Jacobowitz & Gubits Client Not Responsible for $1Million in Dam Repairs Ruling of DEC Commissioner Reversed

The firm of J&G, LLP successfully argued for the reversal of a ruling by the Commissioner of the State Department of Environmental Conversation which made clients David and Judy Cook responsible for repairs to the Honk Falls Dam in Warwasing, New York. The earlier ruling made the Cooks and a neighboring property owner responsible to undertake engineering studies and reports, breach or repair of the dam estimated to cost over $1 million, post-financial assurance in the amount of $500,000, and pay fines in the amount of $116,500.

The Honk Falls Dam, located on the Rondout Creek, was built in 1898 to generate hydroelectric power. In 1924, United Hudson Electric Corporation, which later became Central Hudson Gas and Electric Corporation, purchased the dam and other land parcels along the Rondout. In the 1940s, the city of New York constructed the Merriman Dam upstream from Honk Lake and acquired, through condemnation, certain property and the right to divert the waters of the Rondout Creek, curtailing Central Hudson’s ability to generate electricity at the dam. The city and Central Hudson settled Central Hudson’s compensation claim via a deed and agreement in 1948.

In 2006, the New York State Department of Environmental Conservation (DEC) notified the two owners of property adjoining the dam, the Cooks and Bergers, that DEC considered the dam unsafe and that the DEC had determined that the Cooks and Bergers owned the dam. Under state law, a dam owner is required to repair and maintain the dam in accordance with state law. After a years-long administrative proceeding, a DEC Administrative Law Judge, and the DEC Commissioner, ruled that the two couples were joint owners of the dam and that they were jointly and severally liable for the remediation and penalties.
J&G (Ben Gailey, of counsel) argued on numerous grounds that the Cooks had no ownership interest in the dam, including the argument that New York acquired the dam in 1948 and that the Cook’s property interest was limited to vacant underwater land with no improvements – the bed of Honk Lake.

Gailey was the only attorney or title expert in the case to argue that New York City owns the dam and not just the riparian rights. As a result of Mr. Gailey’s compelling arguments, the New York Appellate Division, Third Department, agreed that the City owns the dam. The court unanimously found that pursuant to a 1905 statute governing the city’s acquisition of land for water-supply purposes, the condemnation proceedings and the 1948 deed and agreement, the city acquired ownership of the dam. The court ruled that neither the Cooks nor Bergers hold any ownership interest in the dam, and annulled the DEC Commissioner’s ruling.