ALBANY, N.Y. (CN) - New York City could be on the hook for repairs to an upstate dam after a midlevel appeals court found the state erred in demanding that two adjacent landowners take on the maintenance.
Because the state considered only the rights and not the property that the city acquired in the 1940s in condemning land to create a drinking-water reservoir in the Catskills, the "conclusion that [the landowners] own the dam is not supported by substantial evidence in the record," the Appellate Division in Albany ruled on Feb. 19.
The dam dates to 1898, when a section of Rondout Creek in the town of Warwarsing, about 45 minutes west of Poughkeepsie in Ulster County, was blocked to generate electricity. In 1924, a predecessor to Central Hudson Gas & Electric, a Poughkeepsie-based utility, acquired the dam and expanded it over the years.
Today the dam stands 42 feet tall and 294 feet across; the water behind it created the 40-acre Honk Lake, which is touted for its largemouth bass fishing. But the dam no longer generates hydroelectric power.
That ended when New York City built the Merriman Dam upstream from Honk Lake to form Rondout Reservoir, one of four reservoirs in the city's so-called Delaware system in the Catskills that supply about 50 percent of its water.
To construct Merriman Dam, New York City condemned land and gained the right to divert Rondout Creek. Because that ended the production of hydropower at the dam at Honk Lake, Central Hudson filed claims against the city that were settled in 1948.
As part of the settlement, Central Hudson won hydropower rights near the Merriman Dam. The company sold its land near the Honk Lake dam, and over the next few decades the property changed hands several times.
In the 1990s, David and Jody Cook bought the land west of the dam; Robert and Karen Berger bought the land east of the dam. In 2006, the state Department of Environmental Conservation notified the couples that they were owners of the dam and had to undertake repairs.
The dam was cited as unsafe by the U.S. Army Corps of Engineers in 1981; in 1983, the Department of Environmental Conservation (DEC) labeled it a "Class C hazard," meaning that failure could result in loss of life and property downstream.
The Legislature shifted responsibility for maintenance of dams from the DEC to dam owners in 1999, which led to the DEC notification to the Cooks and the Bergers.
When no repairs occurred at the Honk Lake dam, the DEC initiated enforcement proceedings against the couples. After nine days of hearings before an administrative law judge, they were named joint owners liable for the dam's maintenance.
The DEC demanded a $500,000 bond and assessed a civil penalty of $116,500 against the couples; they also were told to retain an engineer to develop a dam-safety plan.
Instead, the Bergers sued the DEC, the city and the Cooks in Albany County Supreme Court in 2013 to annul the finding that they owned the dam; the Cooks then filed cross claims against the DEC, also challenging the determination.
The trial court transferred the dispute to the Appellate Division.
On Thursday, the four-judge appeals panel agreed with the couples.
Justice Michael Lynch wrote that the DEC decision credited the opinion of its surveyor that the couples owned the dam by virtue of owning the adjacent land. Because the survey put the boundary between their properties at the midpoint of the dam's spillway, the DEC decided they owned the dam.
But Lynch said the DEC finding was flawed because it was made "without regard to the statutory basis for the agreement and indenture by and between [New York City] and Central Hudson."
Lynch noted the city's authority to take land to create reservoirs dates to 1905 and laws that spelled out the specific process. Among the steps, maps must be filed detailing parcels that will be condemned, and affected property owners must receive "just and equitable compensation" for land that is "taken or affected."
One map prepared for the Rondout Reservoir, known as Rondout Riparian Section No. 2, showed particular affected parcels at the northern and southern ends of Honk Lake, including the dam. The indenture and agreement between the city and Central Hudson then detailed the affected parcels in the Rondout Riparian, including Parcel 33, which was recognized as containing the dam.
When the DEC administrative law judge looked at the indenture and agreement, he saw no express conveyance of the dam, Lynch wrote, and so "concluded that neither document transferred ownership of the dam to the city."
In addition to getting the right to divert Rondout Creek to create the reservoir, "the city also acquired property, namely the 'real estate ... described to the waters of the [c]reek and to the natural flow thereof' at Parcel 33," Lynch wrote. "The Rondout Riparian Section No. 2 map ... clearly shows that Parcel 33 was owned by Central Hudson and was improved by the dam."
While the city claimed it acquired only Central Hudson's riparian rights in the condemnation, "We cannot agree," the 10-page opinion states.
"Only a riparian owner, or one who owns riparian rights, may construct and use a dam," Lynch wrote. "If the city acquired exclusive riparian rights, including 'ponding rights,' it follows that only the city has the right to 'use' the dam."
Justices William McCarthy, Elizabeth Garry and Eugene Devine concurred. Justice Leslie Stein, newly named to the panel, did not take part.
Asked Monday whether the DEC would appeal the decision or seek dam repairs from New York City, spokesman Peter Constantakes responded, "DEC is reviewing the decision."
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