Matter of Chasm Hydro Inc. v New York State Dept. of Envtl. Conservation

[*1] Matter of Chasm Hydro Inc. v New York State Dept. of Envtl. Conservation 2007 NY Slip Op 52670(U) [27 Misc 3d 1219(A)] Decided on November 2, 2007 Supreme Court, Franklin County Demarest, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 2, 2007
Supreme Court, Franklin County

In the Matter of the Application of Chasm Hydro, Inc., CHATEAUGAY HYDRO PARTNERSHIP, CHASM HYDRO PARTNERSHIP, and JOHN H. DOWD, INDIVIDUALLY, and as general partner of CHATEAUGAY HYDRO PARTNERSHIP and/or as general partner of CHASM HYDRO, PARTNERSHIP, Petitioners,

against

New York State Department of Environmental Conservation, Respondent.



2007-439



Poklemba & Hobbs, LLC (Gary C. Hobbs, Esq., of counsel), attorneys for Petitioners; Joseph Koczaja, Esq., Assistant Attorney General, attorney for Respondent.

David Demarest, J.

Chasm Hydro, Inc., et al ("Chasm") seeks an Order under New York C.P.L.R. Rule 7805: staying the administrative proceedings; finding that Respondent, New York State Department of Environmental Conservation ("NYSDEC") does not have permitting or regulatory authority over Chasm Dam; dismissing NYSDEC's Notice of Hearing and Complaint against Petitioners; awarding costs and attorney's fees; and, for such other relief as may be just and proper.

NYSDEC opposes the relief sought, cross-moving for dismissal of the C.P.L.R. Article 78 petition.

The primary focus of Chasm's application is C.P.L.R. Rule 7803 (2), in which it raises the question of whether NYSDEC "proceeded, is proceeding or is about to proceed without or in excess of jurisdiction." Secondarily, the question presented is whether NYSDEC made a determination "in violation of lawful procedure" and/or whether the determination "was affected by an error of law or was arbitrary and capricious or an abuse of discretion, including abuse of discretion as to the measure or [*2]mode of penalty or discipline imposed." C.P.L.R. Rule 7803(3). The latter is not fully addressed in this application, perhaps because Chasm recognizes it is not ripe, since it seeks to prevent the hearing from happening.

In support, Chasm claims:

1) Chasm Dam is a federally regulated hydro-electric dam, operating since June 15, 1981.

2) On October 31, 1980, NYSDEC granted Chasm's application for Water Quality Certification ("WQC"), pursuant to Clean Water Act of 1977 ("CWA"), §401 (d), Part D, Section III, certifying that if the Federal Energy Regulatory Commission ("FERC") issued a licence or exempted Chasm Dam as a hydro-electric project, the project was not likely to violate water quality standards. The Chasm Dam project was ultimately approved, on June 15, 1981, as a project exempt from Part I of the Federal Power Act ("FPA") licensing requirement, but nonetheless regulated by FERC.

3) The WQC of 1980 identified NYSDEC requirements, which became conditions of FERC exemption. The WQC, according to Chasm, allows Chasm to dewater and refill the pond area for dam repairs and/or maintenance purposes. Periodically the pond was drained and the dam was repaired without permit or involvement by NYSDEC.[FN1] The dam is inspected yearly by a FERC representative.

4) In the Summer of 2005, FERC's representative, P. Emeruwa Anyanwu ("Anyanwu"), made a regularly scheduled annual visit to Chasm Dam. At that time, Chasm discussed its plan to drain the pond in order to resurface the face of dam and perform necessary maintenance to the penstock area.

5) Anyanwu visited the dam on April 25, 2006. This was preceded by an April 17, 2006, letter from Anyanwu advising Chasm he would inspect the hydro-electric facility on April 25, 2006, to address proposed repairs. Other interested persons and/or agencies, including NYSDEC, copied with the letter, were asked to contact Anyanwu if interested in accompanying him on the inspection visit. Chasm considers this language to be an invitation to those copied on the letter to attend the inspection. No one from NYSDEC attended the inspection.

6) During his visits in 2005 and 2006, Anyanwu told John H. Dowd (Dowd), owner of Chasm Hydro, Inc., to let FERC know when repairs would take place and to alert NYSDEC that Chasm would be opening the gate to make the dam repairs. Dowd alerted NYSDEC.

7) Dominic C. Fontana ("Fontana"), an engineer with NYSDEC, upon being contacted by Dowd, made a visit to the dam sometime in or around May 2006. Fontana advised Dowd it would be necessary to obtain protection of waters and dam safety permits before opening the dam or making repairs. By letter dated May 9, 2006, NYSDEC confirmed the permits were necessary. Relying on these representations, Dowd filed the joint application on June 1, 2006.

8) Dowd had a telephone conversation with either Fontana or Michael McMurray ("McMurray") at NYSDEC who informed Dowd it was difficult, even for NYSDEC staff, to get through to the dam safety department, and dam safety people would be unable to [*3]visit for at least a year to approve repairs. No affidavit of McMurray to this effect is included in the submissions.

9) Dowd then apparently had a conversation with Anyanwu, who told him FERC regulated Chasm Dam, not NYSDEC, and state permits were not necessary for the repairs. There is no affidavit from Anyanwu (nor any excuse tendered for the lack of an affidavit) as to statements he is claimed to have made. Such representations are hearsay.

10) On June 26, 2006, Chasm submitted applications to FERC regarding the planned repairs and maintenance.

11) NYSDEC issued a stream disturbance permit and WQC permit June 30, 2006, in response to the application of June 1, 2006.

12) On July 12, 2006, FERC, in a letter, authorized Chasm to commence spillway resurfacing and downstream gate house sub-structure repairs to Chasm hydro dam.

13) On September 5, 2006, Petitioner opened the mudgate to dewater the pond to make necessary repairs.

14) On November 11, 2006, NYSDEC served Chasm with a Notice of Hearing and Complaint, alleging violation of the stream disturbance permits as well as other claims alleging violations. The Notice of Hearing and Complaint seeks civil penalties for failing to obtain a NYSDEC dam repair permit and/or for engaging in discharge of water, silt, sand, and other materials from Chasm Dam during dam repairs, and for engaging in dam repairs in violation of the stream disturbance permit, in violation of Environmental Conservation Law ("ECL") Articles 11, 15, and 17.

According to Chasm, NYSDEC claims, among other things, it violated state permitting requirements by not obtaining a dam safety permit before opening the mudgate and that Chasm violated the stream disturbance permit by allowing in excess of 200 cubic yards of sediment to flow downstream.[FN2]

Chasm claims NYSDEC is proceeding without jurisdiction or in excess of its jurisdiction, because Chasm is a federally regulated hydro-electric facility, which preempts any authority NYSDEC has relative to repairs and maintenance of the dam. Chasm argues: FERC has exclusive jurisdiction over licensing, permitting and regulation of Chasm; federal pre-emption over licensing and regulation of hydro-electric facilities is not new; federal pre-emption eliminates overlapping or duplicative review by state and federal agencies and avoids potential conflicts with the FPA; the FPA includes a narrow exception, which allows States the limited power of review relating to control, appropriation, use, and distribution of water; NYSDEC can consider the impact a hydro-electric project will have on water quality pursuant to the CWA but argues NYSDEC has no veto power over Chasm's ability to repair and maintain the dam.

Ultimately, Chasm's argument is: Chasm applied for and obtained a permit from FERC to maintain and repair the dam; the nature of the planned project contemplated discharge of water, silt, sand and other materials into navigable waterways; NYSDEC [*4]was afforded the right to review the project within the confines of the narrow exception to FPA regulation of hydro-electric facilities; NYSDEC granted Chasm a WQC and stream disturbance permit under 401 CWA; on July 12, 2006, FERC authorized Chasm to commence spillway resurfacing and downstream gateway house sub-structure repairs, including permission to drain its dam; and, Chasm was not required to obtain a permit from NYSDEC to repair the Chasm Dam. Chasm further argues exhaustion of remedies is not required where an agency is proceeding in excess of its jurisdiction.

In support of the cross-motion for dismissal, NYSDEC claims:

1) On October 31, 1980, NYSDEC issued a WQC to Chasm under the CWA, making a finding that Chasm Dam will not violate New York's water quality standards "provided that the dam and its operations comply with all applicable state laws and regulations and that a minimum downstream flow is maintained."

2) On June 1, 2006, Chasm made an application to NYSDEC to release sediment into the Chateaugay River, and to repair Chasm Dam.

3) On June 26, 2006, Chasm submitted the repair plans to FERC's regional engineer, notifying him they would receive necessary NYSDEC permits within a week.

4) On June 30, 2006, NYSDEC issued an E.C.L. Article 15 stream disturbance permit and a WQC, but not a dam repair permit, and specifically indicated the stream disturbance permit did not authorize any repairs to the dam.

5) A notice of incomplete application regarding the dam repair application, was sent to Chasm with comments from the dam safety office.

6) The FERC authorization for Chasm to start repairing the dam included language stating construction could start "with the understanding that all work will be done to meet the environmental requirements as stipulated on the NYSDEC permit."

7) On August 20, 2006, Chasm started dredging work, using the method permitted by the June 30, 2006, stream disturbance permit and WQC, to slowly remove sediment without causing any downstream impacts.

8) On September 5, 2006, Chasm "deliberately" opened the bottom drain gate for repair work in violation of their stream disturbance permit, and on September 18, 2006, NYSDEC notified Chasm it was in violation.

NYSDEC claims to have started an administrative action for enforcement of the ECL and regulating water quality standards, as is its right, against Chasm for its discharge of 4000 cubic yards of sediment into Chateaugay River. The extraordinary writ of prohibition lies only where there is a clear legal right to the applicant for the relief and only when the judicial or quasi-judicial body or officers acts, or threatens to act, without, or in excess, of its jurisdiction. NYSDEC argues Chasm has no clear legal right to the relief it seeks, and where no clear right is shown, the writ of prohibition relief should not be granted; and, even if the act is in excess of jurisdiction, the writ of prohibition remedy generally will not lie if there is another adequate legal remedy.

NYSDEC also argues Chasm is exempt from FERC licensing, therefore the argument for FPA preemption is without merit. NYSDEC federal law expressly distinguishes hydro-power facilities from facilities subject to FERC licensing requirements and that

federal regulations applicable to exempt facilities are neither as broad nor as comprehensive as the regulatory scheme applicable to FERC licensed facilities and therefore NYSDEC may regulate Chasm to a far greater extent than if it were a FERC [*5]licensed project.[FN3]

Summarized, NYSDEC's argument is that because the sum and substance of the NYSDEC administrative complaint alleges a violation of statutory and regulatory provisions protecting water quality and pertaining to Chasm's discharge and dredging vis-a-vis water quality, the enforcement action is not preempted by federal law. NYSDEC makes no real argument that it has authority to grant a permit to do repair work on Chasm Dam. While NYSDEC's generic argument that pre-emption does not apply to exempt facilities is specious, it is also irrelevant to the issue at hand.

Although both Chasm and NYSDEC rely on statements and actions attributable to others, neither submits affidavits and/or affirmations of, for example: McMurray, Charles Groggins, identified as a NYSDEC regional engineer; John Clements, Esq. FERC office of general counsel; and Anyanwu. No weight can be given to the hearsay statements, notwithstanding any attempts to show good faith, or their use by either or both parties at any administrative hearing.

NYSDEC crafts its argument as a water quality issue, not as an argument that Chasm needed a NYSDEC permit to make the dam repairs and maintenance, arguing the purpose of its actions is to protect water quality, for which it has authority. NYSDEC makes no real argument that it has oversight to issue a permit for dam repair, except insofar as it, at the same time, claims preemption does not apply to an exempt facility. While this may be merely splitting hairs, the argument that its involvement is to ensure dam repair work "does not violate or adversely affect water quality standards" is not shown to be outside the scope of their authority.

Chasm requests a broad generalized finding that federal preemption precludes state regulation of Chasm Dam. NYSDEC seeks a broad generalized finding that federal preemption does not apply to hydro-electric projects of Chasm's type. The generalized, broad, and far-reaching findings both parties seek, simply cannot be made.

Neither party argues with any effort that C.P.L.R. Rule 7803(3) supports staying the administrative hearing. The issue is not ripe for review. Certainly all parties are cognizant that any prospective penalty or relief obtained by NYSDEC at a hearing on the alleged violations could be reduced or negated on an administrative appeal or in a C.P.L.R. Art 78 proceeding.

Accordingly, Chasm's request for a stay is denied. The requested broad and generic determination that NYSDEC does not have regulatory or permitting authority over Chasm Dam cannot be made and therefore the request is denied. The request for dismissal of the Notice of Hearing and Complaint is denied; and Chasm's remaining requests for relief are denied. NYSDEC's request for a dismissal of the C.P.L.R. Article 78 petition is granted without prejudice, as the remaining issues are not ripe for decision. [*6]

SO ORDERED

DATED: November 2, 2007, at Chambers, Canton, New York.

David Demarest, J.S.C. Footnotes

Footnote 1:No documentation is submitted outlining the dam's maintenance history.

Footnote 2:One of Chasm's complaints is that NYSDEC provides no information as to how the calculations were made by NYSDEC, a fitting line of questioning for the hearing.

Footnote 3:NYSDEC refers to statements made by the FERC Office of General Counsel and regional engineer, but provides no affirmation or affidavit from those attributed with the remarks. At this juncture, therefore, the claims are hearsay.