Abolishes the Hudson river-Black river regulating district and devolves such powers to the power authority of the state of New York; repealer

Summary of specific provisions

Section one amends the environmental conservation law by adding a new section 15-2142.

Section two repeals Section 15-2137 of the environmental conservation law.

Section three repeals section 15-2139 of the environmental conservation law.

Section four repeals section 15-2141 of the environmental conservation law.

Section five provides that the effective date is on the first of July next succeeding the date on which it shall have become law.

Justification

The Hudson River Regulating District was formed in 1922 with the intent "to regulate the flow of the Hudson and Sacandaga Rivers as required by the public welfare including health and safety". In 1959 the New York State Legislature merged the Hudson River Regulating District with the Black River Regulating District to form the current Hudson River-Black Regulating District (HRBRRD) According to the HRBRRD web site, "New York State created the Regulating District to develop dams and reservoirs to capture excess run-off to prevent flooding in the Hudson River and Black River basins, and to release such captured water gradually during periods of low river flow to maintain water quality in each river basin. This system was designed to reduce damage from spring storms and snowmelt, including disease and destruction of life and property, and to improve river navigation and public sanitation."

In 1927 the HRBRRD entered into an Agreement with New York Power and Light Corporation (predecessor of Niagara Mohawk Power Corporation) to construct the Conklingville Dam on the Sacandaga River in the Hudson River Area and create the Sacandaga Reservoir. (now Great Sacandaga Lake). Conklingville Dam has a total head (height) of 71 feet. The Agreement allowed Niagara Mohawk to construct the EJ West powerhouse at the dam, utilizing its original 15 feet of head (from an earlier dam, at no charge) plus the HRBRRD's additional 56 feet of head (for

an annual water fee). In 1980, upon expiration of the 1927 Agreement, the HRBRRD and NMPC entered into a new Agreement to provide for the continued operation of both Great Sacandaga Lake and EJ West. In 1999 Niagara Mohawk sold the EJ West hydroelectric facility to Erie Boulevard Hydropower, L.P. (now owned by Brookfield Renewable Power). In 2003 the 1980 Agreement was prematurely terminated and the HRBRRD and Brookfield entered into a new Reservoir Operating Agreement. As stated, the intent of the 2003 Reservoir Operating Agreement was to "to maximize Erie's hydroelectric energy generation at, and revenue from, the Erie facilities (EJ West)." Erie was to pay the HRBRRD a Water Fee for t he use of the HRBRRD's 56 feet of head and the HRBRRD agreed not to exercise eminent domain with respect to EJ West. At the time the 1980 Agreement was terminated, Niagara Mohawk was paying the HRBRRD a Water Fee of $925,000. Under the 2003 Agreement, Brookfield's Water Fee was decreased to $850,000 (increasing at 3% each year). The 2003 Agreement was amended in 2006 to (1) extend the term until June 30, 2021 and (2) lower the criteria for adjustments in the Water Fee, both of which accrue to the benefit of the operator.

Under the Reservoir Operating Agreement, Brookfield utilizes the full 71 feet of head provided by Conlingville Dam for its hydroelectric plant operations at EJ West, but it owns only 15 feet. The remaining 56 feet (79%) of available head at El West is owned by the HRBRRD. The HRBRRD has abdicated its responsibility for flow regulation to Brookfield who operates EJ West (and hence Great Sacandaga Lake) to allow the operator to maximize its revenue. This means that the operator can take releases from Great Sacandaga Lake to generate electricity during hours when power sales rates are high and withhold releases when rates are low. The result is a daily pulsing of flows in the Hudson River, up and down like a yo-yo, not the steady regulated flow one would expect from a regulating district. In water year 2013 (October 1, 2012-September 30, 2013), Brookfield reported to the Federal Energy Regulatory Commission (FERC) that it generated 67,401,742 kwh at EJ West, Because the operator is allowed to control its operation to take advantage of higher on-peak power rates, it's not known exactly what Brookfield's revenue was for that generation; however, it can be estimated that a run-of-river hydroelectric plant (unable to control flow conditions) would have garnered at least $3,360,000 for the same generation. Because of Brookfield's ability to pulse its operation, it can certainly be assumed that the operator maximized its revenue opportunity. Brookfield's Water Fee to the HRBRRD was reported to be $1,100,000 in 2012 and, as reported in the 2014-15 HRBRRD budget, will continue to remain at that level.

The HRBRRD is also responsible for maintaining permits to Great Sacandaga Lake for exclusive use of the shoreline. The permits, roughly 4,500 in total at amounts starting at $50 each, bring in revenue of $425,000 per year. The permit fee has not been increased since 1983. The land that is owned by the district is forest preserve land, which is state land that is protected as "forever wild" and therefore cannot be leased or sold unless a constitutional amendment is put forward. The land is permitted each year for recreational purposes, although there is some question about whether actual surveys exist for the issued permits. Consequently, it is unclear as to the assignment of liability in the unlikely event there is a claim.

In 2008, in a case brought by an independent hydroelectric licensee, the United States Court of Appeals for the District of Columbia rendered a decision that HRBRRD had no authority to exact compensation from the licensee for headwater benefits. The matter was remanded to FERC who convened a headwater benefits determination proceeding that resulted in significantly reducing the allowable headwater benefits assessments that HRBRRD can charge all hydroelectric plants located downstream of Conlingville Dam. This created a $4.45 million budget gap in the HRBRRD operating budget. In an attempt to rectify this situation, in February 2010 the HRBRRD assessed the five county regions of Albany, Rensselaer, Saratoga, Warren and Washington a total of $4.45 million for a newly determined flood control benefit. It should be noted that the HRBRRD had the opportunity to assess individual property owners (public and private) and/or individual municipalities however assessment of the counties was chosen. The counties responded by filing a lawsuit against the HRBRRD to protect their taxpayers' rights. In 2013, the five counties and HRBRRD settled the lawsuit with the following payment schedule for the next four years:

ÑAlbany CountyÑ$1,034,698 ÑRensselaer CountyÑ$ 542,447 ÑSaratoga CountyÑ$1,035,809 ÑWarren CountyÑ$ 242,908 ÑWashington CountyÑ$ 138,238 ÑTOTALÑ$ 2,994,100

As part of the 2013 settlement, New York State agreed to offset some of the costs of this burden by adding $1 million a year to the operating budget of the HRBRRD, which will reduce. the charges to the counties by that amount.

Nevertheless, the counties will have to pass along the remaining burden of this settlement to their county property taxpayers by raising their taxes in order to generate the necessary revenue. This bill is a step toward saving local taxpayers millions of dollars by eliminating the Hudson River Black River Regulating District and, consequently, their onerous fees and yet another unfunded mandate on county government.

Through a careful review of the timeline listed above, at various periods under the prior management of the HRBRRD amendments and changes were made to the Reservoir Operating Agreement that provided significant operational control and revenue-generating opportunities to the owner of the EJ West hydroelectric plant. During these same periods there were several reports of excessive and lavish spending by the prior management of the HRBRRD. In as much as the current management and board is operating the HRBRRD as efficiently as possible, actions taken prior to the current management and board provided the lack of control over flow management and the additional burden on county taxpayers is not tolerable. When the State Legislature created the Regulating District, it was never intended that the counties, and more importantly their taxpayers, would be responsible for the operational costs. In fact, the private companies that generated power were responsible for the cost of operations of the district.

Currently, the New York State Power Authority (NYPA) manages several dams and reservoirs and is well qualified and equipped to perform the functions of the HRBRRD. Transferring the duties of the HRBRRD to NYPA would be a logical and prudent transition. It would allow for the continued management of the permit system, but also provide an opportunity to allow for better flow regulation and increase government efficiency.

Legislative history

2013-2014: S.1139-b Remained in Senate Education Committee 2011-2012: S.591A/A.3075A Remained in the Senate Committee on Education and the Assembly Committee on Environmental Conservation 2009-2010: S.8118A/A.11401A Remained in the Senate/Assembly Committees on Environmental Conservation

Fiscal implications

None.

Effective date

This act shall take effect on the first of July next succeeding the date on which it shall have become a law; provided, however, that effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date is authorized and directed to be made and completed on or before such effective date.