Assembly Bill A10403

                                BILL NUMBER:A10403

TITLE OF BILL:
An act to amend the environmental conservation law, in relation to
inter-fund advances by the Hudson River-Black River Regulating
District and removing requirements for department approval of
regulations and apportionment

PURPOSE:

This bill would authorize advances of moneys between funds of the
Hudson River-Black River Regulating District, and remove the
requirement that the Department of Environmental Conservation (DEC)
approve regulations or apportionment of costs of any river regulating
district created in accordance with existing provisions of the
Environmental Conservation Law (ECL).

SUMMARY OF 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. Any advance would be required to be
repaid to the advancing fund no later than the dose 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
different base of properties.

Section 2 of the bill would amend ECL § 15-2109(1) to make the
effective date of regulations promulgated by a river regulating
district be in accordance with the State Administrative Procedure Act
(SAPA) rather than when approved by DEC.

Section 3 of the bill would amend ECL § 15-2121 (4) to eliminate the
requirement that the apportionment of costs of a river regulating
district be certified to DEC for approval.

Section 4 of the bill would provide for an immediate effective date.

EXISTING LAW:

Title 21 of Article 15 of the ECL authorizes the creation of river
regulating districts to construct, operate and maintain 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 specifically authorize the District to temporarily advance
moneys from a fund of one area to a fund of the other area.

ECL § 15-2109 authorizes the board of any river regulating district to
adopt regulations to implement Title 15 of Article 21 of the ECL. This
section also provides that the regulations are effective when approved
by DEC.

ECL § 15-2121 authorizes the board of any river regulating district to
apportion its operating and capital costs to the public corporations
and real estate parcels benefitted by the district's improvements.
This section also provides that such apportionment shall be approved
by DEC.

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 operations 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 reasonably
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
Commission, 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, LLC, 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
Benefits 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
Headwater Benefits Determination and is not likely to obligate the
FERC hydropower licensees to the level of assessments seen in years
past. The District will be compelled to utilize existing state
statutory authority, 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 on 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 investments 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
can not temporarily loan or transfer funds of the Black River area
account to the Hudson River area account. The Comptroller suggested
that the District seek legislation to authorize the temporary transfer
of available excess funds, via an interfund loan, and assisted the
District in drafting this proposal.

DEC's responsibility to approve the District's regulations should be
eliminated because it predates modem rulemaking procedures, including
those provided for under SAP A, that require both the Governor's
Office of Regulatory Reform and Executive Chamber approval of
regulations, the filing of proposed and adopted regulations with the
Department of State, and the publication of notices in the New York
State Register.  Similarly, DEC's approval of the District's


apportionment of costs among the beneficiaries should also he deleted
because DEC has no prior experience or expertise in this area. Indeed,
records indicate that an apportionment was last undertaken in 1925.

BUDGET IMPLICATIONS:

This bill would have no impact on the State budget.

EFFECTIVE DATE:

This bill would take effect immediately.