Updated March 2015
Having spent many thousands of dollars on attorneys' expenses, the Sacandaga Protection Committee (SPC) emerged victorious when Senior U.S. District Judge Norman A. Mordue granted the SPC's motion for Summary Judgment against Niagara Mohawk Power Corp. (d.b.a. National Grid). This was a major victory for the SPC and the entire lake community.
In 2009, Niagara Mohawk (NM) filed a lawsuit in Federal Court against the Hudson River-Black River Regulating District (HRBRRD) challenging the authority of the District to charge NM for the benefits NM derives from the Conklingville Dam for property NM owns on the Hudson River. In the lawsuit NM claimed that privately-owned properties and permit holders surrounding the Great Sacandaga Lake (GSL) "are beneficiaries and should be assessed" the same as all downstream beneficiaries. NM also made a number of additional causes of actions, including "preemption", "equal protection", and "taking claims".
The SPC and its legal representatives Hodgson Russ took major exception that permit holders should be subject to the same beneficiary assessments as the downstream beneficiaries. The SPC legal team filed for and was granted intervenor status to gain protection to the rights of the property owners on and around the Great Sacandaga Lake.
As part of its case against the HRBRRD, Niagara Mohawk claimed that the District's current permit system is illegal and/or preempted by the Federal Power Act. The SPC was concerned that the rights of its constituents would be affected by the outcome of the litigation and possible abolishment of the existing permit system. Niagara Mohawk opposed the inclusion of the citizen's group (SPC) in the proceedings, while the Regulating District took no position on the motion by SPC.
Recognizing that the HRBRRD had previously filed a motion for summary judgment which would end the proceedings, Chief Judge Norman A. Mordue approved the SPC's participation in order to give the citizens' group an opportunity to fully present its interests to the Court. In his opinion, Chief Judge Mordue expressly recognized SPC's ability to contribute to the lawsuit as well as its track record of representing the entire lake community. "SPC was well organized . . . to launch a legal and political fight to ensure the current permit access system remained unchanged."
In the Court's discussion of the facts of the case, Chief Judge Mordue recognized that rights granted under the permit system are reflected in the high property values of lakefront properties. The SPC argued in this litigation and in other efforts that these property values directly benefit the local economy through a stable tax base. Conversely, elimination of the permit system would lower the taxes on property immediately around the lake and cause a corresponding increase in property taxes for all properties in Fulton, Hamilton and Saratoga counties where the lake is located.
In its motion, the SPC expressed concern that the HRBRRD had various and serious fundamental financial problems which could affect its ability to effectively defend the litigation. Although the Court did not directly rule on this issue, Chief Judge Mordue recognized that the interests of the SPC and the HRBRRD diverge such that the SPC had a legally recognizable interest that had not been represented in the litigation: "It is apparent that SPC and District have sufficiently different interests insofar as the present litigation is concerned . . . While both parties may have an interest in preserving the District's permit system, the District may not be interested in preserving the permit system as it exists presently . . ."
On September 30, 2010, Judge Mordue issued a decision dismissing National Grid's latest attempt to avoid shouldering its share of the costs for maintaining Great Sacandaga Lake and the Conklingville Dam. In the suit, National Grid claimed that many of the Hudson River-Black River Regulating District's operations, including the GSL permit system, were preempted by federal law and contrary to the United States Constitution.
Following several months of briefing by the Sacandaga Protection Committee's attorneys, Hodgson Russ LLP, and the Hudson River-Black River Regulating District, the Court dismissed National Grid's lawsuit in its entirety. In rejecting National Grid's arguments, Judge Mordue specifically noted the contribution of the Sacandaga Protection Committee, which intervened in the litigation to represent the interests of "both front lot and back lot property owners as well as business and recreational users of Great Sacandaga Lake."
According to Sacandaga Protection Committee Co-Chair Joseph Sullivan, of particular importance of the victory is the dismissal with prejudice of the attack on the permit system. "This is very important for our entire community. The suit, if successful, would have eliminated the GSL permit system, leaving the Great Sacandaga Lake shore area without management and eliminating 70 plus years of permitted access to the band of land surrounding the lake." The Court decision protects the investment generations of Sacandaga Protection Committee members have made in improving the lakefront.
Co-Chair Richard Smith explained that, "We are extremely pleased that Judge Mordue seemed to recognize the rights of lake users and property owners over big businesses." Smith continued, "In many ways, this decision validates the mission of the Sacandaga Protection Committee, and Judge Mordue placed a lot of weight on the arguments our attorneys made while, at the same time, flatly rejecting National Grid's arguments as 'largely irrelevant'." Smith added that the decision was especially important in light of the District's ongoing financial difficulties.
However, the saga was not over. National Grid appealed the ruling to the U. S. Court of Appeals in 2011 and it was sent back to the U. S. District Court for further proceedings.
On December 2, 2011 attorneys for the Sacandaga Protection Committee argued to preserve the Great Sacandaga Lake Permit System at oral argument before a three judge panel of the United States Court of Appeals for the Second Circuit in New York City.
In the case, titled Niagara Mohawk Corporation v. Hudson River-Black River Regulating District, the plaintiff power company sought a refund of more than $5 million in assessments paid to the regulating district plus interest. Niagara Mohawk also argued that the Federal Power Act preempts virtually all of the regulating district's activities, including the operation of the Great Sacandaga Lake Permit System, maintenance of the watershed, and even flood control.
Niagara Mohawk also asserted that SPC constituents should pay greater costs to the Regulating District as a beneficiary. SPC was represented at oral argument by its attorneys from Hodgson Russ LLP, with Benjamin K. Ahlstrom joining attorneys for the Regulating District in arguing against Niagara Mohawk's claim. SPC, with the Regulating District, had earlier prevailed before the Federal District Court in a decision by U. S. District Court Judge Norman A. Mordue. It is this decision that Niagara Mohawk appealed.
Accepting legal arguments raised by attorneys for the Sacandaga Protection Committee and the Hudson River-Black River Regulating District, the U. S. Court of Appeal for the Second Circuit issued a decision affirming some parts of the District Court's decision, but sent the remainder of the suit back to the District Court for further proceedings. All items that directly affected the permit system and the issue of whether or not the permittees were beneficiaries and should be assessed were settled when Judge Mordue granted the Sacandaga Protection Committee's motion for Summary Judgement against Niagara Mohawk in September of 2015.
SPC's Motion to Intervene contains information about the permit system that permit holders should be aware of and that provided the U. S. District Court to allow the Sacandaga Protection Committee to participate in the proceedings. It can be downloaded here.