Assembly Bill A10785

                                BILL NUMBER:A10785

TITLE OF BILL:  An act to amend the environmental conservation law, in
relation to inter-fund advances by the Hudson River-Black River Regulat-
ing District

PURPOSE OR GENERAL IDEA OF BILL:  This bill would authorize advances of
moneys between funds of the Hudson River-Black River Regulating District
in order to pay operating expenses to maintain flood control structures
that prevent flooding of capital district communities located along the
Hudson River.

SUMMARY OF SPECIFIC PROVISIONS:  Section 1 of the bill would add a new
subdivision 3 to ECL § 15-2141 to authorize the Hudson River-Black River
Regulating District to temporarily advance moneys held in any fund of
such district to any other fund of such district. My advance would be
required to be repaid to the advancing fund no later than the close of
the next succeeding budget cycle. In addition, the bill would require a
lost interest component to the repayment if the two funds are comprised
of taxes, special ad valorem levies, or special assessments on a differ-
ent base of properties.

Section 2 of the bill would provide fort"' an immediate effective date.

JUSTIFICATION:  Title 21 of Article 15, of the ECL authorizes the
creation of river regulating districts to construct, operate and main-
              

tain reservoirs to regulate the flow of rivers in order to protect the
public from flooding. The districts are public corporations and are
deemed municipal corporations for purposes of receiving federal funds or
any other benefit under federal law. The powers and responsibilities of
the district are vested in a board, the members of which are appointed
by the Governor. ECL §§ 15-2101 through 15-2135 govern the districts and
the boards. In addition to these provisions, ECL §§ 15-2137 through
15-2141 apply to the Hudson River-Black River Regulating District that
was formed by the merger of the former Hudson River Regulating District
with the former Black River Regulating District.

ECL § 15-2141 requires the Hudson River-Black River Regulating District
to continue to maintain funds for the Hudson River area of the district
that are separate from the Black River area of the district. This was
required when the two former districts were merged to create the Hudson
River-Black River Regulating District (District). The Office of the
State Comptroller has determined that legislation is required to specif-
ically authorize the District to temporarily advance moneys from a fund
of one area to a fund of the other area.

PRIOR LEGISLATIVE HISTORY:  This is a new bill.

STATEMENT IN SUPPORT:  This bill would authorize the Hudson River-Black
River Regulating District to advance funds held for river area oper-
ations from the general fund of one area of the District to the general
fund of the other area of the District, so that those funds would be

available for the cost of District operations in the other area. Money
temporarily advanced would be repaid to the fund from which it was
advanced as soon as available, but in no event later than the end of the
next succeeding budget cycle. Repayment would include, an amount reason-
ably estimated to be the additional amount that would have been earned
on the investment of moneys in the fund making the advance had the
advance not been made.

A recent ruling from the United States Court of Appeals for the DC
Circuit in ALBANY ENGINEERING CORP. V. FEDERAL ENERGY REGULATORY COMMIS-
SION, 548 F.3rd. 1071 (D.C. Cir., 2008), and the proceedings resulting
from the Court's remand to the Federal Energy Regulatory Commission
(FERC), has significantly limited the regulating district's authority to
assess FERC licensed hydropower companies pursuant to Title 21 of ECL
Article 15. Essentially, the Court held that Congress, in adopting
Federal Power Act § 10(f), had "occupied the field" so as to preempt
collection of assessments against FERC licensed hydropower operators
under color of state law. As a result, Albany Engineering Corp,, Curtis
Palmer Hydroelectric Co., L.P., Erie Boulevard Hydropower, L.P., Fort
Miller Associates, Georgia Pacific Corp., Green Island Power Authority,
National Grid, New York State Electric & Gas Corp., and Stillwater Hydro
Associates, L C, have ceased paying their former assessments, which
provided the majority of the District's revenues for over eighty years.
While that decision eliminated the District's authority to assess FERC
licensees under state law, it did not invalidate ECL § 15-2115, which
requires the District to pay county and school property taxes.

Pursuant to the Federal Power Act, FERC will complete a Headwater Bene-
fits Determination through which FERC will dictate how much of the
District's expenses each hydropower licensee on the Hudson River must
cover. FERC is likely to take more than one year to complete the Headwa-
ter Benefits Determination and is not likely to obligate the FERC hydro-
power licensees to the level of assessments seen in years past. The
District will be compelled to utilize existing state statutory authori-
ty, pursuant to Title 21 of ECL Article 15, to collect assessments from
municipalities and owners of real estate downstream of the District's
facility at ConklingVille, Given time necessary to comply with the ECL
15-2121 DEC approval process, public notice/hearing procedures, and
subsequent billing and remittance timeframes, the District is unlikely
to see much revenue before the end of 2010.

In light of this court imposed fiscal shortfall, the District has been
forced to defray payment of school taxes due at the end of September
2009. Once the regulating district completes the reapportionment and
assessment under state law, and FERC completes its' Headwater Benefits
Determination under federal law, the regulating district will again be
on sound financial footing and prepared to meet all obligations.

The advance of Black River area Short Term Investment Pool (STIP) funds
could provide funding to cover payment of the Hudson River area 2009
school taxes, 2010 property taxes, and recurring operational expenses
through the middle of 2010. However, upon review of the District's

request to advance Black River area funds to the Hudson River area STIP,
the Comptroller determined 6r1 the basis of ECL § 15-2141 that the Black
River area funds must be kept separate from funds of the Hudson River
area and that such provision did not authorize any transfer of moneys
from the Black River area accounts or investments to the Hudson River
area accounts. ECL § 15-2141 further provides that all moneys received
and held by the District on behalf of, either area shall be applied
solely for the cost of maintenance and operation in the respective area
from which the moneys were received.

The Comptroller also noted that no other provision of the ECL authorizes
a temporary loan or transfer of moneys from one account to the other. In
contrast, State Finance Law § 4(5) and General Municipal Law § 9-a
contain limited authority for such temporary loans or transfers of State
and municipal moneys. Moreover, ECL § 15-2129(6), restricting invest-
ments of the District, precludes the District from investing in' its own
funds. Therefore, the Comptroller determined that this provision of law
creates a strong implication that the District cannot temporarily loan
or transfer funds of the Black River area account to the Hudson River
area account. The Comptroller suggested that the District, seek legis-
lation to authorize the temporary transfer of available excess funds,
via an interfund loan, and assisted the District in drafting this
proposal.

FISCAL IMPLICATION:  This bill would have no impact on the State budget.

EFFECTIVE DATE:  This bill would take effect immediately.