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Saratoga Water Services, Inc. - Decision, October 15, 1997

Decision, October 15, 1997

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1010

In the Matter

- of the -

Application of SARATOGA WATER SERVICES, INC. For a
Water Supply Permit pursuant to Environmental Conservation Law
Article 15 and Title 6 of the Official Compilation of Codes,
Rules and Regulations of the State of New York, Part 601

DEC Project No. 5-4152-00073/00001

DECISION

October 15, 1997

Decision of the Commissioner

ALJ Montecalvo's attached Hearing Report is adopted as the Commissioner's decision in this matter, subject to the following comments. The Commissioner's April 1996 decision to issue a water supply permit to the Saratoga County Water Authority (SCWA) to acquire Saratoga Water Services, Inc. (SWS), the applicant herein, does not preclude approval of SWS' water supply application in this proceeding. Granting SWS' application is in the public interest for the reasons given by the ALJ.

Accordingly, Staff is directed to process and issue the requested permit, with appropriate conditions, including those requested by the Department of Health, consistent with the determination herein.

For the New York State Department
of Environmental Conservation
/s/
By: John P. Cahill, Commissioner

Albany, New York
October 15, 1997

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
Office of Hearings and Mediation Services
50 Wolf Road
Albany, New York 12233-1550
Tel. 518 457-3468

In the Matter of the Application of

Saratoga Water Services, Inc.

for a Water Supply Permit pursuant to
Environmental Conservation Law Article 15 and
Title 6 of the Official Compilation of
Codes Rules and Regulations of the State of New York,
Part 601

DEC Project No. 5-4152-00073/00001

HEARING REPORT

-by-
__________________________________
Frank Montecalvo
Administrative Law Judge

THE PROPOSED PROJECT and PERMITS SOUGHT

Saratoga Water Services, Inc. , P.O. Box 2109, Malta, NY 12020 (the "Applicant" or "SWS") seeks a Water Supply Permit from the Department of Environmental Conservation (the "Department" or "DEC").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, Title15, (Water Supply), and Article 8 (State Environmental Quality Review); and 6 NYCRR Parts 621 (Uniform Procedures); 624 (Permit Hearing Procedures); Part 601(Water Supply Applications); and Part 617 (State Environmental Quality Review).

The Applicant proposes to extend its existing service territory to provide potable water to 14 residential units, a golf course clubhouse and maintenance building, and for irrigation of the golf course. The new area to be served would be located near the intersection of Lake Road and NYS Route 9P, Town of Stillwater, Saratoga County, N.Y.

PROCEEDINGS

The application was initially filed June 20, 1996. Following the submission of other documents, DEC Region 5 Staff ("Staff") issued a Notice of Complete Application ("NOCA") on December 18, 1996. During the time the Applicant was submitting other documents, the Saratoga County Water Authority (the Water Authority) wrote August 1, 1996, to object to permit issuance.

On January 29, 1997, Staff denied Applicant's request for the permit, alleging that it failed to meet the requirements of 6 NYCRR 601.6(b)(1), (2), and (6), based upon Staff's determinations (a) "that the use of 86,000 gallons per day of potable water for golf course irrigation is not justified by public necessity," (b) "that other sources of water supply for golf course irrigation have not been properly considered," and (c) "that the use of potable water for golf course irrigation is not just and equitable to the future needs of the Saratoga Water Authority whose Master Plan includes servicing this area." (See Exhibit 3B.) Applicant subsequently requested a hearing on the denial.

On April 11, 1997, the DEC Office of Hearings and Mediation Services received Staff's request to schedule a public hearing, and Frank Montecalvo was assigned as the Administrative Law Judge ("ALJ") who would hear the matter.

A combined Notice of Complete Application and Notice of Public Hearing (the "Notice") was issued April 23, 1997, and was published April 30, 1997, in DEC's Environmental Notice Bulletin, and the (Schenectady) Daily Gazette. The Notice was also directly mailed on April 23, 1997, to the supervisor of the Town of Stillwater, the clerk of Saratoga County, the counsel for the Water Authority, as well as to other persons or entities deemed interested in this proceeding. The Notice scheduled a public hearing and issues conference, required that petitions to intervene be filed by May 22, 1997, and required that written comments be received by the ALJ prior to or at the hearing. The Notice also indicated Staff's tentative determination to deny the permit.

In response to the Notice, requests to intervene were received from the Water Authority, the City of Mechanicville and Town of Stillwater Industrial Development Agency (IDA), the Town of Stillwater (Stillwater), and the New York State Department of Public Service (DPS).

As advertised in the Notice, the public hearing was convened at 7:00 PM on May 27, 1997, at the Stillwater Town Hall, 66 East Street, Mechanicville, NY 12118. Including representatives of Staff and Applicant, 12 persons commented on the proposed project. With the exception of Staff, which reiterated its reasons for denying the permit, all other statements were in favor of the proposed project. The Water Authority did not comment at this session. The statements presented are summarized in Appendix A, "Summary of Public Concerns."

The Issues Conference was convened at 9:30 AM, May 28, 1997, at the same location as the public hearing. DEC Staff was represented by Steven L. Brewer, Esq., Assistant Region 5 Attorney. The Applicant was represented by Roland, Fogel, Koblenz and Carr, LLP; Usher Fogel, Esq., of counsel. The Water Authority appeared through Tabner, Ryan and Keniry; John W. Tabner, Esq., of counsel. The IDA appeared through George W. Cregg, Sr., Esq., Agency Counsel. Stillwater appeared by Andrea J. DiDomenico, Esq., Town Attorney. The DPS appeared by David R. Van Ort, Esq., Assistant Counsel. Potential hearing issues and participation were discussed, and agreement was reached on what the issues were and how they would be developed. A description of what took place at the Issues Conference and the events leading to the June 13, 1997 ALJ Rulings and Scheduling Order, and the July 7 and July 11, 1997 modifications to same, is contained in those documents and not repeated here. Essentially, party status was granted to all petitioners (except for DPS, which withdrew), and three issues were identified for adjudication as follows:

  1. "What is the effect of the Commissioner's April 1996 decision (to issue a permit to the Water Authority to acquire Applicant's water supply source and system) on this application's proposal to use potable water on a golf course, and does this application meet the test of public necessity?"
  2. "Is it more reasonable to irrigate the golf course from on-site wells or from Saratoga Lake, as opposed to the Applicant's proposal?"
  3. "Does the third ground articulated in the January 29, 1997 denial i.e., "that the use of potable water for golf course irrigation is not just and equitable to the future needs of the Saratoga Water Authority whose Master Plan includes servicing this area."(Exhibit 3B) provide as a matter of fact and/or law sufficient basis to support denial of the permit?"

Issue II was the only factual issue in dispute, and was set down for an exchange of pre- filed testimony with an evidentiary hearing to follow at a later date. Issues I and III were identified as legal issues to be resolved on briefs, with the possibility that a factual dispute might arise on Issue III during the course of briefing (with factual disputes to be identified in the reply briefs).

By letter dated July 15, 1997, Staff notified the parties that on further review it had changed its position regarding the "reasonable alternatives" issue (Issue II, above), concluded that the Applicant had adequately evaluated alternatives, and, therefore, would not be submitting pre- filed testimony on such.

By letter dated July 17, 1997, in response to the ALJ's query, the Water Authority notified the parties that it, also, would not submit pre-filed testimony regarding the "reasonable alternatives" issue, but would raise as a question of law the ability of the Applicant to obtain access to Saratoga Lake by utilizing its powers under the Transportation Corporation Law and the Eminent Domain Procedure Law.

In accordance with the Scheduling Order as modified, briefs on the issues identified in the Rulings above were received on or before July 25, 1997, from the Applicant, Water Authority, IDA, Stillwater, and Staff. Briefs in reply were received on or before August 11, 1997, from the Applicant, Water Authority, IDA, and Staff. No one submitted pre-filed testimony, and no one contested any facts in reply briefs.

Because no pre-filed testimony was submitted and no facts were contested, Ruling 5 is made herein:

Ruling 5 -- Due to the absence of disputed facts, the evidentiary hearing contemplated by Ruling 3 made June 13, 1997, is canceled and the record is closed as of August 11, 1997.

This matter is now ripe for determination of the issues on the papers submitted. The documents considered are listed on the Exhibits List attached hereto as Appendix B.

SUMMARY OF THE PARTIES' POSITIONS

DEC Staff

Department Staff contends that the proposed use of 86,000 gallons per day of potable water for golf course irrigation does not meet the test of public necessity; and that the Commissioner's April 1996 Decision to issue a Water Supply Permit to the Water Authority to acquire SWS' water supply source and system precludes approval of the application. Noting the Commissioner's findings (i.e., that service areas beyond the Applicant's service area had a need for additional water, that the Water Authority's master plan offered a prudent and rational means of fulfilling the need, that supply problems would be addressed through long range planning and development of a unified system, and that the plan would provide a better balancing of the County's water supply needs) and the Water Authority's plan to combine SWS with the Saratoga Glen Hollow system, Staff concludes that the Commissioner "in essence dedicated the excess potable water supplies in the Applicant's service area for uses covered by the master plan." (See Exhibit 3E, Brief, p.8, emphasis supplied). Because the Applicant proposes to use a substantial amount of its "excess capacity" water for irrigation of the golf course, Staff argues that the "general public of Saratoga County covered by the master plan may be hurt by the proposed project because the potential exists that the [Water Authority] will not have sufficient capacity to implement its master plan." (See Exhibit 3F, Reply, p.4). Staff believes that a "threat of harm to the Applicant's water resources exists," because the use for irrigation "threatens to deplete potable reserves already needed by the [Water Authority] to implement its master plan." (See Exhibit 3E, Brief pp 7-8). Thus, Staff concludes that the proposed project is "inconsistent" with the master plan and the Commissioner's Decision, and therefore is not justified by public necessity.

For the same reasons, Department Staff also contends that the use of potable water for golf course irrigation is not just and equitable to the Water Authority and those municipalities and inhabitants covered by its master plan.

The Water Authority

The Water Authority contends that a portion of SWS' application [i.e., irrigating the golf course] warrants denial since it does not meet the test of public necessity. The Authority notes the reference in the April, 1996 Decision to the nearby areas which need water, and the finding that combining SWS' supplies with others and sharing as planned by the Water Authority would assure optimal service to Saratoga County. The Water Authority also notes SWS' efforts in court to defeat the Authority's takeover of SWS, and argues that "SWS is seeking as a last effort to reverse the decision by allocating all of its resources, to an area outside its present service area. It now seeks to expand use of its water supply in accordance with its plan rather than that of the [Water Authority]." Although some nearby residents and town officials support the application for reasons of tax revenues, economic growth and improvement of quality of life, "[s]upplying water to residents and businesses is a better demonstration of public necessity."(See Exhibit 5E, Brief, p.7). "In this instance the determination has been made that the UMP allocation is just and equitable. No evidence has been produced to furnish sufficient grounds to reverse such determination." ( Exhibit 5E, Brief, p. 8, emphasis supplied; "UMP" being the Updated Master Plan).

The Water Authority also contends that the "proposed use of potable water for the golf course is not just and equitable with regard to the future needs of the [Water Authority]'s plan." The Water Authority believes it has already proven in the proceeding on its permit that combining the SWS system with the Saratoga Glen Hollow system would create excess capacity available for use nearby. It argues that to permit SWS to use this resource "for purposes beyond the UMP, before any opportunity is given to implement it, is not just and equitable, since its effect would undo years of work and deprive areas in need of potable water from access to it." (Exhibit 5E, Brief, p. 9). With regard to claims that its plan may not be just and equitable to Stillwater or the City of Mechanicville, the Water Authority notes their having not appeared in the prior DEC proceedings on the Water Authority's permit to acquire SWS, nor in any of its own proceedings, even though these proceedings were publicly noticed; and also notes that the Water Authority's master plan discusses their needs.

While acknowledging that it elected not to submit pre-filed testimony on the "reasonable alternatives" issue, the Water Authority claims that facts, as a matter of public record, demonstrate that SWS can acquire access to Saratoga Lake which would provide a sufficient supply of water. The Water Authority notes that the Applicant has the power to acquire access to Saratoga Lake as an alternate source under the Transportation Corporation Law and the Eminent Domain Procedure Law. It also notes that Applicant made no showing of its efforts to obtain access through negotiation, nor offered any explanation for failing to commence condemnation proceedings. The Water Authority argues that Applicant has a burden to make such a showing; and also argues that the Applicant's economic considerations do not affect public necessity or just and equitable allocation.

The IDA

The IDA notes its responsibility for economic development; that it determined that the golf course would help prevent unemployment and economic deterioration; that it made the golf course an IDA project; and that it committed itself to financing the golf course.

The IDA, in essence, argues that although the DEC's permit to the Water Authority to acquire SWS was based on the Water Authority's Master Plan and Updated Master Plan, neither the IDA nor Stillwater had a real opportunity to contest those plans. Noting the Water Authority's claim that the instant project would hamper the Authority's plan to use SWS' supply to serve parts of the Town of Malta, the IDA argues that Stillwater has a "superior" right to use the water from its own "resident" resource, and that this particular resource is the logical and normal source of water supply for the portion of the Town of Stillwater that the Applicant now proposes to serve. IDA argues that "[b]oth the Town of Stillwater's economic development and the IDA's economic development area ... depend on this resident resource." (Exhibit 8D, Brief, p. 4). IDA argues that the Water Authority's plans do not control. Noting the Authority's objection to using "potable" water for a "non-potable purpose," and that the controlling statute and regulation only apply to "acquisition, conservation, development, use or distribution of water for potable purposes," the IDA suggests that perhaps DEC might not have the authority to control the distribution of water for non-potable purposes. (Exhibit 8D, Brief, p. 5). Noting that the ECL permits municipalities to extend water mains within their territories "for any purpose" without a permit, the IDA argues that DEC should allow the Applicant the same deference in granting the permit. (Exhibit 8D, Brief, p. 6).

IDA contrasts the Applicant's study of alternate supply sources with the lack of similar information on the Town of Malta's needs to argue that without extreme conditions requiring the use of the water elsewhere, no consideration should be given to "exporting" Stillwater's water. IDA notes Staff's admission at the Issues Conference that a public need would be served by putting the water on the golf course, but that Staff believed "down the road" there may be a public need in other areas "inconsistent," with and "higher" than what is proposed. IDA counters that the public necessity is measured by an "immediate" need, particularly that of the "residents directly concerned" with this proceeding. (Exhibit 8D, Brief, pp.8-10; Exhibit 8E, Reply, p. 3). IDA argues that residents of the region, especially the residents of Stillwater, need the significant economic benefits from the golf course now. IDA claims that denying the permit would deny these benefits, ignore the legislative acts of both the IDA and Stillwater, and have a strong negative effect on the state's economy by implying that the state does not have enough water to sprinkle a golf course.

Stillwater

Stillwater reports that pursuant to law it created the Saratoga Lake Golf Course Planned Development District, and approved of SWS as the water supplier to the District.

Stillwater argues that the instant application is significantly different from that leading to the Commissioner's April 1996 Decision. That proceeding involved permitting the Water Authority to acquire the SWS source and system. This proceeding is over providing water to the Saratoga Lake Golf Course in Stillwater. Since the "public necessity" standard affords "some measurement of the public's need for the particular water supply proposed," but does not mandate a "minute examination into the needs of the people of the State as a whole before any geographically limited proposal for the use of potable water could ever become justified," Stillwater argues that its needs must be given priority over those of the larger area covered by the Water Authority. Based on these principles, Stillwater claims that the application meets the public necessity test.

Stillwater notes that local governments are responsible for protecting the general health, safety and welfare of their citizens; and, to help with this, have been given specific authority to develop comprehensive land use plans. These governments implement such plans by regulating land use. Stillwater alleges that although the Water Authority has adopted a "master plan," its plan is not binding on anyone. In essence, Stillwater views a DEC deference to the Water Authority's "master plan" as infringing on its legal authority to control land use, implying that controlling water distribution effectively controls land use. Stillwater argues its "property and affairs" should be left to its Town Board to decide.

The Applicant, SWS

The Applicant contends that its application meets the "public necessity" test, and that the April 1996 Decision does not in any way inhibit or preclude Applicant's proposal to serve the golf course. Applicant argues that under the "public necessity standard," it must show a "need" to use the particular water source, and sufficient capacity to serve the need without harming existing customers. Applicant argues that because the public needs the golf course, and the golf course needs the water from SWS to be viable, the "public necessity" for its project is clear and persuasive, and warrants DEC approval. Applicant argues that Stillwater's public need for the golf course is as great if not greater than the amorphus undefined need of the general public referred to by Staff.

Applicant contends that any conflict between the application and the April 1996 Decision or Water Authority's Master Plan is erroneously presumed. Applicant points out that the Commissioner only authorized the Water Authority to acquire the SWS system -- he did not authorize service to other areas nor did he allocate or dedicate any excess supplies in SWS' system for any particular purpose or place. The Authority's permit expressly requires that further permits be obtained before service is extended to other areas, and also sets the Authority's service area to be whatever is SWS' service area at the time of acquisition. Applicant also points to Staff counsel's indication at the Issues Conference that there has been no allocation to another service area and won't be until such time as the Authority applies for such. The Applicant argues that the Master Plan "is, at best, a generalized indication of what actions the Authority may take after it acquires the existing system; in no way does it reflect the specific areas that might possibly be served by the Authority after the acquisition takes place." (Exhibit 2O, Brief, p.8) To emphasize this point, Applicant noted that the Village of Round Lake (mentioned in the Plan as a potential area to be served) recently announced that it had no current plans to purchase water from the Authority.

Applicant argues that the Water Authority has no authority to restrict the Applicant from determining the extent of its service territory or the uses for which water service would be provided; that it would be improper for the Commissioner to confer such authority; and that it would also be improper to confer upon the Water Authority the power to determine what economic growth and development will occur in Stillwater or anywhere else in Saratoga County.

Referring to the municipal consent required to supply water service and county water authorities' power to only recommend whether consent should be given, Applicant argues that the municipality, not the Authority, determines whether and to what extent water service is provided within municipal boundaries.

Applicant further argues that the use of potable water for a golf course does not violate the Authority's Master Plan because the Authority at one time indicated that all customers and potential customers would be served without qualification as to type of water service or use. The Applicant contends that the Authority is now changing its earlier public representations to undermine SWS' effort to increase its customer and revenue base and to exert control over Stillwater.

Regarding what is "just and equitable" to the affected municipalities, Applicant points out that the Department must ensure that supplies relied upon and more available for use in one community or area are not dissipated or transferred to another, and that the focus must be on the immediate need of the residents directly impacted rather than some generalized future need of the people of the state. Applicant argues that, here, Stillwater is the municipality most directly affected, and Stillwater's needs are being totally ignored in favor of certain potential Water Authority customers identified in the Master Plan -- none of whom have committed to purchase water from the Authority.

FACTS

Existing Permits and Water Supply System

  1. DEC has issued permits to SWS, authorizing SWS to draw specified amounts of water from specified sources to supply customers in a specified geographic area (Applicant's "service area"). SWS's permits are in the record as Exhibits 4A-4G, 4J, and 4K. Applicant is authorized to take up to 342 gallons of water per minute (gpm) from wells PW-1, PW-2, PW-3, PW-4 and PW-6 located in the "Knapp Road Well Field" in the Town of Malta. (Exhibit 4B). Applicant is also authorized "[t]o 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." Well PW-7 is located on Cold Springs Road in the Town of Stillwater. (Exhibit 4D). On April 30, 1997 (the effective date of the last permit issued to Applicant in the record) the "approved average demand for the entire system" was "increased to 309,800 gpd (215 gpm)."Please note that the "approved average demand" language does not appear in the permit which authorized the taking of up to 342 gpm (Exhibit 4B), nor in the permit which authorized the taking of an additional supply from well PW-7 (Exhibit 4D). (Exhibit 4K).
  2. On July 16, 1996, in response to an application by the Water Authority and pursuant to the Commissioner's April 1996 Decision thereon (incorporated here by reference as if fully set forth), DEC issued a permit to the Water Authority which authorized "(1) The acquisition of the existing, approved water supply and distribution system, including all sources of water supply, owned by [SWS] ... and (2) The acquisition of the existing approved water supply source ... owned by Luther Forest Corporation and leased to [SWS] ..." (Exhibit 4I). Among others, this permit was granted upon the following conditions:
    • that the Water Authority had to complete the acquisition of the SWS system within 5 years, otherwise the permit "shall be rendered null and void" (id., Special Condition 9);
    • that the Water Authority's "approved service area shall be that which is approved by the New York State Department of Environmental Conservation for [SWS] at the time that the acquisition takes place" (id., Special Condition 11);
    • that the "currently approved water sources for this system", were wells PW-1, PW-2, PW-3, PW-4 and PW-6 with a combined "approved capacity" of 342 gpm; and well PW-7 with an "approved capacity" of 471 gpm (id., Special Condition 13); and
    • that nothing contained in the permit would be construed to authorize the Water Authority to distribute water to any other district or service area which has not already been approved by the Department or its predecessors without having received a further permit from the Department (id., Special Condition 20).

Applicant's Request

  1. SWS seeks permission to extend its existing service area by approximately 210 acres to provide potable water to 14 proposed residential units, a proposed golf course clubhouse and maintenance building, and for irrigation of the proposed 18 hole golf course ("the golf course"). This extension would be located near the intersection of Lake Road and NYS Route 9P in the "Saratoga Lake Golf Course Planned Development District" within the Luther Forest, Town of Stillwater, NY. (Exhibits 1, 2C, 2D, 2I). Applicant has not requested an additional taking of water for this extension (see Exhibit 2A, item 4), asking for approval of neither a new supply source nor an increase in capacity to take water from the previously approved sources.

Adequacy of Current Supplies to Meet Applicant's Request

  1. Excluding water to be used for irrigation, the 14 residences and golf course related facilities are expected to increase average demand on the water system by 3,900 gallons per day (gpd) or 3 gallons per minute (gpm), and maximum demand by 8,600 gpd or 6 gpm. (Exhibit 2I, p. 11)
  2. SWS intends to provide irrigation water to the golf course on an "interruptible" basis during "off-peak" hours. (Exhibit 2D, p.3). The supply would be discontinued under specified conditions including (1) if there is insufficient water available to supply the golf course after first supplying customers with "continuous" service, and (2) if the water level in the "Cold Spring Road aquifer" falls below 80 feet. (Exhibit 2I, pp. 4-5).
  3. The golf course is expected to demand an average of 86,000 gallons of water per day for irrigation purposes during the May 1 through September 31 period each year (Exhibit 2I pp. 7-8), expected to be pumped during the night hours of 10:00 PM to 6:00 AM when other demands on the system are nil. (Exhibit 2I, pp. 3-4). Over the 8 hour irrigation period, the irrigation demand rate would be 179 gpm, increasing the average daily demand (i.e., over a 24 hour period) by 60 gpm. Because the irrigation water is not expected to be drawn during periods of maximum demand, increase in maximum demand is expected to be "nil." (Exhibit 2I, p. 11).
  4. Adding the 3,900 gpd (3 gpm) expected average demand from the new residences and golf course related facilities, 86,000 gpd (60 gpm) expected average irrigation demand, and the current approved average demand of 309,800 gpd (215 gpm) for SWS' existing service area yields an expected average demand of 399,700 gpd (278 gpm) for the entire system if the extension is approved. SWS currently has the capacity to reliably deliver 492,490 gpd (342 gpm, i.e. the approved capacity of all its wells minus the capacity of the largest producing well) to meet the average daily demand (Exhibit 2E). Thus, SWS' existing approved supplies have more than adequate approved capacity to meet the needs of the proposed expanded service area.

The Golf Course's Place in Local Plans and Its Need for Water

  1. The Stillwater Town Board took several actions designed to bring about the development of the golf course including:
    • enacting a local law to create the planned development district known as the Saratoga Lake Golf Course Planned Development District (the "PDD," essentially, the development which SWS now proposes to serve with water, Exhibit 9B);
    • approving the development plan for the golf course portion of the PDD upon several conditions including "extension of a water franchise to serve the project" (Exhibit 9D); and
    • approving SWS' application to supply water to the PDD (Exhibit 9C).
  2. The IDA made the acquisition, construction and equipment of the golf course an IDA project, and also authorized the issuance of approximately $2.8 million of taxable industrial development revenue bonds to finance the project. The IDA expressly took action "for the purpose of promoting, attracting and developing economically sound commerce and industry, and to advance the job opportunities, health, general prosperity of the State of New York and the economic well being of the people thereof. (Exhibit 8C). The IDA depended on a feasibility study which indicated there existed a lack of golf facilities and available tee times, particularly during the summer tourist season, in the Saratoga Region. The study said that the introduction of a new golf facility in the region would produce a greater ability for the region to attract visitors for a longer period of time and more often, essentially improving the area's convention and hospitality businesses. (Exhibits 8A and 8B).
  3. Applicant SWS produced "An Economic Analysis to Provide Irrigation Water to the Saratoga Lake Golf Course." This analysis first calculated the irrigation needed based on local rainfall data and what turf required for optimal growth, then compared five options for irrigating the golf course: (1) no irrigation, (2) an on site well, (3) an on-site groundwater irrigation pond, (4) potable water from SWS, and (5) water from Saratoga Lake. The analysis reasoned that a non- irrigated facility would be unattractive, unpatronized, and, therefore, unviable; and quantified the opportunity lost at $860,000 annually. A preliminary study and test wells were found to rule out the second and third options. Using water from the SWS system was estimated to require $9,000 in construction and just under $18,000 in total annual costs. Using Saratoga Lake water was estimated to require $250,000 in construction and over $28,000 in annual costs. In addition, the Saratoga Lake water option was found to require an easement that Applicant had not been able to obtain [understood here to be voluntarily, and without resorting to using its right of eminent domain]. The analysis concluded that using water from SWS to irrigate the golf course was the option that was economically viable. (Exhibit 2J). Since no testimony was pre-filed on reasonable alternatives, the substance of this analysis is unchallenged.
  4. The use of potable water to irrigate a golf course is not uncommon in the region. Applicant's identification of 6 golf courses in the region which follow this practice has not been disputed. (Exhibits 2H, pp. 2-3; 2I, p.12).

The Water Authority's Plans and Their Relationship to the Pending Application

  1. The Water Authority intends to acquire the existing water supplies, distribution system and service area of SWS, and those of a number of other private water companies, and connect them to each other and to existing municipal systems (which would remain municipally owned and operated) to form a regional water supply system. As noted above, DEC has already approved of the Water Authority's acquisition of the SWS system for this purpose. The regional system is expected to eventually include a new water supply source from the Hudson River. More immediately, however, the Water Authority intends to redistribute water from where it perceives an overabundance to places expressing a need, making an application to DEC each time it decides to take a specific action to implement its plan when the action requires DEC approval. (Exhibit 4H, Hearing Report Findings 1 and 2; Exhibits 4I, 5C, and 5D).
  2. In the proceeding on the Water Authority's application, the Water Authority asserted, and the Commissioner found, that the SWS system then had at least 139 gpm "excess capacity" (i.e., the amount by which the reliable capacity of the system, calculated in accordance with the "Ten States Standards," exceeded the average daily demand). The Commissioner also found that 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." Indeed, it was indicated in the Hearing Report that because of the way the "Ten States Standards" (generally accepted engineering standards) calculates acceptable system capacities, once supply sources become interconnected, particular supplies could be used to served greater demands than would be acceptable without interconnection. (Exhibit 4H, Decision p.4, Hearing Report Findings 3, 4, 15). The ability to serve this "greater" demand following interconnection is called "additional capacity" here to distinguish it from "excess capacity."
  3. In approving the Water Authority's application to acquire SWS' system, the Commissioner found that other parts of Saratoga County had a need for additional water supplies, and that the Water Authority's master plan offered a prudent and rational means of fulfilling that need. Examples cited of areas having needs were the Village of Round Lake (which was using a non-conforming surface supply pursuant to a variance), the Exit 12 area of Malta, and the Saratoga Lake area (where homes were affected by water quality problems). The Commissioner's conclusion that the Water Authority's proposed acquisition of the SWS system was justified by public necessity was based on his finding 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." (Exhibit 4H, Decision, pp.5, 7).
  4. Since the decision on the Water Authority's application was issued, DEC has permitted SWS to draw upon the aforementioned "excess capacity" to supply water to other service area extensions (see Exhibits 4J, 4K). It is out of its remaining "excess capacity" that SWS seeks to supply the service area extension proposed here. Like the other service area extensions already approved, to the extent that the remaining "excess capacity" is used as proposed by the Applicant, it will further reduce the 139 gpm "excess capacity" figure that the Water Authority relied upon during its own permit proceeding.

DISCUSSION

I. Public Necessity and the April 1996 Decision

The Facts above establish that the proposed project is justified by the "public necessity."

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 ..." Ton-Da- Lay v Diamond, 44 AD2d 430, 435 (3rd Dept., 1974). Here, Stillwater and the IDA, acting within their jurisdictions on behalf of the public, determined that a new golf course was needed for the economic and recreational well being of their constituencies and the region. Applicant demonstrated that this golf course would need irrigation to be viable, and that the only reasonable source of irrigation water would be out of the "excess capacity" currently available in the SWS system. (See "Reasonable Alternatives" below). Hence, a public need to use the SWS water supply for the proposed extension area, including irrigation of the golf course, has been established.

"Public necessity" also encompasses the conflicting water supply interests among competing private, corporate or municipal bodies. See Ton-Da-Lay, above. Here, the competing interest comes solely from the Water Authority, which plans on using the same "excess capacity" as a source of water to be distributed to various other localities in need. But for the Water Authority's interest, the "public necessity" for this project would not have been questioned.

The April 1996 Decision did not determine the "public necessity" issue here. When the decision was made to give a permit to the Authority to acquire the SWS system, there were specific references to SWS' "excess capacity" and how it could be used to alleviate water needs elsewhere. Both Staff and the Authority now argue that the decision somehow "dedicated" this "excess capacity" to the plan or that an "allocation" of such had approved of. Although this argument is understandable, it is belied by the plain language of the permit that was issued which indicates that nothing contained in the permit should be construed to authorize the Water Authority to distribute water to any other district or service area which has not already been approved by the Department or its predecessors without having received a further permit from the Department. Furthermore, to construe the Decision as approving of an allocation or a "dedication" of the resource to any area other than the SWS service area invites the argument that it was done without notice to Stillwater and others likely to be affected. Plainly, that proceeding was about the Authority's application to change ownership of the SWS system, not about its plan to reallocate the resource. People would have had no way of knowing that a reallocation was at stake. Thus, the April 1996 Decision can not determine the "public necessity" question here. Nevertheless, the Water Authority's competing interest in this resource still needs to be considered.

When considering competing and conflicting water supply interests in a resource, the Department has examined proposed uses among affected municipalities. Here, Staff and the Authority both distinguish between "potable" and "non-potable" uses. The precedent for the Department prioritizing "potable" over "non-potable" uses when determining "public necessity" is Town of Hempstead v Flacke, 82 AD2d 183 (1st Dept., 1981), affirming the Commissioner's May 1, 1981 Decision on the Application of the Town of Hempstead (WSA. No.7020). In that case, the Department denied an application to deepen a well from the Magothy to the Lloyd aquifer on Long Island, the well being primarily used for cooling water (a "non-potable" use). That decision, however, turned on several facts significantly different from those here. Specifically, (1) many communities already depended upon the Lloyd aquifer for their water supplies, (2) the Lloyd aquifer was the only source of fresh water for certain "barrier beach" communities, and (3) a major increase in pumpage from the Lloyd could cause saltwater to intrude further shoreward, jeopardizing the water supplies of those communities. Those barrier communities were clearly "affected municipalities" owing to the hydrology of the area. The Commissioner refused to put those communities at risk and denied the application.

Here, granting the permit would present no known risk. It is undisputed that there is plenty of water for both SWS' existing service area and the proposed extension. Even if this extension used all of SWS' "excess capacity," no one else would be affected since the withdrawals would be within the capacity limits that have already been approved. (See "Just and Equitable" below for further discussion of which municipalities are "affected.") Unlike the limited availability of alternative sources on Long Island, there is nothing to indicate a similar limitation on the sources available to Saratoga County communities. Contrast this with the demonstrated lack of reasonable alternatives for irrigating the golf course. In fact, the Water Authority's own plan calls for the eventual tapping of the Hudson River. Simply, there is no reason on this record for the Department to distinguish between "potable" and "non-potable" uses and deny the "non- potable."

The Department may look at the timing of competing needs when determining "public necessity." Country Knolls Water Works v Reid 52 A.D.2d 284 (3rd Dept., 1976) makes clear that the Department must find a degree "immediacy" if the "public necessity" standard of ECL 15-1503(2) is to be met. The case even suggests that the Department does not have the authority under ECL 15-1503 to make an allocation for a need that will not arise until some time in the distant future (id., 288).It should be noted, however, that ECL Article 15, Title 11 "Local and Regional Water Resources Planning and Development" 15-1101 et seq., provides a mechanism that can be used to plan future water resource development within a region. Once a plan under Title 11 is finalized, the Department would have the power to disapprove projects that do not conform. 15-1107 (4). At this point, neither the Water Authority, nor any of its potential customers, have applied to take from this resource to serve competing needs, and it is unknown when any of these entities will be in a position to do so, if ever. At best, the Water Authority's interest in this resource is the possibility that at some future time it will own the "excess capacity" and will then be able to apply to DEC to distribute it elsewhere as described in its Master Plan. The golf course, however, is a project about to be built, so the need for irrigation water is imminent. The golf course meets the test of immediacy; the Authority's Master Plan does not.

In sum, the competing interest of the Water Authority lacks the immediacy, definitiveness, and unavailability of alternatives demonstrated by the pending application to warrant further consideration. The Applicant has adequately demonstrated the "public necessity" of its project.

II. Reasonable Alternatives

Proper consideration was given to other sources of supply that are or may become available. Although no facts are disputed here, the Water Authority still argues that Saratoga Lake water should be used on the golf course and could be obtained through Eminent Domain. The Applicant, however, did not reject the Saratoga Lake alternative because of the lack of a voluntary easement. Rather, the Saratoga Lake alternative was rejected on economic grounds. Applicant's analysis of the use and sources of irrigation water (Exhibit 2J) provides a rational basis for this rejection.

III. Just and Equitable

As required under ECL 15-1503 (2) the proposed project is "just and equitable to all affected municipalities and their inhabitants and in particular with regard to their present and future needs for sources of water supply."

As indicated under "Public Necessity" above, it is clear that the only municipalities and inhabitants "affected" by this geographically limited application are those in the current and proposed service areas. The neighboring areas mentioned in the Water Authority's Master Plan are unaffected. Those areas should have had no expectation that SWS' "excess capacity" would be available to them because such was already allocated to SWS' service area by virtue of SWS' permit to take up to 342 gpm (Exhibit 4B). Had the Master Plan been an ECL Article 15 Title 11 regional plan, it would not have been able to include any of this amount because 15-1107 (1)(d) prohibits inclusion of "any amount of water, the use of which has theretofore been duly acquired or authorized pursuant to approval, license, permit or other official sanction."

Even had this allocation not already been made, the conclusion would not change. Under the "just and equitable" provision, the DEC as successor to the Water Power and Control Commission (WPCC). must "exercise just and fair supervision to the end that supplies which are more available for use by one community are not absorbed by another." City of Syracuse v Gibbs, 258 AD 405, 408 (3rd Dept., 1940), rev'd on other grounds 283 NY 275. Here the SWS supplies are "more available" to serve Stillwater's proposed golf course, needing a mere service area extension which SWS is ready to provide. There is nothing in the record to indicate that the resource is "more available" for use elsewhere.

CONCLUSIONS OF LAW

  1. The proposed project is justified by the public necessity. The Commissioner's April 1996 Decision did not determine the public necessity of this proposed project.
  2. The proposed project takes proper consideration of other sources of supply that are or may become available.
  3. The proposed project is just and equitable to all affected municipalities and their inhabitants and in particular with regard to their present and future needs for sources of water supply.

RECOMMENDATION

It is recommended that Staff be directed to process and issue the requested permit, with appropriate conditions, including those requested by the Department of Health, consistent with the determinations herein.

* * *

Appendices:

Appendix A - Summary of Public Concerns

Appendix B - Exhibits List

Appendix A - Summary of Public Concerns

Essentially, those who spoke viewed the proposed project as an integral part of establishing the golf course that would be served with water. Referring to the Applicant's study, it was concluded that the proposed water system extension was the most practicable way to irrigate the golf course. Concern was voiced over Staff appearing to draw a distinction between "acceptable" and "unacceptable" water uses without explaining why or how the determination was made, given no apparent lack of water in the region. It was questioned whether Staff was favoring one type of development over another (such as residential or industrial as opposed to a golf course), which was viewed as more appropriate for the community to determine.

The golf course is considered to be an important development, seen as a much needed commercial and recreational facility that will contribute to the area's tourist business, create jobs and economic growth beyond the golf course itself, and improve area residents' quality of life. A marketing study was cited as supporting the existence of such need.

Speakers indicated that Stillwater's Town Board and Planning Board have reviewed and approved of the golf course, and understood that the golf course would be irrigated with water from the proposed project. It was noted that to induce the golf course's creation, the IDA agreed to acquire the golf course and lease or sell it back to the developer, to issue bonds to finance its construction, and to arrange for the property involved to be assessed and taxed at a reduced level of taxation (with the developer making payments in-lieu-of taxes) for a period of ten years.

Given the local municipal effort to establish the golf course, and the understanding that using potable water to irrigate a golf course is not unusual in the region, Staff's decision to deny the permit based on the opinion that there is no "public necessity" to irrigate the golf course with potable water was perceived as infringing on Stillwater's right to govern itself. Commenters were particularly disturbed by the permit denial being based on the golf course being in conflict with the Water Authority's Master Plan. One person argued that the Water Authority was created to provide water to areas that did not have water service, not to "swallow up" water companies (such as the Applicant), nor to stop "positive" projects such as the golf course. Noting that the water source exists within Stillwater, concern was expressed that the water was being reallocated to foster continued commercial and residential growth in the adjoining Town of Malta at Stillwater's expense (Stillwater being relatively depressed). In essence, Staff's stance was viewed as giving the Water Authority veto power over local development efforts, and being unfair to the residents of Stillwater.

Rev. September 30, 1997
NAME OF HEARING: Saratoga Water Services, Inc. (SWSI);
Application No. 5-4152- 00073/00001; Water Supply Permit

EXHIBITS LIST:

1 HEARING NOTICE DATED April 23, 1997 1A Office of Hearings Hearing Notice Distribution List 1B Copy of Hearing Notice published in April 30, 1997 ENB 1C Affidavit of publication of Hearing Notice in the Gazette on April 30, 1997

2 APPLICATION/APPLICANT'S POSITION DOCUMENTS (NO EXHIBIT 2)):

2A Application for a Public Water Supply Permit 6/20/96 WSA 9431 21.
2B Joint Application for Permit 21.
2C Short Environmental Assessment Form 6/20/96 21.
2D Engineering Report 6/19/96 19.
2E Project Justification 7/9/96 19.
2F SWSI Minutes of 6/12/96 16.
2G Municipal Consent and Acknowledgement 3/21/96 11.
2H Letter 12/1/96 - Benjamin Richards to Stephen Marshall (NYSDOH) - responding to August 21, 1996 comments. 11.
2I Letter 12/1/96 - Benjamin Richards to Walter Haynes - responding to July 22, 1996 Incomplete Notice. 10.
2J "An Economic Analysis of Providing Irrigation Water..." 11/4/96 7.
2K Letter 2/4/97 - Usher Fogel to Richard Wild - concerning permit denial and requesting clarification of status of 14 residential lots and maintenance building. 3.
2L Letter 2/24/97 - Usher Fogel to Richard Wild - requesting an adjudicatory public heating in response to permit denial.2.
2M "Saratoga Lake Golf Course Town of Stillwater Title Site Utility Plan" compriseing 3 sheets U-1 through U-3. 11/10/94 [OHMS Rec. 5/23/97]
2N "Preliminary Plat Subdivision Plat Saratoga Lake Golf Course Golf Course P.D.D." 10/28/94 [OHMS Rec. 5/23/97]
2O Brief [OHMS Rec. 7/25/97]
2P Reply [OHMS Rec. 8/11/97]

3 DOCUMENTATION OF STAFF'S POSITION (NO EXHIBIT 3):

3A Notice of Complete Application 12/18/96. 8.
3B Letter 1/29/9 -Richard Wild to Alexander MacKay- informing Saratoga Water Services of permit denial. 4.
3C Hearing Request [OHMS Rec. 4/11/97]
3D "Denial - January 29, 1997" [OHMS Rec. 5/19/97]
3E Brief [OHMS Rec. 7/28/97]
3F Reply [OHMS Rec. 8/13/97]

EXHIBIT 4 SERIES - RELEVANT PRIOR NYSDEC DETERMINATIONS (No Exhibit 4)

4A Permit to SWSI, WSA No. 6918 11/16/78 [OHMS Rec. 5/23/97]
4B Permit to SWSI, WSA No. 6918 Modification 6/29/92 [OHMS Rec. 5/19/97]
4C Permit to SWSI, WSA No. 7014 7/7/81 [OHMS Rec. 5/23/97]
4D Permit to SWSI, WSA No. 8745 7/1/92 [OHMS Rec. 5/19/97]
4E Permit to SWSI, WSA No. 8944 9/30/94 [OHMS Rec. 5/19/97]
4F Permit to SWSI, WSA No. 9225 5/10/95 [OHMS Rec. 5/19/97]
4G Permit to SWSI, WSA No. 9356 2/28/96 [OHMS Rec. 5/19/97]
4H Commissioner's Decision and attached Hearing Report - Application of Saratoga County Water Authority (SCWA), WSA No. 8858 4/4/96 [OHMS Files]
4I Permit to SCWA, WSA No. 8858 7/16/96 [OHMS Rec. 5/28/97]
4J Permit to SWSI, WSA No. 9408 2/18/97 [OHMS Rec. 5/19/97]
4K Permit to SWSI, WSA No. 9520 4/30/97 [OHMS Rec. 5/19/97]

EXHIBIT 5 SERIES - SARATOGA COUNTY WATER AUTHORITY POSITION (No Exhibit 5)

5A Letter 8/1/96 - John Tabner to NYSDEC - comments regarding SWS applicafion. 13.
5B Petition for Party Status [OHMS Rec. 5/19/97]
5C Master Plan [OHMS Rec. 6/4/97]
5D Updated Master Plan [OHMS Rec. 6/4/97]
5E Brief [OHMS Rec. 7/28/97]
5F Reply [OHMS Rec. 8/12/97]

EXHIBIT 6 SERIES - NYS DEPARTMENT OF PUBLIC SERVICE POSITION (No Exhibit 6)

6A Letter 7/18/96 - Jack Agansky (PSC) to Walter Haynes - comments regarding WSA application. 18.
6B Letter 12/19/96 - Jack Agansky to Walter L. Haynes - responding to SWS submission of December 1, 1996.7.
6C Petition for Party Status [OHMS Rec. 5/22/97]

EXHIBIT 7 SERIES - NYS DEPARTMENT OF HEALTH POSITION (No Exhibit 7)

7A Letter 8/21/96 - Stephen Marshall to Benjamin Richards - comments regarding WSA. 12.
7B Letter 1/7/97 - Stephen Marshall to Walter Haynes - transmitting NYSDOH recommendation of no hearing and approval of application. 6.

EXHIBIT 8 SERIES - CITY OF MECHANICVILLE AND TOWN OF STILLWATER INDUSTRIAL DEVELOPMENT AGENCY (No Exhibit 8)

8A Petition for Party Status [OHMS Rec. 5/15/97]
8B "Regional Tourism Relationship ..." [OHMS Rec. 5/27/97]
8C Resolution of Inducement [OHMS Rec. 5/27/97]
8D Brief [OHMS Rec. 7/16/97]
8E Reply [OHMS Rec. 8/7/97]

EXHIBIT 9 SERIES - TOWN OF STILLWATER (No Exhibit 9)

9A Petition for Party Status [OHMS Rec. 5/21/97]
9B Local Law No. 1 of 1994 [OHMS Rec. 5/28/97]
9C March 21,1996 Minutes [OHMS Rec. 5/28/97]
9D Copy of Town Board Minutes 2/5/95,1/19/95, 8/18/94, 6/30/94, 4/18/94, 3/31/94 [OHMS Rec. 6/5/97]
9E Brief [OHMS Rec. 7/28/97]

[Small digits indicate item numbers for material from Staff's original file received by OHMS 4/11/97]

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