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Poughkeepsie, Town of - Decision, October 16, 1996

Decision, October 16, 1996


In the Matter
- of the -
Application of the TOWN OF POUGHKEEPSIE for a Water Supply Permit for an Existing Connection to the Culinary Institute of America

October 16, 1996

DEC Project No. 3-1332-00010/00004-0

Water Supply Application #9329


The Town of Poughkeepsie ("Town") and the Culinary Institute of America ("Institute") appeal to the Commissioner pursuant to 6 NYCRR 624.8(d) from the Rulings of Administrative Law Judge ("ALJ") Helene G. Goldberger dated August 21, 1996 in this proceeding. Pursuant to Article 15 of the Environmental Conservation Law ("ECL"), the Town has applied to the Department for a water supply permit. The Town seeks to continue supplying water to the Institute's culinary education campus located within the adjacent Town of Hyde Park, and within the service area of the Hyde Park Fire and Water District ("District") as expanded in 1987. ALJ Goldberger's Rulings granted party status to both the Institute and the District. She also found that there were no substantive and significant factual issues for adjudication and she recommended denial of the Town's application. The Town's and Institute's jointly filed appeal asserts that the ALJ misapplied the applicable law and also denied them due process by declining to hold an adjudicatory hearing.

Upon consideration of the ALJ's Rulings, the application and other filings of the parties in this matter, I adopt ALJ Goldberger's Rulings to the extent they are consistent with this Decision. The appeal is dismissed and the Town's application for a water supply permit to continue supplying water to the Institute is denied.


The essential facts are undisputed and are recounted in ALJ Goldberger's attached Rulings. It is sufficient at this juncture to note that the Town has never obtained a permit to serve the Institute and that the Institute is located in the service area of the Hyde Park Fire and Water District, not within the Town's service area.

The Institute's water has heretofore and is currently supplied by the Town through mains connected to the Poughkeepsie Psychiatric Center, a facility operated by the New York State Office of Mental Health (formerly the Department of Mental Hygiene) and located in the Town. At the time the Town connected its water supply system to the Psychiatric Center, in 1984, the Department, by letter, advised the Town that it was not required to obtain a water supply permit from the Department in order to connect the Town's mains to the Psychiatric Center. The matter of the Center's interconnection with the Institute was not addressed. See letter of Gordon Behn of the Department to Town Supervisor Anna Buchholz, dated February 4, 1985. The District's service area was expanded by the Legislature in 1987 (L. 1987, ch 651) to include the Institute. However, until recently, the District has not been able to supply the Institute because improvements to its treatment plant and distribution system had not been completed. Those improvements were authorized by this Department in 1988 (See WSA #7857).The 1988 DEC permit issued to the District describes the authorized activity as follows: "Construction of an intake system for a water treatment plant and authorization to draw 2.1 million gallons per day from the Hudson River for distribution in the expanded Hyde Park Fire and Water District. This new treatment plant and distribution system will replace the District's existing supply on Crum Elbow Creek." They are now in operation and available to serve the Institute. The District seeks to supply the Institute. However, at the Institute's behest, the Town seeks to ratify its connection to the Institute and has applied to the Department for a water supply permit for that purpose.

The issue on this appeal is whether the Town's application for a water supply permit to continue service to the Institute should be denied, as the ALJ recommends, or should be granted.

Applicable Law

Under Article 15, Title 15 of the Environmental Conservation Law ("ECL") and related regulations at 6 NYCRR Part 601, the Town is required to obtain a permit from the Department in order to supply water for use within another water supplier's service area, such as the District (Section 601.3).

In determining whether to issue or deny a water supply permit, 15-1503 of the ECL as implemented by 601.6(b) of the Department's regulations provides (as relevant here) that:

"To issue a permit, the department must determine:

(1) that the proposed project is justified by the public necessity;

(2) that the applicant properly considered other sources of water supply that are or may become available....

(6) that 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.

The Town's Application

The Town's application addresses each of the criteria specified in 601.6(b), of which the above three are the most germane under the applicable facts. However, the ALJ found, correctly, that the Town's application had failed to satisfy these criteria.

Public Necessity

The ALJ found that the Town failed to satisfy the "public necessity" requirement because the District is now able to supply the Institute. The Town's application is premised on the notion that DEC Staff's February 4, 1985 letter stating that no permit was required in connection with the Town's connection to the Psychiatric Center was an "approval" of the Town's supply to the Institute, showing that the public necessity test has been satisfied. See Application Form, item 13, project description: "The Town has been supplying water to the CIA since 1985 with NYSDEC approval" (emphasis added). The Town's reasoning is flawed because it erroneously equates the Department's "no action" letter with an affirmative "approval." However, contrary to the Town's application, the Department Staff's letter stating that no permit is required was not a permit or other affirmative approval. It clearly was not a determination of whether the Town's present application meets the test of "public necessity."

In ruling on this point, the ALJ correctly decided that where a duly formed district, such as the Hyde Park District in this case, is capable of supplying the consumers within its service area, supply by such district is to be presumptively preferred over supply by other service providers. Accord: In the Matter of Smithtown Water District, WSA #9318 (Decision of the Commissioner, September 11, 1996): "There is no basis in this record for us to exercise our discretion and depart from the established premise that assigned water service areas should be maintained" (at p. 2). This follows from the fact that the Legislature has established the District's service area, and the District has been issued a water supply permit by the Department to serve its assigned area. Absent unique circumstances, the District should be entitled to rely on the expectation that it will be the entity to provide water service to all persons and entities within its assigned area. An out-of-area supplier seeking to serve a consumer within another district has the burden of justifying its request. The Town's justification in this case is that it has supplied the Institute in the past, is capable of continuing that supply, and that the Institute prefers to continue receiving service from the Town instead of switching to the District. However, none of those reasons overcome the presumption that a district assigned to a specific service area, such as Hyde Park's, should be the preferred supplier of service, as opposed to service being supplied by an out-of-area provider. The rationale for this, as the ALJ notes, is to maintain stability in planning by the assigned district. A water district has the duty to serve all persons and entities within its service area who request service. Conversely, a district which has the capability of serving is thereby entitled to provide service to all within the district. The Institute's preference that it be supplied by the Town is not a valid criteria for departing from this premise,See Swan Lake Water Corp. v. Suffolk County Water Authority, 20 NY2d 81 (1967). "Neither the hospital [the consumer in that case] nor the defendant [the out-of-area service provider] can determine for themselves what shall be their source of supply, which is a matter for the Commission [Department] to decide" (at p. 87). because the District is entitled to rely on the expectation that it will serve all consumers that it is obligated to serve, in order to rationally plan and finance the capacity and design of its water supply and distribution system. The Town has not shown that its application is justified by the "public necessity."

Alternative Sources

Section 601.6(b)(2) requires the applicant properly consider "other sources of water supply." The ALJ found, correctly, that the Town's application had not properly considered other available sources of supply, specifically supply of the Institute by the District.

On appeal, the Town erroneously argues that the District is not a natural "source" and that the "source" is the Hudson River, whether the Town or the District supplies the water. The Town's argument is rejected. First, the regulation, 601.6(b)(2), refers to "other sources of water supply," and the District is an "other source of water supply." Secondly, the Town's argument ignores the reality that the Department permitted the District's plans to build a new treatment plant in order to provide service within the expanded service area of its District. The plain facts are that the District is an alternative source of supply and the Town has failed to consider it adequately in its application. The Town's position is that it should be allowed to continue supplying the Institute because it has done so in the past. The Town's argument is rejected for the reasons given above.

Just and Equitable

Consistent with the discussion under "public necessity" above, I further conclude that the District's providing service to the Institute is the most just and equitable outcome from the standpoint of inhabitants of all affected municipalities. The District and its residents and water users are committed to paying (through special assessments and rates) for a new and costly water intake and treatment plant designed to service the expanded District. The Department has issued a water supply application to the District for the project. It would not be just and equitable for the Department now to effectively cede a major water consumer within the District to a neighboring supplier, because doing so casts the burden of paying the foregone revenue back on the remaining consumers within the District. The just and equitable result under the circumstances is that the cost burden should be shared among all potential District customers, including the Institute. It would be unjust and inequitable to do otherwise.

Economic Considerations

The role of economic considerations in this case merits a brief discussion. The parties and the ALJ recognized that the Department's primary objective under Title 15 of Article 15 of the ECL is to allocate and manage the State's water resources prudently, and to assure that adequate water supplies are available. However, fulfilling that role does not preclude the Department in a case such as this from dealing with the economic realities when it makes judgments on criteria such as "public necessity," "other sources of water supply" and "just and equitable." Economic factors are elements of these criteria and should not be ignored. Thus the allocation of the cost burden among the District's consumers is a legitimate consideration. On the other hand, the Department is not responsible for setting the District's water rates, and the specifics of rate setting are not our concerns in this case. However the Department has the responsibility for establishing municipal water rates under certain limited circumstances. See ECL 15-1521 and In the Matter of the Village of Elbridge, WSA #9039 (Decision of the Commissioner, February 8, 1995); and see NYC Administrative Code 24-360 and Matter of Westchester County, WSA #8865 (Decision of the Commissioner, November 9, 1995). Economic considerations will be taken into account as appropriate in determining whether the applicable statutory criteria under Title 15 of Article 15 have been satisfied. The parties did not raise a substantive and significant issue of fact for adjudication in this regard.

Due Process

The Town's and Institute's appeal also asserts that they were denied due process because the ALJ found that there were no issues of fact for adjudication. They cite in support the ALJ's dictum at p. 8 that "it is not even clear to what document Gordon Behn was responding in his February 4, 1985 letter." However, a trial-type hearing to determine what document Mr. Behn was responding to would not affect the outcome of our decision in this case, and no "significant" issue is raised. See 6 NYCRR 624.4(c)(3). As noted above, Mr. Behn's letter was not a permit or approval. Moreover, Mr. Behn's letter could not act as an estoppel against the State, as the ALJ notes (Ruling p. 8). Appellants' other due process arguments have no merit and are also rejected.


Based on the record of this proceeding, the application, the ALJ's rulings and the above discussion, I find that the Town's application should be and is hereby denied. This Decision shall be the final order of the Commissioner in this proceeding.

Michael D. Zagata,
Albany, New York

Dated: October 16, 1996

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