David A. Paterson, Governor
HUDSON RIVER-BLACK RIVER REGULATING DISTRICT
STATE OF THE REGULATING DISTRICT
Glenn A. LaFave, Executive Director
January 12, 2010
Board Meeting - Johnstown, New York
Members of the Board:
In recent years, at the Regulating District’s January Board Meeting, it has been a tradition for the Executive Director to report to the Board on the “State of the Regulating District”. This informal report is my retrospective of the previous calendar year and a look into 2010. In the long history of the Regulating District, including the predecessor Hudson and Black River Regulating Districts, it is unlikely that any year has been busier or more challenging than 2009.
The Regulating District continues to work closely with Governor Paterson’s Office, Members of the State Senate and Assembly, the Governor’s Office of Regulatory Reform, the Department of Environmental Conservation, Department of State, Adirondack Park Agency, State Historic Properties Office and Department of Transportation. We make every effort to comply with all Executive Orders, applicable laws, rules and regulations. The Regulating District Board operates in a manner that promotes predictability, accountability and transparency.
Our management staff works to keep informed and consistent with other components of NYS government. The Executive Director and appropriate members of the senior staff attended NYS conferences as appropriate. Regulating District employees participated in our annual Staff Development Day, attending training sessions facilitated by the NYS Commission on Public Integrity, the NYS Governor’s Office of Employee Relations and our own staff.
The mission of the Hudson River-Black River Regulating District is to regulate the flows of the Hudson River and Black River for the purposes of flood protection and flow augmentation. At our reservoirs staff regulated inflow of 788,691,200,000 gallons of water, carefully and systematically releasing 844,267,600,000 gallons.
At Great Sacandaga Lake, our program for erosion control and shoreline stabilization is both a Regulating District priority and mandate of the Federal Energy Regulatory Commission. This year, our staff placed 4,780 tons of stone, repairing 6,741 feet (1 1/4 miles) of shoreline at 677 sites. As you are aware, we have received numerous letters from access permit holders commending Regulating District staff on their excellent work.
The rulemaking process for the Access Permit System at Great Sacandaga Lake ended. The Regulating District could not file a Notice of Revised Rule Making with the New York Secretary of State as the Governor’s Office of Regulatory Reform did not approve the submission. By not filing this notice, due by June 11, 2009, the Rule Making process expired. Current permit rules and fees continue unchanged. In 2009 the Regulating District issued 4,605 access permit renewals, 175 new access permits and 353 work permits.
The Regulating District met with staff from the State Historic Preservation Office (SHPO) to discuss changes to the Regulating District’s Historic Properties Management Plan (HPMP). Those meetings resulted in recommendations for changes that will streamline the process for permit holders who file work permits for ground disturbances. After acceptance from the Federal Energy Regulatory Commission (FERC) these new guidelines were implemented in 2009.
At a Public Authority Board Governance Seminar, the Regulating District’s previous year’s Independent Audit was again used as a teaching tool. The presenter was complimentary regarding our accounting practices and reporting. Our Annual Financial Audit by the independent auditor was again unqualified and we are in full compliance with current New York State mandates.
The Regulating District completed the paperwork temporarily transferring the jurisdiction of the lands of the State of New York needed for the construction of the new Batchellerville Bridge to the Department of Transportation (DOT). The Regulating District staff continues to meet with DOT on this project.
The Regulating District is undertaking ongoing initiatives as we comply with Governor Paterson’s Executive Order No 4: Establishing A State Green Procurement And Agency Sustainability Program. We revised our procurement practices to maximize “clean and green” purchases. In 2009 we increased the use of email, the Internet and other technologies to work more efficiently and effectively while saving postage, paper and other resources.
Acknowledging Governor Paterson’s concerns and actions regarding the fiscal and economic challenges in New York State, the Regulating District is taking steps to economize whenever possible, including carpooling, reducing travel when possible and viewing electronic copies of documents rather than printing. We are at full staffing and have no plans to hire more personnel, other than to replace existing staff if needed.
Governor Paterson established a new Office of Taxpayer Accountability (OTA). The Regulating District is complying with many information requests and surveys from OTA. In addition, staff participates in a monthly meeting hosted by OTA. Our website includes a link to this new office.
In 2009 we celebrated the 50th anniversary of the establishment of the Hudson River - Black River Regulating District, formed on May 22, 1959 combining the Hudson River Regulating District (established in 1922) and the Black River Regulating District (established in 1919), recognizing fifty years of effective river regulation for the people of the State of New York.
The United States Court of Appeals issued a decision which impacts the Regulating District’s authority to assess some downstream beneficiaries resulting in a significant revenue shortfall. In 2000, a comprehensive “Offer of Settlement” for the operation of Great Sacandaga Lake (GSL) and the EJ West hydroelectric plant was negotiated among and signed by 29 entities, including state and federal agencies, municipalities, non-governmental organizations, and hydroelectric project operators in the Hudson River basin. The settlement, the Federal Energy Regulatory Commission (FERC) approved in 2002 when it issued licenses for the GSL and EJ West projects, also provided that the District’s apportionment and assessment of costs would continue under New York law. Although Section 8.4 of the settlement states that “The Signatories to this settlement offer understand the assessment of charges is done by the Board of the Regulating District in a process defined within Article 15, Title 21 of the New York State Environmental Conservation Law,” on November 28, 2008, the United States Court of Appeals, District of Columbia Circuit, determined that the Federal Power Act preempts the Regulating District’s use of New York State law to collect the Regulating District’s costs from Hudson River hydropower companies licensed by FERC. The court ruled that these hydropower licensees could only be assessed using section 10(f) of the Federal Power Act, which allows FERC to levy annual “headwater benefits” charges for a portion of the Regulating District’s interest, maintenance and depreciation expenses. As a result, the Regulating District can no longer collect assessments from the FERC-licensed hydropower plants to cover operating expenses including school and property taxes that the Regulating District is required, by statute, to pay.
At the direction of the Federal Energy Regulatory Commission (FERC), Oak Ridge National Laboratory is conducting a Headwater Benefit Determination to quantify the benefit received by the hydroelectric projects downstream from the Conklingville Dam and Great Sacandaga Lake, so the Regulating District can assess them via Section 10(f) of the Federal Power Act.
The Board directed staff to conduct the necessary studies to develop an apportionment based on flood protection for a supplemental 2009-2010 assessment in the Hudson River Area, including calculating the flood benefit derived by Albany, Rensselaer, Washington, Warren and Saratoga Counties from the operation of the Conklingville Dam at Great Sacandaga Lake. Although the Board hired consultant American Economics Group (AEG) to perform a reapportionment study, that study may not be completed until June 2010. An apportionment performed by Regulating District staff could expedite the process by months. The Board plans to utilize AEG’s study for the 2010-2011 apportionment and assessment.
The Regulating District’s bond counsel, Lemery Greisler LLC, advised the Board to consider the issuance of a Tax Anticipation Note (TAN) and the Board retained Fiscal Advisors & Marketing, Inc., to assist in the issuance of a TAN.
As Winston Churchill once said “It’s not good enough that we do our best; sometimes we have to do what’s required.” Much has been required of this Board in 2009 and you have worked hard to meet the challenges. Board members receive no compensation. All of you volunteer your time to prepare for and attend board meetings and other public meetings, some of you taking time off from your work. I commend you for your diligence and dedication. With your competent leadership, 2010 holds great promise. Thank you.
Respectfully submitted,
Glenn A. LaFave
Executive Director