Poughkeepsie, Town of (Water Supply Permit) - Ruling, August 21, 1996
Ruling, August 21, 1996
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
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
RULINGS OF THE ADMINISTRATIVE LAW JUDGE ON PARTY STATUS AND ISSUES
DEC Project No. 3-1332-00010/00004-0;
Water Supply Application #9329
BACKGROUND and PROJECT DESCRIPTION
The Town of Poughkeepsie ("the Town") has applied to the Department for a water supply permit pursuant to Article 15 of the Environmental Conservation Law ("ECL") and Part 601 of Title 6 of the New York Compilation of Codes Rules and Regulations ("6 NYCRR") to ratify an existing water supply connection to the Culinary Institute of America ("the Institute" or "CIA") located on Route 9 in the adjacent Town of Hyde Park, Dutchess County, New York. Currently, the Town supplies approximately 130,000 gallons per day ("gpd") to the Institute from the Hudson River. The Town does not seek any changes to this supply. The Institute is located within the Hyde Park Fire & Water District ("the District") and in January 1995, the District first became capable of serving the Institute. The staff oppose granting the Town's application based upon its view that the Town has failed to meet the criteria in the Article 15 and Part 601 for a water supply permit.
History of Town's Current Connection to CIA
In 1972, the Institute, a college of approximately 1,400 students, moved to its current site in the Town of Hyde Park which was formerly served by private wells. These wells were unable to supply adequate water and in 1973, to obtain water from the New York State Department of Mental Hygiene's facility at the Poughkeepsie Psychiatric Center ("Center"), the Institute constructed a water line along the east side of the Conrail railbed to serve its needs. In 1984, due to deficiencies in its private water supply, the Department of Mental Hygiene decided to abandon that supply and to purchase water from the Town of Poughkeepsie. The Center was located within a Town water improvement district. The Town acquires its water from the City of Poughkeepsie ("the City) which uses the Hudson River as its source of supply. At this same time, the Institute arranged to also receive its water from the Town of Poughkeepsie through the Center's water lines which the Institute maintain. In addition, while no new construction was involved in this endeavor, in 1993, the CIA purchased an easement from Conrail that it had previously leased for the connection.
By letter dated October 18, 1984, the State Department of Health ("DOH") approved the installation of the connection mains between the Center and the Town of Poughkeepsie. In this letter, DOH also referred the Town's engineer to the Department to see if a permit was required for this connection and for service to the Institute. By letter dated February 4, 1985, G. Gordon Behn of the Department's Bureau of Water Resources advised the Town that the project -- the connection between the Center and the Town's water system -- did not require a water supply permit from the Department.
Hyde Park Fire & Water District Expansi
In 1986, the Department and the District entered into a consent order to address the District's State Pollutant Discharge Elimination System ("SPDES") violations related to discharges from its water treatment plant into the Crum Elbow Creek. To correct these violations, the District decided to construct a new drinking water treatment facility. In 1987, the District obtained legislative approval to expand its territory to include the Institute. See, L.1987, ch.651. By permit dated March 8, 1988 (WSA #7857), the Department approved the District's construction of a new water treatment plant for distribution of 2.1 million gpd of water from the Hudson River to the expanded district. The Department classified this project as Type I under the State Environmental Quality Review Act ("SEQRA") and required that the District prepare an environmental impact statement. It was not until January 1995 that the District completed the installation of distribution pipes that would enable it to serve the Institute.
Town's Current Water Supply Permit Application Proceedings
In September 1995, in response to the Department's request that the Town apply for a water supply permit based upon the District's observation that the Town did not possess DEC's authorization to connect to the Institute, the Town submitted its water supply permit application to DEC. On October 16, 1995, the Department staff determined the Town's application was complete and this notice was published in the Environmental Notice Bulletin of October 25, 1995 and the Poughkeepsie Journal of November 9, 1995. Because the staff determined that the water supply connection existed prior to the enactment of the SEQRA in 1975, the Department has classified this project as an excluded action pursuant to 6 NYCRR .617.2(p).
LEGISLATIVE HEARINGS and PUBLIC COMMENT
A notice of public hearing, dated May 10, 1996, was published in the Department's Environmental Notice Bulletin and the Poughkeepsie Journal on May 22, 1996. As announced in the hearing notice, legislative hearing sessions were held in the afternoon and evening of June 18, 1996 at Marist College in Poughkeepsie, New York. There was a combined attendance at the two sessions of approximately 65 people of which 21 were speakers. Apart from the Town and Institute representatives, all of the comments received were in opposition to the issuance of a permit to the Town. The speakers, the majority of whom were Hyde Park Fire & Water District residents, are concerned about their water rates. They expressed the view that the Institute had been part of the District's expansion plans and was therefore obligated to accept its supply from the District. One speaker stated that the water quality from the District could be better than that of the Town's at times of drought due to the effect of saltwater intrusion. With this one exception, concerns regarding the quality of the water supply or impacts to the source of the supply were not raised by commenters or by the parties.
ISSUES CONFERENCE
The issues conference was held on June 19, 1996 at Marist College in Poughkeepsie, New York. The purpose of the conference was to determine what issues bearing on permit issuance would require adjudication and who, among the petitioners for party status, would participate in an adjudicatory hearing, should one be required. The participants at the issues conference were the Town, DEC staff, the Institute and the District.
The Town was represented by Town Attorney Patrick Moore and Deputy Town Attorney Denise Ackerman. Because Mr. Moore could not be present for much of the conference, the Town provided that Jon Holden Adams, Esq. of Corbally, Gartland and Rappleyea would serve as Special Deputy Attorney for the Town. In addition, Mr. Adams represented the Institute.
The District was represented by Allan E. Floro, Esq. of Nixon, Hargrave, Devans & Doyle with Nancy Holtby, Esq. assisting.
The staff was represented by Sandra Ansley, Assistant Counsel with Keith Silliman, Assistant Counsel assisting.
Timely filings for party status were received from the District and the Institute. Because these parties had submitted lengthy submissions to Department staff and the Office of Hearings and Mediation Services prior to the publication of the hearing notice, the notice provided that petitioners could incorporate by reference these prior submissions. Accordingly, the District referred to submissions dated March 29, 1996 and November 10, 1995 and these are incorporated into its petition. Similarly, it was agreed at the issues conference that the Institute's letter to Michael Merriman of DEC's Division of Compliance Services (formerly Regulatory Affairs) dated November 20, 1995 is part of its petition.
By letter dated May 10, 1996, staff notified the Town of its decision to recommend that the permit be denied. In this letter and at the issues conference, the staff stated that its opposition is based on the Town's failure to meet two of the requirements of ECL .15-1503(2) and 6 NYCRR .601.6. Specifically, the staff argues that because the District is now ready to serve the Institute, which is physically located within the boundaries of the District, there is no public necessity for the Town's water supply. ECL .15- 1503(2); 6 NYCRR .601.6(b)(1). For the same reasons, the staff presents that the Town did not consider the District as an alternative source of water supply in its application as required by ECL .15-1503(2) and .601.6(b)(2). With respect to the 1985 Behn letter, the staff argue that it did not constitute any approval for the Town to supply water to the Institute and in any event, the government cannot be estopped from carrying out its governmental responsibilities. The staff also maintain that since there are no environmental quality issues at stake, there should be no consideration of any economic issues, i.e., rates, etc.
The District concurs with the position of staff. However, the District argues additionally that because it considered the Institute a key component in the planning of the expanded water supply district, it requires the Institute's water payments in order to prevent an unfair burden on the other rate payers in the District.
In support of its application, the Town argues that its connection to the Institute met the needs of this institution when no other public source existed. The Town argues further that consideration of another source, i.e., the District, is not necessary because the water it supplies to the Institute is excess water available to it based upon its existing water supply permits. The Town also argues that because there is no distinction between the quality of the water available from the Town and the District nor difference in the environmental impacts as a result of either supply, it is the Institute's preference, as customer, that is paramount.
The Institute concurs with the Town and also advances several equitable arguments in support of maintaining the current supply. The Institute argues that because it has invested financially in the connection to the Town and has used that connection for some time, it has a vested right to that connection. In line with this theory, the Institute argues that the Gordon Behn letter of February 1985 constituted Department approval and DEC is estopped from altering that approval due to the Institute's reliance upon it. The Institute poses that it has already paid assessments that contribute to the cost of the District's water treatment plant upgrade but that it should not have to pay higher water rates when it has a less costly supply.
PARTY STATUS
According to the Department's permit hearing regulations, an issue proposed by a prospective intervening party is adjudicable if it is substantive and significant. An issue is substantive if there is sufficient doubt about the applicant's ability to meet statutory or regulatory criteria applicable to a project, such that a reasonable person would require further inquiry. In determining whether such a demonstration has been made, the ALJ must consider the proposed issue in light of the application, draft permit and related documents, the content of any petitions filed for party status, the record of the issues conference and any subsequent written arguments authorized by the ALJ. 6 NYCRR .624.4(c)(2). An issue is significant if it has the potential to result in the denial of a permit, a major modification to the proposed project, or the imposition of significant permit conditions in addition to those proposed in the draft permit. 6 NYCRR .624.4(c)(4).
With certain exceptions, pursuant to Article 15 of the Environmental Conservation Law, the Department is delegated the authority to approve the taking of water for potable purposes or other uses. ECL .15-1501. ECL .15-1503 provides for the Department to use a permitting process for this approval and also sets criteria for approval. See also, 6 NYCRR Part 601. The Department shall determine whether:
- the proposed project is justified by public necessity;
- whether the project takes proper consideration of other sources of water that are available or that may become available;
- whether the supply will be adequate;
- whether there will be proper protection of the supply and whether there will be proper treatment of any additional supply;
- whether the 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;
- whether there is provision for fair and equitable determinations of and payments of any direct and indirect legal damages to persons or property that will result from the acquisition of any lands in connection with the proposed project or from the execution of the proposed project.
ECL .15-1503(2); 6 NYCRR .601.6(b).
In order to obtain party status, a petitioner must also meet the requirements in 6 NYCRR ..624.5(b)(1) and (2) -- the petitioner has raised a substantive and significant issue or can make a meaningful contribution to the record regarding a substantive and significant issue raised by another party and has an adequate environmental interest. The District and the Institute have applied for full party status. The Institute has applied for amicus status in the alternative. Neither the Town nor the Institute has an objection to consolidation with each other.
Pursuant to .624.5(d)(2), amicus status will be granted where the petitioner has filed an acceptable petition, has identified a legal or policy issue which needs to be resolved by the hearing and has demonstrated sufficient interest in the resolution of such issue and through expertise, special knowledge or unique perspective may contribute materially to the record.
It is clear that both the District and the CIA have an interest in this application. The District has concerns relating to the potential approval of an application for water supply in its service area to an outside municipality. It has raised legal issues concerning whether the supply is required by public necessity, whether alternative sources have been considered and whether granting of the permit would be a just and equitable result to the residents of the District and the Town. Therefore, the District is an appropriate party in this proceeding.
The Institute supports the application and thus, has not raised an issue as to the Town's ability to meet permit requirements. However, because the results of this proceeding bear directly on the Institute and because it has demonstrated an in depth knowledge of the history of this matter, it is appropriate that it be granted party status. 6 NYCRR .624.5(d)(1)(ii).
Although I do not find that the issues presented in this proceeding are subject to an adjudicatory hearing, I do find that both the District and the Institute have raised significant and substantive legal questions sufficient to grant them party status. 6 NYCRR ..624.4(c)(2), (3).
DISCUSSION
Vested Rights
The Institute argues that it acquired a vested right in the connection that it has maintained with the Town by virtue of its expenditures on this connection and the passage of time. The District argues that because no valid permit was granted to the Town and there was no substantial expenditure made in furtherance of the connection, there is no vested right in the connection. I conclude that Article 15 does not confer the CIA with vested rights in the Town's water supply. The Department must limit its review to that of the criteria set forth in the statute and the implementing regulations. Certainly, while the needs of the Institute and its population must be considered as part of this application, the ECL does not grant any individual property owner an entitlement to a certain water supply. Rather, the Department is bound to consider the impacts to the resource and to the supply on the actual or prospective needs of others that will be affected by the project. ECL .15-1503(3).
In the brief submitted on behalf of the Town and the CIA, in support of the vested rights argument, these parties cite Lefrak Forest Hills Corp. v. Galvin, 40 AD 2d 211 (2d Dep't 1972), aff'd, 32 NY 2d 796 (1973), cert denied sub nom, Baum v. Lefrak Forest Hills Corp., 424 U.S. 1004 (1973); Town of Orangetown v. Magee, 88 NY 2d 41 (1996); and Kadin v. Bennett, 163 AD 2d 308 (2d Dep't 1990). However, these decisions are not relevant to this matter because in all three of the cited cases, permits were granted. Most importantly, these cases involved building permits not water supplies. And, in Kadin, the court noted that vested rights must be determined on a case specific basis. Here, the Town did not apply for nor obtain a permit. Moreover, it did have the benefit of its investment in the connection to the Town's water supply over a lengthy period of time.
Similarly, these parties' reliance on Parkview Holding Corp. v. Joy, 58 AD 2d 865 (2d Dep't 1977) is misplaced because in that matter the court held the respondent agency could not delay the processing of an application so that revised regulations applied to the petitioner's project. In other words, an agency cannot refuse to make a decision within a reasonable time. Here, the Town did not apply for a water supply permit until recently.
Estoppel
The Institute also argues that the Department is estopped from denying a permit to the Town because the February 1985 Behn letter constituted an approval of the connection upon which the Institute and Town relied. The staff and the District argue that because the Town never made an application for a permit and the Department never made a determination on such application, the Town cannot claim that it relied to its detriment on DEC's actions. As noted by the District, it is not even clear to what document Gordon Behn was responding in his February 4, 1985 letter.
The October 18, 1984 DOH approval letter to the Town's engineers suggests that the Town check with DEC regarding the need for further approvals for the connection to the Institute. This letter has a carbon copy to a "Mr. Dean" at DEC. The letter of transmittal from the Town's engineers, Milton Chazen Associates, to Gordon Behn dated November 13, 1984 references a USGS map that is attached and notes the continued service to the CIA via the Center's system. The controversial February 4, 1985 Behn letter to Town of Poughkeepsie Supervisor Buchholz states that the Bureau of Water Resources determined that the connection between the Center and the Town's water system did not require a permit. The letter does not refer to the DOH approval letter, the Chazen letter nor mention the Institute; although it is possible that Mr. Behn was cognizant of the connection.
In any event, the State cannot be estopped from performing its statutory duty, which in this case is ensuring that water supply permits are obtained by entities seeking to serve customers outside of their service area. ECL .15-1501; Town of Cornwall v. Diamond, 39 AD 2d 762 (2d Dep't 1972).
In their brief, the Town and the CIA argue that governmental immunity from equitable estoppel is not absolute and rely on Our Lady of Good Counsel R.C. Church and School v. Ball, 45 AD 2d 66 (2d Dep't 1974), aff'd 38 NY 2d 780 (1975) and Magee, supra, in support. Again, in Magee, a permit was found to be improperly revoked and in Our Lady, the agency delayed a decision on an application, thus improperly subjecting the applicant to new standards.
In Catskill Center v. Jorling, 164 AD 2d 163 (3d Dep't 1990), cited by the Town and the CIA, the Third Department found that the application for a transfer of riparian rights permitted the Department's limited review. The Town and CIA argue that the Behn response was tantamount to such limited review because there was no requirement for a permit for the service between the Town and the Center. While a limited review may have been appropriate, no application was made until the one pending before the Department. Because no application was made by the Town nor permit granted by DEC prior to this application for this service, these cases are inapposite.
Alternatively, citing Environmental Concern, Inc. v. Larchwood Corp., 101 AD 2d 591 (2d Dep't 1984), the Town and Institute argue in their brief that the Behn letter constituted a "waiver" of permit requirements and that DEC should not be permitted to recant their former position. As these parties themselves admit, the Behn letter was not a response to a formal application. Therefore, the Department's position is not inconsistent because it never made a determination on a permit application.
As noted by the District in its brief, the courts rarely grant estoppel against a government entity. In Parkview Associates v. City of New York, 71 NY 2d 274 (1988), cited by the District, the Court of Appeals reiterated its position that estoppel is not available against a municipality from enforcing zoning laws and the mistaken issuance of a permit does not estop it from correcting errors, even when there are harsh results. In Parkview, the city stopped a developer from going forward with the construction of a building that was in excess of the height restrictions in the special district where it was located. The court upheld this prohibition in spite of the fact that mistaken approvals were given by city employees. The court reasoned that the developer was in a position to determine the appropriate restrictions if it had exercised "reasonable diligence". Again, here no permit was given and we are not addressing a zoning/building problem. To the extent analogies can be drawn, the Parkview analysis is the appropriate one. Article 15 requires a permit and the Town was in a position to obtain a determination from the Department at the time of its connection to the Town's supply.
Based upon the above discussion, there is no basis for finding that vested rights, estoppel or waiver need to be addressed further in this proceeding.
Public Necessity
The parties do not dispute that public necessity is one of the criteria that the Department must consider in making its determination on the permit. 6 NYCRR .601.6(b)(1). Nor do the staff and the District dispute that when the Town initially began supplying water to the Institute, there was no other public source of water available to the CIA and thus, the connection was warranted by public necessity. In fact, the staff representative at the issues conference stated that it was likely that the permit would have been granted had application been made in 1985. However, the staff and the District argue, in contrast to the Town and the Institute, that the Department must consider the application based upon the circumstances that prevail now. Since currently, the District is in a position to supply water to the Institute and the Institute is located in the approved expanded service area of the District, they argue that there is no public necessity to grant the Town's application.
In its brief, citing Sunhill Water Corp. v. Water Resources Commission, 32 AD 2d 1006 (3d Dep't 1969), the staff state that because the applicant has not demonstrated public necessity for the supply due to the availability of the District's supply, DEC must deny the permit. In Sunhill, the Water Resources Commission denied a private water company a permit to expand into a subdivision outside of its service area and within an area designated to the Suffolk County Water Authority. In Sunhill, the Commission found that the capabilities of the Authority for providing water -- source, storage capacity, integration of distribution mains, and maintenance -- greatly exceeded that of the private company. Here, there are no allegations made by any party that the District or the Town would provide better service. In addition, this application is for a ratification of an existing supply rather than a new supply into an area that is designated to the District.
The Institute and Town note in their brief that the public necessity criterion is meant to address the protection of the source of water for the use by the public. I agree that the public necessity standard is meant to provide some measurement of the public's need for the particular water supply. Ton-Da-Lay v. Diamond, 44 AD 2d 438 (3rd Dep't 1974). The public is defined as those living in the surrounding and affected communities. Id. For example, in Town of Hempstead v. Flacke, 82 AD 2d 183 (2d Dep't 1981), the court affirmed the Department's denial of a water supply permit for non-potable use where there were concerns about the long term needs of the surrounding communities for potable water.
In this case, the source of water is the Hudson River and no party has raised an issue as to potential negative effects to that source resulting from the Town's water supply connection to the CIA either in the present or foreseeable future. If the District were to supply the water to the Institute, similarly, there would be no additional impacts to the water source because the same quantity of water would be taken from the identical source -- the Hudson River. There is no question that the Institute requires a public supply of water in order to operate its large educational facility. Regardless of which entity supplies the Institute with its water, the impacts to the surrounding communities' water source will remain constant.
Because it is undisputed that the CIA's use of the water supply is essential and the source of the supply will not be significantly affected, there are no factual issues to determine with respect to the issue of public necessity. There is a need for the supply and it will not impinge on the water supplies of surrounding communities. See, Town of Hempstead v. Flacke, 82 AD 2d 83 (2d Dep't 1981). Although the Institute requires the water however, because the District in which it is located can now supply this resource, the public necessity for the Town's connection is lacking. When duly formed districts are established and water supply from within those districts is available, those connections need to be supported. Otherwise, the ability of the districts to plan to develop their resources is hampered by the potential for competition with outlying water suppliers. This result would undermine the viability of water systems that are necessary for the community. The Town has not met the public necessity requirement in Article 15 and Part 601 due to the District's ability to supply the Institute.
Alternative Sources
The staff and the District argue that the Town has not met the requirement in 6 NYCRR .601.6(b)(2) that the applicant properly consider other sources of water supply that are or may become available. The Town disputes this argument in an addendum to its application (Ex. 3, p.3), stating that the water to be used is surplus water available to it pursuant to an existing water supply permit, and thus consideration of other sources is not necessary. In addition, the Town argues that because DEC granted the Town's permit (WSA 5488 - granted in 1968 and modified in 1972) prior to the District's, the Department presumably factored that prior determination into its decision to grant the District's 1988 permit.
The Institute posits that because there were no alternative sources at the time that it connected to the Town through the State's facility, it is this historical perspective that should govern. And, the Institute argues that as the customer, its interests should come first.
It is true that there were no alternative sources when the CIA made its connection to the Town, however, the Town did not apply for nor obtain the appropriate Article 15 permit for this out-of- service area connection. Now that it has applied for the permit, another viable water supplier, the District, exists. Moreover, the Institute is located within the legislatively designated service area of the District and DEC approved the District's application to serve this area in 1988.
In the cases cited by the parties, there appears to be some environmental or engineering consideration that provides sufficient weight to readily declare one competing water supplier superior over another. See, e.g., Swan Lake Corp. v. Water Resources Commission, 31 AD 2d 44 (3d Dep't 1968) (Water Resources Commission granted Suffolk County Water Authority ["SCWA"] permission to supply water to hospital rather than private corporate based upon evidence that SCWA had bigger and better supply). In this matter, the sole purpose of the Town's application is to ratify the status quo. But the Department must consider the changed circumstances in the availability of an alternative water supply since the Town originally made its connection to the Institute.
It would seem appropriate to ratify a supply that satisfies all health and environmental concerns. And, as pointed out by the Town and the Institute in their brief, the parties do not present authority for the proposition that the existence of the District alone constitutes sufficient basis to connect the CIA to that supply. However, when the Department granted the District's application for an expansion to include the CIA, the Town had notice of that event and should have pursued any remedies it deemed appropriate. Because the Town has no permit to serve the Institute, the Commissioner retained the right to allow the District that serves the area of the CIA to supply the Institute with water. See, e.g., Suffolk County Water Authority v. Water Power & Control Comm'n, 12 AD 2d 198 (3d Dep't 1961).
Having retained that right however, the Department is bound to consider the needs of the existing areas served. Suffolk County Water Authority v. Water Power & Control Comm'n, 12 AD 2d at 202. In this matter, there are no issues related to environmental or scarcity matters and thus, based upon the District's designation as the water supplier for the area in which the Institute is located, it is appropriate that it be permitted to provide that service. To find otherwise would allow entities to shop for water service, thereby creating uncertainty for established systems and users. Given the vital importance of a reliable and clean public water supply, the Legislature has sought to avoid instability by establishing designated service areas and by providing for DEC's supervision of allocation of water resources. While the Town's supply to the Institute may have been necessary prior to the District's expansion, such is no longer the case.
There is no factual question as to the existence of another source. The parties have not disputed the District's capability to serve the CIA at this time. In 1988, the Department determined that the District fulfilled the requirements of Article 15 and Part 601 by granting the requested permit to the District. Therefore, the Town has not met the standards in Article 15 and Part 601 by failing to demonstrate that despite the availability of a water supply within the service area of the Institute, the Department should grant its permit application.
Just and Equitable
The staff argues that the just and equitable criterion does not apply to this proceeding because there are no environmental matters to consider. In support of this argument, in its brief, staff cite to a number of court and administrative decisions regarding water supplies that address the just and equitable criterion. As noted by staff, these cases do not address economic issues and instead, address the questions of public need and availability of resource. In City of Poughkeepsie v. Diamond, 76 Misc 2d 290 (Sup. Ct. Alb. Co. 1973), Justice Larkin affirmed DEC's decision on a water supply where the Commissioner determined that questions raised as to present and future rates and charges were not within DEC's purview. While there are several DEC Commissioner decisions in which economic considerations were factored into the determination on the subject water supply application, these appear to be situations where large capital expenses were projected. Town of Geneva, Hearing Report (annexed to Commissioner's Decision, April 29, 1988) (Commissioner opted to choose the supply that would prove less costly to the inhabitants).
At the outset of these proceedings, the District stated its agreement with the Department that economic matters do not bear on the just and equitable criterion. However, the District also stated in its petition and at the issues conference that it was prepared to demonstrate the negative consequences to the District's inhabitants in the event that the CIA did not join its supply.
At the issues conference, the Town did not put forward proof on this matter and, interestingly, while the Institute also argued at the issues conference that the economics of the supply was not relevant, it also provided information in its petition regarding the negative effects of the District's water rates on this educational institution. In the post-issues conference brief and reply brief submitted by the CIA and Town, they argue that economics should not be a consideration because the limited objective of Article 15 is the prudent allocation of water resources. They argue further, in line with staff, that unless a water supply is in jeopardy, economic issues are not germane and because both the Town and the District draw water from the same source that is not an issue. The Town and Institute contend that no customer can become a guarantor of a facility and to attempt to do so goes beyond the purposes of Article 15.
Primarily, a determination of just and equitable in this context requires the Department to ensure that an adequate water supply will be available to the surrounding residents. While economic factors may play a role in this determination, it would appear that they do so only when there are extraordinary costs associated with a certain supply or in the event a water supply may be in jeopardy based upon economics. While the District and the Town/CIA may have contrary evidence on the future of water rates, this information is speculative. More importantly, as noted by the Institute, the State cannot be a guarantor of the rates regardless of the supplier. Instead, the Department must scrutinize the application in light of whether the residents of the Towns will have an adequate supply.
The source of water here is not in jeopardy and it does not appear that economic matters will result in harm to the viability of either potential water supply. Rather, the Legislature has determined that the District's service area should be expanded to encompass the vicinity of the Institute and accordingly, the District has included the CIA in its planning. As the Town notes, it is currently supplying "excess" water to the Institute and whether it continues that service or not will not have a large influence on the supply to the Town's residents.
Monopoly
In its submissions, the CIA questioned the jurisdiction of the Department to, in its words, "create a monopoly" by requiring the Institute to connect to the District's supply. It is clear that the Department has broad authority and responsibility to make determinations affecting water supply in the interests of the public. See, Matter of City of Syracuse v. Gibbs, 283 NY 275 (1940). And, while the entire State's interest will not be considered in each water supply application (Ton-Da-Lay v. Diamond, 44 AD 2d 438 [3d Dep't 1974]) and one water customer's needs should be weighed in making the decision, the Department is obligated to look beyond the interests of an individual landowner. Sperry Rand Corp. v. Water Resources Commission, 30 AD 2d 276 (3d Dep't 1968).
Constitutionally Protected Property Rights
In their brief, citing Walz v. Town of Smithtown, 46 F.3d 162 (2d Cir. 1995), the Town and the Institute argue that the CIA obtained a constitutionally protected property right in the water supply from the Town in 1985 when DEC waived the permit. In Walz, the Second Circuit stated specifically that it would not address the finding of the District Court that the plaintiffs had obtained a property right in the subject water supply. Rather, the appeals court found that an arbitrary denial of the extension of a public water supply to a private homeowner was a denial of due process and a violation of 42 USC .1983. This forum is not appropriate for the litigation of alleged constitutional issues. See, e.g., Matter of Finn's Liquor Shop, Inc. v. State Liquor Authority, 24 NY 2d 647, 657, n.2 (1969), cert den, 396 US 840 (1969). Rather, the Department must make its determination on the current application before it on the basis of the criteria contained in Article 15. The State's control of water resources for the benefit of all inhabitants of the state is an incident of sovereignty. City of Syracuse v. Gibbs, 283 NY 275 (1940).
Other matters raised by the CIA in its petition such as the relationship of the Town Law, the District's role as a water versus fire district and historical conflicts between the Town and the Institute are not germane to this proceeding.
New York State Department of Health Concerns
By letter dated January 17, 1996, Laurence R. Keefe, P.E. of DOH wrote to DEC to comment on the Town's application. In this letter, Mr. Keefe stated that DOH endorsed the Town's water supply application with the condition that the water supply from the Town be limited to the buildings currently served at the CIA with all other lands and building located within the Town of Hyde Park served by the District. DOH further recommends that the Town and District interconnect the water systems to enhance service to all the consumers of public water of Dutchess County. DOH based these conclusions on the impacts of salt water intrusion and increases in water consumption on the City of Poughkeepsie's water treatment plant. While DOH was provided with notice of the legislative hearing and issues conference, it did not have a representative at either proceeding.
At the issues conference, I inquired of the parties as to the significance of the DOH comment. Because the parties stated they had not seen the 1/17/96 DOH letter, I provided copies and asked them to discuss these issues with DOH. I also asked the staff to let me know the status of these discussions. By letter dated June 27, 1996, Ms. Ansley advised me and all the parties of staff's discussions on June 26 with Mr. Keefe. Mr. Keefe reiterated DOH's recommendation with respect to the interconnection and the limits on the Town's service. He explained that DOH maintains a policy of interconnection and cooperation of water systems and such interconnection would allow the Town to get potable water from the District during emergency situations, i.e., high chloride levels. DOH also believes that this mechanism would provide for a compromise position for the parties with the existing water service between the Town remaining in effect and the District serving any future expansion.
In this same letter, staff reports that Mr. Keefe also stated that the interconnection would require maintenance. If the District were to be the new supplier to the Institute, the current hookup could be abandoned and fall into disrepair. Mr. Keefe also expressed concerns regarding the physical condition of the Institute's water supply hardware. According to staff, Mr. Keefe also advised that the Institute should be prepared for a temporary disruption of its water supply if a hookup with the District occurs because corrosion could be jarred loose.
The staff concluded in its June 27 letter that these technical problems could be addressed and did not affect its recommendation to deny the Town's permit. Ms. Ansley also invited the other parties to participate in a call with DOH and to provide information regarding the Town's current connection with respect to maintenance. By letter dated July 8, 1996, I wrote to the parties asking for their responses to the staff's letter by July 12. In a letter dated July 9, Ms. Ansley reiterated the staff's position that the "technical issues raised by DOH, . . . could be addressed, if necessary, and do not merit adjudication." By letter dated July 11, the Institute stated its support and that of the Town's for the "concepts outlined in staff's letter [of June 27]" but did not explain the nature of its agreement. The District responded by letter dated July 11 stating that the District was capable of and willing to sell water to the Town on an emergency back-up basis however, the Town could not supply the District without the construction of a pump station. The District also stated that there is no benefit to the District or its residents in interconnecting and that this issue was not relevant to the Town's pending water supply permit.
It is unfortunate that the Department of Health did not choose to participate actively in the issues conference so that these matters could have been discussed fully with the benefit of that agency's expertise. While in theory it would seem beneficial to all the parties and prudent to have an interconnection, none of the parties has provided any information that would serve as a basis to find this issue to be the subject of an adjudicatory hearing. The staff has reported that the "technical" problems can be resolved and the District states that an interconnection is not necessary or relevant to these proceedings. Therefore, regardless of the outcome of this permit proceeding, I recommend that the Commissioner require the staff to work with DOH and the parties to determine whether the interconnection should occur. In addition, the staff should ensure that the equipment status is examined so that whatever supply occurs, the Institute is provided with adequate potable water.
Draft Permit
At the issues conference, I inquired as to the parties' response to the draft permit that accompanied staff's request for hearing to this office. The representatives at the issues conference maintained that they had not reviewed the draft permit. The staff stated reluctance to discuss the conditions because of the permit's draft nature. I explained that the draft permit, while subject to change during a permit hearing, was an essential document that served as the basis for the parties' positions in their petitions and at the issues conference. The staff agreed to clarify the permit and revise it to better reflect its intent. The parties were given an opportunity to submit comments on the revised permit in their reply briefs.
The staff distributed a revised draft permit with its closing brief. The ALJ intended that the issues conference record would be held open until receipt of the parties' briefs on July 22, 1996. However, in the cover letter accompanying the reply brief of the Town/Institute, received in this office on July 22, 1996, these parties raised some questions regarding the staff's revised draft permit. This permit was not available for review by the parties until the submission of the staff's brief dated July 9, 1996. Based upon the provisions in 6 NYCRR .624.4(c)(i), I wrote to the parties by letter dated July 22, 1996, requesting that these matters be addressed and a status report be provided to me by August 12, 1996.
By letters dated August 12, 1996, staff counsel advised me that Mr. Adams, Mr. Floro, Ms. Holtby, Gordon Behn and Ms. Ansley discussed the draft permit conditions and agreement was reached on the issues raised by the letter submitted by the Town/Institute. Staff resubmitted the revised draft permit that includes changes to the permit language for condition #1. By letter dated August 9, 1996, Mr. Adams confirmed that this language is acceptable along other conditions the Town/Institute previously questioned based upon staff's representation that these are standard. Thus, there are no proposed issues for further adjudication based upon the draft permit conditions.
SUMMARY OF ISSUES RULING
I find no issues for suitable for an adjudicatory hearing as the matters addressed in the parties' petitions, at the issues conference and in their post-issues conference briefs are legal issues. I have found that the Town has not met all the criteria contained in Article 15 and Part 601 because although the Institute requires a water supply, the District is capable of serving the CIA and is the appropriate source based upon the CIA's location in the District's service area. Therefore, the Town has not demonstrated that the application is warranted by public necessity or that the project takes proper consideration of other sources of supply. In addition, because there are no issues concerning the scarcity of the source or the environmental impacts resulting from the supply whether served by the Town or the District, the just and equitable criterion is not at issue. Based upon these findings, the Town's permit application should be denied. Staff should be directed to address the DOH concerns prior to any connections between the CIA and the District.
RULINGS ON PARTY STATUS
I do not find that a factual adjudication of the issues summarized above is necessary prior to a determination on the permit. However, as discussed at pp. 6-7, the District has demonstrated adequate environmental interest and by raising substantive and significant legal issues is granted party status. Based upon the Institute's understanding and interest in this project, it is also granted party status.
APPEALS
A ruling of the ALJ to include or exclude any issue for adjudication, a ruling on the merits of any legal issue made as part of an issues ruling, or a ruling affecting party status may be appealed to the Commissioner Michael D. Zagata (NYSDEC, 50 Wolf Road, Albany, New York 12233) on an expedited basis, within five days of the disputed ruling, pursuant to 6 NYCRR .624.8(d)(2). However, due to the timing of this ruling, I will extend the period for appeals; written appeals may be filed by September 13, 1996; replies to appeals may be filed by September 20, 1996. Four copies of the appeals and replies are to be filed; one to the Commissioner and three to the Administrative Law Judge.
Filings must be received by the Commissioner by the dates indicated. The parties shall ensure that transmittal of all papers is made to the ALJ and all others on the service list at the same time as transmittal is made to the Commissioner. No filings by telecopier will be allowed or accepted. Appeals should address the Administrative Law Judge's ruling directly, rather than restate a party's position. To the extent practicable, appeals should also include citations to pages in the transcript or to specific documents.
The parties are advised that if the Commissioner's Interim Decision certifies an issue for adjudication, this matter will proceed to an adjudicatory hearing. In that event, we will set a schedule for prefiled expert testimony.
_____________/s/_____________
Helene G. Goldberger
Administrative Law Judge
Albany, New York
Dated: August 21, 1996
To: Distribution List
