the subpoenas by two persons demonstrated they were not overbroad.

On June 14, 1995, at NYSDEC Headquarters, the ALJ conducted the previously scheduled pre-hearing conference in order to clarify the application, to attempt settlement of the issue regarding Applicant's provision for damages, and to determine the extent to which testimony on the value of the Companies' assets would be admissible. At the conference, the Applicant indicated that it wanted to acquire the SWS water supplies and system for the purpose of regionalizing it in the manner described in its UMP. The application had not expressly stated this intent. To further clarify or correct the application, the Applicant noted that the transmission line mentioned in the application's project description was no longer proposed. Following the conference, the ALJ advised the Parties that no further action would be taken until after the NYSDEC Commissioner determined Applicant's pending June 5, 1995 motion.

On September 11, 1995, the NYSDEC Commissioner denied Applicant's June 5, 1995 motions (to cancel the hearing and be issued the permit) and remanded the matter back to the ALJ for a hearing on the matters of provision for damages and public necessity. Noting the Applicant's plans to regionalize the Companies' system (including an interconnection with the Saratoga Glen Hollow water system), the Commissioner held:

"The question of "public necessity" under 15-1503(2) of the ECL is intended to take into account the proposed use of the water supply resource. Here, the question of "public necessity" should evaluate the use of the resources currently used by the Companies, for the Authority's proposed utilization, including incorporation of the resource into the Authority's plans. The Companies assert, among other things, that reliability of supply to its existing customers will be adversely affected. To this extent, for example, an issue for hearing on the issue of "public necessity" remains open."

On September 15, 1995, the ALJ conferred with the parties' counsel via telephone conference call, and scheduled another pre-hearing conference to determine the status the "necessity" and "damages" issues in light of the NYSDEC Commissioner's ruling. This conference took place at NYSDEC Headquarters on September 21, 1995. Subject to an opportunity by the Companies to further consider the matter (which expired September 28, 1995 without comment), the parties agreed that the "damages" issue could be resolved with permit conditions in the manner discussed on the record that date.

On September 27, 1995, the Companies moved for an order that either the UMP be made part of the application or not be considered at all, that NYSDEC comply with the ECL's requirements governing applications (if the application were amended to incorporate the UMP), and that Saratoga Glen Hollow Water Supply Corporation be given an opportunity to intervene in this proceeding. On September 29, 1995, the Companies moved for an order adding as issues to the hearing (a) whether applicant considered other sources of water supplies, (b) whether the supply will be adequate to meet the needs of the proposed service area and (c) whether the proposed project is just and equitable to all affected municipalities. The Applicant and Staff opposed these motions.

By Ruling and Orders dated October 5, 1995, the ALJ denied the Companies' motions, noting that the NYSDEC Commissioner's September 11, 1995, Ruling indicated that the UMP should be received in evidence, and that the Applicant had not yet requested a permit to modify the SWS system. Since the UMP was to be considered, the ALJ described the "public necessity" issue as follows: "Would the resource, currently designated to serve only the needs of a portion of Luther Forest, be put to better use by "regionalizing" it in the manner described in the Applicant's UMP?" The ALJ ordered that the hearing would be focused on evidence that would "test the prudence and rationality of the UMP with regard to the proposed takeover of the Companies' supply and system from the standpoint of water resource use and water supply engineering." Regarding the specific issues proposed by the Companies in their September 29, 1995 motion, by letter of October 19, 1995, following a request for clarification from the Companies, the ALJ stated that the issues would be considered only to the extent that they fit the question of "whether the UMP is conceptually prudent and rational from the standpoint of water resource use and water supply engineering."

The adjudicatory phase of the hearing was subsequently scheduled and took place at the Malta Town Hall on November 17, 27, 29 and 30; and December 5-7, 1995. Applicant and the Companies appeared by their aforementioned counsel. Staff appeared by Randall C. Young, Esq. Applicant called as witnesses James D. Ryan and Deirdre J. Hancock, both Professional Engineers associated with Clough, Harbour Associates, engineers for the Applicant. The Companies moved for summary judgment at the conclusion of Applicant's case. This motion was reserved upon. The Companies called as witnesses Benjamin Richards, PE, and Eric L. Hanson, professional geologist. Staff called as its sole witness Michael D. Holt, PE. The hearing concluded December 7, 1995, with closing arguments. The record was closed December 20, 1995, upon receipt of the final volumes of the stenographic transcript.

HEARING ISSUE

Is the proposed project justified by public necessity? (ECL 15-1503(2)).

SUMMARY POSITIONS OF THE PARTIES

The Applicant seeks a permit to acquire SWS' water supplies and system. Applicant contends its proposed regional water supply system will serve the best interests of Saratoga County better than the many existing private water companies such as SWS. Applicant contends that its plans and ownership of resources will "optimize" existing resources and better protect them from "mining" i.e., taking water from a resource faster than the resource is replenished. and pollution. Applicant's long term plan is to develop the Upper Hudson River in the northern part of the County as a water supply source. However, the greatest number of people are located in the southern part of Saratoga County. Applicant sees SWS, in the southern part of the county, as one of the first building blocks of its coordinated regional water supply system.

Applicant's master plan calls for the SWS system to be combined with the neighboring Saratoga Glen Hollow system. The excess reserve capacity of the combined system will be used to supply the needs of other areas near by, notably the Village of Round Lake, the Malta Water Supply District of the Clifton Park Water Authority, the Exit 12 area of Interstate 87, and Northwood.

Staff supports the application, agreeing that Applicant's plans will provide for greater utilization of the available water resource, allow for greater operational flexibility and increased reliability, allow higher quality water to be delivered to Round Lake and Northwood, and make regulatory oversight easier.

Staff points out that the proposed interconnection of the SWS and Saratoga Glen Hollow systems is feasible from an engineering standpoint. Staff asserts that Applicant's ownership of both the SWS and Saratoga Glen Hollow systems would "virtually guarantee" that the water resource would be used in the most prudent manner possible because the systems would no longer be competitors and because Applicant has a statutory responsibility to serve the public's best interests. Staff contends that implementation of the master plan's Phase IA will allow for greater operational flexibility and provide additional alternatives in cases of drought, fire or emergency, because the individual systems could rely on each other in addition to their own resources. The Department considers a regional approach as inherently better than and preferable to the alternative of many individual and potentially competing uses of the same water supply resources.

The Companies argue that the "optimization" of the resource that Applicant speaks of is nothing more than a "slight of hand trick" that will deplete the existing capacity available to serve existing customers. They note that Applicant's perceived benefits rely upon presumptions that Applicant will not only acquire the neighboring system, but also acquire an increase in that system's authorized taking. The Companies contend that Applicant's information is insufficient to show that the aquifer is capable of supporting such a use, but does show that the combined system will be incapable of meeting average and maximum day demands, violating sound principles of water supply management and engineering.

The Companies also argue that the areas Applicant proposes to serve already have sufficient water supplies and do not need the water supplies used by the Companies. They contend there are no deficiencies in the Companies' service area, nor in the area it is to be combined with. They argue that the Clifton Park Water Authority currently has excess capacity and that the Village of Round Lake and Northwood subdivisions already have enough water and meet water quality requirements. With regard to these last two areas, the Companies point out that the Applicant plans to abandon their existing supplies. The Companies claim that Applicant has not identified any specific deficiency to justify acquisition of the Companies' supplies, and argue that because no deficiency was identified, the acquisition plan is imprudent and irrational.

FINDINGS OF FACT ("FF")

The proposed project:

1. The Applicant, Saratoga County Water Authority, proposes to acquire, operate and service the existing water supplies, distribution system and service area of Saratoga Water Services, Inc. (SWS), to make them part of a regional water supply system that would serve the needs of a growing Saratoga County. (Exhibits 2A, 2B, A-1, A-2, A-3; Transcript of 6/14/95 conference).

Applicant's plans for a regional water supply system:

2. The details of Applicant's plans for a regional water supply system are set forth in its 1990 Intermunicipal Water Supply Study, that study's Executive Summary, and Applicant's May 1995 Updated Master Plan (UMP). Applicant intends to acquire a number of existing private water companies and connect their systems with each other and with existing municipal systems to form a regional system. Applicant would own and operate the currently private systems it acquires. The existing municipal systems would remain owned and operated by the municipalities. Applicant would sell and buy water to and from interested municipalities. This regional system is planned to eventually include a new water supply source from the Hudson River. More immediately, however, the Applicant intends to redistribute water from where there may be an overabundance to places expressing a need. Applicant will make an application to NYSDEC each time it decides to take a specific action to implement its plan when the action requires NYSDEC approval. (Exhibits A-1, A-2, A-3; Transcript of 6/14/95 conference).

General Benefits of Regionalization:

3. The interconnection of systems would result in "redundancies" and greater reliability of service in the sense that should there be a failure in one place (e.g., a well pump breaks down), facilities elsewhere may be called upon for service. Such "redundancy" would make it possible to comply with generally accepted engineering practices known as the "Ten States Standards" The standards were developed by the Water Supply Committee of the Great Lakes-Upper Mississippi River Board of Public Health and Environmental Managers, which has representatives from 10 states, including New York, plus one Canadian province. (Exhibit A-22) with fewer facilities (e.g., back up wells) than would be required if systems remained unconnected, meaning there would be potential cost savings.

4. The interconnection of systems offers an opportunity to "optimize" use of the water resources in the sense that water could be moved from where there may be excess to where there may be a need. Furthermore, after interconnections are made, given the "redundancies" noted above, it will be possible to use existing facilities to serve greater demands. For example, wells needed as "back ups" for peaks in demand and to cover the failure of another well, would become available after interconnection to serve the average day demand for water, assuming the aquifer is capable of sustaining this use.

5. Replacement of a multiplicity of private water purveyors with one county-wide authority would reduce the number of parties controlling the county's water resources, offering the potential for administrative efficiency through elimination of duplicative effort (i.e., potentially reducing the cost of providing service), and making regulatory oversight easier.

The water supplies and system Applicant proposes to acquire:

6. SWS currently holds NYSDEC Water Supply Permits with issuance dates as follows (Exhibits 4A through 4F):

(a) WSA No. 6918 11/16/78

(b) WSA No. 6918 Modification 6/29/92

(c) WSA No. 7014 7/7/81

(d) WSA No. 8745 7/1/92

(e) WSA No. 8944 9/30/94

(f) WSA No. 9225 5/10/95

These permits define the water supplies and system that Applicant proposes to acquire. The system includes wells, pumps, water mains, and storage tanks.

7. SWS' permits authorize the "taking of 342 gallons per minute from wells PW-1, PW-2, PW-3, PW-4 and PW-6 ..." (Exhibit 4B p 1 of 6; also known as the "Knapp Road Wells"), and also authorize SWS to "take an additional supply of water for use in the existing system through the installation of Well No. 7 (PW-7) having a capacity of 471 gpm. The total supply capacity from all approved sources is 813 gpm." (Exhibit 4D, p 1 of 6; PW-7 also known as the "Cold Spring Road Well"; "gpm" means "gallons per minute").

8. In both the original permit issued to SWS in 1978, and the modification issued in 1992, the Department determined that "[u]ltimate water supply needs are estimated to average 525,000 gallons per day" (Exhibits 4A and 4B), which translates to approximately 365 gallons per minute. For comparative purposes, flow numbers have been converted to gallons per minute. This was with reference to the entire Luther Forest development, as then proposed.

9. SWS' permits authorize SWS to provide water to a particular area located within the Town of Malta as shown on a map filed with the Department entitled "Service Territory of Saratoga Water Services, Inc." dated November 15, 1994 and prepared by Benjamin F. Richards, Jr. (Exhibit 4F, p 3 of 4). (For convenience in this Report, this service area will be called "Luther Forest," although the service area may or may not coincide exactly with what is commonly known as Luther Forest.)

10. SWS currently owns and operates the water supplies and distribution system described in its permits with the exception of well PW-7 which is owned by the Luther Forest Corporation. Well PW-7 is the newest well in the SWS system and is in a different aquifer formation from the other wells in the system. (Exhibits 4A-F; Transcript p 364)

11. There is no dispute that the SWS system currently meets the "Ten States Standards" and that it meets Luther Forest's need for water. In this regard, the total developed groundwater source capacity equals or exceeds the maximum day demand, and equals or exceeds the average day demand with the largest producing well out of service; a minimum of two sources of groundwater are provided; and there are two different electric power sources to operate the system.

Applicant's plans for SWS:

12. Applicant perceives there is an overabundance of water supply capacity (what it calls "excess source capacity") on the SWS system and on the neighboring Saratoga Glen Hollow (Glen Hollow) system. As proposed in its UMP, Applicant intends to combine these systems (including their service areas), take what it considers to be their existing "excess capacities" plus additional "excess capacity" it contends would result from combining the systems (explained below), and sell this "excess" to other areas, outside these systems' existing NYSDEC-designated service areas, which have expressed an interest in obtaining water from the Applicant. (Exhibits A-3, A-21).

13. Applicant points to the "Ten States Standards" as being the basis for its conclusions that the SWS and Glen Hollow systems are each capable of supporting greater demands, and that combining the systems will allow serving an even greater demand than separate systems. Applicant relies on the particular provisions which require that the total developed groundwater source capacity shall equal or exceed the design maximum day demand, and equal or exceed the design average day demand with the largest producing well out of service. (Exhibits A-3, A-22)

"Excess" capacity of the SWS system to serve average day demand elsewhere:

14. Based on the "Ten States Standards" and its NYSDEC-approved capacities, the SWS system is capable of serving an average day demand of up to 342 gallons per minute. This number is derived from the 813 gpm total capacity authorized by the permits, and subtracting the 471 gpm capacity of SWS' largest well.

15. Applicant asserts that the SWS system has 139 gpm "excess source capacity" which could be used to serve average day demand elsewhere. Applicant's engineer estimates that the average day demand on SWS at "build-out" of its NYSDEC-approved service area will be 292,064 gallons or approximately 203 gallons per minute. This number is derived from the actual average day demand on SWS during 1990-1994 of 242,764 gallons, plus an estimated average day demand of 49,300 gallons for identified new users. (Hereinafter, an average which accounts for these new users will be called an "adjusted" average). (Exhibits A-3 Tab 2 Attachment D, and A-21; Transcript p 597). Subtracting the adjusted average of 203 gpm from the 342 gpm average that SWS is capable of serving yields the 139 gpm difference which the Applicant characterizes as "excess source capacity." (Exhibit A-20).

16. Applicant's characterization of the 139 gpm difference as "excess" that could be distributed elsewhere is erroneous because it presumes that the 1990-1994 adjusted average day demand of 203 gpm will not be exceeded. However, such demand has already been exceeded on an annual basis, and it can be expected to be exceeded in the future. The actual average day demand for all of 1991 was 266,104 gallons. Making the same adjustment as above to make the numbers comparable (i.e., adding 49,000 gallons for the identified new users) yields an adjusted average day demand of 315,404 gallons or 219 gpm for 1991. (Exhibits A-3 Tab 2 Attachment D) In a 1992 study, Applicant's engineer estimated that Luther Forest would require 378,000 gallons per day (or 262 gpm) by the year 2013 (Exhibit A-4 Table No. 6). When the Department issued SWS' original permit in 1978, and when it modified the permit in 1992, the Department estimated that Luther Forest ultimately would need an average of 525,000 gallons per day (or 365 gpm).

17. Given the adjusted actual and estimated average daily demands noted in the Finding above which exceed Applicant's estimate of 203 gpm, prudence dictates that the SWS system be regarded as not having any "excess source capacity" available to serve average day demand elsewhere.

"Excess" capacity of the existing Glen Hollow system, and of a combined SWS/Glen Hollow system, to serve average day demand elsewhere :

18. Applicant asserts that the existing Glen Hollow system has a 73 gpm "excess," and a combined SWS/Glen Hollow system would have an additional 200 gpm "excess." These assertions are based on an assumption that the existing source capacity at Glen Hollow is 350 gpm. Again, Applicant would use the "excess" to enable it to supply needs beyond Luther Forest and the Glen Hollow service areas (Exhibits A-20, A-21).

19. The Glen Hollow supply consists of two wells, 100 feet apart, which are within the same "Cold Springs Road Well Field" as SWS well PW-7 (approximately 900 feet away) and Saratoga Pine Ridge Townhomes well SR-1 (approximately 1200 feet away). NYSDEC permitted Glen Hollow a "total approved average water supply capacity" of 111,000 gallons per day (or approximately 77 gpm) from its wells. (Exhibits A-12; A-14-A; Transcript 1049)

20. Applicant's assertion that the existing Glen Hollow system has 73 gpm "excess" was derived by taking the assumed total capacity of 350 gpm and apportioning 150 gpm to one well and 200 gpm to the second well. With this apportionment, the "Ten States Standards" would disregard the capacity of the larger well and allow the system to serve an average day demand of 150 gpm, or 73 gpm more than the 77 gpm currently permitted by NYSDEC (hence the asserted 73 gpm "excess"). (Exhibits A-19, A-20, A-21)

21. Given Applicant's assumption and under the scenario proposed in Applicant's UMP, if the Glen Hollow and SWS systems were combined, the "Ten States Standards" would allow the equivalent of Glen Hollow's entire assumed 350 gpm capacity to be used to serve average day demand. This is because SWS' largest well (471 gpm capacity) is larger than Glen Hollow's largest well (200 gpm capacity). "Ten States Standards" require that the total developed groundwater source capacity shall equal or exceed the design average day demand with the largest producing well out of service. The calculation comparing capacity and demand for the combined SWS/Glen Hollow system would be made leaving its largest well (i.e., SWS' 471 gpm well) out of service. As independent systems, however, the calculation would have to be made separately for each system, meaning that two wells (SWS' 471 gpm well plus Glen Hollow's 200 gpm largest well) would both have to be considered out of service. Combining the SWS and Glen Hollow systems would enable the existing resources to serve a greater average day demand equal to the capacity of the smaller of the two largest wells, yet still comply with the "Ten States Standards." In other words, given Applicant's assumption, the capacity of Glen Hollow's largest well, 200 gpm (which can be thought of as being held in "reserve" for as long as Glen Hollow is a separate system), could be relied upon to serve average day demand if Glen Hollow were to be combined with SWS.

22. Applicant's assumption of a 350 gpm source capacity at Glen Hollow is based on statements contained in a report that had been part of Glen Hollow's permit application, which was prepared under the supervision of Eric L. Hanson (Exhibit A-14-A, hereinafter, the "Hanson report"). The Hanson report stated that the aquifer is capable of supporting well yields in excess of 350 gpm on a long term basis (i.e., in excess of 365 days). With regard to a particular well being discussed (Glen Hollow well PW-1), the Hanson report also stated that data indicated long term well yield capability of 650 gpm or greater. (Exhibit A-14-A, p.1)

23. Applicant's reliance on the Hanson Report is misplaced. It has not been established that the aquifer can support the increased intensity of use inherent in Applicant's assumption that it can depend on a 350 gpm capacity from Glen Hollow. The Hanson report recommended that a "well field, constant rate aquifer pumping test should be performed if a rate higher than 350 gpm is required on the three principal production wells in the local aquifer system for a minimum of 72 hours." The three wells referred to were Glen Hollow PW-1, SWS PW-7 and Saratoga Pine Ridge SR-1. (Exhibit A-14-A, p. 2). It is noted that SWS PW-7 has a capacity of 471 gpm (Exhibit 4D), and Saratoga Pine Ridge SR-1 can pump at 50 gpm (Exhibit A-14-A p. 2). Mr. Hanson testified that his report could not be relied upon in the manner that Applicant has done. The purpose of his report's analysis was to develop a groundwater supply capable of being used for the proposed Saratoga Glen Hollow Development, not to assess the maximum aquifer yield. The report's analysis of test results was based on an assumption that the systems drawing on the aquifer would be separate systems, not combined. Hanson testified that conclusions about the capability of the aquifer to support Applicant's proposed use require further testing, including a 72 hour or longer test being conducted on the well or on the aquifer with all wells being produced at their maximum yield. Hanson testified that it would not be prudent to take a portion of the existing reserve and increase the average day demand without first conducting such a test. (Transcript 1048 - 1055)

The "need" Applicant would serve:

24. Using its perceived 412 gpm "excess" within a combined SWS/Glen Hollow system [i.e., 139 gpm from SWS, 73 gpm from Glen Hollow, and 200 gpm from the combination], plus another 117 gpm it intends to purchase from the Village of Ballston Spa, the Applicant identified the following average day demands outside the SWS/Glen Hollow service areas that it plans to serve (see Exhibits A-21; A-15):

Applicant Rate
Village of Round Lake 101 gpm

Malta Water Supply District No. 1 (Clifton Park Water Authority)
(consisting of Collamer Drive 8.5gpm Northway Estates 17gpm Shops of Malta (2 phases) 9gpm Parade Ground Village 5.9gpm)

139 gpm
Northwood Water Company 38 gpm
Total 319 gpm

Applicant also proposes to serve "[o]ther developments and communities within Saratoga County as needed." (A-3, p. 15)

25. The Village of Round Lake currently meets its water supply needs from a spring fed surface reservoir with a NYSDEC approved capacity of 139 gallons per minute. This system is operating on a year-to-year variance of a federal (1986 amendment to the Safe Drinking Water Act) filtration requirement. Applicant proposes to supply water to Round Lake, to enable the village to abandon its surface supply and avoid filtration. In a draft report, the village's engineer presented several water supply alternatives (including the village purchasing water from the Applicant), and recommended that the village consider purchasing water from the Clifton Park Water Authority (Clifton Park) rather than from the Applicant. In this regard, the engineer noted that Clifton Park was willing to sell water, and that there were logistic advantages to such an arrangement. There is already a connection between Round Lake's water system and that of Clifton Park. (Exhibits A-1 pp 155-157; A-3 p 6-7; A-17 pp 4, 5, 9; Transcript pp 257-259, 342-343, 474, 520-521). If Applicant is able to sell water to Round Lake, it would give Round Lake an alternative to filtering its current supply (assuming variances will end). Although the village engineer's draft report presents purchasing water from the Applicant as an alternative under consideration, it neither states nor implies that filtration is unfeasible.

26. The needs of the Malta Water Supply District No. 1 (Malta) are currently being met by Clifton Park. Applicant proposes to sell water to Clifton Park for use in Malta so that Clifton Park could serve "other users" within the Town of Clifton Park. (Exhibit A-3 p 15). NYSDEC requires Clifton Park to serve Malta as part of Clifton Park's water supply permit. (Transcript 1309-1310). Clifton Park expects to have several new sources of water supply placed on line by late winter 1996 that will increase Clifton Park's capacity to more than the amount Clifton Park considers necessary for "optimal performance" even under the conditions of the 1995 drought. (Exhibit C-3).

27. The Exit 12 area is currently supplied by a combination of private wells and private water companies and distribution systems (Exhibit A-6 p 2, A-3 p 12). Assuming these needs are not currently met, the need to take water from any SWS/Glen Hollow "excess" is not apparent since Applicant proposes to make Ballston Spa water available to the Exit 12 area (Exhibits A-6 p 3, A-15 p 20, A-21; Transcript p 292), and Applicant indicates Ballston Spa could sell quantities far exceeding the amount Applicant says Exit 12 needs.

28. The Northwood Water Company currently meets its water supply needs from its three Laurel Acres wells which have a NYSDEC approved capacity of 80 gallons per minute, plus another facility. Although NYS Health Department limits for nitrates were exceeded when only the first two Laurel Acres wells were used, the blending of water from the third well has brought the finished water's nitrate levels into compliance with the limits. (Exhibit A-7 pp 2-3). Applicant proposes to supply water to Northwood, to enable Northwood to abandon its existing sources. (Exhibit A-21; Transcript p 288).

Summary Findings:

29. Applicant has shown in concept that there are benefits to combining smaller water systems into a regional water system.

30. With regard to this specific project, Applicant proposes to acquire Luther Forest's water supply to enable Applicant to sell some of Luther Forest's water to other areas as a substitute for water supplies currently available to them.

31. Applicant has not shown that Luther Forest's water supply is capable of meeting the demands of these other areas in addition to its own.

32. Applicant has not shown that the water supplies currently available to these other areas cannot meet the demands of these areas.

DISCUSSION

The desirability of regional water resources planning has long been recognized (see ECL Article 15 Title 11, "Local and Regional Water Resources Planning and Development" derived from the Conservation Law of 1911). The legislature more recently recognized the need for statewide planning by enacting ECL Article 15 Title 29, "Water Resources Management Strategy" in 1984, in which the NYSDEC was directed to inventory water resources and develop strategies for managing them. This directive resulted in NYSDEC's January, 1989, publication of the "New York State Water Resources Management Strategy." On page III-27 of that document, "Establish regional water supply systems and interconnections where feasible" was identified as an agency objective, and Saratoga County was identified as a location where an opportunity for regionalization existed. This document was not made part of the record herein, and the ALJ is not taking "official notice" of it because his determinations do not rely upon it. It is noted for the Commissioner's reference as a prior statement of agency policy should he desire to solicit input on it from the parties herein before rendering a decision. As stated above in Findings of Fact 3, 4 and 5, benefits will flow from the acquisition and combining of small private water systems into a regional system.

This hearing, however, was not about the desirability or need for regional water resources planning and a regional water supply system for Saratoga County. These things have already been found to be worthy endeavors by those who are charged with and responsible for making such decisions. Rather, the hearing was about whether or not there is a public necessity for Applicant to acquire a particular water supply and system, specifically: Luther Forest's water supply and system.

The "public necessity" requirement is found in ECL 15-1503(2). "Public necessity" under this law relates to the public's need for the particular water supply proposed, and encompasses the conflicting water supply interests among competing private, corporate or municipal bodies. See Ton-Da-Lay v Diamond, 44 AD2d 430, 435 (3rd Dept., 1974). In the specific context of this case, the Commissioner already ruled that "the question of 'public necessity' should evaluate the use of the resources currently used by the Companies, for the Authority's proposed utilization, including incorporation of the resource into the Authority's plans." (September, 1995 Commissioner's Ruling).

As I noted in my October 5, 1995 Ruling, "[i]n the context of this case, the "public necessity" issue appears to be the following: Would the resource, currently designated to serve only the needs of a portion of Luther Forest, be put to better use by "regionalizing" it in the manner described in the Applicant's UMP?" Obviously, in considering this question the need of Luther Forest for this supply is to be weighed against the needs of the region for the same supply. Here the law is clear: NYSDEC as successor to the Water Power and Control Commission must exercise just and fair supervision to the end that water supplies which are more available for use by one community are not absorbed by another. City of Syracuse v Gibbs, 258 AD 405 (1940), rev'd on other grounds 283 NY 275.

The Findings of Fact evaluate the current and proposed uses of Luther Forest's water supply and system. In its barest essence, Applicant proposes to acquire Luther Forest's water supply to enable Applicant to sell some of Luther Forest's water to other areas as a substitute for water supplies currently available to them (FF 30). Yet, Applicant has not shown that Luther Forest's water supply is capable of meeting the demands of these other areas in addition to its own Luther Forest's need for the supply was already established when the original permit was granted in 1978. (FF 31). Nor has Applicant shown that the water supplies currently available to these other areas cannot meet those areas' demands (FF 32) (i.e., the other areas haven't been shown to "need" Luther Forest's water). All that Applicant has shown are the general benefits that flow from its regionalization concept (FFs 3, 4, 5, 29), ones that would be difficult for anyone to deny.

Given that "public necessity" is the public's "need for the particular water supply," the "public necessity" for Applicant to acquire Luther Forest's supply has not been shown, at least in the sense such terms were used in Ton-Da-Lay, above. It is upon this definition of "public necessity" that I recommend that the permit be denied. It is noted that the Companies' motion for summary judgment is still pending. With the exception of some clarifying details brought out in the Companies' and Staff's cases (none of which changed the thrust of the findings), the Findings of Fact essentially represent the state of the Record as it was at the close of Applicant's case when the Companies' moved for summary judgment. Based on my interpretation of "public necessity" as explained above, the Applicant did not make a prima facie case, and it is unnecessary to make findings based on evidence submitted during the Companies' direct case. I note, however, that the Companies presented evidence which tends to indicate that there are abundant water resources in the area with a potential to be turned into water supplies. This information would further undermine the claim that Applicant "needs" to acquire Luther Forest's supplies to serve growth in the region.

Nevertheless, what constitutes "public necessity" is to some degree a matter of the Commissioner's discretion. The courts must accept the Commissioner's determination of what constitutes "public necessity" unless it is irrational or unreasonable. Town of Hempstead v Flacke, 82 AD2d 183 (2nd Dept., 1981). Even the Ton-Da-Lay court was hesitant to confine itself to strictly the definition it had given. see Ton-Da-Lay, above, at the bottom of 435 where the court, attempting to define public necessity, states: "Although this term may well encompass more than the conflicting water supply interests among competing private, corporate or municipal bodies ..." (underline supplied) Given the general benefits associated with regionalization set forth under FFs 3, 4, and 5, I cannot say that it would be unreasonable or irrational for the Commissioner to find that there is a "public necessity" for the Applicant to acquire Luther Forest's water supply in order to obtain such general benefits. The rationale for doing this would have to be clearly set forth, since no prior determination of "public necessity" based on such generalized benefits has been brought to my attention and I have not found any such precedent.

CONCLUSIONS OF LAW

  1. By issuing at various times, between November, 1978, and May, 1995, the permits currently held by SWS, the Department, pursuant to ECL 15-1503 (2), effectively determined that SWS' "taking of 342 gallons per minute" from the Knapp Road Wells plus an additional supply from well PW-7 for use by Luther Forest in accordance with the permits: (a) was justified by public necessity, (b) took proper consideration of other sources of supply that were or might become available, (c) would be properly protective of the supplies, (d) was just and equitable with respect to all affected municipalities and their inhabitants with particular with regard to their present and future needs for sources of water supply, and (e) that the supplies were adequate for the taking.
  2. Applicant's regional plan would change the taking of water that NYSDEC authorized to SWS by taking a portion of the water found to be needed by Luther Forest and distributing it elsewhere.
  3. The record indicates that the original taking is still needed by Luther Forest to the full extent of NYSDEC's authorization, and that this water is not needed elsewhere.
  4. Interpreting "public necessity" as being the "public's need for the particular water supply" (Ton-Da-Lay v Diamond, 44 AD2d 430, 435 (3rd Dept., 1974)), no public necessity for Applicant to acquire the SWS supply and system has been shown.

RECOMMENDATION

Applicant's application for a permit to acquire the Companies' supplies and system should be denied.

_____________/s/_____________
Frank Montecalvo
Administrative Law Judge (ALJ)

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